Saturday, July 25, 2009

Don't let "they" do the thinking for you!

What happened to Caterpillar after earnings? Two days before earnings it was 33. It's now 42. You had that action in six days. And we heard how they "missed" on the top line.

How about MMM? Wednesday before earnings, the stock was 64.67. After earnings Thursday the stock was 5 points higher! And they "missed" on the top line!

How about GOOG? They beat numbers last Thursday night, but they sold the stock down on expiration to 430, because "they" wanted you to think it was a miss. Where did the stock close yesterday? 446! How about its twin BIDU? Thursday it was 332. After earnings--358 at Friday's close!

How about ISRG? Remember when this was manipulated on April 16? After earnings? You had the story here, on this blog. After earnings, they knocked the stock down 10 to 109, only to see it close at 131 the next day. Three months later we get another earnings report from ISRG. Wednesday before earnings, the stock closed at 169. It closed Friday at 222, double the manipulated price that the bears printed only just three months ago!

How about JNPR? Weren't we told that it missed it's numbers after it reported? Didn't these hapless bears and shorts knock this number down in Thursday's after hours to 24. What happened? Didn't Goldman Sachs then upgrade JNPR Friday morning? And didn't this number then close at 26.86?

But we hear the stories and the excuses. It's just the HFT. The high frequency traders and the flash orders. Why else do you think I have the women flashing on this blog? Did you get anything from the women flashing? That's the same that these HFT's guys get. Sometimes the flash is worthwhile, but sometimes they just need to get the programs interested. Because buyers are under the market, thinking that they are so smart, when these buyers underneath the market are just dumb! They should be taking offers; instead, they think they are being prudent, and smug, in their own analysis of where prices should be, when they should be as giddy as the folks at the Heinz wedding!

Newsflash stock buyers! Prices should be much higher, and if the HFT traders need to smoke you out, to pay up, then so what. They at least know where stock prices are going, and those folks with their bids in the system don't.

These HFT traders are doing just what we did during the Internet stocks. But this time, they are doing it with real companies, with real assets, and real franchises, that have a real worth.

It's just that the typical stock buyer hasn't gotten a clue of where prices should be. They read the erudite bears, and they look at the unemployment numbers, and they see the foreclosures, but somehow they can't see past any of this.

March, 2009, is the equivalent of August of 1982. And now we are just approaching December of 1982, and it's July of 2009. Where did that market go? Where then, do you think this market is going?

So now you want to sit and bid for stocks?

So the supplemental liquidity providers then will take your money. Your liquidity, goes to supplement those with billions. But you let them. You should be just taking offers instead of bidding for stocks.

Spreads are so tight with these algorithms, that you don't need bid against the machines. You can pick your entry points, when the machines exaggerate the moves downward, or sell when they exaggerate the moves upward.

So pick their pocket, or otherwise let them pick yours!

Heck, one company that did report, that they have now taken down, is United Technologies (UTX 52.23). Long term buyers should be all over this number right here, when these programs are trying to smoke out the stock. This stock really isn't the kind I buy, but these mutual fund that keep getting their pocket picked, should take stock down here, now, and in size. Take it when they are giving it to you!

This HFT game is no different than anything else.

Remember when Goldman Sachs economist Jan Hatzius, was calling for the end of the world, and the next great depression? Right at the market low, and the months before? Notice how he doesn't show his face on television anymore? But to Goldman's credit, at least he was allowed to throw a sop at the market on April 22.

Is it any different here with the Supplemental Liquidity Provider's? Didn't Goldman just up their S&P target now to 1060? But that target is moving anyway. Heck we went up 7.3% the week before last, and 3.9% this week.

How about oil? Did we hear a peep from Goldman when it was $59? Now that it's $68, don't you think they are getting ready to get out of the closet again? After all, weren't we supposed to have an investigation of oil being rigged? What happened to that story? It was swept under the rug, just long enough, that now oil is ready for another Goldman pump!

Because the HFT scandal has now become main stream. The NY Times has that story.

It used to be "pump and dump."

Now it's just "pimp and pump!"

Without a peep!


Anonymous said...

Well, GS did pump oil at 85 bucks by the end of the year around the time it hit 73 bucks, It subsequently pulled back to 60 in pretty short order. It's what, 68 bucks now, so GS might be right about 85.

So I'm curious, you don't think there any kind of serious pullback happening anytime soon, right?

What would make you start shorting?

Palmoni said...

I think oil is going to get another spike here; my point was Goldman wasn't going to advertise oil at $60, when they needed to buy it!

It's just too hard to short when the primary trend is up!

So what would make me start shorting?

If shorting became easy! I don't like to work that hard to see the stocks move in the direction that I want them to go, and this market rescues you from the long side, but not the short side.

So I'll look for cheap longs than expensive shorts. Because at least with the longs, I'll get paid!

Anonymous said...

I wasn't clear, I did get the point. I was just mentioning that they did call 85 when it was running up a couple weeks ago, didn't see that in your perspective. Wouldn't bet against your call about another spike.

I am a bit curious about what you define as an expensive short :) Excuse me if it's obvious, I'm just an ignorant investor reading the blog.

Palmoni said...

An "expensive" short is one that moves against you!

But expensive is really twofold--
1) because the price keeps on going higher, and costing you
2) price keeps getting more dear--ie expensive as in PE. If its at 40X earnings, what difference is it to the momentum guy if it is 50X or 60X earnings?

A classic is BIDU--at 300 people considered it expensive-it's now 358--I scalped it for 20 points when it was close to 300, but I was lucky--these expensive numbers can keep on moving!