About The Week
1. Fed cuts 25 basis points and leaves the market in the mix. Does that signify an end to rate cuts or not? We don't know. But what I feel is that the worst is not over because housing is not at the bottom yet. GDP grows at 0.6% for the quarter. So is it good or bad given that we have quite a number of horrific things happening to the credit market and housing? Again, it depends on how you see it. However despite the uncertainty on the outlook, Dow broke 13000 and S&P closed at 1413. Reluctant to believe what I am seeing though, I believe we are going up even more at least for the moment (logically thinking however...).
2. In case you thought the credit crunch was over, the Fed has apparently noted the elevated levels of LIBOR recently. Just before the nonfarm payroll reports, the increased the size of the TAF (Term Auction Facility) to $150b from $100b but is leaving the maturity at 28 days. The TAF, you will recall, allows the Fed to auction funds to depository institutions and accept a wide range of collateral in return. They are also expanding the type of collateral they will accept in the TSLF facility to include AAA asset backed securities.
3. Micro-Hoo. I have to rant about this and unleash all my frustrations. Both of them went silent for the past 6 days before friday #!%!@$%. Microsoft Chief Executive Steve Ballmer threathened Yahoo that they would walk around if the deal did not proceed fast (so much of a bluff). On friday, Microsoft raised its bid to $33, yet Yahoo was believed to be holding out for $37 according to some sources. Yahoo closed above $28 on friday while I sold Yahoo for $27 on monday. #%@#%!!%?@.
4. Rotation, rotation, rotation. We see even more money going into Tech and Financials while Commodities stocks are being thrown away. Is this going to last for long? We will see
5. I like this article on GDP. It sums up the report on GDP and gives a nice detailed coverage on it. Click here for the article.
Looking Back
Quite a number of recommendations and trading ideas so far. Time to see how they are performing.
1. Alcoa. Shorted at $39.4 and covered at $35. Around 11% gain
2. Intel. Bought at $21.12, sold at $22.13. Around 4% gain but if you had kept it in your hands or bought it back agian when I said that tech sectors are where you should be in, you would have Intel at $23.58. Another 11% gain. Look for $24.
3. UOB was flat for the week. Opened and closed at $20.60
4. It could have been a 20% gain for the week but sadly, I couldnt catch the bulk of it. Cosco at $3.09 to $3.30. Neat 6% Cosco was actually down all the way to $3.08 again this week. It proved some bargain again closing at $3.37 yesterday.
5. I certainly don't use yahoo for its search engine. Bought at $28.43, sold at $27. NEGATIVE 5%. Boycott www.yahoo.com please.
6. Oil was interesting. 1/5 of our position at $115, 4/5 at $113. I was so close to add a sell note if oil broke $110 (it hit a low of $110.30). Luckily it didn't. Average out the position, you get a mean of $113.40. Oil stood at $116.59. Assuming 5 contracts to make things easier, which means you need a total of $35,250 for margin, at $10 per contract for $0.01 movement in price, you earned $3190 = 9% of your margin.
7. I was impulsive on Gold. Should have referred to Fuzzy Logic and realised that dollar will strengthen, which means Gold will fall slightly just like what happened to oil. I made the call on Gold at $880. It closed at $856.10. $0.10/oz = $10 per contract. Margin required is $5875. Loss of $2390. Ouch. That is a whooping 40% of your margin. Hmm... this is bad.
To some up, total loss is -8% with gold in it assuming all being bought to the same value. Minus 1% per trade for commission, we have a net loss of 15%. Of course, if you were to ignore gold and oil as they were for long term purposes, it's 16% net gain for stocks alone.
Looking Ahead
I am running out of ideas for this week. It seems as though the rally is going to be unstoppable, especially if people are buying financials. I don't like to buck the trend, but things are too good to be true. After going through all the panic of a deep recession, illiquid credit system, mass inflation, we are standing at 13k, just 5% off record high last year.
So... with earnings winding down in the week ahead, I am going to be very aggressive with my calls this week. This is a huge call in fact. We have the so called "Rotation" of stocks this week - commodities to tech and financials. In order for this rotation to be sustained, we need good earnings or at least decent earnings from Cisco Systems and Fannie Mae next week. They are two big names from tech and financials respectively.
1. Fed cuts 25 basis points and leaves the market in the mix. Does that signify an end to rate cuts or not? We don't know. But what I feel is that the worst is not over because housing is not at the bottom yet. GDP grows at 0.6% for the quarter. So is it good or bad given that we have quite a number of horrific things happening to the credit market and housing? Again, it depends on how you see it. However despite the uncertainty on the outlook, Dow broke 13000 and S&P closed at 1413. Reluctant to believe what I am seeing though, I believe we are going up even more at least for the moment (logically thinking however...).
2. In case you thought the credit crunch was over, the Fed has apparently noted the elevated levels of LIBOR recently. Just before the nonfarm payroll reports, the increased the size of the TAF (Term Auction Facility) to $150b from $100b but is leaving the maturity at 28 days. The TAF, you will recall, allows the Fed to auction funds to depository institutions and accept a wide range of collateral in return. They are also expanding the type of collateral they will accept in the TSLF facility to include AAA asset backed securities.
3. Micro-Hoo. I have to rant about this and unleash all my frustrations. Both of them went silent for the past 6 days before friday #!%!@$%. Microsoft Chief Executive Steve Ballmer threathened Yahoo that they would walk around if the deal did not proceed fast (so much of a bluff). On friday, Microsoft raised its bid to $33, yet Yahoo was believed to be holding out for $37 according to some sources. Yahoo closed above $28 on friday while I sold Yahoo for $27 on monday. #%@#%!!%?@.
4. Rotation, rotation, rotation. We see even more money going into Tech and Financials while Commodities stocks are being thrown away. Is this going to last for long? We will see
5. I like this article on GDP. It sums up the report on GDP and gives a nice detailed coverage on it. Click here for the article.
Looking Back
Quite a number of recommendations and trading ideas so far. Time to see how they are performing.
1. Alcoa. Shorted at $39.4 and covered at $35. Around 11% gain
2. Intel. Bought at $21.12, sold at $22.13. Around 4% gain but if you had kept it in your hands or bought it back agian when I said that tech sectors are where you should be in, you would have Intel at $23.58. Another 11% gain. Look for $24.
3. UOB was flat for the week. Opened and closed at $20.60
4. It could have been a 20% gain for the week but sadly, I couldnt catch the bulk of it. Cosco at $3.09 to $3.30. Neat 6% Cosco was actually down all the way to $3.08 again this week. It proved some bargain again closing at $3.37 yesterday.
5. I certainly don't use yahoo for its search engine. Bought at $28.43, sold at $27. NEGATIVE 5%. Boycott www.yahoo.com please.
6. Oil was interesting. 1/5 of our position at $115, 4/5 at $113. I was so close to add a sell note if oil broke $110 (it hit a low of $110.30). Luckily it didn't. Average out the position, you get a mean of $113.40. Oil stood at $116.59. Assuming 5 contracts to make things easier, which means you need a total of $35,250 for margin, at $10 per contract for $0.01 movement in price, you earned $3190 = 9% of your margin.
7. I was impulsive on Gold. Should have referred to Fuzzy Logic and realised that dollar will strengthen, which means Gold will fall slightly just like what happened to oil. I made the call on Gold at $880. It closed at $856.10. $0.10/oz = $10 per contract. Margin required is $5875. Loss of $2390. Ouch. That is a whooping 40% of your margin. Hmm... this is bad.
To some up, total loss is -8% with gold in it assuming all being bought to the same value. Minus 1% per trade for commission, we have a net loss of 15%. Of course, if you were to ignore gold and oil as they were for long term purposes, it's 16% net gain for stocks alone.
Looking Ahead
I am running out of ideas for this week. It seems as though the rally is going to be unstoppable, especially if people are buying financials. I don't like to buck the trend, but things are too good to be true. After going through all the panic of a deep recession, illiquid credit system, mass inflation, we are standing at 13k, just 5% off record high last year.
So... with earnings winding down in the week ahead, I am going to be very aggressive with my calls this week. This is a huge call in fact. We have the so called "Rotation" of stocks this week - commodities to tech and financials. In order for this rotation to be sustained, we need good earnings or at least decent earnings from Cisco Systems and Fannie Mae next week. They are two big names from tech and financials respectively.
Weekly chart of Cisco system. Hmm, nice three white soldier here. The thing about three white soldier is that it can lead to a three line strike (a long black candle after three white soldier). Note that Cisco has a history of killing the tech sector last quarter with its poor guidance. I suggest shorting Cisco at $27 or closing price of tuesday if it never reached $27. It reports after the bell. Target $23. I have to credit this Cisco sell trade to Mad Money's host, Jim Cramer if it were to succeed.
I cant see anything for Fannie Mae though.
By Wednesday, we should be able to know the whole story of whether this rally will sustain. Maybe, just maybe, I will be less bias towards the bear side.
Commodities
So far my knowledge is limited to oil and gold for commodities at the moment. Hopefully, I can expand my scope in the future. Oil is very interesting. First, it can go down because of poor demand and weak economy outlook. Next, when weak economy outlook leads to dollar sliding, oil goes back up. To add things to the twist, dollar strengthens because of economy optimisim and oil goes up because of good economy outlook. LOL sounds funny and more fuzzy than my fuzzy logic. It happened last week. But watch for the $120 oil. I expect to see some pullback for the moment. Gold is failing me badly. Unless you want to sit really long term with gold (I'm pretty sure it will go back to $1000 because of dollar weakness), sell your gold positions. I will sit tight.
Latest Update
I just saw this piece of news when I woke up in the morning. Guess what? Micro-Hoo is gone. Read this for complete story. Honestly, I really don't know what is Yahoo thinking. Maybe they really believe that they have a bright future ahead. Nonetheless, I think Yahoo will free fall downwards to the pre-offer level at about $18.
This is a daily chart from Yahoo. I have actually noticed this when I made the Yahoo call previously. But when I move on to the weekly chart, it shows me another thing. I suppose this is one of graph glitches. Nonetheless, all gaps must be closed. In a week where I am looking for a tech break catalyst, Yahoo provides me one. However, Microsoft needs Yahoo actually. We will have to see how it goes. If I were Steve Ballmer, I would have to give in to Yahoo. Maybe $37 a share is way too much a premium. Oh well, if you never sell off your Yahoo which I sold on Monday at $27, good luck man.
Anyway, I strongly suggest that you still stand by on the side line unless you want to be aggressive, then you probably wish to short Yahoo and Cisco. For Microsoft, I am not very sure about its movement. It seems as though Yahoo's deal is dragging Microsoft in my opinion.
I just remember Semb Marine. I reiterate my stand that you should be shorting Sembawang Marine. Target price of $3.60. Major earnings for Singapore market actually. We have UOB on tues. DBS, OCBC, Semb Marine and Starhub on wed. Noble will report on thurs (hmm... commodities).
“I don’t know whether I make myself plain, but I never lose my temper over the stock market. I never argue with the tape. Getting sore at the market doesn’t get you anywhere.”
Jesse Livermore
I cant see anything for Fannie Mae though.
By Wednesday, we should be able to know the whole story of whether this rally will sustain. Maybe, just maybe, I will be less bias towards the bear side.
Commodities
So far my knowledge is limited to oil and gold for commodities at the moment. Hopefully, I can expand my scope in the future. Oil is very interesting. First, it can go down because of poor demand and weak economy outlook. Next, when weak economy outlook leads to dollar sliding, oil goes back up. To add things to the twist, dollar strengthens because of economy optimisim and oil goes up because of good economy outlook. LOL sounds funny and more fuzzy than my fuzzy logic. It happened last week. But watch for the $120 oil. I expect to see some pullback for the moment. Gold is failing me badly. Unless you want to sit really long term with gold (I'm pretty sure it will go back to $1000 because of dollar weakness), sell your gold positions. I will sit tight.
Latest Update
I just saw this piece of news when I woke up in the morning. Guess what? Micro-Hoo is gone. Read this for complete story. Honestly, I really don't know what is Yahoo thinking. Maybe they really believe that they have a bright future ahead. Nonetheless, I think Yahoo will free fall downwards to the pre-offer level at about $18.
This is a daily chart from Yahoo. I have actually noticed this when I made the Yahoo call previously. But when I move on to the weekly chart, it shows me another thing. I suppose this is one of graph glitches. Nonetheless, all gaps must be closed. In a week where I am looking for a tech break catalyst, Yahoo provides me one. However, Microsoft needs Yahoo actually. We will have to see how it goes. If I were Steve Ballmer, I would have to give in to Yahoo. Maybe $37 a share is way too much a premium. Oh well, if you never sell off your Yahoo which I sold on Monday at $27, good luck man.
Anyway, I strongly suggest that you still stand by on the side line unless you want to be aggressive, then you probably wish to short Yahoo and Cisco. For Microsoft, I am not very sure about its movement. It seems as though Yahoo's deal is dragging Microsoft in my opinion.
I just remember Semb Marine. I reiterate my stand that you should be shorting Sembawang Marine. Target price of $3.60. Major earnings for Singapore market actually. We have UOB on tues. DBS, OCBC, Semb Marine and Starhub on wed. Noble will report on thurs (hmm... commodities).
“I don’t know whether I make myself plain, but I never lose my temper over the stock market. I never argue with the tape. Getting sore at the market doesn’t get you anywhere.”
Jesse Livermore
1 comment:
The bulls are not on a roll their in a rout.
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