Bill Cara’s Blog for March 26, 2010 [See post-close report]

i know im harping on this one but i cant stress this point enough about GATA at the moment:

zero hedge has the full transcript of the email exchange b/w what they call their "deep throat" and the CFTC, it details how a trader claims manipulation by JPM and confirmation of this fact due to "conversations with other traders" and that it was a "well known fact that JPM would take down the market at certain times".

i urge anyone interested in such claims to read the actual emails in ZH's site, it shows not a whistleblower with actual inside information and actual material proof of figures conspiring to manipulate markets, no it simply shows exactly what GATA and many others have said over the years in terms of large shorts having manipulative effects on the market. yes he emailed the CFTC some 5 days before the POG fell on a payroll report... what does this prove exactly? for every time a market timer has made the right call on the movement of gold do we hail them as an insider too?

im sorry to say this is at this point in time nothing but more baseless speculation attempting to convince us that when PM's move down it is the result of manipulation, and when they move up it is the true market. luckily as the deep throat contends, most people know about it, and gold/silver have risen year over year the past 10 years, so how exactly is that manipulation if everyone knows about it and its not actually working longer term?

http://www.zerohedge.com/article/whistleblower-exp...
manipulation-scheme

Repost from yesterday, for 2nd

This is one of those academic things that is hard to comment on, because it's a such strange mix of correct and wrong observations and conclusions, combined in such manner that you can't really separate them without ruining whole construct; meanwhile construct dos have ideas that have merits...

Last sentence for instance is undoubtedly a gem (not that it's a big news for anyone who traded more than 10 times). But let's have a look at this: "First, the market provides opportunities less than 15% of the time. Second, even if you’re an unusually gifted investor, you’ll only occasionally be capable of identifying such rare opportunities." This makes little practical sense without identifying time frame. For a day trader for instance, opportunities exist every day. They may be limited to 15% of the time WITHIN that day but that, in turn, has no relation to his next conclusion about necessity to identify and utilize unusually high percentage of those in order to outperform the market.

Here is the thing his theory misses: market spends a lot of time threading water. If you made anything during that period, you have already outperformed it. Market that went from 10,800 to 10.900 and back did nothing over that period of time performance wise; it did a lot however creating opportunities wise. If a trader managed to get 10 points on the way up and 10 points on the way down, he is already ahead. When the market establishes trend, a trader stays ahead by either utilizing movement in the direction of the trend and skipping counter-trend ones, or by playing both. I.E, if market went from 10,000 to 11,000, it did so with let's say 10 upward thrusts 200 points each, and 10 downward ones 100 points each. Get 120 points out of 200 on each leg up and skip legs down - and you will have already outperformed the market. Alternatively, get just 80 out of 200 on the way up and 40 out of 100 on the down - and you again will have outperformed the market - EVEN THOUGH YOU UNDER-PERFORM IT IN EACH DIRECTION! Such is a power of flexibility.

But one must be a trader, not pure academic, in order to get these practical things.

"luckily as the deep throat contends, most people know about it, and gold/silver have risen year over year the past 10 years, so how exactly is that manipulation if everyone knows about it and its not actually working longer term?"

Perhaps you should have saved this remark for next week's April Fool's Day! Just because the NY gold cartel allows gold to increase in value YOY does not negate the fact that the gold price is suppressed on a daily if not hourly basis.

Let us just say that I rob you everyday in broad daylight but allow you to keep just enough money for you and your family to survive and accumulate an extra $1 in savings YOY. According to your logic, this is not a crime scene because everyone knows about it and your wealth is still rising YOY.

The only thing more despicable than this is that the police force, i.e. the CFTC, watches me rob you everyday and turns a blind eye to it.

Cheers

At this rate, all you really have to do is cut and paste your replies to my comments, and the book is half done. You can insert my name in small print as co-author- it really doesn't matter, as long as an appropriate percentage of royalties is forwarded ;)

Actually, I am doing just the opposite: copying from the written parts to create replies (very big grin)

fireworks,

your comparison was at best an incomplete metaphor.

implicit to any sort of manipulation is the idea that something is being moved in a way it wouldnt normally go at a given point in time.

because one can long or short the market, and because the allegations of manipulation were both well known and long standing, and because metals have on balance risen the past decade, i fail to see exactly how unusual price action after the release of the payrolls report constitutes manipulation by 1 specific party.

look at the price action of the PM's after each payroll report for the past few years and you will not see much of a patten.

gold pundits have been calling for a collapse of the COMEX for over a year, with each pivotal month approaching the "breaking point" or where the US treasury will default. the Jim Willies, and that pointless LEAP 2010 whatever they are who's predictions for the past few years have been by and large wrong on this account.

one day who knows these events may come to fruition, and they will surely be the first to remind us how they called it. too bad you would have lost the farm trying to follow their bets over the years.

once again it comes back to a very basic idea:

a whistle blower has inside information of a pivotal nature, including names and or direct evidence of concerted fraud. the person in GATA's case was not new, nor did they provide any direct evidence, they simply pointed to market action with unsubstantiated claims of manipulation.

by evidence we mean just that: evidence. its simple and has yet to be given to us.

GATA, bless your hearts for your efforts and you may be proven right one day, but the approach and the postulates continue to be nothing more than unsupported conjecture made all the more uncredible by your false claims to hard evidence.

In the Murphy testimony, he said there were signals that the traders knew that JP Morgan would send and then all the traders would pile on with JPM driving the metal down.

Anyone know what the "signal" that traders know are?

PS: My goal is to make money. I know I don't, won't and can't control the market, but if I knew the signals, maybe it would improve my odds.

My guess its its the big 20 ton dump routine at or after what looks like a top? But to be honest, I'm pretty clueless with "hints" that others pick up on. You people can sit here and argue paragraph after paragraph, so eloquently all you want, but it doesn't make a bit of difference if you lose all your money because they out manipulated you.

"- who ever heard of large market entity making their intentions known to anyone outside of those that must know it in order to execute it?"

Case in point: "...Like the legendary Babe Ruth brazenly standing at home plate and pointing his bat to the exact spot on the outfield fence over which he intended to launch the pitched baseball, the Bank of England (BoE) also “called the wall” prior to the actual gold bombing. As in the past, this latest gold bombing was scheduled in advance and crafty public relations folk ensured that there would be maximum knowledge of the aggressive raid about to be launched. Timeless principles of information warfare handed down from the legendary Chinese strategist Sun Tsu were fully employed pre-raid to create the maximum amount of confusion and fear for the BoE’s old enemy, the free gold market."

http://www.zealllc.com/2001/boebomb.htm

I see the signals and gold/silver will plunge in about 8 minutes at the London fix :)

red-headed step child

SPX working on a small H&S with a target around 1150.

http://tinyurl.com/ygop6lu

Vad,

He said it was based on a signal or signals from JPM.

I'm just trying to guess what the signals might be.

Are you telling me that you don't think JPM was or is manipulating the gold price, and that you think they aren't sending some kind of signal to the traders to get them to help it work?

Maybe the answer is in the the Maguire tapes or text...

Meanwhile, while diverted here I've missed a big opportunity. I had a huge position in DGP bought on this am's panic and sold way too early again. I hate my life when I keep making the same mistakes like that. I don't even have a clue why it is rising. I feel totally in the dark on an ongoing basis.

Perhaps the most salient point in Bill's comment above:

"In fact, Goldman Sachs, being one of the primary agents of central banks, like JP Morgan and Barclays, loses one day in 100, which, in a fair market, is impossible"

Proof in absence of fact that the market is cleverly manipulated. And as Bill Murphy said, to the effect, the gold traders were selling short, naked short !

Bill, and everyone following this board,

thank you for encouraging this line of discussion, and others of similar notoriety.

the case for gold is made stronger by debate and honest discourse, and exposing our own weaknesses before our opponents do.

Define "other traders" then. Original item was not implying that they were a part of manipulating entity, but rather outside party benefiting from manipulation. Thus my remark about this making no sense applies - they would be competitors, and what manipulator would want to signal intention to them enabling them to frontrun manipulator? And, if they are part of conspiracy, they are not really "other traders", are they.

http://finviz.com./

"Nice recovery in the VIX..."

http://tinyurl.com/yl3j6jm

H&S neckline and all fib fans on previous chart pierced.
To know next direction, monitor PPT orders for coffee and doughnuts.

Not yet, but closer to it than they've been in a year. Not by technicals, we've seen bigger selling at various points... but there is some ferocious feel to the selling bouts over last couple days that I haven't seen in quite a while.

Okun hokum...

The conclusions from this very detailed, technically oriented report presents some very difficult problems for me.

First it assumes the government data is valid. I don't trust any government data of any kind. Things like CPI housing reported as "owner equivalent rent", the "birth/death index", BLS definition of what is a job, and seasonal adjustments are some specifics which are used to work visual miracles.

Another is a problem of job quality. Several states are finally attacking the pension problem by reducing benefits for new employees. While I see this as long over due it will put state employees in the same boat as so many others who formerly had higher paying jobs with better benefits.

My conclusion therefore is that while the government can report any employment growth number they choose, the employees will be receiving less than the historical norm and the "economic recovery" will not be the same quality as in the past.

Your aversion to shorting is,IMO, still valid however because the market will likely react to the spin — not the reality.

Bought a few $16 April calls at $1.05 on GCI. Earnings are due out 5 days before options expiration and I think they easily beat estimates. Short interest is over 15% on this one...

Does this ( ABIO ) remind you of another point in time... ?.. !!! ( Of course, Time is relevant in these warps !! ).

I know just the person to help with the computations.... http://www.youtube.com/watch?v=jTmXHvGZiSY

His testimony:

http://www.youtube.com/watch?v=9wIMpe9SjfQ

Talks about Deep Throat to CFTC man with strange hair here:

http://www.youtube.com/watch?v=e9bU0r6JP4s

In February, new ' Notices of Default ' outpaced home sales by 10%....hmmmm

I can't trade/invest on my opinions of whether reports are bogus, only what i see.

And cutting pension benefits is long overdue. It's completely unsustainable. Most people in the "private" markets have lost jobs, had pay freezes or cuts, and had their 401k matches dropped so people with public jobs should expect the same. And that's beside the fact that these pensions are absolutely ridiculous. There are some people in government in my area in southern CA that are getting pensions of over $200k per year. That's disgusting.

Well, Kaimu do you sell now or hold on for the 'wild ride'? LYM@0.23 +35.29% presently.

Is there a Copper ETF?

:Chrono-synclastic infundibulum. A "Sirens of Titan" reference."

Good call bobbyo. One of my all time favorites - on the same shelf with 100 Years of Solitude and Master and Margarita.

deleted

JJC, DBB correct, and a few other variants, long and short, 1X or 2X. You can track most commodity ETFs live at http://nexalogic.com/commodity.html Hope it helps.

this year, and average maturity is four years....

Let's get the scorecard up to date. A couple hundred wallstreet dudes lose trillions on 'bad bets' and get bailed out with $two trillion. Home owners who don't understand the complexities of percents and interest rates get forgiveness on their half million dollar condo that is some how only worth 150,000 grand. People that have unpayable credit card debt because they have to watch 60" plasma screens while wearing their $75 t-shirts and $300 blue jeans from Ab + Fitch get forgiven for their "life style' choices. These people get a pass because they make America great. Where would America be if we didn't have easily manipulated, brain dead consumers or greedy sell their souls to the devil financial guys. We would have a real depression.

We all know who the real culprits are in this down turn. The one's that are driving the country in the ground. Public Service Pensioners. They simply live too long. Having them live is certainly unsustainable. Basically getting paid because they WORKED for 30 years is a bad deal for America. Only one solution to save America. We should take out all those old policemen,firemen and teachers and put a bullet in their head.
Bob

bobbyo, I understand your position but have you looked at the price of lead? Perhaps we do like the Chinese and bill the family for the bullet.

Pensions will not be paid, at least not in the same purchasing power Ameriskansky assignants. Pieces of money that we exchange each day are what I call FERNS. Federal reserve notes from a private bank. This is the accepted specie......today. It's kinda like my Social Security Number. It was assigned to me as a sort of 'work' permit. I didn't choose that number. Anyone that wants to use my assigned number is welcome to it. For a few FERNS, i'll sell it! I've always liked selling what is not mine..

Back to pensions. The one hundred and thirty year Bismarckian revolution of rising expectations has hit a wall. There are certainly screwed up systems and values but they will be altered as sure as taxes will increase and Bro Ben will print mullah. I know a guy (friend) with a 20 year military, 15 year teaching pension with Social Security benefits. We joke that he is a triple dipper. He makes more in retirement than his annual at any one of his previous jobs PLUS he substitutes twice a week for the same remuneration as if he was full time. We know there are tax penalities but HE knows that the system is corrupt, played it and laughs all the way to the bank...and he will agree that it is an untennable system.

I don't know how long it will take but I would guess at least 10 years and we will get a really PO'ed electerat (sp) that may throw the deadweight balast off the boat. But in the long long run, the hoi ploi doesn't want to work and they think they can vote themselves benefits... Democracy NEVER works in the long run. We need a benevolent Czar.

http://ronsen.blogspot.com/2010/03/saturday-mornin...

The confluence of charts, the Cara RSI system, and the re-funding action reflected by this week's bond auctions does speak to enhanced risk...

I,
Always good advice. Guess I have been bitter ever since my beloved Wildcats did the choke of the century. I thought you were not suppose to have home games in the Ncaa tournament? Anyway adding insult to injury the Illini go and lose to a over-hyped and under talented North Carolina team.Thinking about Roy crying still turns my stomach. Unforgivable really.

Ross, SO your friend basically did 35 years of service for his country and community where his pension was committed to him before he signed up. That was part of the package to get him to sign up. I guess if our commitments are too costly its ok to renege on them. Right? The Govt broke, so we got to unplug Granny's Weather Channel. No more Sunday dinners at Marie Callenders. Its Alpo super chunky on a hot plate. My previous solution would be more dignified even with these Obama inflated prices for ammo.
Bob

Les , A good post ,I believe you are right about the value of practice. But especially your thoughts on GREED and PATIENCE . Bob.

Does that mean we will reach the moon first before we reverse since BEARS are no where to find these days?? So far the charts keep going up and up? just curious how far up this 13 months rally will go?? See XLF chart below as an example, hummmm

http://chartstuff.webs.com/likethis.htm

Les I don't see the set up on the 2nd and fourth circle. I see a DBI on one and three.
Mr. Sardonic

Idiotic, IMO.

The FDIC is the ONLY good thing about the banking/finance system. All the failures should have been ALLOWED to fail, and the FDIC should have protected DEPOSITORS *ONLY*.

Instead we have "too big to fail", "moral hazard", and "the debt bubble from hell", all out the WAZOO.

It will take 200 years, if lucky, to recover from the debt left in its wake.

NYUGrad,

"Sources familiar with the plan" are pumping the PR value of this announcment. The guidelines are pretty hard to meet. Expect few to qualify.

Housing Wire story: http://tinyurl.com/ydov2yj

MoKat,
Perhaps "watch out below" starts the day the Fed stops buying Mortgage Backed Securities (next week). Coming soon to an auction block near you.

ALOHA!!

Wow, Bill ... I guess the moral is be careful when you testify against JPM!!

I know I am "jumping" to conclusions and the whole "innocent until proven guilty" thing and all, but what are the odds this guy in jail "accidentally" gets "shanked" by another inmate? I was wondering when Madoff will get shanked by an angry investor with enough cash left over to pay an unscrupulous inmate. I guess so far there aren't any more unscrupulous inmates than Bernie!

One thing I came away with during my many years doing prison projects as a contractor is that these guys "inside" have tons of time on their hands! Kind of like the guys in the US Congress and the US FED!

ALOHA!!

Hey Jack ...

Well now that PIMCO is moving into "stock funds" they want to scare us out of "US fixed income"!!! HA!!! Pretty soon we'll all be scared right into the "poor house" which is where Wall Street, the US Congress and the US FED want us. Actions speak louder than words in my book!

Bill Gross Warning May Catch Bond Investors Off-Guard
March 26, 2010 Bloomberg

Bill Gross’s warning that the almost three-decade rally in fixed-income has run its course may catch individual investors off guard after they poured $89 billion into bond funds this year.

The inflows through yesterday are running almost five times higher than deposits during the first three months of 2009, according to Brad Durham, co-founder of Emerging Portfolio Fund Research Inc., a Boston-based firm that tracks investor flows worldwide into mutual funds and exchange-traded funds. Investors reeling from losses during the financial crisis poured record amounts into fixed-income funds last year, missing the biggest stock market rally since the 1930s.

Pacific Investment Management Co.’s Gross, manager of the world’s biggest bond fund, said yesterday in an interview with Tom Keene on Bloomberg Radio that “bonds have seen their best days.” Pimco, which announced in December that it would offer stock funds, is advising investors to buy the debt of countries such as Germany and Canada that have low deficits and higher- yielding corporate securities.(more)

LINK: http://tinyurl.com/ycrqqo7

A very good chart that puts the market in perspective from our friends at "Slope of Hope."
http://www.slopeofhope.com/

Mr Sardonic, at the risk of being beaten around the head with a scalping course book on Monday, I was taking a few cents out of the trend that was developing in PMI, in tune with SPY.

PMI was on my screen from the opening on the 25th, and its failure to follow SPY higher after 11am led me to conclude it was a short. What is difficult to describe to you is the way the "tape" changes, as my clue to entry. T&S speeds up, so does level 2 and its reflected in this case in those consistent red candle sticks that I was riding on the way down. Like the way 2nd ave talks about the train leaving the station, I start to get this notion of when the stock is leaving and moving purposefully somewhere.

For example, on the 4th circle I missed the setup we both would recognise at around 11:30 on the 26th, when PMI broke .54 and shot upwards to resistance at 4.75. Figuring this move to be unsustainable given my observations of PMI and the market tanking nicely after 12:30pm, I simply played the reversal - short low and cover lower.

Those setups you were looking for are consistent winners for me now on paper and will ensure a profitable return to trading this year - those being Vad's setups. There's also a talented crew working with Vad and their strategies have opened my eyes to euphoric/capitulation reversals, momentum trading (practiced with much guidance from Vad - see ABIO on 1 min. chart Friday for an example of momo) and large share scalping. Creating my own style from these various strategies will no doubt be a multi-year learning experience.

Working with a bunch of loonies that give Monty Python a run for their money makes it all the more fun.

cheers

http://www.nytimes.com/2010/03/28/business/28stra....

123

http://ronsen.blogspot.com/2010/03/sunday-morning-...

Is Ben Bernanke the Delmon Young of central banking?

Au contraire Ross, it was not General George who colluded with the Soviets but the Allied High Command. Thus, the good general had to be silenced because he knew too much, was highly respected, outspoken, and was on the verge of going home to the U.S. Keep in mind too that Ike had major political ambitions and a few words from General George would have ended that campaign rather quickly. Also, books are sometimes not much worse than the official history books or media propaganda. Just have a gander at any government statistics, e.g. BLS job report, for some real fiction. Additionally, I would definitely consider one of Bill's financial books much more dependable than any communication from GS or JPM.

Cheers

A few problems with that article. THe Day trader is against impossible odds bent to the article is a theme rewritten many times. Only 1% of daytraders can be successful someone says. Only 20% of active traders make money another study contends. ECT ECT. Basically the article whispers. You can't do it, the odds are too high. Then of coarse the ever present robo trader. With its smart algorithms. In the example given. It was the robo trader that took him out of his stop. Well dude, maybe your stop was not loose enough? I compare Day trading to gambling. You could write the same piece about gambling. "Only 1% of the people who gamble can make a living at it. The house has all the odds. You can't go against the big boys ect.ect." All probably true. But there is a much higher success rate if you just take serious professional gamblers. One with risk control, a disciplined system and the ability of keeping the task a complete bore. Like day trading the success rate is significantly higher.
Bob

"The prospect of a strengthening U.S. economy (?) and rising interest rates makes an “argument to not own as many” bonds, Gross said in the interview."

This is Gross's reasoning for his change of attitude regarding bonds.

I know some here see an improving economy, but I can't see any genuine indications of improvement.
• Too many homes for sale and too many under water.
• Too many people unemployed and many more underemployed.
• Too many cities and states with budget shortfalls
• Too much foreign competition on too many product lines.
• Too many people still too scared to borrow even if they could qualify.

I would welcome anyone (especially Gross) to change my mind on the state of the US economy — or the entire western economy for that matter.

My measure is enough jobs for three a month period to more than equal the newly added to the workforce. This would be mean 300,000 or 400,000 new, well paying jobs each month! Forget seasonal adjustments and temp hiring — real jobs only.

FD: Approx. 40% in bonds and bond funds until a sustained 4% 10-yr.

Bill - You said "Btw, it was two years ago this month that the 5-year yield ($FVX) was about to soar in just three months from 2.16% to an economy-stopping, equity market crashing 3.80%. Fast forward to the low of 2.00% four months ago to 2.59% this week, on the way to maybe 3.5% or higher in the next few months. Bondholders first and shareholders next will choke. The latter will cave in as interest rates reach a certain cycle high level. Nobody knows at this point how high that level will be, but I suspect it may be about 3.5% yield on the 5-year US Treasury paper."

The way I see it though, it looks like the 5 year is reactionary to the equity markets, plunging when the equity markets plunge and rising when the equity markets rise. That is, if I saw the 5 year rising I would assume the equity market would do the same. Do you disagree?

If PIMCO (owned by a Germany's Allianz, don't forget) is recommending a move to equities and "stable" sovereign debt, it may be time to short the U.S. debt. Bill Gross would know that Bernanke is finished with the QE as pledged at the end of March. PIMCO, with over $1 Trillion under management, is saying something here and it dovetails with WIR #13 commentary that U.S. debt may have had it as a safe haven.

Thoughts on TBT as a hedge on gold going down with an equity crash as interest rates climb to attract dollars appreciated.

Tomorrow I'm going to move my money in my long term investing account into our Emerging Markets Index Fund, 18% of which is allocated to China.

Bobbyo,

Perhaps the defect is on the other side of the issue. Nearly all forecasts and expectations are built on fairly recent past patterns.

The attached is from Big Charts. Note the over 50% short interest.