The Stock Market

[DarterBlue]

Today’s market action was significant. Based on the criteria I use, a buy (go long) signal was flashed loud and clear. Now to be precise, I am an intermediate term trader. I am looking to make money off the trends for the next three to six months. So, my buy signal is predicated on that. If you were to ask me about my opinions of the economy and, indeed, the overall state of America’s societal fabric I would be far less sanguine. But my trading is divorced from what my longer-term overarching opinion of fundamentals are. It is based solely on the shorter to intermediate term opinion of where the market is likely to trend.  

Today was a beautiful day for those with a bullish opinion. All major indices closed significantly higher; volume was significantly higher; breadth was nearly 10-1 positive on the NYSE and over 5-1 positive on the NASDAQ. Further, stocks closed right at day highs. In short, the day was flawless and such days usually herald further upside in the days, weeks and months ahead. Do I think the bear market is over and we will be at new highs before the year is over? Hell if I know! What I do know is that there is at least a 75% probability that the lows seen on March 23, 2020, two short weeks ago, will not be taken out over the next several months and that stocks will be higher at the end of June.  

Today, the averages gained from 6.42% on the NYSE to 8.24% on the Russell. Given the steep gains it is likely the averages may pull back a bit tomorrow. And that, in my opinion gives great cover to go long. So, as long as we don’t get a violent selloff tomorrow, by mid-afternoon, I expect I will have purchased several long positions. I intend to go long July Calls on at least two of the major indices. I will likely also purchase TEAM, JD, LUV and a few other individual positions.

 None of the above is meant to be a recommendation. Each person needs to evaluate his own situation and act accordingly. But I did promise a post on the market when my work commitment ended. Well it has, and probably could not have come at a more opportune time for me, assuming my read of the next three months is accurate.

 

[DarterBlue]

After being up very solidly early, stocks faded into the close. This is not what one wants to see after a breakout day. It would have been far better if the averages had pulled back on light volume rather than reverse lower on higher volume as they did today. With that said, I feel we are in an uptrend and will maintain that view until and unless the next two days continue the downward trend.

As I initiated the purchase of three positions during the course of the day, I am not off to an inauspicious start with them and am down .68% net in my entire trading portfolio. This, after being up over a percent earlier in the day. Obviously, this is not how you want your trade to begin as it has been my experience that the ones that show a profit from the get go are most likely to end up making you money. 

With that said, you win some and lose some. One of the hallmarks of success is to effectively manage the losing trades by cutting losses early when you are wrong. Thus, the next two days will mean a lot with this trade. 

[World Citizen]

6 minutes ago, DarterBlue said:

After being up very solidly early, stocks faded into the close. This is not what one wants to see after a breakout day. It would have been far better if the averages had pulled back on light volume rather than reverse lower on higher volume as they did today. With that said, I feel we are in an uptrend and will maintain that view until and unless the next two days continue the downward trend.

As I initiated the purchase of three positions during the course of the day, I am not off to an inauspicious start with them and am down .68% net in my entire trading portfolio. This, after being up over a percent earlier in the day. Obviously, this is not how you want your trade to begin as it has been my experience that the ones that show a profit from the get go are most likely to end up making you money. 

With that said, you win some and lose some. One of the hallmarks of success is to effectively manage the losing trades by cutting losses early when you are wrong. Thus, the next two days will mean a lot with this trade. 

Best of luck brother and it's great to read your posts again.

[DarterBlue]

1 hour ago, World Citizen said:

Best of luck brother and it's great to read your posts again.

Luck is good. But discipline is better. We are coming out of a very quick, violent bear market caused by external factors. To a great degree, the market will be driven by the perception of where we are on the Covid-19 curve.

I have a son who lives in China. There they are just coming out of a six-eight week shutdown of their economy. Business have reopened and restrictions have been lifted, but banks are very jittery and hesitant to lend, and many workers don't have the purchasing power as not all employers maintained salaries during the shutdown.

China employed far stricter controls than the USA has, but it still took many weeks to get by the virus. It should be very interesting to see how the next two to three months play out. But clearly much of the big money on Wall Street sees brighter times ahead.  

[World Citizen]

20 hours ago, DarterBlue said:

Luck is good. But discipline is better. We are coming out of a very quick, violent bear market caused by external factors. To a great degree, the market will be driven by the perception of where we are on the Covid-19 curve.

I have a son who lives in China. There they are just coming out of a six-eight week shutdown of their economy. Business have reopened and restrictions have been lifted, but banks are very jittery and hesitant to lend, and many workers don't have the purchasing power as not all employers maintained salaries during the shutdown.

China employed far stricter controls than the USA has, but it still took many weeks to get by the virus. It should be very interesting to see how the next two to three months play out. But clearly much of the big money on Wall Street sees brighter times ahead.  

I'm very interested in how that works out for China.  It seems a little early to open things back up and seems like it's a recipe to initiate a 2nd and 3rd wave of this virus and there are so many people and most have not had the virus yet.  

But I sincerely hope it works for them and if it does it may work for us as well.  That would be great and welcome news.  Do you know if they put a stimulus of any kind to help the people or the financial sector?  

Where in China does your son live?  

 

[DarterBlue]

1 hour ago, World Citizen said:

I'm very interested in how that works out for China.  It seems a little early to open things back up and seems like it's a recipe to initiate a 2nd and 3rd wave of this virus and there are so many people and most have not had the virus yet.  

But I sincerely hope it works for them and if it does it may work for us as well.  That would be great and welcome news.  Do you know if they put a stimulus of any kind to help the people or the financial sector?  

Where in China does your son live?  

 

Their incidence of new infections is very low. So low that many in the west have questioned the accuracy of their statistics. I am neutral where this is concerned, but do believe that, at least for now, they are well past their worst. Their shutdown across the entire country was very thorough and infringed greatly on personal privacy (individual tracking via their cell phones, enforced restrictions on travel within the country, etc.). In terms of stimulus, what they did was very weak relative to countries in the west. And with respect to locals and foreigners working there, some employers were reasonably generous with keeping pay going, others were far less so. 

He lives in Kunshan, a medium sized city a little northwest of Shanghai. It is in the same province as Shanghai and in a sense is almost like a suburb of the much larger city. In the last two weeks he has been out and about after being more or less home bound for the prior six. He restarted his job this week. He teaches English and Western Civilization in the International Department of a highly rated Chinese public high school. It helps greatly that he speaks fluent Mandarin. His students are Chinese nationals that either plan to study in the west (USA, Australia and Europe), or engage in international business within China.  

There is the fear of a resurgence of the virus later in the year. But the country has been working diligently on finding a cure or at least a vaccine and the thought is that they have till fall to do so and avoid a strong resurgence. 

[DarterBlue]

Today, stocks closed broadly higher on lower volume. There was a lot to like but also some troubling things of which to take note. First, the positive aspects. The rally was broad based and the averages closed near day highs indicating that traders were willing to carry their positions overnight despite the fact that employment data, which is sure to be a disaster, is set to be released before market open. This is something that traders were unwilling to do since the start of the bear market. Another big positive was the nice breadth statistics, as advancing stocks dominated declining stocks by margins of 9-1 and 5-1 on the NYSE and NASDAQ, respectively. So, these are huge positives.

From a negative standpoint, there was a sharp decline in volume. Investors Daily also sited the fact that the strongest growth names which had held up best in the bear market, names such as Amazon, Microsoft, etc., as well as several secondary growth names have not participated as well as beaten down stocks in the travel and energy sectors. I don’t regard this as a big negative, though. In normal cyclical, bear markets I would agree with their position. However, this meltdown was primarily driven by an external force (a pandemic) and the drop was the sharpest I have seen in 31 years of market activity. Norman Fosback’s book, Stock Market Logic, which was published in the 1970s when the meltdown of that era was the collapse of the, so called, Nifty Fifty, actually observed from his research conducted at that time that after sharp market drops, particularly when they went hand in hand with a steep contraction in economic activity, that the stocks that performed best when the bear had run its course were the most beaten down. He surmised that this was likely due to the fact that these stocks had traded down to liquidation value as investors had seen bankruptcy as a distinct possibility. More recently, coming out of the so called, Great Recession, of 2008/2009, the same thing played out as beaten down banks actually were among the best performers coming out of that bear market. It is actually for that reason that LUV was one of the positions I purchased.  

On a personal note, my losses from yesterday were erased today as I moved from being down .68% on my total investable capital, to being up .4% as two of the three positions purchased did well today. I remain cautiously optimistic that we have seen the lows for at least the next three to four months. Currently I have committed roughly half of the dollars I am willing to commit to the current market. I will not go all in, as while I love the current technical action, I don’t like the economic and social backdrop. Anyway, I will be looking for pullbacks over the next few days, to put the remaining capital I am willing to commit to work. I will deploy it if and only if I like the nature of the pullback and I will not chase this market despite being optimistic over the next three months.

[rockinl]

I was up 24% at noon. Closed up 18%. Still a not too bad day.

[DarterBlue]

6 hours ago, rockinl said:

I was up 24% at noon. Closed up 18%. Still a not too bad day.

Clearly you must be in options, futures or else be very highly leveraged on margin. I would only caution that in any of those circumstances, you need to be very careful managing the position. 

[DarterBlue]

Stocks ended the Good Friday shortened week broadly higher on much higher volume. The only fly in the ointment is that they closed in the lower half of the day’s range which is a sign of some distribution going into the holiday lengthened weekend. Still, this was a great week for stocks and the day provided further evidence that stocks are probably on a sustainable upswing for the next few months (at a minimum).

On the day, small and mid cap stocks dominated larger stocks as day’s gains ranged from a low of .11% on the large cap, tech heavy, NASDAQ 100 to 4.62% on the Russell 2000, which is a proxy for the smallest 2000 publicly traded companies. Breadth continued to remain very positive as advancing stocks led by margins of 13-2 and 3.5-1 over declining stocks on the NYSE and NASDAQ. For the second day running, I had a good day and the positions I purchased Tuesday are now firmly in the black.

So, one may ask, are we back to the normal of every rising share prices? In the short to intermediate term, the answer seems to be yes. The massive support provided by the Fed and Congress, coupled with signs that Covid-19 seems to be peaking, is providing the fuel for this rally. However, from a purely objective standpoint, we can see how ridiculous it is to believe that financial markets sustained by the Fed’s largess could even begin to represent value, as opposed to price. The smart money represented by individuals such as George Soros and Jimmy Rogers has fled the US a long time ago. For these two founding members of the Quantum fund, despite their political differences, both see us for what we are: a naked Emperor waiting to be exposed. I suppose if I had their kind of capital, I would flee too. So, I really can’t blame them for their exhibited lack of patriotism.

But for now, halcyon days are here. My job is to take advantage of them before the next meltdown, which surely will be upon us over the next few years. Then my job will be to again go short.

[golfaddict1]

  FYI @DarterBlue.  I added a few comments recently.   Certainly the numbers this week were in favor of the S&P 500, which gained  12.84% per my Morningstar analysis chart.  

 

On 4/8/2020 at 11:14 PM, rockinl said:

I was up 24% at noon. Closed up 18%. Still a not too bad day.

I may be mistaken, but I seem to recall you asking about how to invest 50K last year?  Seems like you chose wisely   

 

My fav investment show on CNBC  didn't disappoint yesterday.   Here is a clip of a portion of an interview that I found quite entertaining.   The show is called Fast Money - Halftime report (noon to 1 pm est).  

http://www.vveheartit.com/video/2020/04/09/palihapitiya-us-shouldnt-bail-out-hedge-funds-billionaires-during-pandemic.html

 

[HawgGoneIt]

20 minutes ago, golfaddict1 said:

  FYI @DarterBlue.  I added a few comments recently.   Certainly the numbers this week were in favor of the S&P 500, which gained  12.84% per my Morningstar analysis chart.  

 

I may be mistaken, but I seem to recall you asking about how to invest 50K last year?  Seems like you chose wisely   

 

My fav investment show on CNBC  didn't disappoint yesterday.   Here is a clip of a portion of an interview that I found quite entertaining.   The show is called Fast Money - Halftime report (noon to 1 pm est).  

http://www.vveheartit.com/video/2020/04/09/palihapitiya-us-shouldnt-bail-out-hedge-funds-billionaires-during-pandemic.html

 

Yesterday I jokingly posted about Blue Horshoe liking Novavax... Maybe I should have said Blue Horseshoe likes Emergent Biosolutions. They gained a percentage point yesterday and another so far today. They are the company that Novavax is giving production rights to. 

This chart is for Novavax, but look at Emergent down below them. 

[golfaddict1]

25 minutes ago, HawgGoneIt said:

Yesterday I jokingly posted about Blue Horshoe liking Novavax... Maybe I should have said Blue Horseshoe likes Emergent Biosolutions. They gained a percentage point yesterday and another so far today. They are the company that Novavax is giving production rights to. 

This chart is for Novavax, but look at Emergent down below them. 

You'll find some interesting daily moves in the 3X leveraged bull/bear positions.  A few examples from yesterday.  

NUGT  -  plus 20 pct (bull gold mining)

DUST -   minus 20 pct (bear gold mining)

URTY  -  plus 14 pct (bull Russell 2000)

TZA    -  minus 14 pct (bear Russell 2000) 

[DarterBlue]

1 hour ago, golfaddict1 said:

  FYI @DarterBlue.  I added a few comments recently.   Certainly the numbers this week were in favor of the S&P 500, which gained  12.84% per my Morningstar analysis chart.  

 

I may be mistaken, but I seem to recall you asking about how to invest 50K last year?  Seems like you chose wisely   

 

My fav investment show on CNBC  didn't disappoint yesterday.   Here is a clip of a portion of an interview that I found quite entertaining.   The show is called Fast Money - Halftime report (noon to 1 pm est).  

http://www.vveheartit.com/video/2020/04/09/palihapitiya-us-shouldnt-bail-out-hedge-funds-billionaires-during-pandemic.html

 

A slight fallacy in the interview. The employee pensions do often get wiped out, unless there is government intervention. With that said, I agree with the person being interviewed. I am no billionaire, but when I have a losing trade I don't expect to be bailed out. When you have no risk capitalism, you get a system that is ultimately destined to fail spectacularly. We are fast heading in that direction

[golfaddict1]

1 hour ago, DarterBlue said:

A slight fallacy in the interview. The employee pensions do often get wiped out, unless there is government intervention. With that said, I agree with the person being interviewed. I am no billionaire, but when I have a losing trade I don't expect to be bailed out. When you have no risk capitalism, you get a system that is ultimately destined to fail spectacularly. We are fast heading in that direction

Ditto.  

[imaGoodBoyNow]

On 4/8/2020 at 11:14 PM, rockinl said:

I was up 24% at noon. Closed up 18%. Still a not too bad day.

This week I’m up $2.18

 

big baller shit 

you already know

[DarterBlue]

6 minutes ago, imaGoodBoyNow said:

This week I’m up $2.18

 

big baller shit 

you already know

5% aint bad! But penny stocks wont make you rich. You will learn that lesson in due time.

[imaGoodBoyNow]

4 minutes ago, DarterBlue said:

5% aint bad! But penny stocks wont make you rich. You will learn that lesson in due time.

Man I don’t know jack shit. Absolutely 0 but I’m young so I gotta get my foot in the door somewhere 
 

Especially there’s no stores open , no sports, no gambling,  my money needs to go somewhere. ..

 

I’m not gonna  start investing until  I watch videos and  start to understand what the stock market actually is

 

 

but I had to buy those penny stocks cause ibio  is dealing with Covid 19 field and the other 2 companies are oil vessel 🚢 shipping companies in Greece, I think those 2 ima have to wait 6 months until Gas prices are back to normal 

[imaGoodBoyNow]

13 minutes ago, DarterBlue said:

5% aint bad! But penny stocks wont make you rich. You will learn that lesson in due time.

Would you invest in Boeing or do you think the markets gonna crash again?

 

it went from $400 to $95 in February and March, it’s up to $155 today 

[DarterBlue]

1 hour ago, imaGoodBoyNow said:

Would you invest in Boeing or do you think the markets gonna crash again?

 

it went from $400 to $95 in February and March, it’s up to $155 today 

Here is the deal with BA (Boeing). If it gets bailout money (it has applied) and if there are few or no strings attached to that money, then $155 is a price that will make you money over the next year or two.

If it does not get bailout money, or the money comes with a lot of strings attached, then stockholders could get wiped out. BA one way or the other will likely survive. However, if BA has to file for bankruptcy, stockholders could get wiped out or lose a significant percentage of the original investment. 

[rockinl]

2 hours ago, imaGoodBoyNow said:

Would you invest in Boeing or do you think the markets gonna crash again?

 

it went from $400 to $95 in February and March, it’s up to $155 today 

Check out Live Nation (LYV). Largest concert promoter and also own Ticketmaster. They will be back strong when all of this is over. I look for things people wont do without when we are back to "normal". 

Was $22 3 weeks ago when I bought. Topped at $47 a week ago. Has settled in at $38-40 the past week.

Was $75 a year ago.

It will make you a little cash when all of this is over. I bout at $22. Its back up to $38 now. 

 

[golfaddict1]

3 hours ago, rockinl said:

Check out Live Nation (LYV). Largest concert promoter and also own Ticketmaster. They will be back strong when all of this is over. I look for things people wont do without when we are back to "normal". 

Was $22 3 weeks ago when I bought. Topped at $47 a week ago. Has settled in at $38-40 the past week.

Was $75 a year ago.

It will make you a little cash when all of this is over. I bout at $22. Its back up to $38 now. 

 

Good point.   In the same school of thought, looking at airlines like Delta may not be a bad idea for those who don't mind the value focal point and have time to wait it out.   

I may be wrong, but I'm liking Gold (BAR .17% expense fee) and SGGDX as recent investments (small %).  One stock pick for gold mining that is popular could be GDX or GDXJ.   I'm not EF Hutton, invest with your own research.   

 

[DarterBlue]

17 hours ago, golfaddict1 said:

Good point.   In the same school of thought, looking at airlines like Delta may not be a bad idea for those who don't mind the value focal point and have time to wait it out.   

I may be wrong, but I'm liking Gold (BAR .17% expense fee) and SGGDX as recent investments (small %).  One stock pick for gold mining that is popular could be GDX or GDXJ.   I'm not EF Hutton, invest with your own research.   

 

Interesting take. I currently own LUV, (Southwest). I chose them over a Delta or American, or a garbage airline such as Spirit, because historically, it has been better managed and has been far more transparent with pricing. 

Regarding Gold, historically it has been perceived as a safe haven in times of crisis. It has performed well in some bear markets and poorly in others. More recently, there have been other options such as Crypto which have been proposed as safe havens. It is not clear to me that they are. Gold, to my way of thinking, is a bet against the dollar, since its price is denominated in dollars. If you are bearish on the US greenback, then gold is a good hedge. However, the dollar, despite total mismanagement on the part of the last several US Administrations, is still perceived as safe in turbulent times so there is that to consider. 

[golfaddict1]

1 hour ago, DarterBlue said:

Interesting take. I currently own LUV, (Southwest). I chose them over a Delta or American, or a garbage airline such as Spirit, because historically, it has been better managed and has been far more transparent with pricing. 

Regarding Gold, historically it has been perceived as a safe haven in times of crisis. It has performed well in some bear markets and poorly in others. More recently, there have been other options such as Crypto which have been proposed as safe havens. It is not clear to me that they are. Gold, to my way of thinking, is a bet against the dollar, since its price is denominated in dollars. If you are bearish on the US greenback, then gold is a good hedge. However, the dollar, despite total mismanagement on the part of the last several US Administrations, is still perceived as safe in turbulent times so there is that to consider. 

Yea Gold has a strange correlation to the market at times and hasn't exactly been a stellar performer in recent years, but it did bounce back a bit and I see a strengthening position brewing for the near term future (V shaped look very recently).   

I played with a crypto fund GBTC (bitcoin) for awhile last year and it was not ideal timing and I bailed.  I have some bitcoin currently from 5dimes gambling winnings.   I'm going to sit on that for awhile and hope it rises nicely again.  

 

[DarterBlue]

As I type this, the futures are down over a percent and a half. This is to be expected following the monster gains scored last week. It also provides an opportunity to increase exposure as I expect that at a minimum, the first leg of the current bear market has run its course. Thus, for the next few months, pullbacks should be viewed as buying opportunities, if like me, you are intermediate term traders.

As I have said before, I have no idea whether the current bear market has run its course. But I am pretty certain that at the very least, we are in a phase that will retrace a significant portion of the losses (probably quite a bit more than 50%) that we sustained from peak to trough. 

Thus, I will likely add to my longs in the afternoon hours of tomorrow. This will be predicated on what I would define as normal pullback action on the part of the indices. If, however, we have a violent down day (large percentage losses on high volume), I will wait to initiate any buys, not because I will have concluded at this stage that I am wrong about the market's intermediate term trend, but because I would expect further downside action over the next few days which would provide a better entry point.