Bill Cara's Blog for Jun 6, 2011 [See Post-Close report]

Good morning.

5-7 Billion Dollar POMO Injection Today.

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HBC - HSBC initiated with a Neutral at Credit Suisse.

SBUX - Starbucks upgraded to Outperform from Market Perform at BMO Capital based on valuation and increased confidence in the company's growth outlook. Price target is $45.

TXN - Texas Instruments initiated with a Buy at ThinkEquity. Target $40

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"Freedom of press is limited to those who own one." - H.L. Mencken

The Dow Jones Global Index has twice broken its long-term ascending trendline, indicating that the primary trend is losing momentum:

http://www.incrediblecharts.com/tradingdiary/2011-...

(GR) German govt offical spokesperson: Not certain whether there will be second bailout package for Greece or the terms of such an arrangement
- Greek aid does not need to come from EFSF.
- Expects full troika report by the mid-week.
- Chancellor Merkel supports Schaeuble's idea regarding the involvement of private creditors in Greece bailout.
**Note: On Friday's session the EU/IMF/ECB issued a joint Troika statement in which they noted that they saw the next tranche to be available for Greece in early July after talks; They also noted that "significant" progress had been made in Greece

(GR) ECB Bini-Smaghi: Debt restructuring must be used only as last resort
- Default would make EMU less attractive as an area
- Greece must implement reforms or default is in the cards
- Greece is solvent if it is willing to sell some assets
- The cost of reform is lower than the cost of restructuring; Must strengthening of adjustment programs
- Restructuring would have severe implications
- Banks of default State would not have collateral and would need new public money

(SP) Moody's comments on Spain region of Catalonia: Budget deficit is Credit Negative for Spain
- Outcome of Catalonia debate with the national government is not clear.
- Spain needs national consensus or compliance measures.
- Spain's government unable to enforce regional fiscal compliance.
- Spain could cut central govt deficit beyond the target; but such cuts would only be a short-term fix
- Spain does not have tools to control regions.
- NOTE: Last week, FT commented on fiscal discord between the govt and Spanish region of Catalonia, alleging the regional govt has again defied central govt on budget targets, forecasting 2011 deficit of €5.4B - 2.7% of GDP - above 1.3% official limit.

I wrote about political risk increasing in South America in April and how things could change rapidly in Peru, Bolivia and even Argentina.

BVN is down ten percent thanks to Humala winning their election. The Peruvian market was expecting something else.

http://www.fcx.com/operations/southamerica.htm

Add Bear Creek Mining (BCM.V) to the list of Peru companies getting slammed this morning. They have one of the larger prospective silver mine properties in the world. Shares have been more than cut in half since the stock peaked at $12 CAD a few months back....

Thanks for the heads-up! The server rebooted last night, so we need to run some checks on the databases. The site might be down briefly while we do so. Hopefully, it won't be any more than a minor inconvenience.

"BC"
Thanks for clarifying that for me. I always use a magnifying glass when going over your daily and weekend reports. I especially enjoy this weekend's write up on how you use the 8 EMA on the MCD trade. Love those gold nuggets you throw out now and then. ;-)

I agree. I have long positions in GDX, GDXJ and SLW (barely in green though). Thinking about going long FCX. Charts/sentiments look great. The only problem is the unknown dollar direction and global macroeconomics. We also don't know when QE3 will be pulled from the hat.

Thanks for the writeup this week was great. The correlation between your thoughts and the indicators, and chart symbols ...read every week thoughtfully it eventually clicks in....especially how you think bring in things outside the charts (like when reading a silver chart, the correlation with miners or whatever ) which inflect the big picture.

Thanks!

Could articles like this contribute to the overall negative atmosphere? Do you believe it'll happen?

http://www.scribd.com/doc/56369819/SocGen-Alternat...

I can't help but think that anyone shorting this market for anything more than the short term gyrations needs to get their head examined.

Why? Well, people point to bad econ reports recently. Look at why they are showing softer econ growth: primarily because of supply disruptions related to the Japanese earthquake and also from crazy weather that is causing jobs disruptions in the midwest US. Just as it was last year around this time, these issues are temporary, while strong profit growth continues unabated. In the meantime, valuations under "normal" market conditions are significantly higher than the current valuation on the market. That leads to a pretty significant margin of safety in my mind.

I believe people shorting now will soon enough be covering at much higher prices. I think we see 1,500+ in 2012.

Not sure longer term, but short term, the sentiments are lousy and we should rally some.
I just went ahead and bought a small position in EWY calls. I liked EWY since mid March, but sold a bit too early, and going in again.

EWY looks strong jack, almost as strong as my MITK, but not everything can be that strong :)

Good luck with the trade.

I would like to be able to continue to comment on this board in peace. For the record, I never said GW's charts were cluttered or that he used too many moving averages. I said he was using fib numbers as moving averages... and made a general comment intended especially for less experienced traders that one would not want to place too many moving averages (a moving average for every fib number) on your chart. I did not say he had done so.

There is a natural tendency to think that if two indicators is good and three is better, then if I just add one more filter/indicator then I'll finally have the holy grail. Instead, it usually creates a situation where multiple indicators are telling the same information or there are so many filters prior to entry that one rarely gets an entry signal. There is no one best way to trade. The best way is a plan that you are comfortable with and can be consistent in following it.

ok, I've heard and read of trader's using the ABC correction but am not familiar with it. Guess I'll read up.

Ha! you're more optimistic than I in getting those sorts of prices coming to us again. I remember TCK at $3, sold it for +.50 - thought I was a king... newbie luck when a blind monkey could make money.

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T11, if there is a smiley face, it is to signify that it is all in good fun. I have no place belittling anyone here. cheers.

Don't get me started on my war stories. I muffed TCK, SLW and a few other big time. The big mess up was with UXG when I unloaded 50,000 shares at 1.98 for what amounted to walk around money. URGH!

I'll take some uxg at $3.60 :)

just finished adding my last batch of DZZ. Now 100% short gold in my swing account. There may be one more small surge in gold later today, if so then I will open up a gold short position in my day trading account [if DZZ falls below 6.40].

I have seen some charts posted else where with every indicator known to man on them.

My favorite are those where I can't even tell which line is price :)

Looks like gold is getting ready to roll over. Will be very surprised if today's high is tested [in the short term] after today's close.

Almost all indicators are a product of price, so they are really duplicates of price bars. I find a simple bar chart the most useful for my style of trading, which is simple trend trading.
Every once in a while during transitions like we've been seeing lately I throw in a few MA's that show if we've crossed up or down in a meaningful way. Maybe a 50 DMA and the 200 also as they tend to be watched. Simple bar charts, perhaps in faster and slower time sequences will suffice unless you are big enough to scalp fractional moves by the second or minute.

Any opinions as to why SLW is taking a serious turn south while Silver spot is healthy and moving up. I don't remember seeing such a divergence between the two It worries me as I tend to buy and hold and am way overweight SLW.
Forgive my jumping onto the boards without so much as an introduction (Bill knows me). Thanks .

(GR) Greece PM Papandreou: Willing to consider referendum on certain austerity measures; Looking to form widest possible consensus
- Negotiations on terms of new bailout still not finished; Next few days/weeks are critical.

- NOTE Sunday: At least 80K protesters gather at central Athens square on Sunday following announcement of further austerity and cuts to govt jobs as part of the new aid agreement; Greece Cabinet to meet on Monday to discuss medium-term economic goals before PM Papandreou presents the plan to his PASOK political council on Tuesday.

TOF, where do you see interest rates while the market rallies higher?

I believe there is a rift in the cabinet. The referendum is a way of saying "no mas," but getting the people to do it for you rather than having the backbone to do it yourself.

Countdown to Drachma initiated.

The hourly signal by which I work with was being given Friday. There is support just below and with the market having dropped this far I've a hard time believing that the Euro is just going to rollover and the $ strengthen here. I certainly wouldn't make a trade on this supposition just yet.

But this could be a lower high setting in and we'd wanna see a corresponding higher low set in on the $. We could see a couple of sessions of $ up/market up if the indexes drop much lower. They could be ready to bounce. We shall see.

4ever,

"Could articles like this contribute to the overall negative atmosphere? Do you believe it'll happen?"

Perhaps it is the other way around and the overall atmosphere is contributing to such articles.

Bill pretty much covered all aspects of the economic situation in the WIR this weekend.

We have seen a stock market boosted by artificial means for years now.

I would say it is happening and perhaps a few more people are beginning to realize it.

Grym

Weiner, JOhn Edwards, Arnold Schwarzenegger, etc etc. I have lost track. But apparently Anthony Weiner admitted to sexting photos to multiple woman, after another woman came forward today with evidence.
http://bit.ly/kkKnLC

" After days of denials, a choked-up New York Democratic Rep. Anthony Weiner confessed Monday that he tweeted a bulging-underpants photo of himself to a young woman and admitted to "inappropriate" exchanges with six women before and after getting married. He apologized for lying but said he would not resign"

And we the people want to trust these type of characters with policies and regulation of their own masters at HB&B? Between money bribes, hidden campaign cash to spend on mistress', and other gifts, how are we supposed to trust these charlatans?

We need to elect people who have morals and strong will to walk a righteous path, regardless of their religion.

All we have is a Hollywood society and reckless leaders.

Where are the real men and women who will have some fortitude? Where are the next Martin Luther Kings, Robert Kennedy's????

http://bit.ly/kkKnLC

Kaimu is big on abolishing things he doesn't agree with!

360 plus million people and processes would be thrust into chaos if our tax code was abolished. Trains, ships and planes would seize. Universities, schools and towns would close; our police, post office, firefighters...hey even the military and prisons would be forced to figure out how to get a payer system into place. Who exactly uses our military and prisons anyhow?

Oh right, the contractors selling them all those jet engines and jail cells....wasn't that you, Kaimu? You benefited for years from the Federal tax code system as an IRS employee and contractor. So now that you have extracted yourself and live in a grass hut off the grid, do you think it's safe to 'stow thrones' (old joke)?

We DO have a choice to vote in honest people to make our systems run more fairly. Some of us might have to step up or at least pressure our politicians to walk their talk. Grassroots organizations do have power to assist postiive change. Thank goodness we have a moblized youth of millenials - a generation even bigger than the baby boomers - who seem to have the energy. I always have hope.

ALOHA!!

"Kaimu is big on abolishing things he doesn't agree with!

The complete opposite of what I said ... I said I would abolish things that don't WORK! There is a big difference!

You look over the United States of America's financials (aka: US Treasury Statement) and show me how well things are working by living in political largess, above our means and using debt to accomplish that unstated fiscal goal. I do not think issuing unlimited debt works. Historically such policies have always ended in failure. I believe it is corrupt and such policies corrupt our society.

“In a state where corruption abounds, laws must be very numerous.” – Tacitus, 115AD

How much "crazy" must we humans constantly repeat?

It matters not whether I was an IRS employee or a Public Works contractor nor does it matter one iota if my hut is grass.

I have some nice panoramic shots of the scene, police, K9, MPs with machine guns, in the mix of tourists, rush hour folk and protesters.

I only hope the turn out and fervor of the June 14 protest will be louder. There was a mention of today that something would be revealed on June 23 about the lies to us Americans, via June23.org.

I don't have my cable dongle that connects my camera to my laptop.

the protest was a decent effort but it was quite stark contrast. Protestors had signs. HB&B had police with guns, K9, machine guns, horses, etc.

I think the old way of protesting will not work. since the people who we elect have no power over HB&B. I feel the much more effective way is anonymously uniting via the internet/social networks, and deciding to act in unison where it will cripple HB&B.

It's a new war. New tactics must be adapted. Imagine... in unison, every tax paying American withdraws from XYZ bank. Or we all cash in our 401k/roth IRA, vowing not to return to the financial markets until regulation and oversight is built into the new system, and dismantle the old.

Or if every american decided to drop use of the dollar, and create a new digital currency that can be redeemed via digital payment systems such as paypal.

As i took photos I couldn't help wonder if the tourists even know why there was a statue of George Washington at Federal Hall, in front of Wall St? How perverted the concept of Liberty has become.

edit: i may have a way transfer the photos later this evening

Above.

http://i55.tinypic.com/2zsvig4.jpg
http://i53.tinypic.com/2mm9yra.jpg
http://i54.tinypic.com/x5z9fl.jpg
http://i52.tinypic.com/1470iv.jpg
http://i56.tinypic.com/2wpnyva.jpg
http://i52.tinypic.com/2ag885z.jpg
http://i53.tinypic.com/2psm8zk.jpg
http://i53.tinypic.com/b96utv.jpg
http://i52.tinypic.com/20p6a1g.jpg

http://huff.to/kKEgf2

No quick settlement Mr Obama. drag it out into the mud in public view with spot light on the culprits.

My guess is it will be more than 20B+

as he invites an economist to speak of Europe's woes. I see why now a French national is being hooked up for the IMF. They are Europe's major debt-pushers after the Netherlands and Germany. Some extracts:

Also unlike the United States (or almost any nation), Europe’s parliament was merely ceremonial. It had no power to set and administer EU-wide taxes. Politically, the continent remains a loose federation. Every member is expected to pay its own way. The central bank does not monetize deficits, and there is minimal federal sharing with member states. Public spending deficits – even for capital investment in infrastructure – must be financed by running into debt, at rising interest rates as countries running deficits become more risky...

This makes countries going this route less competitive. It also means they will run into debt to Germany, France and the Netherlands, causing the financial strains that now are leading to showdowns with democratically elected governments. At issue is whether Europe should succumb to centralized planning – on the right wing of the political spectrum, under the banner of “free markets” defined as economies free from public price regulation and oversight, free from consumer protection, and free from taxes on the rich...

The role of the ECB, IMF and other financial oversight agencies has been to make sure that bankers got paid. As the past decade of fiscal laxity and deceptive accounting came to light, bankers and speculators made fortunes jacking up the interest rate that Greece had to pay for its increasing risk of default. To make sure they did not lose, bankers shifted the risk onto the European “troika” empowered to demand payment from Greek taxpayers.

For the first time since the 1920s (as far as I know), Iceland made the capacity-to-pay principle the explicit legal basis for international debt service. The amount to be paid is to be limited to a specific proportion of the growth in its GDP (on the admittedly tenuous assumption that this can indeed be converted into export earnings). After Iceland recovers, the Treasury offered to guarantee payment for Britain for the period 2017-2023 up to 4% of the growth of GDP after 2008, plus another 2% for the Dutch. If there is no growth in GDP, there will be no debt service. This meant that if creditors took punitive actions whose effect is to strangle Iceland’s economy, they wouldn’t get paid. No wonder the EU bureaucracy reacted with such anger...

ECB intransigence leaves little alternative to breakup. Europe’s payments-surplus nations are waging financial war against the deficit countries. Without a common union based on mutual support within a mixed economy – one capable of checking financial aggression – the European Central Bank replaced the military high command. Its bold gamble is whether the Greeks will be as stupid as the Irish, not as smart as the Icelanders... (more)

http://www.investorsinsight.com/downloads/otb/mwo0...

loannetter,

''At least part of these systems ARE working'' ----- which part are you reffering to,
the front end or back end.

please ref: http://bit.ly/k4mv13 ; http://bit.ly/mwWzTg

''Certainly they are dis-eased'' ------ systems are not, but we are, with "Stockholm
Syndrome" from being captive for so long.

"Our tax code pays people to run our infrastructure from
national to state to local'' --------- including the bullet proof vested, assault rifle
carrying watch dogs to protect
the HB&B (ref: NYUGrad's pictures) so they
can have us both ways , while we slumber
in the orgasmic bliss of having it both ways.

''What exactly is your plan besides abolishing it? How would you
implement the enormous shift necessary to retool an entire country?
Cold turkey? '' -------------- O.K. agreed, let's wait till the whole system collapses
on top of us, or till they destroy it, so that we don't
have to blame ourselves for consciously turning Cold
turkey.

''Not everyone in our systems is corrupt nor are their ideals corrupt" ------------ precisely isn't it
the reason we chose to have a govt. in
the first place, to protect the innocent.

ALOHA!!

In 1999 the conversion to the Euro was overnight ...

To be absolutely honest the only way anyone would be able to find out where America stands in terms of government and money is to first shut down the US FED. Before you can implement any CHANGE you need to know what your options are. When these two monopolies operate in near ZERO transparency it is difficult to know exact assets and liabilities. For instance I believe the only way to know the exact amount of gold reserves the USA has is to shut down the US FED one day without notice confiscate all computers and data and armed guards on all buildings and vaults within the system. As you may know there are twelve FED districts all across the USA from New York to California. Not to mention all of the US FED member banks. I would suggest that the same employees who labor under confidentiality agreements with the US FED and the member banks now would be huge sources of felonious data if they knew their agreement was null and void and they would be immune from prosecution for such disclosures.

It took the US FED and Congress some 97 years to accumulate and store data so that process of "unwinding" a 100 year monopoly would take many years to complete. Perhaps the era when computers were first utilized would go faster but prior to computers there must be reams of meeting minutes and data that is stored physically at numerous district locations. In reality it would be something similar to the US Military takeover of Saddam's palaces and bunkers only on a much larger scale. Just the missing data from FOMC Meeting Minute transcripts and similar type meetings going back to 1913 would be a laborious affair. Not to mention the gazillion e-mails that must be stored on computers dating back to the 1980s.

Logistically it would be quite an undertaking, but the logistics to convert our monetary system from one of corrupt debt to a more stable metal backed money whereby bank deposits cannot be inflated 10 times over(fractional reserve) would be rather swift. For "electronic money" it could happen overnight, but to abolish the physical FRN would take time, but could be accomplished rapidly by using the same FRN Notes on a temporary basis. Infrastructure wise the computers at all major US banks(bricks n mortar) are already in place and branches could operate normally, retaining deposits and loan data. If you want to see a modern example of how fast the conversion can occur then look no further than the EURO which replaced the Deutsche mark overnight in Germany in 1999. I see no reason the same reform could not be just as fast.

In terms of a conversion to SOUND MONEY the process would be rapid. Ask Nixon's advisers and US FED personnel from 1971, back when one day we are on the gold standard and the next day we are not! Where were you in 1971 when that happened? You can probably recall with ease where and what you were doing when JFK was killed, but I doubt anyone here can recall where you were and what you were doing when Nixon announced we are no longer on the gold standard. Heck, probably half of us here at this blog were not even born!

AUGUST 15, 1971 ... WHERE WERE YOU?
LINK: http://www.youtube.com/watch?v=iRzr1QU6K1o

Look who NIXON blames for this action to defend the USD!

I plan to do a more detailed analysis of this NIXON speech backed up by charts and data that disprove his entire Keynesian speech. I only post this here to show you how fast America went from one monetary system to another. Look how fast it took FDR to confiscate US citizens property ... one signature on an Executive Order. Congress ramrodded the BANKING EMERGENCY ACT in one day.

I am not sure why you think there would be this HUGE disruption in the World when there was no such HUGE disruption to convert to debt based money. Money is whatever is made legal. The problem comes in when fraud and corruption is made legal. Remove those components that favor an elite few and we have SOUND MONEY that favors a more stable system of saving versus debting. Banks make hardly any profits from savings as it is much too barbaric and boring. Banks prefer Americans in debt and so debt has become the driving force of the American Dream.

ALOHA!!

"The first test of a down slide is often to remember not to value yourself to the results of the financial chaos."

Casey ... YES ... Mahalo ...

When we have crisis, financial or otherwise, in our lives who do we call? Do you call Obama? Your Senator? Your local Bank of Hawaii loan officer? NO ... you call friends and relatives first. You call on your local community for help. There is the Human Action. We dismiss Washington DC. Washington DC is just an envelope and a stamp. It is brutally faceless. If you doubt that then call your Senator for some one-on-one face time! I wrote Senator Akaka, my Senator, just to answer a couple questions I had on the US Treasury Statement. It took me two months to hear back and the answer was basically to ask the US Treasury and not bother him. The reason I had to ask my Senator was because I did not get a reply from my US Treasury in Washington DC. It turns out there is no CUSTOMER SERVICE in Washington DC, which is something I already knew from my IRS days!

We need resilient communities in America not gigantic centralized monopolies controlling our lives. The more of our tax dollars that can stay in our local communities the better. Who knows best where our tax dollars need to go than our local government? To send tax dollars 5000 miles away to Washington DC so those dollars can run the special interest gauntlet of corruption is about as inefficient a way of utilizing tax dollars as i can think of. DECENTRALIZE and DEMONOPOLIZE!

... if this chart of Eurodollar commercial's position continues to hold correlation with the SP500. That is one almighty drop and I would really wanna be short on this bounce and holding on to my position like a terrier this time. Forget the 2010 lows - 2009 all over again?

http://www.mcoscillator.com/learning_center/weekly...

Loannetter,

"We could OUTLAW LOBBYING..."

There have always been "good people inside", but nowhere near enough to override the deeply entrenched who control committees, know how to work the inside track and therefore "we" can do nothing without a major change in the way congress is allowed to operate.

Look at the similarities between "our representatives" and CEOs.

They appoint those who make their rules (board of directors). They set their own pay and benefits through this buddy system (compensation committee) and they come back as lobbyists (board members) later.

Who and what will change this? Congress itself? How long will it take to vote out all except those "good people"?

U.S. citizens must get severely burned before this can happen. At 73, I don't expect I'll see it.

Grym

Loannetter,

"Your method of crash and burn sounds like it will harm a lot of people and stall very important access to funds."

While I hate to see these people suffer this may be what it takes to wake people up to the reality of our condition.

No access to funds?

My son's company couldn't meet the payroll Friday, (got a check Monday) but his real estate taxes went up again this spring on a home he has no possibility of selling for anything close to what he has in it.

The Madison protests to keep funding public unions is still seen as defending a "right" due them from taxpayers. Some of these taxpayers are at the point where the"unfunded" has become unsustainable for them.

Yet, neither party is seriously addressing our unfair tax system buy stopping spending and taxing the elite. (Ryan's plan is still protecting the wealthiest.)

Grym

NYUGrad I watched a couple of channels of T.V. news and no mention of the protest , that I saw . A lot of coverage of congressman Wiener though . From what I could learn he lied , he's untrustworthy and he's a lawyer . He's pretty much run of the mill in Washington .