Al..and KM----
The number is very important, I don't see why should we have a 'good number' with new construction strong and economy overall showing no strength of weakening we may still be able to live with a strong number if hourly earnings are benign. If earnings are strong we have a problem at hand, wage inflation will not be overlooked. This will help break this 1282 and 1250 level. If the number is strong and we have earnings in line I think market will test 1330 1335 area but it will still be range bound until CPI is out. Techs will anyway in my opinion out perform the market. I expect based on ECI that wage inflation fears will be put to rest, we may see some volatility but the possibilities that 1282 holds look good. 382 on SOX will hold and I expect that 402 test if number is in line. PSE 511 and DOT 560 remain important levels. However break of 1282 starts a new leg downwards where my first objective would be 1250.
KM...
<< I think this is the best thread on SI. I write your levels down every single day on my
desk calendar and track them religiously>>
Thanks for this very nice remark, I don't know if it is 'best' thread or the worst the jury is still out on this one yet.ggg
However, since my first post the struggle is on with the bears, from 700 levels on SPX to nearly 1400 we doubled in last three years but bears still think they had a great run. Intriguingly enough when market was at 700 the arguments was 'inflation' due to the rising demand. Since 1996 the GDP deflator has been going down, the out put gap and lower capacity utilization indicates that the economy is working at far lower than its potential output. We talk of new paradigm in economy it is not only IT but globally the decisions of government even the socialists to avoid tax and spend policies. The macro changes in approach the conversion of Tony Blair and British Labour part to ideals of Thatcherism! The surpluses instead of yawning deficits all have to seen within the ambit of 'new paradigm'. 1970 and 80 was an era of declining labor productivity, US was gripped in Vietnam and later on economic leadership vacuum the famous 'malaise' era under Carter.
The problem is the lack of awareness of contemporary financial history, when comparison to Nikkei is made it is conveniently forgotten that banks and tangible assets are not selling at multiples of 200 times earnings like in case of Japan. US banks does not have huge exposure to real estate or equity markets, their capital is not tied with Yahoo and Amazon. LTCM hedge fund was a good example, a chaotic winding up would have hit the global markets but with little organized winding up of positions removed a 100 billion $ problems relatively without any major long-term problems. This was amidst global crisis in Russia, Far east and China under threat from hedge funds, they had this keen desire to hit Yuan so as break the peg with HK $. The Yen weakness (153) artificially created and sponsored was an actual double play. To destroy the SEAN currencies and break the peg. Yen weakness was hurting Chinese exports and the speculators thought by getting China devalue we will get the puts on HK $ in the money they were short the markets too.
The 'resolution trust' crisis of mid 80's a 600 billion $ problem is another issue where hype was behind investment delusions. It was resolved at half the cost. The reason being leadership addressing the core issues. Japan and Europe due to cultural habits would hate confronting the issues with surgical precision like US. The sectors like Bio tech. or Internets have 'wavered off tangent' but see the slaughter, the 480 billion $ of cap was reduced to half just recently. This self-adjusting adaptability is just not available in other maniac heights.
I can give many other examples but the fact remains that change of 'politicians' heart the new found love for financial discipline and 'convergence criterion' heart is not fully recognized or understood by the economic pundits. The lack of beneficial impact of lower long term rates at 3% in Europe compared with big boast to employment as the yields dropping to 4.5% on 30 year bond in US can only be appreciated if you see the difference between European and Anglo-Saxon economic model. The former imposes labor rigidity the later releases the firms from rigid structural codes. US policies of hiring and firing of Labor and wage structure provides jobs to everyone but at a low cost. This has resulted in buoyant labor market, strong domestic demand. The lower unemployment with low salaries and robust GDP growth is better than high unemployment with low GDP growth. In Germany the labor market is rigid and you find the 'unemployment at 11% and GDP growth nearing recession with low inflation. US have employment for every one with far lower size of the government intervention, the entitlements have seen a significant drop. Lost of lust for gold, lost of commodity price pressures, peace dividend, end of cold war, integration of China in global trade, new emerging economies like India where demand is robust are other factors one need to know well if this new paradigm of economy has to be fully understood.
This thread engages in kind of debate highlighted above, simple and straight. It is result of such posts that we trade and find bottoms and tops. This thread does have a enviable record if bottoms are to be longed like 8th Oct 98 or 27 Oct 97 or tops are to be shorted we have 1362 and 1380 as selected tops very recently. We are only thread that was long at bottoms 1310 on Comp on 8th Oct 98 'when bond broke at 135' we called the bottom. Also when we hit 855 on SPM on 27th Oct we went long, both these days are here on my thread, no other thread was long.
My stories is consistent and have told my story from 7000 to 11400 with consistency. Yes I have been more long than short but those fools who keep shorting this market for last three years have nothing but some thousands of posts to show which has nothing but bearish sentiment. Are you not suppose to be long in a bull market? I have seen 90% bearish biased posters making decent living on SI, how they make money is beyond me but they keep buying short funds and one of these days if market is down big they get vindicated, forgetting that market is only testing 1230 and not 630 they were expecting on Oct 8th 98.
When we broke out of 1000 my target was 1130, we hit it right on the bull's eye, it was the target which to date remains my best call. That was bhumbo 1. Bhumbo 2 from 1310 to 2550 on Comp was another classic. This was when these gurus were calling this break a false break like they were shorting the market at 1310 on Comp on eventful 8th Oct.
I am not of those guys who have been short 90 out of 100 posts waiting for that big one. I don't keep company of people who like to self inflict wounds and this is the reason they get it on the chin every time they have challenged this thread.
On levels and focus on leaders again I have been in IBM INTC MSFT LU ASND EMC COMS NOK and many more from levels where they were dust cheap we identified the trend that is back the leaders cup winners cup rally was the coinage of this thread and rally it was , we coined this strategy around NDX and made SPM a tool to understand markets not to be whipsawed. Some complain we rarely loose, but why should we, our levels are our guides and we work on them religiously.
One thing I know for sure that from SPM 1130 to 1362 or Comp 1780 to 1310, 2400 or 2360. Or 2020 to 1980 on NDX or 1760, or OSX 48 to 81 or BKX 934 to 902 or 888 or 820, these levels in unison are only available on this thread. RUT 399 402 430 435 and 453 just print them search for them you will find that no one posts these supports and sensible levels on daily basis. Interrelated global levels with US markets is a story which holds well, it is not just printing, no one hit them more often than we do here, and I can see it every day, my posts are rarely answered on the thread. 'Idea' is one of the most back tested thread. I go back to see my mistake everyday. I stick my long neck every morning out and I take great honor in that and also the credit and abuse too when it is unceremoniously hurled. gg
It is not 'hi BI good BI kind of approach' when it is becomes like that I do take the back seat, but take charge immediately when my thread becomes deserted, my input increases with decrease of posts. I am not at all complacent and neither is my trading. I have one rule whatever I write should be traded after I write. I have the honor to say that so far all trades on the thread have a ticket.
I work hard on it and I intend to make it better, the more you work the better it is, 'keep it simple silly' is my slogan. I am story teller and I keep looking around me to find new stories, I enjoy it and my close friends keep encouraging, my PM's keep growing so is my e-mail, it is all thank-you and the show goes on. The vote of gratitude is enormous and I owe it to 'them' to perform every day with best of my ability.
Yes the thread is remarkable, but my father told me only thing that is remarkable is if you have consistency and regularity in your responsibility. For me Idea matures in five years, come hell or heaven I will like Idea to survive and that I will do.
It is 10 minutes to mid night now in Pakistan. I will sleep in next one hour in the mean time I will like to work on strategy since 1305 has become a resistance and we have tested it twice. Before I go to bed, for tomorrow I want long 1250 SPM puts but I don't want to pay for it, I will be 4% away long with a contract of 250,000 $ each but to protect erosion of premium I will sell 1860 put on NDX, nearly 10% away, if I have a dip I will like to take advantage, below 1280 I will anyway buy more puts like 1230's.
I am working on premiums and see that I get $ to $ cover for NDX and SPM puts. SPM is a 250,000 $ contract whereas NDX is 200,000, if SPM put is 9 $ or 2.25$ or 2250 $ per contract 1860 may be 11-12$ or 1100 $ per contract. A bunch of 10 will cost me $22500 long puts of 1250 June SPM giving me 2,500,000$ protection and NDX 1860 will be short 2,000,000 $ below 1860 where I will collect 11,000$. I will pay 11,000$ more however, I will have protection just 4% away and I will be protected net 500,000$ more. The reason I am selling the lower puts is if market rallies I would like to get out of 1860's and expect that 1330 may prove to be good enough a resistance and my 1250 will finally work by 18th June.
This is just a kind of trade I execute and like AMZN I don't sell naked puts but I do make trades where it pays, I write these trades for education and higher skills as you grow in the market you will realize that market is just not about owning stocks, it is these trades.. The best thread should have great trades too, that I will now try to post more often. Regards.
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