***Official*** 2011 Stock Market Thread

[Pliablemoose]

NFLX in and out 71.97/7401. 1500 shares

 

[ponyo]

NFLX in and out 71.97/7401. 1500 shares

What's the point of this post? If you want to make this your blog, at least post right after your entry and then again when you close your trade. Selectively posting only winning trade after the fact is lame.

 

[Pliablemoose]

What's the point of this post? If you want to make this your blog, at least post right after your entry and then again when you close your trade. Selectively posting only winning trade after the fact is lame.

Sorry, it went pretty fast, in at 10:02 am, out at 10:53 am. And I've been insanely lucky lately, haven't lost any $

Also took a long position in Apple, Should have another blowout quarter on iPhone, iPad, and MacBook sales

Also: http://micgadget.com/18976/iphone-4...permit-set-to-go-on-sale-in-china-this-month/

 

[IHateMyJob2004]

Sold 3 companies last week. Bought them back. One at a loss, two at a gain. Net positive but less than 1% positive. Too much headache for so little.

I own good companies and have some cash. I'm just going to sit and wait. Hoefully this bear keeps on beating up good comapnies. Want SD in the 6s again!

 

[Imp]

Still 96% cash, only holding SLF - it's a complete dud and I've lost about 20% on it so far (in the span of a month), but I have such a small position and pays a 7% dividend (rumour says it's going down), so "meh" for now.

Boo ya on the market crashing again. Enthusiasm over Euro Summit bullshit "solution" is waning significantly. Would like to buy back in when DOW hits 11,000 resistance again, but not so sure this time. I think it has a serious chance of hitting 10,000 or lower before Merkel gets neutered and ECB grows some balls?

 

[IHateMyJob2004]

Imp,

What is funny is that I worry more about Dow14,000 today than 10,000

Unemployment and railtime indicators of late have turned me into an optimist.

 

[Imp]

Ya, major continuous rally to 13,000 and up is a worry to me, especially as US economic indicators appear to be improving.

But it looks like Canada's pulling back, and the Euro idiocy is nerve-wracking. Back of my mind tells me there'll be an 11th hour "fix" of some sort though. I'm semi-cushioned even if I sit on cash as about 2/3 of my money is American and exchange rate will only improve if Euro goes to hell and/or US improves.

 

[Pliablemoose]

Andy Zaky's take on Apple's earnings http://www.appleinsider.com/article...guidance_to_accurately_forecast_earnings.html

In fiscal Q4, Apple beat its own EPS guidance by 28.2 percent. For fiscal Q1, Bullish Cross is expecting Apple to beat its EPS guidance by a lower 26.3 percent. Yet, we believe that in fiscal Q1 it will amount to one of the biggest if not the biggest earnings blowout in company history whereas in fiscal Q4 it resulted in a huge earnings miss

.

Zaky has nailed earnings in the past, hoping he's got this right...

 

[Arachnotronic]

Semiconductors taking a beating after INTC announced a revenue guidance cut.

Accumulated more AMD today. It's funny -- AMD's having trouble meeting demand yet people worry that because Intel cut guidance AMD will too?

Intel's producing more chips than it can sell, apparently. AMD will sell every last chip it'll make. These "analysts" need to be fired.

 

[KB]

We could certainly rally on consumer spending in the near term, but we will fall hard in the medium term. From this article:

"Italy’s 10-year debt yield is up to nearly 6.7% this morning, according to Tradeweb,
...
Irish yields are up to 8.6% and wider by 20 basis points.
...
But make no mistake, Greece is priced for default, yielding nearly 32% on its 10-year debt."

Yields over 7% are major worries. Greece has to default and go back to the drachma before we can repair the EuroZone. If it does default, Italy yields will hit 10%+

If the stock market was actually about fundamentals I would be shorting it, but it isn't. We could find out that Obama spent $100 on an ipod and the stock market could rise 100 points in this environment.

http://blogs.wsj.com/marketbeat/2011/12/12/european-bond-yields-surging-again/?mod=yahoo_hs

 

[Imp]

Semiconductors taking a beating after INTC announced a revenue guidance cut.

Accumulated more AMD today. It's funny -- AMD's having trouble meeting demand yet people worry that because Intel cut guidance AMD will too?

Intel's producing more chips than it can sell, apparently. AMD will sell every last chip it'll make. These "analysts" need to be fired.

News says that computer system makers are reducing orders because of a supply shortage of hard drives... AMD should be running off that same supply of hard drives, so I don't see how AMD wouldn't be affected by whatever Intel's affected by.


Also, turns out SLF is not as duddy as I thought. New CEO and some strategic reorganizations = 7+% rally today. Only need 13% more to get back to par...

 

[IHateMyJob2004]

Imp,

I guess I'm in the other boat hoping for a Dow rally so I can dump most of my holdings.

 

[Arachnotronic]

News says that computer system makers are reducing orders because of a supply shortage of hard drives... AMD should be running off that same supply of hard drives, so I don't see how AMD wouldn't be affected by whatever Intel's affected by.


Also, turns out SLF is not as duddy as I thought. New CEO and some strategic reorganizations = 7+% rally today. Only need 13% more to get back to par...

But Intel has no supply issues of its own, so it's pumping out CPUs and not finding enough people to buy them. AMD is actually unable to meet the current demand for its products, hence the HDD issue shouldn't be a problem for them until their own internal roadblocks are broken through -- and their stock price already has their internal shortage priced in.

I'm the biggest Intel supporter around, but man, AMD has been doing a LOT of things right (Llano, discrete GPUs, Brazos, etc.) and is improving its situation. Intel's already on top of the world, so they're much more prone to getting "hit". Especially when their "cut" forecast is still quite good -- it's just not a stratospheric increase like they've seen quarter-to-quarter.

 

[Imp]

But Intel has no supply issues of its own, so it's pumping out CPUs and not finding enough people to buy them. AMD is actually unable to meet the current demand for its products, hence the HDD issue shouldn't be a problem for them until their own internal roadblocks are broken through -- and their stock price already has their internal shortage priced in.

Okay, that would make sense.


As for the market today... YA! Die motha effa...

http://money.cnn.com/data/markets/dow/?iid=H_MKT_Data

So typical. For the previous "Fed Statement" days I can remember, the market rallies a bit in the morning, then post statement, it goes straight to hell. Crud, forgot to check out of SLF...

 

[Arachnotronic]

Shiiitt. Today was a bad day. Again.

 

[mshan]

I was doing some google research on bank nationalization deflation and found this interesting article:

"Either we’ll see a massive new plan to stop the contagion in Europe or the contagion will spread with failing banks nationalized as the Euro is dismantled. If this is allowed to happen it will lead to a deflationary recession or possible depression in the Euro-Zone and beyond. Tragically this is all preventable, yet the leaders of Europe sit frozen in their own inaction to address their fundamental problems. Stop-gap measures such as the coordinated international injection of liquidity just employed is important defensively, but only buys time.

Most likely, real action will come only at the point of panic. There is nothing like panic to focus the mind. If the market loses confidence in the government’s ability to pay their bills or questions the solvency of banks, the ball game is over. Confidence is the only thing tying the Euro-Zone together. The consequences of failure would be extreme, which is why we should take a little time to review and prepare for the various scenarios and possible outcomes if this happens.

The first and most likely scenario if panic should set in is that free-falling markets and spiking interest rates would quickly force the governments of the world to step up and throw everything they have at the markets. At that point, all of the plans they have been talking about but unable to agree upon would come together. So, no doubt an international response would be volleyed to try and stop the panic. Their attempt might work—and might not. We just saw evidence that all nations including China are willing to participate in such an attempt. This is at least a first step. China adds to the "Bazooka effect".

What do they have in their arsenal? They can inflate. The ECB could inject massive amounts of cash into the banking system, even though they are not suppose to. The IMF could create reserves in the form of SDR's to serve as an asset backed by a basket of currencies, and then loan these to governments, an even greater inflation weapon. They also have gold in their coffers which can be used as collateral. And they have the ability to borrow from those that have cash such as China or Brazil, whom they are courting.

Finally, they could restructure their debt through amortization or forgiveness at below market interest rates for longer periods of time. If all these efforts failed to stabilize the system they have brute force at their disposal and can impose capital controls, shut down markets, close and nationalize banks, and impose higher taxes.

Scenario number two is that the Euro breaks apart as Greece returns to the Drachma and other hopelessly indebted nations do the same. OR...Germany does the splitting by returning to the Deutsche Mark and refusing to continue support to the weaker countries. One route leads to devaluation and the other to revaluation of currencies, but both would end in major defaults and reversals of trade flows. The German surplus would dwindle and the Greek trade deficit would turn to surplus, but at the end of the day it would primarily be the creditors who suffered the losses together with importers or exporters. Historically, when push comes to shove, debtors win over creditors. This is in my opinion why we have seen bank stocks falling throughout the world -- they are volnerable.

A third scenario is that the status quo just continues. The Euro-Zone buys more time through the application of various half measures and Band-Aids until they eventually get their financial house in order. Fiscal austerity would need to be the order of the day throughout Europe. That could take about five years to accomplish if they are sincere about cutting spending. Assuming they eventually subsidized all financial losses, the price tag, as I see it, would be upwards of three trillion dollars, include a prolonged recession, and a falling Euro.

In addition to these three scenarios there are all the “Armageddon” prophecies that include the breakdown of the monetary system, hyperinflation, or a deflationary depression with all of the social unrest that comes with the breakdown of societies. But what does all this mean for us as investors and traders?

The answer is simpler than you might think: follow the money. The great classical economist Ludwig von Misses taught that it is human action which determines the value of things and the direction of markets. If people panic and sell things we will enter a deflation as cash becomes king just as it was in the Great Depression. Whatever cash you hold could be worth many times more in purchasing power at the end of a great deflation. If on the other hand people run from cash and trade it for stocks, or homes, or commodities like gold and silver, we will be in an inflationary world where cash is trash.

Gold* is one commodity that should fare well either way. However, gold could fall in a deflation and do worse than paper money guaranteed by the FDIC. Remenber, gold was fixed during the great depression, and is not today. There are no guarantees that any one position will preserve or make money during a panic. The best we can do in preparation for the possibility of panic is to diversify, identify where money is heading, and lean into that trend.

I have always been an optimist when it comes to America and I can even see a bright side for the US if the Euro-Zone busts apart and goes into what I think would be a deflationary depression much like Japans, especially if you add an additional shock to the system like an economic downturn in China. If that were to occur we’d be assured of a deflationary recession, worldwide. Yet, North America in general could fare well, as I will explain. But let's back up.

I’ve been sending my readers reports of newly constructed vacant train stations in China, and quoting Chinese insiders who are predicting a housing crash there. I'm worried about a stealth crash in China that would bring more chaos to an already chaotic world. Fox News recently showed footage of an entire “ghost city” in China, complete with a state of the art convention center and a beautiful modern library surrounded by hundreds of high rise condos. Yet it sits virtually deserted. Built to house a million people this city has no industry, no businesses, and few living or working there.

This is reminiscent of previous “five-year plans” where a bunch of bureaucrats sat around deciding what they should spend people’s money on. These plans always create an initial illusion of prosperity but cannot be sustained and inevitably fail. China has been pretty lucky, parlaying its artificial boom into an impressive expansion. If however it is about to fail, the whole world will be thrown into a deflationary recession or even depression as all of Asia is dragged down with China.

Interestingly, if this were to happen, the only country that would be able to stand on its own two feet would be the US. We will be affected adversely of course, but we are not dependent on exporting like almost every other nation in the world. Exports account for only about 10.7% of our 14 trillion dollar economy. Other nations will fight to export to us with cheaper and cheaper goods—an obvious benefit to the American consumer. Nor are we dependent on the value of other nation’s money. The supply and value of the US dollar is within our control. And we have most of the resources we need right here at home and won’t need to import them, although you can bet other nations will fight to provide them to us first, for less.

Canada and Mexico are our major trading partners, and between the three of us, we could move quickly to compensate for the loss of other trading partners if need be. In fact, if we handled a worldwide deflationary recession correctly, we could become energy independent in a few years and be one of the only growth areas in the world, all by tapping our huge oil and natural gas reserves. A North American block would become a formidable economic power in the world. And we have the unemployed work force to start manufacturing what we need if we choose to move back to a manufacturing society. After all, we have not lost that capacity.

Europe, Japan, and Asia would go into a depression for years. Even Germany and England would not survive a collapse like that. North America, however, would not necessarily do all that bad. Yes it would be scary, and it would be disruptive. But at the end of the day, anyone who had liquid cash would be able to gain big time. I have no idea whether such a collapse will happen in China, but the reports leaking out of China must be monitored as closely as any information we can get about Europe. There is still plenty of time to liquidate and raise more cash if that becomes necessary. The key is when to pull the trigger in order to position oneself to ride out the chaos and still be in a position to pick up the pieces after.

So when is the right time? At the point of panic. If people panic governments will react vigorously to stem it. That is when we will see what decision governments, for better or for worse make, and the decisions people make regarding their money in response; that’s when we follow the money. Sell or buy into the developing trend by either raising more cash, or buying more gold or silver, or buying the stock market if the market took off due to real solutions being instituted. In the meantime it's 50/50 as to what might happen.

The coordinated move by governments to lower interest rates and supply liquidity to banks and governments, has tipped the hand of world leaders. It will no doubt be seen as inflationary if they choose to go that route, but it is actually an anti-deflationary move. It is a concerted action to off-set de-leveraging. In my opinion it is a test run leading to further action as necessary, and it will involve almost every major nation in the world. The immediate reaction this time was money flying into equity markets around the world. The subsequent actions were ones of stressing austerity without a financial backstop, and stocks fell dramatically. The following days and weeks should tell us much more about the direction we are headed. Hopefully we will be able to avert a panic."

http://www.kitco.com/ind/Nathan/dec092011A.html

Peter Morici seems to imply the U. S. will have to stealth bailout our banks (Citigroup again? ) if Eurozone truly implodes (?): http://video.cnbc.com/gallery/?video=3000061435 (start around 2 minute mark)

Kyle Bass (Wednesday morning, Dec. 13 on CNBC): http://video.cnbc.com/gallery/?video=3000061932
- comparing what he said vs. previous video clips I've seen of him on YouTube, sounds like Euro Summit last week does not change his thesis that Eurozone will eventually break up
- said he thinks ECB will print after default, not before
- said payments system worked perfectly with Lehman, problem was that their senior unsecured debt was in money markets and when those broke the buck, that is what scared everyone (7:43 mark, but recommend start watching around 6:30 point)
- found what seems like decent article trying to figure who ultimately pays the bill with bankruptcy vs. nationalization: http://www.realclearmarkets.com/articles/2009/02/go_with_bankruptcy_over_nation.html
- some reference to MF Global, big investors pulling their money from system, and concerns about hyper re-hypothecation (around 9:40 mark)

* Bill Strazullo's (Bell Curve Trading) technical take (post market close on Wednesday Dec. 14) on potential ultimate downside technical target for gold (1400 -> potential washout at 1100), plus short-term downside targets for oil and SPX.
- Following up on Noid's comments below Strazullo says bulk of retail investors on gold from Sept. 6 high are caught long from 1660 - 1700: http://video.cnbc.com/gallery/?video=3000062311 (start around 6:40 mark)






** Please note: What he says sounds reasonable to me (e. g. inflation vs deflation inflection point is consistent with what Ken Moelis said in CNBC video clip I previously linked - http://video.cnbc.com/gallery/?video=3000060748), but I don't have the financial background to independently vet what he says and concludes, so again please just view this as food for thought for your own follow-up research and due diligence. **

 

[The-Noid]

*snip*

But, but, but, Gold does well in every environment! *snicker*

Full disclosure I do own gold for the end of the world tail risk scenario, it gives me comfort for that 5% of my portfolio that is in physical pm's and 5% more was in gold futures that I fear is going to get stopped out just below the 200 dma. Having said that the sign of a bubble is when I am driving in my car, listening to bbg and 4 out of every 5 commercials is for a gold dealer. It worries me how many people are in this market selling to retail. Demand is huge but it will be interesting to see what happens if we move into a long term sustained losing scenario for gold.

 

[manly]

Andy Zaky's take on Apple's earnings http://www.appleinsider.com/article...guidance_to_accurately_forecast_earnings.html

.

Zaky has nailed earnings in the past, hoping he's got this right...

Zaky was wrong last quarter, as were all the independent analysts.

I don't have a problem with the content of his AI feature, but his tone is totally condescending towards Wall Street. He never fessed up that he was wrong last time, and that WS consensus was actually closer to the mark.

His track record is historically very good, but Turley Muller is even better. I don't recall if there are one or two others at the top of the mythical rankings.

It's also clear that he's an AAPL bull and probably has a huge un-diversified position. That's fine with disclosure; and I'm not trying to knock the guy, but he comes across as a jerk.

Most importantly, the FY Q1 guidance might be the first time Apple did not low-ball its guidance (remember, Cook is the new boss and he's made some subtle adjustments). I actually find it easier to believe that they'll hit $38B revenue than over $41B just because they've always low-balled in the past. Their guidance is already $9B more than they've ever done. If Apple low-balled us in October, then they amazingly knew they would sell over 35M iPhones this quarter (and they'd still need breakout sales of both iPad and Mac).

 

[Pliablemoose]

Zaky is a perma-bull, no question there...

 

[The-Noid]

Zaky is a perma-bull, no question there...

I think we got into this conversation about AAPL earnings last time. Old Wall Street got it closer this quarter than all the previous combined. Sales will plateau for AAPL at some point and the Twitter perma bull AAPL fanbois will get it wrong.

 

[Arachnotronic]

Down 10% and counting on AMD. Tech is just getting raped thanks to Intel.

 

[Imp]

But, but, but, Gold does well in every environment! *snicker*

Full disclosure I do own gold for the end of the world tail risk scenario, it gives me comfort for that 5% of my portfolio that is in physical pm's and 5% more was in gold futures that I fear is going to get stopped out just below the 200 dma. Having said that the sign of a bubble is when I am driving in my car, listening to bbg and 4 out of every 5 commercials is for a gold dealer. It worries me how many people are in this market selling to retail. Demand is huge but it will be interesting to see what happens if we move into a long term sustained losing scenario for gold.

Bloomberg article said that gold bull is dead/dying - like the other 1000 analysts that have said so for the past few years. This time though, I'm inclined to believe. Gold peaked at $1800 or $1900 a few months ago, and has been hovering around $1600 for a while in spite of all the bad news. People need the capital?


And stocks... VERY uncomfortable with any buying now. I checked out my last 4% (100% cash now) yesterday because stuff is not adding up. The DOW is still at around 12000 (upper 11k), which is where it was early 2011. Meanwhile, all bank stocks are 25% or more down, AA is like -50%, XOM ~-5%, etc. So commodities and financials are dead, but other stuff is keeping the DOW up. Feels like the bottom is about to fall out.

 

[IHateMyJob2004]

That long post above. Anyone think 2012 beign the end of the world is no joke?

 

[IHateMyJob2004]

Bloomberg article said that gold bull is dead/dying - like the other 1000 analysts that have said so for the past few years. This time though, I'm inclined to believe. Gold peaked at $1800 or $1900 a few months ago, and has been hovering around $1600 for a while in spite of all the bad news. People need the capital?


And stocks... VERY uncomfortable with any buying now. I checked out my last 4% (100% cash now) yesterday because stuff is not adding up. The DOW is still at around 12000 (upper 11k), which is where it was early 2011. Meanwhile, all bank stocks are 25% or more down, AA is like -50%, XOM ~-5%, etc. So commodities and financials are dead, but other stuff is keeping the DOW up. Feels like the bottom is about to fall out.

Someone here said they will not sell gold till it hits $2000. Even as it went to $1900, I asked why pick up the pennies in front of hte bulldozer? They still helpd as it dropped. I wonder if that person is still holding. I'd double check as to who it was but I could care less to hunt throguh this thread to find out.

Any volunteers to start the 2012 thread when the time nears?

 

[Imp]

Someone here said they will not sell gold till it hits $2000. Even as it went to $1900, I asked why pick up the pennies in front of hte bulldozer? They still helpd as it dropped. I wonder if that person is still holding. I'd double check as to who it was but I could care less to hunt throguh this thread to find out.

Any volunteers to start the 2012 thread when the time nears?

Mental goal/barrier. I do it too sometimes, before I just say "eff it" and just buy/sell. But I day/week trade, so I'm assuming the mental barrier is stronger for those who don't buy/sell as often.

You just volunteered yourself.