May202014

Dollar, Pound, Euro, Yen, USD/CAD

May192014

Chart is a possible blow off top path…only a few believe probable.

6AM

China’s Real Estate Bubble and it possible consequences

This is a guest post from my friend of many years, Unni.  It gives possible scenarios to the Chinese stock market chart at the bottom.

Scenario A:  Sudden Collapse of the Real Estate Market in China

There have been discussions on the risks currently built into the real estate market in China.  The consequence of this bubble breaking (suddenly) and its ripple effect within China’s economy and global markets, can be of serious concern to many investors, economists and global leaders. 

The Chinese banks are largely owned by the government of China, as a major or key equity holder.  The Chinese banks heavily loaned money to developers, builders and real estate companies in China during the boom period last decade.  Many of these real-estate-companies are sitting on inventories of buildings with no takers, under-construction projects with few buyers and markets where prices have gone way too high for affordability of prospective buyers.  This in effect has stretched their balance sheets and their debt servicing ability. 

In the event of a sudden collapse in the Chinese real estate market the direct impact will be felt by the government, which will be forced to write off Non-Performing Assets (NPAs) and Bad Debts, from banks to the real estate market.  This worst case scenario would likely lead to bank failures.  As the banks begin to write off debts or NPAs, the government is forced to re-capitalize these banks — propping up these sick banks with more capital. 

The Chinese government budgets and the amounts spent on infrastructure projects will also take a downward squeeze.  This will have major impact on Chinese trading partners:  USA, Europe, Japan and Australia.  Countries which fund, sell equipment and services to the infrastructure markets in China will be greatest hit.  The various economic barometers of the Chinese economy will also take a serious hit:  currency rates, unemployment, retail spending, interest rates, trade current account, etc.  The US money market that is pumped up and held up by over USD 1 trillion of Chinese government investment can see short term attack — with hot money exiting back to China to shore up the local economic situation.  If this capital flight from US money market to China coincidences with withdrawal of Quantitative Easing in US, then unfortunately the combined effect can be a double whammy in USA.

Scenario B:  Gradual, Planned and Managed Bubble Pressure Release:

One would think the Chinese government planners are already thinking about ways to manage this bubble:  to prevent a possible, sudden and catastrophic collapse and run on the poorly capitalized banks or banks with huge NPAs.  The Chinese planners are better off conducting a stress and quality test of their government owned banks.  On completion of the triage, they would be well advised to shutter (be sold off/merged) smaller banks with huge NPAs and re-capitalize mid-large banks with sizeable NPAs.  Such a managed recapitalization approach will auger well for the Chinese economy and prevent “too large to fail” situation that happened in USA.

image

May152014

Market is at a key decision point

Tech 100 continues to chop aimlessly as they trace out a possible right shoulder.  The PO of the blue wedge is the neckline ot 3450.  That would complete a valid head and shoulders.  and really debullishize the situation.  PO of the large h&s is 3150…rough! It likely would lead to another recession. So stakes are high.  The good news for bulls is that failed h&s are come at critical junctures.image

image

I think this guy sounds pretty tight on the GOLD analysis.  I like his 7 year cycle theory.  Bo Polny - predicting gold finishes 2014 strong.

April42014

Was friday a key reversal?

Long time, no chit-charts. Chart freedom reset for me!  Adjusting to east coast, settling into home. Challenging each other to step out of the comfort zone every day.  Using the time away from twitter (and trading) to focus more time on real world experiences, work and goals.  Striving to stay in the present moment - to be here in the now.  Friend ask me to look at the std & pooors.  My mind cannot resolve copper (world demand) with US equity indexes.. Commodities usually kick off later in the cycle. Stay sharp mes amis.

Musique vous guérit 

October42012

Crude prices were spectacularly smashed yesterday on news that US production hit 15yr highs and consumption was down.  Looking at the brent crude daily chart it appears that brent has broken out of a small bear flag.  However, zooming back and looking at the weekly chart (above) it looks like crude is still settling within a very large consolidation pattern.

Additionally have a look at brent’s term structure.  This is a very bullish structure in sharp backwardation.  Syria and Turkey lobbing bombs at each other.  Iran currency collapsing nearly 60% in one week?  What’s going on?!? 

What’s going on is brent is on sale and about to go higher in my opinion.

Gasoline futures appear to have had a false breakout yesterday of a large bearish head & shoulders on the daily chart: http://imageshack.us/photo/my-images/337/78773793.jpg/  From false breakouts fast moves in the opposite direction can and often do occur.

The US Dollar has worked off its oversold situation by creating what appears to be a large bear flag.  Today could be the day it let’s go and breaks out of this bearish formation — right on time during the most seasonally weak period for it between now and Christmas: http://imageshack.us/photo/my-images/855/71950307.jpg/

SPY chart in front of tommorrow’s non-farm payrolls: http://imageshack.us/photo/my-images/402/spyi.jpg/ (possible expanding wedge, bull flag breakout)

Gold continues to toy with the $1800 dollar resistance level.  Gold in Euros and CHF approaches all time highs.  Gold stocks sit still in a large symmetrical triangle awaiting direction of the NFP outcome: http://imageshack.us/photo/my-images/211/gdx.jpg/

Update on TLT after the fed minutes it continues to drip lower: http://imageshack.us/photo/my-images/88/tltc.jpg/

July32012

Commit To Change

A couple of months ago I mentioned that I had adopted a few things to get more organized for a few projects I started working on this summer. Some techniques were old, some were new versions of older systems like the Pomodoro Technique.  I mentioned on Twitter that I would try to summarize the system for anyone that may be interested.  Warning: this post is probably not for 95% of my readers.  It’s very detailed, rather prescriptive, but i just jotted down some thoughts quickly tonight to trying to get this out to a few people that said they would like to see what I had adopted. 

The beginning is rather a collection of ideas and sort of philosophies I’ve come across. I’ve given links to most of the material. So when you read the information below, assume that its from one of the sources linked…sort of the cliff notes.  I figure even if it helps one or two people make a positive change in their life, it was worth the effort to put this blog post together. 

INNER DIALOGS

Traders often view the level of their worth by the performance of their trades.  Bad performance can lead to a feeling of worth-less. The self critic is always the harshest.  What you produce is not your complete ability.

Your mind is a thought machine, it is not awareness you are the awareness, by itself, it is just a machine. The mind is like four wild horses running free pulling a chariot and rider without reins.  You need to take the reins. Your inner dialog is NOT in control…your awareness is in control.

People tend to procrastinate to escape inner conflict and anxiety.  It reduces tension temporarily by removing us from something that we view as painful or threatening.  Fear of failure, perfectionism and fear of success can all contribute to this destructive habit.   Breaking these types of habits requires a strong commitment, conscience choices, full responsibility for the outcome and an accurate self-awareness. 

Keep a procrastination log for about a week or however long you find it useful (see “LOG” worksheet in Excel sheet link near the bottom).  I read about this suggestion in The Now Habit by Neil Fiore.  Identify the negative self talk or rationalizations that are stopping you from getting started.  Replace them with a focus on one small step:  25 minutes of uninterrupted work on that task. 

Start changing your inner dialog into positive, productive, clearly communicated choices.  When is it that you will start again? Eventually, you will likely realize the insane lengths that you went to in order to avoid the pain you associated with the particular task. 

You will continue to procrastinate (including working on low priority items) until you adopt a strategy that allows you to find full satisfaction in working on your highest priority tasks. 

PLAY HARD, WORK EFFICIENTLY

"Life is what happens to you while you’re busy making other plans."  — John Lennon

Regularly set aside time to play/relax…this is a must. It may seem paradoxical, but looking forward to regularly planned personal downtime is an extremely motivational and a rewarding tool for getting your work done. Schedule time to exercise, vacation, read a book or the paper, go out to eat with friends, etc. 

Neil Fiore call’s this “your proudly earned guilt-free play.”  Stop putting off living due to procrastination; avoid the vicious cycle of your life being “on hold”.  You can manage your time better and have plenty left over to accomplish the things you really want to do.  Work will not deprive you of the enjoyment of life if you incorporate guilt-free, regular play.  Schedule these rewards first and then plan your work around it.

YOUR MISSION: DEVELOPING YOUR GOALS

"People with no goals are doomed forever to work for people who do." — Brian Tracy (@BrianTracy)

"Dream big dreams; only big dreams have the power to move men’s souls." — Marcus Aurelius

I think it’s important to have a clear set of goals.  Start with writing down the following and review/refine them once every few days (it only takes 10-15 min):

  • Bucket List:  30 Things you want to BE before you die
  • 30 Things you want to DO
  • 30 Things you want to HAVE

Some goals will be small, but don’t be afraid to make big life long goals. What would you like your legacy to be — what people remember about you?  A goal without a burning desire or purpose, is just a potential reminder to nag you where you settled or dropped the ball yet again. 

Know your outcome and find the beliefs that support it before you take action.  What I’ve found useful is the visualization of goals in bright, larger-then-life, intricate detail.  The more often and clearly you can envision these goals, the more likely your chances of actually obtaining it. There are probably several books that discuss this; I have tried to adopt Anthony Robbins’ method which I read about years ago in Unlimited Power. 

Don’t become the hapless traveler carried along the stream of life with little direction or clear path. Nobody cares about your lot in life more then yourself.  Exercise choice, including the ability to say no to things you don’t have time or desire to do.  Goals are extremely important, but at the same time realize it’s a waste of energy to constantly focus on a particular (especially “vague”) goal: focus on the process, stay in the present.

It’s critical to break apart daunting projects/goals into manageable steps or tasks.  The more vague and overwhelming it is the more likely you are to avoid getting started.  Get started on the first step; have faith that the next, small steps will reveal themselves as you get more involved in the task at hand.  One small step at a time in due course. 

I could write several pages about perfectionism.  Suffice to say there is no “perfect” unless you believe in a higher being.  It’s perfectly human to make mistakes, you will never achieve “perfection” so get over it and move on. Perfection is ever changing, so abandon this idea of perfection…it’s a ghost you will never find. Criticizing your mistakes makes “failures” only more likely.  It’s human to be imperfect so try to be imperfect by unlearning.

COMMITMENT TO START - THE POWER OF CONSCIENCE CHOICE

"Things do not change; we change." — Henry David Thoreau

Choosing to do something, rather than avoiding it or arguing about it is empowering. As my father likes to say: "There is only one, small letter separating bitter and better — yet a world of difference between these two choices."

Replace “I must finish” with “When can I start (again)?” This leads to the importance of planning.

First schedule your high quality, guilt free play.  Also, make the periods of work shorter and the rewards (breaks) more frequent. Make sure you reward your milestones along the way, regardless of size. 

Stay in the process, stay in the present - the worry goes away. The past (analysis) cannot be changed and the future (anticipation) can only be changed by the present.  It’s amazing when you knock off something that’s been bugging/screaming at you from your “to do” list for months, maybe years…and it took less than 30 minutes of focused commitment to accomplish it.  It’s very empowering.

HOW MUCH CAN YOU GET DONE IN 25 MINUTES?

Spending over a decade as a consultant, I realized early the importance of project management and accurate tracking of billable hours / tasks performed.  Without some sort of documented history and clear, workable plan, the hours and days just melt into one another.

I’ve tried a lot of different systems over the years and by far the best I’ve found for time management is a technique called “The Pomodoro Technique”.   If you want to improve your productivity and time management I highly recommend downloading the free PDF book at the bottom of the page at the above link and putting it into practice for at least a month - every day.  I like to say it takes three months to make a habit.

It’s a great technique, you can get an overview by it by reading the cheat sheet.  If you need to get a lot “shit done” and have been struggling to get started, this system works well. 

You can buy a kitchen timer (i.e. the Pomodoro), but I found this free focus booster app works good for me.  While you are at it, download the free version of Rescue Time monitoring tool to see how much time you are currently wasting every day on your computer.

I use an Excel spreadsheet to track my daily schedule. You can download  it here:  July Schedule (File/Download) - Maybe you will find that it is of use to you; if not, figure out a way that works:

  • Read the Pomodoro Technique for details on how to use/track
  • Each day is a separate worksheet/schedule
  • Copy the worksheet “Template” to create a new day, label it MMDD (e.g. 0704)
  • At the end of each day copy completed tasks to the “Records” worksheet and remove the tasks also from you task inventory (MS Office Task Manager, Evernote, Google Tasks, Excel, etc)
  • Each month is a new workbook
  • Use the Tally Worksheet (Pivot Table) to summarize the “Records” information

SOME ADDITIONAL TOOLS THAT I USE

I use a combination of tools — the key is to find something that works for you.  Here are some tools that I found useful:

  • An everyday, comfortable watch
  • Regular exercise at least 30min a day; make it routine, plan for it.
  • These simple breathing and mediation exercises help with relaxation and focus
  • Microsoft Outlook’s Task Manager to inventory “To-do’s” (I synchronize this with my iPhone). Organize tasks by category types, put details of tasks in the body of the task. Record estimated and actual hours spent, prioritize tasks. Filter out tasks that are completed from your view, but save them for reference.
  • Microsoft OneNote for more detail projects, for example a job search or a complex project
  • Evernote is a great free app that can be used to record information and can be synchronized to your phone.  For example, I use this to keep track of my goals and other non-tasks.

The choice is yours, whether it’s a positive change or some other alternative.  If you have questions about the spreadsheet or have other similar strategies that work well, I’d love to hear about them.

Good Luck and remember that: this Mission is uniquely yours…

Rick

February162012

I wanted to give an update why I didn’t bail on my EURUSD long yesterday/this morning. First I got in near the lows, so i have room for error on my swing trade. I also was anticipating resistance on the green dashed neckline that the bears are hyper focused upon. This is why there are near record shorts on this currency pair as per COT (and they probably added this week through Wed, due out Friday). It isn’t enough for me to sell due to this first test of key resistance.

The first time you hit these support/resistance rails you can bet there is going to be a pullback. That’s the way S/R levels work. I have a much more longer term mindset then most traders. I don’t get in a currency swing pair unless I can get at least 500pips and hopefully 1,000 or more.

You will notice at the bottom of each chart I have highlighted where the Relative Momentum Index was trading this morning. Weekly — it’s clear there is a lot more room before it’s close to overbought. 4hr chart: it was at a bombed out 7 on a scale of 0-100 (big buy signal) and the hourly was under 5. All three time scales were on buy signals. This is not area that you sell long positions. Doesn’t mean this trade will be blue skies ahead, but not a reason either to panic out of a working swing trade.

Hope this tip helps some of you in the future.

Regards,

Rick

P.S. the commerical big banks have cast a large net on the EURUSD shorts taking the other side of the trade or many months. Big hedge fund tunas are trapped in their net: http://bit.ly/x37JfD Sushi time cometh!

August12011

Real Estate REITs … A double dip will crush them

I made a list of the ones that look the best to me from the short side: all REITs

 

This is based on:

Large market cap (options available),

High forward price/earnings ratio; the higher the better, but over 30 min

Elevated debt/equity ratio, preferably > 1.25

Reasonable short float right now – I don’t want to short something that’s already heavily shorted (8% of short is my cutoff)

Charts that look questionable (either they are sky high in need of breather or they are breaking down)

 IYR - Real Estate ETF: IYR

These are the ones I think look the best from my scans:

 

1.       SPG – Simon Property (already short, commercial retail) $35.4B, forward P/E 41, Debt/Equity: 3.59; low cash; short float  4.5% (con: super strong though..great relative strength on the weekly chart, bearish rising wedge on daily chart)

2.       EQR – Equity Residential Props (residential) $18.6B, P/E 62; D/E: 1.83; short float 4.6% // good relative strength lately

3.       BXP – Boston Properties (office); $15.6B, P/E 48; D/E: 1.69; short float kind of high 7.4% // con: good relative strength on weekly

4.       ESS – Essex Property Trust (residential) $4.6B, P/E:95, D/E: 2.0, Short 6.8% // con: good relative strength on weekly

5.       HST – Host Hotels & Resorts (hotel) $11B, P/E: 396, D/E 0.89; Short float: 6.4% // weak relative strength

6.       CPT – Camden Property (residential) $4.7B, P/E: 80, D/E: 1.48, short 2.5% // new all time recent highs

7.       HR – Healthcare Realty (heatlh) $1.4B, P/E 89; D/E: 1.43, short 5.9% // serious dog

8.       OFC – Corporate Office Props (office) $2.2B, P/E: 36; D/E: 2.0, short 4.8% // rolling over, looks bad

9.       KRC – Kilroy Realty (office) $2.3B, P/E: 104, D/E: 1.36, short 7.4% // dog

10.   O – Realty Income (retail) $4.2B, P/E: 27, D/E: 0.76, short 6.7% // supper strong since crash, weak lately

 

Click on the hyperlinks above to see the chart. So maybe you have some feedback on these but these are the ones that look good to me – ordered by what looks most lucrative if the economy goes into a double dip.  My top #4 ideas are really strong on the weekly charts, which could be bad, but they are also considerably overbought right now. 

July172011

Gold stocks were a leading indicator of disinflationary forces that culminated in the 2008 commodities/stock market crash.  Gold stocks badly underperformed gold itself before the financial/banking collapse.  A large bearish head and shoulders appeared with the right shoulder peaking in July 2008. It was a foreshadow of the carnage to come in the broader market and commodities in particular.  Again, we have a h&s that is developing here in 2011. At the same time, gold stocks are poorly underperforming gold itself and now are at one of the lowest levels relative to their underlying in decades — not withstanding the shock lows in late 2008.  This is a bearish development for the risk on trading strategies and should be pause for concern.  Gold stocks are either badly mispriced or they are indicating some serious trouble in world markets ahead. 

← Older Entries Page 1 of 21