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My blood was spilled yesterday with trading longs bigtime, today well healed a few wounds. CEY looked massively overdone to me for starters.

 

Agree the AT's were massively at work yesterday on everything in fear flight and it all looked self perpetuating.

 

Buying not long after the intial drop this morning was a chancey experience, but it's all been another trading lesson for me.

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Stockholm OMX index opened at around 900 a full 23% below the 3 month high of 1173.

 

All eyes on the US jobs report. Even if the US has slowed down over the past 3 months a lot of good companies have made good profits in that period.

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My blood was spilled yesterday with trading longs bigtime, today well healed a few wounds. CEY looked massively overdone to me for starters.

 

Agree the AT's were massively at work yesterday on everything in fear flight and it all looked self perpetuating.

 

Buying not long after the intial drop this morning was a chancey experience, but it's all been another trading lesson for me.

These markets can move too fast so trading, especially against the general market trend can be very risky. I work on strategies to only trade with the trend or stay out if it is too volatile. For example, in the last two days I've mainly "paper traded" on demo platforms, every trade has been short, everyone a winner! Going £10 a point (spread betting platform) I have had 9 in a row so far trading 3 min charts using basic stochastics and parabolic sar indicator, demo profit, £615.50. Sounds good, except that quite a few of these trades were 10+ points down at various stages because of the volatility. Each ultimately went my way and the short trend looked clear, but it could have easily been an expensive reverse.

 

As for individual stocks, there are many looking good right now, an example are the insurers Aviva and Legal and General both produced really good results but are down around 5-10%. For longer term investors there occasionally comes a time when good companies are offered cheap and ultimately if you are interested in equities you have to go for it. Right now I would avoid the most obviously bad sectors like banking, building and non-food retailers, but look for well run companies making money elsewhere.

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Stockholm OMX index opened up at around 900 a full 23% below the 3 month high of 1173.

Bought at the money index options expiring in Nov.

All eyes on the US jobs report.

 

I'm reluctant to do anything before that jobs report, market just too nervous ahead of it. Even a slightly lower figure than estimates could send this market tumbling. It would be irrational, but the markets are in that kind of mood.

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US Job numbers look better than expected.

 

WASHINGTON (MarketWatch) - The U.S. economy added 117,000 jobs in July and an even larger 154,000 in the private sector while the unemployment rate fell to 9.1% from 9.2%, partly because 193,000 people dropped out of the labor force, according to the latest government data. Job gains in May and June were also revised up by a combined 56,000, the Labor Department reported Friday. Average hourly wages rose 10 cents, or 0.4%, to $23.13. The workweek was unchanged at 34.3 hours. Economists surveyed by MarketWatch had projected a 75,000 increase in jobs in July, with the unemployment rate holding steady at 9.2%. Average hourly wages were expected to rise 0.2%.

 

http://www.marketwatch.com/story/us-economy-gained-117000-jobs-in-july-2011-08-05?dist=beforebell

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How the Dow performs after big declines

 

Here’s a look at how the Dow performed after it’s ten worst point drops based on data compiled from FactSet Research.

 

Point fall Date Next day Next week

 

-777.68 9/29/2008 4.68% -3.95%

-733.08 10/15/2008 4.68% -0.68%

-684.81 9/17/2001 -0.19% -3.55%

-679.95 12/01/2008 3.31% 9.63%

-678.91 10/09/2008 -1.49% 4.66%

-617.78 4/14/2000 2.69% 5.22%

-554.26 10/27/1997 4.71% 7.17%

-514.45 10/22/2008 2.02% 5.54%

-512.76 8/04/2011 ? ?

-512.61 8/31/1998 3.82% 1.34%

 

2.69% 2.82%

 

Reads better at; http://blogs.marketwatch.com/thetell/2011/08/05/how-the-dow-performs-after-big-declines/

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Commodity, energy and oil companies have been hit quite hard in these falls, but that tends to be normal at times like this as the market begins to think that recession means cheaper commodity prices and commodity surplus. Usually that means there are bargains to be had.

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US downgraded fromm AAA to AA+. Does this mean they won't get their university place now?

 

Cheap, good companies getting cheaper.

 

Is that panic in the air?

 

Are we seeing the kind of panic selling that contrarians look for in forecasting the end of a decline? You be the judge.

 

In mid-day trading today, for example, the widely-respected Aden sisters, both prominent technical analysts, emailed clients with advice to sell all equities—after having already reduced their equity exposure earlier this summer.

 

Specifically, Mary Anne and Pamela Aden wrote, “We now recommend selling all of your U.S. and global stocks, as well as your energy and resource stocks (totaling 30% of your total portfolio), and keep the proceeds in U.S. dollars for now.”

 

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

 

With analysts as respected as the Adens now saying to sell everything, it’s not unlikely that many other advisers will quickly follow suit. If so, a robust wall of worry may be soon in place that the market could start climbing back up.

 

http://blogs.marketwatch.com/thetell/2011/08/04/is-that-panic-in-the-air/

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Funny.

 

Credit downgrade: UK 'vindicated' by S&P decision

 

The UK government's attitude towards the US downgrade has been bordering on smug. One government spokesman said it meant that Britain had been "uprated".

 

It's true that the UK retains triple-A status and that that allows it to borrow at cheaper levels on the international money markets. It's also true that it retained that rank thanks to decisive and politically unpopular measures to get the ballooning deficit down since taking office.

 

What's inaccurate is the impression that Britain might always retain its AAA status - especially now that the seal has been broken and the world's most powerful economy has been downgraded.

 

Watch out for markets and rating agencies kicking all triple-A tyres that bit harder in the coming months and years if they let up in cutting their costs.

 

A downgrade would be a notable Plan B for George Osborne.

 

http://www.bbc.co.uk/news/uk-politics-14430065

 

 

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Computer server at work chose this week to malfunction. Spent the week without internet access, very frustrating in the circumstances.

 

After the last crash, I bought (well nibbled at) some smaller AIM listed UK miners. They took a while to come goo, I spent a fair while feeling not so clever. Bigger FT100/250 stocks moved earlier I seem to remember. It could have been bad stock choice on my part Doh!).

 

Is there a good argument for buying bigger stocks and then moving to smaller companies as the market recovers? Needless to say will be a bit more careful in stock choice.

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Computer server at work chose this week to malfunction. Spent the week without internet access, very frustrating in the circumstances.

 

After the last crash, I bought (well nibbled at) some smaller AIM listed UK miners. They took a while to come goo, I spent a fair while feeling not so clever. Bigger FT100/250 stocks moved earlier I seem to remember. It could have been bad stock choice on my part Doh!).

 

Is there a good argument for buying bigger stocks and then moving to smaller companies as the market recovers? Needless to say will be a bit more careful in stock choice.

 

The FTSE 100/250 stocks are more liquid so I would expect them to correct quicker if and when the market decides that the selling has reached a silly stage and things look too cheap. AIM, smaller company stocks, which I don't really follow, tend to have less market makers and may be less liquid. However, I suspect the good ones would move quicker once the market realises they are undervalued. Likewise on the downside they can move quicker too.

 

I've never been a big fan of buy and hold accept when market conditions are really in your favour. By that I mean when stocks are woefully oversold and everyone is predicting the end of the world, the blood on the streets scenario, that is when you should buy and tuck them away. Back in 2007/8 miners and commodity companies took a battering and looking at these markets now, it is amazing to reflect that some FTSE100 companies reached incredible lows and yet had more justification to bounce back than others. Fresnillo, the gold and silver miner was less than 100p, yesterday, even after the latest falls it stood at 1845p! We all could have made a pile from that, but who had the bottle to go in when it was less than a 100p and falling like a knife? Blood on the streets. It works, that is when you should fill your boots and hope it isn't the end of the world or the market system. That is when buy and hold really pays off, but the opportunities only come along very rarely. We may be witnessing that now.

 

Having said all that, some sectors should be avoided like the plague. I wouldn't touch banking (other than to trade), building, companies heavily exposed to Govt spending (although to be fair some of these like Capita and Carillion seem to be good at what they do and tend to pick up long term contracts replacing the Govt hired depts/worker)and non-food retailers. When any rebound comes the miners and oil companies will be at the front of any advance if recent history is anything to go by. Doubt they will reach the low valuations of 2007/8 though, they were just silly.

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Insiders are buying

 

Commentary: Insiders now consider their stocks to be attractive

 

All right, all of you who say you’re contrarians: Now’s the time to see if you really walk the walk, not just talk the talk.

 

You say that the time to buy is when the blood is running in the streets. Well now would certainly appear to be one of those times. How many of you are stepping up to the plate to buy?

 

Not many, I am sure.

 

But there is one group that appears to be doing so. And they have a history of being more right than wrong about the market’s direction.

 

I’m referring to corporate insiders, a group that includes corporate officers, directors, and largest shareholders. You may recall that, three weeks ago, corporate insiders were selling at an abnormally high pace. By one measure, in fact, they were then selling at the fastest pace in the nearly 40 years that insider data had been collected. ( Read my July 29 column: “Insiders selling at unusually fast pace.” )

 

With the Dow Jones Industrial Average now more than 1,400 points lower, the insiders appear to be shifting back to the buy side in a big way.

 

Consider an insider indicator calculated by the Vickers Weekly Insider Report, published by Argus Research. This indicator is a ratio of the number of shares that insiders have sold to the number that they have bought.

 

For insiders transactions last week, according to the latest issue of the Vickers service, which I received late Monday night, this sell-to-buy ratio stood at 1.68-to-1. That’s bullish, according to Vickers, since the long-term average level for this ratio is between 2 and 2.5 to 1.

 

To further put the current level of this ratio into context, consider that in the week ending July 22, this ratio stood at 6.43-to-1. And among those companies whose stocks are listed on the NYSE and the AMEX, the ratio during that week stood at 13.10-to-1 — which is the highest, and most bearish, reading for the ratio since Vickers began collecting data in 1974.

 

http://www.marketwatch.com/story/insiders-are-buying-2011-08-09

 

 

 

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How can it be bullish when there are more sellers than buyers?

The sellers may be dealing in smaller amounts, but there are more individual sellers? In markets like these that may be typical as the smaller investors are shaken out. It's an old tactic that when prices are falling much of it is a shake out, the pros want to get the shares at a cheaper price, what better way of doing it than scaring the smaller investors to sell up. This way you still may have more sellers than buyers, but it is the smart money that is buying. That is my guess as when markets panic we are always told after the fact that was the best time to buy when everyone else was selling. I see no reason as to why it would be different this time accept that as usual it is almost impossible to pick the market bottom and that may still be a way off yet.

 

To some degree I think what we are seeing is a mass shakeout, much more difficult to deal with, but excessive fearmongering and marking down by the market makers that will ultimately result in the smart money buying up good companies on the cheap.

 

“Shake-Out” – Definition, Examples and how to deal with it?

 

Have you ever been in the following situation:

 

You held a position on a stock and found the market’s low for a while, which made you sell that stock but then the stock rebounded even higher than before the low/dip?

 

If you found yourself in this situation, that means that you have probably experienced a “shake-out”.

 

So, what happens there and how do you fall into this trap?

 

Well, in this move, the enormous institutional players of the market decide to drive the stock down in order to shake-out the weak hands of the retail traders and investors in order to buy more stocks at a cheap price. Then, they jump back in and drive the stock back higher and higher. Remember that throughout this move, the basics of the stock doesn’t change- a good stock is a good stock. This dip only takes place for several days, and it is usually meant to get the individuals who are unfamiliar with this move to jump out of the stock position and sell their shares.

 

The principle here is: A person who owns shares but isn’t committed to the position, will run scared and sell on the dip!

 

http://www.marketsigma.com/education-center/market-sigma-wiki/shake-out-setup/

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So what to do given the my current situation ? Basically I decided to keep it simple and if the S&P hits 1200 increase the leverage (sell stocks or index ETFs and buy the same items with x2 leverage). This could be repeated at 1100 and 1000 at which point everything would be leveraged.

 

Well is it a FTSE low of 4800 for 2011 ?

 

I didnt expect the past weeks falls to be so large and by yesterday started to throw a few Hail Mary passes to preserve cash by buying out of the money options. Given the S&P rally I would be disappointed if a couple of them are not 10 baggers at tomorrows opening.

 

Hoping for a decent rally from here to take of the leverage.

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Below is a list of all the FTSE100 companies that have fallen by 20%+ in the last 30 days. The ones that I think are pretty good companies are in bold. Heavy hit on the commodity and energy sector again as the fear in the market believes that resources will not be in demand if the world economy falters. Questions is, when is the time to buy and tuck them away? Will they fall 60-90% as happened to many of these in 2008? Many of these now look cheap, but market fear could make them a lot cheaper yet.

 

Vedanta Resources 1,294.00p -32.25%

Royal Bank of Scotland Group 24.29p -32.00%

Lloyds Banking Group 30.84p -31.22%

Inmarsat 389.70p -30.97%

Kazakhmys 918.00p -30.51%

Essar Energy 262.10p -30.35%

Barclays 163.70p -30.03%

Xstrata 1,000.00p -26.79%

Cairn Energy 293.90p -26.47%

Glencore International 363.00p -25.99%

Man Group 187.20p -25.68%

3i Group 212.60p -25.53%

Wolseley 1,473.00p -25.38%

Hargreaves Lansdown 454.50p -25.37%

International Consolidated Airlines Group SA 177.30p -25.25%

Tullow Oil 974.00p -25.02%

IMI 808.00p -24.84%

GKN 178.50p -24.11%

Anglo American 2,314.00p -23.88%

Eurasian Natural Resources Corp. 585.50p -23.66%

BHP Billiton 1,866.00p -23.43%

Rio Tinto 3,416.50p -23.22%

Petrofac Ltd. 1,141.00p -23.16%

Carnival 1,792.00p -23.02%

Investec 387.50p -22.89%

Old Mutual 103.20p -22.70%

Smith & Nephew 521.00p -22.59%

ARM Holdings 488.70p -22.12%

Aviva 328.40p -21.64%

Legal & General Group 93.70p -21.26%

InterContinental Hotels Group 1,011.00p -21.20%

Amec 870.00p -21.05%

Smiths Group 945.50p -20.75%

Prudential 567.00p -20.20%

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Not surprising to see Oil producers and Copper miners there, given the big drop in oil and copper

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Interesting comments from the Naked Trader, Robbie Burns.

 

Markets

 

 

Honestly. I thought two weeks ago this summer update would be a quick one, might take me just a few minutes to type up. Probably not much happening, shares stuck in a narrow range, nice quiet summer etc

 

Instead this update is going to take me hours and hours to compile.It was really tempting for me to say I'll update again in September and save me the bother!

 

I've made an effort with this because it's all very easy to make money in a gentle market but when the s*** hits the fan, that's when it becomes tough. And I feel because so many of you seem to enjoy my efforts I should make a big effort to cover my thoughts in a crisis and my ideas on how to handle it.

 

Of course there is no answer to it and I have no idea what the future holds and all we can do is handle it the best we can and all I can do is tell you how I did it. Though I did my best and still lost money! Or at least lost some paper profits.

 

Well, what a few days. From the calmness of the year so far in a comfortable but perhaps tight range suddenly all hell broke loose. And then it got even heller.

 

Real hell I would say for private investors - we have all either lost some money or at least by holding on lost some paper profits. I've certainly done some dough and bet you have too. But don't you feel slightly robbed?

 

I've been trading for donkey's years and even though I've kind of seen all this before, the ferocity of the moves was quite surprising but easily explained.

 

Since the last few market downtrends things have changed and the robots have simply taken over causing all kinds of mayhem and unfairly hitting the more illquid smaller stocks which robots can easily knock down massively for no real reason.

 

During the last few years too many smaller stocks now trade directly which means prices are just too easily manipulated.

 

As market analyst Jim Cramer said:

 

"Credit ratings agency downgrade on Friday isn't what caused stocks to have the worst day since the credit crisis, he thinks the machines of the high-frequency traders are to blame.

 

"You have to believe that it's related to the machines because the sell off was in total lock step," Cramer said. "It's not acknowledging that gasoline prices are coming down and raw energy declines are good for many stocks. It's not even acknowledging the positives for gold stocks, and gold is off the charts."

 

The velocity of the selling on Friday was so great, Cramer said you couldn't get in front of it. The sellers were willing to sell below were you wanted to buy, he complained. Instead of rational investors making decisions about individual companies, the machines were pushing things around.

 

http://www.nakedtrader.co.uk/

 

http://www.youtube.com/watch?v=M1ypn0y32Ac&feature=related

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Honestly. I thought two weeks ago this summer update would be a quick one, might take me just a few minutes to type up. Probably not much happening, shares stuck in a narrow range, nice quiet summer etc

 

 

What a week, every time I looked at the market thinking of getting in I saw plenty of dropping prices and red ink. Today seems to be better however. I fancy a trip to TSCO but not for food shopping. Better not show my inadequate charting skills but looks like a pert double bottom.

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What a week, every time I looked at the market thinking of getting in I saw plenty of dropping prices and red ink. Today seems to be better however. I fancy a trip to TSCO but not for food shopping. Better not show my inadequate charting skills but looks like a pert double bottom.

 

For those of a long term buy and hold disposition I don't think you can go wrong with Tesco. It has been in a downtrend since hitting around 440, but even if we do have a double dip people still have to eat and they will shop at Tesco's. Sainsbury's are looking cheap as well. I also wonder if Morrison's has bottomed out at around 280p? May post some charts over the weekend.

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More on insider buying.

 

Insiders Are Buying As Shares Drop, And They're Worth Watching

 

As investors wonder whether it's safe to buy beaten-down stocks, some corporate executives already have made up their minds, splurging on shares in their own companies.

 

Some of them have shown a knack for snapping up their stocks at just the right time, based on historical-trading records complied by InsiderScore, a research firm that dissects executive transactions.

 

Consider AK Steel Holding Corp. (AKS).

 

On Aug. 9, Chief Executive James Wainscott bought 25,000 shares of AK Steel at an average price of $7.96 apiece in open-market transactions. His purchase followed the company's July 26 earnings report, which missed Wall Street's profit target by 17 cents a share.

 

Based on Friday morning's trading prices, he's bagged a 14% gain so far.

 

The executive made a similar open-market buy in early March 2009 just as AK Steel shares traded near 52-week lows, and just before the Dow Jones Industrial Average began to rebound from its months-long plunge.

 

"Wainscott was one of the insiders who helped make a perfect market-bottom call back in March 2009, thus it's encouraging to see him step up here again," InsiderScore noted.

 

He's not alone. On Aug. 8, Fernando Aguirre, the chairman and chief executive of Chiquita Brands International Inc. (CQB), bought 133,000 shares worth $1.2 million--his largest open-market purchase since he joined the fruit company in 2004. The stock, acquired for an average price of $8.75 a share, was purchased for his family trust, based on a regulatory filing.

 

Aguirre also has earned a 14% gain on that investment. Shares of Chiquita Brands traded at $9.94 Friday morning. Investors had roughed up the stock Aug. 3, sending it down 20% on disappointing earnings.

 

http://online.wsj.com/article/BT-CO-20110812-713261.html

 

Insiders Buying Stock at Highest Rate Since March ’09 as S&P 500 Drops

 

More executives at Standard & Poor’s 500 Index companies are buying their stock than any time since the depths of the credit crisis after valuations plunged 25 percent below their five-decade average.

 

Sixty-six insiders at 50 companies bought shares between Aug. 3 and Aug. 9, the most since the five days ended March 9, 2009, when the benchmark index for U.S. equities reached a 12- year low, according to data compiled by Bloomberg. Morgan Stanley (MS) Chief Executive Officer James Gorman and two other managers purchased 175,000 shares of the New York-based bank as the shares fell to the lowest level since March 2009, according to filings with the U.S. Securities and Exchange Commission.

 

Almost $3 trillion has been erased from U.S. equity values in the last three weeks as signs the economy is slowing and S&P’s downgrade of the government’s AAA credit rating left the benchmark gauge for U.S. shares within 30 points of a bear market. Some analysts say insider buying is bullish because executives have the best information about their prospects.

 

“Nobody knows a company better than the people running it,” Shawn Price, who manages $2.4 billion at Navellier & Associates Inc. in Reno, Nevada, said in a telephone interview. “It’s a positive sign that they are committing their personal capital.”

 

http://www.bloomberg.com/news/2011-08-11/insiders-buying-stock-at-highest-rate-since-march-09-as-s-p-500-drops-18-.html

 

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Tesco on the weekly chart. About to turn or continuing that downward trend? Could go either way from here or consolidate between 370 and 400 before deciding what to do next. Anything below 350 on fundamentals looks cheap to me.

 

ScreenShot146.gif

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Current FTSE 100 div yields of 4%+ (from DigitalLook.com)

 

RSA Insurance Group 7.46%

Aviva 7.20%

Resolution Ltd. 6.73%

Man Group 6.71%

BAE Systems 6.69%

Standard Life 6.12%

National Grid 6.06%

Scottish & Southern Energy 5.93%

AstraZeneca 5.48%

Vodafone Group 5.30%

Royal Dutch Shell 'A' 5.10%

Royal Dutch Shell 'B' 5.08%

GlaxoSmithKline 5.08%

United Utilities Group 5.06%

Inmarsat 5.02%

Marks & Spencer Group 5.01%

Sainsbury (J) 4.99%

British Land Co 4.78%

Centrica 4.70%

Legal & General Group 4.63%

InterContinental Hotels Group 4.54%

Capital Shopping Centres Group 4.50%

ICAP 4.49%

Severn Trent 4.46%

Reed Elsevier 4.21%

BT Group 4.18%

Investec 4.16%

Imperial Tobacco Group 4.11%

British American Tobacco 4.10%

Unilever 4.02%

Tate & Lyle 4.02%

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