Bill Cara’s Blog for March 2, 2010 [See post-close report]

The STOCK TRADERS ALMANAC says early March tends to drive prices up and "Beware the ides of March" is good advice for traders. Stock prices have a tendency to decline, some times steeply, around mid March. The last 4 days of the month have had declines 11 or the last 14 years.

March triple witching week has, in recent years, tended to be bullish but the week after has been down for 14 of the last 18 years.

This does a beautiful job of summarizing what Bill has been saying about these crooks for years...

http://www.doonesbury.com/strip/dailydose/index.ht...

SNDK - upgraded at UBS from Sell to Neutral. $34 price target. Estimates also raised, as pricing should improve along with handset storage growth.

PUKe as a capitulation play. Is that some kind of joke? (:
Bob

That's a funny one.

SDS:
Put on a big position in SDS as a trade at $34.00 average (includes last nights after hours trade). 1,120 was and is a big resistance point for the S&P...I'll remove the trade if we get up to the high 1,120's.

GME:
Sold GME at a small loss at $17.6. Taking too much time for this one and I'm losing my patience.

Sold at $6.95 that I bought two days ago. The RSI 7 on this flipped a switch and hit 70 so it was a signal to me to sell.

Look at the charts GLD:FXB and GLD:FXE. Now that's a flight to safety. That's why gold is going up these days in USD terms even though the euro and the pound are hitting new lows. Folks in europe are buying, I think. I know I've said this before, but that GLD breakout in euros and especially pounds looks so nice!

It looks very dangerous to me since the RSI 7 day for GLD:FXE is 76 and GLD:FXB is 85. Both FXE/FXB max pain is sitting above current prices. And GLD's is below.

Putting on a FXB buy limit at 148.60 (update, now long at 148.60)

JMO. Do your own homework.

trailing a 20 cent sell stop which is 1/3 of 10 day ATR.

Need to raise some cash by week's end. Expecting to open some short positions by Friday.

long at 14.50. One cancels other order. Sell stop 13.15. Sell limit 20.

Do your own homework.

BTM:
Brazil Telecom. Looks like it's forming a nice bottom. It's down 40% from highs in November. FD: Long at $20.77.

MRH:
They just bought back about 8% of their shares outstanding from Wilbur Ross and the stock is down about $0.50 from the announcement. FD: Long $17.60.

A few market guru (including Marc Faber) see ST euro bounce to 1.4. Looks like Bill in that camp as well. UUP crossed it's daily MACD and there are lots of negative divergences since early Feb. The opposite for FXE. PM look toppy on daily RSI, but I'm not selling and waiting for dollar drop.

BTW, some TA people see bullish flag formation on GLD (in longer term charts). Anyone agrees?

Recent price action in the SPX, DJIA, TRAN, and COMPX have all been impressive. What's lacking is volume. Volume shows us the degree of conviction and strength in a move. This most recent rally has largely been devoid of significant volume to the upside.

I remain suspect of the validity of this move to the top of the range until volume comes in size and confirms.

Typically, volume precedes price action, and we simply haven't seen it develop in the major indices.

KC - I shorted IWM back in late October after seeing underperformance in that index relative to others. However, after I closed it I started thinking about the effect that a potentially rising dollar (at that time it was falling) would have on smaller companies. I came to the conclusion that if the dollar was rising, companies with international exposure would perform worse relative to companies with operations predominantly in the U.S. So in an environment where the dollar is rising, I think IWM will outperform others.

Just thoughts...

ok, i'm probably crazy but I decided to buy a little AIG only for a trade at $24.90. I'm thinking their ALICO subsidiary may trigger a bidding war after AIA was purchased by PUK for $35.5 Billion.

no conviction on this...closing it out at a small profit. I'm closing out all other long positions except BTM and bought a few $115 SPY puts at $3.39 to protect it somewhat. Unless if a big opportunity comes up, I'm going to sit on the sidelines and wait out these moves this week, which should be quite a bit. The jobs situation is going to make the ride really bumpy.

I don't think my novice TA knowledge will help anyone. Prices are political these days.

I have only been using weekly/monthly time frames lately. Anything shorter seems less reliable in painting a clear picture. the fog of political & social economic war is overtaking any short term tech analysis, in my opinion.

Bill was prescient again. No word from Dr Cosa though - wonder what his thoughts are.
FD long lots.

My own opinion or "estimate" of Dr Cosa is not that he is bearish on the precious metals. He only tries to straighten up all that mis-information that is out there for us. I actually agree with a lot of his arguments, but that does not make me a PM hater. I have my own share of bullion.

I once wrote that gold bugs are a special kind of freaks believing that everybody is going to be poor as only they will get rich and boy was I criticized for that. Gold is religious for many people. They should print warning labels on bullion!

Forgive me Dr. if I wrote something that might have offended you.

Bill,

Good luck on the ETF mission! I'd bet you will prevail.

Regarding the Zack's opinion in your daily comment, they said:

"While we are not out of the woods yet in terms of the credit cycle, the worst may be behind us. A key risk factor at this stage remains the timeline for the eventual recovery in asset quality.

We may be at the bottom of this credit cycle, as we have been claiming, but it may be a while before we see clear evidence of improvement. The timeline for the eventual recovery is, therefore, the key risk factor, in our view. But as we have argued in the past, the time to invest in banking stocks is when non-performing assets peak, as is most likely the case right now."

The "recovery of asset quality" is a helluva long way off.. IMO.

And "non-performing assets are peaking?" Please..... FASB still exists, a huge wave of new mortgage failures are on the horizon, huge questionable positions in CDS's and derivatives lurk, SIV's and dark pools, sovereign debt in question, commercial real estate non performing loans still carried at full value, state and muni debt failing. Maybe we have plateaued at best with another downleg ahead. The global debt bomb is still out there and ticking.

IMO, only when all the bad debt is acknowledged and cleansed from the system and we see real gains in income after inflation, will an honest recovery be possible. With the global labor market the way it is, the odds for real gains in income for the US worker are slim. Plus our demographics are a detriment, much of our production facilities have been shipped to foreign shores and we have a government run amok, seemingly bent on destroying our credit and monetary system.

Perhaps someday we may see asset recovery in nominal terms.... where your house is selling for 40% more than the current market price but the dollar will buy 40% less. Perhaps the Dow will be 20,000 but what will it buy?

OK I couldn't stay away. Bought GLL at $9.43. Gold looks overbought to me.

Is this the peaking of non performing assets?

FDIC seen stepping up sales of failed bank assets
2:04pm EST
By Nancy Leinfuss
NEW YORK (Reuters) - The U.S. Federal Deposit Insurance Corp is expected to offer $3.8 billion of guaranteed securitizations backed by the residential mortgage assets of failed banks, market sources said on Tuesday.
The deals are expected to come in three separate transactions with Barclays Capital acting as sole manager for the sales, market sources said.
The FDIC could not immediately be reached for comment.
Its first $1.81 billion two part transaction, is expected to price later this week. Two additional offerings, including a $1.37 billion three-part sale and a $668 million one-tranche deal, are seen pricing in the coming weeks, after investor road shows were held for all three, market sources said.
"The FDIC has all this paper that they inherited from failed banks and they need to move it. An easy way of doing it is to put it into a security and slap the full faith and credit of the government on it and people will buy it," said Dan Castro, chief risk officer at Huxley Capital Management.
Still, while the sales move the assets off the FDIC's books it does not move the economic risks.
"The sales move the funding of the assets from the government to the investors which is good, though potential liability of losses stays with the FDIC," said Castro.
The asset sales, which are guaranteed by the FDIC, are closely tied to the meltdown in the U.S. mortgage market and are seen as a positive step toward restoring investor confidence in the segment.
In a move reminiscent of the Resolution Trust Corp, the government agency charged with insuring deposits and thrifts is employing securitization as a financial tool to help mop up the assets.
In the early 1990s, the federal government employed a similar method to dispose of the assets of failed banks and thrifts. During the savings and loan crisis, it created a new entity called the Resolution Trust Corporation, or RTC, whose mission was to dispose of assets, largely through securitization.
The move has been anticipated by investors and dealers for months as the FDIC piles up loans from banks failing at an alarming rate. It could also awaken a market that has been largely frozen for two years, except for government-sponsored programs of Fannie Mae and Freddie Mac.

Why? The recovery is under way no?

http://bit.ly/beoNMt

Guess which HB&B will be the new owner?? 1 guess

im honored that people are wondering what i am thinking,

may i remind all of you that i am a failed trader, down several percentage points over the past 5 years on my ill-advised gold trading.

i am a fake doctor of the highest order and an awful speculator, my advice to you is not to listen to a word i say other than for entertainment purposes only.

dispelling the myths of gold-buggery is just one piece of the puzzle. if that makes anyone any money is a different story.

note my posts the last week were off the mark in every which way. other than my core position i am mostly in cash wondering if the lack of volume is just a blip or a sign that this little spike is at best a burp.

im not seeing the kind of volume in the JR's as a group that one would expect during a serious run up. im also not seeing the kind of technical weakness one would expect in the USD. the problems of the euro are both situational and structural. the shackles of history for the continent of Europe are not so easily removed. i dont like the euro as a concept let alone a currency system, it puts the usual superpowers in charge yet again.

im sick of hearing about what Germany thinks, or plans to do, or not to do. as if somehow they have done something so fabulous that france and italy havent. heres a hint: you can save a lot of money from not having a standing army for a few decades while the allied forces rebuild your economy. same for japan.

so yes, the germans are the big dogs once again in europe, and as history has taught us in no uncertain terms, they will fuck it up royally in favour of extremist nationalism. though this plays over a much longer period. our mistake is always thinking that americans are somehow special in their extraordinary stupidity and excess, that somehow human beings in other nations are special and smarter because they are from eurpoe or asia. dont believe the hype. people are people.

but thats another story.

back to gold:

a great move today from a technical standpoint, with more volume id be convinced. looking back at the charts i wonder though if we do the past dances where gold would rise close to the past peak then consolidate for severla quarters before a run higher.

predictions of gold price targets by any brokerage or big bank are useless and unfounded piece of propagada. why we even report them or discuss them are beyond me. if these men really could accurately guess where gold was going they would be rich. instead their funds can barely beat the S&P.

no wonder people turn to false profits and sages who never fullfill their promises, we need soothsayers...

ultimately what i think is of no value because i am at best an epic gold trading failure. i am as we speak staring out my window onto the masses of concrete and glass that comprise toronto's financial district, it is at best an alter in a church of lies.

ci vediamo,

even unskilled factory workers age getting signing bonuses, and wages have risen 20% in the industrial heartland. These increases could ( should ) lead to higher commodity prices... ( in time, this, most likely, will lead to inflation ).. Is this an opportunity for some of those unsung equities that the quants have not invaded, yet ? Could be.....

absolutely, and that is where the ' funding ' drama starts.... Bill Fleckenstein wrote last night about the onset of the funding problems now starting in on the Brit's, and America will experience the same, at some point in time... The money printing is the only thing keeping it at bay, but the tipping point Will be reached.. I have always like China, as its market is now trading above its 200 day moving average... I will take every opportunity to scale into new and existing positions...

Mackinaw -

His name is Martin Armstrong and you can call me Dr. Strangelove (I just uplinked my picture under my profile to help you remember). Here's a link to a recent New Yorker article about Mr. Armstrong (hint: he's a player in the global scope of things): http://www.martinarmstrong.org/files/The-New-Yorke...

Armstrong's prison essays are nicely organized here:
http://www.martinarmstrong.org/economic_projection...

I've come to realize that those with formal educations in business don't question the legitimacy of cycle theory. It's as real as the wave patterns in your brain. I doubted Armstrong when I heard he was in jail but have since altered my opinion and find his historic observations far more useful in fomenting investment strategies than, say, Soros and Buffett talking their books.

In regards to your name, did you know the United States surrendered Fort Mackinaw to the Brits after firing only a single shot during the War of 1812?

Cheers.

http://www.rubbernet.com.sg/baltic_indices.htm

Define "cleansed debt". I don't think the effect of so many people claiming bankruptcy (foreclosures have not peaked yet) will be felt for a while by unsecured creditors...until they see what they were forced to write off. While the debt noose tightens --many slip it!

Interesting observation from http://ewtrendsandcharts.blogspot.com/ (See attached chart) re: volume and price action.

KC

Dr. S- Yes, you look exactly as I imagined you would.

Difficult to understand and/or filter all the markets at this point.

Tax receipts across the board seem to be shrinking. Federal, State, and Local tax revenues are shrinking. Tsy and Fed creating $$. Outlays keep rising.

I am very short financials and S&P. I am long physical gold and gold miners. I am short bonds (futures).

Everyone I talk to locally - people across the board - hard times and lack of funds for wants - not needs.

Just seems to me that the truth/reality will ultimately rise to the top.

TOG

Mackinaw reminded me to have another look through Armstrong's work - this time I chose "The Sum of All Fears":

http://www.martinarmstrong.org/economic_projection...

This paper is divided into two parts. The first part goes over my head a little, but asserts a cyclical period of 8.6 (in various time frames I think) being central to market cycles. The author points out major highs in the US market (I believe he is referring to US markets) are slated for 2012 and 2016. Whilst I have no opinion of this assertion and will simply continue to play the setups I see, it would indeed be most ironic and the biggest contrarian play of all - that when the majority see doom and gloom market prices continue to rise for several more years.

If I'm understanding the logic of Armstrong's model and reasoning, it is that his model's prediction of a collapse in housing, which he has been asserting for at least a decade was to come in 2007, heralds what he refers to in the 2nd half of the paper as the end of immovable asset classes. He is quite adamant that this does not mean the end of the market.

Incidentally Mackinaw, Armstrong asserts that Goldman Sachs No.1 lawyer, whilst in the position of SEC prosecutor, stitched him up on fraudulent charges in order to eliminate his research and took all his material, which disappeared. Given this prosecutor's employment by GS following this case, it's not difficult to imagine where his research went and why GS came out looking like the "smartest guys in the room" following the crash in housing.

Armstrong's argument for the end of "immovable" asset classes like housing occurs during time of declining confidence in government. Thus as he illustrates and we've all witnessed by now, humungous prices are being paid for "movable" asset classes like rare wines, coins, art and of course gold. He relates an historical example from the Roman period.

Worth a read.

I imagine someone here has caught wind of it, but for those who haven't:

http://www.sprottphysicalgoldtrust.com/Home/defaul...

Jesse's cafe posing some questions in relation to Sprott's (IPO was Feb 26) and recent gold spot activity:

http://jessescrossroadscafe.blogspot.com/2010/03/i...

He discloses himself as a net buyer in the new trust awaiting further info, so his questions have some relevance to those interested in such an investment.

DYODD and FWIW