Ridin' on Max Margin was Mad today...
NE DO NBL - pillars of the Oilpatch community - down 7-8% today.
For those riding on "Max Margin" - that's a 15% to 22.5% hit to capital - ouch~
What do you do on a gap down open the following morning if seen; in those cases ? ... what options would you have ? - hold and wipe out 1/3rd of all your funds ?
Nothing worse than trying to eek out a few extra points at the top into the potential sledge hammer of a .50 basis point Fed hike .
I have come to believe that less than 5% of individual investors are profit takers on rallys; virtually 95% sell on the way down when they have to & buy on the way back up...chasing the dragon endlessly whipsawed.
Risk - it still exists. Sometimes your best gains come from protecting capital.
Nothing is Bulletproof - the OSX & the E&P's were not at $32 Crude Oil, or $3 Nat Gas; the entire sector was able to be bought much, much cheaper than when they peaked at those levels. The Oilpatch is not bulletproff - not back then, not now - not the next time.
And by the way; what is the traditional "anti-christ" to a Bull Market ?
- Hello ? Maybe, Rising Interest Rates ?
PS - when is the last time we had a .50 basis pt hike ?
How many relief rallies have we had on .50 basis pt hikes folks ? - Especially ones into $25 Crude, $3 Nat Gas and the still good chance of $2ish gasoline by summer again that will add fuel to the inflationary fire ?
9% Mortgage Rates, 7%+ Fed Funds - good for the economy ?
.... liquidity needed by companies is drying up. The Post Y2Not monetary clean up can not occur without signficant near and longterm pain.
A "relief rally" ? Maybe, maybe not. More importantly - why ? Why immediately. Ultimately yes; but immediately ????? - you'd have to be asking; did he fire 5, or 6 while looking down the barrel of ole' Clints (Greenie's) .44 mag ?
Why not wait to see if the American Consumer quits buying computers & home electronics, cars, taking airline flights & cruises, shopping at Marshall Fields, buying & refinancing homes etc. ?
Even with the Nasdq pullback; the core of the technology sector is still priced for no allowance of a single stutter step - period.
"T" wavering, MSFT with a cloudy future ?
The Oil's ? 60-80 PE's in may OSX names...
Surely fundamental expectations are great with $25+ crude & $3 Gas; but the major Oils have yet to participate, integrated's are blowing the door's off cash flow, earnings, production, paying good dividends and are still in single digit PE's ?
The OSX & the "name" E&P's ? Well; few have broken thru the "Wall" to significant new highs. Most bounced off, or are teetering toward doing so.
I think we are in a waffle zone untill the next earnings period - buy the bottom of the range & sell into the top. Unless crude oil breaks out surprisingly - there is no catalyst in this overall market environment to have ANY reason to be on ANY margin here, or even to not have allreay been taking profits & being in moderate cash here.
Reality says .50 basis points now and as much as 2 more .25 hikes - especially with the huge resurgence of Oil & Nat Gas Prices !
Can a market maintain record valuation multiples into the face of an abosolute "Denver Boot" being put on the economy ?
...Cash - Bonds & the short side might be the only place to hide in the nearterm. Also, aren't we due - sooner, or later for a significant Bear ? Someday ? Where do they ususally start from (euphoric market tops), when do they usually occur (when no one expects one), what is the ususal catalyst (rising rates) ?
Are we entering a potential Bear Market ? Who knows, but what I do know; is the place to NOT get caught in a true "Bear" - is margined at the top... one can survive by nibble into the downturn, only to exit and wait for support; but get caught leveraged at the top in a market blow off & wave good bye to your capital quickly.
The hardest thing to do for traders is to just step aside and sit out a few games.
Sounds like the smart thing to me - I may be back into the Oilpatch at OSX 100-105 and nibble in tech on the way down.
Gold stocks look real interesting to me. Gold Stocks & Reits performing well, along with the lack of participation of the Oil Majors; that is speaking volumes imho.
Put yourself in the place of those portfolio managers who just took a 25% YTD hit in tech. How quick do you think they'll be on the sell button here. Can they hold thru Naz 3500, 3250 - will they just dump sub 3000, will that dump find support quickly ? How about the ones that clawed back to down just 5-7% here - do they want to risk another qtr of being down 25% YTD "again" ?
Oil's ? Lots of profit to be taken off the table here - lots of it. Funds that are energy heavy can sell and lock in superior gains here; those who aren't energy heavy can sell what they have to raise cash to defend tech prices .
Why ride down sterling performance ? - more importantly; perhaps they aren't sellers; but why would they be strong buyers here ?
Realistically; in the best case scenario - we retrace across the market to lower support levels from a lack of buying as much as a rash of selling.
We saw Tom Galvin of DLJ and the fundies crank the close today to put the brakes on what was getting real ugly, real fast. There was truly a "buyers boycott" as they were calling it on CNBC.
Check out the Cisco chart - CNBC touched on it this pm; classic. Rising volume into the initial bounce, but now volume is moving lower in lockstep to the retrace - not good.
Cisco & Dell report and the Fed Meeting
next week off of the heels of MSFT & "T" going down ?
They can't waver, not a bit imho...
Longterm Naz support on the upward trendline lies at 3000; that's 20% from here and 40%+ to those on margin... I think we revisit it and the DOW see's 9850 and the OSX tests 100-105.
I think I just may sit and watch; do some in & out scalping for a $1 here, or there; maybe a couple of momenteum short rides for the same buck, or two. Should of hit CAM today - a sitting duck...
I think those Fundies who are down 25% YTD would like you to believe in the "Relief Rally" along with the Easter Bunny... I don't see one; but, I'll glady hop on for 50-75% of the ride if there is one, but bet your bippy I'll be among the first ones off.
I hope the Greenie blinks and only bumps .25; because .50 is a full throttle retrace to solid support levels - Naz 3000, Dow 9850, OSX 100-105.
See you there... untill I am convinced otherwise; call me "Mr. Cash" I'm taking a "show me" stance here . It's much,much easier to catch the bounce off support than it is to fight it all the way down - hoping like hell that it comes soon...
Big impact economic news yet to come this week - those who are selling the .50 bp hike is built into the market are hoping "you" give "them" an exit imho...
Watch the 2nd, 3rd tier players on the NAZ melt down tomorrow...
Pray that those econimic indicator's don't bring bad news thurs & friday.
The true flight to safety - is cash. |
