I want you to observe what happens to a stock when expectations are too high and that respective company fails to deliver:
(see FFIV, RAX, CRM, VMW for similar pain)
Like it or not, expectations are very, very high, for nearly every sector. Ask yourself a question: how lucky am I feeling?
According to management at several high profile steel companies, things are not too rosy. Same goes for tech, even though people seem to have forgotten that AKAM, INTC, AMZN and several other high profile names warned last quarter. Again, how lucky are you feeling right now?
This is what we do know to be fact.
The yen is knifing higher daily, much to my delight, despite the opposition of the Bank of Japan. Bonds are going up, again to my delight, as investors funnel into what they deem to be safe. And, finally, equities are grotesquely overvalued, based upon the laws of reason and mathematics.
Like I said, buying a basket of puts on the current dot-com-esque high fliers (CMG, FFIV, NFLX, CRM, VMW, CAVM, RAX, AKAM, AMZN) is indeud better than lotto.
Here is The PPT oscillator chart, as of yesterday (marked overbought as of yesterday for the 4th time this cycle)
First
Second
Bronze medal
All I got was a Certificate of Participation.
Shit.
lol
everyone gets a plastic trophy here. thee is no winner..just winer
Funny.
And I was just watching on the sidelines. With 50$ beer and 100$ hotdog.
Oh man I cant wait to see this post.
5th…
Again, how luck are you feeling right now?
SHORT NFLX as of 2 days ago. Look at yesterday’s action during the banana-run.
The Glass is half full or empty. That was an excellent post. If we get S&P 2011 fowrard earnings in the $92 range the economy will need to be doing ok. That could lead to a 1400 SPX in 2011 with no QE. If foreclosures rise and the consumer economy cools earnings could be much lower. In that case I don’t think QE will help much and we could go much lower, say a 10 multiple on $75 SP earnings.
there are several situations, like gold, many stocks, where a straddle seems to be a prudent course of action… a bet that things will move. Problem is, I am not the only one thinking that and long dated volatility isn’t all that cheap.
I sometimes use iron condors or double butterflys(they are cheaper) to lower the cost in high vol sitiations. I prefer directional trades when I feel I have an edge (not now).
Time for REW?
its about to be a 5th time overbought this cycle……
AEM – you have to know Gold to play with it.
I started long ago, ok very long ago.
The asshole who shines my shoes is talking to me this morning about buying gold, I’d say the top is near.
guess what its going higher….
gold is in muti-year bull market..
bull markets hae no tops
Who you calling an A – Hole ?
How about a decent tip , high roller
I am sure there were many calculations and hours of pondering behind it, but the move to 2.95 for overbought is perplexing to me. This up cycle has fairly interestingly… avoided the old overbought levels of >3 or 3.1 etc.
For 2 cents related to the valuation of stocks, I sort of see a reasonably small number of grossly overvalued names (the ones you frequently talk about), but by and large most names are not exorbitantly priced at all as far as I can see.
True. I see lots of reasonable valuations. My longs are mostly boring large caps now (INTC, COP, …). All have decent dividendsand stable-ish earnings. The higher beta plays seem overpriced. I am hedged with index put spreads. I worry now that the market will continue it’s climb with me underperforming.
There is a divergence, which is interesting. On one hand, large cap offers good value. On the other, there is FFIV.
yes, exactly. several bone cheap insurance stocks (a sector that has a fair chance of becoming a takeover stomping ground), big pharma is cheap, big telecom yields almost 3x the 10 year, etc etc etc.
But then we have the “CaNDIES” and the rest of this handful of dot-com-bubble-priced POS’s. Small a in candies because I don’t own apple, but its not that expensive.
HA! ‘F’ FFIV
Join the club. Exact same strategy here. I get clobbered on melt-ups too.
17th
I remember in the beginning of 2009 when I had puts in PNC and every other bank was crashing to the ground except for them and then in 2 days the stock dropped 50%. That was a good time indeud.
Just when you thought it was safe “FLASH CRASH 2”.
They said it couldn’t happen again.
The streets will flow with the blood of the non-believers!
You have been warned.
if you fear “bloodricution” , it may be time to reach for a bottle of EDZ (triple short emerging markets)
http://www.youtube.com/watch?v=UosmKd1krWU
22 …
STEC is my next IOC…traded it 2X already today
The upside down h&s jumps off the s&p chart. We go to 1220 before dropping back to 1125.
Fly, you still believe in market reversal? Maybe just let go and change the strategy? Scot and others were right about this rally.
You don’t understand. It’s mano-a-mano now.
I’ll field this one:
Two men enter, one man leaves.
Stay cloaked. Stay cloned.
It’s supposed to be money-a-money
As I have stated repeatedly: We are all Ladies & Gentlemen here. There is no competition, just value-added…