Trading Buy
Our Institutional Research firm -- my day job -- made a short term buy call last night.
Its only a trading call, but I will see if I can get permission (from our clients) to release it publicly.
Bottom line: A bounce, similar to January, only not as strong or long-lasting. And, its not a lasting bottom.
Wednesday, July 02, 2008 | 06:00 AM | Permalink
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@BR,
Considering your (undeserved) perma-bear reputation, this might be viewed as a very good contrary indicator...
Posted by: OldBrokenRecord | Jul 2, 2008 6:39:42 AM
I think I agree with this call. You had a discussion of the Fed raising rates a few weeks back and decided they were jawboning - correcty as it happened.
Now, what if Trichet was actually also just woofing? After all, banks in Europe have issues too, so a hike could be disruptive. The $ rallies, oil falls and we get a short-term stock rally.
Posted by: leftback | Jul 2, 2008 7:01:11 AM
Should the choice be between two contrary indicators This one may be more appropriate
Buy `Crash Protection' Puts on European Stocks, Goldman Says
By Alexis Xydias
June 30 (Bloomberg) -- Investors should buy ``crash protection'' against a plunge this year in European stocks because losses are likely and insurance costs are low, according to Goldman Sachs Group Inc.
Posted by: Philippe | Jul 2, 2008 7:03:45 AM
Wouldn't surprise me -- the sell triggers I set months ago on SDS went off yesterday, so I'm sitting on a wad of sidelined cash. I'm not sure in this market I want to go long though -- I was considering waiting a week, and then re-shorting the dead cat bounce. I figure if the bottom falls out this time I've missed out on another pile of delicious profits, but with the piles of volatility sloshing around, I can live with that.
Posted by: DDK | Jul 2, 2008 7:08:19 AM
Agree...SP, held 1270....
Posted by: SINGER | Jul 2, 2008 7:08:30 AM
I agree with BR.. But I am a little scared of missing the next ( more or less " in your face " easy short´s buy buying some SDS later this month.)
Maybe a little SSO with a stoploss... and then some SDS later this month.. but yes the 1270-1275 held well ...
Posted by: kontorhotel | Jul 2, 2008 7:19:10 AM
You cannot rely on one person as a contrary indicator.
Even Joey Baggadonuts learned his lesson post 2000 and became cautious in 2006
Posted by: Contrary | Jul 2, 2008 7:53:25 AM
With you on that call, Barry.
I covered a lot yesterday too, unfortunately into the morning swoosh rather than the deeper noon one.
Oscillators were sooo oversold, the stars were aligning for a bounce. I'd felt that way for a few days and covered part of the China short too early.
From the way it reacted to the crappy GM news, you could see that Mr. M is ready to have his bull goggles on.
Posted by: zackattack | Jul 2, 2008 7:54:42 AM
Vince Farrell:
"I'm not sure what earnings are going to be so let's plagiarize some of Jason Trennert's work from Strategas. Jason looked at all the recessions since WW II and calculated that on average earnings fell 17% from whatever the peak had been. I don't see a recession on our table yet, but let's declare one for the sake of argument. The recent peak in earnings was the four-quarter period ending June, 2007 when the S&P earned $91.50. If we take 17% off that, and remember, those that don't study history are condemned to repeat it, then the trough in earnings will be $76. That number is far below any estimate I have seen, so that might be bearish enough."
- - - - - - - - -
Now...THIS guy works on WALL STREET? WTF?
Look at the ACTUAL S&P 500 EARNINGS DATA!
The last 4 quarters of earnings equal $76.77 (including the high water mark of $24.06 in Q2 of 2007).
Once this high water quarter is dropped from the tabulation (in about 6 weeks) the trailing 12 month earnings will be $70 +/- based upon the assumption Q2 will come in at roughly $17.50 per share.
THUS...if you take his market multiples of 16 to 17 on $70 per share in earnings that would equal 1120 to 1190.
UNBELIEVABLE! He is at best VERY VERY misleading.
Now...assume earnings stay muted at $17 for another couple quarters then you will see trailing 12 month earnings at $67 to $68.
Again...NOT SUPPORTING a market much above 1120 to 1200.
DOWN 6% to 10% from here!
So when they say it is all baked in...
C'mon!
This is the same %$& who didn't see ANY earnings hit coming of any amount a year ago!!!!!!
%&*!
Keep in mind that S&P 500 estimates were for $21.08 per share in early April for Q1. ACTUAL Q1 earnings turned out to be $16.62!
EARNINGS ESTIMATES ARE VERY VERY OVERSTATED!
http://72.14.205.104/search?q=cache:PkIP...
Posted by: Kirk | Jul 2, 2008 8:05:34 AM
BR, remind me how we square your upside trading call against Fusion IQ's sell call issued yesterday. thx.
Posted by: d | Jul 2, 2008 8:10:48 AM
http://www.alphatrends.blogspot.com/ has a similar view
Posted by: Diarmuid | Jul 2, 2008 8:42:55 AM
Foreword: I'm joking.
@d,
Now you know that BR has been enrolled in the PPT... You blew his cover.
Posted by: OldBrokenRecord | Jul 2, 2008 9:01:04 AM
You could get a light volume holiday week rally...I might say cover shorts if you must, but surely don't buy. As sentiment goes, 10 day put calls were 1.25-1.3 at recent trading buys...now a mediocre 1.05. It would take a month to get to 1.3. II Bulls are 32% vs. 20% for March low. You could get a bullish oil number and bad jobs number and get killed buying here.
As for fundamentals, last year S&P revenue was 9$40 per share. I have to think it will be around $920 this year at best. Put a generous 1 times multiple given housing, credit, recession and uncertainty and you get S&P at 920.
Posted by: Steve Barry | Jul 2, 2008 9:16:21 AM
WRONG! You show me one thing from yesterday's bounce lending any kind of underlying substance to the rally off mid-day lows. There was NOTHING. This market is screwed ... and the deepest, most frightening decline of any seen thus far over the past year is at hand. Complacency reigns ... even among those who claim to know better.
Posted by: Risk Averse Alert | Jul 2, 2008 10:05:46 AM
So everybody covered and everybody is waiting for the bounce that everyone knows is coming because the sticksaved support at 1270 held--this while everybody winds down for vacation.
Who the hell is going to do the buying? Vince "Hip Deep in Financials" Farrell?
Posted by: mephisto | Jul 2, 2008 10:10:08 AM
you don't advertise the fusionIQ stuff regularly, so I hate to ask for comparisons, but the fusion blog mentioned Sell signs for all three indexes, while here you mention a buy, seems counter-contra. Can you contrast the time frames of these two?
The mid-january bounce was 2 weeks long...
Posted by: gregh | Jul 2, 2008 11:18:37 AM
Mephisto -- my intuition (just intuition) is that the recent oil spike briefly goes down as fast as it came up (to, say, 125-130), and "surprising" non-seasonally-adjusted-non-revised home sales numbers come in for June saying people are buying more houses now than they did during the winter, causing the mainstream media to issue their monthly "The recession is over! Buy now!" mousetrap.
Posted by: DDK | Jul 2, 2008 11:19:38 AM
Already ahead of you, bought short-term calls on the index yesterday when the S&P went under 1280
Posted by: david | Jul 2, 2008 11:21:00 AM
I must agree, and I think a trading bounce is highly likely although I would have loved to see the VIX hit 28-29 or so, at some point in the past few sessions.
Long SSO, DDM, UYG at these levels. Thing is, if we do bounce, to say 1340 or so, that is when the shorts will start scrambling to cover and really power the bear market rally.
Posted by: UrbanDigs | Jul 2, 2008 11:22:05 AM
We may get a bounce here, but it probably won't be more than 3-4% on the S&P.
Posted by: DL | Jul 2, 2008 11:47:27 AM
Barry says this will be similar to the January bounce, but not as long lasting...The January bounce started 1/22 and lasted 8 trading days, making its high on 2/1, then went into a range...so this one lasts what, 5 days? I don't even see it happening with a total 10 day put/call MA at 1.03 now
Posted by: Steve Barry | Jul 2, 2008 12:02:58 PM
I agree and bot C and VLO 2 days ago.
Let us pray for the bounce, even if it is only a sold-out bounce.
Posted by: Robert | Jul 2, 2008 12:33:26 PM
I think you better pray for no splat...why be long on the cusp of a depression?
Posted by: Steve Barry | Jul 2, 2008 12:34:40 PM
Hmmmm...IWM is now below yesterday's low.
Posted by: Al Czervic | Jul 2, 2008 12:34:54 PM
Steve....you are correct, as this will be deep and long. I bought these for a trade ONLY and could be out in 5 minutes or 5 days. But I also have gold stocks, too.
Posted by: Robert | Jul 2, 2008 12:54:53 PM
