Bill Cara’s Blog for Nov 4, 2010 [See post-close report]

Good morning.

POMO Injection Scheduled For Today.

8:30 - Initial (+20,000)/Continuing Claims (-42,000)

Cara 100 Earnings:

APA - (2.19 vs 2.24)
CNQ - (.55 vs .45)
SU - (.42 vs .41)

After The Close - ATVI, NGD, SBUX

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AAPL - Baird Initiates with an Outperform. Target $410

GILD - Gilead initiated with a Neutral at Goldman. Target $38

QCOM - Upgraded to Neutral @ MKM. PT Raised from $30 to $55

QCOM - PT Raised from $48 to $60 @ RBC. Outperform

RIMM - was started with a Market Perform rating at Wells Fargo. Stock is already pricing in bad news, but lacks near-term catalysts.

WFMI - PT Raised from $46 to $50 @ RBC. Outperform

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"It is well that the people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning." -- Henry Ford

whoa! look at the futures go! glad i bought UGL and a few GLD calls yesterday. i had a feeling GLD would gap higher. now i think it goes on a run of all runs and possibly a blowoff top. consider me a short term gold bug. I still can't figure out the fundamental value of the thing, but i'm joining up with some of you "crazies".

POT - Potash upgraded to Buy from Hold at Desjardins (pre-open)

I want to short, but POMO's been running between 10 and 11 lately...

Sold my GLD calls and UGL just now. Worried that a better than expected jobs report could reverse this spike a little bit.

Sold more BYD/BYD calls. still holding on to some in case there is a buyout.

Rough waters on the short side.

What's even MORE CRIMINAL is that if you were wise enough to save your wealth in Constitutionally provided for money, ie $20 gold pieces, you will be taxed 40% on the debasement of the dollar.

Nice quick scalp though. What did you see at 9:40 that made you take that trade? Or just good instincts?

invariate-

Countertrend moves using the 3x ETFs seem to work out if I wait for the third 'wave' of selling. When you think it can't go down any further, wait. When it sells off further and you're pleased with yourself for having waited, wait some more. The third sell-off usually leads to the thought that you should just stay away from this POS- that's when you jump in.

Screw it...went back in on the long side on GLD with UGL and bought some GLD Nov $136 calls at $1.54. This is the reason why I'm back in on the long side:

http://online.wsj.com/article/BT-CO-20101104-71474...

in ' tlr '... good drill results

You could be right here. TED spread has been rising for over a month now. Just like in March-April 10. There could be easily a blowout in fear just like May 10. Gold should do fine then. I just hate to go long on top of immediate sentiments.

Monday snapshot.... http://data.imagup.com/2/1288625234.jpg

that there is no sense in owning miners unless you think the underlying asset, in this case, gold, is going to increase in value. He points out that the ' dead fish ' ( his term for useless anaysts ) have a penchant for pushing companies that are trying to promote several venues other than the core structure... as Bill Cara would say, " got gold ? " !!

(US) Federal Reserve Board established the Office of Financial Stability Policy and Research

- The office will bring together economists, banking supervisors, markets experts, and others in the Federal Reserve who will be dedicated to supporting the Board's financial stability responsibilities. The office will develop and coordinate staff efforts to identify and analyze potential risks to the financial system and the broader economy, including through the monitoring of asset prices, leverage, financial flows, and other market risk indicators; follow developments at key institutions; and analyze policies to promote financial stability. It will also support the supervision of large financial institutions and the Board's participation on the Financial Stability Oversight Council.

FED, one of the major destabilizing forces, establishes Office of Financial Stability... oh the irony. Sheer number of "experts" they intend to bring together doesn't inspire either - after all, a camel is a horse designed by a committee

GLDX - DYODD. Largest holding in Novagold(NG). Thought some others might be interested.

Does the Federal Reserve bear any responsibility for social equity? Clearly, those living on fixed income (or savers) become progressively disenfranchised by 'real' cost of living inflation and currency debasement. Does he think that they're all traders?

Bernanke's embarrassing and bizarre op-ed piece in WashPo today where he takes credit again (in so many words) for 'saving the global economy' and for maintaining price stability shows how out of touch he is.

Most economists don't see QE2 having a big impact (of course the Krugmanites look for more shock and awe), and a propos of that note PAYX dragging along at 0.45 percent up today.

We the people simply has become wee, the people.

Right-O' Jack.

When I start feeling like a trader genius I know I better, at least, tighten stops.

Baz22 - I've recently been reading Fleckenstein articles and he's got a great point when he says that it's never a top when people are worried so much about it being a top, which is what people have been saying about gold. He also said that while the recent mining conferences have had record attendance, when asked what percentage of their assets they had in gold, only 5% of attendees stated 90% and most were in the 5% area, which is also indicative of there not being enough bullishness to consider the current price to be a top.

I liked the finance ministers comment:

"Now, if the U.S. persists (in this policy to inject funds in the market), we have excess credit is not being channeled into the production. This credit will end up being channeled to speculation."

I think we're seeing that today. I'm glad to hear this will be a huge topic at the G20 summit - it seems the world is getting increasingly fed up with the debased US currency.

RSI(7) D W M now 78.67 84.93 71.33. First time in Distribution zone since late 2007. Of course, as overbought as it is, it can and probably will get more overbought. $SPX, $INDU and $COMPQ getting closer to Distribution zone with RSI(7) M all above 65.

Hi team... hope all is going well... yes, he's got a good point.. been subscribed to Fleck for 7 years now.... followed him when he was at ' The Street ' ( he parted company, as he and Cramer did not see eye-to-eye on the ' bubble ' in 2000, as Fleck was warning people, as he did during the housing bubble - < and saved and made me money > - and ' The Street ' had their party-hats on ) One of the good guys... take care..

To risky to short with big position, but small position with tight stop is low risk for this PM IMHO.

ain't 45' to 45' ... more like 44' to 46', and round off the edge !!!!

' rxii ' parent >( cytr ) getting bid.....

Although Bill Fleckenstein is afraid to quit the Bernanke-fueled stock market, he says quantitative easing marks a long-term inflection point.
"If you debase the paper enough, no one's going to hold it and the markets are going to have to turn against the easing. The markets are going to have to finally become vigilantes and say we're not going to buy when you ease, now we're selling," he said on King World News.

"That's the funding crisis, the final leg to this pass we've been on for twenty years. First Greenspan printed too much money and we tried to speculate our way to prosperity, then in the housing boom we tried to borrow our way to prosperity and now we're trying to print our way to prosperity. This will end like those others did in disaster, but we can't take the printing press away from ourselves anymore then if the Greeks had a printing press they would have taken that away from themselves. The difference between the United States and Greece is essentially a printing press."

The trick is finding a way to short a market that keeps rising. "Even if it is an inflection point, the machinations of the market convince you that you're wrong even if you're right, so yes I'm tempted [to short], and I may do something and we'll have to see."

I see those references to "insider selling" all the time lately as basis for shorting the market and can't help but wonder why would anyone put any significance in those. This is highly misleading as far as general market direction is concerned.

In traditional application, insider buying or selling is regarded as indication of positions taken by those familiar with secret future development or coming material events. When it comes to a particular company, such actions sometimes have significance (plenty of evidence to the opposite as well to be sure). As far as general market direction is concerned, "insiders" are just as clueless as any.

algo's just ripped down and took those who had stops in ' tlr '... next few days may tell the tale !

AMEX:UXG +9.70% & AMEX:RBY +9.43% had a nice day WOW!
J

Actually, VXX has to roll over VIX futures contracts every month. Does it remind of another similarly dreadful ETF out there?

Correlation between UNG and VXX is consistently over 0.83 since... June, and has topped 0.88. (tool: http://nexalogic.com/nexacorrelation.html)

Both things have no possible floor, they lose value by doing nothing.

Sold all SVNT and NE, both for a profit and both too early, wish I still had the NE. Bought YCS proshares ultra short yen@15.52 close 15.54. I just think the Japanese have had enough of the rising yen falling dollar. I almost bought a short ETF on the USD/YEN, but held back.

Long the miners.
J

I remember reading the Fleck for YEARS while he predicted a big fall in a market that only wanted to rise. Maybe it's finally time for the perma-bears to rule for a few years.

fresh interview yesterday with Fleckenstein on Eric King... excellent discussion on the insanity of the Fed's actions, past and present ( Sir Allen and B.B. )... http://www.kingworldnews.com/kingworldnews/Broadca...

Just asking?

Do we get a bubble high now and Ben prints hot air to fill it, or does the market keep rising for 8 months because that's how long Ben will be printing?

So sad to be asking that question knowing that at the same time the money my accounts are measured in is being made worthless at the same rate and that I will have to pay 40% in taxes on my "gains" when in reality, I will have no real gain, just higher numbers of worth less currency.

TOF,
I agree and I have Mar/Jun 2011 put options on FXY and bought YCS ultrashort yen shares today. Going long the Nikkei seems a less risky trade, I will look at late tonight or early tomorrow.

A better trade might be to write call options on the yen currency related securities, but my account is not setup to do that.
Good luck.
J

Johnny - I think you should do well with those trades. Good thinking and good luck.

A term used by the late Winston Churchill when referencing his black moods.

http://tinyurl.com/yk4wmcq

There is a variant of the black dog that occasionally surfaces when trading- at least I suffer from it when faced with lost opportunities.

We all know the 'affirmation'- 'Lost/missed opportunities are more easily made up than losses,' or something to that effect. Which is quite true. However, there is often more mental baggage attached to missed opportunities. What am I carrying around tonight?

(a) BAC/JPM/WFC sold at 'giveaway' gains yesterday, in spite of being fairly confident the banking sector would take the indexes higher.

(b) An intuitive take that the sharp sell-off post-FOMC was enough to shake out weak hands-

Weak hands taken out?
Submitted by 2nd_ave (4907 comments) on Wed, 11/03/2010 - 15:11 #73437
Certainly not all of them- there wasn't time for a lot of traders to react. But possibly enough of them to clear the way higher for the indexes.

Any other takes on market direction into Friday?

-was unfortunately complicated by an urge to play both sides-

Opening TZA @ 21.51> Shifting attention to nervous longs
Submitted by 2nd_ave (4907 comments) on Wed, 11/03/2010 - 15:27 #73441
My degree of confidence in this trade is 70% of that in buying the banks this morning- ie, very short time frame...

We all have our own ways of dealing with it. For me, a good night's sleep is usually enough to dispel all traces of the black dog.

In this case, I at least avoided adding insult to injury (or more appropriately, avoided adding the injury of a loss to the insult of selling early) by stopping out of trades in the leveraged inverse ETFs (aka PsOS) TZA/VXX. So I really have no reason to spend much time in the mental doghouse.

Hi All - Interesting news on this one - basically a joint venture with Cameco to explore & develop a large ranch in TX in an area historically prospective for uranium production using in situ methods (pretty benign to the enviornment). The company along with many other U308 concerns moving up very well over the last month or two. You guessed it - one of the litter. Happy Trading

http://www.businesswire.com/news/home/201011040057...

It takes a very special horse to work longhorn cattle. If he works too close both horse and rider are in danger of being gored.

I don't have a special longhorn market horse so I'll sit on the rail and watch you kids have fun.

That new GLDX ETF intrigues me. Under certain circumstances it could be a rocket sled to heaven...Or? It could be another arrow in the quiver.

David Stockman doesn't mince words: "Today the Fed is scared to death that the boys and girls and robots on Wall Street are going to have a hissy fit. [Its programs are] designed to somehow pacify the stock market, [fooling] the people into thinking they are wealthier... The Fed is injecting high-grade monetary heroin into the financial system of the world, and one of these days it is going to kill the patient."

Dow 11371.00 -16.00 -0.14%
S&P 500 1216.00 -2.60 -0.21%
Nasdaq 100 2180.75 -3.75 -0.17%

Euro popped and then dropped lower at Europe's opening. FTSE making new highs.

http://www.telegraph.co.uk/finance/economics/81111...

Illini,

I doubt Constitutional change will happen in my lifetime, but clearly the U.S. Congress has reached levels of power and elite status beyond what the founders would have approved.

As for the overwhelming Illinois approval of a process to recall the governor — I see it as only symbolic and of little use. After so many state executives being imprisoned for their excesses it strikes me as the same kind of emotional outpouring which led to Obama's election. Bush left a bad taste to so many that the masses were ready for a message of hope. ("Find a parade and jump in front.")

I have higher hopes (unusual for me;-) that the grassroots protests of the Tea Party movement will bring a bit of reform through the election of candidates more in tune with the goals of the Preamble to the Constitution rather than the party hacks and personal career minded bunch who've been trampling on us for so long.

ALOHA!!

I find this statement that Volcker made in Seoul, Korea interesting:
"The thought that you can create a prosperous economy by inflating is an illusion, in my judgment," he told reporters after his speech. "And we should never forget that. I thought we'd learned that lesson and I hope we continue to learn that lesson."

Can we be any more prosperous deflating?

Then Mish goes on to mention this about Bernanke and his "expertise" at the US FED:
1. He will not listen and cannot be taught
2. He has no common sense whatsoever
3. He is dedicated to bubble blowing in response to crises

And then the inflation vs deflation debate keeps going and going ...

In layman's terms all this debate and Volcker's views on how you cannot create a prosperous economy with inflation are like two old truckers at a truck stop outside Dallas looking at their tires and arguing whether they should be inflated more or deflated for the road conditions ahead, all the while not noticing that the reason the tires don't roll very well is because they are square! I mean Volcker just defines the entire banking system with his comment. In essence what Volcker said was that our economy cannot be prosperous because of the way the banks in the Federal Reserve system create money(operate). This is what we get when we allow bankers to make DEBT the basis of our money system, hence our life. Its like going to the Toyota dealership in your town demanding that he sell you a Harley Fat Boy! If you want FRNs and debt based money then do not expect anything else from the US FED, even the Volcker FED ...

We should instead focus the debate on what we will replace the US FED and its FRN money with. What we need in our money and our political leadership is "quality" not "quantity"!

IN DEBT WE TRUST ...

"Can we be any more prosperous deflating?"

I would say yes, if the deflation is a matter of allowing markets to determine the lower value.