Well that was an interesting trading day. First it is down, stays down, and then as if on cue we start to get buying into the afternoon. Put buyers stepped in and really hammered any progress we had made but the filp flop really says something to me. Fear still exists in large buckets, and is actively hedging. That is a good thing since we need fear to continue going higher. It just makes the market look unstable to flush out the weak.
Look at our tell...The ten year is at 3.83 off from 3.88. These are small moves but they reflect the level of hedging going into this almighty number on Friday. God. I loathe this job number. Any way you look at it there is so much built into it that whatever it is, we are going to get a violent lurch when it comes out. We will either rinse out every short on our way to Dow 11,000 or test the lows once again. I cant say I know which way it will go, but I sure hope it doesn't stink. The lows are a very painful place to be.
Wednesday, March 31, 2004
Jobs....the real deal....
This morning I turned on CNBC and I heard Altman (one of Kerry's Campaign Advisors) talking about how "This president will be the first president to create 0 net jobs" (paraphrase).....The host asked the question..."What could President Bush have done that he didn't do to avert this?".....All we got was a repeat of how this President is poor on jobs....Then Mr. Altman decided to tell the viewers (most of which we can all agree are Business people) that "he is a business man, and he knows that this President is bad for business" (paraphrase). As if to suggest that we all just don't get it and that he is here to tell us. Thanks for the lesson in spin Mr. Altman, but there is a certain part of the populace who don't need the Democrats telling us what we should be looking at.
Here is how I'm trading the jobs situation. It is much better than the government numbers are reflecting. The numbers don't reflect self-employed (of which we have the largest number ever), they don't reflect partnerships (as the ones I run), and they don't reflect the true business hiring climate. Yes. Business is cautious on CapEx (thank you Mr. Altman), however that's just good business. The macro economics of the situation don't reflect the jobs numbers we are getting. More houses sold, better consumer confidence than expected, better personal earnings (but we still suck at saving) all say to me that consumers are making money "somewhere".....Probably somewhere that is not counted by the jobs number.
Markets opening lower, but if yesterday set up what I think it set up, we should see some institutional buying at the end of the day. I'm looking for the NDX to test support. If we break that all bets are off.
Here is how I'm trading the jobs situation. It is much better than the government numbers are reflecting. The numbers don't reflect self-employed (of which we have the largest number ever), they don't reflect partnerships (as the ones I run), and they don't reflect the true business hiring climate. Yes. Business is cautious on CapEx (thank you Mr. Altman), however that's just good business. The macro economics of the situation don't reflect the jobs numbers we are getting. More houses sold, better consumer confidence than expected, better personal earnings (but we still suck at saving) all say to me that consumers are making money "somewhere".....Probably somewhere that is not counted by the jobs number.
Markets opening lower, but if yesterday set up what I think it set up, we should see some institutional buying at the end of the day. I'm looking for the NDX to test support. If we break that all bets are off.
Tuesday, March 30, 2004
Volatility
Everyone is calling for high volatility as we go into the end of the month (more importantly end of the quarter). I guess I subscribe to this. Although merely predicting volatility is like saying...."It aint going to be boring.".
Where are we going when it comes to price? That's a much harder question. Our tell has stalled at 3.87 on the 10 year. This seems to suggest that the market will lack upside momentum today unless the late day traders get involved. The common wisdom is that large institutional traders run the last hours of the trading day. Given that these hours have been weak throughout this latest run, I think we may get a vacuum and see some significant selling today.
I view this as good. Right now I'm trying to game my way into PWI for the 12% yield it is sporting. Although yesterday the suckers came in and bought it up to 20 from 18.75 after some dope on Fox recommended it. I'm patiently waiting for some weak hands to dump it back to the low 19s. Then I'm going to load up for my fixed income PF.
Other than that, I'm on hold, hoping for a downdraft. I really need to cram some more dollars into this market because overall I feel we are going higher. Whether we play this volatility will be largely a function of whether the PF gives up some 15% or north gains.
Where are we going when it comes to price? That's a much harder question. Our tell has stalled at 3.87 on the 10 year. This seems to suggest that the market will lack upside momentum today unless the late day traders get involved. The common wisdom is that large institutional traders run the last hours of the trading day. Given that these hours have been weak throughout this latest run, I think we may get a vacuum and see some significant selling today.
I view this as good. Right now I'm trying to game my way into PWI for the 12% yield it is sporting. Although yesterday the suckers came in and bought it up to 20 from 18.75 after some dope on Fox recommended it. I'm patiently waiting for some weak hands to dump it back to the low 19s. Then I'm going to load up for my fixed income PF.
Other than that, I'm on hold, hoping for a downdraft. I really need to cram some more dollars into this market because overall I feel we are going higher. Whether we play this volatility will be largely a function of whether the PF gives up some 15% or north gains.
Monday, March 29, 2004
The Art of Filtering
Great up day on the averages. This run is starting to make the pain of the last few weeks disappear very quickly. It has been my experience that ANYTHING that dulls the pain that fast is going to make you pay one way or another. I just don't feel like it is "up up up" from here. Which is the subject of this piece.
Filtering......I think if you brought the word up 20 years ago, people would think you were talking about a Mr. Coffee machine. In this case it means what you take and what you throw away from the information cycle broadcast to us daily. I think that to be successful in today's economy, you have to master the art of filtering information. For me, filtering the constant onslaught of "message" "spin" and "hype" that invade our very being 24 hours a day starts with a few guiding precepts. What do I stand for? What do I believe is reality? What REALLY makes money in America today? My precepts begin by answering basic questions. For the art of filtering requires that simplicity win over complexity.
Why basic? Why am I not looking for the riddle mixed up in an enigma? Think about he great frauds perpetrated upon the American public over the years? Think of how some were able to manipulate the masses. Think about it all and underneath the scheme you will find simple slights of hand. Not grandiose schemes. "Why steal a million dollars when you can steal one dollar from a million people easier."
Mix this fact with the idea that those who would want to influence the public would use the same approach and you can easily filter out 90% of the din. Those who can see clearly, those who can wipe away the grime and excess of the spin will see the way to succeed. In the markets and in life as we know it in the post 90s bubble.
Filtering......I think if you brought the word up 20 years ago, people would think you were talking about a Mr. Coffee machine. In this case it means what you take and what you throw away from the information cycle broadcast to us daily. I think that to be successful in today's economy, you have to master the art of filtering information. For me, filtering the constant onslaught of "message" "spin" and "hype" that invade our very being 24 hours a day starts with a few guiding precepts. What do I stand for? What do I believe is reality? What REALLY makes money in America today? My precepts begin by answering basic questions. For the art of filtering requires that simplicity win over complexity.
Why basic? Why am I not looking for the riddle mixed up in an enigma? Think about he great frauds perpetrated upon the American public over the years? Think of how some were able to manipulate the masses. Think about it all and underneath the scheme you will find simple slights of hand. Not grandiose schemes. "Why steal a million dollars when you can steal one dollar from a million people easier."
Mix this fact with the idea that those who would want to influence the public would use the same approach and you can easily filter out 90% of the din. Those who can see clearly, those who can wipe away the grime and excess of the spin will see the way to succeed. In the markets and in life as we know it in the post 90s bubble.
Moving higher into mid-day.
Ten year at 3.90.
GE is up for the third day straight.
Commodity, and industrials all broadly higher.
Dow up 121.55
I feel vindicated. Last week I wrote about the idiocy of the panic selling. I had to exercise an extreme amount of strength as analyst after analyst bemoaned the fall of our grand capitalist system. While this type of panic buying is also not good for the markets, I suspect it is really more gap filling than panic buying. A vacuum of money coming in to fill the void that the weak hands created.
Action like this validates the painful value strategy that I've adopted. You have to buy when things are going down, but once they turn, you are so glad you did. The TRIN is rapidly approaching 0 (31) so I expect that this buying is going to give way to some selling soon. Danger in situations like this is that we go too far too fast and get a mini blowoff top. The buying has gotten more orderly as the morning has progressed, so I don't see a big risk of a blow off right now.
The finish is going to really tell if we are entering a new upward phase. If we close strong, watch for us to get overheated going into the jobs number Friday. Id want to consider putting on some index shorts if things get too out of hand.
For now, I'm just enjoying the ride.
GE is up for the third day straight.
Commodity, and industrials all broadly higher.
Dow up 121.55
I feel vindicated. Last week I wrote about the idiocy of the panic selling. I had to exercise an extreme amount of strength as analyst after analyst bemoaned the fall of our grand capitalist system. While this type of panic buying is also not good for the markets, I suspect it is really more gap filling than panic buying. A vacuum of money coming in to fill the void that the weak hands created.
Action like this validates the painful value strategy that I've adopted. You have to buy when things are going down, but once they turn, you are so glad you did. The TRIN is rapidly approaching 0 (31) so I expect that this buying is going to give way to some selling soon. Danger in situations like this is that we go too far too fast and get a mini blowoff top. The buying has gotten more orderly as the morning has progressed, so I don't see a big risk of a blow off right now.
The finish is going to really tell if we are entering a new upward phase. If we close strong, watch for us to get overheated going into the jobs number Friday. Id want to consider putting on some index shorts if things get too out of hand.
For now, I'm just enjoying the ride.
Everything concludes with the jobs number....
I'm looking at this week as a "capped" week. The March employment report comes out on Friday, and that has been such a market mover, everything done this week will be in anticipation of that number. Economists (who are always wrong) are looking for job creation of 100,000 new jobs. The current trend of thinking is that for this number to be moving in a good direction we must create and sustain 100,000 jobs a month for three months. To date this number has been very bad and has been shaking both the markets and the fear bid in bonds.
This morning we are looking at a strong open. Our tell, the 10 year, is now standing at 3.87 (up another 3 bp over the weekend). This suggest that there is going to be fresh money on the open which should squeeze the shorts out of their interim positions and bring us higher. Will we gap? I feel like a small gap down is in order for traders. I'm still holding more cash than I would want at the start of what seems to be at least a bounce, and at best a resumption of the bull trend.
This morning we are looking at a strong open. Our tell, the 10 year, is now standing at 3.87 (up another 3 bp over the weekend). This suggest that there is going to be fresh money on the open which should squeeze the shorts out of their interim positions and bring us higher. Will we gap? I feel like a small gap down is in order for traders. I'm still holding more cash than I would want at the start of what seems to be at least a bounce, and at best a resumption of the bull trend.
Saturday, March 27, 2004
Tells tell the tale.....
So, we had another up day on Wall Street....Except for the close, where the bears sold us down to about even at the close. At one point, we were up 35 points on the Dow. Respectable, considering the 170 point day we had the day before....
Most importantly I think my tell is really on the money. The 10 year yield has backed up to 3.83 (which is a big move for the ten year lately), and is approaching "pre-February employment number" levels. Now, some would say that this is just a normal reaction to the upcoming March jobs number and that the action is not market related.
My retort to that is that correcting and basing action like that is usually more abrupt and any good govvie trader is going to wait next week to get the income numbers before they start trying to pin the yield anywhere. I believe this is the crawl towards 4 that will release the dollars back to the stock market and drive us higher. So far, the tell is moving in conjunction with the market in similar steps, Ill keep watching. However if we get to 4 before the jobs number, I'm going to take a short hedge in case the jobs number stinks it up. Please don't stink it up jobs number, please don't stink up the room.
Have a great weekend! More commentary on Monday....Is this thing on? If you read this blog and are finding the information useful, please email me at gerryl@ethigent.com Id be very interested to hear your views.
Most importantly I think my tell is really on the money. The 10 year yield has backed up to 3.83 (which is a big move for the ten year lately), and is approaching "pre-February employment number" levels. Now, some would say that this is just a normal reaction to the upcoming March jobs number and that the action is not market related.
My retort to that is that correcting and basing action like that is usually more abrupt and any good govvie trader is going to wait next week to get the income numbers before they start trying to pin the yield anywhere. I believe this is the crawl towards 4 that will release the dollars back to the stock market and drive us higher. So far, the tell is moving in conjunction with the market in similar steps, Ill keep watching. However if we get to 4 before the jobs number, I'm going to take a short hedge in case the jobs number stinks it up. Please don't stink it up jobs number, please don't stink up the room.
Have a great weekend! More commentary on Monday....Is this thing on? If you read this blog and are finding the information useful, please email me at gerryl@ethigent.com Id be very interested to hear your views.
Friday, March 26, 2004
Watching tells, not doing anything...
That's about the sum of it for this morning. I'm a longer player than a short term day trader. I made my bets on this market on the way down and even caught what could have been the bottom on Wednesday by buying some good value. Right now the game is in play for me and I've locked and loaded. I'm hoping for a bit of a selloff so I can get some of the sacrificial funds from yesterday into the market.
However something is nagging at me that we are going to have another up day. Which will make me wonder where the money is coming from. Perhaps our tell is actually telling us something. The yeild on the 10 year has come up two basis points from last night to 3.76.....a small move, but perhaps an indicator that our tell on the 10 year is a relevant one.
Careful out there today. Fear is still all over this market like a wet blanket. Rumors, weekend flattening of accounts, and other factors could swag us lower quickly. Im hoping for low, but not lower than earlier so we can establish a stair step that gives a market legs.
However something is nagging at me that we are going to have another up day. Which will make me wonder where the money is coming from. Perhaps our tell is actually telling us something. The yeild on the 10 year has come up two basis points from last night to 3.76.....a small move, but perhaps an indicator that our tell on the 10 year is a relevant one.
Careful out there today. Fear is still all over this market like a wet blanket. Rumors, weekend flattening of accounts, and other factors could swag us lower quickly. Im hoping for low, but not lower than earlier so we can establish a stair step that gives a market legs.
Thursday, March 25, 2004
Not worth the tape it's printed on.....
.....nope, not one bit. Stocks get pounded for weeks and the bounce that everyone said was going to happen after every "down over a hundo" day..... Finally happened. Is it a dead cat? I really hope it isn't because this is some powerful steam....But the weathered and beaten side of me just has to stand in disbelief.
So I trimmed. I had some nice points in my FDC position, and I took a 1/4 off the table. I know....Not the right thing to do from a positioning standpoint, but I'm superstitious and needed to sacrifice to the "sell it and it goes up" god. And guess what? FDC went down and everyone else went up! So I scored twice. Nice god, that "sell it and it goes down" god.
Why do I know it is going to go back down again? Well one of our tells is still not where it needs to be. The 10 year yield is still a paltry 3.74, and part of my thesis is that for the markets to advance, that fear trade has to unwind. So far.....Many are still firmly shaking in their boots.......And not doing anything. I know, this is not the greatest tell in the world but I feel like it is relevant since fear is what sent the markets to these levels in the first place. The high price of bonds is indicative of that fear. I think ultimately, the great company earnings we are about to hear about will weaken the fear position, and beg these dollars to come participate in an economic expansion once again.
So I trimmed. I had some nice points in my FDC position, and I took a 1/4 off the table. I know....Not the right thing to do from a positioning standpoint, but I'm superstitious and needed to sacrifice to the "sell it and it goes up" god. And guess what? FDC went down and everyone else went up! So I scored twice. Nice god, that "sell it and it goes down" god.
Why do I know it is going to go back down again? Well one of our tells is still not where it needs to be. The 10 year yield is still a paltry 3.74, and part of my thesis is that for the markets to advance, that fear trade has to unwind. So far.....Many are still firmly shaking in their boots.......And not doing anything. I know, this is not the greatest tell in the world but I feel like it is relevant since fear is what sent the markets to these levels in the first place. The high price of bonds is indicative of that fear. I think ultimately, the great company earnings we are about to hear about will weaken the fear position, and beg these dollars to come participate in an economic expansion once again.
Beware the head fake....
Im still not convinced. At midday we are up huge on the Dow, Naz, and the S&P. It sure is nice to see the breadth and the bounce, but I think this is a head fake. There is ONE thing that can get me to believe this rally. The virtuous cycle.
One of the reasons that I've decided to be a student of market psychology is that many times it feeds it's own momentum by setting up a virtuous cycle. This is the idea that if enough stocks show signs of life, if enough economic indicators show positive movement, heck even if enough best friends get together at BBQs and say "Im buying stock", that the market will follow suit regardless of technical indicators. Moves like today can either set fire to a virtuous cycle, or head fake you into oblivion.
At midday I trimmed some profits as sacrifice to the trading gods, who rewarded me and took my PF higher. Im waiting for a gap down to occur as a result of this bounce. If we don't test the lows of last week, but set up for a higher low, then Ill put some more dollars to work. Currently looking at doing some more DD (for the nice Divi and the contrarian oil play), more UVN, and perhaps even some more EL if we get a gap down.
Careful and steady....
One of the reasons that I've decided to be a student of market psychology is that many times it feeds it's own momentum by setting up a virtuous cycle. This is the idea that if enough stocks show signs of life, if enough economic indicators show positive movement, heck even if enough best friends get together at BBQs and say "Im buying stock", that the market will follow suit regardless of technical indicators. Moves like today can either set fire to a virtuous cycle, or head fake you into oblivion.
At midday I trimmed some profits as sacrifice to the trading gods, who rewarded me and took my PF higher. Im waiting for a gap down to occur as a result of this bounce. If we don't test the lows of last week, but set up for a higher low, then Ill put some more dollars to work. Currently looking at doing some more DD (for the nice Divi and the contrarian oil play), more UVN, and perhaps even some more EL if we get a gap down.
Careful and steady....
A change in the tide? I think not...
Futures are higher this morning off some good economic numbers and a better than expected jobless claims number. Although the futures were good going into the numbers and didn't really fluxuate as they came out. I feel like this just a bounce and we will return to the nastiness either this afternoon or tomorrow. We still have to scare the crap out of more people before we go higher. This is a correction that will require a very high pain tolerance.....Im mentally and fiscally prepared....Are you?
Although I really hope IM wrong, the pain of watching big gains evaporate for the sake of averaging down to cram more dollars in is immense. It affects your whole spin on life and seems to somehow affect your unrelated fortunes as well. Don't ask me how market movement up can affect the sales we are closing at ReadyTechs but it seems to be a 1 to 1 relationship right now. Strange.....
Although I really hope IM wrong, the pain of watching big gains evaporate for the sake of averaging down to cram more dollars in is immense. It affects your whole spin on life and seems to somehow affect your unrelated fortunes as well. Don't ask me how market movement up can affect the sales we are closing at ReadyTechs but it seems to be a 1 to 1 relationship right now. Strange.....
Wednesday, March 24, 2004
The Un-Market....
So is this how we have to wait out this dismal period? Relentlessly bouncing between positive and negative territory on all the averages? I actually thought we were going to see a bounce today around 1PM, but it just fizzled like everything else. This really is not a market that ANYONE (long or short) can build wealth in....It is...The un-market.
One bright spot is that there are a lot of traders out there talking about a bottom for the NASDAQ. In all fairness, the Nazty has been selling off for much longer than the broader markets and it really SHOULD be the one to get bottomed first. However the last correction we had (early fall if memory serves), the same setup occurred only to find the NAZ lag everything else (first in, last out). Will it be different this time. Mmmmm....not so fast.
The post bell Micron call was downright mediocre. Not boding well for strength in chips tomorrow. Many people use stocks like Micron as a tell for overall PC demand. Im not too concerned with it for the fund. Our strategy doesn't need tech at all for recovery. We (Ethigent) need strong cyclical demand and a healthy interest in core materials. All the things that a recovery should get us and a bit more. Just to be safe though, I've got some Qs and a pretty hefty telecom bet going on in Nortel (exceptionally painful right now). Nevertheless, I feel like our ability to supply China with raw materials is what will swing the undercurrent in the market and our economy. If this thesis is true, we will see a gradual rise in prices from the DD, PD, and ALs of the world......ultimately this type of growth should END in Tech....not begin with it. This would mean that the Naz bottom is a head fake and that we are still stair stepping in the same type of core mix of businesses. If Im right, we will see the Dow turn back first in a nice solid pattern up.
Speculation indeed. But I need something to keep me from hitting the sell button all day long.....Don't I ?
One bright spot is that there are a lot of traders out there talking about a bottom for the NASDAQ. In all fairness, the Nazty has been selling off for much longer than the broader markets and it really SHOULD be the one to get bottomed first. However the last correction we had (early fall if memory serves), the same setup occurred only to find the NAZ lag everything else (first in, last out). Will it be different this time. Mmmmm....not so fast.
The post bell Micron call was downright mediocre. Not boding well for strength in chips tomorrow. Many people use stocks like Micron as a tell for overall PC demand. Im not too concerned with it for the fund. Our strategy doesn't need tech at all for recovery. We (Ethigent) need strong cyclical demand and a healthy interest in core materials. All the things that a recovery should get us and a bit more. Just to be safe though, I've got some Qs and a pretty hefty telecom bet going on in Nortel (exceptionally painful right now). Nevertheless, I feel like our ability to supply China with raw materials is what will swing the undercurrent in the market and our economy. If this thesis is true, we will see a gradual rise in prices from the DD, PD, and ALs of the world......ultimately this type of growth should END in Tech....not begin with it. This would mean that the Naz bottom is a head fake and that we are still stair stepping in the same type of core mix of businesses. If Im right, we will see the Dow turn back first in a nice solid pattern up.
Speculation indeed. But I need something to keep me from hitting the sell button all day long.....Don't I ?
Life in a vacuum
Interesting things Im reading about news, the absence of news, and how that relates to the Terrorist threat in the Markets. It seems that many traders are saying that the market has "priced in" the Terrorist Threat. In other words, because we didn't have any major economic or company news last week and again this week, the market was able to grind it's fears about terrorism into the market averages.
This essentially sets up an upside bias since if we get better news, Terror fears will not impact prices anymore. It is strange how the market reacts to things like Terrorism. It attempts to price itself as if we are going to have bombs going off all over the place that the hope of eliminating terror is non-existent. I have so much to learn about market psychology. It is so raw and unemotional, that you find yourself doing foolish trades and things just to counteract the stark contrast of it all.
This essentially sets up an upside bias since if we get better news, Terror fears will not impact prices anymore. It is strange how the market reacts to things like Terrorism. It attempts to price itself as if we are going to have bombs going off all over the place that the hope of eliminating terror is non-existent. I have so much to learn about market psychology. It is so raw and unemotional, that you find yourself doing foolish trades and things just to counteract the stark contrast of it all.
More staring into the void.....Pre-Market
One of the nice things about a market that is down big and staying down is that you get the opportunity to do homework a little more dilligently. Today Im considering getting into Univision (UVN). Why? Because this network is actually "growing" in the face of the slump in traditional network viewership. Gotta wake up and smell the coffee here. The Latino market is a great place to be when it comes to sheer volume. So this morning, Ill be looking to get a nice price on an opening position, and would like to take this one up to a full load if we get some more market chop over the coming days. I think Ill be happy Im on board here once we start turning north, the price, at 32.50 pretty much erases the last 52 weeks of value that UVN ran up.
Otherwise, I think we will gap the open down and make another run at a solid day (but this time hold it). The ten year (our new tell) actually caught a small bid this morning running the yield down below 7.70. With bonds so range bound I dont expect much today. Ill be looking for the normal NDX breakouts as well just in case.
Otherwise, I think we will gap the open down and make another run at a solid day (but this time hold it). The ten year (our new tell) actually caught a small bid this morning running the yield down below 7.70. With bonds so range bound I dont expect much today. Ill be looking for the normal NDX breakouts as well just in case.
Tuesday, March 23, 2004
Whipsawed...while sitting and waiting.
The markets just dont want to go up. We spent the day trying to make a good showing to no avail. When all was said and done, we ended up almost even (after having gone up almost 70 points on the Dow). We need a catalyst.....but this needs to be more than the average catalyst. We need a good jobs number (even if it is shaky), we need the Fed to do or say something foolish (or at least radical), or, and this would be the best, we need "knock the cover off the ball" earnings reports. Thats what will move this market higher. Without a catalyst, we sit and wait for news....it could be good, or it could be bad.....but it has to be big.
So we sit and wait, watching the TRIN (which at one point yesterday was above 3, the sign of absolute oversold panic), and patiently waiting for the VIX to show us that the market is ready to be bought. I feel like Im watching a condemned man waiting for a last minute reprieve from the governor.
So we sit and wait, watching the TRIN (which at one point yesterday was above 3, the sign of absolute oversold panic), and patiently waiting for the VIX to show us that the market is ready to be bought. I feel like Im watching a condemned man waiting for a last minute reprieve from the governor.
....and then the fighting takes over.....
Ahh me....let me set the stage.
I start this journal at a very low period in the markets. We have undergone weeks of pounding in the Nazty, and the Dow just fell prey to the selling a week ago. Yesterday, all the US markets sold off horribly in a death spiral that made everyone run for the hills. This morning we sit at levels that are moderately better, but one cant escape the stench of pain in the air, and the mood that we are in for far more flogging before we can declare a bottom.
The Tell? Low interest rates. Or rather, absence of higher interest rates. It is truly the weight around the market's neck.
The one market sage that I can say that I follow in a religious sort of way is Jim Cramer. This morning Jim started to use Interest rates as a tell for the market bottom. His article merely suggested that this could be a good tell, however I believe that this is much more significant a tell for the moment we are experiencing in the markets today. Once bonds back off (bonds, for the uninformed, have been on a tear in price for the last six months, which means low yields), and yields come up significantly (like to 4 or slightly higher on the 10 year) we will be able to say that the market is making a positive turn north.
This will say to me that the "fear bid" currently existing in the bond market is unwinding, and that the markets will be a recipient of the dollars. "Why take 4 when you can do 8 in a rising market". This ultimately will end once bonds back up to 4.5-5 on the 10 year because at that point, the market will not be as attractive on a risk/reward basis.
Let me also say something about this "fear bid" that I keep seeing. The fact that this market can be ignoring some of the outstanding growth we have been seeing from American public companies, real hard data that is completely ignored in favor of speculating what a Socialist Europe (which it is and always has been) means for our markets is absolutely insane. How can we fear terrorism to the level that rational data collection and analysis goes by the wayside? I will always side with cold hard facts in the face of an ever falling, fear encrusted market. That is the beauty of the market. You don't have to sit there and complain, you can put your money where your mouth is and step up behind your beliefs. My money is on the reality of an expanding market, not the fear of things that are at the worst hyped beyond recognition, and at best representative of a small minority. Lets not forget that the backdrop of Democratic fear stumping, combined with terror threats provide a layered fear landscape that takes twice as long to work it's way through the news cycle.
Strong hands folks...Strong hands indeed.
I start this journal at a very low period in the markets. We have undergone weeks of pounding in the Nazty, and the Dow just fell prey to the selling a week ago. Yesterday, all the US markets sold off horribly in a death spiral that made everyone run for the hills. This morning we sit at levels that are moderately better, but one cant escape the stench of pain in the air, and the mood that we are in for far more flogging before we can declare a bottom.
The Tell? Low interest rates. Or rather, absence of higher interest rates. It is truly the weight around the market's neck.
The one market sage that I can say that I follow in a religious sort of way is Jim Cramer. This morning Jim started to use Interest rates as a tell for the market bottom. His article merely suggested that this could be a good tell, however I believe that this is much more significant a tell for the moment we are experiencing in the markets today. Once bonds back off (bonds, for the uninformed, have been on a tear in price for the last six months, which means low yields), and yields come up significantly (like to 4 or slightly higher on the 10 year) we will be able to say that the market is making a positive turn north.
This will say to me that the "fear bid" currently existing in the bond market is unwinding, and that the markets will be a recipient of the dollars. "Why take 4 when you can do 8 in a rising market". This ultimately will end once bonds back up to 4.5-5 on the 10 year because at that point, the market will not be as attractive on a risk/reward basis.
Let me also say something about this "fear bid" that I keep seeing. The fact that this market can be ignoring some of the outstanding growth we have been seeing from American public companies, real hard data that is completely ignored in favor of speculating what a Socialist Europe (which it is and always has been) means for our markets is absolutely insane. How can we fear terrorism to the level that rational data collection and analysis goes by the wayside? I will always side with cold hard facts in the face of an ever falling, fear encrusted market. That is the beauty of the market. You don't have to sit there and complain, you can put your money where your mouth is and step up behind your beliefs. My money is on the reality of an expanding market, not the fear of things that are at the worst hyped beyond recognition, and at best representative of a small minority. Lets not forget that the backdrop of Democratic fear stumping, combined with terror threats provide a layered fear landscape that takes twice as long to work it's way through the news cycle.
Strong hands folks...Strong hands indeed.
Welcome to the Ethi-Letter!
This Blog is here primarily as a way to track my thoughts about the state of the economy, the markets,
interest rates, and business in general. As a trader, it is helpful to be able to keep a record of your thoughts to ensure that you are being true to your original investment objectives. Therefore this Blog is first and foremost for me, as a tool. Some of you have expressed an interest in hearing about what I am doing in the markets, so I decided to make this journal public.
First, a bit about me:
I am an entrepreneur and Internet developer with roots in Online Service Delivery dating back to the start-up of the industry. I began my career at Charles Schwab and Company where I played several critical roles in delivering Schwab's online investing products: StreetSmart and The Equalizer. These products were the first of their kind in the investment industry and were a precursor to Schwab's eventual success on the Internet.
Following my accomplishments at Schwab, I formed G.Triad Development Corporation in 1995. Under my leadership, and with no funding or investment beyond my personal time, G.Triad became the Internet development services firm of choice for enterprise and "dot-coms" alike. G.Triad delivered some of the largest and most comprehensive Web applications in operation today, including such revolutionary projects as SmartMoney.com, Simon and Schuster's SimonSays.com, ToysRUs.com, Dow Jones University (an online distance learning application), and several award winning Intranet applications. Under my direction, the company grew from a modest 10 person technology company to a 300 person, multi-national IT consulting company; and in 1999, I led the acquisition of G.Triad by Computer Horizons Corporation.
I am a graduate of Seton Hall University in South Orange NJ. I have served on numerous technical boards of advisory for startup organizations ranging from CRM related enterprise software to network optimization and management, and actively mentor startup companies in my home state of New Jersey. I have been an active supporter of eGovernment initiatives around the country, and frequently gives my time to municipalities interested in bringing local government to the internet.
For the past two years, I have managed a private hedge fund and achieved an average yearly compounded return of 22%. I am also the current CEO of ReadyTechs LLC at http://www.readytechs.com/.
interest rates, and business in general. As a trader, it is helpful to be able to keep a record of your thoughts to ensure that you are being true to your original investment objectives. Therefore this Blog is first and foremost for me, as a tool. Some of you have expressed an interest in hearing about what I am doing in the markets, so I decided to make this journal public.
First, a bit about me:
I am an entrepreneur and Internet developer with roots in Online Service Delivery dating back to the start-up of the industry. I began my career at Charles Schwab and Company where I played several critical roles in delivering Schwab's online investing products: StreetSmart and The Equalizer. These products were the first of their kind in the investment industry and were a precursor to Schwab's eventual success on the Internet.
Following my accomplishments at Schwab, I formed G.Triad Development Corporation in 1995. Under my leadership, and with no funding or investment beyond my personal time, G.Triad became the Internet development services firm of choice for enterprise and "dot-coms" alike. G.Triad delivered some of the largest and most comprehensive Web applications in operation today, including such revolutionary projects as SmartMoney.com, Simon and Schuster's SimonSays.com, ToysRUs.com, Dow Jones University (an online distance learning application), and several award winning Intranet applications. Under my direction, the company grew from a modest 10 person technology company to a 300 person, multi-national IT consulting company; and in 1999, I led the acquisition of G.Triad by Computer Horizons Corporation.
I am a graduate of Seton Hall University in South Orange NJ. I have served on numerous technical boards of advisory for startup organizations ranging from CRM related enterprise software to network optimization and management, and actively mentor startup companies in my home state of New Jersey. I have been an active supporter of eGovernment initiatives around the country, and frequently gives my time to municipalities interested in bringing local government to the internet.
For the past two years, I have managed a private hedge fund and achieved an average yearly compounded return of 22%. I am also the current CEO of ReadyTechs LLC at http://www.readytechs.com/.
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