Cara's Commentary & Community Chat, Friday, Sept. 11, 2009

and gold, the Mad Hedge Fund Trader remarks the following:

"1) The precious metals markets were stunned with Barrick Gold’s (ABX) announcement that it will float a $3 billion public offering to retire its gold hedges in the futures markets. This means that the world’s largest producer is cashing in its downside protection and gearing itself for a ballistic move up in the price of the barbaric relic. The timing of the announcement, the day that the yellow metal broke $1,000 for the first time since February, couldn’t have been more auspicious. I have been a huge fan of Peter Munk’s ABX all year, cajoling readers into the stock at $27 in January before its 56% run (click here for report )."

I've noted a more Machiavellian view of ABX in this blog than what this guy has to say about the company. Is it fair dinkum to suggest ABX is simply going long?

"South Africa’s largest gold miner, AngloGold Ashanti’s CEO Mark Cutifani says his company put its money where its mouth is, taking off its hedges some time ago. “People are doing what they have been doing for 5,000 years, and that is buying gold as the only hard currency,” opines Cutifani."

There's another unhedged miner - AU.

"In the meantime, the Street Tracks gold ETF (GLD) announced that it has $34 billion of gold holdings, making it the largest ETF of all, and the fifth largest owner of gold in the world after four central banks."

Any thoughts on this statement? Why did GLD fess up to owning this much gold now? Was an independent audit held to verify this?

Good morning.

INTC - Upgraded to Buy @ Roth Capital. PT Raised from $21 to $25

Downgrades:

BBY - to Perform @ Oppenheimer. PT = $44
NOK - to Neutral @ Robert W. Baird. PT = $15

More good data from China.

Last week gave UTA here as a reversal play, up 25% since and now at 50MA and potentially can burst through easily. Could turn to a IBD 100 play near 15 as it has 99 99 numbers.

GE, MTW, YRCW, NCS, USU, MS

for the reasons I stated yesterday

Mr. Cara, any updates about your ETFs going public?

looks like an exhaustion gap to me. Time will tell.

RSI 7 day 88.42

no position.

Mr. Cara, are there updates on when your ETFs going public?

955 ET: Consumer sentiment to 70.2, up from 65.7

Consumer sentiment picked up nicely in the first half of the month, extending last month's second half gain. Reuters/University of Michigan's consumer sentiment index rose 4-1/2 points to 70.2 with gains split evenly between expectations, now at 69.2, and the assessment of current conditions, at 71.8. Inflation readings were mixed with the 1-year reading, reflecting lower pump prices, down 2 tenths to a very mild 2.6 percent but the 5-year up 1 tenth to 2.9 percent. Report after economic report are pointing to recovery, with this report pointing to recovery in the key consumer sector which so far, due to job losses, has been lagging. The month-end consumer confidence report from the Conference Board will break down in detail this month's consumer assessment of the labor market. Today's report made for immediate gains in stocks and a pop higher in gold to $1,010.

GRMN - That is interesting. I have a friend who works for GRMN and about a month ago they reduced their their work load of the factory workers from 5 days week to 4 days a week.

I guess they will reduce operating expenses to improve profit.

"That sounds like a challenge for Grym..."

Sorry, Les, I don't understand in what way.

removed...

Already wishing I hadn't been so conservative on the YRCW position size.

YRCW....that is one beat up stock/company. I will need to take a look at that one. Possibly a good risk/reward play.

Bullhunter, you don't need a weatherman to tell you its raining. All you need to do is look outside. This rally has created an opportunity to short names that are 50% overvalued. It amazes me that everyone is focusing on gold when the story is yesterdays news. THe real opportunity is to short retail and casual dining. These companies are tied into long term expensive leases and are facing an overtapped consumer and a weak dollar which reduce spending power. BBBY comes out with earnings Sept 23 and BWLD on Oct 27th. If we are in a recession, how many people are going to spend $50 for a dozen wings and some beer. Take a drive around your communities and see how many stores and restaurants that were added in the last 5-10 years. During this deleveraging period it stands to reason 1/2 won't be there in a year or so. The good news is some of them are publically traded. If you don't follow some of these names now might be the time. IF YOUR GOING TO FOLLOW THE HURD, YOU WON'T MAKE NO MONEY!

Analyst here has gone to the trouble of calculating chesapeake's production profile for its shale wells. The author suggests that increased consumption (I assume using the present cheap prices as a catalyst for changeover to gas burning over other resources) may have a detrimental effect on deliverability in the short/medium term. Sounds like a sweetener for those going long once NG prices have finished crashing.

http://www.financialsense.com/editorials/powers/20...

excerpt:

"In conclusion, the natural gas deliverability crisis that I am predicting is not years away, we have already seen signs that it has started. The last two EIA 914 reports (the monthly report that details US natural gas production) have shown a downtrend in US production. However, the crisis will not really come to pass until the first half of next year when US production declines accelerate. The deliverability crisis will be front-page news one year from now when an uptick in drilling activity does nothing to slow the current production decline. Be prepared."

agreed. July Month over month non-revolving credit (for big ticket items like Cars, education) off 11%, and credit/charge cards off 8.1% (on an annualized basis).

I'd love to hear about consumer/retail stocks that have lots of insider selling, diminishing short numbers, and are hitting long term resistance from pre-2008 crash levels. There are many!

There FIRE blows coming to new highs over 20.

Well, I learned some time ago that rational thinking doesn't pay well in investing. Too many stories too tell.
I appreciated the insider info from you, even though it may turn out to be misleading. As I said previously on this board, Oil:Gas ratio is ridiculous and it has to change at some point. Maybe the change started now?

UNG on the 60 min chart is about to roll over. That might tempt me into a position. Non yet. DYODD

I'm suspicious about the PE=129 number. However, can't PE look horrible just before a significant rebound? It happened that way in 1994 and 2003. Yes, PE will go down, no question about it, but it could via increasing E via inflation.

Les
Sorry, but I live and breath this topic every working day. I haven't posted much lately, but... IMHO this article is nonsense. He's taking bits and pieces of information and turning it into a pretzel. I can take the exact same information and show that gas prices will effectively be capped at under $5/mcf for the forseeable future. Please be very careful with this.

$5 would be nice compared to the current spot price.

Thanks for knowledgeable input and contrary argument...

but you spoiled prospect of making a zillion bucks next year :(

Here's a weekly chart of DineEquity, (DIN). The longer term trend line is near $30-31, which also matches up with prior support, and may represent a potential area to enter a short position.

http://chart.ly/pzse57

The daily chart shows the stock already at overbought levels using RSI 7 and slow stochastics.

Thanks mate. I like your charts - thorough and well explained arguments for the movement. Would you mind posting them here please? A search of your name in Chart.ly reveals nothing. Or alternatively if there is a way to pull your name up in a search bar in Chart.ly, please do tell...

Les, the easiest way to see my charts is to follow me on Twitter - @ToddinFL. Some charts that I mark up aren't always relevant to the conversation here so I refrain from posting them.

BTW, Brinker Intl. (EAT) has a similar looking longer term weekly chart, and the daily chart is even weaker. Resistance there is near $15.75

I have been trading some options to learn option trading in the last several weeks. I made some money on one lost some on couple of others (net loss of just a few hundreds).

So far seems like options buyers are dumb money and option sellers are smart money. Anyone agrees or disagrees?

Also, TDAmeritrade is not cheap. 9.99 + 0.75 per contract. Better alternatives?

One more question: are charts available on options? Would help with paper trading but nowhere to be found.

Jack,

Option buyers are generally considered to be "buying risk", while option writers (sellers) are "selling risk". This has been talked about extensively here in the past.

It's an important concept to understand as most novice options traders find a stock they like to move in a certain direction, then go out and buy a call or a put. What they don't fully grasp is that usually the writer of the option they're purchasing from has the edge because they tend to be the more experienced trader.

Options leverage can be awesome, and a person can make astronomical gains in a short time period. One can also lose their entire investment dollars in a matter of months if they don't know what they're doing.

a close above $1000 for the week seems to be a tug of war with gold looking destined to close just under.

miners looking imho weak and diverging from gold's action. we may be moving lower on the session but we are still up a nice chunk from yesterday.

as noted repeatedly by me over the year, w/ the headwinds working against the miners, it will take what i believe to be a parabolic move in gold upwards to unshackle them from the host or forces keeping them lower. for gold miners to move back to their relative value of 2 years ago would take moves in GDX that have been virtually extinct for the past while: high surges into the close on high volume in the face of a sagging market for sustained periods.

we got a small sample of that recently but now are loosing some momentum. follow through next week will be instrumental. i believe there are many nervous hands who were buying into the "3rd times a charm" nonsense that gold would explode through 1000 on this 3rd try. even 321gold.com has a post by the editor suggesting we take gold money off the table.

is it time to get contrarian against the contrarians????

A few minutes later, HND.TO is at CAD$16.50. :) So my plan for this trade now is to let it run until the end of the day PROVIDED I don't see HND.TO dropping below $16.10, at which point I'll exit this position completely so as not to "let a profit turn into a loss." I suppose this is the key when day trading...

Another rule of day trading, as I recall from observing 2nd_ave, is to take profits whenever decent profits are observed. So I have just placed a sell limit order at $17.04 for all HND.to that I purchased at $16.04. I suppose that's a decent profit...

tensions and nation disruptions.... LMT looks awfully good at these levels...

baz the stuff that is gonna be worn out from 7 years of operational use makes LMT a good buy. LMT is good just as a post-war, pork barrel, "lets stimulate congressional members voting districts with the only industrial production in the US that doesn't require consumers" long trade.

And for the conspiracy lovers, just as flu bubble attracts voters to the relevant stocks, imagine war or the threat of war as the worlds economy melts down and politicians search for a scapegoat as a boost to LMT, BA et al.

Thanks, Les....

I have a buddy who works for them. Malone has a good track record with SD, he is starting to work his magic at this place. Good for the long term, also the Eastern European Nat Gas play that has lots of implications on the russians selling to the baltics.

Nice job on HND David. I stepped away from the screen as UNG fell through yesterday's price as support and was too chicken to chase. A missed opportunity cost only, but it smarts nonetheless.

Is that a couple of flags breaking the steep run up in UNG on the 60 min? 5 min chart looks like its ready to turn but I ain't going long now.

Jack Black, RE charts on options, try
http://www.quotemedia.com

They are pretty good, just select the option, strike and month you want and it will give you a summary with a small chart. You can then select charts from the left hand menu and pull up a larger interactive chart for that particular contract.

But beware, charting and TA on options charts is not the same as equities due to the time decay which doesn't exist for equities.

JAG's an interesting stock. It didn't fail me and sold off heavily after opening and is clearly holding at the 200dma on the 30 min chart. I'd take an entry before closing but have no idea if gold is now here to stay above $1000. Anyone with any ideas?

Les

If you don't have a clear view on the direction, perhaps its not a trade worth making. Its better to let the prices move until a trade appears that provides you a comfortable level of certainty on direction in your defined time frame.

I personally am bullish on gold and more so on silver prices but price direction in the very short-term (day-trade) is only a hypothetical guess.

The point is, don't be overeager to be in the trade just because its more fun than being on the sidelines. Its better to lose opportunity than lose capital.

Dave,

I've been watching TBT for such a reversal.

Here's an updated chart.

http://chart.ly/wh33qq

You're right of course. What has me holding off trading JAG is the POG and this massive volume sell off on the weekly chart. I think it's institutional investors bailing out. Anyone with knowledge or suspicions of what that volume is?

edit: and that volume query shouldn't read early long investors "taking profits" - should read "bailing out".

Thanks Telestar, but I don't know much about trading stocks on earnings news. Any thoughts, opinions, good/bad stories in trading earnings anyone?

I'm wondering if fundamentals matter anymore. If Gap is down 3% in sales yet is breaking 3 year high then I wonder in trying to trade anything on fundamentals now.

edit: Wow, I can access charts with patterns drawn already. That's great!

I think and the price says (Trade what you see and not what you think)concept suggests that we are at the beginning of a really strong move in gold. Where it will be on Monday I have no clue. Between now and Feb 2010 based on seasonality the probability is that its going to be meaningfully higher and we should seek to buy weakness and not get shook out (sit on hands).

Here is gold's seasonality chart.

Thanks ToddinFL. Mad Hedge Fund Trader remarked yesterday it was time to load up again. Nice to see competent advice matched to great charts. Makes trading more confident.

Of course, it was disappointing seeing the PAL breakout fail. I love this stock though. I am keeping this sucker and I will win in the end.

One day this thing will be 9 bucks again.

All in all, a fun week, a successful week, but this is nothing, NOTHING compared to what's coming.

I pointed out to someone yesterday that you have to play the individual names rather than the etfs or indicies. I already played the options on SHLD. When WMT released earnings SHLD short rallied and then tanked when the earnings were released. This also happened to MW they rallied when JOSB earnings were released. A good deal of thought goes into my option plays. Its a combination or different things I look for. Because your entire investment is at risk you don't get a 2nd chance.

ALOHA !!

"Welcome to the monthly meeting of IA, Idiots Anonymous ... Hi, my name is KARL D and I am a Grade A idiot ... I first started stealing other people's charts and claiming them as my own over a month ago now ..."

Hey Denninger, will you please apologize or pay or do something with Matt Trivisonno so we can all look at his US Withholding Tax Charts that you "appropriated" as your own?

ITS OVER A MONTH NOW ...

Here look this is what I see instead of charts now ...

Withholding Taxes Chart

I’m not happy about having my content “appropriated” by bloggers who do not ask for permission, or even link back to my site:

http://market-ticker.denninger.net/archives/1384-Income-What-Income-Is-BEA-Lying.html

Thank you-u-u-u ...

Despite S&P making new highs, IYR looks to be making a triple top between early August, late August and now. There is a good reason for IYR to be bounded from above, and David Rosenberg wrote a little about it this morning:

"We just found out that the delinquency rate on commercial real estate loans has doubled since March to stand at 4.1% — remember that this indeed may turn into a financial event seeing as banks have $1 trillion of these loans sitting on their books and an additional $530 billion in direct construction loans. The National Association of Realtors is estimating that in the retail sector vacancy rates are likely to approach 13% by mid-2010 from 11.7% now, which would be the highest since 1991; the office vacancy rate in the U.S.A. is expected to jump to 18.8% from 15.5%."

I've now heard from two friends/family members that their companies are re-hiring. I won't disclose (nor will I trade on the information) which companies they are or which industry they are in but I will say that they are rehiring 25% to start of the same people they laid off. That's a good sign.

I also read on Minyanville this week in a Jeff Saut article that CAT is re-hiring about 12% of the people that they laid off.

Again, people bearish on the economy will say there is no top line growth. In what downturn has there ever been top line growth at the trough? Companies cut costs and use the profits to reinvest in their businesses, then re-hire, then revenues grow. This cycle appears to be no different than ones in the past. There are still plenty of doubters out there to make me remain bullish.

"$5 would be nice compared to the current spot price."

jack black: the sad truth of the matter is that even if the NG spot price rises to $5 in January, there is no obvious way of making ANY money on this move. If BillySundance is right and NG futures indeed represent the best market guess for what the NG spot price will be at expiration, then the futures prices should be expected to stay constant over time, just like the price of any stock is expected to stay constant (the current price is the average of all guesses about what the price is going to be in the future). Therefore, the ETFs such as UNG and HNU.TO are expected, mathematically, to stay constant over time, since they will simply be rolling from one futures contract to another (each at a higher price in the current contango environment) but price of each futures contract will stay constant over time.

It may also be the case, however, that futures have some risk premium built into them, and hence futures are actually expected (mathematically) to go down over time if the spot price is below the futures price (as it is now). In that case, we will see UNG and HNU.TO gradually decline while the spot price rises to $5 in January.

liquidation of Feb. 18 to March 18, when those ' in the know ' were buying, the true heavyweights such as RTP, BHP , APPL, etc., never crossed below their November, December and January lows... If so, we still haven't reached even 30 % gains from the 7500 ' low '... I will attempt to look up ALL of the big boys that never reached lows in that 30 day smash...

buy limit 45.52 good for the day.

I think this "Chart of the Day" is very telling: http://tiny.cc/D5vMq

1. The trend has been clearly down. The S&P has been losing value vs. gold.

2. Either we're reaching a point of resistance where S&P continues to recover/gain vs. gold, or it breaks "support" and begins to follow the steeper downward trajectory.

3. My assumption is that it's political suicide to let the S&P crash. So if they continue to support the market with QE, moral hazard, etc.; and assuming the more recent trend lines hold, then gold will rise to higher prices - keeping the trend in place.

Any other observations or opinions out there?

"I guess the crowd can become bigger and bigger and bigger".

Not to mention they have to take it up higher before they can successfully short it again. (Ex: last year's boom/bust in price of crude).

Thanks Kaimu for the link to Trivisonno. What do people make of the following opinion piece. It forces me to reappraise my thoughts on Ron Paul and The Fed. Obviously it doesn't change the fact that we don't need the Fed and eliminating the Fed now would be one piece of the puzzle to putting the US back onto the path to prosperity, but as the situation stands now, should we forget about the Fed?:

"Forget the Fed

The Fed is only a small player in the decline and fall of American economic power.

Think of it like this: suppose that you are appointed Chairmen of the Federal Reserve Board. Then President Obama takes you to a mothballed factory and says: “Your first assignment is to stimulate this factory so that it once again provides jobs for Americans.” Then he takes you to Armonk, New York, stops the limo in front of IBM headquarters, and says: “I want you to find a way to convince IBM to resume hiring Americans.”

You reply: “Sure thing boss. I’ll get right on it.”

Later on, when you are back in your office, you think: “How am I going to revive that factory? It’s gone to China and it ain’t coming back. And how am I going to convince IBM to drop its “No Americans” hiring policy?”

Then you think about the powers that the Fed has, raising and lowering interest rates and such. And you are forced to conclude that you are powerless.

The Fed has absolutely no control over what ails the economy. It has no control at all over trade policy, and it is wide-open free trade with low-wage nations that is draining the life out of the USA. And in the case of tech companies, it is immigration policy that is throwing Americans out of work as companies like IBM blatantly and arrogantly kick out Americans and replace them with Indians.

Get it? The Fed blows up bubbles with funny money because that is all it can do.

So when H.R. 1207, the regulate-the-Fed bill written by Ron Paul, stirs up the media, realize that you are being distracted from the real problem.

Forget the Fed. It is ultimately inconsequential to the fate of the USA.

(Note: Ron Paul is for unlimited free trade. If every factory in the USA went to China, and every service job went to Asia, it would be just fine by Ron Paul.)"

http://www.trivisonno.com/forget-the-fed

"According to the just reported CFTC data for the week ended Tuesday, the net spec long position in gold rose to an all time record high (dating back to 1993), up 22% on the week to a net 225k contracts. Silver net longs rose to the most since Aug ‘08 and net longs in platinum rose to a record high. Most other commodity changes in position were little changed and remain range bound."

http://www.ritholtz.com/blog/2009/09/gold-net-long...

Bull trap?

ALOHA !!

Les- Matt only views the US FED in one dimension. I documented that even Arthur Burns, US FED Chairman prior to Volcker, admitted in a 1974 FOMC meeting that the US FED could not control long term interest rates and Greenspan agreed.

None of what Matt talks of was ever the US FED charter. Since when have you seen the US FED at the personnel dept at IBM or stimulating employees on the assembly line at GM?

Matt needs to examine why US companies are moving overseas and not retaining their current manufacturing base in the USA. US companies are globalizing profits and socializing unemployment. The last stats I read showed that only 15% of all Chinese based companies were actually 100% Chinese owned. The other 85% were foreign owned.

All Matt has said is that the US FED is useless and I agree, yet he misses the MONEY aspect. If we were using any other currency other than a US FEDERAL RESERVE NOTE(FRN) then I would agree, but we are not. The US FED controls the money and as long as the US government endorses the US FED then the US government has unlimited funds(symbiotic monetary fraud). That is the problem ... UNLIMITED FUNDS means UNLIMITED DEBT. Who has to pay for the DEBT ultimately? Unlimited Funds means unlimited mistakes ... and here we are with massive malinvestment thanks to money that constantly expands.

Like Mises said ... "No country need ever fear for not having enough money." Even during the Great Depression and WW2 FDR never ran out of money, did he? Have the Swiss and the US government ever run out of money? What country is out of money today? Even Zimbabwe has lots of money!

Matt misreads Ron Paul ... Ron Paul is for free markets and competition. If Americans prefer to pay a factory worker $19/hr per union wages and the China non-union factory worker will accept $5USD equivalent then the American business will not be able to compete and those jobs will be lost to China. Why is it an American factory worker will not accept $5/hr pay?

There is an endless list of US business rules and regulations that govern how and when US businesses are allowed to operate. Chinese based companies have much less red tape and lawsuits to contend with. All these factors affect America's ability to compete globally. Obviously it is just fine by Bush and Obama for every factory and service job to go to China because ... they have!

When I see that the governor of Hawaii, Linda Lingle, cannot even cut spending by mandating a 3 day per month furlough of state employees because the union is too powerful then maybe its time to allow America to collapse, unions, housing, banks, money and all.

Just because I use Matt's charts does not mean I have to agree with him on everything. I don't ...

QUESTION PEOPLE WHO MAKE CHARTS!

http://ronsen.blogspot.com/2009/09/saturday-mornin...

Like Bill, I try to add value, while reinforcing "good trading habits". Maybe my site will always be an "undiscovered country". A teacher is first always a student.

Loannetter, Do I understand correctly that you were at one time in graphic design also?

I can't say I ever got to like the digital version as well as a hands on style. (My hands just do it without stopping to think about each move.) I had no choice, it was learn digital graphics or go to the Wal-Mart greeting brigade. Several of my friends in typesetting, photography and illustration/design did just that. At 52 I was too young and not wealthy enough to just quit.

It cost me over $100,000 (an RAM upgrade in 1993 cost me $45.50/MB) for hardware and software my last ten years. As a comparison: When I started my business in 1966 I borrowed $1,000 from my dad. $500 for supplies and equipment and $500 to support a family of four until my first checks came in.

My first MacSE needed an upgrade the day I bought Illustrator 98. I did lesson One and "not enough memory" to save it. Then it began to get frustrating. The video which came with the tool to open the case conflicted with the written instructions to cut a wire if manufactured after a certain date (Who knew the date?)

Every additional application had to be started in an order determined by trial and error at first. I had a total of 23 — mostly just to open from a PC and convert to Apple the standard of the graphics industry and then to some form I could show clients. Floppies to Syquest cartridges to Zip to CDs — I went through 5 different Macs in the first three years, followed by two scanners, four printers, a battery back-up system for power outages, a dozen external HDs... but outlasted all my competitors until my last client left for China, Mexico and Timbuktu.

My current iMac is two years old and needs more RAM to go to OS X10.5 Snow Leopard. For the first time ever I can't install the upgrade myself (requires a $2,500 license from Apple and special tools).

BUT... now I can just say, "Forgeddaboudit!" and go mow the lawn :-)

Note: Bill, I hope non-financial topic is OK on the weekend.

http://news.goldseek.com/GoldSeek/1252609733.php

Thought this was an intresting artical
http://www.theundergroundinvestor.com/2009/09/the-...

"It's not a very complicated story," said Charles Biderman, who runs market research firm Trim Tabs. "Insiders know better than you and me. If prices are too high, they sell."

Biderman, who says there were $31 worth of insider stock sales in August for every $1 of insider buys, isn't the only one who has taken note. Ben Silverman, director of research at the InsiderScore.com web site that tracks trading action, said insiders are selling at their most aggressive clip since the summer of 2007.

Silverman said the "orgy of selling" is noteworthy because corporate insiders were aggressive buyers of the market's spring dip. The S&P 500 dropped as low as 666 in early March before the recent rally took it back above 1,000.

http://jessescrossroadscafe.blogspot.com/2009/09/s...

DBRN - DYODD.

Chart aficionados - please do not hesitate to improve and/or comment upon what I post, for I am but a mere novice - cheers.

edit: Not sure about the weekly chart. There is a prior peak in early 2006 but with a price trough of 40% seperating it from the second peak in late 2006. I've ignored the prior peak as a point of departure for the down trend. Of course Vad will tell me that I'm creating a fantasy for my own personal bias, but we all have vices. Still with a previous peak in late 2008 it looks like reasonable resistance. The daily has risen in the last week on increased volume. I am looking to see if earnings news gets sold off on Wednesday, as RSI and stoch are overextended. Strong horizontal consolidation at $16.

Found this in a discussion on Gold. The article isn't important, except that the author is cautious against further gains in the POG, but this question posed by a reader was most interesting:

"QUESTION: Last week I guess I was expecting a comment on the negative divergence that is now visible on the daily charts of many major market indices, is this not something you consider? Although we have seen a small downside move (with some reasonable volume), I believed that this is a relatively rare signal and in the words of one of my former TA tutors when you get the signal it is the time to just "close your eyes and go short" (I am short).

ANSWER: Acknowledging that you may well be right, I must say, with respect, I think that is horrible advice. Negative divergences abound, but, during a bull market, bull market rules apply. This means that you should expect bullish resolutions from bearish setups. That is to say that the odds are strongly against you when you buck the primary trend. Of course, at the bull market top, negative divergences are 100% prescient, but you won't know it is "the" top until long after the event. In the meantime, trying to pick the top all the way up will prove costly."

Dated yesterday, so the reader's comments are probably a week old, but I thank my lucky stars I've been awakened to the flaw in his/her thinking before being entirely cleaned out. Happy to short overextended individuals, not the market as a whole.

http://www.bloomberg.com/apps/news?pid=20601087&si...

Sept. 12 (Bloomberg) --Treasury 10-year notes posted a fifth week of gain after the relative value of U.S. government debt helped fuel demand at auctions of $70 billion in bonds and notes and a report showed consumer spending remains soft.

“The bond market is still questioning the V-shaped recovery,” said Suvrat Prakash, an interest-rate strategist in New York at BNP Paribas Securities Corp., one of the 18 primary dealers required to bid at Treasury auctions. “We are looking forward to next week where we have a lot of economic data, which should provide some clarity for the market.”

http://www.bloomberg.com/apps/news?pid=20601068&si...

Sept. 9 (Bloomberg) -- The Federal Reserve said 11 of its 12 regional banks reported signs of a stable or improving economy in July and August, adding anecdotal evidence that the worst U.S. recession in seven decades is over.

http://en.wikipedia.org/wiki/Cognitive_dissonance

Cognitive dissonance is an uncomfortable feeling caused by holding two contradictory ideas simultaneously. The "ideas" or "cognitions" in question may include attitudes and beliefs, the awareness of one's behavior, and facts. The theory of cognitive dissonance proposes that people have a motivational drive to reduce dissonance by changing their attitudes, beliefs, and behaviors, or by justifying or rationalizing their attitudes, beliefs, and behaviors.

So the equity market is rallying because its anticipating a V-shaped recovery. The bond market, on the other hand, is rallying because it is questioning a v-shaped recovery.

Another explanation is that one or both of the markets are being manipulated. Is the recent spike in gold a clue somehow? Is it just the last dancer off the floor with reflation money sloshing into that particular sector, or is it saying something more profound this time around? Bill "Mr Patient" Cara has been calling for this gold rally for the last few months now. He's said previously that it was going to be up, but not for too long. And now it's here. Could it be the gold newsletters suggesting we take money off the table are actually getting wise to the game?

All I have are questions these days.

shark,
When you are setting up for these breakout plays like GMO do you have an order in place before the share price hits your mark or do you get an alert and place the order once the breakout occurs? It seems with the breakouts to get the right risk reward one has to have a limit order already in place since the market has the potential to go into a fast market condition. What is your process?

Vad you are one very intuitive gentlemen and I take my hat off to you. I have met very few people in 30 years of trading that have your disiplined yet down to earth commonsense approach to trading which unfortunately so called many "Day Traders" and "Position Traders" many on them on this site fail to get or do get yet still fail to commit to.

No offense to anyone but as Vad said you can't trade on a wish and a prayer and hope to succeed in the long run. The market is and has been in an bull market uptrend for months now and despite all the doom and gloom fundamentals being discussed here and frankly on so many other blogs the market is not listening and many are getting they arsses handed to them.

Vad I have many Russian (Moscovites & St Petersburg) friends down in Miami who back in the Old Soviet Union suffered as so many did but they were more clever and were able to maintain a relative good quality of life through black market. After the fall my ex GF had a thriving designer dress business (became a millionaire there) and then the moronic gangters showed up one day and told her she needed a "Roof". These gangsters were so absolutely stupid that they caused her thriving business to go under and my GF went into debt to them and had to go into prostitution to pay them back before fleeing to the States. Through this she and many others like her developed incredible discipline and fortitude in whatever they did after because nothing could be worse than what they endured back home even after the fall of the SU. Most are stinking rich in the USA. Most mind you from owning Mortgage companies catering to other Russians and other businesses of course. You remind me of them in a good way.

Remember the Trend is your friend and it goes both ways. Now it is bullish. and has been for months. That is an undeniable fact and all you have to do is ask the shorts. And when it breaks down it will give many the opportunity to finally say I told you so not to look as foolish and make money on the short side. And will there ever be another financial meltdown so gleefully talked about. I hope not and any you that are so glee about it are not thinking straight as to the horrible outcome of such a scenario as that.

Bill - When you reference volatility I would assume you are speaking generally based on what you have observed within your stock universe. Would I be correct in that assumption?

Re: low volatility - Do you have a range for volatility and the implied to historical delta that would be considered average? Have you found each sector weighs differently?

There were a few bounces, but most charts show Sept. 25 as the start of the general equity slide, with temp. support at 9200, before the next wave down.. I stated last night that Dow 7500 represented the ' true ' bottom to me, as Feb. 18 - March 18, 2009 was a flush, a general panic liqudation, although, yes, many equities ' bottomed ' in that one month period... I was noting that equities such as RTP, BHP, PTR, AAPL, PBR, GOOG had made their ' lows ' in Nov. and Dec. 08' and early Jan. 09', and did not come within 10 % of their lows during the Feb. - March crash... So, if I use 7500 Dow, then we still haven't retraced 30% yet.. But, I will use the Sept 25, 08' reference as a major resistance point on most charts... that's just me, but I have strong beliefs in support and resistance areas, especially when the fundamentals are still very shakey... Cramers famous ' sell ' call at 11,000 may be approached, but that is still pretty close to Dow 10,800......

Ah, the Roof... boy, do I have stories to tell.

For those who are in the mood for 10 min of the light weekend read: http://www.realitytrader.com/freechapters.html#cha...

Nice call on GSX Shark! Traded this one in the past, along with TGC. Missed this move though, and hoping for a pullback to throw long. Natural gas has been beaten down for so long and all everyone talks about is the storage glut that it has to be a reasonable play...

David,

"The theory is that speculators buy futures and hedgers sell them. If that's true, why would a speculator buy a futures contract unless he/she expected to profit (i.e., unless he/she perceived the futures price being below the expected future spot price). "

I am not sure where you found this info, but there is a very serious flaw in this logic. It is not true that speculators buy futures and hedgers sell them. Speculators both buy AND sell futures by taking a directional view of price - they buy risk. Hedgers are buying or selling price in order to reduce operational risk. A hedger may be a consumer who needs to buy gas in order to lock in an operating profit. A hedger may also be a gas producer that will sell to lock in revenue to cover the cost of production. Goes both ways.

"The futures price being below the expected future spot price is consistent with the idea of a risk premium for the buyer. The market observers do agree, however, that even if some bias is present in futures as a forecasting tool for the expected future spot price, this bias is very small and is overwhelmed by the volatility of the futures that respond very quickly to new information becoming available."

I can't really glean any useful information from this statement. There may be some risk premium built into the price of a futures contract, but I think this is describing a phenomenon that is generally present in all physical commodities markets and is based on the "physical premium" in markets where a good must actually be delivered. That is because unlike being short a stock where you are only required to cover financially if the price moves against you, in physical markets you must cover with physical product. With a stock there is always a price but in physical markets there can be much more dire consequences if there is a physical failure to deliver. Think power outages, lack of gas/oil/coal to heat homes and operate manufacturing, litigation for default leading to bankruptcies,etc.

This very phenomenon is the same reason that physical gold/silver purchases were demanding much higher physical premium a few months back when gold was near its lows than it is now. The same JM 100 oz bar of silver that I bought at $12.50 + $1.5 premium/oz is now selling for $16.73 + 0.59 premium/oz.

I think there is a deep flaw in your conclusion that the premium in UNG is nearing imminent collapse. What if UNG is forced to go into the futures market in order to maintain proper exposure but then actually begins to drive the price up?

Why do you believe that the premium will disappear when UNG is near its bottom rather than when its $5-10 higher, or $30 higher for that matter? And why are you convinced the premium on UNG couldn't actually go higher before lower? Hey it could happen, but in my eyes UNG puts now are a high risk, low reward proposition here for a speculator.

Good morning.

Man it is becoming so much more difficult to function in today's political and economic society with so much animosity and anger. It's almost Croat versus Serb in the tone and sentiment in America today. Worst thing that happened to America is not the power of the banks but the power of the media to throw so much crap in the fire to creat this hostility. And the dumming down of Amerca in general plays a role as well.

"While I do believe in some of the FreedomWorks issues like "Less Keynes More Hayek", I really do not want this movement to be about the two corrupt aristocratic political parties that have dominated politics in America for the past 100 years. I would never join FreedomWorks ..."

Kaimu - I am all for FreedomWorks as long as we are talking about SALMA HAYEK and not Freidrich Hayek.

Both parties are to blame and America desperately needs a strong third party in order to dissipate the power structure in DC.

Kaimu - Yea, I guess I can see a strong third party that can EITHER have control of Congress or be able to work with a Republican and Democratic party controlled Congress when my infant daughter is legal age no wait retiement age.

I love your passion Kaimu but your anger seems to run deep and you're going to give yourself a heart attack. Can there really ever be change. Who knows but you and I will be long dead despite everything we might try and do. I wonder how things might have been with that 3rd party hero Ross Perot. Probably he would have been instituionalized while in office or we'd be on the brink of WWWIII. Maybe Ron Paul might have been good.

http://ronsen.blogspot.com/2009/09/sunday-morning-...

Q&A (sorta)...

I'd watch the video...so true. Welcome to the future. The ICU thing beckons, sheesh.

Loannetter,

LOL! "...the fresh faced youth interviewing talent were not looking for a cougar!"

I felt less of a cougar an more like a museum piece. What could a 50+- year-old know about advertising or design?

As clients I had worked with for over thirty years fell away to "early retirement" (Leave now and keep your health insurance, or in six months without it.) I began dealing with people who were enthralled with glitzy computer effects, but couldn't tell when a photo needed to be retouched.

My son is still working in graphics and is constantly confronted with people who don't know what bleed is, or worse yet how to tell people what they are trying to sell. (example: Apple's website doesn't tell you if Airport Extreme is a modem or a router — the customer is on his own to research it.)

In talking to others of my generation it appears to be true in their areas of expertise as well.

Those who were mentors were forced out to boost the bottom line and those on the job now will need to relearn what took decades for their predecessors to accumulate and could have passed along.

P.S. The Grym comes from a friend who I asked to translate into Swedish the slogan I wanted to add to a coat of arms I felt appropriate..."Vicious When Riled!" (Grym När Inflammerad) :-)

I’d just like to welcome myself to the Bill Cara Community and say I am happy to be here. This is a great site and I love the diversity and discourse. I might also say I have made some money following a couple of Mr. Cara’s suggestions on and off for about six months.

I am American and an equities trader for about the last 15 years. I would have to say I am pretty good at it and technically retired in my mid forties. I grew up in the great state of New York. Rest my case. Married once/divorced once.

About 4 years ago I got so disenchanted with life in the States that I decided to make a move to Thailand. The States was getting too judgmental and conservative not to mention infringing for my liking. Suffice to say I detest politics and politicians and what was happening to America. I was really starting to get old before my time there and needed a change. Thailand has always been a vacation location for me especially as a mostly single guy. I sold everything near the top in late 2005 and moved with a container following me a few months later. Anyway since moving to Thailand I think I have regained more years back of my life than I can count.

The Present: I am in my early fifties and I have a college educated beautiful Girlfriend 22 years of age and we just had a handsome and healthy baby boy 7 months ago. We recently finished building a 3br/3½ bath 2500sqf beautiful house for about $30 SQF located about 10 blocks from an equally gorgeous beach. We have a full time nanny for our son and a full time helper/maid. Both are live-in.

I play golf most days of the week at a private country club that costs me $2,000 a year for unlimited play and just caddie or cart fees. I bought my own cart and just pay for monthly charging now. I try and scuba dive most weekends. We own a nice truck and had most of our house furniture locally made for hardly anything (would cost a fortune back in the States). Our kitchen is stainless appliances and granite countertops. Just about anything you could want or think of is available in the Country and there are plenty of cultural events to keep your mind busy as well. We eat great and our internet connection is fast. I have great medical coverage and it costs like nothing to see a doctor here. Major surgeries are about 1/10th of the price in the states. And for our son, his future will be full of love and affection as Asia is such a wonderful place for children to be raised and they offer some of the best private schools in the world. No doubt he will be speaking Thai, English, Chinese and Spanish by age 6.

Perhaps the only downside is the trading hours but it has forced me to change my trading style which believe it or not has allowed me to make more money than previously and I still get a decent nights rest. Also English is not prevalent here except with Expats.

And all this costs me less than $2,000 a month. (In the States this would be over $8,000 a month) You can live like a king for $3,000 a month. So my friends if you too are burned out in the States and have nothing holding you there, you should consider a move to Asia.

The Philippines is certainly another Country to consider living. English is widely spoken there. I have many friends living there as well and also very happy with the quality of life. I had considered it but prefer the more modern conveniences as well as the better beaches, golf courses and food here in Thailand.

Of course we visit the states annually. I still love the USA and will never take that for granted.

I bet the Bahamas are pretty great for Bill and Pat as well.

A comment about this blog:
On a few occasions I have mentioned "the slope of hope" blog. It is a group of fast moving futures and etf day and swing traders. Mostly day traders looking to scalp the mini S & P futures. Most are looking to go short at 1070-80. The group seems to be mostly 30-40ish in age. There are a multitude of one liners and as many as 500 posts a day. It is very hard to sift through and at best one can find a poster that suits your style to follow up with. That is why I like Cara's blog especially since he decided to make it stay on topic to trading the markets in whichever time frame is yours. Less comments but on target is better. Three years ago 60 comments a day here was fine because what was said had a lot of value to individuals looking to better their trading skills. I noticed that the number of comments has dropped this week but that in my opinion is a good thing. I really appreciate "the shark" opening up and showing the short term traders how he is processing his trading style. If others would deliver the same kind of postings in their time frame I think that we would be on to something here. Then as new posters show up and see the benefits of being here added posting per day on topic would increase the viewership on Bill's blog.

Den of Thieves Era, is that of individual, full and part-time traders, professional and non-professional, all trying to help with ideas, charts, insights, experiences, on a day by day basis... This is a real effort to fight back against HB&B, whether one is on the ' buy side or sell side '... So many great blogs, so many very smart and dedicated people... To me, this is what ' united ' means... people REALLY helping one another, bouncing ideas off each other, celebrating wins, and helping during losses... Thanks all..

Dr Strangelove, I was busy Thursday trying to find a loan for a disabled Veteran of two US wars (your banker friends won't touch his manufactured home) so I unfortunately missed your missive in support of bank loan origination. Pardon me but your bias is showing. Once all the new regulations (we must observe that banks do not) eliminate the competition for banks (independent mortgage brokers) I will retest your love for them!

>>"The market observers do agree, however, that even if some bias is present in futures as a forecasting tool for the expected future spot price, this bias is very small and is overwhelmed by the volatility of the futures that respond very quickly to new information becoming available."

>I can't really glean any useful information from this statement.

BillySundance: the above statement was simply supposed to confirm your earlier statement that the futures price is probably the best estimate (available at that time) of the expected future spot price.

> I think there is a deep flaw in your conclusion that the premium in UNG is nearing imminent collapse.

This conclusion is based on what a representative from UNG told me when I called them up on Thursday. He said that they decided to buy swaps instead of futures and they have almost finished signing all contracts for this purchase, which should take place any day now.

loannetter -

So you're saying banks are done? Done in that "banker friends" are so yesterday. I gather I'm to accept that you're "the broker" to socialized finance via gov't owned Fan/Fred for our disabled Veteran, et al. Great! Now what? Blame the appraiser because he's a private sector stooge?

David- Couldn't happen in a better way to a nicer guy. Good karma.

What will this do to the dollar, to gold and to stocks?

True. I think the 80-20 rule holds for brokers and for bankers. Might be the 50-50 rule for banking executives, however.

'Speak softly and carry a big stick' still applies.

Apart from that, what the SEC needs is the financial equivalent of Buford Pusser: http://en.wikipedia.org/wiki/Buford_Pusser

I thought at one time that Elliot Spitzer came close.

Strangelove my leige

You profess your love yet leave me for your lords!

I do not envy your banks. Your honorable appraisers are all well and true!

Many learned men protest the HVCC is eroding equity by giving non local appraisers and reviewers the task of market analysis all in the name of protecting Fan an Fred, those morally bankrupt institutions. I have NO interest in specific values, only what is fair in my fiduciary role to the borrower. I don't sell houses. I certainly don't control values!

Realtors by the way ARE allowed to interface with appraisers and they are providing the missing local link by offering local perspective to the AMC appointed appraiser in the case of a purchase. You seem to think all brokers do is hype values when the biggest offenders on record are WaMU and Wells Fargo. THEY created the Fan/Fred hyped values. The rigged the game to supply their cronies fodder for derivatives.

Forgive me for disappointing you. I merely beg to represent my clients interests to your lords.

"David- Couldn't happen in a better way to a nicer guy. Good karma."

Thank you for your kind comment, 2nd_ave. Did you notice that my post number was 45610 and your post number was 45710? Your kind thought has added some symmetry to the mathematical world...

After scanning 400 big worlwide stocks listed in US:
http://xrl.us/bfjwwu (from A to K)
http://xrl.us/bfi4rf (from KZ to Z)
with Bill's RSI system, after Friday there are:
3 Buy alerts
11 Distribution alerts
9 Sell alerts
But there are 154 stocks with RSI7daily >70 and 162 with RSI7weekly >70. It's really a lot!
What's more the currencies show tight charts: http://xrl.us/be5t43.
It seems to me that USD is ready to bounce and the speculation between NZD/YEN is losing steam, and it often correlates well with stocks...

I think the timing is getting pretty good and you could be right or close to it I just sold off all my USO at 36.84. Got in at 30.50 back in early May. I still have a bunch of stuff in my Portfolio with good, make that awesome returns but it isn't a matter of greed that I hold them (ok yes it is) it is simply that there is nothing right now telling me to sell them. The charts aren't and news doesn't. Only that every guru, technician, blogger is saying a correction is imminently due any minute is saying that. I agree but when is imminently?. It will be interesting when it happens but initially I think it will be much ado about nothing. Just a short term correction then back in rally mode. The big one should come many moons from now when all the lousy economic really hits with another huge round of mortgage defaults, bank failures and so forth.....

Anyhow I have ridden most of my positions down during the Summer but they held at support levels and are now back up near their highs and I just can't decide what to do. I will probably put in some sell stops lower just so it's not a big fade and then see what happens.

You bet with pleasure. Could be the best move you make for better health, wealth and everything else in between!!!

Obama to Wall St. "Let your conscience be your guide."

Message to Obama
FYI: http://en.wikipedia.org/wiki/Conscience

I apologize. I meant NYUGrad followed by 2nd and Grym.

You might notice I did NOT use "yo'selves" in my reply, in spite of the fact I think PC issues are petty and stupid.

NEW THREAD!!!

Thanks for the updates Bull Hunter.

Nice to see RBC finally upgrade HL now that shares are trading above $4. I Was wondering when they were going to finally capitulate and reverse that downgrade they slapped on it in November 2008 when the stock was about $2.

Les - the world was far different back then than it is now. Today we hear of a $2.5 Billion deal between Hyndai, Kuwait, and GE. Does that sound like protectionism?

I understand the implications of this tire tariff but to just go out and sell things and say it's going to be 1930 all over again is getting ahead of ourselves. I'm not saying you're doing that but people need to have a better understanding of the world and its relevancy to the 1930's.

The Business Insider, Sept. 14, 2009:

One year after America's brush with economic catastrophe, there's plenty of looking back at the bubbles that caused financial chaos.

But what's next?

Ten Bubbles in the Making

http://finance.yahoo.com/tech-ticker/article/325783/Ten-Bubbles-in-the-Making?tickers=^gspc,^dji,xlf

NYUGrad- I think we all know you well enough by now.

golong, on the other hand, doesn't. So we'll let him slide this time ;)

The stock is up 4% in early trade.

http://tinyurl.com/nvpnxh

Ok, then what about the potential Cadbury deal? I guess my point is that the amount of international trade going on now dwarfs what was occurring back then. It's not even in the same ballpark.

The violent swings make for great trading this morning if you have direct access to the Toronto market. The high commissions/slow fills via Fidelity make it a difficult play for me.

SBUX - estimates, target raised at UBS. Shares of SBUX now seen reaching $21. Estimates also raised, to reflect better basic coffee sales and increased operating efficiency. Neutral rating.

------

Note to BillySundance:

You're quite welcome, sir.

Regards,

BH

on the 13th June 05. Still trawling the archives (taken me the best part of 2 months to get through 9 months worth) and thought this quite relevant given the tyre news.

'The overriding issue facing investors today relates to global imbalances in currencies. I strongly believe this is not a China problem.
As international trade and commerce expands in an increasingly smaller world, there is a growing need for a global monetary system based on a gold standard, particularly now that we appear moving into a rising inflation cycle.
Otherwise, the world will be headed for economic wars (trade and trading) in the near future. All war destroys wealth, and should be avoided.'

Nice call on YRCW.

sneaky pop and drop in the USD at opening. caught me out shorting AMD. Waiting to see what uncle buck does. About to reach September 08 low against the Euro.

Well my one good trade for last week seems to have confirmed its reversal today. And its a utility, of all things...

Les
I forgot to mention to you on Friday that the key to the NG market turning around in a longer term sustained way (from a producers point of view) is when you start to see NG being shut in. Prices may of course anticipate this!!

Yeah this could get very interesting.

Dave- What does the Fed want? Right now, it appears they want the market at '09 highs (for whatever reason). Why fight that? Allowing the dollar to drop, keeping rates low, encouraging bids on an overpriced market via selective news releases- I think they can do all that.

2nd - What does the Fed want? Well you certainly have a proof by example here. :) Buying dips, things moving up ever so gently, that is the current trend to be sure.

I was just opining that there are many ways for this thing to go down, regardless of whether or not Bears capitulate. There is a limit to how low the buck can go. Those pesky foreigners won't enjoy it if the buck goes too much lower. And with perfection priced in, any serious disappointment and the chickens will come home to roost.

cover trigger reached, b/o signal tells me to walk - loss taken.

Thank Alberio. Any tips on where we'd wanna be in gas when the bottom is in. HNU.to? Miners? Any particular names that are cashed up and will come out stronger following this production issue?

Les
When there is no more storage capacity [i.e. old depleted reservoirs, offshore salt domes etc]left for the produced gas, then the gas wells themselves will have to be either dramatically choked back or shut in. Of course when this happens, exploration and further development of existing fields will grind to a halt. Then the excess gas in the system will start to be used up from the system and eventually causing the price to rise and thus sparking exploration.

For those with time to read a short, readable 8 page article on economics, this one comes with my recommendation.

How Did Economists Get It So Wrong? By PAUL KRUGMAN Pub: September 2, 2009
A few excerpts that summed up the article for me.

Krugman: "This seems, however, like a good time to recall the words of H. L. Mencken: “There is always an easy solution to every human problem — neat, plausible and wrong.”"
----------------

1 - Krugman: "...the central cause of the profession’s failure was the desire for an all-encompassing, intellectually elegant approach that also gave economists a chance to show off their mathematical prowess. Unfortunately, this romanticized and sanitized vision of the economy led most economists to ignore all the things that can go wrong. They turned a blind eye to the limitations of human rationality that often lead to bubbles and busts; to the problems of institutions that run amok; to the imperfections of markets — especially financial markets — that can cause the economy’s operating system to undergo sudden, unpredictable crashes; and to the dangers created when regulators don’t believe in regulation."

2 - Krugman: Keynes considered it a very bad idea to let such markets, in which speculators spent their time chasing one another’s tails, dictate important business decisions: “When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done.”

3 - Krugman: There was a telling moment in 2005, at a conference held to honor Greenspan’s tenure at the Fed. One brave attendee, Raghuram Rajan (of the University of Chicago, surprisingly), presented a paper warning that the financial system was taking on potentially dangerous levels of risk. He was mocked by almost all present — including, by the way, Larry Summers, who dismissed his warnings as “misguided.”

4 - Krugman: By October of last year (2008), however, Greenspan was admitting that he was in a state of “shocked disbelief,” because “the whole intellectual edifice” had “collapsed.”

5 - Krugman: At a 90th birthday celebration for Milton Friedman, Ben Bernanke, formerly a more or less New Keynesian professor at Princeton, and by then a member of the Fed’s governing board, declared of the Great Depression: “You’re right. We did it. We’re very sorry. But thanks to you, it won’t happen again.” The clear message was that all you need to avoid depressions is a smarter Fed.

6 - Krugman: Some economists, notably Robert Shiller, did identify the bubble and warn of painful consequences if it were to burst. Yet key policy makers failed to see the obvious. In 2004, Alan Greenspan dismissed talk of a housing bubble: “a national severe price distortion,” he declared, was “most unlikely.” Home-price increases, Ben Bernanke said in 2005, “largely reflect strong economic fundamentals.”

7 - Krugman "There’s already a fairly well developed example of the kind of economics I have in mind: the school of thought known as behavioral finance. Practitioners of this approach emphasize two things. First, many real-world investors bear little resemblance to the cool calculators of efficient-market theory: they’re all too subject to herd behavior, to bouts of irrational exuberance and unwarranted panic. Second, even those who try to base their decisions on cool calculation often find that they can’t, that problems of trust, credibility and limited collateral force them to run with the herd."
(Johnny - To this I would add: HB&B/government market manipulation and insider trading aided by powerful high speed computer trading software to skim the "investments" from mom & pop.)

8 - Krugman "a more or less Keynesian view is the only plausible game in town. Yet standard New Keynesian models left no room for a crisis like the one we’re having, because those models generally accepted the efficient-market view of the financial sector."

9 - To cut to the chase, go here, bottom of page 8: Krugman - VIII. RE-EMBRACING KEYNES

http://www.nytimes.com/2009/09/06/magazine/06Econo...

Les
"I'd like to hear an industry player's thoughts"

You just did! I have a degree in petroleum engineering and own and operate gas wells here in western Pennsylvania. Which by the way I have over 85% of them shut in and the other 15% which I use to hold the leases I have choked way back. I do not know where Alberio is located but up here we have an over supply of natural gas. It may be a long time before the gas market rebounds especially if we continue to have mild winters like we did in 2008 and industries which use natural gas are not running any where near full capacity. Because of our dependence on imported oil I see the oil markets bouncing back before the natural gas sector does. IMO of course. As for a strong major player in the gas market --> CONOCO

Don't know if anyone has posted this yet; if so, sorry for the duplication if it exists.

From ETFS Securities USA unit:

There's a new gold ETF backed by bullion housed in Switzerland, not the U.S. or Britain. It also appears cheaper than other competing products as expense ratio is only 39 basis points. Launch was last week.

SGOL

Approximately 2 months ago, ETF Securities also launched a Silver Trust backed by the physical held in London. SIVR.

No position. DOYDD.

************************************************
Ron Sen, Agree with your post . . . may be better things to do . . . although nagging thought of calm before the storm . . . and calm VIX signaling vast majority too complacent IMO.

Les
I've been doing this for 30 years in western canada.
I'm an owner/manager of a private gas company.
I completely agree with Bev's assesment of oil vs gas.
For a longer term name you could look to Encana which is a Cara100, it also happens to pay a dividend. By the way, they just announced last week that they are splitting their oil and gas divisions into 2 seperate companies. I think the gas side is going to retain the Encana name.

"shark- It's just my opinion, but I have seen few signs of capitulation by bears."

Really?

The 50 percent rally we've just had did NOTHING to cool the ardor of your honey-stealing furry compatriots? AIG going from 12 to 55 was driven by what? Optimism?

shark- My take is based on following a number of bear blogs. I can infer that there's pain, but I don't really see it yet. Capitulation usually involves the visible raising of white flags.

could go

Bid to cover on both short term Treasury auctions was above 4, which is quite high. Econoday has this odd explanation:

"Demand for Treasuries is extremely strong as investors begin to move out of their no-return storm shelters and into financial instruments. Demand for T-bills, the next thing to cash, is on the rise with coverage at today's 3- and 6-month auctions well above four."

Investors are moving out of their "no-return storm shelters" into Treasuries??? The six month treasury is yielding all of 0.21%. Which storm shelters did these geniuses come from that 0.21% is a positive move? Cash under the mattress?

It seems to me that investors are PILING INTO no-return storm shelters.

It also seems to me that Econoday has a narrative already prepared, and is trying to fit actions into that narrative.

davef, I know I keep harping on about the mad fund trader this and mad fund trader that (I do enjoy this guy) but he noted the ignorant investors who have yet to see the train that is going to pummel them plunging into poorly yielding treasuries. Seems the crowd won't win whichever way they turn.

Doubling position

not liking the action in gold at the moment for some reason these late day moves down w/ underperformance of the miners all day smells bad.

ive sold most of my position waiting to reboot lower.
my feeling is that if we move lower in gold it will be sudden, swift and deadly, and that a rebound will be at best temporary. if we dont move down, then $1100 gold cant be far away as the shorts will get hijacked on the way up.

the large short position according to the COT is troublesome, as is the non-confirmation of the move up by the miners in the last few sessions. im stuck on the effect of Barrick's annoucements on the gold mining indicies.

either way, i will be watching closely, but mostly from sidelines.
a move past the $1033 highs rigth away will prompt me to get back in.

good luck.

that would be very nice for a USO short...

Nice call of GE - appears to be in play- breaking out...

KC

I know I sold too early, but that is still by far the best thing that ever happened to me on an airline.

check out LCC as a possible long if not today maybe later this week.

I own GE too. Attached chart looks like a golden cross and a cup with handle breakout. Lots of charts out there look like this... I've missed a fair amount of this move fearing a "crash" this fall. Think I'm going to let in ride and use parabolic SAR to trail the stop.

KC

Hi Szoya - Just when I think I have one figured out the metallurgy, permitting or heaven knows what will take you to the cleaners. I wouldn't bet the farm on this one or any commodity stock, but this one sure has treated me well so far, and the management here isn't going to be blowing smoke & mirrors in news releases. Happy Trading

My buy limit order for SRS at 10.50 was triggered today, placing another 0.5% of my portfolio into SRS. I just placed a sell limit order at $11 for it. I am accumulating SRS VERY gradually, to make sure that I survive until the moment when the turn around actually comes and also take advantage of most trading opportunities in the meanwhile (buy automatically selling SRS when my limit orders get hit, which I have placed at 50-cent increments).

DRYS
Check this out "Revealed: The ghost fleet of the recession"

http://www.dailymail.co.uk/home/moslive/article-12...

Looks like I been banned here. None of my posts get posted. Ooooo well, I will try again some time again in the future.

[Hi 2nd! Thanks for your email]

Noting has been fixed. In fact the problems are deeper.

http://stopinvesting.blogspot.com/

EDIT: Hmm now I'm wondering if this was such a good idea. :)
Market close crept up on me without me noticing!

Dave- Good to see we agree on something for a change.

There is a 24/7 casino down the block. Look for the neon 'ES' sign.

re-loaded at $12.68 after hours the shares of TZA I sold at $14.40. I am trying the opposite tactic to what I was doing before: instead of waiting for a sell-off to commence, buying TZA and then finding that I bought it at the bottom of another bear trap, I'll buy it today at the new all-time low after basically straight 7 days of declines. I placed a sell limit order at $13.18 for 1/2 of this purchase and at $13.68 for the other half. Let's see how it turns out...

I took a loss on my previous TZA trade (and exited it at $14.40) when I saw that $USD is breaking down. Now I see that for the past few days, $USD has been basing and making higher lows on the intra-day chart. As we saw overnight and this morning, a spike up in $USD (which looks to be heavily oversold on a daily basis but is beginning to lift off) can do some serious damage to market futures. If $USD breaks down out of this range once again, then oh well, I'll be happy for my GLD calls that I bought on Friday. :)

So between Friday and today I basically put on a paired trade on $USD: long January 2010 $90 GLD calls and long TZA.

David
The actual storage capacity IS open to debate, I don't think anyone really knows for sure and the range between 3.8 and 4.3 are as good as any I've heard. However, there is currently approx 3.4bcf in with approx 8 weeks left at approx. 75bcf/week takes the total to approx 4bcf. Which is as close to or full as you can get. If you want to believe that there is going to be 4.3 available which won't crash prices and therefore puts you in a happy place be my guest. There are just way too many variables which we have talked about before that puts NG prices in a happy place for me.

"There are just way too many variables which we have talked about before that puts NG prices in a happy place for me."

alberio: what's a "happy place" for you? Are you waiting for another leg down to go long NG? Which vehicle are you going to use to go long NG? If the futures prices stay where they are now, then by Thursday UNG will be completely on November futures which closed at $4.40 today. That doesn't leave much upside for UNG even if the spot price rises to $5 in January...

Bev: what is your thinking about this rally in NG futures? Do you think the price drop in August was WAY overdone and we are now back to reasonable levels, or do you think there is a greater than 50% chance of revisiting the price lows seen at the end of August?

Sundance- You're right. I've noticed that buying the hardest-hit ultrashorts on a rotating basis works. When they're bidding up the energy sector, pick up ERY at the close. Sell the following day. Bidding up semis? Buy SSG at the close. Sell the following day. Financials? FAZ. Gold? DZZ. As usual, one needs to limit the holding period to a day or two.

Think back to high school, and the embezzlement of lunch money (or lunch, as the case may be). When you're 15 and surrounded by 18-year-old thugs, it's no joke.

Fast forward to early-to-late adulthood, and what's the difference?

The differences (IMO) are (a) it's legal (as legislators are bought), and (b) it all takes place in the shadows of Wall Street and DC.

I've always thought there should be mandatory high school classes on the subjects of "Buying a Car," "Buying a House," "Investing in Stocks and Bonds," "Buying Insurance," and "Preparing Your Tax Return." All of these actions are undertaken by citizens daily/annually, and none involve rocket science. Yet many people end up delegating them under the (deliberately fostered/reinforced) impression that the processes are complex and better left to 'experts.'

Knowledge is power.

You might consider the following:

(a) Short airlines.
(b) Short hotels.
(c) Short restaurants.
(d) MMM makes N95 respirator masks.
(e) Short DIS. Short CCL.
(f) Long NFLX. Long DELL.
(g) Long Jimmy, Johnny, Blackie and Red.

' Baseline Scenario '..... total recap of Fed's actions and Wall Street's political control since 1907... what a total blundering mess by the Fed and total control by the bankers.........

http://tinyurl.com/nu5sq7

Not exactly sure why it caught me off guard (the cancer was headline news last year), or why the profound sadness. Just two years older than I am. For some reason, the photos of him with his wife Lisa Niemi at his side always represented a visual image of the 'perfect marriage' to me.

jock- You're right. It would be almost impossible to navigate life's ups and downs without memorizing historical names and dates. And I don't know about you, but I use sines and cosines every day, not. Man, if someone tried to scam me with a geometry puzzle, I might as well hand over my wallet.

STE, MCK.....

great session on BNN, wherein Joanne reviews past picks, new pics, and the big picture in Canadian oil and gas:

http://watch.bnn.ca/monday/#clip213283

Regardless of the pros/cons of the coming ' trade war ', I find AOB to be a solid company... China just released the ' EDL ' ( Essential Drug List ) for its citizens.... AOB has 61 drugs on the list, with many more to be available for consideration... Solid cash flow, ' repeat ' business, lotta people... has been a good trade in the past... will do some more DD on rsi, etc...