I draw your attention on this evening to two things, before taking my leave for bed.
The first is ERY, which persists in rolling over. (I have a small 5% position which I’ll take losses on at $10, no holding out here).
The second are my stocks; AEC, CLP and CCJ. I have gotten good at reading them, as they’ve been a part of my party for a while now.
When things get bad, these three stocks crater. AEC and CLP are small and people don’t trust housing. And CCJ is just insanity (not to be confused with “linsanity”).
All three have been resilient, bouncing.
I’m not skilled at reading the tea leaves. I tend to focus more on the flesh eating parasite attached to your skin, or the fires rising from your house, when trying to fortell the future. But, I would not be surprised in the slightest if we are on the cusp of another mind numbing Fall rally.
Rather than fighting it, or worse, trying to embrace it with 2X margin leverage, why not just raise 20%+ cash, put the rest in some steady longs, and call it a day?
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Why be bullish? Last year was the no one with money really cares year like the year before. Now we have the year that matters. So the tape goes ape shit into a 0 second term? Do not see it on this end.
This year is the show. Seems the bears are all bullish now. Why? No fucking clue. Is the tape gonna explode into 0care and massive tax hikes? It is fantasy land.
Why’d the tape explode last year when the EU banking system was just a few months away from insolvency?
I know it’s crazy
Check out WY, Cain. They are leveraged to lumber prices and right now dealer stocks are approaching pre-07 lows while lumber mill operating rates are quite elevated. Dealers can’t access adequate credit and have suffered from the several head fakes in housing as of late thus have been overly conservative in their planning. Any marginal demand will be bought from mills regardless of price, because it will pass-thru to builders, etc. Mills are not stupid and have taken advantage of this dynamic before but the street is still neutral on the name. Typically, this scenario plays out for 1-2 years until dealers can get their stocks back above 2.5+ months of inventory. I think it’s a smart way to diversify and leverage a housing recovery, any thoughts?
I like the idea, but the stock is up a ton.
On the positive side, the demand for lumber will be strong, even if housing doesn’t take off again. We have a lot of rotting infrastructure that needs reinvestment.
But a move from $15 towards $25 might be pricing in a lot of that already.
I sold ERY this morning for $10.00 exactly.