Still Rotating

SP 300x189 Still Rotating
S&P

I wrote a piece a couple of weeks ago about sector rotation. I threw out the idea that when we do correct, it may be a shallow and probably a very buyable pullback. I addressed the idea that we just might not see that 8-10% correction that everybody thinks.  I thought we might see more of a sector rotation, where the same money just sloshes around from sector to sector while finding temporary new homes. Tom Demark telegraphed this brilliantly.

Are stocks going down? You bet. Look at $FCX or $JOY, or some of the oil service stocks like $SLB or $BHI,the latter I got stopped on today. Other stocks like $AAPL, $CMG and $PCLN seem to find new highs on a daily basis.  How about coal $KOL and steel $SLX. Getting crushed, really crushed.

There are holes and leaks all over this tape, but guess what? The S&P still managed to tag the 1419 level yesterday and the Nazzy continues to rip.

The baton seems to get passed from sector to sector on a weekly basis and the indices hold firm. Sectors like technology and banks have picked up the slack.

We should pull back soon, if not, we may just rotate our way to 1500. Nothing surprises me anymore.

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Still On Training Wheels

fed 300x300  Still On Training Wheels

464 0f 500 S&P stocks rose yesterday, It was broad based, excellent breadth, but as usual, volume lacked. A win is a win and just like in sports, you can win ugly. The Bernank chirped more “accomodative” language yesterday and that’s all that matters. I guess he feels the economy can’t ride on two wheels yet. The bond market didn’t reflect this though. I didn’t think the language was that powerful though, and I think it was more quarter end window dressing than anything else. Not only is it the end of the quarter, but this week is also fiscal end for some companies and fiscal “year” end for countries like Japan. The monetary morphine continues.

Every chart looks like a Picasso again, many are overextended like $CMG, and yesterday $AAPL stuck it to the skeptics again, as it found more life and squeezed a few more shorts just for the hell of it. $AMZN looks like AMZN again, and it broke through its 200 day moving average yesterday. Window dressing? We will know soon.

Technology did well, but the real story is the financials $XLF, as the ETF came within two pennies of that 16 level yesterday. XLF is starting to flag on the weekly and it looks higher. We’ll see if there is any serious follow through in the days ahead.

Coal continues to get hammered, but the fertilzers seem to be setting up for a move higher. Energy $XLE, is just hanging around, but with the dollar probably heading back to the dirt, I’m watching the group to get long.  Stocks like $HAL $SLB and $BHI are having trouble and look a little broken for now. They may set up soon as longs soon though. It all depends on your time frame.

Surely the Black Swan Folks will be reappearing at these levels again and everyone has an opinion, that’s what makes a market. The market has already reached the year end targets of many of the “gurus” and “pundits”, so that puts them in the rare position of being right way ahead of schedule. So what do they do now? I don’t know , but Abbey Joe Cohen and many of her ilk just got new life.

Right now I’m riding the wave as I buy em’ and bid em’ while taking profits along the way. April has a tendency to be a decent month for the market, but could be setting up for an epic “sell in May and go way”.  We’ll see. I’m looking for the banks and tech to lead for the rest of the week. Good luck.

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TVIX and Pissed

tvix 300x185 TVIX and Pissed
TVIX

You can click on the above chart to magnify the image (and the pain) if you were long this broken, twisted, poorly managed ETN by Credit Suisse.

ETF’s (let’s be clear that this is an ETN) make gobs of money, there is a new one every day it seems. Wanna be short gefilte fish or raccoon pelts? They have an ETF and an app for that. Am I the pot calling the kettle black to a degree because I trade these freakishly aggressive items? Maybe I am, but that doesn’t change what happened today for a lot of traders.

My story:

On February 10, the market was having a bad day. All of a sudden $TVIX started to rip higher. I have been through a few market crashes and a “flash crash” so I bought the ETN. Something was up, right? Greece defaulted again, Israel hit Iran?  I paid about 18.50 and it ran to 21.10. That was the top and it started to implode after that. Why?

Today

It turns out there was a monumental, if not an error of biblical proportions in calculating ( a shortfall) in the amount of shares  that needed to be issued by Credit Suisse.  This is old news. If you call old news two weeks ago . The bee in my bonnet is who knew to begin with? Who knew, and when I ask? And why did the ETN go from 14 to 20 in a day? This move happened before anyone was in the loop. I will defer to the authorities. I love good information, I thrive on it, but really?

Today, while the ETN was starting to die, the news wires reported that Credit Suisse made a statement that the true NAV (net asset value) of $TVIX was really only worth 8.50  a share. Thanks for that. At the time the stock was about 13 . There was nothing to short, I tried. the ETF closed at 10 bucks.

As traders we all opine about how retarded the $VIX really is as a leading indicator. The $VXX is more ridiculous. We now know that the $TVIX was now just a money maker for “the man”. Credit Suisse needs to come clean for their failure on this one, and Mary Shapiro, head of the SEC needs to talk to the trading community right away. By the way, have you heard her voice or  seen her face since 2008?

If you are new to the trading game, NEVER trade these names unless you have guidance.

P.S. Still pissed and I have a keyboard.

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