Cara's Commentary & Community Chat, Thursday, Oct. 1, 2009

Good morning. Lots of analyst activity this morning but not much affecting the Cara 100 :

CHRW - Deutsche Securities Initiates Coverage with a Hold. PT = $62

Speaking of the USD and the wild currencies markets, I have set up a site that tracks all currency ETFs on the U.S. market, with daily and YTD performance of each at http://nexalogic.com/currency.html

BZF, Brazilian Real is still the winner +30% YTD.
DRR and EUO, Leveraged short Euro are the biggest losers.

Bill said: "At this point, we are confused whether the market wants to go up or down. We are seeing a lot more global politics than usual, and this is worrisome."

I'm guessing Bill that if you're not familiar with what's happening then this *could* be bad news for the markets. I'm not trying to make the reality, but simply be psychologically prepared for the worst.

On Monday, the catch phrase on CNBC was "jobless recovery". I expect to hear more of this nonsense today.

Regards,
BH

Les... there is nothing of utter importance to it. View them as mini-exchanges within the exchange, Since their books are being combined so market comprises them all, as long as your routing hits them all searching for the best price, what else do you care :)

If one is into microscalping for pennies (which I am not), there are some details one needs to know... for any really meaningful way to trade, first paragraph is all you need.

Thoughts that are similar to Bills:

http://www.alphatrends.net/2009/10/sp-500-morning-...

Charts from JL:

http://ibankcoin.com/chart_addict/2009/10/01/apex-...

He's looking for resolution on those three ETF's in the near future.

NYGrad,
Where do you find the daily charts for this blog that you displayed yesterday? Do you have a link?

Greg,

http://tinyurl.com/2os8rk

if you ever lose the link, just go to my blog and its there on the right under "My Favorites". http://stopinvesting.blogspot.com

Maybe in MX. But this is a nationwide issue as of the past 48 hours.

About a 3% return on capital invested.

Fox news picked this story up.
http://tinyurl.com/yba2jps

I guess that is the driving force and trumping everything else.

look out below

Obama......quote, I will put 1 million, I mean 2 million, possibly 5 million, or 10 million , or 15 million people back to work, unquote.
Just vote for me, not my opponent, I'm the only one that can create jobs!

I'm thinking 50 million jobs will be needed before the rich and connected get done pillaging the working peoples pockets.

Crime is going up, prisons are full to just over capacity, and no jobs are being created other then more and more government jobs.

Sooner or later, the repercussions of spending and spending and spending to keep these crooked bankers afloat is going to implode. Who knows where that will leave the masses, but I haven't seen any change what so ever since all the sheeple voted for Obama and his Chicago thugs.

Oh, yes, Bernanke was calming the unemployed on national tv a month ago saying the recovery is under way, we have seen the bottom.
Independent thinking would be my best advise.

A 52.6 vs. 53.5 isn't exactly well below. Plus, it still indicates expansion. I would not be shorting on this information.

Still on sidelines and enjoying vaca!

BA - Downgraded to Hold @ McAdams Wright Ragen

KO - PT Raised from $54 to $65 @ Barclays. Overweight

I apologize. Edited my response This thread is not worth continuing

Wasn't that one of Bill's targets? Heading there fast.

Uh, bigwad, are we still stuck in the us vs. them, Dem vs. Repub debate here? It seems clear to me we had two choices: the banker's candidate, and the other banker's candidate. The dirty trick here was, Obama pretended to NOT be a banker's candidate. This has happened before. For instance, Johnson was the Peace Candidate back in 1964 when he was running against Goldwater. 3 months after he was elected he started Operation Rolling Thunder.

Suggesting the blame lies with "the sheeple" who tried to vote in change is not accurate. Clearly people wanted change. They ordered change. Unfortunately, it just wasn't on the menu. Just like peace wasn't on the menu in 1964.

Close enough. I believe it was actually a 1038 close.

From what I can tell, it's all about dollar strength today.

So something that occurs to me: Eyeing the last few corrections we've had on this northbound SPX train, I see they've all come at around RSI 30. For me the real test will be, what happens this time at RSI 30? We might get another down day, and then we will see what transpires.

TOF,

Cashed out of MCGC today (3.43->4.27) - of course now it will trade sideways and then go to $9... Thanks again for the trading idea. I'm scouring the charts for a play to contribute (long or short), but don't seem to have the knack that many others here do. Mostly in cash, with positions in PLM and USA.V. Waiting for a low(er) risk opportunity... Hope you are enjoying your time off.

Regards,
KC

http://online.wsj.com/article_email/SB124657655235...

Around this time, Mr. Carlin and a colleague presented a 98-page analysis arguing the agency should take another look, as the science behind man-made global warming is inconclusive at best. The analysis noted that global temperatures were on a downward trend. It pointed out problems with climate models. It highlighted new research that contradicts apocalyptic scenarios. "We believe our concerns and reservations are sufficiently important to warrant a serious review of the science by EPA," the report read.

The response to Mr. Carlin was an email from his boss, Al McGartland, forbidding him from "any direct communication" with anyone outside of his office with regard to his analysis. When Mr. Carlin tried again to disseminate his analysis, Mr. McGartland decreed: "The administrator and the administration have decided to move forward on endangerment, and your comments do not help the legal or policy case for this decision. . . . I can only see one impact of your comments given where we are in the process, and that would be a very negative impact on our office."

is it really that difficult to compare the temperature readings from the Moon with those from Earth, thereby differentiating solar temperature fluctuations from man-made temperature change? apparently...

Good job KC - I sold out too early on MCGC as a result of going on vacation...speaking of which, i'm heading out. Take care.

...but I cannot quite put my finger on it."

Inside sources are indicating that the federal reserve/ central banking system's days are numbered. While none of us here would find that to be any great insight, what is interesting is that with increasing vigor, these sources are indicating that an actual date and agenda have been put in place to facilitate this transition. As a result, the elites are jockeying for pole position while trying like heck not to spook the "sheeple."

For what it is worth, I've followed this game for over 2 decades... looking under stones and around corners. I have applied the same rigor to these investigations that I apply in my research. Over the years, I have learned a few things, including which sources have been consistently reliable. Those very reliable sources are now putting the word out to those listening...a transition is actively in the works. At first this topic was a trickle that I watched for a couple of months, but now the flow of information from these sources is increasing and the message remains the same; warning for a bumpy and confusing transition (no surprises there) followed by an emotional release as the people of the world realize that life, and business, go on. Assets of value are not going to suddenly become value-less without the Federal Reserve elitists controlling the markets. How is such a coup supposed to look anyway? Apparently, a lot of hard work and effort(both from within the US and internationally, particularly from Japan) has been going on behind the scenes toward ridding the markets of these parasites and much of that work has been focused on dealing with the potential and temporary fallout... ie, removing the parasite without killing the host.

For those beating the "End the Fed" drum, be careful what you wish for... an end may actually be closer than we all might think.

As an aside: this may also be one of the reasons for the relentless swine flu propaganda ploy... For what it is worth, I wouldnt touch that vaccination with a 10 foot pole, nor would I advise any of my family or friends to do so either.... and I am a doctor and a scientist in the human biological sciences. They are using the same propaganda machinery to promote the swine swill as has been used relentlessly to control and direct the fallout of the banking swindle. I will be in the streets protesting or in a detention center should they mandate that I receive it. There is something very fishy around this whole situation. Things just are NOT adding up and I am not comfortable with either the overt or covert implications.

As Bill says:
".....we’ll all find out in time what is driving the body politic. We usually do."

Im crawling back under my rock now... happy trading.

I see, the person's boss at the EPA silenced one of his scientists. Do you happen to recall what occurred over the last 8 years when consensus scientific findings on the effects of carbon pollution were ordered changed by the White House. Consensus findings, not the findings of a single scientist at the agency. And it wasn't the person's boss that silenced him, it was someone outside, someone exerting political pressure- the White House. Do you see a difference between a situation where a person's boss 'silences' him, and where an outside person does it? According to the EPA chief under Nixon (I forget his name at the moment), interference by the Bush White House into science at the EPA was unprecedented. Christy Whitman walked off the job as administrator. Did you write about any of this when it happened, when it worked the other way, when consensus scientific findings were being changed by non scientists?

Bill is right, getting too far from the markets so I am wrong here too, I already posted. Will try to keep it in mind going forward.

I'm impressed too. LIHR and GORO are actually showing a tiny "green" shoot right now.

LIHR is now down, probably heard me mention it.

MtnGnTx- Don't crawl under your rock just yet...;)

Thanks for your observations, now as always. Your post raises some questions/observations:
1. What are the primary sources for your information? Is there a URL we can look at? You said it was "inside information" and perhaps because of that confidential so I will understand if you are unable to provide the primary source(s).
2. I think it naive to think that when the Fed is disbanded we will remove the "parasite". No disrespect intended at all...just my opinion. While the 'Fed parasite' may be removed (if it ever is), there will be other more invasive, more destructive, less visible parasites emerge. To follow your analogy, there may be more of a new, more deadly species of parasite appear rather than just a small genetic mutation.
3. Re flu 'pandemic'- My wife, a very accomplished Health Services Research Scientist (MD, SM), agrees whole heartedly with you. She is appalled at what is happening, the rate of speed decisions like this are being made and the "evidence" given for these decisions. Makes me wonder what drug company is paying what lobbyist(s) and politician how much.

Sorry to be so cynical but I'd rather be inquiring well beyond and much deeper than what the 'sheeple's' info is. After all, isn't that part of Bill's message? Delve deeper; think for yourself; try to get a larger view and attempt as far as possible to see the linkages? Thanks Bill. (And correct me if I'm off base here.)
s

If prices hold we may see another gasp to retest the upper trend line. But my gut says more selling before weekend.

I am still holding my QID position from $22.92. I am waiting for each retest higher to add onto my position.

http://tinyurl.com/ybhfzu4
http://tinyurl.com/yc6tytz
http://tinyurl.com/ya2uby9
http://tinyurl.com/ydafaye
http://tinyurl.com/ydj2q3w

That was one of the main reasons i am guessing a retest of the upper trend lines.

over the next year or two... That is when I will be mostly in PM's....

In hard times people are looking for ways to stretch their dollar. When i moved two yrs ago i had to find a way to donate furniture and other "stuff" but the local salvation army couldn't pick up some of the larger items. So i found http://www.freecycle.org.

In my local area they are creating a free-market (flea-market) where people with stuff they want to get rid off park their trucks, and people who need stuff go browse. You want it? you take it.

My older ikea leather sofa ended up with a freshman in college after 9 yrs of use, and he can now save that money for books and food.

its a good cause and way to help those in need. and a great way for people who have tight wallets to also find treasures.

And how does someone like jim cramer, who went on national tv and told everyone to buy buy bye the day before the 40% haircut, not go to jail?

To teach?

NYU... I gave up arguing that years ago... That is why I subscribe to his site, just to keep up with what direction he is leaning... always keep your opponents in sight....

Well today certainly seems to be a high volume, big move day for TBT. Is this capitulation? We're approaching a big resistance zone for TLT at 100. This takes us back to Feb/March of this year with bond prices.

I wrote some more puts - deep in the money, far out in the calendar.

"I think I have it now. The selling today and the unease of yesterday has nothing to do with the economic data. I think it's all about CIT."

Bill, looks like your view just got confirmed... this headline sent financials down just now:

1:53:06 PM
CIT Reportedly planning to file DIP loan of $5-7B if needs to file for pre bankruptcy - unconfirmed report
- notes has not yet finalized any debtor in possession loan; but will do so if filing for bankruptcy

Can the Dollar move higher? I don't know, but I am watching UUP for a possible upmove confirmation indicator for the Dollar and a contrary indicator for PM.

Attached chart show a lot of resistance but if the Dollar is meant to go up, then watch for a gap up and over resistance at open tomorrow. Just my way of looking at things - do your own analysis.

Thanks for returning my money Vadym.

Pretty scary world where a technology glitch can prevent banking nationwide and it actually got tested this week.

Thanks Todd, I was noting that SPY 60 min was reluctant to follow through below the 200 dma. I'm guessing that the line has been drawn by the bulls, but as Bill said - "watch this space". A recovery above the 200dma on the 60 min should put the daily back above the long term trend. It's a nail biter.

Sorry Kaimu, I checked your claims and could only find Sarah Palin and her "Going Rogue" in the top spot. Perhaps that is, in some sort of sense, a "hockey mum's" notion of speaking out...

edit: Attention is drawn to the slightly positive MACDh divergence and oversold Stochastics indication in the 60 min chart. A rebound *could* be in the making.

ALOHA !!

Davidfairtex-Wow ... you're mention of "Rolling Thunder" and LBJ in 1964 was prophetic for me as I plan to use a satellite map of Cambodia and Laos to show how much land mass was bombed during the Vietnam War. For a long time Nixon was blamed for the "Secret War" but it was actually LBJ who did it. Check this out ...

From my weekly "REVENUE BREAKDOWN" article:
"All told, the US dropped 2,756,941 tons of bombs on Cambodia (slightly smaller than Oklahoma). This is the same amount dropped by the US and Great Britain in the European theatre during all of World War II. Bombing of that magnitude changes a country's history."

We literally bombed SouthEast Asia into the hands of the Communists ... How has there been any CHANGE in US Foreign Policy since then? What was "SHOCK AND AWE" other than more mass bombing on behalf of Democracy?

Many of you here may be saying ... "So? Whats that got to do with anything today?" Or perhaps you may ask, "How does that tie into me making a profit day trading in 2009?"

THINK ABOUT IT ...

Just a personal anecdote to add.

For at least 3-4 months prior to the start of the Clunker program, I was thinking of trading in my old 1989 (still running good) Ford pickup truck for a new truck (brand undecided)so I was routinely checking out prices on various web sites. Suddenly (relatively), before the Clunker program started, even though vehicle sales had been reportedly horrible, truck prices that I was researching JUMPED up about $4000 bucks!

Now, subsequent to the Clunker program, when I check the same web sites for current prices, I often see something like "MSRP is $50,000 but our price to you is only $46,000.

Hmmmmm. Surely, those wiley car dealers didn't raise their prices by the amount of the Clunker program in order to collect that stimulus amount instead of the customer?

If they did, then perhaps the Clunker stimulus was always meant to be just a gift to the car dealers?

Seeing that the upwards momentum in SRS seems to be waning for today (and keeping in mind that a downtrend is generally a zig-zag, with a minor rebound being likely after today's sell-off), I decided to take some SRS off the table at $10.19, which I had purchased on Monday and Tuesday at the average cost of $9.37. The trade size was small as usual, resulting only in a 0.12% gain to my portfolio. It is better to learn how to trade with small position sizes, as it allowed me to be "wrong" in my expectation of the market going down since May and still be alive today. :)

Ahead of September's Non-Farm Payrolls report, Goldman Sachs (GS) is ominously lowing their numbers.

Via ZeroHedge:

Downgrading Our Sept Payroll Forecast

BOTTOM LINE: We are changing our forecast for the September change in nonfarm payrolls to -
250,000 from -200,000. We continue to think that the unemployment rate will be reported at 9.8%.

http://www.businessinsider.com/goldman-downgrades-...

This is off topic but I'm sure a concern for most Carraistas

Canada has terminated the regular annual flu vaccine program as a study revealed those taking the vaccine
were 2 times more likely to then contract the H1N1 flu. Now only those who are over 65 may get the regular annual flu vaccine shot.

They are also saying secondary bacterial infections developing in conjunction with H1N1 may be linked to those who die. They are recommending a pneumonia vaccine shot to those most vulnerable.

From the Victoria Sun

VICTORIA — British Columbia is suspending its annual seasonal flu shot program amidst emerging concerns the vaccination could make people more susceptible to catching H1N1.

The suspension — which limits the seasonal flu vaccination mostly to the elderly — puts B.C. in line with many other Canadian provinces, but means most people will not have access to any type of influenza vaccination until at least mid-November.

The decision was announced Monday morning by provincial health officer Dr. Perry Kendall, who characterized this year’s flu season as an “emerging and complex scenario.”

“Obviously this is a complex decision,” Kendall said, adding it was “not one that is being taken lightly.”

Kendall said the decision rested in part on a new Canadian study — which has not yet been peer reviewed or published —that found those who receive the seasonal flu vaccine become two times more likely to get H1N1.

There is definitely more crime in my neighborhood, not directly Obama's fault, but indirectly due to continued job losses.

Bailouts have continued under his watch, so have bonuses. People are more inclined to ignore laws when they see the high end doing so, IMO.

I know my feelings about honesty relating to income taxes are cooled by the behavior of the Treasury Secretary. I could use a few "honest mistakes" in my favor.

http://stockcharts.com/charts/carpet.html

You can change "Price performance" to RSI.

Also of note, you can change the time frame from 2 days, up to 31. Check out thw 10-12 day picture. Lots of red going on.

Maybe so, but ST feels very oversold. VIX spiked up to the envelope. Got TNA at 41.60 with a tight stop. ST trade only.

NYUGrad
How about this for some HEAT?

http://finviz.com/map.ashx?t=sec

and there is this for the BIG picture

http://finviz.com/map.ashx?t=geo

USD at the day's highs
http://quotes.ino.com/chart/?s=NYBOT_DX&v=s

http://tinyurl.com/y8pcvjw

This is long.

It promises reform of virtually everything that is bad - e.g., bank non-regulation and under capitalization, derivatives non-regulation. It promises economic and environmental cooperation, coordination, restraint of protectionism and much more IMF involvement of the emerging market countries.

There's a lot more.

They agreed to meet next in Canada in June 2010.

In my view, it appears to have been prepared before the meeting and does not reflect any points of contention that emerged in the meeting.

I think that we have so many serious long term issues to deal with concerning the huge govt deficits and currency debasement that is occurring. I just saw a really good article at http://seekingalpha.com/article/164322-expect-gold-to-reach-3-000 that discussed this problem of continuing to try to cure a patient with the drugs that made him/her sick to begin with. The story goes on to talk about the potential investment implications for fiat currencies as a result of all the money printing by central banks around the world. I personally believe that the power of central bankers to print money has gotten completely out of control, and that we will go back to a gold standard or another form of hard currency once there is enough social unrest to force our politicians to make the tough choices for the long term health of our country.

Perhaps the news headlines are conflating two numbers in that GS has said "we expect overall unemployment to be 9.8%." This is already consensus according to Econoday:

http://fidweek.econoday.com/byshoweventfull.asp?fi...

GS is differing in that it is calling a much higher M/M number than what consensus is for tomorrow's report. And with all due respect for investors in GS, I trust their intentions about as much as a snake's. I see an oversold market at the same time as GS is coming out with more doom and gloom.

If this 60 min channel is to hold, and I see nothing to change that at the moment, then I see "surprise" numbers giving us a lift. I'll be in front of the screen at 08:30 ready to play this whatever way it turns out. My trust of GS and the oversold nature of the 60/15/5 suggests to me a rebound in the morning. Night all.

Stopped out from TNA before the closing.
I still think there could be a couple of days worth of rebound.

Every market that I checked went down today. Not a catastrophe, but scary.
Everyone that comments regularly and with common sense felt that a downturn was possible.
Bill C put it nicely : "something smells fishy".

Now, thanks to fellow posters, I feel justified in reaping my little profits.

My thoughts; this is not the "last dance'. Gold should rise, for a few weeks, it is the currency of choice. Here in Mexico there are some opportunities to buy, silver is always available, at a premium.

What will tomorrow bring ? My guess, more red numbers.

Depending on your data service, various Elliott waves are in play. I have the McHugh service, who calls for one more run-up into a blow-off top.

I had Precther's EW service until recently, and they claim wave B has topped. ie retest of the March lows. Thinking of adding back the Tim Wood data service, as Precther has posted the ideal services are EW and Cycles.

Can any of you recommend better then these?
I pay for services that deliver value and these do. I scoff at $5000 miracle makers. Mu budget allows 1 to 2K for services max.

McHugh has been a double edged sword. Now that I think I finally understand him, things are better.
I need McH though, as a better than 50% prob!

My background is, I'm a laid off techie that has been consulting and used trading as fill in work.
Employment is bleak, and I'm trading to survive the next several years before start-ups be come more popular.

The employment base of the US has been gutted, over the last decade. I'm trying to bootstrap some ventures here to save our prosperity.

My hope is our plan is stronger than the apparrent
power grab to reduce us to serfdom! There is an effort (and I'm not in the Illuminati camp) to "terraform" the WW economy.
Something bad is affoot!

My interest here is to trade into the wave IV decline, and survive it.

I hope you all realize that this wave IV decline
is one or two levels higher than the 1929 decline.

I hope to learn something here, as I've tried to trade full time and found it more difficult than I thought.

GB

loanletter,

I urge you to enlighten 10 people and ask them for committment to enlighten 10 more. eventually this ripple will fade, but the more people we can wake up the better.

If my NYU education is worth anything, I recall a non financial course where i read Plato's "The Republic" he talks about a group of people (us) stuck in a cave. http://en.wikipedia.org/wiki/Allegory_of_the_cave. Amazon: http://tinyurl.com/yd2eekx

Basically the allegory of the cave is all of us stuck in a cave, knowing only what we know, which isn't a lot. But as we realize there is a reality that we have never known, and people start to come out of the cave into the light, we then must serve the duty of bringing others out of the cave. Very much like the movie The Matrix.

Bill and this blog was a paramount influence for me to come out of the cave. we can each pull some of our friends and family out with us into the light.

A Democracy filled with people who don't even realize they are slaves, is just a tyranny!

NYUGrad

"Bill and this blog was a paramount influence for me to come out of the cave. we can each pull some of our friends and family out with us into the light."

I agree on the first part, but whenever I've tried the second part, everyone (and I do mean everyone) looks at me in silence and then asks "how can you possibly be that cynical?" OR "have you been drinking?"....seriously.

http://bit.ly/4EVLZx

Wow. Is anyone here a executive recruiter? I need to get a cushy CEO job. This is ridiculous.

I am expecting more selling, but here is the cautious case of a snap back recovery tomorrow or Monday.

http://i33.tinypic.com/728410.jpg

The closing TRIN was 3.73 which supports your snap back theory.

Give me 1 hr. I forgot stockcharts doesn't like direct links.

Continuing to follow the airlines from a distance - been out of positions for awhile. UAUA announced a large capital raising and got knocked for 20%. Remainder of the sector got hit for 5-10% losses. Ultimately I think this was the culmination of a large push of upgrades given recently by JPMorgan and UBS that conveniently occured just prior to large capital raisings for some of the largest airlines like LCC, AMR, and UAUA to name a few. So the analysts gave the final exhuberant pump into the period of distribution. In the medium term I see the capital raisings as creating a buffer on both sides of the spectrum - reducing likelihood of bankruptcy - but also diluting potential future profits and thus limiting upside.

I'll be keeping a closer eye on this sector now that valuations are beginning to come down. UAUA at $7.30 is looking somewhat enticing - from a technical analysis perspective I am looking for a test of the $6.40-60 range where the "golden cross" recently occured (50 DMA moving above 200 DMA). I think that area may set up a nice long entry.

thx

The House Bill is called "American Clean Energy and Security Act." The Senate Bill bears the name "Clean Energy Jobs and American Power Act." House Speaker Nancy Pelosi in her own special way said the bill was about "jobs, jobs, jobs, and jobs." Chairman Edward Markey, House Energy and Environment Subcommittee not to be outdone said the bill will "create jobs by the millions, save money by the billions, and unleash energy investment by the trillions."

But a fair reading the the bills do not support all these claims. The bills will raise energy prices. That could save consumers some money by forcing them to use less energy. The bills impose strict new efficiency standards on automobiles and appliances, which will save the consumer money only if the manufacturers do not pass the increased costs of such standards to the consumer. But its more likely they will.

So, if cars, homes, goods, and energy are more expensive and consumers buy less, does anyone think industry will not layoff a bunch of employees. They will.

Optimistically, the bills' sponsors would claim that the bills' "green jobs" will offset the loss of other jobs.

But this is just hype and they know it. There is a section setting up a petition process for displaced workers in energy-producing, energy dependent, energy intensive and consumer goods manufacturing industries, or those industries related to energy, or energy-intensive industries. Such displaced workers can petition for job re-training, and cash benefits to assist in obtaining other jobs. Congress is preparing for job losses that are so significant that a retraining and special cash assistance program has to be established.

Montreal, September 15, 2009 • No 270

Harry Valentine is a
free-marketeer living in Eastern Ontario.

THE EMPEROR'S DERRIÈRE
ECONOMIC RECOVERY OR SIGNS OF AN EMERGING MALINVESTMENT BOOM?

by Harry Valentine

Over the past few weeks, various news stories have suggested that the economy may be recovering. Some so-called experts have even suggested a "jobless economic recovery." Amidst mounting job losses in the manufacturing sector and in several service sectors, there have been reports of increased activity in the Canadian housing market. There are also allegedly some signs of possible economic recovery emerging from the United States and claims from elected officials that the "economy has bottomed out," despite mounting job losses.

Over the past 12 months, the US Federal Reserve has increased the amount of printed money by over 70% and dropped interest rates nearly to 0%. Canada has done likewise and dropped interest rates to record lows. While politicians complain about banks not lending out enough money, both the governments of the United States and of Canada have initiated various economic stimulus packages that include public works projects and green energy projects. Much of the money that has been allocated to the renewable/green energy sector is regarded as seed money that will grow new business opportunities.

Ontario's Power Glut

Toward the end of July, Ontario provided an example of the downside of government investment in new energy projects. Prior to the mortgage meltdown of late 2008, the government of Ontario had for several years indicated a projected shortfall in electrical generation capacity. The industrial heartland of Ontario (and of Canada) had seen numerous cutbacks and layoffs during that period and authorities seemed willing to build new nuclear power stations to meet the projected power demand.

Then in July 2009, the government received bid prices for new nuclear reactors, and these were far in excess of what officials expected. It had no sooner cancelled plans to build new reactors than the power operator announced that the province had excess generating capacity. Factory closures across Ontario had reduced the demand for electrical power dramatically, a situation that is now expected to remain unchanged for the next 5 years. Tax revenue that had been allocated to develop new renewable energy technology for use in Ontario may now achieve little.

Ontario may not be the only jurisdiction in North America to make the transition from a projected shortage of electrical power to an excess of generating capacity, courtesy of factory closures and a drastic drop in demand for electrical power. But in several cases, companies will use state stimulus funds as seed money to develop new electrical generation technology from clean and renewable resources, a policy supported by no less eminent an official than the new American president.

"There is likely to be a boom in the development of a variety of renewable energy power generation technologies. But once they are developed, not all energy conversion technologies are going to be cost-competitive in a free market against traditional technologies."

Green Boom Would Likely Bust

There is a very high propensity for state funding of the renewable energy technology sector to follow the path of the high-tech sector of a decade ago. During the 1990s, a large number of companies in the high-tech sector gained easy access to government funding and special low-interest loans. The easy money first gave rise to a high-tech boom that was followed by the high-tech malinvestment boom, culminating in the dot-com bust and high-tech meltdown just after 2000. The US Federal Reserve tried to re-ignite the high-tech boom by making special funds available, but to no avail.

There is a high propensity over the short term for state-provided stimulus funding to create the illusion of economic recovery as various public works projects and some green energy projects get underway. Public works projects such as road repairs and infrastructure upgrades are essentially short-term projects. The manufacturing sector is ultimately the cornerstone of wealth creation, provided they produce useable products for which there will be a long-term and growing market.

Earlier forecasts had indicated a growing market for electric power in Ontario, prior to the extreme contraction of that province's manufacturing sector that consumes a large proportion of their electric power. There are forecasts of growing demand for electric power coming from across North America. Much stimulus funding has become available to fund the development of a variety of clean, renewable energy technologies. However, the accuracy of some of these forecasts are questionable given the recent precedent set by Ontario.

While a few renewable energy technologies can compete cost-wise with fossil-fuel power technologies in an unfettered free market, most cannot. State stimulus funding is available to almost anyone with a renewable energy technology concept or idea. There is likely to be a boom in the development of a variety of renewable energy power generation technologies. But once they are developed, not all energy conversion technologies are going to be cost-competitive in a free market against traditional technologies. Ontario had earlier proposed to offer 80 cents per kilowatt-hour to purchase electric power from solar-electric farms.

Several other jurisdictions are considering similar programs that essentially subsidize the operation of costly technologies. Such programs would likely encourage companies to use easily available state stimulus funding to develop a variety of power generation technologies that produce electricity from clean renewable energy at very high costs. Not all of these companies or their technologies will be viable or competitive as they enter a subsidized, state-regulated market. Just as the high-tech bust followed the high-tech malinvestment boom, a green energy technology bust will likely follow a green energy technology malinvestment boom.

INDEX NO 270 • WHAT IS LIBERTARIANISM? • ARCHIVES • SEARCH QL • OTHER ARTICLES BY H. VALENTINE

SUBSCRIBE TO QL • WHO ARE WE? • LE BLOGUE DU QL • REPRINT POLICY • COMMENTS? QUESTIONS?

NYUGrad, yes its a trendline story, short / med / long term.. And all those terms have become a little shorter these days. Here's one of my medium term chart lists, of indexes and at this point they are still in an uptrend on the daily / weekly swing trade time frame. Its part of the problem here as most daily posts are by minute by minute day traders. When many of us look at the weeklies and use the dailies only for entry exit points, (60 or 10 min charts, for us, are only entertainment when we have a weekday off work).

Not sure if you all can see this one, as its on one of my fav lists at Stockcharts
http://stockcharts.com/def/servlet/Favorites.CServlet?obj=2368072,61&cmd=show[]extra[uu[305,A]dallyaci[pb20!b80][dd][ilb7]]&disp=F

If not attached is screen shot of the above.

...will Big Ben still print, print, print?

Montreal, June 15, 2009 • No 268

Harry Valentine is a
free-marketeer living in Eastern Ontario.

THE EMPEROR'S DERRIÈRE
REAL SIGNALS OR THE ILLUSION
OF ECONOMIC RECOVERY?

by Harry Valentine

The 'libertarian' economist who presently serves as Canada's Prime Minister delivered an economic report on June 11th in which he suggested that the Canadian economy was beginning to show signs of a turn-around. He then mentioned a range of very spectacular public works projects that could only be achieved through a federal deficit and that were intended to stimulate real economic recovery. However, the accuracy of such a prediction is highly questionable, if only for the simple reason that for up to a decade during the 1990s, Japan provided the precedent for publicly-funded efforts to stimulate a stagnant economy. Japan's economy underwent a series of little booms, but none of them re-ignited the stellar economic performance of the 1980s. Like Canada, Japan was heavily dependent on the American market to buy its products.

While Canada's spectacular public works program may in fact stimulate economic activity over the short term, the results over the long term are uncertain. While government economists remain convinced that the short-term economic stimulation would inevitably lead to prosperity and economic stability over the long term, there is no proof of this. The Canadian economy is heavily dependent on American markets. Canadian protectionism, courtesy of the provincial governments, has brought on a retaliatory response in the form of a 'buy-USA' policy whenever American public funds are concerned.

Foreign Currency Alarm

The American Federal Reserve has literally been printing new paper currency 'like a drunken sailor' and such action has raised alarm bells on foreign currency markets. China holds almost US$2 trillion in US currency and nearly US$800 billion in various US treasury bills and US bonds. China, Russia and a few other Asian nations have begun to voice concern over ultra-low American interest rates and the rate of expansion of US paper currency. Such expansion (or inflation of the amount of currency) is causing the US dollar to decline in value against several other foreign currencies.

The Bank of Canada has attempted to reduce the value of the Canadian dollar against the American dollar by lowering interest rates to 0.25%, but to limited avail. At present, the American dollar is still the world's reserve currency. However, there have been rumblings from Asia to replace the American dollar with some other form of currency. So far, the American Fed seems willing to push currency markets to the limit by continuing to use the printing presses to inflate the supply of American paper currency.

"The American Federal Reserve has literally been printing new paper currency 'like a drunken sailor' and such action has raised alarm bells on foreign currency markets."

The prevailing attitude among top officials at the Fed seems to be that world currency markets are not ready to begin to dump the US dollar. Prior to the invasion of Iraq, Saddam Hussein refused to accept American currency as payment for Iraqi oil but accepted Euros. Such action is believed by some to have contributed to the American decision to invade Iraq, given that no chemical stockpiles or weapons of mass destruction have thus far been discovered in that country. There is, however, the remote risk of some money markets dumping the American dollar and causing it to decline drastically in value against many other currencies, perhaps even against the Canadian dollar.

Recovery or Mirage?

What, then, can we make of the Rt. Hon former libertarian's proclamation of economic recovery in view of Canada's dependency on the US market and the decline of the US dollar against other currencies, including the Canadian dollar? It may only be valid over the short term in a stagnant economy. We will agree with him that there may in fact be a small economic bubble or 'micro-boom' that is giving off signals that mimic those of economic recovery.

The American economy is literally a mess and would need to rapidly create many high-paying jobs in order to generate customers who will buy new cars from a Fiat-Chrysler consortium and from the New General Motors (aka, Government Motors). The Government stimulus packages in the US and Canada may in fact create many new high-paying jobs, over the short term. Many of these wage earners may actually buy new cars from the new GM and Fiat-Chrysler over that short term. But deficit-ridden stimulus packages provide no guarantee whatsoever for economic recovery over the long term.

While the American Fed steadfastly refuses to shut off the printing presses and raise interest rates, world currency markets may compel it to do exactly that should those currency markets begin to dump the American dollar. Shutting off the printing presses and raising interest rates will definitely precipitate a major economic upheaval across the USA and Canada. It will also provide an opportunity to liquidate the massive malinvestment in the American (and Canadian) economy, eventually allowing markets to generate genuine signals instead of the misleading and distorted signals generated by ultra-low interest rates.

INDEX NO 268 • WHAT IS LIBERTARIANISM? • ARCHIVES • SEARCH QL • OTHER ARTICLES BY H. VALENTINE

SUBSCRIBE TO QL • WHO ARE WE? • LE BLOGUE DU QL • REPRINT POLICY • COMMENTS? QUESTIONS?

CURRENT ISSUE

David- Obviously, I disembarked way too early. All that practice over the summer cutting losses quickly/banking (short) gains quickly naturally had me doing the same this morning.

Shorting, as they say, is not easy. And when it goes your way, you're never holding enough.

On the other hand, I side-stepped major losses through the summer using the very strategy that capped my gains today.

In any case, what matters is the next play.

(a) It's possible we just continue down. After all, we went up non-stop. And it always goes down faster than it goes up (short squeezes notwithstanding). This would also be the favored scenario if the trend has in fact reversed, as it would disallow easy boarding.

(b) We may bounce, and then continue down. This would be the best scenario for nascent bears. Solid entry points.

(c) Just another bear trap. What if today's sell-off launches the move to 10000? That's probably the scenario that caused me to exit shorts this morning.

Any opinions? (I don't think hashing out different scenarios runs counter to 'opinionless trading.' It's more like being prepared for likely patterns and mentally rehearsing your approaches to them.)

The jobs report, of course, could catalyze a move in either direction. As well as a move in one direction followed by one or more counter-moves.

Kaimu,

Got into SLR at $0.88, heck I already made money, lol.

Another item of note to all. Check DVN after-hours, I think something good is happening.

FD: OWN DVN AND SLR

Sorry for the double post

CB said: "I hope to learn something here, as I've tried to trade full time and found it more difficult than I thought."

Welcome to the club! It is difficult but I love games and a challenge. Trading is a great combination of both.

"I pay for services that deliver value and these do. I scoff at $5000 miracle makers. Mu budget allows 1 to 2K for services max."

I was paying The Motley Fool but now between the various posts here, blog links elsewhere and my accumulating experience I pay only Stockcharts now. There's enough information out there for free.

"My interest here is to trade into the wave IV decline, and survive it."

Why only survive it? I wanna short it all the way back to 666 or even better. Plenty of time for that, so I'm not going to try to guess the top. Have fun.

For thought and discussion. This article you can tie into NYUGrad's post on shadows in the cave. I have my doubts about applying the ontology of traditional science like Physics (example: an atom is precisely this or that) to a social science like Economics (which involves human beings who do not necessarily share the same outlook in anything) but that I'll leave to my own future studies.

It just occurred to me that Vad and Bill are teaching us in the discipline of trading the same principle that Plato wanted to teach people in the discipline of philosophy. The legendary trader Jesse Livingstone in "Reminiscence of a Stock Operator" can help everyone abandon their "a priori" beliefs and ego as much as any course of philosophy. Even if one is not interested in being a daytrader, the belief system that comes with being a trader can be absorbed by everyone here and applied to all aspects of trading and their lives in general. JMO and FWIW. cheers.

From Jesse's:

"In times of change learners inherit the earth; while the learned find themselves beautifully equipped to deal with a world that no longer exists."

Eric Hoffer

A Priori:
from Latin, literally "from the former." Reasoning that starts from accepted first principles or facts requiring no proof or foundation, being a self-evident assumption to the true believer

Empirical:
a. Relying on or derived from observation or experiment: empirical results that supported the hypothesis. b. Verifiable or provable by means of observation or experiment: empirical laws. 2. Guided by practical experience and not theory,

A Priori reasoning is often associated with religion and other belief systems, because it is 'top down' reasoning from a given, accepted fact that is judged to be self-evident and sufficient in itself. So for example, if one believes in an all-powerful and loving God, one can start making logical deductions from that first principle.

Empirical reasoning is often associated with the 'scientific method.' This is reasoning from the "bottom up" based on data, evidence and replicable experimentation and demonstrable relationships. Empirical reasoning can only take one so far, and generally follows the pattern of hypothesis - proof - re-examination - new hypothesis based on new data or insights.

In Economics, it never ceases to amaze how quickly people gravitate towards a priori reasoning once they have become wedded to a belief in an idea, a trading system, a school of thought, or a cult of personality..."

http://jessescrossroadscafe.blogspot.com/

'Why only survive it? I wanna short it all the way back to 666 or even better.'

Les, what's your preferred way of going short on the S&P? SPY Puts ? Shorting the SPY? Or via the (double) inverse ETFs?

ALOHA !!

LES-As far as I know there is no set date for drill results except that I know the management plans to do a monthly announcement at the minimum. I am not sure what their lab status is for assays in terms of turnaround time.

I am interested to know who these "institutional investors" are that are participating in this funding. I already know Sprott Assets is on board as a major shareholder. I am not sure if these "investors" are newcomers or not, but any substantial shareholders will have to report either a ASX Form 603 or 604 just like Sprott did a few months ago.

Les (& Kaimu)- If your going to do some due diligence on Oz gold miners make sure you do some on Andean (AND) and Centamin (CNT). I believe both are dual listed on another exchanges too.

They will both be monsters by all accounts. At the right price they are seriously good investments. Just a heads up.

I don't own at the moment, having sold out of both in the last month, but I will definately be re investing heavily after any correction.

Don't take my word for it, but I thought if your going to do some DD you'd be mad not to include them in your research. After the big boys Newcrest (NCM) and Lihir (LGL) these will most likely be two of the next 3 or 4 that the Australian insto's pile into if and when gold breaks out upwards.

Cheers
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ALOHA!!

A BIS DIS ...

Once the IMF GOLD is sold, if it is ... I was thinking who else has a lot of gold sitting around collecting dust? I decided to check out the BIS and so I went to their Balance Sheet for March 2009(latest)and they record $25BIL SDR worth of "gold deposits" as ASSETS, then they list $23BIL SDR of "gold and gold sales" as LIABILITIES, so in actuality then the BIS has $2BIL of gold deposits as ASSETS, yet if these are "gold deposits" then obviously this BIS gold does not belong to the BIS, but some other central bank or banks have the gold "on deposit". Unless the BIS is talking about an actual gold deposit, some open pit there in downtown Zurich ... HA!! Well, the US Gold Reserves list "deep storage" ... HA!! Now how "deep" is "deep"? It depends on your definition of the word "deep" is ... It depends on what your definition of the word "is" ... is ... Is deep ... Is deep or is deep is?

Okay, so I went to the NOTES to view more detail and I may as well have put on a blindfold and played "pin-the-tail-on-the-derivative" for all the clarity you get from the BIS notes. I thought to myself, 'what else can you expect from a bank that claims to be the "central bank for all central banks"?' At least the US Treasury will state what the value of the US gold reserves are listed at $42.22USD per ounce, but on the BIS the Note 11/12 just talks about spot prices, not even a date or a $$$ amount, and conversions between a USD and a SDR. Then those notes refer you to Note 17 and all Note 17 does is repeat what Notes 11 and 12 said ... round and round and round. If none of this was a PONZI then those BIS notes would actual disclose some useful and accurate accounting information instead of a quick game of "guess the numbers"! Fill in the blanks!

BIS-Bank for International Settlements, based in Basel, Switzerland. What has happened to the Swiss banks? Is there an honest bank left anywhere in this Fiat World? I used to have such high regard for banks when I was a kid growing up ... You guys remember what it was like to go into a bank when you were a kid and open up your first bank account? With all the high ceilings and marble floors and mahogany deep rich woods and golden trim on the huge vault door, it was like going into a Church or some sacred temple. Man, all that BS is right out the window for me now! Jefferson had it right ... "Den of Vipers and Thieves ..." Little did I know or my parents know for that matter. We were all brainwashed! Sometimes I think Americans suffer from Stockholm Syndrome when it comes to our relationship with the US FED and its member banks. How much of our wealth will we allow them to steal before we JUST SAY NO? So far its been a lot and I don't see an end in sight.

Good night ... Mahalo ...

I hear ya Les. Look at it this way then. Along with SLR they are two of the very few that reached all time highs (above 07 peaks) in the last spurt.

I'm not ramping them mate, just saying if your looking for quality Oz goldies, these two cut the mustard big time.

All the best
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ALOHA !!

Oopps ...

Les posted - "But seriously, I trust Kaimu and Bill to corner the best and safest junior miners ..."

Les, there is no such thing as a "best and safest" junior! Besides Bill has never endorsed or approved of SLR and I doubt he owns any shares or puts any of the CTA clients into SLR.

DYODD ... as they say!

Okay ... now GOOD NIGHT & Mahalo ...

"Under the offer, which seeks to end months of uncertainty about CIT's future, holders of the lender's shorter-dated bonds will get more new debt than owners of bonds that mature later, people familiar with the matter said.

The aim is to get bondholders holding about $31 billion in debt to slash this by at least $5.7 billion, said CIT in a statement late Thursday night. In addition, if not enough creditors holding bonds maturing from 2009 to 2012 sign on, the debt restructuring will also fall apart.

If the debt exchange offer fails, CIT said it will seek bankruptcy protection to reorganize under a prepackaged plan that would offer creditors less than what the company is now offering.

The plan can't be changed or amended, said a person familiar with the matter. The plan has been approved by CIT's board members, the company said.

The company already has commitments from holders of about $10 billion of its debt, though it isn't clear how much savings those holders would be willing to offer. Still, having that many creditors on board already pressures CIT's other bondholders to participate in the debt exchange."

http://online.wsj.com/article/SB125444327517858013...

Will this have debtholders in general running for the exit en masse? Deep pocketed Hedge Funds to clean up?

The Fed bailed Lehman Bros. just before bankruptcy and got paid back in full. I guess that's possible when you are (above) the law. Speaks oodles about the place of government and so-called government entities in the free market place.

http://online.wsj.com/article/SB125443891097957691...

http://fidweek.econoday.com/byshoweventfull.asp?fi...

GS was telling a grain of truth... Why?

I agree, Les, you can't count on anyone to keep you "safe" with juniors. I think MOST fraud reveals itself through the track record of the board and management, but NOT ALL. If you do DD, you'll catch that part.

BUT, I think the bigger risks are simply the risks involved in growing a junior:country risk, exploration risk, development risk, etc. And NOBODY can know the outcome in those areas in advance. You pays your money and you takes your chance ...

I read the other day from a sage: "the odds of moving from a geological anomaly to a profitable mine are 3,000 to 1". Most juniors start with land where they have identified geological anomalies.

Rick Rule has said that of 10 mines, only 1 is long-term profitable.