Is the stock market going to tank?

Quote:

---

Originally Posted by 4matic

One of the more interesting things right now is action in the VIX. Personally, I think this is an over watched indicator and it is a short month but its virtually collapsing the last few days. Another strong rally and VIX will just fall apart.

Edit 12/02: VIX fell almost 8% this morning. Stunning.

---

Quote:

---

Originally Posted by Wikipedia

The VIX is the square root of the par variance swap rate for a 30 day term initiated today. Note that the VIX is the volatility of a variance swap and not that of a volatility swap (volatility being the square root of variance). A variance swap can be perfectly statically replicated through vanilla puts and calls whereas a volatility swap requires dynamic hedging. The VIX is the square-root of the risk neutral expectation of the S&P 500 variance over the next 30 calendar days. The VIX is quoted as an annualized standard deviation.

---

I'm smart enough to know I'm not smart enough to know what this actually means. Can you guys just tell us what you're buying and selling and skip some of the theory, please?

Quote:

---

Originally Posted by iceman

I'm smart enough to know I'm not smart enough to know what this actually means. Can you guys just tell us what you're buying and selling and skip some of the theory, please?

---

VIX in simplest terms represents the value of near the money SPX options with 30 days till expiration. The higher the VIX the higher the option premium or risk premium and the anticipation of a large percentage move (either way). Although, up trending markets tend to make the VIX decline because traders are less inclined to buy "insurance." It was never meant to represent potential for a decline. As a contrarian indicator? "When the VIX is high. You buy!"

This month the VIX has been skewed because December is a short month (only twelve trading days till expiration.) By nature it can't be a manipulated index but it's also not a perfect index because we now have weekly, monthly, and quarterly options.

I don't trade options because of all the math involved, It's too easy to be right and wrong at the same time.

Quote:

---

Originally Posted by liv2ski

What cheering??? I guess you guys could take my reality based observations as cheering, but I am pretty far from being happy about what I see going on. The only think that makes me happy about this entire shit show, is that it is going to take years longer to finally fuckin blow up than I originally thought it would.
My wife is a teacher for San Diego Unified School Dist. She came home last night and told me the superintendent had send out a email memo that the district was officially insolvent yesterday. This is after two years of lay offs and 40 kid per class room now being common. Her districts issues are just the tip of the iceberg here in CA. This shit does not make me happy, as I see how it adversely effects peoples lives. Just because I am not a bull market shrill, doesn't mean I am not without compassion for all the shit I see coming and the people who are hurting because of bad and non sustainable choices that have been made by our leaders over the last 50 years.
And speaking of the market, I know you guys are all master stock pickers, but when most money managers don't beat the index averages, I wonder how much your up in earnings in the last 10 years. Look at this article: http://seekingalpha.com/article/1191...ed-performance While a pitch for how cheap stocks are today, I see the charts as how empty the returns have been. But have fun with it. I will wait for the occasional days when a 3X short ETF gives me a year of your bull side returns.

---

Sorry to hear about your wife's school district. But, like I've said, how does that really affect IBM? What's happening in govt has some affect on multinationals and macro risk but corporate earnings are at record levels and stock multiples are historically reasonable. MSFT has a forward PE of 8 and $40 billion in the bank. Yeah, it's a dog and I own it but with a 3% yield I feel it's safer than a bond. Same with BRK. The reason i own these two is because I'm not a great or even a good stock picker. It's because I feel like I won't wake up down 30%.

I said a couple posts ago that I was underperforming the SP500 this year. Hardly claiming "genius" status. I did have a good day Friday because Junk Bonds performed well and I gained .2% on the SP. I have a forward plan because I think next year will be similar to this year price wise.

Also. I didn't make a trade for almost 8 years. Market returns were fine and I don't need the stress. After 2008 I was forced to take action. I didn't want to. Since then I've probably made 100 or more trades and it's helped me outperform by a few percentage points the last 30 months with a lower risk profile. I screwed up this year and got sidetracked by other opportunities so right now I'm sitting with a very high beta mix overweight small and mid-cap. IF we get a rally extension small and mid will outperform as they did yesterday and this week.

And, what if you make your 3x leverage trade and you're wrong? If you lose "a years worth of gains" in one day what do you do? You have a better chance in Vegas betting on black.

I like my chances right now:

"Kevin Pleines at Birinyi Associates, Inc. notes that this week’s 7.4% surge in the S&P 500 SPX is the index’s strongest week since the start of the bull market in March, 2009.

It also marks only the 12th time since 1962 that the S&P has risen more than 7% for the week.

Even better, for market bulls, the market averages a gain of 2.7% in the month following such surges, and 5.7% over the following three months.


"

I don't know whether ANY rational tool could provide any semblance of guidance in these zombie markets. I mean, let's think about all that happened this week:

1) S&P downgrades 37 banks

2) China's PMI falls off a cliff

3) US unemployment decreases but only because people are leaving/falling out of the labor force

4) World's central banks in desperation pull a co-ordinated move

And the rest of the news is mainly bearish to downright frightening when you think about it i.e. over-leveraged European banks unable to borrow USD short-term etc.

And what happens - RISK ON!

Does not compute.

"Danger Will Robinson, Danger"

Birinyi is the anti Roubini.

Ironic that the market is barely positive after 11 months of turmoil. Who's really making money with all of that churning?

Quote:

---

Originally Posted by Benny Profane

Birinyi is the anti Roubini.

Ironic that the market is barely positive after 11 months of turmoil. Who's really making money with all of that churning?

---

HFT for the win:rolleyes:

Quote:

---

Originally Posted by iceman

I'm smart enough to know I'm not smart enough to know what this actually means. Can you guys just tell us what you're buying and selling and skip some of the theory, please?

---

Ice 4M explained VIX pretty well, but you can also use it as a sort of fear gauge. Market sinks, fear goes up, VIX goes up (stems from option premiums increasing). As the market levels out or moves back up, VIX decreases. It doesnt necessarily have to happen- October was a strong up month but VIX came down only moderately because there is still fear out there (option premiums stay high)

I just shorted Red Hat (RHT) on Friday. I think its valuation is just way too high for a company growing at a moderate rate in an industry where there are fairly low barriers to entry and with their specific product, low barriers to entry. Growth has been tough in the past 3 years certainly among public sector but I think it will continue to tighten (see: San Diego teachers post above) which will hit growth numbers. Sure, in the long run it may be cost effective to implement new RHT infrastructure but in the short term, kids read old textbooks, adults use old legacy systems, and the cloud moves forward with Oracle or SAP throwing weight around.

Any of these reasons, I think, could impact the multiple for RHT so Im short. Im also long Halliburton stock. Taken a hit on that recently. Closed out of Anadarko which was a mistake. Earlier I had shorted Green Mountain and Netflix but closed out of both. Other than that, Ive just been buying FAS calls when the market sinks and FAS puts when the market rises. From day to day the amount of truly new information out there is fairly small, yet the moves are huge. Just doesnt jive.

iceman - technically what 4matic and brock said. To add to that VIX is sometimes thought of as an indicator of volatility. One of the times when wikipedia is pretty much bang on

Personally i tend to go pretty hard to conservatism when the VIX is high because i don't hang around in offices or screens too much during markets opening or closing (those are the times when trading and price swings get particularly frenetic).

Option prices do get pretty high when vix is high. 4matic remember that long MSFT sell calls strategy I talked about? Implemented it and it seems to return a nice yield so far but then its only 1 month and also the premiums seem to be high.

Quote:

---

Originally Posted by liv2ski

I don't know whether ANY rational tool could provide any semblance of guidance in these zombie markets. I mean, let's think about all that happened this week:

1) S&P downgrades 37 banks

2) China's PMI falls off a cliff

3) US unemployment decreases but only because people are leaving/falling out of the labor force

4) World's central banks in desperation pull a co-ordinated move

And the rest of the news is mainly bearish to downright frightening when you think about it i.e. over-leveraged European banks unable to borrow USD short-term etc.

And what happens - RISK ON!

Does not compute.

"Danger Will Robinson, Danger"

---

Failed german bond auction too. That's pretty remarkable and doesn't get mentioned enough. Sure the yields were pitiful but so are the US bond auctions yields and the US bond auctions don't fail. Good idea to gtfo risk

Quote:

---

Originally Posted by LeeLau

And the US bond auctions don't fail. Good idea to gtfo risk

---

Tough to fail when I am certain the PPT is backstopping the action. (To primary dealers: "you buy it, we buy it from you" wink, wink) Just waiting for US bond auctions/yields to go full Italian. 2012 or 2013 to buy TBT for the win.

I love reading this guy lately:

http://interloping.com/

http://www.youtube.com/watch?v=WA7rG...layer_embedded

Quote:

---

Originally Posted by LeeLau

4matic remember that long MSFT sell calls strategy I talked about? Implemented it and it seems to return a nice yield so far but then its only 1 month and also the premiums seem to be high.

---

With a 3% yield to boot..

Selling puts below 25 and calls above 27 on MSFT has been one of the best conservative strategies for YEARS. I've been reading this blog for a few months: http://www.fullyinformed.com/US-Stoc...-microsoft.htm. I really like the strategy.

The stock has to break out of the sideways channel at some point.

AMR up huge. There you go rational markets

Quote:

---

Originally Posted by LeeLau

AMR up huge. There you go rational markets

---

It's the penny stock spammers/scammers driving the price up...Or maybe some bored Bond Fund vulture having some fun...

yup - penny stock daytraders are spamming the AMR ticker around. It's basically a trading vehicle for them

Quote:

---

Originally Posted by Hugh Conway

The pension costs are just the latest trendy excuse from a sector that's perpetually fucked because of fuel expenses they can't mange well and debt (for a trendy little mint making op rightnow aircraft sale/leaseback). Of the 9 largest US carriers in 1990 all have declared bankruptcy; the only one of those 9 to exit the playing field without a merger or organized passing on of assets was Eastern airlines. This is zombie capitalism. Players need to exit the field and the field needs to be redesigned - or just reregulate certain routes and accept the consequences.

As an example of why things are fucked:
http://www.philly.com/philly/busines...are_hikes.html
as an industry they can't make money in competitive markets; the rest of society is unwilling to pay enough regularly to sustain the extortion fares.

---

As another example why AMR should get the death penalty:

Quote:

---

Buried deep in American Airlines' Chapter 11 bankruptcy filing is a striking asset -- a town house in one of London's most expensive residential streets that property experts say could be worth up to $30 million.

The five-bedroom house in London's high-end Kensington district is a throwback to the airline's expansion two decades ago and stands a 10 minute walk from the former home of Princess Diana, with gentry and diplomats as neighbours.

UK regulatory filings show the house has been used as a residence for senior executives, including the current chairman and chief executive Thomas Horton, since the airline bought it in the early 1990s.

---

http://www.reuters.com/article/2011/...7BD02M20111214

what good reason do you have to own a townhome in london for senior executives in the current era? A: none.

Quote:

---

Originally Posted by 4matic

The stock has to break out of the sideways channel at some point.

---

MSFT? Curious why you think this is the case? I also have owned this stock for some time. Price has been very stable. I don't see it as a growth stock. They have the a solid share of the desktop/laptop market, but have been late to the show in other areas ( Zune, web services/cloud computing, phone OS) or not had a strong showing. They have not been the first to market in several areas which has been a huge part of the Ipod/Iphone/kindle success story, IMO.

Would love to see them break out of the holding pattern. But have not seen anything in a few years to lead me to believe this will happen.

Not trying to disagree. Just trying to learn a bit from your posts and this thread.

Quote:

---

Originally Posted by mobygrape

MSFT? Curious why you think this is the case? I also have owned this stock for some time. Price has been very stable. I don't see it as a growth stock. They have the a solid share of the desktop/laptop market, but have been late to the show in other areas ( Zune, web services/cloud computing, phone OS) or not had a strong showing. They have not been the first to market in several areas which has been a huge part of the Ipod/Iphone/kindle success story, IMO.

Would love to see them break out of the holding pattern. But have not seen anything in a few years to lead me to believe this will happen.

Not trying to disagree. Just trying to learn a bit from your posts and this thread.

---

MSFT has earnings growth. The multiple continues to contract with the assumption that earnings will not continue to grow. I liken MSFT to IBM. IBM went sideways for many years and finally they were perceived to have value again. Also, Bill and Steve will be done with regular stock sales in teh next few years which weigh on the stock.

If Skype, Winphone, and XBOX media center grow above expectations that would also be a plus.

Stock action is constructive lately.

Since Natural gas is at lows that haven't been seen in ~10 years, I am contemplating investing in some stock/ETFs that could be longer term (2-5 years) winners.

I've looked at United States Natural Gas Fund (UNG), but I don't have any experience with ETFs. I'm leery of the drilling companies,. There are some companies that do natural gas conversions for vehicles that I thought might be interesting (FSYS and CLNE), but they have their issues.

Any recommendations for investing in Natty gas?

No on UNG...the way its set up sucks, you invest in forward-rolled futures contracts...so youre investing in the spread of month to month contracts widening/compressing as much as anything.

If youre bullish Nat Gas, check out Devon Energy (DVN) or Chesapeake (CHK). CHK has a little more upside as it has a higher debt component (more downside too) whereas DVN is a stronger balance sheet. Both are nat gas AND oil companies. Cabot Oil and Gas is good too, though valuations are troubling.

Also look at UNL...its like UNG without the roll problems as it spreads out contracts

SD, baby

Quote:

---

Originally Posted by Verde

Since Natural gas is at lows that haven't been seen in ~10 years, I am contemplating investing in some stock/ETFs that could be longer term (2-5 years) winners.

I've looked at United States Natural Gas Fund (UNG), but I don't have any experience with ETFs. I'm leery of the drilling companies,. There are some companies that do natural gas conversions for vehicles that I thought might be interesting (FSYS and CLNE), but they have their issues.

Any recommendations for investing in Natty gas?

---

Just trade the futures. It's the purest play. Performance bond is $2800 so you should have at least $20k to play a one lot. ANOTHER 52 week low on the commodity but also a nice reversal into the close today in the face of weak oil. NG has been widow maker for the longs. Brock is right on UNG. It's a short term play at best.

MSFT: Booyah! 52 week high.

Financials turning higher in the last hour today with Dow Industrial 1.5% from a four year high. Hard to call a top in here..

Crude Oil broke down from a rounded top so the chance of a big rally is contained for now and that supports equity.

Quote:

---

Originally Posted by dos bolsas

SD, baby

---

Down 6% in an up NG market?

Quote:

---

Originally Posted by Yossarian

P.S. I say yes. DJIA will be below 13,000 again sometime this summer.

---

....aaannnd, almost 5 years later it's almost within sight again. Just a little 5-year dip.

Quote:

---

Originally Posted by Verde

Since Natural gas is at lows that haven't been seen in ~10 years, I am contemplating investing in some stock/ETFs that could be longer term (2-5 years) winners.

I've looked at United States Natural Gas Fund (UNG), but I don't have any experience with ETFs. I'm leery of the drilling companies,. There are some companies that do natural gas conversions for vehicles that I thought might be interesting (FSYS and CLNE), but they have their issues.

Any recommendations for investing in Natty gas?

---

i wouldnt do that.

despite historical lows, ng isnt going anywhere higher; mild winter, low demand, massive oversupply. one of my fin advisors could actually see the ung etf going away because the demand to buy it is just going to drop further and further.

i'd suggest oil stocks and oil is likely to go higher all the way thru the summer.

Quote:

---

Originally Posted by SkiCougar

i'd suggest oil stocks and oil is likely to go higher all the way thru the summer.

---

Well, to give props to 4matic, months ago he mentioned oxy, I liked it and got in at 75. For the last few months I have been selling covered calls on it to pick up a little income. Thanks 4matic, if I ever see you on the hill, I got your bar tab.

Quote:

---

Originally Posted by liv2ski

Well, to give props to 4matic, months ago he mentioned oxy, I liked it and got in at 75. For the last few months I have been selling covered calls on it to pick up a little income. Thanks 4matic, if I ever see you on the hill, I got your bar tab.

---

Thanks Man.. I'm always happy when someone pulls money out. Oil and the oil stocks look a little heavy right here in the short term. OXY only yields 1.8% and is more leveraged to oil price.

FB hanging 4matic jibber jabber wasabi framizdat - down 3 days in a row - probably bounces off low today unless Zuckerberg fibopasta line activated

Trans. Probably bounces today. But I'm going biking so have fun with it.

Quote:

---

Originally Posted by LeeLau

FB hanging 4matic jibber jabber wasabi framizdat - down 3 days in a row - probably bounces off low today unless Zuckerberg fibopasta line activated

Trans. Probably bounces today. But I'm going biking so have fun with it.

---

Damn I'm good. My paper STRONG BUY was at the bottom and I made 12 Whistler seasons passes on my bike ride on this one trade just by calling the Candles

You just simul Doji'ed the shit out of that one LL. When are you on Fast Money, bro? ;)

PLEASE subscribe to my newsletter

OK last post in 4matic style for now. GRPN full blown single digit aids! Oh how good it looks on such a piece of corn studded shit company

Thanks for the shouts.

I went to market risk at 1340 SP500. Even on the year now. :fm:

Shoulda taken that 401k loan I need for real estate last month. :tongue:

I'll take some losses selling next week for sure..

http://www.bloomberg.com/news/2012-0...5-million.html

Quote:

---

A Ferrari 250 GTO bought by U.K. television and radio host Chris Evans for about $18 million in 2010 has been sold for a million-dollar price “in the high 20s,” dealers said.
“I’ve heard of eight Ferraris selling for a total of $135 million during the last eight weeks,” John Collins of the U.K., Ascot-based dealership Talacrest Ltd. said in an interview.

---

better listing here:
http://www.finecars.cc/en/editorial/...ash=72ab76e426

there's been big numbers in the art market too. People putting money into tangible best of best assets ahead of a plunge?

Quote:

---

Originally Posted by Hugh Conway

http://www.bloomberg.com/news/2012-0...5-million.html

better listing here:
http://www.finecars.cc/en/editorial/...ash=72ab76e426

there's been big numbers in the art market too. People putting money into tangible best of best assets ahead of a plunge?

---

Stick with tea leaves. Much more reliable.

:nonono2:

Oh ... and the scab starts to rip today (6-4)

Gonna be painful. Hold onto your hats and watch for the bottom!!

Moody's to Downgrade 15 Banks tomorrow.

http://www.cnbc.com/id/47903018

Time for another tankin'.

Quote:

---

Originally Posted by Hott Butt Mud

Moody's to Downgrade 15 Banks tomorrow.

http://www.cnbc.com/id/47903018

Time for another tankin'.

---

No, surely that is bullish as then Ben has to open the QE3 to Infinity flood gates.:rolleyes2

downgrades are already priced in, interesting to see just how far. noone gives a shit about the ratings agencies anyway anymore.

Looks like MS isnt going to get cut that badly

Quote:

---

Originally Posted by Hott Butt Mud

Moody's to Downgrade 15 Banks tomorrow.

http://www.cnbc.com/id/47903018

Time for another tankin'.

---