Cara's Commentary & Community Chat, Tues., Jan. 13, 2009

Good morning.

SLW - Upgraded to Buy @ UBS

ADBE - Downgraded to Underperform @ Friedman Billings. Price Target = $17

FSLR - Downgraded to Hold @ Citigroup

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Dylan Fans:

William Zantzinger Dies - http://tinyurl.com/ayk2at

"The Lonesome Death Of Hattie Carroll":

http://tinyurl.com/79n68j

Sign of the Times: Blogger Arrested in Korea for Post That Led to Won's Decline

SEOUL -- South Korean officials arrested a blogger who for months had been criticizing the government's economic policy, charging him with spreading false rumors that led to a drop in the country's currency.

Prosecutors identified Park Dae-sung, who is unemployed, as the widely read blogger writing under the pseudonym Minerva.

The charge stems from a Dec. 29 posting in which Mr. Park allegedly accused bureaucrats of writing a letter to local bankers to persuade them not to buy dollars so as to raise the value of the won. Prosecutors said Monday that news accounts of Mr. Park's anonymous posting had led to a plunge in the value of the won that forced the government to intervene in trading.

http://tinyurl.com/8lmkp8
(WSJ online)

I think today or tomorrow we'll know whether or not we're heading back to the November lows. Key support on the S&P in the 850 area. If that breaks, it ain't good. If it holds, and I see some ripe divergences start to form, well then, it's time to buy. But it's too soon for that, imho.

FWIW, I'm seeing some bullish divergences starting to appear on the 3x ultras 15 min charts. But still too soon for "go time".

Update: actually, I'm liking the looks of DIG here. If it comes back a bit after this strong open I'll enter with a stop at the daily low.

"So the South Koreans are left to demonize an out of work blogger who sounds as if he might need some mental health treatment?"

Absolutely, only sanctioned media are permitted to commit malpractice.

Bill
Long time follower. I just started the book and this information may be in there. I was wondering when you use calls and puts how far out are you trading (1,3,6,9 months)?

Madoff, in the scheme of things, is still a small distraction from the shell game run by Hank and Ben.

Think about who we blame:
Abu Graib? Grunt soldiers and a woman General did it all?

Was it Credit Suisse that had the poor schmuck junior trader lose some several billons supposedly running some scam?

Actually, has't there been a number of no-name junior traders supposedly taking down whole banks and investment houses?

And now some unemployed blogger?

Either a true David VS Goliath story or a sad line of total BS.

How much lawyer, besides the General, do you think these people could muster VS the endless resources of the State? Scary.
Oh look! MY BS meter is spiked!

"tick tock tick tock. what am i gonna do?"

You made me chuckle... I'd keep it a while longer unless the electric bill isn't paid yet. Why not let it run, to compensate yourself for time and effort exerted on the way in?

I'm always taking profit too soon and the opposite, never seem to get it right.

Hola, Senor Chicken!

SiO2,

I was interested in the TSX:HAX product too until I read the same Globe & Mail article you referenced. Rob Carrick called the JOV Talisman fund a "total pooch".

If you were to buy BAC at today's price and the dividend were to return to historical levels, you would receive an annual dividend distribution of ~16% on your investment.

It's option expiration week . . . think November lows will wait.

Maybe next week or sometime after inauguration.

You are probably right. We will have one more push up to revisit 900-950 before retesting lows. Holding on to my "in the money" TNA from yesterday and underwater energy.

teamonfuego - You may well be correct, BAC looks pretty risky. From a dividend perspective, potential returns on BAC seem too good to be true...

Seamus - Yes, Bill did reference GE. There're beaten down quite a bit too, and Immelt claimed recently the divvy is reasonably safe, if he can be believed...

I've read some persuasive articles recently that suggested that GE needs to drop the dividend to keep the AAA rating..

Update on that AMZN purchase, order that was placed Nov 19 with an estimate delivery of Dec 4. Yesterday they replied to me that the new delivery date would be Jan 29, and it would be shipped express.
I received the package 10 minutes ago (?!).

You have to pay foreign tax on dividends for companies in many countries. It's not unusual. The rate can vary by country.

You can claim foreign tax paid as a credit on your U.S. income tax.

(Of course always seek the counsel of your trusted accountant)

Interesting RSI, Money flow and deMark

Seamus - thanks for the answer to my nuts & bolts question. That gives me enough to figure this out - at least talk intelligently to my tax guy.

Thanks,
Chris....

I trust analyst ratings as much as i trust the salesman at my car dealer. but this just hit my Google news filter; nothing we dont know already i guess. I might open a position but waiting for it to come to me. Disclosure: cash position at moment.

http://tinyurl.com/7r99kx
NEW YORK, January 13 (newratings.com) - Analyst Dan Rollins of UBS upgrades Silver Wheaton Corp (SLW) to "buy," while raising his estimates for the company. The target price has been raised from $5.75 to $7.50.

In a research note published this morning, the analyst mentions that the company is likely to focus on allaying concerns associated with its debt facilities in 2009. Silver Wheaton would be able to renegotiate its debt covenants and de-leverage its balance sheet via divestiture of equity investments and/or acquisitions, the analyst says. The EPS estimate for FY09 has been raised from $0.03 to $0.05.

you can see it in gold.

falling after failing to break back above yesterday's price.

shares held up better than i thought, but w/ the SPY falling, lo and behold
so are the gold stocks.

nothing has changed. and im sitting tight. if things change then so will i.

you can see it. when gold falls after a plunge it falls hard and fast. it tricks us into thinking its a retest or a consolidation. it falls hard and fast or moves up hard and fast these days. if its not doing one its about to do the other.

Great article, thank you for the post yvrapx.

I find it interesting how well SLV is holding up with gold and oil all over the place.

thank you Bill,

i am talking gold stocks down in the sense that im ST bearish on them and giving my reasons why. other than barrick they are just a nudge above or around yesterdays price.

i do believe i have an open mind as my history on the board reveals a mix of bullish and bearish stances over varying periods. right now thats my shorter term bias. as noted before, it can change as im not married to my viewpoint, only the prices.

thx

J

I must be watching the wrong charts. Spot oil is unchanged @ -0/60 and OIL/ERX etfs are jumping off the bottom. So what is???

Spot going positive...and FAST

As a student of media studies I've enjoyed a couple of PBS doco's about spin in the commercial world.

http://www.pbs.org/wgbh/pages/frontline/shows/pers...

http://www.pbs.org/wgbh/pages/frontline/shows/cool...

I could see the author of these two doco's hooking up with Bill and the few other honest players out there to deliver a kick in the pants to the financial services industry.

Unfortunately, and as I've heard elsewhere here, you'd be preaching to the converted.

Els

"The market is still digesting recent gains and may have some unfinished business down in the 850 S&P area"

I was banking on that. Bought TZA pre-market.

Paid too much.

LE.s

swiss - It happens to us all. We can only guess at the future, none of us can actually see it. When I get frustrated, I just walk away for awhile. I had some TBT not long ago and a similar experience.

UCO yesterday and ERX today barely made me lunch money for the week. I also sat and stared at the PC mostly all day long. I need a good class with a teacher. Books are very fine. But I need feedback and have lots of questions.

Good luck to you! TLT is DOWN 45 cents right now and TBT is UP 45 cents. Things are going your way!!

Another fun day in the life...

So after getting the US Government to backstop Fannie and Freddie he follows up w/GMAC paper.
http://tinyurl.com/8kh4sr

It has to be said this community is the greatest internet discovery ever!

Thanks to Bill and everyone. I'm very thankful for everyone's help. There is just so much to learn here.

I've been learning the dance steps on SLW since November and have been taking small profits for every trade.

I will start taking new dance partners for some fun and profit any day.

Just looking at the RSI(7) for both GLD and USO, both of them really look like a place where I'd rather buy than sell. I know there are more elaborate analytical techniques, but my sense is based on examination of how the RSI(7) has worked as an indicator in the past year, unless massive deleveraging is about to start again, both of them look like buys to me - at least short term anyway.

I went long USO and short some USO Feb 31 Puts yesterday. So far I'm even.

And I think the GG chart looks pretty similar. So I got some more of that today at 25.

I have to think if GE is going to try and retest Nov lows that it would make a good risk/reward entry

That was a beautiful pennant on a one minute chart of GLD that Bill pointed out, and it broke out upwards, but very late into the apex. As I understand it, that nullifies the significance of the breakout. Anyone have experience, thoughts or good TA history on this?

I have a watchlist of commercial real estate companies, list with todays performance in parenthesis;
ACC (2.99%)
ANL (1.40%)
AIV (-1.80%)
AEC (-2.80%)
BRE (4.16%)
CPT (1.49%)
DEI (-1.40%)
EQR (5.50%)
ESS (4.09%)
IRET (2.15%)
MAA (2.00%)
PPS (2.28%)
SUI (3.94%)
UDR (4.61%)
UMH (0.32%)

My question is, are these good shorting opportunities?
TIA

"I like there are both sides of voices in this lovely community."

Me too, it helps me balance the decision making process.

I got stopped out from TBT recently at 40.5 for a 10% profit. But I'm not jumping back yet. My take is it will go up some in a few days, then will likely crash and retest it's low before going up again long term. One can use limit orders to get out of position at a slight profit above the entry point if in doubt.

By the way, what is your cost of trading TBT? TDAmeritrade's fee turned out to be $49 and the rep said it was not mistake. Anyone else had that?

I totally agree with that assessment (that financials won't lead). I'm staying far away from that industry in my investments. I believe we can rally with just a stabililized financial industry. Today's news is big in my opinion. The takeover, for lack of a better word, of Citi by the gov't may turn out to be a big tide turner for the financial industry. I'm going to continue watching news on potential break ups of good/bad assets with other firms to see if my early beliefs are correct.

Wed and Thur, as our co will be asking us to do 2009 planning and 08 review. Sitting on cash until i return for friday's open.

good luck on your trades everyone.

overweight sr. gold producers, market-weight Uranium and fertilizers, underweight bulk commodity and base metal producers, 20 stocks recommended:

http://www.mineweb.com/mineweb/view/mineweb/en/pag...

Chris,

my take is, this not so much diminishes the significance of a breakout as decreases the chance of it. In other words, the closer to the apex pennants or triangles go, the less are the odds of a break. If, however, breakout occurred, it's a breakout just the same.

As far as significance of a break is concerned, mass psychology is not changing much. Those who bet on resistance holding still got their wish broken and forced to rake stops or sit on a loss; if price pulls back into new support (former resistance), they will be just as happy to use it to cover their shorts; and those who missed original break will be waiting for such pullback for a second chance of entry.

the bottom 5 losers on the top 100 miners list are:

Kazakhmys - Khazak copper miner
Uralkali - Russian fertilizers
Teck Cominco - no introduction needed!
Silvinit - Russian fertilizers
Mechel - Russian steel co.

stock price losses ranged from 87 to 93% from their peaks.

The Kremlin is considering buying control of Silvinit and Uralkali (along with Apatit) to create a "national chamption" for fertilizers.

(BTW, the list referred to in my previous post can be imported to Excel and sorted.)

Top 10 Value Destroyers from Morningstar that are rated 5 star (most undervalued):

GE, MSFT, BAC, GOOG .... in order of mkt cap destroyed in 08.

http://tinyurl.com/8vetuo

When does the Rsi tool reset with todays results. By the way that tool rocks!
Bob

I posted on saturday 1/11/2009
Plan for coming week is to buy put on city CNP and BYONJ. I think after earning C will be under 5 and BAC under 10. My speculation?

Did anyone have a take on Steven Chu's testimony today? I thought he provided some clues on his idea of where the energy industry should be tweaked...

"Chu said nuclear energy produces a fifth of the nation's electricity and 70 percent of the carbon-free electricity and "is going to be an important part of our energy mix." About domestic oil production, Chu reiterated Obama's views that some expansion of offshore oil and gas development should be included as part of a broader energy plan.

But Chu sidestepped Murkowski's question on whether he would oppose any reinstatement of a broad ban on offshore oil drilling on the Atlantic and Pacific coasts. "Improvements in energy efficiency is the one single factor that can most reduce our dependency on foreign oil," said Chu."

http://www.newsday.com/news/politics/wire/sns-ap-e...

Yes, normally that's true and fairly well known.... However if I recall correctly, Bill had said a few months ago this time it would be different in that their lead would be brief. So, I'm a little confused by the interest in the banking industry... and by BAC's divvy.

bgt tbt on monday.sold the jan 41 call, when it expires on friday will then sell feb 41 or 42.....gap on tbt in the 38s shold hold the downside/ hopefully.....dull way to pick up 5 or so percent a month.......doing same on auy and tck.DYOD cannot be overemphaized.....

Call me a weirdo but I bought TZA today as a short term hedge to TBT. I figured that bad economic news this week is going to drive stocks down, but I don't want to let go of TBT just yet. TZA's on a short leash and if people aren't panicking out of the market come the consumer confidence and retail earnings report later this week I'll let it go.

Have a nice day.

LE.s

Check out HTC on TSX for carbon capture play

Commission at Fido is $8

The Financial Bailout as Viewed by Physicians

The Allergists voted to scratch it, and the Dermatologists advised not to make any rash moves.

The Gastroenterologists had sort of a gut feeling about it, but the Neurologists thought the Administration had a lot of nerve, and the Obstetricians felt they were all laboring under a misconception.

The Ophthalmologists considered the idea shortsighted; the Pathologists yelled, 'Over my dead body!' while the Pediatricians said, 'Oh, Grow up!'

The Psychiatrists thought the whole idea was madness, the Radiologists could see right through it, and the Surgeons decided to wash their hands of the whole thing.

The Internists thought it was a bitter pill to swallow, and the Plastic Surgeons said, 'This puts a whole new face on the matter.'

The Podiatrists thought it was a step forward, but the Urologists felt the scheme wouldn't hold water.

The Anesthesiologists thought the whole idea was a gas, and the Cardiologists didn't have the heart to say no.

In the end, the Proctologists left the decision up to some a**holes in Washington.

Alberio -

The concept is to partner with the gov't, and the hope that they want the partnership to work. Remember how Armand Hammer of Occidental Petroleum worked with the Soviets?

In VZ, the gov't takes 18% off the top of gold mined as taxes. They'll have 51% of the JV with Rusoro. Gov'ts know they aren't good operators of businesses. Rusoro is betting Chavez won't want to kill "the goose that lays golden eggs" ....

My impression is that VZ is like Russia; if you play by the gov't rules and learn to "dance with the music" you can do well ... I have Venezuelan friends who are prospering under Chavez.

Thanks for that Westcoaster.

I dunno. Here's an alternative view.

http://seekingalpha.com/article/114143-the-fed-s-b...

If what Peter Schiff is saying has any bearing (do U know the guy's reputation Bill?) than this game could change quickly - IF the fed stays out of the bond market. It's not so much the question of deflation/inflation but that speculators are rigging the game and it's this I'm betting against.

Just as we're all betting on those same printing presses that Schiff refers to sending precious metals for a shot to the moon.

LE.s

Was going to post my opinion on news about Marcus Schrenker, the "advisor" and also read a wsj article about edward jones "advisors" who still go door to door. but i guess adding discourse at 3am is synonymous to adding it while intoxicated.

Good luck trading tomorrow (couple hours) everyone.

Thanks Bill, yes I find remarks confusing when the time frame is not included.For the record a few days ago(wed or thurs?) I commented that gold may be about to jump the creek(referring to the daily downtrend line from the July high) On friday I switched to warning about an hs top in gold that might break down.

"the 4hr chart has a potential hs top that may be holding back momentum till the 890 high gets passed. o.e. is always a concern when I see a pattern like this prior to."

fwiw my reasoning is on the chart attached,and that hs neckline in gold is at 840,if price gets repelled there I would be cautious that the po at 780ish would get visited on an options expiry week. The hui:gld ratio has been fairly strong for usd's rally from Dec 17th as Bill suggested. Just thinking out loud

good luck today,I'll be out.(wish I could watch todays action)

I've read some comments here about being stopped out, and/or queries as to hold or sell and wait for a better entry.

Purely from a TA standpoint, it is acting very well. The big decline in the stock finally stopped on December 18, which coincided with the highest volume it had ever traded up to that point. That's very bullish as it suggests that all those who wanted out did so (capitulation), and someone was there to absorb the supply.

The action starting on December 29 was even more bullish as volume expanded in a big way, even exceeding the huge volume the week of Dec. 15, as the stock moved higher.

After such a big move off the bottom, it's only reasonable to expect that there would be a pullback as short term traders book profits, and that's where we're at now. Volume has declined during the pullback, which is also constructive.

There's a gap from January 2 right at $39. That may be an area where the stock comes back to retest, as it coincides with the enormous volume day of Jan. 5 where someone took a significant position.

Depending on one's entry point, I'd have a stop loss set (either actual or mental) at around $38.35, staying away from the round numbers of $39 or $38.50.

Just one person's view.

Good Morning.

SU - Downgraded to Sector Perform @ RBC

New Coverage:

AMZN - Buy @ Collins Stewart. Price Target = $65
INTC - Sell @ Auriga USA. Price Target = $10

Price Target Lowered:

LLTC - from $28 to $21 @ Global Crown Capital

TBT

After reading many comments and questions here...

I too, have been trading TBT & TLT (not in either now). I was badly bitten by 2X ETFs SKF & SRS mid-2009 and went from a 15% gain to a 12% loss in less than a week, so am v. careful with any Xs now.

Have been doing well with the all-Treasuries mutual WHOSX (40% of my net worth) since mid October and also LQD (w/ close stops).

I'm not usually a short time trader, but long term investor for 40+ years. I've made more trades in the past 12 months than ever before — this is a whole new economic picture, but many pros are still working from their college textbooks and traditional theories.

Globalization, the internet and light-speed have irreversibly altered everything we ever "knew" (or thought we did). As Mark Twain said, "It ain'twhat you don't know that gets you — it's what you KNOW that just ain't true."

A suggestion: Instead of trying to anticipate what will happen to Treasuries, corporate, junk bonds, just watch and wait. LQD has given me a 15% gain and WHOSX is currently up over 13% (has been double that) and rising a bit again lately. When/if the 10yr rate crosses the 3% mark I may sell the mutual fund. In the mean time it's paying me 4% at my cost basis.

Since I am skeptical the Fed will be able to inflate their way out of this mess, if the deflation scene plays out I'll hold the Ts mutual and double up on the LQD.

I find simply doing nothing to be the most difficult "decision" of all.

Just one guy's opinion, but it's been working for me.

(Because of bonds I finished 2008 at minus .003% overall.)

CCJ - Downgraded to Sector Perform @ CIBC

GOOG - Price Target Lowered from $525 to $475 @ Stifel Nicolaus

INTC - Caris & Co. resumes coverage with a Below Average. Price Target = $11.50

I liked the joke, it's good to hear from you too Grym. There's a major equities sale going on this morning, doesn't look good right now.

Thanks, Bill and CP