?Investing is the only endeavor in which victory goes to the minority,? said the great economist, John Maynard Keynes.
While the Diary of a Mad Hedge Fund Trader focuses on investment over a one week to six-month time frame, Mad Day Trader, provided by Jim Parker, will exploit money-making opportunities over a brief ten minute to three day window. It is ideally suited for day traders, but can also be used by long-term investors to improve market timing for entry and exit points.
As a potentially profitable opportunity presents itself, John will send you an alert with specific trade information as to what should be bought, when to buy it, and at what price. Read more
As a potentially profitable opportunity presents itself, John will send you an alert with specific trade information as to what should be bought, when to buy it, and at what price. Read more
As a potentially profitable opportunity presents itself, John will send you an alert with specific trade information as to what should be bought, when to buy it, and at what price. This is your chance to ?look over? John Thomas? shoulder as he gives you unparalleled insight on major world financial trends BEFORE they happen. Read more
While the Diary of a Mad Hedge Fund Trader focuses on investment over a one week to six-month time frame, Mad Day Trader, provided by Jim Parker, will exploit money-making opportunities over a brief ten minute to three day window. It is ideally suited for day traders, but can also be used by long-term investors to improve market timing for entry and exit points.
While the Diary of a Mad Hedge Fund Trader focuses on investment over a one week to six-month time frame, Mad Day Trader, provided by Jim Parker, will exploit money-making opportunities over a brief ten minute to three day window. It is ideally suited for day traders, but can also be used by long-term investors to improve market timing for entry and exit points.
Global Market Comments
September 12, 2013
Fiat Lux
Featured Trade:
(BUY APPLE ON THE DIP), (AAPL), (CHL)
(PICKING UP FREEPORT MCMORAN),
(FCX), (CU), (ECH), ($SSEC)
Apple Inc. (AAPL)
China Mobile Limited (CHL)
Freeport-McMoRan Copper & Gold Inc. (FCX)
First Trust ISE Global Copper Index (CU)
iShares MSCI Chile Capped (ECH)
Shanghai Stock Exchange Composite Index $SSEC
Buy the rumor, sell the news. That was again the lesson of yesterday?s new product launch, where Apple (AAPL) rolled out their new premium 5s and low-end 5c iPhones. So many commentators heaped such abuse on the company in the run up to the release that today?s weakness was a sure thing.
Failure to announce a deal with China Mobile (CHL) in Beijing last night was the immediate reason for today?s $30 plunge, which prompted several houses to downgrade the stock. It was a classic ?closing of the door after the horses have bolted? moment. As with time immemorial, your broker is asking you to buy high and sell low, delivering to you a perfect money destruction machine.
However, this time, there is far more than meets the eye. China Mobile wasn?t the barrier to greater access to gargantuan 700 million mobile users. It was compatibility with China?s unique 3G TD-SCMA networks. The new plastic? $99 iPhone 5c bridges that gap.
Chinese customers can now buy the iPhone 5c retail unsubsidized, as are 70% of the mobile phones in the Middle Kingdom, and use them on the local China Mobile network for the first time. Analysts expect this will enable Apple to pick up 6% of China?s mobile market share immediately, much at the expense of rival Samsung. The full China Mobile subsidy package, which the uninformed and non-technical have been looking for, could still be years off, but has been rendered irrelevant by Apple CEO, Tim Cooks, move.
The reality is that Apple?s unit sales will remain stable, or even grow modestly, with no new products whatsoever, its marketing presence is so overwhelming. So the next version of the Mac Book Pro and iPad, due out in coming months, can only deliver upside surprises on profits. Expanded carrier distribution, better ASP?s, and higher margins will be the inevitable result.
The company also has plenty of room to cut prices and build market share as existing products, like the iPhone 4 and 4s, age. It?s clear that the ultimate low end entry point for Apple products will be the iWatch, to be launched early next year.
The net net here is that Apple?s earnings estimates will be revised up for the first time in more than a year.
This is happening with the additional rocket fuel of a massive $50 billion share repurchase program that continues unabated. Corporate raider and major shareholder, Carl Icahn, is trolling in the background demanding more.
It also helps that the company carried off one of the largest corporate bond deals in history at the absolute peak in the bond market five months ago, a brilliant move that resulted from no small amount of prodding from me.
My tumultuous personal life aside, I am entering this trade cautiously as usual, adding a deep in the money call spread that limits my risk. Note too on the chart that the strikes align nicely with major support levels that should provide an extra safety margin. These only have to hold for five weeks for the October expiration to work.
Take a look at the China Mobile (CHL) chart as well, which will go ballistic if the China recovery story is real.
It is clear from the improving economic data from China that the hard landing scenario is off the table. This is great news for the producers of everything that the Middle Kingdom buys in bulk, especially copper.
If you like copper, you?ve got to love Freeport McMoRan, one of the world?s largest producers for the red metal. On top of these rapidly improving fundamentals, the stock yields a nice security blanket of a hefty 4% dividend. These factors explain the sizeable insider buying that has been taking place in the shares over the past month.
Finally, the technical picture is looking pretty positive. The chart is showing that an upside breakout is taking place, supported by a sharp turn up in the 50 day moving average. The 200 day moving average is not far above, settle up the possibility of a fabled ?golden cross.? This is universally positive for share prices.
This commodity is known in the investment industry as Dr. Copper, the only metal that has a PhD in economics. That?s because of its uncanny ability to predict the future of the global economy. Copper is now hinting of better things to come, along with the stock market, like a 3.5% GDP growth rate in the US next year.
The recent strength further is confirmed by longer-term charts for the Shanghai index ($SSEC), which is showing that a double bottom may well be in place. Will China permabear, Jim Chanos, finally get his comeuppance?
Copper was the first metal used by man in any quantity. The earliest workers in the red metal found that it could be easily hammered into sheets and worked into shapes, which became more complex and artistic as their skill increased. The ability to resist corrosion ensured that copper, bronze and brass remained as functional as well as decorative materials during the Middle Ages and through the Industrial Revolution to the present day.
Of the 16.7 million metric tonnes of copper produced in 2012, Chile was far and away the leader, with 5.4 million tonnes, followed by China at 1.5 million tonnes, Peru at 1.2 million tonnes, and the US at 1.1 million tonnes. This makes the Chile ETF (ECH) another great backdoor play in copper. As copper is a great electrical conductor, it is primarily used for electrical wiring, followed by the construction industry and shipbuilding, and the auto industry, especially in alternative vehicles.
It?s true that copper is no longer the dominant metal it once was. Because of the lack of a consumer banking system in the Middle Kingdom, individuals have been hoarding 100 pound copper bars and posting them as collateral for loans. Get any weakness of the kind we have seen this year, and lenders panic, dumping their collateral for cash.
The high frequency traders are now also in there in force, whipping around prices and creating unprecedented volatility. You can see this also in gold, silver, oil, coal, platinum, and palladium. Notice how they seem to be running the movie on fast forward everywhere these days? This summer, we probably got an overshoot on the downside in copper that finally flushed out the last of the weak holders.
This is why I am loading up with a bull call spread Freeport McMoRan. The gearing in the company is such that a 50% rise in the price of copper triggers a 100% rise in (FCX). More conservative ad less leveraged investors can buy the First Trust ISE Global Copper ETF (CU).
Where to Find Copper
