Wednesday 11 July 2012

Pivot Point.


You may have already seen this work of art from Banzai and it possibly says everything that we need to know about all the leaders and various talking heads of Wall.St.

Was it a green or red day? While the major indexes are in red, SPY is showing a tiny green. It could have been worse and it will get worse. There were no magic words in the FOMC meeting and the reaction was that of a dejection and despair. I still do not understand who in their right mind is hoping for a QE or liquidity injection in every FOMC meeting. When the SPX is just about 5% below its high for the year and there is no riot in the streets yet. I mean in the streets of USA. But it is already burning in Spain. So the dreaded “A” word has reached the 4th biggest economy of Europe. Yesterday Italy also gave not so subtle hint that they world also ask for bailout in the near future and Finnish finance minister has said what was unthinkable even few months ago, that Finland is ready to leave Euro if push comes to shove. Things are getting interesting.

I think the markets will chop around for the rest of the week given that there is not much of data coming up but it is struggling to hold on at this present level. Only thing that is holding it up is the hope of a good earnings report. And it will be a sell the news kind of event. In my opinion any rip in the next two days will be an opportunity to add to the short position.

Today I added a short position on Crude but somehow the tweet did not go through.  If Crude remains at this level tomorrow, it will be a good opportunity to short.  So now the only thing left to do is: to wait. We are coming up to an extremely volatile period and possibly you can sense the uneasiness. But one word of caution, whatever you do, keep your stops in place. I do not know your risk tolerance level. So use your own discretion for setting stops.

Apple is very close to my short target and as and when it falls below $ 600, there will be lots to travel down. Apple earnings report is due on 17th and it sure going to be fun.

A dear reader had asked about Bonds. Both the 30 year and 10 year is on a buy signal now and will possibly continue till end of July or 1st week of August, when bonds top and equities bottom.  But this is the final or end of the 30 year bull run of bonds and the next 30 years bear market in bonds are about to start from coming September. My assessment is based on fundamental and cycle analysis but famous chartist Peter L Brandt has a nice post on this subject which is here: http://peterlbrandt.com/treasury-bonds-in-final-blow-off-stage-of-30-year-bull-market/

He lost money in the latest scam and is very much upset about all the day light robbing that goes on in our free capital market. And he rightly pointed out that every penny stolen from investors finds its way in JPM.  

So stay focused and play it safe. Thanks for reading http://bbfinance.blogspot.com/ . Please join me in Twitter (@BBFinanceblog) and do re-tweet, post it on wall and share with your friends and circle. I need more readers to stay motivated. Somehow, the readership of the blog has not grown to the level I expected. So need some stimulus from you guys to spread it around.

18 comments:

  1. Hi,
    Thanks for posting;interesting blog.
    Is your asessment that equities will bottom in the next two weeks based on the reasoning that if the market is down at the next fedmeeting on July31/Aug 1st a Q3 willbe anounced?

    You are also stating that the market is holding up because of the earnings anouncements. Most analysts are taking down their earnings expectations and this earnings season is set up to be disappointment. FWIW I think the market is holding up expectinga Q3 on July 31st and will hold up till then and collapse ifthe fed disappoints.

    Apppreciate your comments on the above. Thanks
    Fenix

    ReplyDelete
    Replies
    1. I expect the market to bottom between end of July to 1st week of August. As you know, cycle analysis is not an exact science. If I get the exact date correct, it is more by chance. The idea is to get the general direction right.
      let us see how things develop in the next few days/ weeks. I do not see much of an upside from here and so I think risks are limited.
      When we say "Market" I mean TBTF banks who speculate on free money provided by the Fed. Retail does not count. The big Boyz know that to get the Fed to act they will need panic. If there is no QE in August, then next meeting is mid-Sept.So let us see how it plays out.
      Either way, we are in no hurry. There is only one road sign, which is pointing down.

      Delete
  2. Will you be shorting US treasuries when the time comes? I'm wondering what will trigger the end of the run in treasuries. Perhaps the fiscal cliff in Jan 2013?

    ReplyDelete
    Replies
    1. I would be taking a position in TBT when the time comes. It is not just fiscal cliff. There are whole lot of other issues which will things worse than 2008.

      Delete
  3. BB, good post and i am sure will share with my friends. I didn't tell you actually i am from Asia. Hope my Asian friends enjoy your post too

    stimulus package is good :P haha

    have a good day!

    ReplyDelete
    Replies
    1. Thanks Mikey, Any stimulus in readership is good.

      Delete
  4. Hi BB: Have you noticed for the last few days 1/2 hour before the close the market starts moving higher? This is what happened during the QE days, prompting me to think money is already secretly coming in. any thouhts?

    ReplyDelete
    Replies
    1. I don't think anyone actively buying or accumulating. Its just bots fooling around before they drop the ball.

      Delete
  5. Hi BB thanks again for your posts. By the way apple earnings report is due on the 24th, http://investor.apple.com/ anyways it is sure going to be fun

    ReplyDelete
  6. Is apple earnings on 24th?

    ReplyDelete
  7. Wow... The S&P broke 1333, I was hoping for a bounce to 1380 to take a short position. Looks like 1374 was the high, and should be heading to the 1200 level, as per your forecast.

    ReplyDelete
    Replies
    1. You possibly missed my last two Tweets when I said that we are looking for a bounce and then I said that I am selling UVXY. I sold UVXY around $8.91.
      It will go down to 1200 but not in one straight line. In the process it will kill some more bears and bulls.
      We will have a bounce till tomorrow. Not sure if we will see 1370/80 but bounce it will be.

      Delete
  8. Hi, BB, just found your blog, great stuff!
    nice call again this morning.
    The VIX actions had been strange last few days, it should be screaming higher, but looks like as the big boyz not afraid and not buying protection.

    ReplyDelete
    Replies
    1. May be another push higher is due. Would be good shorting opportunity.

      Delete
  9. BB, can you provide any price target for AAPL's low in July? Thanks!

    ReplyDelete
    Replies
    1. I looked at cycles which has topped as it closed below $600 today,it can fall very hard before the earning. Even $500 is possible. But I do not play Apple as it is a monster and high risk stock to short. I would not advise anyone to short Apple. It is a fantastic company which should be acquired on weaknesses.

      Delete
  10. BB, thanks for you comment. @500 AAPL would have a ridiculously low P/E... interesting to see what the low will be before earnings. Yes of course, great company - What "cycles" are you looking at when analyzing individual stocks? Thanks!

    ReplyDelete