September 24th 2016
One of my favorite people in Wall Street and a former boss, JLD used to say “I’d rather be lucky than smart” and that´s what happen to us in the last quarter. Just five traiding days after my last blog one stock of my Short list dropped 110 points, Priceline (PCLN). Now I don’t know about you but if I had a Short drop 110 points in 5 days, that´s $250,000 on 25 puts. I would have at least taken half the gain, if not all of it. That alone would have covered all the cost of my other puts, where 2 or 3 had 10 and 15 points gains all the other lost money but Net-Net we still would have had a great quarter.
In my last blog I said that one of my internal market indicators turned bullish (the new highs, new lows numbers) and that the Dow could see a new high and I also said if it breaks new highs on big volume, you should sell all puts. Not only did it not move higher on big volume but the higher it went, the smaller the daily volume totaled.
Volume actually decreased each day, never a good sign.
Don’t underestimate the value of internal market indicators, the new highs new lows indicator is now neutral.
Also, just remember the Dow is only 30 stocks. There is roughly 6 to 7 trillion dollars under management.
I am sure a small % of these Mutual Funds and Hedge Funds spend a large part of the trading day trying to move the Dow up, what they have got to lose.
I call these guys “The Dow 30 Video Game Boys”.
The same with the S and P futures, they almost always move higher overnight when the volume is small but as soon as the next trading day begins, they are hit to a more realistic price level.
The Dow is only 30 stocks, the S and P is 500 stocks.
The index to watch is the NYSE, it´s 3300 stocks and that index never hit a new high, in fact the best level it reached was almost 360 points lower than its high for the year.
You should still be buying puts and add GS and BIDU to the short list.
Oh! Talk about luck; I got an e-mail this week saying that Jim Chanos, the king of shorts and Enron fame, just put out his new best short idea, TESLA (TSLA) which has been on my shortlist.
I think zerohedge.com is one of the finest web sites out there. They recently wrote “There are over 40% fewer stocks listed in 2016, than in 1996” that may be the only reason this Bull market has lasted this long. That’s like twice as much money chasing half as many stocks. Does that make me bullish now? NO.
Because last year June 2015, when I said we were already in a recession, and a Bear market will begin. I was a lone voice. Since then the market have moved sideways and most stocks trend lower in a range bound market, as for the roughly 40% fewer stocks being listed.
To me it means they will be hit twice as hard in this Bear market as earnings continue to slide.
Well we didn’t See 13,000 Dow yet and that made me depressed for the last 3 months. I mean I´ve been wrong before, at least once, maybe twice but never for this long. One year wow!
When I am depressed I usually do one of three things:
First I’ll read some of my positive emails, one of my favorite is: “You know what I like about marketcallanastasi? He says the same thing everyone says, but 3 to 6 months before everyone else”.
Not this time. I called for a recession and Bear market; well I got the recession right.
The next thing I do is listen to Pink Floyd’s “Dark side of the moon” their music and only their music put me in a transcendental state and I think it is the combination of the slide guitar and organ, then when I heard “Comfortably numb” I said that´s perfect description of this market.
The last thing I do is work out, you know what? I am going to go listen to more Pink Floyd.!!
Well I shouldn’t feel too depressed about Dow 13,000, we’ve had 4 good corrections in the last year and a half, and my readers made lots of money, that’s more than most Mutual Funds and Hedge Funds can say. Besides I like all the names of the people, money, managers, funds and banks that turned bearish 3 to 6 months after me, even Donald Trump. Wow!!!!!
I wonder how much buying power has been taken out of the economy from savers not making much on their money due to low interest rates over the last 6 or 7 years.
The SEC should check option trades in CMG the weeks before it crashed from 742 to 413, tainted foods in several different states, sounds like terrorist or short sellers to me. They should have done the same after the 911 twin tower attacks.
Follow the money, you might be surprised.
Trucking industry shipments fall off charts
K-Mart closing 64 more stores
Container ship companies beaching their boats and cutting them up for scrap metal, the business is dying
Fewer customers at all restaurants, you know? Americans don’t like to cook, things must be bad
Teenagers in poor cities selling sex for food
Tent cities popping up all across America for homeless people
Driving season is over, oil could see 30 again unless Russia and Saudis make a deal.
The list of good news I see is usually Bullshit.
Caterpillar Inc. (CAT) starting to lay off workers, a bellwether stock, in mining, farming and construction.
Sounds like a highway to hell to me.
Bullishness among traders hit an all-time high in august, meaning most shorts are covered. I am a seller, buy puts. It takes balls to go against the crowd.
I always felt that the rich will do anything and everything to protect their wealth, well they have, and we are still nowhere.
“Bulls make money, Bears make money but pigs get slaughtered”
This has been the most difficult year for trading that I can remember since my start on Wall St. in 1967, almost 50 years ago. I never thought I would live this long.
The best way to reach me is
So long from Peru.