Mar

18

BinocularsOne of the connections is viewing the market as a super scout, watching and measuring all events in other markets as an adjunct to how to play the current market game. As I have noted before, the super market scout, all seeing and sentient, noted what happened in the three final days of the insider trading decline at the big French bank, and noted a big down open on Monday, and a big down follow up, which was greeted by and was contemporaneous with two huge 5% opening Wednesday, and declines on Tue, and Wed Jan 22 and Jan 23 in the US each followed by an up 5%. This was finally completely recapitulated today, and it was like the Super Scout had seen an opportunity to unleash much capital from the slow moving and undercapitalized to support the infrastructure and then took it.

What other scouting tips does the Market Scout see as it scans the occurrences around the world and looks for opportunities?

Rodger Bastien adds:

The Super Market Scout reminds me of the great "bird dog" scouts I have known whose job is to identify amateur talent for Big League baseball clubs The truly great ones first and foremost look beyond the numbers of a player to figure out what is really going on with him. The sand lots are full of players who hit .400 but can't hit a curveball or whose bat speed won't allow him to turn on a pitch and drive it; pitchers who mow' em down at the Division II level whose fastball never touches 90; great college power hitters who hit 20 home runs with aluminum bats whose power will not translate with the less forgiving wooden bats used in the pros. On the other hand, the wild, hard-throwing lefty who walks ten a game or the raw-boned, 6'4" 240 pound first-baseman from North Dakota who crushes the ball but strikes out every other at bat are the treasures, whose upside is limitless and flaws are fixable. The Super Market Scout hopes that his competition focuses on the "noise"– the gyrations, the trumped up economic activity and bail-outs et al that all of the amateurs focus on. Like the Bird Dog Scout, he will quietly look beyond the numbers, where the true value lies.


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6 Comments so far

  1. Anatoly Veltman on March 18, 2008 12:55 pm

    “What does the Market Scout see as it scans the occurrences around the world and looks for opportunities”? Look at EUR approaching 1.618 Fibonacci Golden Price:

    According to CQG Monthly chart (constructed out of DEM rate pre-1999):

    EUR/USD rallied 0.53->1.15, basically 62 Fibonacci handles (1970-1980); corrected (1980-1985); rallied .56->1.45, basically 89 Fibonacci handles (1985-1995); corrected 62 Fibonacci handles again 1.45->.8228 (1995-2000); and rallying toward 1.6180 as we speak!

    I will point out similar trade I’ve calculated for Canada currency back in 2002:
    USD/CAD rallied 0.95->1.45 (1976-1986), corrected (1986-1991) and then rallied exactly for as many years and handles again 1.12->1.618 (1992-2002). At that precise Fibonacci Golden Price of 1.618 USD/CAD reversed to recapitulate 100% of its 20y appreciation, trading back between 90-100 by 2008!

  2. steve leslie on March 18, 2008 1:42 pm

    Chair: I picked up a comment from a Fast Money contributer last evening who stated that although the depth of the correction has been adequate the length must now be satisfied for the recovery to ensue.

    Rodger I think you touched a very valuable point. Let me expound.

    Some years back there was a basketball playground legend out of NY named Lloyd Daniels. He never played college ball but went directly to the pros initially with the San Antonio Spurs under Jerry Tarkanian. He was considered a can’t miss 6′7″ guard. Some compared him to Connie Hawkins another NY playground legend and NBA star. Daniels had great natural talent yet had some very obvious flaws.

    I remember a discussion John Gabriel of the Orlando Magic had concerning Daniels and his prospects. His comments were that there is far more than raw talent (see assets) that goes into the making of an NBA player. He described the need for a work ethic, a willingness to learn the game, and a tenacious zeal for playing both offense and defense. He described Greg Kite a bulky player who despite his lack of natural talent, had been able to survive in the NBA for nearly 2 decades. After bouncing around the league for six years, with 6 clubs Daniels finally left the game in obscurity. He was nearly killed by gunfire in late 1989 and had completely fallen off everyones screen.

    As I have mentioned before the stocks that I think will rebound as winners once this mess clears up will be the ones that were the stars before. There is no secret here who those are. They will lead the field at least initially. The Googles, the Microsofts, probably Visa the total packages if you will. The ones without issues. Those with franchise dominance, clean balance sheets, sound management. Then the rest will follow.

    At least that is one way that this can all turn out.

    sjl. s for sagacious

  3. Lon Evans on March 19, 2008 3:14 am

    Mr. Leslie,

    One of many.

    lon

  4. Greg Vinately on March 19, 2008 1:30 pm

    The market scout was on this site on March 15th (the Saturday before the recent low) when Mr. Lon Evans made his most aggressive and incessant bearish prognostications by sporting comments such as:
    “To date, I’ve been right, and, well, you’ve been wrong. ”

    The market mistress took no prisoners and on the following Monday the S&P 500 cash index bottomed at 1256 to close on Tuesday at 1330.

    Now the Market Scout returned just as quick as it failed to show its face during Tuesday’s rally to proclaim:

    “p.s. Some 130 handles in the money, and more to come. And that’s not including the day game. ”

    Not sure who apparently really cares about Mr. X or Mr. Y being 130 handles in the money. Apparently, we are led to believe that Mr. Right sat through a 75 point rally in the S&P and held his glorious position and did not buckle to the “stupidity” of those that were buying. Oh, but wait a minute…one can always claim to play the “day game” to counter balance the losses of his other “big game”. Let’s just pretend that Mr. Right is not part of the market “grinders” club that contributes the daily share of commissions and whipsaws to the big feeders of the market foodchain.

    Lol…keep it coming Lon.
    Mr. Scout himself is actually right…”and more to come”.

  5. Lon Evans on March 19, 2008 10:01 pm

    Greg,

    Options, buy and hold, still holding through all the whipsaws, now some 170 handles in the money, looking to exercise with a grand total of 250.

    I’ll keep you apprised.

    lon

  6. Greg Vinately on March 20, 2008 11:22 am

    Lon,
    this just keeps getting better and better.

    By the way, I have a bridge for sale. We can negotiate a price and since I’m a nice guy I’ll ony charge you a grand total of 250 handles.

    I’ll keep you posted on the bridge condition and the repairs that are just finalized.

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