Bill Cara's Blog for Jan 3, 2011 [See post-close report]

Good morning.

7-9 Billion Dollar POMO Injection Scheduled Today.

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10:00 - Construction Spending
10:00 - ISM Index

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AAPL - PT Lifted from $370 to $400 @ ISI Group. Buy

BA - Boeing upgraded to Overweight from Neutral at JP Morgan citing an improving outlook for the company's commercial aircraft business. The firm raised its price target for shares to $83 from $80.

BCR - C.R. Bard downgraded to Neutral from Overweight at JP Morgan.

INTC - Intel downgraded to Neutral from Overweight at Piper Jaffray on concerns the company is missing the ultramobile market wave and its margins will peak in 2010. The firm lowered its price target for shares to $21.50 from $25.

LLTC - LLTC - Linear Technology downgraded to Neutral from Buy at Goldman based on valuation. Price target remains $35.

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"Sometimes opportunity knocks, but most of the time it sneaks up and then quietly steals away." - Doug Larson

2nd,

"Examining the past two years, our main challenge has been uncertainty about whether or not the recent downturn should be treated as a standard post-war economic cycle." — John P. Hussman

I can relate to his predicament as outlined here, but think I have a simple answer — Only to the issue, not to the investing choices. (Traders probably know this instinctively.)

I would say that this is NOT a "standard post-war economic cycle" nor standard anytime cycle. I believe we are in a truly "different this time" period. Globalization applies to all.

However, if most people believe it is a "standard post-war economic cycle" the stock market can (has been) perform along those belief lines.

This is time to say the usual. "Past performance is no guaranty of future success" ;-)

Have a good 2011!

Thank you Bill; after 4 hours I finally made it to the end and with some sections marked I have to go back for further review. I wish I had caugut your earlier message on Kroger but your point was well taken on the company and in time I may get back in (I've sold put on KR before). But espically your comments about picking 6 to 8 stocks (AAPL MSFT GOOG QCOM RIMM CSCO INTC ORCL GILD EBAY or there about) and watch them like a hawk - that's probably better then watching the general market - I think I get the picture.
best regards,
Earl

BA - target, estimate lowered at Barclays. BA price target sunk to $80 from $87. Still attractive, even with another 787 slip, Barclays said. 2010 and 2011 EPS estimates lowered to $4.10 and $4.50, respectively. Maintain Overweight rating.

BCR - rated new Equal-weight at Morgan Stanley. Stock already trades at a premium multiple.

INTC - Downgraded at Piper to Neutral. Company is not leveraged to the wave of growth in ultramobile devices.

2nd, and you can also sell covered calls on top of it. CSCO Feb. 21s will add another $0.60 to your income, either lowering your cost by $0.60, or ensuring an exit a $21.60. Then repeat the following month(s), ad infinitum.

"Hello, you've reached the Toronto Stock Exchange. Sorry we can't come to the phone right now, but we're not a serious international financial exchange, so we're closed for the day. If you would like to trade stocks today, please contact another country's exchange or register as a financial institution. Thanks for calling and we hope tomorrow morning's price adjustments treat you well."

"Bank of America said it agreed to pay Fannie Mae and Freddie Mac $2.8 billion to settle claims that it sold the mortgage finance companies bad home loans."

thats quite an ROI for them. Every home owner should remember these type of settlements when the media and or banks give the little people a hard time on foreclosure. offer pennies on the dollar and send them jingle mail.

The very handy RSI Calculator on top of the page seems broken again. Tried several times since earlier today but it gets no results

Betting on a ST ebb in the wave of bullish sentiment.

Schizophrenia has set in at BAC......pull the curtains!

http://www.nytimes.com/2011/01/03/business/03wikil...

3.5% in 2 sessions and it looks like momentum is waning. Will watch for the hand being played into the closing.

Les - I also like the hourly time frame for short term holds, and they work well with the ultra ETFs. I like using EMA crossovers, as you don`t get whipsawed as much. I prefer using an EMA 7 and EMA 15, I think Bill sometimes uses EMA 8 and 20, but you can experiment with shorter periods like 4/9, 5/11 etc. In Stockcharts, you can display display several different periods at once by using MACD indicators. An MACD of 4,9,1 is the same as an EMA 4/9 crossover (you have to add a horizontal line at 0). I have attached an example using SLW.

http://tinyurl.com/2fqhhke

If using on Ultras, use the signals on the underlying indicator rather than the ETF - for example, on QLD or QID, examine the QQQQ or $NDX for the signal.

would you be surprised if the banks one day make it a criminal offense for breaking the mortgage and walking away? punishable by jail time?

and liberty?

"To preserve our independence, we must not let our rulers load us with perpetual debt. We must make our election between economy and liberty, or profusion and servitude."
— Thomas Jefferson

When asked what his greatest accomplishment had been during his two terms as President, Andrew Jackson replied "I killed the Bank." He was talking about the "Second Bank of the United States", which was our country's second central bank.

Maybe Obama will become the Obama we need after he leaves the shackles of the White House.

A company that has exposure to many different metals. I am watching the $12 dollar point on the chart as a possible break out point. The daily chart looks like it could break out at $11.95-12.
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Frontier Gold (FRG) has a market cap of $1.74 billion and also mines gold, silver and copper along with its uranium properties. The company has mines in the U.S., Canada and Turkey. Frontier's shares have doubled over the last six months. The company's move has been somewhat muted based on exposure to other metals. FRG will own approximately $259 million in Paladin (PALAF.PK) stock after all of Frontier's uranium assets are sold in an all stock deal. So you can indirectly invest in Paladin through this company.

Not if Wikileaks reveals to the people who the real criminals really are.
These banksters have run in stealth mode for far to long, it's time to pull back the black curtains and reveal what's behind there pulling the levers and pushing the buttons.

Divide the people...........

NEW YORK (Dow Jones)--Insurance company Allstate Corp. (ALL) sued mortgage-originator Countrywide Financial Corp., now a part of Bank of America Corp. (BAC), over $700 million in residential mortgage-backed securities that the insurer had invested in.
The suit also names Countrywide executives as defendants, including Chairman and Chief Executive Angelo Mozilo, who agreed in October to pay $67.5 million in penalties to settle civil fraud and insider-trading charges from the housing crisis.
Allstate's suit, filed Monday in Manhattan federal court, contains similar allegations other investors have raised with mortgage creators, namely that lax underwriting standards are to blame for the collapse of the investment vehicles.
"Countrywide began systematically to ignore the underwriting standards it touted," the suit reads. "Countrywide was singularly focused on increasing its market share, offloading the risk onto Allstate and other institutional investors that purchased securities backed by pools of Countrywide's mortgages."
The insurance giant says between 2005 and 2007 it purchased $700 million in securities from Countrywide, investments it thought were "highly rated, safe securities." The suit alleges that, in fact, Countrywide knew the loans were "a toxic mix of loans given to borrowers that could not afford the properties, and thus were highly likely to default."
Countrywide's mortgages turned into some of the worst mortgages issued during the whole crisis, and ever since Bank of America bought the lender in 2008, the bank has had to handle growing loan losses.
"We are still reviewing the complaint, but this unfortunately appears to be a situation where a sophisticated investor is looking for someone to blame for a downturn in the economy and losses on an investment it made," said a Bank of America spokesman Bill Halldin.
The suit by Allstate is just the latest by a big name investor to claim the mortgage companies and nation's banks misled investors into buying what were in actuality highly risky financial creations.
Lawsuits this year have been filed by big names including Charles Schwab Corp. (SCHW), MBIA Inc. (MBI), Ambac Financial Group Inc. (ABKFQ) and various Federal Home Loan Banks.
In October, investors including the Federal Reserve Bank of New York, Freddie Mac (FMCC), Pacific Investment Management Co. and BlackRock Inc. (BLK) all wrote a letter to Bank of America alleging Countrywide had poor underwriting standards and demanding the bank cover the losses. The bank is in discussions with the investors over the letters, but the bank has maintained it would fight investors who simply want to recoup losses.
A Bank of America spokesman declined to immediately comment on the Allstate suit.
Investors and analysts for banks have been worried recently about the potential legal damages and costs arising from mortgage-backed securities that went bad. In November, Bank of America said it still faced up to $31 billion in lawsuits over the securities.

at the end of the day. if you know everyone, you know no one.

and I have healed my account. Big difference from the first IB account I held in 2009.

Was up 5% on PMV, GIX and SLW's more recent run when I got this account opened in late October. Managed to lose that profit and then 5% of my own capital messing around with bad entries, options and other thoughtless trading. Now back to flat, so aligning myself with one important tenant of Tao trading, no more wild swings back and forth - steady as she goes. Last time around it was all downhill. Price of tuition I guess. Now lets make that steadily profitable...

SLW didn't fail to disappoint. Too many times I've watched good profit turn to loss and today was no exception. Happy to have exited stage left in premarket. Afternoon confirmed hourly time frame sell off emerging. Waiting for a buy signal.

JRCC offered me a short-term sell signal. By afternoon's end that it had turned into a longer-term sell signal. Traders were clearly taking profits on strong stocks. Worried about pullbacks I guess.

ATPG is still in my account and it is starting to show some squeeze potential, which is one of the reasons I bought it - 42% float short. see attached for all 3. cheers.

I think it likely reflects the reporting of a volume-weighted average price trade (VWAP). You can see IB's explanation of how they execute VWAP trades here:

http://www.interactivebrokers.com/en/trading/vwapN...

"By agreeing to execute a large transaction pursuant to IB's VWAP average price arrangement, your transaction will be executed after the close of trading at the average price for the security during the reference period, as calculated by Bloomberg."

There are also some other variations of this type of execution and I believe that a broker may be able to negotiate terms (i.e. a VWAP for only the first or second half of the trading day, or specific hours, etc).

hi earl... This year, will start to refocus on shipping.. look foward to your views.

ATPG after hours traded up 2.90%, +0.49 to 17.41. Maybe your squeeze is on the way Les :)
J

Les- Nice entry/exit on SLW over the past few days. Let us know when you decide to reenter.

It is 'Fronteer Gold' and they do not have any mines. They have projects that I fully expect to become mines after Fronteer is acquired.

Short the Aussie. Short the Yen. Quadruple double dog down short leaps on ANY Jap or American T-Trash debt!

Ride the commodities parabola givin your own risk tolerences. Might I suggest very tight stops?

High prices tend to illicit supply. An echo of an example from Bunker Hunts $40 an ounce silver corner over 30 years ago may be instructive for the new unwashed.

I was asked to a meeting with the CFO of Hunt Oil to explain the terms of the convertable debentures of Texas Gulf Sulpher. At that time TG through their Frasch processes in the gulf was a major by-product producer of silver. Eh, long story short, those guys were wildcat drillers of oil and had no idea regarding the financial markets. The CFO was a 60's year old semi pot bellied fellow with white hair and a mustache to match wearing a starched striped shirt with a single windsor knotted tie and burgandy suspenders. He was the spitting image of Wilford Brimly and had not a clue about ANYTHING except oil and gas. I'm sure that after my presentation, he thought I was from Mars!

About that time, there was a stampede of companies buying old X-rays from doctors and dentists for their silver values... It was truely a Bizzare time!!!

I'm just happy that my insurance agent, a dear friend can dig up his Bunker Hunt $40 an ounce ingots from his hidey hole in his backyard and almost break even after 31 years!!!

As for moi, I sold the last of my palladium ingots this AM. High prices tend to scare out supplies that have been horded or not accounted for in past records.

This commodity cycle which still has legs may last for another 5 to 7 years but in my observation will become increasingly selective. The 'buy em against the inflation trade' is very long in the tooth. From here, supply and demand rules.

On the Ag side, rough rice is what I monitor as the ultimate food input worldwide. If you feed chickens then yes, corn prices and other protein grains are determinate. My black steers GRAZE but in the end, they need to be finished off with grain protein and those prices are 40% higher than last year.

Deflationista's tend to slurp the silly government stastical slop at the official trough and will always swill the excriments of their own kind, in kind. It's good comedy if you can maintain a reasonable perspective!

Most cannot!

Baz22 - I like that idea, hitting the books on it. I recall your words on buildout - then later watched a report on FOX business from one of the CEOs how they managed to ameliorate that issue.
regards,
Earl