CheetahhhhhhhBlog Mark III

First of all, regarding the dollar. The decline of the dollar over the last year has reflected the government’s willingness to borrow in order to keep the overall economy on life life support. We should see continued decline in the dollar, or consolidation, until such a point arrives as the Fed starts talking about raising rates. Now, all this talk about how the dollar is not the world’s reserve currency any more, etc etc, is in my opinion nonsense, and is mostly political maneuvering on the part of China (among others, and China has a big voice when it chooses to bitch-n-moan).

Regarding the US markets, obviously I picked its bottom on Monday too early. I warned that this was a distinct possibility. Indeed I might note that I am actually very specific if you read with an “academic” eye for precision of speech. Specifically I said I would wait until Nov 1st. And actually on Tues and Weds I was kicking myself in my ass for not taking my own advice, as I was down 10-12%, and that hurt. After yesterday’s rally I’m still down 5-6% but I think this will be very short term. I anticipate the Christmas rally starting up, if it hasn’t already started yesterday.

In the long term, well, I’m watching CNBC Europe right now while my family sleeps, and the opinion is split. Some see the rally continuing, and others are cautioning about a double dip. This tells us something we already know, specifically, that stock picks even on CNBC are speculation. Speculation with evidence, but speculation. When I give my opinion here, I’m speculating. So hence we can have a panel of 5 highly=paid financial advisers on CNBC, all giving different opinions about the economy. This having been said, I can only say what appears evident to me, so here goes.

The federal government has kept the economy on life support of a year and shows no inclination of taking it off life support any time soon. Therefore it is only logical to assume the market will continue to rise. There have been moves by Norway and Israel to raise rates, but these are non-events globally and have little predictive value for US stock markets. Furthermore the strength of the rally in the last 6 months has surprised everyone, including me, and I don’t think we should make the mistake of underestimating it again. The fundamental conditions behind the rally which started in April have not changed. Indeed the fundamental conditions have gotten a lot better. GDP is up and earnings are consistently beating forecasts. Mall traffic is up. Etc. So yes, I’d say we’re in full-blown recovery mode. I’d look for the Dow at 11,000 by this time next year.

Then there is the issue of seasonal patterns, of which I’m a proponent. Studies have shown that if you trade merely by seasonal patterns, you’ll be profitable. The most simple seasonal pattern would be buy Nov 1st and sell May 1st. This would be, generally speaking (except for last year as the notable exception to all things), a profitable trading system. So yeah, on Monday I’d hit the “buy” buttons.

As always I could be completely wrong.

So I downloaded Ubuntu 9.1 first thing today. Ubuntu is Linux if you don’t know. 9.1 is not a monumental change but #1, a few glitches seem to have been sorted out with Flash and Java, which were rather annoying before. #2, and it’s rather hard to gauge these things, but my system seems to be running a mite faster. Maybe more than a mite actually, a rather noticeable speed increase.

I had a few letters asking for more details about why C and ETFC, and more specifically why now. OK #1 you shouldn’t buy stock based on what some blogger thinks. This caveat out of the way, I’ll give you my reasons, along with caveat #2, as always I could be completely wrong.

FAS is a good proxy for financial markets. If we draw Fibonacci Retracements from 11/10/08 @ 293 down to the low of 3/9/09 @ 11, then you will see on the resulting Finonacci Retracements that FAS closed yesterday bouncing on the 23% retracement. So I predict FAS will bounce back up.

Second, the financial industry as a whole is in general recovery thanks to massive government intervention, and the implicit promise of more intervention if necessary. So the financial industry, contrary to some perceptions, is actually a pretty damn safe place to put your money right now.

Third, With C I draw support/resistance line running at 4.23, starting on 5/7/09 and extending to now. You will note that C has declined to very close to this line. So I predict, as would be the logical prediction with support/resistance, that it will be difficult for C to break below this line, and it will be likely that C will bounce back up.

With ETFC, I draw an upward trendline starting at 59 cents in March 09 and extending to 1.23 on 8/17/09 and now currently to 1.55. So again I would say that ETFC has some powerful support with the upward trendline.

The October effect isn’t over until Halloween and the market may decline a bit more. I jumped in yesterday with C and ETFC for the reasons listed. I might have been premature. Part of my reason yesterday was I had made 60% of my profits with a very volatile RUT iron condor and I wanted to grab my RUT money and run. So I wanted to put this new cash somewhere. It might be prudent to wait until Nov 1st; this would be my advice to people in general. In truth I am picking a bottom, and picking the bottom almost always backfires on you. Indeed I have lost $300 on the trade so far, which is not a lot, but well…

This having been said I think 2010 will be prosperous with C and ETFC feeding money into my wallet.

The market has had a bit of a tumble today. It might go down a bit more but I think this is generally the October Effect manifest. I could be wrong as always. I have various statistical reason why I hold this opinion but suffice it to say, I doubt the market will fall much more. I liquidated my RUT positions for a handsome profit. I jumped in on C. Teggatz Enterprises LLC now has about 80% of its eggs in Citigroup’s basket. I’m losing a little cash at the moment while I type but this is a long term trade. I’m thinking of January 2011. I have also added to my ETFC position. You may note that once again I’m heavily invested in the financial industry. Well, #1, I’d actually buy BAC if I could afford it. Contrary to popular perception, Bank of American is actually one of our healthiest and strongest banks. #2 it is a reasonable assumption that capital will continue to return to the stock market, which will only benefit ETFC. #3 C, I’ve given many reasons over the months why I am putting my money behind C, and probably the biggest is they’ve cut off the chaff and are now lean and mean and ready to make money. #4 also if I could afford it I’d buy GS.

As always I could be completely wrong about everything.

So the doctor said I had a classic allergic reaction to something, it’s almost impossible to say what it could have been, for example some woman’s perfume in the mall could have set it off, who knows. Anyway he gave me a painful shot in the arse and I’m already feeling better.

I said about a month ago that I was SOH (sitting on my hands) with the market waiting for the October Effect to pass. I don’t think the October effect has passed yet. However I made my first purchase in anticipation of the Christmas rally, and in anticipation of the market rising next year with general (although slow) economic recovery. My first purchase was ETFC better known as E*Trade. I don’t use them, their commissions are too expensive, however for the commercial trader who knows nothing about trading, E*Trade is great, and money is starting to flow back into the market. Furthermore E*Trade announced its earnings on the 27th. I’m buying before the 27th with the bet that their earnings won’t be too bad. Most financial companies have done better than expected. I anticipate the same with E*Trade.

Probably next week I will be buying C. Better known as Citibank. Why? Like E*Trade, the stock is cheap. Other factors involved here–too big to fail, one of the biggest banks in the world, Uncle Sam has demonstrated they won’t let C fail, they spun off their less profitable divisions into CIT… and as I have mentioned before, C has always been a good money maker for me…

I don’t know what the hell is going on, and I don’t like it, but my skin is under serious attack by something. A virus, a bacterium, a bug, I don’t know what the hell it could be, all I know is that I itch like crazy everywhere, even strange places like my eyelids, and in a few places I have literally scratched myself raw. Last night I took an Ambien sleeping pill primarily to knock myself out so I wouldn’t scratch myself any more. I have been tossing it around in my brain and I can’t identify anything that is different in my life, no new food, no new laundry detergent, etc etc… Anyway RAK being a small dustball, there is no dermatologist in the hospital. What the hell. So I am going this afternoon to some fancy private clinic which doesn’t accept my insurance. Going to probably cost me a fortune, all for the sake of not itching. I’d almost rather itch. ALMOST.

I’m just geek enough to be mildly excited about the upcoming Ubuntu Linux release.

I’m also geek enough to have put a lot of effort into getting a Google Wave invite, and getting all excited about the communication possibilities. Not to brag, but I’ve been among the first to embrace new technology. For example I’ve been blogging for about 8 years now in lieu of “letters home” or etc. Once my sister scolded me about that… “I don’t see how you can consider a blog a letter home”… which was almost funny since she’s a web designer and now has a blog herself… this happened a few years ago… and for example, my primary means of communication has been email and IM for well on a decade now. And actually I conduct all business on the internet. If I can’t do business with you online, then we’re not doing business. The sole exception to this is the damn Emerati power company, which actually requires you to physically walk in to their office and hand them paper currency. Damn their filthy hides. Irritates me to no end. ANYWAY to make a long story short, I was all psyched up about Google Wave and I gotta tell you, it’s a bit of a let own. I see no improvement over email or IM.

I suppose when you have children you start thinking about Armageddon scenarios, eg losing your job, losing your limbs and being unable to work, etc etc, the whole slew of potential Armageddon that life can toss at us. Once you get going, there’s no end to potential Armageddon scenarios. In the Showtime series Weeds in season 4, the police come for Kevin Nealon and he grabs his “Armageddon Bag”, which is a duffle containing wads of cash, mary jane, and a change of underwear. He grabs the Armageddon Bag and jumps out the window. Well I don’t need an Armageddon Bag though I like the concept. Though a few things trouble me, among them, insurance companies going bankrupt, and insurance companies not paying or stalling about paying. We all know these things happen regularly. I wonder if it would be prudent, for the safety of my children and wife, to have 2 different life insurance policies on myself, one as a hedge against the other? So this would be hedging a hedge. Conceptually it would almost be like a hedge fund actually. Does this kind of thinking seem too much? Eh, perhaps, but I bet you my wife and children will be safer than most. And actually I already practice several Armageddon concepts. My money is mostly in my company as a hedge against personal liability. I have at least 2 bank accounts in every country I operate in. I operate financially in 3 countries and have a safe haven bank on the Isle of Man, this, once again, in case of Armageddon. I could go on. So actually this Armageddon thinking is not new for the Cheetahhhhhhh. I’m just raising it to new levels, I suppose. And here’s one for you. This is going to sound crazy to a lot of you but I’m in a sharing kind of mood. I would like to buy a bunch of Krugerrands (gold coins) or Canadian Maple Leafs and keep them in a safe deposit box as a hedge against the collapse of my primary currency (the dollar). This might sound ridiculous but actually I see it as a possibility in the distant future. So anyway… thinking about buying 2 life insurance policies on myself….

There is some carnivorous bug that lives in our 3rd bedroom and has eaten half my left leg.

As you know, the Cheetahhhhhh is totally on the ebook bandwagon. I rather want a Barnes and Noble Nook http://www.barnesandnoble.com/nook/index.asp

Bug had a birthday party with the local kids and “the girls” ie the Filipinos in the compound. He had KFC and a Baskin Robbins ice cream cake, which was delicious incidentally. So my son is 3. Seriously, where does the time go? It seems like yesterday he was a little baby.

Well yesterday I said I had no market comment. Now I have one. The guy who founded the newspaper Investor’s Business Daily, I forget his name, wrote several good books detailing his system of stock trading. It’s a fairly efficient and logical system and I follow its general principles myself, though I trade options, which is a whole different ballgame. But to make a long story short, one of the principle ideas of his system is that a healthy market can only absorb 3-4 days of institutional selling. We’ve had 7 or 8. Now, I will also mention the “October effect”, that historically the market tanks right around Halloween. This happens so regularly that you could set your watch by it. And traders know this, so there is probably a psychological effect going on also. So anyway my short term bias is down.

So I just bought life insurance for myself. You never know what the future may hold. This does however feel a bit morbid, which might be partly why I put it off. Anyway Teggatz Enterprises LLC stands to receive a good sum of cash should I kick the bucket.

My vacation is Nov 26 to Dec 6. Strange dates because of Emerati national day on the 3rd. Anyway it’s 10 days and we have not gone anywhere in over a year, and Van and I were discussing it, and we really feel we need a vacation. Van wants to go to Macau for some reason. I have a Thai beach on my mind. One problem as always is that we have 2 family members with Filipino passports, and so they need visas for almost every country in the world except Macau and Thailand…

I’m not going to give you a market commentary this week because I don’t know what the hell is going on. The stock market is extremely volatile and actually I have been too busy and tired to read the Wall Street Journal for the last few days. So I have nothing intelligent to say about finance this week, sorry folks.