My best guess is that $GLD is bear flagging here after the double top from September 6 and cascade lower.
This is not fully formed and so I am intimating the resistance line and not trading off of it. I would eventually like to get long again lower and have already monkeyed around a bit with near dated out of the money put selling though I am flat at the moment after covering yesterday.
A buddy of mine sent me this recent quote from Bill Fleckenstein’s daily column.
For those of you who don’t know, Bill has been one of the very smartest bears on record since before Ursa Major was a constellation. (His excellent and modestly priced commentary can be found here.)
It is notable that he is somewhat constructive on US banks. He writes:
As someone who has always hated financial companies because their financial statements are such a joke, I’m going to risk looking really stupid. I think the drama over US banks is overdone. Europe is a disaster, I get that, but we aren’t nearly as bad off. I think that lots of people who didn’t see 2008 coming are now sure they will see a replay. I’m not so sure. If the ECB starts to print finally, we will see an absolutely hellacious rally.
$XLF
According to comScore, $YHOO and $MSFT are the 2nd and 3rd largest web properties in the US respectively by unique visitor and not far behind Google.
While there would be considerable overlap on this metric, still the combined properties, if the latest rumors had merit, would be massive.
Here’s the Top Ten US Properties for August 2011 according to comScore:
Update: Jay Yarow over at TBI has the chart of what the combined uniques would look like. Check it here.
Its been almost a month since my last update on Yahoo! and much has transpired in the interim. The company is in play and Jack Ma explicitly expressed interest while visiting Standford.
Here’s a few takes amid the swirl of rumors and speculation…
Price (The White King) – The price action in the broader market has been insane over the past month and $YHOO has held up much better than media and internet companies in general. That said, if a deal was imminent, the stock price would be higher.
As mentioned in my post from September 8, this is a marathon and so the best strategy is not to buy into strength (more on this below) but to have a strategy and to try to accumulate shares lower over time.
The Media (TheBlack Pawn) – The finance news media is a pawn in this chess match. This is incredibly important to understand. They are being manipulated by guys like Ma and others who are smarter, better informed and loaded.
These real players know that the media is eager for any new information and will print what they are told and so they use this to position themselves and spread propaganda that they believe helps them jockey.
Perfect example is Swisher’s recent post at All Things D where she reports that Ma is “‘perplexed’ about why the US has such restrictive rules against foreign ownership of a consumer business.”
He’s not perplexed. He is angling.
It is critical to filter everything from ‘sources’ or ‘purported’ etc.
Jack Ma (The White Knight) – Jack Ma is a man among boys. He thinks strategically, identifies the vulnerable (in this case the $YHOO BOD and Bartz before she left) and then plots accordingly with long term objective all the while exploiting the media. He’s a fricking artist. Watch what he does and says but even more importantly, watch what he does and does not say.
The Rooks (Microsoft and Disney) – These guys do not have a great plan. They have needs.
Time (The Black Knight) – $YHOO is fundamentally deteriorating without proper leadership in a hyper competitive environment. While traffic is somewhat inelastic, the sooner they get a deal done the better and if this stretches out too long it will negatively affect the condition and value of their assets.
The Yahoo Board (The White Pawn) – The $YHOO BOD has finally thrown in the towel 3 years after rebuffing Ballmer and $MSFT. They can only save any semblance of face by at least helping to orchestrate some type of deal at a premium to present value. It appears that they do recognize the urgency.
Searching for Bobby Fischer – I see many chasing the stock on news reports and while someone will eventually get lucky there, I believe this is classic noise trading and the real players are trading around those who are buying higher.
The way to play this in my opinion is to recognize risk, that there are many much better informed than you and to try to accumulate shares lower through selling premium and buying lower during downside volatility. I outlined this in my previous post from September 8.
$MSFT $DIS
At the end of the day, no one knows where the market is going before it gets there.
When we get to extremes, odds always favor reversion and so there are a ton of guys who have been hawking that trade before today and this morning.
The thing about trading the snap back though is that one time in 100 we do not get it, selling intensifies and the ship sinks.
Bill Miller beat the S&P500 ($SPX, $SPY) for 15 straight years after fees before he got crushed buying financials into the teeth of the credit crisis.
John Paulson caught the credit crisis but went from the greatest trade ever to the greatest fade ever, gloriously on both counts I might add, in a manner of a few years.
No one knows for sure.
And so it goes…
I watched the BBC interview last week with Alessio Rastani. People were mortified at the excitement he expressed at the opportunity of being on the right side of a crash.
This is moral relativism at its finest. The guy’s a trader. Its what he does.
Is there a hint of sociopathy in it? Perhaps, but its tough to pin that down when its legal and when we don’t know much more about the guy.
On the other hand, I have spoken at length with short sellers who are saddened by “seeing the doom” up ahead and deeply conflicted about capitalizing on it. My take there is that those betting against the market are at a significant disadvantage if they are unable to compartmentalize their empathy for man. Trading is emotionally taxing enough without having the weight of the world’s misfortune on your shoulders.
To the rest of us, as long as people put their money in the markets, they will get themselves into risky situations they don’t fully understand and ride losers too long and sometimes all the way down.
Its uncomfortable not having control of a big situation and so people pretend they have control or do something else to avoid the anxiety related to the realization. They listen to brokers or others who exude confidence but really also have no idea.
Meanwhile, during crashes, the upper middle class will hide their quarterly mutual fund statements at the bottom of the mail pile and avoid them like phobics avoid the Brooklyn Bridge.
The incomparable @Dinosaurtrader handcrafted this mix on 8tracks. Its certain to become the definitive 2011 crash soundtrack if the market does indeed leap from the bridge.
And if the market manages to find its legs and composes itself here, well, you still get the killr mix.
Chris Christie is Jabba the Hut fat.
Blodget argues that he may be too fat to be president and Henry’s smart but sometimes he just posts stuff to stir the pot.
If we’re going to find the lost soul of America it’s not going to be a slim guy (or woman) brimming with good health working the hair and teeth thing. That look is poison and all of those guys suck and some of them are likely dangerous.
Its a look that says presidential and has become representative of what a leader ought to look like. Americans have gone for the charade for too long that masks poor leadership in a deteriorating system and questionable motivations.
George Washington powdered his hair and wore stockings. FDR spent his four terms in a wheel chair.
So who cares if the guy is fat.
America is fat.
Maybe we need a fat guy who can relate to the fat masses and inspire them.
I have no idea if Christie is the guy but he can’t be worse than the hollow men “headpiece filled with straw.”
Also, there ought to be a law that if you get botox you are inelgible to be president.
Friday marked an end of week and quarter and the action was very negative.
Below are a few key charts I plucked from the Chartly stream for your insight and pleasure.
@hertcapital snapped this shot of China 5yr CDS chart which prices insurance of defaulting credit. Anyone who recalls the US credit crisis of 2008 is shuttering a bit looking at this one:
@HCPG posted this $MOS chart just before 2pm yesterday and it was so timely. It shows the weekly trend line dating back to 2009 which was indeed compromised by the end of day. May God help the ags…
@Xiphos_Trading posted what I think is the key chart of the week here of the $DJIA ($DIA). Click through, expand it and take a close look at his notes. When an index is consolidating a most important question becomes one of timing. The implication of this diamond pattern chalk up is that resolution is getting near.
@NatanSI outlines a bearish head and shoulders on $BAC and captions it simply with “The story of my dreams.” Funny but ominous…
@ABtrader managed to find a few stocks holding up well in the melt down. $SONE somehow closed higher yesterday and looks poised.
Finally, I must point to the work that @Fibline did yesterday on his Chartly stream. It was a work of art. He posted 10 charts of the $IWM starting before noon, chronicling his bearish view and the melt down BEFORE it happened.
Here’s one entitled simply “I smell Napalm here.”
Standing ovation bro!
Check out Fib’s full Chartly stream here.
