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
June 6, 2014
Fiat Lux
Featured Trade:
(JULY 11 SARDINIA, ITALY STRATEGY LUNCHEON)
(THE ECB?S DRAGHI FINALLY USES HIS BAZOOKA),
(FXE), (EUO), (EZU), (EEM), (SPY),
(A COW BASED ECONOMICS LESSON)
CurrencyShares Euro Trust (FXE)
ProShares UltraShort Euro (EUO)
iShares MSCI EMU Index (EZU)
iShares MSCI Emerging Markets (EEM)
SPDR S&P 500 (SPY)
After remaining woefully behind the curve on European monetary policy, European Central Bank president, Mario Draghi, has finally leapt to the forefront.
Specifically, he has announced a package of measures designed to stimulate the beleaguered continental economy that includes generous doses of interest rate cuts and quantitative easing. In short, his has finally pulled that big bazooka out of his pocket that he has been threatening to use for years.
No, he?s not just glad to see you.
The markets were caught unawares of the central banker?s aggressiveness, a character quality that has been sadly lacking in the European leadership since the financial crisis began in 2008. One derivative of the package is to drive short-term European interest rates in to negative numbers. Yes, deposit overnight money in a European bank now, and you have to pay them to take it.
No kidding!
The goal is to punish savers and force them to invest farther down the risk curve, such as through buying stocks. It is a radical move that I have not seen since the mid 1970?s, when the Swiss National Bank was forced to do the same in the wake of the US dollar?s decoupling from gold.
However, depositors quickly got the message, and the negative rates were gone in months.
The move triggered an unrestrained and frenetic global stock market rally. Shares have been mired in a tedious, nerve wracking range for months, awaiting a trigger to break out to one side to another. It looks like this is it, and the new trend is northward.
It also helped that my friend, hedge fund legend David Tepper, gave the green light for stocks (SPY) in the aftermath of the ECB move. That alone was probably worth 80 points of today?s rally, and more in the days to come. All of a sudden, all signals are shouting go!
David?s logic is clear and simple, as he has explained to me in recent weeks. Bring Europe out of hibernation and online, and you get a major boost to global economic growth. Europe is both America and China?s largest export customer. All of a sudden, those US 4% GDP growth rates that I have been shouting about all year don?t seem so pie in the sky.
The ECB?s execrable behavior until now is explained away by their constantly underestimating the severity of the downturn and lacking the institutional tools to do any thing effective, such as an American Style US Treasury and Federal Reserve, with teeth.
Personally, I think they were all just a bunch of wimps. It?s a classic example of a camel being a horse designed by a committee.
I have noticed over the decades that if everyone agrees that a certain scenario is going to play out, it tends to accelerate. We have just experienced the summer doldrums over the last quarter. Is this the fall rally now?
Perish the thought! I?ve already started packing my bags.
It?s screamingly clear that this is only the opening act of move in the Euro (FXE) down to $1.27. But you don?t want to jump into the market right here. The traders who got this one right have been selling into this meeting since the beginning of March.
Mad Day Trader, Jim Parker, and I tried to short the (FXE) a few times above $137. But the time it spent up there was so fleeting, we couldn?t get the Trade Alerts out there fast enough. This is a year when you don?t chase trades, or you will be sorely punished. So we kept our discipline and stayed away.
That said any strength in the Euro should be sold into for the next several months. That window may already be opening. After diving on the news, the Euro then rallied hard as the early players took profits so they could take a long summer vacation. It was a classic ?buy the rumor, sell the news? move.
The currency isn?t the only way to play the ECB?s sudden conversion to religion. You can expect continental stock markets (EZU) to outperform the US for the rest of 2014, especially the long suffering southern European ones, the biggest beneficiaries of the ECB action.
If I am right in my assumption that US bond markets peaked last week, then so have emerging market shares (EEM). It might be prudent to take profits in those marginal markets, and plow the money back into Europe stocks (EZU).
Finally!
All of a Sudden All Signals Are Flashing Go!
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.
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
June 5, 2014
Fiat Lux
Featured Trade:
(JULY 7 ROME, ITALY STRATEGY LUNCHEON)
(IS CYTRX (CYTR) ANOTHER TEN BAGGER?),
(CYTR), (TSLA), (BIDU), (MCP), (LNG), (DNA),
(AN EVENING WITH ?GOVERNMENT MOTORS?), (GM)
CytRx Corporation (CYTR)
Tesla Motors, Inc. (TSLA)
Baidu, Inc. (BIDU)
Molycorp, Inc. (MCP)
Cheniere Energy, Inc. (LNG)
Genentech, Inc (DNA)
General Motors Company (GM)
If there is one complaint about the Diary of a Mad Hedge Fund Trader, it is that I am too short term in my orientation. My response is that this is the only way you can obtain a 138% trading return in 3 ? years. I can skim off the cream when others can?t.
There is a reason why we are the only investment newsletter that publishes our performance on a daily basis. Basically, all our competitors lose money for their readers. It?s a lot like those Japanese restaurants that display plastic models of their food in the front window.
Still, I like to throw readers ten baggers when I find them. Long-term followers get that warm and fuzzy feeling when I mention Baidu (BIDU) ($12 to $190), Cheniere Energy (LNG) ($5 to $68), Molycorp ($12 to $80), and Tesla (TSLA) ($16 to $260) for a good reason.
Well, I found another ten bagger, one you can just buy and forget about for the next three to five years. I discovered this jewel at the SALT conference in Las Vegas last month organized by my friend, Anthony Scaramucci (click here for ?The Report on the 6th Annual Skybridge Alternatives (SALT) Conference?).
At the keynote dinner, I randomly picked a table near the stage. One of the couples next to me wore a UCLA pin from where she graduated, prompting a discussion of the Golden age of Bruin basketball and the salad days of? legends John Wooden and Bill Walton (four perfect 30-0 seasons and an 88 game winning streak!).
I casually mentioned I was there as a cancer researcher and DNA scientist during the early 1970?s, and graduated in biochemistry. The ears perked up, and the dam broke.
The gentleman I was dining with turned out to be the CEO of CytRx Corp. (CYTR) a revolutionary innovator in the chemotherapy field. Through a top secret, patented chemical reaction, their chemists can add an acid sensitive linker molecule to pre existing generic chemotherapy drug.
That enables the drug to only kill the cancer cells and not the rest of you as well, eliminating side effects, and permitting a substantial ramping up of the dosage. I worked out the chemistry in my mind, and quickly figured out that it would work.
The net effect is to install a turbocharger on existing drugs, greatly enhancing their curative effects. Stage three trials will be completed by 2016, when the company expects full FDA approval. The company has $125 million in cash and no debt.
I lost a wife to cancer 12 years ago, and received a crash update on the state of the science then. I have been following it ever since, awaiting my turn. If CytRx is able to pass the FDA gauntlet, then they have found the Holy Grail. Best of all, the shares have just suffered a 67% pullback, thanks to the spring biotech meltdown.
To learn more about the company and obtain the details, please visit their website: ?http://www.cytrx.com .
Curing of cancer during the 2020?s is a major part of my Golden Age scenario for the coming decade (click here for ?Here Comes the Next Golden Age?).
The kicker here is that there is not just one, but hundreds of companies developing ground-breaking treatments that will come out in the years ahead, many of them just across the bridge from me. This should collapse the cost of health care for the government, and the rest of us as well.
I knew I would live forever!
Remember that buying the shares of a drug company before final approval is always a crapshoot. The last time I did this was with Genentech?s (DNA) Avastin, because I was dating the senior researcher there at the time (tall, long legs, brilliant).
The shares doubled the day they got the green light, and Bank of America flipped from a ?SELL? to a ?BUY? recommendation for the stock on top of a $30 move, tail between legs. That was good.
As we parted ways, the CEO even pushed over his desert, from which his doctor forbade him for health reasons. I gobbled that up as well.
Is CytRx (CYTR) Another Ten Bagger?
?I served seven years as the chair of the Princeton Economic Department where I had responsibility for major policy decisions, such as whether to serve bagels or doughnuts at the department coffee hour,? said the former chairman of the Federal Reserve, Ben Bernanke.
