During the month of September, we are going to be adding a special section to this site.
The TDI Managed Growth Strategy provides a private “client-only” blog where we discuss the day and our general outlook. Areas that we cover range from current holdings analysis, economic reports, political commentary and more.
The primary purpose of the “client-only” blog is provide information so that clients for whom we manage money will have a better understanding of what is the rationale for portfolio decisions. In addition, the information is designed to be educational so that readers can learn from both our mistakes and successes.
On a daily basis, simply follow www.thedisciplinedinvestor.com or use an RSS reader and point it to : http://tinyurl.com/3u3jahy or http://www.thedisciplinedinvestor.com/blog/category/stocks/insideedition/feed/
2011-09-27
Before reading this, know that I am a bit grumpy today. Not for any specific reason mind you, perhaps just a general Monday malaise.
Part of the reason may be due to the absolute ridiculousness that we are dealing with in a daily basis. There is a constant flow of crappy reporting and twisting of the details on almost every level. While much of this is noise, it seems to be taken as gospel lately. Markets are swaying (in a big way) with every news item.
Here is an example (Reported from Briefing.com):
Apple: CNBC discusses JP Morgan’s note out on AAPL this morning; says JP Morgan is now out trying to downplay earlier note
CNBC discusses the JP Morgan note on AAPL, which they say suggests that AAPL maybe cutting their orders from its Asian supplers for parts for the iPad. The note was specifically about Hon Hai Precision. CNBC says that JP Morgan is trying to play down an earlier note and has told clients they are not cutting iPad estimates and they remain Overweight on AAPL.
Downplaying? Why did they put out the information in the first place then? For just one day, it would be nice to have some form of severe punishment inflicted on those pushing views in an blatant attempt to manipulate. Granted, it would be messy.
Since I am already complaining, have you ever noticed that something odd occurs right at about 2am ET? Probably not – as the normal day/night cycle for many on this side of the Atlantic would put that squarely in the sleep zone. But trust me, from what we see on the charts, 2am is a time that there is a good deal of action when it comes to the Euro and other commodities.
Apparently, it is a time that there are announcements/leaks/rumors made and the time when the 2am Bandit (what I call it anyway) comes out of hiding. Notice the sharp movement of silver, right at 2am.
There is also the 11:30am Marauder that often comes out to play. He is from a distant land and loves to play havoc with the Euro, after most of the European markets close. Between 11:30am and 12:00 pm, he does most of his dirty work. Every once in a while, he will get a few of his close buddies to announce something bold near the end of his shift to really sway the currency. We now have reason to believe that his job is to throw a confusing tone into any trend of the early part of the day in order to profit from the buying and selling that occurs.
Once the 12pm chime rings, he is off to another job. (Of course there are those unusual days that he is called back to duty at the 3pm – 4pm hour in order to shake up some action during the last 60 minutes of trading.
It is not 10 minutes until the end of the 11:30 Marauder’s shift, the U.S. Dollar has moved up about 0.30% up since it hit its low for the day at 11:45am. Of course that also corresponds to the high in U.S. stocks, which have been fading slightly since then.
Update, 12pm and almost to the second, stocks move down by 0.25% in a flash. The USD is starting to break higher as well. Silver, which had a miraculous recovery from the 2am levels, is starting to sell off from its high of $30.50. Breaking below $29.80 is a level that needs to be watched as it would signal a point where support is lacking.
The USD is up by 0.07% on the day and the Euro, which had been positive, dropped into negative territory, below $1.35.
What is the point of all of this blather about the daily motion?
Also, note that Reuters had some commentary about the recent action of the metals:
Gold crashed more than $100 lower Friday as a slide turned into a free fall, with weeks of volatility, renewed strength in the dollar and talk of hedge-fund liquidation wrecking its safe-haven status.
Widespread talk of possible selling by big hedge funds covering losses in other markets set off one of the biggest routs on record. Silver futures, which had attracted even more speculative funds over the past year, closed 18% down, the biggest daily loss since 1987.
Mounting fears this week of a global recession and a deepening Greek debt crisis made investors treat precious metals like any commodity, ignoring the safe-haven appeal that had made them a must-have in times of trouble.
Gold slumped more than 6% at one point ”” its biggest slide since the financial crisis in 2008 ”” to hit early-August lows as this week‘s losses accelerated. The sell-off came even as stock and oil markets stabilized after Thursday‘s rout.
Adding to Thursday‘s losses, gold is down almost 9% over the last two days, while silver has lost nearly 25%. In the case of gold particularly, it was the third-sharpest daily loss in the past 20 years.
“I‘m sure talk of hedge-fund liquidation is helping to pressure things, though there‘s no confirmation of any single fund selling,” said Jonathan Jossen, an independent Comex trader.
Still, gold remains up 16% year-to-date, thanks to gains from earlier months. But silver turned negative, with the spot price down almost 1% for the year.
While in the grouchy mood, let’s not forget about the 2pm Fairy either.
Today, CNBC (at precisely 2pm) came out with a news item (Steve Liesman is being credited with breaking this story):
CNBC reporting a detailed plan is in the works for Europe!!! Hooray!
Although, detail plans of the program will not be released until approval of July 21 EFSF plan. In other words it is a secret… No one can know, but trust them it is in process. (Reminds me of when Paul Kanjorski ran up to a camera during the TARP release and shouted : The Calvalry has Arrived!)
Some of the rumored details include:
— EFSF would be used to shore up bank capital
— It woudl create a European Investment Bank
— It would create a SPV which would issue bonds to purchase debt
— Awaiting approval of the July 21 EFSF program before complete details would be released
Once the wheels started moving at 2pm, there was a short-squeeze that followed. What was negative day for the small-caps and the NASDAQ for most of the day, turned out to be a screaming rally. Out plan to look to get involved somewhere on Tuesday to Thursday may have been foiled as the run appears to be to neatly packaged. Even so, there is a lot to be explained about what is going on in Europe and if this is just one of the same operations that we have seen of late, it will end up being no more than a well planted story that will be discredited within days.
Other than that, there was lighter volume on the day and what we need to see is a few more positive outcomes with broader participation. Short-cover rallies just don’t cut it.
Do I feel better? Hmmm.,,,
