Investing in the stock market - Discussion

[Warhippy]

32 minutes ago, nuckin_futz said:

The mess in the USO ETF continues to unfold as it trades 7.8% above NAV

Mon 20 Apr 2020 23:55:33 GMT

 

This ETF is doomed

A popular take is that the May NYMEX oil contact isn't representative of crude because at this point it's oil for physical delivery while the June contract is a more liquid futures contract.

 

It's the opposite. The May contract represents the real demand for physical crude while the June contract is puffed up by retail money.

 

A full 25% of the June futures contract is now owned by the USO ETF and that will rise above 30% once pending trades are processed. It's an instrument used by retail traders to bet on one-day moves in oil. It's very likely that tourists in the oil market thought they were buying crude at $1 today or at negative prices in the May contract. In reality, they were buying an 80/20 split in the June/July contracts trading at $22/$27 respectively. These can fall much further.

 

Moreover, all the money flooded into the ETF faster than the managers could create new units. As a result, the ETF finished the day at $3.75 but with a net-asset value of $3.46, according to data just released. That's a 7.8% premium.

 

What's happened in the ETF is truly mind-blowing. Look at the massive number of newly-issued shares along with the unprecedented rise in volume today.

The ETF alone now has $4 billion in assets and was the most-traded instrument on Robinhood yesterday.

 

Starting May 5, The June/July contracts will need to be sold and rolled into July/August contracts.

 

In the day or two ahead I expect more retail money to be ploughed into this ETF.

 

It's a similar story in UCO, which is a 2x levered oil ETF. IT closed at $1.35 and its NAV is $1.21 and holds July contracts among other things. Add it all up and we have a retail slaughter in the making.

So in essence unless the feds step in and start buying up USO/UCO they're done.

 

Are they considered large enough for the feds to step in?  If so might be a great buy in for a morning and sale by afternoon

[nuckin_futz]

1 hour ago, Warhippy said:

So in essence unless the feds step in and start buying up USO/UCO they're done.

 

Are they considered large enough for the feds to step in?  If so might be a great buy in for a morning and sale by afternoon

I don't believe the Fed is allowed to buy assets like this.

[Warhippy]

2 minutes ago, nuckin_futz said:

I don't believe the Fed is allowed to buy assets like this.

Up until ten days ago I didn't think they were allowed to manipulate the markets the way they have so I'm just curious

[nuckin_futz]

1 minute ago, Warhippy said:

Up until ten days ago I didn't think they were allowed to manipulate the markets the way they have so I'm just curious

They've been manipulating markets for ten years.

[Warhippy]

11 minutes ago, nuckin_futz said:

They've been manipulating markets for ten years.

True.

 

But not quite so openly as massive cash injections and tampering with energy.

 

If I recall they were dumping money in to the market and high loss earners as far back as Sept with their massive lines for corps

[CBH1926]

34 minutes ago, nuckin_futz said:

I don't believe the Fed is allowed to buy assets like this.

They have purchased HYG and LQD etf. both of whom have large energy components.

I don’t see why not.

[nuckin_futz]

20 minutes ago, Warhippy said:

True.

 

But not quite so openly as massive cash injections and tampering with energy.

 

If I recall they were dumping money in to the market and high loss earners as far back as Sept with their massive lines for corps

4 rounds of QE, TARP program where they basically took responsibility for the troubled entity's toxic assets. Arranging a shotgun wedding between BofA and Merrill Lynch.

 

They have played around with the SPR (Strategic Petroleum Reserve) before. In an effort to manipulate prices.

 

Repo operations are not that unusual. What was unusual about in Sept was when they were doing it (at all time highs) and the amounts.

 

1 minute ago, CBH1926 said:

They have purchased HYG and LQD etf. both of whom have large energy components.

I don’t see why not.

HYG is high grade debt. Unless they have changed the rules they are not allowed to buy crap assets. How do they buy USO when the Russians and Saudi's can come along and pump a zillion barrels and sink the asset?

[CBH1926]

17 minutes ago, nuckin_futz said:

4 rounds of QE, TARP program where they basically took responsibility for the troubled entity's toxic assets. Arranging a shotgun wedding between BofA and Merrill Lynch.

 

They have played around with the SPR (Strategic Petroleum Reserve) before. In an effort to manipulate prices.

 

Repo operations are not that unusual. What was unusual about in Sept was when they were doing it (at all time highs) and the amounts.

 

HYG is high grade debt. Unless they have changed the rules they are not allowed to buy crap assets. How do they buy USO when the Russians and Saudi's can come along and pump a zillion barrels and sink the asset?

HYG portfolio includes bonds worth about 1.5b issued to energy companies.

Also if Russians and Saudis pump more oil, it will not be beneficial to them.

https://www.cnbc.com/2020/04/09/fed-fires-an-even-bigger-bazooka-expands-its-shopping-list-to-include-junk-bonds.html

[nuckin_futz]

2 minutes ago, CBH1926 said:

HYG portfolio includes bonds worth about 1.5b issued to energy companies.

Also if Russians and Saudis pump more oil, it will not be beneficial to them.

https://www.cnbc.com/2020/04/09/fed-fires-an-even-bigger-bazooka-expands-its-shopping-list-to-include-junk-bonds.html

Yes but it's high grade debt. If that debt get's downgraded they can't be involved.

 

Not beneficial to them in the long term. In the short term, it's very beneficial to them to bankrupt all the smaller producers.

[CBH1926]

3 minutes ago, nuckin_futz said:

Yes but it's high grade debt. If that debt get's downgraded they can't be involved.

 

Not beneficial to them in the long term. In the short term, it's very beneficial to them to bankrupt all the smaller producers.

Most of smaller companies and the ones that are involved in shale drilling will go out business.

The ones that are left will be absorbed by xom and cvx.

 

[I.Am.Ironman]

If we wake up tomorrow and still haven't hear from Kin Jung Un it could make for an interesting day

[AriGold2.0]

I'm curious for people to look into their crystal ball.

 

This was the Dow from 2007-2011. Where I have pinpointed the chart is where I think we are right now in terms of our market and what will happen.

 

Do you think the Dow has bottomed out at 19,100 ?

 

I think we have another huge drop off happening, even lower then 19,100.

 

 

[HI5]

16 minutes ago, I.Am.Ironman said:

If we wake up tomorrow and still haven't hear from Kin Jung Un it could make for an interesting day

Just adds to the memories of 2020!

[I.Am.Ironman]

@HI5 what a crazy year.. we aren't even half way through!

[nuckin_futz]

13 minutes ago, I.Am.Ironman said:

@HI5 what a crazy year.. we aren't even half way through!

2020, so far ......

 

Coronavirus ( COVID-19)  Out Break 

 

One of the Major incidents of 2020 is the Coronavirus outbreak which is affecting almost all countries of the world.
Coronaviruses are a type of virus. There are many different kinds, and some cause disease. A newly identified type has caused a recent outbreak of respiratory illness now called COVID-19.

 

COVID-19 can be passed from person to person through droplets from coughs and sneezes. COVID-19 has been detected in people all over the world and is considered a pandemic.

Assassination of Iranian General, Qasem Soleimani

There has been tension between Iran and the US for decades, but after the US placed blame on Iranian militia over the death of a US contractor in December 2019, the relationship soured even further. The Baghdad US embassy was attacked, and then on 3^rd January 2020, the US launched a drone strike which killed Qasem Soleimani, a senior and influential military figure in Iran.

It has been reported by researchers at theirandeal that Soleimani “made a tactical error becoming too complacent in his travels and communications”. His death was met with mourning and threats of revenge against the US, and on 8^th January, Iran launched missiles at bases which were housing the US military in Iraq; however, there were no fatalities.

Ukraine International Airlines Flight PS752

On the same day that Iran launched the airstrikes on the US military housing in Iraq, Ukraine International Airlines flight PS752 crashed in Tehran, killing all 176 people on board. Iran initially blamed technical issues, but soon afterward, it emerged that the plane had been shot down because of ‘human error’. The commercial flight included Iranian citizens as well as passengers from Canada, Ukraine, Sweden, the UK, Afghanistan and Germany.

Harry and Meghan ‘Step Back’ from Royal Family

Another event which took place on 8^th January was the controversial, and almost unprecedented, the announcement by Prince Harry and his wife Meghan, the Duke and Duchess of Sussex, that they would be stepping back as senior members of the British Royal Family. The pair intend to become financially independent and to live both in the UK and North America. According to reports in the media, the Royal Family were “disappointed” and “hurt” by the news.

Australian Bushfires

After record-breaking temperatures and extreme drought, Australia has been battling some of the most violent and destructive bushfires in history since June 2019. But by January 2020, the damage had reached catastrophic levels. It is estimated that over 18 million hectares of land and more than 5,900 buildings have been destroyed, with at least 34 fatalities. It is also believed that around 1 billion animals have been killed with the possibility of some endangered species now being extinct. The quality of the air is now also hazardous.

UK’s ‘Brexit’ From the EU

On 31^st January 2020, the UK officially left the European Union (EU) — three and half years since the public referendum (vote) of June 2016. In that referendum, 17.4 million people, 52% of voters, chose to leave the EU.

The EU is a political and economic union between 28 European countries. It enables free trade between members without extra fees or checks and free movement of people to live and work in any of the EU countries. The UK had been a member since 1973, and is the first member to leave.

After years of controversy, broken deals and public unrest, the UK left the EU on 31^st January, although the country will continue to abide by EU rules until December 31^st 2020. This is to allow for the UK and the EU to come to a trade agreement.

Donald Trump Impeachment

After becoming the third US president to be impeached in December 2019, Donald Trump faced his trial in January 2020. The two charges involved abuse of power and obstruction of Congress, relating to the President’s conduct regarding Ukraine. Specifically, it was said that Trump allegedly tried to coerce Ukraine and other foreign countries to provide damaging narratives about Joe Biden, the 2020 Democratic Party presidential primary candidate. This also included information about possible Russian interference in the 2016 US elections.

Had President Trump been found guilty by two-thirds of the Senate, he could have been removed from office and disqualified from ever holding office again. However, on February 5^th 2020, the Senate acquitted Trump on both counts — 52 votes to 48.

 

******************

 

Not to mention the Amazon fires, Hockey being cancelled and 2020 taking Neil Peart.

 

Did I miss anything?

 

Oh yeah, that sh**head in Nova Scotia.

Edited April 21, 2020 by nuckin_futz

[I.Am.Ironman]

@nuckin_futz I had forgotten about the Ukraine plane being shot down! The Iran fiasco seems like an eternity ago. I could have sworn that was in november

Edited April 21, 2020 by I.Am.Ironman

[Me_]

Decided to share a bit of what I do in the Stock Market.

 

It took me about five years to know what kind of boat is best for me. When the financial sea is not for my boat, it stays docked.

 

The interesting part of being a Trend Trader, is that if the job is well done, all Trend Traders end up following the same stocks. 
 

I never look at the stock market during market hours. So from 0930 to 1600, the stock market doesn’t exist to me. I’m not a computer and working against computers, I will lose to emotion.

 

Note that trading to feel emotion is pure gambling. 
 

But “feeling” the stock market is necessary for great performance. That means it has to be a daily practice. Otherwise, the “feel” of the state of the stock market fast disappears. I estimate that it takes about two to three weeks of daily work to start to “feel” the market, and about two to three days to lose the feeling. You can always get it back again.

 

So at around 1900 hours five days a week, I now spend about 45 minutes doing what amounts to accounting. Since by that time all is settled in New York, I look at the Price and Volume of the 20-30 companies I follow.

 

My range is:

$20-$100 per share

Anything under $20/share increases the risk per dollar, and anything over $100/share doesn't move fast enough for me to make money on.

 

1,000,000 shares traded per day; no limit on the up. This indicates that the stock is alive. When a stock shows an unprompted spike in volume, THAT'S the news; not what’s on TV.

 

I look for 52-week high
(The stock hasn't been as high as it currently is, in the last year)
All-Time high is best.

 

I’m also looking for an average of 1% a day. That means I’m looking for a 5-20-60;

5% per week (5 business days)

20% per month (20 business days)

60% per quarter (60 business days)
Then I know the stock is going up this week, has been steadily going up this month, and for the last three months as well.

 

For each company, I “box” it’s price (I identify the ceiling and the floor of the stock’s behavior through time), and then I follow it for about three weeks until I personally have empirical data that the price is going up on an increased volume. Most companies fall hard after a while. This monitoring system costs nothing to your equity.

 

If the price of a stock keeps going up, I'm interested. If it drops bellow the highest “box", I stop following it.

 

If a company’s price action and volume proves to be going up, only then may I put in a pilot buy; say 10% of my total equity.
When to invest?

At the bottom of the next up “box” whenever that may be.

 

I never buy at market. I always buy on a Buy Stop at a higher, specific price, with a GTC; “Good ‘Till Cancelled” attached so I can always cancel it. If the price never reaches my Buy Stop price, I cancel the potential purchase and go on. Still free up to now.

 

When I get notification that I was triggered into the market, I then quickly put in a Trailing Stop Loss under the price (10-20% under depending on the accepted fluctuations of that particular stock, or what the current “box” says). This way, if the stock suffers a down turn, I’m sold out automatically at a set price, taking out the emotional burden of “having to make the difficult decision of when to sell”.

 

I work in %, not in $. The “box” tells me if the price is still within the “box” range, even when it may look like I “lost” that day. If the price is still in the determined ”box“, great. It’s on me to deal with the idea of loss on that day; not my account.
 

If the price goes under the floor of the highest “box”, I’m sold out as per calculated. I may leave some money on the table but I usually walk away with quite the profits.

 

That's where it gets interesting; as the price goes up, so does the Trailing Stop, thereby securing profits on its way up.

 

Here is my last successful trade:

(see box set below)

GSX worked well for a while.

I started to follow it on 24 October 2019

I got triggered in on December 16, 2019

As the price went up, I bought more.

I was automatically sold out on 28 February 2020 but I kept 5 shares so I could still "feel" the stock in case it was going to go up again but it never did, so I sold those too.

 

My system sold me out, I made a profit.

 

Notice that I had an order to BUY 55 @ 45.50 STP GTC, but it was never triggered as the stock started to move the other way.

 

Now my system is telling me NOT to invest in GSX, though I’m still following it.

 

Boxset:

 

The actual price movement looks like this:

 

 

My system sold me entirely out of the stock market on February 28 (except the 5 GSX shares). There were no signs of investment opportunity until around March 26 when the stock market adjusted to this pandemic.

 

I never stopped following the market during that time, and the companies that qualified for “follow” mostly disappeared and new ones started to emerge. And now some companies are coming out on top.

 

These are the rules I read every day, that help me bring in constant profits from the stock market. 
 

MY RULES

1. Ego, Pride, Fear, Greed and Over-Confidence have to be subdued.
2. Be an impartial diagnostician who does not identify himself with any theory or stock.
3. There is no sure thing in the market - I am bound to be wrong half the time - I must accept this fact.
4. Do not merely take chances - Reduce risks as far as humanly possible.
5. I don’t have to be invested all the time; only when I prove it makes sense.
6. Opportunity missed by caution is inconsequential misadventure.
7. The equation of weighing the possibility of profit versus the possibility of loss works best.
8. Trade only in listed stocks where there is always a buyer when I want to sell - NEVER "over the counter”.
9. Ignore Wall Street sayings, no matter how ancient and revered.
10. Do not listen to rumours, news, no matter how well founded they may appear.
11. Do not follow advisory services - they are not infallible anywhere - including brokers' advice.
12. Hold on to one rising stock for a longer period rather than juggle with a dozen stocks for a short period at a time.
13. Always put in a pilot buy first. If it rises, double. If it keeps rising, buy more.
14. Walk. Don't sprint.
15. When you want to get out of a position, get out.
16. Always sell what shows you a loss; always keep what shows you profit.

____________________________

OBJECTIVES

1.     Right stocks

2.     Right timing

3.     Small losses

4.     Big profits 

____________________________

TOOLS

1.     Price and volume

2.     Box theory

3.     Automatic buy-order

4.     Stop-loss sell-order

____________________________
 

The “box theory” comes from

Nicholas Darvas’ 1960 book called “How I Made $2,000,000 in the Stock Market.”

 

You can download it online for free as PDF. The most helpful book I’ve ever read in any walk of life and have read probably around 50 times. It is a very simple read, but as one becomes more versed with trading and investing, one realizes the depth behind its simplicity at every read.

____________________________

The books that really helped me figure out the stock market in order of relevance and importance to my style of operation:

 

How I made $2,000,000 in the Stock Market

Nicolas Darvas 1960

 

Trend Following 

Michael W. Covel 2009

 

The Battle for Investment Survival

- G.M. Loeb 1935 (2010)

 

Reminiscence of a Stock Operator

-Edwin Levèvre 1923 (2006)

 

All About Candlestick Charting

- Wayne A. Corbitt 2012

 

How to Make Money in Stocks

- William J. O’Neil 1988 (2009)

 

Consistent Profits in the Stock Market

- Curtis Dahl 1951

 

You Can Make Money on the Stock Market

- Everett J. Mann 1955

 

A, B, C of Investing 

- R.C. Effinger 1947

 

How to Make Money Selling Stocks Short

William J. O’Neil 2005

 

The Intelligent Investor

Benjamin Graham 2006

The Successful Investor

- William J. O’Neil 2003

 

One Up on Wall Street

Peter Lynch 1989

 

Way of the Turtle

Curtis M. Faith 2007

 

 

 

Edited April 22, 2020 by Me_

[AV's Coin]

Does anyone have insight into the renewable energies sector?

 

What about TransAlta (RNW). Has rebounded off its lows however Dividend is around 6%.

[wiseupsucker]

@ Me_

 

You seem well experienced, knowledgeable and a veteran of trading. Curious of your take on how HFT traders and AI bots are handling this. Surely they have to play in it?

1 hour ago, Me_ said:

Decided to share a bit of what I do in the Stock Market.

 

I

 

 

 

 

[Me_]

2 hours ago, wiseupsucker said:

@ Me_

 

You seem well experienced, knowledgeable and a veteran of trading. Curious of your take on how HFT traders and AI bots are handling this. Surely they have to play in it?

 

That’s exactly why I don’t trade during the day. The stocks I get involved with fluctuate 10% to 20% daily on their way up. 
 

Ticker watching during the day would give me a heart attack every time the price went down and a sense of euphoria when the price went up. To me, this is gambling. Emotion cannot compete against computers.
 

The entire stock market is mostly HFT/AI. I’ve already lost in thinking alone. 
 

So when the stock market is closed, the dust has settled and the real price is static. That’s when I can do my work and make sound choices for the next day.

 

I’m not a day trader because I don’t trade nor watch the stock market during the day. But I do my work every night five days a week.

 

I think the best way to fend the potential emotional whims that lead to bad decision and severe losses that come with trading, is to not be involved when the market is open.

 

Nicolas Darvas found that one out the hard way. He was always flying around the world. Early when he finally figured out his own rhythm, he made over $500,000. With that, he felt confident he could get an office in a New York brokers’ firm. He almost went bankrupt.

 

Why? Noise from other investors. 

”Universal is going up and I’m buying”

”Tyocol is sliding I’m getting out of it”

He stopped adhering to his system and started listening to panic.

 

He left that office, almost broke, got himself a hotel room across the street, and told his broker to never call him again whatever bad news he may have to share.

 

He proceeded to make over $2,000,000 in the stock market.

 

That hit me hard. And to this day, it works. Today oil went to negative $40. I have nothing to do with oil in any way because not one oil company is in the 52-week high. Oil doesn’t even get on my radar.

 

But I made money today.

 

Edited April 21, 2020 by Me_