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Don't understand...
"Anyway i have sympathy for csco this year."
It what respect. There was a small piece of information that really is worth remebering in the results announcement:
"Gross margin, the percentage of sales left after subtracting costs of goods sold, shrank to 65.3 percent from 67.9 percent a year earlier."
http://www.bloomberg.com/apps/news?pid=20601087&sid=aO8fqTLQokJY&refer=home
Yep, this time the conference call didn't kill it
I went short it at 18.80. I has climed a straight wall, I just don't believe it will be at the top by open. Just a small postion, but I'll take the cents. The real question is how much impact it will have on the tech sector as awhole and whether it provides an excuse to concentrate on the "positives" or whether the macro view will dominate. We live in interesting times...
CSCO
But they haven't had their conference call yet? Last time when CSCO came out with their earnings, it was up a lot AH until about mid-conference call and then tanked....
Fed and the pattern
It works until it fails. The reason I am less confident is that the macro picture is signifantly worse than it has been at prior fed sell off times. If the last few days were actually the start of the big down draft that everyone is expecting AFTER the next bounce, we will have a string of 6 to 9 days down before a green close.
I went out for dinner right after the fed announcement and got back 15 minutes before the market close (I'm in UK) and thought of reducing my short positions for the expected bounce but I could not find any that I honestly felt it was worth bothering. If we bounce big, I sell it. If we don't bounce, I need to do nothing.
What the fed report immediate bounce did, it gave me some December, November and October puts quite cheap in ETFs that tend to have large spreads and poor liquidity, BKX in particular. All of them closed more 10% or more in profit. But it is nothing once the indices they follow actually fall apart.
PokerSam
I know I'm bugging you, but I really would like to know how far QQQQs have to fall to invalidate your current count? Last time I asked, you refered me to the chart of your wave count and told me to extrapolate, but I can't because I do not understand ewaves and the future in your map of the market's path is not to a scale on the time axis.
I guess the bottom line is that we have been mostly in agreement during the downfall and I find it very difficult for QQQQ to reach 39+ given the circumstances before we get the next big down. It is quite possible that they make some up movements, but I pretty much in sell any significant bounces and collect the cash mode.
So I guess, what I really would like to know is
a) what is the minimum level up QQQQs has to reach to meet the requirements of the upwards corrections according to your ewave count
b) what level down would invalidate your count?
I just see us reaching seasonally very weak period with fundamentals becoming more visibly bad and macro economic picture really screwing everyone up: stagflation. And the technical indicators that I follow simply are not improving.
And late Thursday/sometime Friday you sell the post Fed bounce....
It's almsost like the fed feels obliged to have a green day or two after the meeting so they cannot be claimed for the melt down...
Although, you have to consider the risk that people have learn the behavior and start using it as an exit. And we should all remember what happens when too many people head for the exit through a narrow door at the same time...
The problem for economy is in this bit:
"because they have ignored the longer term impacts on the economy of higher energy prices for the foreseeable future, and while that may require an adjustment in people's spending habits, in and of itself, it is not inflationary in the same way that increased wages and salaries without a corresponding increase in productivity is."
Today's report showed decreased productivity and increased wage pressures. Add that to increased inflation measures (pick whichever you like, they have all shon up ticks) and increased unemployment, the bugbear of markets, staglation, is at the door.
Thanks Gleno,
That comment gave me a laught and it's good to laugh. I'm with thespookyone: no pause, need for another insurance against inflation. The language moderates a bit.
Tomorrow rally with repo money and a bit later (usually few days afterwards) down when the slowing economy and increasing inflation picture all the sudden is taken seriously.
The time line is hazy, though....
Staglation - productivity down, labour costs up
Not an impressive start. I wonder whether the fed statement has any significant impact. If we sell off hard today, I will take a tiny long position for the post fed day ramp with repos that has taken place often.
Given the fact that inflation is up, employment down, the direction for markets in near term is pretty clear...
I think the probability of a suprise rate raise is slightly higher than before.
OT - Iran
My point is that in the current climate the politicians in Iran are free to ignore the economic results of turning the oil tap off. The West would be hit worse. In fact, given the geopolitical tensions, maybe all they need to do is to make the threat more explicit and the speculators will do Iran's job for it.
Btw. according to CIA World Fact book, they have $40 billion in forex so although the "numbers" measuring their economy would suffer, it is not clear how much the average citizen would be affected. The government is not exactly addressing social and economic problems now either.
https://www.cia.gov/cia/publications/factbook/geos/ir.html
Iran
"As far as Iran using oil as weapon. Please please let them try. 50 percent of Iranian GDP is from oil sales - I think if they used oil as weapon it might hurt US a bit but it would crush the Iranian economy."
They have not spend all the income from oil, and probably have large forex reserve stored at least in part in gold. Given the political climate in the country and the region, they have the freedom not to worry about taking a hit in their economy in fight against the US political hegemony
The oil is second best guarantee of their sovereignty after nuclear weapons that they do not have.
Crude is not the immediate problem - refinery capacity is
Also, higher crude price supports oils. The US government has already indicated that they will look favourably any requests to borrow crude from the strategic reserve. Also, US oil and refined product inventories are at above average levels.
The attention is really at the feds and their statement and maybe geopolitical things. I expect the crude come up as an issue later in the week. Particularly, as Iran basically made a pretty clear statement that it could use oil as a weapon if sanctions are imposed against it. That news item got hardly any attention at all today.
Markets are like children with attention deficit syndrome: they can only concentrate so many things at the same time for a brief moment and move to the next story afterwards.
Hi PokerSam,
I think you are a good trader and as you hopefully remember I have stood in your corner at other boards when people where attacking you position. Don't take this as challenging your opinions but as looking for common ground and understanding.
I'm slightly disconcerted about this board starting to feel like a cult. There are two things that you do that I do not like at all: you often use HAHA in your posts in context that I really do not see any other point except expression of contempt of the other person i.e. there was no joke or humorous context. Second and more pedantic point is your use of the expressions "the proof of the pudding is in the tasting". The correct expression is "the proof of the pudding is in the eating".
Any way back to the stock market things:
First mistake many people make is not reading the small print i.e. judging whether is being said is still valid and whether it matches the time frame that they trade. When people make trading recommendations/changes of position, they really should indicate the time frame in mind: some hours, intraday, few days, weeks, months or years. (Not a critique of you per se.)
I was left with an impression that you expected us to hit 39.50+ sometime AFTER the August option expiry (you responded to someone that there was not enough time to hit that by the expiry a while ago). You have since modified the high of the correction a bit down which is no problem.
Personally I feel that we might make at least a local top at these levels if not even bigger one. My confidence in the near term developments is decreasing and I have actually scaled down my market exposure because of it. As I said before, I am collection September to December puts, but I have taken profits in some September puts after big declines where I hold further out puts.
I was long only for the very initial part of the correction up, since I have not trust in the fundamentals or the move as a whole: it all takes place with decreasing technicals. I don't want to be caught long on a 200 point INDU move down which will turn into 500 point move. It sounds huge but it actually is not by historical standards. The volatility has been increasing.
You have said that you are only guided by ewaves and Williams and something else that I forgot. I simply do not believe in ewaves for the one simple thing: it is fatalistic i.e. somehow the markets will follow the predetermined pattern no matter what the external influences are. Pretcher is making a big case that ewaves actually control social changes in the society and so on which is just rubbish.
"Ewaves map the emotional swings of real people. It is human emotion that drives the markets (primarily fear and greed) and those emotions are affected at times by fundamentals and at other times they are not. The tech bubble had nothing to do with fundamentals, right? It is much easier for me to follow the emotional swings of the markets because they follow a set pattern than it is to try to figure out how humans will react to a change in fundamentals."
This is simply something I do not believe for the same reason I do not believe in god. It's a statement that cannot be proven right or wrong, as it does not actually say very much.
Btw. do not unreal people have any influence on the markets? Sometimes I think that markets are actually mostly formed by the unreal people until the reality makes itself know as the unwelcomed houseguest.
We are in full agreement on two things:
1) People can be impatient
2) Extremes of greed and fear make the markets very interesting to trade and profitable; as for assuming that weaves actually tell you when the switch takes place from one to another I do not really see evidence for that.
"You say we must finish this correction in the next two weeks because we are gong down. So, contrary to your statement that you DON'T, I guess you DO claim to know how things will unwind."
No, I don't think that we have to finish the correction up in any given time frame, but I see three things:
1) most technical indicator are indicating no trend or slightly overbought
2) the candle formations look to me slightly more like a top than continuation of the correction up. Either way, it looks like we are about to see a large move one way or another.
3) this past week we had quite dramatic reversal down. I consider Friday's action very, very bad for the long case.
I am looking for reasons not to trust what I see and stop from throwing myself 100% short yet. I am trying to understand the logic/reasons that could make us to extend the correction a lot further (and for not being vague, I'd consider >2% above the recent highs a lot).
The only scenario for a good rally I can see is for the feds to raise rates, sell off and rebound on the expectation that it was the end of the tightening period. But what levels would that start from?
I expect increased volatility and strong movement down
I know that this is an argument based on fundamentals instead of technical factors, but the chart indicators on dailies are basically telling that there is no trend in place. I as I've said before ewaves are a mystery to me...
Just think about this: markets fully factored in no raise in the rates this time by the feds today and then sold off. So it's not even the case that there are news to sell off on Tuesday. And look at the behaviour of USD. Dollar weakness might be good for some multinational's balance sheets but if USD manages to fall below $2 to a GBP and below $1.30 to Euro the feds will get worried about attracting enough cash to prevent free fall. And if they gave to choose between USD or the stockmarket, they at the end will always choose USD because without USD there is no stock martket or bond markets given the level of foreign ownership of US assets. The proverbial rock and hard place. US needs daily net inflows of some 11 billion. Only possible surprise is that the rates are raised which is more likely than many think. The fundamentals do always asset themselves at then end. Just look at Warren Buffet's peformance. I make no claim to know how things unwind and I find it completly counterintuitive that ewavers do claim so. PokerSam, your bacon was saved by williams, not ewaves today.
In fact, I could make a convoluted argument for the feds raising rates, panic sell off in equities and a rally afterwards. I cannot see how this could rally if the feds do not raise rates. The daily candles are pretty ugly and at some point more and more people will reach their point of pain. The uncertainty is increasing. Just look at the daily candles of RUT and COMPX: this is a great market for short term trades: you can basically make money being "wrong" as long as you collect it when it is offered instead of getting greedy and letting it slip through your fingers. You even get a 2nd chance often.
Seasonality plays against us really breaking much higher and we are beack below significant resistance on many indices.
PokerSam, I asked you how low can we go between now and end of September and still keep your wave count valid. You answered by refering back to the chart of your wave count, but I cannot read it since 1) I know nothing about ewaves 2) the time frame on ewaves seems to be extremely flexible and I cannot just extrapolate linearly from what has happenned to future in accordance to the wave pattern that you have drawn.
I fully agree with you with the "long" term view, but I fail to see us being able to reach 39+ UNLESS it takes place within the next few weeks and personnally I think the probability of it has been decreasing, not increasing.
I actually expect failure of oil and gold/commodity stocks in general pushing us into new lows quite soon: stagflation.
Maybe for a change they are actually paying attention to the data
in the report instead of the .25 rate increase not taking place. USD sure didn't like the report...
Indeed
I had a tiny position in (5) puts... Just to start following it closer. Sometimes one is lucky.
I wonder what would happen next week if the fed
follow the lead of other central banks and raise the rates? The rates are not coupled with the employment situation. It does weight in to the equation but is not the main determinant.
U.S. payrolls up 113,000 in July, unemployment rate rises to 4.8%, hourly wages up 0.4%.
GLENO34, your AAPL short was timely:
Apple Shares May Fall as Probe of Options Leads to Restatement
http://www.bloomberg.com/apps/news?pid=20601087&sid=ae2_HRnZHjZY&refer=home
"Aug. 4 (Bloomberg) -- Shares of Apple Computer Inc., maker of Macintosh computers and iPod music players, may fall as the company said it will probably restate earnings after an internal investigation into options backdating found more suspicious grants.
The stock fell $4.59, or 6.6 percent, to $65 in after-hours trading yesterday, according to the Web site for Nasdaq's Inet trading system. The shares had gained $1.43 in Nasdaq Stock Market composite trading before the Cupertino, California-based company's announcement.
..."
SPX mini futures working hard trying to stay positive....
In a few minutes we'll know... Looks like cash SPX is not going to break above 1280, though.
SPX was at resistance, too
which it had tried to break and failed.
Negatives? Positives?
I haven't followed the markets today. Just saw the open and been busy elsewhere since then. There seems to be a bit of a bullish mood around the boards. Not sure whether that is justified or not.
First stop: SPX daily chart. Today's candle looks like it tried to break resistance at 1280 and failed. Interestingly slow stochastics are rolling over.
NDX: nothing really catches my attention in the chart except the same candle like SPX: we closed a good distance below the high of the day.
COMPX: the same
INDU: doesn't the last few days candle formation look like a perfect top in place although it closed a bit closer to the highs of the day than most other indices. Slow stochs are looking like they really want to turn down.
RUT: Kind of cute how the RSI-14 has been dancing around the 50 line for quite a while. Looks like 700 has been a brick wall and if it breaks above that, who knows how far it runs. This is actually the most interesting of the charts so far.
Btw. ADX is indicating on all daily charts that there is no trend in place at the moment.
I think it is a flip of coin thing but we are getting close to a bigger move one way or another. Personnally I think we will go down, but if it is up, I rather have us make a very fast visit to PokerSam's 39plus instead of a slow grind.
Hi PokerSam,
I agree. Your calls have been very good. As I stated, I'm starting to find the time frames difficult. A question, if it is not too difficult or time consumining to figure out:
To me, it sounds like the big five down might not take place until sometime early next year i.e. maybe the post Christmas, late January/early February sell off since you don't expect us to make it to 39 plus any time before August expiry which probably would push it to September
How far could QQQQ falls between now and end of September without hitting the 39 plus before and keep your wave count valid?
Hi PokerSam,
Keep up with what you are doing and I hope it turns out as you are saying as it would make a a lot of money. It is always easier to trade the market if you have a map of how things will unfold even if one doesn't agree with it fully
It is just that I cannot see the timeframes working out.
Hi Dan,
All the best from me, too. You one of the traders on the boards that I respect because you definetly do not stick to one side of the markets, although you tend to more positive about the markets at times than I am.
Strength and stay positive. The body is an amazing thing which many fail to recognize.
A bit of save started when there was half an hour left
but it did lose some of its steam. The interesting bit is that this sell off was supposedly sparked by interest rate expectations and inflation, but USD actually fell. I think the future is stagflation. At the moment, I have no long term faith in PokerSam's expectations of hitting 39.50 on QQQQ. Sorry... You've been very good.
The reasons are multiple, but the biggest one is that I don't see any time frame where it would fit. Maybe, just maybe the feds not raising rates will cause us to rally madly.... That's about the only excuse I can see. And note, they do need some plausible excuse at the end of the day, even if it is quite teneous.
I did think that what PokerSam stated sounded reasonable some weeks ago, but the idea that we might have to wait for hitting 39.50 past August expiry does not feel right unless it happens immediately afterwards going into the end of the month manipulations and then down fast to the seasonally bad period. But then again, seasonality is often front run earlier and earlier.
I'm increasingly starting to think that we might have quasi-crash.
I was busy evaluating my option positions when the rally started and for some stupid reason decided to finish that before making decisions about my futures positions which lead me closing them at good profit but quite a bit off the best prices that I could have done... Oh well, it was a good winner anyway.
I'm doing the same thing as I've said before: I'm accumulating "free puts" i.e. after significant rallies, buy a number of puts in October, November and December series and when the position reaches reasonable profit, sell enough of the position to recover the cost plus the commissions of closing the position. Then for now, I just forget the position. I'm hitting indices and individual stocks using this. It combines my belief of significant downdraft with swing trading.
MaxPain pointless at this point
Still three weeks to the next expiry
Down?
SPX looks like it is at resistance and TRAN seems to be in down trend. Can NDX/COMPX pull them up? Volatility indices are up quite a lot today. Tomorrow _might_ be big day down.
Vestor, thanks for the update
I check COT, too, but not as timely as you do. I appreciate the affort. NYSE TRIN finally finally fell below 1 and we are breaking out. Interesting to see how far we go and if there is any pull back at the last minute.
I checked VIX, VXO and VXN and they are approaching supports. I guess Monday still up at least open (or maybe it goes the other way: down first and then up), but we should at least have a pullback.
I don't understand
NYSE TICK has been above 400, a lot of time above 500 and several times extended peaks between 800 and 1000 and we still fail to break out....
I'm starting to think that there is some serious selling taking place behind the scenes. Note also that NYSE TRIN has been mostly above 1.
Waiting for a strong move one way or another
We've been in a pretty narrow trading range and the NYSE TICK has been very strong, so either we break above the current highs or crash hard into the close. Up more probable but it can go either way.
Agree
I'm trying to figure out when to get in fron of the train NYSE TICK is overwhelmingly positive, in fact, very strong, but TRIN is above 1. Nasdaq TICK and TRIN indicate good strength.
I guess I settle on buying some puts on something when things like starting to fall, but I'm not sure what. SMH maybe... MSFT? It's not like they buy their shares now. A large percentage of announced share buy backs never take place!
So GDP came at 2.5 instead of expected 3%
Dollar reacted as expected and fell. The EUR and GBP futures went up like a wall. Easy money. Since then they have formed flags on the 5 min charts that are about to break.
Index futures seem to be unable to decide. They moved up a bit and then backed off. Reading between the lines of the GBP report: stagflation seems to be a real issue.
Congratulations PokerSam,
I am still not sure whether I trust what you are saying about the near term, though, we agree in the large scale But I hope you are right because it would make lots of easy money...
Do I understand correctly that you are calling this to bounce to go to about 37.50 on QQQQ, then down to 35 (if I remember right) and after that to at least 39 and then down, down....
Today's bounce is large credited on the weakened economy as evidenced by Beige Book. I made good money on betting against USD. As I have written before, slowdown in the economy, particularly, consumer spending is NEVER positive for the stock market in the long term. US GDP is about 60% consumer spending and the corporate spending must run very high to compensate. Plus, if there is evidence of medium to long term consumer spending low down, corporate spending slows down quite fast after consumer spending slow down has taken effect.
Today's bounce has very weak foundations but it does not mean that it will not go a lot furher, just that as you have said, it cannot be trusted. But we are coming off from a very low level. Note that GM contributed INDU, OEX, SPX and a bunch of other less known indices.
To me, based on daily charts, it looks like SPX has resistance at 1280. NDX has resistance at 1500, 1520 (better defined), 1540, 1550, 1560. INDU is at resistance, and next points of resistance are at 11150 and 11200. COMPX is at resistance. RUT looks like ready to resume downtrend.
I tend to think that we would go down at least initially tomorrow barring some "fundamental" knee jerk reason that so far I do not see.
I am building positions in December to September puts (preference in November and October ones as seasonally that is where we bottom; August is too early for my strategy; September only when December is very expensive; also I place bids that just exceed the national best bid by the minumum amount on several series, particularly on less liquid issues to get a fill) at the moment instead of playing the long side any more. I had a small long position that I am all out by now. Instead I have bought a bunch of 3 to 4 monts out in time puts when things rally and sold them to reduce the cost basis to zero cost basis on the subsequent falls. At this point, I take only positions in the very short term or long term. The medium term is foggy for me....
Learn about "delta" and don't trade options until you do...
Fully agree with that, but you should also know the basics about:
1) gamma (change in delta w.r.t. change in underlying; formally second partial derivative of price of the option w.r.t. the price of the underlying), too
2) theta: partial derivative of the price of option (derivative) w.r.t time i.e. it measures the changes in time decay
And given these are changing at the moment
3) vega: partial derivative of the price w.r.t. volatility of the underlying
4) rho: parital derivative of the option price w.r.t. interest rates
Changes in vega can kill your option profits, particularly in out of money options. When volatility is high, you want to sell options and hedge on the equity markets to collect option price decay based on volatility decreasing (vega reverting to the norm) and time decay....
Symptomatic of a bear market rally
Fewer and fewer stocks participate. By the way, that value is low but not a record:
mid-April 2000 BPNDX was 11
mid-March 2001 12
late September 2001 it was 1
Jul 02 it got to 8
This is from stockcharts, daily 7 year chart, so it is difficult to read the dates more accurately, but values are exact as I used price labels.
OT: FreeMarkets - That is not exactly the KCA. You should do more research.
I've done all the research I need to do to understand several variations of it. Unless I all the sudden get faith, no further research will give me any further knowledge about the argument. I guess if I found it interesting I could spend time learning more about the people who at various times championed this argument, in what cultural and historical context, but frankly I am not interested.
I'm quite willing to continue the discussion if you can provide some grounds for discussion. So far I have not seen you trying to answer any of my questions: when I set simple and clear questions, you ignore them and react by patronising me.
Can I recommend that you read Schopenhauer's treaties on rhetoric, the Art of Controversy which you can find here:
http://coolhaus.de/art-of-controversy/
It might give you some understanding about how you are trying to win the argument without actually addressing the facts.
You state that what I quoted is not exactly KCA. I would very much like to know how it differs from what you think is KCA?
" I see that I have gotten under your skin. LOL. That's good because I want you to think about it more."
Yes, you have, very much, but probably for very different reason than what you think. My background is philosophy, theoretical physics and mathematics although I work in computer science. I get annoyed when people use sloppy statistics to justify things when the statistics quoted in no way actually support the claim they make. I get annoyed when people try to use the language of science to lend credibility to their argument when either they do not actually understand the words or concepts they use or purposefully mislead others by employing complicated phrases purely in order to try to make their statements sound like science.
I have no problem with belief. I do not seek to impose my view of the world onto anyone. I believe religion and spirituality are personal matters (note not private) that can be wonderful sources of inspiration and support, but that does not make them true or give their adherents the right to trample over the rights of others.
Thanks EspressoCoffee...
Vestor, there was a bit of upset and argument here some two or was it three weeks ago. I am not really clear of the details as I missed the argument only saw the aftermath. The end result is that PokerSam started his own board.
Anyone know the URL for PokerSams board?
I don't have it on this machine and can't find the board now...
COT
I'm not sure if they are planning to eliminate it, but definetly they are planning to change it.
Here's the actual announcement of the comments period:
http://www.cftc.gov/opa/press06/opa5190-06.htm
And here's the actual request for comments from the federeal register:
http://www.cftc.gov/foia/fedreg06/foi060621a.htm
It's long so I am not sure exactly what they are after...