Friday, July 1, 2016
Joined Dec 4, 2012
205 Blog Posts

Oversold But Yet To Hit Darkest Before The Dawn

bear

I use several indicators to help with oversold conditions and pukes. Currently we are beyond oversold, puking and maybe moving into dry heaves. Thanks Phil Erlanger for the analogy on dry heaves!

I use a proprietary RSI that is not 14 days. That is the standard one. My version is sub 30 on the S&P 500. Once it breaks 30 then I wait for a move back above to be a buyer.

Second, I use a modified version of Bollinger Bands. Once below -20 we are oversold. The S&P 500 is now at -29.42 as I write. It is rare to hit sub -30. Once or twice a year.

Next I track the Erlanger Big Barf Indicators on a Daily, Weekly and Monthly basis. All are negative.

Last the Erlanger Nantucket Sleighride (ENS) OBOS (overbought/oversold) measure. It has yet to hit oversold on the daily.

So where are we in relation to dawn? My best guess is maybe 3:00 in the morning. The question is whether the sun is rising early due to the proximity to summer? More on this as it unfolds this week.

The best advice I can give here is be careful on shorts and start to make lists of names you want to buy on the long side.

 

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The Week Ahead In A Post Brexit World

mario draghi

The Dow Jones Industrial Average fell for the week. The S&P 100 was also lower for the week along with the NASDAQ 100 and the Russell.

1.Geopolitical and Fiscal Events.

Monday sees ECB Head Mario Draghi speak along with Federal Reserve Chairman Janet Yellen at a European Forum. Tuesday sees the European Union leaders met. On Wednesday Federal Reserve Chairman Yellen speaks. On Thursday Federal Reserve St. Louis President James Bullard speaks at 2:00 p.m. EDT. On Friday Federal Reserve Cleveland President Loretta Mester will speak.

2.Economic Releases.

Releases of note this week include the weekly chain store sales, oil/gas numbers, mortgage applications and Q1 GDP (revised), personal income, Chicago PMI, ISM Index and construction spending.

3.Earnings Releases.

Notable releases include NKE CCL IHS FDS MON GIS AYI MRVL STZ CAG PAYX MU.

Monday, June 27

European Central Bank Head Mario Draghi speaks at a European forum on central banking with Federal Reserve Chairman Janet Yellen at 10:30 a.m. EDT.

Tuesday, June 28

The third estimate for Q1 GDP is due out at 8:30 a.m. EDT and is expected to rise to 1.0% from 0.8%.

At 10:00 a.m. EDT, June Consumer Confidence is due out and expected to rise to 93.1 from 92.6.

European Union (EU) leaders hold a Summit to discuss Europe in a post Brexit world.

Wednesday, June 29

May Personal Income is due out at 8:30 a.m. EDT and is expected to fall to 0.3% from 0.4%.

Then at 10:00 a.m. EDT, May Pending Home Sales are due out and expected to fall to -1.4% from5.1% in April.

Federal Reserve Chairman Janet Yellen speaks at 9:30 a.m. EDT.

President Obama meets with his counterparts from Mexico and Canada.

After the close, Federal Reserve Bank Stress Test Results are due out.

Thursday, June 30

June Chicago PMI is due out at 9:45 a.m. EDT and is expected to rise to 50.8 from 49.3.

Chinese Manufacturing PMI is due out at 9:00 p.m. EDT.

Friday, July 1

June ISM Index is due out at 10:00 a.m. EDT and is expected to rise to 51.4 from 51.3.

May Construction Spending is due out at 10:00 a.m. EDT and is expected to rise to 0.5% from -1.8%.

Eurozone Manufacturing PMI is due out at 3:30 a.m. EDT.

Puerto Rico bond payments of $2 billion are due and a default could be on the horizon.

Markets are closed in Canada and Hong Kong.

The U.S. bond market closes early ahead of the Fourth of July weekend.

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Today’s Action & Brexit Polls Are B.S.

howard beale

If you track the S&P 500 and SPY, then you would think today is a bad day. SPY is below intraday support while DIA is above support and IWM is above pivot.

Moreover, the advance/decline line on the NYSE is +437 while NASDAQ is at -401. That does not validate the S&P 500 being off -11.48.

Remember SPY is off -1.05% due to a dividend adjustment with today’s expiration.

There are several indicators I follow that are saying we are at a bottom. Others are not confirming. More on this over the weekend. With that thought, I am more in the camp of being a buyer here than a seller. With the Brexit vote aside.

Now in terms of the Brexit vote, I am working with a firm out of Singapore, Sqreem, that is a generation beyond Palantir in terms of data scrapping. Here is their calculation on the vote. 50.9% want to stay. The polls are bullshit and the oddsmakers are closer to reflecting what will happen next week.

brexit friday

P.S. My image is of Howard “I am mad as hell” Beale. More on him as well over the weekend. Fly, I suggest that movie for your Saturday Cinema. I think you will see the parallels to today.

 

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Insider Trading Is Alive And Well

exa co pic

Yesterday Exact Sciences (EXAS) was up 33% to close at $9.39. This morning it is up 17% at $11.07. Later it will present at the William Blair Conference.

exas

To be upfront, I own this stock. It is based where I live, Madison WI, and think ultimately it will be a huge stock and get purchased given it is in the diagnostics space. More on this later. That is not the story today.

People traded yesterday on inside information no doubt. Volume was huge. This morning the USPSTF is out recommending that those 50-75 get screened for colon cancer. Really? How obvious is that? Here is the link:

http://www.uspreventiveservicestaskforce.org/Page/Document/UpdateSummaryFinal/colorectal-cancer-screening2

Funny the website is now temporarily unavailable. Maybe Preet should be looking into this pin action.

 

 

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The Week Ahead Tuesday Afternoon Onward

ibcfortuneteller

1.Geopolitical and Fiscal Events. Tuesday sees the FOMC begin its two day meeting and Wednesday Federal Reserve Chairman Janet Yellen holds a press conference after the announcement. Tuesday also sees Secretary of Botox John Kerry meet with Iranian and European counterparts. Wednesday sees the Bank of Japan announce their latest rate decision. Thursday sees the Swiss National Bank and Bank of England announce their latest rate decision. Thursday also sees Treasury Secretary Jack Lew speak. Friday sees Russian President Vladimir Putin speak.

2.Economic Releases. Releases of note this week include the weekly chain store sales,oil/gas numbers, mortgage applications and retail sales (out this morning), PPI, industrial production, CPI, Philadelphia Fed Survey and housing starts.

3.Earnings Releases. Notable releases include BOBE CTRP QUNR JBL ORCL KR RAD.

Tuesday, June 14

May Retail Sales were out at 8:30 a.m. EDT and rose to 0.5% versus 0.3% expectations from 1.3% in April.

Washington D.C. holds the last primary.

The Federal Reserve Open Market Committee (FOMC) begins its two day meeting.

Secretary of State John Kerry meets with Iranian and European counterparts on the Iranian nuclear deal.

Wednesday, June 15

May PPI is due out at 8:30 a.m. EDT and is expected to rise to 0.3% from 0.2%.

May Industrial Production is due out at 9:15 a.m. EDT and is expected to fall to -0.2% from 0.7%

The latest FOMC Decision is due at 2:00 p.m. EDT. No change is expected. Press conference to follow at 2:30 p.m. EDT with Federal Reserve Chairman Janet Yellen.

The Bank of Japan holds their meeting and announcement on their latest interest rate policy.

Thursday, June 16

May CPI is due out at 8:30 a.m. EDT and is expected to fall to 0.3% from 0.4%.

The Swiss National Bank and Bank of England both hold meetings and announcements on their latest interest rate policy.

Treasury Secretary Jack Lew speaks about his latest discussions with China at the American Enterprise Institute Forum.

Friday, June 17

May Housing Starts are due out at 8:30 a.m. EDT and are expected to fall to 1,155,000 from 1,172,000.

Eli Lilly & Co (LLY) holds a business update and is a Type 4 Long Squeeze.

Russian President Vladimir Putin speaks at the St. Petersburg Economic Forum.

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What Q2 and YTD Numbers are Telling Us

ibcwtf

Below are the Q1 and Q2 return numbers as well as the combined year to date. What are the key observations?

1.Treasuries are kicking the crap out of stocks again. Those that said to sell bonds continue to look like morons.

2.The only equity index down year to date is the NASDAQ Composite. If you own Mid Cap stocks you are crushing it. The $64,000 question that has to be asked is, “Why is this the worst year for hedge funds?” Pretty easy answer is they suck at shorting stocks and market timing.

3.Silver and Soybean are the best performers in the Commodity space. USDA WASDE Crop Data at 12:00 EDT. My favorite is CORN which is up 9.68% year to date.

4.The U.S. Dollar is down and all other currencies are up against it. We discussed this earlier in the week.

5.International markets see Brazil killing it to the upside gaining 35% and Russia up 20%. Emerging market is the laggard down -2%. it has some serious catchup.

6.In terms of Sector/Group tracking, Biotech is God awful at -18%. Utilities are the winner at 17%.

That is all, contemplate these stats and develop a process to follow them like we have or miss out on pretty obvious trends.

quarterly results 061016

quarterly results 061016a

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Grandmonster Has Lost Her Mind On $UUP

ibcyellen

Yesterday Federal Reserve Chairman Janet “Grandmonster” Yellen gave a speech in Philadelphia that stopped trading on Wall Street as traders were glued to either CNBC or Bloomberg.

For me, there was one line that was an absolute lie. It caused be to say enough and turn off the speech. The Chairman stated that ,”And, since the beginning of the year, the dollar has been roughly unchanged against a broad basket of currencies”. Sorry but this was a flat out lie. The fact that she got away with this lie is even worse.

Since the end of 2015, the U.S. Dollar via UUP is down 5.20% through Monday’s close. UUP is designed to replicate the performance of being long the US Dollar against the Euro, Japanese Yen, British Pound, Canadian Dollar, Swedish Krona and Swiss Franc. That my friends is a broad basket of currencies.

The fact is UUP has fallen -5.11% since December 31st. In currencies, that is a decent move to the downside. To say it is flat, well that is just a fabrication of the truth or an outright lie.

uup

The Federal Reserve wants and needs the U.S. Dollar to continue to fall so that commodities can rise and inflation gets back above 2.0%. By the way, this is good for stocks as a weak dollar will help earnings. The U.S. engine gets going and voila we have a world wide rally.

What I am upset with is the inability of the media to challenge the Chairman’s comment that there has been no change to the Dollar. Why is it that only alternative websites like IBankCoin have the guts to call a spade a spade or in this case a…

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LinkedIn ($LNKD) May Calls

lnkdjw

We are going to roll the May $124 call to May Wk4  $128 Calls. The  May Wk4 $128 is at $1.04 and the May $124 is at $1.04 as well. We remain with the short position.

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Followup On LinkedIn Short

gekko

We have a short recommendation on LinkedIn ($LNKD) with a call to hedge the position.

On April 28th, I noted that I was going to stay short BUT hedge the short.

Therefore, we recommended to buy 1 May $124 Calls for each 100 shares. The cost of the call is $8.85. The call is at $1.73 today and LinkedIn has fallen with the market. We will wait until tomorrow to close.

We wanted to let you know that we have not forgotten about our position. Except to see an alert on what to do if you followed our recommendation. I have a couple other ideas I am working on that will weigh in on over the next few days.

The short was put on at $114.25 and the stock closed at $125.24 today so the loss is $10.99 or 9.62%. The option loss so far is $7.12 which takes the overall loss to $16.74 or  14.65%. Hopefully, we can get a pop in LinkedIn early close out the call and remain short as it drops into the close.

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The Rest Of The Week Ahead

calendarimage

Monday was a crazy day in Mad Town so here is the rest of the week ahead:

Geopolitical and Fiscal Events. Monday sees Federal Reserve Minneapolis President Neel Kashkari speak at 7:00 p.m. EDT, he just spoke. Tuesday sees Federal Reserve San Francisco President John Williams speak at 12:00 p.m. EDT as does Atlanta President Dennis Lockhart with Politico’s Ben White while Dallas President Rob Kaplan speaks at 1:15 p.m. EDT.

Economic Releases. Releases of note this week include the weekly chain store sales, oil/gas numbers, mortgage applications and CPI, Housing Starts, Industrial Production, Philadelphia Fed Manufacturing, Leading Indicator and Existing Home Sales.

Earnings Releases. Notable releases include A QUNR HD TJX CSCO LOW WMT ROST DE CPB.

Tuesday, May 17

April Housing Starts are released at 8:30 a.m. EDT and are expected to rise to 0.4% from 0.1%.

April Industrial Production is released at 9:15 a.m. EDT and is expected to rise to 0.3% from -0.6%.

Presidential Primaries are held in Oregon and Kentucky.

Wednesday, May 18

The latest Federal Reserve Open Market Committee (FOMC) meeting minutes are released for the April 26-27 meeting at 2:00 p.m. EDT.

Thursday, May 19

May Philadelphia Fed Manufacturing is released and is expected to rise to 1.6 from a drop of -1.6.

April Leading Indicators are released at 10:00 a.m. EDT and expected to rise to 0.4% from 0.2%.

Friday, May 20

April Existing Home Sales are due out at 10:00 a.m. EDT and are expected to rise to 5.38 million from 5.33 million.

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