The Stock Market - A daily diary

I decided to open up a new thread that just talks about the markets and stocks in general.  Seemed Detox's and Gamble's threads were getting cluttered  with posts unrelated to their original topic of interest.  (sorry guys, I contributed to this... )

What a crazy last 12 hours we've had..  Biden has a huge day in Super Tuesday, Bloomberg drops out of the race, and LA county declares a virus emergency with 6 new cases confirmed.   That's a lot of cross currents for the market.   Clearly, the market likes the stronger possibility of Biden as a candidate than Bernie, but still much too early to call.  My concern is what happened to the significance of the virus?  Here in the U.S. we've been slow to test people, so the actual number is likely much higher IMO.    This gets much worse before it gets much better

Ironically, we are just several days from celebrating the longest bull market in history.. It's been almost 11 years.  The most hated bull market is about to face its biggest test w/ the corona virus.  I fully expect the market to pierce through the -20% threshold later this year and mark an end to the bull market.  These economists and forecasters have been wayyyyy too rosy about their predictions due to the effects of the virus.  They're talking about " a hit to Q1 earnings, made up later in the year."    Excuse me ?  Production lines and supply chains just don't turn back on w/ a flip of a switch.   This isn't SARS 2.0 when the virus wasn't this widespread..    

My expectation is you'll start hearing more companies talking about a hit to full year 2020 earnings, and not just a hit to Q1 earnings.  This will be the next major drawdown in the market ; too many people are underestimating its effect..

Commence the roller coaster! Up today, down tomorrow. I stand by my comments yesterday in the crypto thread. Volatility will remain high until the fall as a vaccine and a 4 year extension for Trump become more certain. I find it interesting that the dirty laundry Media isn't making the public more aware of the vaccine progress. The first vaccine was completed two weeks ago and is preparing for phase one trials but you never hear a peep about it. 

Not surprisingly, the company that developed the first vaccine (Moderna, MNRA) has risen from 18 to 27 in the past two weeks. It's probably one of the few stocks up since this downturn started. I have no idea about the future prospects of this company and I'm not advocating a buy at 27 or any other price as I just heard of the company yesterday. I do, however, find it interesting to discuss other biotech stocks and how they could "might" be a good buy.

I think you're right 'Gamble..  Volatility is here to stay for some time.   Did you see what the healthcare stocks did today, in particular (PFE, MRK, UNH) ?  They "Really"  Jumped.  Today was through and through "A Biden Bounce."    It's almost as though the corona virus news didn't matter for a day. lol.  In all seriousness, as you point out,  it would be helpful if the media kept us more updated on the testing being done and the expectation for a vaccine. 

Regarding biotech stocks like MNRA, man I learned my lesson on these over a decade ago, and swore never to invest in these small biotechs again .  I view these as binary outcomes.  They either hit it big with a drug/vaccine, or they miss the mark and the stock gets crushed.  Never again will I do that.  I've got my sports if I want to gamble some ..

These low rates are freaky, the 10 year is below 1 and the 30 is at 1.6 and that idiot Trump is complaining about high rates?

Does anyone give a flying crap about how Trump is actually devaluing our assets with this zero talk? The dollar has been majorly weak with these drops in rate and it will continue to drop if rates keep dropping and that makes our tangible national assets worth less and less and less...it makes foreign purchasers more motivated to acquire our debt, our real estate, our corporations everything...it cheapens the country....but hey it makes that idiot happy on Twitter!

Markets on pace for another extraordinary loss today.  Warren drops out which can only help Bernie, and corona virus on pace to become a pandemic.  What the hell is the World Health Organization waiting for in that declaration ??  They have totally been behind the curve on this from the very beginning .  They take a lot of responsibility in not being more proactive, and working to keep the virus in China.  Utter failure.

Wall, the bond markets are heading into unchartered territory as you elude to.  I, too, wish Trump would not opine when it comes to monetary policy.  He and congress have their jobs (fiscal policy), the Central Bank has theirs.  Let it be, and do your job.   The Fed was designed to operate independently, and should remain such..   

Another big loss today..  Heard a small number of companies removed their guidance completely for 2020.  Yeah, that sounds about right.  We've been talking this is likely not just a one or two quarter hiccup.   Nobody has any idea on this...   And any loss in earnings isn't likely to be made up in future quarters.   Also, been thinking what stocks have been irrationally hit due to their business.. Like a small or midsize business that doesn't do any business overseas, nor relies on any overseas supply chains for their products.  That excludes a lot of companies right there...  Restaurants , maybe small fast food chains.   Chipotle, Hardees, etc.  Any other ideas out there ? ..  It doesn't sound like U.S. consumers have avoided these places yet, but their stocks have likely traded in "sympathy" with all the others..

Well still outside energy there is zero value out there. People are so used to the drop 5% and rush in and buy buy buy...value isnt a program based drop that lasts 2 days and back to the highs every single time. Value is relative to historical figures not discounted because rates are low and there are no choices for a return...that is backwards thinking that the casino wants you to use and keep buying stocks.

Seeing rates down here is not good...its terrible and what is most interesting is how these greedy disgusting banks are holding rate on the ONLY group that can benefit from this theft. Mortgage rates should be WAY lower given the way mortgage are priced compared to the 10 and 30 yr treasuries. 

I refi'd to a 15 year about four years back and at that time and until recently I caught the bottom of the drop in rates and it had never gone that low until now. Well the problem is that bond/note prices are MUCH MUCH higher/yield lower than at that same time....I asked my mortgage broker and he said that banks/lenders are soaking up the profits between the spread of how much money to them costs via the FED and what they are charging in rates. It is another example of greed and theft. The saver has been screwed for the last ten years and what little they can get from this theft is also being marginalized right now. Mortgage rates should be down at least a half point further relatively speaking. If you pull up a chart of the 30 or the 10 vs a 30 or 15 yr mortgage you will see what I am referring to.

Up and down and up and down. Like I said, wake me up in 2030 and somehow I think everything will work out just fine. Call it burying my head in the sand or whatever but at least I'm not Chicken Little raving about the sky falling every day.

The markets have a lot of variables to digest over the next 8 months but saying the markets have zero value outside of energy is not exactly a popular opinion. Tomorrow or the next day or the day after, hordes of people will line up to buy stocks in disagreement with that thesis. That said, I'm buried in XOM and the XLE with huge losses so I hope some of that "value" shows up eventually.

That divi yield on the XLE looks great but I wonder how much it will drop with current conditions and what that divi history is over a 5 yr period. 

Thank's for sharing your thoughts and insight, have been following this thread.

Well....there goes the XLE dividend yield popping over 9%. Buying here gives you decent one year out price protection but the fear creeping up in my mind tells me that there is a decent chance the XLE tests the financial crisis low of $39 before this corona mess is over with. From here, that's another 8% to the downside. This is one of my worst long term buy-and-hold investments of my entire lifetime. I have been in it since $66 around 2007 and was basically breaking even after dividends in 13 years leading into this crisis. 

Wall? So are you really buying in to the XLE? The 9.2% might get you hooked?

Moving on to the overall markets....nothing looks good. The media has brainwashed the entire country into a mass hysteria.

Rush? Remember my predictions from the last correction? I pretty much nailed it in a 20 day window where the bottom would fall and when a new high would be made. Part of it was a lucky guess, so I'm not bragging, but I had some significant data to back up my theory. Well...no data helps with a virus, but I do have a feeling that come this summer time, when world wide temps are hitting 80-90-100-and higher, this virus is going to go bye bye. There has never been a flu type virus that can survive the heat of the summer. That's why there is no flu in the summer. The scientists will continue to develop their medicines and the world will be better prepared for the 2021 flu season, but transmissions of the illness will slow down. People will get better. The crisis will essentially end with the summer heat. People will recover and unforunately, some will die. 

So, all the doom and gloom that is being predicted to my eye is unfounded. 

I am making a prediction that this crisis ends with the summer heat. Until then, it will be a bumpy ride!

I'm not so sure this is only about the virus...the bond market is crushing forward and the market is almost forcing the hand of the FED to keep dropping, either that or the market will keep dropping.

I read today from whichever FED moron that suggested they buy stocks aka Japan and that is just absurd, it is toxic and moronic...but you know who will support this? Oh yeah Trump will support anything to make the market go higher..he lies about the severity of the issue, he lies about how the greatest are on the case and it will be an easy fix..he lies about rates being too low. Everything he does is to prop the market and try and save his kind, the elite. I know all politicians are scum, Biden is just Trump with a different political party but Trump is all the bad and none of the good. He is abusive, degrading, he is a total liar and throws out absurd comments on a daily basis. I have no idea how such a total moronic clown got in this position.

XLE divi yield is tempting, the way oil dropped today and the cartel did not try to stop it tells me it could go lower. I looked at the holdings and its like 40% Chevron and Exxon so Ill have to look and see if it makes more sense going with one of those two and skipping the rest since the weighting is so high.

I would think the individual stock in this case is the better bet. Exxon and Chevron will be around forever. On the bottom of the XLE you will be more apt to find companies facing possible bankruptcy if oil craters significantly lower from here. Both are paying nice dividends (7% and 5.4%).

My DOW Jones and NASDAQ stocks going tf down. Shits wild

I looked yesterday at both CVX and XOM and Chevron just isnt at a value price yet even though it is down quite a bit still its price is not all that attractive especially for what upside you might get if oil reverses...its the safer play for sure but XOM with higher risk, higher div and higher upside is for sure the more aggressive play. If I were like 70 and wanted a better than market div yield I'd probably throw it in Chevron knowing the odds of it getting killed are low and they seem to raise divi every year so that 5-6 yield isnt bad plus their div cover ratio is pretty solid.

Read a VERY interesting story on the Vix on ZH yesterday that the reason for the spike in Vix was some MM got blown out being short and had to cover the gamma short play that the entire market has been milking for a decade and had to buy long then when he finally got the margin call they reversed it and that is why the market screamed up 700 pts in a few minutes...the buyer of the VIX was done and the market reversed. 

I find it interesting how big players leverage so high that a reasonable move up can destroy someone like that...I bet most of these guys are leveraged 50X on their capital so lets see if any move higher throws out any other players. 

Wall, you bring up a good point as what represents "value."  I know I'm probably oversimplifying it by strictly looking at market drawdowns (-10%, -15%, -20%, etc.) when I look at levels to put some of my cash portfolio to work.  P/E ratios are an important part of "value" , as are other metrics, but this drawndown plan has served me well , so I'll stick with it.  I do get your point though about today's artificially low bond yields.  This is an upside down world we've lived in since the financial crisis,  where the FED has pumped up bond prices to high levels that are ridiculously high, and driving bond yields and interest rates to ridiculous low levels.  They've effectively pushed people to the stock market in search of  any kind of return..

This all time low for U.S. treasuries is a big concern... I agree with there.  I just hope we never go negative rates like Europe and Japan.  Right now, it seems like we're the best looking house on a downright ugly street. lol.

You're gonna hate me for this Wall, but I actually added to my position onJP Morgan on Friday. lol.    They are now down -25% from 52-week high, and sport a 10 P/E.  (You got me to take a look at the PE .) 

 It doesn't look like the benefits of low rates are tricking down to the consumer in mortgages like it should.  I know I got my mortgage back in 2012 at 3.625% for a 30-year, and it was 3.29%  on Friday for the same 30-year.  What a joke.  Back when I got mine in 2012, the U.S. 10-year Treasury bond was around 1.5% I think.  On Friday it was 0.8% or so ?  So yeah, they are keeping most of those benefits...

Speaking of adding to positions, I also added to my Facebook stock on Friday.  I never thought its price would make a round trip near my initial buy price over a year ago, but here we are..  It just crossed over bear market territory on Friday (-20%), and sports a PE of 30.  I'm willing to accept higher PEs on high growth names like this..

You guys are looking at the XLE the same way I am... CVX and XOM make up almost 42% of its weighting combined as Wall eluded to, and not surprisingly have the best credit quality.  Might as well just look at those stocks on their own, considering that they are they Only two that have an A rated balance sheet.  (Heck, they had AAA rated balance sheets, but that was years ago !)     In any event, I want to stick with those guys because they will be around when the dust settles, and many of the smaller operators are likely go BK as 'Gamble mentioned.  This Will help oil prices over a longer period (patience will be key), because they won't be around to pump any oil.  Right now, these small guys Must keep pumping just to service their debt .  What a terrible position.  They just need to go bye, bye. 

OPEC + Russia on Friday decided to not come to any agreement, and that absolutely destroyed the oil patch.. I certainly won't be adding to my oil positions any more because I'm already overweight oil in my portfolio.   But if I were a new investor reading this.. I would start a position in an S&P500 index fund, and start a smaller position in CVX and/or XOM to complement the S&P.

Energy makes up 4% of the entire S&P500 portfolio.  4%  !!   That is just astonishing to me.  APPL (5% of the index) is worth more  than the entire U.S. energy market.  I'm sorry, but at the end of the day, common sense must prevail at some point.

U.S. Futures already down 1k points as all-out oil price war adds to coronavirus stress, per CNBC.  We might hit a bear market before we know it.  Ironically, tomorrow is the 11th anniversary of the current, longest ever, bull market.

I saw that...but these markets are illiquid and who knows. I cant see the crude market down 30%, thats nuts. It smells like some players are going to be liquidated in the crude market and maybe the bond market and VIX markets...these violent moves are plays they are meant to roast someone and provoke a response.

I didnt like seeing that Trump was implying something through his idiotic twitter account...we should not applaud a president taking actions over the stock market or commodity markets the way Trump does. It is not what the POTUS is supposed to do and he is taking liberties he should not, instead of focusing on what he should.

Lets see how it plays out, I imagine those idiots at the FED will come out and say whatever the hell the market wants so this paltry selling stops. The players are acting more childish than they did at the 2008 crash and we are not even SNIFFING those numbers.

I spent a good deal of the afternoon looking at the companies in the XLE and the different aspects and financials for the companies in that index. There are some really good companies in there, hardly any stinkers so the challenge is to try and find one or two that have a good divi, good valuation and financials that are not crumbling. 

One odd thing that came to me this weekend, when I was a broker in Philly I had a customer who worked for SUN and we did their company stock option transactions. I was looking at Sunoco and I dont see why they are paying such a high dividend and the price is so stable. Their cash flow figures are reasonable and I dont see how a refiner like them or Valero are going to get knocked versus drillers and explorers. They are light on cash but they always seem to be that way, but their cash flow covers all debt and dividends. I was a bit surprised they are not included in more ETF's and that there are not many refiner ETF's available.

 I can't comment much about the refiners like Valero, Sunoco,  Philips 66, etc.  myself  The oil patch is hard enough ; I hate isolating myself further to just  refining operations.   It's an additional reason why I like the integrated big oil guys.  They have the E and P business ;   they have the refining operations,  and they have the retail operations,  or gas stations.   I like having all the businesses top to bottom in one company.  More diversified, and  both CVX and XOM fit the bill.  

I know from earlier postings  you're comfortable taking more risk in this area..  It sounds funny, but the ETF  is actually more risky

( higher beta) than either Exxon Mobil or Chevron.  

So the market is down today of course but what I find as quite confounding is based on where oil is, where bonds are that the stock market isnt down like 10K right now. The market is pointing the middle finger at the FED right here and has been for the last week or so and taunting the FED to pull QE back today.

The DOW at 24k given all else around and the NAZ at 8k, what a massive joke. I hope the FED is looking at the markets not at bonds because this is a massive con job right in front of our faces.

In the oils the stocks getting killed are those that are leveraged and exposed to fracking...some HUGE drops but then you look at say SUN as I mentioned and its down but nothing like Marathon or Oxy.

I might go get me some XOM today, the divi yield is probably enough for me to sit on and add to if the stock goes lower over the next few months.

I would hope the Fed sits tight and leaves rates as is (we need bullets in the chamber on the other side of this crisis) but the global pressure for coordinated movements is immense at the current time. 

I alluded to the fact several days ago that I did not think the bottom had been set in as there was an absence of panic. Today, with trading being temporarily suspended, is starting to feel more like that fear is setting in. I believe we will give up all of the gains from last year before a bottom is set in. The markets were priced for perfection at the top and while that was nice, the market pendulum is now swinging to the opposite side of the spectrum. History tells us, assuming the world is not ending, that the markets are overreacting and that an equilibrium will be found as summer gets closer. 

I love the 4 seasons, but it sure would be nice to skip spring this year!