Remember there is a columnist in a chinese newspaper in Toronto who (paper trade) and shorted Baidu at $180, held and saw BIDU hit $429, then only to cover the short at around $330? This same guy shorted BIDU again in his newspaper paper trading account at around $300 about 2 weeks ago, and now he covered at $360. He said there was an email kicked his ass by saying that he pretends he is a professional, but no real knowledge on investing/trading. He didn't post the whole email there, but he posted 2 other emails that paid high respect to his analysis.
I don't know how many emails this guy received, and it doesn't matter that the comments are good or bad. But it's funny that I found being a columnist is actually very easy. One of the email he posted said his analysis is good and meaningful, and losing money can happen to anyone anytime, so losing money is not an issue, who can say this columnist cannot make back all the money he lost in the future?
I assume this email is real, but sounds like it's somebody who take "money" as evil or garbage, so, it doesn't matter if we lose them. Yes, who cannot say he cannot make it back, but as well, who can guarantee he can definitely make it back??
He covered his position at $360, a loss of 20% in about 2 weeks. If you went back to the column when he said he will short BIDU at around $300, you'll see he didn't really give much strong reason or analysis to back his decision. He just said BIDU went up fiercely in 2 weeks from about $200 to $300, the sharp increase in a short time period can also serve as a reason to drop sharply very quickly. Well, what a reason. I totally don't know this can be consider as an "analysis".
This columnist from time to time will tell people that he already knew subprime could create a very big problem, however, didn't really see him do anything to take advantage of it. No wonder he can only write column in a newspaper but not a fund manager. This guy also will tease himself in the column, of course he is not really teasing himself, he just wants to separate himself from the general public to show that he is different than other people. This guy is too funny, not much more reliable than Jim Cramer.
I made mistake too. In the meantime I consider I didn't sell the SDD as a mistake. I should have sold it when it first rebounded or at least second rebound to $80. Now i'm sitting at about 13% loss, really need to think about what to do.
DGP as well, I should have sold like I talked about SDD above, then I should have limited my loss below 10%. Oil was going up so much so fast but gold was not moving and I should know that gold is relatively weak now.
So many bad news about oil, but I still think oil cannot just keep going up, it has to take a rest, and i think $120 is a good chance that it will retreat before it can go up further. But given my entry point of HOD.TO was not very good, probably I won't make much money on it.
Finally got some LOR, but since the market is still weak (stocks go up because bad news is not as bad as they originally thought, but not much good news), i better take a deeper look before i want to commit more money to ETFs like that.
Sunday, April 27, 2008
Thursday, April 24, 2008
Sold Nintendo and SKF, bought ultra short oil
finally sold my NTDOY.PK at $70.95, i'm not sure i ever received any dividend, or will be receiving, at least i sold at a price that is closed to breakeven.
At the same time I sold SKF at $109.08, not the best price but very good still, as I made a 6% since I bought last Friday, can't complain.
On the other hand I think the oil went up too fast, I am expecting a short term pull back to close to $100 before it can go up again. But I think i didn't get into it at a good price at $10.99, now it's at $10.77 so i'm down by 2% in the blink of my eye..... I bought in at before 10:30am, somehow I think i should not buy from there. If i at least wait until 11am i definitely should get a better price.
earnings report period cannot serve as the main gauge of the direction of market because there could be too much noise. as i always say i want to see the follow through trend and volume, which should only happen after the earnings season. If there are no news and people still keep buying and price at least does not drop, there could be something. In the meantime let's watch and learn.
At the same time I sold SKF at $109.08, not the best price but very good still, as I made a 6% since I bought last Friday, can't complain.
On the other hand I think the oil went up too fast, I am expecting a short term pull back to close to $100 before it can go up again. But I think i didn't get into it at a good price at $10.99, now it's at $10.77 so i'm down by 2% in the blink of my eye..... I bought in at before 10:30am, somehow I think i should not buy from there. If i at least wait until 11am i definitely should get a better price.
earnings report period cannot serve as the main gauge of the direction of market because there could be too much noise. as i always say i want to see the follow through trend and volume, which should only happen after the earnings season. If there are no news and people still keep buying and price at least does not drop, there could be something. In the meantime let's watch and learn.
Friday, April 18, 2008
why did market go up?
i forgot to say i bought HFU.TO at $13.75 on Tuesday, probably i was too busy on other stuffs and too tired.....
on the other hand i sold HFU.TO at $15.04 and URE at $36.37 today. i missed the best chance to sell URE in the morning (because i was in stupid and boring meeting in office), then i was a bit hesitate in the afternoon while URE was still trading around $37.50. i should have known that after a very bullish week we should trim back position on such a Friday. Well you know more every time you make a decision, right or wrong. At least i'm glad that i still made money on it, though both positions were a bit shy of 10% (in less than a week).
I was quite disappointed about SDD and DGP though. I should have sold SDD earlier when it went back to a bit below $80. I should sold it like I sold SRS and SKF to cut my loss. You wonder how did i come up with the decision to cut those ultra short position? that's because i saw the 20-day EMA of these ETFs (or on the other hand the 20-day EMA of the ultra long ETFs) made a lower high (a higher low). As well, the 20-day EMA has been diverged from the 200-day EMA by quite a lot. As i said, even if things will go down in a longer term, nothing will just go down in a straight line, specially a ETF, not individual stock.
DGP is another disappointment due to 2 problems. The first one, oil is making new high but gold is not moving. Sooner or later after I trim this position i will go for oil for US dollar-play instead of gold. i will still go for gold by a bit but won't be large position. The second problem, I don't see if this ETF is paying me interest/dividends, i wonder if this is priced in the ETF price or what. anyway, can't figure that out.
people are wondering how come market is going up with such big write-offs from financials? i don't think i have a very clear reason, I just tried to react to what I saw, and so far other than UYG I handled that pretty okay. Sometimes you need to get what market gives you before you ask too many questions, otherwise you will miss the chance.
Now that by end of the day I got back into SKF at $102.64, a small position. After a very good week of rally I guess the market needs to relax a bit. Anyway I still have my UYG so I'm actually hedged at this point, but UYG is an ultra long that I can always hold longer if you believe market eventually will go back up.
on the other hand i sold HFU.TO at $15.04 and URE at $36.37 today. i missed the best chance to sell URE in the morning (because i was in stupid and boring meeting in office), then i was a bit hesitate in the afternoon while URE was still trading around $37.50. i should have known that after a very bullish week we should trim back position on such a Friday. Well you know more every time you make a decision, right or wrong. At least i'm glad that i still made money on it, though both positions were a bit shy of 10% (in less than a week).
I was quite disappointed about SDD and DGP though. I should have sold SDD earlier when it went back to a bit below $80. I should sold it like I sold SRS and SKF to cut my loss. You wonder how did i come up with the decision to cut those ultra short position? that's because i saw the 20-day EMA of these ETFs (or on the other hand the 20-day EMA of the ultra long ETFs) made a lower high (a higher low). As well, the 20-day EMA has been diverged from the 200-day EMA by quite a lot. As i said, even if things will go down in a longer term, nothing will just go down in a straight line, specially a ETF, not individual stock.
DGP is another disappointment due to 2 problems. The first one, oil is making new high but gold is not moving. Sooner or later after I trim this position i will go for oil for US dollar-play instead of gold. i will still go for gold by a bit but won't be large position. The second problem, I don't see if this ETF is paying me interest/dividends, i wonder if this is priced in the ETF price or what. anyway, can't figure that out.
people are wondering how come market is going up with such big write-offs from financials? i don't think i have a very clear reason, I just tried to react to what I saw, and so far other than UYG I handled that pretty okay. Sometimes you need to get what market gives you before you ask too many questions, otherwise you will miss the chance.
Now that by end of the day I got back into SKF at $102.64, a small position. After a very good week of rally I guess the market needs to relax a bit. Anyway I still have my UYG so I'm actually hedged at this point, but UYG is an ultra long that I can always hold longer if you believe market eventually will go back up.
Tuesday, April 15, 2008
URE
so busy at work that don't even have time to write anything, but gotta update the status.
I sold my SKF at $117.06, loss on commission after 3 weeks. as you see sometimes even if you are right in the direction but got in at the wrong time, you will see your profit sinks.
On the other hand I just buy into URE this afternoon at $32.89, and again thinking about increasing a bit position in UYG and maybe some other dividend paying ETFs. In the past I had LOR, which is a dividend paying ETFs, mainly high dividend paying firm and currencies. It is managed by Lazard in US, and so far I didn't see they cut their dividends, so my thought is maybe they can get through this bear market with limited chance of cutting their dividends at all. In the meantime they are paying 8.4% as dividend (that breaks into capital gains, interest and dividends), given that boarder stock markets may stabilize at the last lowest range 8.4% is a pretty good bet. I'll think about it.
Nintendo drops again, 4.6%, there is not much news i can find. This is the bad things about individual stocks. Sometimes you just cannot get enough news to do any meaningful analysis. I'm still looking for a close to break even price to cut this pos.
I sold my SKF at $117.06, loss on commission after 3 weeks. as you see sometimes even if you are right in the direction but got in at the wrong time, you will see your profit sinks.
On the other hand I just buy into URE this afternoon at $32.89, and again thinking about increasing a bit position in UYG and maybe some other dividend paying ETFs. In the past I had LOR, which is a dividend paying ETFs, mainly high dividend paying firm and currencies. It is managed by Lazard in US, and so far I didn't see they cut their dividends, so my thought is maybe they can get through this bear market with limited chance of cutting their dividends at all. In the meantime they are paying 8.4% as dividend (that breaks into capital gains, interest and dividends), given that boarder stock markets may stabilize at the last lowest range 8.4% is a pretty good bet. I'll think about it.
Nintendo drops again, 4.6%, there is not much news i can find. This is the bad things about individual stocks. Sometimes you just cannot get enough news to do any meaningful analysis. I'm still looking for a close to break even price to cut this pos.
Thursday, April 3, 2008
SRS
I was very tired and sleepy over these few days so I haven't updated in here that I sold my SRS on Monday at $99.24 already. It's a loss of about 6%. I did try to quickly revise to buy URE at $33.50, however I cancelled my order later on Monday, and now you know it's $37.39....., how unlucky.
While on today I initiated a small position on UYG at $34. And yes, I'm still keeping my SKF. That means I ultra long financials and at the same time ultra short financials.
I initiate ultra long position in financials (and almost in real estate) because I think in the short term, they are going up. I know in a longer run it may not be the case but I saw their 20-day EMA made a higher low recently. Even better for URE its 20-day EMA crossed over the 50-day EMA from below.
They were still all below their 200-day EMA. I don't believe the stocks can just blast through all moving averages and it's a bull market again. But I'm not surprised in the short term it's a little bull market.
I may try to find chance to sell my SKF first, but I still want to keep my SDD.
My Nintendo is coming back, so for now I'll keep it for a while as I expect it will see $70 or above in this quarter.
Finally DGP, gold and other commodities are facing pressure in the short term, but I still want to keep DGP for now, but not thinking to add to the position until I see a clear trend.
While on today I initiated a small position on UYG at $34. And yes, I'm still keeping my SKF. That means I ultra long financials and at the same time ultra short financials.
I initiate ultra long position in financials (and almost in real estate) because I think in the short term, they are going up. I know in a longer run it may not be the case but I saw their 20-day EMA made a higher low recently. Even better for URE its 20-day EMA crossed over the 50-day EMA from below.
They were still all below their 200-day EMA. I don't believe the stocks can just blast through all moving averages and it's a bull market again. But I'm not surprised in the short term it's a little bull market.
I may try to find chance to sell my SKF first, but I still want to keep my SDD.
My Nintendo is coming back, so for now I'll keep it for a while as I expect it will see $70 or above in this quarter.
Finally DGP, gold and other commodities are facing pressure in the short term, but I still want to keep DGP for now, but not thinking to add to the position until I see a clear trend.
Friday, March 28, 2008
Sold my HFU.TO at $14.39
I guess I was pretty lucky. I don't want to be a Jim Cramer type of stupid head, so I'll not just attribute all the gains to my skill. I couldn't believe I could get out at the daily high of HFU.TO. Anyway it's a gain of about 16% over 10 days, I'm pretty satisfied.
Also glad that my SKF is now at the money, just a bit disappointed that my SDD is still under the water. SRS I kind of know it's getting weak, guess I'll try to sell it next week in case market rallies back up.
Citigroup upgraded LEH, well I can't say they are wrong, but just that these days who will believe these analysts. Be careful because LEH and MER continued yesterday's downward move, specially MER had an accelerating volume with the downward price movement. I guess it's still too early to say US financials are bottomed.
Also glad that my SKF is now at the money, just a bit disappointed that my SDD is still under the water. SRS I kind of know it's getting weak, guess I'll try to sell it next week in case market rallies back up.
Citigroup upgraded LEH, well I can't say they are wrong, but just that these days who will believe these analysts. Be careful because LEH and MER continued yesterday's downward move, specially MER had an accelerating volume with the downward price movement. I guess it's still too early to say US financials are bottomed.
Thursday, March 27, 2008
LEH and MER the next?
I am not sure about if they follow BSC. I'm just a chart reader, as I don't have insider information. Even if I read many news I don't think I can come up with an exact and correct answer.
So what my does chart say? Well it's very simple. Just look at the daily candlestick of LEH and MER. If you ignore the strong come back last Monday and Tuesday (assume it did not happen), LEH and MER are actually below the closing prices of March 14, Friday.
There are many other stocks and ETFs are at a similar situation. Although not lower than their March 14 closing prices, but pretty closed. Given that there are rumors that LEH and MER may the next shoes to fall, maybe the charts are saying something. We'll see.
So what my does chart say? Well it's very simple. Just look at the daily candlestick of LEH and MER. If you ignore the strong come back last Monday and Tuesday (assume it did not happen), LEH and MER are actually below the closing prices of March 14, Friday.
There are many other stocks and ETFs are at a similar situation. Although not lower than their March 14 closing prices, but pretty closed. Given that there are rumors that LEH and MER may the next shoes to fall, maybe the charts are saying something. We'll see.
Sunday, March 23, 2008
Gold price down, market up, then what?
My DGP dived. It went to as high as above $28, then went all the way down to $22.44. Many people believe the rate cut is closed to an end and therefore gold price stopped to go up. Well maybe they are right but I guess the story is still not close to the end. But in the meantime I acknowledge that people may be shifting out money from commodities, at least for a while (look at SLV and DBA as well). Commodity ETFs dropped pretty fast over the last few trading days, I think at least there should be a little rebound before it heads a bit more lower. I'll think about closing my DGP position, even for a little loss.
On the other hand, my SKF, SRS and SDD are now all in the red. I just read the charts myself, somehow I found that SRS is even weaker than the others (based on relative strength). I guess I'll try to find chance to close my SRS position, and maybe as a hedge to start a URE position, but keep my SKF and SDD position. As well, I may add more SDD if I see fit. I still like EEV, I'll see how it approaches the 50-day EMA (if it will) and may start a small position there.
Finally agricultural commodity ETF. The ultra long and short agricultural commodity ETF in Canada finally arrived, but with very little volume. DBA went down with other commodity ETFs over the last few days and actually made a double top, definitely a short term top. I'll see how it retreats back to the 200-day EMA and may start a small position in HAU.TO.
Watch the clips on Youtube about Jim Cramer incident on Bear Stearns. I think he is done, he lost all his credibility. I think people should learn something:
1. do not just believe what you see and hear from any media about investing
2. it is okay to be wrong, but not okay to lie
3. even former professional can be deadly wrong in this area because this area is dynamic
4. current professional can be deadly wrong too
5. that's why I say individual stocks are dangerous and may leave you no time to cash out and that's why I want to move my strategy mainly on ETFs but not individual stock
6. you should take care of your own money, not Jim Cramer
Bye bye Jim, I bought two of your books and I think they are well written. People may accept your wrong call but not your lies. I guess you are at least wealthy enough to live on your money (hopefully not all US dollar) till you die. I guess nobody wants to hear your comment on any stock anymore because you are proved not reliable. Just accept you don't know much about all stocks and you made wrong calls.
I understand I don't know much about individual stocks, that's why I'm making changes.
On the other hand, my SKF, SRS and SDD are now all in the red. I just read the charts myself, somehow I found that SRS is even weaker than the others (based on relative strength). I guess I'll try to find chance to close my SRS position, and maybe as a hedge to start a URE position, but keep my SKF and SDD position. As well, I may add more SDD if I see fit. I still like EEV, I'll see how it approaches the 50-day EMA (if it will) and may start a small position there.
Finally agricultural commodity ETF. The ultra long and short agricultural commodity ETF in Canada finally arrived, but with very little volume. DBA went down with other commodity ETFs over the last few days and actually made a double top, definitely a short term top. I'll see how it retreats back to the 200-day EMA and may start a small position in HAU.TO.
Watch the clips on Youtube about Jim Cramer incident on Bear Stearns. I think he is done, he lost all his credibility. I think people should learn something:
1. do not just believe what you see and hear from any media about investing
2. it is okay to be wrong, but not okay to lie
3. even former professional can be deadly wrong in this area because this area is dynamic
4. current professional can be deadly wrong too
5. that's why I say individual stocks are dangerous and may leave you no time to cash out and that's why I want to move my strategy mainly on ETFs but not individual stock
6. you should take care of your own money, not Jim Cramer
Bye bye Jim, I bought two of your books and I think they are well written. People may accept your wrong call but not your lies. I guess you are at least wealthy enough to live on your money (hopefully not all US dollar) till you die. I guess nobody wants to hear your comment on any stock anymore because you are proved not reliable. Just accept you don't know much about all stocks and you made wrong calls.
I understand I don't know much about individual stocks, that's why I'm making changes.
Tuesday, March 18, 2008
Big increase today
But as I always say we need to see follow through, namely, steady normal volume, white candlestick and not making lower low.
I should have got into SSO in Monday morning or so, well too late to get in. In fact, I got into SKF at $117, SRS at $105.25, SDD at $81.50 and HFU.TO at $12.37. I guess I made two mistakes here (although I still think in general, what I was doing is rational, though may not be profitable).
The first mistake is, my 3 short positions are 3 times bigger than the long one. I think there maybe still a bit upside before the market may go down again, so I should at least initiate the long position almost as big as my short one. The little relief is, I already have some money in two mutual funds and Nintendo, so not as bad as it could be. In fact, Nintendo went up by 3.7% today, I am considering liquidating it because I said I'll try to focus on ETFs in the future but not individual stock, at least not individual stock before I confirm bull market myself.
The second mistake is I used market order for my long position and limit order on my short position. Although eventually it turned out okay because the market up big anyway. But I think I should enter all orders in one way instead of different. Otherwise I may enter into one position but not all position which made my portfolio skews to certain way that I don't want.
Anyway, the 3 short ETFs I entered almost at the lowest price as of today. As I said there maybe still a bit more upside, so in the meantime I will not increase my short position. Even if I want to do so I may want to go SDD or EEV. FXP, SKF or SRS is only a second choice.
All 4 major US indices ETFs (SPY, DIA, IWM, QQQQ) were more or less about the same place as beginning of March. Market dropped and then there was the $200 billion liquidity program. Market dropped again due to Bear Stearns and Lehman Brothers and there was the rate cut. Will all these plans solve the problem? I don't know, I guess the follow through will tell me more.
On the other hand, DGP dropped all the way back to slightly below my entry price, quite disappointed. In the meantime I'll still adhere to my original idea that to add some more if gold back down to $950. I guess in the meantime gold will not trade exactly as the opposite direction of US dollar. So gotta to be very careful to consider adding or selling it.
I should have got into SSO in Monday morning or so, well too late to get in. In fact, I got into SKF at $117, SRS at $105.25, SDD at $81.50 and HFU.TO at $12.37. I guess I made two mistakes here (although I still think in general, what I was doing is rational, though may not be profitable).
The first mistake is, my 3 short positions are 3 times bigger than the long one. I think there maybe still a bit upside before the market may go down again, so I should at least initiate the long position almost as big as my short one. The little relief is, I already have some money in two mutual funds and Nintendo, so not as bad as it could be. In fact, Nintendo went up by 3.7% today, I am considering liquidating it because I said I'll try to focus on ETFs in the future but not individual stock, at least not individual stock before I confirm bull market myself.
The second mistake is I used market order for my long position and limit order on my short position. Although eventually it turned out okay because the market up big anyway. But I think I should enter all orders in one way instead of different. Otherwise I may enter into one position but not all position which made my portfolio skews to certain way that I don't want.
Anyway, the 3 short ETFs I entered almost at the lowest price as of today. As I said there maybe still a bit more upside, so in the meantime I will not increase my short position. Even if I want to do so I may want to go SDD or EEV. FXP, SKF or SRS is only a second choice.
All 4 major US indices ETFs (SPY, DIA, IWM, QQQQ) were more or less about the same place as beginning of March. Market dropped and then there was the $200 billion liquidity program. Market dropped again due to Bear Stearns and Lehman Brothers and there was the rate cut. Will all these plans solve the problem? I don't know, I guess the follow through will tell me more.
On the other hand, DGP dropped all the way back to slightly below my entry price, quite disappointed. In the meantime I'll still adhere to my original idea that to add some more if gold back down to $950. I guess in the meantime gold will not trade exactly as the opposite direction of US dollar. So gotta to be very careful to consider adding or selling it.
Monday, March 17, 2008
BSC worth $2? Your guess
I don't know if it worths $2 or more or less, that's not the point here. The point is, betting on one single stock, either up or down is dangerous for individual investor. Since we are not insiders, have no non-public information, no way you can play this game smarter than the big boys.
BSC may shoot back up to the teens, LEH may strike back by a lot tomorrow as well (in fact, it did strike back by a lot from $20.50 to close above $30 already, quite a come back). I don't know the answer. I only know I'm not smarter than other people, particularly not the big boys, so I'll try to avoid BSC and LEH, and many other financials.
I'm not surprised that many ultra short ETFs today exhibited red candlesticks, that is, opened high and closed lower. Some indices/ETFs are now again sitting at January's low and some are sitting at below January's low. Unless there will be more bad news coming into the pipeline, otherwise, in a short term, I think the market will take a rest here. I don't think it will shoot up very high, nor I think it will tank by a lot.
Still holding my DGP. I guess people started to think gold went up too fast over the last few months. Oil started to come down and it comes down fast. It's expected as it went up too fast from $100 to $111. Gold probably dragged down by the oil trend too. So in the meantime gold will hove around $950 and $1,000 I think.
Okay back to financials. I guess in the meantime it's too much on the attention that it will totally collapse, I'll try to avoid ultra long or short financials here. Ultra short real estate I may think about that but will only put very little money.
What about China or emerging market? Well I may want to shift to ultra short emerging market than China, because shorting China at this time maybe a bit too much.
On the other hand, I start to think about ultra short mid cap and small cap, MZZ and SDD. Since some indices may be forming a W-bottom (at least for a short term), I may put a little money in the ultra long S&P 500, SSO. I still think this is just a bear rally so don't want to be aggressive.
BSC may shoot back up to the teens, LEH may strike back by a lot tomorrow as well (in fact, it did strike back by a lot from $20.50 to close above $30 already, quite a come back). I don't know the answer. I only know I'm not smarter than other people, particularly not the big boys, so I'll try to avoid BSC and LEH, and many other financials.
I'm not surprised that many ultra short ETFs today exhibited red candlesticks, that is, opened high and closed lower. Some indices/ETFs are now again sitting at January's low and some are sitting at below January's low. Unless there will be more bad news coming into the pipeline, otherwise, in a short term, I think the market will take a rest here. I don't think it will shoot up very high, nor I think it will tank by a lot.
Still holding my DGP. I guess people started to think gold went up too fast over the last few months. Oil started to come down and it comes down fast. It's expected as it went up too fast from $100 to $111. Gold probably dragged down by the oil trend too. So in the meantime gold will hove around $950 and $1,000 I think.
Okay back to financials. I guess in the meantime it's too much on the attention that it will totally collapse, I'll try to avoid ultra long or short financials here. Ultra short real estate I may think about that but will only put very little money.
What about China or emerging market? Well I may want to shift to ultra short emerging market than China, because shorting China at this time maybe a bit too much.
On the other hand, I start to think about ultra short mid cap and small cap, MZZ and SDD. Since some indices may be forming a W-bottom (at least for a short term), I may put a little money in the ultra long S&P 500, SSO. I still think this is just a bear rally so don't want to be aggressive.
Saturday, March 15, 2008
Market confidence, what confidence?
So BSC collapsed. Well it's not a surprise that the Fed stepped up and provide helping hand again. There is a very good lesson to learn technical analysis here.
If you look back on Tuesday, market went up big, but BSC did not go up by much. In fact, its candlestick was red, meaning it went up to start with, only to go down to end. Look closer, it has been once dipped even below its Monday's low. Many stocks showed a white candlestick (although many eventually went back down to lower than Monday's low) with at least average 3-month volume. BSC showed a red candlestick with higher than normal volume. Then you saw the follow collapse on Wed, Thurs and Friday.
When market up big and a stock doesn't move, something must be wrong with that stock. You don't even need to know why, just avoid it or run if you are holding it.
Some news and columns are now saying that after these panic selling, market must be very close to a bottom. Well those are not panic selling at the first place, and I don't know if the selling is over. I guess the selling will only be over when all the di-leveraging completes.
Another piece of news I find very funny (and a bit stupid) is that, it says certain companies (in this case particularly banks) can go down to zero due to market loses confidence. Well, what's confidence??? I don't get it. Or you tell me as a bank, somebody borrowed money from me and now telling me he does not have money to repay me and I still have to trust that guy that he can pay me back in full? Be rational, if you are the bankers, what would you do? Trust that guy and extend the loan? No way, unless he puts up some collateral, which of course that guy has none.
If the bank sticks to its policy of lending, it definitely will call you for the money back, and stops lending money to suspicious customers. That is logic and rational. The bottom line is, you don't have collateral to put up, no proof of income, namely no credibility, why should I trust you?
Therefore, it's not about confidence, it's about no hard asset being put up as collateral. Otherwise, what about you go to casino to gamble with no money, but tell the casino that you will pay them back when you win, as you believe at some point, you will win. See what the casino will tell you.
If you look back on Tuesday, market went up big, but BSC did not go up by much. In fact, its candlestick was red, meaning it went up to start with, only to go down to end. Look closer, it has been once dipped even below its Monday's low. Many stocks showed a white candlestick (although many eventually went back down to lower than Monday's low) with at least average 3-month volume. BSC showed a red candlestick with higher than normal volume. Then you saw the follow collapse on Wed, Thurs and Friday.
When market up big and a stock doesn't move, something must be wrong with that stock. You don't even need to know why, just avoid it or run if you are holding it.
Some news and columns are now saying that after these panic selling, market must be very close to a bottom. Well those are not panic selling at the first place, and I don't know if the selling is over. I guess the selling will only be over when all the di-leveraging completes.
Another piece of news I find very funny (and a bit stupid) is that, it says certain companies (in this case particularly banks) can go down to zero due to market loses confidence. Well, what's confidence??? I don't get it. Or you tell me as a bank, somebody borrowed money from me and now telling me he does not have money to repay me and I still have to trust that guy that he can pay me back in full? Be rational, if you are the bankers, what would you do? Trust that guy and extend the loan? No way, unless he puts up some collateral, which of course that guy has none.
If the bank sticks to its policy of lending, it definitely will call you for the money back, and stops lending money to suspicious customers. That is logic and rational. The bottom line is, you don't have collateral to put up, no proof of income, namely no credibility, why should I trust you?
Therefore, it's not about confidence, it's about no hard asset being put up as collateral. Otherwise, what about you go to casino to gamble with no money, but tell the casino that you will pay them back when you win, as you believe at some point, you will win. See what the casino will tell you.
Tuesday, March 11, 2008
Big rally, so familiar
A big rally today. The news said it's one of the biggest one day point gains of DJIA since July 2002. Looks like people are happy about it. I think the rally is more on the news regarding the group of several central banks will lend banks about $200 billion to provide them some credit relief. US government (the Fed actually) initiate a new plan which will lend treasuries securities to the investment banks, take mortgage-backed securities as collateral, and let the banks to make money on the borrowed capital, and only to repay them in 28 days, instead of next day.
Will this method better than reducing the fed fund rate and discount rate I'm not sure, as the economic consequences can be very complicated and unpredictable. I'll first go back to my charts and check the reaction today.
Yes all indices went up by a lot today. The rally is pretty broad base too. However, I checked many US sectors ETFs and country ETFs, as well as the major 4 (DIA, QQQQ, SPY and IWM), none of them has blast through any meaningful resistance. I then checked some large cap names like all the banks, brokerage firms, some tech stocks and some other big names. Only a few of them has tested the 20-day EMA or the lowest EMA out of the 4 I usually use. As well, on some of the ETFs and large names, I don't see significant abnormal volume.
Given that kind of graphical result, I guess only if there is follow-through rallies and the rallies are strong enough to push those ETFs and stocks to test more major resistance (that is, the highest EMA and as well, at least bring the 20-day EMA to test the next closest EMA), otherwise, I cannot conclude and convince myself that market changes direction.
Funny gold and oil didn't drop due to this "good news". Oil went up by about 10% as I expected earlier since it broke $100. I would expect gold is the same kind of situation. If gold breaks $1,000, it will go up by about 10% very quickly. It may then go back down to below $1,000 before it will go up again. I think oil is doing this now. So in short term I think $110 is the top, as most of the short position around or below $100 should have been covered.
Still have my little position in DGP, the ultra long gold. I guess sooner I'll buy a bit more if gold dips to closer to $950, it that happens.
Will this method better than reducing the fed fund rate and discount rate I'm not sure, as the economic consequences can be very complicated and unpredictable. I'll first go back to my charts and check the reaction today.
Yes all indices went up by a lot today. The rally is pretty broad base too. However, I checked many US sectors ETFs and country ETFs, as well as the major 4 (DIA, QQQQ, SPY and IWM), none of them has blast through any meaningful resistance. I then checked some large cap names like all the banks, brokerage firms, some tech stocks and some other big names. Only a few of them has tested the 20-day EMA or the lowest EMA out of the 4 I usually use. As well, on some of the ETFs and large names, I don't see significant abnormal volume.
Given that kind of graphical result, I guess only if there is follow-through rallies and the rallies are strong enough to push those ETFs and stocks to test more major resistance (that is, the highest EMA and as well, at least bring the 20-day EMA to test the next closest EMA), otherwise, I cannot conclude and convince myself that market changes direction.
Funny gold and oil didn't drop due to this "good news". Oil went up by about 10% as I expected earlier since it broke $100. I would expect gold is the same kind of situation. If gold breaks $1,000, it will go up by about 10% very quickly. It may then go back down to below $1,000 before it will go up again. I think oil is doing this now. So in short term I think $110 is the top, as most of the short position around or below $100 should have been covered.
Still have my little position in DGP, the ultra long gold. I guess sooner I'll buy a bit more if gold dips to closer to $950, it that happens.
Thursday, March 6, 2008
Ultra Long Gold and take advantage of bottoming
Just got into DGP by a small amount of money to test the water. That is ultra long gold. It is a new ETF issues by Deutsche Bank. Got in about $26.
Today mark another big down day. And where does it come from? REITs. You look at them, they all dropped 20% or more today. There are two pieces of news about mortgage-back securities management firm (Carlyle Capital and Thornburg) could not meet margin requirement.
This is again one of the domino effect. I still hear that the global economy is okay, just slower growth, not recession. Well I don't have more data to prove it right or wrong, probably it's not my biggest concern anyway.
Again I want to say, focus on how the news affect your investment, not the news itself. Anyone has the right to interpret the news the way he likes, but the market is the final place that reflect how he thinks. How many times since last November I heard people said the economy is okay but only to see the market dropped again and again?
I understand there must be a bottom. I do not know where is it, I can only express my opinion on how to take advantage of bottoming.
In a commercial world there are two sides, price-setters and price-takers. If you have the bigger bargaining power you are a price-setter. To make the money at a higher chance and highest profit, there comes in the distressed debt funds.
The story is very simple. A company is now in a distressed situation, take something as an example, CFC, as this is a good example these days. In this case, DON'T BUY THEIR SHARES BECAUSE IT DROPPED BY A LOT. It may go back up in value but that's not how you should play, particularly when you are very wealthy, like an institutional fund. In fact, you should purchase most of its debts, approximately 2/3, decline their restructure plan, force the company to liquidate itself, wipe off the stockholders. Now you become the shareholders of this new company and you have better control to move this company back up.
Under this scenario, you act more like a price-setter than a price-taker. You have better control on what price to pay to the debt holders. The worst case is you couldn't purchase enough to wipe off the original shareholders, but your potential loss is already calculated and estimated. Anyone who is interested in this topic I suggest them to read books about distressed debt.
The lesson is very simple, in the long run you definitely earn much more as price-setters and price-takers. Same idea as you can never earn more money by gambling than the casino.
Today mark another big down day. And where does it come from? REITs. You look at them, they all dropped 20% or more today. There are two pieces of news about mortgage-back securities management firm (Carlyle Capital and Thornburg) could not meet margin requirement.
This is again one of the domino effect. I still hear that the global economy is okay, just slower growth, not recession. Well I don't have more data to prove it right or wrong, probably it's not my biggest concern anyway.
Again I want to say, focus on how the news affect your investment, not the news itself. Anyone has the right to interpret the news the way he likes, but the market is the final place that reflect how he thinks. How many times since last November I heard people said the economy is okay but only to see the market dropped again and again?
I understand there must be a bottom. I do not know where is it, I can only express my opinion on how to take advantage of bottoming.
In a commercial world there are two sides, price-setters and price-takers. If you have the bigger bargaining power you are a price-setter. To make the money at a higher chance and highest profit, there comes in the distressed debt funds.
The story is very simple. A company is now in a distressed situation, take something as an example, CFC, as this is a good example these days. In this case, DON'T BUY THEIR SHARES BECAUSE IT DROPPED BY A LOT. It may go back up in value but that's not how you should play, particularly when you are very wealthy, like an institutional fund. In fact, you should purchase most of its debts, approximately 2/3, decline their restructure plan, force the company to liquidate itself, wipe off the stockholders. Now you become the shareholders of this new company and you have better control to move this company back up.
Under this scenario, you act more like a price-setter than a price-taker. You have better control on what price to pay to the debt holders. The worst case is you couldn't purchase enough to wipe off the original shareholders, but your potential loss is already calculated and estimated. Anyone who is interested in this topic I suggest them to read books about distressed debt.
The lesson is very simple, in the long run you definitely earn much more as price-setters and price-takers. Same idea as you can never earn more money by gambling than the casino.
Tuesday, March 4, 2008
Lost on HXD gain on FXP
because I sold both today. Sold HXD.TO at $20.59 and FXP at $96.62. So I lost about 7% on HXD.TO and gain about 8% on FXP.
Markets went down 2.5 days in a row, not surprise to see it came back a bit before end of today. I always like to see which stocks didn't go with the market. Those stocks may go up later, but usually not by much. As well, by the time they go up, they probably couldn't lift the market to go with them. Then when they resume to go down, they will go down faster than the market.
Financials again is one of the worst. XLF by itself is okay, but some individual financial companies are not. Even there is rumour (or bet) that the Fed is going to lower the rate by 75 basis points, doesn't seem the market reacts positively to it. So far we got quite an amount of good news but seems like it only slowed down the slide but not stopping it.
Markets went down 2.5 days in a row, not surprise to see it came back a bit before end of today. I always like to see which stocks didn't go with the market. Those stocks may go up later, but usually not by much. As well, by the time they go up, they probably couldn't lift the market to go with them. Then when they resume to go down, they will go down faster than the market.
Financials again is one of the worst. XLF by itself is okay, but some individual financial companies are not. Even there is rumour (or bet) that the Fed is going to lower the rate by 75 basis points, doesn't seem the market reacts positively to it. So far we got quite an amount of good news but seems like it only slowed down the slide but not stopping it.
Monday, March 3, 2008
weakness continues
I am not here to try to scare people who hold stocks, just check continuously what I saw on market.
In the meantime, the weakness continues. Even I checked on weekly EMAs, it doesn't make me believes the tide changes.
I still hear people fooling around with numbers and wordings. For example, refuse to use the word recession. I wonder how important it is. Sometimes government acts like your mutual fund advisor; try to make up a better word to make you feel better.
Or on the other hand, only if market drops 20% from its top is consider as bear market. Heck, but my friend, when you realized you are losing more than 20%, probably it's too late to sell. So why not just sit back and wait till the market to recover? At the end of the day, you hold whatever you hold and have not done anything. You may be smart (as market does bottom when people sell), but I can tell you that you are not smart, you are just lazy to do anything.
About a month ago I said we'll see if January marked the bottom of the market, well if you check enough charts you will see probably it's not the case. At least you should not expect a V-shaped rebound from here again. A few stocks, which are large in size, already made a lower low compared to January.
Some stocks performed a bit better, but still, couldn't pass my criteria that they changed direction. For example, XHB, it came back up from about $16 to more than $23 in less than a month of time. Quite impressive and a lot. It hasn't lost all the upside it made yet, sitting at around $19.50. However, check the EMAs, a better measure than daily price candlestick, you'll see its 20-day EMA didn't surpass the 100-day EMA. It just sat tangent to the 100-day EMA and started to trend down late last week. The hint, it is probably still not the right time for it to resume longer term uptrend.
Though not a perfect match, but if you originally expected the 20-day EMA would not surpass 100-day EMA in one try, utilizing SRS with a small amount could work. It's like last Tuesday I tried to put in order to buy TWM at $77.50 (unfortunately couldn't get filled.....) because i expected IWM probably couldn't break the 50-day EMA in its third try in a month.
You are right, it's based on my expectation. It may work out the way I want or it may not. You need to ask yourself if it doesn't work out at your first position, where is the next stop of the stock? Can you take that risk of losing more and not to sell too quickly?
A more mental challenge than a quantitative one.
Still holding FXP and HXD.TO and Nintendo
In the meantime, the weakness continues. Even I checked on weekly EMAs, it doesn't make me believes the tide changes.
I still hear people fooling around with numbers and wordings. For example, refuse to use the word recession. I wonder how important it is. Sometimes government acts like your mutual fund advisor; try to make up a better word to make you feel better.
Or on the other hand, only if market drops 20% from its top is consider as bear market. Heck, but my friend, when you realized you are losing more than 20%, probably it's too late to sell. So why not just sit back and wait till the market to recover? At the end of the day, you hold whatever you hold and have not done anything. You may be smart (as market does bottom when people sell), but I can tell you that you are not smart, you are just lazy to do anything.
About a month ago I said we'll see if January marked the bottom of the market, well if you check enough charts you will see probably it's not the case. At least you should not expect a V-shaped rebound from here again. A few stocks, which are large in size, already made a lower low compared to January.
Some stocks performed a bit better, but still, couldn't pass my criteria that they changed direction. For example, XHB, it came back up from about $16 to more than $23 in less than a month of time. Quite impressive and a lot. It hasn't lost all the upside it made yet, sitting at around $19.50. However, check the EMAs, a better measure than daily price candlestick, you'll see its 20-day EMA didn't surpass the 100-day EMA. It just sat tangent to the 100-day EMA and started to trend down late last week. The hint, it is probably still not the right time for it to resume longer term uptrend.
Though not a perfect match, but if you originally expected the 20-day EMA would not surpass 100-day EMA in one try, utilizing SRS with a small amount could work. It's like last Tuesday I tried to put in order to buy TWM at $77.50 (unfortunately couldn't get filled.....) because i expected IWM probably couldn't break the 50-day EMA in its third try in a month.
You are right, it's based on my expectation. It may work out the way I want or it may not. You need to ask yourself if it doesn't work out at your first position, where is the next stop of the stock? Can you take that risk of losing more and not to sell too quickly?
A more mental challenge than a quantitative one.
Still holding FXP and HXD.TO and Nintendo
Tuesday, February 26, 2008
Worst time in history?
I read another article today which I think it's very misleading.
I am not going to go through all the content of that article here. My belief is, the author thinks, considering the current credit situation and market crash as the "worst" in history is stupid because market always recover.
Market always recover, it is true, but this idea does not connect to each individual. Imagine if you buy a house and it's very expensive, eventually economy cools down and you don't have enough to pay for mortgage. Your house is foreclosed and you are done. Years later the market recovers and your original house now worth more than the time you bought it. But will that benefit you? Of course not! Because you were foreclosed.
If I need this author to tell me "the market will eventually cover", I AM NO SMARTER THAN A GRADE 5! I bet this author doesn't really know what he wants to say. In his article he quoted Legg Mason's CEO's statement that "it's the worst credit state he has ever seen in 47 years of business", and then the author said 30 years of experience is a blink of history. WHAT THE FUCK, if you take a look at the author's picture, I bet he doesn't live 47 years in his life. But he is criticizing about other people's 47-years of experience based on his bull-shit.
The current market may recover in 3 months or in 3 years, I don't know. Writing an article telling people that market will eventually recover is bullshit. As well, look at Nikkei 225 in Japan, look at Nasdaq Composite. Have they recovered??? I bet there might be some people in the past that thought Nikkei dropped 50% from almost 40,000 to 20,000 was a good buy (because market eventually will recover), only to see that it dropped more, and they have only limited time to sell above 20,000 around 1997. Then they went under water again and it's now sitting at about 13,500 after probably 18 years.
How many 18 years can you live? I bet not many. This article shows you how stupid and naive some people are, even people who write articles. Markets can exist forever, but you don't. Markets may recover, you may not live long enough to see it. Markets may recover, but it may not benefit you. Market recovers is an objective fact. What you own is your subjective measure.
I can bet you that if market starts to recover from here, this author will think he is a genius, he predicted the market correctly. Makes me throw. Based on the article he wrote, I believe this guy is inexperience and stupid.
I am not going to go through all the content of that article here. My belief is, the author thinks, considering the current credit situation and market crash as the "worst" in history is stupid because market always recover.
Market always recover, it is true, but this idea does not connect to each individual. Imagine if you buy a house and it's very expensive, eventually economy cools down and you don't have enough to pay for mortgage. Your house is foreclosed and you are done. Years later the market recovers and your original house now worth more than the time you bought it. But will that benefit you? Of course not! Because you were foreclosed.
If I need this author to tell me "the market will eventually cover", I AM NO SMARTER THAN A GRADE 5! I bet this author doesn't really know what he wants to say. In his article he quoted Legg Mason's CEO's statement that "it's the worst credit state he has ever seen in 47 years of business", and then the author said 30 years of experience is a blink of history. WHAT THE FUCK, if you take a look at the author's picture, I bet he doesn't live 47 years in his life. But he is criticizing about other people's 47-years of experience based on his bull-shit.
The current market may recover in 3 months or in 3 years, I don't know. Writing an article telling people that market will eventually recover is bullshit. As well, look at Nikkei 225 in Japan, look at Nasdaq Composite. Have they recovered??? I bet there might be some people in the past that thought Nikkei dropped 50% from almost 40,000 to 20,000 was a good buy (because market eventually will recover), only to see that it dropped more, and they have only limited time to sell above 20,000 around 1997. Then they went under water again and it's now sitting at about 13,500 after probably 18 years.
How many 18 years can you live? I bet not many. This article shows you how stupid and naive some people are, even people who write articles. Markets can exist forever, but you don't. Markets may recover, you may not live long enough to see it. Markets may recover, but it may not benefit you. Market recovers is an objective fact. What you own is your subjective measure.
I can bet you that if market starts to recover from here, this author will think he is a genius, he predicted the market correctly. Makes me throw. Based on the article he wrote, I believe this guy is inexperience and stupid.
Sane or insane?
I got a bit more FXP at $87, maybe I'm stupid, maybe I'm not.
I tried TWM as well but couldn't get filled, maybe I'm unlucky, maybe I'm not.
Market looks a bit funny. Anyway, funny may not be the good way, as market will go to where it is going, not where you want it to go, unless you have unlimited capacity to drive the market. I don't.
Market rallied with "good" news, if you consider injecting $3billion into Ambac is good news, if you consider IBM using $15 billion to repurchase its own shares is good news, if you consider banks freezed the foreclosures is good news. If you even consider the Fed will lower the rate during the next meeting then it's even better.
Well I read several articles about the Ambac news and I'm kind of agree with 3 points:
1. How can $3 billion help if their positions in credit default swap is as much as $60 billion?
2. Why would the insurance policyholder inject cash into the insurance company so that the insurance company can pay their insurance benefit is good news?
3. How can a company needs external cash injection to save itself can maintain AAA rating?
I need somebody to tell me if I'm wrong or the market is wrong. Or maybe it's just too much shorting since October so it's a mere short covering?
I tried TWM as well but couldn't get filled, maybe I'm unlucky, maybe I'm not.
Market looks a bit funny. Anyway, funny may not be the good way, as market will go to where it is going, not where you want it to go, unless you have unlimited capacity to drive the market. I don't.
Market rallied with "good" news, if you consider injecting $3billion into Ambac is good news, if you consider IBM using $15 billion to repurchase its own shares is good news, if you consider banks freezed the foreclosures is good news. If you even consider the Fed will lower the rate during the next meeting then it's even better.
Well I read several articles about the Ambac news and I'm kind of agree with 3 points:
1. How can $3 billion help if their positions in credit default swap is as much as $60 billion?
2. Why would the insurance policyholder inject cash into the insurance company so that the insurance company can pay their insurance benefit is good news?
3. How can a company needs external cash injection to save itself can maintain AAA rating?
I need somebody to tell me if I'm wrong or the market is wrong. Or maybe it's just too much shorting since October so it's a mere short covering?
Sunday, February 24, 2008
Ambac
Sold my TWM on Friday at $85.71. Haven't sold my FXP and only saw it plummeted back to $88 decimal......
The rumours about bailout of Ambac hit the market late Friday, causing my FXP to decline sharply and fast. Will the insurer be saved I don't know, but market took it as good news and rally. Will this rally last? Still need to check. So far what I saw is the following after market closed on Friday:
1. Many other banks and brokerages reacted to the news as well, but not any one I saw did really break any significant moving average resistents.
2. Ambac itself's volume was not very high. Given the rumours came out on a Friday afternnoon and if that made the shorts very nervous, I expected more volume than that. As well, it didn't push the price above the 20-day EMA.
3. Some stocks are already at or below their January lows. For example, FRE, FNM, LEH. Even worse were among tech stocks like AAPL, GOOG, AMZN, DELL and EBAY.
The bailout of an insurer may help, but I doubt it will help the whole economy. By Monday we should have a better idea of how people react to the news. People believe gap up in Ambac and up in global market are already in the pocket. A more detail analysis should be needed before you think the market is now clear.
The rumours about bailout of Ambac hit the market late Friday, causing my FXP to decline sharply and fast. Will the insurer be saved I don't know, but market took it as good news and rally. Will this rally last? Still need to check. So far what I saw is the following after market closed on Friday:
1. Many other banks and brokerages reacted to the news as well, but not any one I saw did really break any significant moving average resistents.
2. Ambac itself's volume was not very high. Given the rumours came out on a Friday afternnoon and if that made the shorts very nervous, I expected more volume than that. As well, it didn't push the price above the 20-day EMA.
3. Some stocks are already at or below their January lows. For example, FRE, FNM, LEH. Even worse were among tech stocks like AAPL, GOOG, AMZN, DELL and EBAY.
The bailout of an insurer may help, but I doubt it will help the whole economy. By Monday we should have a better idea of how people react to the news. People believe gap up in Ambac and up in global market are already in the pocket. A more detail analysis should be needed before you think the market is now clear.
Saturday, February 16, 2008
Long weekend
This is the first time we in Canada have a long weekend in February, suppose to be nice, just that I have too much work in office that I couldn't take advantage of it..... Anyway....
I bought a bit more FXP at $90.38. As you saw it quickly turned into a loss as of ending of Friday. We still hear positive tune in the market. I couldn't remember where the tune comes from. But I want to say if the tune comes from Wall Street you better second guess again. If Wall Street brokerage firms mainly make money by underwriting old and new issues, they probably would need to make you believe the market will be turning around quickly. Otherwise, how can they make money if you are not buying stocks???
To gain myself more flexibility and control over my own money I would like to sell a bit more mutual funds I have on hand to raise cash for further usage. I think I should manage my own money, not someone else. It means I will have to sell one fund in a loss and one in a gain.
Well but I want to say, it's not about selling at a gain or a loss. It's about take back the control, as well, sell when you should, before it's too late. Even selling 2 more mutual funds I still have long positions, so I'm not totally out from market.
I would like to brainstorm a bit more about the upcoming US president election. I think I have some questions to myself that I couldn't make it clear for now. Maybe I should post those thinking later.
I bought a bit more FXP at $90.38. As you saw it quickly turned into a loss as of ending of Friday. We still hear positive tune in the market. I couldn't remember where the tune comes from. But I want to say if the tune comes from Wall Street you better second guess again. If Wall Street brokerage firms mainly make money by underwriting old and new issues, they probably would need to make you believe the market will be turning around quickly. Otherwise, how can they make money if you are not buying stocks???
To gain myself more flexibility and control over my own money I would like to sell a bit more mutual funds I have on hand to raise cash for further usage. I think I should manage my own money, not someone else. It means I will have to sell one fund in a loss and one in a gain.
Well but I want to say, it's not about selling at a gain or a loss. It's about take back the control, as well, sell when you should, before it's too late. Even selling 2 more mutual funds I still have long positions, so I'm not totally out from market.
I would like to brainstorm a bit more about the upcoming US president election. I think I have some questions to myself that I couldn't make it clear for now. Maybe I should post those thinking later.
Thursday, February 14, 2008
FXP
Well I got into FXP again this morning at $91.75. Ben's comment obviously didn't help the market. Glad to see my TWM rebounded almost 5%. HXD.TO rebounded much less, due to the rise of oil price.
Looks like even Bush, Bernanke and Buffet (all B's, what a coincidence) play Santa Claus doesn't help much. Well that is expected. It is not the end of the world, but downside will continue for a while.
My short position in the meantime is not very big, as I only put a small % to FXP. I guess I'll not reduce my long position further, as a hedge.
In the meantime, I'm not surprise US government will try to control the direction of the market to the upside. But I guess eventually they could run out of options to save the market. After all, a market cannot just keep going up for years without bailing out some irrational behaviour.
Looks like even Bush, Bernanke and Buffet (all B's, what a coincidence) play Santa Claus doesn't help much. Well that is expected. It is not the end of the world, but downside will continue for a while.
My short position in the meantime is not very big, as I only put a small % to FXP. I guess I'll not reduce my long position further, as a hedge.
In the meantime, I'm not surprise US government will try to control the direction of the market to the upside. But I guess eventually they could run out of options to save the market. After all, a market cannot just keep going up for years without bailing out some irrational behaviour.
Tuesday, February 12, 2008
Losers take turn
Well we all know winners take turn, losers take turn too.
During the second half of the year no doubt in US financials and homebuilders were the losers. By that time tech were still strong. Now since 2008 tech followed, dropped more than financials and homebuilders now. Look at today's action. QQQQ started positively, many former high-flyers like GOOG, BIDU or FSLR started well in the morning. Only to see all of them turned red later. AAPL even turned red faster than anybody. Fortunately QQQQ's volume is not that high, so I'm not surprise that QQQQ can go up a bit to test its 50-day EMA. But insofar, it looked like it couldn't even get pass the 20-day EMA.
We all heard about the tax cut, we all saw the interest rate cut, now we see the freeze of foreclosure. That probably could slow down the bust of the problem, but will that solve the long-term problem I doubt.
I don't have exact numbers with me, but I still want to make a guess. It maybe way off so you can just read for fun and don't take it seriously.
Imagine many Americans actually use their home as ATM, it means when their house value decrease they have to pay the banks to maintain their homeowner position. Just that you buy stock on margin and now you get margin calls. Either you deposit cash into your account and maintain the margin or your position will be sold. US is a $15 trillion economy. We always hear that individual consumptions make up 2/3 of US economy. Now this 2/3 is in danger because some people keep spending their unrealized capital gain on their houses without enough cash to maintain the margin.
Banks decided not to force foreclosure. Well sounds okay. But at the end they still need to collect some cash from the homeowner in order to keep their houses. So these people have to save money from now on to pay the margin to a certain level that the banks feel comfortable. Since many people need to squeeze cash from somewhere, the first thing they need to do is to spend less, which hit the whole economy.
Some people have stocks with them probably. So in order to squeeze cash, some of them may decide to sell some stocks to raise cash. After all, a living place is more important than your Google stocks right at this moment.
So what could happen? Banks are delaying their losses. Those suppose-to-be foreclosures are in the meantime, unrealized loss. By the time these people squeeze out enough money to put up the margin, the economy slides by a lot already. Consumer staples and utilities can hold better, but not any other sectors as all kinds of demand will slow down. Banks will then be flood of money that they couldn't loan out, until bank clients with strong credit quality started to initiate loans again.
So I think. How long US economy will stay down really depends on how many people on US land have good credit quality, and how long do other people need to build or rebuild their credit quality to a level that banks are willing to loan money to them again.
During the second half of the year no doubt in US financials and homebuilders were the losers. By that time tech were still strong. Now since 2008 tech followed, dropped more than financials and homebuilders now. Look at today's action. QQQQ started positively, many former high-flyers like GOOG, BIDU or FSLR started well in the morning. Only to see all of them turned red later. AAPL even turned red faster than anybody. Fortunately QQQQ's volume is not that high, so I'm not surprise that QQQQ can go up a bit to test its 50-day EMA. But insofar, it looked like it couldn't even get pass the 20-day EMA.
We all heard about the tax cut, we all saw the interest rate cut, now we see the freeze of foreclosure. That probably could slow down the bust of the problem, but will that solve the long-term problem I doubt.
I don't have exact numbers with me, but I still want to make a guess. It maybe way off so you can just read for fun and don't take it seriously.
Imagine many Americans actually use their home as ATM, it means when their house value decrease they have to pay the banks to maintain their homeowner position. Just that you buy stock on margin and now you get margin calls. Either you deposit cash into your account and maintain the margin or your position will be sold. US is a $15 trillion economy. We always hear that individual consumptions make up 2/3 of US economy. Now this 2/3 is in danger because some people keep spending their unrealized capital gain on their houses without enough cash to maintain the margin.
Banks decided not to force foreclosure. Well sounds okay. But at the end they still need to collect some cash from the homeowner in order to keep their houses. So these people have to save money from now on to pay the margin to a certain level that the banks feel comfortable. Since many people need to squeeze cash from somewhere, the first thing they need to do is to spend less, which hit the whole economy.
Some people have stocks with them probably. So in order to squeeze cash, some of them may decide to sell some stocks to raise cash. After all, a living place is more important than your Google stocks right at this moment.
So what could happen? Banks are delaying their losses. Those suppose-to-be foreclosures are in the meantime, unrealized loss. By the time these people squeeze out enough money to put up the margin, the economy slides by a lot already. Consumer staples and utilities can hold better, but not any other sectors as all kinds of demand will slow down. Banks will then be flood of money that they couldn't loan out, until bank clients with strong credit quality started to initiate loans again.
So I think. How long US economy will stay down really depends on how many people on US land have good credit quality, and how long do other people need to build or rebuild their credit quality to a level that banks are willing to loan money to them again.
Monday, February 11, 2008
Sold SKF and HBU.TO
Market performed pretty strong today that even AIG slashed its earnings. Financials was pretty much the only sector that went down today. Since other sectors are performing strongly, I prefer to sell my SKF first. I sold my SKF at $111.48, not at the highest possible, but pretty good 6.5% over 1.5 weeks. I'm still keeping my TWM, but if market sentiment changes (for a short term) I may want to liquidate it first. I think there are still good chances to set up short positions.
As well I sold my HBU.TO. I guess this is due more to my psychological setback. Want to sell something to realize a gain, as well, trim some long position (which has a gain). I know many people think gold may surpass $1,000 mark, but I rather reserve the money for something that may have a better upside.
I'll keep an eye on SKF and SRS. As well, I only have a small position in TWM, I can see if I can increase the position by a bit, if there is no obvious reason of economic improvement.
I think the market is stabilizing, so possibility of V-shaped movements is getting lower. In this kind of market, either you want to go long or short, you need to be a bit more patient (which I usually don't have.....) to let the trends work out. But since I still see technically it's a bear market, we should wait for the chance to go short than long. The bottom in January looks quite strong. Not that mean the market cannot go lower, just that it may need some more bad news to push it beyond that bottom. So even if you have short position, I currently suggest you to cover it when we reach there.
As well I sold my HBU.TO. I guess this is due more to my psychological setback. Want to sell something to realize a gain, as well, trim some long position (which has a gain). I know many people think gold may surpass $1,000 mark, but I rather reserve the money for something that may have a better upside.
I'll keep an eye on SKF and SRS. As well, I only have a small position in TWM, I can see if I can increase the position by a bit, if there is no obvious reason of economic improvement.
I think the market is stabilizing, so possibility of V-shaped movements is getting lower. In this kind of market, either you want to go long or short, you need to be a bit more patient (which I usually don't have.....) to let the trends work out. But since I still see technically it's a bear market, we should wait for the chance to go short than long. The bottom in January looks quite strong. Not that mean the market cannot go lower, just that it may need some more bad news to push it beyond that bottom. So even if you have short position, I currently suggest you to cover it when we reach there.
Tuesday, February 5, 2008
Go short again
Market started to drop again, nice. Because I got into SKF last Thursday at $104.50. It went down to as low as $93-ish in Friday, now I'm more than breakeven at $105.39 so far.
As well, got into TWM, HXD.TO and HBU.TO this morning. The 3 short positions worth about bit less than 20% of my total portfolio. Feel a little regret not getting a bit more because I have other funds and now the HBU.TO which represent closed to 40%. Given that I have a bear view myself I should have more short side than long side. Will keep an eye on what should I do next.
Just looking at the percentage of drop today it actually dropped quite a lot even compared to those daily drops in January. Given this kind of market action I'm not surprise there will be another round of V-shaped movement in the coming days. I guess it's not easy to time the perfect entry time. But stay cash or short sounds like the way to go.
Funny still saw a few articles talk about the credit problem is small and contained in sub-prime. Either these people mean to fool you or they are really stupid. Sounds like these people will only acknowledge the market is going down after the market drops another 20%. I don't mean I am much smarter than they do, nor I know more detail information than everyone. Just that looking at how the market reacted to the news and statistics you know some big players smell fire. Ask any (smart) trader on the street and you should get the same answer: react before you ask question. When something strange is happening, find a way to protect your capital first, ask the question later. It will never hurt that you only know what was wrong after it is done. But if you stay there and not reacting until you fully know what was wrong probably it's too late.
Learn from 911. When a plane crashes into the building, evacuate first, investigate how a plane crashed to the building later.
As well, got into TWM, HXD.TO and HBU.TO this morning. The 3 short positions worth about bit less than 20% of my total portfolio. Feel a little regret not getting a bit more because I have other funds and now the HBU.TO which represent closed to 40%. Given that I have a bear view myself I should have more short side than long side. Will keep an eye on what should I do next.
Just looking at the percentage of drop today it actually dropped quite a lot even compared to those daily drops in January. Given this kind of market action I'm not surprise there will be another round of V-shaped movement in the coming days. I guess it's not easy to time the perfect entry time. But stay cash or short sounds like the way to go.
Funny still saw a few articles talk about the credit problem is small and contained in sub-prime. Either these people mean to fool you or they are really stupid. Sounds like these people will only acknowledge the market is going down after the market drops another 20%. I don't mean I am much smarter than they do, nor I know more detail information than everyone. Just that looking at how the market reacted to the news and statistics you know some big players smell fire. Ask any (smart) trader on the street and you should get the same answer: react before you ask question. When something strange is happening, find a way to protect your capital first, ask the question later. It will never hurt that you only know what was wrong after it is done. But if you stay there and not reacting until you fully know what was wrong probably it's too late.
Learn from 911. When a plane crashes into the building, evacuate first, investigate how a plane crashed to the building later.
Sunday, February 3, 2008
U and V
A colleague of mine asked me if he should got into QID at $51 by beginning of last week. I told him that I don't know why I thought the market was going to go up more before it starts going back down. Anyway I'm damn right about it as QID is currently sitting at $47.02.
Last week we kind of had a V-shaped rebound. Well I always say nothing will go up in straight line, as well as nothing will go down in straight line. Many stocks have been going down in straight line for days and months. Those declines created hugh differences between their 20-day EMA and 200-day EMA. So it's not surprising that they should go back up a bit to shorten that distances.
But since we are still in a pretty confirmed downtrend (meaning 20-day EMA is below 200-day EMA), even if we are going to turn back to uptrend, we at least have to retest the most recent strong bottom (which came in at the middle of the week before last week, the day and the day after the surprise Fed 75 bps cut).
Just read a little interview of Jim Rogers before I wrote today. He is predicting a worse and worse US economy and stock market. I pay high respect to this man and I'm pretty sure he has a view. I am not as smart as he does, but I was thinking, given that in the past we see double-digit interest rates and then we have economic problem. Government started cutting rates and then economy turns good. Now the Fed started cutting rates when interest rate was only 5.25% (if I remember that right). Last time US Red needed to cut rates down to 1.0%.
We all know Japan was in big trouble because they had no interest rate to cut as it reached closed to 0%. I guess nobody would like to see US goes that way.
Okay back to the topic I want to talk about.
From time to time we see U-shaped bottom and V-shaped bottom. As the name suggested. U bottom is kind of smooth and curvey, while V bottom is sharp and rebound quickly.
I did not check into all historical moves and bear markets, but I will not be surprised that if I will see a V-shaped curve as the first phase of bear market within a completed U-shaped bottom.
Usually in the first phase of a bear market people started to panic, as the economy is damaged surprisingly. It is surprising because people mentally are still deeply attached to a bull market. The news has to be very bad to wake them up. While the news is very bad that they suddenly change their mind from greed to fear, they rush to the exit quickly. Now margin calls kick in and many people have to sell to raise cash, forming the down-leg of the V-shaped. As most margin calls got wiped off and probably some portfolio rebalancing kicks in (note that I don't use the term value buyers here because there is no guarantee that all investors who buy at these levels are value players) as well as people are speculating a bottom, creates huge buying power and push the market back up very quickly, forming the up-leg of the V-shaped.
V-shaped rebound doesn't have to be symmetric. For example, the V-shaped rebounds in February and August 2007 may not be a perfect V-shaped, depends on how you see it. The January 2008 V-shaped is more obvious.
I'm just wondering, starting from November 2007, it maybe actually started forming a U-shaped downtrend. In the meantime I cannot conclude it. We'll see.
The current strategy is still wait to look for the chance to go ultra short ETFs. Better to wait till the current price of the tracking indices to hit 100-day or 200-day EMA before starting a position.
Last week we kind of had a V-shaped rebound. Well I always say nothing will go up in straight line, as well as nothing will go down in straight line. Many stocks have been going down in straight line for days and months. Those declines created hugh differences between their 20-day EMA and 200-day EMA. So it's not surprising that they should go back up a bit to shorten that distances.
But since we are still in a pretty confirmed downtrend (meaning 20-day EMA is below 200-day EMA), even if we are going to turn back to uptrend, we at least have to retest the most recent strong bottom (which came in at the middle of the week before last week, the day and the day after the surprise Fed 75 bps cut).
Just read a little interview of Jim Rogers before I wrote today. He is predicting a worse and worse US economy and stock market. I pay high respect to this man and I'm pretty sure he has a view. I am not as smart as he does, but I was thinking, given that in the past we see double-digit interest rates and then we have economic problem. Government started cutting rates and then economy turns good. Now the Fed started cutting rates when interest rate was only 5.25% (if I remember that right). Last time US Red needed to cut rates down to 1.0%.
We all know Japan was in big trouble because they had no interest rate to cut as it reached closed to 0%. I guess nobody would like to see US goes that way.
Okay back to the topic I want to talk about.
From time to time we see U-shaped bottom and V-shaped bottom. As the name suggested. U bottom is kind of smooth and curvey, while V bottom is sharp and rebound quickly.
I did not check into all historical moves and bear markets, but I will not be surprised that if I will see a V-shaped curve as the first phase of bear market within a completed U-shaped bottom.
Usually in the first phase of a bear market people started to panic, as the economy is damaged surprisingly. It is surprising because people mentally are still deeply attached to a bull market. The news has to be very bad to wake them up. While the news is very bad that they suddenly change their mind from greed to fear, they rush to the exit quickly. Now margin calls kick in and many people have to sell to raise cash, forming the down-leg of the V-shaped. As most margin calls got wiped off and probably some portfolio rebalancing kicks in (note that I don't use the term value buyers here because there is no guarantee that all investors who buy at these levels are value players) as well as people are speculating a bottom, creates huge buying power and push the market back up very quickly, forming the up-leg of the V-shaped.
V-shaped rebound doesn't have to be symmetric. For example, the V-shaped rebounds in February and August 2007 may not be a perfect V-shaped, depends on how you see it. The January 2008 V-shaped is more obvious.
I'm just wondering, starting from November 2007, it maybe actually started forming a U-shaped downtrend. In the meantime I cannot conclude it. We'll see.
The current strategy is still wait to look for the chance to go ultra short ETFs. Better to wait till the current price of the tracking indices to hit 100-day or 200-day EMA before starting a position.
Saturday, January 26, 2008
Friday no good
I was again off on my prediction for Friday. I thought good news from Microsoft and Juniper could at least lift the market till Monday. But after I looked at the opening and the next 30 minutes I know I was wrong.
So I acted fast, I sold my HGU at $32.60 in the morning, pocketed a 21% return since I bought it Monday. I liquidated the remaining shares of my dividend paying closed-end fund in the morning as well. So I'm down from about 75% long at a time to 30% long and 70% cash now. I could not find better chance to liquidate more later in Friday.
The weak performance of Microsoft stock and many others is telling you that we are now in a phase of sell the good news. The Fed is having their meeting the coming week plus Google is reporting earnings, so next week could be quite volatile.
The Canadian market just got 4 more categories of 2 betas, they are gold, natural gas, crude oil and global mining. In the meantime the volume are very low, but that's normal. I'll keep my eyes open on the gold one. That's gold bullion and it's not gold companies, which is different than HGU (or HGD). And I'm still waiting for their agriculture beta product.
Going back to the US market. Looking at the graph somehow I have a feeling that we can have a leg up soon. Well I don't mean the downtrend is done, but I just think some sectors may due to a bigger rebound before they go back down. For example, I would like to find a good entry point to buy some URE (ultra long real estate). But as a hedge, by that time I will also want to get into an ultra short of something. I have to think about it further first.
So I acted fast, I sold my HGU at $32.60 in the morning, pocketed a 21% return since I bought it Monday. I liquidated the remaining shares of my dividend paying closed-end fund in the morning as well. So I'm down from about 75% long at a time to 30% long and 70% cash now. I could not find better chance to liquidate more later in Friday.
The weak performance of Microsoft stock and many others is telling you that we are now in a phase of sell the good news. The Fed is having their meeting the coming week plus Google is reporting earnings, so next week could be quite volatile.
The Canadian market just got 4 more categories of 2 betas, they are gold, natural gas, crude oil and global mining. In the meantime the volume are very low, but that's normal. I'll keep my eyes open on the gold one. That's gold bullion and it's not gold companies, which is different than HGU (or HGD). And I'm still waiting for their agriculture beta product.
Going back to the US market. Looking at the graph somehow I have a feeling that we can have a leg up soon. Well I don't mean the downtrend is done, but I just think some sectors may due to a bigger rebound before they go back down. For example, I would like to find a good entry point to buy some URE (ultra long real estate). But as a hedge, by that time I will also want to get into an ultra short of something. I have to think about it further first.
Thursday, January 24, 2008
Reduced long position
I didn't wait till HFU to hit around 50-day EMA, because it maintained a black candle for the whole morning. I'm worried that it may top out for now, so I sold at $15.90. Not bad because I think that is more or less the highest price after I entered my limit order. However I'm keeping my HGU even though I'm already sitting at a 18% profit.
As well I sold my FMCN at $50.09 for now. I don't want to take that risk to bet Microsoft will report good earnings and market will continue to move significantly up. Since tomorrow is Friday I think market will start up high, slow down and closes in green. If the closing price is significantly higher than opening price, this upward move may still have some energy to go next week, otherwise, market may start to get weak again mid next week.
I also sold some of my closed-end fund holdings. That is a fund mainly hold dividend paying stocks and financials is a big sector. I reduced half of the position, free up some cash for later opportunities. If market continues to go up and lift this closed-end fund up too I will sell the other half. I think I want to keep more cash for ETF investings.
Couldn't find a good price to unload another mutual fund which mainly invests in Canadian financials. I incorrectly thought Canadian financials were stablizing, only to see the position now sitting at almost a 10% loss in no more than 2 months. Forunately I never want to start with a big position so absolutely I'm not burned badly. Another global equity growth fund disappointed me today as well. With the market rebounded and the fund surprisingly showed me a negative return. This fund is now losing more than 12% since I bought about 1.5 months ago.
So I'm still roughly about 50% long and 50% cash. I still think under such an economic environment 50% long is too much. I think in the meantime the desire long % should be no more than 20%, and should not be in individual stock. I'm now left with only one individual stock, which is Nintendo, and I'm going to hold it.
If chance allows I'll try to close more position, given Microsoft provided a good earnings and sounds like market is going up tomorrow, I believe I may have chance to unload again.
As well I sold my FMCN at $50.09 for now. I don't want to take that risk to bet Microsoft will report good earnings and market will continue to move significantly up. Since tomorrow is Friday I think market will start up high, slow down and closes in green. If the closing price is significantly higher than opening price, this upward move may still have some energy to go next week, otherwise, market may start to get weak again mid next week.
I also sold some of my closed-end fund holdings. That is a fund mainly hold dividend paying stocks and financials is a big sector. I reduced half of the position, free up some cash for later opportunities. If market continues to go up and lift this closed-end fund up too I will sell the other half. I think I want to keep more cash for ETF investings.
Couldn't find a good price to unload another mutual fund which mainly invests in Canadian financials. I incorrectly thought Canadian financials were stablizing, only to see the position now sitting at almost a 10% loss in no more than 2 months. Forunately I never want to start with a big position so absolutely I'm not burned badly. Another global equity growth fund disappointed me today as well. With the market rebounded and the fund surprisingly showed me a negative return. This fund is now losing more than 12% since I bought about 1.5 months ago.
So I'm still roughly about 50% long and 50% cash. I still think under such an economic environment 50% long is too much. I think in the meantime the desire long % should be no more than 20%, and should not be in individual stock. I'm now left with only one individual stock, which is Nintendo, and I'm going to hold it.
If chance allows I'll try to close more position, given Microsoft provided a good earnings and sounds like market is going up tomorrow, I believe I may have chance to unload again.
Wednesday, January 23, 2008
Panic sell? Rational sell?
Yesterday marked as one of the most dramatic trading day in recent history. The US Fed cut 75 basis points before the market opened. Everything almost opened at the lowest point of that day. Well, that makes me think why. The cut came in before the market open, and all stock prices just shot right back up after they opened at the lowest point. Has the basics of the stocks really changed from the open to 30 minutes later?
Of course not. You see the power of margin calls and overnight positions. Unfortunately investors who got hit by the over-leverage needs to sell to raise cash. I don't have any solid numbers here but I believe that is how it works. Some investors at that very moment were forced to sell. And since they were forced to sell, they were price-takers, and they could only be price-takers, because they didn't have a choice. There are sharks out there to eat them and took this chance to buy at the lowest price of the day.
Usually under this situation we call this panic selling. Well, just sit back and think about it, amateurs only represent a small portion of the investing population moneywise. So even amateurs were not using leverage and just plain panic sell will not cost the market to go down so much, so fast. I can almost guarantee to you that the market went down so fast was largely due to margin calls. When margin calls come in, it's not panic selling. It's rational selling. At least in the eyes of your broker. So next time, don't be fool by the media that market goes down due to panic selling.
Looking at today and yesterday market's performance. I think a short term bottom is formed. It is again due to margin call selling. Different leveraged-investors entered their positions at different price levels. A huge solid white candle with hugh volume probably means at these price levels margin call sellings are done. Unless the market moves down more, that is, moves below the bottom of the white candle, in the meantime it probably will not trigger another round of margin call selling.
But of course there are still trimming along the way up as investors are getting nervous and pessimistic. Those are mostly not margin call selling, so the selling will be less powerful.
I'm glad that I got into HGU and HFU at the bottom since Tuesday close. Since I already have a closed-end fund invests in Canadian financials, I'm looking to sell all my HFU if it touches the 50-day EMA. If the Canadian financials can go up more, I'll see if I can sell my closed-end fund for now, as I think in the meantime I have too much long position.
Looking at SKF, SRS, SDS, DXD, TWM and QID, they all displayed consecutive two big black candles. In the short term it is not looking good. But other than QID and DXD, all the other ETFs is having its 20-day EMA > 50-day > 100-day > 200-day. So unless there are signals that they are reversing at significant volume, they could be good bet when near 200-day EMA.
Of course not. You see the power of margin calls and overnight positions. Unfortunately investors who got hit by the over-leverage needs to sell to raise cash. I don't have any solid numbers here but I believe that is how it works. Some investors at that very moment were forced to sell. And since they were forced to sell, they were price-takers, and they could only be price-takers, because they didn't have a choice. There are sharks out there to eat them and took this chance to buy at the lowest price of the day.
Usually under this situation we call this panic selling. Well, just sit back and think about it, amateurs only represent a small portion of the investing population moneywise. So even amateurs were not using leverage and just plain panic sell will not cost the market to go down so much, so fast. I can almost guarantee to you that the market went down so fast was largely due to margin calls. When margin calls come in, it's not panic selling. It's rational selling. At least in the eyes of your broker. So next time, don't be fool by the media that market goes down due to panic selling.
Looking at today and yesterday market's performance. I think a short term bottom is formed. It is again due to margin call selling. Different leveraged-investors entered their positions at different price levels. A huge solid white candle with hugh volume probably means at these price levels margin call sellings are done. Unless the market moves down more, that is, moves below the bottom of the white candle, in the meantime it probably will not trigger another round of margin call selling.
But of course there are still trimming along the way up as investors are getting nervous and pessimistic. Those are mostly not margin call selling, so the selling will be less powerful.
I'm glad that I got into HGU and HFU at the bottom since Tuesday close. Since I already have a closed-end fund invests in Canadian financials, I'm looking to sell all my HFU if it touches the 50-day EMA. If the Canadian financials can go up more, I'll see if I can sell my closed-end fund for now, as I think in the meantime I have too much long position.
Looking at SKF, SRS, SDS, DXD, TWM and QID, they all displayed consecutive two big black candles. In the short term it is not looking good. But other than QID and DXD, all the other ETFs is having its 20-day EMA > 50-day > 100-day > 200-day. So unless there are signals that they are reversing at significant volume, they could be good bet when near 200-day EMA.
Monday, January 21, 2008
Canadian market
US is closed today, but the shock wave continued to hit the global market. I bought into HFU (again) at $13.785 and got some HGU at $26.59. Now I averaged down my HFU cost to about $15.50.
I bought into HFU because HFD, its reverse version shown a black candle (that is, closing price lower than opening price). As well, the highest price of HFD all day is the opening price. After a parabolic uptrend since beginning of 2008, I think it's time for Canadian financials to rebound a bit. Well, I just expect about a 5% rebound in financials from here, which a probable 10% upside for my HFU. If that happens, I will break even. As I said, nothing can drop in a straight line.
HGU went all the way up from $24 at beginning of 2008 to as high as over $36 in 2 weeks, crashed back down to as low as above $26 today. The uptrend definitely was due to the anticipated higher price of gold bullion with weaker US dollar. I'm not greedy here, something close to 10% is perfect to me.
Markets reversed trends faster than I was expected last week. I was not surprised that markets will resume down trend even after US government announced any plan to help the economy. Just that the rebound was so short live that surprise me. All my long positions like mutual funds/closed end funds were down almost 10% more. I'm still waiting for a better time and chance to unload some of those.
I know many people said markets are oversold, a rebound is due. Well but the size of the rebound and the length of time of the rebound can vary. To me, oversold or overbought is not that important. Rather, the distance between the 20-day EMA and 200-day EMA is more meaningful to me.
I'm currently spending some time to do some study there and I hope I can come up with some solid conclusions. I will post them here when I find something.
I bought into HFU because HFD, its reverse version shown a black candle (that is, closing price lower than opening price). As well, the highest price of HFD all day is the opening price. After a parabolic uptrend since beginning of 2008, I think it's time for Canadian financials to rebound a bit. Well, I just expect about a 5% rebound in financials from here, which a probable 10% upside for my HFU. If that happens, I will break even. As I said, nothing can drop in a straight line.
HGU went all the way up from $24 at beginning of 2008 to as high as over $36 in 2 weeks, crashed back down to as low as above $26 today. The uptrend definitely was due to the anticipated higher price of gold bullion with weaker US dollar. I'm not greedy here, something close to 10% is perfect to me.
Markets reversed trends faster than I was expected last week. I was not surprised that markets will resume down trend even after US government announced any plan to help the economy. Just that the rebound was so short live that surprise me. All my long positions like mutual funds/closed end funds were down almost 10% more. I'm still waiting for a better time and chance to unload some of those.
I know many people said markets are oversold, a rebound is due. Well but the size of the rebound and the length of time of the rebound can vary. To me, oversold or overbought is not that important. Rather, the distance between the 20-day EMA and 200-day EMA is more meaningful to me.
I'm currently spending some time to do some study there and I hope I can come up with some solid conclusions. I will post them here when I find something.
Tuesday, January 15, 2008
Sold FXP again
I keep writing new record of myself. I sold FXP at $81.76 today and made a 15% gain in two business days. I have to acknowledge that I sold prematurely, only to watch FXP went as high as $86.46.... I did not expect that kind of movement so fast because when Merrill Lynch issued a warning on larger write down on upcoming earnings report (due this Friday) the stock actually went up. But it didn't happen to Citigroup today.
Intel's report definitely does not help the market tomorrow. I guess tomorrow should be the climax of selling. Thursday and Friday may slow down a bit as some other financials including JP Morgan, Merrill Lynch, Wells Fargo, Washington Mutual, Bank of New York and etc are reporting. But since they are financials, probably their numbers are in Wall Street's pocket. Significant surprise on the downside is not quite expected.
I also need to acknowledge that my previous prediction of 2008, specially on the Chinese stocks that I have been talking about, are being violated. I would put all those stocks on hold, or be more aggressive, sell them at a good time to cut back long position. I may want to get out from FMCN for now to try to minimize the loss. As well, I'm still looking for chance to unload my HFU in Canada, as I was wrong on financials having a rebound last week. But glad that I didn't initiate a big position.
You may still hear people saying we are not going into recession. Again I want to emphasize, it doesn't matter. If there are a large number of investors do not believe the market is going up, they will sell, and their transactions will show on the graph. In a downtrending market it's easy to pick a stock to go down than to go up. This is what we call "Don't fight the trend".
I probably have not mentioned my thoughts on solar energy stocks, but I really want to say, I know many solar energy stocks are going to come down with the market, because the market in a whole is going down and as well, these stocks have had crazy runs that their 20-day EMA significantly outpace the 200-day EMA. Same story to dryship stocks earlier in 2007. Too bad I do not want to short individual stocks.
Intel's report definitely does not help the market tomorrow. I guess tomorrow should be the climax of selling. Thursday and Friday may slow down a bit as some other financials including JP Morgan, Merrill Lynch, Wells Fargo, Washington Mutual, Bank of New York and etc are reporting. But since they are financials, probably their numbers are in Wall Street's pocket. Significant surprise on the downside is not quite expected.
I also need to acknowledge that my previous prediction of 2008, specially on the Chinese stocks that I have been talking about, are being violated. I would put all those stocks on hold, or be more aggressive, sell them at a good time to cut back long position. I may want to get out from FMCN for now to try to minimize the loss. As well, I'm still looking for chance to unload my HFU in Canada, as I was wrong on financials having a rebound last week. But glad that I didn't initiate a big position.
You may still hear people saying we are not going into recession. Again I want to emphasize, it doesn't matter. If there are a large number of investors do not believe the market is going up, they will sell, and their transactions will show on the graph. In a downtrending market it's easy to pick a stock to go down than to go up. This is what we call "Don't fight the trend".
I probably have not mentioned my thoughts on solar energy stocks, but I really want to say, I know many solar energy stocks are going to come down with the market, because the market in a whole is going down and as well, these stocks have had crazy runs that their 20-day EMA significantly outpace the 200-day EMA. Same story to dryship stocks earlier in 2007. Too bad I do not want to short individual stocks.
Thursday, January 10, 2008
FXP the fourth time
Got into FXP at $70.73 again today. I missed out the good opportunities in all TWM, SKF and SRS in the beginning of this year. I expect the rebound will not hold for very long, so I started to initiate a small position on it.
As said, markets these days are very fluctuate. Things move so fast during a day (look at CFC). I don't want to gamble too much. So I'll play with ETFs instead of individual stocks.
As said, markets these days are very fluctuate. Things move so fast during a day (look at CFC). I don't want to gamble too much. So I'll play with ETFs instead of individual stocks.
Tuesday, January 8, 2008
Markets didn't wait for me
Only a few days ago when we headed in 2008, I still saw articles here and there predicting a strong equity market this year. Just a few days I wonder if those people change their view.
I already became bearish since November, became more bearish by end of 2007. As you see I'm not perfect. I did not correctly predicted a sub-prime blew up in August, but at least I tried my best conservatively to recoup some of my losses by trading TWM and FXP.
When a recession comes or big fall of market, you will start to see articles about what sectors and what stocks are defensive. Let me tell you (again), due to the current invention of short ETFs, you should not bet on yourself you can find a stock that can go up well in a down market. You should simply hold some cash and make use of the short ETFs.
I am a bit scared by the market these days, swing too much and too fast. Otherwise, I should have got myself some short ETFs and making money to offset some of my loss on the mutual funds and closed-end funds I have. I already have some ideas what to buy and when to buy, just that the market moves so fast that it didn't wait for me......
Anyway, I was wrong on the direction about Canadian financials as well. Nothing falls in a straight line, so at least I believe I stand a chance to recoup some of the loss before I cut loss. I'll see.
I already became bearish since November, became more bearish by end of 2007. As you see I'm not perfect. I did not correctly predicted a sub-prime blew up in August, but at least I tried my best conservatively to recoup some of my losses by trading TWM and FXP.
When a recession comes or big fall of market, you will start to see articles about what sectors and what stocks are defensive. Let me tell you (again), due to the current invention of short ETFs, you should not bet on yourself you can find a stock that can go up well in a down market. You should simply hold some cash and make use of the short ETFs.
I am a bit scared by the market these days, swing too much and too fast. Otherwise, I should have got myself some short ETFs and making money to offset some of my loss on the mutual funds and closed-end funds I have. I already have some ideas what to buy and when to buy, just that the market moves so fast that it didn't wait for me......
Anyway, I was wrong on the direction about Canadian financials as well. Nothing falls in a straight line, so at least I believe I stand a chance to recoup some of the loss before I cut loss. I'll see.
Sunday, January 6, 2008
The shortfall of ultra long and short
I like to apply idea to realistic situation other than on paper only. After all, you want to make real money profit, not paper profit.
I emphasized the use of ultra long and short ETFs. I want to make sure they are effective and how would they affect actual trading and profit in real world. Therefore, I did some very simple test using make up numbers.
Note that ultra long and short ETFs search for 200% exposure to a particular index on a day-to-day basis. Some articles emphasized the tricky part of day-to-day basis. However, this is not the important point in here, they went the wrong way.
The most important issue for the ultras are the leverage minus cost. What I mean is, when the index goes up, an ultra long ETF should produce roughly less than 2x, and when the index goes down, the ultra long ETF should lose roughly more than 2x. That is due to the cost and management fee.
I tried to produce a graph of a series of make-up returns. I initially assume the index loses 2% in 1 day, then gains 1% the next day. It flips between -2% and +1% for about 32 days. Then the pattern changes. It flips between +2% and -1% for about 70 days. The index produces approximately 19.4% in total. If we assume the ultra long produces exactly 2x exposure, the ultra produces approximately 39% at the end of 102 days.
Using the ultra actually compounded the effect. Therefore, if the index has been negative for a while, it takes more effort for the ultra long to catch up in performance. As you would see, while the index is slightly positive, the ultra long is still negative. But if the index continues to rise, eventually the ultra long picks up the speed and surpass the index. Conclusion, to hold an ultra ETF for long time, you have to make sure that you are making the correction directional bet. If the index takes longer than you expect to go to your direction, you have to expect to hold the ultra ETF longer to realize the compounding profit.
Now however if I change the exposure to 1.9x your direction and 2.1x the opposite direction, the picture totally changed.
If I use exactly the same index return pattern as above, assuming the ultra long only goes up by 1.9x when the index goes up, but the ultra long goes down by 2.1x when the index goes down to reflect the costs. Not very surprising, the ultra long actually underperformed the index by 0.02%.
Now if you believe this kind of exposure makes more sense than simply 2x. What you need to do is 2 things:
1. market timing matters. Just that you think the index should go up over a year, it doesn't mean you can earn more by using ultra long. Due to the imperfect 2x exposure, you better time the market carefully.
2. trade in and out. If there is no tax, sell into strength and buying back during pullback always help the performance of an ultra ETF. Given the compounding effect against you, I guess even after you consider the tax effect you will still find trading in and out helpful.
I emphasized the use of ultra long and short ETFs. I want to make sure they are effective and how would they affect actual trading and profit in real world. Therefore, I did some very simple test using make up numbers.
Note that ultra long and short ETFs search for 200% exposure to a particular index on a day-to-day basis. Some articles emphasized the tricky part of day-to-day basis. However, this is not the important point in here, they went the wrong way.
The most important issue for the ultras are the leverage minus cost. What I mean is, when the index goes up, an ultra long ETF should produce roughly less than 2x, and when the index goes down, the ultra long ETF should lose roughly more than 2x. That is due to the cost and management fee.
I tried to produce a graph of a series of make-up returns. I initially assume the index loses 2% in 1 day, then gains 1% the next day. It flips between -2% and +1% for about 32 days. Then the pattern changes. It flips between +2% and -1% for about 70 days. The index produces approximately 19.4% in total. If we assume the ultra long produces exactly 2x exposure, the ultra produces approximately 39% at the end of 102 days.
Using the ultra actually compounded the effect. Therefore, if the index has been negative for a while, it takes more effort for the ultra long to catch up in performance. As you would see, while the index is slightly positive, the ultra long is still negative. But if the index continues to rise, eventually the ultra long picks up the speed and surpass the index. Conclusion, to hold an ultra ETF for long time, you have to make sure that you are making the correction directional bet. If the index takes longer than you expect to go to your direction, you have to expect to hold the ultra ETF longer to realize the compounding profit.
Now however if I change the exposure to 1.9x your direction and 2.1x the opposite direction, the picture totally changed.
If I use exactly the same index return pattern as above, assuming the ultra long only goes up by 1.9x when the index goes up, but the ultra long goes down by 2.1x when the index goes down to reflect the costs. Not very surprising, the ultra long actually underperformed the index by 0.02%.
Now if you believe this kind of exposure makes more sense than simply 2x. What you need to do is 2 things:
1. market timing matters. Just that you think the index should go up over a year, it doesn't mean you can earn more by using ultra long. Due to the imperfect 2x exposure, you better time the market carefully.
2. trade in and out. If there is no tax, sell into strength and buying back during pullback always help the performance of an ultra ETF. Given the compounding effect against you, I guess even after you consider the tax effect you will still find trading in and out helpful.
Friday, January 4, 2008
sold FXP
Sold at $82.70. Made a profit of approx. 11% from $73.50 about 2 weeks ago. I made myself two records. Trade the same securities 3 times within 2 months, and made profit all 3 times. I guess if I can keep up of that kind of good work I can retire very soon.
Unfortunately I'm not that smart, therefore, all my other holdings dropped today. But almost all of my holdings I'm going to hold them for a while purposely, so the drop today doesn't bother me too much, unless it really drops very badly.
In the meantime I would not go to any individual stock, unless you want to go short. Given the expansion in ETFs these days I guess individual investors should learn how to make use of them in any market environment. These months mark a sequence of down days of market, under this kind of market, it's easier to pick a stock that will go down than a stock that will go up.
Today may mark the end of some strong (tech) stocks uptrend, we'll see how it plays out later. But all strong stocks like AAPL, GOOG, BIDU, AMZN, VMW, ISRG and FSLR dropped by quite an amount. That may mean the downward pressure starts bringing the strong stocks down too. But instead of trying to bet on the supposed-to-be-strong stocks, as I said in last paragraph, a better trade is to bet on stock that will go down. But if you don't want to short individual stock, ultra short ETFs are a good way to go.
As I said yesterday, XLF either rebounded or made new low today due to the job report. It made new low. If we would take this as an example. Wait for a rebound and when XLF hits the 50-day EMA, buy some in SKF. If you would like to play the rebound as well then you have to make a guess of when XLF will bottom in the short term and buy some UYG.
Anything, current strategy should be, bias to the downside. Good luck.
Unfortunately I'm not that smart, therefore, all my other holdings dropped today. But almost all of my holdings I'm going to hold them for a while purposely, so the drop today doesn't bother me too much, unless it really drops very badly.
In the meantime I would not go to any individual stock, unless you want to go short. Given the expansion in ETFs these days I guess individual investors should learn how to make use of them in any market environment. These months mark a sequence of down days of market, under this kind of market, it's easier to pick a stock that will go down than a stock that will go up.
Today may mark the end of some strong (tech) stocks uptrend, we'll see how it plays out later. But all strong stocks like AAPL, GOOG, BIDU, AMZN, VMW, ISRG and FSLR dropped by quite an amount. That may mean the downward pressure starts bringing the strong stocks down too. But instead of trying to bet on the supposed-to-be-strong stocks, as I said in last paragraph, a better trade is to bet on stock that will go down. But if you don't want to short individual stock, ultra short ETFs are a good way to go.
As I said yesterday, XLF either rebounded or made new low today due to the job report. It made new low. If we would take this as an example. Wait for a rebound and when XLF hits the 50-day EMA, buy some in SKF. If you would like to play the rebound as well then you have to make a guess of when XLF will bottom in the short term and buy some UYG.
Anything, current strategy should be, bias to the downside. Good luck.
Thursday, January 3, 2008
HFU
The title is not short hand of some coarse languages, don't worry. It's the Canadian Financials ultra long ETF I bought today at $17.03.
I know the overall market did not start with good upward moving in 2008, but with strong oil and gold, Canadian market did go up 2 days in a row, how surprising.
But, the financials did not follow the index. HFU is now sitting at a price very close to the lowest set in November 2007. I did not commit all my money, just a first dip to test the water. I think given that Canadian banks have less problem related to credit crunch (but still there is ABCP problem) as their US peers, Canadian financials should have some short term upside potentials.
We'll see how it plays out.
My FXP battled to go up passed $80. I guess I'll liquidate it if it hits somewhere like $82. I guess I'll take a look at the market before it opens tomorrow (as US is reporting job data tomorrow before market opens) and see should I put in a limit order.
Quite surprise me too is FMCN, which went up 2 days in a row in a down market. I guess people really like its acquisition of CGEN, which is a direct competitor. I guess if resource allows, I can consider VISN as well. VISN's revenue number doesn't look bad.
Nintendo held up very well as well. I guess nothing I can complain about.
Given the market action today, doesn't look very good to QQQQ or QLD. The Nasdaq was holding up for most of the day, only to see it turned red in the late afternoon. XLF is at the November's low already, if there will be a rebound we should see it tomorrow comes with the excuse of the job report, or expect XLF to make a lower low.
I know the overall market did not start with good upward moving in 2008, but with strong oil and gold, Canadian market did go up 2 days in a row, how surprising.
But, the financials did not follow the index. HFU is now sitting at a price very close to the lowest set in November 2007. I did not commit all my money, just a first dip to test the water. I think given that Canadian banks have less problem related to credit crunch (but still there is ABCP problem) as their US peers, Canadian financials should have some short term upside potentials.
We'll see how it plays out.
My FXP battled to go up passed $80. I guess I'll liquidate it if it hits somewhere like $82. I guess I'll take a look at the market before it opens tomorrow (as US is reporting job data tomorrow before market opens) and see should I put in a limit order.
Quite surprise me too is FMCN, which went up 2 days in a row in a down market. I guess people really like its acquisition of CGEN, which is a direct competitor. I guess if resource allows, I can consider VISN as well. VISN's revenue number doesn't look bad.
Nintendo held up very well as well. I guess nothing I can complain about.
Given the market action today, doesn't look very good to QQQQ or QLD. The Nasdaq was holding up for most of the day, only to see it turned red in the late afternoon. XLF is at the November's low already, if there will be a rebound we should see it tomorrow comes with the excuse of the job report, or expect XLF to make a lower low.
Wednesday, January 2, 2008
Crude Oil $100
Crude oil futures finally broke through $100 per barrel, although did not close above it.
Many people think this is really something. Well when oil was around $70 only years ago, $100 is something. But when oil was $99 in November 2007, $100 in January 2008 does not add to my blood pressure.
The first trading day of 2008 doesn't look very bullish. All SPY, DIA, QQQQ, IWM and XLF are all approaching their November lows again. So if they cannot hold that lows, expect another leg down. FXI is coming down as I wish (because I'm still holding FXP). FXI's first support is $160, which is last time's lowest in December, then the next support will be around $150 - the 200-day EMA. If FXI approaches the prices between the two supports I should cover my FXP.
I was so stupid. I didn't know there are ultra long and short ETFs in Canada trade on the exchange. Now I can trade with the ultra long and short of S&P TSX 60, Financials and more indices in Canadian dollar term. I know there will be 10 more coming up on the market. The ETFs I like are the TSX 60 (which is large cap), financials and agricultural. Now I can set up core financial mutual fund portfolio and at the same time, trade with the financial long and short.
My current view is still the same, little bearish for the short term future. Since in a long run China is still a place to invest, I'll wait for chance to go into China mutual funds and CAF.
Many people think this is really something. Well when oil was around $70 only years ago, $100 is something. But when oil was $99 in November 2007, $100 in January 2008 does not add to my blood pressure.
The first trading day of 2008 doesn't look very bullish. All SPY, DIA, QQQQ, IWM and XLF are all approaching their November lows again. So if they cannot hold that lows, expect another leg down. FXI is coming down as I wish (because I'm still holding FXP). FXI's first support is $160, which is last time's lowest in December, then the next support will be around $150 - the 200-day EMA. If FXI approaches the prices between the two supports I should cover my FXP.
I was so stupid. I didn't know there are ultra long and short ETFs in Canada trade on the exchange. Now I can trade with the ultra long and short of S&P TSX 60, Financials and more indices in Canadian dollar term. I know there will be 10 more coming up on the market. The ETFs I like are the TSX 60 (which is large cap), financials and agricultural. Now I can set up core financial mutual fund portfolio and at the same time, trade with the financial long and short.
My current view is still the same, little bearish for the short term future. Since in a long run China is still a place to invest, I'll wait for chance to go into China mutual funds and CAF.
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