February 2012

I’ve a market order to purchase additional CDXS shares tomorrow. There have been a couple of shocks with CFO & CEO departures: normally [and it may well be in this case, although I think not] it is a red flag.

The entire biofuels sector is pretty beat-up at the moment. I’m still pretty confident, and as this is my ‘stock-of-the-year’ its probably just as well.

Growing revenues is the key. This is being accomplished. At some point scale of economies takes over and profitability follows. It can be a slow process, but, assuming that it happens, the potential rewards make the risk worthwhile.

Did you buy today’s dip? If you have my S&P500 newsletter then you would already have the answer to the question of whether you should.

Certainly blogoland is getting pretty nervous as to the duration of this rally. I’ve seen attributions to Bernanke with regard to the sell-off today and his apparent ‘no QE’ stance. Operation Twist is a QE program. The Fed. is already deep in QE territory.

Of course, with the market so extended, any blip is seen as the ‘top’ and the bend-at-the-end, paranoia is ramping up. Oil & gasoline prices are the latest fear that has replaced the Euro crisis for problems to worry about. Add in some weak economic data, and the bears are out in force as far as bad news is concerned.

The Investors Intelligence survey of investment newsletters last week counted 22% of these handicappers calling for a correction (versus a somewhat unwelcome 51% majority being outright bullish and 27% determined bears). That 22% correction camp isn’t an extreme high, but it is above the level seen since this upward spurt began in early October.

You could simply purchase my newsletter. You would have caught the move. Of course many will simply wait to see if the newsletter catches the ‘turn’ and how well [or badly] that the transition is dealt with. That is actually quite sensible, but what if its a long, long wait?

This is the trouble with investing/trading, when to jump in? Early on, it just looked too ugly, Greece etc dominated the headlines, later, it was too late, you’d missed the lows and the safe entry point, wait for the ‘pullback’: the pullback never came, markets are largely an exercise in frustration. The only way is to develop a methodology that manages your risk constantly.

Over time, my newsletter will demonstrate my method. It won’t be too everyones taste, but then its not necessary to adopt it, you can simply trade your own system to the signals. If you don’t have a methodology of your own, you can easily adopt mine via the newsletter.

I will be outlining the system soon, I meant to do it earlier, but the Court case consumed far more time, along with various other projects, and I just haven’t actually done so yet.

Back in the spring of 2009 I was approached by a middle-class investor in a panic. She had dumped all her stocks in the fall of 2008, following the Lehman Brothers collapse. She just couldn’t stand watching her life’s savings evaporate before her eyes. By the time we spoke, the stock market had already rallied sharply, but she was too afraid to jump back in. She just didn’t trust it. I couldn’t coax her. She was terrified.

It’s a typical story, and the results are plain to see. Last week, the Dow Jones Industrial Average hit 13000 for the first time since the crash. It has recovered most of the ground lost from the peak. When you include dividends, someone who invested on the day before Lehman collapsed is now up a remarkable 18%. If they invested at the lows three years ago, they have doubled their money.

But for all the cheering on Wall Street, there’s a sorry tale behind the headlines.

While we’ve seen a stock-market boom that has made plenty of people rich, much of Main Street America has missed out. Instead of buying, they’ve been selling. The few moments when they’ve steeled themselves and turned buyers have been, on the whole, the worst times to do so.

In total, over the last five years the investors in ordinary domestic mutual funds have withdrawn $490 billion from the U.S. stock market, according to data compiled by the Investment Company Institute, the industry trade group. There have been only a few brief periods during which they were buying. The first was the spring of 2008 — just before the market collapsed. The second was the spring of 2009, after the stock market had already rallied. The third was the start of last year, shortly before the market slumped again.

Look, we’ve been down this road before, haven’t we? I tell you what is going to happen and you ignore me because your brains are small. For a while, you will gloat while swimming in the shit soup, decrying Le Fly as being “passe”–because that’s what faggots do. But then it will all unravel soon enough and the market will sip your soup, leaving you sitting there with dried up feces all over your face.

It’s worth noting, I am merely watching this ordeal, not really in, out or betting against. I’m up nearly 20% and have 75% of my assets in cash. It’s true, I own some VXX and TZA, but nothing too serious. I also own TIF and CPST, but nothing too gargantuan.

Professional money manager. While cash is a position, is it a position for 6mths? This rally has been marching for 6mths, the first few months was range-bound chop, so you could be excused for sitting it out. Then however the market signaled a change to a trend, and our main man is still sitting in cash, looking very foolish and getting abused in the comments section.

Where was the ‘PPT’ during all of this?

What is the event that will cause this market to sell off? It will surely be a surprise. I’m searching for reasons to be bearish and besides sentiment and the Dow Transportation Index , I’m not seeing much. In fact, as far as sentiment goes this continues to be the world’s most hated market. Veteran traders hate this market because they want action, bears hate this market because it’s grinding them to dust, and bulls hate this market because they’re under invested.

We are now getting to the ludicrous stage of this rally and the mentality among market participants is that you’re a fool not to be bearish right now. A FOOL. While I agree that some degree of caution is warranted after such a long run, these types of markets can run for a very long time. Often, instead of giving deep juicy pullbacks, all they offer is a stingy shallow pause.

Which is pretty much the case. Normally traders would welcome a bull run. Not so much this time as many missed getting on the train way back in October/November, another group missed out on jumping on board in January, and so it goes.

The dips have been shallow, fast, and aggressively bought. The backdrop of continuous European woes, incompetence, has flavoured much of the market narrative, yet still the market advanced. I’ll tout my own newsletter: from December 21, the first edition, you would have been long and stayed long through the entire run.

The Court case is finally finished. I e-mailed the final submissions last night. This was essentially a 30pg legal argument and summary of the entire case. The ‘opposition’ have it for two weeks, in which time they have to make their case, and deliver to the Authority, who then writes a decision, which we all receive towards the end of March.

The run continues.

I have started work on next week’s newsletter, and it will be ready Sunday US time. With the ‘bear’s’ getting ever more vocal, the market ever more extended, it will be harder and harder for bears to accept the possibility of further gains in the index, we have already seen ‘professional money managers’ like flippe-floppe spend the last 9 weeks sitting in cash denigrating those actually in the market.

However, if the market is at risk of a turn, then you want fair warning to close longs and as much profit as possible. Realistically you are always going to give away a little at the beginning of a trend and at the end of a trend, catching absolute tops/bottoms is not a viable regular expectation.

I’ll have the results up later, meanwhile I start the analysis for next week to see if I can keep the streak going.

I have just posted issue #9 under the reports tab. The results will be posted later once I have the missus tidy up the screenshots.

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