Low Consumer Confidence Can't Slow Down Amazon
By Jeff Macke Sep 29, 2009 3:20 pm
Best way to digest one-off data points is to watch a company's reaction to the news.
Greetings from Hoover-ville where our numbers are few but our spirits are high. The latter is something of a problem, actually, as generating critical Hobo Mass is going to require an even worse economy. Today’s consumer confidence dip to 53.1 from an expected 57 is a start, but not exactly going to get us back to the Hobo glory days of marching on DC. Right now we’ve got about ten former bankers standing outside a coffee shop, sucking up free wi-fi and ironically heckling beatniks for change. At least we can trade on our Blackberrys while we kill time.
Here’s what I’m doing when not Googling “libel."
- What’s the best way to digest one-off data points like today’s confidence number, weekly employment figures, and the like? Watch the reaction, as opposed to the news. The Fed is signaling a shift from preposterously, historically easy money to a more hawkish stance. This shift is as good a reason as any for last week’s softness. That being the case, weak data is more bullish than bearish -- at least from a marginal day-trading perspective.
- Another example of a great reaction to a somewhat intentionally attention-grabbing news item: Amazon (AMZN) fighting to go green after being started at “Sell” by a boutique research house. Low fuel prices mean lower shipping costs and, as I’ve said before, Amazon is simply one of the best merchants going these days. The tape remains forgiving of mediocre results from merchants (witness: Whole Foods (WFMI), Gap (GPS) et al hitting 52-week highs). You can argue about whether or not that should be the case but, take my word for it, there’s no money in trading “shouldas."
- In other words -- and stop me if you’ve heard me say it before -- shorting in anticipation of a breakdown is exactly tantamount to calling a top. It’s also the evil twin of calling a bottom by “scaling in” to longs without a stop. Calling tops and bottoms in markets are perhaps the most time-honored ways to lose everything.
- Why do I bring it up? Because, even with an influx of emails offering me loans and e-hugs yesterday (well-intentioned but confusing), the question I get most often by far is “What are you shorting?” and the answer is “nothing." As we make our way through the anniversary month of the 2008 meltdown, the most salient lesson for pure traders is this: There was more than enough time to either get short or, as was more the case with me, go to cash after the meltdown was in bloom.
- The biggest trading challenge I’ve had in the back half of this year is holding my fire. The “easy” play of the year was getting long in March; the hardest play was staying long. As usual, the less thought you put into it, the more apt you were to follow the best path. Whatever intellectual arguments you can make against the tape, the fact is that the Purple Crayon trendline (a thin and simple line connecting the lows) hasn’t been broken by the broader tape since the lows.
- For what it’s worth, I remain long Disney (DIS), McDonald's (MCD), a token long in Amazon, and some GLD I picked up when the ETF and ancient metal got rejected by $100 and old highs, respectively. Also, a decent percentage of cash, which is galling, but barring a Weimar Republic inflation ramp, is better than gambling.
Positions in AMZN, MCD, DIS, GLD.
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Reply
2009-09-29 15:16:05
From three point range
Funny, pithy, with a journeyman's spin, nothing but net.
BTW is there a market axiom for the opposite of catching falling knifes? Piling in at the top or chasing?
BTW is there a market axiom for the opposite of catching falling knifes? Piling in at the top or chasing?
2009-09-29 15:30:59
Well and ably put, as always. Sometimes NOT trading is the most difficult choice of all...
re: an opposite metaphor for catching a falling knife-- 'pitching your tent on top of the volcano'?
re: an opposite metaphor for catching a falling knife-- 'pitching your tent on top of the volcano'?
2009-09-29 19:15:06
Thanks
Jeff,
Thanks for your measured and dignified reply to my post.
I think your reply speaks for itself.
You, sir, are a gentleman. But I still want to know what the car people thing meant.
Thanks for your measured and dignified reply to my post.
I think your reply speaks for itself.
You, sir, are a gentleman. But I still want to know what the car people thing meant.
2009-09-29 19:32:25
i guess -
yes, i'm learning, slowly as usual, there really are times it may be best to just not play -
thanks jeff
thanks jeff
2009-09-29 21:38:18
letting the freak out
Jeff, Jeff, Jeff, Jeff, Jeff,
Man - who did you (annoy) off at Z? I have always enjoyed your intellect and found your market savvy compelling. But really.
Granted -it was funny and warranted and I appreciate your honesty. But really, we all know it is a s-Hell game, and we participate, or else we get out,
I truly wish you well. You stood your ground and I respect that- for what its worth. I am hopeful those that love and respect you will rally around.
Looking forward to more posts here,
Mike "the pirate" Turner
Man - who did you (annoy) off at Z? I have always enjoyed your intellect and found your market savvy compelling. But really.
Granted -it was funny and warranted and I appreciate your honesty. But really, we all know it is a s-Hell game, and we participate, or else we get out,
I truly wish you well. You stood your ground and I respect that- for what its worth. I am hopeful those that love and respect you will rally around.
Looking forward to more posts here,
Mike "the pirate" Turner
2009-09-30 11:43:01
got out too soon
Hell,
I thought it was smart and prudent to get out of BAC after a double from 5 to 10 just watch this market melt up like some crazy Frankenstein thing against everything I believed in the past.
I just couldn't appreciate the dimension we now live in. Now I know better.
Just hitting special situations now for quickies.
I thought it was smart and prudent to get out of BAC after a double from 5 to 10 just watch this market melt up like some crazy Frankenstein thing against everything I believed in the past.
I just couldn't appreciate the dimension we now live in. Now I know better.
Just hitting special situations now for quickies.
2009-10-02 10:25:20
letting the freak out
"Who did I annoy off at Z?" Could be most anyone. I never read a prompter, I call BS and smirk at guest and I openly mock people feigning certainty.
I'm good at that and it has legs, if I don't go circus act. I'd be simply horrible subbing for Jon Steward. I would kill Colbert. I know you don't brag on TV when you win and you not only own your losses but flaggelate yourself but what you could have done better. The latter is simply more likeable and realistic TV. People who get past the fear of admiting they were wrong and delve into how they were going to fix it tend to win in most field. Not always, but more than a bell curve.
Which is a way of saying "I don't have any idea who I angered at Z" To research it beyond that would just end poorly as I may get mad or... and I've good just disguising this from the public, but I might be verbally aggressive; always a threat for responding to what people say about you on-line.
I'm good at that and it has legs, if I don't go circus act. I'd be simply horrible subbing for Jon Steward. I would kill Colbert. I know you don't brag on TV when you win and you not only own your losses but flaggelate yourself but what you could have done better. The latter is simply more likeable and realistic TV. People who get past the fear of admiting they were wrong and delve into how they were going to fix it tend to win in most field. Not always, but more than a bell curve.
Which is a way of saying "I don't have any idea who I angered at Z" To research it beyond that would just end poorly as I may get mad or... and I've good just disguising this from the public, but I might be verbally aggressive; always a threat for responding to what people say about you on-line.
2009-10-02 10:32:11
letting the freak out
And PS, "You're Broke" is a wholly different charge than almost anything else. The writting challenge is fighting back fairly but effectly enough to you didn't have to resort to dated numbers and ficticious projections.
Me be broke would require my having traded against what I reccomending here and on TV. It's exactly tantamount to "are you a Fraud." Since saying "No" and leaving it that with a possible "And, honestly, was there moral leap from taking snappsots at the Meeting House and requiring me to somehow defend a career threatening charge so shallow that no actual evidence was really offered. Jesus turned the other cheek; but he wasn't Irish.
So I ripped the lazy research. Maybe too much but the editor and I have made up. So Kenny Rogers (when he had his old face) nailed it years ago, "sometimes you have to fight to be a man".
Me be broke would require my having traded against what I reccomending here and on TV. It's exactly tantamount to "are you a Fraud." Since saying "No" and leaving it that with a possible "And, honestly, was there moral leap from taking snappsots at the Meeting House and requiring me to somehow defend a career threatening charge so shallow that no actual evidence was really offered. Jesus turned the other cheek; but he wasn't Irish.
So I ripped the lazy research. Maybe too much but the editor and I have made up. So Kenny Rogers (when he had his old face) nailed it years ago, "sometimes you have to fight to be a man".
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