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Let's get this thing started!
Look, I hear ya. I make my living mostly daytrading futures. In and out. Picking swing trades is very difficult over the long term because there are so many things that affect why a stock is worth something today and then not tomorrow.
As for SOL, what happened here is that the glut of polysilicon due to the expanded ramp in production to meet Italian and German subsidies is just now being realized in terms of lower selling prices. SOL has been the biggest 'go to' trade for the professional investors because they are the most proficient and cheapest producer out there. So, there are larger positions to sell in it than the others. LDK is a 'glamor' solar stock that only the puny investors trade in because it's the best known. Large investors don't get involved with companies that are owned over 50% by one person like LDK is. But that works for you when things get ugly because as long as that person doesn't sell, it puts a limit on the downside.
Now for the market in general, which is what I'm better at rather than specific stocks, we are now most likely experiencing a 4th wave bounce which should stop at around SPX 1300 to 1320 max. A break above that changes things. But this rally should fail around here and then lead to a final 5th wave decline around SPX 1250ish to 1220 max on the downside.
That then sets up an interesting situation. The ideal scenario is for a big rally to new highs if only for the reason of this being the 3rd year prez cycle which is typically the largest year of the 4 year prez cycle. As of today, the market is up 2% I think for the year. It should end the year at least 7 to 12%.
But be careful worrying about SOL. SOL will easily double and possibly triple by year end if they support anywhere near their last guidance. Aug earnings is going to be a biggy.
Okay, check this out ---
Two topics here - 1 being SOL which I'll get to in a minute. The first thing is Martin Pring. Who's heard of him? He's a legend in technical analysis. Well, here's what he says ---
The downside objective of the DOW is the low 8000's. However, NOT on this current decline. We 'should' get a big bounce possibly here to retest the highs of DOW 12700ish first. Double top and then that's all she wrote.
He's basically saying that later this year will be the beginning of (or continuation of - depending on your point of view) the current secular bear market which will be the final leg down. And it's THAT low you want to mortgage your house to buy and hold for the next 20 year bull market.
Okay, okay. Now that goes completely against nearly ALL consensus in the market if you watch CNBC on a regular basis. But we know thier track record. So, do with that what you will. So, again, it's bottom around here, rally into summer a tad to retest - or just go flat in a tight range, break down in the fall on lower GDP, then collapse 2012 into DOW 8000s, then buy at the end of next year.
As for SOL: let me just tell you what a gift you have here. The stock currently trades for near cash and even the gloomiest forcast calls for nearly $1.50 in EPS. If you pull up all the chinese solars, YGE, JASO, LDK, SOL, TSL, etc, they all have the same chart - a waterfall. To me that spells of a large fund or funds selling out without regard. Because most of these stocks have such low floats, a single large seller or two selling a basket of stocks within a sector they want out of can do this.
Now look at the opportunity presented -- for $195, you can buy 1 Jan $4 2012 call option that controls $525 worth of stock. Multiply that by 10 and you get less than $2k controlling over $5k of stock that gives you 7 months to just see your stock run over $5.95 before you make money.
Do you think SOL, based on all the fundamental reasons we've talked about, will trade in the next 7 months to say, $7? If so, then you'll see that $2k turn into $3k, or a 50% return. At $8, you double your money.
We all know who've been following it that the main and pretty much only reason for the decline in revs for all the companies has been the subsidy cuts in Germany and Italy. So, there is currently and temporarily an inventory glut leading to lower ASPs. But it's only temporary. That sets up for earning's suprises later this year.
So, I'd be a big buyer of those calls and then let the market run, watch it then fall with a TZA position, then wait to see TNA fall hopefully under $50 again. If so, we start averaging into TNA.
Sorry for the delay. I have been working on a new trading thing. I'll explain later, but if you haven't already gotten a response, basically if stocks go down, that money piles into bonds. Bond prices going up means the rates go down. But in this case, the expectation is that that money is not going to be put at risk with inflation around 3%+ now and getting paid only 3.2 on 10 years. So, the lack of demand once the Fed is gone for those bonds will make them fall in price, thus pushing up rates and TMV. That was the idea. I think it still plays out, but maybe not as fast as you'd expect.
I bought it then sold it. The decay problem with these triple leveraged ETFs are dangerous to sit on. I think it's a winner, but don't want to bet on it.
The only question for that guy is who does he consider the 'big boys'? Bill Gross of Pimco is the biggest of them all and he's out and all but saying to short the bond market. If you go back in time and look at what happened to the bond (treasuries, not notes) market after QE1 was over, they didn't top out until about 2 months later. The bond market is very technically driven. So, until you get a clear break of the uptrend, it's going up with or without QE until it doesn't.
But I think that guy has it wrong. Everything the Fed has done has been one large experiment. They are playing a very dangerous game here and all the hedge funds they scared out of stocks by screwing them on every decline has sent them packing into the commodity markets. So now they (the fed) have gained literally nothing of benefit by pushing up stocks because the average Main Street American is getting killed by the higher cost of living. They can't touch the traders in commodities because it's a world wide market.
So, oil will go up and up along with food until the fed gets the hell out of the way and lets ALL markets trade on their own. If that means the SPX falls to 900 or less, well, that's what it does. Time will heal all wounds, but at least they'll tell the accurate tale.
You see, what the fed has screwed up here is by forcing everyone into stocks by making savings worthless, they boxed themselves into having to lock down lending. If you try to get a cash-out refi now, you won't get it. The fed has put the breaks on banks doing that. Home equity is where all the money comes from to pay for high-ticket items like remodels and cars and on and on and without the average income American able to access that equity for cash, not refi of existing, the economy is dead. But for the fed, the second the public has access to that money, inflation will skyrocket making things ten times worse.
It seems to me and those that I read that know this stuff that the only way out of this quagmire they created for themselves (probably by being scared by Jim Cramer screaming at them on his TV show back in 2008) is to truly let the economy fall off the cliff, destroy true demand for commodities like food and oil, and then let the banks do what they do - LEND.
I don't see any other way. The bond market will spike up and rates will collapse, thus helping lending demand, and thus help truly ease the 'real' recovery down the road.
The longer this drags on, the more they are going to be forced into doing something like that.
MRVL, you might want to think about rotating your TZA directly into TMV. I think that might be a great trade for you. The quickest and surest way to get a TZA type of trade right back to $60+
I'm starting to change my focus on how to play the market now. The stock market is dead due to lack of interest by just about everyone. The Fed has been successful I think at hammering the speculators. So, they just ran into commodities and forex where the Fed can't touch them. The only thing the gov can do is raise margins on commoditie trading. That's helped them and hurt the small guys, but the big guys run the world and that won't do anything.
But I see something else starting to take shape - and it's a possible big trade. First, read this article by Bove about interest rates and banks...
http://www.cnbc.com/id/42937720
Now, regardless of what he thinks about BAC or C, his point is now starting to take shape about bond yeilds begining to rise soon, and this time it could be the big one. Everyone has been talking up rates over the last year, but now it looks like it's finally starting to come to a point where it will probably do so in a longer term trend.
Previously, I traded into TYO as a way to play that. The trade actualy worked out, but not for me becuase I was too scared. The problem with TYO was that they added (direxion) the shorter term 7 year bond into it which dragged it down because the Fed has been targeting short term bonds for the QE.
But this time I'm not making the same mistake. This time I think I have the right call here - TMV. TMV is the 3x 20+ year bond bear fund, which goes up when the 20 and 30 year bond yeilds rise. Just look at this chart...
The top window is the actual chart of the 20 year yeild, which as you can see puts us less than 1% above the all time low of about 3.25%. We're currently at 4%ish. But look at where TMV is -- at $38ish now, the low back at 3.25% puts that at just $31, so that's your ultimate risk. Not too shabby for something that could easily triple your money with no time risk of options.
The best part is you can sell covered calls on it month after month knowing that eventually you'll see this ramp because it will HAVE to.
Well, first watch this chart very closely--->>
If that yeild breaks below 3%, then what the bond market is tellin you is that the economy is starting to roll over in a meaningful way and that inflation is nowhere to be found. In that case, the stock market will have to follow it. Almost every tech stock earnings has supported the idea that the economy is nowhere near as strong as the bulls have said. It's all an illusion.
The Russell will get hit the hardest because the only reason people buy those stocks is to play catch up with the SPX. Small companies have a harder time making it in the real world because they don't have the credit or cash to carry them like big companies do.
So, TZA should be a big winner. But for now, you have to go with the idea that the market is just not going to be allowed to go down in a big way until something forces the hand of whoever is out there holding it up. Everyone knows the market is overbought/valued.
June 13th I think is Armstrong's 8.6 year major cycle reversal date.
http://www.tradingmarkets.com/stocks/commentary/the-market-time-period-red-alert-1576930.html
Buying EUO tomorrow. Looks like dollar about to rally. SOL I think is getting hammered because all china sticks getting hit. But if it gets under $8, back up the truck
Headed for double dip?
Well now this doesn't sound so good like everyone that comes on cnbc says...
http://www.csmonitor.com/Business/Robert-Reich-s-Blog/2011/0331/Heading-for-a-double-dip
I know CEPH very well. Have made a small fortune on it over the last 12 years. But you got it, didn't see that coming.
SOL just got a buy rec' today and $15 target, so there could be a nice bid for it just on that and the clear uptrend/breakout setting up.
As for the market, what it looks like here is a possible setup for a 'fake out' breakout above SPX 1330, and then the selloff. The market's so rigged, it's sick. But you can't fight it. A guy on Bloomberg yesterday said if the Fed never came in and helped, right now with the earning's growth in the big stocks, the SPX would still be under 1000. So, knowing that June is just 3 months away, the money managers might try to get all they can out of this rally before they have to sell everything before everyone else. The race for the exits could be ugly.
Here's the Barron's article in full--->
Credit Suisse
We spent a week in China last week, and met several companies in the supply chain. We also met with officials from the National Development and Reform Commission (NDRC) in China to better understand how the country is planning for its energy needs.
We reiterate our cautious stance on solar, our estimates (excluding First Solar (ticker: FSLR)) are 35% below consensus for second-half 2011. The major China-based solar companies are trading at 1.9 enterprise value/replacement capacity off calendar-2010 estimates, and 0.8 times off calendar-2011 estimates.
We think solar stocks can have 20%-30%-plus downside, especially given the recent stock moves higher due to the stronger Euro and positive sentiment on renewables following nuclear issues in Japan.
The solar industry believes falling prices will drive demand -- this has historically been the case the last five years -- but it was due to uncapped subsidies. In 2006 and 2007, demand was driven by uncapped subsidies in Germany and the supply was constrained by poly. In 2008, demand was driven by uncapped subsidies in Spain. In 2009, Germany again drove demand, and financing acted as a constraint for part of the year. In 2010, demand was driven by uncapped subsidies in Italy. In 2011, there are strong policy moves to close the loopholes in Italy, Germany with the result that second-half 2011 will mark the first time in the last five years that the solar industry will experience inelastic demand response as panel prices decline.
Investors are hyper-focused on Italy subsidy trends. However, we think a plain vanilla oversupply is quietly brewing. We think there is 500-plus megawatts (MW) of excess inventory in the channel, and oversupply will manifest regardless of the main outcomes we think are likely in Italy/Germany.
Following our NDRC meeting, we do not think that China will be a backstop for demand until much later in the cycle. We think pricing will need to fall sharply in second-half 2011.
For those who need exposure -- we would be relatively long JinkoSolar Holding (JKS) (competitive cost structure and very cheap), MEMC Electronic Materials (WFR) (semi exposure, and non-US pipelines), growing a bit more constructive on ReneSola (SOL) post the trip (valuations).
Stocks where we think there are potentially large market-cap disconnects (risks) -- First Solar (some level of complacency here given utility pipeline -- but the question will be whether bulls can hold conviction when panel prices fall faster and c-Si (crystalline silicon) channel inventory issues become more apparent), polysilicon stocks (near highs), Taiwan cell stocks. U.S.-listed, China-based solar stocks are much cheaper than some of their global counterparts, but there can still be some downside.
-- Satya Kumar
-- Brandon Heiken
Hey look at SOL. It's just starting. Today's textbook technical action with huge volume on a clear breakout above resistance. Sure, a few days possible of some minor pullback action, but the trend is our friend and I think it's headed easily to $12 to $13 very short term. Personally I'm looking for $13. Fundamentals at a PE of 4ish on $2 per share for the year all but guarantee it!
If you got time, read this about what fedis doing and the risks of QE
http://online.wsj.com/article/SB10001424052748703899704576204594093772576.html
Sent from iPhone
Well, check this out re: SOL --->
http://www.streetauthority.com/research/28/item/4522
I got that in my spam email today. Makes a pretty good case technically and fundamentally.
Yeah, I read that. Today's trading was very interesting and possibly the setup for something bigger. But whatever happens, 'they' won't be able to keep this little gem down for too long.
Yeah, I'm thinking ABC too. But the end is near. If it's an ABC, then we have a final leg higher. But that's it.
Sorry for the delay. Been busy. I'm telling that SOL is a goldmine. Someone on the Yahoo board for the stock posted a very interesting SeekingAlpha article --
http://seekingalpha.com/instablog/872074-curt0/143971-is-wall-street-manipulating-solar-stocks
Whatever the reason, between now and Oct, I think for sure SOL will trade at a new high (above $13 to $14) again, which will more than double these calls. Italy didn't suspend the subsidy so the entire sector will ramp again. The increase in calls is probably due to that and technically the way SOL has held $9 shows we've bottomed.
This chart I think shows that we are now in a downtrend. Looking at this, and the futures now up 10 points on the SPX, it looks to me as if we're going to test the upper end of that downtrend around 1295ish and then fall. This is probably a small 4th wave rally before the 5th. Because you can count a clear 5 waves setting up - that is, if we fail around 1300 or lower - that means this is most likely the beginning wave 1 of a new larger wave count down. We'll see. Only a close above 1310 to 1320 will negate this.
I don't think solar can do anything for Japan. But that's not the trade here. The anti-nuke crowd just got about 10 feet taller this week and solar is really the only viable alternative that works. But the trade is in regard to Europe, not Japan. Italy just last week announced they are thinking about suspending the solar subsidy. Well, not now. SOL in particular is fairly immune to this stuff because they are the maker of the wafers with over 20 long term contracts in place that alone will carry them well into 2013. Those contracts alone all but guarantee them over $2 per share, or a forward PE of 4! This Japan event will surely push that higher. Heck, it was even mentioned on Fast Money tonight as a trade. In other words, the trade is on.
You see the futures right now??? Yikes! Remember the good old days of 2008?
www.cme.com
I'm taking the account $9000 'in' with the Oct $7 SOL calls tommorrow. The more I read up on this company, the more I like it. That gives us 7 months to make a damn good trade here.
As for the market, the SPX 'might' do $93 this year, on the most optimistic EPS. At 15x, that's 1395. So, with all this fed money out there floating around, and the fear of God put into the shorts, we could see that. However, fed money runs out in June and Bill Gross just went completely out of US debt saying he ain't putting his client's money at risk at only a 10 year of 3.5%. Min 5% he says before he's a buyer. Remember the rule of 10 - 30 year mortgage rates + per gallon gas near 10 = end of the biz cycle. 5% mortgage now with $4 gas = 9 now.
This nuclear stuff in Japan could bring back major solar subsidies again and this sector will explode. With SOL only trading at a PE of 4 now, major upside there.
OT ---- You all HAVE to watch this video(documentary)
'Fat Head' on Netflix. If you have Netflix streaming, it's in the documentary section. Look for it and watch it. Wow! You'll change the way you eat if you're a health nut like we are. And I'm not talking about what you might think. How about hamburgers being GOOD for you? and all that grape nuts and wheat bread actually BAD for you!
Fleck's getting ready--->>>
http://money.msn.com/currency/is-the-market-rally-breaking-down-fleckenstein.aspx
The mighty Bill Gross of Pimco sings my song--->
http://classic.cnbc.com/id/41867238
The time to short is quickly upon us
The only problem with that comparison to '87 is the Fed wasn't juicing things back then. That was a pure honest market. But, I'm sure stops are sitting out there en'mass' and will all get hit together. However, this time we have all these 'circuit breakers' to prevent that. We'll see. Stops getting hit have to get filled. Any attempt to prevent that will create chaos as people will want out at any cost on a perceived breakdown, and it gets worse with stopping those sell order.
Hey Plash, the real 'issue' looming is what happens around June. June is the final date of the Fed QE purchasing. Let's see just how strong the market is without uncle Ben's ATM machine. I think that's why we haven't seen any real attempt to short the market because the 'big boys' are putting together their short trades ready to pounce and take advantage of this fake rally. Fake rallies are always nearly 100% reversed. QE3 will only happen if the market falls bigtime between June and Sep, which I think it will.
Again, I ask, how is it that all these market 'pros' are calling for QE3 if things are so rosey?
Yeah, the market is just dead for trading. We all know why it's going up and that the 'proper' play is to just hold your nose and go long. But this rally is completely artificial, the volume speaks volumes as to how the pros think, and shorting is very dangerous. One thing we know is that ALL artificial attempts at proping up anything always fails miserably. This will end up being now the 3rd major stock bubble created by the Fed in just over 10 years. Unbelievable.
Today on CNBC, two money managers were trying to explain why you have to go long stocks because the economy is getting stronger and how inflation is always good for stocks. Yet, in the same paragraph, these idiots then said QE 3 is right around the corner, thus continuing to add fire to this rally. HUH??? Are you F'ing kidding me? Why would the fed need to do QE3 if the economy is so strong????? WTF are you talking about?
This is a CLASSIC example of CNBC's never ending pump up the market at all costs mentality.
Then, turn over to Bloomberg and they have a guy explaining how sure, these companies are raking in the money right now, but based on historical ratios, this is most likely the MAX you'll ever see in terms of profitablity and margins, thus a 'peak earnings' event this year. Then he went on to explain some 4 prior times in the last 40 years how peak earnings then led to massive bear markets. The idea being, if you can't get any stronger, how the hell do you expect investors to pay more for your stock?
See the difference between networks? They then also had a segment on the effect of inflation on stocks. The track record isn't so good as that dumb$ss on CNBC tried to get away with.
Bottom line is this - SPX 1350 represents a 15 or so PE on the index with the assumed $92ish per share this 2011 year. Fair valued at best, a tad over valued historically. Last week's 1344 high is going to be the benchmark, with 1350 being the probable target potential before any major change in trend. The extremes are piling up. Just look at a chart over the last month of the semiconductor stocks. Down down down. Then look at MRVL tonight. Yikes.
Semi's are always market leaders because all technology is built with, wait for it... semi's! So, if those stocks are falling in a 'raging bull market', something is dead wrong. The internals are telling a different story.
Again, technically, this most likely is just market churning with a possible retest attempt at last week's highs around 1344ish. A solid close above 1350 means most likely 1375 to 1400, which I would take as a monster short trade.
Also, I would seriously look at that SOL trade the account is in. That stock now is trading at a PE of 4 and growing over 25%!
I think this says it all-->>
http://barchart.com/headlines/story.php?id=1001433
Not tonight, or tommorrow...
http://barchart.com/chart.php?sym=NQH11&t=BAR&size=M&v=2&g=1&p=I:5&d=L&qb=1&style=technical
Interesting read- April top???
http://money.msn.com/currency/even-cisco-can-not-cool-a-giddy-market-fleckenstein.aspx
SHORT DIS! There's a pretty 'sure' trade, I think. Just look at that chart! Double top city!
Buying the JULY $45 PUT for $3.35 limit.
Yeah, here's the deal, though. QE ends in June. If 'they' are the only ones buying this market up in this attempt to create this illusionary wealth effect, I think it's working, but no one else is buying with them. The pros don't believe it's real - as defined by true market valuation metrics and such as was the case in 2003 where the market truly was climbing with real money behind it, not funny fed money. So, as to Fleck's point, the rally is on fumes and the second the pros sense the buying is coming to an end, the shorts are going to pound this thing, most likely setting up stops to get hit, thus creating another flash type crash even, which, as you remember in May was only the beginning of the decline.
Now that will most likely set up a big protracted decline into Aug/Sep, thus setting up another QE? If so, go long on margin!
Just read these two articles. One explains how this QE works and why the market will hold this bid until it's over. It's really interesting.
http://seekingalpha.com/article/252416-bears-may-be-taken-to-woodshed-during-next-correction?source=yahoo
Then, read Fleck's blog. He's been very accurate and makes a good case for the other side..
http://money.msn.com/currency/ignoring-egypt-markets-roar-on-fleckenstein.aspx
Hey Plash, I'm sending out a very interesting email to the list members which I assume you're one with a couple of very interesting articles I found about what's going on and what to expect. Read this intently and I'll make a comment on the board here about what I now think is the way to play this year for BIG money...