Cara's Commentary & Community Chat, Fri., Jan. 23, 2009

Good Morning.

GRMN - Upgraded to Neutral @ Global Crown Capital

JP Morgan Initiates Coverage of MICC with a Neutral.

GOOG - Price Target Raised from $420 to $450 @ Jefferies & Co.
EXC - Price Target Raised fron $52 to $55 @ Jefferies & Co.

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New Zack's Report on IBM:

On January 20, 2008, IBM Corp. (IBM) announced its fiscal 2008 4th quarter results that were mixed, with revenue coming in below expectations but pro forma EPS beating our expectation. Net income from continuing operations were $4.4 billion versus $4.0 billion in the same quarter last year. With aggressive cost-cutting, diluted earnings from continuing operations for the quarter reached $3.28, up 17.1% from $2.80 in the prior-year quarter.

Total revenue of $27.0 billion was down 6.4% (down 1.0% when adjusted for currency) from $28.9 billion in the year-ago quarter. Earnings were boosted by a reduction in the tax rate in the 4th quarter.

We were ahead of the Street in our expectations for the 4th quarter and for full-year 2009.

Given strong performance in the 4th quarter, IBM provided its EPS outlook for fiscal 2009. It expects full-year EPS of at least $9.20, which is a growth rate of 3.0% over 2008 reported EPS. IBM also expects its full-year 2009 tax rate to be sustained at approximately 26.5%.

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Have a great day and a better weekend.

I'm contrarian myself and believe that when panic reaches a climax, it's time to move in. I just don't see a panic yet. When one looks at the Investors Intelligence Survey (released 1/20/09), it's reading toppy. My reading is too many people hope for a Roosevelt-type rally. Unfortunately, hope is dangerous in investing. Now, we could actually get a Roosevelt-type rally soon, but not until Nov lows are revisited to shake weak hands.

Market Music for the day: Ry Cooders, "Bop Til' You Drop", "The Very Thing That Makes You Rich" (makes me poor).

The new theme song.

Jack, what on God's green earth are you talking about? DJ futures are down over 200 points this morning.

People expect a Roosevelt rally? Where exactly are these people? ;)

This is from a trader name molecool who I found through Old Goat. To me the guy seems to be on top of things.

"Intermediate (4) triangle - E wave up - .......... We first drop, then stall and rally back up just to confuse the last bear out there. We fall from our drop zone at around 920."

He posted this after the close yesterday.

Gold has made a sizeable move over the past few hours, especially in the European markets. What is most interesting about this latest move is that the USD has strengthened along with gold. Presently, gold is sitting just below key $880 resistance. With equities set to swoon, this could be gold's day to diverge. We shall see.

An example of Agnotology can be read in today's NYT.

http://www.nytimes.com/2009/01/22/world/middleeast...

Use of white phosphorus in densely urban areas of Gaza. That's a no no. A criminal act type of no no.

As an act of gutlessness, reporters bring supposed balance to a story when they should be bringing condemnation in the name of their respective readers. Liberal paper media arose as an opposition to state tyranny in the 19th C. Checks and balances. A watchdog over their respective governments and in this day and age, governments around the world.

Yet in the article we read:

>Though there has been no independent confirmation (of a girl's injury from phosphorus)

What? Families word not good enough? Doctor's not good enough? Heaven forbid if an NYT hack should go to Gaza and actually do his job and find out the facts...

>international officials have acknowledged that militaries can legitimately use the substance in some case

The NYT fails to contrast this statement with the allegation that the disputed use of this ammunition pertains to the destruction of a UN compound in heavily urbanised Gaza. And that criminal act is on record with photographic evidence. Willy Pete can be seen in the photos of big plumes of white 'fireworks' raining down on Gaza.

Perhaps the most important point missing from US media, and it's typical, is the history of such acts committed by armies other than Israel in past and present conflicts. NATO bombed civilians in Yugoslavia. The Syrians (crying foul as well) have slaughtered numbers far greater than this in past internal conflicts. America used WP in Fallujah.

This most important last point was raised by British media.

What was even crazier, was when looking at the Guardian online today about these acts committed by Israel, a viewer left a link to a Youtube website showing Islamists murdering helpless captives who were face down on the ground - and the viewer used this video as justification for Israel's actions!

The world is nuts. I actually went to the trouble of creating a youtube account so I could flag this video as unfit for human consumption.

I've learned to dig deeper and ask harder questions in political and social affairs than what mainstream media provides. Unplug your television - this helps a lot.

This is why I'm here @ Bill's place - to cut through the BS and learn financial literacy from a more honest crowd.

>but this stock is really jumping out of it's socks

Where do you see futures for this stock Sharky?

I'm holding it, but Yahoo doesn't give an indication of the stocks movement pre-market.

What are the implications if BAC stock can be pushed below $5 and possibly trigger fund selling by those who are restricted from owning sub-$5 stocks? BAC seems to be very widely held.

I have to wonder if part of the newest down wave in banking sector is on some level a collective realization that this administration is much less interested in providing bank funding w/o strings attached or delivering personal favors and "playing God" for certain powerful banking interests?

spot gold is 879/880 right now..confirmation soon!

http://tinyurl.com/cnryh8 not pretty

Precisely, this is why I try my best not to willfully ignore current "events". These events tend to move the market with some degree of hysteresis. Unfortunately, in many cases I find myself disconnected from the feedback loop at the point of convergence for pessimism and capital preservation.

"Hear no Bull; speak no Bull; see no Bull. Isn’t that the problem we face today?"

18 months ago it was hear no bear; speak no bear; see no bear...the market continued to squeeze the bears out of their short ETFs...

today it's former stars like bill miller being denied any kind of redeeming rally whatsoever...

well, at least here we mostly hear no bull----, speak no bull----, see no bull----

GL to all today....

vanillabean - You know I'm sure, but I'll reiterate; that BAC was forced to flee their shareholders in favor of cheaper government assistance.

So GE will wait for a future quarter before cutting dividend.... This is better than I expected.

Didn't Kaimu say they crash gold on Friday? Vanilla bean. See what I wrote about the stimulus package. It's not...It's a typical DEM spending plan.

to 40% of allocation...

the time to emulate bill miller is when he's down, man...

"I have to wonder if part of the newest down wave in banking sector is on some level a collective realization that this administration is much less interested in providing bank funding w/o strings attached or delivering personal favors and "playing God" for certain powerful banking interests?"

You may have a point, perhaps someone wants to aqueeze the funds into selling at a bottom. The problem I have with buying BAC here is their marriage with fed assistance, presenting a possibility of BAC becoming another GSE. Similar situation with FRE/FNM.

Congrats to Bill! also to the group here.

Should have been #1, although it was not ranked. if it were, Bill would have been #1

read the fine print guys...

The list was in no particular order

Which gold ETF short is a popular one here in the group?

"The problem I have with buying BAC here is their marriage with fed assistance, presenting a possibility of BAC becoming another GSE. Similar situation with FRE/FNM."

Indeed. Due to the haphazard and random way the government has dealt with Fannie, Freddie, Bear Stearns, Lehman, Merril Lynch, etc., there's no way one can accurately game what they'll do next.

And now that Geithner is in charge at Treasury, and the fact that he was in on all the meetings during the 4th quarter mess, why would we expect anything to change from already occurred ?

Betting on a short squeeze is a pure gamble. It may work, but it could just as easily blow up. If for whatever reason they decide to wipe out equity holders, no one can say they were surprised given what's already happened.

the lack of volume on gg, slw, auy, gld, slv makes me think it will be hard to rocket without new buyers for today. the bigger picture is up I think.

tick tock. thinking...

in at a buck, out 1.36

DZZ

Thanks 2nd

>We're near the 20 day a place of professional (and amateur) accumulation

Can you elaborate on that Sharky?

So if someone has an opinion with which I disagree, it is because some special interest is deliberately spreading misinformation? I find this definition to be nonsense, particularly when the mirror image would be a form of rigidly enforced cultural consensus, such as the environmentalists are attempting with manmade global warming.
I guess I must be one of them if I suggest that the charts are indicating a Dow 6000 as a real possibility.

they do...but today is the fourth friday of january '09...next opex will be feb 20...

I found this Cara archive apropos of Bill's gnome reference today:
http://www.billcara.com/archives/2006/05/just_who_...

I want to buy FAS but since there isnt enough data for reliable charts, i am using SKF as the opposite indicator, ESPECIALLY since FAS is 3x (more volatility) and SKF is 2X.

I personally wouldnt buy FAS, until i saw SKF overbought and signaling it is going lower.

And right now, skf is not overbought yet. but too bought for me to open a position.

http://tinyurl.com/co9ltp

http://tinyurl.com/btwpwn
I expect "the big runup" is yet to occur.

"Starting today, we must pick ourselves up, dust ourselves off and begin again the work of remaking America," he says.

Hold on... there are some huge busts that have to happen first... We're watching for busts in U.S. government debt (U.S. Treasury paper)... the dollar... and finally, after a big run-up, gold. Then, Americans can rebuild on a more solid foundation.

"...And, eventually, even the U.S. government itself will go bust. (A bankruptcy that will most likely be disguised by inflation...)"

Hi Todd,

You are in Regent Bank Territory down there in Florida.

What is your opinion on Regents bank? Didn't the CEO write a letter to the shareholders a few months back assuring them Regents was strong financially??

What is your opinion on BAC directors buying large amounts of shares a couple of days ago?

Just curious on your take on this. I have some bac at 5.59 and on the fence about it. Also comtemplating my purchase of UYG a couple of day ago. Maybe STEM is a better gamble (and yes, this all feels like gambling these days!)

thanks

vb

"I guess I must be one of them if I suggest that the charts are indicating a Dow 6000 as a real possibility."

Yes, anyone suggesting DOW 6000, or any number for that matter, are under the influence of special interest groups intentionally spreading misinformation. Prices trade only in absolute vacuum, absolutely.

gotta love my broker. I placed a telephone order for FAS to be sold break even yesterday just before closing.

They didn't do it and subsequently it was sold this morning....at a substantial loss.

I am so outta that joint ASAP.

Swiss, see my comments late yesterday about schwab.

"I am so outta that joint ASAP."

Don't buy anything else by phone. Do it now, set up your IB account. You've got to do this or you'll get eaten alive trying to trade by phone IMO.

VB,
You might want to consider KOOL; a takeout target I believe late Spring. They make the bags that stem cells go into for freezing. No one else is in that space. They make other items as well. The machines that extract the bone marrow/umbilical cord cells to go into the bags. The company has the equipment and intellectual patent properties but a poor management. The BOD fired the latest CEO who replaced the founder/CEO. They are not looking for a new CEO and have given the duties to the CFO. They have given a directive to work to profitibility in the next quarter. That tells me that they are looking for a buyer once they achieve that goal.

Thanks! I'll check it out.

I vote for Mr. Market

Depends on how you define "liberal." That has changed significantly over the years.

posted 9:52

I think they have setup more affordable hotel accommodations options too.

Guest on CNBC pumped a stock.

He recommended it and when I checked it was already up to about 5.20 !

Appears to be a good stock though whihc huge jumps in quarterly earnings and a stron balance sheet.

was discussed in another blog some this week on Jan 17 when the prices were much lower.

Team, comments on this stock ?

You made my point. The science on global warming is anything but settled, but many proponents of man made global warming are attempting to enforce an orthodoxy.

If I were looking for a broker it would be one that aligns with CTAB. The only issue I have with this is not being able to move cash in/out any time of day with ease and at no cost.

Sandy, it looks like a great short opportunity, especially the longer it stays verticle.

UTX - Downgraded to Market Perform @ Bernstein

>Having you considered paper trading?
Set up your trades using Yahoo Finance. When you are consistantly making money on paper then dip your toe in the market with real money.

I just smiled at the thought of putting training wheels on my bicycle :)

No Bear I'm happy (very happy) at the learning curve since being here.

Unfortunately ETF's are not internet tradable in switzerland. It's all telephone, from me to the broker who calls NY.

As for yesterday's trade of FAS, I would have comfortably sold the stock (having missed the peak early afternoon) still at profit if I was on a computer. I'm much faster pressing a key than this dinosaur process that I go through now.

Brokers fee for the trade is 100 USD buy and sell. It's too much. Time to change.

Sheesh, even Obama is spreading propaganda.... where does this stop??? I assert the problems are real, and the sooner we accept this and begin working with it, the better off our ability to think on our feet will become.

GOOG - numbers cut at Barclays. Shares now seen reaching $460. Estimates also lowered, to reflect lower expected top-line growth. Overweight rating.

taking off the shares bought this morning-> 15% in 90 minutes? have to take it...

FD: long at 13.50

trading above the open where the big boys got Ma and Pa to panic.

Cha Ching! congrats. now book the ctab bahamas with your gains.

:)

Is it symbolism, innuendo, or do they not know?

Hearing Nancy Pelosi and John Boehner discuss the size of Obama's package is scaring me.

Qtr & annual results due Feb 19. The stock has traded up from 4.90 January 15 and is testing it's January 2 high of 6.58, those highs were broken October 6. It's looking good. We'll see if silver can hold above 11.50 and gold above 880 I could not find any insider trading info.

bought @ 42.27 - Sold @ 45.00.

Took a wee longer than 90 minutes

thinking about switching to march calls for further adds...

After a few unsuccessful attempts today, gold finally broke above key $880 resistance. Air space should be clear until well above $900. Silver appears to be tagging along for the rise but hesitantly. Gold has put in a very impressive display today especially with the USD being up as well. Additional confirmation would be prudent as gold has been rocked before on Mondays.

I bought SLW Jun 5 calls some time back and have been underwater until today. I am bullish on PMs but recommend buying on a pullback

Gold is at its all-time high in euros, it appears.

http://tinyurl.com/2fwp45

100% cash. Sold everything.

Any forex traders in the crowd?

Am tempted to change all back into Swiss Francs, given the dollar's strength.

Any likelihood of USD coming back down in the short term?

Jan. 23 (Bloomberg) -- California is investigating whether Wall Street banks and financial advisers conspired to overcharge local governments for derivative contracts tied to municipal bonds, a state official said.

Investigators are looking into whether bidding for guaranteed investment contracts was rigged.

http://www.bloomberg.com/apps/news?pid=20601103&si...

Foz-at the risk of beating this to death, shouldn't we all be aware that propaganda is not new. Propaganda is not necessarily the dissemination of untruths; it can be factual, even though it does not present a balanced view or is incomplete. number2son is demonstrating the problem with this concept by accusing me of a wilful denial of his established orthodoxy. The concept of agnotology is a means of stifling debate.

Further, I am not sure how interested this administration is with letting the Federal reserve "play god" with the price of PMs. I think there is a much better chance now that this move in gold will be sustained - globally, once these banks get nationalized, government balance sheets will have acquired a lot of new liabilities but very little in the way of assets.

Agree 100 %.At ONE Dollar per 100 shares.....Swiss could save a fortune,let alone make one.!

Also IBKR is a Cara 100 selection.

Post-bottom high was 34.45 on 1/2/09 - currently just below 34. I think we hit or exceed 34.45

today. 50 Day MA (27.43) moving closer and closer to 100 Day MA (27.75) - could be a powerful blast to pull it right above there.......

I plan on posting my junior producer lists again this weekend for anyone who is interested. Todays action should set off a number of RSI buy alerts....

Billy, I am in agreement with you on PMs. I think the base is in, for gold I expect we break the magic 900 soon. I certainly didn't expect it to be today, with gold spot @899.48 momentarily

Perhaps we will see a major double bottom in the dollar, which would complete the move in the Yen since 2002. There may still be a little life left in the Yen/Dollar bull market, though we have seen much to support the dollar on declines in the Euro and Pound.

Gold did not participate in the recent Yen rally due to the fact that interest rates are not tied to its price, though bullion lease rates have been declining in the past few months after a sharp rise.

The rise in gold price may be due to quickening pace of investor demand for the physical bullion, that and the drawdown of physical supply from the major trading warehouses may be affecting the ability of trading entities to fulfill their contractual obligations by delivery. No such problems with delivery of any currency that I am aware of.

$901 trigger for gold:

http://www.rickackerman.com/commentary/2008/A_901_...

(note that the date of this article is Dec. 31)

check dba I don't know particulars

thx for asking but why would i know whats going on any more than anyone else?

im still peeved i moved some of my gold allocation to HOU!!!!

it would be nice to see gold start moving through a 9 handle again!!
i wont even mention the "1" handle....yet!!!!

"HUM! Nobody can have an opinion on the market without being under the control of an international cartel?"

Yep, and all extremists should immediately be lined up and shot!!!

1100 to be laid off at HOG... Their problems are real, regardless of the root causes. This is the reality we are trading in, whether it be manipulated, propaganda, or not. The ostrich sticks his head in the sand.

The only thing I am sure of regarding $USD is that long is currently the path of least resistance. From a logical standpoint it is easy to make a case for why the dollar shouldn't be strong (government spending, yadayadayda) but there is very little case to be made about the strength of other currencies (the gauge by which $USD strength is being measured - except perhaps the Yen!). Euro and Sterling still subject to lowered borrowing rates and assumption of large bad banks debts.

So I think trying to predict a bottom in the USD vs other currencies is a dangerous game at this point - no one wants to cover their dollar shorts but they are getting squeezed mercilessly - its hard to tell when that sort of action will subside.

There is the comparative value in the $US and the Yen since interest rates cannot lower any further. Other currency regimes are looking at lowering their interest rates as things deteriorate, implying that their value vis a vis the $US should be lower. I believe this is why the Yen is such a performer, since the unwinding of the carry trades and the demand created by net settlements are boosting the currency.

Technically, the Yen should be done in its bull against the dollar, but the irrational nature of zero interest rates is having an adverse effect on currency valuations.

Proctor says. “But ignorance also comes from people literally suppressing truth—or drowning it out—or trying to make it so confusing that people stop caring about what’s true and what’s not.”

It seems obvious the reverse of this statement (and others in this argument) may also be true. Just as the statement, "oil and auto industries carefully seed doubt about the causes of global warming," may be true, those with political or financial interests in pushing the man-made climate change argument may also be spreading propaganda favoring their interests.

Consensus, like consistency, may also be the product of small minds.

(Or... it may not be.)

IMO, forming hard and fast opinions is not conducive to being open to rapidly changing conditions.

Whether speaking of market conditions or news from Gaza, truth is as illusive as ever — perhaps even more now than ever with the ubiquitous influence of blogs and other unsupported or substantiated information. How much print and website "news" is simply organized from Goggling by "journalists"? How much is from personal investigation of evidence?

With what we've recently witnessed in financial derivatives packaged as "tranches" we could be getting the same in media reports of all kinds. A bit of truth packaged with a bunch of rumor or lies will find a market with little opposition.

Money/profit is what drives the news and has since Edward R. Morrow lost his fight to maintain journalistic purity in the 1950s. (Perhaps even before that?)

I am finding more validity in anecdotal accounts than ever before.

In my part of the world job losses and job quality have been leading to financial and economic disaster for nearly two decades. The economically developed world seems to currently be discovering a bit of the same.

Today is the day...

No miners in RSI buy/accumulation mode now.

ran DZZ:DGP in stockcharts.com. 7 day RSI was about 30. Bought some DZZ at 23.87

Thanks Old Goat, I'm going to frame this one.

"... all extremists should immediately be lined up and shot!!!"

Well yes, all right-thinking people would know that.

Is POG decoupling?

POG is great but POS is vertical.

I sat on a very similar case and it creaps you out for a while.

long at 107.42. Feb max pain 114. Lower price low, MACD diverging.

do ur own homework

QUA is a good company. I have been invested in QUA for a long period of time during the commodities boom. It is moving today, but clearly it is pulled by the sector. The last time I looked at their numbers, they had a quickly diminishing cash balance. Anyway, I prefer to buy a stock that attracts money, just to have the odds on my side.

QUA is extremely oversold and might move back quickly up if the sector moves. If the sector tanks, it will be the first to go down, because it is "unloved".

To say simply what I think this market is doing right now is to move money out of treasuries into commodities related stocks.

If the new administration could put banks under their control (and maybe suspend trading in their stocks for some time) that would stabilize the system. If, above that they give money to healthy banks (there are some) to lend to the industry, we will have a market reversal.

Pascal

You should have seen him on CNBC last night bragging how he is currently long china, gold, banks etc. AND correspondingly short the same. His newsletter is OK but you need to have the BS filter on high.

Unless there is a departure from the historical extremes of the Gold/Oil ratio, I think that gold busting above $900 will likely drag oil prices upwards.

We are currently around a 21:1 ratio - above 20 IMO is unsustainable.

Oil beginning to rocket upwards. GDX just busted above that 34.47 post-bottom high mark.

Quite an interesting day!

still bullish

These concepts are brought out in the piece. I do not know if they exactly address the concepts...but are important nonetheless.

http://www.takimag.com/blogs/article/life_as_a_tra...

DJIA down 147 in first 30 minutes. Big boys got Ma and Pa running. GE, MSFT, etc.

Now down 30 which is virtually flat.

Love those panic opens with capitulation plays.

buying 'Wintel' feels a little like betting on Jim Brown @ age 40-> it was a winning bet...

I spoke on the phone today with a representative from the USO ETF, who did confirm that if the spot price and all the oil futures contracts stays constant in a contango environment, the USO fund will keep going down every month by the amount equal (in percentage terms) to the price difference between the expiring futures contract (which is priced at the spot price right before expiration) and the new front month futures contract. According to my understanding, nothing special happens on the roll date, since USO sells its current futures contracts at the spot price and buys the one-month-out futures contracts, and so the value of fund's assets do not change on that day. However, as time goes on, the price of the new futures contracts being held by USO will decline toward the spot price, and so USO will keep gradually going down throughout the month even if all the futures contracts and the spot price do not change.

I am not sure that the oil contango will end soon, as the oil prices can really stay under $30 while demand is much smaller than supply, as we are seeing now. In this case, the oil price will go down to the production cost of the last 10 most expensive million barrels per day, and given that the world is demanding now $82 mbpd or so, the Canadian oil sands might not even be required in order to keep supply inline with demand. What I am getting at is that the production costs for Canadian oil sands (which are the most expensive production methods in the world) are an obvious upper bound on the oil production cost now. Suncor reported on Tuesday that they expect their production costs to be in the range $33-$38 in 2009. So as long as demand stays much smaller than available supply, the oil prices can stay under $30, which can be quite a few months.

While contango lasts, I don't like the value erosion to work against me, so I just sold all my USO at $31.57, which had a cost basis of $30. Instead, I am planning to use this money to buy BTU, which tracked USO very closely over the past 2 years, but which should perform better than USO during the steep contango we are having now.

almost feels like flying the inverse of UAUA last summer...

Sold my ABX. Keeping GG, SLW, WGW and GIX. I will leave ABX trading to the pros like Bill. Since he saw fit to remove them from the CARA 100 I decided it was not in my interest to hold them any longer.

I wish GIX would come out of the closet. As I recall Bill thought they were one of the most capable prospects at last years convention in Canada.

Sometimes it pays to wake up early and sometimes it doesn't. Today I obviously woke up half an hour too early, as I could have sold my USO now at $32.70... But I am still keeping some UCO and enjoying the ride. :)

I'm a little surprised by this. He has always seemed to be a straight shooter to me. He doesn't come across to me as a guy of the "sleazy stock picker" ilk. What about him don't you like, besides the slightly awkward use of "of"?

RE: Bill's Gartman comment, I must have missed Gartman saying the opposite about gold recently...?

EDIT: I just saw Bill's follow-up comment so I now understand the "bigger gist" of the initial post.

Gartman does maintain a track record for his newsletter. So if he stated that he was long Gold, his newsletter would show what date he entered the trade and his position size. I read his letter for 6 weeks for the then free trial so I know he would not say he was long Gold without the newsletter to back himself up or any other commodity/stock position.

The newsletter writers are important for the speculative crowd, but the gold bull market has been in an investor demand phase for some time, which could very well take many quarters to play itself out. So it would not be out of the question if Mr. Gartman seems a little behind the times overall.

But there's sure the be a very heated shouting match in Fast Money tonite.

This is from his Dec 12th newsletter

"as the dollar has plunged and doing so despite the fact that the precious metals are falling quite sharply today. Note that gold is down nearly $20/ounce overnight, and is down materially more than that when compared to its highs made yesterday in Asia dealing. Gold's recent rally has been sufficiently strong to put it back into overhead resistance, thus inviting profit taking. But in reality, we fear that gold is being seeing as the one area of liquidity where cash can be gotten.. in size... at a moment's notice... which is being needed today to fund margin calls
as panic spreads through the markets. In this sort of environment, gold should rise, all things being equal; but its problem is that not only is gold a store of value, but it is a store of liquidity, and it is its latter attribute that is its problem today. Should spot gold trade down into the
$802-$807 level we will be tempted to own it as a hedge against disaster, but otherwise, we'll leave it to others far wiser or for more idiotic than we to trade gold"

I'll see if I can get his lastest one that to see if he advised mading the purchase when it dropped into the low 800's

True enough greg, I have been reading the Gartman Letter for at least 8 years now and he does provide reasonable disclosure. What irks me is specifically his gold trading. He always needs to preface his gold buys with "'I am not a gold bug blah, blah ,blah' which is fair play however he waffles from being long physical gold (coins I believe) and the indexes and occasionally in past/currently years gold stocks. He has been horribly wrong at various times and oddly right at others but is a better contrarian call in most instances. Bill, I would agree he isn't a tout he is very articulate and has an excellent background in the commodity space etc. I do find he suffers from the same boorishness he accused the tech shills of having before/during and after the tech wreck.

added to position at 108.01

I'm not sure if Gartman can be accused of something that is a pervasive media practise, where you find that market darlings are promoted only to see them sell off precipitously once profits are taken off. My opinion on that is that all of the newsletter writers participate in the same exercise of selling what they are promoting, its no different than what you see in the business press, or via the media.

The sell side industry needs its advocates and its advantages, its had a lot more traction in the markets than the buy side.

i always read gartman when i can,

i wouldnt accuse him of being disingenuous.

i think he is a shameless self-promoter who uses a john mccain type tactic of portraying himself as this maverick trader who trades according to principled ideals and isnt swayed by the crowd...

i have followed his gold trading for years with interest, not because i think he is generally right, but because it gives me a feel for what many others may be thinking. a barometer of sorts.

i think his use of superfluous old english lore such as

"we are long 3 units of cotton, whilst short 3 units of soybeans, as the old saying goes 'beans in the teens', we are not farmers here at TGL, so when Farmer Joe speaks, we are on balance inclined to listen. and listen we shall."

anyways,

back to gold.

a close above $900 would just be the cherry on top for the week.

GG Coming back in and in a tight channel.

Next time I going to hold this one without a stop

DONT DO IT

With all due respect Vinod.....Get A Grip On It!

No stops may be fine for scaling into a long term hold position.(you can average down).No stops for a trading position ......you better have REAL deep pockets.

Very much enjoy your posts ,and would much prefer to view them as a Speculator rather than a Spectator

All the best!

Thanks for the clarifications/furtherance, Bill.

I'm curious: how confident (or not) are you that all that will end under the new administration?

REUTERS UPDATE 2-HudBay-Lundin deal in danger as OSC orders vote [JJRKQDP]

(Adds details)

By Cameron French

TORONTO, Jan 23 (Reuters) - The Ontario Securities Commission ordered HudBay Minerals on Friday to allow shareholders to vote on its C$550 million ($440 million) takeover of Lundin Mining , raising both hopes and fears that the deal will not go through.

Shares of HudBay jumped more than 25 percent on the news, recapturing a chunk of the ground lost since the unpopular deal was announced last November. Lundin plunged 19 percent, as the potential loss of HudBay's deep pockets reignited fears of insolvency.

Both Canadian companies mine mainly copper and zinc, prices of which have plunged amid a global economic slowdown.

"I think the probability is that it is (dead)," Blackmont Securities analyst George Topping said of the deal. He upgraded shares of HudBay to "buy" from "hold" on expectations the deal will get voted down.

The three-member Ontario Securities Commission panel ruled HudBay must get approval to issue the 153 million shares it planned to use to pay for Lundin, an amount that will double HudBay's publicly traded float in the process.

I spent a good deal of time in the past trying to learn from CNBC.
What I learned is to turn off CNBC. Too corrupt.
If one goes to a local restaurant and keeps getting bad meals at some point you need to quit eating there.

"If one goes to a local resturant and keeps getting bad meals at some point you need to quit eating there."

it's not so much the meals are bad; they're just bad for you...

After a week of relentless shake-outs, I am thinking a very strong last hour of short covering to end the week. Not enough genuine shock and awe left to keep shorts comfortable holding into the weekend.....

While I was out, my sell limit order was hit at $3.30 for 4 contracts of BTU February puts at the strike price of $25. If these options expire, I'll have a one-month gain of 13.2%, annualized 158%. If BTU rallies strongly, then ACI will follow it, and I have some ACI already. Basically, I am just putting to work, in a defensive way, the money I got from selling USO today.

With about a 1/2 hour left in trading, it would be a great set-up for next week if the DOW closes below 8000, gold above $900, and silver above $12.

vanillabean what is your take on the PALM story in light of the AAPL direct shot at the co. in regards to IP?

vinod - "I do read, listen and pay attention to suggestion. And have respect to comment by member here."

Those gaps down were the burr in my attempts to implement a stop limit strategy, a prime and glaring example of how markets are rigged, IMO. Upstairs/downstairs trading etc, etc... ad-nausium. Regulators turn their heads, draw their bribe money, and walk away. These phenomenon are so glaringly obvious the shame of it all is incredibly baffling (for lack of a better word).

Follow up article in Nat Post:
http://tinyurl.com/apkff3

Oops - I was looking at the daily chart. Looking intraday it looks like you picked the bottom for the day... :)

holding into the weekend.

Texas Ratio
http://tinyurl.com/as82hn
Tracking the $700 Billion Bailout - NYT
http://tinyurl.com/65mmh3

Craig,

"I sat on a very similar case and it creaps you out for a while."

Definitely!

When the sweet, scared little girl gave her testimony I'm sure I wasn't the only one who choked up. When we returned to the jury room several minutes later and were still not supposed to talk about the case, the looks between us spoke volumes.

'journalism'?

does it matter? i'm anti-everything right now when it comes to trading the markets...

enjoy the weekend, all...

You walk into the room
With your pencil in your hand
You see somebody naked
And you say, "Who is that man?"
You try so hard
But you don't understand
Just what you'll say
When you get home

Because something is happening here
But you don't know what it is
Do you, Mister Jones?

You raise up your head
And you ask, "Is this where it is?"
And somebody points to you and says
"It's his"
And you say, "What's mine?"
And somebody else says, "Where what is?"
And you say, "Oh my God
Am I here all alone?"

Because something is happening here
But you don't know what it is
Do you, Mister Jones?

You hand in your ticket
And you go watch the geek
Who immediately walks up to you
When he hears you speak
And says, "How does it feel
To be such a freak?"
And you say, "Impossible"
As he hands you a bone

Because something is happening here
But you don't know what it is
Do you, Mister Jones?

You have many contacts
Among the lumberjacks
To get you facts
When someone attacks your imagination
But nobody has any respect
Anyway they already expect you
To just give a check
To tax-deductible charity organizations

You've been with the professors
And they've all liked your looks
With great lawyers you have
Discussed lepers and crooks
You've been through all of
F. Scott Fitzgerald's books
You're very well read
It's well known

Because something is happening here
But you don't know what it is
Do you, Mister Jones?

Well, the sword swallower, he comes up to you
And then he kneels
He crosses himself
And then he clicks his high heels
And without further notice
He asks you how it feels
And he says, "Here is your throat back
Thanks for the loan"

Because something is happening here
But you don't know what it is
Do you, Mister Jones?

Now you see this one-eyed midget
Shouting the word "NOW"
And you say, "For what reason?"
And he says, "How?"
And you say, "What does this mean?"
And he screams back, "You're a cow
Give me some milk
Or else go home"

Because something is happening here
But you don't know what it is
Do you, Mister Jones?

Well, you walk into the room
Like a camel and then you frown
You put your eyes in your pocket
And your nose on the ground
There ought to be a law
Against you comin' around
You should be made
To wear earphones

Because something is happening here
But you don't know what it is
Do you, Mister Jones?

Copyright ©1965; renewed 1993 Special Rider Music

Starting the weekend off deep.

A friend of mine from a Wall Street hedge fund suggested to me today to hedge this strategy, so as to reduce the risk even further. That is, he suggested buying June 09 XLF puts with a strike of $7, which would triple if XLF falls 50% by June 09. If that were to happen in an uninterrupted series of declines, then FAZ would probably triple as well, judging by its performance during the recent collapse of the banking stocks. Interestingly, if an uninterrupted series of declines were to happen in XLF, then it would fall to $4 much sooner than June 09, in which case a lot of volatility premium will remain in the put options and they will more than triple. If, however, XLF falls to $4 in June 09 with some occasional rallies, then FAZ might very well be down, in which case this strategy would make money both on FAZ short and XLF puts. If we have another plunge in the XLF on Monday, then I'll double my FAZ short and will hedge it with some XLF puts (or will wait for a up day to buy the puts).

Gartman is no dummy, but for the last year he is as wrong as he's right. He has good technical insights and a good set of eyes for things that are meaningful to monitor. He writing is quite boring IMO and Bill's is much more colorful.

If not mistaken, he has been long one unit of gold which he purchased about a month or so ago. Here is what he had to say today in his writing's.

"Finally, regarding gold… and sounding very much like
a broken record… we are bullish of gold, but only
modestly so, and have remained such for the past
several weeks. We have included an hourly chart of
spot gold at the upper left of p1.this morning, and we
think that chart speaks volumes. A move upward
through $870… where we bought gold last… would
allow us to tell those who’ve not yet entered the market
to do so, and would be somewhat enticing even to
those of us who are long already. For the latter, which
includes ourselves, we shall wait until spot gold trades
fairly above $885 before adding to the position.
We are bullish of gold for the simple reason that with
the currencies under duress… and most notably the
EUR and now the Swiss franc… Gold is quietly but
steadily becoming the 2nd reserve currency of the
world. The dollar shall remain the world’s primary
reserve currency, and so long as the US remains the
dominant military power in the world, it shall hold that
status. No country shall challenge it. But with the
recent rioting in Greece and the Baltic states, and with
Russia flexing its energy muscles against Ukraine
specifically and Europe generally, “Euro-“land seems
more and more vulnerable. Prof. Friedman’s
statement that the EUR would not survive its first real
recession looms larger and ever larger."

Maro, who use to post here, in his last post I think he gave his method of determining a bullish or bearish trend. It is the price crossing the 50 wma that signals a bullish trend. Today, we achieved that condition. So Maromatics would be looking at the long side of gold here going forward.

David- many thanks to you and SiO2 for exposing the ultra ETFs for the cannibalistic serial portfolio killers they are....

2nd
We were in a bar after work, lots of trader and other who works in financial industries.
Their take on C is it will be around buck and not good for BAC unless government keeps pumping money in it. All bank’s stock are too high. I got feeling that I should not hold UYG/XLF like ETF more than couple of days.

A new digital plague has hit the Internet, infecting millions of personal and business computers in what seems to be the first step of a multistage attack. The world’s leading computer security experts do not yet know who programmed the infection, or what the next stage will be.
From NYTIMES

"Freddie Mac, the big struggling mortgage company, said late Friday that it would need an additional $30 billion to $35 billion in government aid as it copes with billions of dollars in losses on the bad loans it backed during the nation’s housing bubble.

The company disclosed in a filing with a Securities and Exchange Commission filing that it expected its government regulator, the Federal Housing Finance Agency, to request the money from the Treasury Department."

http://tinyurl.com/aenkg5

vinod- have you seen the trading volume in C, BAC, UYG, and FAS the last 5-7 days? close to 3b shares on C/BAC, over 1b on UYG, 350m on UYG...if that doesn't indicate at least ST capitulation, i don't know what would...

if i had to guess, the selling has probably not been the smart money...of course, i'm more interested in finding out who's been buying...

how about this from last june: "we were in a bar after work, lots of traders and others who work in the oil industry. their take on oil is it will be around 200, and not good for the global economy unless the government steps in to stop the speculators. all oil stocks are already high, but can easily go higher. i get the feeling i should not be shorting USO/XLE more than a couple of days."

Thought this was funny...We filed our tax return late. I asked my wife yesterday if we actually received our stimulus check for last year. When told we did I asked her what she did with it....."I used it to pay part of our property taxes."

The Center for Nonsense and Bipolar Conjectures (also known as CNBC) is continuing its tradition of mental illness with the recent addition of the most sought-after of delusive diseases – multiple personality disorder.

The site is just the tip of the iceberg in terms of the wild volatility that once accompanied the market, but now is becoming a characteristic of the news and analysts’ interpretation of that news.

Against my better judgment, I want to confess to my readers that I regularly use CNBC’s website to check commodity prices, as they have a quick and easy real-time menu that saves me 13 seconds of logging into my own securities account with a nameless broker. Unfortunately, this throws me into the obstacle course of headlines that, similar to grocery store checkout magazines, are offensive, petty, and usually unfounded – but difficult to ignore.

http://www.oxburyresearch.com/content/view/400/36/

Agnotology was the word of the day, wasn't it?

2nd_ave, I would like to point out that ultra-long ETFs are much less susceptible to value erosion than ultra-short ETFs. For example, I purchased QLD on 10/3/08, which closed on that day at $44.75 while QQQQ closed at $36.18. Today, QQQQ closed at $28.90 while QLD closed at $25.13. So QQQQ is down 21% since then, while QLD is down 44%. That period included some of the highest-volatility days in the recent years, and value erosion increases with volatility. In a less volatile period between December 4, 2008 and January 20, 2009, QQQQ stayed flat and QLD stayed flat, so value erosion was insignificant. UYG, being more volatile than QLD, is more susceptible to value erosion. For example, on November 24, ^DJUSFN closed at 203.91 while UYG closed at 5.06. On January 13, ^DJUSFN closed at 202.15 (down 1% since Nov 24) while UYG closed at 4.78 (down 5.6% since Nov 24).

I am still holding QLD, USD, UCO and UYG (with my biggest position among them by far being in QLD), but I am planning to get out of all ultra-longs if we have a rally in the next couple of months.

Vanillabean:
I have been following this sector for years out of a scientific interest as an academic physician.
The stem cell companies have had a boost by FDA clearance for human trials using stem cells. Geron (GERN) has received approval for human embryonic stem cell use in the spinal cord paralysis. The preliminary animal work has shown that paralyzed rats can walk after stem cell treatment.
The press on this subject has given all stem cell company shares a boost but remember that this upcoming study is the earliest phase of trials (Phase 1). This phase establishs the promise of the therapy in humans. Subsequent phase 2 and 3 would further establish safety, dosing and larger numbers. I would expect much excitement if the Phase 1 has a positive result as the promise of stem cell treatment is huge and would establish the new field of regenerative medicine. These stocks at present are speculative and trade on momentum.

Disclosure: Long GERN

Fishfulwinker, I have fallowed RGBO, (previously RGBI) for a while. Now that they have FDA approval for their collagen scaffold replacement for meniscus damage, I see a lot of up side from here. Yes, it is a very tricky surgery, but has done well abroad.

FD Was long but sold on the news and want to renter.

Good Morning everyone. It's 5.44am local time and a balmy -2 degrees C.

I saw a MACD divergence on $gold based on today's closing.
http://stockcharts.com/h-sc/ui?s=%24gold
is that something we should alert for PM's uptrend?

I think that there is plenty of reasons to be worried about the US big banks (C and BAC as well as others).

The evidence seems to show that the entire banking system is technically insolvent. Barclays in England is apparently close to circling the drain and the chance of a full systemic crash is very real.

I have some shares in a Cdn. Bank (BNS) and I am questioning my recent purchase. However, it's in an account that I don't intend to touch for 5 years and so hopefully the dividend remains intact. It's paying 7% right now and they are still able to support the div. out of cashflow.

That said, I would not be surprised to see full-on nationalization in some countries, with nothing left for the shareholders. England is currently worrying the hell out of me. The Gov't. of Canada just announced a 64 billion dollar deficit over the next two years. Remember, California has more people than we do here in Canada.

So, I trade, hold almost nothing for the long term (<5% of assets) and stay cool. Interesting days ahead.

Bac is now @ .01 dividend. 2nd, just because BAC is a large bank, why is it so hard for you to see it nationalized? All of the depositors would be safe, up to FDIC limits. I could see it happen with out a wimmper as far as the average Joe is concerned. As investors/traders we place far more importance on this than Joe.

I agree with you Mark. As a depositor, as long as the govt stepped up and guaranteed my deposits, I'd probably be happy to have it nationalized. At least they'd stop wasting my fees on bonuses!!

I sometimes wonder if they should have just guaranteed all deposits and let the banks fail one by one. But I suppose then you'd have to guarantee all the pensions invested in toxic crap. But in the end, which would have been more expensive? And which would have given us a cleaner slate?

Can someone take up the task of explaining the transaction of buying a failed bank? In particular this failed bank: First Centennial.

http://www.bloomberg.com/apps/news?pid=20601087&si...
http://www.fdic.gov/news/news/press/2009/pr09007.html

"First Centennial, with $803.3 million in assets and $676.9 million in deposits"

I can't seem to figure out how the math would add up and make this worth it for First California Bank who is buying up (some) of the failed banks assets and all of its deposits.

So, Assets of $293m plus $227m from FDIC, is still $144.1m lower than the Liabilities of 664.1(only the insured deposits) plus the $35.2 premium paid.

And that is assuming that every penny of the cost to the FDIC is going to pay the bank that's doing the buying...

Even if you exclude the brokered deposits, it still doesn't make financial sense to me.

hi fishfulwinker,

Thanks for the info on GERN.

A close friend of mine used to fly jets for dr hariri in the early days. Used to fly in to pick up the fetus / placenta for experimentation. At the time, the doc was short on funds but had a dream. My friend gave him a good deal on the cost of the jet. Later hariri sold to Celgene.

dreams do come true / keep the passion :)

vb

In December 2002, Celgene acquired Anthrogenesis, a company dedicated to the research of placental stem cells and cord blood banking. Dr. Robert Hariri, CEO of CCT, incorporated Anthrogenesis in the late ’90s with a mission aimed at developing, testing, and commercializing human stem cells derived from placentas. “We’re focusing on the ‘pharmaceuticalization’ of stem cells,” Hariri said.

“We harness the unique biological properties of those cells and use them to treat a range of diseases,” he continued. “The therapeutic properties of stem cells were discovered almost 40 years ago. Stem cells serve as the foundation of bone marrow transplantation, but aside from that, they’re not very commonly used because no one has figured out a way to make them more accessible.”

Hariri and his team hope to discover an easier way to utilize the capabilities of stem cells. Currently, a patient looking to receive stem cell treatment has to find a matching donor, an arduous process comparable to that of organ transplantation.

http://online.wsj.com/public/resources/documents/s...

>not Geithner who is the operative who had been dealing with the NY banks, and is needed for negotiating purposes.

What does this mean, that Geithner's an insider that Wall St would be comfortable working with/will only work with?

Is this a pick for the people or for Wall St? Or is he a fall guy once this show/crisis is over?

Is it the same pragmatic/diplomatic solution that Obama found for Hillary Clinton as Secretary of State?

Do we need to remember her honesty and consistency in public affairs?

http://www.youtube.com/watch?v=uHVEDq6RVXc

(someone official, somewhere, is going to rub that in her face at some point)

It's going to be an interesting four years.

proudPapa,

Certainly not what you asked for, but may be of some interest to you.

This is from Van Hoisington @ www.hoisington.com (Q408 report)

"In the world's three most recent debt deflations—the U.S. fro the 1870s to the 1890s, the U.S. from the 1920s to the 1940s, and Japan from the 1980s to the very present—the low in long term interest rates occurred about 15 years after the end of the debt mania. Even 20 years after the end of the debt boom, interest rtes were not much above their yearly average lows. Using this history as a guide, it would not be surprising to experience a decade of low and declining interest rates."

Yesterday had an interesting program from the AEI. Here is a link to the description on the AEI website: http://www.aei.org/events/eventID.1862,filter.all,...

If any have a chance to see it in re-run this weekend (Of course Bill will be on the beach :)), it might be worth your while. One of the more interesting points that Phil Gramm made was that the the "repeal" of the Glass Steagall act was not really a deregulation, it was an "updating" of the associations in the financial industry that were already taking place, and that there was no repeal of any of the regulation that governed the individual entities from different areas of the financial world. He made the point that one could arguably say, from the history of Glass Steagall, that it was designed specifically to neutralize J. P. Morgan.

He went on to say that Credit Default Swaps are actually beneficial for this reason: The current rating agencies are part of a cartel that was not particularly good at doing their jobs. CDSs, as trading vehicles (and he fully supported clearinghouses and market mechanisms for them) are more efficient than rating agencies because as tradeable securities, they would have many more analysts reviewing their quality than the rating agency cabal, and would likely be a better determinant of credit worthiness.

Anyway...there were several panelists, as you will see from the link, and they provided interesting insights into the causes, current situation, and future concerns, from an economic, fiscal, and political point of view.

nemo, you lost me at "interesting points that Phil Gramm ..."

Is anyone looking at GE at these levels? It's trading at book value and the RSI's place it squarely in the accumulation zone.

2nd-I enjoy your posts, thanks...Can you explain "a trade around it mentality"? This coming from an engineer.

Thank you for the Van Hoisington report Grym. I found it very informative as well as sobering.