Random Thoughts

I am having a hard time putting together a cohesive opener this morning so here are some random thoughts running through my head:
  • Intel is a stock that is not liked and has not gone up with the rest of the market. I don't believe one can read into the reaction to Intel. JPMorgan might be a better bellwether.
  • I absolutely hate conspiracy theories because they are unprovable and for the most part used as excuses for being wrong. That said, the food component of the CPI has come out at .1% for the month. There are food riots going on in the World because food prices are up so much. This simply does not compute for me and flies in the face of what is being said on every conference call in the food industry. 
  • That said, the "benign" CPI allows the Fed to keep printing, which in the short term is an incremental positive for stocks and commodities.
  • The Rydex bull/bear ratio reached another new high yesterday.
  • If we get another leg higher in the market I plan on aggressively shorting. I don't know when a correction will arrive but I am fairly certain one will. When it does the frothy part of the rally is typically erased. We are well into the froth.


Anonymous said...

If nothing else you are consistent and bordering on SUPERCILIOUS. Traits that may be good for trading but not in life.

Anonymous said...

S&p another new high. 12 away from 1300.

Tsachy Mishal said...

Thanks for teaching me a new word and the backhanded sort of compliment.

nicasurfer said...

Have you ever seen something like this before?

Tsachy Mishal said...


Anonymous said...

"Have you ever seen something like this before?"

Yes; Pull up Jul 16th 2006 to Nov 21 2006 on a daily S&P.

Put it on top of Aug 31, 2010 to today.

There are other periods as well. Anyone who tried shorting the market back then is having a serious case of deja vu today.


Anonymous said...


The rise was not as steep in 2006 as it took several more months to reach the same percentage gain but it did get there.

The current rally is just crazy in its pace.


nicasurfer said...

But what is supporting the market right now. At this level it is severely overvalued. Back then the houseing crisis was known but it hadn't sunk into the general public.

Now we have millions of homes in inventory and 9.5% unemployment.

It doesn't make any sense.

And food riots is large countries as well as small.

Add all of that up and it equals "loco"

revelo said...

I see nothing loco about the current situation. Stocks are not crazy overvalued. I calculate fair-value for the SP500 at 1000. So we're 25% over-valued. BUT my fair-value assumes normalized interest rates. If you have ZIRP for 5 years, then you can pocket an extra 2% or so in stocks versus normal conditions, which adds up to 10% over 5 years, and that whittles that 25% down to 15%, which is probably within the margin of error of my calculations.

I'm betting that stocks will eventually crash, but not because they are overvalued, but rather because the dumb money has been sufficiently punished, to the point where they swear off stocks for decades. We never reached the puke point, aka capitulation. This is obviously not particularly rational.

As for commodities, they are in a bubble. The third world riots because the cost of food = cost of commodities. Doubling the price per bushel of wheat at the wholesale level doubles the price at retail. But cost of raw materials is a minor factor in food costs in the US. Look at your grocery bill. Are you really buying bulk wheat? More than likely, you're buying bread in a plastic package with a brand-name on the label, and most of the price is thus independent of the price per bushel of wheat.

CPI went up 1.5% in 2010, and that includes all the food and energy zigzags. IMO (which many economists share), CPI is overstated by at least a half-percent, not understated.

My personal cost-of-living (which doesn't include healthcare since I self-insure and never get sick) is plummeting. Most of my expenditures last year were on housing (I'm one of those bitter impoverished irresponsible renters), travel-related, durables, restaurants. Rent is stable, lodging costs are falling, the internet is making it easier to find bargains that outweigh hikes in fuel surcharges on air travel, durables have been in deflation since forever, restaurants prices are stable or declining if you factor the hedonics of more-attentive service.

Anonymous said...

Sold BRN @ 7.14 (long from 6.50) Cash money OL DAWG

Anonymous said...

Only 20 minutes or so until the end of day S&P ramp of 5 points or so. Do you have your offers in Tsachy?

I am 1295 in the e-minis...


Anonymous said...

I bought SDS on Dec 1st when S&P was at 1175. Down 18%. Don't short. I am in danger of losing all my profit from 2010 which was about 20%.

Anonymous said...

Its been very hard to trade this market since mid november all was good before that. Even 2008 was fun trading. Mid Nov till now is the worst trading time for me in last 5 years. :(

Anonymous said...

My money is going to JPM

Anonymous said...

Covered GMAN @ 15.80 short from average price 17.00 and sold CGA @ 8.08 long from 7.23 OL DAWG

Anonymous said...

Dawg, it all sounds good. Do us a favor, Also print the losing trades. Theres NO WAY you hit them all. How did that TZA trade work for ya?

Anonymous said...

I did print out that losing trade on TZA dawg. Of course there's no way I win them all. The key is to be more right than wrong.

I covered the TZA and right about then, market owl starting getting bullish.

I get influenced alot by this blog and MO's and realized you all are kind of all following the crowd at lunch time looking to get short.

Anyways I lost 10% on that trade. I'm right 2 out of 3 trades. I'm not kidding.

Watch all my trades dawg. I do post them all here and on Market owl's blog. And read my twitter too.


Anonymous said...

And don't hate dawg.

Most everyone who follows this blog and the other one are short the e mini's, spy, or long FAZ or TZA or EDZ or something like that. IE short the market.

Y'all are losing money. I had a couple good 5 to 10% trades playing EDZ and DRV and even EDC but trading the overall market especially in the short side is a loser's game.

Even Banana Ben came out and said that POMO and QE1 and 2 have helped the market. He's hosing the market with liquidity and printed dollars.

Can you blame me or any of us for trying to fight such a tape when it climbs every day?

Anyways, we're used to 2007 to 2009 and still in that mode. Just like Tsachy.

He say's all the time that's he's never seen anything like this before and on and on.

The fact, is we're in the middle of a massive spx trading range and in the early stages of a recovery with job growth.

Fuck it dawg. It's easy to get caught up with dark shades from 2 years ago and think we've come too far too fast. I"m made a shitty trade trying to get short.

But I do believe we're set up nicely for a 4 to 5% dip at about 1300.

But I'll probably just short an individual stock than play the overall index. Can fight Banana Ben.


Anonymous said...


Anonymous said...

Anon, last April I was short the index and took around a 20% hit in that trade but I didn't blow up. Ol DAWG

Random Thoughts said...

@ol dawg
I was following your trades ( including the longs). They got killed also, around the same time you left this blog.
Don't throw stones if u live in a glass house.