coolhand's Account Talk

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Coolhand,
This is just a drive by to tell you that I always appreciate your insightful posts. Your latest about political control and the market is an excellent example, and I thank you!

Lady
 
Thanks for the drive by's folks. I'm always glad to hear that I'm contributing some good links and thoughts.

Same old song here. Won't try to explain it again. I'm just trying to be patient. Part of my strategy is to get to Nov 1 while still holding my 100% C position. By doing this I'll get an extra trade for the month and have a chance to use this volatility more to my advantage. I'm also allowing the market more time to finally put together a rally of some magnitude.

If it doesn't happen before we plunge significantly lower then we have much more serious problems than we know.

I will say that I am not long term bullish at all. We have some serious head winds to contend with, but I can't play this market as though it's going straight down (relatively speaking). I am really not sure what target to look for if we do rally because of how much distance we've put in to the downside since September. It will depend on volume, breadth and sentiment should it come. Between the volatility and our trading contraints, it seems a little silly to try and pick a "target". I'm just looking for a good, sustained rally that has little chance of reversing quicker than I can sell.

We've still got some good volume support levels below and sentiment says, "Look for a low". Eventually we'll get a rally of some serious magnitude. We've got the set up and with the VIX so high, "da boyz" will short the puts and engineer a rally as soon as they think that they can get away with it. The OEX P/C is flashing a reliable ST Buy."
 
I have read quite a few Stratfor articles the past couple of weeks that have gone into good detail about the economic troubles around the globe. In summary, I would say that the US is in much better position to weather the current credit crisis than the vast majority of countries. It's ironic in a way since it's our own greed and deception that's caused this pain.

But that aside, I bring this up for several reasons; and this is looking out longer term. First, Russia is being hit hard. The Russians have a great deal of cash on the side to weather this crises, but their main export, oil, has plummeted in price. There are rumors floating around the motherland that Russia is considering devaluation of the ruble. The Russian people know all too well what happens when that occurs. The point here is that while this is still a rumor, it could cause a run on their banks. And Russian banks do not have a whole lot of currency floating around to weather such an event. Even now the people of Russia are buying dollars. Dollars!!!

As bad as we think our own economy is, we are still seen in many places as having the most stable currency. Just look at the Dollar chart. It's no fluke that it's moving higher.

Japan depends on exports to drive their economy. Exports are down around 90%. 90%!! On top of that the Yen is currently the strongest currency on the globe, which means that their already dismal export numbers are going to get worse as the US and Europe have not yet seen the deepest part of this recession.

China is in the same boat in that their exporting is way down as well. Again it's what keeps their boat afloat just like Japan. But in China the Communist leaders are worried about unemployment, which could potentially cause an uprising by the population. This could happen.

Europe has its own problems. Their banking system was already in poor shape before this crisis started. Now it's getting worse.

I have only scratched the surface here. It's a complicated mess, make no mistake. Many other countries are involved as well.

From a geopolitical standpoint, it is putting a lot of pressure everywhere, including on our enemies.

But from an economic standpoint it should be understood that the US has much more capacity to weather this situation then just about everyone else.

Our dollars are being bought as a hedge against currency devaluations around the globe. It's hard to see how this will play out, but the world is not going to end and once people start to realize that, our market will take off once again. Where else are they going to put their money?
 
Building on my last post, I'd like to offer some very intriguing thoughts.

How bad can our markets get? The good news is that the equity crisis — as demonstrated by the 3-month dollar London Interbank Offered Rate — continues to loosen. But, do we have capitulation in the markets? If so, we should see many investors return to the market soon, which will mean the US is turning the corner. But the question of capitulation remains just that; a question.

Make no mistake, the world’s money is flowing to the United States, strange as that may seem to us. And as I have mentioned before the world economies cannot recover until we do. And for some, such as Japan, recovery will be much more painful.

I find it very interesting that some of our enemies are getting trampled in this process. Some, such as the oil producing ones (think Russia and Venezuela) are getting hammered. China too is facing some serious challenges. Remember, none of these countries can begin to compare to the economic power of the United States. And as bad as we think our economy is, and as screwed up as we might think our puppet-masters are, we can weather this storm in pretty good shape as opposed to anyone else.

Those of you who remember me from a few years ago may remember me speaking of the notion of using currency as a form of warfare. I cannot help but be struck by what I am seeing unfolding, on a global scale. Remember the IMF computers being hacked a week or so ago? It seemed to originate in China. But China appears to be a decoy as it's computers may very well have been used as a proxy by another power. And who has recently emerged flexing their muscle? Did you say Russia? Remember the Georgian conflict?

What on the surface appears to be a crisis centering and adversely affecting the US appears to be reeking havoc on a larger scale everywhere else. Coincidence? :suspicious:

Just some thoughts for those of you who like this sort of thing.
 
coolhand said:
Building on my last post, I'd like to offer some very intriguing thoughts.

How bad can our markets get? The good news is that the equity crisis — as demonstrated by the 3-month dollar London Interbank Offered Rate — continues to loosen. But, do we have capitulation in the markets? If so, we should see many investors return to the market soon, which will mean the US is turning the corner. But the question of capitulation remains just that; a question.
Click to expand...

Very interesting comments. Thanks for sharing.

As for LIBOR easing, I don't trust it. With all the liquidity pouring in, we might be seeing manipulation. The credit market is still frozen. If there were hints of real easing, we would be in a rally right now, as the markets would know before we do.

As for capitulation, I don't think we have it. Certainly not today.

Btw, I don't remember reading any of your posts when I first started here, but welcome back.:)
 
350zCommTech said:
Very interesting comments. Thanks for sharing.

As for LIBOR easing, I don't trust it. With all the liquidity pouring in, we might be seeing manipulation. The credit market is still frozen. If there were hints of real easing, we would be in a rally right now, as the markets would know before we do.

As for capitulation, I don't think we have it. Certainly not today.

Btw, I don't remember reading any of your posts when I first started here, but welcome back.:)
Click to expand...

Things take time to play out. Fears need to ease. Deleveraging needs to continue. There were a lot markets wound tight and now all heck is breaking loose. I tend to agree that capitulation probably has not taken place yet. But taking a macro look vice micro tells me things should turn around in the next 3 months. That doesn't mean SPX is back to 1400 or DOW is over 10,000 necessarily, but I suspect we'll have seen the bottom. From there we work our way back to the top, which could take a significant amount of time.
 
My concern is the bottoming process take two years. Actually I would like to get the shares cheaper but the consumer will not see the credit loosen up for them until all the big players get theirs. Auto dealers are dying because they have to turn away customers that have decent credit but not spectacular credit.
 
Think about this; economic policy is not just simply about financial maneuvering. There are geopolitical considerations taken into account as well. That means trade-offs. As in any war there are unintended casualties. If the trade-off means taking out some of your enemies at the expense of innocent bystanders then so be it. It's a matter of priorities to those pulling the strings. This is not the kind of thing you will hear about in main stream media. My observations come from reliable, non-biased, geopolitical and economic analysis. Instead of paying for a biased newspaper, I now subscribe to Strategic Forecasting. http://www.stratfor.com/

I do not have the time to conduct my own analysis, so I am more than willing to pay for good information. If it wasn't copyrighted, I'd post more of it here on this website. I did post one recently with permission.

The economic landscape will probably change after all this plays out over time, but this is the bust side of the cycle. In a way it wipes the slate clean and allows us to begin building all over again. It is the nature of economics. We can't avoid it. But it is important to recognize it for what it is and plan accordingly. As nice as it would be to have sidestepped all this pain, it does not mean you can't recover. I myself am still about 17% ahead of the S&P. That kinda pales in comparison to how far I've been dragged down this month, but it happens.

Much as we'd like to "day-trade" our accounts, we cannot. I have found it very important to learn to look longer term when necessary as a result of our recently imposed restrictions. Now is one of those times. When we have relatively normal market conditions we can look for short term opportunities, and you can bet when things settle down I'll be looking to gain back my losses. But I do look at it as a temporary condition. The house makes the rules and I have to play my hand as best I can.

Now is a time of opportunity. One can begin to accumulate now like I'm doing, or one can wait until an upturn appears legitimate. There's still a lot of risk out there and it won't go away any time soon.
 
I believe things are going to continue to be scary for a while. With or without a rally. A lot of deleveraging is taking place and much geopolitical positioning as well. The economic fallout is going to take its toll on virtually everyone around the globe. Lot's of scary scenarios regarding capitalism's demise.

Bullchit.

We're in for some more pain I'm sure, but the US is the economic engine that makes everyone else's boat float. Enemies and allies alike. Without us there is no engine. While China and Russia have a lot in reserve, they cannot sustain a prolonged recession. We can. Militarily and economically there is still no one to match us.

This is really historical stuff. I am getting SITREPS every day showing many meetings taking place everywhere. New alliances are trying to be forged, but it won't matter in the long run. Our financial infrastructure is much more stable than anyone else's. We can absorb much more shock, albeit with suffering.

Yes, incredible, incredible stuff. Most of the time this sort of thing is transparent. Insidious even. You have to take a lot of steps back to see it. It's easy to caught up in the micro of it all.

Be ready for more significant downside. It could easily happen and probably will. I had hoped for an IT rally to help me make it to November, but it doesn't look like that will happen. If you got out on one of the quick rallies it looks like it was a good move. If we get a rally this week I may go 50/50 stox/cash, but I'm not getting completely out.
 
It's been a tough month. Very few rallies to sell into and none of them lasted more than a day. We've had set-ups to rally for a while, but fear has really put a check on normal market trading, which really makes sense in light of the underlying problems plaguing the markets.

Relative VIX and absolute VIX have been very high and sentiment quite bearish in some pockets. Small hedge funds appear to be heavily short. The premiums are very high, and now the $-weighted P/C's are way up there. This is normally a great bullish set-up. Unless we can get some heavy shorting into the next rally along with selling by those who want out of their positions, it could be tough for a rally to have legs. We need exploitable shorting and fear to drive this market higher.
 
coolhand said:
It's been a tough month. Very few rallies to sell into and none of them lasted more than a day. We've had set-ups to rally for a while, but fear has really put a check on normal market trading, which really makes sense in light of the underlying problems plaguing the markets.

Relative VIX and absolute VIX have been very high and sentiment quite bearish in some pockets. Small hedge funds appear to be heavily short. The premiums are very high, and now the $-weighted P/C's are way up there. This is normally a great bullish set-up. Unless we can get some heavy shorting into the next rally along with selling by those who want out of their positions, it could be tough for a rally to have legs. We need exploitable shorting and fear to drive this market higher.
Click to expand...

I posted in my thread that the IMF and the BOJ have drawn a line in the sand in the YEN. All we need now is a capitulation selling so a decent rally can get started.
 
Some very good insight here...

"After a decline like what we've had, it's not extreme pessimism you need to get a good rally.

It's a turn toward Bullishness that's needed.

You gotta get some buyers. There's plenty of built up pessimism, which means that there's plenty of shorts and plenty (a whole lot) of cash and future fuel for a rally. What you need to get it is a reason to buy. I.e. a little bit of optimism.

This isn't a Bull market corrective low. This is a Bear market trying to find A low. Very different. It's also not about stocks it's about the rest of the financial system, really.

Now, if the optimism gets too overblown, it'll kill any rally (as it has), but I suspect that many folks will be getting more Bearish on a rally, getting ready for the re-test.

THAT will be the hook."
 
Re: last post...look out for the hook.

Don't forget, this could also be a buy the rumor rally on what the fed is going to do. But have a plan for either.
 
So far, futures are moderately down, which I view as a positive. I'd much rather see selling tomorrow morning before the afternoon fed announcement. It's the kind of action that can give us a follow-through day.

Tough to trade on Fed day, though. With our 1200 deadline and the volatility.
 
Thanks. Occasionally I get those gut feelings that tell me when the market is going to move in one direction or another. Right now I'm smelling a rally. It's still a bear market, but if "da boyz" want to engineer a big move higher they've got a great set-up for it. High pessimism, high premiums, "perceived" pre-fed rally, folks wanting out of the market to end their pain, bears putting on shorts for another expected one-day wonder rally reversal. And "da boyz" are sitting on a lot of cash. They can dish out some punishment right now and make a killing.

I really like this set-up. :D
 
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