Cara's Commentary & Community Chat, Tues., Apr. 21, 2009

Good morning.

New:

NOK - Jefferies & Co. Initiates Coverage with a Buy.

Price Target Raised:

ORCL - from $19 to $22 @ Jefferies & Co. Buy

---------------

Other Stocks of Possible Interest:

ABX - Upgraded to Overweight @ Thomas Weisel. Price Target = $40

-------

Back with more when/if they happen here on CaraVision.

2nd
Once FAS 5.90 is taken out, I think there is no bottom now?
Now I think it is SRS and FAZ time with tight stop

Just trying to game the emotions re FAS/FAZ, which must be high right now. FAS holders absolutely getting shaken out (I would even bet they are shaken, period). So a lot of supply.

SRS- Yes. I'll watch for an entry.

wow. great stuff. i am being led to the water of life.

2nd
It is very tough market. Just for moment if I am still holding all four of yesterday’s sell
Would be up over 20k today. If we play right there will be many days like that

Well, well.....time to re-examine where we are.
Sure glad I set my stops on Friday knowing I would be away Monday. HA!
Got kicked out of USO but my SLV/SLW purchases from last week are on my side.
I only had four positions open EOD Friday with concern over oil, which did what I thought it might on a correction.

Those with ultra short positions from last week are happy! But we knew this was coming, didn't we?

Its moving so fast!

Was eyeing FAZ at 82 cents. 3 minutes later its $1.2+

DEO - upgraded to a Buy at BofA/ML with a price target of $58, which implies a fwd. PE multiple of 12.8x and 7.2% FCF yield. Despite tough industry news Diageo's share price appears to have found a floor. On an absolute basis price target and 4% DY implies attractive total return. On a relative basis, ML believes that Diageo is likely to underperform if the market rallies.

IBM - estimates increased at UBS through 2010. Company realizing higher margins, because of cost initiatives. Neutral rating and $100 price target.

i dont know what to make of gold's action,
on one hand a move above $890 is great,
but i fear a massive position just above $900 that might serve to beat
the POG back down.

for all the buyers at the $860-$870 level may get scurred off if we dont blast right through $900 and encounter some blowback.

so a move just above $900 wouldnt immediately indicate bullishness or bearishness to me until we see the follow through. if we move solidly through $900 w/ the broad market falling, bonds and the USD rising, then something might be brewing...

Les- Don't be so hard on yourself. Let yesterday go, and focus on today- look where FAZ is now, 11.82...

Whoa. One blink trade.

did the same thing - and then IB reminded me that I am demonstrating a potential day trader pattern....

&%ç*!

Gone over to the Canadian markets.

You can almost jump in anywhere, and be guaranteed you'll get carried somewhere...

TCK - Broke it off @$7.25
KGC - Took small position @$14.88

Something lit the fuse....

smaller position.

2nd, I've found SRS is copying FAZ.

I'm just gonna point out what Bill said at the top:

"There might be another attempt to rally the broad market before the next wave of selling, and if that happens, I think the gold market price could improve from here."

Really, the volume looks just so-so, but not like massive buying.
Remember we're supposed to not just look at price, but also at the volume behind it.
And it doesn't look like there's much.

I'm using this as a chance to get short.

FD: Short, long Gold

thx for the article,

Ambrose Evans-Pritchard is generally a EU-perma bear, bullish on gold and prone to making blustery statements that never come true, at least not anywhere near the time frames he suggests.

anyways, i have yet to see any conclusive evidence that there is "unprecedented demand for gold bars" that is causing some sort of disruption in the markets... if there is such demand, why isnt the price rising sky high? of course solid gold bars purchases over the counter are going to catch a premium to the spot price, same for coins.

high demand for coins does not equal a rising price of gold. demand for gold bars, gold mining companies and futures contracts make up the lions share. its where the central banks play, its where the ETF's play and where the mining shares are housed.

does anyone really believe anecdotal stories about difficulties getting gold bars as being bullish of gold $100 of a high reached over 1 year ago?

i cant get a green honda civic in toronto right now, its going to take a few months and cost me extra, does that mean theres collusion in the honda civic market? are honda civic's rare? or just one colour of civic's that fetch a premium?

gold bars sold to private citizens, minted and held by banks or dealers are dwarfed by the sheer size and volume of the big ETF's, gold funds and the COMEX. deliveries on COMEX gold arent having much of an impact either? why arent people taking delivery en mass from the COMEX? sure they might be making it hard and you can only do it for larger sums, but if there was all this aggregate demand, then would medium sized dealers be able to enter the market, buy large bars knowing they could sell them at a hefty premium to all these alleged buyers?

thats the beauty of the futures market, if youre seeing all this demand, then take delivery and in a month youll have gold to divy up to all these buyers... or are there not enough to make it worth the investment in COMEX contract for gold? or are they not willing to pay enough above the spot price to make it worth your while? think about it...

or are we really talking about people trying to buy small denomination coins and bars, which arent reflective of the gold price but supply of these unique items?

stories about retail gold demand are just that: stories. the lead headlines on kitco everyday about "indian gold demand" are just blah blah blah blah. theres no trading basis on these concepts, jewelers who are selling gold to indian familes for wedding gifts have purchased said gold from someone already... well before buying season, and whomever sold them gold purchased it from somewhere too....

whats my point: youre focusing on the end purchaser not considering that someone has already bought the stocks they are selling. how is someone buying a gold necklace indicative of anything when the retailer already has bought the gold to make a necklace...

again, this is akin to the whole "the chinese are buying gold and resources", so is every other country with a population that needs raw materials. someone is selling the stuff to the buyers, thats not implicitly bullish.

if there is collusion on the COMEX and illegal activity on the paper gold market, it will likely cause sudden and massive disruptions in the price as people rush in and out depending on the situation. those holding core positions in gold always protect themselves from possible price spikes that have happened before and will happen again.

but in the meantime if people think indian gold jewlery buying, chinese claims on IMF gold or coil dealer buying are bullish factors, good luck, may as well check your horriscope (or bio-dex for Toronto sun readers) for trading advice.

Les, SKF also has a high correlation with SRS. Check it out on StockCharts "Performance Charts" feature.

I think this is a buying opportunity...chip stocks have basically announced that the bottom is in. Tech is doing pretty well relatively speaking. I think the rally continues for a little while longer...

Remember this name?

I recall her being labelled an extremist and exaggerating her "shock doctrine" economic theory.

Worth a second look now.

http://www.youtube.com/watch?v=aSF0e6oO_tw

Dr Cosa I always appreciate your skeptical eye on the perma gold bugs. Deflates the bubble a little bit, reminds us these are just prices. "But gold is so pretty!"

You have clearly watched gold and read way too many newsletters at this point and are now jaded. Given your viewpoint, what did you think about the article entitled "Did the ECB save COMEX from gold default?" There's a bunch of speculation in there, but the one hard number that actually did impress me was the sheer number of people demanding actual delivery.

If the number of open contracts at expiration really was 15% of the total, does this speak to either a factual scarcity we hear so much about, or merely the premiums that the scarcity story allows the dealers to charge? What does that kind of demand for physical imply?

How's that for the ultimate pair trade!

"But the warning from IB is that they're about to freeze my account for 90 days if I buy and sell one more time this week.

At least they give me a warning."

Les, on IB you can see the number of day trades available on the Account page, "Available for Trading" heading. In that section you will see available funds, and at the bottom the day trades left for each of the next 5 business days. (If account is over $25,000 US it will indicate "unlimited".)

Well I don't know how the future will play out but looking at the candlestick chart COF might be a decent long...

went against me and cut a small loss. then got busy at work.

out of short canadian financials.

my pain threshold was met.

Hey I only meant jaded in a good sense. Probably should have picked a better word. Skeptical of the constant claims of gold glamour. Jaded about that part. I think it's a good thing. I rely on your jaded eye to cut through the crapola. :)

I was referring not to the fact that COMEX was saved, or by whom. As you say that's just the general fun speculation that seems to be constantly connected with gold folks. Really I was focused on the demand for physical that sounded much larger than normal. That part, presumably was not speculation. Have any thoughts on that one? I'm just asking for your experienced eye in these matters.

April 21 (Bloomberg) -- Treasury Secretary Timothy Geithner told a congressional panel that the “vast majority” of U.S. banks have more capital than needed.

Wall St. provided the treasury with the necessary speaking notes for today's congressional hearing, I see.

waiting to see if the ice cream can take the worst UK budget in 50 years tomorrow without a licking - excuse the pun...

ditto.

I'm a dog chasing my tail.

IMF releases gloomy outlook for world finance institutes VS. Geithner statement...what gives?

My last quote was 10:55... no updates since.

Looks like teck longs got lucky!

"Teck Announces Bridge and Term Loan Extension-US$4.4 Billion of 2009 Payments Deferred"

I would prefer if people gave gold a chance to do its job.

What is happening is a massive crash in the copper price, and with it an entire mining industry which is inclined to offset its losses by dumping its gold by-product as fast as it can. But there is certainly an increase in demand for gold since year 2000. There is no comparison between the gold market of 8 years ago and now.

Once the gold price goes above a certain level, I'm pretty sure that discouragement about the price and its manipulation will evaporate. Used to be a self-fulfilling prophecy that gold wasn't worth its weight. And really, it hasn't been for a very, very long time. "Oil" people would garrulously garble. 'Fix your currency to oil!' Famous last words, imo.

Just ask anyone what they think about gold, and they're pretty sure to reply that its an artefact with mere notional value that people decide upon amongst themselves. Perhaps they've been to see the pharoah. Or, if they're investors in the sector, they're likely to say its a store of value. Even some will complain its just a paper market. Still others say that its better to look after something else, silver perhaps or copper, since they are all the more real. An object with mere talismanic effect.

But what if gold, the commodity, were a primary market? That is, a market with massive world participation where it becomes a key driver in the financial sector used to expand liquidity? Certainly you'd say that about government bonds, or forex. These markets go into the trillions per day in trade. But that would take a massive expansion of either the gold supply, or an increase of price, wouldn't it? The bond markets tick up and down in the matter of price by a few points over the years, and since 1982, the U.S. long bond hasn't yet doubled.(I must admit, interest rates have swung by a larger margin) The U.S. dollar has lost only a percentage of its "true" value. Something to consider.

The primary market in the world, which is the derivatives market, is a mere notional one, where value isn't questioned, it just doesn't come into play. Its all about controlling the underlying assets, not exactly the prices. And we're talking about a market which is presumed to be in excess of a quadrillion dollars. And yet this market can easily go to zero without certain props and legislative actions. And in very short order.

Which of these would you prefer to be a primary market?

Ok, so like a smart guy I bought plenty of C after BAC did it's thing and a palpable rally erupted in the banks. What a goshdarn schizophrenic market eh? Down one day, up the next. Anyway, I made an almost miniscule profit in C when I should have held it longer and made a monster profit.

I'm at the point with my trading that I usually do half the trade right an half the trade wrong still. Stunad!

April 21 (Bloomberg) -- Wall Street may be heading for the deepest investigation of its practices since a congressional panel’s probe of abuses following the 1929 stock market crash.

House Speaker Nancy Pelosi plans to push for a comprehensive inquiry, saying that three-quarters of Americans want to know what led to the bankruptcy of Lehman Brothers Holdings Inc. and the collapse of Bear Stearns Cos. and Merrill Lynch & Co. She favors one patterned after Senate Banking Committee hearings led by Ferdinand Pecora starting in 1933, according to her spokesman, Nadeam Elshami.

The Pecora review “was probably the single most important congressional investigation in the history of our country, except perhaps the Watergate hearings,” Donald Ritchie, associate historian for the U.S. Senate, said in an interview.

Well if we end up with someone like Elizabeth Warren heading the commission, something might come of it all.

If it's another Goldman alumni, it will be a total waste of time.

buying more at 19.70. this is a solid company that has significantly diversified its revenue stream. they are getting beaten down because they are buying ELX at a premium, but ELX has 1/3 of its buyout price in cash and it is pretty cheaply valued ex-cash.

Additionally, mgmt stated that revenues will be approx $940 MM next quarter vs estimates of $865 MM. This is sequential growth of about 11% and almost 10% above analyst estimates. Ask yourself if the stock will go back up to $23 soon. I think it will...

Especially with these damn manipulators opining and jiggering the market at will.
Bears make out, bulls make out but -
"Hogs get slaughtered"

Good one, I liked the pun!

Freedom57, Les,

I noticed last week that SRS and SKF are shown at etfconnect.com to be based on very similar holdings.

Dave offered an interesting clarifiction — see:

what's in an SRS anyway? new
Submitted by davefairtex (332 comments) on Sat, 04/18/2009 - 10:30 #23411

also:

Re: saturday review new
Submitted by davefairtex (335 comments) on Sat, 04/18/2009 - 13:25 #23421 (in reply to #23414)

You whipped out a fast, indisputable retort to deflate my little bubble of hope Ron Sen.

I hope you treated your patients a little more kindly... :)

R U still a doc?

Really? My only gripe was Bobby Goldsboro made me feel a little dated...:>)

Other than that, I'm pretty good with cynicism.

Les, Dave,

Color me skeptical.

Nancy began her marriage by agreeing to iron a shirt for her husband — then secretly threw it in the trash. (Actually heard her verify this live on TV. "I was not about to start my marriage with ironing his shirts!"

A self-confessed sneak, liar and a cheat, Nancy will do or say anything which has a potential benefit for her. (Other than than I like her.)

Nancy aside, when was the last time a Congressional inquiry on any topic produced a valuable result?

I need to see someone (several someones) hung out to dry as a result of the fine work by Elizabeth Warren before I will see any change I can believe in. (To coin a much over-used phrase.)

I remember her private jet privelages from her place in CA to the few days a week she's in Washington. Tis true she is not "one of us".

"Commenting about Pelosi's physical appearance is not acceptable"

Apologize if I said something offensive. This won't happen again, ever.

Come on Les. More BS.

She is the Speaker of the House and third in line to the Presidency. There are security issues she doesn't have any choice in.

PLEASE, the FACTS first.

Heh you know Mr Geithner could be technically correct about the banks and their capital. Presumably, if the small local banks are doing fine, and only the ones that have over $100 billion are in trouble, his words would be accurate.

After all, there are a lot more small banks than there are $100 billion dollar banks.

"I'm wondering how that SRS trade worked out..."

Worked out OK. Out @ 33.77. Sorry, there's too much going on today>> so I'm trading, not posting ;)

Time share maybe. I would imagine scheduling could raise substantial issues as you need a sharer.

Business class commercial...there is no inspection of postal freight on *all* flights. There is NO security for commercial flights, period, which would preclude their use.

Pilots union knows it and is trying to raise awareness, airlines resist as usual.

Sorry about security, we have a Constitution here that provides for continuation of our government. It's practical, not paranoid.

In comparison, the unfounded attacks definitely appear paranoid. If this had started with some well founded facts, maybe we would have something..... But it started with crawling skin and deteriorated from there.

under the impression that these comments are short term tactical efforts for HB&B's benefit.

Pandi's gone and backed him up with some vacant words of reassurance.

That's enough for me. Gotta stop watching the fluctuating numbers... :)

Everytime I try to get out of trading FAS/FAZ, they pull me back in!

Its actually quite a beautiful day trading mechanism. think about it. 1 of them is guaranteed to always goes up today because the other goes down.

trick is to not fall in love with either direction one is moving in, and trying to catch the right one to ride the up wave.

Hope my point makes sense.

From personal experience: the airlines don't want high profile high risk targets on their flights. They want to move as many passengers on time and as quickly as possible. They can't afford the delays that would be required to search planes, hold planes, screen and search passengers, screen commercial cargo, etc. As a passenger, I for one don't want to be anywhere near the plane flying the 3rd in line to the presidency of the US.

The airforce is, however set up to handle the job. The force is accustomed to moving high profile "clients" securely and efficiently, including the top brass in the services. They land and launch from secure facilities that can easily handle the needs of the large SS detail that accompanies dignitaries.

I cringe whenever I see either political party plant soundbites that make the opposition appear petty to the general public who are unlikely to research or understand the reasons for these things.

I would prefer to read well thought out discussions of the actions of our political leaders ... not insults to their appearances or the way the pronounce words (like nuclear). Just food for thought.

Get better soon man!

Just wanted add my best wishes for a speedy recovery.

Regards,
BH

This is Vegas. Absolutely. One winner, one loser, and then there's the house. They rake the chips off at the end of each play>> seven out. Each market open is an entirely new play>> new roller. New odds/new assumptions apply for each day. I don't know I would be betting these kinds of figures in Vegas, though.

I'm with you here Les! I'm not holding my breath mind you, but agree good examples are needed as well as 2 way communication.
Effective investigation or not, I imagine the Speaker is trying to react to her constituents letters asking WTH is going on.

She did mention it when she was on Jon Stewart's show when he asked WTH is going on.....
Seems the pressure is from both sides to have this done. That might be good.

I'm not kidding and don't think she was either. It was said in an, "I'm too important to stoop that low for ANYONE," kind of attitude and tone of voice.
(I don't think it was Tina Fey.)

:-)

Not a person I would want to be around, far less be married to.

My wife and I celebrated our 48th anniversary last week. There have been times when one of us didn't jump to accommodate the other, but I guaranty if either had been that self-centered we would not have lasted 48 days together.

There was some discussion recently about how to detect program trading. See indexarb.com . Some vendors (e.g. tradestation) have symbols you can track to see when the arb is likely to occur. Problem is that it is wicked fast so you would have to be extremely nimble to react to it.

As I recall, the big move on that day occured when a key resistance level was broken and was more likely short stops being taken out.

Grym - congrats to you and your wife. 48 years and counting! May we all be so fortunate.

Bill do you think that they are going to be a teenager. It seems they have earnings of 50 cent canadian this quarter and at 2 dollars canadian a year you are looking at 12 canadian dollar stock at a 6 multiple and 24 canadian at a 12 multiple. Is this a reasonable estimate becuase if it is I'm buying more

Sorry one more question bill, what do you think of MICC earnings. Looks like 1.29 this quarter basic earnings (not sure what this exactly means). If that extrapolates to > 5.00 a year again with a conservative 9 multiple your looking at 45 or a bit more to upside. Do you think its got more in the tank for the long run given its excellent emerging markets exposure

I see coal represents the lion's share of its operating revenue this quarter. Any talk of teck of selling some or all of this energy asset to aid debt still? Or does that bridge facility permit them to keep everything?

It'd make a nice base metal/energy/non-US Peso holding.

Hi Bill

When you mention:

I’m struggling to get my groove back.

Since I work in potentials, helping people find their heart, I know what you mean, There is a groove to knowing how and where society, markets and other human activities will flow. It's always there... Except at rarer times when the rules are skipping... the players are changing step , game etc.

More importantly so much potential has been released.. It isn't truly possible to pick which potential is going to get activated at certain times, There is a pause before every major change... where many many different potential outcomes are possible and equally likely.

That is where we are at now... 2009 represents a massive release of potential, so much so, I don't think even the players who normally rig the games are in control like they think they are.

Personally this means it's a very interesting time, since by measuring the potentials you can help effect and activate so many different results to occur.

Which I think is more interesting since as a trader you work from a place of accepting the current flow rather than influencing it. So this would be the one time feeling for the groove would be the most disturbing thing to do.. since none of the answers would feel quite right... or many equally right.

So what if the reason you are having trouble to get to your groove is becuase we are at that moment of pause before change... (the calm before the storm so to speak)

And if that is where we are... Then

More interestingly from a Taoist perspective it's best to leave the block uncarved, to let it remain in potential rather than reduce it down to a single final form.

To do one of two things

One, be in pause to best be aware of shifting currents

or

To take the time to use the potential energy to other effects... To skip up to a different place rather riding down the next carnival ride set up for play

Its interesting to consider

Apologies if I ramble

Vinod- Is it a 'phony rally,' or was it a successful 'test' of the (financial) bulls? I don't know, and if I'm not sure, then I have to stay out of the way.

But the reason was i saw an ascending triangle forming. and it just consolidated and broke up.

Not sure how long i will hold. will prob sell before close.

Yes, I do, and have with varying degrees of success and failure.

I should also add that it is very risky and most money managers are not interested in stocks below $5.

I believe as much as I dislike Jim Cramer, he is correct when he talks about the business cycle and euphoria attached to small caps. And by B cycle, I mean everything from lack of a business plan to the next MSFT. The reporting standards are also different, depending on listing exchage as well.

Also Bill, talks about this in his book I think.

ok, I'll note that the blog bans discussion about BB stocks. Only question I have is has anyone ever had experience with a penny stock (i.e., under $0.10) switching to a major exchange? I think I remember reading somewhere that CROX was once a penny stock. Is this correct?

I keep 7500 shares of RSMI in my portfolio to remind me never to trade true penny stocks. Its worth a whopping 75 cents, it doubled the other day and was worth $1.50. :' ) My cost basis is 550$ from some time ago.

Only trade thus far today.
PFE @ 13.24....reopened half position I closed at 13.86 last week.

Did well with the inverses yesterday, but late day trade of FAS took most of those gains. As usual called it correctly, but followed up call with poor trade and sold my winners way to early. Always learning and yesterday was no exception

good question.

UK budget will disrupt the party Wednesday.

Present volatility in FAS says many unloading at end of session. Don't like tomorrow.

Wondering if market movers trying to absorb selling, push on through to the other side.

I'm holding canadian short financials, for lower opening tomorrow.

Fear and profit preservation for fund managers.
They took a beating last year and won't wait to pull the trigger if it starts to head south.

What financials/banks report next?

Vinod- In case you're wondering, putting money behind it is the best way for me to gauge what's going on ;)

Unreal - anyone watching this dive

Had my finger on the buy button for the last 5 minutes - then at the last second decided my indecision was a reason not to buy. I'll contemplate it again after hours.

leaving with 5% gain on the trade. Booked 23% gain on my sale of FAZ this am.

not a bad day. who knows what tomorrow will bring.

WFC is reporting tomorrow, so SRS could go up

From the article:

"At some point, the number of investors who figure out that they had better buy gold is going to go from less than 1% of the public to 5%. When that happens, the supply of gold will not increase, and the price of gold will skyrocket. If as many as 10% of the investing public tries to put 10% of their assets in gold, I suspect the price of gold would go to $10,000 an ounce. The gold market is so marginal in the overall commodities market that the attempted 10% of investors to increase their holdings of gold to 10% of their assets would make today's holders of gold very rich and very happy. I think at some point this is going to happen, but I think it is going to happen in a time of price inflation so bad that the purchasing power of the currencies will decline so fast and so far that the fact that you can get rich in fiat money by selling your gold will not persuade you to sell your gold."

Gold would be scarce and hard to find at that price. Makes a very strong case for mining stocks, no?

I have been saying for about a year now that goldbugs are at war with every government in the world. Gold used to be the canary in the mine, but with are form of government (lie, spin, omit, confuse, cheat, steal, and betray) we are now at war with honesty. Gold use to be able to tell our leaders that you might be having some problems with your currency when gold spiked, but not now! The only play in this market is either to trade prices(Bill's strategy) or buy gold for safty. I'm not that good at trading prices so I will buy gold at any dip.
Kamiu hope your doing better, miss your posts, we need all the goldbugs we can get!

"If as many as 10% of the investing public tries to put 10% of their assets in gold, I suspect the price of gold would go to $10,000 an ounce."

The problem with this statements is that it assumes that "10% of the public" is indifferent to the price of gold and that they would be investing 10% of their assets in gold. If I buy 10% of my assets in gold at $1000 and then it rises to $10,000 it now comprises 90% of my portfolio (remaining portfolio held constant).

Right now, I am not so sure that gold isn't relatively fairly valued. Sure, its off its high of just above $1000 USD (where it spent virtually no time - quickly peaking and falling back). In my eyes physical gold has been an adequate store of value in real terms during the panic. Think how much more house, car, boat, gasoline, etc you can buy with your gold than you could at the peak of the equity market/housing craze. Think about how many Euros,Francs,Aussie dollars,Canadian dollars you can get for an ounce of gold than you could at the top of the equity market.

I think too many people are focused on the value of gold strictly in $USD terms.

And it is true, a lot has been well, said!

Thanks for passing this on Bill. Could be a weakening of oil stocks over the summer. Less driving, more sweltering, back to the '50's! Getting my bicycles tuned for the short runs as we speak.

I'm sure you've noticed the absurd volatility in companies after they announce earnings. Oftentimes I've found that a company's option volatility index will decrease significantly after earnings are announced (which is normal) only to see the stock have a HUGE swing during the course of the day. I noticed this with BBBY, HOG, BBY, WFC, and so many others.

The similar characteristic amongst all of them that I could find was that they were either heavily shorted/heavily beaten down or that they were trading at very low estimated p/e's. Typically, they opened low and finished much higher but sometimes they opened higher and finished much higher or opened flat and closed significantly lower.

Either way, I think it would be a good idea to buy calls and puts with strike prices within a 5% range or so that the stock looks like it will open at. Two interesting plays I see for tomorrow are:

FCX
NE

to a lesser extent I will follow TEX.

Let me know what you're all thinking about this strategy.

I agree completely.

I have no way of knowing, but I suspect there are readers who have bought and held the ultras. I've held a few myself for periods far longer than a day, and paid the price. In retrospect, those of us who played QID/SKF/SDS/DXD/SMN/DUG/FXP during 2007-mid 2008 were lucky to have gotten out when we did. More recently, I made the decision to cut my holding periods to 1-2 days, which is pretty much a necessity for the 3x ETFs.

On the other hand, the ultras are xlnt trading vehicles, and apart from options it's difficult to replicate the kinds of returns possible with them.

It's like learning to drive. You can't really do it on the Autobahn. As one progresses, one begins to seek out roadways with higher speed limits, trickier terrain, and more traffic. Some drivers go on to high performance cars and competitive speedways.

Life is full of 'dangerous' devices/sports/procedures that are beautifully designed for their purpose(s) and entirely safe when handled/executed properly. We cook on high-temperature stoves and grills. We drive 2-ton metal vehicles at high speeds. We scuba dive to high-pressure depths. And we trade 3x ETFs.

fwiw...

Bill, I respect and admire you and your team's diligent work (as evidenced by your above average successes). I have to sheepishly admit that I thought you were way off base with your insistence that TCK was not broken. I had thought that the CEO played texas hold'em with the company, went all in and got busted. I did not even begin a detailed look into their financial situation, I just THOUGHT that they were done.

It all goes to show that the diligent, thoughtful and purposeful work is what really counts, not bravado filled 'gut feels' cuz I'm in the industry and THINK I KNOW better... I passed up a golden opportunity that you presented. I'll live and learn.

There's a few things I've learned about these 2X, 3X ETFS. 1) They can work for day trading if there's lots of volatility and you're "in the groove", but they are nerve-racking (and do your TA on the underlying index, not the ETF), 2) You're a gambler if you hold them overnight, EXCEPT 3) when the world seems at an end, with no future for anything ever going up again, short the inverse ones (e.g. FXP, FAZ, BGZ, TZA, etc) and hold on!

I found the regulatory questions posed in Bill's post,

http://caracommunity.com/content/caras-commentary-...

to be very important; especially now that 3X ETFs are available on the treasury ladder (groan).

The idea that there are these "obscene money-makers" (see point 3 above) around, requiring only a little market panic to work, scares the hell out of me when I think about the morning strategy chats that go on behind HB&B's closed doors. The only consolation, I think, is that all eyes are focused on these bankers/$-managers and if they DARE steal another significant penny from Ma&Pa's 401Ks they'll have a real tea-party to deal with. As Bill said, back in Sep/Oct/Nov, they got their pound of flesh, now they (specifically Paulson, at the time) have to deliver the Bull or they can kiss their business (model?) goodbye forever.

It figures that these Swiss Gnomes would start mucking around in the space just as I got interested in them again (eg. Devry - DV).

http://www.streetinsider.com/New+Coverage/Educatio...

http://tinyurl.com/d66z3l

All cash. no position

Bill,
the reason I mentioned to TOF that penny stocks were off limits was the Community Rule:

015. Do not present penny stock tips.

Can we either clarify this or perhaps eliminate it please.

Shiva,

Sorry about this. I realized I wrote a confusing post. I'm referring to doing a straddle almost immediately after it opens AFTER earnings are released. The reason is the premium comes out of the options yet the volatility in the stock doesn't seem to go away, especially in those highly liquid and shorted stocks. I think both NE and FCX meet those requirements. I was dead set on doing this after BBBY opened after earnings and had I done that the calls would have gone up 5-fold while the puts would have gone down 80%; the net change of which would net you a solid 2.6-fold return in one intraday trade. I know BBBY was not the norm, but I've seen this kind of volatility in a lot of stocks lately during the day after it reports earnings.

TOF, You would probably have to papertrade it for one or two results (aapl on thursday might be a good pick). First 1/2 hour from market open since options are thinly traded in that hour, ask/bids are not that good. It all depends how much +/- stock closes from the open. Might be worth trying with a few contracts.

Listen VB, just because Kaimu is laid up does not give you rights to his trademark "HA!" or use of ALL CAPS to make a point. Just want to retain his a priori rights in this august forum.
Next you'll be trying to pull off something like "IT ALL WORKS UNTIL OUR BEST THINKING ELIMINATE US FED"
:-)

Interesting thought on The Big Picture today ( http://www.ritholtz.com/blog/ ):

"... that markets tended to forcefully trade in the direction of the underlying trend on Monday’s and Fridays. Wednesdays and Thursdays were less strongly correlated with the main directional trend, in his opinion, but Tuesdays were different. Tuesdays seemed to trade in the opposite direction of the main trend, and often with less force and less volume."

Seems to tie together with that Master the Markets pdf linked here recently, in regards to volume and price action telling a tale. Maybe the big trading desks took their bids off the table or raised the prices, lowering supply, driving prices up to the point where pro's can continue distribution.

just a thought...

And here's another fine example of lack of security:
http://news.bbc.co.uk/2/hi/technology/8010729.stm

I'm really delighted that so many have been fortunate to sell TCK after being presented with today's market opportunity. The complete 2008 TCK price collapse is due almost entirely to a bad management decision last yeat to spend $14 Billion for the Fording Coal Trust. They must have bought into the myth spread during last year's US election campaign - that there was such a thing as "clean coal"! Sorry, but there is no such thing as clean coal and the future for the dirty kind remains as bleak as the steel industry it feeds - at least for the forseeable future.

Now does today's news that amendments and extentions to almost $10B US in term loans and bridge financing ( at a cost of $96M just for extention fees ) really support a sustainable 35% increase in share price? Frankly, I don't think so. After TCK has unloaded their several more-promising metals and energy properties to keep the ship afloat - what's left to deal with the bankers when they come calling in 2011? And now we have a fox in the henhouse working his plan. The BAMsters will see that this does not end well for the holders, so I would be looking at downside -protective strategies if one must play TCK.

yeah, i agree it should be paper traded. i've tried it out for BBBY, MOS, and HOG and they all worked like a gem. I'm sure there are some duds, but i think it's best to pick the most volatile and liquid companies you can find.

April 22 (Bloomberg) -- Millions of lost jobs mean billions in lost tax revenue for the U.S. government, and billions in additional Treasury debt to fund a federal budget deficit that may soar to more than four times last year’s record $454.7 billion.

Employers cut 3.7 million positions from their payrolls in the six months since the fiscal year began Oct. 1, and the unemployment rate reached a 25-year high of 8.5 percent in March. That suggests receipts for April -- the biggest month for tax collection -- are likely to come in well below April 2008, analysts said.

With spending on unemployment insurance and other safety- net programs rising, the deficit is already at a record $956.8 billion six months into the fiscal year. To help close that gap, the Treasury Department has more than quadrupled borrowing, pushing the government deeper into debt.

“Tax receipts are just collapsing,” said Chris Ahrens, head of interest-rate strategy at UBS Securities LLC in Stamford, Connecticut, one of 16 primary dealers required to bid at Treasury auctions. The need to sell more debt “is a big issue in the Treasury market and it is ongoing. The surging budget deficit is the primary cause.”

"There is an awful lot of hate out there for leveraged ETFs. Microcap Speculator identified the Direxion 3X ETFs as "Wealth Destroyers." Jim Cramer called the Ultrashort Financials ProShares (SKF) the "ETF of mass banking destruction."

Some have called for banning these ETFs, but why bother? They don't hide the fact that they're the financial equivalent of crystal meth, and traders who abuse them are destined to go broke sooner or later."

http://tinyurl.com/cj8rhg

I think we understand the dangers of 3x now. Thanks Si02. I'm a near-reformed addict.

"The pound, *U.K. government bonds* and corporate debt fell on concern Chancellor of the Exchequer Alistair Darling’s budget today will show Britain’s recession is worsening. Industrial metals fell, with copper posting its longest losing streak in almost 10 weeks."

There goes copper as well.

Not in any hurry to do anything 2nd. Bought SRS and TBT last week, watched them both tank, sold em and then watched them recover this week and then some.

This volatility is killing me.

Happy to trade on Bill's TOG. just question of timing.

Good morning.

FSLR - Price Target Raised from $130 to $150 @ Citigroup. Hold.