I woke up with this morning with the intention of finding a nice prayer for health as a quote. I thought it would be a simple process searching for one online that’s not tied to a specific religion. It wasn’t so easy so I stuck with the quote above. I chose the quote as it seemed to have stood out the most from the other health related quotes. I probably chose it because I was just at my family doctor with my father who is suffering from a long term illness and is physically wasting away before my eyes. He’s had the illness for years now but within the last six months, his body has degenerated rapidly and now he is in need of a surgery that might just improve the quality of his life and extend it just a little longer. What’s interesting about all of this is that I’ve always gone about my daily life and I had been able to safely tuck away the fact that he is suffering and perhaps, which is even harder for me to admit until now, dying.

For the first time, in many years, I’ve let his illness affect me. I’m only human, right? Isn’t it strange though that in my prayers for his health and my focus on his pain that I myself have taken pains. My sleep for the past several days have been fitful and I find myself wide awake in the middle of the night. When I do sleep, my dreams are vivid and are of his family. My own body has deep knots in my shoulder as if I had whiplash and my ability to concentrate at work has become comprimised.

So, what am I to do? Well, for starters, I bowed out of the trading early on Friday and decided to take the rest of the year of off with a plan to come back fresh on January 5. I was going to take a vacation anyway so in essence I’m only taking a couple extra days off. The trading desk is highly competitive and it’s no different than showing up to a play a game. If my head is not in the game, then why play. I am not a bench warmer so I don’t want to show up unless I’m playing.

My goal during this time off is to get back on track with some sort of consistent workout. I don’t care what it is as long as I’m doing something every single day. I discovered several years ago that because of the high level of stress of what I do, that if I don’t have some sort of outlet at least five days a week my body begins to break down. When I first started in the business my “medicine” came in the form of booze, food, and cigarettes. They all work really well but there is no quality in life in those things. After several years of doing that, I decided to take the opposite end of the spectrum by giving up the booze and cigarettes, eating healthy and running like Forrest Gump. The results from making that shift have paid off in so many positive ways that it requires a whole other journal entry.

I guess my point of bringing my dad’s health, my health and all of this up is because I have not worked out in a week and my body is paying the cost. Of course, I have a woderful excuse that comes in the form of my father’s physical problems but doesnt’ it seem insane that I have to aquire my own actual, physical pain just to deal with his? Certainly there is the deep emotional, human element that must not be ignored or contained (thus the cause of the neck stress). This can be handled other ways like talking about what I’m feeling openly with my family, seeing my shrink (everybody should see one), and saying my prayers.

For now, I’m going to Bikram Yoga this morning. I’m going to eat healthy foods all day and tomorrow I’m going to do physical activity again.

Media Tentacles

It’s funny how the financial media works. Since Thanksgiving, give or take a few days, we had nothing but positivity coming out of the tube when it came to the Markets. The actual data, the real stuff, like the unemployment numbers were horrific but the Markets shrugged it off and so did the talking heads on television. We were, and will still be, bombarded by the most annoying question of the quarter and most likely next year: “Did we make a market bottom?” Well, did we? Huh? Let’s get the guy who was the bull on six months ago to call the bottom .Who really knows? Nobody, that’s who.

Yesterday’s selling, profit taking or whatever was that little wakeup call that said “look, it’s not over.” It’s definitely not over. What has caught my attention as well as the attention of a lot of other investors out there is the Treasuries. Just Google the words “treasury bubble” and see how many articles you get. I had very small positions in TLT and TLH in another account that I could not resist cutting them in half. How many more people are doing the same? Just like the JB Income and Growth account, I’m letting the cash sit aside for another rainy day.

What does the possible Treasury bubble mean? There’s roughly a 50/50 contrarian correlation on the SP500 and TLT charts. That is, during certain peak dates on both charts, they singled a reversal. This time around, there is no correlation. The TLT is busting the charts (literally) while the Markets were going up. Initially, my target to buy some January puts was the 115/120 range but without a release in steam and a break in the trend, it just looks like we could see 125. I may just buy the TBT, which is the etf short, so I could average in and not worry about a short options month like the January 2009 for the TLT to correct. It might just be really interesting when it does. If the correlation hold true this time, we could just see a big stock market bounce. Or not.

I started to make my little buy or focus list again yesterday and it had oil written all over it. It’s a wonderful thing to see gas prices below $2 a gallon and oil at $36. I don’t foresee a huge demand that would cause another super run or spike to the $150 level happening as quickly as the last one but it’s nice to now, if you get long, that there’s only so much oil left in the world to fuel or transportation needs and even if the car manufactures produce a oil alternative vehicle tomorrow, not many people can afford or are getting the credit to buy one. It’s as simple as that. Therefore, my list includes DIG (great yield too) and the USO.

On a final note, as I was driving home, I listened to a great opinion segment on NPR. Yes, I listen to NPR and I’m not a senior citizen. The subject was on Obama and how he’s wrapping up his administration picks so quickly. The commentator pointed out that he is missing one important new category and that is the Office of Common Sense. This would be the government agency in charge of waking up the middle class from the illusion that are in middle class territory and force them to realize that their economic status and more important their habits must change or going to change whether they realize it or not. I like that.

Mr.Goldfinger

There are still plenty of setups at the trading desk. Certainly, and I’m not fooling myself, the volatility of the last three months has vanished. Therefore, I have to make the absolute most of what the Market is putting on my plate. At the same time, vacation is on my mind but as I said in my previous posts, I just have to pretend that it’s not.

Right now, it’s very hard to see the direction of the Markets. It was so much easier when commodities were in a massive bubble as well as oil and you could look at it and say, “how can you not take your profits off of the table?”. We are super steady right here and right now and equities on average have been blunted all around by roughly fifty percenty. The big question is, has it baked in the worst? That’s it. Simple as that. So, I continue to read the financials and watch that it’s steady as she goes in difficult times. AT & T fires a bunch of workers but then they raise their dividend. As a stock holder I’m not pleased. The dividend was sufficient enough and as a citizen and human being I would have been happier that those people could have kept their jobs.

What I’m trying to say is that I’m wondering if the Markets have priced in the unemployment numbers? Is it smart enough? Obama’s social programs are a right step but when his administration hands out it’s billions in contracts to American(hopefully) corporations, are the workers going to be American workers as well?

It’s hard to see through all of this and find some sort of direction and precedent. I don’t want to be naive but I also don’t want to look at the early 1930s as what to expect. Nobody does. We aren’t even close to being there yet and if we ever do, it won’t be same.

Yesterday, oil and gold and gold related stocks like the miners were the trades du jour. We have a gold bug in our office that swears that gold will be, as if it already hasn’t seen it’s hey day, the biggest thing. He backs it up by buying the physical stuff. It’s beautiful to hold gold coins and silver too if you ever get a chance. I understand his argument for gold but I don’t think it makes sense considering, like the dollar, it represents a value or a perception that we give to it and nothing else. The American dollar exists out of our perception that it has value by the People who stand behind it. Nothing more. I don’t want to imagine a time when that could no longer be the case and gold takes precendence for the sake of being gold.

Finally, once again, I poured over my current long term (5-20 years) positions in the Markets and decided not to add to the biggest losers. I figure that there are four possible macro scenarios in the near term.

1. First, we break the last DJIA lows, capitulate and price in a new Depression in which time I would add to my positions. I’m not the only person who believes it and as of this writing it does not seem like an iminent possiblity and the more we hold steady and possibly climb, the less likely the scenario becomes. I do not want to head in this direction whatsoever. No way. It’s way too scary and if it happens, times will be very, very difficult.
2. We hold steady, maybe just maybe, test or slightly break the lows but not in a capitulation fashion. It could be a slow bleed scenario but we we trade in a range for years. Hopefully, the equities in our portfolio continue to pay dividends and you could reinvest and with extra cash flow add onto them as time goes on. The Markets would see micro bubbles here and there. Micro bubbles are certain theme trades, for instance, the trades we saw in national security stocks after 9/11. They are bubbles that come and go based on a very brief new paradigm. The range, as I mentioned, could last for years like the Markets saw during the Cold War and Vietnam War years in the DJIA. Eventually, we could emerge and go up after we resolve, like those wars, whatever it is we need to resolve as a nation and a world. If not, well then, I would have to write a new list.
3. We could steadily climb up from here. The world and the nation, not unlike the Internet days experience a new sense of hope and we all get excited again about life and about making lots of money. We’d test highs and not lows. It could happen. Nobody, before they happened, could have seen the boom before the Internet bubble nor the Housing/Commodity bubble.
4. I’m totally wrong.

These are my thoughts now. Normally, it’s nice to be able to have just one possibility and not four. The sequence of numbers are in most likely to occur order. My vote is for number three.

Shortly after, I rode it 15 or 16 miles round trip to sign up at my new gym. My goal is to do that trip at least twice a week. Three times a week would be amazing. I can mostly only go when it’s dark so I equipped the bike with super strong lights in the front and the bank. It’s a big rush riding at night.

Personally, as far as trading goes, even though I tried to focus I was still in vacation mode. I think that there was just a lot of distractions this week and I’m hoping that next week I can have more focus. The setups are certainly there and it’s a shame to waste them.

What I mean is that a Depression scenerio is definitely still on the table. Mr. Dimon from JPM himself expressed skepticism over the possibility that one could occur but he would be the last person if he truly believed one was iminent that would just come out and say, “oh yeah, we’re definitely going down much further.” I further believe that because he had expressed, almost in the same breath, that he thinks housing prices will fall another 20% that he’s not telling us what he really believes.

That last comment of his sparked me to revisit Realtor.com and do my weekly real estate homework. I’ve been hitting this website just about once a week for over three years now. I link it with the local property appraiser web site to see what the home owner paid for his or her house. You know what? Prices are definitely going down and inventory is up. Yeah, it’s a bummer to see the same house for sale for years now but I’m not bummed out when I see the same homes on the market and when they are priced well above (sometimes 200%) of what the owner paid. It’s a strange sense of entitlement that a home owner believes that they must make a profit on their home. Interesting. Nevertheless, in my new search yesterday, I’ve noticed that local prices have come down and are becoming rather tempting. However, if you believe a new Depression is around the corner and that a push for even lower mortgage rates wont’ help the situation, it might just be worth waiting a bit longer. My point is, and I’m trying to tie this into my equity purchasing list, is that I’m not ecstatic about adding to my portfolio and I’m not sure I’d be willing to add to my portfolio if we drop 500 or more points from here. Well, maybe I’d add just a little but if, psychologically speaking, we do drop big again, but then the notion of breaking the 7492 level becomes a reality again and I would want to wait and temper my new purchases. For example, psychologically speaking, it becomes less plausible to get to the level and let alone breaking it, when we are over 1000 points away. I know that seems really obvious but it’s the truth. The closer we get the more depressing the thought of making the lows and new lows becomes. We start to bust out our long term technical charts, begin to revisit the macro fundamentals and convince ourselves once more that a DJIA below 6000 is feasible. If so, do we get there hard and fast or painfully slow?

Also, I’ve yet to give up a bunch of my personal belongings as I mentioned in JB Giving Back. That’s all part of the mood I’ve been in. My goal today is to make at least two phone calls to get the process rolling.

What else? Oh yeah, the JB Health. Well, it’s a new year that’s rolling around the corner and I’ve been an avid runner for several years now and I’m just bored with it. I shouldn’t have to listen to my ipod just to get going and stay going. I love the high of the long run but I need a change of pace from the short ones so I’ve put together some goals and ideas. There’s always a bunch of options I get to do when the weather is permitting and the first thing that always, and I mean always, takes precedence when the conditions are right is surfing. I love surfing and I will surf before anything else. If I lived in a location where I could surf like scheduling a tennis match then that’s what I’d do but I can’t so I have to be imaginative to stay healthy and blow off the steam that’s accumulated at the office. All traders need to let out a lot of tension. So here goes. My idea is to join a gym. I don’t love the gym per se. I mean it’s ok but it gets boring like jogging and it’s cool to have a gym partner but that’s when I was in school. I’m not hooking up with a gym partner these days and I’m definitely not squandering my money to pay a trainer to be my partner so I figured that I can make it interesting and challenging at the same time. The gym I want to join is approximately seven miles from my house so I figured I’d buy a new bike (my beach cruiser wont’ cut it) and bike there to get a thirty minute workout in then bike home. I’m pretty stoked on the idea because if you think about the whole common gym routine it’s pretty backwards. I work by the gym I want to go to and every morning I see the gym goers drive up in their cars, get out with low energy and hop on a lame cardio machine to get them going (by the way, I don’t get the avid runners on those machines). If I go on my bike, it will take me ten or fifteen minutes longer to get there but I’d already have my cardio done and I get to push myself or challenge myself again by riding back home. The amount of time is totally the same.

In conclusion, moving forward it’s all about positive change, making goals and keeping them. This JB journal will help keep me in check.

I ran the PB marathon on Sunday. Perhaps I should use the words “light jogged” instead. I didn’t train for it, I admit, and after I finished the first words out of my mouth to my wife was “that was the dumbest thing I ever did”. I was very happy to be alive.

The only reason I got out of bed at 4:30 a.m. on Sunday morning was two-fold. First, I wanted to test myself and see if I had the courage and mind over matter ability to get to the finish line. Second, and more influential, I had made a bet with somebody at work that I could do it. I’m a trader, betting is what I do.

I guess my point is that I love running in marathons. It’s my third one so far and I have a goal to do the New York and Palm Beach one again. The thing is, I have to train. It’s not that I was totally out of shape, I’m in decent shape, it’s just that I hit a couple of hurdles while I was training.

Moving forward, as this is my first entry into the JB Health category, is that I will use this space to journal my physical activity and my physical goals. I know it doesn’t seem like trading and running or surfing or yoga or whatever I’ll be doing don’t seem to match on the surface but in essence everything is connected and health is the most important form of a man’s health.

The Early Days

     Momentum continued to surge in the energy related and infrastructure names. Letter X was up around 30% and it was all very exciting until you took a step back, looked at the daily chart and noticed how sad it is that a 30% move barely makes a dent. This is how it will be for quite some time.

     I have to admit that things, the Markets, etc. do seem and feel a lot more stable. It’s not as easy, at the time of this writing, to see us breaking below 7392. Fundamentally, nothing has changed in the last few weeks with the exception of acceptance and faith. We’re putting a lot of faith into this new administration. Maybe too much but who knows from this point. It’s not very clear right now but at least the Markets seem to be searching and scratching to believe in the positive side of things. Until that might change again.

     The bottom line is that, and I loosely quote from another trader, is that pumping money into the same economy is not creating and putting sustainable use to our abundant lands nor is it creating new wealth. I really want to believe and I am really tempted to buy more into my JB portfolio. Not yet. My focus is buying into some of these energy and infrastructure stocks when we get another pullback. If we push higher and hold past 9000 this week and we get overbought then we sell off,  I would be interested in X and DIG to start out with and will keep the list tight.