Nice reversal. De-risk, de-risk, de-risk…
It was late in Q4 2014 and in accordance with our macro view and in anticipation of the coming ‘tax loss/January effect’ festivities TTNP was among several stocks I picked up. As noted weekly in NFTRH’s portfolio notes it was a “rank chart speculation” bought at support.
Then came subscriber RK’s info that the stock was well regarded by a Biotech analyst who has had way more hits than misses (Mr. BioNap) and I thought hmmm, maybe I’ll not be so hasty to sell it as long as the chart continues to look constructive. Well, the chart has expressed itself as hoped and now I have de-risked the position, taking 1/2 of it off the table for a 32% gain. I’ll watch to see how it shakes out from here.
The baby Biotech stocks and specialty Pharmas are starting to get some bids. Old friend OMED was bought for the same general reason as TTNP, and it was partially de-risked as well. I hold two others and while I agree with some that Biotech is getting silly, it has been one of NFTRH’s best markers on a potential bullish market blow off scenario in maintaining its robotic uptrend by a weekly chart we routinely review. But the idea though, is to TAKE SOME PROFITS, routinely and unemotionally.
Here is what some of the smaller entities have been doing vs. the big guys (like CELG, GILD, etc.) in 2015. This could be signaling a maturing bull market now that the speculative stuff is out performing. DEPO is not really speculative. It is a fundamentally solid company; but it is smaller and more speculative than the giants.
Continue reading Biotech; Titanic Gains
The US stock market’s job this week is to make this break (Dow used as an example, as it broke upward on Friday, following the leadership indexes) to new highs stand up. What it’s got going for it is that it’s not particularly over bought and it made a weekly close above resistance. What it’s got going against it is a degenerating sentiment backdrop (toward an over bullish extreme).
If the breakouts in the Dow and other indexes holds up, the markets could be going much higher; including a long… not anticipated, but provided for… manic blow off scenario. Watch things beneath the surface having to do with sentiment, participation, breadth and one indicator that alerted us to the bull phase weeks ago, Junk bonds and bond spreads. Thus far, they do not show a negative divergence.
Can we now put the debate to bed? 3D Printing and the oh so hype-infused phrase “Additive Manufacturing”, spun from Wall Street suits who’ve never even been on a shop floor, was a bubble that was spoon fed to the public.
Stratasys Plunges 27% [32%, real time] Q4, ’15 View Miss on MakerBot, Steps Up Spending
Again and again this space talked about the really cool gizmos with which you could fashion just about any geometry; but we also talked about competition, hype and most of all, valuation.
SSYS is an excellent company, but valuations had to come way down. Cue all those stock analysts at SeekingAlpha constantly touting and rationalizing higher price levels for 3D Systems – an inferior company to Stratasys – while we noted growing competition and a b/s detector that was red lining.
Wasn’t MakerBot going to turn us all into 3D Printers? Happily bringing our imaginations to 3D reality? Anyway, the adjustment continues and anyone who bought this promotion is discovering the wonders of a new concept, Subtractive Manufacturing.
How often do you see one company acquire another, at a 24% premium, and see its own share price pop by 7%? Answer… not very often. On a day when the market is down big? Even less often.
 Here’s the PR: Lattice Semiconductor to Acquire Silicon Image for Approx. $600 Million oh, and LSCC is now +15%; very strange indeed.
I had tentatively held LSCC and now need to go look into why the market perceives this as such a nice marriage. Strange stuff on a gloomy market day, including in the Semiconductors, where Intel is eating away at my gain in Lattice.
Even stranger, all of my Biotech holdings are green, as are the miners. The miners I can see, given continued deceleration in economic data, but it appears people are pile driving the Biotech’s and doubling down on momentum in the face of bearishness elsewhere. But the broad market seems to be making some decisions here folks. It is a strange and bifurcated market.
Last week we noted over at NFTRH.com that silly season was upon us. In that post, Oncomed (OMED) was one of the featured items. This is a stock I first became acquainted with a little over a year ago and it has had a special place in my stock trader’s heart ever since. It got irrationally bid up on news last year and as that stuff unwound over the last year it was a nice seasonal Tax Loss / January Effect idea to close out 2014.
So another 19% is taken as I stick to my stated objectives (in NFTRH), which are to peel off some, most or even all of these trades into the expected market bounce. You have got to take profits when they are there. That’s what they say.
BTW, the actual target on OMED is 26, but I sold at 25 and change.
When I saw the headline below I thought the writer may have been referring to spring of 2011, when Bill Gross seemed to single-handedly end the commodity and ‘inflation’ bull market with his call to short the Long Bond (which is another way of saying he called for long-term yields to break out). That was all baseless hysteria, as our continuum chart clearly shows. Just another red arrow.
We called the Gross stuff hype in 2011 and for good measure we called the most recent red arrow from 1 year ago hype as well. “Great Rotation” anyone? The longer I participate in the markets the more amazed I am at this stuff, and the media behind it all, promoting hair brained ideas on a daily basis.
“The good times are over”. In fairness, I am not nearly disagreeing with him, but I am noting a broken clock thing here.
The writer highlights Gross’ current call against stocks but also mentions 2011’s bond market call. So good job Mark Decambre. He’s done his homework and though he is polite, Mr. Decambre makes a slight inference that Gross may be playing contrary indicator yet again.
Gross has become a cartoon character in my book, and it culminated as the rock star manager was hired away from PIMCO by Janus. Or was it all the unquestioning followers of Gross that Janus actually hired? Whatever, silly markets, silly goings on as usual.
 On a related topic, NFTRH has a market sentiment update this morning as well.
As November came to a close, the market rebound out of the October correction had not only reset over bearish sentiment, but had put it wildly bullish and very unhealthy. Yet the Santa seasonal was oncoming and something had to give. Santa’s rally was not going to generate from such unhealthy over bullish conditions.
In NFTRH we reviewed this seasonal pattern (from Sentimentrader.com) and anticipated some corrective activity in the first half of December (NFTRH+ offered a short on SPY, which went right to the downside target). But this would just be a clearing of the decks for the portly man in red. Here is the seasonal for December…
Looking ahead, here is the 30 year average seasonal for January…
You cannot take historical data as a be all and end all because it sometimes fails at the most inopportune times (part of why I take ‘quant’ style analysis with a grain of salt), but it sure is a factor because it is the undeniable reality of what has happened before.
Or Ha ha ha… whatever, he has arrived on cue.
Oh my I am glad I didn’t get greedy on the shorts and held and added the longs.
You see, it is called having a plan and the rough plan – per the average seasonal – was for a hard dump in early December off of hideously over bullish sentiment and then the potential for Santa. Yesterday and today, as the tax loss sellers evaporated, he got here.
Other festivities could revolve around the ‘January Effect’ depending upon what’s in holiday revelers’ eggnog.
We’ll take it week to week, but for now… the fat man is in the house.
Bulls and bears trading left jabs, and the black boxes just doing what they do, churning the market based on inputs of geopolitical and geo-financial (it’s not a word, I know) angst and inflammatory headlines. All while a group of interest rate manipulators huddle to try to find the ‘just right’ (ref: Goldilocks) statement to put together tomorrow.
I have one tech company up 5% and the other down 5%. But cash is by far my best holding right now.
As a decidedly non-committed bear I took my own advice and covered all short positions as SPY hit target. I managed some nice bear trades and still managed to lose money on balance so far this week. That argues to me that I am not smarter than the market this week and thus, should act accordingly.
As for gold and gold miners, I really don’t know right now. My already small exposure was eliminated on the pop after yesterday’s breakdowns. But I tell you folks, if I see the combination of weakening forward-looking data (I could not care less about November’s ‘Jobs’ or Industrial Production) and commodities continuing to implode relative to gold, I for one will be on high alert. Also, it’s a prime tax loss selling week. So how real or materially important is that selling in the miners, other than to provide a potential trading opportunity?
Bigger picture, the final piece of the puzzle for gold bugs is the US economy and its headline stock indexes. This is a very interesting, no compelling market environment for geeks who live for this stuff. Certain markets and ratios are blowing off (up and down) and it is really fascinating. Something seems about to change after these terminal moves blow out (cue Silver 2011 reference).
 btw, volatility aside, the stock market has not at all broken its short-term downtrend.
Today MarketWatch treats us to…
Four reasons why the market will rally for the rest of 2014
Aside from the fact that I hate it when people talk in absolutes (because there is no such thing as a guru who can really predict absolutes) the writer, a CFA and regular Fox Business and CNBC guest tells us why stocks will rally all the way to the end of 2014. Wow, two whole months?
Before I even read the article let me just say that the irrational fear became extreme earlier this month and while we anticipated the bounce, its strength is now pushing through the top end of expectations. Got to love the markets, and that ploy of putting a supposed Fed hawk, James Bullard, in front of a mic to go on about QE extension the moment the market took a decent correction. Right there belies vulnerability and desperation.
Anyway, to the article written by the CIO of the aptly named Global Guru Capital…
He highlights how sentiment is still way too pessimistic out here…
1) The Market’s Manic Mood
Americans haven’t felt this bad about their country since Jimmy Carter’s malaise years. According to a recent POLITICO poll, 64% of respondents believe things in the United States feel “out of control” right now. Exactly half said the country was “on the wrong track.”
Yes and do you know why? It is because the majority have not participated due to the inequality and inequity of the current recovery, born of policy and aimed at those who already have capital and have assets. What do ‘Americans’ have to do with this? It is all about keeping asset owners whole. Next…
Continue reading 4 Reasons Why…
Just as we (well, NFTRH) did with the GDX gold stock ETF over the summer, when we gauged resistances 1, 2 & 3 on the Ukraine hype b/s (GDX stopped at #3), we now have established resistances 1, 2 & 3 on the S&P 500, DOW and NDX on the rebound rally, which itself we had anticipated.
SPY hit a trend line today, which I have a feeling will not hold as ultimate resistance. So understanding that in my nature I have a sort of chronic mental problem with being a strong short (this is me the faulty trader speaking, not me the top notch* macro market manager), I took the small step of shorting SPY today. No leverage, just a short. This is against some still held longs but the last 2 weeks have been pretty good and I want to seek out balance again.
This chart of SPY shows what could be the ultimate resistance level beginning at 196, but the indexes (ref. SOX post earlier) have started hitting some bounce targets so I thought it was worth a shot to begin creeping shorter the stock market.
* Sorry, but that’s just how I feel about my own work. It continually adjusts the faulty trader and keeps his head on straight.