Chat with Joe Ross
Chat log from: Tuesday, August 7, 2007
Live Chat with Joe starts Tuesday at 8.00 PM U.S. Central Time! |
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| berto | welcome mr joe ross |
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| shamutooth | Hey Big D, all |
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| BigD | s'up |
| mapletrader | Hey Joe! |
| JoeRoss | Hidy ho everyone |
| shamutooth | What's up Joe |
| marc | Evening Joe - |
| JoeRoss | It looks like the stock market is up. The PPT at work again. |
| marsh | Hi Joe. |
| marsh | Yeah, the market really came back after being slammed down. |
| BigD | What a swing the last 2 hours |
| shamutooth | Probably not up for long. Looks to me like big bad grandpa bear has kicked back and is going to stay awhile. |
| JoeRoss | I've got some 1515 Calls. I hope they can hang on for another 8 days. |
| JoeRoss | Well the market is waiting to see what Bernanke says tomorrow. |
| JoeRoss | Then it could soar or drop like a rock. |
| shamutooth | I can almost smell his cigar and cognac |
| JoeRoss | They are hoping for a hint at lower interest rates. But I think he will do nothing. |
| marsh | Usually, from August to November, the market falls, sometimes historically spectacularly. |
| JoeRoss | It can't fall soon enough for me. |
| BigD | Once the dust settles i think its going to be shorting time. |
| marsh | Remember 1929, 1987, 2001? |
| JoeRoss | I can remember two of those ;) |
| marsh | I remember 1029 from a previous life. |
| marsh | And 1929 too! |
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| JoeRoss | marsh is a REAL old timer |
| mapletrader | Joe, Do you do any option sales on the electronic overnight? They seem pretty far from "fair value" as far as I have seen. |
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| JoeRoss | maple: No I need my nights for sleep and watching TV among other things. |
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| BofB | Hey room. |
| JoeRoss | I've been recording some of the stuff I want to watch and so I can click through the commercials. |
| BigD | Hey bob. |
| shamutooth | WUZZUP BofB |
| zendre | Hi everyone. |
| mapletrader | That sounds fun. |
| JoeRoss | Hi to all. |
| BigD | I tried my hand at nights with no luck. |
| marc | Joe, how could I get more insight into how the s/p moves against the bond market; also how gold correlates with those? |
| BigD | I stick to the day stuff. |
| JoeRoss | I don't think there is enough volume at night for option trading. |
| BigD | Yup. |
| mapletrader | Its got to be day time somewhere, and they cannot hide that volume forever! |
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| JoeRoss | marc: The only way I can answer that is for you to do the research. I have no idea of how they relate. I've never found any consistency among them. |
| JoeRoss | maple: It may be day time somewhere, but that doesn't mean they're interested in our markets in the U.S. |
| marsh | With the volatility high, do you think there is an opportunity in volatility option spreads, like were popular a few years ago? |
| zendre | I can see that the Bond market is very popular here. Is there any basic material regarding fundamentals I should read regarding Bonds? |
| JoeRoss | marsh: High Volatility is why I've been selling options lately. |
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| JoeRoss | zendre: All I've ever known about bonds is that when interest rates are rising or thought to be going to rise, bonds go down and vice-versa. What more do you need to know about them unless you are going to actually buy them to hold over time? |
| mapletrader | Why is the Hang Seng or (is that the Hang Ten) unavailable for trading for me, or perhaps rather do I have to speak Mandarin to trade it? Is it electronic? What platform, clearing house will handle it? I only ask because it seems to go straight up, and down. |
| marsh | I think IB Brokers has the Hang Seng. |
| JoeRoss | My son-in-law buys municipal bonds to hold, so he needs to think about the long term. But otherwise, all I do with bonds besides selling options is to trade the Easy Bond Method. |
| shamutooth | Most large lenders raised rates on option ARMS 200-400 basis points overnight. More evidence of liquidity drying up. |
| BofB | What shamu is saying is......... |
| BigD | And the guidelines tightened like a noose. |
| JoeRoss | maple: Hang Seng is all electronic. All you need is software that charts it and a broker who handles it. There is no law against trading it. |
| marc | And I'm shopping for a new mortgage. |
| BofB | On option arm at 7.5% interest rate paid 2 pts yield, now 8% interest rate costs 2 pts.... |
| marc | Hmm. 2 years late. |
| BigD | Bad timing. |
| BofB | Its going to get way worse the next 2-3 months. |
| BigD | What kind you looking for. |
| marc | New construction owner-builder . |
| BigD | Sorry can't help. |
| BofB | It changed overnight from the lenders. |
| BigD | Try 'Indymac' |
| marc | Have-expensive and want me to have someone to hold my hand. |
| BofB | Marc, if you can go full documentation....try Indymac for new construction. |
| JoeRoss | If interest rates go up, that will kill the stock market. If they go down it will kill the dollar and the bond markets. So what will the FED do? They will probably do nothing except make a lot political type noise. |
| marc | Thanks BofB |
| JoeRoss | FED can't really control the interest rates on notes and bonds. Mortgage rates key off of the ten year notes. |
| BofB | And the lenders will keep on tightening the guidelines for all loans as it hits the prime market loans. |
| netwonc | When is the FED suppose to testify to congress. |
| BigD | Tomorrow I think. |
| JoeRoss | netwonc: We should hear tomorrow at about 1:15 PM Central time. |
| netwonc | Thanks. |
| marsh |
Is it naive of me to think that after being so historically low for so long, some sort of balance has to drive interest rates back up over the historical mean? |
| BofB | Angelo Mozilo "CEO for countrywide loans", is already talking with Congress. |
| BigD | Interesting to see how market will respond. |
| JoeRoss | I agree, Marsh, but when????? |
| BigD | If today is any indication, be ready to get in and out quick. |
| BofB | Angelo is blaming every1 else even though he made $41.9 mil last year. |
| BigD | And sold all his stocks in C-wide. |
| BofB | We haven't seen the end yet. Lenders will be hurting even more, top PMI companies have lost 2/3 of value in their stocks..... |
| BigD | AHM filed for bankruptcy protection yesterday. |
| BofB | Will probably keep seeing the hit in all main indexes for the next month at least, huge volatility to keep coming. |
| BofB | I have been in the mortgage field for 4.5 years and even the old timers haven't seen the market this bad. |
| BigD | You mean the industry! |
| BofB | Lending guidelines and the strictness it is reverting back to. |
| BofB | I don't know of any lender "home mortgages" or builders "home building" which are not hurting with today's market. |
| marc | Do you think its just a shake-out due to the sub-prime problem? |
| BofB | Nope, hitting the prime market now....... |
| acman | When I moved to Austin in 91, every bank changed names and I met bank presidents that went into construction after their bank closed. |
| BofB | Greenpoint Mortgage will not do 2nd mortgages behind negative AM firsts..... |
| BofB | National city will not do W2 stated loans any more ..... |
| BofB | Countrywide is a complete joke now. |
| JoeRoss | acman: I remember that. You could have bought a $100K house with nothing down and 5 years interest free loan in 1990.. |
| shamutooth | acman: was that during the S&L crisis? |
| acman | I bought 4 plex's for 28,000 that were 4400 feet and now are over 200k. |
| BofB | We have loans killed by lenders killing appraised value "easiest way to kill a loan...even if you got full documentation with 200-300k in assets. |
| BigD | Can't get 100% financing now. |
| JoeRoss | I paid $126K for mine before I found out I could have gotten it for nothing :( |
| acman | One of the 4 plexes had a note for $225k. I paid 70k for it. |
| JoeRoss | I paid cash |
| BofB | Texas probably has 1 of the greatest market value for homes right now. |
| marsh | How could you have gotten it for nothing? If the bank fails, isn't the note transferred to another bank? |
| BofB | 300k home in Tx is...... |
| acman | It was almost impossible to get a loan as the housing market was deemed so risky back then. I paid 10% interest. |
| BofB | Ohio is worth 500k...... |
| JoeRoss | marsh: Sure, but the note was interest free for 5 years with 0 down payment. |
| BigD | Soon it will be gov't backed loans ONLY. FHA etc. |
| BofB | California is worth 1 mil. |
| marsh | I see, sell it before the 5 years is up. |
| JoeRoss | marsh: Right. I only lived there for 4 years and then moved to the Bahamas. |
| marsh | BofB: Do you mean the average house in California is 1 mil? |
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| BofB | Here is an example in California...... |
| BofB | 2002, house is worth 135K in California.... |
| acman | The standing joke around in Austin that people foolishly paid almost $100 per foot for houses in 1984. Those houses went to 20k and now are only 250-300 per foot but the funny thing is they are 20 years older. |
| JoeRoss | They were selling them that way in Blockhouse Creek. The banks just wanted out from holding the land and the builders were happy to build on it. It was at the tail end of the oil depression that hit Texas. |
| BofB | 2005 its worth 510K...... |
| BofB | Now lucky to sell for 350-400K. |
| BofB | But the problem is the average homeowner has refinanced 3-4 times the last 4 years so he still owes 450K on a 350K house in today's market. |
| marsh | Where does the 1 mil come in? |
| mapletrader | 20% per year profit is not too bad, if he/she did not refinance. |
| BofB | Foreclosures will be higher then ever before the next few years which will keep the average home prices hurting till 2009-2010. |
| BofB | That's why all the lenders are pointing fingers everywhere but themselves. |
| BigD | Sad to say but MANY in California are maxed out expecting appreciation, and are in for a big surprise when their rate goes adjustable. There will be A LOT of foreclosures in California in the prime market very soon. |
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| JoeRoss | Maybe those guys from California will move to Texas so I can get my house sold :) |
| JoeRoss | If it doesn't sell by labor day, I'm gonna rent it out. I own it free and clear. |
| BigD | Could very well be. It might be time to invest in a couple fire sells there soon. |
| BofB | The 1 mil came from appraisals we have done "comps use true selling values" but fire sales will keep the sales lower and lower as time goes by. |
| BofB | One of our clients in California has 4 foreclosures on their street. |
| netwonc | I was reading somewhere that the Texas housing market was still going pretty good compared to everywhere else. |
| shamutooth | Joe, maybe you can just give the house to Susan for a wedding gift? |
| JoeRoss | shamu: She doesn't want it. |
| BofB | Here is an example of 1 of our clients in California........ |
| BigD | Texas is good but they keep us from doing mortgages in that state. |
| BofB | Middle of 2005, house in San Diego is...... |
| BofB | 950 square feet...... |
| BofB | 4500 sq ft lot..... |
| BofB | 2 bedrooms, 1 bath, no garage and comps support $510,000. |
| BofB | Now same house is going for around 400k and dropping. |
| BofB | Average house in California has dropped 20% the last 2 years...that will really depress the market. |
| BofB | Problem is 70-80% of people in California owe more then the house is worth. |
| acman |
When I was in LAX last week from my Alaska trip, a 30ish builder was bragging about Oregon as the best place to build and sell at great profits. He was chatting to a guy in the bus between terminals. He was going to Hawaii to try to deal with his Carpal Tunnel. Glad I only own my personal house free and clear now. |
| BofB | Oregon, Washington and TX are still strong. |
| acman | The problem with houses is the liquidity. I get better fills at 3am on Dec 2008 corn! |
| marsh | Places that get a lot of rain. |
| BofB | Florida, California, Nevada, Maryland, Connecticut, Virginia, Arizona are hurting really bad and they have 40-50% of all houses in the USA. |
| kevinj |
if you chart the real estate market doubling in price for ten years of course it has to come down and if you're the greedy one that bought ten houses... well, pigs get slaughtered. Let's not forget how our government and insurance companies have been raping us making the 500 really worth 200. After all, insurance and taxes have been doubling also. |
| BofB | All this will make the market volatile which will help the traders make $ the next few years ::huh :) |
| JoeRoss | zendre: I saw you typing something awhile ago. Did you want to say something? |
| acman |
There are futures contracts on the housing market. They are getting more liquid. Probably better bid/ask spreads then a Single Family and alot less commission. |
| BigD | I LOVE BIG VOLUME AND VOLATILITY!! |
| zendre | I would love to hear something about other markets, but I decided not to disturb the housing discussion. |
| acman |
The ER-YM and ER-NQ spread has been terrific. I am taking profits on peaks. This downturn was one of the easiest for me to follow. Anybody else trading index spreads? I am guessing a good peak around 9am. |
| BigD | Sorry...we got carried away. |
| JoeRoss | zendre: We never know which way the chat will turn. Tonight it was Housing and Mortgages 101. Too bad we can't get college credit for it. |
| zendre | Joe: no problem. |
| acman |
Housing is simply a trade with the value of the dollar being a factor (raw material cost), interest rates, and area job growth. Liquidity and commissions are bad. it is just another commodity just like Orange Juice! |
| zendre | acman: Do you trade these index spreads intraday? |
| BigD | It's a big part of the the big picture. |
| acman | zen: No, I trade on a multi-day scenario. |
| JoeRoss | Last week it was Economics 101 ;) |
| BigD | hehe |
| JoeRoss | Now and then we talk about trading |
| BigD | Anybody here an active full time daytrader? |
| zendre | Acman: Is there a reduced margin for these index spreads? |
| zendre | I am only part time. it cost me 40K this last week :( |
| marsh | I day trade. |
| acman |
Sometimes I take some intraday but usually the moves are several days. The rhythm is controlled alot by the ER so if the ER is moving up, the spreads go up at various rates. |
| JoeRoss | I trade whenever I get the chance. |
| acman | I think there is reduced if you do around 5 or 6. I am doing 20 sets today. |
| BigD | I found out it pretty much has to be full time or no time (at least in my experience). |
| marsh | Sometimes I sleep late, so I only trade half the day. |
| marc | acman - what's ER? |
| BofB | Joe did you see 6J-6B the past week, awesome profits. |
| acman | Russell 2k mini. |
| marc | Thanks. |
| marsh | What is 6J, 6B |
| BofB | Around $4500 profit per contract in 4 days. |
| JoeRoss | BofB: I have two students this week, so I didn't see much of anything. It's all I can do to keep my eyes on the ES trade I'm in. |
| BofB | Japanese yen-british pound. |
| acman | BOB what is J-B? |
| JoeRoss | marsh: Yen vs Pound |
| zendre | Was that a seasonal? |
| marsh | Yes, soon after Joe mentioned that spread, the Yen went up and the Pound went down. Very dramatic. It's been sidesways lately. |
| marc | Joe, do you ever use hard stops in spreads? |
| shamutooth | Marsh,what time frame do you like to daytrade in (5,15,30,60)? |
| acman | THE JY-BP. I did that one while I was on vacation. Didn't do it since. |
| marsh | I like 3 min, 5 min and 1000 ticks |
| JoeRoss | Keep an eye on the Asian currencies. They have to go up. |
| BigD | HAHA I am a 5 min guy too. |
| BigD | What's their symbol? |
| JoeRoss | marc: You can't use stops in spreads. |
| acman | Which currencies other than the Yen are very liquid? |
| mapletrader |
Joe, speaking of trading 101, if you wished to take a a long position of three units in beans, and you were using a traders trick entry what sort of risk per unit would you allow for you. --$50 per contract-less, more. Assuming you did get paid for trading, with two units would you allow any of that profit to get away from you or just literally go break even including brokerage fees? |
| acman | In the asian currencies that is. |
| JoeRoss | The only Asian currency you can trade in futures is the yen. |
| acman | Joe: do think the Yuan will be trading in the next year? |
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| marc | Joe - so if you don't use hard stops in spreads, how do you avoid getting whacked like today in feeders? |
| JoeRoss | maple: The answer to that has too many variables. It would depend on a lot of things. I don't believe in fixed risk trading. |
| JoeRoss | acman: You mean yuan futures?? I haven't heard of any. But I think the Chinese want to still control their currency. |
| mapletrader | Thanks. |
| JoeRoss |
marc: I have no idea of what happened today in feeders. I have an exit point for every spread and if that point is hit I go out the following day around the time of the close. |
| marc | Hmm. Just like in the book! |
| acman | Joe: that is what I was thinking. The Yuan is the big unknown. |
| BigD | joe: do you do mostly futures or spreads? |
| JoeRoss | marc: Just like in the book, yes! |
| zendre | Joe: will there be somewhere a forum to discuss your TLOC video material? I think it was good and I do have some questions. |
| JoeRoss | BigD: I do whatever looks good to me. Lately I've been doing options on futures. |
| marsh | I'm looking at FCX07/FCU07. It's been in an up trend for a while. The big moves made it go up farther. |
| marc | Maybe I should look in to the intensive course for hardheads? |
| JoeRoss | zendre: I thought we already have one, but if we don't we should set one up. I will talk to Susan about it. |
| marsh | Marc: Ha. You do have to be a hardhead to think of winning in this business. |
| BigD | Keep us all posted on that Joe. |
| marc | It hasn't broken yet, marsh! |
| JoeRoss | I know how to teach dyslexia 101! |
| zendre | That is another course :) |
| JoeRoss | It's time to say good night. So good night all, and thanks for sharing about mortgages etc. |
| zendre | Is there a video material too? :))) |
| shamutooth | GN Joe, all |
| marc | Thanks Joe See ya next time. |
| zendre | Good morning (It is 4 Am here). |
| JoeRoss | Yes, but you have to know how to cross your eyes to take the course. |
| BigD | G'night. |
| acman |
Marc: watch the spread peaks and troughs, They will move to a previous trading range, pause, then up or down. You need to be taking profits and not be greedy or they can turn. I protect myself with different markets and not too much money in one spread. Don't have a position that is a potential account killer. |
| berto | Thank you Mr. Ross and all the participants. |
| netwonc | See you all next week. |
| marc | Thanks acman - much. |
| zendre | Thanks all |
| mapletrader | Zendre: I haven't seen it but just the books and the "live" video--well worth the penny. |
| acman | Marc: good trading! |
| marc | I took notes - |
| marc | er/ym & etc |
| BigD | c'ya later all |
| BofB | Gnite all |
Next Chat with
Joe Ross:
Tuesday, August 14 , 2007
Time: 8:00 - 9:00 P.M., U.S. Central Time.
COME BACK WITH YOUR TRADING QUESTIONS & COMMENTS!
