Cara's Commentary & Community Chat, Tues., Mar. 10, 2009

"By the end of the day, I’ll be back home, sitting oceanfront in Bahamas with a G&T in hand, asking myself what life’s come to. :-)"

Sounds like a hopeless situation Bill...

Do you like flossing with barbed wire also? Every day interesting...look at FAS 10 day chart...looks like a bottoming pattern.

Just continuing your comments regarding US contraction in global security affairs, permitting expansion by others.

I'm no expert Grym but but if we were to take international relations as a chart, like a stock, then we would find precedent in the notion of a global concert of power in the 19th Century. We should not take as gospel the military state of affairs as it stands in our time. That it may or may not continue does not, in my mind, change the potentiality of the US's economic and political power in the near to medium future.

US withdrawal from active military and security interventions may aid global stability and permit a more balanced state of affairs. This might induce greater co-operative efforts on behalf of former US client states - e.g., A China/Japan/Korea trilateral pact. Certainly, the example of a US spy ship being harassed by Chinese vessels is indicative of foreign attempts to impose greater national sovereignty against US dominance. Similarly, Afghanistan, Iraq and Iran will not prosper through military solutions.

This does not equate with reduced innovation coming from the military's requirement to address future needs. Indeed, the F-22 raptor stands as testament to the United States having long ago commercialised its post-Vietnam technology to client states - it has subsequently developed superior technology to maintain its lead (And nobody, as far as I know, are making advanced aircraft like that).

As George Friedman pointed out, the economy will be built on robotic technology this century, thanks to a shrinking population. That technology is presently being funded, tested and deployed care of the US taxpayer in the Iraq theater today. I have a couple of Irobot Roomba's and I suspect its Irobot's funding from the military that has kept it afloat until now.

Kaimu would be proud. The US Congress doing good deeds to advance the global economy.

This sort of US Socialist nanny-state political economy is Noam Chomsky's line of expertise. You'll find plenty of articles to read on his website:

http://www.chomsky.info/articles.htm

>Do you like flossing with barbed wire also?

Sorry if I'm brimming with boyish enthusiasm. I actually enjoy this game.

"the economy will be built on robotic technology this century, thanks to a shrinking population"

The population is shrinking? When did that start happening?

Well, I am in agreement that there will be inevitably a "marriage" of robotics and humanity at some point - in fact that is already occurring in many ways - artificial joints and implants that are better than the original, for example. But quelling the propensity to procreate. That's a big if.

Maggots (or the flies they turn into) don't stop breeding, even when they have consumed the entire dead dog.

Ah yes, investments for the kids......

when we (the Boomers) start kicking the bucket it will be the greatest drop in population in this country ever, just as it was the pig in the snake going up.

There's got to be a longterm investment idea contained in this....mortuaries?
Headstones? Crematoriums? Decorative Urns? Short life insurance?

Good morning.

NUE - Upgraded to Buy @ UBS

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Downgrades:

DIS - To Sell @ Pali Research. Price Target = $12.50
DNA - To Neutral @ Robert W. Baird. Price Target Lowered from $100 to $95
SLB - To Sector Perform @ RBC
WMT - To Hold @ Citigroup. Price Target Lowered from $53 to $48

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XOM - Price Target Lowered from $90 to $85 @ Argus. Buy Rating

>"Pandit: Citi Operating at Profit Through February- AP

Citigroup CEO Vikram Pandit says the embattled bank has been operating at a profit through the first two months of the year. In the letter sent Monday, Pandit said Citi had an operating profit of $8.3 billion before taxes and special items through February. Pandit said the first-quarter performance so far has been the bank's best since the last time it recorded net income for a full quarter -- that was in the July-September period in 2007."

Oh I'll bank that for a dollar before it crashes again...

Were they shorting the markets? Or long in gold? I believed for a long time that HB&B used the free public money to speculate on markets. It realized that a year ago when the easy money from Feds coincided with an huge spike in commodities.

Then, the sudden crush of commodities left major HB&Bs insolvent, henge TARP in September 2008. I wish someone had evidence to collaborate that.

Well Ben is on TV asking for the authority to take over the banks....

This is one of those Dirty Harry moments.....go ahead, reach for it.....
Ya think this is confidence inspiring?

Feels like a trap this AM. I would welcome a rally but prices are acting funny.

Warren Buffett does buy companies, but he also has large numbers of shares in McDonald's, Coke and others. He's made his opinion on taxes is quite clear — "I pay a far lower percentage in taxes than my secretary." He'd happily make it more fair.

I only watched a little of his interview, but his call for all patriot members of Congress to concentrate on fixing the economy rather than taking advantage of the situation to push pet projects is one of the simplest, wisest comments I've heard on CNBC — ever!

I also respect him for refusing to offer advice to President Obama on their entertainment show. He has always been a complete gentleman and... one of the few people to publicly admit it when he has screwed up.

I read his biography once again last year and, while I disagree with his politics, think he is intelligent and far more patient than I can ever hope to be.

He is a highly visible target for criticism, but I'll cut him a lot of slack on his recent "mistakes" — remember all the talk about him being over the hill for not investing in the tech boom?

I remember what TBT looked liked prior to it's breakout above 38-40. It had large volume over a few days in a tight range. I will nibble today on FAS

No, just that it looks like FAS is bottoming, or at least due for a bounce.

"4. Thanks to Bill and those here who engage in civilized and enlightened discussion w/out the acrimony so easy in a medium with high content and low context. Reminds me of a medical intern long ago who told me, "thanks for teaching me all I know...but I wish you could teach me all you know." I'm trying to learn every day."

When you cease to strive to understand, then you will know without understanding.

SLW - Upgraded to Sector Perform @ CIBC

Mark to Market will not be suspended. SEC and Heli Ben say no.

What should be reported is that Goldmad and Morhan make 40% of their revenue through CDS and they have a very powerful lobbying presence on K street.

Banks will get their bounce today and hopefully tomorrow.... We need more fluff to reload!

i think the financial world has made a false prophet of Mr. Buffett.

countless books and praise were written about his as Berkshire shares rose through the late 90's and the early part of this decade.

people quoted him how many times about derivatives being weapons of financial mass destruction despite his continual involvement and losses in these and other SIV's. his most recent pronouncements to buy in late 2008 were wrong, along w/ others, but his new pronouncements that we are going to hell in a hand basket a few months later smacks of indignation. what happened to the disciplined value investor who buys when there is blood in the streets?

how could a few months make him go from American patriot buyer of stocks to doomsday man?

i think the media focuses too much on what he has to say, ignores the suspect aspects of his fund's performance and his paradoxical involvement in derivatives (and his roundabout way of not fully counting current losses. Buffett has become at least for the mass-media a product unto himself, and people who turned to his style of investing and Berkshire shares the past few years are now in trouble. i guess he will just come out with another book titled "how to survive in tough times, the Buffett way" or something.

selling books seems to be the only profitable part of his current business.

it reminds me not to make prophets of these people, that they make mistakes like everyone else, and they lie/bulls*$t like everyone else. the more you pick apart his statements and so-called apologies the more i see an overly-publicized and politicized figure, increasingly detached from the value-investment philosophy originally espouses.

i think more books will eventually be written about the fall of the oracle as losses mount.

If you want to see what is under the hood of the news, have a look at denninger's site today. Interesting info nonetheless.

Good luck trading today! Set your stops and make some coin on this turn. We all could use a shot of positive sediment, even if it is for a day or two hopefully three...

I also follow NYAD, and according to that we are rallying since 2/23/09 (I lost some money on that "rally").
The delta on SPX EMA50 is useful and shows no panic yet.
BTW, I subscribe to sentiment investor and the free tool is as good as the hundreds of paid tools. Just one of the pieces. However, I have to say that prior a serious reversal, the free indicator was pegged at the top. Now we have no extreme bearishness yet as the sell off is slow and orderly.

Now, after saying that I agree there should be a bounce up short term.

FAS is for trading. But I would keep a little on the shelf. You never know.

For penetrating and deeply knowledgeable commentary on our failing economy, take a look at the work of Karl Denninger at http://market-ticker.org/. I'm sure Bill would give this guy a strong endorsement is he knows of him. Check him out.

-MK

2nd
i think short are like weather forecasters use real data and they’re right much more often than economists

still, I'm inclined to recall that Buffett's personal fortune stood at what...?

60,000,000,000 in 2008?

He'll have to work on that if he wants to outpace inflation next year ;)

Don't have the patience to trade crude? All the ups and downs of crude in 5 days with FAZ.

gold at $902, USD taking a bit of a beating too.

i find no real rationale to support that the recent move in gold in the same direction of the dollar was anything but a temporary abberation.

the miners have corrected back to levels similar w/ the USD, gold still has a ways to go. who knows if it goes there.

many people were expecting weakness in the POG to the $890 area, i say the quicker we get there the better we can gauge if the next step is back up or down. these moves are happening so fast its tough to gauge whats going on.

again, i cant see a scenario where gold will rise strong along side a rising equity market, today being a great case in point, USD down, market up, gold/miners down. but 1 day a trend does not make. i think some seedlings are here.

I'll love the smell of denial in the morning.

I cant make whats going on anymore. tough trading environment for sure

From Up and Down Wall St Daily:
http://tinyurl.com/dcm5bj

Thinking about adding to a long-term position in UXG, but is anyone else seeing a head & shoulders formation here?

I'm wondering, pondering.

If these hold up today on good volume, is this what Bill looks for? If they close toward their lows it must point to weakness. He mentioned wanting to see a "reversal" during the trading session.

A ? ..Does a reversal in the trading session speak better of a breakout than starting off to the races like today?

I hereby name this rally in the name of Kwai Chang Caine. Thank you oh honorable and wise one!

How about investing in bilingual businesses? How about developing communities based around foreign cultures and their needs (Islamic Banking?)

We may see (in our lifetimes) our population replaced not by robots but by immigrants. In fact, I believe that is already starting to happen.

Well maybe, maybe not Doc. A couple of things;

Firstly, on the daily chart draw a trendline from the March 08 peak ($1030 odd) and the July 08 peak ($988 odd).

You will notice that (obviously) we broke through that trendline recently, but of note is that tonights action has taken us right back onto that trendline, tested it and as of now has marginally moved away from it. If the price can continue to respect that trendline and move higher from here, I would consider it a bullish signal.

Secondly if you draw another trendline, this time from the lows of Nov 08 (not the ultimate low in Oct) and the higher low reached in Jan of this year you will also find that this line intersects almost perfectly with the lows of tonight AND the downtrend line mentioned above

Thirdly, attach the RSI (7) indicator to the chart and note the higher low of the RSI tonight compared to four days ago and the lower low in the price. Classic bullish divergence (if it holds!)

So while I agree the action of late has looked a little shaky, if we can hold above the $890 level, I think we can look forward to higher prices.

Maybe Bill was right when he wrote a little while ago that gold and the miners would lag the 'rally' by a couple of days. Hopefully thats the rally that seems to be kicking off tonight and the gold miners will shine by the end of the week.

All the best
Ad

CP

What is your rational for backing the truck to 100% on gold here?

Just curious.

Took my 2000 shares off at 3.28 reluctantly. Net even trade unfortunately. Hard to trust any rally these days. Holding TNA for possible carry through
Cash Sell 2,000 shares FAS at Market Day 03/10/09 Filled

03/10/09 09:55 Filled 2,000 at 3.282

nice analysis.

looking at the chart now you see the current price action is just against/below that trendline from the november lows.

macd is showing negative divergence on the recent lows vs. mid-jan lows
the only positive sign i see is a decline in volume as the price has fallen on the GLD chart.

again i think we are looking at the issue from 2 different angles.

we are seeing the broad market rally while gold and the dollar are falling.
we are seeing the miners fall hard on gold falling after moving up some while the broad market fell.

there is nothing indicating that the gold stocks will rally alongside the market unless gold starts moving up as well. against a negative to neutral gold price, i see nothing that portends miners following the market. how and where do you see such a scenario unfolding? right now the price action is telling us the opposite.

More proof that the credit crunch is a red herring and that consumers are not coming back regardless...

Want a stunning figure? Half of Americans now say they are only one month or less away from not being able to meet their financial obligations if they were to lose their job — just two paychecks or less. And of these, more than half — 28 percent of all Americans — say they could not survive financially for more than two weeks without their current job.

This disturbing data comes courtesy of the 2009 MetLife Study of the American Dream, released Monday, which looks at how the financial crisis has affected the American Dream and consumer perceptions. It’s all the more disturbing considering that unemployment in the U.S. has already surged to 8.1 percent, with 651,000 jobs lost last month alone.

For the first time since MetLife fielded the annual study, there is evidence that consumers are no longer interested in keeping up with the proverbial Jones’. Nearly half (47 percent) of consumers say they already have all the possessions they need, up from 34 percent in November 2006 — and a full three-quarters (74 percent) no longer agree that the pressure to buy more and better material possessions is greater than ever.

“Sweeping changes in the economy have led to a reevaluation of priorities for most Americans and a fundamental shift away from materialism,” said Hirschhorn.

http://tinyurl.com/d254py

allen -

Perth Mint account for U.S. clients is held by JPMorganChase and the Perth does not sweep this account. So until you purchase gold/silver, your cash is in the mouth of a pig. Once Perth gold/silver is purchased, however, it is ultra safe with Aussie military base nearby.

I would not go with BV as it is a brokerage based in the UK and UK is in bad shape as are the Swiss. BV also doesn't provide inspection/serial numbers. No go for me.

Cheers.

Bill's comments from WIR Feb 22, 2009:

"Once the US dollar begins to weaken, interest rates rise, and commodities lift, the stage will be set for an impressive advance. Blood is running in the streets, investors are unbelievably pessimistic, and buying opportunities have been emerging."

He also wrote in that same WIR:

"Keep a close eye on them [miners] after the broad market puts in a bottom. They will probably lag by a day or two, as traders rotate out of miners and into higher beta names. However, once gold and silver stocks catch a bid, clearing defined resistance areas, the upside move could be quite dramatic."

of course i noted Bill's comments,
im just giving my own opinion from where i stand.

my curiosity is how the miners would act with a more neutral gold price.
its falling aggresivley so one could expect the miners to fall.

but the broad market is making a rally, the first of a few small ones,
i see nothing in the price action of miners to suggest they will suddenly turn corner on market power. if gold continues to drift down in a less volatile way, i find no reason for the miners to rally. they arent right now and the USD is even softer.

so lets watch and find out. my feeling is you will miss the bus hanging on to them while everything else makes a move up, and once again gold miners will defy logic as tehy have done to me and many others before. remember all the people clamouring that the miners would be the only stocks spared in the oct/november crash? wrong. we enjoyed a great counter trend the past few months but as noted many times before, this was muted on a relative basis with the miners very far off their highs back when gold was at these levels last year. why would they turn tail now and rally?

ill buy a bit more if and when we move lower. gold is giving us the clear signal that on a market advance, gold is being dropped on psuedo-bullish sentiment. gold did the opposite the past while when the market tanked. its a clear relationship.

of course gold should be going up, all this money printing and claims by russia and china of buying gold, mine supply down, tonnage of the gld ETF. all these things we are told should be bullish of gold but have no basis in fact or proof of a rising price. just blind speculation.

2 weeks after russia annoucned adding to its gold reserves in what many considered a bullish development, look where we are. why does anyone think central bank "statements" about what they are doing w/ their gold actually reflects reality or the POG. if they are "buying" gold it just means someone is selling. why is this bullish?

@ 1.33 took almost an full hour to fill.
I'm not the only one selling this bank rally!

Who conveniently leaked the C memo? Pandit?

sorry fransix but this doesnt prove anything.

if this were the case why werent gold sales at their peak when gold moved below $700?

the idea of trading gold based on central bank selling is a myth imho. the spanish central bank sells 100 tons of gold to the german central bank. who cares.

russian central bank announces aquiring gold reserves, prices rally a few days before collapsing. i dont think this caused it, but it shows us there is no definable relation. remember all the hype last year about the IMF ready to dump gold on the market.... same hogwash. gold moves when it moves. CB's shifting gold from safe to safe makes great headlines but proves little unless fraud of lease's are exposed and the quantity of gold held comes under serious quesiton. until then i think its just a way to manipulate the market.

tango6,

"I think robotics is a bigger agent of change than immigration.

My take is that a body of millions of people is ungovernable. People are happier in a tribal situation. Smaller communities, self sustaining (or nearly so) in energy, food, water and waste recycling is the way to go - think globally but act locally, rather than the other way round."

---------
I agree governing a large group of people well is very difficult, but...

In some ways it has become easier to govern a larger population the way the governors like to govern — pitting the sub categories (tribes) against each other— racial, economic (blue collar/white collar), etc.

One voice in a meeting of 12 commissioners has more clout than 12 thousand in a city or 12 million in a nation.

While people are thinking locally, Congress is planning massive changes for the collective mass.

The biggest reason immigration has been out doing robotics — it is more profitable for those who employ them than buying equipment. Look at people picking fruit. The cotton gin may have done away with the "need" of slaves, but over two hundred years later we essentially have slave labor picking lettuce. I don't believe for a minute we could not develop a machine to pick almost anything.

I'm pretty sure we could build roads impervious to winter's pothole digging weather or machines to fix them. But it is cheaper to hire people to fill them.

Hint: By adding a shot of Elmer's Glue to a concrete patch I was doing annually, I have not had to do it again since 1986. My wife's cousin (a genuine rocket scientist) told me about it.

What I would not be surprised would happen is if it falls through the hs top but only tests the 1980 high at 875 then reverses(fooling the most)

"Uptick Rule on Shorting Stocks Will Be Restored in About a Month: Rep. Barney Frank (story developing)"

thats the headline on cnbc website.

Leave it up to a peter puffer to decide the rules of the market.

It's something to believe in, right? I had the tin foil hat on today!

ALOHA!!

It is unbelievable to me that such nonsense is allowed to exist in financial reporting within the US borders! Perhaps this passes the stink test in Zimbabwe or Russia but here!!!

Now why would any legitimate financial reporting network allow an internal "employee memo" to substitute for a Q1 financial report?

Here is the crux ... from the Yahoo Finance news release. PANDIT: "Citi's projected earnings before taxes and one-time charges would be about $8.3 billion for the full quarter.

The one-time items include credit losses, write-downs and additions to loan-loss reserves. Pandit did not disclose the size of those items." (more)

Does anyone with a first graders understanding of economics see a problem here?

PROJECTED is a key word, but "before taxes and one-time charges" is an even bigger red flag!

Then the reporter goes on to say that Pandit did not want to disclose the size of "credit losses, write-downs, and additions to loan-loss reserves" ...

HA!! Hummmm???

That is like saying "I made $8.3bil this quarter if I don't count my losses!" HA!!

I often hear people say, "I had a great year ... I made $150,000!" My next question is always ... "Gross or net?" There is a vast difference!

Where is the SEC? That news release should NOT be allowed to see the light of day!

Then I have to say BUFFET certainly has no "agendas" with Wells Fargo!!! Hummmm??? The largest shareholder saying that Well Fargo is going to do great! This from the guy who started unwinding derivatives positions at General Re years ago, saying the losses and the huge complications associated with such unwinding were staggering, in which he coined derivatives as "Weapons Of Mass Destruction"! So in one side of Buffets mouth, on the same day, he comments that the US economy has fallen off a cliff and then in the same breath he extorts Wells will go great! Hummmmm??? His credibility just sinks lower and lower the more geriatric he becomes. Will his financial prognostication comments eventually be dismissed as "senility"? I don't know? At some point though we all have to step back from the "control panel"!

vanillabean

Glad you saw my update yesterday and did not enter FAZ.

I think it continues to run, however...

I am holding bac, rf and fas until I see a sharp move UP in SKF, then I might sell half.

If it we're so close/accurate then it would be easy to dismiss.

Sure enough, you did have the caveat emptor/tin hat warning, so you're covered there!

ALOHA !!

I always have to question the integrity of a bank or a speculator for that matter, who decides to pre-announce a major sell of an asset! If you want a lower price when you sell then that is a great strategy, but if you want to cap prices then it makes sense! Then there is that operative word "MAY"!!! Hummmmm??? MAY is non-committal in my opinion! The IMF used to put out releases like that all the time only to find out later that they did not have the gold to sell! HA!!!

Would Buffet pre-announce he was selling all his Wells Fargo shares? He certainly does not mind pre-announcing he is buying them, especially since he is a major shareholder prior to the announcement! Then we read about his WFC purchase of 1,000 shares! HA!!!

These central banks are laughable at best! Unreal ... the games! For such a small market gold and silver has some of the biggest manipulators in the World all over it. I wonder why? Why are these guys, the central banks, the JP MORGANS, the GOLDMANS, so concerned about the POG rising? Hummmmm???

ELIMINATE THE US FED!!!

A fellow who had lived a despicable life (bond rating agent?) was sent to hell after death. Upon arrival, Lucifer showed him a couple of doors, from which he could choose his fate.

He asked whether he could check them out. Lucifer said, "sure." Behind the first were searing flames and screaming voices. Behind the second, a giant pool of horse manure and the patrons waist deep drinking coffee.

The bond rating specialist said, "I'll take my coffee, thanks."

After about ten minutes, Lucifer returned. "COFFEE BREAK IS OVER. BACK ON YOUR HEADS."

The market is enjoying the coffee today.

How long is this coffee break?

Hehe it depends on if you're a trader or an investor. Me, I'm an investor. Sigh.

ALOHA !!

Yes and is it roasted whole-bean 100% Kona Coffee or Folgers instant?

davefairtex,

Perhaps not what, but who.

This guy should be prosecuted for his dealings with his Fanny May buddy (campaign contributions) and the way he let them be paid (as a percentage of loans issued).

I don't care what or who on his own time, but his hypocrisy before the cameras is sickening.

What is gut feeling here
We will be up 500 point today?
Kaimu
Who cares if they leak or are lying/manipulating?
Just bring this baby up to 10000

vinod, thousands will be sucked into buying into this "rally". They will care eventually. Very sad if you think about it.

I only use straddles, either way is fine as long as it moves :-)

Grym - "This guy should be prosecuted for his dealings with his Fanny May buddy (campaign contributions) and the way he let them be paid (as a percentage of loans issued)"

Yeah I agree, Barney Frank is lame. Perhaps criminally so. I am not a supporter. I don't think he should be let anywhere near the industry.

But bigwad seems to think its the fact that Barney Frank is gay that makes him, uh, unqualified to regulate the industry. I took exception to that part of it. He'd be incapable of regulating the industry even if he were straight.

Sorry to ruin the party for those playing the long side -- it looks like my entry into FAS has turned the market south... :) or :(

ALOHA !!

vinod ... Yep, obviously nobody cares what it takes for the market to rally, but it would be nice to see a half way legitimate rally based on real fundamentals and actual accounting that isn't fraudulent!

GAAP has turned into "Generally Accepted ASSinine Principles"!

Throw in Bernanke's "well timed" claim that the recession is over and VOILE!

Imagine if FDR actually knew ahead of time that Pearl Harbor was going to be bombed? People will buy into anything so long as it fits their planned agendas! PLANNED CHAOS anyone?

This will last just as long as it takes for HB&B to sell their longs and re-enter on the short side... which will coincide with their "everything's rosy... we're rallyin' forever" calls.

At some point in time, I've got to grow a pair and trade the obvious moves! I sat in cash at 14k, knowing full well it was going to tank, rather than going short. I sat in cash at 9k after the initial crash rally, knowing full well it was going to tank, rather than going short. I sat in cash yet again after the indices hit the bottom of their trend lines, knowing full well mama gov wouldn't let the financials and the market overall just crumble any further without a fight, instead of going long on FAS at 2.45.

I keep asking myself what's making me miss the OBVIOUS trades, and I keep coming back to the same answer: fear of the market due to a stifling lack of transparency and obvious manipulation.

Hopefully it'll rally hard over the next few days, the M2M rumor will be priced in, the indices will be at or near the top of their trend lines, the USD will be drubbed a bit and the dollar shorts ready to cover, and I can actually pull the trigger on the next obvious move.

After seeing FAS go down the same moment I opened my large position in it, I was pretty nervous. So now, when I saw FAS return back to the $3.62 level at which I opened my position, I just sold 2/5 of it at $3.62, leaving only 3000 shares, to which I will be able to add on weakness. If I had kept all 5000 shares, I would not have enough guts to add to them on weakness and instead would have been tempted to "wait out" any declines. This is not the right strategy -- any long position should be small enough so that it could be further increased on weakness.

>"President Barack Obama said Tuesday that American children should go to school longer — either later in the day or into the summer — if they're going to have any chance competing for jobs and paychecks against foreign kids. "We can no longer afford an academic calendar designed when America was a nation of farmers who needed their children at home plowing the land at the end of each day," Obama said."

Well, you learn something new every day, don't ya.

setting up a new piece of legislation for this year or next....

Is the market strong today?
Any signs of weakness across equities, besides Gold?

chickened out or smart......too easy to lose money in this volatile ocean

hopefully, we won't see C come out with their version of, "just kidding"

That was a trick on my part -- make a "sacrifice" with a part of my position so as to clear the way for the rest of my position to rise. Works like magic. Every time. :)

I still kept 3000 shares, so now I am enjoying the ride with a peace of mind. :)

Joe,

nothing wrong with not loosing money. Try and learn to trade the long and short side with paper trades. Use the /rsi tools available and Bill's good companies....make it less an emotional thing....keep score, take notes about yourself and the market.....my 2-bits, you didn't ask, but.....

I was actually remarking on the creation of a school schedule based around agricultural communities. Thinking about it you realise how cemented some institutions and practices have become. Some reflections on improving them are welcome, even if such a proposal is not as cut and dried as he makes it sound.

night all.

dberry said: "nothing wrong with not loosing money. Try and learn to trade the long and short side with paper trades... .....my 2-bits, you didn't ask, but...."

Hey, I appreciate the 2 bits.

I've done the paper & real trading plenty. My problem is getting over the fear/emotion involved in knowing full well the market is manipulated from the inside out & the top down.

Without real transparency, I have to wonder why even bother.

Re. "options for 2X and 3X being for suckers"

Yes Shiva, options of FAS, SDS, et al, are horrible. You are much better of with the underlying. Did a study on this back a while ago: http://shockedinvestor.blogspot.com/2009/01/perfor...

Do not buy options on those things (well, or the underlying anyway unless you like playing at the casino :-))

dberry, if a stock is at 30, a straddle would be call-put at strikes of 30 for both, a strangle would be 25-35 and so on.

David,

I think trading with a peace of mind makes for a better trader...

Partly about understanding your personal appetite for risk and how it affects your decisions....

Ahhh grasshopper,, wax on, wax off......

The sell stop limit orders I placed last night on SLW were triggered today at $6.00, and I sold about 1/2 of all my SLW at that price. Just now I sold the rest of my SLW at $5.90. Why? Well, gold broke below $900 after a temporary bounce to $940, which shows a lack of strength (at least for now) to make another assault on the $1000 level. Also, $USD has just done a major moonshot, rising from 88 to 89 in 3 hrs. So the case for a $USD weakness on the back of a major equity rally is not there yet. Once I see $USD drop below 86 AND gold/silver move higher over the same time frame, I'll assume that $USD is on the way down AND gold/silver have regained their usual negative correlation to it. Until that happens, I'd rather stay on the sidelines and observe. Or better yet, move my cash to equities, which I think will rally for some time now. It is hard to believe that today is another one of those one-day spikes in the middle of a long market decline. Today's spike is just too powerful. I think it will suck more people in, and a whole avalanche of panic buying might develop.

"Thinking about it you realise how cemented some institutions and practices have become."

Obama should re-think the lobby institution while he's at it.

VB,
That's me the one in the middle! Trying to figure if I should duck and cover!

when was the last time C traded a billion shares?

If Citi made some change this quarter.

If another big bank makes some change, or sorely beats estimates.

If a few numbers come out looking better than expected.

This could be a doosey of a rally.

If not, then I guess it will fizzle and retest lows....

Darn ifs.....

2-Mar-09 1.50 1.60 1.15 1.20 1,077,996,200 1.20
27-Feb-09 1.56 1.93 1.40 1.50 1,868,209,400 1.50

I find those volumes incredible, since according to Google Finance there are only 5.48 Billion shares outstanding.

C traded 1.86B shares on 2/27 according to Yahoo

"Agree with kaimu on this one. We are rallying because of a "leaked" internal email, where was obviously known that it would be "leaked". I'd like to know what C was buying yesterday..."

How ironic it is that the market rallies in relation to a leaked C memo on the SAME DAY Bernanke asserts the need to better regulate financial markets. The dog & pony show is mind numbing!

Then again, this "rally" was coming soon, regardless.

Now, I wonder what he has to say after today. One scenario is that the 650 support happened at 666, but I'm note sure as it did not feel like panic and reversal.

Alternatively, another wave of dramatic selling starts tomorrow or anytime soon (after 3/12 ?).

Nevertheless, I feel that the 600 or below will happen. That will be the event when 401k owners will trow in as it did not happen yet. That would be a start for a meaningful rally (that I will only play in strong markets (china, miners, energy, etc).

LOL, I traded on sentiment system that I thought was bullet proof since late 2007. Both long and short. At the end I wish stayed all in cash (or played only on the short side). However, back then I thought staing in cash was a losing option as I feared inflation. Trading becomes only obvious in retrospect or for observers.

just last week on the sell off

Last night, in John Mauldin's latest "Outside the Box" special, I read the following:

"On February 13, David Rosenberg, Bank of America's North American Economist, recently reduced his 2009 and 2010 S&P 500 operating EPS forecast to $46 (from $56) and $55.50 (from $63), respectively. Mr. Rosenberg is now forecasting an S&P 500 low of 666 based on a 12x multiple of forward (i.e. 2010) earnings."

That was written on February 13, 3 weeks before S&P500 hit 666 and bounced up! Is David Rosenberg in "THE PACT" with you know whom? :) I am just kidding, but his forecast is amazing!

Jack Black said: "Trading becomes only obvious in retrospect or for observers."

Jack, I don't think that's the case. Sometimes trading IS obvious. Bill's call of "Trade of a lifetime" back when gold was being hammered and AEM was down to 20 is/was a perfect example.

For me, the rub is simple: everytime you consider a trade, you have to "consider" what you "think" about what rabbit HB&B, Gov, and (to a lesser extent) media might try to pull out'a its hat. Unlevel playing field at best.

I am curous:

I noticed in the commodities area that Platinum did not participate in today's rally.

CU was strong; my FCX did well.

Any theories...thanks in advance, it has been a long day.

Kaimu, do you have a link? I'd like to read that over on the GATA site (couldn't find it).

Also, interesting that C "reports" was all over the airwaves, but "Too big to fail? 5 biggest banks are 'dead men walking'" not so much:

http://news.yahoo.com/s/mcclatchy/20090309/pl_mccl...

wow...that's pretty remarkable if it only is a short term bottom. we were pointing out on friday how funny/freaky it was that 666 seemed to be the (at least) short term low.

TN,

did you learn anything about the lack of action on platinum?

Sorry, that would be no.

Platinum - Isn't it likely automaker issues are the bottleneck? This should come to resolution with upcoming automaker proposal negotiations in DC? The push of course is for electric automobiles... but at least 5 years out due to battery issues. Windmill alternators like copper, the required transmission lines are still using copper as well?

Incidentally, $USD is weakening right now, which eases my concerns about the sustainability of the current rally. Looks like it made a "double top" between Thursday and Monday, and then a "head and shoulders" pattern on Monday-Tuesday, and so it might be on its way down.

EDC, could you expalin your reasoning as to why
gold has much farther to drop.

"As it should have happened, I got shaken out of my FAZ at THE TOP of its spike, and then got shaken out of my FAS, which I bought as a replacement, at THE BOTTOM. Well, seeing the markets surge today, I decided to get back into FAS and bought 5000 shares at $3.62. I think this is not the end of the party -- rather, it is just the beginning..."

David- Let's take a look at this situation.

(a) You got shaken out of FAZ at the top. But you kept 20% of it, right? You had too large a position (which you were aware of), and had the presence of mind to cut it down by 80%. So, lesson(s) learned, and paid for.

(b) You got shaken out of a lateral move into FAS yesterday. You bought at 2.41, placed a stop at 2.50, which got triggered. No worries there. You did the right thing by placing a stop.

(c) You woke up late today, but that's your usual modus operandi, which has worked/works to your benefit 50% of the time, and to your detriment 50% of the time. Can't fault yourself for sticking to it. So you buy in at 3.62, which is not a bad price when you consider that 90+% of traders in FAS probably have a higher basis.

(d) I see you later sold off 40% of your position due to second-guessing yourself. But (as you point out) that probably just takes you to a position size which now works for you.

So I see a series of trades that went as well as could be expected. It's a series of trades that almost all traders have experienced (more than once), and let's face it- there are some paths on the road to success (be it academics, work, or even love) that take you down before they take you up. Enjoy the FAS trade!

Thank you for the kind words, 2nd_ave. I don't know what I did to deserve such a confidence that you have in me surviving this market.

As for FAZ/FAS, I am just amazed that I held out for so long, and then, at THE TOP of FAZ, I finally ran out of my buying power and decided to close my short. Maybe it is the market Gods that are trying to teach me the same lesson over and over again: NEVER be so greedy as to open positions that can potentially cause troubles for me. That is, I should always keep positions sizes small enough to be able to treat trading as a game rather than a fight for survival. My first year of investing went horrible precisely because my position size was too large. My second year was awesome because I kept position size small. My third year (which finished a couple of months ago) went horrible because I was stubborn to buy on margin in October (which is another instance of taking positions that are large enough to cause trouble). Maybe this year I'll learn my lesson and it will be awesome, just like year 2? :)

Craig

"There's got to be a longterm investment idea contained in this....mortuaries?
Headstones? Crematoriums? Decorative Urns? Short life insurance?"

STON pays dividend now @21% yield per Yahoo; Avg. volume (3 mo) @ 54K

STONEMOR PARTNERS LP engages in the ownership and operation of cemetery and funeral home businesses in the United States. It offers cemetery products and services consisting of interment rights, such as burial lots, lawn crypts, mausoleum crypts...

(No position but have bought and sold it for a managed income oriented account in the past) Not a recommendation. DOYDD.

"I'm pretty sure we could build roads impervious to winter's pothole digging weather or machines to fix them. But it is cheaper to hire people to fill them."

Just to provide a little perspective, March and April are the pothole patching months in Chicago. Weather flucuations with some warm days and some sub freezing days wreck havoc on the infrastructure already weakened by a winter of corrosive salt. Expanding and contracting, cracking and opening.

City crews repair 3,000 potholes a day, seven days a week. That's not a typo. By the end of April, hopefully they've filled them all.

"Hint: By adding a shot of Elmer's Glue to a concrete patch I was doing annually, I have not had to do it again since 1986. My wife's cousin (a genuine rocket scientist) told me about it."

Thanks for the tip. May come in handy around a driveway. With all due respect though, I assume your patchwork is not exposed to the traffic volume of a Lake Shore Drive or similar city road.

Mark, Good one, LOL!

Actually haven't followed up on it, but I believe I saw a reference sometime in the last year related to STON where the concern of increased cremations in lieu of formal burials, more selections of cheaper caskets, arrangements, etc. and other less costly alternatives would have an impact on revenue. Economic impact strikes everywhere!

Just thinking, but wonder if the "Paupers' Field" of our big cities are reflecting an increase in numbers?

Perhaps we all need to own a little farmland for that final resting place. ;)

http://www.cspan.org/Watch/watch.aspx?MediaId=HP-R...

Omg, I need a potent head-pain killer after this one. Did I hear someone cite this as a stimulus for today's rally? Somehow I doubt it. If I hear "macro-prudential approach" one more time I think I'll be truly sick. Anyway, hacking one's way between the lines, one can't help but think that M2M's days are numbered [edited later: check that; M2M will be modified from its present form]... i.e. "adverse pro-cyclical effects need to be mitigated" ... ugh.

If you prefer to read, rather than listen to it, here is the text:

http://www.federalreserve.gov/newsevents/speech/be...

For example, on M2M (I think) he said:

It seems obvious that regulatory and supervisory policies should not themselves put unjustified pressure on financial institutions or inappropriately inhibit lending during economic downturns. However, there is some evidence that capital standards, accounting rules, and other regulations have made the financial sector excessively procyclical--that is, they lead financial institutions to ease credit in booms and tighten credit in downturns more than is justified by changes in the creditworthiness of borrowers, thereby intensifying cyclical changes.

Good Luck!

Thanks vinod!...That was even better than the green on my screen today.

"economics is not like music and math, it's not valuable for its own sake; it's only useful in how it helps people...".

The ease with which he responds to these pressures - pressures that we can't possibly imagine - makes me question seriously all the extreme-sounding information about the evils of Fiat currencies, Central Banks, Cartels, Rothschild conspiracies, Gold-manipulation theories, that I have listened to over recent years. There's a distinct possibility that Central Bankers, TODAY, are just like all other well-intentioned public servants: trying their best, in difficult circumstances, to perform a positive function for society.

I'll just duck out of the way now, as the rotten tomatos are flung my way. :P

FranSix -

Love Wired but article puts all the blame on the quants' formula to quantify risk using the derivatives spread instead of real world risk data. More likely that the investment team at Goldman or AIG drummed up a scam called CDSs and CDOs and THEN hired a quant to make a relatively simple equation to 'quantify' the deception. This article suggests the equation came before the scam. I don't buy that for one second.

Cheers.

Dr., 2nd- Talked to X+3B tonight. I'm not sure if this helps answer your specific question DR., but it applies to FAZ. He said if the uptick rule is reinstated, it cuts the ultra-shorts at the knees. Basically they won't be able to produce the leverage they need.
2nd- I'm working on my trades for tomorrow, but X+3B is ADDING to BAC. M2M is the prescriptive course for the banks you talked about for alcoholics. BTW, I used to be a Paramedic, and what you said is true...The question is how did you know that?

Loannetter- Don't forget congress's mandate that Freddie/Fannie buy these loans.

Of course, shame on me.

Mackinaw,

I am with you there. Bring the tomatoes on.

Some of them are stupid (and gods know we can list quite a few). Some are greedy (that's going to be a very long list). Some are arrogant selfish pricks (not likely to be a short one either). Some are lucky to possess all of those qualities. So what else is new, what profession or social layer doesn't have enough of those. But I don't believe for a second they are sitting around the table thinking how to harm the society and plotting the ways to make things worse. Yes, a lot of things they do bring harm - but why explain by conspiracy what can be explained by stupidity?

I thought the following may be of interest to the community. I took Korvus's data that was recently posted (#15954) on the performance of the RSI Screen tool and tried to emulate what a series of trades would like. Attached is an .xls workbook.

Buy and Sell:

Initial Equity $50,000, trades limited to 20% of residual equity after accounting for 100% coverage of short positions.

Randomly picked a starting point that included all trades after June 2007.

41 trades in all, with only 8 long trades initiated. Approximately 19 months of trading, final equity of 115,980 for a annual return of approximately 70%.

Buy only:

Initial equity $50,000, trades limited to 20% of residual equity.

Used all of the Buy alerts that resulted in 41 trades (coincidence only). Approximately 6 years of trading, final equity of $135,402 for an annual return of 18%.

Caveats:

Minimal Risk Management in above analysis.

No accounting for "slippage & fees".

Entries and exits perfectly timed to "Alert" prices yet they would likely be unattainable in real life due to stops placed or next day transactions after signal given.

One has to be nimble as the "Days in the Zone" is usually short or the "Days from Alert to Close" is short.

Unsure of how many trades may have been triggered but are still languishing between alerts. If this was the case, then some capital would need to be allocated to these that would affect performance of the portfolio.

Hi David,

that email cut'n'paste was specifically for you. Take it any way you want.

For those who want to unwind from our nightmare for a moment, I thoroughly recommend Bill Moyers interview with John Lithgow. It's back by popular demand and I thoroughly enjoyed it a second time. He loves poetry and he recited quite a few in this interview. The guy has a masterly control of scansion.

http://www.pbs.org/moyers/journal/03062009/profile...

ALOHA !!

I see Asia is rallying based on a CitiBank office memo ... Maybe Buffet can send a memo to Wells Fargo tomorrow and AIG can start their own memo!

"Asian markets extend global rally on Citi news- AP"

Lets see the tobacco companies are relentlessly pounded with class action lawsuits when they tried to hide the "toxic" nature of their product(cigarettes). The oil companies are lavished with class action lawsuits when they spill toxic oil. Somehow financial companies are immune from "toxic" class action lawsuits! Not only are they immune but the US TAXPAYER hands them hundred of billions of BAILOUT money! So the next time we get another Exxon Valdez will the US TAXPAYERS throw hundreds of billions to Exxon? Heck, Tony Soprano deserves US TAXPAYER money to clean up his toxic waste dump in Jersey!! So the next Three Mile Island do the nuclear utilities get hundreds of billions for their toxic waste?

The TOXIC WASTE of US Banks has taken a much more devastating financial toll on America than the Exxon Valdez clean-up could ever hope for! At least the Exxon Valdez disaster can be explained by a drunk captain. What's Citibank's excuse? Not only that but the captain of the Exxon Valdez got no bonus or private jets or commode for his disaster!

So ... here we sit waiting for this fantastic highly profitable Q1 financial report from "C" that the World markets based their rally on. What happens if "C" reports absolutely dismal losses? I would say that was grounds for class action lawsuits against "C" and the various global stock exchanges and financial news networks who championed this fraudulent cause!

Maybe I am wrong and "C" will have an absolutely super Q1. But if I am right and it turns into yet more "business as usual" then I think I will just cash my portfolios in and go to Vegas where regs and "free markets" are 1000% more credible and are not changed on a dime every other year! A place where inflation is non-existent, since $1USD still buys 1 chip!

Think about it!

No matter what the markets do ... its still THE MONEY STUPID!

Mark-

The summer of my senior year in high school (1972), I decided to learn classical guitar. I looked up a name in the local paper, and my first lesson was interrupted twice by "cats" from the local music scene (in Ann Arbor) dropping in and lighting up. This guy both fronted and backed jazz bands in the SE Michigan area, and I kept up with him over the years before he finally left for Texas. Multi-substance abuser.

In the early eighties, I befriended an older classmate in graduate school (he was 40 at the time). Horn player (trumpet, flugelhorn, alto and tenor sax), who had, among other things, toured with Meatloaf in the seventies. Multi-substance abuser. Got his life together, got married/had kids, then promptly got into crack in the mid-eighties. I was a friend of his wife also, and we spent many nights looking for him (which is one reason I know Inkster and Detroit so well). They left for his wife's native country, which probably saved the family (4 kids).

Back on-topic: I think financials eventually recover, but playing the recovery conservatively with mutual funds (predominantly FIDSX in the retirement account). Also trading quite a bit with FAS, and may even keep a partial position for a multi-week/month holding period, just to see a 10-15 bagger if/when that happens.

Added to FAS @ 3.80

last time I checked, over half of his STAY MAD 20 portfolio was down > 60% since the beginning of 2008. Who wouldn't be mad?