It Sure Ain’t Lionel!
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One thing I can promise you going forward is volatility, in everything, even your Commodores covers. In fact, I wrote a whole witty diatribe about the dangers of buying “Fo’Teen” here — a.k.a. XIV — the anti-volatility hedge that’s supposed to be the opposite of the bear’s friend in VIX and VXX. I wrote a whole spiel, and tried to save it, and WordPress ate it for late evening snack. Now you get the re-hash, bare-bones style. Sorry.
It just so happens I was reading something this morning at the esteemed Stocktiming.com website that put me even more in the mind that the recently embattled “Fo’teen” is headed to “Ovaltine” status (that’d be “zero-teen” for the slow-witted among you).
It’s all about the Zero-based RSI indicator which I haven’t time to explain all over again (this being iteration two), so I will just link this page instead. Suffice it to say, when that indicator is “below the zero line” on the NYA Index, we are looking at continued volatility and difficult-to-trade, bear-leaning markets.
This graphic below, also cadged from Stocktiming.com (hat tip to them), in conjunction with the link above, will illustrate where we are in the current cycle.
As you can see… anytime the zero-based RSI is over that negative line, stocks have had a difficult time of it.
This confirms a lot of what I’ve been seeing in other areas as well, which tells me players are taking chips off the table right now in anticipation of a paltry Fall.
As a result, all I did today was continue to trim. I actually tried to take some hedges off by letting the declining prices come to me (on the sold calls) but none hit my buy points, so I remain heavily hedged on some of my oldest deepest in the money positions. I expect that all the value will soon come out of those sold calls, however, and I will likely end up selling even more rather than re-selling more calls at this juncture.
I also bought some more SKF today. Not a tonne, by any means. Nothing more than toe-dips for now, as we are due a nice snap-back rally here. Use these opportunities, people.
My best to you.
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Thank you sir, and the indicator a nice find.. really appreciate all I learn here.
By BIG players, who are you alluding to? BIG like PAULSON? Or BIG like imaginary managers who trade ahead of everything?
Where do I say “big” players? Not sure to what you are referring.
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I like the SKF idea. It should work well when we start to turn down again. I’ll wait for now.
Those guys are good. I use to read them all the time, but I haven’t lately. Thanks for reminding me.
Nice post Jake. You really should think about composing the posts offline, then posting them. Hard work is a terrible thing to waste.
Agreed. Just save your missives in Word. Problem solved!
Jake,
Great call on the pm’s yesterday. I didn’t understand the exact reasoning, but the results certainly speak for themselves.
As far as WordPress eating things, well that sucks, but – you knew dat when you took the job
That (or possibly any) version of Easy was too gey to leave un antedoted: http://www.youtube.com/watch?v=eVLJ4HOzi1c&NR=1
That’s pretty good… sounds a little like a melodic Bjork. She’s cute too.
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Threw me for a loop with that Faith No More video.
Thought you were tawkin bout this: http://www.youtube.com/watch?v=wzXtxqMRd8g&feature=related
No.
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Yeah, well I switched to Firefox to avoid the post nuking thing. This was the first time since.
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The use of “Easy” as in “Not Easy” was a kind of visual pun. Get it… it wasn’t (the original) “Easy?”
You people.
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Watching gold “do the Louganis™” this morning.
Huzzahs, Sir. Perfect timing.
Yes, but I hate being right about it, even so.
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Kass told CNBC that everyone is too bearish. He’s got a good track record to back it up. Guess my fiat is wasted sitting idle in my account.
His analysis shows that everything is looking great and we should see 10-15% rise in banks in about 2 months.50% in the next 6-15 months! SKF looks perilous if you are a believer.
He says that the hard trade is the right trade and that is to buy.
I find it difficult to ignore the problems in the economy and government. I do not see what Kass sees. I certainly didn’t jump in when he said the bottom was in at 676 so what do I know.
I just have zero faith in government and Wall Street. It feels wrong. It feels corrupt. I can’t trade around it and investing in it is perilous. Buy and hold is dead remember?
I find it sad that a (supposed) free market economy is reliant on the blessings and benefaction from a shady government organization. QE3. This will be the third time the stock market will be bailed out, if it comes to pass.
I suppose if we keep priming the engine eventually it might catch on. That is the hope right? To prop up broke-ass pension funds and friendlies on Wall Street. If Wall Street is inflated then the rest of the economy will feel better about itself and improve too, right?
It worked so well in QE2. But like Krugman says, we just. didn’t. do. enough.
I would like to see what would happen if government got the hell out of the way. No more QE or bailouts. Loose the overabundance of regulations. Reform taxes in a meaningful, broad and fair way. Let’s see what main street can do.
I think main street has been screwed the last 5 years. Government and Wall Street has richly rewarded itself. Main street and those that inhabit it are left to pick up the scraps. Wall Street recovered nicely after 2008 given the bailouts from the Fed. Main street has not. And it is getting pummeled by onerous regulations and taxes from all levels of government. Maybe the Fed needs to consider someone other than Wall Street and big banks for a change.
I think main street is too big to fail.
Maybe Main Street doesn’t need a bailout so Congress is nonplussed?
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5-year note auction draws mediocre demand — event is mortgage interest rate unfriendly.
No I don’t think Main Street needs a bailout. I wish my missive didn’t imply that I did. IMO they need the GOVERNMENT to get the hell out of the way…think Harding and Coolidge during the roaring 20’s.
The Fly talked about the robots in his latest posts:
“The up and down nature of this market has people sick to their stomachs. Retail investors have fled from the landscape and now the fucking robots are ruling the roost.”
Indeed.
The average guy has no problem taking and accepting market risk. Rightly or wrongly they/we think the game is rigged.
The central planners today won’t get out of the way. Too much power to be had. Therefore we will continue to suck on the economic malaise. It could be different but we are forced to suffer the Keynesian despots rule for now.
For those of you with broken teeth from too many SKiFfles, the Dr’ZZ in …. Dr BACon will see you now.
I haven’t even got 15% of my position in Skiffles yet. Looking for the gap fill tomorrow.
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Congrats … just in time to get Jackson Holed.
Remember that nut Ken Fischer?
Check out the hands action on this gold bug dude.
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Gold up, Skiffles up.
Skiffles closed that gap, too, Teahouse.
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For now but whats your avg cost? You had to be down before today’s buy, no?
I do not hold for two days like a jack rabbit on cocaine.
I will fold into this position like a good layer cake. Surely you’ve learned something on this site all these long years?
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Yes, that when juggling ETF’s a swing position is one thing but building a LT position in a proven rocket full of dynamite to the sun is something else unless your expecting a full blown depression sans a gubmint bailout from a sector that is already down 30-50% since Feb … GLWT
What say you to the idea of the mining shares having a lot of compressed/latent value in them? As you have said before they did not follow the bullion during this last wave up but even if gold pulls all the way back to $1100 (unlikely) they still have tremendous potential. The cash flows and earnings growth for many of these companies is going to be extraordinary. I don’t see how it can continue to be ignored by Wall Street or Main Street especially with a lack of good earnings everywhere else. Don’t you at least think the shares have some catch up to do and should outperform the bullion over the next few months or even years? On top of that I saw a stat that said professional money managers are still well below their historical 5% allocation to the sector.
Since you were in these names at far lower levels than most of us, I can understand that maybe you are simply being a prudent risk manger but this sector is the only real game in town right? I did some trimming of my ANV and SLW yesterday and have to say it’s making be a little queasy. This cash is burning a hole in my pocket! How ironic – I am more concerned about my cash holdings than my equities – Lol.
Are you mainly looking for the zero based RSI to turn positive before jumping back in or is there something else?
I do not think gold, silver or their miners correlate w. that zero based RSI metric.
That was merely a market tell. I am watching the miners closely to see if today’s action has some continuance.
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Thanks for the post..The RSI metric was interesting. Why would it not work for gold? I was trying to apply it to the gold chart to see if there was any divergence at the top of the gold chart..It looks like there might be..This would be a nice signal to possibly short gold and give some help with the direction of the market no? http://dl.dropbox.com/u/8662936/gld.png