Cara's Commentary & Community Chat, Saturday, Jul. 25, 2009

http://wallstcheatsheet.com/?p=1019

Reading the various takes does it not seem like 50/50 odds for a pullback? Those are of course exactly the odds of red in roulette (ignoring the 0/00), even after 12 consecutive blacks. The bet, however, is not that the next spin is red- rather, that red comes up more often over the next 12 trading days.

Agreed, thank you Bev for taking the time to share your discoveries!

FYI - I really resent the way our government is hiding truth and manipulating the marketson the backs of the people with our tax dollars instead of fading the powerful banksters who's greed and corruption put us into this position.

So they wanna play pump and dump? They'd better be prepared to pump this baby to heaven and hold it there 'cause I'm going in both barrels blazing when this sucker turns south. It shouldn't take too long, but I'm not counting on the big dance until 4thQ '09 or maybe 1stQ next year when the face of reality appears on my charts.

BTW - Rosevillebill had mentioned MSFT may have implemented a conservative strategy in order to limit their share price until their share buyback program is complete. Then I consider INTC's non-GAAP earnings report that sparked this "rally". These guys are in trouble and they've got nowhere to hide except in more of the same opaque ways the Big Boys on Wall Street have devised.

It's only a matter of time until we reach a ceiling, we'd all be much better off if only they'd come clean and start working with us to repair the damage instead of continuing to cover it up.

The only hope as I see it involves China stepping up to the plate to reel in some slack. If I were them, I'd contemplate rushing in to buy out the impending slide. Maybe that's what we're witnessing?

I seriously doubt China's 8% GDP growth figure, usually Chinese economic activity tracks with their electricity consumption, which has fallen off considerably. So yes, I still think China has some serious issues that are being swept under the carpet.

There must be a money printing surge in order to arrest plunging prices and restart money flow. There will be more job and accordingly, GDP losses if this doesn't happen.

The stock market pump strategy is too little too late while on the other shoe we're contemplating the difference between the delicate balance of a butterfly in flight and two freight trains colliding while political agenda reins supreme.

On taxes: I suspect the talk of additional taxes is rooted in the soils of inflation fears. If the administration had the option available to levy additional taxes, this would provide additional leverage to halting a potentially runaway inflation. So, I don't anticipate any large tax increase unless the inflation genie somehow escapes the bottle. It will be a reactionary tax increase.

But hey, at least Zimbabwe's carbon footprint is minimal!!!

The biggest hiccup that started things off imho is the 2000 high and downtrend, odd the dow made new highs while spx double topped but at any rate the downtrend from 2000 on the dow is now getting teste from below and I wonder if it is the chart to watch? I have no idea for sure but it is important that we see price coming back to this downtrend at a time where the usd hits its 1992 low to the pip and reverses.

ps: the flag that formed against this downtrend in all of 2004 had a po of 13,800ish, was that important? Sure looks like it on the monthly.

tbar - good observation, thanks for sharing. I guess we'll see how important keeping up the appearance of a strong dollar really is. Personally, I don't see any more value in keeping the dollar strong than I do in the wisdom adopted when the US decided to export jobs.

The buffalo chips will fall where they fall, there are no magic elixers.

ALOHA !!

mntinbi posted - John Mauldin article says, "But don't confuse fast growth with sustainable growth. Much of China's growth over the past decade has come from lending to the United States..."

Agreed on the growth, but then he fails to establish what sort of growth fueled China's rise and what sort of fuel has accounted for America's rise? Essentially America's rise has been fueled by "debt consumption" and "fraud" at the expense of its shrinking Middle Class, while China's fuel has been from manufacturing and the growth of its Middle Class.

Where most miss the boat is they over analyze the Treasuries that China and the rest of the World have been purchasing while the backdoor has been completely ignored as to the massive redemptions going on in US Agency Bonds, like FNM and FRE. To the tune of $240BIL USD liquidated over the past three quarters as reported by TIC. In fact quarter ending Dec 2008 had so much US Agency Debt reddemed that it swamped the other US DEBT products (Treasuries) and ended up a "negative quarter" overall. Yet if the press only reports "Treasury auctions" the tunnelvision works beautifully, but as usual, the masses miss the BIG PICTURE.

DEBT is not a one way street ...

Where as the motto for America's financial future was encapsulated in the phrase, "As goes GM, so goes America", it is now, "As goes CHINA, so goes America." You cannot have a DEBT addict survive for very long if the DEBT fix is cut off. It is in the best interest of the US DEBT and American people to have China show steady and strong growth, because there are no other global creditors the size of China and if OBAMA plans to continue his "spending spree" he needs creditors willing to buy even more US DEBT than China currently does. Taxing the rich has never proved a long term viable option for any historical economic recovery. Besides the rich just don't have the kind of receipts that OBAMA needs to keep outlays viable without resorting to printing DEBT, which is what he is doing now anyway.

IT ALL WORKS UNTIL IT DOESN'T ...

Remember this post from 2007? Might keep an eye on the December SPY puts for cheap tickets if/when we head higher.

http://tinyurl.com/26w7y9

"Simon recommended to accounts and friends and family alike to buy six month 10% out of the money puts and wait. In today’s market this would cost around 1% of the price of the index. In 1987 the cost was a mere 0.02%.

"Simon went out and bought 2000 of these puts for $0.0625 for a total cost of $12,500. He bought them for his mother too. There were several traders on the desk who bought them as well.

"When the market began to correct in October, all the traders who had bought them were tripping over themselves to sell their puts at $0.25, some even waiting until $0.50. Clearly all thought this was a normal correction and were quick to lock in their profits.

"Not Simon. Simon had a view. A good trader always starts with a thesis. Simon was carefully and unemotionally watching what was going on, continually re-evaluating the trade within the context of the market action. I imagine that the others selling quickly out of their positions was a data point for him.

"The puts went to $1, then $5, then $10. Simon hadn’t sold a one yet. Some traders quietly advised Simon to sell “at least some” to lock in a profit. Simon thanked them for their advice, but did nothing. I can remember a feeling of incredulousness began to creep up on the desk. People were shaking their heads. How could Simon be so irresponsible with his (and his mother’s) money?

"Late in the day before the day of the crash, Simon began to sell a few puts. He finished selling them the day of the crash when the market was paying any price to buy in puts. Simon’s average price on the sale of the puts was $59. I imagine the price was the same for his mother."

yep I just dont know, just an observation as you say, the chips will fall where they may. Just looks like support for usd as the markets run frantically upwards. Fundamentals don't seem to be near as important as momentum at these turning points. cheers.

re: Total number of people collecting unemployment is lower this week, the media saw this unemployment number as a plus, lies and more lies.

If you dig deeper, I think you find that the continuing claims number excludes everyone who has been unemployed longer than 26 weeks, even if they are collecting on one of the extended benefits like the 26 week extension or the other one that goes 70 odd weeks. The numbers are lies by design, IMO, intended to make people see things as better than they would otherwise.

Just in case you were starting to think this market will not pull back again, ever.

2nd, you sly dog. God love ya! I remember this well....I'm thinking we all should.....

So guess what I've been doing for the last 4 hours...

I was doing some due diligence on the Japan markets - literally looking right at a bunch of LCD manufacturer's charts (PC, etc) - when lo and behold, my screen went blank! I've been having some troubles with my video cards lately (swapped a faulty one out) so I thought it was that again. You know the routine ... out with this, in with that, reboot, reboot, jiggle this, jiggle that, blah, blah, blah.

Well it turns out that my fancy pants $900 Samsung LCD monitor (purchased about 6 years ago) has gone KAPUT!

So, I'm back up and running with my old, disgusting, giant, 10 year old CRT (yes, another Samsung) which I could never bring myself to toss out.

Now I have to try and get my head around this event's meaning for my due diligence ... lol.

Anyway, that's my funny story for the weekend.

Mackinaw - I bought an Westinghouse cheapy 22" LCD monitor last year, I think I paid around $120 for. It's beginning to act up, when I allow it to idle with the screen blanked overnight I have to physically turn it off then back on otherwise it will blank out.

I figure when the screen is blank the power supply capacitors are charged slightly higher than their voltage rating and begin to leak current and pass AC into the display chip.

A few new replacement electrolytic capacitors in the switching power supply should do the trick, just got to get a round 2 it....

Yes, just replace the electrolytic capacitors. I'm going to replace mine with a higher voltage but same capacitance components so they'll last longer (the slightly higher voltage while idling causes the capacitor to break down and leak current, a higher voltage rating, maybe just another few volts, will solve the problem) When the engineers design the switching power supplies, they often do so using theoretical parameters, and forget to include real-world effects.

So go find a soldering iron, some solder, a philips screw driver, replacement capacitors, and a couple of hours. Polarity, capacity and voltage count, so pay attention to detail.

Or buy a replacement monitor.... I'm going to repair mine cause I'm cheap that way and I figure it's the green thing to do anyway.

Glad you didn't throw that lead-laden CRT in the refuse stream, I've still got my very first orange screen monitor sitting on a shelf in the closet next to a few more duds... There's probably a few filter capacitors in there somewhere that'll do the trick... when I get to it.

2nd - New monitor - You forgot to mention how buying a new monitor would contribute to kick-starting the global consumer economy, we have to consider these issues in our trading thesis you know....

So Mac - Forget I said anything about filter capacitors, just let us know which brand you bought.

Mack - I think I may have helped you guys out a bit with that $C thing a few times, I seem to remember passing some of that stuff as the real McCoy in the vending machines back in college. Or were those Japanese coins... I don't remember.

CP- You're right, man. He needs to wait until after I unload a few ultrashorts before placing that online order. Every little bit helps. Anytime after Monday morning should be OK.

Which brings me to another thought I had last week. Y'all in the States are raving mad about the prospect of increased taxes, deficits, weakening currency, and more government regulation. This is the STUFF of our Canadian existence! So Buck-up! A little hardship will be fortifying in the long-run. :P

2nd - "You're right, man. He needs to wait until after I unload a few ultrashorts before placing that online order."

Or we could accomplish the feat from a purely technical aspect by watching for a breakout of the Lorenz attractor from an ascending wedge:

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

http://www.fortunecity.com/emachines/e11/86/beffec...

ouch!

Walmart in Canada....before China was such a cheap a$$ source, had large signage on the wall declaring all products were 100% Canadian. When I would cross the border for herding jobs I would shop Walmart Canada for some products (identical) that were sometimes 60-70% less there...except gasoline. My wife feeds birds. I could get the same Perky pet bird feeders in Canada for $3.75 cdn that cost $12 usd. We still have quite a few as I loaded up the trunk. That and aspirin/tylenol with codeine....

The super deal was to bring cigs and booze for my Canadian friends and return with Walmart junk or stuff like Hudson Bay blankets. Of course the exchange killed my fees but the hospitality and laid back attitude more than made up for the loss and I could always just buy goods for the trip back.

I do love Canada. It's in my maternal blood. Eh?

ouch!

Oh lord god - Please give me back my analog computer, the quantization effect of ones and zeros drive me batty in comparison to a good ol' fashioned Z-transfer function or the jolt of working out a LaPlace transform!!!

2nd - "Is that what you're trying to say?"

Precisely, and the fun part of it all culminates with raining money!

Craig- Based on our positions (I should say the holdings we borrowed after-hours Friday...I wouldn't call them positions), we should be unleashing a string of negative vibes, my man.

LOL! Somehow I doubt we'll have such a marked influence 2nd. but judging by how it's been lately maybe we need to try the contrarian approach....
Hey! All is well and this things going to eclipse 14,400....by September....:>)

Kaimu, as is always the case with American public agencies there are too many and I cannot see the big picture of the debt maze that has been created. Would you mind putting that in graphic form sometime please? I suspect such a graphic layout will come in handy for you since you're in this biz of reporting on these sleazebags. I'm curious enough to try to get my head around all the means of passing debt from one investor to another and a graphic explanation, with numbers attached for say the negative overall quarter just reported would be interesting to see.

"don't overpay for technology IMO."

Yes, that's step #2, just behind closely reviewing performance characteristics. Many of the designs are quite excellent, reliable, and use identical components. You don't always get that "extra" you think you're buying. Often when I speak with salespersons about performance specifications, I discover their knowledge is relatively limited and they don't fully disclose their own self interests.

I've actually witnessed vendor reps on sales floors masquerading as sales persons.

CP:>"I've actually witnessed vendor reps on sales floors masquerading as sales persons."

I dunno what you guys and girls can do in the states for buying electronics but I gave physical stores the flik a long time ago. Reviews, comparisons, the cheapest online seller, all found with the click of a mouse.

No car, no driving, no hassles. (and no comparison in price between an online seller and physical stores)

Regulators shut 6 Ga banks, 1 in New York state

(AP:WASHINGTON) Regulators have shut six banks in Georgia and a small bank in New York state, boosting to 64 the number of federally insured banks to fail this year.

The Federal Deposit Insurance Corp. was appointed receiver of the banks: Six bank subsidiaries of Security Bank Corp., based in Macon, Ga., and Waterford Village Bank of Clarence, N.Y.

The six Security banks had total assets of $2.8 billion and deposits of $2.4 billion as of March 31.

http://news.ino.com/headlines/?newsid=6899763689794

"...all you would need is one record per person ... with attributes maintainable BY THAT PERSON, no different than voting or paying taxes online..."

How many people vote or pay taxes online or are even able to do that? Yikes! I'd hate to think of what kind of data would come out of such an unwieldy and flawed sampling methodology.

"Its not because the computer systems are incapable of giving correct and timely information, its because the politicians and paper pushers would lose power, control, and money as a result."

Nah, it's not so sinister, really! :)

wireless is no problem, and sirius will keep me current.... any tips on where to set-up for a week or two at a time... ? Thanks all for such good info over the months....

Cheapy,

Part of the problem is human nature. In the military I soon discovered those above me didn't want the truth, they wanted affirmation. Our First Sergeant, who knew I'd had three years ROTC, said, "In dismounted drill you always start off with your left foot." (He looked at me and said, "Isn't that so?")

When I said, "Almost always." I then pointed out two exceptions — About Face and Right Step — he wasn't too happy. The "correct" answer: "Yes, Sergeant!"

The same was true in my experiences with corporate management. Most people will defer to the boss.

In government and politics it is to the advantage of the majority to look better than reality and it shows everyday on CNBC and financial pubs.

The actual info is available, but you need to dig for it. Most people will not go to the Census Bureau or the Bureau of Labor Statistics. Even when the GAO or the former Comptroller General, David Wlker, reported the real data that looked bad — the media overwhelmed this with glowing nonsense.

My older son worked for a consumer research firm for several years and was in charge of data quality. Their job was to provide clients with info that they could use in planing. Often clients were turned away who were seeking "proof" of things which were just not so. The government was not one of their clients :-)

The general public is easily fooled.

How many people vote or pay taxes online or are even able to do that? Yikes! I'd hate to think of what kind of data would come out of such an unwieldy and flawed sampling methodology.

Sorry, Mac,

10 or 15 years ago that was a valid excuse, but today, just to collect the unemployment you need to be able to enter/maintain your info on the web or via phone system, anyway. My wife does it weekly to get her check. She is no longer included though because she is now beyond the initial 26 week benefit period. Given that people ARE already reporting to collect, then why dont we have honest and timely reporting? Ok, maybe that would only get really reliable data for those who were collecting benefits, but I would expect the accuracy of data on the others would still be improved by an order of magnitude above its current, at best DISMAL, level of what could better be described as DISinformation rather than the information it was once intended to be. Having to rely on a phone survey of a few thousand households because the BLS numbers are complete garbage, if not out and out lies, is inexcusable in this day and age.

Obviously you would prototype, demo, test and parallel such a system, analyzing the differences on a person by person basis until the confidence in its accuracy was established, before switching to it. My bet is that within a few weeks you would find yourself chasing errors in the current system, that would show how badly we are being misinformed.

ALOHA !!

Les - From TIC over a three quarter period starting with Q3/2008 and ending at Q1/2009 Net Purchases by Foreigners for LT US Securities only netted the USA $910MIL USD, over a nine month period, due to the sell-off in Agency Bonds and US Corporate Bonds during those quarters.

I see that as a "negative watch" on the US Sovereign Credit Rating, an unofficial downgrade, as foreigners vote with their feet. As we have all learned the rating agencies did not downgrade Sub Prime DEBT until it collapsed. There would be no reason to suspect the same wouldn't happen with the S&P and Moody's regarding Sovereign Ratings. So in that case the lack of transparency and honesty forces one to look outside the normal channels to find answers.

I will provide this data in my report on FINSOB as well as other "banking stability" assessments.

(note: written late August 2008)

Secondary Reactions/Counter-trend Moves

“Bear markets seem to be divided into three phases: the first being the abandonment of hopes upon which the uprush of the preceding bull market was predicated; the second being the reflection of the decreased earning power and reduction of dividends; and the third representing distress liquidation of securities which must be sold to meet living expenses. Each of these phases seems to be divided by a secondary reaction which is often erroneously assumed to be the beginning of a bull market.” – Robert Rhea, author of The Dow Theory (1932)

Every bear market has always been made up of 2 or more major downward swings, or primary legs down, and at least 1 secondary reaction between 2 legs. The purpose of the secondary reaction is to correct oversold levels and to reduce speculative activity brought on my new investors. The problem with identifying when a secondary reaction begins is that a primary leg may or may not end on high volume, therefore as with trying to find a bear market bottom, identifying the start of a rally may be difficult. However, when capitulatory volume is present and the market has made a near vertical parabolic move down, then it may signal that the primary leg has ended.

The secondary reactions in most cases take lesser time and may swing with more volatility than the primary leg itself. We are currently in a secondary reaction due to the fact that the price is divergent with volume. As volume declines further, we should see a reversal. Afterwards, we should again see heavy volume resume on the down days.

Another divergent characteristic is the divergence between indices. For example, currently the Russell 2000 and the NASDAQ are performing fairly well, but the DJIA and SPX are getting crushed. Typically, one of the indices reaches a high, but the others are unable to do so. This characterizes “phantom” weakness in the markets that may not be readily visible in the presence of a rally.

A secondary reaction ends as bullish sentiment starts to wane. First, people don’t believe that the rally is ending, but slowly and surely, more and more people start to believe. Once the majority changes their opinions, the next primary downward swing is underway.

The rallies may end at the 50% retracement level, as most people like to believe, however, that’s not true in most cases. These reactions can be as little as 10% or 99.9%, and has history has shown me is that only 7% of reactions end at the 40-55% level. 27% retrace 55-70%, 8% retrace 70-85%, and 14% of secondary reactions retrace past the 85% level. There seems to be this herd mentality that if a secondary reaction goes past the 50% level, these “experts” start to claim a new bull market…

http://weeklyta.blogspot.com/2008/08/investorstrad...

More:

"Here’s how to tell if a bear market is ending

Instead of the price-volume divergence we see in the current rallies, volume actually picks up on rallies and dry up on pullbacks

Zero confidence, investor sentiment is at a serious low

No good news on the front pages, negative news permeates the media
Lack of credit, lack of buying power

Real Estate still remains down, commercial properties take a big hit, vacancies high

Slight improvements from a feeling of total hopelessness for the market

Investors take money out of the market, because they actually need it

And many other indicators"

http://www.themistrading.com/article_files/0000/03...

Regardless of where you stand on algorithmic trading, it's good to know what games are being played.

hehe flattery will get you everywhere in my book 2nd...

Bill- I have to say, in the 4 years or so I've been reading the WIR, your AZ/DZ system has played out in the 'real world' time and again. You're right- it's not rocket science. It's all about the mental discipline to buy in the AZ and sell in the DZ.

baz22- Where are you starting and how far will you go? I might have some ideas.

http://www.para-tours.ch/_admin/pdf/06_Denali_Hwy.pdf

from zerohedge...

http://www.zerohedge.com/sites/default/files/The%2...

from Jim Puplava- with a different take on the inflation-deflation debate...

http://www.financialsense.com/stormwatch/update.html

baz22- Wall Mart is a great place to stop. They encourage it. I only have spots more west but will check with my parents for sites closer to you. Forget the slide out if it's only the 2 of you. Why would you need the extra 3 feet?

Have fun...I'm jealous.

I'm no expert but imodium is first line of defence, not the last. Please look after yourself and see a doc in the states if necessary.

http://ronsen.blogspot.com/2009/07/trading-deadlin...

Bernanke testified last week that this swap money was dolled-out by those foreign central banks to their local large banks to deal with the increased demand for U.S.$ by those local bank's customers.

ABV INFY sell signals

FD: No positions, long or short.

So not surprisingly this rally has encouraged some short covering. This interesting table from zerohedge shows short interest is down 72% on average across all sectors over the past 2 weeks:

http://zerohedge.blogspot.com/2009/07/market-rips-...

I think this is 2nd_ave's "hand grenade" :)

Am I getting bad PM data? No shares traded on any of these PM and TBT bidding up a buck.

If you're wondering why I sold it off this morning- my 'counter-trend' rules now include:

Rule #1: Cut losses as soon as I determine I'm wrong.
Rule #2: If I'm unsure whether I'm wrong, then I'm wrong.

I have TBT bid/ask @ 54.66/54.76...No shares traded, 7/26 close 53.19. That's a huge jump with no shares traded??

I like rule #2.

CIBC cuts target to $11.50 from $14 and to sector perform from sector ouperform. News supplied by Schwab.
What's up with that? Are they having problems? Anybody know?

Bid 54.7300 Ex. Dividend Date 09/24/2008
Bid Size 42 Dividend Pay Date 09/30/2008
Ask 54.75

Not sure what is happening. L2 order flow is running, but still no shares traded in all 3.

Either way, looks like I sold TBT a tad early.

According to reports still unconfirmed, gremlins have been found to be living underground in the Yamana mine, and on weekends they are actually throwing elaborate parties with live entertainment and an open bar.

The availability of free drinks and accordian music is negatively impacting 2nd quarter results. Gremlins...Imagine that.

If I were the COO, I would open a weekday cafe, and make it free coffee and doughnuts. That would offset the negative impact and return Q3 results to projections.

http://zerohedge.blogspot.com/2009/07/etf-gloves-a...

some info. that may be helpful ( from Yahoo finance ): Pequot Capital was being liquidated in May and June.... They had $ 13.21 M. ( 15,357,700 shares ) of AKRX..... also, Pequot had 2,600,000 shares of VICR ( Vicor ) at $ 12.77 M... liquidation may be ending....

I cannot find confirmation of that anywhere:

Nothing in the UBS media releases:

http://www.ubs.com/1/e/media_overview/media_americ...

Nothing in Google news search:

http://news.google.com/news?pz=1&ned=ca&hl=en&q=ub...

You are correct about Charlotte, Sharkie.... and its to bad, because I lived here ( or nearby ) for over 45 years, and in the 60's and 70's it Was a really cool place to live... but the incessant push for growth and money ( from all the banks ) has made the area so very crowded and mean... that is the whole reason for the camper... I am getting out...

thanks

been happily long sqnm should be good for an all-dayer

Anyone think 9067 might be the low for the day?

Seriously.

ESLR reports earnings this Thursday after the close. Over the past few quarters, management has disappointed with large one-time charges. What's different this time is they haven't pre-announced (as they have in past), so maybe shareholders will catch a break. But the management of this company is the worst in the sector by far, so nothing from them would be a surprise.

Several ETFs show no trading activity on my Schwab screens.

I expect traffic tickets are one meal ticket for an increasing number of municipalities. I have received two electronic camera tickets for minor traffic infractions in the past 12 months, from a small Maryland town I used to shop at. My solution is not to shop there anymore and be extremely careful about traffic laws. I also drive less. There are still many municipalities without the automatic cameras. The local government will squeeze the drivers, but tax revenue from local shop keepers may see a decline if others change their behavior as well.

http://www.youtube.com/watch?v=z06mQT_vkkw

The market liked New Home Sales numbers briefly today at 10AM ET, but now it's giving it all back and then some. Perhaps that's a "sell the news" reaction?

one thing I noticed, is that akrx has not made any post's on their site in regards to the CDC contracts... untill any news is forthcoming, it could trade back to the low $ 1's... I am re-researching some very good little bio's and will try to post some info. soon...( somewhat like the vicl pattern from few months back... different research fields ( non-h1n1 )..

And then some times you do get lucky...Ca. pulls the plug (for now) on the Tranquillon Ridge project. Go Cali!!

Just trawling through some of the old site archives, looking around for those little gems of info. (Bit like the cheap CD bins - you know there's some treasures in there, you've just got to spend the time looking)

Anyway, I found this written on the 28th March 05

'One factor that could make gold prices skyrocket would be a deflation following a real estate bubble collapse, where the Fed would reflate in order to save a destabilized financial system in the U.S., which is a possibility that many now see as more likely than a year ago.

What did you used to say Bill......Ka-ching!

Ad

Most of us have never been so lucky to find that elusive good advisor. We try to learn, but fear or greed win all too often over method and reason, and if per chance we do find that good advisor, we are afraid to take the trades till after the window of opportunity has shut.

All I need to do is get myself to buy when I want to dump, and sell when I feel happy from making a great profit, and my returns would double or triple.

As someone else mentioned, Immodium is a really good first line of defense Bill, then it would be a good idea to test for some intestinal bug like giardia....these things tend to run amok in some places and can be pretty nasty.
All it takes is a simple fecal flotation and a microscope.

Otherwise you've been back long enough to overcome most simple causes.

A McDonald's cheeseburger always works for me...gums up the works pretty quick, but that's just me.

No mercy whatsoever.

Actually his name is Louie. Louie's Landscaping.....

Mostly I call him screwy Louie ever since I caught him sawing the head off of a dead deer one fall day during leaf-cleanup. He explained that it would look good on his wall. I went back into the house.

The whole world is chock-full of wackjobs.

Bill come on up to NYC...best hospitals in the world. Good pizza too.

Bit off a little piece, gonna try riding into the sunset....

...

"And then some times you do get lucky...Ca. pulls the plug (for now) on the Tranquillon Ridge project. Go Cali!!"

Sorry, I don't get it... Go Cali? I need my morning Biden wisdom fix; we've got professional racial profiling instructors being chastised by our president and now the only physicians capable of resolving intestinal irritation eat pizza and reside in NYC......

How bizarre, chills are running up and down my spine!

good #'s.... but midpoint 09' $ earnings( out last week ) is slightly lower than announced last month... also, France decrease in Gov. dollars for solar has to be accounted... Cal.ifornia $$ is still real iffy... guess a 2 point trade could be done off the $ 27-28 range... but, if oil moves up ( I agree with Bill ) she may take off again.

Time to break out the Elliott Wave charts? This impulse wave almost requires one to get your head around it.

I am now seriously contemplating going long.

....Richard Russell, author of the Dow Theory Letters, forthwith replaced the bear on the first page of his daily newsletter with a long-horned Texas bull. The long-timer said: "I believe we are now dealing with an extended bear market rally (some will call it a cyclical bull market). But I'm operating on the thesis that a primary (secular) bear market is still in force (although it has been suspended for a while). In my opinion, the true final bottom for this secular bear market lies somewhere ahead.

"Remember, on March 9 very few of the items characteristic of a true bear market bottom were seen. There was no extreme pessimism, there were no huge bargains in stocks, and the public continued to be hopeful. On this evidence, I concluded that the final and true bottom of the bear market had not been seen."

[Planet Yelnick]

Saw the Spongetech sign along the pitch last nigth during the AC/Inter Milan match on ESPN2....seen many of them at ballparks as well in the outfield.

I agree with you. I took a small position a couple of weeks ago and early this morning tripled down. I feel the downside is pretty much limited but can easily jump to 1.35 on the way to 1.97. Good risk reward in my opinion. Ya have to realize it's a biotech and therefore BIG jumps are not unusual.

dr,cosa - "so, whats the best position now if you think market is overbought and due for a correction? holding gold?????"

I would think not, based upon my relational observations. Could the $USD flop and the market tank at the same time? I think it's possible but not all that likely. I don't see higher gold unless the market joins the party, but who's the host? Probably not gold, but gold could be the last couple off the dance floor, in usual fashion.

I sure wish I knew more than I actually know...

vicl... waiting to see secondary ( or convertible offering )announcment for funding.... not sure if CDC, etc.. will include them in gov. vaccine monies... will definitely reload on corresponding news... INCY has had a monster run from the $ 3.30 range we bought,,, sold most..

getting a nice bid. Even my much beloved AIG is getting a bid.

Remember that a rising market bodes very well for these insurers that had to mark down their equity holdings significantly in q4 2008 and q1 2009. These are highly leveraged plays that probably will rise the most if the market stays up here...

"Could the same people that design them for HB&B theoretically build them for anyone?"

Yes. The algorithms are actually not that complicated. What gives HB&B the edge is the computational power (which allows them to compute the right trade faster than others), physical proximity to NYSE (which makes their orders go through ahead of the other orders) and a fair amount of dishonest conduct. :) But if you take all these out of the equation, then the remaining strategy will still give you a Sharpe ratio of 2 to 3, which is very good.

Those seem like good rules in general. I would add 'most likely' at the end of #2. Either way, good stuff to add to a list of aphorisms.

...

Max frustration rules.

Note the yellow area in this chart

http://tinyurl.com/n3ycff

Looks like the S&P could roll over. [edit: look more so at 3PM]

And if you are a McHugh watcher note this

From McHugh mid day report......

"The S&P 500 may be tracking a small Rising Bearish Wedge to finish the past two week's rally leg. If so it needs one more small rally leg to complete the pattern."

http://www.screencast.com/t/wHhlkJCS9

"a small change in the McClellan Oscillator Friday...This suggests we are likely to see a large price move early this week" [<--- I must admit he has been on the $$$ with this call. The other ones not so much]

That's the problem, one only knows after the fact. Ask people who were going to retire in Oct of 1987 how their plans were altered, or ask the same question of people who had that plan between 2000 and 2009. If you were heavy 70% plus in equities your were crushed.

SRS, is incredibly down -94% since 11/21/08 yet all we here is that commercial real estate is not going to be able to refinance their current debt. What
a dis-connect.

...

2nd_ave, what about your intent of going long? :) Shooting first and asking questions later? :)

No worries, all small positions.

Daniel, sure if you bought in MARCH the RSI accumulation signal would have worked, but what about all the accumulation zones from S+P 1250 all the way down to 666. There was months of accumulation going on, So which accumulation should one buy? and if your rule is to buy them all you would be down big time. So is the rule only buy accumulation zones in March?
Bob

The tea leaves finally chased this buy & holder to the sidelines at least for the big gainers in the pokey. Hated to see POT, TKC, ARD, PCZ etc. head down the road to lock in gains. Now I only get to look at my laggards day to day. I feel your pain on the re-entry saga Daniel. Happy Trading

can't remember if Bill posted that one, but one of the best to remember...

several out there besides APA, etc....

" I guess the 8000 Verizon workers about to lose their jobs better hurry up and buy."

That's right. They need to get two months' worth of pay stubs to their broker, claim the $8000 first-time credit, and be homeowners before the bank knows better. After this morning's headlines, lenders are probably tripping over themselves trying to rehire the document signers and office help they let go a few weeks ago.

"The impetus for going short at the close, btw, was the hesitation to do so. That tells me shorts are likely burned out/afraid to add."

That's true. Even I decided today to stop adding to my ultra-short positions so frequently and instead wait for several strong up days AND for S&P to breach 1000 (if S&P breaches 1000 in a one-day push, I'll wait for a few more up days after that).

This will allow me to exploit the great property of the ultra-shorts: they are a great way to bet against a rally while the rally is still going up. If the underlying index (say XLF) rises 5% per day for 5 days (for a compounded 27.63% rise), then a $10000 short position in XLF will turn into a $12763 position, resulting in the absolute loss of $2763. On the other hand, a $5000 long position in SKF (which will have the same absolute gain/loss as the $10K position in XLF during the first day) will be down 41% and will be reduced to $2952, resulting in the absolute loss of $2048 -- noticeably smaller than that on the short XLF position!

So "waiting out" a rally while in ultra-shorts is not that unreasonable provided one can add to them near the top of the rally. If XLF moves down 5% per day for 5 days in a row, then the $2952 position in SKF will grow to $4754, but ANOTHER $5K invested into SKF at the top of the rally will grow into $8050, for a total gain of $2804 on both positions during this inverse "V" shaped move up and then down.

On the other hand, those with an XLF short will be more reluctant to add to it as it grows against them, since they will naturally see a larger short position during a more overbought market even if they do nothing. Those who do decide to increase their XLF short by another $10K at the top of the rally will see their original short reduced from $12763 to $9875 and the extra $10K short reduced to $7737, for a total gain of $2138 on both positions.

So, strange as it may seem, it is more profitable to be in ultra-shorts during the rally and add to them at the top of the rally than to be short the original index and increase that short at the top of the rally (which, as I have observed, is harder to do psychologically than adding to ultra-shorts). The longer the rally lasts (assuming it ends up being an inverse "V" shaped rally), the bigger will be the difference.

In order to take advantage of this difference, one has to make sure that several "up" days happen between consecutive increases in the ultra-short position, and so now I am waiting for several strong up days before adding. If they do not materialize and instead the market starts plunging in the next day or two, then so be it -- the ultra-shorts I bought so far will carry my portfolio higher. The third possibility of the market stalling here and oscillating in place for one month (so as to "evaporate" about 5% of my ultra-shorts) is not very likely, giving the extent of the recent 2-week advance.

I don't think we'll see gold over 1000 till 2010 and only after the commercials are given a sub 900 panic to cover on. The Fed will pretend to raise rates or ANYTHING to prevent gold from going over 1000, IMO. It wont be till NOBODY ON EARTH wants more US debt that it finally breaks above, would be my guess.

In the meantime gold miners are worthless in my eyes, but I still will cling to what metal I have, which has now been moved to the great white north just in case Obama decides to play FDR.

Bev, I'm short the builders (the other "david") :)

Its one of those things. I'm quite sure this is a housing head fake based on the (well-known) current situation:
* winter foreclosure moratorium
* summer is the strongest buying season
* low mortgage rates increase affordabllity
* $8000 buyers credit
* buyer's desire not to miss out on the bottom
* deliberate withholding of REO supply

And if you read the builder article carefully, it appears the homebuilders really dropped the prices vs the prior month. The median home price went down 6.2% from May 2009 to June 2009 - in one month! Annualize that! Clearly, if you drop the price dramatically, more people will buy. This sounds more like homebuilder capitulation than a groundswell of buying. It will also be interesting to see what those price drops do to homebuilder earnings.

"The median price of a new home decreased 12 percent to $206,200 from $234,300 in June 2008. Last month’s value compares with $219,000 in May."

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

Unfortunately, the market can go up based on this for months, and the move can be dramatic (market can be crazy longer than I can stay solvent, etc) so there will come a time when I will have to bail out. My decision point is my expectation of a dollar rally here at USD 79. I was hoping something would happen last week, but it has been inconclusive. If the dollar rally fails to materialize and the buck continues its way downhill, I'm out.

bobbyo -- my point was that buy and hold was not really dead. Looking back to the lows in Q4 '08, there were available opportunities there too, and while the ride might have been a little rougher, stocks like AMZN, INTC, GOOG, QCOM, RIMM, SNDK, CTSH, PBR and others would have been good buy and holds, even to this day.
daniel

"Weren't you short homebuilders? If you are I thought you might be interested that John Murphy says they appeared to have bottomed."

Bev, John Hussman noted several times that there is very little informational content in the mean-reverting bounce in the economy we are seeing now. Let's not confuse the long-term fundamental deleveraging bubble-popping trend with the short-term fluctuations. Has everyone forgotten about the second wave of mortgage resets? An analyst who is looking only at the latest sales numbers and is extrapolating them into the future is "a talking head." Only those who can logically argue that things will not get worse despite all the headwinds the US economy will face over the next few years should be listened to. I do think that Tim Knight's long-term prediction of the stock market (and homebuilders as an instance of the market) is reasonably accurate: http://slopeofhope.typepad.com/PredictionLT.jpg

Daniel,
My point was that hindsight is 20/20. You can cherry pick any stock at the bottom and match up a corresponding buy signal too it and say, "See it works."
Buying on accumulation and selling on distribution probably works well in non trending markets; if you can get the stocks to move enough to actually be in those zones, but in a trending market you are going to miss the big pops and be in on the big bottoms, that is why you use the buy and sell signal(RSI 30,70 crossovers). I believe Bill uses these zones to assess risk and probably has more sophisticated assessments to tell him when to buy and sell. But if you did buy in March at the low I will have to give you a big congratulations and PLEASE let us know when feel the time is right to buy again. Is it now? I really need a kick in the pants. I can't find any stocks or storys I like right now other than shorting about everything.
Bob

Would anyone care to share their insight on Sequenom's MassARRAY Compact 96 System?

How unique is this? Do they have a competitive edge? How is the outlook for demand?

Do we have an expert in the field???

[Bill Cara note]
http://news.prnewswire.com/DisplayReleaseContent.a...

In an otherwise mind-numbingly dull day in the markets, I noticed shippers moving this morning. They didn't dissappoint for the rest of the day.

As well as the huge volume, check out the list of shippers directly below the DRYS chart on the google page.

http://www.google.com/finance?q=NASDAQ:DRYS

SEA is a diversified play on this but it's a bit illiquid.

Something's up with C$ and AUS$ and their connection with 1) emerging markets, and 2) general bullish sentiment in the global economy. In particular, as a C$ investor, AUS$ and hence, AUS$ assets look very interesting here IF this trend continues. I just can't decide whether it's toppy blow-off action or a sign of higher prices to come. As far as the shippers are concerned, they've been decimated YOY (e.g. DRYS -93%). As far as Emerging markets are concerned, I've been heavily invested in them since Dec-Feb and for the last few weeks have been looking to lighten up with a 40% gain because I think they've reached some resistance near full-value, but haven't done so. Interesting juncture...

http://news.yahoo.com/s/ap/20090727/ap_on_go_co/us...

Don't people know by now that denial only makes you look twice as bad?

Sorry CP- I guess that was less than clear. I sold my PXP last week on the news that the Tranquillon Ridge project was going to go through. I also have close ties to Santa Barbara, and have followed this story for years. It is one of the rare oil/gas projects that just about everyone agrees is a smart move. Environmentalists, industry, citizens, local governments, etc. And the giant brain fart in Sacramento pulls the plug on it.

I suspect it will still go through, but here in Cali, you never know.

This is a pretty reasonable review of the project...

Grym - I just gotta love that Gartman fella, what a guy! Now I know it's time to go long! ;)

Mark - If they'll put the central farmers out of business just to keep LA toilets flowing, they'll also keep the hydrocarbons in the ground. Damn the torpedoes, full steam ahead!

I did not buy or sell anything today.

To me, the trend is going sideways, thus the trend is no longer my friend.

On the sidelines and waiting.

CP - I sold my MTW too last friday. I don't trust this market right now, even for a day trade.

VB

TOF- One of our favorite shorts is looking pretty fat right now. Maybe 30.77?

I have a feeling we will get a bust-ass Atlantic hurricane early September... things are to quite....time to plan accordingly..

Hi vanillabean! Good work on the MTW, I'm gonna watch for a reload on that puppy! Unfortunately I don't have any VAR these days, it was quite a long time ago when I last did....

I hope the cellphone ticket isn't too expensive.... Guess you better stop yappin' on that thing while driving.... ;)

Somehow I don't think they're going to make up the state deficit by handing out tickets, all they'll accomplish is making the rule benders mad.

yeah, bean... and ya' better bet when they say speed 'Limit', they don't mean " we'll give you 10, but slow er' down next time "... I hope to get a little more discussion tomorrow about the ' Funding Crisis ' that Fleck has been discussing for awhile....got alot of reading and plotting ( !! ) to do.... take care... Baz

Kinda like his buddy, Sir Allen Greenshoots, eh, Bill ! Gotta polish up that reputation for those juicy speaking engagements to come....

Well, if ( IF ) we do, and ya' gotta vacate, Sharkie will have scouts out in Charlotte and all of Texas.... guess elsewhere will be OK....

Are bluetooths not the antidote to that? Much safer, just as effective, difficult to detect?

Mark - I'm still waiting on shorting this one. I see it going up to $40 believe it or not...I wouldn't go long or short at this point in the game, though. It's just too darn risky.

I'm going to use David's approach to shorting this market. Wait for a high with a confirmed lower high before considering going short.

Belatedly posted due to server issues:

Lined myself up to buy BPOP and entered the trade at 1.315, after an initial spike up that I had not been watching as for the last two sessions, BPOP didn't move during amateur hour.

Obviously linked to the opening drop in SPY I didn't sell even after seeing 2nd's call to pull out ("it's a gas,gas,gas") and BPOP dropped to 1.29 for a specific reason. Even as 2nd was pulling out (and this is no way defamatory of 2nd's trading) I noticed a reversal in the 1 min. MACDh signal, something I've seen before and anecdotally heralds a reversal although it wasn't until a strong MACDh trend a few minutes later occurred that I was more certain of SPY's movement - see attachment.

Unfortunately the S&P's failure to push through yesterday's closing just before Midday triggered a sell off in BPOP, or I suspect that this was the trigger. Level 2 quotes are great for seeing a change in sentiment straight away and having begun reusing them today was not disappointed to have sought out this particular site I used to a limited degree last year.

BPOP was on a short leash and after falling through yesterday's closing price after trending flat for a time I sold it off. The stock caught my attention later on level 2 quotes as I saw some big orders at the top of the book, yet they failed to move price. This relationship between volume and price movement is something I would like to understand better, so that I may understand the failure in this case of large volume on the books inability to move the price - see level 2 attachment.

I was glancing through John Lee's site for more info and well wouldn't you know! In his twitter blog embedded in the page it was written "sold BPOP 1.26/27". Ha! I was on the right track but too late to the party. He sold about the same time that I did and had probably bought the day before - will check his twitter blog. Going to run through another scan looking for signals that aren't already being traded upon by the pros - or at least permit me to buy at the same time as them.

FWIW I've added a screen shot of a reorganised desktop used during trading hours. You can see the value of a 28 inch screen to fit in a large number of tabs which can be viewed in compact mode or rapidly expanded to full screen (more of an aid to newbies like myself thinking about organisation) - see attachment. For anyone prepared to use freestockcharts.com - patience with the silverlight plugin - it is another buggy application courtesy of mr softy.

Lastly, I've been using the trend as my friend, and the short term trend says "stay the course". See SPX on the 30 min chart. Riding the bottom trend line throughout yesterday. Either a change in trend is due today or there could be a decent rally to bring SPX back into the trend channel. (Or it could ride the lower trend line again today). Note negative MACDh that is near positive at close.

edit: deleted the chart. JL in the next post has annotated correctly the SPX on the 30 mins that I have not.

http://tinyurl.com/look-at-that-no-volume

No volume above our present market level.

kudos to Bev for having already remarked upon this, if I remember correctly.

http://ronsen.blogspot.com/2009/07/dammit-i-said-m...

Tim Knight's "Rules"
A different perspective using MACD 3-10-16
Dave Landry's Approach
Extended? "What you talkin' about, Willis?"
Put-call ratios on the OEX
Volatility-based setups

Whatevah...