Bill Cara’s Blog for January 6, 2010 [See POST-CLOSE REPORT]

Good morning.

DOW - Upgraded to Overweight @ Barclays. PT Raised from $30 to $40

ERJ - Downgraded to Underweight @ JP Morgan. PT = $18

KSS - Sterne Agee Initiates Coverage with a Buy. PT = $65

Bought a little more at $4.79. I just read that they are most likely in the Nexus One by Google:

http://www.thelion.com/bin/forum.cgi?sf=immr&msg=3...

Still holding on to LCRD that I bought yesterday...the company signed another deal worth $11 Million today. It trades at 10 to 11 times forward earnings and it has a significant cash position on their balance sheet.

Sumpin's up.

Going to gold more so than the dollar on uncertainty. That is a big change in mentality.

Took more profits on DGP on the spikes. All cash in accounts now.

Bill,

Thanks for the Nievert assessment of risk associated with taking or holding positions in potash at this time. While POT continues to show market strength despite their repeatedly gloomier forecasts for earnings this year POT is another example of why analysis does not correlate with price in the times we trade in. I've decided that since the risk is high then the best strategy for me is to lever myself with smaller positions in potash development stocks such as Potash One ( KCL ) which has a large property near POT and potential for 2M tons a year of production in the coming 3 -5 years. There are others out there so DYODD.

6 months severance from a health/biotech company. and he can collect unemployment as soon as they start laying off in the spring.

So he is basically given a 2 yr paid vacation. In NY, we get 26 weeks standard of unemployment. The extension can add up to an additional 73 weeks, or total of 99 weeks. lolol. If only I was this lucky. The first 6 months of his unemployment it's as if he is getting a raise, his 6 month severance + unemployment checks. Booyah!

http://www.labor.state.ny.us/ui/claimantinfo/exten...

EDIT: I am not entirely sure if one can collect unemployment during your severance period. But it all nets out the same. if he cant simultaneously collect, than it just extends the time he is unemployed, yet still collecting cheese.

so entrenched in the calculus of commodity outfits is the idea that their product is both rare and becoming rarer while demand is increasing.

neither is true in the sense that price is not reflecting this over a longer time frame of a few years. a 3 or 4 year chart of POT looks strikingly similar to so many other TSX stocks. still well off its 2008 highs.

let get serious about reconsidering how we review non-metal commodity stocks, we were fooled by chimes of peak oil and increasing demands esp from china to boost the price of crude which has for some time not even come close to its previous high which was nothing but baseless speculation.

the japanese are experimenting with growing crops without soil. each year they get better at this technology. we can only wonder how much a place like china with so little arable land will seek out this option in the face of steep agricultural product prices over the decades to come.

Sold my shares at $6.54 that I bought yesterday. That's enough of a run for me, although it does still look cheap.

Bev,

there is nothing new about forced cover as such. Shares borrowed for shorting can be called in at any time, and that's the risk short sellers always face. Rule 204 simply tightened some formerly loosely defined parameters and language to limit naked shorting.

VIX is going to zero or close to it, at this rate.

This is worth a read, thanks Bev.
Note 204 T as in temporary, was implemented July 2009, apparently to deal with "naked shorts'.

PDF: http://www.sec.gov/rules/final/2009/34-60388.pdf

But as Bev notes she had to "buy back" borrowed shares, which later dropped, and it does indeed smell fishy.
With Bill's opening comments this morning, it sounds as though we are now in the thick of it where government is in control with its' current ally 'government sucks'.
sad, Allen

ALOHA!!

As an aside ... All my 20,000 orchid plants require NO SOIL. In fact, to plant one of my orchid plants in soil would kill the plant! All my plants are rooted in rocks, but I do have to use fertilizer.

I find it interesting that Mother Nature, the jungle that surrounds me, uses no man-made chemicals and yet it flourishes. Some of the plants and trees growing wild here on our farm:

- Papaya
- Mango
- Coconut
- Coffee
- Guava
- Lilikoi
- Lychee
- Puna Orange
- Grapefruit
- Lemon
- Tahitian Lime
- Noni
- Mountain Apple
- Banana
- Avocado
- Ulu

I do not water or fertilize any of the plants and trees listed above. They are all taken care of by God.

Considering I used to pay $2-$3 for each Papaya or Mango at SafeWay supermarket in San Francisco I am very fortunate to have them for free here. If you are homeless or unemployed here in Hawaii you could survive off the land year round. In fact, I see numerous people foraging here in the jungle on the weekends. Entire families drive a truck and stop along side the road collecting food. Fishing is very popular here. Water is super abundant here. Hawaii is still the Paradise that Capt. Cook saw when he first landed here over 200 years ago.

Trading note: I have followed this company for years as it is a "solar" stock. Here in Hawaii solar is big, for obvious reasons.

The company was yet another casualty of the credit crunch and then the Chinese took over. I see this same scenario in many stocks, whether at the ASX or TSX or here in US markets.

I own no shares ...

HOKU SCIENTIFIC - HOKU(NASDAQ)

Chinese company gains control of Hoku Scientific
Chinese company gains control of Hawaii-based solar panel material supplier Hoku Scientific

On Wednesday December 23, 2009, 8:45 pm EST

HONOLULU (AP) -- A Chinese company is now the majority owner of a Hawaii-based supplier of silicon for solar panels.

Hoku Scientific Inc. of Honolulu said Wednesday it has issued more than 33 million shares to Tianwei New Energy Holdings Co. of Chengdu, giving the Chinese company control of 60 percent of Hoku's outstanding shares.

In return, Tianwei has canceled $50 million in Hoku debt. Tianwei is also loaning Hoku $50 million through China Construction Bank and has agreed to help the company obtain additional financing it may need to build and operate its Pocatello, Idaho, facility.

Financing problems held up construction earlier this year. The $390 million actory will employ 200 workers when completed.END

Look there the CHINA CONSTRUCTION BANK is giving "Stimulus" to a US company. May as well since no US Bank wants to do loans and neither does the SBA ... too risky!

I can't help but wonder how much different America would look right now had Obama had the balls to disconnect from the MONEY MONOPOLY and instead let "failure" happen. Had he given $800BIL to the SBA instead of the UAW. The Obama Treasury, in three months, has issued enough debt for every American to pay off their credit cards and car loans! Over $2TRIL US Treasuries issued in three months ... nearly a TARP every month ...

Its too bad we did not have a SBA SUBPRIME instead of a HOUSING SUBPRIME ... Not that jobs matter!

To grasshopper who asked a few days ago. I did not reply as I feel I should not teach so much as need to learn. But here is my experience. I subscribed to The Kirk Report for one year. Very interesting and gave me boocu links to read and some actionable trade info. I subscribed to The Leavitt Bros. for a year after watching his free videos on charting and entry and exit points. I liked his calm approach. More actionable direction from this author. I may rejoin Leavitt. I like their long list and their short list descriptions. Reviewing the short list over time gave me the confidence to actually short some stocks on a very small scale...mostly easy pickings like C and BAC last oct.
I had two others I won't mention as I have nothing good to say. One is well known but, only good for research and discussion for beginners. Much of whats available is also available for free elsewhere.
On a normal trading day for me I have a routine;
1. The Knight Trader first thing in the morning as it has a link called "before the open" written by Jason Leavitt. Today for example he posts the entire long list provided for subscribers with charts showing resistance and target prices. I like this, as it identifies potential that I don't yet see easily. This could get someone into trouble if they blindly purchased without doing DD. I apply stoch and macd crossover for entry points...learned here
2. Bill Cara for last nights report if I missed it then the daily commentary. I cannot emphasize more that this is the best place to learn. Repeated lessons on position sizing and stops and easing in to a position have at least saved me from losing all my money. I need to stay away from SRS. I have repeatedly bought some on some news I thought would start another correction only to lose money. (this may be called trading what I expect as opposed to what I see)
3.check gold spot price at kitco as I like to hold miners.
4.I used to check the spot dollar price at Future source in the daily and the 30 minute time frame but the site no longer opens a chart for me- an error on my part somewhere I am sure!
4.Google finance and then news but they both are (more obviously lately) canned news sources telling me what someone else wants me to know. Google news has had more commentary on the movie Avatar than on IRAQ or Afghanistan combined.
And the net result of there habits has not..I repeat NOT been profitable for me. Educational yes. And either I will get smart enough to stop losing money or I will run out of money. I do not use the tools presented here to my advantage. I am getting slightly better at entry points but exits (especially)on the losing trades sink me every time.
I hope this helps. I read here every day. I learn something regularly though not every day-my fault not yours. I have a day job but because of my left coast location could trade every morning, but do not. I enjoy making trades. I feel I have a better view (although decidedly more cynical) of the business of these United States. Bill says markets are manipulated and by extension my pension (if its there in the future), my 401k now 201k, Carlin says we are dumbed down because thats what “they” want (god I miss him), Kaimu says we are encouraged to buy debt, Dr. Cosa says the miners do not correlate with GLD or the price of gold. Pearls before swine I am afraid... but, As I follow threads down rabbit holes here on the web, I learn. I do not become more optimistic. I feel the need to manage my own money
To use the fishing analogy, I have gotten better gear by reading here but I (must)like to stand in the water by the waterfall because I like the action. Those guys over in the small pools waiting for the fish to come to them do much much better.
peace from beautiful North Puget Sound

Vad said: "Rule 204 simply tightened some formerly loosely defined parameters and language to limit naked shorting."

The naked short list is barely maintained anymore, much less enforced. The irony being that the worst abuses of it are now occurring...they just don't like when it's retail investors that participate in well-placed short trades (although, we really couldn't if we wanted to, could we?). For this reason puts and ETFs are far more effective methods of shorting.

For example, the most well known stock on the naked short list now is YRC. They are about to go bankrupt, but the SEC isn't lifting a finger even though YRC has been on the naked short list (delineating a substantial order imbalance between open short interest and actual shares traded) for quite some time.

So, respectfully Vad, I think your comment is a bit of an over-simplifcation. The tightening of Rule 204 is far more likely to do with forcing retail investors out of short positions than to actually render meaningful enforcement of naked shorting which can only be pulled off by institutional investors.

Wednesday, January 06, 2010 2:00:26 PM
*MINUTES OF THE DEC 16 FOMC MEETING: SOME MEMBERS SAID MORE STIMULUS MAY BECOME DESIRABLE; ASSET PRICES ARE NOT OUT OF LINE WITH FUNDAMENTALS; SEE SUBDUED INFLATION IN 2009
- Members did discuss additional steps to normalize lending programs and sees total securities holdings falling after purchases end
- members saw that resource slack was only diminishing slowly and that more stimulus in the large scale asset purchases may be necessary; especially if econ outlook weakens
- reiterates predicts unemployment to remain high for some time
- all members agreed that no changes to the Committee's large-scale asset purchase programs, or to its target range for the federal funds rate, were warranted at this meeting, in as much as the economic outlook had changed little since the November meeting.
- Affirmed its intention to purchase $1.25 trillion of agency MBS and about $175 billion of agency debt by the end of the first quarter of 2010 and to gradually slow the pace of these purchases to promote a smooth transition in markets.
- home prices appeared to be stabilizing and in some areas moved higher; mortgage markets could come under pressure as Fed's MBS purchases wind down

http://www.federalreserve.gov/monetarypolicy/fomcm...

Vad,

I don't think I took anything out of context...you were somewhat dismissive of Bev's initial comment in this thread in your reply and then you chose to link the issue of Rule 204's impact back to naked shorting. I am sorry to ruffle your feathers, but you tend to speak with a good deal of authority and I just wanted clarification that the application of Rule 204 to what Bev was referring to had nothing to do with naked shorting at all. So...I think we actually agree, no?

They'll leave you alone once your account is broke.....they own a second mortgage on your home you inherited....and your retirement savings of 36 years reads zero!

So from what I see, the Fed was trying to talk down long rates today by threatening to print money and buy MBS, and instead of rallying in response, the long bond went down, breaking to new lows on the week. Contrast this with what happened last Spring when they announced quantitative easing. This is a surprising reaction - at least to me.

Is this some game of chicken between the Fed and bond traders? Or are some large longer-term holders of treasuries starting to realize that the Fed's "print our way to prosperity" strategy is bad for the dollar, negative for bond rates long term, and as a result they are selling their treasuries in response to this?

When the Fed prints money and buys MBS, it trades off lower rates now, in exchange for higher rates later when they (presumably) start to unwind. This guarantees higher than normal interest rates at some point in the future. The more they buy, the higher the rates will be later when they finally sell.

Low on TLT (and some pretty good support) is 89, which it touched intraday twice in the past few weeks. If it breaks below that, I'd say Mr. Market is making a pretty dramatic statement about the Fed MBS purchase.

FD: I closed out my TLT long position in response to the move

I don't know whether there is any significance to it, posting for those who track all the gold intricacies.

Wednesday, January 06, 2010 4:49:54 PM

GLD SPDR Gold Trust holdings decrease 4.9metric tons as of Jan 6 from 1,123.9 metric tons
**Note: On Jan 4th, the ETF's holdings declined by 4.9 metric tons

Nebish,

those are two different issues... on first one, forcing a holder to cover his short position: see, both the guy quoted in Bev's post and you refer to this as some recent development. That was exactly what I made a point about - it's not. It has been this way, well... I don't want to say forever but at least as long as I can track it and certainly as long as I trade for a living, which is 13+ years. In order to incorporate proper risk control, one wanting to establish and hold short position by direct shorting the stock must know that a)he borrows shares to sell, and that b)a lender can call those shares in at any moment. Correct choice of strategy and applying proper risk control requires knowing all the factors involved; this particular factor is inalienable part of shorting - and that's exactly why I made my original comment.

Second part is naked shorting... being debated as a hot and highly inflammatory topic forever. This is not something we retail traders can do easily on our level - if our broker has no inventory for a stock we simply see a message "not available" or whatever wording particular broker chose (mine has strange message "cannot be shorted per SEC rule #something", LOL). At the institutional/marketmaking level things become much more complicated and open to multiple forms of abuse which, I have no doubt, takes place. Well... among all the forms of abuse of financial system and market mechanisms taking place at all levels, this one is somewhere in a "can be dealt with if/when we manage to make the very market function as it should - free and within confines of the law" category. Not to dismiss it as harmless or minor, but there are abuses that threaten the very existence of the whole system, thus should probably take priority at the moment - and we are yet to see someone dealing even with those most crucial...

So I don't know what it was like in the economy as I navigated a new country, new smells, new foods, new cultures, new life.

And in my financial education I am still focusing my studies on long range combat, before I take on the hand to hand (scalping like a machine) trading combat. It's a life long war and I want to make it til the day I die of old age.

So, I try to seek people who were around in the trenches long before I learned to ride a bike. One radio blogger I listen to is Bill Tatro. Today's show was very clear and purposeful so I thought I should share. http://bit.ly/90AXFW.

Disclosure: he is a money mgr and I have never spoke to him or ever plan to move money to him. But technology had given me access to a wide spectrum of people.

Summary: he looks at macro economic data of 1982 vs 2010, and tries to connect the dots. His premise was we had a true bull mkt from 82 to 00. So if we are at the beginning of a new bull, similar traits should be apparent and abundant.

Hope you enjoy.

So after the bull run from 70 to 83 and change, WTIC's daily RSI is 89. Looking back along the daily chart, I don't see another period where the RSI was quite that high. Of course it can always go higher, but - what has oil so excited these days? Its not simply dollar weakness. Is this just a pump operation from HB&B or is there something more fundamental? Or is this just freshly printed money looking for a home?

96.60ish is the next fib po off the june high,back in June when rsi was at this level, oil was at 65 and went on to 74. So who knows? perhaps it keeps running? The producer charts seem to look bullish.

Good morning.

BBBY - Upgraded to Neutral @ Piper Jaffray. PT Raised from $24 to $43

INFY - Downgraded to Hold @ Jefferies & Co. PT Raised from $55 to $56

Submitted by Grym (1657 comments) on Thu, 01/07/2010 - 07:23 #55316 (in reply to #55306)

"Guessing some other insiders don't wish to point fingers for fear of having them cut off?"

Hey, cutting off their fingers! Not a bad idea.

Maybe branding their foreheads with a scarlet dollar sign too? ];-)