Sunday, August 4, 2013

Are We There Yet?

The following is from yahoo Finance:
A study from Spectrem Group asked wealthy and affluent investors "what do you wish you had done differently in the crisis."
For the top earners-those making $750,000 or more-the No. 1 answer was "saved more." Ranked second was "done more research about finances on my own" and then "not taken on as much debt."
Their regrets have turned into real action-with possible impacts on the broader economy. Since the financial crisis, the wealthy have become the nation's top cash hoarders, filling up deposit accounts and money markets at a rapid clip.

Well, at least somewhere someone is being prudent.
That was something I have been shouting about from the rooftop for last many months.

George C. asked the following question:
Hi BB,
I have been reading a lot about cycles and they seem to be less and less reliable these days. What is the margin of error ? For example you mentioned a cycle top of July 25. We just pounded out a new high on August first. so what its the "zone" of this cycle top ? I also do not understand why shorting is not a good idea if one truly believes in the cycle, assuming there is some margin of error that could trigger a stop on short position. Otherwise we have to rely on broken support levels, moving average  crossovers etc.....
In this market I am losing faith in information. For the past several months I have read many credible articles and blogs, including yours that speak of extreme sentiment, record high margin debt. low levels of mutual fund cash etc...yet there is not even a moderate correction. I know things take time but I am wondering if FED printing can push this for many more years. Simply amazing !
Love your work and patience, just venting. I am afraid to go long for sure but have been for quite some time. 

And my answer was:

Hi George,
As you might have seen, I work from the side of being ultra cautious.
So I will take trade when everything that I watch line up.
When the trend is up and cycle is up, it is safe to go long. But when the trend is up but cycles have topped, I would stay away from taking any bets. Does not mean we should short. Because, we also need price confirmation.
As for now, the cycles have topped, but we have no sell signal. Therefore no going short. Going long is out of question. This is the time when greed overtakes retail and Mom&Pop gets in equity.
My up-side target for SPX is in the range of 1720-30 and we are not there yet. Last May, we went short but the indices kept going higher till everyone threw up their hands.
We are coming to that inflection point. No other market in the world is following the US market. So the US markets cannot just keep going on for ever. You might be interested to read the following:
http://www.mcoscillator.com/learning_center/weekly_chart/u.s._nearly_alone_in_making_new_price_highs/
So just hang on. Keep lots of cash on hand. Opportunities are coming soon. Gold & Silver will bottom in a month after another sell off. We will short bonds big time by Fall. Short equities big time.
Technical analysis alone will not get us anywhere in these markets. But patience will.

Hope that helps.

In my years of writing finance blog, I have actually come across only a handful of investors who are willing to wait and not be greedy. I had one subscriber, whom I shall call "The Troll". That guy would pay money for subscription and then do just the opposite of what I would say. I would scratch my head in bewilderment. For e.g. during the last correction, we closed our short position and went long XIV. After few days, the correction resumed and XIV was hit hard. I asked everyone to hang on tight with their XIV. But this A**hole sent mocking email, saying how smart he was and how he did not follow my advice and did the opposite by going long UVXY. Well, after a month, XIV is over 25% up!

And he is not alone. I see folks always trying to score on every turn, going in and out of positions almost every day. And I shake my head in disbelief.
Have patience folks. Don't listen too much to those talking heads in TV. They get paid to say stuff and sell snake oil. Only you can save your money. Wall St. wants to get their hands on your savings. They can do so when you are greedy.

I do not have to prove anything to anybody. I have made calls on record over the years and I think barring few and some in the early years, when I was still perfecting my system, most have come correct. I have a full time job which keeps me busy. I do the Newsletter and Blog as a hobby and I can do without A**holes. My record on gold and silver is close to 100% and I pray I am able to maintain that. But I am not trying to beat up my drum. All I am trying to say is that, whatever is your method, whomsoever you follow, you must have patience and not chase every shiny thing that catches your eye.

Stay Focused and stay nimble.

Good luck trading / investing everyone.


Monday, July 22, 2013

After A Long Leave Of Absence.

I have not been able to post anything for quite a while now.
It has been extremely busy and just keeping up with the weekly newsletter has been a challenge.
Let me quote from some of the newsletters that I had written in the last few months:

On June 5, I started to close all short positions and sent this email:
:Starting to close 50% of all positions (Except WEAT & CORN)

Then we long XIV around $20.50-$21 range.

On June 9, I wrote:
From a pattern standpoint, the pull back was corrective and with our short-term momentum work hitting oversold levels I have increasing evidence that Friday’s bullish reversal represents my anticipated June minor low. I would still see this as the basis for another bounce/rally into deeper June, anticipating a retest of the May high at 1670 to best case 1700.

XIV did well and continued to go higher. However, around June 19, the indices failed to clear 1650 and the correction resumed. Our resident troll started to send abusive emails but I said the following:
The stock market is ruled by fear and greed.
We are no exception.
We are mostly out of the market except for XIV and now that the indices have broken the earlier low, the momentum has shifted to the downside. However the downside is limited to SPX 1565-70 which will be enough to generate tons of short interest before the bounce.
I expect to see another bounce soon at which point we will close our XIV.
For now, do not give in to fear and panic.
Gold and silver has reached my downside price target but the cycles have not bottomed yet.
All in all, it is fishing time, and do not give in to fear or panic nor to greed.
Have a great weekend folks.


On June 30 I wrote the following:
  •    From a daily trade point of view, I think we have seen the bounce and the correction will continue till 1st half of July. If 1560 is taken out in SPX, the next stop is 1535 and then 1510. But I am not fully sure whether 1560 will be taken out or not and hence I am hesitant to take a short trade here.

  • From a weekly perspective, I am fairly certain that we will see another rally to new high of around 1710 by 1st half of August.

  • On July 11, I wrote:

    Yes, the low came in early.
    For those of us who cannot wait and must have something going, here are two items worth going long with:
    SLB:  with a sell stop at $ 74.00
    XOM: with a sell stop at $ 89.60

    The target for upside moved a little bit. SPX can go upto 1740.


    Now the XIV is at $25.78 (I had sold 50% of XIV at a loss of about a buck), SLB is at $84.80 and XOM is at $94.83 and I have advised subscribers to book profit.

    How is that for hitting the ball, Mr. Troll?

    We are still waiting for the cycle bottom of gold and silver and waiting to short treasuries. We are mostly in cash and I am asking readers to raise as much cash as possible and be patient.

    Do not be greedy like the Troll nor be a spineless snake.
    If you want to be on the right side of the market, you can join the readership and subscribe by donating $99 per month by clicking the "Donate" button.
    However, I do not trade very much and wait for the right opportunity with a very long term outlook. I am not a day trader nor do I care for the short term moves. I am looking forward to what is going to happen in few months, not in few days. So if you have a short term outlook, you will be wasting your time and money. If you do not have the patience and want to buy or sell always, the talking heads in TV will be a better bet. I am not looking to become a mass market newsletter writer nor am I looking to become rich by selling subscription.

    Thanks for reading this post and good luck investing everyone.



    Sunday, June 9, 2013

    Thank You!

    Life of Finance Blogger can be tough.
    People have different time frame for trading and we all expect instant and positive results for all our trading. That is simply not possible and many times Trolls send abusive emails.
    However, once in a while, someone send encouraging emails as well.
    The following is an email from one of my long term subscriber:

    Hello BB.
    Thank you so much for a the many good calls you have come up with.
    This has been quite a experience for me.

    I would like to thank you for the newsletter and the many blog entries
    you took the time to author.
    I would also like to share a bit of my trading history, and the
    reasons for me to sign up for the newsletter. You see I have been
    trading for 7-8 years. It all started with the many daily discussions
    about media, politics and financial bubbles of the danish housing
    market (I live in Denmark), almost needles to say my views was/is
    contrasting to the media painted views -  most the discussions back
    then was ending the same way, with my friends telling me "if you are
    that smart, go make some money". Well, I opened an account and so it
    began.

    After the beginning of my trading there was big wins and big losses,
    my trading style was about macro and stats, I thought, but I was so
    wrong. For me it was mostly about emotions. I became emotionally
    exhausted and the timing of the swings was my bad. I saw ETF 3X move
    up and run away with gains up to 100% ending with losses in the double
    digits. What agony.

    So I left the "minute chekking" - checking accounts on hourly basis -
    emotional stress and returned to where my successes were (looking from
    my trading history). It took half a year before I did any trade again
    - and quit levered ETF as a whole (up till now). I never thought I
    would be subject to this level of stress because I am a very clam guy.
    After my pause I got some checks and balances in place which could
    counter some of my bad trading habits (for instance if a trade goes
    against you the counter trade is not the right one either, it not
    about being IN - its about capital preservation).

    I started following you on the blog and it was a easy choice signing
    up for subscription to the newsletter and that was the first time ever
    I paid for trading advise. But I knew I needed some guidance to grow
    with. Partly so I would not revert to my old trading patterns of wild
    swings (happened before) a sane voice so to speak, and to get my
    emotional toolbox in order.

    And now I am more confident than I have ever been and hoping to
    continue the journey with you on ward and finally this week concludes
    some of the best winning 9 months for me.
    My deepest thanks for the advise and being the sane voice I needed so much.
    THANK YOU.

    With the best regards.


    I was both humbled and touched with this email.
    Thank you my friend.

    Coming back to market, our exit time was very good and so far our new trade has played well. I was not able to scale in the 2nd part because it ran away from us on Friday but I decided not to chase it. I think the trade will come back to us on Monday to a certain extent when I will add the balance position.

    I see a long term top forming on Housing and would think that with the coming bounce we should exit housing if we are long housing. Also with the sentiment negative on gold, I see a long term bottom forming but I still think we will have to wait somewhat more before we can go long.

    Thank you and wish you all great trading.

    Thursday, June 6, 2013

    First Meaningful Pull Back.

    It has been a while since my last post. It is simply a function of lack of time. In the mean time, I have somehow managed to send the Weekly newsletters to the subscribers.
    I was hoping for a market TOP around 1st week of May and accordingly we went long VIX (UVXY) and short Emerging markets and other sectors including Finance.
    However, there was an over-shot and the markets kept going up till May 22nd. Obviously, there were some doubts amongst the subscribers. I kept stressing that the correct has simply been delayed not cancelled. And we kept hanging on to the long VIX and short everything else trade.
    Yesterday and today we closed our positions. We made a tidy little sum on UVXY and peanuts on others. But at least there was no big red anywhere.
    Now we are taking a new position for a short term trade.

    I think we are in the process of a giant TOP forming which will take us till the end of summer before we see any major correction.
    For now, I think the short term correction is over and we will see another bounce soon. How far it will go is a question of time. But if it fails to make a new high, we have problem. Big problem or little problem, I am not sure at this time.

    We stayed away from Gold and Silver because I think the cycles did not bottom. Nor for that matter the cycle for Apple and we will see more downside for Apple as well.  We are waiting for more favourable time to go long PM sector.

    We play the game by the seat of the pants. And we always correct the course of action as we go along. We cannot be correct 100% of time. For e.g. I am holding grain ETFs for few months now and I am under water, although not by much. But I am holding onto those positions for longer term. And that is where I find most folks have problem. Committing to a position for long term. May be we got brain washed by leveraged option trade, when we start expecting instant results. We get impatient and when a trade initially goes against us, we get scared. The cycle of fear and greed plays on.

    Hope you guys are doing great.
    Trade safe.

    Saturday, May 4, 2013

    We Have A Road Map

    I have taken permission to quote part of an email exchange with one of our long standing subscriber, who knows the meaning of patience and looking at longer term picture:


    Adrian McMahon Stone
    4:54 PM (20 hours ago)
    to me
    You have nerves of steel BB!

    I feel like throwing in the bearish towel..with all the other bears.. a sure contrarian sign.

    I will commence my ******* next week.

    All the best

    Adrian

    To which I replied:

    BB Finance <bbfinanceblog@gmail.com>
    9:36 PM (15 hours ago)
    to Adrian
    But surely you are reading my Newsletters and Emails!
    Did I not write about the BOYZ pushing SPX past 1600 about 10 days back and few times thereafter?
    Everything is going according to plan.
    No need for panic my friend.
    Have a great weekend.
    BB


    Just to demonstrate that we are not flying blind. We are well aware of what is happening around us, risks and rewards and we are positioning accordingly. 

    We do not believe in fancy charts although we execute our trades based on TA. And we are looking a much longer time frame. Mostly in months and years not in weeks, leave alone days. We are looking at what will happen in 2018-20 not next week. I know this is not for everyone and we get anxious / worried when a position initially goes against us. But then I have faith on my system and have seen it work better in longer term. That is why I am long grain today when no one loves it. That's why we went out of gold at $1660 over 2  months back and waited patiently before we get long again. Regular readers will remember our call for Apple many months back. 
    Of course we have our share of misses but looking back, had I hold on to those positions for longer term, most of them would have turned winners.
    On the whole the winners are far more in numbers and longer we wait in a position, better our rate of success.

    People send email asking how to subscribe. I have quite a few selected subscribers who have been with me for long time. There was a time when I took sabbatical for a year and wanted to spend time writing  They have been with me since then. But now I am back to my high pressure  12 hours + day job and I really do not have much time for blogging, however much I love it. But I am committed to all my subscribers, that I should be able to reply to every question, every email, that they may have. All I want folks to know that there are alternative methods of investing, we do not have to hit every ball and score on every turn. I used to provide it free here in this blog but then folks do not value free stuff and most are looking for quick gain. So my style may not be suitable for all. Better to provide it to those who are on the same page with me.

    I will close by repeating one of the old calls. That "Tectonic plates of the financial world" are shifting. If I would still be writing in 2018 and you would still be reading it, we will exchange notes about that call.

    Safe trading , no, safe investing everyone.

    Have a great weekend.

    Monday, April 29, 2013

    Life In The Fast Lane

    Or would you like "Hotel California"?

    Either way the thrill of going up and up and never to worry about coming down must be real giddy.
    Didn't I say not to short yet.
    Although all your indicators are screaming over bought most are throwing in the towel and joining the buy express.
    Where do you think we are in the following curve?

    My take is, we are right at the Euphoria stage.
    And that was why I wrote don't short yet about 2 weeks back.
    Although we went out of the long positions in Jan. end , we did not short the market. We gave up this 80-90 points on the upside because we want to catch all the ride down and not take any risk. And if any of you are still long, now may be the time to cash in for good.
    After many months, we are now ready to take new positions and subscribers have been given the tip and trades for the coming week. 
    And no, I am not looking to get rich by selling Newsletter Subscription.
    Good luck trading all.

    Monday, April 15, 2013

    Don't Short Yet.

    Just a quick note.

    A 40 point drop in SPX in one day is  reason enough to say: "I told you, the risks are high".
     We went out at 1510 and today the market is around 1550. I have one question who were long in the last two months. Did you get out in time?

    However, I think it is not yet time to short the market. We still need to give it some more time and the subscribers will know when to short.

    Same goes with Gold. It is still not the right time to long gold because cycles did not bottom and there will be separate email to subscribers when the time is right.

    Grains did not suffer much damage today because all weak hands were flashed out last week. And Oil has some more to drop but I am not shorting it.

    All in all, we are in good shape and hope everyone is raising cash to take advantage of the coming Tsunami.

    Note to the Troll: New subscription rate for the month of May and onward is $ 99 per month. Only the existing subscribers for April get to renew it at $ 49.

    Good luck trading all.