August Stock Discussion

I dunno..

There wasnt real selling pressure, the VIX is barely moving, no real fear out there. The talk is "we were due for a drop" so until they crack some skulls and start some strong selling, I consider this little more than a light trading down day.

Wall-

When companies pay PR firms to pump them up you know it is a sleezy situation-

link

5M shares is it and the stock is 7 cents?-

The Company has recently been listed on the Regulation SHO threshold security list indicating a possible short squeeze. In an on-demand Webcast scheduled for Friday, August 21 to review China Crescent's second quarter results, management will include a discussion of the possible short squeeze and how the covering of short positions identified by Regulation SHO could support a price per share movement toward the Company's previously announced suggested fair value target pps of $0.30.

No offense but...

Yep.. and sleazy when companies do reverse stock splits, too.
Does nothing at all to change the fundamentals of a company.

Market seems to ignore any negative data on the consumer.
13% of all mortgages in the U.S. are either delinquent or in foreclosure.  

Added more FAZ at 23.75

was a great comment about this news item on BB's speech.....

https://www.marketwatch.com/story/we-saved-the-world-from-disaster-bernanke-says-2009-08-21-10100

 

"I wish these modern day robber barons would stop patting themselves on the back for averting the crisis. These f****** people CAUSED IT TO BEGIN WITH." 

A couple of weeks old,macroeconomic, interesting nonetheless...

https://www.bis.org/publ/arpdf/ar2009e.htm

I don't get this given how things are progressing right now. The bears had their chance this week to capitalize on that down Monday, and still, they got their heads ripped off.

This market is poised to keep surging higher. Everyone can kick and scream that the fundamentals don't support the ramp up, but if there's one rule every trader should know it's: You do NOT fight the momentum of the market. It has become a largely manipulative (and thus irrational) being, so what's the point of hopping into the FAZmobile?

This market's ticking higher, fundamentals be damned. It's already proven as such. And, I don't have to tell you Wall Street that FAZ is intended to be a swing-trade, to be held no longer than a week. I think you're asking for trouble averaging into it the way you are.

Just my two cents.

Wall must be right as I agree with both of you above.

That being said, this uptrend is nothing special in terms of past bear market rallies.

 I have more problems with the vehicle than the idea...after reading all I cared to regarding them, I see serious disadvantages to these funds.

That's just it, Vermeer. FAZ and FAS and all these 3X ETFs are a fool's game. They are meant to be swing-trades, NOT investments. You DO NOT hold them as long or they will burn you. The closest analogy I think I can give is that they're the equivalent of hitting 51% in sports betting. An outside observer might say, "Great you're in the money." But as we all know the juice kills you. And that's what's in play with these 3X etf's. Because they reset everyday, you're left with severely diminished returns. FAZ and FAS depend on serious volatility. If you don't get that, and you hover around the same baseline for 6 months, they'll gang rape you.

Well lets just say Ive seen this setup so many times that I feel good enough that I am willing to take the risk.

Summer trading is nothing to bank on, small dollar figures spent on SPX futures can move the markets like crazy.

I am not looking for a 50 bagger here, rather my feeling is that they will sell the market come Labor Day and given that feeling and the move in the financials to this point, I think the odds are at my favor.

The trade isnt a large percentage of my overall portfolio, but I can sniff a rat out and this rally smells like a rat to me.

I like the higher beta trades, those who have seen me trade in the past know this..so it isnt for people who are risk adverse at all.

I could be completely wrong and I could get killed on the trade, but given the run in the financials and the underlying risks STILL out there, plus the way they have run this market non-stop for all summer, lets just say those who have invested over a decade know how these things normally end up reversing after Labor Day.

To be clear, I don't disagree with you at all there are serious, fundamental issues underlying the banking sector.  There's still a lot of trash on their balance sheets that is being propped up by all the excess liquidity.

But I can't tell you how many times I've heard the exact same reasoning that you espouse. This is a volume-less rally. It will all end by Labor Day. This is what everyone, everywhere thinks. The uber-bears have clung to this line of reasoning as markets have surged higher.

I can't give you any reasoning based on fundamentals that will convince you this run ends soon. What I do know is that there are way too many in the "this ends by Labor day" camp.

Wall,  even if you are right, and this run starts to reverse by, say, mid-September, you will have a lot of ground to make up on your FAZ investment. And more importantly, when we get this retrace, for your FAZ bet to pay off, you need a steep run downward. You can't afford for the pullback to come in the form of a 6-month gradual decline. You need a two-week plunge for FAZ to pay off. Otherwise, you're headed for disaster.

And with the Federal government clearly determined to prop up big banks, why bother betting against them? At this point, big banks failing seems less likely than the dollar being replaced by the Amero.

Check the balance sheets and stock performance on most financials.

Nearly all financials are at levels they were a year ago, which erases all the drop we had from the near-fatal implosion and are back to where we were pre-LEH.

Now..check the balance sheets and see what has changed.

GS increased common float by almost 20%, so has BAC increased by almost 50% and WFC is up by 50%. Liabilities across the board have increased and outpaced stockholders equity. Most all firms have either dramatically increased preferred share count, or started a new preferred share count..some which are 10 times higher than the common count. (GS increased preferred by 5 times, JPM has 10 times more preferred shares than common, BAC upped preferred count by EIGHT times previous)

The point is that these moves in the stocks are on the back of large increases in common shares and implied preferred shares (some are convertible, others just pay out a fat divi) and THAT makes the valuations that much crazier.

In reality these banks could realistically retrace all the move and they would probably be properly valued and I think the smart money will take advantage and bring them down, and probably very quickly.

Check out the change in share counts and how the balance sheets are structured..goodwill and LTI counts etc.

Its not pretty..

Wall,

I reiterate that I don't disagree with you on the fundamentals.

Your claim that "nearly all financials are at levels they were at a year ago" is blatantly false. All the major banks still have quite a bit of room to run to their yr ago levels.

To make money on FAZ, you need financials to retrace back to their nadirs.  This would result in a full-on Depression. And while I don't think the risk of Depression has been entirely averted as CNBC would have you believe, I think it has significantly been reduced. The work of BB, Geithner and the Administration, while not perfect, has been successful generally speaking.

You can sit here and lecture me all day on the porous state of the financial sector. I DO NOT disagree with you. But this is what EVERYONE knows already. You're assuming that everyone thinks the stress tests were the real deal.