Stock Market 2016

[odesseus]

Good morning all - good discussion here, thought I might offer my own opinions on the few sectors that I am familiar with. To start off I am a former market professional, now solely trade for myself and family. Currently my portfolio is sitting in 100 percent cash since March of last year (was tough to watch things make money for a few months).

At the moment the negative news and market fear are rampant. However in chatting with my circle there seems to be some opportunity to chip away at some of the oversold, large cap, oil and gas (here in Canada) as well as other key large cap resource plays. I would be buying the Canadian dollar below 69 cents and selling above 75-80 cents US.

I stay away from oil and other commodity ETFs as well as options unless I really have some knowledge. If you are short bonds in Canada - stop - there may be a rate cut coming which would hurt. That being said I wouldn't load up either.

 

[thoughtgypsy]

I've bought some QID (Nasdaq Short), BIS (Nasdaq biotech Short), as well as some UWTI (3x Long Crude ETF). I know I'm probably early on crude and I'm expecting modest losses, but I'd rather be early than miss out.

Anything that I should consider regarding these positions?

 

[Invisible]

10 years so you're not a newbie which I assumed.

I'm glad you've got a system that works for you.

Do you consistently grow your account each year? I assume you're making money with your strategy?

FWIW, my system and those I follow are based off of the system of the most successful or one of the most successful, traders ever. Jesse Livermore from Reminiscences of A Stock Operator Fame.

Yes, I know all about position size being part of risk management as I'm a big advocate of it.

As far as being "addicted" to trading and the markets every day, if that fits your temperament, that's great. As for me, I'm happy as a lark to be sitting in cash since mid December when this correction started and while everyone else invested in stocks is down.

I understand what you do from the explanation but it's way too complex for my temperament. I've found something that works for me and that's the key if one is to be a good trader.

Best of luck.

Trading makes up around 50% of my income so I rarely take money out so yep, I'm consistently growing my account.

I've read about Jesse Livermore in the past but I'm not aware of his system. I did think he traded short as well or maybe I'm thinking of someone else?

If you're only trading long then staying out of the market in pullbacks makes sense. Do you let your stops take you out or do you get a specific signal and then just close all positions?

Although it sounds complicated my trading is pretty simple once you understand a few key concepts. It's very mechanical, being probability based takes out any emotion. I'm happy to go into more detail if anyone's interested.

 

[Invisible]

I've bought some QID (Nasdaq Short), BIS (Nasdaq biotech Short), as well as some UWTI (3x Long Crude ETF). I know I'm probably early on crude and I'm expecting modest losses, but I'd rather be early than miss out.

Anything that I should consider regarding these positions?

I've been long oil for a few months now so I know what it's like being early, as long as your position is small enough you can wait it out. Up 3% today so I'm liking the position a little more now.

As for your shorts I'd say the same thing, as long as your not to big. I've put on some short deltas into this rally via calls in SPY and QQQ. If we keep rallying from here volatility will get crushed and I'll be able to get those calls back. At least thats the plan.

The rally is looking good at the moment, if it can hold up tomorrow it might have some more legs.

Not much to consider once you've got the position on other than where you're taking profits and loses. Most would say that should of been considered beforehand also.

 

[The Beast1]

Although it sounds complicated my trading is pretty simple once you understand a few key concepts. It's very mechanical, being probability based takes out any emotion. I'm happy to go into more detail if anyone's interested.

When you have spare time Omad, i'd be interested to read more about your trading philosophies and tricks.

Pop up a datasheet on the subject in this section of the site. Welcome to the forum!

 

[thisisright]

I've been wondering. If everybody is aware of the crisis, then it can't be a surprise crash, right?

 

[reliquary]

Markets in full meltdown mode right now. The flood of negative economic news is really hitting hard. My portfolio is up 2.32% today alone as of this exact moment though.

I have triple inverse shorts on all three major indices, and will buy the same on energy sector as soon as I have some funds clear.

Some tickers that might be of interest to all of you right now:

SDOW
SQQQ
SPXS
YANG
RUSS
ERY
FAZ
TECS

These are all inverse ETFS of various regions/sectors/indices. Stocks alone are going to be a bloodbath.

 

[jj90]

Looking at NYMT yield: 20%

NCT: yield 15%

NLY: yield 13%

AGNC and TWO are north of 10% also. Am considering significant size in these soon. Possible recession yes, but worth a nibble at these yields. I don't see default/vacancy rates rising like 07'.

 

[RichieP]

I've been wondering. If everybody is aware of the crisis, then it can't be a surprise crash, right?

Expectations do get "priced in", you're right. Expectation is one factor that drives prices, but there are many others too.

Things can still go down even though most people expect them to. Although not as much as when people are naively optimistic and don't see what's happening, all else being equal.

BTW, differentiate between stock market crash and economic downturn/recession. They're linked, but distinctly different phenomena.

 

[OrthodoxExpatCol]

I've been wondering. If everybody is aware of the crisis, then it can't be a surprise crash, right?

Expectations do get "priced in", you're right. Expectation is one factor that drives prices, but there are many others too.

Things can still go down even though most people expect them to. Although not as much as when people are naively optimistic and don't see what's happening, all else being equal.

BTW, differentiate between stock market crash and economic downturn/recession. They're linked, but distinctly different phenomena.

Expectations are usually priced in, yes, but in the case of oil, even the expectations are optimistic right now because no one knows exactly what the outcome of Iran etc. is going to be. Anxiety is high right now on the street, but it's just (as usual) a huge roller coaster of emotions and overreaction.

People keep claiming that Canada is in a recession, which just isn't true. "Technically", there's no recession. At least not yet.

Most think that 2016 will be the year of stabilization of WTI and Brent, leading to moderate growth of the overall economy, but that's just a prediction. Other say 2017-2018. China will rebound fairly quickly. Their government is set up to respond to these sort of crisis' with injections of cash and new regulations, so long-term investors aren't too worried. It's just a short-term overreaction which is typical on the street.

When in doubt, ask Tai Lopez :dodgy:

 

[OrthodoxExpatCol]

These are all inverse ETFS of various regions/sectors/indices. Stocks alone are going to be a bloodbath.

*Gold mine dude.

Tons of companies are at ridiculously low valuations right now. Cherry pick some with solid fundamentals, buy at cheap, and go long. That's what we're doing for all of our clients. IB's aren't slowing down on deal buying right now for that reason IMO.

Sure, we hedge, but in general all of the metrics are lighting up right now. In two-three years you'll see books written about this "Company X makes huge profit on oil bets".

I do like ETFs, but I just feel that right now you can profit on this massive overreaction if you have some patience brudda.

 

[SunW]

I've been wondering. If everybody is aware of the crisis, then it can't be a surprise crash, right?

The disaster that's coming is the recognition that central bankers and centralization has failed; they're already beginning to overreact. This is a correction that we need to flush out tons of debt. They won't allow it to happen. The only winners in the end will be the self-reliant. That will be harder and harder to do because the "leaders" will make it easier to easier to play their game while you feel like you're winning (when you're losing).

 

[Chengiz88]

Markets in full meltdown mode right now. The flood of negative economic news is really hitting hard. My portfolio is up 2.32% today alone as of this exact moment though.

I have triple inverse shorts on all three major indices, and will buy the same on energy sector as soon as I have some funds clear.

Some tickers that might be of interest to all of you right now:

SDOW
SQQQ
SPXS
YANG
RUSS
ERY
FAZ
TECS

These are all inverse ETFS of various regions/sectors/indices. Stocks alone are going to be a bloodbath.

Full meltdown mode?!?! You gotta be kidding, you obviously weren't around in 2008 that was a real meltdown (bank runs/near financial apocalypse), this is just a healthy and long overdue correction. Due to CB manipulations valuations are massively over-stretched. Now that the invisible hand of the FED has eased somewhat, markets are just finding their natural equilibrium. Only people panicking now will be over-leveraged retail traders worried about their next margin call.

 

[RichieP]

Expectations are usually priced in, yes, but in the case of oil, even the expectations are optimistic right now because no one knows exactly what the outcome of Iran etc. is going to be. Anxiety is high right now on the street, but it's just (as usual) a huge roller coaster of emotions and overreaction.

People keep claiming that Canada is in a recession, which just isn't true. "Technically", there's no recession. At least not yet.

Most think that 2016 will be the year of stabilization of WTI and Brent, leading to moderate growth of the overall economy, but that's just a prediction. Other say 2017-2018. China will rebound fairly quickly.

What you say about oil price makes sense.

When you say China will rebound, what are you referring to exactly? Stocks stabilizing? Many people think their economy is undergoing a major slowdown which causes all sorts of problems for them, and for the rest of the world.

 

[Dr. Kahn]

Anybody already short china ETFs?

http://etfdb.com/etfdb-category/china-equities/

 

[BIGINJAPAN]

I've been wondering. If everybody is aware of the crisis, then it can't be a surprise crash, right?

Expectations do get "priced in", you're right. Expectation is one factor that drives prices, but there are many others too.

Things can still go down even though most people expect them to. Although not as much as when people are naively optimistic and don't see what's happening, all else being equal.

BTW, differentiate between stock market crash and economic downturn/recession. They're linked, but distinctly different phenomena.

Expectations are usually priced in, yes, but in the case of oil, even the expectations are optimistic right now because no one knows exactly what the outcome of Iran etc. is going to be. Anxiety is high right now on the street, but it's just (as usual) a huge roller coaster of emotions and overreaction.

People keep claiming that Canada is in a recession, which just isn't true. "Technically", there's no recession. At least not yet.

Most think that 2016 will be the year of stabilization of WTI and Brent, leading to moderate growth of the overall economy, but that's just a prediction. Other say 2017-2018. China will rebound fairly quickly. Their government is set up to respond to these sort of crisis' with injections of cash and new regulations, so long-term investors aren't too worried. It's just a short-term overreaction which is typical on the street.

When in doubt, ask Tai Lopez :dodgy:

People are claiming Canada is in a recession because it posted 2 negative quarters of GDP growth in 2015. Which is the definition of a recession.

it then posted a positive gain in the 3rd quarter. jury is still out on the 4th quarter and any revision on the 3rd quarter.

 

[Dr. Kahn]

Will ending the Iranian sanction further depress crude oil prices?

 

[OrthodoxExpatCol]

I've been wondering. If everybody is aware of the crisis, then it can't be a surprise crash, right?

Expectations do get "priced in", you're right. Expectation is one factor that drives prices, but there are many others too.

Things can still go down even though most people expect them to. Although not as much as when people are naively optimistic and don't see what's happening, all else being equal.

BTW, differentiate between stock market crash and economic downturn/recession. They're linked, but distinctly different phenomena.

Expectations are usually priced in, yes, but in the case of oil, even the expectations are optimistic right now because no one knows exactly what the outcome of Iran etc. is going to be. Anxiety is high right now on the street, but it's just (as usual) a huge roller coaster of emotions and overreaction.

People keep claiming that Canada is in a recession, which just isn't true. "Technically", there's no recession. At least not yet.

Most think that 2016 will be the year of stabilization of WTI and Brent, leading to moderate growth of the overall economy, but that's just a prediction. Other say 2017-2018. China will rebound fairly quickly. Their government is set up to respond to these sort of crisis' with injections of cash and new regulations, so long-term investors aren't too worried. It's just a short-term overreaction which is typical on the street.

When in doubt, ask Tai Lopez :dodgy:

People are claiming Canada is in a recession because it posted 2 negative quarters of GDP growth in 2015. Which is the definition of a recession.

it then posted a positive gain in the 3rd quarter. jury is still out on the 4th quarter and any revision on the 3rd quarter.

Yes, you can say 'technically' it was a recession, but it didn't have the typical indicators of a recession. The jobs weren't in a recession-typical decline. No one internally every considered it a real recession.

 

[Chengiz88]

Expectations are usually priced in, yes, but in the case of oil, even the expectations are optimistic right now because no one knows exactly what the outcome of Iran etc. is going to be. Anxiety is high right now on the street, but it's just (as usual) a huge roller coaster of emotions and overreaction.

People keep claiming that Canada is in a recession, which just isn't true. "Technically", there's no recession. At least not yet.

Most think that 2016 will be the year of stabilization of WTI and Brent, leading to moderate growth of the overall economy, but that's just a prediction. Other say 2017-2018. China will rebound fairly quickly.

What you say about oil price makes sense.

When you say China will rebound, what are you referring to exactly? Stocks stabilizing? Many people think their economy is undergoing a major slowdown which causes all sorts of problems for them, and for the rest of the world.

What he means is once markets find value in the SHCOMP and CSI300 they will naturally stabilise. Look at the charts the move higher in late 2014 in china and through 2015 was unsustainable technically or fundamentally.

The oil price drop will feed through once all the previously hedged contracts expire and and start boosting China and India again. Likewise the consumers in the west will also increase consumption with the oil price drops. This is a win/win

 

[SunW]

A lot of the discussion here about expectations is misguided, as it assumes that these expectations can be fulfilled. Suppose that these expectations are limited by previous expectations that had high use of leverage? It doesn't matter what someone expects if they owe trillions in debt - they have to first get rid of the debt (bankruptcy or payoff) before their expectations of what's next can be fulfilled.

Five years ago the expectations were hyperinflation and everyone rushed into commodities, especially precious metals, some of whom were borrowing with 10+ leverage. Five years later, those people are getting hammered. It simply doesn't matter what's next for these people; they are eating their expectations today from five years ago.

Why no one sees this is beyond me, but this explains why it's possible (not guaranteed though) that oil and other commodities could still go lower in price.