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NASDAQ tumbles over 2% after reaching all time

  
Analysis, US Market
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California rolling back reopening and the outside the lower close pressure tech talks

The US stocks are ending the session with mixed/negative results. The Dow industrial average actually close marginally higher on the day. The S&P index and NASDAQ, however, reversed earlier gains and fell sharply. Contributing to the declines was the news that California was rolling back some of the reopenings

  • The S&P index fell -29.77 points or -0.93% at 3155.27. The S&P index turned briefly positive for the year above 3230.78% intraday with the high price reaching 3235.32. That is the 2nd time since February 25 that the price briefly extended above the close from 2019 only to fail in the same trading day. Bearish
  • NASDAQ index -226.59 points or -2.13% at 10390.84. The index had a outside day lower close, after trading to a new all time high of 10824.78. Bearish
  • The Dow industrial average close up 10.7 points or 0.04% 26086.00
All the major indices closed near the lows for the day, after giving up some hefty gains.
  • The S&P index was up 1.58% before closing down -0.94%
  • the NASDAQ index is up 1.95%, before reversing lower in closing down -2.13%
  • the Dow industrial average was up +2.13% before reversing and closing near unchanged at +0.04%.

Intel earnings are impressive (as is guidance)

  
Analysis, US Market
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EPS $1.52 versus $1.25 as expected

Intel stock is moving sharply higher in after-hours trading after their earnings and revenues beat expectations.

  • EPS, $1.52 versus $1.25 estimate
  • Revenues $20.2 billion versus estimate $19.22 billion
  • Intel sees 2020 revenues about $73.5 billion versus estimate of $72.21 billion
  • Intel sees 2020 adjusted earnings-per-share of $5 versus estimate of $4.69
  • Intel sees 1st quarter revenue about $19 billion versus estimate of $17.2 billion
  • Intel earnings, forecasts boosted by cloud a data center demand
  • Guidance completely above normal seasonal levels
The stock is currently trading at $67.82 after hours. That is up $4.50 or 7.11%

US major indices close lower on coronavirus concerns

  
Analysis, US Market
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No records today

The major US indices are closing lower as concerns about the coronavirus worried investors.
  • The S&P index closed down -8.83 points or -0.27% at 33 to 0.79
  • NASDAQ index fell -18.135 points or -0.19% at 9370.80. The high reached 9397.578 (new all-time intraday high. The low reached 9350.20
  • Dow fell -152.06 points or -0.52% at 29196.04. The high reached 29341.21. The low extended to 29146.47
After the close Netflix reported earnings
  • revenues 5.47 billion versus 5.45 billion estimate
  • global net adds 8.76 million versus 7.6 million estimate
  • +550 K subscribers in US and Canada
  • earnings-per-share $1.30 versus $0.52 expected
  • sees first-quarter streaming paid net change of +7.00 million versus 7.82 million estimate
  • sees first-quarter EPS of $1.66 versus $1.16 estimate
Netflix stock is currently trading down $5.37 or -1.59% at $332.74 and after hours trading despite the beat. The subscriber numbers estimate for the 1st quarter is hurting the market even though this quarters global net adds surpassed the estimates by 1.1 million.
Meanwhile IBM reported:
  • earnings of $4.71 versus estimates of $4.69
  • revenues $21.8 billion versus $21.6 billion estimate
  • IBM is currently trading up $6.69 in after-hours trading

The earnings calendar for next week includes Netflix, IBM, Intel, and American Express

  
Analysis, US Market
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A lot of the big names are still ahead but some interesting names reporting next week

Tuesday, January 21
  • UBS
  • Netflix
  • United Airlines
  • Capital One
  • IBM
Wednesday, January 22
  • Abbott
  • Johnson & Johnson
  • Texas Instruments
Thursday, January 23
  • Comcast
  • P&G
  • Intel
  • American Airlines
  • Kimberly-Clark
Friday, January 24
  • American Express
  • synchrony

A Venerable Technique

  
  Education
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JL-ASROne of intelligent honest things that Livermore did was to get out of one market by selling a related market, inducing the other traders to think that there was weakness in one market which would carry over to the related market. The art of indirection and letting people use their own intelligence and inferences to come to their own conclusion. for example if he wanted to get out of cotton, he’d sell some coffee. If he wanted to get out of a common, he’s sell the preferred or a related company that owned a big chunk of it, like sell Christiana which owned general motors et al. This technique one wonders how often is it used today. When it happens, is it artful indirection or chance? How to quantify and what predictions to be made? Would the robots be smart enough to do this?

There was a moment in late 80s Energy trading, when legend has it that a great admirer of Livermore who runs a venerable hedge fund near New York was Bearish to the tune of 40,000 lots. If you think it’s not much, just remember that Exchange limit for open speculative position in any contract was 6,000. Of course, his positions were in all possible inter-month spreads and across products. So once decision to cover was made, he picked up the phone and asked for the cockiest trader in the Crude pit. “Are you a man or mouse?” Trader thought it was a prank: “Come on Paul, what do you want?” “I’ll give an order to sell 1,000 market, and I mean worst. But if I don’t see Crude print through even– they’re all yours! Do you accept?” 

Book Review : Jesse Livermore: Boy Plunger

  
  Education
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71bdRlXbWuLThis is a story of triumph and tragedy.  Jesse Livermore is notable as one of the few people who ever made it into the richest tiers of society by speculating — by trading stocks and commodities — betting on price movements.

This is three stories in one.  Story one is the clever trader with an intuitive knack who learned to adapt when conditions changed, until the day came when it got too hard.  Story two is the man who lacked financial risk control, and took big chances, a few of which worked out spectacularly, and a few of ruined him financially.  Story three is how too much success, if not properly handled, can ruin a man, with lust, greed and pride leading to his death.

The author spends most of his time on story one, next most on story two, then the least on story three.  The three stories flow naturally from the narrative that is largely chronological.  By the end of the book, you see Jesse Livermore — a guy who did amazing things, but ultimately failed in money and life.

Let me briefly summarize those three aspects of his life so that you can get a feel for what you will run into in the book:

The Clever Trader

Jesse Livermore came to the stock market in Boston at age 14, and was a very quick study.  He showed intuition on market affairs that impressed the most of the older men who came to trade at the brokerage where he worked.  It wasn’t too long before he wanted to invest for himself, but he didn’t have enough money to open a brokerage account, so he went to a bucket shop.  Bucket shops were gambling parlors where small players gambled on stock prices.  He showed a knack for the game and made a lot of money.  Like someone who beats the casinos in Vegas, the proprietors forced him to leave.

He then had more than enough money to meet his current needs, and set up a brokerage account.  But the stock market did not behave like a bucket shop, and so he lost money while he learned to adapt.  Eventually, he succeeded at speculating on both stocks and commodities, leading to his greatest successes in being short the stock market prior to the panic of 1907, and the crash in 1929.  During the 1920s, he started his own firm to try to institutionalize his gifts, and it worked for much of the era. (more…)

Jesse Livermore’s Best 10 Quotes & Free Link to His Book

  
  Education
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Here is a list of the ten most powerful quotes from Jesse Livermore’s book “How to Trade in Stocks.” Livermore was one of the greatest stock market operators of our time and his quotes stand the test of time. No one made more money in the markets or came back from more bankruptcies than Jesse Livermore. He successfully shorted the Great Depression crash for one of the biggest trading wins in history. While his weakness was not managing his risk of ruin his strength was he could become a millionaire trading during a trending market over and over starting with a small stake. While in the end he decided to take his own life he lived his life as the world’s greatest trader for half a century.

“Do not anticipate and move without market confirmation—being a little late in your trade is your insurance that you are right or wrong.” -Jesse Livermore

“The good speculators always wait and have patience, waiting for the market to confirm their judgment.” -Jesse Livermore

“{Limit} interest in too many stocks at one time.  It is much easier to watch a few than many.” -Jesse Livermore

“Experience has proved to me that the real money made in speculating has been: “IN COMMITMENTS IN A STOCK OR COMMODITY SHOWING A PROFIT RIGHT FROM THE START. ” -Jesse Livermore

“As long as a stock is acting right, and the market is right, do not be in a hurry to take a profit. You know you are right, because if you were not, you would have no profit at all. Let it ride and ride along with it. It may grow into a very large profit, and as long as the “action of the market does not give you any cause to worry,” have the courage of your convictions and stay with it.” -Jesse Livermore

“It is foolhardy to make a second trade, if your first trade shows you a loss. ” “Never average losses. ” Let that thought be written indelibly upon your mind.” -Jesse Livermore

“One should never sell a stock, because it seems high-priced.” -Jesse Livermore

“Profits always take care of themselves but losses never do. ” The speculator has to insure himself against considerable losses by taking the first small loss. In so doing, he keeps his account in order so that at some future time, when he has a constructive idea, he will be in a position to go into another deal, taking on the same amount of stock as he had when he was wrong.” -Jesse Livermore
“It is significant that a large part of a market movement occurs in the last forty-eight hours of a play, and that is the most important time to be in it.” -Jesse Livermore

“A speculator should make it a rule each time he closes out a successful deal to take one-half of his profits and lock this sum up in a safe deposit box. The only money that is ever taken out of Wall Street by speculators is the money they draw out of their accounts after closing a successful deal.” -Jesse Livermore

Link to Jesse Livermore’s Book “How to Trade in Stocks”

You Never Know When You Will Drop Dead

  
  Education
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Arnold Schwarzenegger used to always say — Schwarzenegger, love him, hate him, I don’t necessarily have a feeling one way or the other, but he used to always say that a good pump in his weight-lifting world was as good as sex. I’d say hitting a home run is right there. The point is, getting to the point where you have got it on the line, you’re making something happen, you don’t give a shit what your neighbors think of you. You don’t give a shit what your family thinks of you. You’re just gonna take on the world. That’s it. That’s the goal. You live one time, one time and it’s over. If you go through life scared, if you go through life following the plan that your father told you to do, that your mother told you to do, or some other nonsense society told you to do: you need to get a steady job, you need a college degree, then you get a steady job, yada, yada, yada. Guess what, you’ll be 60, by the time you know it you’ll be 70, maybe you’ll be dead soon.

Stop waiting for the perfect opportunity to start living the way you want to live. 

10 Foolish Ways to Lose Money in Bull Markets

  
  Education
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” There is only one side of the market and it is not the bull side or the bearside, but the right side.” – Jesse Livermore10-number-

  1. Be a bear in a bull market.
  2. Keep shorting a bull market and see what happens. LOSSES.
  3. Wait for a deep pull back that never comes as the market goes higher and higher each day. Then chase at the end of the move.
  4. Buy puts and sell them for a loss over and over.
  5. Keep betting on a market meltdown as the indexes make all time highs over and over again.
  6. Buy ABC ,XYZ  and see what happens. LOSSES.
  7. If your trading plan is the “the market just can’t go higher” you’re going to have a bad time.
  8. Short in the hole right at resistance. The bounces are brutal.
  9. Have a bearish opinion, keep a bearish opinion, trade a bearish opinion.

  10. Being a stubborn perma-bull instead of a flexible trader.

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