Remember, "Partially Long (or Short)" means less than your normal full position. E.g., If you typically use leverage, then 100% long would be "Partially Long".
Remember, "Partially Long (or Short)" means less than your normal full position. E.g., If you typically use leverage, then 100% long would be "Partially Long".
As many of you know, Dennis Leontyev (aka DenLeo) has been a member of the Fearless Forecaster community since we were part of Carl's Decision Point on AOL. We've seen bits and pieces of his work and learned a bit about his strategies. What many of you may not know is that Dennis has been a hedge fund manager for years.
I have personally corresponded with Dennis regularly for well over a decade and a number of our colleagues and friends have had good business relations with him.
So, I was pleased when Dennis informed me that he was multi-tiered program at InterMarketEdge.com to allow folks to exploit his expertise. I was even more pleased when he offered an affiliate relationship to Traders-Talk and offered to provide registered Traders-talk users a 15% discount on purchases.
Now, neither I nor Traders Talk, LLC can warrant any product offered by an affiliate and we certainly won't claim to be doing your due diligence for you, but Dennis is about the closest thing to a "known quantity" that you can find on the internet. I would think that one level or another of his services would warrant some careful consideration by many folks in our community.
So with that, I'm inviting Dennis to show us what he's got. Feel free to ask questions.
BTW, Dennis is also going to be offering some of his thoughts here and on the Market Analysis area to help folks get an idea of how he approaches the market.
If you have any questions regarding Traders-Talk's role please review our Terms of Service.
Every week, the National Association of Active Investment Managers surveys its members to determine their market exposure levels. The managers are active and some are quite aggressive. They have the technical capacity to be as much as 200% Long or Short the market.
We have found that this data, particularly Median exposure levels appear to have some meaningful contrarian predictive value. We have also found, gratifyingly, that during well defined Bullish and Bearish market cycles, survey respondents appear to properly position for extended periods. There are limits to confidence levels with a relatively small data set, but thus far, the predictive patterns appear robust.
We looked at 4 different types of contrarian "signals" from this data. They are as follows:
Intermediate-term Buys when Median Exposure is less than/equal to 20% Intermediate-term Sells when Median Exposure is greater than/equal to 80%
Very Short-term Buys when Median Exposure shifts down 20% or more Very Short-term Sells when Median Exposure shifts up 20% or more
We defined "Intermediate-term" as more than 5 market days and/or more than 5% We defined "Very Short Term" as a move beginning within 1 or 2 days of the signal and generating at least 1.2%.
Intermediate-term Buy or Sell signals are considered to be "in effect" until a reset, that is until median exposure levels move back above or below the trigger levels of 80% and 20%.
2006-2007
2007-2008
2008-2009
Current, Thru 2-22-10
Out of 7 Intermediate-term Sell Signals, 4 were followed by declines within 3 days. 1 signal was followed by a decline within 5 days. 2 of the Sell signals only generated very modest pullbacks. The failed Sells were during pronounced Bullish periods. 5/7 of the Sell signals can be viewed as "accurate/profitable".
Out of 9 Intermediate-term Buy Signals, 7 were followed by rallies within 5 days or less. 2 signals were failures. Both were during the prolonged Bear market of 2008-2009. 7/9 of the Buy signals can be viewed as "accurate/profitable".
Out of 7 VST Sells 6 generated immediate or near immediate short-term sell offs. 1 sell off took 3 days and was considered the lone failed signals. 6/7 of the VST Sells were "accurate/profitable".
Out of 11 VST Buys, 9 generated appreciable rallies within 1-2 days. 2 signals failed to generate any tradable rally.
Of note, we find that this study does not imply some inherent failure of active investment management. In fact, exposure levels often indicated managers were well positioned during extended market moves. Since managers are not typically very short-term traders, one cannot conclude anything about active investment management from very short-term adverse moves, other than such are part and parcel of investing in equity markets.
Todays afternoon reversal was all too predictable--for anyone who's studied the tape carefully during the last few weeks. I've been a buyer on weakness nonstop since Feb 2009, but this last run up after touching the 200 DMA on the spx has not been the same action we saw before. Before I get into details, I want to point out two things which I've been waiting for since last Fall, the occurence of which would be the warning that dips are no longer buyable. First, Apple - almost every institutional investor, and every US market maker like JPM and Goldman have large positions in Apple including calls at or above $220 for March or later in 2010. Lets face it, if the indices begin to retrace a significant portion of the bull run, it wont be easy for anyone to pump Apple back up over $210 so they can unload shares. Second, and for a similar reason, is the action in Citigroup today. Again, if Citi ends up finding a home closer to its normalized EPS potential for 2010, the govt will take quite a loss on their common shares holding. So long story short, I've been waiting for Citi and Apple to make "breakout" moves before seriously considering a significant correction as the next market move. Apple has made new highs recently but This is the first time we've traded Apple up to the end of the range call buyers have hit up the last 6 months--the high volume areas being 200-230 or so. Sure enough, now that we're there, I'm not seeing the same sort of volume extend to 250, 260 etc. in coming months, signaling this could be the end of the road and as high as institutions take ApplNot only did we get both but it sort of fits the theory by happening all in the last 3 days. Not to mention, from my perspective, the market is clearly in distribution---mainly based on these three things: volume increasing as price does, low put/call ratios, and dip buyers becoming VERY hard to come by (giving us the low volume selloffs that take the whole market down like we've seen three times in the last nine trading sessions or so).
the put/call ratios being so low especially in individual stocks really concerns me, and marks a transition from dip buying long positions to speculating with long calls instead. The implication of such a transition should make any bull nervous--clearly suggesting that something has changed strategically for hedge funds and other institutions. And just from watching the tape and trading this market, I have witnessed the conviction of buyers disappear . The staple of this rally has been institutions protecting with puts instead of selling, but now it seems like being long is more speculative than being short, even though all the green lately may confuse people and hide this transition.
The price action itself has just been soooooo bearish in my POV. goldman sachs' resurrection last week, and prompt reversal today, reeks like a distribution joy ride for the big banks still holding the bag. So much buying and conviction in GS for 3-4 days, but one little dip today takes the stock nearly to an outside reversal day? Seems more like shorts covering and/or stopped out rather than the next leg up for financials. The failure of names like MS or JPM to break above resistance sort of confirms the fraud of the move. Same goes for Apple, though I've admittedly traded some 220 and 230 calls the last few days for some uber gains--and in fact I played it that way for the very reason that I dont believe in the move--stock is too overowned and too "mainstream" to be anything different. Or I could believe that AAPL is going to $300 and its just the easiest 40% move in the history of the stock market for every retail investor who has a brokerage account. Hmmm tough call? lol
and this all leads me to an interesting question. Just what will the "end" of this rally be like?? Sharp move down? how far? Or do we sort of slowly slip into a "new normal" with the VIX below 20 (almost below 17 now) and yearly 8% gains? Hard to believe a run like this doesnt end in debauchery. just my humble opinion though.
just to be clear--This is not a doomsday SPX 400 by next Friday call here, and I'm not even sure which way we go yet. If the next big move is down, then its exactly that--and not a short term panic or sell signal. We could drift around between 1134 and 1150 for two weeks, then eek down to that quicksand level between 1090 and 1112 and sort of hang out there for MONTHS. and on the flip side, we could make a new SPX rally high tomorrow and I still wouldnt be longer term bullish just like that. I went from more long than short to about 60/40 short today just before that reversal, and the action confirmed exactly what i feared. I have not made a decision yet on whether the "end" is definitely here or not--but as someone who has been long term bullish since Feb 2009 when I bought my first stocks, and bearish only for a few days at a time, I now find myself wondering if the next move down is more than 8-9%.
Any thoughts appreciated, and I'll update when I've done more work and come up with my theory on direction and how to position accordingly.
PS--taking a step back to the here and now technicals, we went above the 78% retracement level from the January-feb move down on the SPX but have not reached the 99%, and/or made a new high yet above 1151. Another bearish signal especially if we dont close above Tuesdays reversal point before this Friday
"The potential is enough to power humanity from now until the asteroid hits."
The crystals are formed when methane gas, which results from the natural decomposition of animals and plants, comes into contact with water at just the right temperature and pressure. Crystal gas forms almost any place there's low temperature, high pressure and water, making the organism-rich continental slopes ideal spots. They're most prevalent in water over 1,000 feet deep, and up to about 200 miles offshore.
The U.S. government currently runs a multi-agency research project with scientists from the Department of Energy, the U.S. Geological Survey and the Minerals Management Service, among others. They've partnered with a few corporations, including BP (BP) at a site in Alaska's North Slope and Chevron (CVX, Fortune 500) in the Gulf of Mexico.
At the BP site in Alaska, Collett said using current technology to go after crystal gas would effectively double the known gas reserves there. "We're chipping away at the technical issue," he said. "We just have to get at the economics."
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