No6's Financial Markets Thread

[John Doe]

Went short the Dow again earlier, on the 62% retrace of the recent falls. (after it hit and started to reverse).

 

Tight stops as always.

 

Right, that's my 150 ticks in the bank. Nice

 

Stops are now just above where we are.

 

But, if any EWers are about, am I right in thinking it looks like it might be the start of a third of a third?

 

Edit to note that my short on the 62% was closed out for a flat trade. Went short again on the 76.4% retrace.

[drbubb]

Right, that's my 150 ticks in the bank. Nice

 

Stops are now just above where we are.

 

But, if any EWers are about, am I right in thinking it looks like it might be the start of a third of a third?

 

Edit to note that my short on the 62% was closed out for a flat trade. Went short again on the 76.4% retrace.

I am near max position short (thru puts and Bear spreads) from Friday's close.

The move could be big here, because most other shorts were wiped out, and the crowd

is very long witrh big leverage.

 

3 of 3 ? Maybe.

Wednesday may break that uptrend line, and give an even larger drop

 

SPX chart : http://stockcharts.com/c-sc/sc?s=$SPX...06929&r=300

[No6]

I supose that if we wait long enough and people predict a fall often enough, that a little like waiting for a bus one will eventually come along. Or three at once.

[littledavesab]

Sorry to interrupt your thread No6 but I think 1 or 2 visitors to your thread might like this one.

 

Another selected from the survival podcast - seems to be off the radar of people on here as I never hear it mentioned?

 

Anyway in general its not a podcast for those without hope. And here is one on staying positive in a gloomy world.

 

http://www.thesurvivalpodcast.com/episode-...ull-of-disaster

 

have never understood wholly negative people, you know the folks that personify the Winni the Poo character Eeyore. To these people the world is one of unending hardship and everyone who succeeds either knows the right person or screwed someone over to reach a place of prominence.

 

Ps. For me the glass might look half empty from some angles, but I cant help betting on it being half full! Especially with QE2 in progress in the US and the way money flows accross borders. The piper might turn up with his invoice wanting to get paid but probably not until the World is looking normal !

[No6]

Noticed that Rightmove continues to defy the market.

 

Rightmove celebrates record year

 

(UKPA) – 5 days ago

 

Property website Rightmove has hailed the best year in its history after increased spending by estate agents fuelled a 43% surge in profits.

 

Despite a marginal increase in membership numbers, Rightmove said average spend by advertisers jumped by £71 a month to £379 last year as customers worked harder to sell properties in the current lacklustre housing market.

 

While Rightmove expects the sector to remain subdued in 2011, it said healthy trading in January and February pointed to another year of growth.

 

Rightmove, which posted record pre-tax profits of £52.2 million for 2010 on revenues 26% higher, said it had been the "busiest year in its history".

 

Managing director Ed Williams added that 2011 had started with record levels of activity on the Rightmove website.

 

He said: "Almost every day since the first working Monday of the year has seen stronger site traffic than on any other day prior to 2011. January 2011 has seen us send a record number of inquiries to our advertisers."

 

http://www.google.com/hostednews/ukpress/a...01298639919160A

[No6]

Start of the month, risk of further rises ahead?

[No6]

Some excellent results today. I do like both Amec and Kazakhmys.

 

ADVFN Market Report.

 

Sticking with engineering, Amec, also higher today, will be the envy of many a company after it said it can expect to grow regardless of the pace of economic recovery. Pre-tax profits in 2010 soared to £258.2m from £203.5m the previous year as revenues grew to £2.95bn from £2.54bn. Projects during the period included support work with oil giant BP in Azerbaijan and an underground mining contract in Mongolia.

 

Insurer Aviva ramped up profits by 35% in 2010, helped by cost cutting, and had a record year in the UK. The firm, which has 19m customers in Britain, posted a profit before tax of £2.44bn, up from £1.81bn in 2009. Operating earnings jumped 26% to £2.55bn.

 

Full year earnings for mining giant Kazakhmys were a little higher than expected as the price of copper raced higher in 2010. Stripping out any contribution from the group’s 26% stake in fellow Kazakh resources firm ENRC, earnings before interest, tax, depreciation and amortisation (EBITDA) totalled $1.93bn, up 59.5% from $1.21bn the year before and ahead of market expectations of $1.86bn.

 

Oil and gas firm Tullow Oil gushes ahead after it hailed an “exceptional result” on its drilling of the Enyenra-2A appraisal well, in the Deepwater Tano licence offshore Ghana. Drilling successfully encountered oil in excellent quality sandstone reservoirs, with solid evidence of communication with the Owo-1 well, which confirms that the Owo oil discovery, now renamed Enyenra, is a major light oil field.

[John Doe]

I supose that if we wait long enough and people predict a fall often enough, that a little like waiting for a bus one will eventually come along. Or three at once.

Yes, but as you know, I think these big events are very rare. Hence happy to jump in short at fib points and grab 100-150 ticks before banking profits.

 

I used to go for the big ones, (worked once or twice, but failed more often than not) but I have had far more success with the new strategy.

 

I know Dr B plays it differently (ie using puts etc) and is far more able to hedge than I, hence when the big one doesn’t materialise, he still keeps his shirt.

 

 

[No6]

Yes, but as you know, I think these big events are very rare. Hence happy to jump in short at fib points and grab 100-150 ticks before banking profits.

 

I used to go for the big ones, (worked once or twice, but failed more often than not) but I have had far more success with the new strategy.

 

It does make you wonder though why some seem to live for the "big event" as if it is always due and then if one does come it is expected to last forever.

[No6]

Markets seemed to like this.

 

U.S. Initial Jobless Claims Fall to 368,000, Lowest Since 2008

 

Initial jobless claims unexpectedly declined last week to the lowest level since May 2008, pointing to a strengthening labor market.

 

Applications for unemployment benefits decreased by 20,000 to 368,000 in the week ended Feb. 26, Labor Department figures showed today. Economists forecast claims would climb to 395,000, according to the median estimate in a Bloomberg News survey. The total number of people receiving unemployment insurance fell to the lowest level since October 2008.

 

http://www.bloomberg.com/news/2011-03-03/u...since-2008.html

[John Doe]

It does make you wonder though why some seem to live for the "big event" as if it is always due and then if one does come it is expected to last forever.

I think it might be related to the gambler type mentality, which I only learnt to control properly a few years back.

 

Up till then, I was still tempted by the big prize. (Thankfully, I was never actually addicted).

 

 

[jerpy]

With a p/e of about 1 and still profits in the £40million range, I think the Russian will probably buy this once the short sellers have killed it for the final time. He will probably be able to get the debt renegotiated, use the HMV brand in Russia and transform it in a way the city doesn't allow as it will take time. It's probably best the company goes private as it can do nothing to please the city, the latest profit warning was flagged after the last results, so no real surprise here. I wouldn't buy even at 16p, although once the city smells a Russian bid, they will no doubt ramp up the price to something closer to break up value, which apparently is somewhere around 40-50p. Not sure the Russian would buy at that price, but what is the alternative? Perhaps he will just wait for the city to bust it and then pick up the pieces?

 

You need to watch number of shares out on loan for that clue. This one is basic but paints the picture.

 

http://www.dataexplorers.com/products/data

 

[No6]

When Raj Rajaratnam was a hedge fund baron managing billions of dollars and being lionized as one of Wall Streets savviest investors, he was asked what made him so successful.

 

“It is pride, and I want to win,” said Mr. Rajaratnam, the co-founder of the Galleon Group hedge fund, according to the 2001 book “The New Investment Superstars,” by Lois Peltz. “I want to win every time. Taking calculated risks gets my adrenaline pumping.”

 

A decade later, Mr. Rajaratnam is taking the biggest calculated risk of his life. Beginning Tuesday, he will be seated at the defense table in a federal courtroom in Manhattan. In the biggest insider trading trial in a generation, Mr. Rajaratnam, 53, is fighting charges that he made $45 million trading on illegal stock tips.

 

If a jury convicts Mr. Rajaratnam, he faces up to 20 years in prison.

 

http://dealbook.nytimes.com/2011/03/05/for...isk/?src=dlbksb

[No6]

I think it might be related to the gambler type mentality, which I only learnt to control properly a few years back.

 

Up till then, I was still tempted by the big prize. (Thankfully, I was never actually addicted).

I do wonder why some bother to try and call the big one, it must be more of an ego thing, after all we do hear on the news that so and so expert being called to comment as "the economist/whatever that called the 2008 crash". What they don't tell you is that this is the one person that got lucky with the call while 100's of others kept getting it wrong. For trading and investing I see no point, as one look at the daily and weekly charts should give you a reasonably clear indication of direction, up or down.

[No6]

Gold miner Rangold Resources seems to be taking a big hit today. Can't find anything other than it appears to be out of favour at the moment. Does have a spicy P/E of 69.3, not unusual for a gold stock, but expected to drop to around 18 next year according to Digital Look.

 

Randgold Resources (GOLD) Down 2.7% Despite Rising Gold Prices

 

Posted: Monday, March 07, 2011 1:59 PM EDT

 

Randgold Resources (NASDAQ: GOLD) opened at $80.85. So far today, the stock has hit a low of $78.25 and a high of $80.86. GOLD is now trading at $78.31, down $2.17 (-2.7%). The stock hit its 52-Week high of $106.44 in October and set its 52-Week low of $71.15 last March. GOLD stock is trading lower today with gold prices up $6.50 an ounce to $1,435.10. Technical indicators for the stock are bullish and S&P gives GOLD a positive 4 STARS (out of 5) buy ranking. If you are looking for a hedged play on GOLD the stock seems like it could be a candidate for an April out-of-the-money bull-put credit spread below the 70 range. [ABR-Seven Summits Strategic Investments NewsBite]

 

http://www.marketintelligencecenter.com/newsbites/1256964

 

*down 6.1% at time of posting.

 

Update.

 

Shares in West African-focused gold producer Randgold Resources (RRS.L) fall more than 6.6 percent to top the FTSE 100 .FTSE fallers' list on investor concern that violence in Ivory Coast could hit its operations there.

 

Ivory Coast has been in turmoil since a disputed November election that has resulted in clashes between incumbent Laurent Gbagbo and rival Alassane Ouattara, who won the poll according to U.N.-certified results that Gbabgo has refused to accept.

 

Weighing on market sentiment in Tuesday trade was the news late on Monday that Gbabgo had moved to take central control of all cocoa exports from the world's biggest producer, increasing tensions between both groups.

 

http://uk.reuters.com/article/2011/03/08/m...ers&rpc=401

[No6]

FTSE 100 reshuffle happens today.

 

In

 

ITV

Wood Group

Hargreaves Lansdown

 

Out

 

Bunzl

Alliance Trust

African Barrick Gold

 

African Barrick Gold is a bit of a surprise, but the share price has lagged behind other big gold and silver miners. The ones going in the FTSE 100 may find their price rises as trackers and funds buy in. The other point is that ITV, Wood Group and HL have all been steadily rising for some time. If that continues the FTSE will benefit on the upside.

 

Hargreaves Lansdown enjoyed a good last flourish in the FTSE 250 before its promotion to the bluechip index in the quarterly reshuffle which comes into effect on Monday.

 

Shares in the company, founded and still 52pc owned by founders Peter Hargreaves and Stephen Lansdown, closed up 21 to 635p following strong demand from tracker funds. Traders believe that bluechip trackers will be forced to buy as many as 9m shares in the closely-held company.

 

ITV and Wood Group, which are also being promoted, gained 1 to 91p and lost 11½ to 655p, respectively.

 

Bunzl, Alliance Trust and African Barrick Gold, the companies relegated from the bluechips to the midcaps, gained 10 to 734p, lost 1.1 to 358p and lost 12 to 535½p.

 

http://www.telegraph.co.uk/finance/markets...e-FTSE-100.html

[No6]

We are in a bad news market gloom phase again. Good news at the moment being overlooked. This almost went unnoticed.

 

U.K. Manufacturing Surges

 

LONDON—U.K. manufacturing output rebounded in January, growing at its fastest annual rate in 16 years, official data showed Thursday.

 

The data, which come hours before an eagerly anticipated interest-rate decision from the Bank of England, are an early indication that the economy may have recovered in the first quarter of the year after a surprise contraction at the end of 2010.

 

The Office for National Statistics said manufacturing output rose 1% in January from December, its fastest rate of growth in 10 months, and was 6.8% higher than the corresponding month of 2010. That was the fastest annual rise since November 1994.

 

In December, by contrast, output fell for the first time in eight months as the cold weather hit production of building materials, specifically nonmetallic minerals. That sector rebounded in January, growing 9.9% in monthly terms.

 

Manufacturing makes up just under 13% of gross domestic product, meaning growth in the sector doesn't guarantee an economic recovery overall. The services sector, which makes up around three-quarters of output, has struggled to grow strongly in recent months, according to recent surveys.

 

http://online.wsj.com/article/SB10001424052748704823004576191941789422446.html

 

[No6]

I actually quite like falls in the market like today as it takes some froth off and makes good companies cheaper. Quite a few good ones got hit today and as long as the bear dreams of big falls don't pan out, this could be an opportunity, once the market prices in the current gloom phase.

[DontPanic]

A big event which could cause a huge fall would be if Saudi Arabia went the way of Libya and ended up in civil war.

There are some worrying developments like this headline "Oil Prices Jump On Reports Of Saudi Violence" - http://blogs.forbes.com/afontevecchia/2011/03/10/oil-prices-jump-on-reports-of-saudi-violence/

But then again there is always something to worry about it you look hard enough and are natural worrier.

Lots of bad stuff could happen but normally doesnt.

 

By now I would also expect the US to have a plan ready for Saudi Arabia if and when its needed. Libya is just not important enough.

[littledavesab]

It does make you wonder though why some seem to live for the "big event" as if it is always due and then if one does come it is expected to last forever.

 

I have noticed there are some very big ego's in the world of finance. Some newsletter writers not to mention some IFA's I have had the dubious pleasure of meeting in the past,

 

Think that is why I like your blog No6, distinct lack of ego is a good thing.

[No6]

A big event which could cause a huge fall would be if Saudi Arabia went the way of Libya and ended up in civil war.

There are some worrying developments like this headline "Oil Prices Jump On Reports Of Saudi Violence" - http://blogs.forbes.com/afontevecchia/2011/03/10/oil-prices-jump-on-reports-of-saudi-violence/

But then again there is always something to worry about it you look hard enough and are natural worrier.

Lots of bad stuff could happen but normally doesnt.

 

By now I would also expect the US to have a plan ready for Saudi Arabia if and when its needed. Libya is just not important enough.

 

Saudi Arabia would be one domino to fall too far for the US, they would intervene if it looked like the black gold was going to be cut off. The script that would likely arise is that the Saudi Government would call for assistance if it could not handle any rebellion itself. Then it would be widely reported that the opponents to the Saudi regime are islamic fundamentalists or Al Qaeda inspired and therefore would not be in favour of replacing the current dictatorship with a democracy. The US and the usual allies would then intervene, no doubt with some promise of democratic reform being imposed on the current Saudi dictatorship. Once over, any move towards democracy would probably be forgotton as time goes on. It's the usual hypocracy of politics, calls for democracy in countries like Libya and Egypt, but Saudi Arabia, simply because of its oil lifeline to the West, democracy would go out of the window.

[No6]

Well, it looks like we have a big event happening with the earthquake and tsunami in Japan. Markets in Asia are down, but at times like this they don't matter. Just as markets going up or down on the back of what is happening in Libya and Egypt doesn't really matter, people are dying. It's one of the things that tends to disgust me about financial markets, all of them, stocks, commodities, gold, I don't care what it is, the idea that some people may be ok out of making money on the back of death and destruction shows that as a species we still have a long way to go.

[John Doe]

Saudi Arabia would be one domino to fall too far for the US, they would intervene if it looked like the black gold was going to be cut off. The script that would likely arise is that the Saudi Government would call for assistance if it could not handle any rebellion itself. Then it would be widely reported that the opponents to the Saudi regime are islamic fundamentalists or Al Qaeda inspired and therefore would not be in favour of replacing the current dictatorship with a democracy. The US and the usual allies would then intervene, no doubt with some promise of democratic reform being imposed on the current Saudi dictatorship. Once over, any move towards democracy would probably be forgotton as time goes on. It's the usual hypocracy of politics, calls for democracy in countries like Libya and Egypt, but Saudi Arabia, simply because of its oil lifeline to the West, democracy would go out of the window.

Iran would be the obvious enemy here (the protesters are Shia).

[No6]

Iran would be the obvious enemy here (the protesters are Shia).

 

I remember during the Bush era many of the supposedly soothsayer types were predicting a US attack on Iran, which of course never happened. I also remember debating on here 2-3 years ago the terrible logistics of any attack on Iran from the US, it is not easy especially for land forces. For the moment they can probably overlook and isolate Iran as much as possible and use other means, like stuxnet.

 

The Iran Stuxnet Affair

 

 

Press revelations that the Stuxnet worm that attacked Iran had been developed in Israel, with US help, came as talks on Iran’s nuclear program were held in Istanbul. Does this mean a new era of cyberwars? Wonders Philippe Rivière.

 

 

Middle East Online

 

The Russian ambassador to NATO, Dmitry Rogozin, has claimed that the Stuxnet computer virus that attacked Iran’s nuclear installations could have led to a Chernobyl-style meltdown. He demanded an enquiry into the malware, which he said could have caused a thermonuclear explosion at the Bushehr power plant in southern Iran. This idea was dismissed as unfounded by the German cybersecurity expert Ralph Langner, who made the first complete study of the virus: “First, Stuxnet does not target Bushehr.” (It affected the uranium enrichment plant at Natanz, which has 7,000 centrifuges.) “Second, even if it did, it could not mess with the systems in the primary circuit [in contact with radioactivity]. The funny thing is, the Russians know that very well.” Russia is Iran’s partner in its nuclear program. The Stuxnet affair is a game of mirrors, of computer code sabotage and diplomacy.

 

Some facts have been established: The authors of the virus had time (it is estimated that it would have taken 10 man-years to write the 15,000 lines of code) and specialist knowledge (the worm spread through four unpatched holes in the Microsoft Windows system). “Code analysis makes it clear that Stuxnet is not about sending a message or proving a concept,” Langer wrote. “It is about destroying its targets with utmost determination in military style.”

 

But were Iran’s nuclear installations the target? An article in The New York Times in January said the virus was tested and developed on a lifesize model of the centrifuge system at Natanz, and that the large-scale operation was carried out in Israel’s military nuclear complex at Dimona in the Negev desert. The article was based on the accounts of several US and Israeli computer scientists, nuclear enrichment experts and former officials, all unnamed. Its conclusion was that “the covert race to create Stuxnet was a joint project between the Americans and the Israelis, with some help, knowing or unknowing, from the Germans and the British.”

 

http://www.middle-east-online.com/english/?id=44789

[No6]

Some interesting snippets of information from various market report emails.

 

=================

 

Basic Resources: Kazakhmys Plc (-3.33% to 1334p), Rio Tinto (-3.83% to 3931.5p), Eurasian Natural Resources (-3.84% to 902.5p) and Vedanta Resources (-4.46% to 2184p) reached a new 3-month relative low against the FTSE 100.

 

=================

 

AIG (AIG) is offering $15.7B to repurchase from the Federal Reserve Bank of New York a large portfolio of subprime mortgage bonds the Co was forced to hand over during its bailout in 2008, according to a public filing.

 

=================

 

Elsewhere, the number of Americans claiming unemployment benefits for the first time grew by 26,000 to 397,000 last week. Economists had predicted an increase to around 380,000 from 368,000.

 

Meanwhile, the US trade gap has widened from $40.6bn to $46.3bn, much bigger than the $41.4bn predicted and the highest number for five months. Bloomberg’s “consumer comfort” survey also made for unpleasant reading. Surging petrol prices sent the index to -44.5 last week, down from -39.7 the previous week.

 

Stocks were already under pressure in pre-market deals in response to losses in Europe this morning following China’s surprise budget deficit and a credit rating downgrade for Spain.

 

China posted a trade deficit of $7.3bn in February compared with the usual surplus, due mainly to the shutdown of factories during the Chinese New Year holiday, and higher commodity prices.

 

=================

 

A multi-millionaire fraudster was facing up to 20 years in a US jail after admitting ripping off thousands of investors in Britain's biggest ''boiler room'' scam. Richard Pope, 53, funded a lifestyle of fast cars, yachts and private jets as his international gang pressurised pensioners over the phone into buying non-existent shares. His crime empire made over £100 million as more than 2,300 victims were bullied into handing over life savings, detectives believe. One victim alone lost more than £800,000, the Telegraph reports.

 

Moody's has reignited the storm of controversy over the power of rating agencies after it downgraded Spain, and warned that the bank clean-up will cost vastly more that claimed. The move comes a day before a crucial summit of EMU leaders to thrash out a "grand deal" intended to create workable machinery for the euro and end the debt crisis once and for all. Moody's cut Spain's credit by one notch to Aa1 and said Madrid's estimates of €20bn (£17.2bn) of fresh capital needed to rebuild the banks and cajas is too low. "The overall cost is likely to be nearer €40bn to €50bn," rising to as much as €120bn in a "stressed scenario", the Telegraph reports.

 

=================

 

GlaxoSmithKline will launch its first blockbuster drug for more than a decade after a new medicine for lupus was approved by US authorities. Benlysta, the first treatment for the auto-immune disease to become available for more than 50 years, has the potential to bring in more than $3bn in annual sales by 2015 for GSK and its partner Human Genome Sciences, analysts said. The EMEA, the European medicines regulator, is expected to approve it for sale later this year. Lupus, which causes the body to attack its own cells and tissues, is usually treated with steroids, which can have unwanted side effects, the Times reports.