I am not going to lie. That was painful. Luckily I had very good timing on entry and somehow I have managed to still be up slightly. I may press my AMZN short. The divergence in that stock from the rally is telling you something. Their free cash flow is a lie and others are starting to catch on. Their recent $6 billion capital raise is not to fund new endeavors like they said, instead they are hemorrhaging cash and those proceeds will be used to plug a hole. Lets start a bear raid on AMZN. Spread the word. The recent divergence is all you need to know.
Now, Let’s have a serious chat. I don’t care if you are a Bull or a Bear but something is seriously wrong with this market. I am not here to be proven right or be a top caller for my own glory. I am seriously concerned that a big storm is coming. The moves in the currencies and commodities are out of this world. And now they are coming to equities. I want everyone to make money but I fear this volatility eventually resolves to the downside in a big way. Last week I wrote about the VIX and that its speed is telling us something is off in the markets. Here is a piece by Jared Dillon about the same thing and since he is an former options trader it should also make you think: http://www.mauldineconomics.com/the-10th-man/may-the-fourth
As far as I can tell, Janet’s testimony should frighten you a lot. That was hawkish not dovish. The Fed is so far behind the curve its not funny. If she was really worried about what is going on she would have said so and hinted at QE4 which is every shorts fear. She seems to be clueless that credit is disappearing into a black hole abroad and that contagion will be coming home soon enough. There was a time when the US could have shrugged off this stuff in the past but globalization and the amount of debt in the system have made this global slowdown very dangerous indeed. Nothing fundamentally has changed. The periphery is a mess and a global margin call is well under way. The next few months will be very interesting. In the short term it looks like we rally but I am very suspicious. Lets see what the next several trading days hold.
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Remember to stay solvent longer than markets stay irrational.
velth,
agree,
i am keeping it tight.
BlueStar: first of all, what’s the significance of your moniker – BlueStar?
2. It has been theorized that we are about to enter the parabolic blow-off phase of this 5 year move, which could send the S&P to 3000 or wherever, who knows in a blow-off. That will excoriate any remaining bears and draw in the general public to complete the deal. After that we get the long-awaited old-time and time-honored correction of more than a few measly percents.
What say you to such a final bubble-phase theory?
You sound like a guy who sold at the lows and was long oil.
That dolt who wrote the blog post you linked truly has no understanding of Einstein’s theories. Interstellar bastardized those beautiful theorems.
Agreed, there’s something is seriously wrong with this ‘market’. And that something is: there is an unknown amount of price discovery occurring. That’s always the case, but not to this extreme degree.
However, some people will get very rich when (not if) this ends. I have a 1-5 yr horizon and I am positioned/ing accordingly, Rick Rule-style.
Fact: oil, gold, silver, platinum, uranium, etc cannot be produced below costs forever.
I think Maudlin is a Pollyanna so I haven’t read his stuff, but the vvol thing seems interesting.
Your timing and preservation of capital
is something to behold in these truly
bipolar times. I feels as though I should
take my marbles (I’m even) and go home.
Watching you surf though shows one
can still play.
Juice,
I am aware of bubble theory and if we begin that I will play. I am not religious. It has paid to be cautious this year. I may not have made a lot of money but I am not hurting like most traders. Even though the indices are up this year if you thought the economy was growing you lost. High beta has underperformed low beta YTD by 20%. All of The Flys problems relate to that.
BlueStar comes from Wall Street the movie obviously (BlueStar Airlines). I love the line “blue horseshoe loves blue star airlines” plus The Fly did not like Maui Trader. That simple.
bart smith,
i was not involved in energy. should have been short.
a little knowledge,
Timing this market has been very tough. But because of the warning signs when we descend it could be fast and vicious.
Blue,
this could last longer than most think. Capital flows are still hitting the US and its the only market that can absorb the flows.
QE has pressed the market to such highs that they actually have a cushion if you will.
the wild card is Draghi and whether he will be allowed to monetize in 2015. Unless there is a further federalization of Eurozone, not likely. But the economic slowdown that will magnify with Russian sanctions may put a tail wind to Drahi’s wish. One thing I have learned since the crisis is do not underestimate the CBs.
Nice post.
Every bear is going to be right eventually, especially when you call a top every other month. Short AMZN was great and is still a good call. Would you think about doing more of those?
I’m beating the dead horse again, but wouldnt it be more productive to outline select shorts on specific companies? Getting chopped around on expiring put options every month just seems like a lot of work for not much gain.
Have you ever thought about going long vol? It seems like your thesis is that the market is broken, so something is wrong, but you dont know which direction its going to go, or at least you’re not confident in the direction because it doesn’t seem like you keep positions on for very long. But, either way, if you’re thesis played out, vol would explode, in either direction. Seems like a better way to go.
Paulo Santos writing in SA claims
$AMZN distorts their FCF by a couple of
billion by using capital leases instead of capex.He is short so read with a grain of salt. but does make a point.
Doesn’t this latest rally feel more like a bear market rally than a bull market one? Maybe I’m wrong, but I’m expecting one last hurrah before things come tumbling down much harder than we just bounced.
God @TheTweetOfGod
‘It’s a sad day when the North Korean government can keep a Japanese corporation from making money off the American people.’
The great free money of this year is long volatility. I continue to think that’s the case for next year.
RUT 50dma crossed up through 200dma.
Haave’t seen that in awhile, so what, does it mean, anything? imo ATH’s will be reached on no volume then others money plays catchup till we dip again.
rinse & repeat
every 30 days
Predictions for sometime in 2015 – Extra tin foil hat
The US stock market will crash
QE to infinity will be re-instituted
The US stock market will hit all-time highs.
Gold, silver & oil production will decline. ^ g, s & o prices will spike after a financial collapse.
The Comex will make deliveries only in cash (i.e. default)
There will be a loss of confidence in the financial markets and bank runs.
A race war will break out after a heinous event.
War breaks out around the world. The US is drawn in with an ‘unexpected’ event.
The new “Treasury” dollar will be introduced for domestic use. The original dollar will be for international use only.
Let’s hope the original ppt can somehow keep this madoff market going for another year.
Enjoy the good times now! Happy New Year!
Or nothing happens to stocks and we tread water here, earnings compression takes place, the float is further reduced as corporate treasuries in the S&P500 continue to slowly buy back anything that anyone sells and all the bears are poked in the other eye and you and Jared end up being fools. We survived ebola, russia’s invasion of it’s neighbors several times, govt shutdowns after shutdowns, boston marathon bombers, ISIS, Syria’s collapse, several polar vortexes, a taper tantrum, 100 dollar oil, a potential eurozone collapse 3 years ago..the list goes on and on.
Wake up.
American resurgence is in the cards.
mauitrader,
I agree with everything you say about news flow. Markets never top on bad news. I don’t give a crap about news. I watch three things: 1) Credit markets- getting worse 2) Liquidity- going the wrong way 3) Cycles and Market internals- peaking and diverging.
Bluestar,
What are some of the specific indicators you track wrt liquidity and credit markets?
wrt an American resurgence,
it seems the Woz is betting against it,
http://www.sovereignman.com/expat/second-passport-lessons-from-steve-wozniak-and-albert-einstein-15809/
regarding stock buybacks,
how long can they keep doing that without growing the top line?
As long as it’s near-free to borrow the
money; it works.
http://davidstockmanscontracorner.com/the-canary-in-big-blues-mainframe-why-ibms-q3-bust-marks-a-turning-point/
Mainstream news is a joke. No one should pay any attention to that spin.
Pedro,
TED spread, HYG.
The Profit,
I agree 100% on Volatility.
QEinfinity,
Yes feels like a bear market rally but technically it is not.
You will discover that many people throw away their deals end up in the rubbish.