Tag Archives: spooz

The Way We Were: One Year Ago on April 6, 2010

HedgeFundLIVE — Let’s rewind back to exactly one year ago on April  6, 2010 and see what our Chief Market Strategist Jeremy Klein had to say on that day:

It’s Never Easy

So the Spooz settled right at the stop level requiring me to blow out of my market call for a modest 5-6% retracement in this impressive near 14% ramp from the February 5 lows.  Since 1183.00 marks my exact point where I cry uncle (it’s never easy is it?), I could cling to my hope for a selloff to commence today, but why bother?  The worst day since February 23 had the futures closing down 5 handles, and if one throws out the 10 point “slide” six weeks ago, then he or she has to go all the way back to February 4 for a session which produced more pain. 

Other things that impress me include the SPX’s hard to believe recent 21-6 run which sounds more like the record of a top seed in the NCAA Men’s Basketball Tournament than the number of up vs. down days over the past 5+ weeks.  I also like the solid closing NYSE Tick for consecutive sessions including last night’s month high of 1052 thereby signaling that large institutional money has started to funnel back into stocks.  Throw in the fact that the only things on the calendar for the rest of the week are today’s release of the FOMC meeting notes, most likely a yawner given the inert Fed and its text of little consequence last month, and Thursday’s Jobless Claims data, which will pale in comparison to last Friday’s Nonfarm Payrolls, and what’s not to like?  To be sure, volumes printed beyond pathetic numbers yesterday, but I will throw that out, for markets remain closed in Europe and many traders and managers are lounging in the Caribbean this week with hoards of kids off from school.  Even if the quietness was legit, I would not care too much as the SPX grinded up 105% from 2002-2007 on effectively no volume.  Finally, while great earnings initially sold off equities last quarter, with the financial world seemingly sobered up from the Greek hangover and Congressional reform of the banks no longer on the front of anyone’s agenda, it seems unlikely that we suffer through a reprise assuming companies supply us with good numbers.

So if I now officially shift my intermediate term bias to match my bullish stance over the long term, what do I view as my new target for the SPX?  As I mentioned in a commentary a few weeks back, the three big up legs that followed the only 7+% retracements of the massive grind higher from 2003 averaged a subsequent return of 17.5% from the bottom which extrapolates to 1227.  While 19.9% represents the best of those moves to correspond to a 1251 end game and a move to 1272 potentially taking the forward P/E to 16.4x (vs. the current 15.2x), effectively the upper bound for “richness” in the blue chip index before the collapse in 2008, my lack of 100% Rah Rah bullishness makes the 1227 target, or a 3.7% shift up from last night’s close, just fine… for now.  For completeness, I will place a stop 2% lower at 1159 at which point I will recognize my getting caught in a whipping maelstrom and need to re-evaluate once again.  As I said, it’s never easy is it?

S&P 500 June E-Minis Key Technical Levels

Support:  1174.50, 1166.25/65.25, 1161.25/60.00, 1156.50, 1147.75, 1145.50

Resistance:  1183.00/83.75/85.00, 1190.00, 1195.00, 1198.00, 1200.00, 1210.00

Where we were then:

S&P Futures

Open: 1183.00

High: 1188.00

Low: 1177.25

Close: 1185.75

Where we are now:

Last: 1330.50


Trader Profitability: Book ‘em Danno!

I am too young to have been a fan of the original Hawaii Five-O and have yet to see the current hit remake but just about everyone knows the famous tag line that McGarret would say to his partner “Book ‘em Danno”.  Well I must have finally gotten hit over the head enough times to realize that I need to be booking more than I am in profits.

Book 'em Danno, profits that is

Let’s recap the last three days of trading including todays: Friday, R4 breakout on the Spooz 12:15 flatline, selloff at 2 pm I was up $5,000 and finished down $2,000 as the market closes way off the highs, Monday, early rally R4 holds as resistance put the highs in at 12 pm market sells off, I was up small early in the day, finished down $8,000, Tuesday (today) the market opens weak, I glibly say to Zach that it has been a while since we have gone S3 to R4 which of course the Spooz do reaching the peak at 1:06 pm before violently selling off closing back near S3 but the difference for me today was that I was up $11,500 at my peak and finished up $9,200.

Yes I gave back a decent amount but there are a few lessons here: 1) I learned from the previous two days, 2) I had my stops in place and 3) I stuck to my plan and booked a very nice winning day. 

The Spooz are just not acting normally, these midday selloffs are a clue that market participants are scared and are happy to be trading more and investing less.  Back in the fall, money was very much falling from the market g0ds, it was easy to buy the dip and ride it up the rest of the day but we are so far from that right now.  For me lesson learned and I will continue to trade this way until a couple of days go by where I say “had I only held that all day I would have killed it”.  Believe me it is much better to miss out on opportunity than to lose hard earned money.

I have no overnight book tonight because I have no clarity on market direction.  My partners are primarily short so I hope we puke overnight and we make a bundle but let’s keep watching for the 12 pm turn around, who knows maybe we can make money on both sides of the trade?

Watch me book ‘em daily on the Day Trade Well channel at www.hedgefundlive.com.

Trading Notes: Don’t Let a Slow Day Drive You Crazy

Another crazy day in the market. This time instead of moving strongly in one direction or jumping back and forth, it surprised all us by laying flat. Overall in the firm, traders with short positions lost and traders with long positions lost; no sense there. The Spooz had a range of about 7 handles, which is tiny. The VIX had a range less than 3.5% and GLD was slightly up for the day. Typically this kind of market action makes for extremely tough trading. Volume was light, as can be assumed, money didn’t make any clear distinction as to where is was flowing today (to risky assets or safer assets). Trades would appear and then become stagnant, causing traders to grow anxious and bail.

Don't let the market drive you crazy.

Personally, I took one trade today, it lasted 6 hours and I made 15 cents. One of the worst aspects of a day like this is it gives no indication of what way it wants to move tomorrow. I’m preparing for tomorrow by practicing patience overnight and at the opening tomorrow. I will wait to see if the market makes a clear step to the down or upside. I think this will be the best way to attack the situation. Major Oil names and Financials were weak today, but have been in a bullish trend. I will look at those two sectors tomorrow for early market direction and because after falling today, they are cheap. One of the things I am learning most as a young trader, is to analyze the situation yet not dwell on the past; if financials were weak today, that only means they could be cheap and strong tomorrow. The market droves me nuts today, but I need to remember not to bring any of that emotion to the table tomorrow.

Sokol Resigns from Berkshire - Could this send the Market Lower?

HedgeFundLIVE -

Warren Buffett just announced that David Sokol has resigned from Berkshire Hathaway, citing among reasons a goal to invest family resources, without giving further details.

  • Buffett “had not asked for his resignation, and it came as a surprise”
  • Sokol first purchased 2,300 shares of LZ on Dec. 14, that he sold on Dec. 21; Jan, 5,6,7, he bought 96,060 shrs pursuant to 100k-shr order he had placed with a $104-shr limit price
  • As late as Jan. 24, Buffett had indicated skepticism about LZ offer and expressed preference for “another substantial acquisition for which MidAmerican had made a bid”
  • Buffett says Sokol’s LZ purchases were before he had discussed LZ; does not feel share purchases were unlawful, were not a factor in his decision to resign
  • Greg Abel to be chairman of MidAmerican; Todd Raba will become chairman of Johns Manville; Jordan Hansell will be chairman, CEO of NetJets

This seems to come as a shock to everyone close to Berkshire Hathaway and Warren Buffet.

BRK.B which is trades on the S&P 500 and weigh’s heavily on the XLF (7.72%) is down $1.60 is after hours trading.


Trade Review

INTU, PNC, spooz, quarterback, memory

Trade today as if yesterday never happened


Today was a tough trading day for me. I came in, seeing the markets up sharply from the over night session. I thought we would see the markets continue to rise throughout the day. Unfortunately, the market traded in an extreme tight range throughout the day. We saw the spooz trade maybe eight handles throughout the day which made for a quiet session, at least in the stocks I was following.  I began the day with a short in Intuit and it worked for me right away. I booked profits and moved on to my other trades. While assuming we would see a push higher, I got long PNC and from that point my day turned upside down. Originally I had an entry level of PNC at 62.20, but noticing a level of support from Friday I got long at 62.80. What a mistake it turned out to be. As I watched the stock work against me I became screen locked and really did not trade it properly. Thankfully Mosk told me to get half my position out and reload up later.  Following his directions I cut 300 shares out immediately and watched the stock come in even further. Taking off those 300 shares limited  the pain I would have felt. I added my other 300 shares around 62.25 or so just to watch the stock drop another 20 cents from there.  In hindsight, the right move should have been cut to trade when it started to work against me.  Like any good quarterback, I am able to put today behind me and will trade tomorrow as if today did not happen.


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Tuesday Market Action: 1257 Close Not Unlikely, Statistically Speaking

HedgeFundLIVE.com — Some quick stats on large down days in the S&P futures:

Whenever the range in the Spooz has been greater than 40 handles and closed down on the day:

- Avg daily pct chg was: -3.0%
- Median daily pct chg was: -2.6%

- Avg % off low of the day: 1.1%
- Median % off low of the day: 0.6%

At current time of typing, the Spooz are down 2.3%, close to the average and median change historically since Jan. 2000.  And the Spooz are 68bps off the overnight low.  From a historical perspective (unfortunately, data only goes back to 2000), I don’t see much risk to the downside for today.  A median down 2.6% day suggests a close at around 1257, which in turn would put the close 48bps off the low.  48bps is on the low side (not enough off the lows), which could suggest that we will see another leg lower today to new lows.  Statistically speaking, 1257 close is not unlikely.  Of course, stats don’t always play out.  (As a note, worst case we have seen si down 9.9% on October 15, 2008.)


Japan’s Devastation sends the US Markets into Panic - Morning Preview 3-15-11

The S&P 500 futures are down 2.5% in the premarket.  Some big cap names moving lower are C, GE, BAC, CSCO, F, INTC, and AA.


FSLR +6.5%: Renewables, waste management rise on Japan.

CLH +4.2%; SPWRA +3.8%; SOLR +2.6%; WFR +1.3%

MDSO +3%; 4Q earnings beat

NFLX +1.1; raised to buy at Goldman


ALV -6.3%. Japan OEM exposure: JP Morgan 

CCJ -14%. Nuclear sentiment; DNN -21%, USU-11%, SHAW - 8%, AVL-9.7%

RIG -5.8%. Oil drops below $98-bbl; SDRL -5.1%

SLW-6.6%. Gold, silver drop. EXK-14%, AG-12%, PZG-11%

TMT Analyst Commentary

LED Industry checks are positive for Cree, Rubicon, Oppenheimer analyst Yair Reiner said.

Checks show LED BLU demand re-emerging, LED general lighting has strong momentum in Europe/N. America and parts of Asia, are positives for CREE, Reiner said

Sapphire prices holding up well, potential for price hike in seasonally strong 3Q are positives for RBCN, Reiner said

CREE short interest 19% of float, RBCN short interst 38%: Data Explorers

RBCN up 19% YTD, CREE down 27%

Veeco Instruments is undervalued by as much as 20%-25% and cash on pace to be $20-share of net cash by year end, JPMorgan analyst Chris Blansett said.

VECO valuation by cash is better than traditional earnings- based, Blansett said

JPMorgan rates VECO overweight, PT $75; 12 buys, 6 holds, 1 sell, avg. PT $56.50: Bloomberg Data

Short interest 31% of float, down from Sept. 16 high of 46%: Data Explorers

VECO up 11% YTD; trading above 50-, 10-DMAs, below 20-DMA


Citi Sees Chip Supplies Tightening; Watch TXN, FSL, MXIM, XLNX 

Citi says Japan quake will hurt semiconductor supply more than demand, with country accounting for est. 30% supply, 11% consumption.

Texas Instruments said after close it expects “some” loss of 1Q rev., more in 2Q, after substantial damage to plant in Miho, Japan (plant accounted for ~10% TXN 2010 rev.); Citi sees other cos. making similar announcements

Separately, Freescale Semi’s Sendai plant has ceased ops

MXIM, XLNX may also see production disruptions, Macquarie said in note yesterday

Gleacher says in long-term some chipmakers such as TXN may benefit as disruptions spur higher prices, more orders

In Europe, disruptions at competitors could boost ASML, Infineon, STMicroelectronics: Citi

Monday Sell Off Unlikely

HedgeFundLIVE.com — Reposting my blog (with updated stats) from Feb. 11, 2011, a very similar day to today in that we made a round trip (up) day on a Friday.

The action in the Spooz so far today reminded me of a blog that I had written on Jan. 14, 2011.  I had run an analysis on Round Trip days.  A “Round Trip” is a HFL coined term that means a name has moved from below S4 to above R4 or vice versa (R4 down to S4).  We saw this action on Jan. 14, which happened to be a Friday like today as well.  Here are the updated stats for what occurs in the market on the day following a round trip up (S4 to R4):

All Days Fridays Only
Next Day Pct Chg Input 0.00%
Upside: Next Day Pct Chg Input 1.00%
Downside: Next Day Pct Chg Input -1.00%
Number of Instances 121 17
Number of Up > 0% Next Days 65 8
Number of Higher High Next Days 87 11
Number of Lower Low Next Days 16 4
Number of Up More Than 1% Next Days 13 2
Number of Down More Than -1% Next Days 20 0
Number of High Above R4 Next Days 27 4
Number of Low Below S4 Next Days 41 5
Probability of Up >0% Next Day 53.72% 47.06%
Probability of Higher High Next Day 71.90% 64.71%
Probability of Lower Low Next Day 13.22% 23.53%
Probability of Up More Than 1% Next Day 10.74% 11.76%
Probability of Down More Than -1% Next Day 16.53% 0.00%
Probability of Ticking Above R4 Next Day 22.31% 23.53%
Probability of Ticking Below S4 Next Day 33.88% 29.41%

The blue font denotes input parameters for this model.  The bold font denotes the output of the model.

Round trips where the Spooz have closed in the green have occurred 121 times since Jan. 2000, or roughly 4.2% of the time.  Out of those 121 days, 17 of them were Fridays (like today).  The probability of the market closing up on the following day is 53.7%.  The probability of making a higher high though is 71.9% while the probability of making a lower low is 13.2%.  The probability of the market ticking below the S4 pivot level on Monday is no more than 33.9%.  So all in all I would not expect a huge sell off.  Similarly, the odds of the Spooz closing down more than 1% are low, 10.7%.  Actually, if the round trip up occurs on a Friday, we have never since the year 2000 seen a down more than 1% on Monday.  With these lackluster data that neither point strongly to the up or down side, I am anticipating a flattish day to kick start next week.


The Way We Were: One Year Ago on Feb. 24, 2010

HedgeFundLIVE.com — Let’s rewind back to exactly one year ago on Feb. 24, 2010 and see what our Chief Market Strategist Jeremy Klein had to say on that day:

Mr. Bernanke Goes To Washington

While my daughters look forward to February for Groundhog and Valentine’s Day, I, on the other hand, instead get all giddy for the Chairman of the Federal Reserve marching up Capitol Hill to deliver his semi-annual Humphrey Hawkins testimony. Ok, not really, but certainly I enjoy it on some level as traders have always had a high level of anticipation which can often lead to increased volatility. Given a record balance sheet weighing in at over $2 trillion and a hike in the Discount Rate less than a week ago, this installment should be no different.

For those keeping score, Bernanke will not be delivering a Humphrey Hawkins address, for the Congressional Act that mandated it expired in 2000. However, the tradition of a February and July report to Congress by the most powerful person in the financial universe has rightfully continued. History aside, the Chairman must answer many open ended questions about the current state of monetary policy, the direct subject of his speech. Namely, how in the world will the Fed work down its massive balance sheet (it measured only $300B going into 2008), and what more does the economy need to accomplish before the central bank can start removing accommodation to thereby avoid the next great bubble – that being one of excess liquidity?

In my effort to provide as much actionable trading acumen as possible, I will attempt to make my best guess on what the Chairman will say as well as the subsequent reaction from stocks. I have always subscribed to the notion that Bernanke is the type of person who wants to be popular and liked. Whether or not the reason for that comes from his being socially inept in his younger years – he does own a P.H.D. in Economics from MIT and scored a 1590 on his SAT, his past speeches and his loose inebriated-affected lips while flirting with Maria Bartiromo at a White House formal dinner in 2006 suggest that he would rather please those he is rubbing elbows with than disappoint. Consequently, I researched all the commentaries I recorded for each Humphrey-Hawkins testimony he has given. Surprise, surprise, the stock market received all but one quite positively. That outlier came in July, 2008 when everything was melting down anyway, and the Chairman inexplicably gave a speech that reeked of stagflation.

Therefore, if we assume that he speaks dovishly in his text, which the press will release at the stroke of 10:00 AM, then look for headlines that indicate accommodation will remain until necessary as well as a reiteration for the umpteenth time that last week’s hike of the Discount Rate did not signal a shift in current easy monetary policy. In addition, he may talk of slack in the job market and even mention yesterday’s caught-with-your-pants down Consumer Confidence number as evidence that the economy, while improving, still has a long way to go. He will also likely rehash his February 10th speech, released but not given thanks to two feet of snow on the Mall, which indicated that the Fed will work down the balance sheet quite passively. I would not be surprised if when speaking of the low levels of inflation, he uses a phrase such as “can afford to be patient, yet vigilant at the same time.” In other words, the Fed will let America keep their bar tab on liquidity running for quite some time and probably too long such that we will paying for it with higher prices down the road.

Complicating matters, the U.S. Census Bureau will release the New Home Sales report, one of the biggies of the month, at exactly at the same time as the Bernanke text. I think traders will largely ignore the number unless it prints a huge outlier either way. Still, I think despite yesterday’s abysmal confidence numbers, optimism should reign for the day as the S&P futures bounced 7 handles from its lows late yesterday to settle 4 points rich to fair value and our old pal Ben will arrive to the rescue regardless of whether he did Jello shots with Ms. Bartiromo last night.

S&P 500 E-Minis Key Technical Levels
Support: 1090.25, 1086.50, 1079.50, 1065.00, 1060.00, 1057.50
Resistance: 1107.50, 1111.00/11.75, 1120.00, 1125.00, 1130.00, 1138.50


Where we were then:

S&P Futures
Open: 1096.75
High: 1105.50
Low: 1092.50
Close: 1103.50

Where we are now:

S&P Futures
Last: 1303.50

Technical Analysis- The proof is in the Pudding

HedgeFundLive.com -

Technical Analysis lecture by Prof. Mosk

Over the past two weeks I have been learning about technical analysis. Mark the head trader on the Day Trade Well desk has said to me on numerous occasions, “the market likes too test levels.” And on numerous occasions I have witnessed this statement hold true. During our morning strategy session I asked Mark, “what do you think the market will do today?” His response was, “I think we test the 1300 level on the spooz.” Sure enough we tested that level today making a low of 1297.5 on the spooz. For me what validates technical analysis is with or without news, such as the Middle East crisis, the market finds a way to test their levels. Case in point, last week Mark had a short target on Apple around 363, noting this was a level of resistance. Then the news about Steve Jobs being seen at Stanford’s Cancer Clinic was released and the selloff began. Since then, the stock has fallen 20 points right into an optimum buying level which was 338.75 which it reached today(low of the day was 338.61). This level was Mark’s buy target for Apple. Coincidence, or do the markets truly respect their technical levels?