The end of the Obama Trump Great Bull Market

[ohio]

1 hour ago, DarterBlue said:

I have to disagree on Zulu. In my book he is an utter and total a**hole pure and simple, end of story!

Just came from my walk.  It's pretty cold outside so I cut it short.

Didn't know that about him.  I assumed he was just talking about the graph that I posted and that he was in the belief that brokers and advisers knew what they were doing better than we did.  It's surprising how people and investors quit thinking for themselves and rely too much on so called professionals.

I really try to stay away from the politics on this site, though sometimes I get suckered in and then regret it.  There a few people on here that I totally won't reply to.

So, I'll ignore Zulu as well.

Have to get ready for work.  Talk soon.

 

[zulu1128]

To be fair, I'm only an asshole to self-important goofballs. 

Carry on. 

[DarterBlue]

57 minutes ago, ohio said:

So, I'll ignore Zulu as well.

Have to get ready for work.  Talk soon.

If he is not rude to you, no reason you should ignore him. I certainly would not hold that against you. But in my books he is dirt. Just an opinion based on his posts as I have never met the man. 

The market has had its, arguably, worst day since the weakness set in in early October. All the fall lows have been taken out by all indices. The February and April lows are next. We will see how they are defended in short order. 

[DarterBlue]

1 minute ago, zulu1128 said:

To be fair, I'm only an asshole to self-important goofballs. 

Carry on. 

I think you have just described yourself. Congrats, I could not have done a better job!😎

[zulu1128]

LOL... the "I know you are, but what am I?" retort. 

 

Savage. 

 

 

[DarterBlue]

8 hours ago, DarterBlue said:

Hope UGAZ works out for you. As I type this, the market indices have clearly taken out their October and November lows. Now this may not hold as we could rally from here. But if we don't this should herald the second leg of what I believe is a nasty bear market. As of five minutes ago, my equity for the year was at an all time high and I was up about 63% on the put options positions. If the week is particularly bearish, I may consider covering the PUTS and waiting for another good opportunity to buy more. We are approaching oversold conditions and as the market is like a rubber band we will probably be stretched to the downside soon. 

Implications of Today's Market Action: The action today can best be described as terrible on so many fronts. First, the October/November lows were taken out decisively. Secondly, and more troubling, in addition to the Russell, NYSE Composite and S&P MID Cap index, the S&P became the first large index to also record year lows, which means that it, too, took out its February lows. The DOW is one semi bad day away from doing so too, while the two NASDAQ indices are one day like today from doing so. In short, this certainly looks like the second leg of this bear market has begun. Is this for certain? No, nothing that happens in future is ever for certain. As they say in sports, that is why they play the game. Third, there was nowhere to hide except gold related issues today, as all indices got beaten up and stocks of all capitalization levels were destroyed. 

With that said, I think the odds are at least 80% that we are now in the second leg of this bear market. The secondary Russell and MID Cap index both closed at bear market levels as generally defined as they are both off over 20% from their highs. The other indices should soon follow. The implications of taking out the lows are that there is no support within the next 7% down. Now that does not mean that we lose another 7% in short order. What it does mean is that there is no obvious level at which the big boys step in and buy aggressively. '

The FED begins its December meeting tomorrow. It will announce its interest rate policy at around 2 pm Wednesday. It is widely believed on the Street that they will raise rates one more time, but that the announcement will indicate that they are done raising rates for now. Given the obsequiousness that Jerome Powell has displayed toward  POTUS of late, I would not be surprised if he does not raise rates at all at this meeting. Unfortunately for the bulls, however, if he goes this route, at best I don't expect more than a one day rally. Things are that weak. 

At today's close my equity is at its highest level of the year. In percentage terms I am up over 9% in a market where all the major indices are now down on the year. If we continue to get this level of weakness for the remainder of the week, I may cover the PUT positions which are now up over 70%. Does this mean my market opinion has changed? Clearly not; as you can tell from the above I am quite bearish. What it does mean is that further weakness will lead to a strong, snap back rally. If I sell on further weakness the goal would be to buy PUTS again at the top of the snap back rally. This is somewhat contrary to my usual style which is one of patience. However, under current circumstances it may be justified. As always, I will let the market's action and not the opinions of others, informed or ignorant, guide my actions. 

[DarterBlue]

The Second Leg Down: I type this on the assumption that the second leg of this bear market has begun. If I am right, these comments may be helpful. The second leg is usually the longest. If this is a common garden cyclical bear market, it will last a few months. If on the other hand, it is a more damaging secular bear market it will last anywhere from many months to several years. That will depend on the reason for the downturn and policy responses toward it. The second leg is not as violent as the first leg, or for that matter, the third and final leg. It is often characterized by a slow grind down, punctuated by a few violent selloffs.

The violent selloffs occur from time to time because during the second leg the reasons for the bear market often begin to make themselves apparent. In other words, the cockroaches that had been in the closet are emboldened and come out not just at night, but during the day, too. These may manifest themselves in the failure of several well known, bedrock businesses, or in a new housing crisis or in anyone of a number of things that had gone largely unnoticed during the preceding bull run. 

The second leg down is akin to a football game in which the team with the lead goes on slow, clock eating, defense tiring, drives that wear the other team (investors) out. It is during this phase of bear markets that average investors begin to realize that conditions have really changed. Thus greed changes to fear which may lead some, not all, of them to toss in the towel and go to cash. After grinding on for a while, with no indication of a turning point in sight and with economic conditions that have probably changed from expansionary to slowdown, if not outright recession, even the most bedrock buy and holders get worn down and eventually some of them panic and decide to get out at all costs. It is then, and only then we go on to the third stage which is often even more violent than the first, as at this stage fear is replaced by despair and the mantra becomes: get me out at all costs. 

They don't teach you the above in graduate courses in Finance, but the market is first and foremost, and forever will be a psychological animal. Thus, the cycle repeats itself ... again and again ... as Santayana mused, "Those that don't know History are condemned to repeat it."  

[ohio]

20 hours ago, DarterBlue said:

The Second Leg Down: I type this on the assumption that the second leg of this bear market has begun. If I am right, these comments may be helpful. The second leg is usually the longest. If this is a common garden cyclical bear market, it will last a few months. If on the other hand, it is a more damaging secular bear market it will last anywhere from many months to several years. That will depend on the reason for the downturn and policy responses toward it. The second leg is not as violent as the first leg, or for that matter, the third and final leg. It is often characterized by a slow grind down, punctuated by a few violent selloffs.

The violent selloffs occur from time to time because during the second leg the reasons for the bear market often begin to make themselves apparent. In other words, the cockroaches that had been in the closet are emboldened and come out not just at night, but during the day, too. These may manifest themselves in the failure of several well known, bedrock businesses, or in a new housing crisis or in anyone of a number of things that had gone largely unnoticed during the preceding bull run. 

The second leg down is akin to a football game in which the team with the lead goes on slow, clock eating, defense tiring, drives that wear the other team (investors) out. It is during this phase of bear markets that average investors begin to realize that conditions have really changed. Thus greed changes to fear which may lead some, not all, of them to toss in the towel and go to cash. After grinding on for a while, with no indication of a turning point in sight and with economic conditions that have probably changed from expansionary to slowdown, if not outright recession, even the most bedrock buy and holders get worn down and eventually some of them panic and decide to get out at all costs. It is then, and only then we go on to the third stage which is often even more violent than the first, as at this stage fear is replaced by despair and the mantra becomes: get me out at all costs. 

They don't teach you the above in graduate courses in Finance, but the market is first and foremost, and forever will be a psychological animal. Thus, the cycle repeats itself ... again and again ... as Santayana mused, "Those that don't know History are condemned to repeat it."  

Bought 1000 shares of UGAZ at 80.68, then went for a follow up with my doctor. All's good. 

Will hold the long position as the weather service is saying there is a cold front in the Arctic that will head this way.  We'll see what happens tomorrow.

Am off to work.  Will talk to you tomorrow about your 2 posts, as I'm running late.  Good luck

[DarterBlue]

22 minutes ago, ohio said:

Bought 1000 shares of UGAZ at 80.68, then went for a follow up with my doctor. All's good. 

Will hold the long position as the weather service is saying there is a cold front in the Arctic that will head this way.  We'll see what happens tomorrow.

Am off to work.  Will talk to you tomorrow about your 2 posts, as I'm running late.  Good luck

Good luck to you, too!

[DarterBlue]

On 12/17/2018 at 4:42 PM, DarterBlue said:

The FED begins its December meeting tomorrow. It will announce its interest rate policy at around 2 pm Wednesday. It is widely believed on the Street that they will raise rates one more time, but that the announcement will indicate that they are done raising rates for now. Given the obsequiousness that Jerome Powell has displayed toward  POTUS of late, I would not be surprised if he does not raise rates at all at this meeting. Unfortunately for the bulls, however, if he goes this route, at best I don't expect more than a one day rally. Things are that weak. 

After opening very strongly up on the day, stocks faltered in mid afternoon and actually went negative on the day early in the final hour of trade. This did not last as they rallied back between 3:15 and 3:45 pm before selling hit them again in the final fifteen minutes. At the close, with the exception of small caps, the averages closed higher. With that said, the day was a big disappointment if you are a bull. Why? Solid early gains could not be held for even a day. That is the hallmark of a weak market, one that wants to go down. So, from where I stand, despite the small gains, bears have more reasons to cheer than bulls, particularly coming off a 1,000 point drubbing to the DOW Friday and Monday combined. After the close, Federal Express and Micron Technology did not do the bulls any favors as while both slightly beat earnings, their forward guidance was weak, thus in the after hours all the days gains were surrendered. Today, despite owning PUTS on the S&P and NASDAQ 100, I actually made a small amount of money due to increased volatility reflected in the price of the options, as well as the FED EX and Micron disappointments after the bell (the options get repriced for the first fifteen minutes after the closing bell). 

Tomorrow the FED announces its decision on interest rates. While this would have been unheard of two weeks ago, I actually see three scenarios playing out. In all of them, I am sure the verbiage will reflect the end of the current cycle of increasing rates. The three scenarios I see are: 1. Increase by 1/4 point. I now see this has having only a 30% chance of happening. Recent signs of economic weakness in the earnings of some of the bellwether stocks, as well the shocking Empire Index numbers (New York economic activity), provide cover for the FED. Powell will not look so much like POTUS's puppet now if he does not raise rates. 2. Keep rates steady. This is the most likely outcome. I think the probability of this is about 50%. 3. This is the shocker, cut rates by a 1/4 point. A week ago I did not even envision this as likely, but with the market acting the way it has, it would not shock me as I see our officials acting with increased audacity. I would assign around a 20% probability to this happening. If it did, it would shock the market to the upside. 

So, what's my game plan going into tomorrow. If we open down a percent and a half or more from today's close, I would be inclined to book my profits before the FED announcement. Why? In two of the three FED scenarios, I see the market going higher (2 and 3). In the case of 3, it could go quite a bit higher before reality once again set in. So with the probabilities lining up 70% to the near term upside versus 30% to the downside near term, booking profits on early weakness would seem the prudent thing to do, particularly as the early weakness would be erased in short order. With that said, I would be looking to re-position myself short in the near future, as my overall bearish perspective has not changed.

I will post the results of my decision before market close, should I liquidate the PUTS. 

[ohio]

Sold UGAZ at 86 at little after 4 am.  Bought 880 DGAZ at 74.14.  Sold 400 DGAZ at 78.25.  

Sold 480 DGAZ 76.75.

Been up since 3 am.  Love that Ameritrade's extended hour trading lets you trade at 4 am, used to have Scottrade which let you start at 7am.  Good thing Ameritrade bought out Scottrade, or I would have been hosed this morning.

Going back to sleep.  Won't trade anymore today till after the Fed announcement. 

Have you exercised your puts?

[DarterBlue]

1 hour ago, ohio said:

Sold UGAZ at 86 at little after 4 am.  Bought 880 DGAZ at 74.14.  Sold 400 DGAZ at 78.25.  

Sold 480 DGAZ 76.75.

Been up since 3 am.  Love that Ameritrade's extended hour trading lets you trade at 4 am, used to have Scottrade which let you start at 7am.  Good thing Ameritrade bought out Scottrade, or I would have been hosed this morning.

Going back to sleep.  Won't trade anymore today till after the Fed announcement. 

Have you exercised your puts?

I hardly ever exercise as that would entail either ending up with the underlying security if calls, or buying it and then putting it to the counter-party. I usually just close the position by, in this case, "selling puts to close" which will offset the buying puts to open. Just some of the technicalities of options. But to answer the question I think you are asking: Am I still long the 40 puts? The answer is yes. I have not closed the position. As the market seems to be headed higher at the open, I probably will not, at least not till the FED announcement. 

[DarterBlue]

1 hour ago, ohio said:

Sold UGAZ at 86 at little after 4 am.  Bought 880 DGAZ at 74.14.  Sold 400 DGAZ at 78.25.  

Sold 480 DGAZ 76.75.

Been up since 3 am.  Love that Ameritrade's extended hour trading lets you trade at 4 am, used to have Scottrade which let you start at 7am.  Good thing Ameritrade bought out Scottrade, or I would have been hosed this morning.

Going back to sleep.  Won't trade anymore today till after the Fed announcement. 

Have you exercised your puts?

Glad your trade worked out!

[ohio]

4 hours ago, ohio said:

Sold UGAZ at 86 at little after 4 am.  Bought 880 DGAZ at 74.14.  Sold 400 DGAZ at 78.25.  

Sold 480 DGAZ 76.75.

Been up since 3 am.  Love that Ameritrade's extended hour trading lets you trade at 4 am, used to have Scottrade which let you start at 7am.  Good thing Ameritrade bought out Scottrade, or I would have been hosed this morning.

Going back to sleep.  Won't trade anymore today till after the Fed announcement. 

Have you exercised your puts?

In hind sight.  I could have get a bigger return if I sold UGAZ and bought DGAZ yesterday before I went to work.  Would have saved me a headache and some sleep.

[ohio]

2 hours ago, DarterBlue said:

I hardly ever exercise as that would entail either ending up with the underlying security if calls, or buying it and then putting it to the counter-party. I usually just close the position by, in this case, "selling puts to close" which will offset the buying puts to open. Just some of the technicalities of options. But to answer the question I think you are asking: Am I still long the 40 puts? The answer is yes. I have not closed the position. As the market seems to be headed higher at the open, I probably will not, at least not till the FED announcement. 

Yes that's what I meant.  Now you know why I'm not trading options yet.  Lol.

We'll see what the Fed has to say. 

 

[ohio]

16 hours ago, DarterBlue said:

After opening very strongly up on the day, stocks faltered in mid afternoon and actually went negative on the day early in the final hour of trade. This did not last as they rallied back between 3:15 and 3:45 pm before selling hit them again in the final fifteen minutes. At the close, with the exception of small caps, the averages closed higher. With that said, the day was a big disappointment if you are a bull. Why? Solid early gains could not be held for even a day. That is the hallmark of a weak market, one that wants to go down. So, from where I stand, despite the small gains, bears have more reasons to cheer than bulls, particularly coming off a 1,000 point drubbing to the DOW Friday and Monday combined. After the close, Federal Express and Micron Technology did not do the bulls any favors as while both slightly beat earnings, their forward guidance was weak, thus in the after hours all the days gains were surrendered. Today, despite owning PUTS on the S&P and NASDAQ 100, I actually made a small amount of money due to increased volatility reflected in the price of the options, as well as the FED EX and Micron disappointments after the bell (the options get repriced for the first fifteen minutes after the closing bell). 

Tomorrow the FED announces its decision on interest rates. While this would have been unheard of two weeks ago, I actually see three scenarios playing out. In all of them, I am sure the verbiage will reflect the end of the current cycle of increasing rates. The three scenarios I see are: 1. Increase by 1/4 point. I now see this has having only a 30% chance of happening. Recent signs of economic weakness in the earnings of some of the bellwether stocks, as well the shocking Empire Index numbers (New York economic activity), provide cover for the FED. Powell will not look so much like POTUS's puppet now if he does not raise rates. 2. Keep rates steady. This is the most likely outcome. I think the probability of this is about 50%. 3. This is the shocker, cut rates by a 1/4 point. A week ago I did not even envision this as likely, but with the market acting the way it has, it would not shock me as I see our officials acting with increased audacity. I would assign around a 20% probability to this happening. If it did, it would shock the market to the upside. 

So, what's my game plan going into tomorrow. If we open down a percent and a half or more from today's close, I would be inclined to book my profits before the FED announcement. Why? In two of the three FED scenarios, I see the market going higher (2 and 3). In the case of 3, it could go quite a bit higher before reality once again set in. So with the probabilities lining up 70% to the near term upside versus 30% to the downside near term, booking profits on early weakness would seem the prudent thing to do, particularly as the early weakness would be erased in short order. With that said, I would be looking to re-position myself short in the near future, as my overall bearish perspective has not changed.

I will post the results of my decision before market close, should I liquidate the PUTS. 

A smart way to look at it.  Today's higher open might imply that the markets are anticipating the Fed to not be as aggressive in future cuts, or even no cuts in a while; even if they raise rates by 1/4.  So, everyone is trying to figure out what the FED plans to do next year.

Seriously doubt if the FED will actually cut rates, but you never know.

Anyways, got to write a few more Christmas cards and take care of some other things.

[DarterBlue]

20 minutes ago, ohio said:

Yes that's what I meant.  Now you know why I'm not trading options yet.  Lol.

We'll see what the Fed has to say. 

 

It took me awhile to get used to the language and technicalities of trading options. For most people they are not a good choice. For a very disciplined, risk conscious investor or trader, they are a valuable tool, but only one tool in an arsenal. 

[ohio]

2 hours ago, DarterBlue said:

It took me awhile to get used to the language and technicalities of trading options. For most people they are not a good choice. For a very disciplined, risk conscious investor or trader, they are a valuable tool, but only one tool in an arsenal. 

You get not arguments from me there. lol

Bought 700 shares of DGAZ at 79.64

See what happens overnight.

[HSFBfan]

Go short the market....the Fed just destroyed the market a little bit more 

[DarterBlue]

11 minutes ago, HSFBfan said:

Go short the market....the Fed just destroyed the market a little bit more 

Probably too late to go short now. Being already short, I am possibly looking for the right place to book my profits. 

[World Citizen]

@DarterBlue @ohio 

Really appreciate you guy's and this topic.  Keep it up because I find great value in these posts.  You each earned a smiley face and you can print it out and put on your refrigerator.  

☺️

 

[DarterBlue]

31 minutes ago, World Citizen said:

@DarterBlue @ohio 

Really appreciate you guy's and this topic.  Keep it up because I find great value in these posts.  You each earned a smiley face and you can print it out and put on your refrigerator.  

☺️

 

You are a good man. I appreciate your posts on a variety of topics, also. You add balance to a board that tends to be dominated by some pretty hateful people. You restore my faith in humanity!

[DarterBlue]

On 12/18/2018 at 7:23 PM, DarterBlue said:

Tomorrow the FED announces its decision on interest rates. While this would have been unheard of two weeks ago, I actually see three scenarios playing out. In all of them, I am sure the verbiage will reflect the end of the current cycle of increasing rates. The three scenarios I see are: 1. Increase by 1/4 point. I now see this has having only a 30% chance of happening. Recent signs of economic weakness in the earnings of some of the bellwether stocks, as well the shocking Empire Index numbers (New York economic activity), provide cover for the FED. Powell will not look so much like POTUS's puppet now if he does not raise rates. 2. Keep rates steady. This is the most likely outcome. I think the probability of this is about 50%. 3. This is the shocker, cut rates by a 1/4 point. A week ago I did not even envision this as likely, but with the market acting the way it has, it would not shock me as I see our officials acting with increased audacity. I would assign around a 20% probability to this happening. If it did, it would shock the market to the upside. 

So, what's my game plan going into tomorrow. If we open down a percent and a half or more from today's close, I would be inclined to book my profits before the FED announcement. Why? In two of the three FED scenarios, I see the market going higher (2 and 3). In the case of 3, it could go quite a bit higher before reality once again set in. So with the probabilities lining up 70% to the near term upside versus 30% to the downside near term, booking profits on early weakness would seem the prudent thing to do, particularly as the early weakness would be erased in short order. With that said, I would be looking to re-position myself short in the near future, as my overall bearish perspective has not changed.

Market Action in Response to the FED: I have never been so happy to be wrong in my life. As indicated in my post from yesterday, I expected the FED to surprise by holding rates steady today. At the very worst, I expected that if they did hike rates the accompanying policy statement would indicate that they were pretty much done unless unexpected inflation showed up in subsequent data. It seems pretty clear from the way the market was trading prior to the announcement at 2 pm and subsequent press conference at 2:30 pm, that most traders were of the same mindset as me. And who can blame them? After all, earlier this month, in an amazing response to DJT's jawboning, Mr. Powell had pretty much said that the need for continued increases in interest rates was dissipating. So it was reasonable to expect a dovish FED ... not so fast. Not only did the increase come, but aside from saying it only expected to raise rates twice next year instead of at least three times, the statement and in Mr. Powell's subsequent appearance before the media, it was as if nothing had changed with respect to the FED's position since the last hike. The market which had been up in excess of a percentage prior to this strange event, immediately and decisively turned south; in the process it wiped out all the day's gains and reversed violently to the downside. 

The whole occurrence was extraordinary on so many levels. But I guess we now live in extraordinary times. But why should I complain? After all, what had been substantial daily losses prior to 2 pm quickly turned into gains. At the market's close, all the major indices but one, the NASDAQ 100, took out the February lows and were trading at 52 week lows. The NASDAQ itself was only about a 1% from entering bear market territory which now seems inevitable. 

With the above said, the market is now deeply oversold and is due for either a sharp, snap back rally or a period of calm as it consolidates its huge December losses. I would be mildly surprised and even a bit concerned if the free fall continues the next two days unabated. With that said, while I did not book my profits today, the probability of doing so before Christmas is now fairly high. At today's close the PUT positions are now up just over 85% which is a tidy sum. 

[ohio]

14 hours ago, DarterBlue said:

 

Stop loss got hit yesterday and DGAZ sold at 74.83

Bought 900 DGAZ again at 67.50. see how EIA report goes.  Stop loss at 65

 

[ohio]

2 hours ago, ohio said:

Stop loss got hit yesterday and DGAZ sold at 74.83

Bought 900 DGAZ again at 67.50. see how EIA report goes.  Stop loss at 65

 

Sold DGAZ at 76.4025.   Learned my lesson about holding these two stocks for too long.  It might still go up, but it's better to take a quick profit.

Still got your puts?