I jumped out of $JCP this morning for a quick 10% gain. The pause in price over the last couple days may be consolidation for a further advance, or may be buyer exhaustion.
My shippers are doing better than I had expected thanks to an upside explosion in the Baltic Dry Index. My $FRO position is up 41% while I am down 13% in $GNK. These are volatile little stocks and move accordingly. My tiny lotto play in $SMSI is only up 6% as of now.
While we certainly cannot call this week’s market action ugly, it is becoming more difficult to make money. I am slowly raising cash in an attempt to not be the last one standing when the music stops, despite the fact that all previous excercises in caution this year have been a mistake.
I relax in the sitting room, beside the smoldering remains of the evening’s fire. The guests have left and the manor is quiet and warm. It is with a strange combination of sadness and curiosity that I read the news and watch the steady stream of night’s Walmart fight videos uploaded to YouTube. I will link some below for your own enjoyment. Maybe the still of the night is provoking philosophical insight. Have Americans always been this desperate to accumulate stuff, or has something changed in the recent past?
I believe in the grand scheme of things, stores like Walmart exist for one very important reason. To buoy the perceived wealth and spending power possessed by the working class. A person will be less aware of their declining wealth and standard of living if the effects are masked by a weaker dollar and cheap imported goods. Who cares if the inferior merchandise only lasts a few months? A content working class will not feel motivated to clamour for higher wages or improved working conditions. So, in effect, Walmart is a “gift” from the wealthy to their employees.
When I was a middle class child in the 1980s, everyone was watching “Lifestyles of the Rich & Famous”. Donald Trump was also making headlines with his newly acquired 727 and massive yacht. My conservative German family found the extravagance quite foolish, bordering on the insane. Most Americans, however, were absolutely infatuated by these displays of prodigality. As the years have wore on, the über-rich have become surprisingly more generous and philanthropic, now choosing to spend their fortunes in less flamboyant ways like divorce and $212,000,000 paintings. The materialistic instincts of the 1980s wealthy were conveyed into the bourgeoisie middle class of the 90s and have finally found their way into the modern day working class.
I believe the disgusting fights over door buster deals are a mere extension of what we as Americans accept and even celebrate. When floor traders scream, yell and fight over futures contracts on the floor of the Chicago Board of Trade, it is celebrated as healthy, aggressive capitalism. Many high profile public fights, like the Ackman/Icahn Herbalife tussle resulting in a $1/2 Billion loss for Bill Ackman, are fascinating and even endearing. But we find the low brow fisticuffs at Walmart to be stomach turning. Maybe it is our perception that is faulty. Our bias against those who must get the $100 TV because the $400 TV is out of the question. Sure, for many participants of the Black Friday madness this is mere sport mixed with very bad manners. But for many of the shoppers, their ability to grab the door buster items will make or break their family’s Christmas. Many are working hard to bring home $250 per week. I think we all know this economic path is unsustainable. Change will eventually be demanded. Either prices will fall or wages will rise. There are now too many too close to the bottom. Either way, the trip will be painful for all involved. This post has ended at a very different place than I expected.
Many today will give thanks for the usual, family, job, friends. I live my life in a state of continual gratitude for my amazing family, relationship with Christ and my job. These are the three most important things in my life and I am eternally grateful for them.
What I am mindful of this Thanksgiving, however, is the amazing age in which we live. I began trading in the early days of the dot com bubble. Traders had very few forums for discussion. Much like the early days of the personal computer, those interested would gather in local meetups and investing clubs. The buy and hold investor crowd watched Wall $treet Week with Louis Rukeyser. Stale information was made palpable with Mr. Rukeyser’s famously dry sense of humor. CNBC seemed like a breath of fresh air with their modern appearance, faster pace and younger guests. I was a regular viewer of Ron Insasa, Bill Griffeth and Sue Herrera. Making money in the market wasn’t too difficult in 1999/2000, giving CNBC much undeserved credit. Today, the financial television landscape appears to be in steady decline. Indeed, many local newscasts draw more total viewers than the once proud financial news networks. CNBC has been viewed as a cheerleader to many recent bubbles, leaving many amateur investors with a bad taste in their mouth. Fox Business’ over the top conservatism is a turn off to many, including myself. Bloomberg is the best of the lot, but seems difficult to watch at times.
The best, most actionable and fresh financial information today may not have the most gorgeous talent, fancy graphics or largest financial backing but is FAR better than anything ever before available to the average trader. Platforms such as Stocktwits, Twitter and the recent upstart BTFTtv offer real traders sharing trading concepts and actionable ideas for everyone. I cannot imagine a university teaching more about trading than I have learned from the kind and generous ladies and gentlemen on these platforms. So, let us all be thankful for the era in which we live. There is now no excuse for ignorance. Take full advantage!
For your pre-holiday enjoyment is a daily chart showing a potential bearish rising wedge pattern forming on the S&P 500 chart. Of course, the series of higher lows and higher highs present is bullish in nature. Besides, who would want to short this freight train market? Nevertheless, to be forewarned is to be forearmed.
Yesterday was a day of complete degeneracy in the markets. The Dow and S&P 500 spent the day grinding slowly higher, only to give it all back at the end of the day. Meanwhile, the materials space, including my WLT position, was dismantled. I was stopped out for a 10% loss. Ironically, my degenerate JCP and SMSI positions were up 2% and 10% respectively. Even the homebuilders and Blackberry caught a bid!
I never waste much effort over-analyzing low volume days. It does seem the pace of sector rotation has increased. If you position into a sector that was hot last week, you’re too late. The party is already over. Clearly we are overdue for a nice pullback, but I’ve been saying this all year.
Today the shippers are on fire with my GNK and FRO up 11% and 15% thanks in part to their morning earnings call. Truth be told, I didn’t even know they were even reporting earnings. Moeaz Mazhir gave me a heads up in the blog comment section. I took the chance and it worked out. My degenerate SMSI position is giving a little back, down 5% while JCP rallies 4%.
Top priority in this tape is to minimize downside. As the excellent financial blogger ChessNwine likes to say, if you minimize downside and avoid the big drawdowns, the upside will take care of itself. One thought I had earlier, and not saying it will happen, but can you imagine how many would be caught out of position if we saw a downside surprise event over the Thanksgiving holiday?
I like the volume expansion as it broke above the 30 week moving average. Very small position on this dollar stock.
The shippers are acting well today, especially against the 30 week moving average.