Bill Cara’s Blog for February 5, 2010 [See post-close report]

Given a choice between the two postures during a sell-off, I prefer cash. Why?

(a) Prior to the advent of inverse ETFs, cash was the ultimate high for most of us when markets took a dive. I just enjoy the association.
(b) Immediate access to capital when it's time to buy. Which can sometimes appear in a heartbeat.
(c) No worries about the occasional short squeeze.
(d) It provides a respite from the constant monitoring of positions.

You know, it was possible to have made only one trade in 2009- all-in the first week of March. And to have exited that trade yesterday or today.

Of course, none of us did that. Just saying.

thx for the link Bill, forgot to use a home link for a chart.

Sprott came to fame some time ago, their funds focused primarily on commodities, gold and aggressive market action made their boutique firm a force to be reckoned with. John Embry appeared on Canadian Financial TV quarterly, Jean Paul Tardiff as well would give his "alternative" strategies air time and Sprott could do no wrong.

like all things eventually cracks appeared, not all the funds were high flyers, and they started to introduce more of them and add new managers... their flagship precious metals fund captained by Mr. Embry was suffering badly as the jr. share-heavy fund suffered through 2007 forward.

their name was synonymous with great returns, and the shadowy Eric Sprott was still considered a financial genius after almost a decade of prescient calls, this momentum was enough for them to release an IPO, and at $10 a share people couldnt buy it fast enough.

suddenly market dumps saw most of their funds get hit very badly, their IPO followed suit.

at $2.50 a share it was a steal they said at the bottom of the crash, now at double that many are wondering if it really was, some 2 years since inception their own IPO is down from $10 to $4.

their website changed from displaying annual returns on the splash page to burying it towards the back, some high flyers have left, and Mr. Embry is less the high flyer and more the grandfatherly advice giver, ever the eloquent and cogent speaker who couldnt make his own gold fund follow his bullish incantations of the metal over the years.

so, i say, best of luck to the $1300 gold predictions by spring/summer, but when they fail to materialize as these predictions most often do, where will we be? hanging off their next words during market weakness to somehow make us feel better?

should we rehash another GEAP LEAP G20 (whatever they are called) report about the dollar's alleged catastrophic crash that they have been "forecasting" every year for the past 5 year that surfaces right when the technicals on the dollar look like theyre about to turn down? yes, yes a crash right around the corner in the dollar, yes yes gold to benefit during times of market panic... how many times must we suffer through this to learn that the US is still until otherwise evident the only beneficiary of a market panic? when it stops jumping higher on weakness and gold moves up as this so-called safe haven play, or moves up in tanden strong w/ the USD then ill be convinced, but until then it is smoke and mirrors that hasnt made us money.

now tell me again how Jim Rogers is bullish on commodities because he knows something about china the rest of us cant figure out? these guys will still be rich long after their bad advice is seen as worthless. we make false idols of too many of these snake-oil salesmen.

gold is a light, it is monetary truth, but those professing to speak for it are sadly not.

good luck.

Will be a good opp to sell long positions into strength or build/add short bias positions.

Just my opinion.

Non farm payrolls -20,000
work week: up from (prior) 33.2 to (current) 33.9
unemployment rate down from (prior) 10.1% to (current) 10.0%

Time for party hats everyone!

Here is interesting context to that:

Insight on Jan Payrolls

***Census affect on Payrolls: Starting with today's data, payroll numbers will be skewed higher by the Federal government hiring thousands of census workers. Speculation is the the Jan nonfarm would be boosted by 20K from census hirings. Early last year, the Obama Administration announced that as part of the stimulus package, 1.4M workers would be hired for the 2010 Census. By comparison in the first five months of 1990 and 2000, the census bureau hired 330K and 515K workers, respectively, and workers rolled off the payrolls over the next few months. According to analysts, at the peak of census hiring this year, payrolls could be bolstered by up to 700K m/m, which could temporarily push down the unemployment rate by a full percentage point. The BLS does not officially break out the effect of census jobs on the payrolls data, but may give informal comment on census jobs after the payrolls numbers are released.

***Annual Benchmark Revisions: The Bureau of Labor Statistics (BLS) will simultaneously release its annual benchmark revisions for payrolls. There is much speculation that the BLS could announce substantial downward revisions for the first three months of 2009 when layoffs were most severe. A preliminary estimate by the BLS issued last October forecasted benchmark revisions would cut the payroll numbers by 824K as of the end of March. Additional revisions for the last three quarters of 2009 could add to this total.

Just watched some "investment strategist" claiming people are going to be happy with this jobs report. I'll bet he used the commercial break to call his trading desk and tell them to sell into the early bounce.

Hey! Vad, do NOT take away my party hat with your alleged "insight." Sheesh.

"The prospect of $5,000, $10,000 or even higher prices is in reality scary when you think about the type of economic/sociological changes that would necessarily occur."

Each oz of gold will still be 1 oz regardless of its price in U.S. dollars.

That said, it really would mean that the American standard of living would need to decline dramatically via inflation, whether recognized by the official CPI numbers or not.

Hey, no worry - with all the propaganda, there should be enough of party hats for all of us!

Holy cow Vadym !
possibly the one thing that will affect me the most is short selling, or changing the rules. When the short sellers have driven down a price , I jump in, small gains,
But "naked shorts" , when I've waited for stocks to be "delivered" have cost me.
So, no more naked shorts ? B-S.
Just reinforcing the "naked shorts" rule would satisfy me,
Allen

I am not a short expert but allowing shorting is healthy. Maybe just stop naked shorting?

Si02 said:

"alleged crash of the USD", it already happened last year. Ask anyone who does not live in the U.S. and earns income in USDs. Yours truly, included, very unhappy with a 40% drop since March 09. Funny money that is."
______

you are comparing the USD's fall from its Mar'09 high to its 2009 low, which is disingenuous, the USD did not crash when it failed to fall lower than the 2008 low on the USDX. that is not the definition of a crash, it is for all intents right now a bounce off the lows.

stocks crashed in 2008, gold stocks especially, but gold has held up well, relatively.

as i have preached over and over, this gold bull will leave behind the bodies of many a gold bug because it wont be easy. the runs in the fall of 2009 made few long term gold bugs rich because id wager most were still underwater on their jr's and mid-caps from many a year ago.

things dont often work as we wish them too, consider that other places are weak enough to scare investors away from the Euro and the Yen and back into USD's who in the next quarter or two might show some limp signs of life, however beleaguered it may be. add to that announcements of troop widthdrawls from Iraq and later on Afghanistan, and the shutting down of services, scaling back of state expenditures begin to help the balance sheets of various states.... however ham-handed these "improvements" might appear to us, these optics might be enough to convince people the US is the place to be while the EU continues to suffer, China over heats and folks become risk averse.

we have seen through the ages the speedy rise of markets and people will throw money its way on the way up and dive overboard on the way down. of course china is hot, but with protracted weakness the so-called "smart" chinese investor that has been manufactured in teh media as some sort of super-smart hard-working spendthrift who is allegedly buying gold on the dips will pull out of their risky chinese investments and go back to what has served so many chinese well the past few decades: US treasuries.

like it or not, holding boring safe bonds at a few points per year has seen better returns than most conservative portfolio's in stocks.

the chinese are buying gold anymore than anyone else, these are vampire myths designed to make you buy gold. the announcements of shortages and diminishing supply were oddly similar to those when oil was $140 a barrel. the same ones we heard in the 70's, and now 30 years later people still think we are about to run out of oil...

the fact is, old oil wells are appearing to be exploited for increasing amounts of crude we never thought existed, just like old gold mines are being put back into production. gold mining companies havent kept pace w/ the rise in gold over the years because its harder to hide behind a balance sheet when your outfit has a bigger PR department than a geology team actually finding gold. Barrick only goes so far, but the metal has jumped because its actually gold while a mine is a promise, very often a bad one.

save a few high flying jr's hand picked, this is a tricky market, where our once contrarian slice on gold is now becoming more common place, lets not loose focus on the fact that most people praising the merits of gold are analysts hoping to sell you a subscription to their letter writing service, which is more profitable than their investments. you can tell by their cheap pressed suits at gold shows where they are hawking their wares.

Re. "you are comparing the USD's fall from its Mar'09 high to its 2009 low, which is disingenuous,"

Well... If you had taken a look at the link provided you would have seen that it shows prices since JAN 2009. Since Jan 2010, both FXA and BZF are down 8%, the bounce from that bottom. If ~40% is not a crash for currency, I am not sure what it is. Brazil SWF is desperately trying to keep the Real low as their interest rates will increase, it would be who knows where without it. Anyone who bought FXA or BZF is still extremely happy.

Take a look at some of the companies on his campaign contribution list:

http://www.opensecrets.org/politicians/contrib.php...

Any wonder why he's against the Volcker Rule?

http://www.opensecrets.org/news/2009/11/sen-richar...

"During the past 20 years, securities and investments ($1.03 million), real estate ($1.02 million), commercial banks ($921,850) and insurance ($691,350) round out his top five donor list, when ranked by business industry. "

Someone mentioned the CEF premium a few days ago when it was ~5%. Well, yesterday it was 2%. Today will certainly be lower. If this is not panic selling in gold I don't know what it is. In the last 5 years the only time periods with such low premium were 2005, early 2006 (before the the huge spike in silver), early 2008 (again before the the huge spike in silver), and late 2008 (during the crash). http://www.cefconnect.com/Details/Summary.aspx?tic...

Now, you can argue that we have crash 2.0, but It's hard for me to believe that after all that work Fed and Treasury did since 2008 (dishonest but still), they are going just watch and do nothing. Unless this a political straggle between HB&B and Washington.

I will go in back into SLV today if we have a V shaped chart today.

...

Excellent post. I believed for a few years now that we are replying 1970's. Oil, gold and stock wise. If so, a lot of inflation is in the cards, unless Volker has something to say about it now. My take on the cycle was 34 years rather than 40 years, but obviously the history will not reply exactly.

Better late than never?

EXC - Downgraded to Market Perform @ Bernstein

----------

Gilead Sciences Inc. (GILD)

Zack's Bull of the Day:

By: Bill Wilton
February 05, 2010 | Comments: 0

Gilead Sciences, Inc (GILD - Analyst Report) posted record sales last week and analysts continue to raise estimates. The double-digit growth rates are also coming at a great value.

Company Description

Gilead Sciences is a pharmaceutical company that makes new medicines for life-threatening diseases.

Record-Setting Quarter

On Jan 26 Gilead reported fourth-quarter results that included record sales of $1.8 billion, a 30% increase. Revenues came in just over $2 billion. This was a 42% increase and led to net income of $802 million, up from $560 million.

Earnings per shares were 90 cents, topping the Zacks Consensus Estimate by 8 cents. This was the sixth consecutive earnings surprise.

Buying Back

A few days after the earnings release, Gilead announced that it will repurchase up to $1 billion in its common stock. The program will go through January of 2011.

Estimates Surge

Since the report we have received 17 upward estimate revisions for this year. The Zacks Consensus Estimate for full-year 2010 is now $3.37, up from $3.15. Gilead analysts also raised forecasts for 2011, which no average $3.75, up 11 cents.

If met year-over-year growth rates will be 16% and 11%, respectively.

And a Solid Value

Shares of GILD are trading at 15 times this years consensus. The PEG ratio is a roughly 0.9 times. Gilead operates with a net profit margin of 38% and an ROE of 48%. Most companies in the industry post negative numbers for both metrics.

The Chart

Projected earnings for Gilead have been climbing consistently over the past 5 years. However, lately the share price has not kept up which makes for a great buying opportunity.

Why just ban short selling? They should introduce floor prices for each and every stock as they did in Pakistan in 2008. The Karachi 100 did not have one single negative day in those good old days. ;-)

OK, after that of course ...

Played FCX BKS VXX and a massive 80 break of DTO(did oil go to zero?).

Vad when we meet you are going to get a big fat wet one from me right on the kisser.
Love,
Bob

The point is for him to continue to come and teach, not run away :)

they are under increasing cyber-attacks.....

Funding crisis....

Bill - Would you agree it also a conflict of interest to do the same on the long side?

Yet, nobody speaks against it the same way they speak against naked shorting.

for extreme snowboarding.

http://bit.ly/d5lzE2

http://bit.ly/965SPf

but if the markets can remain irrational longer than I solvent, on the way up, then i guess it can on the way down. prob even more so!

taking some chips off the table right here. but leaving a big chunk on the table. We are speeding to 9799!

I will have some cash near the close if ppt ramps this up.

I haven't had as much of a chance to keep up with the boards the past year, but I'm still following along as best as I can.

I remember discussions of Gold being the last off the dance floor. Are we witnessing that now? I see a tad bit less talk of TOG. Who's looking to buy this Gold dip?

On Dow, I hesitated on shorting at 10.6k and held off every day and here we are. Now I'm looking at S&P and thinking that I wouldn't want to go either direction until we either crack above 1100 (unlikely) or get to 1025 and either respect or fall below. I'd put a small bet on shorting below 1025 and a medium bet on a bounce if we hold 1025.

I think I'll sell some technology stock puts and global ETF stock puts once we reach S&P 1025. I'd like to gain access to Brazil and the rest of Latin America at nicer price points.

As is KGC

7 day RSI below 25. Waiting for 3PM to put a buy stop at 3 PM price +5% of 10 day ATR. Playing for a snapback.

Do your own homework.

Quite a few miners are not falling with the market today. I've had Randgold (GOLD) on my screen today and although it's down (edit: already looking like a green close), it has (thus far) strongly rejected the 65 level, which corresponds to the lows which are resaonably close together at Sept 3rd, Oct 2nd and Nov 3rd.

prob a nickle.

to list. These are capitulation plays, below RSI 10 for 7 day period with max pain options expiration 50% or greater above current price.

I'll play these ahead of the ETF's.

Do your own homework.

Update:

PFWD,KNSY,LBJ,EDC,DZK,SLV in that order.

Update:

PFWD did not execute.

KNSY long @ 20.01. Flat. Stock was down 14.8% for day. Bought in bottom 1/3 of range.

LBJ long @ 22.97. Up 3.2%. Stock up .4% for day. Bought in mid 1/3 of daily range. Should have been monitoring the hourly chart for divergence which showed at 1 PM. Would have been long at 21 something. Always room for improvement.

DZK long @ 55.21. Up 3.3%. Stock down 3.1% for day. Bought in mid 1/3 of daily range. Ditto 1pm comment.

I'm not putting up these comments to pat myself on the back or to brag. In fact, after I enter a trade, I generally do not comment on it until the trade is closed. I am posting these to show one can use a variety of tools and methods to trade a volitile market.

GL

Dave

Looking at the GDX/GLD ratio (based on closing prices), it appears that PM miners stocks may be bottoming out in the very short term. 200 day Moving Average of this ratio is 0.4315. I think there is a strong likelihood that if we stabilize here, we will be headed up to test the 200 DMA at 0.4315. In other words, miners should fare well relative to the gold price if both can stabilize.
GDX GLD GDX/GLD
02/05/2010 41.25 103.9 0.3970 so far today.....
02/05/2010 41.1 103.75 0.3961
02/04/2010 40.27 104.41 0.3857 bottom retest?
02/03/2010 42.57 108.7 0.3916
02/02/2010 43 109.13 0.3940
02/01/2010 42.94 108.35 0.3963
01/29/2010 40.72 105.65 0.3854 lowest close since 5/1/2009
01/28/2010 42.17 106.45 0.3961
01/27/2010 42.77 106.53 0.4015
01/26/2010 43.13 107.56 0.4010
01/25/2010 43.2 107.5 0.4019
01/22/2010 43.79 107.18 0.4086
01/21/2010 43.75 107.37 0.4075
01/20/2010 44.91 108.56 0.4137
01/19/2010 47.69 111.52 0.4276
01/15/2010 47.42 110.86 0.4277
01/14/2010 48.6 112.03 0.4338
01/13/2010 48.86 111.54 0.4380
01/12/2010 48.35 110.49 0.4376
01/11/2010 50.17 112.85 0.4446
01/08/2010 49.84 111.37 0.4475
01/07/2010 49.1 110.82 0.4431
01/06/2010 49.34 111.51 0.4425
01/05/2010 48.17 109.7 0.4391
01/04/2010 47.71 109.8 0.4345

http://bit.ly/bjHGij

Talks about overnight positions prior to market opening here.

Monday trend of up days still in play until broken.

large volume on e-mini contracts overnight.
---------------------

I heard many reports the past 3 months that firms were hiring U.S traders to trade throughout the night overseas. I recall Bill also talking about looking for tell tale signs overseas and that usually intl follows U.S, but when positions need to be bought or unwound aggressively, they spread the trading all around the world to hide intentions and get the best price.

Monday should be interesting.

This site has floated so many rumors over the past 10 months that it's kinda hard to believe anything they say.

I bought some CGA at $13.05...thinking this could see a bit of a short covering rally with earnings on Monday. If not I'll determine my willingness to hold through earnings.

on behalf of Obama.

Friday, February 05, 2010 12:39:49 PM

(US) ECB's Trichet: ECB will NOT hold any special meeting this weekend
- Denies rumors that circulated earlier that the ECB would convene a special meeting to discuss debt issues facing certain EU members like Greece, Portugal, and Spain.

hold my breath and diving in.

http://bit.ly/bbDFRf.

one of the most amazing price battles in this current war so far.

the dow is sloshing around like a penny stock!

Looks like the credit contraction may finally be abating...

wondering where all my clothes went.

this market is no longer a market. with these super fast quants, they can write a target for the entire market on a napkin in a board room, and in 20 minutes it will get there.

Today should be a testament to why wall st needs to be regulated. even though i made money today it upsets me that this type of un-natural "Easy" button exists for the masters of the universe.

Hey lets close it at 10,001.11.

but i can't recall in my short tenure of trading a time where the DOW and other major indices had a weightless feeling to them, like penny stocks.

this is really an unprecedented experience for me.

You have many advantages over the big boys if you decide to use them.

You don't have to trade every day.

You can wait till prices come to you.

You can trade the 1st half hour when Ma and Pa panic or buy in the last hour when the big boys make their decision to buy stock and take it home.

You can control risk thru position size and using Bill's RSI system.

Or not.

I second that. The script, as you should well know, has been UP Mondays, especially now that HBB has won a round.

i switched to cash at 3:58pm.

For you candlestick pattern folks that in one heck of a bullish reversal pattern just laid down.

So Vad, I want to point out that nobody has claimed "someone can move the market whenever they want or need."

I know and agree with you about that statement - nobody can move the market whenever they want. But, to bring up a straw man argument and then proceed to knock it down, well that's not right either.

I think its quite likely there are participants out there with the knowledge, technology, funding, motivation, and ability to seriously influence the market at strategic tipping points, pushing the market significantly in one direction or another - at zero cost to themselves. They do this by having nearly complete information and applying their "lever" at these strategic moments, provided to them by this information.

That's not at all the same thing as "omnipotent forces", but its also quite a distance from "a free market."

As for why they didn't "fix the crash" last year, my guess is, the program hadn't been fully implemented or funded yet. Why write a bunch of code and get an organization deployed without any real rationale?

My guess is, the previous intervention implementation was just an agreement with a bunch of banks to buy S&P futures when things were looking really dicey, paid for by the treasury or the Fed. Current implementation, described vaguely by Treasury Secretary Geithner when he stated "we have the ability to keep this [2008] from happening again", is much more elaborate, but only works when applied over a series of days and weeks. It probably seems like magic to them.

As for what happened today - the buck sold off before the weekend, and a bunch of shorts decided to cover, and a whole bunch of people decided they wanted some gold & miners. All late in the day. Perhaps mysterious forces helped the buck to sell off after europe closed, perhaps not. Perhaps "they" helped slow the downward movement when the selling slackened. Perhaps "they" didn't get involved at all. Who can say. But I do believe "they" exist, even if "they" are not omnipotent.

That's my story and I'm sticking to it.

missed my entry which was ok. Nice kangaroo tail reversal. Close was 14.90 and LOD was 14.37, range of 53 cents. Half of that is .27 (rounding up). 14.37+.27 = 14.64. 14.64 will be my buy limit. 10 day ATR is .50

Take 1% of portfolio, say your portfolio value is 100,000. Only want to risk $1,000 of your equity on this trade and you're willing to let it move against you for two days' average move. $1000/(2*.50)=1000 shares. BUT that's way more than 6% of your total equity. So 6%*100,000=$6000. $6000/14.64= 404 shares. I generally risk 1/4-1/2% of my equity on any one trade esp with markets we're seeing. I know there will be posters that say this is too difficult to caculate but as traders, one can only control the position size, the entry price, and the exit price. If you cannot calculate position size, you run the risk of losing too much on a trade and conversely, leaving too much on the trade by not taking a large enough position. JMO.

It's Miller time (actually a Labatt's Ice).

GL.

I was busy at work this PM and missed the reversal. Otherwise, I would go in at least 50% allocation with my miners and gold.

The CEF premium looked very good, so good that I ordered a bunch of Gold & Silver Maple Leafs today, to beef up my physical holdings. My target was 1050.00 US, which got hit, today, next target 975.00 US for another physical purchase.

I am in CEF, but have decided to add more to the physical hands on portion of the portfolio which means I have zero confidence in any Government to control their spending.

and lean to the upside on Monday. those dragonfly doji's are there, and are not make believe.

but i will likely watch the open for a few minutes before i do anything. off to unwind and spend time with the gf. we're supposed to get a lot of snow tonight.

BillySundance -

How about just one 10 oz silver ingot at 8.4% or $1.24 over spot. Silver is silver unless it's old and collectible. I see a single 2010 silver dbl Eagle offered at a 53.2% premium to the 10 oz ingot and ask why? The U.S. Mint says they will mint Eagles again so how rare will they be ...

http://www.libertycoinservice.com/daily_quotes.pdf

Sen. Shelby blocking all 70 of Obama's nominees until $35B contract for new aerial refueling tankers extracted from Airbus parent EADS/Northrup Grumman and given to Boeing. Shelby cites national security concerns.

http://tinyurl.com/yeqwny8

That should goose BA come Monday Morn.

Cheers.

Senator Shelby has become quite a large head above the Republican parapet!

http://tinyurl.com/ykdax8l

O.K. it's Friday - fun time :) Forget all the Dragonfly Dojis and such. Here's a classic comedy routine:

Robin Williams on Broadway (parts 1-10 of 10)

Part 1: http://www.youtube.com/watch?v=g8RNmHkDDxE
Part 2: http://www.youtube.com/watch?v=Z5vSpz7Eu9Q
Part 3: http://www.youtube.com/watch?v=IfS5NORfG14
Part 4: http://www.youtube.com/watch?v=ZqRJZfsKaJs
Part 5: http://www.youtube.com/watch?v=CsRqnuvuo6U
Part 6: http://www.youtube.com/watch?v=KL6EnvM2GyQ
Part 7: http://www.youtube.com/watch?v=o27Oq_OMpZc
Part 8: http://www.youtube.com/watch?v=BsNkU3kCm1g (hilarious description of golf at 4:00)
Part 9: http://www.youtube.com/watch?v=DYRYJFdS7oc
Part 10: http://www.youtube.com/watch?v=la6Lw-gfHcE

Its all a question of your time frame. Look for a monthly chart. Then a weekly chart, then a daily chart. Make your decision off the trends of these time frames and trade the direction of the trend. You may or may not find the candlestick pattern in your chart. Id say the weekly chart brings into question of the monthly trend. And we all know the daily chart is headed down. Maybe this is helpful. Look at the trend of the market and then choose your vehicle to suit.

I concur. it all depends. 1 part science, part art, part bias.

I have seen plenty of dragonflys confirm on next session and still not work.

Good luck

loannetter -

Dems blocked Bush 43 nominees too. Whatever. Neither party represents my core interests. We need the jobs and if isolationist policy is required to keep manufacturing jobs here (for the most part since BA offshores, I know), that's just one more monkey in the banana kart of this new demand economy we're in anyway. I'm for productive capacity in our economy over more service sector jobbers greeting me at the WalMart (they may go away too, I know). Seems kind of stupid to run an industrial war machine with the bulk of jobs and profits going to overseas production as unemployment soars back home and private debt defaults at an alarming rate. Trillions in stimulus dollars without real production will take care of that, right?

Moreover, Boeing knows aerial refueling.

http://tinyurl.com/pqh6p7

http://bit.ly/cOqWRR

This treatise by a western Buddhist teacher I follow encapsulates the opportunity we have in every moment to respond creatively To life rather than react habitually.
http://tinyurl.com/yzud92w

CREATIVE
REACTIVE

just exchange the position of the 'C' and 'R'

FWBO, very interesting, accommodates many streams of the Mahayana School in the progression from India, China Japan etc.

I have recently been reviewing several interpretations of the Lotus Sutra by Roland Watson, of the Oxfordian School. The last time I was at a temple in Japan, a student asked the head priest.

"The journey from Kamakura to Kyoto takes ten days, if one stops on the ninth day how can one ever hope to see the moon rise over the capital?"

Priest Reply: "don't stop"

loannetter, another Bodhisattva, could draw a conclusion to the reactive part of the mind, re Carl Jung, Tien Tai, re the systematized teachings of the Sutra.
Exchange Sutra"s

Gary
gcogdal@netkaster.ca

"That's why I suggest a tripolar system with the dollar, the euro and the renminbi serving as global reserve currencies. Instead of fixed exchange rates, the values of the three currencies should be strictly determined by interest rate differentials. For example, if the euro zone has higher interest rates than the US, the euro would have to be devalued against the dollar. If the interest rates in the euro zone then falls below that of the dollar, the euro would be revalued again.

All other states could peg their currencies to one of the three reserve currencies of the tripolar system. The entire system would be monitored by the IMF, making selfish monetary policies impossible. Likewise, speculators wouldn't have a chance because should a particular currency have favorable interest rates, that would always be offset by a corresponding devaluation in the value of the currency (i.e. making carry trades unattractive). That would contribute massively to stabilizing the global economy"

http://www.spiegel.de/international/world/0,1518,6...

ALOHA!!

One thing is missing from this equation and that is "debt". What will stop the USA from accumulating debt? Interest rates have never been a barrier in the past. Nothing has been a barrier as the 71 year history of the Debt Ceiling easily shows.

What this guy is trying to do is create a gold standard without gold being part of the equation. Interest rates and CPI have always been a diversion from the true goal of every government and central bank and that goal has always been currency devaluation ... mainly through debt accumulation. Hand anyone a blank check and they will always spend it!

To get out of the "recesssion", "keep" jobs and "balance" the deficit the US Treasury needs a weak dollar in the export markets, yet so does the Euro and so does the Yen and so does the Renminbi and the Real.

Oh look another $308BIL USD worth of debt was issued yesterday. And hey look, total outlays(spending) over the past four months is now nearing $4TRIL USD as of Feb 4th. Nearly $1TRIL per month ...

Now if you never intend to ever pay back any of that debt then what is to keep you from just piling more and more debt on top of more and more debt from decades and decades of living beyond your means. Will those interest rates do the trick?

I will do another post and show you how government will effect the markets next year and then the next ...

"Eh, sorry about that, Chief."

Heh, heh! :-)

And I have placed the cone of silence over CNBC and most MSM.

Unfortunately the "crawl" showed me the latest unemployment lie. (I mean seasonal adjustment.)

Had an email from a friend of over 50 years just before that. His son has been unemployed for over five years now, except for occasional temp jobs (No more unemployment checks.)

Vad- LOL, even a handshake may eventually go the way of the communal wine goblet traditionally used during Mass. I think Donald Trump has the right idea.

OK... I retreat to nod and hand wave, no smile just in case. Don't corner me any more, my next and last resort is to stay home :)

The Boomers have always been into them.

It started in real garages in the sixties with Vox organs (I can remember trying to copy Ray Manzarek riffs)/electric guitars.

Then it was vacuum tubes and transistors in the garages of Silicon Valley.

Now Boomers are in their fifties/sixties, and collaborating in the virtual garages of financial blogs to fund college educations and retirement.

vb- I'm not referring to meeting in underground garages to day trade. I'm referring to meeting with like-minded individuals to hammer out the 'ways and means' to achieve financial security. Ways and means beyond what the mainstream financial industry has to offer. The same way we used to hammer out music unavailable in the mainstream media.

bigwad1- The Bay Area contingent is doing OK. A couple of face-to-face meetings so far, and a larger one next weekend. Sometimes it helps to know the people you're blogging with. A good reason to attend those conventions. Haven't been able to make it to the Bahamas- Vegas or Vancouver would be a better bet for me.

Gary,
I like the radical (back to original roots) perspective of western teachers who appreciate how analytical we are in our cultural thinking processes. The Vajra comes later in their training program. Check out Meeting the Buddhas for a romping read. http://tinyurl.com/yd6epjr

' This is the eye of the hurricane '... Bill has said, time and again, everything is a cycle...I do not know if he referenced the Elliott Wave, although his team does have the expertise ( Prechter talked about this in the past week... a very dangerous point in time )... Things are moving lighting fast, up and down, and that is never a sign of a stable enviroment, or currency ... Jim Grant ( Grants Observer ) made a very sobering observation this week, which I will post on the site soon ...

Personally, I have never been so stymied as to how to have financial security today as anytime in my life. As time passes on it is clear that our government will burn down the nation in order to benefit the elite.

We have chosen to follow the policy of Japan’s zero interest rate programs. Has anyone in our government noticed that it has not worked? It has been over twenty years and Japan is still mired in problems. Our capital markets have forced us to speculate in the market’s if one wants to try and make a decent return on capital. The majority of Americans are ill equipped to do this. Wall Street and the financial institutions that have matured around the industry are gigantic parasites that feed off our capital to the detriment of our lives.

vb,
We are in a Mars Retrograde cycle right now. Add to that Venus conjunct Saturn and what is happening in the stars suggest major structural changes in our systems including our houses of money enterprise and abundance. All good. Right now until Feb 12 is planning time. No new ventures until Mars starts moving again. http://www.askmadeline.com

loannetter -

"We are in a Mars Retrograde cycle right now. Add to that Venus conjunct Saturn and what is happening in the stars suggest major structural changes in our systems including our houses of money enterprise and abundance. All good. Right now until Feb 12 is planning time. No new ventures until Mars starts moving again."

That's pretty cool but can you explain this phenomenon?

http://www.youtube.com/watch?v=EY3Lw_-bj5U

This is tooooo precious. Seems the Mortgage Bankers Association is selling their new gold plated headquarters in DC. They paid $79 mil in 07 and financed $75 mil with a 30 year floater. They just sold it for $41 mil. Bet it was a short sale.

These are the same folks who admonished homeowners to just keep paying their mortages for moral reasons...There goes the neighborhood!

I couldn't agree more about the effect of the USD$ here in shaping the events. The whole event that happened in trading moves on Friday was influenced by the move of the USD$, the minute the dollar started reversing direction down was picked up by traders on the trading floors that it's time to cover their shorts and start buying like crazy and continued to do so for the following two hours until Market close as the dollar continues going down after reaching high of 80.68. I don't think it had any thing to do with the feeling that market was too over sold or ready for a bounce. Traders in general don't like to buy positions or hold positions over the weekend specially where no one knows what will happen in the Euro Land over Greece, Spain, Portugal ,..etc. There is so much uncertainty and investors or traders alike don't like uncertainty and therefore they won't buy and hold positions for longer periods any more these days. In fact many investors have turned to become traders buying and selling positions in the same day or two kind of trades.

Therefore, if you believe that world market and economic conditions are still the same as they were last week or the week before and that the whole market that ran almost 70% up from March Lows was bound for a huge correction then you might agree with me that the correction has started Jan 20 and has not yet ended. You will see few bounces here and there but this last one is not an indication of reversal yet. The trend is still down and will continue for some time. My feeling is that this bounce has to be confirmed in the next 2 or 3 trading days and a break thru above 1150 on the S&P could convince some that the manipulated fake long-term, computers traded and controlled Rally is going to continue and suck more innocent investors in...

Anyway, lets wait and see what will happen during this weekend in the EURO LAND.

http://quotes.ino.com/chart/?s=NYBOT_DX&v=s

I tend to agree with the analysis below here, what do you think NYUGrad?

"As you know, the financial news media spins the news all the time for the sole purpose of moving markets, the economic calendar is a virtual wall of lies and is revised 'eight ways to Sunday' for the purpose of moving markets. It's manipulative, yes, but it works, so therefore, it's wise to pay attention to the news and to the numbers. As a TA-focused guy, I use these outlets simply as confirmation of what I'm seeing in the charts. But it's all important and all intertwined.

However, for me, it's: Charts...first, news...second. :)

[All due respect to each individual's own method of trading...fundamentals, charts, news, etc. Whatever works, hey, works.]

Weird news and gonzo economic data aside, the good news is that I now, belatedly, know why we had the 2 p.m. bomb dropped on us (bears) at Friday's close. There was no afternoon EDZ run-up because the S&P's Minuette Wave (i)-down was completed at 2 p.m., and for the rest of the session, the $SPX was bouncing up to carve out contratrend Minuette Wave (ii)-up. What comes after this? Minuette Wave (iii)-down, and, my friends, it promises to be a doozy. Especially so, because it's Minuette Wave (iii)-down of Minute Wave [iii]-down.

By the way, a lot of you may already know this (please pardon me if you do), but if you don't, here's one Elliot Wave Rule that stands the test of time: Wave 3's are never the shortest wave of a sequence. They may not be the longest, but they are never the shortest. Moreover, when wave 3's are DOWN waves, the show is always spectacular.

As we found out Thursday morning from the HARD bear reversal of the $SPX upon market open, Minuette Wave (ii)-up may already be completed as of Friday's close. But maybe not. The $SPX may rise a little more on Monday's open to simply be reversed off the horizontal resistance overhead at 1073. When you see this happen, Minuette Wave (iii)-down will be upon us.

Here's the $SPX hourly chart with fresh cross-confirmed Elliot wave counts for those that are interested:

http://stockcharts.com/h-sc/ui?s=$SPX&p=60&yr=0&mn=6&dy=0&id=p91033577776&a=189877115

[Cut-n-Paste into separate browser window.]

Special note: Notice how long Minuette Wave (i) is. Now consider that since a "wave 3 of 3" is due, we know that Minuette Wave (iii) will be LONGER than Minuette Wave (i). And this will likely result in the 1030 horizontal support being taken out in short order without a hard bounce up.

Anyway, food for thought. Have a nice weekend, all."

Why what happen Friday is anyone's guess really. The element that makes the most sense to me is that the shorts started to cover ahead of the weekend, especially the gold shares which just ripped into the close.

I would not hold out for Elliot being the "Holy Grail" for understanding daily movements which are probably unknowable. Whatever floats your boat, smooth sailing to all.

analyst65 - While I"m ready to say we had a reversal Friday and I'm betting on a continuation Monday, I'm definitely not trying to suggest we will break out to new highs in SPX a result. I'm going to watch the buck/euro and see if the possible euro rebound has any legs to it. If so, I'll stick with my PM and commodity positions. The oversold euro, gold holding at 1050, the huge volume rally in the miners Friday, and the additional rally of GDX:$GOLD tells me a medium term bottom may well be in for miners & PM. I'm not as sure about SPX.

Does that mean we resume the climb above 1200 for gold again? I don't know, but maybe. My thesis right now is, the Fed will resume printing once its clear we're going to double-dip and/or treasury auctions start getting a little bit squirrelly. I got into some ITM UUP puts Friday afternoon as a kind of down payment on that.

Having a treasury short as a wild card might be a good hedge in case they don't start printing, since with 2T of net new issuance this year, I think rates will have to climb to attract money to the long end of the curve. Hitting the Fed with long gold on one side, and short long term treasury on the other side I think is a winner - Bill's TOG. I didn't understand why before, but I think I do now.

The timing for that dollar printing might be mid to end March, when the current QE program is supposed to end. So buying PM now might be a little bit too soon - but its hard for me to ignore all that movement on massive volume in the miners when gold itself just manages to find support.

Look at the daily chart for GDX. Nov 1 and Sep 1 I see long white candles on good volume at mid term bottoms. After that, GDX rallies for 2 weeks (Sep 1) and 1 month (Nov 1) after that happens. It may be happening again. SLW shows these same signals. So does Goldcorp. Looking at the charts after a relaxing Saturday, I'm just wishing I'd bought more miners Friday afternoon during the rally. And maybe picked up some Feb calls too.

I am looking forward to see what Bill says about this in the WIR.

I did a brief look at EXC today after Bull Hunter's comment that a particular downgrade was "better late than never." Sure enough, the downgrade came on a day when the stock has Daily RSI=19, Weekly=26, and Monthly=30. It will throw off a triple RSI buy signal as soon as it rebounds a bit, so of course its the perfect time for a downgrade from HB&B to get the public to distribute that last little bit of stock they have left right at the bottom.

On Friday it had a 3x normal volume day, and put in a nice candle that looks like a possible reversal pattern. Now perhaps utility companies aren't your idea of excitement, but this one yields 4.7% and when nukes were all the rage in mid 2008 it was trading around 85. Now it's around 44.

FD: no position - but thinking of getting some. Beats my money market, and the triple RSI says risk is low.

http://ronsen.blogspot.com/2010/02/sunday-morning-...

Rules. Wall Street style.

Long read, but the article gives the average Joe six pack just a flicker of insight into the ruthless beast that GS really is. Ironically there is not one mention of X Goldman ceo Paulson being manipulated and slithered into the US Treasury and stealing billions upon billions of dollars from the present and future taxpayers that are fortunate enough to find minimum wage work in the USS of A. Those to-big-to-fail banks should have failed in 2009, society would have been far better off in the future!

http://www.nytimes.com/2010/02/07/business/07goldm...

jock and loannetter:

Chritianity (not just sub group of Catholisism, jock) = 2.1-2.2 billion
(Catholisism as a sub-group of Chritianity = 1 billion)
Islam (not Buddhism, loannetter) = 1.2 to 1.6 billion
Buddhism = 250 to 500 million

These numbers are broadly accepted and widely used based on numerous sources.

"There are modern day Jewish and Catholic Buddhist practioners." - loannetter

I think you're confusing ethnicity with religion here or does dual faith get your soul more options on the other side?

You both are fast and loose with your facts which make you both good candidates for a BLS job.

http://en.wikipedia.org/wiki/Religions

Cheers.

"Vad, I'm saddened that you never officially recommended Koppel's Intuitive Trader :p

This book is a must read IMO."

I am pretty sure I've mentioned it somewhere, either TTR or MPP... but you'll find a few along the similar lines at http://www.realitytrader.com/books.html

I am just trying to keep this list as short as possible, limiting it to the books having the most impact for the buck.

NY Fed Reserve chief. That'd be a rather strong vote for hyperinflation. We're toast.

http://www.washingtonpost.com/wp-dyn/content/artic...

I no longer plan to short the U.S. bond market (TBT) because selective default does not make for a good investment hedge.

ALOHA !!

MAIDEN LANE I LLC
This was a loan from the US FED NYC and JPM to MAIDEN LANE I LLC in order to purchase the "assets" of Bear Stearns for the purpose of aiding in the JPM takeover of Bear Stearns. The US FED NYC has $29BIL USD into the Senior Loan and JPM only has $1.15BIL in the Junior Loan. The portfolio of assets also act as the "collateral" for the loan.

Meanwhile what The US FED and JPM have done here was a deal where the US Taxpayer now has to backstop 86.2% of the $30.15BIL toxic RMBS and MBS assets of Maiden Lane onto FNM and FRE(agency debt). There are also CMOs listed with ratings of BB+ or lower that make up another 8% of the portfolio. In essence 94.2% of Maiden Lane I is agency debt or junk. Most of this property in the portfolio is located in California and Florida and Nevada.

A gift to JPM which saved JPM from going under since Bear Stearns was a major counterparty to JPM. Now this loan from the US FED does not include the $134BIL that JPM got forgiven prior to the Bear Stearns collapse.

MAIDEN LANE II LLC
This was a similar loan like Maiden Lane I LLC only this was to purchase "assets" of AIG, which went to benefit Goldman Sachs mainly. The US FED NYC issued a Senior Loan in the amount of $20.8BIL. No other entity put up any funds for a Junior Loan.

Maiden Lane II LLC was to mainly deal with the toxic SubPrime loans as they related to RMBS derivatives. Interesting to note on Dec 31, 2008 total BB+ or lower rating was only 18.9% and BBB+ to BBB- rating was 14.3% of the portfolio. Both combined, which was 55% Sub Prime loans was 33.2% for BBB+ or lower, essentially "junk"!

Fast forward to Q3 2009 and the numbers drastically change for the worse. Total percent of portfolio rated BB- or lower jumps from 18.9% to 74.7% while BBB+ to BBB- goes to 4% for a combined portfolio percentage of 78.7% junk.

So essentially Goldman Sachs got par while Maiden Lane II LLC is largely in junk status, which would have collapsed AIG and Goldman Sachs counterparty on its SubPrime short trade would have vaporized into thin air leaving Goldman Sachs holding the bag.

MAIDEN LANE III LLC
Another AIG vehicle for Goldman Sachs benefit. One was not enough.

This time the Senior Loan from the US FED NYC was $24.3BIL USD to cover AIG counterparties. This Maiden Lane covers mainly CDOs(commercial). Three types ... High Grade, Mezzanine and Commercial Real Estate, CMBS. All three combined the total BB+ or less rating was 33.2% of the overall portfolio in Q4 2008. By Q3 2009 that same BB+ or lower rating jumped to 76.3% of the portfolio that is now essentially junk, yet back in 2008 Goldman Sachs was being paid off at par and as high as 300 cents on the dollar.

It is doubtful the US FED will ever be able to move this junk in a fiscally responsible manner off its Balance Sheet any time soon. The commercial defaults are all just now starting to heat up, which does not make the outlook for Maiden Lane III LLC so rosy.

By the way BlackRock Financial another US FED member bank was retained by the US FED NYC to manage all three Maiden Lane portfolios with substantial fees being paid to manage nearly 100% junk!

One thing stinks about the "management" that BlackRock is performing. While the ratings of all three portfolios have tanked into junk status the "fair value" of the portfolios is only off by 5% or so since inception, yet according to the Q1 2009 financials the "fair value" was substantially lower for all three. Someone got the nod from the US FED to goose the assets to make someones Balance Sheet look more palatable, as I am not sure how a portfolio can turn into junk and still hold its overall value. More Wall Street accounting magic I suspect, although those magical details are not reported in a substantial manner. I guess those real estate values magically went up as the ratings tanked. This is surely reflected in all our home values over the past year ...

Econoday reports rapid capital flight, Lisbon backed off from a 500 million Euro auction, HB&B might dump the market if they don't get their way in Washington, the game of brinkmanship in play between European governments over debt bailouts could come to a head at any moment:

http://www.telegraph.co.uk/finance/comment/ambrose...

One can only imagine what is running through hedge fund manager's heads as they rebalance holdings going into 2010. The consensus appears to be a lightening up of portfolios.

Bill's said it before, but it could all come together and get real ugly real quick. GL this week.

As the Superbowl is the zenith sports day for a consumption populous who will sit in front of their 55' tv's ready to be dazzled by the latest advertising for us to spend spend spend, while gorging on pizza, wings, beer and soda.

On a sobering note, I will be cheering for the New Orleans Saints, as they are representing the forgotten city. Hopefully a super bowl win can bring back much needed spotlight on the families and economy that is still nowhere near pre-Katrina.

On a closing note, i have had some time to digest the friday's closing price action. The price is the price. the volume is the volume. that hammer doji is the hammer doji.

I can only wait for the markets to open before i can re-commit my cash. the hammer has to be confirmed or its meaningless, in the wake of the technical devastation recently. The week still ended down. the selling volume is still outpacing the buying volume. the technical damage will likely serve as Katrina level resistance above.

Enjoy the game.

Big mo,

"I do agree we need something like Glass-Steagall but I think we need to make sure there is a hearty dose of everyone involved having skin in the game."

I heartily agree. This includes all those in elected positions at all levels and CEOs. As it is, those people take no financial risks (always get their full pay and benefits regardless of bad, unethical or even criminal behavior) and often are even rewarded for a job poorly done.

...

they are playing agressive! on-side kick to open the half. And scored a TD as a result.

I have to page down go get to refresh or new posts. It used to take me there.

Something not addressed that I know of by any of the new regulating is the CDS's which appear to be life insurance you can buy on someone else to go with the license to kill. I'm paraphrasing there, BRKB's Charlie Munger.

But why aren't CDS's being outlawed?

Won't they kill Greece next? IE: Buy the CDS's and then drive the debt down till they go under...

A second unrelated comment... Doesn't PA belong on that list of "bad states", too.

3rd, not related to WIR, probably missed the cutoff
Geithner said the other day that the US would NEVER lose its AAA rating... Hmmmm... I donta trust that guy at all.
http://www.bloomberg.com/apps/news?pid=20601087&si...

speechless.

Same here !

Here's my wiki answers source:
"There are 360 million buddhists worldwide...About 1.2 to 1.6 billion people pratice Buddhism throughout the world today."

My original quote was in response to Ross's suggestion that Buddhism is so 19th century. Who cares? Maybe the millions converting to spiritul practices that they find helpful in these trying times. BTW Buddhism does not subscribe to the concept os a 'soul' per se nor is 'the other side' considered very relevant. What matters to a Buddhist practioner is the here and now. Like the market, the present moment all we've got to work with.

kaimu -

Excellent update on the Maiden Lanes. Thank you. I'd just add that U.S. real estate values - exclusive of the doomed REITs and manic residential housing - are not as fluid (liquid) as the shares traded at the bourses of the world. When the CRE tanks, the office/retail/manufacturing/warehouse leases can take years to expire and reset at lower rental rates just as the debt balloons thereby hugely impacting CRE market values like a slow motion OTC panic only to be recorded by your local register of deeds office and observed in horror by the title companies. Apartments are annual leases so they should tank first along with month-to-month self storage. That is well underway but commercial property managers will be the last to run out and say the sky is falling. The only way to know if CRE is failing is to pole each title holder's spouse to simply ask if their significant other is sleeping at night. It should've been part of the Census. Only those operating with strict OPM standards are spared. I've gained a lot of insight on ownership performance knowing the answer to that simple question over the decades. I suspect CRE insomniacs are at epidemic levels today.

If CRE bag holders want to buy time - and we know the Maiden Lanes and Regional Banks want to buy time with all their faultering real estate debt - allow FASB to modify standards to pump the assets with blatant accounting fraud and wait for a stable economy to start liquidation. No refi looms large as leases turn and go dark at the Maiden Lanes' portfolios. Alternatively, dump all this destablizing shadow inventory onto the market at once and all of it comes down hard in the form of banks runs. I remember the RTC taking its own convoluted bureaucratic sweet time to unload $394 billion of S&L junk CRE in the 1980s. It resolved by transferring from the RTC to the FDIC after successfully forming public-private partnerships or MIF Partnerships and other instruments for the long haul. The old Confidence game is alive a well.

Perhaps the Maiden Lanes will partner with connected private sector players and make a bundle for a few clever congressmen and their friends someday. Remember the Clintons and their real estate developer pals?

Cheers.

That halftime show made me sad. This brought my spirits up. Keith Moon does God's work. http://www.youtube.com/watch?v=1n4W0-98c-c

"Banks will probably raise interest rates above and beyond any official increases announced by the Reserve Bank over the next few months as they move to shore up margins after the federal government ends its wholesale funding guarantee.

The Rudd government said yesterday it will scrap its $190 billion wholesale funding guarantee on March 31.

Mr Lim said the government is anxious to remove the guarantee - halting it one-and-a-half years ahead of schedule. "They want to make sure the banks don't get too many benefits from the tax payer because it's…an election year.""

http://www.smh.com.au/business/rates-set-to-jump-r...

The fallout from the global financial crisis is expected to have hit profits of mining giants BHP Billiton and Rio Tinto when they are revealed this week.

http://www.smh.com.au/business/crisis-fallout-to-d...

BHP and Rio are in hock to the govt for additional royalties too - some A$300M this year, pertaining to the tie up of operations in West Australia to keep the Chinese out. The Chinese had better keep buying their stuff or it could be a rough year for the ASX. Unfortunately, Jim Chanos is decidedly negative on Chinese real estate, so his bearish market stance, if proven correct, will impact on those raw materials that feed this particular industry.

Whenever someone mentions SPNG, I have an image of SpongeBob replying, 'Good luck with that!'