Bill Cara’s Blog for Aug 18, 2010 [See post-close report]

Reposting from yesterday's blog.

Analyst,

some points to consider.

1. General idea of using crowd sentiment to take opposite position is not enough - you also need a timing tool. Just like being right on fundamentals does not guarantee a winning trade unless you have a tool to determine the right moment of the initiating the trade - and that short trade you mentioned was a prime example of that.

2. Crucial difference between current situation and that rally is: that move up occurred AGAINST the widespread public sentiment; this drop we observe now occurs, for now, WITH public sentiment. Therefore, at the moment you do not have a vital element: Price-Information Divergence.

3. We are in a low volume August trading. Many make the mistake of trying to read too much into movements during this time. Most of them are just aimless wandering; actual trading resumes around Labor Day.

To sum it up:
With going against the crowd in mind, watch the price action against the background of the prevailing sentiment. Price starting to act against that sentiment is your first clue; widespread disbelief in price action and loud confident claims of taking positions against it is second (you know, all those "they are not fooling me, I am shorting it right here right now!" and "darn manipulators did it again!"). Chart formation giving you clean setup with nicely defined entry and stop is third, and last you need to initiate the trade.

Hope it helps.

doing "busy" work for the state of Maryland and raising a child as a single parent, I can say that Americans choose to consume past their capacity. Each American makes choices to which they are accountable. Me, I saved, invested and traded my way to a modest amount of "wealth". I just retired at age 57 and bought a piece of property and built a home, all for cash (never having owned a home before). My sympathy for Americans who must consume beyond their means is quite limited. Greed is what paints these indebted people. Let them eat cake. The old axiom of Delayed Gratification comes to mind. Americans have come to think they are owed something. They are about to get that something. Me Im going to buy somewhere near the bottom having stood aside for the better part of a year. It could be another year or more before we see a durable bottom. Deflation will adjust this debt mess and reality will bring real pricing in the market into focus.n Yes, it will take some more time but the risks presently are too great. Let the real traders make the swing money. Im still standing by....

“Luck is what happens when preparation meets opportunity.”

I have always believed that Canadians enjoy something Americans will never have, it is in the form of something Americans can't grasp. I don't really understand why the differences are so obvious but they are. The air has a vitality, the people, even perfect strangers, greet differently. On the happiness scale, America just ain't got it, the idea I mean. I moved to Seattle in the mid 70s after living in the midwest and south, is there a guess why? I made for the border asap and found it wonderful to cross. I think the Canadians have a better predispositioned psychology. Maybe it has something to do with the religous zealism, or the one upmanship that reigns in this country. I have spoken with so many. I have heard stories ranging from I wouldn't be able to buy a pissant if we didn't have the healthcare we have to why don't you yanks relax? Let's face it, social equity has never been the forte of America, that idea has alway's been force fed through legislation. Don't misconstrue all you red white and blue patriots with the flag on your lapel, America does give alot, but on the street of everyday life on the happiness scale across the land, Canada rules dude, along with those damned social misfits the Danes and Norsk's. By the the way, when I'm reincarnated I will be reborn on Marine View Drive in Vancouver.

tmgm501,
I'm a red blooded American patriot. I don't know that I can say Canada is the best place to live. But, I love to visit Canada. I love the people and overall ambiance. Since I live on the East Coast we usually visit Canadian territory just north; the Maritimes, Toronto, Montreal, Quebec is still on my list. We also vacation in Mexico, and I have found the Mexican people to be wonderful as well, but Mexico seems to have more problems than Canada.

I have read that America is a set of ideals, aspirations and goals we strive toward but never quite reach. Any pithy statement of mine cannot do justice to an extensive discussion of the subject, not here and not now.

GDP next week Aug 27.

Maybe those two will bring back some volume.

I've always firmly believed that Cananda (sic) is a really nice place to be...from.

Looks like more short covering by the big bullion banks before the CFTC is forced to set limits. Pulled down and then zoom. Squeeze would be nice.

thanks Grym for the link.......it is "currently unavailable" there also but at least the site had a good recap of what I could not watch.......during a conversation within the last hour I mentioned your observation of all the "company towns" that no longer have a "company" Not sure how my life would have turned out if I had had to compete in the job market of today, always had a "formal" job w/local small businesses after school or during the summer months from in my mid teens back in the fifties....do not think such a thing is possible anymore.....sad

Grym, I looked at both parts (almost 20 minutes). Pretty grim and as David Faber said "Kyle, I bet you're a real downer at dinner."

lessmore said:
"The relevant point is that only Americans pay to support it even though citizens of Canada and Europe are to a great extent equal beneficiaries and appear to rely on it."

As a Canadian, please let me say, we never asked America to build "the largest military industrial complex in the world", we certainly don't "rely" on it, and frankly, we don't always agree with America's foreign policy. As a matter of fact, I'd like to point out the only country to ever invade us was the U.S., (War of 1812), so one might even suggest your military is a threat to us, not a favour. At the risk of being trite - thanks, but no thanks.

But rather than just be negative, I'll also say that Canadians have an affection for Americans. We share a continent. We share similar colonial heritage and multicultural mosaic formed of our immigrant creation. We're happy to receive your tv shows and we're happy to loan you our hockey players. I'm proud that Canadians, (particularly those from our East and West coasts), are so friendly, but I'll also note that the friendliest people I ever met were in Des Moines. We're much the same and have some interesting differences - uniqueness. And when I disagree or dislike something American, it doesn't take much to remind myself that you've been a great neighbour these past couple hundred years!

I kinda' feel like I should say something about beer as well, but perhaps I've said enough. ;)

tobyt & George,

I think Kyle Bass is right on, but maybe it's because yesterday I sold my one remaining stock (ETP) for a slight gain and last time I looked today it was down over a buck at 10X volume.

His outlook was backed by comments which I can understand and they seem reasonable to me.

I also read the link Bill gave us today to an Essay by Joe Bageant.

My Redneck half (Scots-Irish) is totally in sync with him too.

Is it my imagination or are more people finally beginning to realize we're all getting the short end?

Any chance of getting our neighbors to the north to do a buy-out?

Probably not. (We could though in Illinois for free ;-)

I haven't heard of this until recently. Does anyone on the site have insight?

15:46:24
General Motors Corp *FORMALLY FILES IPO; no shares of common stock to be sold; offering series B preferreds
- Registers common stok for selling shareholders, including the US Treasury
- Common stock outstanding immediately after following at 500M shares; The number of shares to be offered and the price range have not been determined
- We have no current plans to pay dividends on our common stock. Our payment of dividends on our common stock in the future will be determined by our Board of Directors in its sole discretion and will depend on business conditions, our financial condition, earnings, liquidity and capital requirements, the covenants in our VEBA Note Agreement, and other factors. So long as any share of our Series A Preferred Stock or our Series B preferred stock remains outstanding, no dividend or distribution may be declared or paid on our common stock unless all accrued and unpaid dividends have been paid on our Series A Preferred Stock and our Series B preferred stock, subject to exceptions such as dividends on our common stock payable solely in shares of our common stock.

- Concurrent Series B preferred stock offering
- Concurrently with this offering of common stock, we are making a public offering of undetermined shares of our Series B preferred stock

les, I agree but I would be careful not to overstate the point. Yes, Europe and Canada benefit from US military might but its citizens do not support much of what the US has done with its military. For example, the citizens of Canada and Europe did not want the illegitimate war in Iraq. This was an invention of the US. The US to a large part advances its own world view with its military and holds no support with the citizens of many if not most other nations. Actually many US citizens don't support the actions of our government abroad.

For those intrepid learners amongst you , I thought this would be a good followup to Bill's recommended article. If you choose to read any of it, I would implore that you read most if not all of it. The quotations are worth their weight in gold alone. But initial pages may be confusing and hard to grasp. Persist; explanation comes deeper within text as a bigger picture is artfully painted.

How I Clobbered Everey Bureacratic Cash-Confiscatory Agency Known to Man
... a Spiritual Economics Book on $$$ and Remembering Who You Are.

Mary Elizabeth: Kroft (A Canadian, by the way).

pdf format:
http://tinyurl.com/23e2qym

youtube ebook:
http://tinyurl.com/2al9bb6

Happy Trading

Speaking of the War Of 1812, as good Americans we have long since forgiven you for burning Washington to the ground. I wasn't aware that there were Canadians with my distant cousin Gen. Ross when he performed that act of urban renewal. If there were Canadians with the British I have only one request;

Would you please do it again!!!

What's causing SPY to drop around 50 cents from close?

Kaimu,

Read a quote the other day that goes along with this theme &
seems so correct in todays world.

"During times of universal deceit, telling the truth becomes a
revolutionary act." George Orwell

from wiki:
http://en.wikipedia.org/wiki/Hindenburg_Omen

"To eliminate false positives some technical analysts have imposed the condition that the Hindenburg Omen

* must be triggered 3 times in a row within a month from the 1st triggering event for said initial trigger signal to be considered to be valid
* is only valid when "all tightly coupled triggerings are within a fortnight"
* will indicate a possible future downturn or correction, depending on the magnitude of any "one off" triggering

The creators of the signal have not fully explained the selection of the threshold value of 2.2% of issues traded.

From historical data, the probability of a move greater than 5% to the downside after a confirmed Hindenburg Omen was 77%, and usually takes place within the next forty days. The probability of a panic sellout was 41% and the probability of a major stock market crash was 24%. Though the Omen does not have a 100% success rate, every NYSE crash since 1985 has been preceded by a Hindenburg Omen. Of the previous 25 confirmed signals only two (8%) have failed to predict at least mild (2.0% to 4.9%) declines.

Because of the specific and seemingly random nature of the Hindenburg Omen criteria, the phenomenon may be simply a case of overfitting. That is, by backtesting through a large data set with many different variables, correlations can be found that don't really have predictive significance. The Omen is at best an imperfect technical indicator that is a work in progress."

This is a fair description, but I don't agree with the last paragraph.
I first heard about it in 2007-2008 when multiple HO were triggered. Rest is history.

The fact that one HO was triggered recently has no meaning without more sightings.

Also, some of the hard core HO experts argue that the new hi/low should be calculated on stock exchange only and not NYSE, as NYSE has lots of bond ETFs that spiked recently and that should not count as new equity highs.

IMHO, the flash crash and especially the big sell offs in 2007 and 2008 started when retail investors were high on stocks and low on cash or bonds. Now, it's the opposite allocation. Sure, oversold can get more oversold, but if there is a surprise move in the cards, I would not be surprised about bonds lower, stocks higher at least for a couple of weeks or maybe even till the end of the year. The same way 2009 played according to the 2003 script, 2010 is similar to 2004 so far.

Mike Kahn's take on Barrons

http://tinyurl.com/25e897p

Still working on the book by Croft.

These videos are interesting and have the potential to alter your thinking.

Reminds me of:
(a) You become what you think about
(b) I am affected only by my thoughts

http://www.youtube.com/watch?v=FEhExE62lss&feature...

http://spiritualeconomicsnow.net/?p=93

Do you have clarity of purpose?

P.S. I emailed you through the CC system, but never receive a reply, that's okay since you may have changed your mind about passing on the information. However, I have used the CC e-mail contact five times and never had a reply from anyone, sometimes I wonder if it really works. Peace.

look up in the sky,
its a bird!
its a plane!
no, its a possible break out in the GDX vs. bullion!!!

no friggin way i said... but i bow before the objective analysis that demands I speak the TA truth:

http://jglobal.blogspot.com/2010/08/breakout-for-g...

Very interesting read. Thanks for the post. Some of her advice seems bad and perhaps she is a bit of a kook but a lot of the material resonates with me. Worth reading for the quotes alone...thanks again.

KC

Vad, Bill...Bless you boys. I guess it's just human nature that folks search for the Holy Grail, Fountain of Youth and other 'no lose systems' like race handicapping or the perfect stock market indicator.

Everyone wants a silver bullet and are willing to pay to be fleeced by snake oil salesmen for the sake of health and wealth.

Keep up the good work...

http://wallstreetpit.com/40934-double-dip-watch-up...

Analyst said "In my question, I was more asking of a long term trade move"

yeh, that was what I was responding to Analyst. I actually like your 3xETF for daytrading purposes, as I've often lost solid opportunities in one equity I was following while hunting around for other opportunities.

I am trying to adopt the habit of trading TZA/TNA tied to support and resistance on the Russell 2000 IWM as a particular niche strategy while waiting for calls to be made by others.

Things should pick up in equities once this narrow range is broken and some vol. returns.

One particular feature of the market I anticipate in future, from the readings of Martin Armstrong, is that waterfall events like May 6th will occur again. That's the only big concern I can see moving forward, as you remark upon yourself. This of course is not a concern in a daytrading environment if stops are well defined.

HOLY COW Mtn! I woulda thought this woman was smoking something. It got me thinking, is this why all the politicians in Oz are lawyers today? What equivalent fraud is perpetrated against the people where I come from. Wish I was back in Oz, I'd have my nose in a copy of contract law right now. CANADIANS TAKE NOTE. Excerpt:

A fun thing to do if you are ever stopped by the cops, in response to, “Can I see your driver’s licence, please?” is “Why would I want one of those?” There is no answer because what legal lunatic would carry around the very thing which gets him into trouble. I think you’re safer with a 38 Special on the passenger seat; at least it is not concealed. The only one who requires a driver licence is one who is operating in commerce so, unless you are driving for hire – i.e.: driving in commerce – you are not required to have one.
Imagine when everyone begins to do what I and many others have done, the PTB will cease to function. The only thing keeping everyone from doing what I do is fear, which is caused from lack of information, time, and clarity on the concept. I intend to change this for you so that you can begin to ‘live your life’, doing what you want instead of ‘earning your living’. Too many people are working way too hard to pay for:

1. things that are already theirs because they are pre-paid and all that is required is for them to claim
them; and
2. charges which they are not required to pay because they are not liable for them in the first place.

Since I caught on to how to make contracts work for me, my best example being the confirmation of agreement to the terms and conditions of the contract I have with the Minister of Transport Canada, I decided
to have way more fun with this process. I wrote to the Minister of Justice Canada telling him I intended to grow, process, market, sell, transport, possess, and use cannabis, aka marijuana. After 30 days I sent him a confirmation of his agreement to the terms and conditions of our contract and if I ever opt to grow, sell, and smoke dope I’ll just notify the local RCMP so they know not to bother me. One of the terms of our contract is that if I get into any trouble he agrees to be culpable.

Pursuing this adventure, I wrote to the Premier of the province and also the provincial Advisor for Procedure Policy for Municipal Affairs and asked them both about ‘property tax’. Neither could prove that I am required to pay property tax. The way to stop paying any tax, never mind property tax, is to remember you are a sovereign and begin to behave like one. I intend to show the contract I have with them to those who have what I require. I’ll show people – my dentist comes to mind – how to save thousands per year in property tax and I’ll negotiate with them for whatever I need. Property taxes where I live are $5,000 a year.

I see the longs were shaken out on the DAX and CAC before prices recovered.

Aw shucks!

Every time someone comes up with a magic powder, someone else points out it is only dust.

Now we must go back to observing and deciding ;-)

"The amount of energy she chronicles having spent on evading statues and laws IS amazing."

She is being facetious in such an act dave, or so I suspect, but more to the point she is playing their game against them. As Bill Clinton pointedly remarked: "it all depends on what the meaning of 'is' is". Get enough people on board to such a game and the table is tilted to advantage, or so it would appear to me.

My eyes have been opened to the ramifications of understanding law.

ALOHA!!

Les-Yes all stuff I have posted here and written articles on especially the MONEY MONOPOLY by Charles A Lindberg.

The financial system has been turned over to the Federal Reserve Board. That board administers a finance system by authority of a purely profiteering group. That system is private, conducted for the sole purpose of obtaining the greatest possible profits from the use of other people’s money. This (Federal Reserve) Act establishes the most gigantic trust on earth. When the president signs this bill, the invisible government by the monetary power will be legalized. The people may not know it immediately but the day of reckoning is only a few years removed, the worst legislative crime of the ages
perpetrated by this banking bill. – Charles A. Lindbergh, R-MN

I mean if you cannot figure out that it is useless to keep voting for only two political parties, which form a monopoly, your entire life then it is time to turn to your children right now and tell them they have no future to look forward to other than indebtedness.

Let me just say that the only reason RON PAUL is a Republican is that he understands he would never get elected if he were a "whacky" Third Party candidate because he understands the ignorance of the US Voter and their all consuming love affair with their "captors", something I call Political Stockholm Syndrome.

Capital must protect itself in every possible way, both by combination and legislation. Debts must be collected, mortgages foreclosed as rapidly as possible. When through the process of law the common people lose their homes, they will become more docile and more easily governed through the strong arm of government applied by a central power of wealth under leading financiers. These truths are well known among our principal men who are now engaged in forming an imperialism to govern the world. By dividing the voter through the political party system we can get them to expend their energies in fighting for questions of no importance. It is thus by discreet action we can secure for ourselves that which has been so well planned and so successfully accomplished. – 1924 US Banker’s Association Magazine

When Rothschild said, "Let me issue and control a nation’s money and I care not who writes its laws", it was the beginning of the modern era’s financial, political, social, commercial, and military strife and subversion. – perfecteconomy.com

We have in this country one of the most corrupt institutions the world has ever known. I refer to the Federal Reserve Board. This institution has impoverished the people of the United States and has practically bankrupted our government. It has done this through the corrupt practices of the money
vultures who control it. A superstate controlled by international bankers and international industrialists acting together to enslave the world for their own pleasure. – Louis McFadden, D-PA

Most Americans have no real understanding of the operation of the international money lenders. The accounts of the Federal Reserve system have never been audited. It operates outside the control of Congress and manipulates the credit of the United States. – Barry Goldwater, R-AZ

I have unwittingly ruined my country. – W. Wilson, upon passage of Federal Reserve Act, 1913

- ELIMINATE THE US FED
- ELIMINATE US INCOME TAX

There is a reason that income tax became permanent the same year the US FED started operating. If you think it was coincidence then ... think again! You are owned!

I honestly can't figure out why people think they should pay any interest on loans. I have stated that numerous times here. I have said get rid of the US FED, because they are middlemen, like the Mafia skimming casino profits. Why can't each and every US citizen have their own "discount window"? But not a "discount window" from the US FED, but from the US Treasury. Who creates the wealth in America? It isn't private banks. It isn't Bernanke. It isn't even Goldman Sachs. Its WE THE PEOPLE. Banks do nothing but shuffle worthless pieces of paper they created. PAPER SHUFFLERS must be extinguished like the debt they live by.

Once again I will say to Davidfairtex and anyone else, even MISH, to quit debating INFLATION VS DEFLATION and start debating why we must put up with a lifetime of fraudulent money. Start debating ways to get rid of the US FED. The only peaceful way I know to do that is to quit supporting the two party political monopoly. Demand your candidate have the elimination of the US FED and US INCOME TAXES as their platform. The only Presidential Candidate who had those two planks in his platform was RON PAUL. And if that does not work then just quit working, leave your job and have millions of Americans stand before each and every US FED office in every District including Capital Hill and stand for an ultimatum to reinstate an honest monetary system, not based on debt. Demand ... do not ask ... to go back to the Gold Standard!

Who gives a rats ass about INFLATION, DEFLATION or even MONEY SUPPLY when money has no store of value, no long term worth? You fall right into the monetary elites trap when you continue this inane debate. Just ask any person who ever lived during the Great Depression or the Weimar Republic as it mattered not since few could afford to eat under either fraudulent monetary symptom. I was at my CPA office today and I asked him how can I ever plan to retire when I am forced to operate under a government and tax system whose basis is a debt derivative called a US Dollar? His answer was two words ... "YOU CAN'T!" He then recanted stories of clients who retired 20 years ago who now struggle to get by. Without an honest and stable monetary system, one with a long term store of value, it is hopeless to imagine you have any control over retiring, especially when retirement is some 30 or 40 years away. In the mid 1970s when I was in my early 20's I thought that if I saved $200,000 dollars then I could retire. That's why when you see old TV shows like HAWAII 5-0 you laugh now when bank robbers steal $50,000! Or criminals like WoFat hold America for ransom for $100MIL! Or the Mayor of San Francisco in the Dirty Harry movie is threatened by Scorpio to pay him $100,000. Then the Mayor turns to Harry and says, "Where's the city going to get that kind of money?" Now we regularly see game show contestants win $1MIL on Survivor. That should set off a light bulb in your head about the worthlessness of the money in your wallet. So in another 20 years we'll see game show winners getting $200MIL dollars ... Quadrillions will be like billions used to be. At what point do we say, "Enough is enough"? Only WE THE PEOPLE can say that. As long as we remain docile servants the money fraud will go on as I see the next step is already being readied ... ONE WORLD CURRENCY, the IMF SDR. Is that truly a "solution" or just more debt labeled SDR instead of USD? As long as WE THE PEOPLE allow bankers, who are the MONEY MONOPOLY, and politicians, who are the POLITICAL MONOPOLY, to control our lives we will never see an end to debt in our lifetime. We will never ever truly experience Freedom as our Founding Fathers intended. There was a reason during Andrew Jackson's Presidency that America owed no debt. What exactly did our Fathers and Brothers fight for in WW1 and WW2 and Korea and Vietnam and now Iraq and Afghanistan? Was it Freedom or Slavery? Was it Freedom or US Dollar Hegemony? Was it Freedom or Monopoly Rule? Even after all that blood was shed over the past 95 years we are still slaves to debt and to banks and to corrupt politicians whose sole power is based in corrupt money. You can never achieve Social Equity without first having Monetary Equity. Such Equity will never exist as long as central banks own our productivity. You are not Free.

I don't agree dave, this is actionable material useful to readers and citizens of the US and Canada. I say "read it, and if you really wanna press your rights, go for it!":

When Nelson A. Rockefeller was being questioned by Congress prior to his installment to a government appointment, he was asked, “How much money did you make last year?” Rockefeller answered, “$650 million.” “And how much Income Tax did you pay on that?”, they asked. “Nothing”, was the reply. If you
pay more taxes than Rockefeller does, don’t you think that you need more education?

Research into who/what is liable to ‘pay’ income tax in Canada reveals in the very first line, to what (notice I didn’t say, ‘to whom’) this applies. Needless to say, the equivalent from the Internal Revenue Code
in the USA reveals the same thing.

Income Tax Act, Canada, R.S.C. 1985, Chapter 1 (5th Supp.), updated to December 31, 2000
An Act respecting Income Taxes

SHORT TITLE
1. This Act may be cited as the income Tax Act. R.S.C. 1952, c. 148, s. 1.

PART I – INCOME TAX – DIVISION A – LIABILITY FOR TAX
Tax payable by persons resident in Canada
2. (1) An income tax shall be paid, as required by this Act, on the taxable income for each taxation year of
every person residing in Canada at any time in the year.

This says it all. You are not a ‘person’. The definition of ‘person’ in Interpretive Laws of Canada and under the 14th Amendment in the USA is: a corporation. Corporations receive ‘income’ and ‘reside at an
address’; Canada is a corporation which includes the territories, not the provinces. We are compensated with remuneration, not income; we ‘inhabit’, not reside, we have a ‘postal location’, not an address, in a province,
not Canada.

Remember that your strawman is a corporate entity created by the government. If you are the surety then you are liable for its taxes, however, if you are the secured party, the creditor to its debtor, then you have first
lien against it and the feds have zero control over it and hence no jurisdiction over you. YOU do NOT owe ‘income’ tax; besides, no one has even been able to define ‘income’.

"If you pay more taxes than Rockefeller does, don’t you think that you need more education?"

I have nothing against education, but...

When the Kennedy family sold the Chicago Merchandise Mart back in the 19070s, I found out i paid more tax than Teddy Kennedy.

I sort of figured he was able to do it that way because his daddy was far richer than mine. I'd say Rockefeller was in Teddy's league and no degree is going change that. ;-)