Market Predictions. Ignorance on Display

Off Topic Politics & World Issues
101

[quote]whatifiwascool wrote:
JEATON,

I think gold’s strength relative to the dollar is a warning sign that once the dollar resumes its downtrend, gold will explode. The dollar’s strength exacerbated the stock market correction. And its current strength is muting the market bounce back. However, I believe the dollar is topping right now and will be at new lows within a month.

Also, FWIW I think 1050 will hold as the low for the year, although we may backtest it before the markets lift off.

I think the best strategy is to buy and hold precious metals for the next year.

Of course, I know I will not change your mind nor will you mine, but I wish you the best of luck.

Jan 2011: Dow 14K, Gold 2K, Silver 30/oz

That being said I am in no way a permabear and believe that the lows for this secular bear market have not been reached. These asset prices are just a reflection of the excessive liquidity in the markets. [/quote]

I welcome all points of view. I think it important not to become “married” to particular view to the point that you go down with the ship. You must constantly evaluate the situation and adjust as necessary.

Gold is particularly troublesome to evaluate. When you have entities such as the IMF making colossal moves, such as selling 200 tons, it can really cloud the outlook. Are they selling it on the open market, or will they orchestrate a purchase with one or more central banks? Either answer leads to a different effect on the market.

Having said this, I am currently watching for an entry point to go short the S&P again. As there are a few resistance points between here and 10767, I would only initiate a smaller position at this point, with more to follow. I think the dollar has more upside potential. Also, I have no desire to touch gold right now.

As always, I remind everyone that this thread is just for “shits and giggles”. I am willing to risk my money on my own interpretations. I have no desire to risk the money of anyone else. Read my actions as entertainment only, and follow at your own risk.

102

Day 21
I stepped into the market on the short side at the close today. Bought 6 put contracts on the SPY. Each contract represents 100 shares, so I control 600 shares. Just a small position, but its a start. I would like to work my way into about 50 contracts if everything starts to line up.

I went off for an hour to play XBox with my son. I just looked at the after hours numbers, and there seems to be a sell off occurring. The DXY (dollar index) just had a big spike up and gold has spiked down. Maybe I got lucky. Time will tell.

OK. I just poked around for a minute and noticed the Fed did a surprise .25 basis point hike to the discount rate. Very interesting. I am lucky. The financials will most likely sell off tomorrow. S&P futures look like today’s gains will be totally erased by morning.

103

PBANDY,

I do not know what is best for your situation, but I am buying silver miners to “play gold”. Silver is leveraged to gold, typically if gold is up 1% silver is up 2-3% but if gold is down 1% then silver is down 2-3%.

Personally, I feel this is an excellent time to jump in.

The miners are even more leveraged to the underlying metal. In particular, I like HL and SLW.

But be warned, these are VERY volatile so if you believe in the long term fundamentals then you should be prepared to hold during drawdowns. For example, silver miners were up 80% November to mid December. And from mid December to early Feb, they were down around 40%.

Otherwise, you can simply buy gold or silver through GLD and SLW, respectively.

I would pull up long term charts of all these symbols so you are well aware of the vacillations.

And I second JEATONs views that I have no interest in providing financial advice, its pure stress with no reward.

GL.

104

JEATON

The rate hike is a joke. The discount window borrowing is $90B so they are pulling a couple billion out of the economy. Big Deal. Pandora’s Box has been opened. This is more symbolic. I think market reaction after the initial reaction confirms this.

I can’t see the FED seriously hiking rates with unemployment 9-10% and with the trillions of debt that needs to be rolled over and with a housing market that is barely staying alive.

That being said, we have been up for almost 7 sessions in a row so I’m sure a pullback is due. But, we are in a cyclical bull market powered by trillions of liquidity that I believe is/will leak out into undervalued sectors specifically precious metals. I have no desire to fight this trend that will come to influence and ultimately define our lives in the coming years.

105

JEATON

The rate hike is a joke. The discount window borrowing is $90B so they are pulling a couple billion out of the economy. Big Deal. Pandora’s Box has been opened. This is more symbolic. I think market reaction after the initial reaction confirms this.

I can’t see the FED seriously hiking rates with unemployment 9-10% and with the trillions of debt that needs to be rolled over and with a housing market that is barely staying alive.

That being said, we have been up for almost 7 sessions in a row so I’m sure a pullback is due. But, we are in a cyclical bull market powered by trillions of liquidity that I believe is/will leak out into undervalued sectors specifically precious metals. I have no desire to fight this trend that will come to influence and ultimately define our lives in the coming years.

106

Day 22
Very interesting day. Overnight, Japan was down 250 and Chine more than 500. Futures were down hard. Then this morning it all started to turn around. After an initial sell off the market came back. It ended the day virtually unchanged.

Many ways to look at this. As I stated in another thread, the timing of the Fed action was very suspicious. Thursday night before an options expiration Friday? Very unusual. My gut tells me that the big guns sold in the aftermarket just before the announcement, bought back overseas during the sell off, and then gunned it back up today for a small fortune. Just a theory. In the end it matters little.

I spent the day looking at charts. This is the conclusion I have come to. I think the odds are very good that today marks the high of the foreseeable future. How’s that for a ballsy call.

Yes, there is room for a little more upward movement, but what I am saying is that we have moved up sufficiently to set up the next down leg. You may recall that I began this thread with such a call. That one was pretty much spot on. How do I feel about this call as compared to that one? Not quite as certain, but good enough to back it with my money. I will be watching the Monday action with the intent to continue to build a sizable short position.

107

Day 23
Not much to add. The market opened slightly up today, only to immediately sell off. It spent the remainder of the day moving mostly sideways. All three indexes ended the day with small loses.

I nibbled on a few more SPY puts today. My opinion remains the same. We are at or very near a fairly large sell off.

108

Day 24
I got the first leg of my expected sell off today. All three stock indexes down fairly hard, gold down, dollar up. Was a pretty good day for me.

Here is what I am expecting in the near term. I think it likely that we get some follow through sell off in the morning, and then a rally attempt after that. I will probably wait for the rally attempt before I add to my short position. However, when the time comes I plan to add big.

Bottom line, if you are long stocks or gold, you might consider closing out your positions (just a suggestion, do your homework). The dollar is less clear at the moment. We have had a fairly large move off the bottom, and I would not be surprised if we gave some back in the short term. Remember, I use the DXY as a tool to access gold and stocks, but I do not trade it. Therefore, it is more of a non issue for me.

Also, I would like some feedback. I am just doing this thread for fun and to force a heavier degree of accountability on myself. When you are posting your thoughts and actions for all to see, you tend to hold yourself to a higher standard. If anyone is getting anything out of this, I am happy to continue. If it is just taking up space, I will be happy to end it. Let me know what you guys think.

Till tomorrow…

109

I may have nothing to say but I am reading all your posts so keep on posting. I like to see your take on why the big three’s stocks are up/down.

110

[quote]JEATON wrote:
Day 24
I got the first leg of my expected sell off today. All three stock indexes down fairly hard, gold down, dollar up. Was a pretty good day for me.

Here is what I am expecting in the near term. I think it likely that we get some follow through sell off in the morning, and then a rally attempt after that. I will probably wait for the rally attempt before I add to my short position. However, when the time comes I plan to add big.

Bottom line, if you are long stocks or gold, you might consider closing out your positions (just a suggestion, do your homework). The dollar is less clear at the moment. We have had a fairly large move off the bottom, and I would not be surprised if we gave some back in the short term. Remember, I use the DXY as a tool to access gold and stocks, but I do not trade it. Therefore, it is more of a non issue for me.

Also, I would like some feedback. I am just doing this thread for fun and to force a heavier degree of accountability on myself. When you are posting your thoughts and actions for all to see, you tend to hold yourself to a higher standard. If anyone is getting anything out of this, I am happy to continue. If it is just taking up space, I will be happy to end it. Let me know what you guys think.

Till tomorrow…[/quote]

I follow your posts almost daily. I do have a question though. What is your target price on your puts that you are buying? I assume these are covered as well?

I tend to be a dividend investor so my time line and company choice is a bit longer than yours. although I have recently been selling calls to add to the cash I make on my stocks. In a year I will push my brokerage to let me sell puts. my intention in doing that is to get free cash on stocks I want to buy at a value that I consider cheap. Until I become more sophisticated with options I am not willing to assume any other risks.

either I sell the stock for a profit (even if it is the profit I could get), or I buy the stock at what I consider a discount due to a close of my sold put.

111

I do not have a particular target price. I watch the developing chart pattern and make my decision based on how the pattern/chart is playing out. I know when to get out when I see it. I do use trailing stops in the chance that I am out of pocket when the turn comes so that I get taken out.

I do not mess with dividends because I do not invest. I trade. I think very little is worth owning any more.

I believe the coming year will end up being one of nastiest stock market performances in history. I will try to hang in till at least the midpoint, the “three of three” sell off point and then take my money and run. Wait to long, and I think emergency legislation, insolvency, etc. could end up making you very right, with nothing to show for it.

112

[quote]haney1 wrote:

I follow your posts almost daily. I do have a question though. What is your target price on your puts that you are buying? I assume these are covered as well?

I tend to be a dividend investor so my time line and company choice is a bit longer than yours. although I have recently been selling calls to add to the cash I make on my stocks. In a year I will push my brokerage to let me sell puts. my intention in doing that is to get free cash on stocks I want to buy at a value that I consider cheap. Until I become more sophisticated with options I am not willing to assume any other risks.

either I sell the stock for a profit (even if it is the profit I could get), or I buy the stock at what I consider a discount due to a close of my sold put.

[/quote]
Haney,
I just reread your post. I have no problem with your methodology. I think it actually a very smart strategy in a “usual” market. The only thing that concerns me now is that we are not in a usual market. I think that the conditions are skewed so that any large scale movements are tilted towards a down direction. This is why I am an trader and not an investor right now.

But…
If I was that damn good at anything I would be charging for my expertise and not giving it away free on a forum. The moral is stick to what you know, but keep an open mind and continue to learn everything you can.

113

[quote]JEATON wrote:

[quote]haney1 wrote:

I follow your posts almost daily. I do have a question though. What is your target price on your puts that you are buying? I assume these are covered as well?

I tend to be a dividend investor so my time line and company choice is a bit longer than yours. although I have recently been selling calls to add to the cash I make on my stocks. In a year I will push my brokerage to let me sell puts. my intention in doing that is to get free cash on stocks I want to buy at a value that I consider cheap. Until I become more sophisticated with options I am not willing to assume any other risks.

either I sell the stock for a profit (even if it is the profit I could get), or I buy the stock at what I consider a discount due to a close of my sold put.

[/quote]
Haney,
I just reread your post. I have no problem with your methodology. I think it actually a very smart strategy in a “usual” market. The only thing that concerns me now is that we are not in a usual market. I think that the conditions are skewed so that any large scale movements are tilted towards a down direction. This is why I am an trader and not an investor right now.

But…
If I was that damn good at anything I would be charging for my expertise and not giving it away free on a forum. The moral is stick to what you know, but keep an open mind and continue to learn everything you can.
[/quote]

perhaps target price wasn’t the words I was looking for. What was the price you bought the 6 puts at. I am interested to see how bearish on the market you are. I agree this is an unusual market and it is very tough to play like you normally would.

I don’t agree that there isn’t anything worth owning though. I still think there are many solid companies especially in the dividend class that if bought at the right time diring this bear market can yield great returns in the long run.

I agree with your moral which is why at this time I am just sticking to my current strategy. I am trying to learn more as I go so I can add active trading to my overall scheme. that way I take risks with only a portion, while I still have a majority in a longterm secure plan.

114

Day 24
I am going short at 1103 S&P. Wish me luck.

115

$3.60 a contract. Got an order for 10 contracts in. Only filled on 2 so far today.

116

Actually got 4. So far, it is one of the better entry point picks I have made in a while.
We’ll see.

117

Weird things happening now. Getting some strange gap up spikes.
Big players going short maybe? With no more naked shorts, they now have to buy the stock before they short it.
Time will tell.

118

Did a little looking around. The SEC voted 3-2 this morning to limit short selling. New rule puts curbs in place when a stock has fallen 10%. Stays in place for two days.

This is the kind of nonsense I hate. Rather than re institute the up tick rule, that had been in place for 70 years before they took it away in 2007, they do this. I was wondering why the market spiked so much at 9:30 when ALL news was negative. Home sells at 70 year low in Jan. Greece and the other PIGS sovereign debt ratings continue to fall. Ben Bernake testimony is that any recovery is very fragile, and we bounce.

This is the kind of crap that makes me want to cash out and never touch the market. When the powers that be can change the rules on you out of the blue, what kind of disadvantage can that put you in? Efficient markets my ass.

119

I am somewhere between the two of you that have been discussing things lately. I both trade and invest with competely different accounts and styles.

It is my opinion that with so many news outlets vying for attention all finanacial news becomes either HORRIBLE or WONDERFUL and then it gets repeated ad nauseum. This causes wild swings which (mostly) aren’t based on facts.

because of this a rarely invest but always have a list of stocks that I like but not the current price. I’ll buy then when I think they are stupidly cheap.

On the other hand I trade based on what I think other people will do. Thus far it is fairly successful but the game is no where near over.

120

Let’s pose this as an SAT question. Which statement does not belong with the others?

(a) Consumer confidence drops
(b) New homes sales sink
(c) Lending falls at fastest pace since 1942
(d) Banks lead stocks higher

Really do not know if they can pump it through to the end of the day, but the charts look choppy. I added to my short position today, and will let it play out. My options are Junes, so I have time. Have a doctors appointment to go to so I will be out of pocket for the rest of the afternoon.

Looking forward to the Doc telling me that I don’t need that extra muscle at my age because it wears on the heart. Probably wants me to lose 20 to 30 pounds. Eat less protein and use “lite weights for more reps”.

Good times…