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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AN OCTOBER BLOOD BATH IS COMING

”You ain’t seen nothing yet”

Marcello Frank Anastasi, No Al Jolson said “You ain’t heard nothing yet” The Jazz Singer.

Does anyone remember October Blood Baths?  I am calling for one now.

They were very common in the 1970’s and 1980’s. I remember seeing traders who were normally strong and calm in face of some really bad days which normally occur during a normal trading year. These same traders would physically shake and have trouble speaking a clear coherent and complete sentence. Believe me when I tell you I saw one young trader actually peeing his pants when the office girl only asked him what he wanted to order for lunch. I also remember him yelling back at her, standing there with tears in his eyes while shaking and peeing and screaming at her “Do you know what the fuck is going on?” She had no idea.

I won’t mention his name because I liked him; he was really a nice guy. Even if I didn’t like him, I wouldn’t mention his name only because the whole fucking thing was not a nice thing to remember.  I think of him every October. It’s one my rare bad memories of Wall Street. He didn’t come to work the next day, or the day after that, or the next either. He did come up to the trading dept. four weeks later to apologize for his behavior on that bad day. He also came to say Good Bye. He was leaving New York. He decided that Real Estate was going to be the next hot industry and he thought the Boom was already starting in California which is where he was going to. Boy! Was he right!.

That was in the late 1970’s I was happy for him, I later heard he ended up doing very well. I want to dedicate this story to all our elected assholes in Wash. DC who never put in a full work day and spend most of their time flying around on some sort of perpetual vacation, paid by hard working Americans.

The only time they stop the vacation is when they have to stop and pick-up a bribe or payoff they earned for passing a pork -belly project or a Bridge to nowhere project. And I’ll bet the really crooked politicians buy cheap Real Estate when they know a bill will be passed. But you know what pisses me off they think the American people don’t know this shit goes on. Shame on you. How come they all retire millionaires? It must be all that over time they put-in during their working careers. Oh! And the buildings in Wash. DC must all have sun tanning bulbs as lights.

Enough, I hate when this mean side of me comes out. but it makes me feel so good, I actually breath better and while we are on the subject of assholes, the MBA’s , Quants and so called pundits. September is not the weakest month of the year. October is. During October blood baths, blood runs in the streets caused by selling panics which usually exhaust themselves by mid-month or later in the month causing a sharp snap-back upward movement and thus showing a not so big % downward end result for the month.

To all those I love, things will get worse before they get better and I said it in my second or third blog. God Loves this great country, we will be back on top again. I also believe God elected every president we had, including Obama. I felt bad during the Bush Gore Election. God had to re-arrange all those hanging chads on the voting cards in Florida. I am a democrat but God put Bush in because he knew Gore would never retaliate the way Bush did. And we would be suffering many terrorist attacks like the Boston Marathon. Am i religious? Do I go to church? All I can say is Jesus is my best friend. Obama’s time to shine will come soon and he will go down in the history books as the President Most Loved by the people.  I loved him from day one. “Be not afraid” my fellow Americans

PS.. No, Flushing Red signals was not a mistake, I meant it. I have never seen all 10 of my indicators go all red (SELL) or all black (BUY) they usually just go to a majority, like 6-7-or 8 out of 10. If I am reading them right, Flushing is the right word. Stocks will tank and flushed right down the toilet.

PS PS Do you remember the movie “Grumpy Old Men? Well I was a lot younger when I saw it. It must be at least 20 years old. When I saw it I said, I hope I’ll never get like that and just laughed. I thought it was so funny. Well guess what, I am worse than that, at times I have no patience and everything annoys me. Then there are times when i get so piss-off I get crazy. I guess I am trying to explain my rage against our political leaders in Wash. DC, but I do notice one good thing about getting old” You care but you really don’t give a shit”

Joan Rivers, no one makes me laugh like you did.!

I will miss you. Her charitable works are unbelievable. Search them on Google.

God Bless you Joan

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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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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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