Thursday, January 13, 2011

Wall of Worry or Maginot Line?

The streets of Cambridge Massachusetts are impossible to plow after snow due to the severe uneven surface. The drive into work for the last 15 minutes was a teeth smashing bumpy ride. Still, who can be upset with a monster NFL playoff weekend on tap and some good luck in the markets?

Rolling Up Stops
Here is my trading update for this week:

NFLX: UP 7.6%
EW: UP 4%

I was looking for moves of about 10% so I am a bit short after about a week. Still, both charts look good (more so EW for more break out) so I am not dumping right this second. What I am doing is rolling up tight stops. This may get my shares triggered to a sale with any medium sized market move, but I am looking to do two things:
-Start off my PPT experience on a nice note after using their hybrid scores and a screen I made to find these stock setups
-Maybe move along to some other ideas I have in my bag of tricks that I want to try out, but I do not want to manage too many positions all at once

We will see where things go (remember markets are closed this Monday for MLK day) but in any case I am very pleased with the setups and results of these trades. Thanks ChessNwine!

News of the Weird
A couple of items caught my eye today.

You know my monster fear of robots (and grizzly bears) and here is more:
The Terminator Scenario: Are We Giving Our Military Machines Too Much Power?
I am going to say......YES!!!!!! Great article at the link so check it out.

Ok, has the gold price made gold mining UNDER THE OCEAN a winning idea?:
Offshore Gold Rush: AngloGold, De Beers hunt gold under Atlantic
NEW YORK (CommodityOnline): It is perhaps the biggest global gold hunt under the waters. AngloGold Ashanti (ANG SJ) and De Beers (DBRSY), two of the world’s largest metals and minerals mining companies, are searching for gold deposits under the Atlantic sea.
The companies that formed a joint venture to hunt for gold and other minerals under the sea have officially launched the project to find gold deposits off South Africa’s west coast, to begin with.
Maybe this is a way my beloved OMEX can get a new lease on life as every treasure they find gets blocked by some country looking to get cash for stuff lost at the bottom of the ocean for 100 years, and yes I am looking at you Spain!
Disclosure: Still own a very small position in OMEX which just got back to my buy price.

Memory Lane
As I cannot come up with my own ideas, I am ripping off my man Jeff at The Housing Time Bomb with a stroll down memory lane. Way back when I stated blogging here is what I wrote on October 31st, 2007, and yes I have been doing this a LONG time:
....That's a collection of some of the better chatter going on today. I fully admit that I can offer nothing on these matters. I could dig out data, charts, a Ouija board and still not get through to anyone that can buy the crap listed above. The totally absurd things I saw and read today have convinced me of two things:
-There will be NO downward movement is stocks in the next calendar year
-The housing bust will be bailed out on the banking end, but through blind instruments and FED shenanigans. Do not get me wrong, home prices are going to continue to fall, foreclosures are going to go parabolic, and the home buying industry will be crushed. Just do not expect to see any macro fallout involving banks or major brokerage firms. They will be well cared for. In time the housing problems will not even get a headline, as its only 5% of the economy anyway!
I was right about banks getting the helping hand but I never thought the overall stock market would get whacked so hard! Of course at the time I had so much less understanding of theses things. Still, chilling call on the banks and housing, yes?

Wall of Worry or Maginot Line?
I have to admit I am more of a "bear" than a bull and more of an analytical thinker than a blind momentum type mover. This will always keep me away from "once in a generation" moves in the markets as well as color my vision to "vastly improved data" in regards to many things. It also means I do not lose money. To each his/her own.

As such, I wanted to offer an analogy for today's climate. I submit The Maginot Line:
The French established the fortification to provide time for their army to mobilize in the event of attack, allowing French forces to move into Belgium for a decisive confrontation with German forces. The success of static, defensive combat in World War I was a key influence on French thinking. The fortification system successfully dissuaded a direct attack. However, it was strategically ineffective, as the Germans did indeed invade Belgium, defeated the French army, flanked the Maginot Line, and proceeded relatively unobstructed.
In plain terms, the Germans drove around it. General Patton once said "Fixed fortifications are monuments to the stupidity of man". Indeud.

I think a major reason why I do not write so much anymore (besides a break I really needed for personal reasons) is that there is no more talking to people. I read "stocks climb a wall of worry" but that is not accurate in any way, shape, or form. The FED, assisted by other central banks in great condition like Japan's, have plotted a course around the wall of worry, the Maginot Line of worry if you will. No frontal assault or climb has been attempted, the markets just drove around it. To compare previous metrics to now and say "see things are all right" is disingenuous at best and insulting to anyone with half a brain.

In the end things are what they are. In an severe uptrending market, mistakes and miscues are easily wiped away. This was the plan.

As of late things are getting a bit strained. More and more days close actually down! Market out performers still work, but take a look a the dregs of those sectors and they are no longer following along around the wall of worry.

Have a good night.


watchtower said...

"Here is my trading update for this week:

NFLX: UP 7.6%
EW: UP 4%"


I really enjoyed the wall-o-worry/Maginot Line analogy too.

getyourselfconnected said...

Thanks Watch! Anything you want for Friday night? You have been with this site since the beginning my man!

watchtower said...

Would you play SAGA's 'On The Loose' for Friday night?

getyourselfconnected said...

For you my brother, anything goes!

CT-Hilltopper said...

How about some more pics of your adorable pug and kitten.

Cant see enough of those.

For friday's short notice, I know, but how about...

Depeche Mode. Let your wife pick the tune. I'm sure I'll love it. :)