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Sunday, January 31, 2016

Chart - $bac

Been trading bac for a while. As it dipped below the tnx correlation and well below tangible book value (and the most oversold since 2012), the bearish of the bear became bullish. A move to 16 is the obvious trade.

After 16, it may consolidate, but it really belongs +18.

Friday, January 29, 2016

$amzn chart orgy

Good numbers. Increasing GM yr over yr. Although it looks like its making too much money. Management can not spend all of it. 

Support around 550 and 520.

Monday, January 25, 2016

Charts - $bac

BAC breaks up tomorrow, investors get $15.60. (Yeah and this models $30 crude for a few months! But the "super-smart" chatter-heads dont buy it.)

As the market goes, so did bac. Its down with the rest of the market since Jan 1st.

Why? Correlations.

Financial stress rises, flight to safety. Banks go down, treasuries go up (yields go down).

Why? Stupid junk bonds.

Why are junk bonds going down? Stupid oil. 

Crude stays near $30, defaults will hit. I shrug my shoulders cause its no different than any other market shaking out the unprepared players. Thing is, junk has not correlated well with the spy. It obviously out performed, and now its under performing. The XLF on the other hand clearly is correlated.

So go financials, so go the markets. Or Vice versa whichever you prefer.

More corelations, bac vs $tnx. 

Clearly there is a disconnect here. How dare bac lose its corelation to the 10yr!

The most important economic data point right now is the rate of oil supply. How much is taken off line as consumption remains steady given global gdp expectations. A curious thing happens to a commodity when suppy reduces and demand keeps rising. This go around it will stem the junk bond defaults, reducing financial stress, inflation starts to pop up, treasuries rise, the banks rise, SP500 earnings level off thanks to energy names and markets rise.

Also, wonder where the $1TRILLION outflows from china will end up. Seems like they are choosing treasuries, maybe they should look to bac :).

Sunday, January 17, 2016

Market Thought... Everyone is Bearish $spy

The good news, at least twtr is not alone with a unanimous bearish chatter. Misery loves company. And that is why the dooms-day folks exist.

A quick economic recap: 

1. US economy is doing pretty good. (Or so says the labor market, the open job positions, incomes, reduced house hold debt, etc)

2. EU is still in stimulus mode.

3. Japan still in stimulus mode.

4. China is on the verge of complete collapse. Or so that is the perception. But in reality it's an economy in transition. Services are doing well but 'old' economy is not and excesses are being flushed out of the system. 

A quick US market sentiment recap:

1. The first time the market started to decline by 10% the Junk Bonds were to blame.  

2. Connected to the junk bonds is oil. (Lower crude, the loans to the smaller players will go bust, increasing NPL to the banks.) But oil is also an economic tell, and it's being tied to China's economy.

3. Lower crude is also causing lower SP500 earnings, allowing for a year-over-year decline.

Shanghai Composite the last eight years shows a country in transition. Negative economic interpretations are being made from a no-where-moving. Although some how, the last few months "are an indicator to something". 

Market players choose what they want to believe. 

This go around, crude is simply trading at lows. So somehow this is support that china, or global GDP, is really fucked. 

A supply / demand driven commodity is corroborating a global slowdown. So a flood of supply means global gdp is collapsing?

Or it's just an imbalance in supply, and negative sentiment got animalistic. 

The oil market is driven by its own dynamic. And as JPM, WFC and C are showing, there is little material spill over to the banks. This include the junk bond 'issue'. 

Since the first 10% decline, the market has been trading at am elevated Vix w a higher low. But we have not seen a higher high. And we should not. There is no scenario where the global financial system will be in crisis. (Crisis as defined as in 2008 US system, and 2010 and 2012 EU collapse.) True crisis is a Vix of +90 and +50, respectively. Run of the mill slowdowns or contained geo-hiccups have seen Vix between 30-40.

The Vix is near its high. The 10yr is at lows. Will they go higher and lower?

Maybe. But depending on the extremes, hopefully we are closer to a bottom. 

Thursday, January 7, 2016

Market efficiency on $aapl earnings?

Let's assume for a moment that the average expected trailing multiple for aapl is 12.5. (Although I can argue until I am blue in the face that aapl should have a higher multiple, regardless.)

AAPL closed at 96.45 allowing for a 10.46 trailing multiple. Assuming they meet Q1 numbers, the trailing multiple will be 10.2-10.3.

If expectations meet, the trailing eps, at the end of Q1, will be 9.39.

If the market is efficient, it is projecting a decline in eps. Assuming an efficient market, the current price is relecting the future average PE of 12.5 (or whatever). 

96.45 / E = 12.5 -- solving for E is 7.71.

The market is expecting a ~18% decline in eps.

Realistic? Who the fuck knows. 

All we really know is that the multiple is out of whack with other large-cap stocks (not just tech stocks). With that respect, there is a gross inefficiency present.

The curious development will be if aapl guides for Q2 with numbers better then the discount.

Tuesday, January 5, 2016

Charts - $amzn $fb

amzn - looks interesting at the sma. 

fb - an initial entry maybe here but prefer the lower sma supports