US stocks suffered another distribution day. The S&P chart looks OK, but could use a rest & consolidation. Ditto the Dow. The Nazz looks like it already is consolidating. Ditto the Rut. I don't expect a big drop like in February, so haven't sold a share. My reasons? There has been NO economic news to indicate the trajectory is changing from disinflation, moderate growth. In fact, we got more evidence that moderate growth IS occurring from the durable goods number. And the housing inventories are dropping. This move of the 10 year Treasury to 4.9% is still in the trading range. The Fed won't cut until core inflation drops to the comfort zone. Contrary thoughts were delusional. This pullback could just be beefer sellers who stupidly bought on that "idea" and are now bailing out; it just shows the level of their insights.
US stocks are massively undervalued. I'm looking for a consolidation or grind up as core inflation moves down & moderate growth evidence continues to grow. US stocks "could" melt up IF the June or later Fed meeting drops the primary risk as being inflation based on actual data in the comfort zone.
Long & strong, 150%+ on butter. [hehehe, that's "margin" cf. the old commercial about the bonehead broker confusing margin in a stock account as butter.]
PS: I see Nazz short interest was up 5% from April to May to a new record. Perma-bears were getting chewed up. NYSE short interest was a record, too [reported a few days ago]. Last fall we saw records, too, when some gurus were pronouncing the market as "extended". AAII sentiment numbers show too many bears, too.
PPS: Briefing.com has a mention of a BusinessWeek article [online edition] that YRCW might get a LBO. I agree & will start a postion today if it doesn't get a poparoo.
P^3S: I noticed that Brent crude is trading at a huge premium to West Texas Intermediate. That pretty much crushes the demagogues claim that US Big Oil is keeping prices up. Norway has the most influence on Brent production. Another myth shattered.
P^4S: There is a serious drought in Ukraine that can really hurt their wheat produciton. Unlike in Soviet year, Ukraine exports a lot of wheat in good crops years. With the late feeze in the US hurting wheat crops here, too, I've got a position in wheat (Chicago, December).
About Me
- Bunkerman
- I have a pioneer mentality. My wife & I live in the woods - neighbors aren't visible except slightly in winter. Our "bunker" - hehe, really a fine home & barn - has plenty of security. We have four dogs: Krypto (age 9, Kelpie), Ava (age 13, Rat Terrier), Sky (Kelpie, age 5) and Lucky Star (age 1, kelpie). I don't take crap from anyone anymore, having enough resources & gear stocked up to survive in any circumstance. I have three degrees from Harvard including a Ph. D. in a physical science, and an MS in Management from MIT. I worked as an investment banker for about 25 years, mainly in secured finance, at three major Wall Street firms and for the last 17 years with my partners at our own firm. I'm semi-retired now, managing some private corporations and business interests and doing my own trading & investing. This is not to boast, but to give you an idea I know a little about some subjects from experience. The photo is my 1943 M16 half-track which I am restoring. These armored vehicles were ubiquitous in the US Army in World War II and Korea. It's driveable.
12 comments:
I agree with most of your analysis Bunkerman. I guess where we differ may be in the scope of the rest....a 5-7% correction is conceivable ...which comes to around 1460 S and P ( 50dma = 1468).
Those short interest numbers really surprise me. Shouldn't that number be going down as the bears get 'chewed up'? As they lose more money shouldn't they be covering?
Uh, Bud, they cover losses at higher prices & then re-short at still higher prices. They keep banging their heads on the wall. Or they keep increasing position siz, adding to shorts to get it back or make new converts to the dark side.
It's the converse of the public buying bargains on a big down move. They get stopped out and then re-enter at lower prices, only to get stopped out again. Or they keep adding, like ... Cramer, until they finally capitulate at the bottom.
Hmmm. India was up 0.85% overnight. And the beefers crushed the India stocks here yesterday. Disconnect?
Hmmm. I think the correct word was "obverse", not converse, re my comment on beefer bears shorting uptrends & covering higher, cf. public buying downtrends & getting stopped lower.
"sell short then cover buy higher"
compared to
"buy long then sell long lower"
seems more like an obverse, not a converse since it includes a negation. Maybe not pure logic, but close, I think.
bunkerman...keeping that shooters edge, good man...we may well need to defend the liberal rebels in the near future.
Thanks for the positon and posture update. Are you still using technical analysis to manage your book? You mentioned India and wondered if you owned INFY. I noticed it broke a h&s pattern yesterday and is making a deadcat bounce into moving avg resistance. Sure looks like a good darkside play setting up.
So you are doing no hedging or out right short side trading around your book?
Not now, Frosty. It's tough to hedge those India stocks & I have really large gains that I want to hold long term. Those India BPOs are getting hurt by the rupee strangth vs. the dollar.
I've thought about hedging the energies, but when I did the math, I'd have to short a huge amount of XLE. Since I have huge gains there, too, & want long-term gains tax treatment, I'm just holding as long as I think they're going up long term.
I do some technical work & chart work on new buys, but I'm so long, I don't want to put more $ at risk of a pullback.
If I think we're going to get a serious pullback for some real reason, I short futures since I have lots of T-bills as margin in my commodity account. That lets me keep the stocks for long-term. The difference in tax rate is about 45% short-term vs. 20% long-term, including state taxes & AMT (this year I'm going to be in AMT). The futures hedging gets better tax treatment, too.
So in late February when I thoght risk was high, I sold all my trades (they were going to be ST anyway) and shorted futures. Then in early March took the trading capital & added to my energy & miners and selected Tech longs.)
I'm not saying I won't hedge or buy puts as a speculation trade, but haven't found a place lately that made sense.
I'm really trying to cut back the hours I put in infront of the monitors. I need less work, less stress.
Rofl frosty...position and posture? I wonder how your posture is after being drunk for years....lmaooooooo
Frosty,
Another thing is that since I cut back on the quickie trading, I've made a lot more $$$ on my own ideas & thinking than I did before, since I put a lot more money behind them & have been mostly correct. I think the quickie trading was distracting for me. But it was lots of fun, though.
I'm really trying to make this semi-retirement work. Short-term chart trading isn't compatible with part-time work, at least for me.
So I just think a lot about the big picture & back my thinking as much as reasonable. I used to make most of my money on the trends, anyway, for month+ trades.
Good Luck.
Mrs. B arrived home with a stack of Double Quarter Pounders with Cheese & other goodies from McDonald's. So I'm shutting down for the day. Have a good weekend.
Peace.
Well said Bunkerman. Short term trading requires alot more 'manual labor'. I can't wait to be able to semi-retire. But never completely retire....I think that would be boring.
Good news! Some 'rich and powerful' friends of mine have invited me to play golf with them at a club whose membership I can't afford. Have a great weekend. Later.
p.s. Mcdonalds? Yuck!!!
I'm still trying to find interesting things to do in my spare time now, being "semi-retired". It takes time to change habits. I get pretty bored some days & find myself looking for trades. Maybe with summer I can start having some fun. In two weeks, I think my homeowner's purgatory will end and I'll be more free to try new things to do.
Have fun with your rich & powerful friends, Bud. ;-)
That Double Quarter Pounder with Cheese was scrumptious. MMMM tasty. :-)
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