Trading the Trend

[ducati916]

1. Yeah but we didn't know if the jobs data was going to be good or not -

2. if it was bad and that was combined with virus data, it would have been a bloodbath.

1. No we didn't. But if you had been following the economic data, you could have inferred that it would be (a) not a disaster and (b) not brilliant, which leaves (c) so-so. On (c) the market goes up. On (a) the market goes up. Even on (b) the market goes up.

2. Virus data becomes more irrelevant every single day that passes. Evidence: you said we had bad virus data: every sector of the market is moving higher.

jog on
duc

 

[over9k]

Sure but they're not moving in equal measure are they? You also discount the employment numbers. What would the market have been if the virus data wasn't bad? Significantly higher that's what. This is just the one day where they've both coincided - every other time we've seen bad virus data, we've seen negative results. The employment numbers just counteracted it to such an extent that there was a net positive today.

Remember last time there was better than expected employment data? The market shot up a hell of a lot more than 1% didn't it?


Stay at home tech is head & shoulders above everything else for a reason.

 

[ducati916]

Sure but they're not moving in equal measure are they?

Stay-at-home tech is miles above everything else and it's miles above everything else because of the virus data.

True. But will that remain true?

That could well be true and is probably true. So what?

jog on
duc

 

[over9k]

Post edited.

I'm pretty firm on the divergence remaining until we see a vaccine.

 

[ducati916]

Post edited.

I'm pretty firm on the divergence remaining until we see a vaccine.

Well I disagree. But I'll go into greater detail over the w/e. You can provide your arguments/evidence for your case over the w/e, unless that is your case.

However if a vaccine were to be found (one that actually works) markets would explode higher.

Anyway, it looks as if we will close at the previous high, prior to the pullback. Tell me what happens Monday. You have a long w/e to think about it and marshal your evidence/arguments.

jog on
duc

 

[over9k]

My argument is very simple: Just looking at the market as a whole does not tell the whole story. There's a massive divergence between sectors and we should therefore be betting on the right sectors (and then the right companies within those sectors), not the entire sp500, if we want to make the most money. To do that, we need to understand the reason for the divergence, and what's going to happen RE: that reason.

Put simply, the more virus we get, the more divergence we get. And there's plenty more virus coming.

I'm interested to hear why you don't think the divergence will remain - even now we're seeing the reimposition of lockdowns in hotspots and that is not going to go away. If anything, it's going to get worse as the virus spreads more.

 

[qldfrog]

My argument is very simple: Just looking at the market as a whole does not tell the whole story. There's a massive divergence between sectors and we should therefore be betting on the right sectors (and then the right companies within those sectors), not the entire sp500, if we want to make the most money. To do that, we need to understand the reason for the divergence, and what's going to happen RE: that reason.

Put simply, the more virus we get, the more divergence we get. And there's plenty more virus coming.

I'm interested to hear why you don't think the divergence will remain - even now we're seeing the reimposition of lockdowns in hotspots and that is not going to go away. If anything, it's going to get worse as the virus spreads more.

Do not let a local lockdown reimposed hide the whole economies being restarted...ohh dear, a city in the UK is licked again..well what is the economic size of a city or even Victoria vs whole countries restarting.
Balance required.

 

[makteb]

My argument is very simple: Just looking at the market as a whole does not tell the whole story. There's a massive divergence between sectors and we should therefore be betting on the right sectors (and then the right companies within those sectors), not the entire sp500, if we want to make the most money. To do that, we need to understand the reason for the divergence, and what's going to happen RE: that reason.

The market does what it does and every indicator is nothing more than an indicator. There may be a story behind the indicator and there maybe a blank page. There is no right or wrong, there is just...how much of the pie do you want to take today...or how much of the pie are you giving back?

We will miss the rise (or the fall) if we take our eyes of the ball, the trend is your friend until it ends.

 

[ducati916]

My argument is very simple: Just looking at the market as a whole does not tell the whole story. There's a massive divergence between sectors and we should therefore be betting on the right sectors (and then the right companies within those sectors), not the entire sp500, if we want to make the most money. To do that, we need to understand the reason for the divergence, and what's going to happen RE: that reason.

Put simply, the more virus we get, the more divergence we get. And there's plenty more virus coming.

I'm interested to hear why you don't think the divergence will remain - even now we're seeing the reimposition of lockdowns in hotspots and that is not going to go away. If anything, it's going to get worse as the virus spreads more.

So what's your call for next week?

jog on
duc

 

[over9k]

I'm holding my stay-at-home tech. I'm expecting more bad virus data & localised lockdowns to come. I've just moved some cash today and am waiting for another dip to pull the trigger on a few buys with. I'm gunning for all of these:

Boeing's the real wildcard - I initially bought at 125 & sold at 190, now looking at taking another swing at it. I'm also considering holding some pfizer long as they apparently have a contract to produce/distribute the vaccine whenever we discover it, but I need to look into that further.

As I know you've mentioned previously we're over the hill of summer too so we have seasonality to consider as well.

Aside from the talk (political bickering) about the next stimulus package I think things are going to be pretty boring for a while now - just virus outbreak, lockdown, lift of lockdown, repeat. Once the mask factories come online we'll see virus data drop off. Even the asx was mixed/choppy today despite following a green night on wall st.

This is the new normal.

 

[qldfrog]

Nearly tought about sending this as Pm
There is a difference between conviction and facts:
Please ask anyone with a bit of background in virology and the sentence:

they apparently have a contract to produce/distribute the vaccine whenever we discover it

is akin to i invest in Tesla as they have a licence to distribute time travel machines.
Not kidding, that is what i. mentioned in a lot of other threads about the effect of propaganda and the myth of a vaccine, it is so widespread that gov will need to release one even if it is 0pc efficient.

I took the pain to cut and paste an example of surgical 3 ply masks you can order and get delivered in less than a week.there is no mask penury in July 2020.you pay, you get them.probably actually an overproduction

The rest of the post, fair, your opinion and we can agree or not but please do not spread knowingly false or twisted information.there is enough real data to make you point: seasonality...as we can see now in Melbourne plays a role etc etc

 

[IFocus]

Talking to a mate today who is on a drug trial for an autoimmune disease, the same clinic is running Covid vaccine trials as well.

Apparently so far they are on track with the results being very good (phase 2 I think).

 

[over9k]

Nearly tought about sending this as Pm
There is a difference between conviction and facts:
Please ask anyone with a bit of background in virology and the sentence:
is akin to i invest in Tesla as they have a licence to distribute time travel machines.
Not kidding, that is what i. mentioned in a lot of other threads about the effect of propaganda and the myth of a vaccine, it is so widespread that gov will need to release one even if it is 0pc efficient.

I took the pain to cut and paste an example of surgical 3 ply masks you can order and get delivered in less than a week.there is no mask penury in July 2020.you pay, you get them.probably actually an overproduction

The rest of the post, fair, your opinion and we can agree or not but please do not spread knowingly false or twisted information.there is enough real data to make you point: seasonality...as we can see now in Melbourne plays a role etc etc

I made very sure to qualify my statement by saying "apparently" and that I haven't looked into it frog. I was by no means stating the pfizer stuff with any kind of certainty and made very sure to state that I wasn't. I literally just saw it in passing somewhere and that's it. Don't be prickly.

 

[ducati916]

1. My argument is very simple: Just looking at the market as a whole does not tell the whole story.

2. There's a massive divergence between sectors and we should therefore be betting on the right sectors (and then the right companies within those sectors), not the entire sp500, if we want to make the most money.

3. To do that, we need to understand the reason for the divergence, and what's going to happen RE: that reason.

4. Put simply, the more virus we get, the more divergence we get. And there's plenty more virus coming.

5. I'm interested to hear why you don't think the divergence will remain -

6. even now we're seeing the reimposition of lockdowns in hotspots and that is not going to go away. If anything, it's going to get worse as the virus spreads more.

1. Agreed.

2. There are significant divergences between the over-all market and sectors. We do need to try and understand why. In part (a) it is the way the indices are constructed. The Dow is based upon the dollar price of the stock, therefore high priced stocks exert greater influence. The S&P500 on market capitalisations. The NASDAQ is very tech. heavy. Therefore when a sector (or importantly single stock) is outperforming (for any reason) the index that it is contained in can be influenced disproportionally by that sector/stock. Currently then we have QQQ on fire because of the heavy concentration of tech.

However the QQQs contain very speculative tech. I remember day-trading TASR when it was one of the hot stocks. Does it even exist anymore? The same will happen with a number of the current crop. ZM leaps immediately to mind. Now when that correction comes (as it always does) will you know the party is over?

3. Which takes us to (b) the current laggards: one of my holdings XLF (held via FAS). Currently held:

I'm a bit annoyed as they let go 'V'. But this is one of the quirks of holding ETFs, sometimes stuff you like gets sold. Anyway, the point being: you have an amalgamation of TBTF. This is a pretty safe ETF. Want spice, just add FAS for x3 movement.

This sector is lagging:

View attachment 105546

Here it is with FAS.

Will it always lag the broader market?

Starting to look very bullish:

Just your bog standard chart.

Indicating that we could expect fortunes to turn.

P&F which seems to have lost popularity lately.

Seasonality.

Fundamentals: the Banks in this ETF are very closely aligned with the Fed. and the health of the Regional Banks, whose fundamentals are picking up: Real Estate:

The largest driver of Bank earnings is picking up. Banks have already passed their solvency tests. All is set for some catching up to the over-all market performance. Corporate finance is also on fire (although probably not for the best reasons).

4. The US is not going to go lockdown. They will go as Sweden did: every-man for himself. There are a number of reasons for this (in no particular order);

(i) Shutting the economy the size of the US is massively damaging: because they 'cannot, they will not';
(ii) It is an election year (shuttering is unpopular);
(iii) There are Constitutional issues. This hasn't been overly discussed, but Yanks are highly litigatious;
(iv) Much of the (highly profitable) business can operate with 'social distancing', work from home, etc;
(v) There is a Cold War developing with China, which means outsourced supply chains could be repatriated;
(vi) Hopes of a vaccine;
(vii) Other.

So whether the virus increases or not, the US is not going to shut-down in the same way as NZ did. Some industries will suffer, cease to exist even, but those are the ones you avoid.

5. Divergences never remain in aggregates. They may persist in individual names for a while, even a long while, but capitalism is competitive (although precisely in XLF we have crony-capitalism at play) and profitability ebbs and rises, driving capital allocation to those on the rise. Banking is a low margin business, leveraged by massive leverage (hence the requirement for cyclical bailouts). We have just passed through an event that would (and would have, save for another bailout, sunk many banks) clear away the most egregious excesses, ready for them to be piled on again (the major money banks can trade again) which for the next cycle will massively boost profits, which will in due course, turn into massive losses.

6. Nobody cares.

jog on
duc

 

[over9k]

1. Agreed.

2. There are significant divergences between the over-all market and sectors. We do need to try and understand why. In part (a) it is the way the indices are constructed. The Dow is based upon the dollar price of the stock, therefore high priced stocks exert greater influence. The S&P500 on market capitalisations. The NASDAQ is very tech. heavy. Therefore when a sector (or importantly single stock) is outperforming (for any reason) the index that it is contained in can be influenced disproportionally by that sector/stock. Currently then we have QQQ on fire because of the heavy concentration of tech.

4. The US is not going to go lockdown. They will go as Sweden did: every-man for himself. There are a number of reasons for this (in no particular order);

(i) Shutting the economy the size of the US is massively damaging: because they 'cannot, they will not';
(ii) It is an election year (shuttering is unpopular);
(iii) There are Constitutional issues. This hasn't been overly discussed, but Yanks are highly litigatious;
(iv) Much of the (highly profitable) business can operate with 'social distancing', work from home, etc;
(v) There is a Cold War developing with China, which means outsourced supply chains could be repatriated;
(vi) Hopes of a vaccine;
(vii) Other.

So whether the virus increases or not, the US is not going to shut-down in the same way as NZ did. Some industries will suffer, cease to exist even, but those are the ones you avoid.

6. Nobody cares.

2 - This is what I've been saying the whole time? Take tech out, and to be more specific, what I'm calling stay-at-home tech, and you see a wildly different picture.

4 - No, but we're seeing significant lockdown(s) in a lot of places and lockdowns based on industry/sector as well. Just look at Australia for example: K.O'ing victoria alone is what, 25% of the population? This is not insignificant. And the U.S has virus basically everywhere.

6 - Absolutely false. If nobody cared about the virus, nobody's behaviour would have changed. People are avoiding things like the doctor etc for a reason. They are shopping on amazon or ebay or whatever and not going into bricks & mortar stores for a reason. Companies are telling employees not to come in to the office unless they have to for a reason. I.e anyTHING which can be done from a distance, is. Lifting the lockdowns is not changing this behaviour - it's only allowing the people that couldn't work from home to *maybe* go back to work. Offices are empty and remaining so. However, I'll humour your assertion that nobody cares to make a bigger point:

Let's for a moment assume that all lockdowns are lifted and everyone everywhere are just idiots with their health and *everybody* gets coronavirus. You think that millions of people either dying and/or being off work sick for weeks is not going to be a HUGE cost all on its own?

This is the reason why companies which can allow/enable their employees to work from home are doing so: Employees off sick costs money. In this case, a LOT of money.

Either the costs will come from lockdowns/people avoiding human contact, or the costs will come from the sickness that comes as a result of not having the lockdowns/avoiding human contact and thus contracting the virus. There is a cost to be paid one way or another. What I am saying is that it CANNOT be avoided.

As a result, what we see is capital diverting into all the various things which enable people to keep their distance.

It's no more complex than that.

 

[ducati916]

2 - This is what I've been saying the whole time? Take tech out, and to be more specific, what I'm calling stay-at-home tech, and you see a wildly different picture.

4 - No, but we're seeing significant lockdown(s) in a lot of places and lockdowns based on industry/sector as well. Just look at Australia for example: K.O'ing victoria alone is what, 25% of the population? This is not insignificant. And the U.S has virus basically everywhere.

6 - Absolutely false. If nobody cared about the virus, nobody's behaviour would have changed. People are avoiding things like the doctor etc for a reason. They are shopping on amazon or ebay or whatever and not going into bricks & mortar stores for a reason. Companies are telling employees not to come in to the office unless they have to for a reason. I.e anyTHING which can be done from a distance, is. Lifting the lockdowns is not changing this behaviour - it's only allowing the people that couldn't work from home to *maybe* go back to work. Offices are empty and remaining so. However, I'll humour your assertion that nobody cares to make a bigger point:

7. Let's for a moment assume that all lockdowns are lifted and everyone everywhere are just idiots with their health and *everybody* gets coronavirus. You think that millions of people either dying and/or being off work sick for weeks is not going to be a HUGE cost all on its own?

8. This is the reason why companies which can allow/enable their employees to work from home are doing so: Employees off sick costs money. In this case, a LOT of money.

9. Either the costs will come from lockdowns/people avoiding human contact, or the costs will come from the sickness that comes as a result of not having the lockdowns/avoiding human contact and thus contracting the virus. There is a cost to be paid one way or another. What I am saying is that it CANNOT be avoided.

10. As a result, what we see is capital diverting into all the various things which enable people to keep their distance.

It's no more complex than that.

2. When I say Tech. I'm more referring to MSFT, AAPL, AMZN. These are huge companies that can (and do) move the needle in the indices.

4. I don't look at Australia. The US is different.

6. I'm not referring to Joe Bloggs in the street. I'm referring to the financial markets. The markets just don't care.

7. The markets are not looking at today or tomorrow: they are looking at 2021/2022 earnings.

8. Where they work is largely immaterial. Productivity is the issue.

9. The market just doesn't care.

10. To date, there is an element of truth to that. Going forward, unlikely.

jog on
duc

 

[ducati916]

So it doesn't look as if there is an analysis of what is going to happen early in the week, that being Monday and which could set the tone for the week.

The Fed. and the creation of liquidity:

Lots of liquidity. Zero inflation (as measured by the Central Banks). Therefore, there will be zero inhibition to creating more liquidity and buying all and anything that even resembles a financial instrument.

So the classes competing for this liquidity: (a) Bonds (Treasury & Corporate), (b) Stocks, (c) Commodities (Gold/Silver) and (d) Currencies.

The Commercials are supportive of the US$. This will have more impact on commodities (Oil) than Bonds or Stocks. Given the latest oil news re. gradual increase in supply coming back online from the Arabs/Russia/US/etc, dollar strength just adds to POO weakness.

Which is supported by the ratio of Bondsollar. We may well see some weakness in Bonds. It will not be major. Any major increase in yield will be bought by the Fed. The macro picture remains strong/neutral for stocks. Therefore it will be a straight out technical fight at resistance in the market.

Gold is the strange one. There is no hint of inflation. Silver is doing nothing, confirming that Gold is not moving on inflation fears. Is Gold currently operating as a stock? I'm starting to think so. Is it competing for investor funds?

The Commercials are still leaning against.

Gold could also be weakening against its natural competitor, Bonds. The thing is this: you could buy gold, it is going up (gradually) but I have yet to hear an explanation why (other than my 4 hour chart says so). Technically the 'why' isn't critical as long as you have an exit plan. It could be that China and India combined (buying the physical) amount to such high value, that it is actually pushing the paper higher. If this is the explanation (if you have a better one feel free to jump in) then gold could go down a lot, very quickly. If that is the case, then gold is not really competing with stocks for liquidity. Again, that has ominous overtones if the purchasers of the physical slow down or reach their fill.

Stocks:

The QQQs have been on fire. The S&P500 lagging (by comparison).

The Commercials are leaning against the QQQs and supporting the S&P500, which is consistent with various sectors other than Tech. starting to wake up as the economic data improves. Therefore I would expect a bit of mean reversion in the markets with Tech. cooling off a tad and other sectors starting to move. The overall result being bullish for stock markets. The S&P500 still needs to (a) move back above recent high and then (b) move above all-time high.

The fight will occur at the 310 price. Pretty much equal OI, but a big surge of new PUTS at 310 on Thursday (+29K). These new positions will be interesting to watch to see how they react to prices when we reopen Monday. The reason for that is the CALLS were placed (probably) when the market was lower. Now potentially, we have a situation where the CALLS go ITM. If the market is strong, they hold those positions to increase profit. The new positions in the PUTS are now OTM and losing fast (Options being highly leveraged) so these new positions close (loss limit). The result is a short term boost to the longs as MMs buy the PUTS and hedge (buy long stock). It is the equivalent of a (small) short squeeze. Of course if a larger quantity of the 165K PUTS do the same, then it amplifies that effect.

Technically, the market is in good shape short term (1-3 days) to move higher. Therefore I would expect to move higher Monday, Tuesday, possibly re-evaluate Wednesday/Thursday, which really depends on how much of a move occurs Monday. If high energy is required Monday, to shift through that short term resistance, then we'll need to re-evaluate on Wednesday.

jog on
duc

 

[ducati916]

Just an old chart:

We are at bottom right. We may move to bottom left. Either way, stocks (for the moment) are the place to be. If we make the move to the left, then add commodities to the portfolio.

jog on
duc

 

[over9k]

2. When I say Tech. I'm more referring to MSFT, AAPL, AMZN. These are huge companies that can (and do) move the needle in the indices.

4. I don't look at Australia. The US is different.

6. I'm not referring to Joe Bloggs in the street. I'm referring to the financial markets. The markets just don't care.

7. The markets are not looking at today or tomorrow: they are looking at 2021/2022 earnings.

8. Where they work is largely immaterial. Productivity is the issue.

9. The market just doesn't care.

10. To date, there is an element of truth to that. Going forward, unlikely.

jog on
duc

2. Agreed. But again, tech and stay-at-home tech are different things.

4. I know, I was just using it as an example. What do you think happens when all of california gets locked down for example? But let's assume that doesn't happen: Getting sick costs money. LOTS of money. You really want to claim that millions of people off work sick (or dead) is not going to effect markets?

6. You think that joe bloggs' behaviour doesn't (to at least some extent) dictate markets? Seriously? You think that, oh I don't know, the fact that doctors' surgeries are now ghost towns doesn't have anything to do with why pharmaceuticals are in the toilet?

7. The markets are looking at all time horizons. Why do you think we have the volatility we do?

8. Rubbish. Where you work DICTATES your productivity because if you work in close contact with people, you get the virus. You get the virus, you can't work.

9. Further rubbish. You're saying that the market doesn't care about lockdowns or millions of people off work sick (or dead). That's essentially your entire thesis. It's nuts.

10. There is a lot more than an element of truth to it and you know it. Do I really need to start posting graphs of zoom, docusign, ebay, amazon, microsoft etc over the past couple of months and then compare them to, well, almost everything else? You're not stupid, you know the divergence is there and you know it's massive and you know why it's there and you know why it's massive: The markets DO care about the virus and its very simple but very significant consequences.

If you want to talk about why things are going to change from here on out, I'm all ears. I'm actually very interested to hear your thoughts. But you've been absolutely, categorically, disprovably wrong up until this point.


My thesis for the week going forward is the same as it has been: More virus dictated mess, more buying/holding of stay-at-home tech and virtually nothing else. I'll be opening up more positions soon now that the jobs data is out of the way (friday's employment data delayed the slump we would have otherwise seen) and the only news from here on out aside from the political bickering about the next stimulus package is going to be more virus data and more lockdowns.

The only difference is that we're now over the hill of summer so we're going to start to see the seasonality changes we always see on top of the change we've seen from the virus as well.

The only thing that can/will reverse this trajectory is some kind of vaccine news. This IS the new normal.

 

[ducati916]

2. Agreed. But again, tech and stay-at-home tech are different things.

4. I know, I was just using it as an example. What do you think happens when all of california gets locked down for example? But let's assume that doesn't happen: Getting sick costs money. LOTS of money. You really want to claim that millions of people off work sick (or dead) is not going to effect markets?

6. You think that joe bloggs' behaviour doesn't (to at least some extent) dictate markets? Seriously? You think that, oh I don't know, the fact that doctors' surgeries are now ghost towns doesn't have anything to do with why pharmaceuticals are in the toilet?

7. The markets are looking at all time horizons. Why do you think we have the volatility we do?

8. Rubbish. Where you work DICTATES your productivity because if you work in close contact with people, you get the virus. You get the virus, you can't work.

9. Further rubbish. You're saying that the market doesn't care about lockdowns or millions of people off work sick (or dead). That's essentially your entire thesis. It's nuts.

10. There is a lot more than an element of truth to it and you know it. Do I really need to start posting graphs of zoom, docusign, ebay, amazon, microsoft etc over the past couple of months and then compare them to, well, almost everything else? You're not stupid, you know the divergence is there and you know it's massive and you know why it's there and you know why it's massive: The markets DO care about the virus and its very simple but very significant consequences.

11. If you want to talk about why things are going to change from here on out, I'm all ears. I'm actually very interested to hear your thoughts. But you've been absolutely, categorically, disprovably wrong up until this point.


12. My thesis for the week going forward is the same as it has been: More virus dictated mess, more buying/holding of stay-at-home tech and virtually nothing else. I'll be opening up more positions soon now that the jobs data is out of the way (friday's employment data delayed the slump we would have otherwise seen) and the only news from here on out aside from the political bickering about the next stimulus package is going to be more virus data and more lockdowns.

13. The only difference is that we're now over the hill of summer so we're going to start to see the seasonality changes we always see on top of the change we've seen from the virus as well.

14. The only thing that can/will reverse this trajectory is some kind of vaccine news. This IS the new normal.

4. Correct.

6. Joe Bloggs is irrelevant. As to medical sector:

7. Volatility is falling.

8. Not what I said:

9. Correct. Market could care less.

10. If it were simply ZM and any other micro-caps, the market as a whole would not be rising. Because it is MSFT, AMZN, AAPL, GOOG: these are mega-caps that will move the market and the QQQs, which are very Tech heavy reflect this outperformance to date as against SPY/DIA.

11. To date you have not provided any evidence. All you provide is your opinion. Therefore you have proven nothing.

12. Which means what? Market moves lower?

13. Posted.

14. What trajectory is that? So far markets have been 1-way.

jog on
duc