[7:22am ET] The last time America experienced a financial crisis of the magnitude of the present one was in the Great Depression era, for about ten years from 1929. During that volatile time in capital markets, there were six complete bear and bull cycles. As history tends to repeat itself, you might be interested to know what happened to the S&P 500 over that time.
If you are a glass-half-full kind of person, you will look to the Bull periods of the Great Depression where the gains were as follows: (1) 148 days/+46.8% (2) 98 days/+111.6% (3) 344 days/+113.7% (4) 723 days/+106.9% (5) 223 days/+62.2% (6) 200 days/+29.8%.
On the other hand, the duration and magnitude of the six phases of the Bear period were: (1) 783 days/-83.0% (2) 173 days/-40.6% (3) 401 days/-31.8% (4) 390 days/-49.0% (5) 150 days/-26.2% (6) 916 days/-43.5%.
At the beginning, on 11/13/29, the S&P was at 17.66. At the end, on 10/25/1939, it was 13.21, a loss of -25.2%.
On average, the Bear periods lasted 469 days with a loss of -45.7%, and the Bull periods lasted 289 days with a gain of +78.5%.
The bottom line is that through the 1930’s, while there were six Bull runs averaging +78.5%, most investors lost immense wealth. The major bankers and well-connected industrialists cleaned up.
There is something the common person can do to fight back. I have often stated that because of the Great Reflation that is needed to enable economic recovery from any crisis as bad as the present one or the 1930’s, it’s a good time to own gold and gold shares. In fact, for the ten years covered by the data above, the DJIA dropped -61%, but the price of gold lifted +69% and the share price of America’s largest goldminer, Homestake Mining, soared +485%.
It’s important that we keep a perspective on what’s happening today. History in capital market tends to repeat itself because the same drivers are at work.
Moreover, in a time of financial crisis, bankers will do what any cornered animal will do to survive. They will do whatever it takes, including illegal insider trading, illegal naked shorting, front-running trades, stimulating trades by rumor-mongering, pump and dump, misrepresenting their financial condition, obfuscation of important information, invading government to attack the Treasury, and a host of other no-good tricks of their trade.
It was scandalous that, during the present crisis, the leading bankers were (and still are): (i) acquiring assets without any understanding of the extent of the liabilities behind those assets (ii) supporting their peer group bankers with higher stock ratings (iii) hyping real-estate markets and companies they knew were and are in trouble (iv) turning their clients into the enemy by trading against them, as the hedge funds have seen (v) putting their key people into the most powerful positions in the Treasury Department, while covering up the greatest theft of all time, and (vi) too many other bad practices to list here.
The smell test, not the stress test, needs to be applied today. Market stability will return when the people smell fresh air.
Comments
Looking for a sell signal.
To those interested in the Berk $VIX sell signal.
Last night I made these charts comparing the 2009 & 2006 rally.
SPY & $VIX charts
2006 Rally & Correction: http://tinyurl.com/d8jz23
2006 $VIX: http://tinyurl.com/cv65x9
2009 Rally & Possible Retracements: http://tinyurl.com/cfhjez
2009 $VIX: http://tinyurl.com/cdh2tm
Note in 2006 the $VIX gave a sell signal and the next day the SPY broke outside the channel thus starting the correction.
Today we need to close inside the $VIX BB to confirm #2.
Then tomorrow close higher on the $VIX than #2 to produce a sell signal.
Safe trading everyone! It's rough out there.
Re: Looking for a sell signal.
Thanks Bev.
That means we'd wanna see a lower close today, to get $vix inside the bands, non?
Re: Looking for a sell signal.
Les
Yes that is correct but sometimes the $VIX and the SPY correlation can act strange. Close #2 has to close inside the BB today or yesterday's #1 close is no longer valid.
AUD ASX
ALOHA !!
AUD UP BIG! 1.03% ... way past the 75 level ... up some 21% since intraday lows Q4 2008.
Of all the economic data I look at this is one of the few that actually shows unemployment decreasing. In Australia unemployment went from 5.7% down to 5.3% according to the Australian Bureau Of Statistics.
ASX up as well 72 points to 3912.1 ...
Transparency, accountability and clarity... I want more.
"Americans’ trust in the financial system has been “shattered” in the past 18 months." says Elizabeth Warren...
Elizabeth Warren interview on Tech Ticker:
http://finance.yahoo.com/tech-ticker
Cara 100 Ratings Changes
Good morning. Looks like adore CSCO Day:
Price Targets Raised:
CSCO - from $21 to $22 @ Credit Suisse. Neutral
CSCO - from $21 to $24 @ Lazard Capital. Buy
CSCO - from $18 to $20 @ Robert W. Baird. Neutral
GM posts $6B 1Q loss, spends $10.2B in cash
"We cannot cut costs fast enough to offset that revenue loss," he (GM spokeseman) said.
"People are concerned about bankruptcy, and that's the reason why we want to avoid it if at all possible."
whatever.
Re: AUD ASX
Kaimu
I'm with you on this one.
FXA--Been riding that train with some sideline cash since end of January as posted back on February 9 & 27.
The improving Chinese economy is helping a natural resource rich country like Australia. Chinese also investing in Aussie mining companies. Your miners should be doing well!
EBAY PRICING
ALOHA !!
Thanks to Johnuk for this info that I found on one of his website recommendations.
Here are the links for GOLD and SILVER PRICES on EBAY ...
For Ebay gold prices: http://www.goldprice.org/ebay-gold-prices/
For Ebay silver prices: http://goldprice.org/ebay-silver-prices/
As many know, in order to buy gold and silver from dealers there is a either a minimum amount of around $2000USD or you get big discounts for the more you spend.
But what if you only have enough cash for one or two coins at a time? Where do you go? EBAY is one place ... but then you end up paying a premium because you are either paying BUY IT NOW or bidding against other EBAY participants(where ego comes into play).
So if you were smart you would buy the coins off dealers for a few dollars above spot and then sell them on EBAY for average premiums of 7.75% for gold coins and 45.46% for silver coins. I believe the premium for silver is higher because the cost per ounce is lower and with lower prices auction participants can afford to relax their bids and chase their egos. For instance the average price paid for a silver Maple Leaf one ounce coin is $20.28USD while the average price for a gold Maple Leaf one ounce is $960.00USD. Most people can afford $20.28 easier than they can $960.00USD. Silver the poor man's gold, but on EBAY its the poor man paying the most premium! What's new with the World ... when hasn't the poor man paid the most?
Look at some of the highs for coins and bullion(in USD) ...
American Eagle Silver 1 oz - $51.03
Maple Leaf Silver 1 oz - $29.00
American Eagle Gold 1 oz - $1,925.00
Maple Leaf Gold 1 oz - $971.00
Gold Bullion bar 1 oz - $1,119.00
Silver Bullion 1 oz - $36.65
All way above the COMEX prices. Amazing ...
gold's going vertical!
...
out of my long financial positions premarket
Waiting and watching for profit taking. up 57% since Monday, is due for some selling.
Re: AUD ASX
ALOHA !!
Gold is UP!! OIL is UP!! But the AUD is already into the 76! Hummmm, I just posted it was past 75 a few minutes ago ... The AUD is way outpacing the other currencies today! AUSSIE AUSSIE AUSSIE!! HA!!
Banks
Are flying pre-market.
Re: out of my long financial positions premarket
Back in on that mini pullback.
Come to papa. GTU-UN.TO bouncing back nicely.
...
charts/headlines
SPY showed spinning top two days ago and either a hammer/hanging man yesterday. Triple RSI screen is at 79, 70, 43.
Kosmo is on Today Show saying all is well, banks don't need no TARP money anymore.
Just need a match.
Re: charts/headlines
SPY looks like a white spinning top to me.
Trends and tops
Those who paid attention to my working scenario will notice how, up to this point at least, it plays out. All this relentless upward move is a lead-up to stress test results; trap door is getting ready to shut close. Step back and look at the situation:
- A lot more of optimistic noise from talking heads,
- upgrades with nicely sounding targets,
- people start talking about how far the market is from former highs thus looking for more upward room,
- volume starts increasing (crowds join indicating last stage starting),
- move become parabolic, with big overnight gaps...
Sounds classic, doesn't it?
That said - there was a whole lot of distrust in this move through the whole two months of it, and lack of volume indicated crowds staying on a sideline. This last stage (euphoria) is not necessary ending in a matter of hours, or one day. Happy crowds starting throwing money at the market is a factor hard to measure. Just like in capitulatory selloffs catching exact bottoms is a questionable proposition, euphoric spike is similarly volatile and tends to go way beyond reasonable. Be careful with that reflexive shorting the highs. Natural (and amateurish) reflex is to try and get tops and bottoms; professional trading is to bite a piece of the move in the middle when the trend is firmly established.
STRESS TEST
ALOHA !!
So Geithner has cleared all the US Banks, especially the ones who are the headliners with the US FED! WOW ... could there have been any other conclusion?
In my opinion he stress tested the wrong entity ... When will Geithner do a stress test on the US TAXPAYER? After all WE THE PEOPLE are the counterparty to EVERYTHING!
Based on my US TAX REVENUE STRESS TEST that I post here nearly every day the US TAXPAYER is failing ...
TIMMY?
READ ON:
Geithner: Stress tests clear bank 'uncertainty'
Treasury Secretary says the government's assessment of 19 major banks will help bring capital into the financial system.
By Ben Rooney, CNNMoney.com staff writer
May 7, 2009: 7:28 AM ET
ROAD TO RESCUE
* Reeling states hit by April tax shortfalls
* Geithner: Stress tests clear bank 'uncertainty'
* Obama will slice budget by $17 billion
* Will Obama tax plan really save jobs?
* AIG: Hoping to stem the bleeding
NEW YORK (CNNMoney.com) -- Treasury Secretary Tim Geithner said Thursday the stress tests of the nation's biggest financial services companies will help bring capital into the financial system by lifting the "fog of uncertainty" over the banking sector.
The results of the stress tests, which were conducted on 19 of the nation's largest banks, are due to be officially released later Thursday. The goal is to assess the banks' health and determine which may need to raise more cash to be considered stable enough to withstand another economic downturn.
"We chose a strategy to lift the fog of uncertainty over bank balance sheets and to help ensure that the major banks, individually and collectively, had the capital to continue lending even in a worse than expected recession," Geithner wrote in a New York Times op-ed.
"The effect of this capital assessment will be to help replace uncertainty with transparency," he said. END
HA!!! I love it ... One of the sidebar news stories is "OBAMA WILL SLICE BUDGET BY $17BIL"!! That's CHANGE WE CAN BELIEVE IN!!
Come one OBAMA you have the chance to turn the USSA back into the USA! You're blowing it dude ...
Re: charts/headlines
on stockcharts.com, it shows a thin red line. On yahoo historical data, it shows SPY closed where it opened, hence the spinning top, meaning the bears/bulls fought to a tie.
Yesterday, SPY gapped up at the open, then filled the gap. Could be a hammer or a hanging man. Not positive IMO.
We'll see what happens today but there are a lotta longs including me lined up to sell into this gift horse rally (again, MO).
Re: Trends and tops
Excellent post Vadym. Very nice of you to help everyone with their GPS whilst in midstream....
Dr. Ron has something similar on his blog today: "53 of the Cara 100 stocks have now gone over the RSI7 week 70 mark. I haven't particularly tracked this, so I don't know where this stands historically. Pretty high I'd guess. But what my son's work showed years ago (while working for Connors Capital) was that no specific technical picture established a limit to greed (while some had statistical edges concerning limits to fear)."
The trouble is...as greed momentum builds the bite in the middle gets bigger!
A peek behind the curtain?
Obama's controllers set to discuss course of this economic crisis.
http://tinyurl.com/c7k2ou
"Pay no attention to the man behind the curtain"
Re: STRESS TEST
ALOHA Kaimu!
I recently read how my county and local little town are laying off because their line of credit with the banks was closed/limited. This is happening all over the place.
So now that the banks "don't need capital infusions anymore" they will be able to fulfill the virtuous debt circle and loan back to borrowing government....national/state or county/city. right? LOL!!!!!
We'll see what they do at the Kremlin...I mean Whitehouse....
GE
selling 1/4 of position at premarket. Breakeven
Re: Trends and tops
Thanks Vadym, I have been reading some of the free info you give about trading and how to disassociate yourself from the emotional side of trading, on your website,particularly poignant right now I think , its very good .
Re: Trends and tops
S&P 666 will stop at 999?
Re: Trends and tops
I agree that this rally feels as though it will culminate (read: screwdoodle longs) probably in advance of or upon release of the stress test "results" which really have a "Through the Looking Glass" quality to them.
Government jabberwocky! Their words mean no more and no less than the beauracrats mean for them to mean. (This is a silly exercise in self-serving rhetorical nonsense. Are the banks insolvent? Trust me if you owned one they'd be coming after you, but since THEY own them....)
That said, Yamana looks to be POTENTIALLY breaking out, gold needs to follow through, PAL seems to be continuing it's upmove on strong metal prices.
Vinod- FAZ has dropped a lot of weight
Looking good. Not playing the pre-market.
Re: GE
Did you hold onto your PDS bsi?
Gonna hit $6 today. The low was $2.
Re: Vinod- FAZ has dropped a lot of weight
2nd
yes FAZ/FXP etc looks good. but i already have oex put brought yesterday near closed.
little early. so, will mot put more money in market
UNG/HNU.to
No complaints here. Just noting the continuing rise in NGas.
Re: Trends and tops
ALOHA !!
Vadym ... "Sounds classic, doesn't it?"
Yes, a SETUP WE CAN BELIEVE IN, as OBAMA would say!
I agree the trend is everything no matter if you are day trading or long term.
For instance my post on EBay gold and silver pricing allows me to sell my 2001/2002 BUY, which was buying a long term trend, and selling for a 720% gain. Had I kept those funds in a money market or in residential real estate where would I be today? I know I would not be able to sell a house as easy or as fast as I could sell a 1oz silver Maple Leaf on Ebay!
So should we really count credit expansion in real estate as MONEY? Real estate does not meet anyone's definition of money that I know of.
There are all sorts of "trends" in play ... finding the one with the longest legs is not so easy.
Now I have a question ... Can you apply your strategy to the FX markets? At CTAB you mainly spoke of and showed examples of stock plays. Do you trade the FX? Not the ETF imitation FX but the FX ...
Preparing for the Day
Getting my head prepared each day starts with reading Bill's commentary and reading everyone's opinions here. Today, he nailed it.
"Moreover, in a time of financial crisis, bankers will do what any cornered animal will do to survive. They will do whatever it takes, including illegal insider trading, illegal naked shorting, front-running trades, stimulating trades by rumor-mongering, pump and dump, misrepresenting their financial condition, obfuscation of important information, invading government to attack the Treasury, and a host of other no-good tricks of their trade.
It was scandalous that, during the present crisis, the leading bankers were (and still are): (i) acquiring assets without any understanding of the extent of the liabilities behind those assets (ii) supporting their peer group bankers with higher stock ratings (iii) hyping real-estate markets and companies they knew were and are in trouble (iv) turning their clients into the enemy by trading against them, as the hedge funds have seen (v) putting their key people into the most powerful positions in the Treasury Department, while covering up the greatest theft of all time, and (vi) too many other bad practices to list here."
Just because I hate bankers doesn't mean I won't play their stocks. Like NYU said it is about making a plan, playing smart and following through.
From past mistakes made, I will only sell half a position if things go south. Then if they keep going south, I will sell some more. I will not panic. I will not panic.
This is my plan for today.
vb
Re: gold's going vertical!
Gold getting its usual plunge down treatment , prior to NYSE trading,now I use these obvious plunges as buying opportunities:)
Stress test
Mr. Cara wrote
"The smell test, not the stress test, needs to be applied today."
Well said!
Bear E
Set to open 930a @ 930 S&P500
...
Re: Trends and tops
Exceptional post Vad. Caught your reference earlier this week and appreciate the expansion this morning.
Have sold a number of positions into strength this week, raising cash.
It's all about psychology now as the herd reacts. Like Craig, saw Dr. Sen's site early this morning and watched the crowd mentality you tube video.
But now more than ever, discpline and patience are necessary if you are "to bite a piece of the move in the middle when the trend is firmly established." Thanks!
Schwab
"March Lows a "Textbook Bottom," Buy the Dips, Says Schwab Funds CIO"
Re: Trends and tops
kaimu...I've never traded that market. Last time I looked into it (admittedly, years ago), from a day trader's point of view it was a bucket shop rather that normal market. Instead of open for everyone and transparent single price there were prices by each bank and broker, and trader would get his fill at that "internal" price - less favorable than "market" price. That's why FX trading was commissions-free - they made their money on the spread between real market (where they got their fill) and their internal prices (at which they gave a trader his fill).
Whether things changed since then, I don't know... I am not really jumping to the "next big thing", just staying with what works for me... call me lazy :)
BAC
selling 1/3 position, slight profit./
Four Horsemen
Drunk and riding backwards?
Re: Trends and tops
Kaimu, somebody,lost a lot of money selling Gold to you in that time period:)
"European central banks $40bn poorer after decade of gold sales"
http://tinyurl.com/cp9vtl
Doing nothing
Monitoring my own emotional response to being out of the market. I can sense the frustration of those who have been on the sidelines waiting for a pullback. Staying in cash for now.
More $USD weakness Scotty!
We're doin' all we can capt'n! The system is overheatin'
'Excuse me Captain..." "Yes, Spock?"
"Captain, wouldn't it be logical for BA to go up with the $USD going down?"
Hmmmm, nice logical point Spock. WTF?
Penny Stock - SpongeTech (SPNG)
A few weeks ago I asked if it was ok to discuss penny stocks. Someone said it was against the rules...Bill said it was ok. I just wanted to point you all to a penny stock that I came across called SpongeTech. Symbol is SPNG.ob.
They have been rapidly increasing revenues, albeit while also diluting their stock (although they recently reduced shs outstanding). They signed a licensing deal with Nickolodeon to make a SpongeBob SquarePants sponge for kids during bath time, which will be coming out in the next couple of months.
The company earned $1.5 Million in q1 2009 on revenues of $13 Million. They issued a PR saying they did $13 Million in revenues in March 2009 alone. They are currently valued at about $15 Million (722 Million shs o/s x $.021). Using standard valuation metrics of P/E or even P/S, you could make the argument that it should be worth about $100 Million or 6 times its current value.
Anyway, I am still doing research on them. I bought a tiny starter position in the stock at $.018 a little while ago. I heard about the company while watching a New York Mets baseball game...they are a sponsor of the Mets.
Re: Doing nothing
2nd
I hope my post about UNG the other day didn't cause you to sell prematurely. When UNG was below 14 I struggled not to buy it and it has been hard watching it soar like it did.
Stick with a theme...
Alright, either we use the force and feel our inner scaredy cat, or we use Star Trek and the more corny 60's lunacy.
Or yesterday's analogy....
I'm still chained to the porch. No worries, the mailman has to get to the slot in the door sooner or later. I'm not chasing, he'll come to me.
I didn't go long yet
Because every time I see that bearded alien-orb, I know that gold will go down.
UNG
I notice it gapped to my target($15.40), more or less, and is now looking to roll over, at least intraday. Remember, TA is like stirring chicken guts with a sacred stick. Right?
FAS hedge bought 10.85/sold 12.47 - Reloaded at 12.04
...
WHATS UP?
ALOHA !!
Whats up? Is it that GOLD and SILVER are up or is it that the US Dollar's purchasing power is down?
One way to answer that is by looking at real estate ...
I was looking at beachfront real estate in Fiji. A country I have been to many times and like very much and could see myself living there until I die. Like Hawaii it has plenty of food growing wild and an endless supply of water, fish and warm weather. It is nicely isolated away from the maddening crowds, especially the outer islands.
I found a property for $360,000USD with two houses on 3 acres of beachfront property with your own private beach. In 2001/2002 if I spent $360,000 USD I would have gotten somewhere around 1,142 gold ounces. Now today if I wanted to buy that property it would cost me 394 gold ounces and I would have 748 gold ounces left over or $684,400USD in the bank, if I cashed in my gold right now today!
Here is one of many bargains I found ... Some are listed in AUD and NZ as well. Because two trends are working in my favor now. One is the long term UP TREND in gold and the other is the shorter trend in falling global real estate prices.
Link: http://www.southpacificrealestate.com/details.cfm?...
Questions is where will fiat currencies be in another seven years? Where's the SMART MONEY, where's the REAL MONEY?
Re: I didn't go long yet
So Bernanke is a Romulin? That fits.
BAC/GE
RSI 7 day 85 (on stockcharts), GE 88
More QE from the B of E
Bank of England to pump another £50bn into economy as it steps up recession fight.
"The world economy remains in deep recession. Output has continued to contract and international trade has fallen precipitously. The global banking and financial system remains fragile despite further significant intervention by the authorities," it said in a statement on Thursday as it announced the plans.
http://tinyurl.com/d6lzfm
Gold going up, euro going up
Supposedly, gold is going up because the ECB has started quantitative easing. I would think that would be bad for the euro and good for gold, but both are rising at the same time. What to think?
TMF
long at 45.86
gold here...
gold back filling towards $913, would need to see a bounce off of the $910 consolidation levels to get the big thumbs up for a bull move.
it would not be unusual to see gold make a monster move in either direction at this point. quick sudden spikes up mean nothing to me until there is follow through. the shares acting nice, but a close above $920 w/ strong volume on the shares would be among my ideal scenario's today.
QID
look, it is doing well considering the NASDAQ is lower.
I have a small position.
edit: well, duh, it should be doing well!
Cara 100 Update (Final)
BA - target raised at Merrill/BofA to $50. Stock should trade well into the upcoming summer air shows. Buy rating.
CSCO - numbers increased at Barclays to $20 a share. Estimates also boosted, to reflect operating expense controls. Equal-weight rating.
INTC - added to Focus List at Credit Suisse. Company is positioned to grow along with a recovery in PC demand. Outperform rating and $18 price target.
vix
VIX going parabolic...
Re: WHATS UP?
Very nice looking property in Fiji Kaimu, and a great, great price... but it's native leasehold. Check the fine print.
Cheers
in yamaana 8.90
in yamaana 8.90
HGU = UGH!!!
using spare cash to make small HGU purchase @ 11.30
will add if and when gold moves over $930....
cof - up 5.00
capital one - trade of the day?
Capital One (COF Quote) upgraded at Goldman Sachs to Buy from Neutral based on valuation. Expect normalized EPS of $4.60, implying that shares trade around 5x vs. long-term range of 10x-12x. Price target raised to $27 from $17.
GM
Excuse me sir...do you have some spare change? Just $2.6 billion....this month....
Indicators
VIX - Large jump up open 32.10, last 33.79
TRIN - Muddling along now 0.76
TICK - below zero line
Scotty
I installed Winpatrol back when the blog was under attack, and it seemed a pretty happy little puppy, but yesterday it started barking periodically. Mouse over the icon says checking IE helpers, so I looked at the IE helpers and they all seem OK. I don't run IE but leave it installed as some applications seem to require it. Anyone else had this or know of a way to quiet the dog when it hasn't actually found a problem.
Re: Doing nothing>>short date with FAZ
Bev- No worries. I made up the opportunity cost picking FAZ up at 485th and dropping her off on 515th. There are endless plays in the market.
DBA out at 26.24 from 25.12
reload lower
You guys aint gonna believe
You guys aint gonna believe me but I sold the Yamana at 8.95 on a whim. I am SO used to selling for no reason. Strangle that baby!
What just happened in UNG? Someone dropped the ball...
...
Re: Doing nothing>>short date with FAZ
Besides, UNG is coming back to me.
Re: WHATS UP?
ALOHA !!
It does not matter because you can still find freehold properties in the same price range ...
The leasehold properties have over 65 years left and 99 years on CROWN property. Compare those prices to Bishop leasehold here in Hawaii and the prices for something equivalent to that property are way over $1mil USD.
Still here is one that is freehold(fee simple) ... Beachfront with two houses!
Link: http://www.southpacificrealestate.com/details.cfm?...
Vadym's sell on news scenario
Bulls eye! Can anyone venture to project the depth of the slide? The scenarios I consider is a shallow consolidation similar to early summer 2003 vs retest of near 740 or even below.
Re: Penny Stock - SpongeTech (SPNG)
teamonfuego,
Thanks for doing the research on this penny stock. I do like this kind of discussion here except when it's by a promoter, for promotional purposes or a single-minded obsession by the blogger. All I ask is for the blogger to id it as a penny stock and what your interest is, and for the rest of us to filter the info carefully, noting (in the blog where possible) any possible red flags.
Re: WHATS UP?
With the autocratic Naval commander presiding over Fiji, and having refused fresh elections for a democratic parliament, I think Fiji is in running with the USSA as to who can scare off investors the quicker...
Just of note the call option buying on XLF for May contracts
http://finance.yahoo.com/q/op?s=xlf
Not meant as investment advice. just an observation.
Re: Just of note the call option buying on XLF for May contracts
What do you see NY? The money on making it to 13? That's what I see.
Re: Just of note the call option buying on XLF for May contracts
not sure yet if the selling is profit taking or people switching to short positions yet. the volume is there but support is also holding. maybe i will get a clearer signal after the lunch break lull.
If nasdaq gets weaker than it is now, it may drag the markets into the close.
Re: Penny Stock - SpongeTech (SPNG)
Thanks for the message Bill.
I found some sort of inside arms length deal between the founders of the company and some other company that provided funding to SPNG through stock that can be repurchased by the company at roughly current prices. I am a little confused by the deal to be honest. This is a red flag to me, although it could have just been a legitimate source of funding for a company that couldn't get reasonable funding through banks.
On the flip side, I have never seen a company trade at such a cheap valuation given current earnings and their growth rate. I've seen the product in a local Walgreens and have heard and seen their promotions on radio/TV, so it's a legit company for what its worth.
SPY/SH/QID/QQQQ
SPY - Today's benchmark is $92.141
SH - Today's benchmark is $66.508
QID - " "" $35.52
QQQQ - "" "" $35.03
TBT/10year bond
As I'm sure many have noticed, TBT appears to be in a nice uptrend, with yields on the long end rising. Since Mid-March, a nice uptrend is in place.
Wasn't Quantitative Easing supposed to keep a lid on these yields?
What's a Fed to do now? More of the same?
This sort of thing makes me nervous. Any comment on recent gains?
FAZ
buy limit 5.40, yesterday 3 PM price + 5% 10 day ATR
FAZ
I got into FAZ($4.90) and out of SPY early this morning. I see that 2nd jumped ship on FAZ, but I might hold it overnight. I almost bought some SRS, but just missed it by $.20 at the open (up about the same 10% as FAZ from the open today until now).
Les, I hope you have a stop loss on FAS if you are still holding from $12. It could fall to $10 quickly, just today.
Who knows how the day will end? I say the rummor was bought, now sell the news!
Re: TBT/10year bond
To my amateur eye jrinbc, TBT dropped with the drop in the market this morning. As Vad pointed out, it's important to wait the turn and the establishment of the trend. If you've been holding since Mid-March, perhaps you want to ladder out a little and pocket some cash, until you can see which way the wind is blowing?
JMHO
Re: Just of note the call option buying on XLF for May contracts
Maybe it's smart money selling naked calls as they know XLF will nosedive from here.
Rob.
Re: FAZ
RE:>Les, I hope you have a stop loss on FAS if you are still holding from $12. It could fall to $10 quickly, just today.
no can do Kerry! That'd be daytrading. I'm learning the fine art of "active portfolio management" (and probably on my way to losing everything, like the rest of the idiots who practiced such)
:p
I am presently 50 shares FAS, 350 shares FAZ which balances pretty well. Will up the stakes either way as required.
Getting out is the tricky part. Gotta wait till pre-market for FAS, can offload a good deal of FAZ today.
Still, pocketed a decent return on FAS pre-market. Will see if it can be done on a multi-session basis. Only way I can play with a 3X ETF. (here I said I was done with such nonsense).
If the Banks are so healthy...
Why don't they return the FED's loans?
Why don't they return TARP money?
Why don't they return the taxpayer money funneled to them through AIG?
Why do we need the PPIP?
Why does the FDIC have to keep insuring their new bond sales?
Why did we just increase the amount the FDIC can borrow to 500 Billion?
Why were bank earnings mainly trading gains and lowered bond valuations?
Where was the traditional bank earnings?
Does anyone really believe none of these banks are insolvent?
Rob.
Setting up the traps
My gut feel is, one more run up into close... trap must be perfect, and that involves luring them in for the final cull.
dips I'm trading/watching
USU missed and is trading down 20%......
VZ has nice dip today as well for anyone interested......
Re: If the Banks are so healthy...
That pesky reality...it should be outlawed, oh, it has already!
Re: If the Banks are so healthy...
Finger, I think the answer to the first bunch of questions is because they haven't been allowed to pay stuff back, no? Cause if they did the few the didn't would be flagged as problems and sold off hard (as they should be). Not to mention, forcing banks to keep this money keeps the banks under the watchful eye of Goldman Sachs, I mean, the government.
Anybody who glances even a brief critical eye on this whole situation sees that the banks are in no better shape than a few months ago. They just keep patching the system up and painting over the rust in hopes that they can 'earn' their way back to healthy balance sheets.
The bulk of the profits in the last decade was from leveraging at all levels. That now having gone in reverse, not only have they lost those profits, but they've been replaced with losses.
And if the regulators get their heads out of their butts, such leveraging won't be allowed again for a very long time (preferably never, but memories are short).
Sorry, I know your questions were rhetorical, but I felt compelled to vent/answer :)
C
When it spiked down below 350 I was downstairs making more coffee.
Then it was at 380 when I got back here and felt I'd missed out and was maybe later than I woulda liked.
Memo to self: Trading idea for your desk....A coffee machine and a big empty bottle of Gatorade!
Sold HNU for a few bob. Vad's beginning to scare me :)
...
Re: dips I'm trading/watching
I'm hoping to get in VZ with an overall market downdraft. I'm thinking 28 or below. Maybe wishful thinking though. Think it is a good buy now with a 3 month plus time frame, considering the fat dividend. All my opinion of coarse.
Bob
cow
Triple RSI buy signal
Technicals today
Huge gaps in SLW and AUY were meant to be sold which I did. Repurchased and resold again. Looking for intraday cycle low to reaccumulate if the price is right.
In the meantime, this market looks tired so I have been in and out twice on SDS and now back in. I expect that we have a nice afternoon selloff or an after hours selloff after stress tests results are in, i.e. sell on the news. My current holding of SDS is at 58.00 cost with a stop at 57.65. I hope I don't suffer whiplash! All trades have made money today.
AUY
Back in at 8.70
The Game
RIMM
Yesterday was upgraded with a target of 78 by blah/blah/blah some crooked analyst.
Hits 78 plus in premkt, just 78 regular hours, now 74.76
Seems like they set the target, lure J6P in with funky ratings (see Bill's ratings game daily) and then their trading desks take their mortgage money.
What an example. I traded the upgrade and sold before yesterday's close.
Re: cow
Good catch BSI!
I like this one....volume looks nice at bottom....I'm in!
Buy 200 shares COW at Market Day 05/07/09 Filled
05/07/09 12:21 Filled 200 at 29.8624
Re: TBT/10year bond
Hi, Les. I noted the gap up in TBT this morning and started to think about the big picture - my expectation is that the folks at the Fed would not be happy with their experiment in QE.
No position right now, just putting the comment out there, with the hope of trying to learn from others with more experience in the bond market.
Thanks for the comment;
JR
Re: Setting up the traps
Agreed and by the addition of the fenzied retail investor looking to jump in so's 'not to miss out' the stars are aligning. One need only look at the gold price action and VIX to see this rally is on it's way out.
Re: cow
I have a buy stop set above yesterday's 3PM close.
sound effects
If todays session were a movie, this is where they would insert the cricket sound effects.
Re: If the Banks are so healthy...
I realize they aren't allowed to pay back TARP funds. An interesting kind of loan they were forced to take and can't repay to hide the insolvent banks.
But how about the nearly 2 Trillion the FED has lent out through other programs? There's no restrictions on when they can pay that money back.
Also, now that the banks are all perfect again why not reinstate M2M? Why should they need to lie about their holdings if they're all solvent?
Something else interesting to note:
BAC 6,310,000,000 shares in the float.
C 5,390,000,000 shares in the float.
WFC 4,200,000,000 shares in the float.
JPM 3,700,000,000 shares in the float.
AXP 1,160,000,000 shares in the float.
MS 1,060,000,000 shares in the float.
Insiders own less than 2% of these companies. My gut tells me that with floats of this size they're going to have to report more than gains in trading and decreases in their bond values to have any investors believe in their earnings power.
GS 464,600,000 shares in the float.
Insiders own 14%. GS seems like the only one with a chance at real earnings again.
Rob.
UNG
2nd,
You proved TA is only one tool in the box.
UNG through the 50 dma with volume 15.82 as I write.
NYSE volume on this red day is now 54% higher than the 20 DMA
...
TBT Up sharply at 1pm
What happened?
SKF off at 44.58
early i'm sure. Looking for one more entry.
Re: Doing nothing>>short date with FAZ/ UNG redux
Bev- UNG re-entered @ 14.98, out now @ 15.92....
Re: TBT Up sharply at 1pm
3 and 6 month bill auctions. But bid/cover ratio was solid. so not sure.
Re: Trends and tops
Speaking of tops, anyone paying attention to the TSX, which has gained even more than the US markets since March 9. Current chart shows a big shooting star candlestick, which often marks a potential trend reversal (if it holds until end of day). Also, RSI 7 weekly is now over 70 - last time it was over 70 on the weekly was June 2008 when the index hit all time high of 15154.
CRB
Does anyone know if there is a stock surrogate for the CRB index?
Re: CRB
Not sure how closely DBB is related... I believe Bill has mentioned it in his WIR
Re: TBT Up sharply at 1pm
30 year bond sale did not go as well as planned, per television analyst who said he was "shocked", heard yield increased to 4.29 from 4.19. Think the cover ratio may have been 2.2, but will wait for Econoday report and post later.
As previously mentioned, "Something to keep an eye on"-bond auctions. Lots of supply coming on, watch the demand.
Re: TBT Up sharply at 1pm
Don't forget about social security. That baby is full of bonds. With jobs going down we could see more going out then coming in next year, thus more bonds on the market. Or higher taxes. I prefer the later.
If we correct, do we think we'll see bond yields drop again? Is there enough money not in bonds already to push yields way down?
Silver Spike
Back up over $14
TLT/TBT
Dr. Ron brings up the ten year yield telling central bankers they're on their own.
I wonder, could this be a reverse trap, with the fed announcing they are buying treasuries and make a Bat Turn with tomorrow's unemployment numbers leaving us all at the station?
Sure doesn't seem like an afternoon sucker's rally right now...
Re: TBT Up sharply at 1pm
$14B in 30-year bonds in a messy auction at a high yield of 4.288% (vs. expected 4.19% - 57.15% of bids were at the high). Bid to cover ratio: 2.14. Primary dealers took $8.8B; indirect bidders took $4.61B. 30-year Tsys fall off a cliff, now -1.66% to 120-10. [seekingalpha.com]
Bond auction results
Econoday:
Released on 5/7/2009 1:00:00 PM For 5/7/2009 1:00:00 PM
Auction Results
Bid/Cover 2.14
Coupon Rate 4.250%
Total Amount $14 B
Yield Awarded 4.288%
Highlights
Accounts are showing Treasury exhaustion, at least for the 30-year bond which has ended a run of strong auctions. The stop-out rate of 4.288 percent was 8 startling basis points above the 1:00 p.m. bid. Coverage was moderate at 2.14 with buyside takedown soft at 37 percent. The refunding is over and just in time judging by how sloppy this auction turned out. With no coupon auctions scheduled for the next two weeks, buyside accounts will have some time to digest this week's new paper.
IMO, key words are exhaustion, ended a run, startling, sloppy.
OEX
Vinod,
What is the difference between those -OE* and -X* options? Is -X the old LEAPS?
DOW
Dow is only down 100 and 900 more to go
Re: OEX
Shiva
for 300 series it start with -OEW
for 400 series it start with -OXB like that
BA
http://www.heraldnet.com/article/20090507/BIZ/9050...
Re: OEX
Vinod,
If you go to fidelity & put OEX & search for option chain, you can see what i am talking. I see -OEWOS & -XOEOS for the 395 May put, for example with the -X being slightly cheaper. I never traded the -x ones, need to find out what the heck they are (European style options or wht)?
Re: OEX
Shiva
I neber look at fidelity for option chain
i will take a look at it toninght. to busy right now
Sold yesterday's FAZ for about 8%.
The pains in the butt at IB don't recognise the difference between purchases from yesterday and today. That was a daytrade.
Oh well, good to know.
Time to Short FAS?
I believe too many short sellers were burnt during this upturn and are waiting for a late day spike up to jump in on the short side. As such, I think now might be a prudent time to go short...that is, going against the masses.
My preferred vehicle is short FAS as we know of the erosion factors with triple ETFs.
Re: Bond auction results
Reading Bill's call on gold & miners this morning and seeing the bond sale results put's us right at Bill's TOG call back in November. Are these stars finally lining up?
positionz
Long SRS @ 20.79 yesterday, long FAZ @5.35, long GG, MRK, and SEPR above entry points; holding all, small positions but overall bearish. Trades I was tempted to make yesterday (didn't), puts on DB @ 55 strike and puts on PNC @ 48 strike, looks like they would've paid off, oh well, live and come back to trade another day...
KGC@16.25
..........
rode fas for lunch money 10.52 to 10.62
Going short is scary here with PPT just around the corner
Might open small short position here.
Re: Bond auction results
Usually the bond market has been right than the stock market
GS
You've got to love Jeff Macke http://www.minyanville.com/articles/GS-banks-etf-s...
"And, yes, I’m still long Goldman Sachs (GS). I’ve got big gains and a Purple Crayon line running a meaty 8 points below the current quote. Oh yeah - Goldman also secretly controls the financial operations of the entire world. That’s a lot to like about a single stock."
Head & shoulders top on XLF, RIFIN?
Look at XLF intraday attached
$Rifin daily
http://tinyurl.com/db5qxo
Re: WHATS UP?
ALOHA !!
Les, you need to get out from your Swiss enclave more ... Most of the World is dominated by elected or unelected "democratic dictators" backed by military and bank elite. Most of the time the elections and the promo using the word "democratic" is so they can still qualify for IMF and US FOREIGN AID! Middle East, Africa, South America, East Europe, Asia and even our near and dear CHINA! If you doubt CHINA is ruled by the military go over and protest the Beijing government! Then there is the good ole USSA ... on the surface it appears free!
Any visit to Fiji and you would see the ethnic divide in plain sight. This is what has been going on since I first set foot there in 1975. The Indians and the Asians own all the businesses and control government and the Fijians who are the majority of the population own the labor and poverty. It has never been much equal representation going on there. The Admiral understands that basic point and probably 90% of the Fijian population understands the ethnic divide, because they see it every day. I have read the politics and I agree that there cannot really be a true democracy in Fiji while voting is rigged and the districts drawn to favor the minority ruling class with an absence of census. If you cannot see the ethnic divide then you are either locked in your hotel room all the time or you sunglasses are tinted too black!
Even with all that and all the current tensions between Australia and Fiji and the other island nations in the South Pacific, there has always been instability with the government and the Fiji politics to varying degrees. I don't agree with the censorship that is going on in Fiji and I believe there should be free democratic elections but there also needs to be some effort to first redress the ethnic differences, otherwise these tensions will only remain divisive and unproductive in the long run. Its the basic "haves against the have nots" that has always been present and yes, I believe the same differences in the USSA that have eroded the Middle Class will also develop into the "haves against the have nots". Essentially this is how it is in most Third World countries. There is the ruling class and then there is the rest of the people! Go to Mexico ... I could just as easily chose to live in Mexico the rest of my life and be happy. Fiji coups are ... oops I blinked ... if you blink you missed the coup! Pretty much benign in terms of the really BIG COUPS like the toppling of Communist Russia. In Fiji Viti Levu is the main island where government and tourism is focused and the rest of the islands don't even know the World exists!
Over 20 years of various FIJI government wranglings and I'd still live there! Even so the people I have met in FIJI are quite nice and very friendly and really do not keep score on government misdeeds as revolutionary tendencies melt away in the Sun ... Somehow the economy there is still going and there are foreign investors still coming in. BULA!
Re: Just of note the call option buying on XLF for May contracts
NYUGrad, in order for someone to buy call options, someone else has to create them and sell them. So the original motivation lies with those who create them. The Big Boyz are naturally feeling that financials are close to the top, and selling calls at the top is a reasonable thing to do. If they can keep XLF at these levels, then they screw the naive people who are projecting the recent uptrend in the financials to continue at the same rate.
Re: WHATS UP?
kaimu
Most of sugar plantation and other agri product are control by western company. Elected left leaning Prime Minister Try to have some control over these industries and have better like for indigenous people. What happen?
Well with help of western company they overthrow government and local took over who has no expertly or knowledge about how to run government and industries.
I been there few times and it is not as simple as you thinks about have and have not
Re: Going short is scary here with PPT just around the corner
Agreed. Let's see how the final hour goes today. Believe Da Boyz may want to bend the shorts over the table a couple more times as a reminder not to get too confident.
MEE
short at 21.15
hnu.to
Wow, sold early at $8.07.
Re: Penny Stock - SpongeTech (SPNG)
I also wanted to point out on this particular penny stock that they are seeking a listing on the NASDAQ, which would do wonders for both credibility and liquidity. I will probably hold my position in the company for a while and just see how it plays out. If they can continue their March sales run rate they you could conceivably see a company with $150 Million in sales and $15 Million in earnings. A 15 p/e means it could be a $225 Million company versus todays valuation of $15 Million.
FD: Long SPNG shares.
Quick chart on FAZ
Disclosure I am short financials. Not through FAZ. Not meant as investment advice.
But the ascending triangle just gave confirmation and broke out. Also looks like an inverse h&s bottom. But i must re-iterate, you cannot do tech analysis reliably on faz or fas without looking at RIFIN or XLF.
"Consumer credit drops record $11.1 billion"
http://tinyurl.com/cwmual
"Consumers' debts fell a record $11.1 billion in March, sending outstanding debt levels dropping at a 5.2% annual pace, the fastest decline since 1990, the Federal Reserve reported Thursday."
FAZ @ 5.68
...
Re: "Consumer credit drops record $11.1 billion"
NYUG, From your posted link, I take this as confirmation that the consumer is not going to 'buy' the U.S. out of the recession.
"Outstanding revolving debt - mostly credit cards - fell $5.4 billion, or 6.8% annualized, to $945.9 billion in March. After falling six months in a row, credit-card debt is down 1.2% in the past year. Until February, credit-card debts had never fallen on a year-over-year basis since the record-keeping began in 1969.
Outstanding levels of non-revolving debt, such as auto loans, student loans, and personal loans, fell by $5.7 billion, or 4.2% annualized, to $1.6 trillion. "
Re: FAZ @ 5.68
ditto 5.65
gold must move or else....
momentum has waned here for gold,
is it forming a base at $910 from which to launch or was the blink move to $925 just a flash-bang before a retest of the 200MA...
volume still not impressive on most miners accept for Goldcorp, nice move today.
im really torn on this one, i dont forsee the miners going up strong if the broad market takes a hit, unless of course gold really jumps, taking them along for the ride.
Loaded up on FAZ - cost basis 5.43
best scenario - rosy pre-market and opening. Drop off my FAS.
And from there all down hill...
:) here's to wishful dreams
Night all.
Re: OEX
the -x series are in fact the European style options for the oex.
WFC>> $6b stock offering
Down 3% after-hours.
Stress Testing
A couple of weeks ago the U.S. Administration loosened the reqirements for the market to market booking of the Toxic ( Legacy) assets(Good timing eh )It seems to me that if the U.S. Big Banks are free to book Toxic assets as they choose then valid comparisons can not be valid and these Stress Tests are not meaningfull.
Regards
Re: WFC>> $6b stock offering
Here comes the dilution. How many shares do they have now in the float?
At 25 a share 6 Billion totals 240 million new shares bringing the float to 4.444 Billion. This dilutes the float just over 5%.
Rob.
Re: Stress Testing
bobbor, I am in total agreement with your observation/statement.
Re: WFC>> $6b stock offering
$20.50-$22 is the offering price range per reuters.
Re: WFC>> $6b stock offering
Well that makes even more shares. That's another 42 million if we take 21.25 as the price most sold at. Bringing the grand total of the float to 4,486,000,000.
Wow!! They're going to have to do some fancy footwork to report any good earnings with that many shares.
Don't forget they have a .20 dividend too which adds up to 897 Million. I wonder how much interest they have to pay the government for the preferred shares. It's amazing to see how much money they need to earn to declare 1 buck per share in earnings.
Rob.
big earnings
beat by 22 cents over 13 estimate and double revenue from estimate.
EBS
Here's what's wrong with my trading
I managed to make a nickel on the long side instead of a dollar going short.
Need to get more conversant with the short side.
Re: Trends and tops
Shooting star on the tse is interesting, Dave. And the dow put up an engulfing candle today, also bearish, along with a bearish histogram -Taking no action but the candlestick formations have my attention.
STRESS TEST RESULTS: 10 BANKS
STRESS TEST RESULTS: 10 BANKS NEED TO RAISE$74.6B IN CUMULATIVE CAPITAL
- BAC needs $33.9B
- CITI needs $5.5B
- STI NEEDS $2.2B
- PNC NEEDS $00M
- BBT DOES NOT NEED CAPITAL;
- BK needs no capital; STT needs no capital;
- KEY needs $1.8B
Re: STRESS TEST RESULTS: 10 BANKS
Wow that's not so bad. I think I'd like to go buy some more stocks for my pension fund.
Conspiracy Theory or Fact?
If you share my feelings about a conspiracy to gain control of world finance by creating a crisis big enough that a smaller-capped broker ranked 20th in 1999 can morph into a money-center bank and gain a seat at the Treasury, Bank of Canada, etc. etc ....you are going to love this chart. It shows the change in market cap of the top 20 financial institutions from 1999 to 2009. Use the slider at the bottom of the chart to change the rankings from year to year. It's hard not to miss the correlation between the timing of the introduction of toxic securities in recent years that paved the way for the crisis and the ascent of Goldman Sachs. The file is too big to attach, so you may need to do a copy & paste but it's worth it.
http://media.ft.com/cms/7a7a1484-17a3-11de-8c9d-00...
FAZ
Just got back from vacation, no trading, no internet - nothing for a week...but looks like I missed a good week as both my favourite plays FITB and LVS took off. Bought FAZ at close, but am biting my nails after seeing whats happening after hours. Anyone else still holding?
C
How does Citigroup not skyrocket on these "stress test" results?
TA analysis on shorting the bear rally
Karl Denninger has some good charts and TA on shorting the S&P. He argues we're seeing a blow-off parabolic top on a bear rally.
http://market-ticker.denninger.net/
Re: C
Who believes these numbers?
Re: C
My understanding was their capital requirements were much greater, but it was assumed they would just convert their preferred. Maybe that's already baked into the capital need reduction to a mere $5 billion.
Re: STRESS TEST RESULTS: 10 BANKS
A stress-less test (compared with what's ahead)
A pass-fail test (without a fail option)
Social promotion, just like in city schools ...
bought more SKF after hours
50 shares at $42.95, placed a sell limit order at $47.95. The current after hours reaction to the stress test results is similar to the one that after an FOMC announcement, when no one really knows what its meaning is and the first ones to move usually lose (the first reaction is usually the fake reaction). I can't imagine that the disclosed results radically improve the market perception of the banks relative to what the market knew 1 hr ago. In fact, given the current after hours reaction (panic covering of the shorts), the biggest surprise would be if the financials drop tomorrow.
Re: OEX
thanks for that info..
Re: OEX
Shiva, a good place to check is the CBOE (Chigaco Board of Options) or the OCC (Options Clearing Corporation).
http://www.cboe.com/default.aspx
http://www.optionsclearing.com/default.jsp
Here's a direct link on the CBOE site to the product information on the various S&P options.
http://www.cboe.com/Products/Cash-SettledIndexOpti...
The OCC site is also excellent for looking up adjustments to options when the split or pay divs.
And yes I agree as it was posted earlier, the X options are European style, can't be exercised early, so I guess they are a few cents cheaper for that reason. Although you can always sell them if you can find a buyer at your price.
Discover yourself
Insert your birth date and see who you really are.....
http://www.paulsadowski.org/BirthDay.asp
Re: WHATS UP?
ALOHA !!
Vinod ... What are you talking about Colonial Sugar collapsed in 1973? Who are the farmers? Show me one Chinese or Indian working the sugar cane farms. That industry has been backward and inefficient for decades now. The sugar cane industry in the Western World here in Hawaii collapsed back in the early 1990s. There weren't any Fijians in Hawaii ... Ever hear of C&H? Its not Fijian! In fact sugar here in Hawaii was mostly Japanese and Philipino run.
Further most of the sugar mills in Fiji that started in the 1800s collapsed by 1959 and only four were left out of ten. The four left over were bought by the Fijian government from Colonial Sugar back in 1973, otherwise there would be no sugar industry left in Fiji. Now it is called Fiji Sugar Corp. All the Fiji sugar industry has been government owned for nearly 40 years! How old are you and when were you there?
Did you ever visit any of the sugar cane mills or go to the sugar cane farms and talk to the farmers? Ever see the tiny gauge railroads they used to haul sugar cane to the mills. Man ... Disneyland has a better railroad!
Are you sure the western companies were that great? If so then, where are they? Why did they collapse back in 1973? Guess who subsidizes the entire Fiji sugar industry now? The EU!!
MISH ON BOARD
ALOHA !!
Okay ... April 3rd ... a month ago ... MISH sees the light and wants to abolish the US FED. Welcome aboard mate!
Part of the MISH, FED UNCERTAINTY PRINCIPLE ...
It's even possible the Fed is behind the curve by not acting fast enough. This is of course all guesswork. I don't know, you don't know, and the Fed does not know what to do. This is part of the "Fed Uncertainty Principle" and a key reason why the Fed should be abolished. After all, how can you give such power to a group of fools that have clearly proven they have no idea what they are doing?
The Fed has so distorted the economic picture by its very existence that it is fatally flawed logic to suggest the Fed is simply following the market therefore the market is to blame. There would not be a Fed in a free market, and by implication there would be no observer/participant feedback loop.
The Fed hints at "possibility" of recession. We are already in one.END
"There would not be a FED in a free market ..." A DUH moment!
When will he figure out that OBAMA had it right by calling the US FED and its member banks "MIDDLEMEN"?
Next time vote for Ron Paul Mish!
Eliminate the US FED!
Re: FAZ- Added AH @ 5.19
Added to the 15% (of allocation) picked up @ 5.68 before the close. Cost basis now same as Les>> 5.43.
Let's see how it plays.
fas:faz
shows bearish engulfing.
re:cow
sell stop at 29.03/29 limit
Re: FAZ- Added AH @ 5.19
2nd
sold my oex put today
AIG doesn’t need to game the books does worse than expected, but they did stress test for other all did good. Now why shouldn’t we expect the payroll number tomorrow to come in better than expected? Lots of people with brain is trusting this market so mine may not be too good
Re: FAZ- Added AH @ 5.19
Vinod- Glad to hear those 30 puts made you money.
Hussman on Banks
http://www.hussmanfunds.com/wmc/wmc090427.htm
In order for U.S. financial institutions to earn their way out of the losses, they will have to accrue and retain an amount on the order of 25% to 35% of GDP. From where will they reallocate that amount? Well, prior to the recent earnings downturn, corporate profits were running at about 8% of GDP, a figure that was already based on unusually high profit margins (the sustainable norm is less than 6%). The personal savings rate was about zero, but has increased to about 4% as consumers have scaled back consumption. If banks were able to sustainably charge high interest rates on loans and pay low interest rates on deposits, the earnings of the banks would come at a cost to what would otherwise have been retained: corporate earnings and private savings.
Essentially, savers will earn less, and corporate borrowers will pay more. To accrue 25-35% of GDP to cover the debt losses (which is a mainstream estimate, not a worst-case by any means), you would have to persistently depress non-financial corporate profits and personal savings by about 25% for well over a decade.
So yes, we can indeed abuse the U.S. public in order to make the bondholders of U.S. financial institutions whole and protect them from any losses. This was the policy of the Bush Administration, and has tragically become the policy of the Obama Administration as well. By doing so, we will commit our future production to foreign hands, or we will commit about a quarter of U.S. non-financial profits and personal savings to these bondholders for at least the next decade.
We can also allow bureaucrats to commit public funds that have not even been allocated by Congress, which is what we have done. We have all become dangerously de-sensitized the the sheer volume of money being tossed around here, and the potential for enormous fraud, misappropriation, cronyism, and misuse.
http://money.cnn.com/news/storysupplement/economy/...
What we cannot do is create all of this out of thin air. Understand that the money that the government is throwing around represents a transfer of wealth from an unwitting public to the bondholders of mismanaged financial corporations, even while foreclosures continue. Even if the Fed buys up the Treasuries being issued, and thereby “monetizes” the debt, that increase in government liabilities will mean a long-term erosion in the purchasing power of people on relatively fixed incomes.
To a large extent, the funds to defend these bondholders will come by allowing U.S. businesses and our future production to be controlled by foreigners. You'll watch the analysts on the financial news channels celebrate the acquisition of U.S. businesses by foreign buyers as if it represents something good. It's frustrating, but we are wasting trillions of dollars that could bring enormous relief of suffering, knowledge, productivity, and innovation in order to defend bondholders of mismanaged financials, and nobody cares because hey, at least the stock market is rallying. If one thing is clear from the last decade, it is that investors have no concern about the ultimate cost of the wreckage as long as they can get a rally going over the short run.
For my part, I remain convinced that without serious efforts at foreclosure abatement (ideally via property appreciation rights), mortgage losses will begin to creep higher later this year, surging in mid-2010, remaining high through 2011, and peaking in early 2012. To believe that we are through with this crisis or the associated losses is to completely ignore the overhang of mortgage resets that still remain from the final years of the housing bubble.
PAL / PDL
Q1 results just came out and on balance I would say they are mildly positive and was encouraged by management's controlled expenditures while Lac des Iles mine is still on shutdown. The Sleeping Giant Gold Mine acquisition is an interesting development and tells me that they are serious about acquisitions and improving shareholder value during this depressing time. There still seems to be a reasonably healthy cash & receivables position and they are determined to wait until their metals prices rise to the point that they can sell what they produce before re-starting production. Despite the recent share price run-up in recent week(s), while not excited about continued near-term share price improvement there were no new negatives presented and I'm not discouraged to the point of bailing out. So, for me, it's a hold with watchful waiting. Any other holders out there with opinions?
Berk's BB sell signal
What say you, Bev? I guess we'll find out shortly whether/how soon that signal works this time.
Re: PAL / PDL
terryc - I'm not a holder, but it seems to me there's good potential for further upside.
Re: Hussman on Banks
haven't even begun to address unsecured (credit card) debt
.
XLF
Black Opening Marubozu, Bearish Dark Cloud Cover Pattern - Highly reliable, however must first be confirmed by tomorrow's price action.
Re: XLF
So...It's going to rain tomorrow? Seriously, what does that mean to a dodo bird like me?
Re: XLF
Mark- Try this.
http://www.candlesticker.com/Cs48.asp
Also: Black Opening Marubozu: Open>Close AND Open=High
C
seriously if the govt would not let any of these banks fail, why do we even trade other stocks? On every pull back, just buy the big banks & sell them or till the next shoe drops. There is an implicit guarantee anyway, for what it is worth....
Hang Seng Index
May 8 (Bloomberg) -- Ronald Arculli, chairman of Hong Kong Exchanges & Clearing Ltd., “wouldn’t be a buyer” of stocks trading in the city, which are at their most expensive valuations since January 2008.
Economic data shows the financial crisis isn’t over, Arculli, 70, said in an interview yesterday. The benchmark Hang Seng Index has surged 52 percent from a four-month low on March 9.
“Stock markets tend to run ahead of economic activity,” said Arculli, who has been chairman of Asia’s third-largest bourse for two years. “There’s a lot of that with the index being at the current level.”
Re: XLF
Ah, so I see. Thanks. Gotta love the names.
Gave some back today on HK, but all other E/P guys about even. Added to UNG @ 15.15, but that's it. I've got a nice cushion so still happy to sit tight for now. NG up to 4.155 (1.8%) in ET. Tomorrow should be a bell weather day SPX.
RE- FAZ. I would have made the same trade @ the close, but I've given up trying to short the financials until I see a real trend change. GL.
Re: XLF
"Seriously, what does that mean"
You're right, I should've been more descriptive. Basically, XLF started and ended the day very bearish but from a technical perspective, this doesn't qualify or justify going short yet, this is a strong warning. The bearish signal must be confirmed by price action in tomorrow's session, if XLF gaps down, then the opening price will be the benchmark. If the XLF opens even or up, the benchmark price is today's closing price ($12.12). If the price falls below and stays under the benchmark, this indicates support failure and it's probably time to bail on XLF or find the nearest exit.
Re: C
Shiva- I would respond to that question by noting that (a) not allowing any of the large banks to fail is not the same as saying shareholders' equity will be preserved, and asking (b) how impressed are you with the share price performances of those other government-backed corporations (FRE/FNM/AIG)? ;)
Re: C
"seriously if the govt would not let any of these banks fail, why do we even trade other stocks?"
These banks are in the process of becoming mega banks. Unless the global economic system is to be completely transformed, this is a necessity...
Re: XLF
Thanks CP- I'll listen to FTWR's conference call tonight, and let you know if anything spooks me, but the action today is obviously positive.
Re: C
Heck, look at Government Motors. No bankruptcy, but 100-1 reverse split basically diluting existing shareholders into oblivion. Still can't figure how they are pulling this off outside of bankruptcy court...
Re: XLF
Mark, Looks very positive. Thx,BTW
"NY Fed chair resigns amid stock purchase questions"
http://tinyurl.com/pngcrp
"While the Fed was deciding whether or not to grant Friedman a waiver, he bought 37,300 Goldman shares on December 17, for an average price of $80.78, according to regulatory filings.
On January 22, he bought 15,300 more shares for average prices of $66.19 and $67.12, according to filings with the U.S. Securities and Exchange Commission. The January purchase brought his total holdings to 98,600 shares.
Goldman shares closed on Thursday at $133.73, meaning Friedman has profited handsomely, earning more than $3 million in total on the two purchases.
"Clearly he should not have done that (bought more Goldman shares), and probably even before he did that, he should have gotten off the board," said Alfred Broaddus, former president of the Federal Reserve Bank of Richmond."
Re: C
They'll be super-trustworthy then when they're mega-banks. I'm still thinking this super-bailout for the connected banks is to allow them to absorb the banks that fail in this next coming downturn when CRE crashes. Then they will be mega-banks.
And I'll still never put any of my money in any of them.
Rob.
The Fed released the stress
The Fed released the stress test results earlier today.
The projected $600 billion in losses over the next two years under the "more adverse" scenario are in addition to the estimated $400 billion in losses and write downs are already taken by these 19 banks. Because of existing resources, future earnings, and planned transactions, the Fed estimates the banks need to raise $75 billion in capital. This is a huge question mark: Is this enough?
On the Obama dinner with several economists, Michael Hirsh writes: No-Stress Tests
It’s not that Barack Obama isn’t aware of what’s at stake. That’s very likely why on April 27, the president gathered in some of his chief outside economic critics —including two of the most vociferous, Nobelists Joseph Stiglitz and Paul Krugman—for a secretive dinner in the old family dining room of the White House. Also in attendance: Paul Volcker, who has one foot in and one foot out of the administration as the head of Obama’s largely cosmetic economic recovery board; Princeton economist and former Fed vice chairman Alan Blinder; Columbia’s Jeff Sachs; and Harvard’s Ken Rogoff. Representing the home team, as it were: Obama’s chief economic adviser Larry Summers, Treasury Secretary Tim Geithner and Chief of Staff Rahm Emanuel. Why did Obama hold the meeting? “I think he wanted to hear the [opposing] arguments right in front of him,” says Blinder. “All I can say is if the president of the United States devotes that much personal time, and it was about two-hour dinner, he must want to hear what people outside the administration are saying and hear what his own people say in rebuttal to that. Why would you do that if you aren’t at least turning over your mind what to do next?”
by CalculatedRisk
Re: C
"Heck, look at Government Motors."
True, it's hard for me to believe GM's price still maintains technical support. I guess the reverse split doesn't change anything except pps and keeps them from being relegated to pink sheet status. I'd be worried about the dilution pps offering.
Re: "NY Fed chair resigns amid stock purchase questions"
I wonder if Friedman managed to score some complimentary income tax evasion priveleges on that stock purchase ala Paulson?
Re: "NY Fed chair resigns amid stock purchase questions"
We all know by now that happiness lies in the journey, not at the end of the rainbow.
In fact, one of life's paradoxes is how fleeting joy is upon the achievement of goals.
It's easy to confuse the attainment of money or power with happiness. Beyond a certain threshold, money and power lead only to confusion (some would say perversion- with more than they [or anyone] can handle of either, and they end living their lives with Eyes Wide Shut).
What exactly do people do with a few hundred million dollars? They either give it away, go out of your way to live a 'normal' life, or step into the Looking Glass.
Re: The Fed released the stress
Vinod- I'd love to read that article. Can you post a link?
NG
Les- You asked earlier about the big spike down in NG. Best I can figure it coincided with Obama's televised speech about additional taxes on energy Co's.
"The global economy is facing
"The global economy is facing “big deflation,” though the risks of inflation are also increasing as governments print more money, Taleb told the conference organized by Bank of America- Merrill Lynch. Gold and copper may “rally massively” as a result, he added."
http://www.bloomberg.com/apps/news?pid=20601087&si...
I'm curious, in a 'big deflation', which would really be caused by demand destruction, why would the price of copper rise, aside from $ drop of course?
And wouldn't a soaring gold price drive miners to mine more copper as a byproduct of gold mining? Thus worsening the supply/demand imbalance?
I really don't know what what the ratio of output looks like, so I don't know if circumstances could actually cause such a dislocation. It just seems plausible from my limited knowledge, and could bode unusually poorly for copper if things turn south, no?
stress test details
looks like a very big bucket of manure to me
can't believe they expect people to buy into the "results" - go past all the bs leading to see the actual bank by bank analysis and draw your own conclusions.
http://www.federalreserve.gov/newsevents/press/bcr...
Re: "The global economy is facing
I think in general that copper miners produce gold as a byproduct, but gold miners produce relatively little copper. Thus mine supply of gold tends to fall when copper demand falls, this being positive for the price of gold, but copper is unaffected by the activities of gold miners.
Re: stress test details
Fridays wsj notes on the stress test. Did they read the actual release? I don't get it?
http://online.wsj.com/article/SB124172137962697121...
edit - from the article ""The government's "more adverse" scenario includes two-year cumulative losses of 9.1% on total loans, worse than the peak losses of the 1930s.""
9.1% may turn out to be a conservative estimate considering the trillions of "guarantees" that are out there.
Re: C
C & AIG - throw them in the FAS/FAZ category. Lets ride it up or down till the govt decides to own them totally....
Re: stress test details
what kind of crap is this? 10% for second lien mortgages (they all should be marked 100%).....Another 5 generations of americans are indentured to pay off this with their labor & taxes to save these ivy league grads.
Re: "The global economy is facing
PP - I'm curious, in a 'big deflation', which would really be caused by demand destruction, why would the price of copper rise, aside from $ drop of course?
I think a "big deflation" (in monetary terms) results from the destruction of money that comes from people or companies defaulting on their loans, when the recovery from the financial institutions holding those loans is less than the original note amount.
money destroyed = original note - foreclosure sale price
So when money gets destroyed, there's less of it wandering around to chase the same amount of product, which results in deflation. This is offset by the Fed's money printing, but right now, more money is being destroyed than is being printed by the Fed. Or so I am told anyway, I haven't done the math myself.
30yr treasury yields ^TYX
its not looking very good
http://www.marketwatch.com/news/story/china-central-bank-says-fed/story.aspx?guid={2B1DC06C-6E35-4C7F-8291-8C3D3CB7283E}&dist=msr_3
Where is the Toxic dump?
One question. Whatever happened to all those "legacy assets" that everyone was concerned about wayyyyy back in early March?
Can the Fed carry it off— Or, are we doomed?
For anyone interested in what's happening in the credit markets, see http://normxxx.blogspot.com/2009/05/of-fingers-and...
2nd Ave
Re: Berk's BB sell signal
Tomorrow's close will tell us.
http://tinyurl.com/cdh2tm
Re: Where is the Toxic dump?
Legacy assets? Which ones are ... oh, THOSE legacy assets. They're around here somewhere. Ah yes, over there, covered with pee pip.
Mish suggested that if Bernanke is so confident the banks can absorb all these losses with current or soon-to-be-raised capital, why bother with the PPIP?
These guys really can't have it both ways Either the banks are in deep doodoo and they need a boatload more capital, and the PPIP is required to rescue their sorry assets, or everyone passed the nice stress test, all is well and PPIP is no longer necessary.
But of course, they want it both ways, so the banks will repay TARP, while receiving a trillion of our dollars laundered thru the PPIP.
If PPIP goes through, it's time to buy bank stocks. But you better buy a lot - at $80,000 for each of us per trillion spent, that's a lot of FAS to get back to even.
Re: Where is the Toxic dump?
They don't count now, since banks don't need to mark them to market. So as long as banks are making enough cashflow to cover their debt payments (which I think they are), they can evade bankruptcy. Something very similar to this has already happened during the Latin America debt crisis, when all banks were technically bankrupt, but the government allowed them to stay around until they made enough new cash to cover up their losses.
Re: Can the Fed carry it off— Or, are we doomed?
thanks for that normzyx. Good reality check to the hype being fed by talking heads.
Randgold
Randgold recommended by Citigroup from hold to buy,just sold a couple of hundred I bought yesterday ,thats 6.5% in a day, I,ll take those returns any day. It was not my intention to become a daytrader, but I cant keep as stock longer than a couple of days these days:)
European markets up again today FTSE +1% , but am not getting involved myself,still looking for a pull back,I think yesterday too many were expecting a reversal for it to happen,just yet.
Thinking about Bills analogy yesterday with the 30s multiple rallies and falls, I think I read somewhere that it wasnt the first crash that did the most damage to portfolios and sentiment it was the second one.
Who is Jeremy Grantham?
Another "forecaster" who called the bottom (he fortuitously wrote an e-letter the day the market bottomed) has gone from being bearish to bullish - SURPRISE!
http://tinyurl.com/orrrov
What surprises me about his bullish forecast is based on the (limited) stimulus (from my understanding) that has so far been injected into the system. A quote:
"Yes, stocks have once again reached fair value, which means there's no enticing valuation opportunity. But what the bears are missing, Grantham says, is that the entire world is now pumping more stimulus into the system than the entire world has ever seen. And stimulus has a much bigger impact on stocks than it does on economies, Grantham says."
In what bloody market is Grantham basing his comparison on? The overly-leveraged market of the last ten odd years?
Secondly, what stimulus? The temporary free lunch offered by reduced fuel prices - that's finished. The $250 social security cheque - after the accounts posted here of friends and family savings having been wiped out? Reduced housing payments? Great if you've kept your job. The injected liquidity in the banks that they're hoarding or swapping for treasury paper?
He continues:
"So by analogy to the normal Presidential Cycle effect, driven by stimulus and moral hazard, we are likely to have a remarkable stock rally, far in excess of anything justified by either long-term or short-term economic fundamentals."
Ah, there he might have a point. But Obama's election is due 2012, is it not? The pork/stimulus congress voted on reportedly takes it greatest effect from beginning 2011 (there's your stimulus and moral hazard - a cute way of saying "a pre-purchased election"). Sort of like a pre-purchase plan at your local Best Buy store. How's that for demonstrating the necessity of deleveraging to the population.
Last point:
"Alternatively, there is still time – just – for another freefall leg, but time is running out. Investor confidence is still fragile, and should we get a series of particularly shocking data points, which, in the unique position we fi nd ourselves is quite possible (say, one out of three)..."
And there Mr Smartypants covers his ASSets by inserting the magic clause. I think he means that a freefall leg is possible if the media actually made clear to J6P the BS being dealt out in his name, in order to strip whatever assets he has left and boost HB&B's trading results for 2Q. Cause those shocking data points are there for those who know how to decipher the jargon and spin that we've been fed.
It pisses me off that people blatantly try to screw others when they know what's coming...
There, that's my Friday tantrum.
Time for an aperitif!
EDIT: oops, is this a contradictory headline to that of Mr. Bulls?
"Toyota sees losses deepening this year- AP
Toyota Motor Corp. lost 765.8 billion yen in the January-March quarter -- a bigger loss than General Motors reported -- wrapping up its worst fiscal year since the Japanese automaker was founded in 1937."
Re: "The global economy is facing
ALOHA !!
Davidfairtex posts "money destroyed = original note - foreclosure sale price"
How is it you think that "money" has been destroyed?
Technically speaking how is an original note "money"?
What really happens in a foreclosure?
Transformers
http://ronsen.blogspot.com/2009/05/transformers.html
A few cool charts and a very cool preview.
haha Ron Sen, thought you were stuck in juvenlism for a moment
RE:>Not a problem for Wall Street...which has Transformed...your money...into theirs.
GMAC, Among the Weakest, Seems in Line for a Bailout
NY Times
It looks as if one more bank needs a bailout. And, four months ago, this bank was not even a bank.
The company is GMAC, the onetime finance arm of General Motors, which itself seems to be hurtling toward bankruptcy.
The results of bank stress tests disclosed Thursday showed that GMAC is in dire straits. Federal regulators determined that GMAC must raise a staggering $11.5 billion in capital, the equivalent of roughly half its current equity. G.M. is in no position to help.
Neither is Cerberus Capital Management, the big private investment firm that briefly controlled GMAC.
That means the government is likely to come to the rescue once again, according to people briefed on the matter.
It would be only the latest instance of extraordinary federal aid for GMAC, whose survival is seen as crucial to G.M. and, now, Chrysler. Both carmakers are relying on GMAC to help buyers and dealers finance their purchases.
In the heat of the credit market turmoil last fall, the Federal Reserve agreed to convert several nonbank institutions, like American Express and MetLife, into bank holding companies. And, in a controversial move, it also bestowed that status on GMAC, even though the company fell short of certain requirements.
Days later, the Treasury Department injected $5 billion into GMAC and gave G.M. $1 billion to acquire additional equity in it as well.
“GMAC is integral to G.M., and without a functioning GMAC, you don’t have a functioning G.M.,” said John A. Casesa, managing partner in the Casesa Shapiro Group and a longtime industry analyst. “To the extent that the government has an enormous amount of money at risk in G.M., it’s essential to help GMAC to protect that investment.”
Last week, President Obama said that his administration would supply GMAC with money to take over the financing of Chrysler’s dealers, displacing Chrysler Financial.
http://www.nytimes.com/2009/05/08/business/08gmac....
Re: Can the Fed carry it off— Or, are we doomed?
Good work norm
Shark.......If you bought C yesterday
you may need a stiff drink pre market.
4.32 after market, while Kindle is going back to school to learn how to pronounce Barack Obama.
USD weakening against Euro
http://www.google.com/finance?q=EURUSD
Does that weakening feed this rally?
Re: MISH ON BOARD
Kaimu,
A long time friend and fellow Ron Paul fan sent me an article today saying 124 congressmen support his bill to require an audit (HR1207).
There is not enough second party strength to even get time to read (if they wanted to do so) the biggest-ever spending bill, so this or any other attempt to institute real change is a total pipe dream.
The problem is systemic and the system is in control — an impossible circle of control and corruption.
I can see no alternative than for this stupid "rescue plan" to run its course until we are in complete chaos economically as well as politically.
Can you? Really?
Re: Can the Fed carry it off— Or, are we doomed?
Contrary Investor, Van Hoisington and A.Gary Shilling all believe the Fed is on a Fool's Errand.
They have been pointing out the similarities in the current "solution" and wwhat was done in the Great Depression. IMO, the biggest difference tody is the immediacy to communication and the overpowering imbalance in alternative opinion reporting. I miss the days when I made my investments based on the printed word in a newspaper. It may not have been "truer", but it was a lot less stressful.
We are all experiencing our own stress test induced by top-down, micro-managing by computer modeling and a group of liars who make Madoff look like a Boy Scout.
I, for one, do not believe the Fed can make this work, but they can most assuredly make things a whole lot worse.
If I have a fatal illness — I want my doctor to tell me. I can then plan what is best for my family. I've had all the fairy tale economics I can stomach.
There is no good substitute for TRUTH!
chaos
GRYM wrote: "I can see no alternative than for this stupid "rescue plan" to run its course until we are in complete chaos economically as well as politically."
I think we have already made it to complete chaos economically as well as politically. Degree of severity?
Is your glass 1/2 full or 1/2 empty?
I am grateful for what I have.
To be healty and happy, living a calm peaceful life is important to me.
My glass is full, flowing over with abundance.
Have a great weekend GRYM, despite what the GOV is doing.
I enjoy your posts and sharing your wisdom.
Bear E