Palpara Merchants

January 20, 2013
by Patrick
Comments Off on 4 BP Workers Possibly Dead in Algerian Attacks

4 BP Workers Possibly Dead in Algerian Attacks

BP PLC said 14 of its 18 expatriate workers at the site were safe, but Chief Executive Bob Dudley added: “Tragically, we have grave fears that we are likely to have suffered one or more fatalities.” – Wall Street Journal

This issue is receiving very little coverage. Even the pages of the most respected ursine publications are void of any headlines about the tragedy in BP’s nat gas plant.

Even BP’s stock seems to shrug off the news that 4 of it’s workers are believed to be dead. In all, 12 hostages were killed by militants. It broke out on Friday to the highest since April, and up 21% since the most recent low.

September 27, 2012
by Patrick
Comments Off on Stock market mechanics

Stock market mechanics

Stock market basics

My friends no loner allow me to listen to or watch business news in their presence. They hate my outbursts at the business journalists’ attempts to assign explanations to the day’s market price action. Journalists always feel the need to assign motive to the price action due to a news event- after all, a good journalist knows how to make the news relevant.
But that’s not the way the market works. It doesn’t always wait for a news item to occur before making a move. After all, any market is just a collection of human participants discovering price, and the stock market is no different. I have observed most people I speak with outside the financial community have a misconceived notion about how a market participant forms the rational for making a financial decision. Most people that ask me for an explanation of the day’s large market movement, ask me what was the reason the market was up. They are disappointed when I tell them the large gain was not due to a brand new, sexy news item- a previously unknown factor whose emergence brings a paradigm shift in the way traders view the prospects for the future. They are disappointed to learn that the move was merely the result of the function of supply and demand for stock. The supply of stock available and the demand for that stock can fluctuate even if there is no new information: just like a fruit stand, the price of the farmers apples aren’t required to fluctuate solely on news of the amount of apples to be harvested that season. Rather, in reality, apple prices also fluctuate based on the number of people at the market at a particular time of day, or week.

This is what is called the mechanics of the market- we will break down the individual components of mechanics in separate posts.

September 7, 2012
by Patrick
Comments Off on Looking to DNC for clues on market direction

Looking to DNC for clues on market direction

Non farm payrolls report will be the first important piece of new info out since the lazy, news- devoid days of summer ended. I was looking to the President’s DNC speech tonight for clues to the NFP number. I got no good looks. If the number was going to be a good one, I have to trust POTUS would have hinted at it. NFP is likely to be an in line number, but I assign 75% odds that we expand higher out of the Bollinger Band Squeeze.

June 8, 2012
by Patrick
Comments Off on Thursday late night reads:

Thursday late night reads:

Why the IMF can’t lend directly to Spanish banks: FT see also Why Germans don’t want to bail out Greece: Seeking Alpha

Spain’s spending by the numbers: Channel 4

Japan growing GDP by leaps and bounds: WSJ

New capital rules outlined by Bernanke today: WSJ

The French Tea Party: WSJ

April 5, 2012
by Patrick
Comments Off on How to get Retail investors back in: Index Makeovers

How to get Retail investors back in: Index Makeovers

Take a look at the info on Nasdaq’s site about its Nat Gas Index (XNG), and you’ll see why the retail investor is skeptical of the stock market. The third component isn’t even listed and the sixth is Enron. Ken Lay was still the smartest guy in the room the last time this index info was updated.

The Dow is a more egregious offender of index fashion. Dow Jones should give Hewlett Packard Compaq the boot and replace HPQ with AAPL. I think the retail investor would pay more attention to the Dow if it was stocked with more relevant companies.

These indexes need an update to bring new life into the market.

March 29, 2012
by Patrick
Comments Off on When the Fed Will Tighten

When the Fed Will Tighten

A look at the current market leaders would usually reveal to the astute investor the probably direction of future Fed policy on rate decisions. The clear market leaders (aside from AAPL) are retail, bank, and housing stocks. The historic pattern is to begin buying these stocks (and sell smokestack, metal and mineral, and gold stocks) when the fed is just starting to ease. Since the Fed has been maintaining a ZIRP for 2 years, the timing is a bit off, but the principle should still apply about future policy decision. At this point in a normal cycle, where the Fed has stayed neutral on rates and GDP exits a trough, we would hold the retail, bank, and housing, begin to buy paper and chemical stocks, and look to sell medicine cabinet stocks. We can see that LTD, EL, COST, and TJX (retail), JPM, GS, BAC, and KRE (bank), and SHW, TPX, and WHR (housing) are all behaving according to the historical cyclical model. IP, DD, and FMC are also starting to break out, again keeping with the model. Given all these observations, there is enough evidence to conclude that rates are about to rise, whether or not the Fed wishes them to. Maybe the old cyclical model is not so much a model of where the Fed will take rates, but where rates will go on their own.

January 23, 2012
by Patrick
Comments Off on Santorum’s SC Performance

Santorum’s SC Performance

Undiscussed by any of the talking heads, was Santorum’s great remark about doing his own taxes. The authenticity with which he gave his response is a quality that he should emphasize more often. It’s this contrast between the down-to-earth guy and the Lobbyist his campaign team needs to get right to take the conservative votes away from Newt.

A few hours infront of a mirror rehearsing his tax response before the debate would have made a world of difference. That remark should have gotten Newt-like applause, but a poor delivery robbed his line of its innate palatability.

January 2, 2012
by Patrick
Comments Off on 2012 Long Shots

2012 Long Shots

Since returns are asymmetric, gains from unanticipated events is where a great deal of the alpha in this market resides. Here are my long shots for this year:
1. Mark Hurd leaves the struggling ORCL to replace John Chambers at CSCO and it’s stock outperforms the tech sector.
2. The republicans take the white house, do away with Bernanke, and install a Volker-esk Chairman that is violently hwakish. This leads to an unsupported stock market that will remain highly volatile and less liquid. The VIX spends most of the year above 30.

December 11, 2011
by Patrick
Comments Off on Reasons for the rally

Reasons for the rally

It looked like the train was coming off the rails on Thursday, only to resume full steam ahead on Friday. It’s easy to be skeptical: the negatives are well known and well articulated by most.
Take the facts to understand why 1270 is more appropriate than 1230, the upper and lower parts of our range around the 1250 average.
The Europeans have said that bond holders don’t have to worry about a sovereign default. They have set up a US style TALF before a credit shock like Lehman has occurred over there. A grand bargain is mythical. All we need is for Lehman to be taken off the table, so we know now that the headline inspired dips can be bought without fear of the never ending decline that keeps us from being aggressive or pulling the trigger altogether. We have that now with the agreement to enforce debt limits as a percent of GDP and the relinquishment by Germany of demands for private sacrifice in sovereign debt haircuts.

November 10, 2011
by Patrick
Comments Off on Rumors Swirling

Rumors Swirling

As of this writing at 2:15pm, it should be noted that the market is holding up rather well, especially considering the excessive amount of rumors that have circulated today. First, there was a rumor that France’s credit rating would be downgraded, then Apple was rumored to have week iPad sales from Cleveland research but later in the day city defended Apple and S&P denied France’s credit rating downgrade.