After the market closed today (Monday), I saw on my news feed that Verifone Systems (PAY) had agreed to be acquired at a huge premium to its closing price, about 50% higher than the market. That’s not especially interesting news to anyone that doesn’t have a position in the stock, but I do. And it’s a short position. And that, as you might guess, is not a good thing.
I am sharing this bit of bad news as an object lesson in risk management, however. Because after I found this out, I asked myself the following questions and gave myself the following answers: (more…)
There are countless quotes, aphorisms, and bromides related to the world of trading. One of the best known is Joe Granville‘s: “If it’s obvious, it’s obviously wrong.”
Having lived with, considered, and occasionally applied this nugget of wisdom over the years, my conclusion is that what’s “wrong” is actually the quote itself. I believe its principal appeal is that it has that counter-intuitive, funny-because’s-it’s-ironically-true sensibility to it. Kind of like Mark Twain’s “….the coldest winter I ever spent was a summer in San Francisco.” Har de har har. (more…)
I cannot shake the feeling that the market gods are trying to trick me. I keep looking at these charts and wondering to myself, “there is NO WAY they are going to make it this obvious.” Because during the depths of the sell-off, the “obvious” move was a rally to the low 25000s on the Dow, which is exactly what happened. Now that we’ve recovered about 62% of the drop, the next obvious move is another plunge, taking out the lows from early February. If by some miracle that transpires, I will fall over backwards at how easy it SHOULD have been to trade (I’m too much of a worrywart to aggressively position myself, in spite of the aforementioned obviousness).
Here’s the DIA ETF, for instance. We’ve got a perfect shooting star reversal formation on Friday, and we’ve come full circle on the retrace back to where the serious fall commenced (at the arrow).
Depicted on the following graphs are percentages gained/lost in Major Indices and Major Sectors over a longer term (1 year), a medium term (year-to-date), and a short term (the past week).
They are presented, simply, to illustrate where they are relative to those three timeframes.
My only comments are as follows:
- Major Indices: Utilities, Small Caps and Transports continue to underperform, and I’d monitor Small Caps, in particular, as I outlined in yesterday’s article, for further signs of weakness and an indicator of further equity risk-off activity.
- Major Sectors: Energy, Consumer Staples, Health Care and Utilities continue to underperform, but I’d keep an eye on Financials for any evidence of further weakening, as I recently described here.
A story making the rounds quite a bit on Tuesday was about the young man who torched his $4 million trading account by betting it all on XIV which, as we all know, got completely destroyed in a manner that most would have never fathomed possible. ZeroHedge featured this story for many hours as its header post.
I like sleuthing around, so I decided to dig deeper into this anonymous fellow who lost all this money. After some digging, I figured out his name was Gregory, he lives in Singapore, and he’s one of those gunslingers that hangs out on Reddit’s “Wall Street Bets” forum. In case there’s any doubt about the youthful male nature of such a place, the animated graphic at the top of the forum leaves nothing to the imagination: (more…)
Nothing worth talking about news-wise until next Friday, when the monthly jobs reports hits. Otherwise….relax!
The Dark Index (DIX) is a simple metric that tells us whether investors are using dark pools to buy or sell shares of S&P 500 component stocks. When it’s high, investors are buying. When it’s low, they’re selling.