Global Market Comments
March 10, 2014
Fiat Lux
Featured Trade:
(THE MARKET LEADERSHIP CHANGE HAS BEGUN),
(XLK), (XLV), (AAPL), (XLF), (BAC), (GS), (JPM), (GM), (F)
(WATCH OUT! YOU PC IS WATCHING)
Technology Select Sector SPDR?? (XLK)
Health Care Select Sector SPDR?? (XLV)
Apple Inc. (AAPL)
Financial Select Sector SPDR?? (XLF)
Bank of America Corporation (BAC)
The Goldman Sachs Group, Inc. (GS)
JPMorgan Chase & Co. (JPM)
General Motors Company (GM)
Ford Motor Co. (F)
Owners of technology (XLK) and health care stocks (XLV) have certainly had a great year.
Except for the round of profit taking that did a quick hit and run in January, these two groups have been moving from strength to strength, punching through to multiyear highs.
That is, until last week.
Starting with the Ukraine induced plunge a week ago, these two leadership groups have started moving in a rather arthritic fashion, substantially underperforming the S&P 500 (SPY). It is all unfamiliar territory for these golden boys.
You also see this in the broader indexes, with NASDAQ starting to trail the main market for the first time in ages. This is why Mad Day Trader Jim Parker shot out Alerts to buy protective puts in the (QQQ) with a one week view.
Is the bull market over? Should you sell everything and immediately go into cash? Is it time to go hide under your bed?
I don?t think so.
All we are seeing is a long awaited leadership change in the market. Tech and health care will throttle back from their torrid pace. It doesn?t mean that these sectors are now to be given up for dead. You should wallpaper your spare bathroom with high tech share certificates (as I once did with my Japanese equity warrants after their crash). They just need a rest. This is why I skipped Apple (AAPL) in my latest round of ?RISK ON? Trade Alerts.
In the meantime, financial stocks (XLF) have moved to the fore to grab the baton after a two-month rest of their own. This is why I sent you Trade Alerts last week to buy Bank of America (BAC), Goldman Sachs (GS), and General Motors (GM).
A shift like this makes all the sense in the world. Bonds (TLT) were great performers in 2014 until a week ago, when they double topped on the charts at $109. That was the logic behind sending you my Trade Alert to sell short bonds.
When bonds fall, interest rates rise, some 20 basis points on the ten year Treasury bond in a mere five days. Who does well when rates rise? Banks, which can now charge more for their loans while the cost of funds, the deposit rates you earn, are still close to zero. That widens bank profit margins, increasing profits. The technical term for this, which you will hear about on TV, is the ?steepening of the yield curve.? Bottom line: buy bank stocks.
They could rise a lot. If Treasury yields back all the way up to 3.05% and the (TLT) revisits its $101 low, the bank shares could go on a real tear. Jim Parker?s medium term target for (BAC) is $23, up a robust 30% from here.
I already have written up a Trade Alert to pick up another bank, JP Morgan (JPM). But I will sit on it until I can catch a dip in the share price, even a piddling one.
And what about the autos? The message shouted out as loud and clear by the red-hot February nonfarm payroll print of 175,000 is that the economy is stronger than anyone thinks. This is an out there view, which I have been arguing vociferously since the summer.
The ferocious winter will no doubt cost retailers some clothing sales. No one is looking to buy a new winter coat in March. Year on year, Chicago has gone from six inches to an astounding seven feet of snow, and I?m told that everyone there is in an unspeakably foul mood, throwing empty bear cans at the TV set when the weather man appears.
This is not so for the auto industry. If buyers couldn?t find their local dealers under the snow, they will return during fairer climes with a check to take advantage of record low interest rates. At the end of the day, buying a car on dealer credit, or a lease, is a nice way to indirectly short the bond market, which we all know, is now in a new 30-year bear market.
Despite the endless blizzards that kept much of the east buried this year, the auto sales figures have held up surprisingly well. The industry is now running at a 15.7 million unit per year annualized rate, up from the 9 million unit trough seen in 2009.
It all sets up a nice upside surprise in carmaker profits after the spring thaw. You want to go out and purchase the entire sector, including General Motors (GM), Ford (F), and all of the subsidiary parts suppliers.
But Which One is On Sale?
Hey! You there, staring at this monitor. This is your PC talking to you. No, not you over there standing in the background. I?m talking to the guy sitting in front of me poking at my keys. Ouch! That one hurt!
So you thought no one was watching, did you? Let me straighten you out. About a month ago you clicked on a certain website, and I installed myself as a cookie on your computer, which is an innocuous little text file that you can?t see.
Since then, I have been tracking your every move, recording websites you clicked on, the pages you visited, and the stuff you ordered. I then used this handy little algorithm to build a profile of exactly who you are. I now know you better than your own mother. In fact, I know you better than you know yourself.
For example, I am aware that you make more than $250,000 a year, live in a posh zip code in San Francisco, belong to a fancy country club, and drive a Mercedes. You donate to Republican political causes, send your kids to a prestigious private school, and bill it all to an American Express Platinum Card. Did I leave anything out?
Because I know every detail of your life, down to your inside leg measurement, I am able to harness the power of this machine to more precisely service your every need. That includes directing advertising to you, which you have a high probability of clicking on.
The more you click on my ads, the higher prices I can realize for those ads. The ad campaigns you now see are unique to your own personal computer because they are tied to your IP address. My program, called ?behavioral targeting? is the next ?big thing? in online advertising. It?s all part of the brave new world.
I see you have been shopping for a new car. Check out the new Hyundai at http://www.hyundaiusa.com/ , which offers the same quality as your existing ride, at half the price. Your clicks this morning suggest you?re taking your ?significant other? out to dinner tonight. Might I suggest Gary Danko?s on Bay Street at http://www.garydanko.com/site/bio.html ? The rack of lamb is to die for there.
Your visits to http://www.travelocity.com/ and http://www.expedia.com/ tell me you?re planning a vacation. I bet you didn?t know you can find incredible deals in Las Vegas at http://www.visitlasvegas.com/vegas/index.jsp . Thinking about buying a condo there? They?ll even pay for the trip if you promise to check one out while you?re there.
Since we?re chatting here mano a mano, I noticed that that last pair of jeans you ordered from http://us.levi.com/home/index.jsp had a 42-inch waist, up from the 40?s in your last order. Better lay off those cheeseburgers. Pretty soon, they?ll be calling you ?tubby? or ?fatso?. Better visit http://www.weightwatchers.com/Index.aspx soon, or the legs on that chair might buckle out from under you.
Worried about privacy? Privacy, shmivacy. There hasn?t been privacy in this country since the first social security number was handed out in 1936. And don?t expect any relief from Congress. I doubt half those dummies even know how to turn on their own PC?s.
Don?t even think about trying to delete me. I?m a ?flash cookie?, an insidious little piece of code that reinstalls every time you try that. Think of me as a toenail fungus. Once you catch me, I?m almost impossible to get rid of.
I hope you don?t mind, but I?ve been passing your personal details around to some of my buddies at other websites. That?s why when you clicked on http://www.nfl.com/ you got deluged with product offers from your local team, the San Francisco 49ers. I?ve got friends at Google, Facebook, MySpace, and pretty much everywhere. Can I help it if I?m a popular guy? I bet the view from those 50 yard seats is great, isn?t it?
I noticed that your spending habits don?t exactly match with the income you reported on your last tax return. Do you think the IRS would like to know about that? I bet you didn?t know the agency offers a 10% reward for turning in tax cheats.
How did you like those triple X DVD?s you bought last week? Whoa! Hot, hot, hot! I hope your employer never finds out about those. It might not go down too well at your next performance review.
I thought it was lovely that you bought your spouse a two carat, yellow, vvs1, round cut diamond ring for $26,000 from http://www.bluenile.com/ for your 30th wedding anniversary. But who is Lolita, the Argentine firecracker, in Miami Beach? Does the old wifey know you sent her a $2,000 pair of diamond stud earrings? What?s it worth to you for me to keep mum on this? Maybe you should take a quick peak at http://www.divorcelawfirms.com/ and see what you?re in for?
Naw, I?m just pulling your leg. This is all just between friends, right? Think of it as a doctor/patient relationship. I?ll tell you what. See that leaderboard ad at the top of the page? Just click on that and we?ll call it even. Oooh that felt good! Click it again. Oh, baby! Not too many times. You?ll trigger my anti click fraud program.
Now you see that wide skyscraper add over on the right? Click on that too. Oh baby! Click it again! And there?s a little button ad at the bottom of the page. No, not that one. A little lower. What was that little cutie?s name in Miami again? Aaaaah.
Global Market Comments
March 7, 2014
Fiat Lux
Featured Trade:
(MARCH 12 GLOBAL STRATEGY WEBINAR)
(LAS VEGAS WEDNESDAY, MAY 14 GLOBAL STRAGEGY LUNCHEON),
(TESTIMONIAL),
(REPORT FROM AUSTRALIA)
Las Vegas Wednesday, May 14 Global Strategy Luncheon
Come join me for lunch for the Mad Hedge Fund Trader?s Global Strategy Update, which I will be conducting in Las Vegas, Nevada on Wednesday, May 14. A three-course lunch will be followed by a PowerPoint presentation and an extended question and answer period.
I?ll be giving you my up to date view on stocks, bonds, foreign currencies, commodities, precious metals, and real estate. And to keep you in suspense, I?ll be throwing a few surprises out there too. Enough charts, tables, graphs, and statistics will be thrown at you to keep your ears ringing for a week. Tickets are available for $218.
I?ll be arriving at 11:00 and leaving late in case anyone wants to have a one on one discussion, or just sit around and chew the fat about the financial markets.
The lunch will be held at a top restaurant at a major Strip casino. The exact location will be emailed with your purchase confirmation.
I look forward to meeting you, and thank you for supporting my research. To purchase tickets for the luncheons, please go to my online store.
Global Market Comments
March 6, 2014
Fiat Lux
Featured Trade:
(ORLANDO FLORIDA SATURDAY, MAY 17 GLOBAL STRAGEGY LUNCHEON),
(A SPECIAL OFFER FOR AUSTRALIAN SUBSCRIBERS),
(IT?S PEDAL TO THE METAL ONCE AGAIN),
(SPY), (IWM), (DAL), (GE), (EBAY), (GILD), (GS), (BAC), (DBA)
SPDR S&P 500 (SPY)
iShares Russell 2000 (IWM)
Delta Air Lines Inc. (DAL)
General Electric Company (GE)
eBay Inc. (EBAY)
Gilead Sciences Inc. (GILD)
The Goldman Sachs Group, Inc. (GS)
Bank of America Corporation (BAC)
PowerShares DB Agriculture (DBA)
Come join me for lunch for the Mad Hedge Fund Trader?s Global Strategy Update, which I will be conducting in Orlando, Florida on Saturday, May 17. A three-course lunch will be followed by a PowerPoint presentation and an extended question and answer period.
I?ll be giving you my up to date view on stocks, bonds, foreign currencies, commodities, precious metals, and real estate. And to keep you in suspense, I?ll be throwing a few surprises out there too. Enough charts, tables, graphs, and statistics will be thrown at you to keep your ears ringing for a week. Tickets are available for $228.
I?ll be arriving at 11:30 and leaving late in case anyone wants to have a one on one discussion, or just sit around and chew the fat about the financial markets.
The lunch will be held at a major resort hotel 20 miles to the southwest of the city.? The exact location will be emailed with your purchase confirmation.
I look forward to meeting you, and thank you for supporting my research. To purchase tickets for the luncheons, please go to my online store.
Executing the Mad Hedge Fund Trader?s Trade Alerts from the other side of the world can pose some annoying challenges. After speaking with many of my Australian followers on my recent trip down under, I learned of the obstacles presented by distant time zones, dealing in foreign currencies, regulations, and obtaining live customer support.
I want to make my service easy for everyone to follow. Execution of my Trade Alerts should never be an issue. The Mad Hedge Fund Trader has therefore tied up with Halifax Investment Services Limited, an established local broker, to provide support and execution serves for my Australian followers.
Halifax possesses an Australian Financial Services (AFS) License from the Australian Securities & Investments Commission to provide brokerage and custody services. It is a member of the Australian Stock Exchange. It has a relationship with the American firm, Interactive Brokers, which gives it access to state of the art online executive at competitive commissions.
Halifax can open trading accounts, Self-managed superannuation funds, or any other type of account. It also offers a wealth of educational resources you can use to improve your own trading performance.
If you open a brokerage account with Halifax they will provide the following for you:
1) Custody of your Australian dollar funds in a safe, segregated account.
2) Personal customer support from a professional financial advisor in your time zone who will explain the fundamentals, the logic, and the risks involved in every Mad Hedge Fund Trader Trade Alert. They will invest the time and energy to make sure you can execute these trades online on your own.
3) The ability to hedge out foreign currency risks in your trading.
4) Halifax can execute the full range of trades recommended by the Mad Hedge Fund Trader with the greatest of ease. These include stocks, bonds, commodities, foreign currencies, precious metals, exchange traded funds (ETF?s), options, and option call and put spreads.
Halifax is a well-capitalized firm. It does not engage in any trading for its own account. It is the subject of regular audits by its regulator. All cash accounts are insured in value up to AUS$250,000. In other words, it is a financial institution where you can place you life savings and sleep well at night.
To avail yourselves of these services, please open an account with Halifax Investment Services Ltd. by clicking the following: ?http://madhedgefundradio.com/hisl-australia/. Scroll down to complete a form with your basic information. Within a few days, you should receive a phone call from a Halifax financial advisor who has been assigned to provide you assistance.
Good Luck and good trading!
If the prospect of WWIII can?t knock this market down, what will it take? A giant asteroid that destroys the earth?
I would have used ?Balls to the Wall? in the headline for this piece. But as this is a family oriented newsletter I opted for the more politically correct screamer.
Even the most hardened and seasoned traders, like me and Mad Day Trader Jim Parker, were stunned by how fast the markets bounced back from Monday?s war scares in the Ukraine. Of course, everything I said in my Monday letter came true.
It would have been nice if the recovery stretched out over a longer period of time, giving me better entry points for my Trade Alerts. But that was not to be. Too many people are still frantically trying to get in this market. There are oceans of cash everywhere earning virtually nothing. It seems the new trading strategy is that if something hasn?t gone down for three days, you buy it.
Bizarre as it may seem, the weather is emerging as the big driver of markets this year. Even the Federal Reserve is now saying that the weather was a big drag on the economy. This means that every negative data point for the next few months has a great excuse to be ignored.
It also means the growth which was lost in Q1 will get added back in during Q2 as the economy plays catch up. This has the potential to create a growth surge, possibly from a 1% annualized rate to as much as a 5% in the spring.
It is inevitable that this would trigger a major spike up in all risk assets. This realization is rippling throughout the markets to create one of those ?Aha? moments, much like we saw last October, when it became obvious that the indexes would melt up for the rest of 2013. Fasten your seat belt!
If you have any doubts about this scenario, you better take a look at the commodities markets, both hard and soft (DBA). After a dreadful three years, the chart now has the trajectory of a bat out of hell. What might cause this? How about a global synchronized economic recovery that boost US growth by a full 100 basis points or higher in 2014?
So I am going to take advantage of the pre Friday nonfarm payroll doldrums to start loading the boat with positions and scaling up risk. That?s why I picked up General Electric (GE) and Delta Airlines (DAL) today, classic cyclical names. Also on the short list are EBAY (EBAY), Gilead Sciences (GILD) for another visit to the trough, Goldman Sachs Group (GS), and QUALCOMM (QCOM).
Today?s new trades graciously turned immediately profitable, taking my performance up to yet another all time high of 134.41% since inception, and a 2014 year to date gain of 11.91%. That improves my average annualized return to a stratospheric 41.4%. Incredibly, after last year?s torrid 68% profit, my performance is getting even better. It appears that, like a fine Napa Valley wine, I improve with age.
Yes, I know you have been told by the talking heads on TV that stocks are expensive, and that a crash is imminent. Personally, I think equities are cheap and that we are on our way to a Dow Average of 100,000-200,000 by 2030 (no typo here). I will keep that view as long as the stocks that I am buying pay higher dividends than the ten-year Treasury yield (TLT), now at 2.69%.
To support my view take a look at the chart below produced by my friends at Business Insider. It shows that the share of technology names, the lead sector for the entire market, trading at more than five times sales is below 40%, a fraction of the 2000 peak.
I think we have to match, or exceed, this peak before the party is over and the lights get turned out.
Global Market Comments
March 5, 2014
Fiat Lux
Featured Trade:
(CHICAGO FRIDAY, MAY 23 GLOBAL STRAGEGY LUNCHEON),
(LUCKY FIND SPARKS NEW CALIFORNIA GOLD RUSH), (GLD),
(THE DIFFERENCE BETWEEN MAD HEDGE FUND TRADER AND MAD DAY FUND TRADER),
(THE NEW CALIFORNIA GOLD RUSH)