Insane day today as news came hot and heavy before the market open. I will discuss below, but I did want to take a second to say a few things. Much more so than on a blog where I think writers put things out that are more calm, Twitter allows for instant transmission of what people are thinking. Obviously this has great advantages, but along with that the avenue comes one where emotions and words can pour out pretty fast. That can be a bad thing at times. I saw some things today that disappointed me very much, and I gather my questioning the actions this morning of all the intervention going on was none too popular either. It is what it is. As always, my email is at the top right and I will discuss anything with anyone at anytime.
Daisy Cutter Wednesday
Major bombs dropped today on the market!
What's easy tonight is that I have already covered the helping hands lent to the markets. All the major Central Banks agreed to currency swap lines with open ended commitment. Of course this happened before on September 15, 2011: Central banks to provide dollar liquidity
I dubbed this "The Unlimited Dollar Funding Machine" and covered what it meant in this post: Hope is Not a Strategy, But is it Tradeable?
This move allows Euro banks access to basically free dollars and as they are ready to lend out into the economy (snark) this will help them in that effort. All in all, it buys time for them with less stress in finding overnight funding. It's possible a major bank was in serious trouble, but it matters little now.
Today the Bank of China also eased on money rates, first time in three years. The reason is probably that China is seeing inflation there fall below target and want to heat things up with loans for more ghost cities(snark). The key word is easing.
Economic data has started to come in not only better than expected (small beats meaningless to me), but significantly so. Home sales (pending is dangerous but ok), jobs and some PMI numbers have come in well over expectations.
And last, I discussed the final piece to the puzzle Monday night in the post: Ghosts of V - Shaped Recoveries
If this is not the picture you want to set up a year end run into next year then it's just not going to happen.
Markets are extreme overbought here. Overbought can be worked off by meandering sideways for a bit, but with jobs numbers on Friday any beat may well push this higher again. Tough spot.
Robert Sinn, who is just killing it with his writing, hits the right notes after a day like today so please stop on by: Regret
The Three Reactions to a Massive Rally
A little fun?
I was at work early today then stayed late. A bit short on time and tired so it's a blogfest where I find all the best stuff from the web and compile it for you. Yes, you are welcome.
Josh Brown penned a missive today that brings up a great debate point along with a historical event: In the Name of Corporate Profitability, 1781 and Today
You really need to read about the Zong Massacre. Here is the debate point:
There is a question now about whether or not productivity gains and the ability to "remain lean" will allow Corporate America to maintain these historic levels of profitability. I would answer that perhaps companies can keep this game going awhile longer, but at what cost to the country around them?
This is key. If companies were to hire more here the costs would eat away at margins huge and hence stock prices. The time lag for when people would gain by higher paying jobs may be a poor time for stocks. And as we know, stock prices matter more than anything else. Going to think on this one a bit.
Erik Swarts of Market Anthropology has a wonderful big picture post up that I really think is worth your time: A Few Thoughts
He drops Wikipedia use in the article which will always grab my attention.
iBankCoin's ChessNwine has an important article up tonight and it's a must read for any market participant: The Two Most Important and Least Discussed Aspect of Trading
Readers know that I am not a trader that relies on market returns for income. I don't know that I ever could do that. But whether you are trading for a living or trading to build wealth for the long term you have to be very aware of one thing: your bankroll. How you make decisions will be HEAVILY influenced if you "need" a certain thing to happen on a trade. The best way to need any result is to have too much money that you cannot lose at work. From Chess:
There are plenty of talented traders out there who blow up their accounts not because they got outmaneuvered by the guy (or robot) on the other side of their trade, but because they were simply not bankrolled properly and felt compelled to overtrade in poor market conditions to try to “pay the bills.” Well, I have news for you: If you need to trade to pay your electric bill and utilities, then you are in the wrong profession. Being properly bankrolled also gives you the peace of mind that you do not have to, in fact, trade all day, every day.
There is more in the article so take a look.
I don't know what is going on in Iran. A missile compound over there was clearly destroyed and news about that is very thin. Tensions have been rising in the area and we all know those losers are insane. Zero Hedge takes a look at Pimco's Oil price thinking should something happen: Pimco's 4 "Iran Invasion" Oil Price Scenarios: From $140 To "Doomsday"
Not market related but the Mars Science Laboratory rover Curiosity is set to land at Gale Crater on Mars this summer! The new rover is a monster! Check out the section on how they plan to land it on the surface of Mars, very complicated: Mars Science Laboratory
Cannot wait.
New roof is in progress. Getting ready for the winter. It should be done by tomorrow.
Ghosts of V - Shaped Recoveries
Markets moved substantially higher today after the Sunday rumors and new money programs were announced. It was your average panic buying party with about every single stock making large one day gains. After a steep drop what you want to see is firming action and basing, but the market never does what would be best. Another large gap opening just makes more of a mess of things to my eyes.
Robert Sinn has an excellent take on the wild day, and it's well worth a look: The Low Volume Reset
Snippet:
The enormous macro uncertainty combined with the day to day market whipsaws have moved many investors/traders to the sidelines permanently. What will it take to bring them back into the game
Rather than hash out the action today I wanted to touch on a subject I think is always in play inside the heads of market players.
"Got a lot of past, Joe. Things accumulate."
-Andrew Cord in Highlander episode "Brothers in Arms"
Faced with debt downgrades, a slowing global economy, persistent high unemployment, and maybe 3 or 4 other concerns one may wonder why buyers line up to plow into a rally at the drop of a hat. The answer lies in the past. I think the ghosts of the past two V-shaped recoveries linger in the psyche of us all. The March 2009 ignition of a monster rally and August's 2010 blow away bottom cannot be forgotten. Chart form (weekly chart):
(don't worry about the lines, just showing the V shape!)
I believe that people can be haunted by memories, both good and bad. I know the V move is something I think about all the time. I cannot be the only one.
At a time when intervention by higher powers (not the spiritual kind!) is all but a sure thing, no one wants to miss the train when it's leaving the stimulus station. It can be very difficult to board later on after a longer run than you thought possible.
This also explains the market dynamic of everything goes up, or everything goes down. When things get going it's not going to matter too much what you have, but it will matter if you don't have anything. It's a nasty part of the market but I think it foolish to not acknowledge it.
How much do ghosts of V-Shaped recoveries factor into your thinking?
Watched the New England Patriots just demolish the Philadelphia Eagles tonight. Sometimes I can almost forget how bad the Pats defense is, what a show.
Great Expectations
It's been strange to see so much fear about Euro zone debt woes when everyone single person on planet Earth knew, and I mean KNEW, some kind of work around was always going to happen. I guess the pressure needed to build enough to get the ECB and crew to make a little pee pee in their pants. Plenty of rumors out tonight about a silly big bailout package and it's party time freak out all over.
Funny thing is it was some obscure Italian paper, La Stampa, that broke the news but catch this line:
The euro rose after Italian daily La Stampa said the International Monetary Fund is preparing a 600- billion euro ($794 billion) loan for Italy in case the debt crisis worsens, without saying where it got the information.
So I am supposed to say stuff like "trade what you see", "don't fight the FED", "the market is what the market is" or some other platitude but I just can't get into it. This is really stupid stuff.
I don't even want to discuss it tonight. More monkey games of throwing bananas. Over reaction and wasted efforts all around. Markets will never have fair pricing of much of anything (debt, credit, stocks, name it) with all the interventions coming all the time. It's all becoming false, a false market built on assumed caps and bailouts. I am getting bored, really.
New Outside the (Cardboard) Box Post
Long time readers may remember my friend Tom of the North and his wonderful work on his site. Tom has a new post up and it's pure genius. Required reading for Sunday night: Supercommittee Reorients For Success
Sample to get you going on over there:
Washington, D.C. – As their budget cutting duties are winding down with the recently announced and widely anticipated stalemate, sources close to the process are reporting that the Congressional Supercommittee is in advanced negotiations with a large investment management company, possibly Black Rock, to form a new investment vehicle directly managed by the Supercommittee itself. Tentatively named the Supercommittee High Yield Terran Equity Fund (SHYTE Fund), the fund structure would allow its Supercommittee managers to invest in any global asset or asset class where a Supercommittee member/member of Congress/SHYTE Fund investment manager has the ability to directly influence the performance of the asset or asset class through legislative action, or has privileged access to information regarding a particular asset or asset class that would constitute an iron-clad trading advantage.
Having a nice quiet weekend after the holiday. Quiet can be very good.
I wrote a post for the iBankCoin Blogger Network today. Why not swing by and check it out? You can leave a comment there and vote from 1-5 stars. Here it is: Why You Should be Trading this Market
The Blogger Network is a really cool feature. If you ever wanted to put an idea out there, this is the easiest way for it to be seen.
Reader Watchtower asked in the comments section about the recent yield blowouts of Italy, Spain and Belgium and how this relates to the Euro as a whole. I was thinking about that this morning and I tweeted the following idea:
Thing about bailouts/backstops/guarantees is market will make you show the whole hand; era of jawboning is over, it's show or go now.
I think that market is pressuring the ECB now very hard (Hello Germany!) to go the "unlimited" route. Once you start intervening the market players are going to push the envelope as far as possible. That's what is causing the yield jumps, it's not that Belgium will go bust any sooner or later than a month ago it's just pressure being placed via that avenue. Remember that CDS is now a serious question and without that protection (real or imagined as it is) yields are going higher. It's a risk premium.
I hope you all dodged being hit with pepper spray across the country as you went Black Friday shopping. If you are not too tired from all the buying and not in jail, it's still a Friday night here at the blog!
Saw Twilight "Breaking Dawn part 1" today, it's no Oscar winner that's for sure.
Market Commentary
It's ugly. It's bad. That is all. More on Sunday.
Friday Night Entertainment
Let's see what I can find to interest you.
The Brinicle
Caught this over at Geekologie and it's well worth the time spent. When ultra salty melt water flows down into the ocean it is able to make an ice plume, a brinicle, all the way to the sea floor. The ice is fast developing and will kill anything that it traps in the process. Poor starfish:
Wes Craven has made many films, most great but some turkey's. I can see where he wanted to go with "Deadly Friend", and it's worth a watch, but it's still a "so bad it's good" sort of flick. Here is the trailer:
One of my favorite lines: "But something tells me you're going to remember me this time" in "American Beauty":
New era classic.
Rock Blogging
Music for the masses.
Loyal reader Watchtower pinged me with a request for an 1980's tune that I have never heard. Try out Nik Kershaw and "Wouldn't It be Good":
Not bad.
I know I am going to inundate you with Nightwish's song "Sleeping Sun" but I think it one of the more beautiful songs I have ever heard. Via the wonders of YouTube here is a piano version of the song:
So pretty.
Some ideas from Twitter.
@seaside_elec was thinking something inspirational, like "Eye of the Tiger" from Survivor would help things turn around. You never know!:
From @TimWolfgang, try out Bright Eyes and "First Day of My Life":
Not bad at all.
From @29thHarvickfan, a little "Thunderstruck" by AC/DC but you know I going live at Donnington!:
Look at that crowd! That's why rock is the best. Hip hop lovers just want to be SEEN at a concert, would kill to be there. Real rock lovers will KILL to be there and don't care about being seen. Big difference.
Two left.
One of my top 10 songs, "The Boxer" by Simon and Garfunkel:
Last call! You should know what to do.
Closing the show with "You Can't Kill Rock and Roll" by Ozzy with Randy Rhoads. Finest guitar player I have ever heard:
I am not going to offer anything about the markets. Today was a nasty washout sort of day. My post the other night calling the market "Damaged Goods" is holding up. The technical damage is bad, and the hit to confidence as I wrote last night is not helping. Great time to take a break and think over things.
All You Ever Wanted to Know About Turkey
I am hoping all the readers have a great Thanksgiving. I have plenty to be thankful for this year and I am sure you do too. Grab some turkey and some drinks and have a great time, as hard as that annoying member of the family makes it.
Now about Turkey.
Here are a bunch of random facts about Turkey I culled from the Wikipedia page. Enjoy!
-The Aztecs associated the turkey with their trickster god Tezcatlipoca, perhaps because of its humorous behavior
-The 16th-century English navigator William Strickland is generally credited with introducing the turkey into England
-Mature toms are too large to achieve natural fertilization without injuring the hens, so their semen is collected, and hens are inseminated artificially. Several hens can be inseminated from each collection, so fewer toms are needed (of course right?)
-A baby turkey is called a poult:
cute
-Unlike chicken, duck, and quail eggs, turkey eggs are not commonly sold as food due to the high demand for whole turkeys and lower output of eggs as compared with other fowl. The value of a single turkey egg is estimated to be about US $3.50 on the open market, substantially more than a carton of one dozen chicken eggs.
Turkey in Cinema?
Some turkey sightings in films.
-Of course, in "A Christmas Story" the turkey gets gobbled up by the dogs next door!
-In "Rocky I" when Rocky comes to take Adrian out, Pauly throws the turkey outside so she has no excuse not to go.
-In National Lampoons "Christmas Vacation" the overcooked turkey deflates upon cutting.
And of course, Adam Sandler's "Thanksgiving Song":
I am off work until next Monday! Little mini-vacation for me. Always good to get the down time. Blog tonight may be a bit rant-like, so you have been warned.
In the Long Shadows of Zero Responsibility
Over the years I have read, been in touch with, and met all kinds of financial participants. Maybe I have been lucky, but the vast majority are great people. Hardworking people. Scary smart people. A common thread shared by all is that we know and accept that trading and investing is a risky endeavor, anyone telling you otherwise is not credible. It's no surprise some of the best operators have extensive backgrounds in game theory and may have played chess or poker at a high level. Over the past few years a troubling trend keeps bubbling up and I think is hovers like a shadow over the entire structure of the market.
Just what are the rules and who is responsible should they be broken?
And there is no answer.
It's not the point of this post to go over all the past chicanery of the past 3 years. The end analysis is the same. The rules are fluid and no one is responsible when whatever rules exist are broken.
We all like to joke about "Chinese Burrito" stocks that are shown to be total fakes. Sino Forest or Focus Media are the rage now (aside: if you trade this kind of junk you are not the manager a type like me will ever give their money to manage) and yet what is the vetting process for such things? How can they be rated "overweight" and then collapse into oblivion overnight? It's always "who could have known?'.
But what about Green Mountain Coffee (GMCR) or a simple staple company like Diamond Foods (DMND)?
Ok, you may say that those are all specific fails that happen all the time. Maybe.
The Grand Poobah here is MF Global, which took money from clients to try and make it another day. This is so damaging to belief and confidence I don't think it can be known now the damage it will cause.
And it goes on and on.
QE? TARP? ECB funding the IMF to side step an issue over what is legal? CDS ruled invalid? Banning short selling? Flash crash cancelled trades? Bond markets that are a farce?
What are the rules? Are there any? When they are violated who is responsible? Nobody is of course. It's just smoothing out market pressures or what not. Things change overnight that have been sacrosanct and no one is responsible, it's all just the way things are. Or are now, this minute.
I think all would agree there are serious issues facing the markets now at the structural level. Nobody is doing anything about it. It's all a blameless, faceless Dance of the Macabre.
If the rules are bent or done away with it's not a market, it's the wild west. The signs are mounting up. Capital cannot and will not be deployed if it's a shrug shoulder and say "Dunno" kind of market going forward. We need adults to look past the next five minutes but it's all kids running the toy store now.
Home later than I wanted to be. Had to pick up car from the service station. 30k mile service for the car, costs a few bucks!
Damaged Goods
In almost a drive by shooting, the markets have gone from flying higher all of October to suffering bad damage over the past two weeks. The easiest way to see this is to go to the charts.
Daily for SPY:
It's clear the SPY has fallen out of the green ascending channel.
You may recall back at the start of October I traded in and out of both CVLT and NI. I cloned those positions in my long term account and here is how they are looking now (both closed out).
NI:
CVLT:
I don't mention longer term trades usually because I like to keep that close to the vest as not to have my thinking be affected by outside discussion. I am showing these two stocks because they were two of my strongest ideas for the October run that I was thinking would happen. You can see where the stocks violated the uptrend lines and they were dropped then. NI was dropped on 10/31 and CVLT, one of the better performers I have seen, was closed out on 11/18.
Things are very oversold now and a bounce higher is probably going to happen. I look over the big picture and I don't like what I am seeing.
Between the MF Global fraud, accounting issues at GMCR, and today's Chinese burrito news on FMCN there seems to be too much bullshit out there to be comfortable. I have been a proponent of the idea for run higher to year's end. I am backing off on that now. If the Euro weenies get their act together and Bernanke unveils some kind of new pony, maybe I would change my mind. At this point after the damage lately I think performance chasers may just start licking wounds and manage funds, not run blindly after a rally that has fizzled out.
The big problem is that charts are so damaged it will take time for them to set up. It's November 21st now which does not leave a ton of time. Any fast improvement will be suspect I believe. The way well supported moves up are being abandoned feels more dangerous to me than a vanilla correction. Just my 2 cents. Things probably go vertical from here on out the way this autumn has been.
Sunday night! Crazy NASCAR race going on now, hoping for Tony Stewart to pull off winning another championship. (Update: Tony Stewart has won the NASCAR title with an unreal display of driving skill and balls. Very happy for him.)
Not doing homework tonight, short week and things will probably be all over the place market wise. I wanted to take a break and enjoy the holiday week. Only working Monday and Tuesday. Tell what your plans are in the comments section.
Images from The Star Wars Expanded Universe
It's always fun to put up some images from the Star Wars Expanded Universe. I just go the new Darth Revan book in last week and cannot wait to read it. The Expanded Universe is a rich and well developed arc of many stories. Star Wars is not just the 6 movies.
The ancestral home of the Sith was on the planet Korriban. The most sacred burial ground for Sith Lords was here, The Valley of the Dark Lords:
In the game "The Knights of the Old Republic" there is a really great ship called The Star Forge that takes energy from stars and makes an armada of ships and droids from the material it takes in. Novel idea:
Luke Skywalker's wife, Mara Jade, was actually killed off in a plot line! A picture of the funeral:
Lightsabers require Adegan Crystals to work and they are found on the planet IIlum. Sith prefer synthetic red crystals. Here is a shot of the Crystal Caves on that planet:
After her brother Jacen fell to the Darkside of the Force, Jaina Solo was forced to fight him to the death and did:
Anakin Skywalker vs Asajj Ventress. This fight is how Anakin gets the scar around his eye:
Ended up being a very long week. I only work Monday and Tuesday next week so that will be a nice break. Everyone have Thanksgiving plans?
Caution is Advised
Last night I featured charts for silver and oil. Both confirmed today with another move down. The gravestone doji for USO is very pronounced. The air is coming out of the monster October rally.
This could be yet another in a long line of fake and bakes to strip market players of their money. It's a mess. As such even the crew at Fusion are taking some exposure off: Ritholtz - Jettisoning QQQs and Small Cap Growth
Josh Brown explains it's not a run for the exits, but a bit of caution is here after the technicals have soured quite a bit: Media: Lightening Up as Technicals Get Mushy
This makes sense. Unless you can be right in front of your trading station, this market is very tough to be in unless your time horizon is long and you are comfortable with your portfolio. My long term accounts are fine, no complaints (not killing it by any means trust me) but I am keeping way back in trading account. It's just that tough.
F is for Friday and It's Good Enough for Me
It's time to relax and have some fun going into the weekend.
Water, Liquid Water on Jupiter's Moon Europa
Now this is not exactly news, but the information coming in is getting very strong that liquid water is beneath the ices of the Jovian moon Europa: New Evidence for Liquid Water on Europa
It has long been thought that water is THE key for life away from Earth. Of course this assumes all life will be like life here, but it's a strong argument. Very exciting news, lets get some more spacecraft up there and check it out!
Fun with Safe for Work Pictures
As fun as it can be I guess.
Umm, the sign is all the same word for the ESPN red letters:
see more This is Photobomb
Ok, so not a movie but The Highlander series episode "End of Innocence" is a complex and deep presentation. In this clip from the 1:30 mark on, there is a wonderful exchange between MacLeod and Haresh Clay. I love the part at 2:50 as Clay talks about his now dead friend of 900 years:
Speaking of Europa, I have had the next clip up before but it's fitting. In the sequel 2010: The Year We Make Contact this scene shows Dave Bowman coming back to warn about the coming Jupiter event that will cause a new sun to rise and give life to the moon.....Europa!! The words "I understand. Look behind you" are chilling. Sorry for poor audio:
Nice.
Rock Blogging
The most fun you can have with your clothes on since 2007.
Well it's Friday so lets lead of with The Cure and, well, "Friday I'm in Love":
I do love Fridays.
I am stealing this one from my friend Jake of EconomPic. Moody, tough song by AWOLNation, "Sail":
That's not bad at all.
EPIC FIND! By now all must know I think the song "Sleeping Sun" by Nightwish may be the most beautiful thing I have ever heard. It's hard to get into my head like this song has. I found a great guitar follow cover on YouTube you have to hear. Skip to 2:02 mark to end, this is just amazing:
I will roll that all night.
How about an old school clip of The Go-Go's and "We Got the Beat"?:
Ok, two left!
Always loved Metallica's cover of "Whiskey in the Jar":
Last song, grab a drink and call your baby!:
Close the show with "Still of the Night" by Whitesnake:
I actually spent the evening taking a huge break and having time that meant very much to me. Luckily I scored the Twitterverse for the best charts and so you get some things to think about.
Silver, readers know I am a huge fan, has been hijacked by MOMO types and has been a great tell for me on markets for some time. No one is better at showing this than Market Anthropology so I submit this chart for review on market direction (click for larger view):
Be warned.
Second up is a type of chart I hate to use, a 3X ETF but the candle is important and my man on Twitter @MarketPlunger brought it up. UCO, a 3X levered oil play:
Huge respect for my man, but that is a clear Gravestone Doji, and its not just in his charts. UCO via FinViz:
Here is USO, no leverage:
An ECB bazooka cannot be ruled out, but these charts are not funny.
Another rain storm here tonight so it's a late arrival. No real time for a finely crafted post, so here is a linkfest for review. Probably will not be a quiz.
Wednesday Links
Stuff well worth a look.
The Reformed Broker captures the struggle all players are dealing with right now:
Do the Push and Pull
Better than expected retail sales? But Belgian bond yields are shooting higher! Industrial Production and Capacity back at pre-crisis levels? But Spain is the next Italy which was the next Greece which was the next Iceland!
Tony of Macro Story has been on the credit markets better than most I read and tonight's recap looks at some currencies as well: Market Recap Wednesday November 16, 2011
Mr. Phil Pearlman has an important take on what lies beneath the psychology of the market and I agree 100%:
The Markets and The Deep Layer of Chronic Diffuse Anxiety
Beneath the surface anxiety though, there is another deeper layer of anxiety that is unconscious and much more difficult to pin down. It is experienced as a general low grade chronic state of worry that does not seem to really be attached to any one concrete thing.
Now read the rest.
Robert Sinn, The Stock Sage, has some good observations on how this week has gone so far, fake outs and shake outs: Bodybags
Leigh Drogen has an interesting take on how social media, largely Twitter, is changing things big time in many ways:
How To Make Friends and Find Investors Without Speaking To Anyone
A lot of people knock social media as ridiculous because people have online “friends” who they aren’t really friends with. In many cases this is true, but Twitter is different. It’s about sharing thoughts and experiences, so that people can get to know who you really are, and connect with you in the real world.
While Facebook is the 21st century Yellow Pages, Twitter is the 21st century telephone. Which one do you think is more important?
The install testing should be all done at work so I can get going on a mountain of work that has piled up while I have been on this thing. Never ends.
What Passes for Monetary Policy
I have talked about the "recency effect" and how recent memories of experiences can color how one sees current and future events. We all do it, it's human nature. The ability for the FED to bail out markets since the fall of Long Term Capital Management (1998) makes the idea that they cannot work magic impossible to consider.
There is a school of thought out there that believes that to have a real recovery, monetary pressure should be pointed towards higher inflation targeting and/or targeting a specific GDP reading. Through devaluation by printing, money will lose value thus forcing people to buy stuff like crazy to use the money before it gets worse. I know, it's a dangerous game.
I think there are big issues with this. Up front the level of inflation that would grab normal people's attention is not 3% or 5% but higher. Say maybe 10%. How hard would a pump have to run to get there? Then it will just be withdrawn? Ok. Another issue is that most middle class and lower people just do not have much disposable income in the first place. Homes, health care, schools for kids, food, gas there is not much left. If money is losing value they are very unlikely to be buying second homes or stocking up on plasma TVs. I just do not see how this will result in anything sustainable.
The last concern may be the most important. You are only credible until you are not. It's hard to know where that line it, but when it's crossed it's crossed. No going back. Heavy thinkers of monetary policy always say the FED should get a little reckless with policy to pump inflation, but would they know when to stop? Could they? Today FED member Charles Evans had the following snippets that preface what I am talking about (Hat tip Trader Mark):
-"I’m advocating a more aggressive stance of monetary policy," he told CNBC. "I think we should be more aggressive and that frankly makes a lot of people nervous."
-"I just think that this is the time to stretch the boundaries a little bit more and take a few chances," he said.
After years of FED tweaking of the economy we are in our current state. Maybe they should just stop and not get anymore "creative". One can dream.
Blind Trust Pledge
On Sunday news show "60 Minutes" ran a story about insider trading laws and the US Congress. Short version, there are none. None. US Congress members by law can use whatever information they may see and trade on it without recourse. It is the law, nothing shady, all legal.
To be fair, I knew that. I think I read that years ago but never really believed it and did not spend much time thinking about it. I figured it made sense, they would do something like this. So why am I even bothering ow?
Perception and public mood. Sometimes forces align were attention will be channeled to the right thing and change can happen. This could be that time, the 60 Minutes show got a lot of mileage in the financial press, blogs, and social media. At a time when people are unemployed, have seen their portfolios all over the place, and have had enough with how the banking system conducts business in this country the environment is right to bring pressure to bear on Congress insider trading.
Clearly this needs to be resolved. It is beyond belief that Congress, who see all kinds of important information, can act on it. I don't really care that examples have been slow in coming in, it's happening. There should be no free pass for them. Simple as that. So what can be done?
I am actually having a tough time thinking of something. I was thinking of starting another site that will just bring up articles or suggestions to bring more attention to this matter. Maybe I will. For now I am leaning towards a two part pledge.
The first part will be to get a Blind Trust Pledge put in front of every candidate that runs for office. A blind trust (thanks Reformed Broker)is most often used by politicians to avoid this very conflict of interest. Their money is handled by another party and no direction is given for the asset placement. Imagine two candidates are running against each other and one has signed on to the Blind Trust Pledge and the other has not? How is that going to go over? It will be an instant attack angle.
Second part is for you to take the pledge that you will not vote for any candidate that has not taken the Blind Trust Pledge. And you have to stick to it. No donations until they accept it.
This is pretty simple. Politicians love stuff like this. They can put a little badge on their websites saying "Proud of My Blind Trust Pledge". The pressure could be enormous if this becomes a campaign issue, you will not want to run without taking the pledge if your opponent has done so.
All it takes is the word to spread and maybe one or two Congress members with integrity to start talking about this. It could happen and I hope it does.
Well that football game was a big surprise, yes? I cannot believe the Patriots pulled it off.
I was up way late last night. I forgot today was more testing of the new robotic lab equipment and I was stuck doing that all day today. As such I am tired and I don't feel very well tonight so no post from me. I am going to read to get caught up and take care of a few things. Like buying the Nightwish album, that song is totally stuck in my head now.
Busy tonight doing market homework and trying not to get too upset over Patriots vs. Jets as we get our butts kicked.
By totally random chance I came across a song that is just hitting me as one of the more beautiful things I have ever heard. So happy I lucked into it.
Please enjoy the band Nightwish and "Sleeping Sun":
In blogging you just never know. Sometimes you spend a huge amount of time working on a post and when you are done you think "This is freaking brilliant". You post it and not a single person in the world seems to read it or comment. Other times you post something you think may not be all that interesting to people and it strikes a chord.
Such was the case from Thursday's post Odd Jobs Over the Years which has turned into one of the most read Economic Disconnect articles since 2007.
I got a bunch of comments and some emails about the railroad work in particular. I have plenty of those stories, did it for a long time. Here are three that jump out at me.
Urinating Icicles
My dad got call one night in February about a stuck switch in Boston that needed a look. He called me around 10pm and asked if I wanted to go help him with the job. I said sure thing, come on over and pick me up. We got there around 11pm and it was cold out. I mean, frigid. I don't know what the temp was, no thermometer, but it was hard to breathe.
We got out of the truck and worked over the stuck switch. We applied heavy grease to it and got it working again. There were two trains waiting for a track change on that switch so as soon as we got it done they started off using it. Took about 20 minutes and I was so cold I don't think I have ever been that cold again.
I had to pee before we went back so I went alongside the truck, unzipped and that was a shocker of cold as well! As I was going the urine was turning into icicles as it hit the ground! That's how cold it was! I could hear the things clinking as they hit the ground. It was surreal. Funny thing it's not even this experience why I hate the cold so much, but that's another tale.
My Hands get Stuck
Freshman year in High School my dad got a contract to build a new rail line from a plastics factory to link up with a nearby access line. It was not long, maybe 200 feet. My father's crew had set most of it up during the week and finish up was for the weekend I was to work. One problem; all the materials were brand new.
Now usually rail jobs use all old stuff like ties, plates, spikes, and rails. It is way cheaper and the stuff lasts forever anyway. But no, the company wanted all new stuff. What's the big deal? New railroad ties are hard as rocks. They are soaked in a sort of oil/tar that makes them weather proof. When new you have to drill the holes for the spikes to hold the rails. The holes are so rigid it takes 3X the effort to get a spike fully hammered in and seated. 6 of us worked all weekend and got it done, but the effort required was huge. My hands were killing me from holding the hammer and all the pounding and I was having trouble getting them to relax from staying the same position as while holding the hammer.
And they were like that Monday morning! My hands were frozen in the exact position as when I was using the spike hammer. I could not get them to relax. I took the day off from school because I could not do anything. By that evening they started to move again, but it was another day until I could hold a pen.
The Race
One summer I was working with my dad laying new rails again. Luckily this was all well used materials so no drama like in the last story. I was 15 and I was heavy into boxing then and in the best shape of my life. I was feeling strong, on top of the world, and so after lunch I walked up to my dad and said "I am going to take you this time".
That was a age old railroad challenge. It meant a race to fully spike down 1 length of rail before the other guy. Rails are about 16 feet long (hard to remember) and there are about 8 ties in that distance with 8 spikes each. So it is a 64 spike race. My dad was rock solid and had a strength that was hard to quantify, but I felt I could take him this time.
I focused in, layed out all my spikes next to the plates and got psyched up. My dad was just looking at me and said "You ready?". Yup, and we were off.
I was flying but of course you have to make sure it's done correct as a check after the race will disqualify you if you missed a plate or a spike is not fully seated. I was really swinging steel and I zoned out, could not hear anything. I had tunnel vision. About half way across I started really breathing hard and I started to see some stars in my vision near the end. I was going all out and almost passing out.
I got to the last spike, seated it down, collapsed and started to dry heave as I was feeling sick. I look up and my dad was leaning on his hammer smoking a parliament. I think it took me 15 minutes to get it done and it seems he was somehow able to get his done in 10 minutes! The rest of the crew were just watching and laughing at the end. I had lost again to the old man.
I caught my breathe and walked up to my dad. I shook his hand and said "Well, I will get you next time or some time in the future!". My dad looked at me and grinned and said "I don't think you will be doing this much longer, your mom tells me the grades you are getting in school".
It was a really sad moment. It was sad because I knew he was right. Even then my mind was very active and I was very serious about becoming a scientist. It was sad because working with my dad had become almost the only time we spent together. I think we worked maybe 10 more times on smaller jobs until the end of high school. By then my dad's drinking roblem was getting very bad and he was not taking many contract side jobs. Two years into College he died. And I never beat him in a spiking race.
Special thoughts go out to all those that serve every day. On Veteran's Day they deserve the respect of everyone. All my best to all those that have done, and currently do, difficult things every day for all of us. Come home soon.
Chasing or Dodging Rolling Boulders
I was very constructive on the market to start the week and opened up some positions on Tuesday while market was correcting down. Wednesday came and I got flushed out of all of them for losses. It was not the loss that bugs me, its the recency effect. We have seen reasonable flush outs turn into routs that can eat a position alive. Still gun shy I guess and with tight stops. The only stock I will be revisiting is TPC which I think is a real runner going forward. Seems one is always chasing a boulder uphill and then trying to dodge it when it reverses just as we get close.
In summary it can be like Jungle Hunt and trying to get up the hill:
Friday Night Entertainment
After another wild week we can all use a break. Well I can for sure.
Picture Pages
Because cheap laughs are priceless.
No plans for the weekend? Two words: Martini Night:
see more Historic LOL
This might work, just move the sign:
see more Very Demotivational
That is an instant classic.
Robot Takeover of Humanity will Start with a Good Idea
I have harped on the coming of the Robopocalypse for years. Recent news shows how it will start, with a seemingly good idea. Here you go: Honda's new ASIMO robot can now pour you a drink all on its own
So this is great, the robot can pour you a beer, you get a bit tippy, and the uncanny valley is crossed that much easier! Next up for Asimo; the robot that can fix the brakes on your car. Yeah right, total set up.
The Ghost Ship Baychimo
I have a great fondness for lost ship tales and one of the better ones is of the Swedish steamer Baychimo Abandoned in 1931 after being trapped in pack ice near Barrow Alaska she was presumed sunk. From Wikipedia, a sample:
The Baychimo did not sink, however, and over the next several decades there were numerous sightings of the ship. People managed to board her several times, but each time they were either unequipped to salvage the ship or driven away again by bad weather. The last recorded sighting of the Baychimo was by a group of Inuit in 1969, 38 years after she was abandoned.
Great list of sightings as well. Enjoy.
Film Clips
Save NFLX by streaming or renting a d film why don't ya. And buy some GMCR while you are at it.
It's no secret I think Kevin Costner's "Wyatt Earp" far surpasses the poorly done equivalent film, "Tombstone". Seems I am in the minority, but after seeing this scene when Wyatt meets Doc Holliday (Dennis Quaid, one of best performances) you may change your mind. Skip to the 2:00 minute mark and enjoy (sorry for bad quality):
Scott Glenn has starred in two of my favorite unknown films, what are the odds on that? Anyways, special bonus tonight, two more picks that you should see then submit a review to me. I will publish them.
From 1983, "The Keep":
From 1982, "The Challenge":
Great scene after this fight keeps this movie in my mind.
Rock Blogging
The tunes have been coming since 2007. 4 years, really?
Leading off the night, as is tradition here since forever, is a birthday shout out to my friend @MarketPlunger:
By request of birthday boy, enjoy Bob Marley and "Burnin and Lootin":
Enjoy your birthday my friend.
Another Twitter friend is @CoderTrader. If you don't know him, you are missing out. Had a brake fiasco tonight, but after a killer week nailing the market a request is in full order. Tim McGraw and "My Next 30 Years":
All my best.
I have mentioned him before, but when reader G first stopped in in 2007 he was, well G. Shortly after this blog started he went for the Armed Forces and for some time I never heard from him. Now and again he pops in, but make no mistake; he was private G to start and now he is Lieutenant G! So proud of his efforts, and wish he would EMAIL me so we could talk (hint!). Anyways, his requests go right into the show so here is Crash Test Dummies and "Mmm Mmm Mmm":
So happy to see you back my friend.
Dinosaurtrader pinged me with this sick as all get out tune "The Hoodoo" and I submit this tune for full enjoy:
I like that one.
Two songs left, better grab a drink or a girl. Both would be just right.
From an 80's icon film, "Old Enough to Rock and Roll" via Rainey Haynes:
Gets me going.
Last tune.
I am a metal head in many forms of the word. Love the acoustic solo from Metallica's song "To Live is to Die" and so please check out this 3 guitar show, all acoustic of the solo section:
Short on time after a nasty commute and I still have to run out in a bit. Had a thought in mind for a non market post, so here it comes.
Tomorrow night is Friday night, so get those requests in.
Odd Jobs Over the Years
I don't know why but I was thinking about all the different things I have done for employment over the years. Why not make a list and see how it looks? I go by grades because it's easier to remember a timeline that way for me. I am bad with years.
Railroad Construction and Repair - 4th Grade to end of High School
My Father was a Trackman and then supervisor for a large New England railroad. Not an office job. I started off bringing coffee and water to the crew when I was in 4th grade in winter and summer. A crazy growth spurt after 5th grade had me almost my current height in 6th grade so my dad let me loose on the work crew.
In winter and summers when my dad had weekend jobs I would work two 10 hour days laying rails and setting ties. I even got to drive the truck in South Boston to go get coffee. Fun times. What I remember most was it was the most time I got to spend with my dad (child of early age divorce, so sad bla bla). I also remember all the tools like clawbars, joint bar wrenches and jackhammers were all steel so in the summer they got really hot. Blister hot. In the winter they got very cold, the kind of cold that gets into your bones. Later in High School I stopped doing this stuff and in second year of College my father died. Great memories of this job.
K-Mart
In Sophomore year of High School I took a job at K-Mart doing stocking and floor work. My first glimpse at the corporate world. It was not too bad working out back with the inventory, but dealing with customers was sooooo annoying. We all had to be trained on the register and the ONE day I had to ring up (over Thanksgiving sale) this huge lady, well over 300 pounds, decided to both go bra shopping and come through my checkout. I had to take them off the hangers (lol) and fold them and stuff. Um, no thanks. I quit before the Christmas season started up!
Hospital Cafeteria Assembly Line
My mother (a nurse) got me this job at a large local hospital junior year of High School. This may have been the hardest job I ever had. We had to assemble, in assembly line fashion, 200-300 dinners in about 30-40 minutes tops. These meals were trucked up in carts to all the floors, then all was collected and washed before leaving for the night. It was very difficult. I hated it and lasted about 4 months before varsity tennis season started so I quit. Mom was pissed.
Convenience Store and Shoveling
Senior year in High School I got my first taste of the convenience store world. The lottery was the most annoying part. People buy insane numbers of all kinds of tickets and they all lose. THEY ALL LOSE. I saw the same people for months on end and would keep a tally. They all lost huge but kept playing. crazy stuff. During winter I would get up at 3am after snow storms to shovel commercial business areas. All by shovel, we had no equipment. Neither job was that fun.
Construction
After graduation from High School, I lucked out and got a job all summer rebuilding a three family housing unit in Lowell. My boss was amazing and taught me everything about total rebuilds. I did it all; sheetrock, plumbing, framing, stairs, siding, roofing, payroll you name it. On Friday's he had a pool business so we would go around going swimming while fixing pool pumps and liners and such. Maybe the most fun summer I ever had. My boss pleaded with me not to go to college, he wanted to make me a partner! I almost took him up on it.
More Convenience Store
After summer and the start of freshman year in college I got a job at a store across the street from my house. More of the same as before. How many sandwiches can you make before you go insane? 4,365 exactly. Only bright spot was that Micky Ward would come in every other week and grab a sandwich so I got to gab with him about the old boxing gym and stuff.
Grading Elementary Assessment Tests
The summer after sophomore year in College I got a job grading the science section of elementary school assessment tests for grades 5-6. This was a blast. We got in thousands of tests in science that had essay answers and were taught the points on which to grade them. If you ask adults science questions you get hilarious answers, imagine a kid answering! Simple science like evaporation or magnets in essay form were a gold mine of laughs. This was fun. Plus this girl I met working there, that was fun!
Breakthrough Pap Smear Company
Clearly no picture for this one!
Now do not laugh! I had the honor of working at the firm Cytyc (now Hologic) junior year in college that revolutionized the pap smear with their ThinPrep Pap Test. The science behind it was simple, but so smart! This screening has saved so many lives. I was in charge of making the slide samples used to train technicians that do the screening of samples (was very early in the products life). The job was very repetitive, but my first real science job exposure. Plus, the product was a life saver by early detection and correct diagnosis of various issues. I had to leave when my piece of shit car lost 3rd gear Chevy cavalier, only 4 speeds) and getting all the way out to the site was impossible.
Screen Printing
Ok, now a more wild time in my life. Late summer into fall of junior year in college.
I was hanging out with friends from the old neighborhood and I mentioned I needed a job. They set me up at a screen printing shop making T-shirts and other clothes with all kinds of ink printing on them. The main machine was like the one from the picture, all the heads put on another color (we had 12 colors). The huge oven that cooked the ink dry always kept the place so warm it was nice.
The crew was crazy! We would blast Cypress Hill and Beastie Boys all day and it was a great time. Some of the crew were big into the wacky tobacky (have tried a few times, not my thing) and one time I drive the company truck across two towns to deliver a shipment to UPS. After I unloaded the truck I walked to the front and saw that I drove the whole way with a 2 foot water bong, fully loaded, right at the front of the dashboard in full view behind the windshield. Not cool. After the summer I would swing by and clean screens for a few extra bucks which involved tons of paint thinner and gloves got in the way of taking off all the tape. No on wanted to do it but I would for the money and I could come and go as I pleased.
Last Call at Convenience Store
No picture as late junior year and all of senior year in college was not the best time. There was an issue at the store I worked at about "accounting fraud" and missing money. The whole crew was 12 people and it was agreed (by 11 of them) to blame me. Shit, I would tell you now if it had been me, who cares now, but it was not. I have never been anything but honest both in life and here since I started in 2007, no change now. Couple not easy to get to job, a crap car, and a crazy school schedule (I qualified to take post-graduate degree courses for full credit towards advanced degree) and I decided to let it ride best I could until graduation. This was the time when I ate 3 times a week and prayed to get a job after graduation.
But it all worked out. How many jobs have you had? What did you do to get where you wanted to? How hard did you try? How much did you lose, or gain? Important questions.
[Leaving?] "So soon? Without any of those answers you so longed for?"
"You said there are none."
"But you asked the wrong questions."
-Louis and Armand in "Interview with the Vampire"
Dealing with charts and technicals is pretty clean cut. My chart last night (in which I cut off the value numbers, smooth) updated today:
So today's rout drops the SPY to the bottom of the range I am keen on (white lines), right around 123 (equivalent to S&P 500 1230). The upward channel(green lines) still has a little room under that before being violated.
My man Swoon has a 60 minute chart that shows a pretty decent head and shoulders pattern. See it here. The neckline coincides with the areas I have marked.
So either it holds here or it breaks. Or it breaks, then reverses. Or something.
Bigger picture I keep wondering if I have been asking the right questions. Italian debt woes sunk the market today as yields reached a level that scared markets. The ECB is expected to resort to FED like printing to bail out the Eurozone, but when this happens remains to be seen. Talk of a smaller Euro that focuses on deeper integration and scuttles some of the periphery is making the rounds. What that would mean is any one's guess. Most of this is known and made little difference in a rally that was going higher for a month.
But are the right questions being looked at? The big three in my mind right now are:
1.) Greek CDS being called off is having ripple effects in debt markets. The idea that protection via credit default swaps will not be actionable may be causing large debt holders to scramble.
2.) Margin games are not something to be taken lightly. Everyone was laughing when silver margins were increased but now margins for Italian bonds are being raised and that is not funny all of a sudden.
Margins in commodities were lowered (Kid Dynamite gets it right) but the spill over has come from MF Global going bankrupt. Peter Brandt has a lengthy discussion here on what it means for futures traders. I am not one, but it's a deep and necessary part of the market: MF Global — 2011′s version of 1929
The failure of MF Global”s segregated account to be made whole would be the biggest financial disaster since 1929 and would spell the end of the futures industry as we know it. Folks in the financial industry should take this matter seriously — very seriously. Do not underestimate the importance of this matter.
I cannot say I am knowledgeable in this area, but Brandt sure as hell is.
3.) Greece restructuring along with the MF Global bankruptcy is calling into question what debt and money is actually worth. The notional value of money as I call it. Add on a municipal debt default (Alabama Jefferson County) and no wonder fears are running high.
After climbing the proverbial "wall of worry" it seems the three questions I outlined had no easy and fast answers.
It was 70 degrees here today and just perfect out. have to appreciate a day like this well into November.
Joe Frazier
After it was erroneously reported before, Joe Frazier died today. The great former heavyweight champion lost his fight against liver cancer. In January I wrote a detailed recap of Frazier's epic first fight with Muhammad Ali, the "Fight of the Century:: From 1971: The Fight of the Century
Sad day.
200 MDA: Iron Bar or Paper Wall?
Today was another wild run as things looked pretty poor at the open, but then settled down. Later in day things took off again. It's very difficult to watch the daily action because of the volatility.
A key moving average for stocks is the 200 day (200 MDA). Some averages mean more to some people than others. I like to view the 200 day as a reflection of longer term price action. It's not the end of all discussion, but usually adds to the conversation.
Here is a daily chart for the SPY:
On October 27th stocks closed above the 200 MDA (yellow line), only to suffer a drop right back below over the next few days. Support was grabbed at the rising 20 day (green line). Today the close was just over the 200 MDA again.
Ideally for long setups the trip over the 200 day would have held up to a drop and that would have been support. As it just barley crossed it, that would have been a lot to ask. This is the second test of it. Will this be an iron bar that rejects stocks or a paper wall that can be pierced and held? Great question! I think it most constructive if stocks meander here or drop slightly (1%) to set up a more solid launching pad. Of course the market hardly ever does what anyone wants. Using the green channel drawn on chart will be the guide post for me.
I look at moving averages and many traders spend quite a bit of time on them. I am more apt to assign price action, volume, and price levels (white horizontal lines) more weight. As such, the 1230 level is still key to me on any downside.
I did open some positions today and may discuss later after the trades have developed.
Crazy busy day today as the automated lab robotics were delivered. I was at work for 6am and ran around all day long. Good to have some down time.
If Only You Believe in Miracles Baby
Clearly I stole the blog title from the Jefferson Starship song:
Sometimes (well most times) the daily kind of noise can get into your head. That's ok, if you can tune it out. If you cannot then you risk missing the forest by staring at every tree that comes along.
This is going to be a short post because it's simple now. The Euro news has passed it's apex. Enough promises of some kind of bailout have been made, it's all details and silly back and forth now. Whether Greece is bailed out thrown overboard has limited impact, the golden goose here is Italy and that is going to be backstopped by whatever means necessary. Yes I know Italian bonds are screaming higher in yields, but that might be mostly speculation being pressed before the bailout.
I had real fears about earnings season this time, but it has gone fine. The only monkey in the wrench (Die Hard) is the ECRI still calling for a recession. I doubted them last year (they said no recession, I said yes) and was wrong, so I am lax to dismiss them again this time.
The price action is telling the story right now. I think there may be some scary opens going forward if some headline gets put out that causes drama, but those drops are going to be supported by buyers coming in. It's a broken record here and elsewhere but market players are not exposed to stocks right now and need to be. The contrarian in you may say "then it's time to be short!" but it is way early for that angle to be in play.
It may seem a miracle the market came up out of that big break lower in early October. It may be even more of a miracle that after a red hot October, stocks keep going up. Sometimes you gotta believe in miracles, baby. Like I do.
Not much to say here tonight. Tony Stewart is all but a lock for NASCAR title and the New England Partiots defense is so bad I think a college team could hang 50 points on them. It's time for Bill Belichick to move on, he looks like a joke with how the defense has evolved over last 3 years. I am done talking about them.
Greece is saved and so is Italy. So is the world. Or something.
It's much easier with cable and electricity fully restored. What a long week. Still a few pockets up here without power, but it should be fixed by tomorrow. Halloween has been set up for Sunday night now.
The Week Ahead
To be honest, I am tired at weeks end here and with Greek drama hitting the screens tonight I will wait until homework night Sunday to get in market mode. Should nothing too scary come out of Europe before Monday this is a market that can be traded. It's hanging around and no momentum to the downside is getting traction. Does not mean it's all a run up from here, but good ideas traded right should work out. More Sunday.
Friday Night Entertainment
After a long week I know I need some fun stuff.
The Dark Crystal Artwork
Long time readers now I think the Jim Henson film "The Dark Crystal" was a masterpiece. No CGI even! The great site iO9 posted up some great art stills of the characters and so here they are:
So you have not seen "The Wraith"? Well check out an all star cast in a cheesy flick:
Features a great Ozzy tune which I will feature below.
A new era classic is "Road to Perdition" and now all kinds of scenes are coming up on YouTube. Check this one out if you ever thought Tom Hanks could not be totally badass:
Should have won Oscar this film.
Rock Blogging
Some tunes to get you ready for the weekend.
Big thanks to Sal Arnuk of Themis Trading. On Twitter (@ThemisSal) today he posted words to a song I was trying to remember for a long time. Please check out Gordon Lightfoot and "The Wreck of the Edmund Fitzgerald":
Wonderful song.
For the great blogger (and where is that mutual fund??) Trader Mark, I offer Prince and "When the Doves Cry":
"animals strike curious poses..."
From the film above, here is Ozzy with "Secret Loser":
So good.
From 1972, a very smooth John Denver performance of "Leaving on a Jet Plane":
Finally! A high quality version of Joan Jett doing "Cherry Bomb":
She was great!
Last call! Grab a lighter and a drink.
Closing the show with "The Flame" by Cheap Trick as to send you off mellow:
