economy, INVESTMENT ADVICE, STOCK MARKET

LAST EXIT OFF THE HIGHWAY TO HELL A down September leading to an October bloodbath

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!!!!!

Just thoughts:

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

marcello.anastasi@ymail.com

So long from  Peru.

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economy, INVESTMENT ADVICE, SOTCK MARKET, Uncategorized

SHORT THEM AGAIN, LET´S GO FOR A HAT TRICK

Well they didn´t go to 13,000 yet but I think all the shorts are covered, again. You know you can make 5 to 10 times more, more money; 5 to 10 times faster being short in a Bear Market  than you can being long in a Bull Market.

I said that the first week last June was the start of a new Bear Market and that the next rally after a 2,000-point drop was a Bear Market rally, followed by a 3,000-point drop, and I think this last rally was also a Bear market trap. If it is, the next sell- off could be down 4,000 points, all toll, the shorts will have made 10,000 points on the Dow, but wait till we go to 13,000 Dow.

Remember, in Bull Markets you buy the dips, in Bear Markets you sell the rips. Easy game.

Let´s check our Short list:

OEX Down -120 pts+

PCLN Down – 450 pts

AMZN Up, lost money

IBM Down -50 pts

GOOG Up, lost money

TSLA Down – 180 pts

NFLX Down – 35 pts

AAPL Down – 35 pts

VIX Up 35 pts

I would buy puts on this same list- except AMZN, wait 2 days, they had great earnings- keep in mind when you go short buy puts. Because the most you can lose by buying puts is the price, you paid for the puts.

If you short a stock and it goes up, your loss can be unlimited. If you do short a stock, buy slightly out of money calls, this will limit your loss.

Being naked short you can lose the ranch, really. Ever since options started trading in the mid 1970´s I am shocked whenever I hear someone has lost a bundle of money, there are so many ways to protect yourself with options.

I think the e-mails I got from my readers, kind of sums-up how they are doing.

The first one is scary:

“Hey, Market Call Anastasi, if the Dow doesn’t go to 13,000 like you keep saying, one night you are going to see a few dark vans parked in front of your house and driveway with mean looking guys inside.”

Well, I live in Peru, that´s a long drive.

The next one I should have saved, printed and framed, he says:

“I don’t believe I made $ 500,000 on the 25 puts. I´m giddy laughing, I made a boat full of money on Priceline and I buy a boat, I mean a container ship. It is the first time I ever bought puts or an option.

I felt like that 70-year-old woman from Wisconsin who for the first time in her life, she bought one Lotto quick pick ticket and won the lottery the next day.   Who knows if I had listened to you about the rally only being a Bear Market trap I could have made 300 or 400 points instead of 200 points… Thanks Market Call Anastasi…”

The majority of the e-mails all said they were happy they sold all their stocks in June at the Bull Market top and that they made money buying puts.

As for the mean looking guys in the dark vans:

If you spent more time, reading my blogs maybe you would be driving “Vettes and Vipers” my two favorite cars. Just remember this blog was intended for friends, family and relatives because it´s easier than constantly calling from Peru and Yes. I have a disclaimer; it reads:

“If anyone is dumb enough to listen a poor Italian kid from South Philadelphia, they deserve to lose money”

I won´t get bullish until the Dow breaks 18,200 on the Upside on large volume. The total daily volume of stocks has been declining.

Not a good sign and earnings of companies have been declining. All I see is bad news everywhere.

I keep about 15 market internals every day, 4 times a day. At 10.00, 12.00, 02.00 and 04.00 O´clock, and I will admit some of them are starting to look a little better. If the Dow should break 18,200 on the Upside and only on a large volume, sell your puts fast for whatever they are trading at. I would be shocked if that happens.

Happy Trading!

 

 

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THE BULL TREND AND ACE GREENBERG DIED AT THE SAME TIME.

You will be missed Alan!

Thank God they reinstated the up/tick rule.

Resilience: An ability to recover from or adjust easily to change or misfortune.

Resilient, ah! Resilient the traders would say or a salesman will rush into the trading room, during a busy day and say:

“What should I tell my customers? Did I miss some news? What’s going on? They should be down!

And a trader would say: Resilient, ah resilient.

We all use that word when we didn’t know why the

f—k—g market was up. I wonder if they still use that word. God I love Wall Street!

Several times in the past someone would look at me with strange look on their face, and say to me you have an anfractuous mind. I just see things differently.

Example: One day last week the market moved to new highs on big volume. Everyone says, wow that was a lot of buying!

Just remember for every buyer there is a seller but the market was on the plus side.

I’ll give you that but less than one percent.

Now 100 point move in the 70’s or 80’s meant something.  There were more buyers than sellers but not by much.

To me there was a lot of selling and I think the sellers were the Gnomes of Zurich. Just like that day in August of 1982, the start of the new Bull Market. I think that day the Gnomes were buying also, from my anfractuous mind.

Another twisted thought:

Suppose the plane that was shot down, the MH 17 from Malaysia wasn’t from Malaysia.

Oh! A small country. Not important??. Please 300 lives were lost and the news said the bodies looked as if they were turned inside out. Maybe the pilot did know that he shouldn’t be flying over the war zone but was diverted because of turbulence or a number of other reasons like a mechanical failure or worse a terrorist on board.

Let say it was a flight from the USA or how about China or some other big nation that could strike back.

It seems to me that they pulled the trigger because they feared it was an enemy plane too close to Russia.

Do you really think that the trigger happy guy checked to see where the plane was from before he fired?

I doubt it.

Next week an American plane could be diverted to that area and shot down. I am not trying to build a bearish case because I am looking for a correction; it’s just that I think you gotta be f—k—g crazy to be in this market. The world is coming apart.

I just don’t think you are doing your customer justice by being in this market, and, what about preservation of capital, your customer’s money. Losing it is a lot worse than not making more.

Some of my friends that I advise “the Oracles of Juniper Valley Park” said:

“Frank we are happy you yelled Buy over 4 ½ years ago. It’s the summer time and we have money in our pockets and we can sleep at night but if the market goes a lot higher, we all are coming down to Peru to beat the sh-t out of you.”

OEX story continue

I executed a buy order and bought 10 OEX puts at 2 ½

slightly out of the money. 2 or 3 weeks went by and the market worked its way higher. The options were trading around 1 ¼ – ½.

And I said: “I’m sorry we never talked about paying for the loss if they went down; I’ll pay you back in full”.

She said “I already sold them”

I said “why?”

She answered “I asked some of the analyst here, what should I do?  None of them were sure about which way the market will go except one analyst who said:” Frank is a nice guy but he is only a trader not an analyst, what does he know?”

She graduated from a nice college and was a CFA a certified financial analyst and he was a Columbia grad.

Well I promise you one; two or three lessons would come from the story.

Two weeks later the market was down big on the Thursday and Friday before the weekend. Unusual, in Bull markets Thursday and Fridays are almost always up, confidence disappeared and everyone in our department and the other Trading Departments, all left for the weekend with scared faces.

I said ” Oh Boy! The Yuppies are all going to talk to their friends this weekend and I know their final decision will be to sell everything figuring it’s better to have some money left to play with rather than nothing.

Monday was scary straight down and some salesmen were throwing up by the end of the day, some send their secretaries out to buy cameras to take pictures of the Quotron Screen, the closing prices were frightening. Tuesday there was a selling climax.

In spite of the movie The Wolf of Wall Street, released-I think- at the worst possible time, when the market and economy were struggling to come back, most of us in the business DO CARE about a customer’s money or the firm’s money.

I knew of one young salesman who committed suicide, a specialist on the floor who committed suicide, and a salesman who took a heart attack and died. Oh! And there was a guy in New Jersey who drove to his broker’s Merrill Lynch office nearby and shot him.

The OEX puts bought at 2 ½ for $2,500 dollars eventually traded at a value of $87,500 dollars. I don’t think I would have stay around that long.  But imagine if I bought a 100 or a 1000 puts.

Next blog: “Lessons”

In a CNBC interview  Ace Greenberg said he only wanted PHD’s working around him but he meant poor, hungry and determined!

Te amo Peru, the food here is unbelievable.

 

 

 

 

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IT’S ALL OVER, CEPT THE SHOUTING.

It’s not over until the fat lady sings. Bears make money, bulls make money, pigs make nothing or as some people say, pigs get slaughtered.

God! I love Wall Street.

If you are a young guy or just graduated go to Wall St. I think it’s an exciting business. I am sure there are other jobs more exciting for example I always love music, I wanted to be a song writer or a great rock drummer who sings. The point is I never had a boring day in Wall St., I had some bad days but never a boring day which leads me to my next point:

In this week headlines there were two items that call my attention

First one said “Wall St. scrambling to hire young bankers”, that’s something you usually hear at market tops and they are heavy at laying off people near bottoms.

“I only know what I read” said Mark Twain I think.

My firm AG Becker tried very hard to keep everybody on, even in the worst times.

Hey! They kept me for twenty five years. I remember one market down turn; they close the OTC Trading Department, my department but offer everyone a spot in other departments that were at least surviving. I accepted the job on the floor of the American Stock Exchange (AMEX) for about nine months as Specialist Assistant, where it became clear to me that the Specialist System was and is still the best system. It wasn’t perfect – by no means- but all orders buy and sell, went to the same location: the specialist on the floor of the exchange.

Anyway after 8 or 9 months they re-opened the OTC Trading Dpt. upstairs in the New York office as promised but I came back feeling that the Specialist System with one market maker was superior to the OTC Trading System with many market makers, which intern has led to all these computer trading offshoots that we have today.

The other news item that bothers me was a news film clip on “The decaying shopping malls in America”. I do believe the economy is coming back, but slowly and I know the USA will rise to the top again. We always did and will do in the future because this country always had God on its side.

The market always anticipates what will happen three to six months from now, but decaying malls and Dow 16,950 where I finally screamed sell is more than three to six months away.

It seems like the bulls are high on something, they just refuse to see what’s going on here in America and the rest of the world. I don’t know what will take us to the “Tipping Point” – a good book- and cause the correction I believe is coming.

I hope it’s not a Black Swam- also a good book- which is something that is already out there but appears at best to be manageable. Then when you least expected, it blows up in your face. There are too many Black Swams out there and all of them are potential disasters.

Wait a minute… I just heard the bread girl hang the bag of fresh rolls on the door knob. It remains me of my home town where I grew up. South Philly,(Philadelphia) where fresh bread, milk, butter, cakes and donuts were delivered every day 60 years or more ago. Just one of the many reasons I love Peru.

Te amo Peru

PS About 10 am this morning I hit Yahoo to check the news and my emails and the headline read: Putin is in Cuba with the Castro brothers for a visit and is for giving them a $30 billion debt.

This bothers me maybe because I remember just finishing army basic training at Fort Knox Kentucky when we were told the Fort was put on alert.

I am not sure it was Cuban missile crisis, I was never that good at World History, but I do remember Russia and Cuba mentioned in the same sentence.

PS-PS Can you do a Ps-Ps??

RIP Tommy Ramone

Strange days indeed!

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SHOW A CHART! … GIVE ME A REASON.

Today is the last day of the quarter. It is window dressing time, the market should be up today Monday June 30th.

This morning I got an email from a guy I worked with years ago in Wall St. He is smart, he is a lawyer, we will call him TI, he gave me five or six suggestions concerning my Market Call Video. He said:

Frankie your 1987 crash call was great but at that time you showed every one in the Risk Arb. Dpt. some charts,  each with a reason for your Crash Prediction to come true.  But this time no charts, no reasons…

I said :

TI that’s exactly the reaction I was hoping for. There must be a thousand Market Call Videos on You Tube, all saying the same thing: By 2015 the Market will crash! or  Hey 6 to 9 month from now the Market will go down or up!  and they all have a 10 or 15 charts with reasons. This or that will happen.

This is not a prediction, this is a guess.

Hell! anything can happen in 6, 9 or 12 months, bullish or bearish and sometimes both. It is like talking to an analyst for half an hour and then he says, on the other hand. Please, give me a one handed analyst.

I did take TI aside one of the days after the crash an explained to him the 87 crash was easy to call. All the indexes were hitting new highs while the advance-decline line was tanking, going down, a  major negative divergence.

I finished this morning conversation with TI by saying  RE READ MY OPENING STATEMENT:

IT’ S ALL OVER!

REMENBER THIS DATE

BIG CORRECTION STARTING NOW!

 

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BH, Buy and Hold equals BS, Bullshit

It’s all over. Remember this date. Big correction starting now:  2 p.m. Tuesday afternoon June 24th. Stay in touch for next update. Stock market is not rigged, if it was rigged and it has been going up for the last five years, who would give a shit if it was rigged. Following blogs will explain why psychology is 90% of this game, it has more to do with instinct and market feel, the other 10% to me is useless I will leave that to the MBA’s and Quant guys to argue about. In the next few days we will talk about BH – BS. (Too many black swans) (Bull Markets do die of old age and so do Bear Markets) Love from Peru.

 WHO IS MARCELLO FRANK ANASTASI

Worked  35 years in Wall Street as a Risk Arbitrage Trader at A.G. Backer and Bank Paribas North America, now retired living in Peru but he can’t get the game out of his system because he loved it so much and he still does. Buy Puts sell Calls get out of Stocks and have a nice summer!

“The reason I started this Blog is because just as I called the New Bull Market in August 1982 due to a Business Magazine article which claimed that equities are dead this pissed me off. Today I am just as pissed off because for the third time in as many weeks I have read some jokers saying that the Market is now going to 30,000, 40,000 and even 50,000. If you still believe in BH, Buy and Hold just ask the guy who bought GE at 70 or the guy who bought Sun –Micro Systems at about the same price (60 or 70) and you might hear aloud roar in the room BS. Miss my Kids in the States Talk to you soon! “ M. Frank Anastasi In case you think I am crazy contact me and tell me so at: marcello.anastasi@ymail.com

 

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