Or at least until the United States Natural Gas Fund (UNG) hits $47 (200 day moving average)
p.s. the Haynesville 4 are finally breaking down to more attractive prices. But still too early to get in there wholesale because hedge funds have decided the story is over. So it is. Until they change their mind. (I wonder what Benjamin Graham would think of this new fangled "investing" that dominates the markets nowadays)Of course this has nothing to do with huge pools of capital whose computers move from 1 theme to another like a butterfly resting on top of one flower and then the next (this week's sexy flower? healthcare!)
Nope, it's all FUNDAMENTALS that create these massive 180 degree turns ;) yep.
Remember "the playbook" we've long talked about. It's simply the pattern that has marked itself consistently in these past 4 corrections of 2007 - 2008. At the end of the correction hedgies move from their hideout places to the beaten "worst of breed" down sectors (rotation station) and then will (as a bonus) find a new 'safe' place and create a thesis that they can use as justification. In the past they were using consumer non discretionary (before input costs ramped and that thesis below up), and then technology (before they were not so "immune to slowdown" after all, and that blew up in their face) - now they will create an investing case for healthcare. Because a Democratic Congress and President [2009] is always to the benefit of healthcare companies (cough). But nevertheless, perception is reality. And the healthcare stocks as a group have been beaten to an absolute pulp. As long as enough dollars are chasing a theme, the stocks can react to said flood of dollars.
So if the past is replayed right about the end of July/early August - they'll abandon all these new found themes (hey financials are not as bad as we thought! or ... why was I not in JCPenney all along?) and be right back into the same global growth plays. Just about time Iran saber rattles or a hurricane forms somewhere far out off the western coast of Africa.
Yep, global growth - it's dead. China "collapsed" (using CNBC parlance) to 10% GDP growth - hide the women and children. So we're supposed to invest in the countries with 0 to -2% GDP (parts of W Europe, Japan, and US) and run away from the 10% growth or 5% (Brazil). Got it. Buy worst of breed or the "new safety valve". ;) (for a week at least)
We'll wait it out. (Have I mentioned this is not a buy and hold market? Every single stock is taken out and shot sooner or later. Bear markets. Fun.)
6 comments:
Thoughts on NUE 9% down?
I have seen the pattern in Nue.
Sell the earnings news..happend in past.
Haven't had time to look at it today.
Will look tonight but as I have written I think the steel customers will be hitting a wall and push back on price increases which means potential for margin compression for steel makers.
Steel has been weak for many weeks actually. Look at chart of X.
This was one of your most informative posts. The most straightforward way to make money has been to get these "sector rotations" right. When they happen, the buying and selling is absolutely vicious.
Perhaps, you could comment about when you think they will return to the new "worst of breed" energy.
It almost helps not to overthink the situations. The money is flying to X, so buy. It's leaving Y, so sell. You have to be early to arrive and early to leave, like a "cool" junior high school student making a brief appearance at a party and then departing abruptly.
Yes, I think it's nuts. But it is what it is.
Just as I was early in MEE, I was early in CRK.. took some heavy losses and closed my puts position and now the sucker finally broke down!! Buu huu huu!! This market is EVIL!
:).
Cheers,
Pankaj
Ebear, you make it sound easy
In this market if you are a few hours early or heck days you are decimated.
If you were in Ultra Financial 3 days early you were down 20% instantly. Then it reverses and goes up 45% in 2 days.
Some of these "switches" are happening intraday - we saw that all last week. Tuesday was all financial, retailer, homebuilder. Wednesday was all energy/commodity.
How do you play that? It is just random action and trend chasing. In the past trends used to work for weeks, months, quarters. Now they work for hours sometimes. If you're lucky 2 days.
It is not an investing climate - it is a dart throwing climate. Very tough.
nice article.
Its much appreciated to read insight like this in a market that is absolutely stomping anyone who is "investing."
I think I need to go buy one of those nifty black boxes and give up on "thinking."
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