Hydrofracturing in Ukraine

This story came to my attention via Stratfor a few weeks back.
This article from Vinson & Elkins. (whoever they are)

This is another possible reason for the strength of the drillers as we learn of Russian Troop Buildup
from WSJ.

Ukraine will need help with energy. And fast!

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DECK up at Midday

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Dan Niles Likes Facebook

When Dan Niles made the comment that he liked Facebook (FB) yesterday on CNBC that was good enough for me. I respect the man's judgement when it comes to stocks.
I looked at the chart and immediately bought some. Today the "bottom" looks set to hold.

I often disparage dipbuyers. But I buy dips quite often. The difference is that I will sell them fast if they don't perform. I won't fall in love with the "investment".

Here are a couple charts of things to look for when buying a dip.

That 5 minute chart was just a few minutes ago.
Add to a position if we go higher today.
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Not Much Volatility

I have been trading volatility the last few days. I must say that the volatility has not gone up as much as I expected. Whenever something does not do what I expected I take it as a warning at least.
Given where we are in this long bull market, and the sharpness of the recent declines, I expected the volatility to go up faster. Perhaps I am being impatient again. Or perhaps the fear is not as strong and there really is a "rotation" going on.

Emerging markets are strong. The last time there was talk of a taper in Fed buying of govt. debt the EM tanked. Not so much this time. The strength may be a result of commodities strength, but iron, steel, gold and silver are weak....???

I am suddenly not so bearish for the reasons outlined above.
Are you getting dizzy?
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Later... @ 1113 pst

And, by the way, I think gold just bottomed for this move... don't bet the ranch, but the volume in GLD kind of fizzled out.
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Gas production questions?

I ran into this article  while looking at some of the drillers that have remained strong even as much of the rest of the markets were weak lately. That is one thing I pay attention to.    ie, who is strong as the market is weak. They are often the best buys as the market recovers.

The natural gas drillers are a good example.

I have on my screen:
CRK
DVN
SLB
WFT

If the natural gas production starts to decline there would be increased work for the drillers to keep the flow flowing....

All are up strong today, some poised for breakouts.

control risk by remaining aware of time and price...

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Bond bottom?

A chart of the long bond ETF TLT looks like it is getting set to rocket higher.
Why?
I am not sure. But at a time when interest rates are expected to RISE it seems ominous.
Or is it that there may be war in Europe.

I don't know what is causing the interest in safety.
The action in the stock markets seems "odd".
Perhaps it is just me. But it seems as if the patrons are quietly heading for the exits before some fool yells "FIRE!".

I am in the cave. Waiting.

.

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Yen vs. US Tbond

These two charts show a strong recent correlation between strength in the Yen and strength in the US bond market.
At a time when interest rates are expected to rise from the action or inaction of the US Fed we would expect the bonds to decline in price as investors demand higher interest on their money. Such is not the case yet. There seems to be a strong appetite  for US bonds paying 2.7% over 10 years.....

And the Japanese want a weak Yen to keep their exports strong. But the Yen is showing signs of strength.

If the price of US Treasuries is trending higher it seems a sign of a weak economy. And that at a time of reduced intervention by the US Federal reserve bank could mean a time of volatility for stocks.
To say the least.

I expect a drop in the stock averages.

Some day....

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Selling at the Open

There is more selling volume on the open than I've seen in some time.
QQQ down quite dramatically....

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Update 3/21/14

I've been a little off on the markets lately. I have been bearish, and that served me well for the first couple months of the year. The last two weeks not so much.

I watched the buying pressure in FSLR build a few days ago and didn't take the trade. The third day it went up like $12/share. I have learned by experience to not let the missed trades get to me, but they do nag, the risk is that they affect future performance.

Banks finally see some buying the last two days. Citi is still a laggard, BUT....

The frothy speculating in the small caps like PLUG seems to be abating. I noticed yesterday that I was antsy to get outside and enjoy the nice weather here.  I wonder if the big freeze on the east coast caused more people to sit inside and amuse themselves by trading.....

My habit is to always examine how I am feeling about the markets and about traded. If I am feeling a certain way my bet is that others are feeling that way. How do I want to trade vs. what is the profitable thing to do....

The markets are near all time highs again. With the continued angst over a rise in interest rates. I cannot help but think what the macro effect is of a 30 year trend of declining interest rates and a migration of the worlds populace to using stock and bond markets as a way to save for retirement. This happening due to the relentless debasement of all world currencies. What is money? What will hold value? If people were to lose confidence in the bond markets and the stock markets what would be left?
That is the question in my mind as the prospect of rising interest rates looms. Or does it? Thirty-plus years of money creation and wealth accumulation by the top may enable an "extended period" of low interest rates. After all, where else would money go? Does starting a business cost as much as it did in years past? Businesses are more efficient, right?  This may explain private equity funds. It is cheaper to buy a business and fix it than to create a business.
And as money congregates with the rich they will seek rent, and thus put the money in safe bonds. This interest rates stay low until the poor have some money to bid up inflation. Or until the weather changes and makes food scarce. If you get my drift.....

Let's see what the day brings.
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Japan vs. US?

Strength in the Japanese Yen has been a sign of the end of the low interest carry trade that has lifted world markets for years.
Lately the Yen is strong. Lately the worlds stock markets are weak.
But the correlation is not true today as of this writing.

The yen looks set to make a breakout to new recent highs. Perhaps it will not.
Yet the US stock market is up for the second day this week. The stock rally does not feel strong to this tape reader.

Waiting

and this

And then there is this, by way of http://ckm3.blogspot.com/


http://www.theguardian.com/environment/earth-insight/2014/mar/14/nasa-civilisation-irreversible-collapse-study-scientists
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Dear Ms. Yellen

The former Fed Chair was a student of the Great Depression of the 1930's. He used his knowledge of that episode to form his view of what must be done to turn an economy around when in the midst of an debt crisis.
I think he missed a key part of the Keynesian puzzle.

I hear that the Great Depression of the '30s was the result of too much debt accumulated by the people. And that depression dragged on and on. It was still going on when the U.S. joined the WWII fray. And if you think about what happened when we went to war at that time in the midst of a depression we may get a clue about what gets us out of this economic/employment depression.

In WWII we sent all of the ablebodied men, and a few women, overseas in the military. They got some pay from the govt. And at home the govt. contracted with the industrialists for military hardware. But labor was in short supply at home. The women went to work. Labor was in short supply and business had big contracts to fill so labor had some power. The big companies paid good wages and even went so far as to offer medical insurance to employees. But austerity was the order of those years. Goods were rationed and people were strongly encouraged to loan their money back to the government by buying bonds.

At the end of the war people were flush with cash from the govt. spending on the war. And labor had gained traction. And labor kept the strength in the ensuing years as consumption created a booming economy and as those soldiers begat many brats.

Those brats grew up and came to take as normal the boom times that they saw. Those boom times would go on forever, they assumed. And furthermore they were told that those boom times in the economy were the result of American Capitalism, and competition is the foundation of capitalism and labor unions are the anti-thesis of competition. So they gave up their voices in the workplaces and found the joys of credit. Free capitalism and free credit. And the boom times continued....

And now the people have too much debt. They must work at any available "job" due to the shackles of their debt. They have no voice in their work. They gave that away in the name of corporate good. Technology has been used to replace many of those workers leaving those out of work to move down the labor structure until they find employment at a lower wage, displacing the less qualified, who find a bridge by the freeway for shelter and drink themselves into a stupor daily.

Thank God for Capitalism. It is the only path to prosperity. Or is it?

It seems that getting the money into the hands of the people at the bottom of the "food chain" was the key to ending the Great Depression of the '30s. And not just giving it to them, but making them work for it at the same time they gained power in their workplaces to use as the economy improved and to empower those workers to share in the fruits of productivity. In other words to USE capitalism for the good of the people, not the other way around.

In my view, the voice of organized labor is a part of not only a healthy social structure, but part of a healthy competitive economy. An economy that is not simply defined by the "beancounters", but by the sense of wellbeing of the most of the participants in the society. The "American Dream" if you will. The govt debt that is the hallmark of a Keynesian manipulation must go to the bottom of society to be effective. That is where it is spread in the most homogenous fashion and where it can most effectively stimulate the velocity of money that can lead to another round of social/credit expansion.

So, to Ms. Yellen and to Congress. Put the people to work and support them in exerting their power.

inDECKator Update

DECK is tanking intraday. Can the DOW be far behind?
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US Treasuries Flight To Safety

This floor in interest rates represents the floor in stocks.

control risk on every trade even if it contradicts your emotions,
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The Euro Just Crashed

The Euro just tanked.
Did somebody start shooting??

China and Gold

A chart of the Chinese Yuan is here.

There has been a sharp drop in the Yuan over the last few weeks. The Chinese economy appears to be faltering as the growth rate drops. And there is talk of a debt crisis in the country that if true will almost certainly be felt around the world. It remains to be seen how the money flows can reverse and who will be hurt and what the collateral damage may be.

A few posts back I posted a chart of the world production of gold overlain with the Chinese gold consumption. Chinese consumption is equal to world production. This seems to be driving the gold market, finally. Gold has been acting differently for a couple months now.

The point of this article is to consider what happens to Chinese consumption of gold if their economy starts to slow, and particularly if their currency starts a noticeable decline. We know what happens in the U.S. with a protracted decline in the dollar. People started buying gold. And this in a country without a cultural affinity for the yellow metal.

What will happen in China when people notice their money declining in value, the economy slowing, and in the presence of a modern communications system. A run to gold seems not unlikely.

Todays chart:

This chart looks set to go up.

I sold REE, and EGLE that I was working on a position in.
Am long VXX, FAZ (on the Citigroup thing) and YANG

Controlling risk,
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Citi

I will reiterate.
Something is wrong with Citigroup.

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Fannie Mae

Watch this story over the coming months.

Congress is looking for way to do away with the Federal Mortgage guarantees.

This can not be a plus for real estate.

How much of bank collateral is still  in Real Estate?

Banks weak today as well as the general markets.

Fannie and Freddie to go?

Those stocks took a beating today:

VXX looks like a good bet.
Again.
Control risk,
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Feels Stuffy in Here

Things seem a little crowded.

I'm keeping my eye on the door....

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REE now

REE, right now.
$1.79

Next day, 3/11/14.
REE did not jump like I thought it might.
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My InDECKator

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S & P Trend Channel

If we go up from here it will be the worst thing that could happen to the world.

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Buying the Dip revisited

A few posts ago I got pretty sarcastic regarding people who are stepping up to "buy the dips". As the market strongly rebounded it would appear to be a "bad call".

It was not a call on the market. It was an expression of a trading principle.
I do not think it is wise to buy a dip just because it is a dip. If there is a trend in place, and you do not have a position, perhaps buy SOME on a dip. Buy MORE as the security goes to new highs. But it all depends on how it does go to new highs, or whether the dip is on low volume. What also matters is the broader market. Where is the broader market in relation to time. Has the broader market just turned a major corner? Or is the broader market at 5 year highs?
 It matters. Particularly if you have a long time horizon, as most of the "money managers" on the Tellyvision profess to have. If you have a  long term time horizon and you don't own something that has been on a tear for years you have a problem. Not that you HAVE TO HAVE that stock. Do you?

The problem with buying on the dips is psychological. If you buy something that has went down in price you are guessing at a bottom. Assuming that you desire the price to go up. If you are O'kay with being wrong and have a plan to sell the stock at a certain small loss then buying the dip may be smart. But it is hard to pick tops and bottoms. And if you waited to buy something that has been going up for some time you probably feel you don't want to miss the party so you will have a problem admitting error.
 And most fund managers are fundamental based managers. They depend on their research to pick the good companies from the bad. Buying on a dip is a purely technical exercise.

And the quality of a dip must be considered. The recent dips in the stock markets have the urgency that is a precursor of a turn in the markets. They are the raiding parties of the bears, to use an expression from Mr. Livermore. And are thus warnings.

I am not impressed by the general market action today. We will have to revisit the prospect of an interest rate rise at the same time China is perhaps in the beginnings of an debt crisis. We saw what the thought of higher interest rates meant to emerging markets and we know they cannot help our own consumers buy Chinese.
And there is Europe, and the prospect of higher energy and perhaps war.
This is not the dip to buy if you have a long term perspective.
IN my Opinion.
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Rare Elements

The price of the rare earth elements is dependent on supply from China. I see the U.S./China relations deteriorating over the next few years as the Japan/China tensions escalate. And financial difficulties in China may reduce supply. Just guessing here.....


This is the link I came up with after writing the above sentences:

China

But from a technical point of view here is a promising company.
And the chart:

Pace yourself, Grasshopper.

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Early Inflation Feels Good

Things just feel like we are in the early stages of an inflationary period. Gold, Silver, Corn, Wheat, Oil and Nat Gas. All strong, despite or maybe because of international tensions. Despite.

And the stock market keeps roaring. Inflation in effect. Look for the velocity of money to pick up.

The early stages of inflation feel good. The later not so much. Timing? I'll play that by ear. And probably be wrong a few times.....


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ECIG

A very smart man told me to stay away from illiquid stocks. I usually follow that advice.

But, ECIG looks like it is going back to $40.....

This is still part of the marijuana trade....

Speculatively yours,

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3/4/14 The Big Cover

Markets up strongly this morning as shorts cover after Putin says it is "not necessary" to invade the Ukraine.
Of course it is not necessary. The west has no leverage and just the implication of force was enough.

I covered that VXX near the close yesterday just because something wasn't right. That is all I can say. And I know, I should have said something when I did it. Blah, Blah, Blah.... Truth.

DECK didn't rally much yet this morning, but I bot some anyway. It can really rip if it gets going and I can add if needed or sell if needed.....

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ADD:
What I meant to say as I started this was that if there is BIG money that was thinking about reducing stock exposure this is the time to do it. This is a market you can turn around in.
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Crimean History

Crimean History is more than we are aware of and more than the mainstream US media will talk about.

TWTR

Can I be blunt. And perhaps date myself?

Twitter! Who fuckin' cares?!
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Watch the Banks

It is useful as a gauge of the overall health of the stock markets to keep an eye on how the bank stocks are doing. It is not a large sample, but I keep charts of Citigroup and Bank of America on my screen every day.
In addition to the weakness that has occurred in Citi, probably for the reasons that are widely known, Bank of America (BAC) is looking weaker than usual and there appears to be some distribution.

We are long overdue for a pullback in the broader averages as well as the banks. Particularly when considering that artificially low interest rates seem to have been the impetus for much of this 5 year rally in stocks. There is mixed evidence of the economy improving, but that not withstanding, interest rates will have to be allowed to resume a more market influenced rate sooner or later and that will probably cause a period of volatility.

BAC:

Control your risk by limiting losses on any and every trade.
Otherwise you are an investor.
Know the difference.
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