Bill Cara's Blog for Nov 15, 2010 [See post-close report]

don't know if anyone spotted these charts over at BI over the weekend, but they do look impressively dramatic.

http://www.businessinsider.com/john-hussman-the-cl...

Europe risks a similar cliff drop according to Ambrose:

http://www.telegraph.co.uk/finance/comment/ambrose...

"As we learn from leaks that “technical” talks are under way on the terms of any EU bail-out, it can only be a matter of weeks, or days, before Ireland has to tap EFSF – for €80bn to €85bn, says Barclays Capital"

Les and Bull hunter,

Hussman also sums up an alternate "solution" to the housing crisis...

"Heck, if the public is going to be on the hook anyway, at least notice that at equivalent cost to the public, the mortgage could simply be written down to half its value, with the homeowner now able to pay the balance off and the lender getting the public handout to make up the difference. But of course, that would reward the homeowner. So instead, we simply make the lenders whole while people lose their homes and foreclosure investors flip the homes at a profit in return for providing liquidity at the auction. That way, the same amount of public funds can be spent through the back door without Congress even getting involved."

Congress is, IMO, the ultimate enabler or, as Reagan put it,"Government is the problem." We need to continue to revise the membership and the operating rules of Congress. They must be held accountable.

http://tinyurl.com/22v5tdr
I particularly like mention of the mining industry.

"Caterpillar in $7.6 Billion Deal for Bucyrus
Caterpillar agreed on Monday to buy Bucyrus International for $7.6 billion in cash in an effort to expand in mining equipment.

Caterpillar is offering $92 a share for every Bucyrus share, a premium of 32 percent over Bucyrus’s closing stock price on Friday. Caterpillar is also assuming the company’s debt and calling it a $8.6 billion deal."

“For several years, mining customers have been asking us to expand our range of products and services to better serve their increasingly complex requirements,” said Doug Oberhelman, Caterpillar’s chief executive and chairman. “This announcement says to those customers, we heard you loud and clear. It is a strong statement about our belief in the bright future of the mining industry.”
J

Released on 11/15/2010 8:30:00 AM For Oct, 2010
Prior Consensus Consensus Range Actual
Retail Sales - M/M change 0.6 % 0.7 % 0.4 % to 1.0 % 1.2 %
Retail Sales less autos - M/M change 0.4 % 0.4 % 0.2 % to 1.0 % 0.4 %

Released on 11/15/2010 8:30:00 AM For Nov, 2010
Prior Consensus Consensus Range Actual
General Business Conditions Index - Level 15.73 15.0 9.0 to 18.0 -11.1

I don't quite know what to make of these two reports.
Retail M/M +1.2%, ex-auto - flat 0.4%
Gen Buss -11.1
J

http://www.foxnews.com/story/0,2933,602182,00.html... morning;

Glenn Beck is pushing to cut the base salary for congress from 174k to 22.6k, the same that the US Army Specialist makes. I watched the video a couple times and after considering the points he makes I believe it's reasonable. Service is the key word and washing your brain, removing the old paradigms is essential.

Johnny - you make some very good points. thanks.

in an hourly timeframe. Trendline's hold until they don't - so not to be taken as gospel, but I'll be monitoring the $ today to see if it respects this trendline.

only 5% of trading accts. Hope I can hold it this time. I keep selling too early, so its difficult even just to reload below my last sale. Did ok on that score this time because of how hard gold got hit past few days...

When it gets busy at the day job, and I need to decide whether to open any positions and which way to lean, my first stop would be the link to the RSI Tool- where fully 28% of the Cara 100 are tagged with a 'Sell Alert,' another 3% are in the DZ, none sport a 'Buy Alert,' and none are in the AZ.

100% cash.

CSCO may be good for a bounce should it slide into the teens and holders bail with each new 52-wk low?

Looks like today we start step two: market reverses upward despite dollar strength:

http://caracommunity.com/content/bill-cara%E2%80%9...

that 100 K buy in a tight frame Friday afternoon over at ' tlr '.. indicators are turing..

I repurchased on a dip after I was stopped out on opening (that was quite a fake move). Eyeing GAZ and wondering if GAZ is more reliable than UNG to play NatGas. Anyone trading GAZ?

a good morning for my daughter's IRA...........the NNVC up .09 and TLR up .05.....if this keeps up it might be worth something when she reaches retirement age.......I have my fingers crossed that these are both home runs.........her and her husband were here over the week-end helping me w/plumbing problems.....now all I have to do is rip out the laminate that got soaked.... rent houses are a never ending job......best of trading to you

WASHINGTON—The Federal Reserve's latest attempt to boost the U.S. economy is coming under fire from Republican economists and politicians, threatening to yank the central bank deeper into partisan politics.

A group of prominent Republican-leaning economists, coordinating with Republican lawmakers and political strategists, is launching a campaign this week calling on Fed Chairman Ben Bernanke to drop his plan to buy $600 billion in additional U.S. Treasury bonds.

"The planned asset purchases risk currency debasement and inflation, and we do not think they will achieve the Fed's objective of promoting employment," they say in an open letter to be published as ads this week in The Wall Street Journal and the New York Times.

http://online.wsj.com/article/SB100014240527487043...

I have been following iPath S&P GSCI Crude Oil Total Return
(Public, NYSE:OIL) for a few days. Today, I note the range, presently 23.93-24.21, with the lowest prices most current. However, Stockcharts shows Money Flow and Accumulate/Distribute at elevated levels. Accum/Distrib popped just after 1pm and continues to rise.

Why is that?
Why is the price falling and Accum/Distrib continuing to rise?
Thank you.
J

Jock,
Killer vid, many thanks. I hope it goes viral.
I emailed the link to several people immediately after watching it.
J

A little more info on CSCO's drop and the rest of the tech area:
http://tinyurl.com/ciscocoal

On my 4 day, 1 minute chart, money flow is positive and accum/dist is at the top of the 4 day band even as OIL is languishing at it's lowest prices for the day.
I can hardly wait to see where we stand on Friday.
J

yeah, are they ( rentals ) not fun ?!! Built a new front porch here, matching the old 1" x 10" roof decking ( can't call That sheathing ! ).. The old 2 ft. roof overhang ( I brought it out 7 ft ) was 2" off on the right side vs. left, and the left side of the stoop was 4" wider than the right !! Boy, was that fun. Got a ' Feather River ' wood grain fiber door with ' craftsman ' 3/4 length beveled glass (for the entry ). Built two columns, from 1x8's, up 36", wrap with 1x6", and then angle in 2" to the top ( total of 8 ft. ), and trim out with nice molding. Really liked that challenge. Installed 2' beaded pine ceiling mold directly to the rafters - damn, that yellow pine has some pretty grain- Set 2" slate on the concrete stoop and steps ( 5 ) down, with river rock on the concrete risers. ( had been a 7" drop from front door to stoop ).. Setting in the new windows this week and next.. The main job was this summer, cleaning the cedar shakes, priming and painting.. 25 gallons of flat-oil primer -damn! (had talked with a rep. from the ' Western Cedar Association ' to be sure about priming, cause some air-heads kept saying don't bother priming, just touch up later - yeah, right. Anyway, went back with a really nice cedar brown solid hide acrylic stain ( as shows the grain better than paint ), and light green gables. Windows are white and keeping the 1x6" trim around - using color called ' icey rose ' ( Behr ) for trim and soffit and exposed rafters ( love that they were never boxed in ).. take care.

Les - Have you read the comments on that Business Insider link you sent? One guy posted references to many of the times John Hussman called for an imminent drop in equities. It looks like his calls are about as bad as it gets. Any posting about imminent pops or drops is probably invested in a way to profit from said pop/drop.

I personally am actually now net short for the first time in a while but it's only for a short term trade. In fact, I closed out a small chunk of it already before the close. I think we ultimately go higher.

TOF, with all due respect, Hussman never called for an immediate drop in equities. He mentioned many times that he is writing about what happened historically following each type of situation in the market. He specifically wrote in December 2009 and April 2010 that the "overbought, overvalued, overbullish market with increasing yield pressures" (which is the one we have now) has a slightly higher than 50% chance of going slightly up and a slightly smaller than 50% chance of collapsing hard, which implies that the EXPECTED return from such a market is negative.

His two previous predictions worked out perfectly for patient traders, who started to tilt their portfolios to the short side gradually once such a market syndrome appeared. I profited nicely from his call in May 2010, when I put my faith in Hussman and started going to the dark side at an ever increasing pace at the end of April, and I planning to profit nicely from his call once again this time, as I have already started tilting my portfolio to the short side once again.

jack black,
I think both are bad products. As is VXX. Why not focus on something else?
Hope this helps.

I've read Hussman for several years and can't ever remember him saying anything is "imminent". Hussman is often fully hedged. He has often stated that he makes NO predictions. When he refers to equities dropping he is mostly talking of a general longer term trend.

I would not advise you or anyone who habitually trades short term to pay any attention to his views.

About the only thing he writes which may be of interest is his comments at the end of each weekly commentary citing his "Market Climate" assessment.

Today's:

Market Climate
As noted above, the Market Climate for stocks last week was characterized by an overvalued, overbought, overbullish, rising-yields conformation that has historically been unusually hostile to stocks. The Market Climate in bonds likewise shifted last week, to a condition of unfavorable yield levels and upward yield pressures. The Strategic Growth Fund and Strategic International Equity Fund are tightly hedged. Strategic Growth holds a staggered strike position where our put strikes are generally quite close to the existing level of the market, and Strategic International Equity has less than 10% of unhedged market exposure, though only a portion of the Fund's currency risk is hedged (currency fluctuations typically represent only a fraction of the total variance of international equity investments). Strategic Total Return presently carries a duration of less than 1 year, with about 1% of assets in precious metals shares, 2% in utility shares, and 1% in foreign currencies.

Thanks Billy. I have been using these ETF's ETN's as proxy's, so I don't have to learn the futures mkt. What you said makes sense, low volume introduces it's own dynamics. Looking at energy futures on INO.com makes my eyes tear-up :) - Long term I watch $WTIC on stockcharts.

I was betting on a pop in oil prices today, using UCO but watching OIL. I can't seem to get on the right side of the trade. Last week I had SCO, oil rose and I quickly got out. Then oil fell and seemed to be holding at support, so I jumped on UCO late Friday @11.02 and held over the weekend. Things were looking good pre-market but never improved.

Right now OIL is holding above SMA200@23.70 on my 6 month chart. SMA200 has held since late September. If it breaks down from here I suppose we could test August lows. Crude feels like it wants to decline for awhile, I was hoping to catch a quick rise. If it decisively breaks below SMA200 tomorrow, I may just take another haircut and get out and move to the sidelines.
J

TF

Was this a bad call? How close to the top was that?

November 12, 2007

Expecting A Recession

http://www.hussmanfunds.com/wmc/wmc071112.htm

"it is best to begin altering your investment position immediately (even if not entirely at once) toward a position that you can maintain regardless of market outcomes. If your position is inappropriate, do not wait for an “ideal” opportunity to change it. Begin changing it immediately, and continue to change it in steps – larger steps when you can get favorable prices, smaller steps when you have to do it at adverse prices. The important thing is to start immediately and decide in advance to move step-by-step over a reasonably limited period of time, until your position is appropriate. "

or how about this one?

http://www.hussmanfunds.com/wmc/wmc081027.htm

October 27, 2008

"Given the pricing of precious metals shares here, it would not be unexpected to see the XAU roughly double within the next 12 months from these levels."

He also sold all his gold(down to 1% last month)

I can probably highlight 10-20 more calls that he has made in the last 10 years.

I'll continue to read his words of wisdom

MS

what a neat remodel............I find behr (HD) and Valspar (lowes) to be both great one-coat paints for most applications unlike the watery garbage....WARNING/WARNING/..two sites that I follow that yhave been fully invested (went long Aug (1050s) have both gone to the sidelines/short as of last tues/sunday...........found it pays to tuck it in when they agree........both were short into auguat........great trading to all

Johnny, with respect to the AD line you also have to understand how it is calculated and plotted. In particular if there is a large volume spike intraday, it will depend on what time frame you are looking at. The mods to the AD line depend on where the stock closed in a particular time frame, (high, upper, middle lower or low), as whether it is added - subtracted or neutral. Shifting the time frame can easily move a spike from add to subtract.

See the following article which explains this in detail.

http://stockcharts.com/school/doku.php?id=chart_sc...

Les - I personally don't have a read on Hussman one way or another. I'm just pointing out that it's clear the guy has been wrong plenty of times over the years so it might not make sense to put a ton of emphasis on his calls. I know people are saying his calls are longer term, but if you listened to his calls from say May 2009 and through the summer of 2009, you would probably be betting on the market to fall and it's highly unlikely you would have waited until June 2010 for the market to fall to 1,010 before closing out your shorts...at a loss nonetheless. I mean we're now up some 30 to 40% since those levels. The same thing could be said for his calls from 2005 or so. How many people had the money or guts to stay short from then until March 2009 and how many were smart enough to cover their shorts in March 2009? I think the statement that his calls are longer term is just a way of justifying being significantly wrong for a long period of time.

I personally think it makes sense to be a little cautious here but I think we go higher. I'm watching the muni action too and see it selling off across the board...not just California. I wonder how much of an impact the Ambak BK had to do with this. I also wonder if this isn't just a correction much like those other short term corrections over the past 18 months in munis. The volume spike and oversold readings suggest they should be bought.

Ciao Kaimu,

I'm preparing a buy and hold account for your junior picks including SRL. Now having read of this demerger plan, I would like to know if this event is a sell trigger for you?

I like the idea of holding coal operations and junior mining/exploration copper and gold assets long-term. Are they both equities that you will remain committed to holding?

If you are not committed to holding the coal operations, would you then recommend awaiting the demerger for a new price to be attached to SRL's mining/exploratory operations?

Of course, given the potential for the $POG to continue upwards I'm not necessarily going to wait that long if SRL's price dictates otherwise.

How goes LYM.V? I see they're moving closer to production...

"I personally think it makes sense to be a little cautious here but I think we go higher"

TOF, I can't reiterate it enough and I'm sure you understand - I am a student of Vad. Price dictates my preferences. I personally don't care which way we go.

If market going up makes everyone feel richer as Ben the Chopper's thinking goes, so be it.

I'm prepared to put my money down on select sectors going up long-term, but for opposite reasons to what the Fed wants.

I know that's what you're saying, but I won't look at the market in any other manner except price action, regardless of deflation, inflation or anything else that pains the economy.

In the premarket outlook I type, the charts I share or show, the bad or good news story that's getting sold to us - I'm always looking for how it affects price. The recent call for a drop in the buck following QE2 - called to the contrary by Vad as an example of the market discounting news - is what fascinates me.

I know that is we are all here - well most of us.

Dow 11107.00 -66.00 -0.59%
S&P 500 1189.00 -6.80 -0.57%
Nasdaq 100 2112.75 -15.25 -0.72%

$ continues to strengthen against major currencies.

Housing sector quick to drop yesterday:

http://stockcharts.com/scripts/php/candleglance.php?$DJUSHB,$DJUSHI,$DJSHMB,$SPHB

Let's see if sell off continues and whether it spills over into banksing.

Is that a shooting star I see on FAS yesterday?

Thanks for posting that EXCELLENT, thoughtful interview on gold, miners, cycles and markets.