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    • Wed, Feb 26, 2020 - 11:35am

      #6

      davefairtex

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      PM Daily Market Commentary – 02/25/2020

    JAG-

    I just want to caution you again about options.  This is the first time I’ve used them in 8 years.  And only long-dated ones, and only because of the “black swan” potential.  So far so good, but the volatility…I’m not used to seeing my portfolio change by 10% per day.  In both directions.

    I’m much more (emotionally) suited to your oil strategy – buying stuff for the long haul after it gets the crap kicked out of it.  And the sector rotation thing will be a clue too.  Sometimes you can do a ratio analysis also.  As in, OXY:$WTIC, to see how the stock is holding up vs its commodity.    If OXY stays steady, while crude continues falling, the ratio will rise, and that’s a sign that big money is piling in.  It may not be the low, but its a sign that at least someone else is interested, and that should stop at least some of the bleeding.  You don’t want to be the only buyer on a long downhill slide.

    Instructive: OIH:$WTIC, XLE:$WTIC.  Ouch.  It was all fun & games until about Feb 9th.  Not something I saw, btw, until I looked today.  I forget when I sold my oil things.  Around that time, maybe a bit after.

    As for bitcoin – I don’t really track it much.  I don’t like that its falling as COVID becomes more of an issue.  If the story is, “safe haven”, and/or “an escape hatch”, its not showing the signs.  Technically, on the weekly, I see a 3-candle swing high, and its not showing any signs of a bullish reversal on the daily.

    While you can buy the big black candles and roll the dice to get the cheapest price, there’s also no guarantee that you aren’t in this horrid downtrend that will last for another 4 weeks.  What’s your timeframe? Is your trade for a day, or for 3 months?

    Day trade – not my thing.  A trend trade – you might want to wait for an actual reversal signal.  Which isn’t in evidence.  🙂

    • Wed, Feb 26, 2020 - 09:39am

      #4

      davefairtex

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      candles, energy, silver

    JAG-

    Candle patterns: they are mostly a relatively short-term indicator; reversal is good for 8 days, meaning, the top tick marks the top for the next 8 days.  The model is complicated – moving averages, RSI values, trading range sizes, nearby support & resistance levels, 52w high/lows, and some patterns too.  Each pattern is trained up on a few thousand instruments, but not too many samples from any given day.  (I.e. if SPX shows a “swing high”, then all the instruments will probably show a swing high on that same day – I pick a few at random to use in training the model).

    I use the same model for all items – theory is, crude follows the same price movement rules as IBM.  And I can’t tell a priori what pattern will result in a high quality reversal.  The model is too complicated.  I wait until end of day + 6 hours, and then I find out right along with you.

    The reversals sure did look ugly today for PM.  Sure enough, they remain under pressure today.

    I agree that energy is going to be super dirt cheap when this is all over.  I was long energy until this virus thing came along, with just that idea in mind.  I’m just not sure it will be buying time within the next week or so.  Patience may be required.  If this virus is really serious, it could be months before we get a resolution.

    And the junky debt bonds of the energy companies might be a better idea than equity.  If the company goes tits up between now and … a year from now, at least bondholders get something.  Equity gets zip.

    Equity-wise, my friends like OXY.  It has a ridiculously high dividend, but it is losing money this quarter.  OXY is trading at 25 year lows.  Not financial advice, and I don’t have any right now.  (I sold mine a month or so ago).

    CR-

    I agree, waiting on this silver situation is annoying.  I wish I had an answer for you.  It has awesome promise, but for years now – it has just been a lot of promise, and not very much execution.

    • Wed, Feb 26, 2020 - 02:52am

      #15

      davefairtex

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      PM Daily Market Commentary – 02/24/2020

    test

    • Tue, Feb 25, 2020 - 10:27am   (Reply to #5)

      #9

      davefairtex

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      re: The Dumb Money is Doubling Down!

    JAG-

    Wow that’s just nuts.  Really nuts.   Super cool chart, thanks for sharing.  That chart gives me confidence that this thing really could have some legs.  Although I’m not sure I’d say puts are cheap at this point, with VIX at 27.  🙂

    The e-minis just keep making new lows.  Down -61 [-1.91%].  I thought we’d see a bounce today, maybe.  Didn’t happen.  Each intraday bounce gets sold.  Traders say “thank you for the bounce, now I can go short at a better entry point.”

    • Tue, Feb 25, 2020 - 04:47am

      #4

      davefairtex

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      silver composite reversal model

    This aggregates predictions from 5 different lookahead periods (5-25 days).  It is suggesting we may be nearing a top, but isn’t issuing a sell signal just yet.  (Note that some of the underlying models are issuing sell signals, but others say buy and/or hold, so the net-net is hold).

    phusg-

    I’m not sure how much the fires contributed — certainly something….Google says 4.4 billion impact, vs economy 1.3 trillion.  Seems like its underestimating the damage a bit, but its hard to say.  How much wealth was destroyed, and how much “peace of mind” too?

    But looking at (roughly) copper prices and AUD over the last 2 years, I’m guessing that China’s slowdown (2018-present, due to the trade war, and then COVID-19) was more impactful.

    Not sure what the balance was.  I wasn’t tracking the fires alongside the currency so I can’t be sure.

    Yeah I totally understand.  I’m famous (at least in an audience of one) of complaining bitterly about a decline right at the dead lows of the day.

    Its actually a super valuable indicator, if you can use it properly.  When you start feeling optimistic, that’s the sign of a top, and when you get ready to make one of your cranky posts, maybe its time to buy.

    I’m kinda not kidding about this one.  First try logging your feelings – and label how strong they are, along with date & time.  Then put them on a chart, and see what comes out.  If your emotions are a good reversal detector, you can use this as a timing tool.

    “I’m feeling really angry today.  Level 8.  That usually corresponds to a low.”

    Don’t think of this as “you being stupid” – think of this as “you being tuned in to the gestalt of everyday market participants” which the banksters love to manipulate for profit.

    It could actually be a really valuable skill if you can train it up.

    • Mon, Feb 24, 2020 - 06:45am   (Reply to #2)

      #7

      davefairtex

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      re: re: Winter is Coming

    JAG-

    Yeah, UAL was a small position, but up nicely.

    My best one was XLK.  I picked that up a bit later, once I remembered that it tends to move even faster than XLF on the downside.  XLK: supply chain, XLF: banking crisis, and both of them tend to lead on the way down.

    Its probably the largest single-day gain I’ve seen in this account.  I may have overdone the puts…my initial buy was small, but then I just kept adding as time passed.

    I’m guessing they are really raining contracts down on both gold & silver at COMEX.  They need to do that to keep SPX from falling more – my guess.

     

    • Mon, Feb 24, 2020 - 02:47am

      #4

      davefairtex

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      known unknowns

    One of my favorite videos:

    https://www.youtube.com/watch?v=GiPe1OiKQuk

    “There are known-knowns.  There are things we know we know….”

    • Mon, Feb 24, 2020 - 01:57am   (Reply to #2)

      #3

      davefairtex

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      re: Winter is Coming

    JAG-

    Yeah, they really are leaning on silver right now.  Huge increase in OI.

    Once the thing breaks loose though, all that short interest will work in reverse.  I just have no idea when that might be.

    When silver starts to run – really – $1 days.  Repeatedly.  I’m out right now, my broker kept telling me my mini SI futures were about to expire, so I sold.  Sadly.  But what can you do?

    Oh sorry – I was non-responsive to your question.  Decline in spring (in percent):

    1938-03-31 -0.194313
    1939-03-31 -0.168812
    1933-03-31 -0.150943
    2001-03-31 -0.121149
    2009-03-31 -0.116668
    1935-03-31 -0.108421
    1932-03-31 -0.099754
    2008-03-31 -0.099199
    1982-03-31 -0.086414
    1977-03-31 -0.084124
    1942-03-31 -0.078251

    Declines in summer:

    1932-06-30 -0.393981
    1962-06-30 -0.212797
    1970-06-30 -0.188664
    1930-06-30 -0.186158
    1940-06-30 -0.185306
    1937-06-30 -0.140625
    2002-06-30 -0.137329
    2010-06-30 -0.118622
    1931-06-30 -0.111444
    1934-06-30 -0.087442
    1974-06-30 -0.084912

Viewing 10 posts - 1 through 10 (of 2,439 total)