Cara's Commentary & Community Chat, Tuesday, Jul. 28, 2009

http://stockcharts.com/h-sc/ui?s=QQQQ&p=30&yr=0&mn...

BB's indicating a decent move in the offing today. Which way is anyone's guess but I'm always happy to be contrary. (sooner or later we're all going to be contrary enough to get our stops ripped out from under us)

GL.

My working hypothesis is that it is. We seem to transition from deflation to inflation thanks to out friendly Fed. Yes, march 09 was a lower low in US equities, but US equities are not relevant from now on. March 09 was a higher low in Chinese equities, and resource equities. Marc Faber was talking about inflation play for a while now, and so far was correct. Now, he doesn't see the ultimate payback time until 5 years from now: http://marcfaberchannel.blogspot.com/

Carl Swenlin is bullish now after that busted H&S: http://www.decisionpoint.com/ChartSpotliteFiles/09...

Yes, we are overbought short term, but as we know things can stay overbought and get more overbought for a while like they did for the most part of 2003.

Any holes in this scenario?

Came across this video from another forum. Apparently, even kids should understand what money printing does. :)

http://www.youtube.com/watch?v=t_LWQQrpSc4

Talking about stops Les , more of mine taken out this morning, only have GSK and RDSB left.Am thinking about shorting one or two indices now for first time since this latest rally got going early July.

http://www.incrediblecharts.com/technical/point_fi...

Johnuk, a useful reminder on dealing with the traps placed before us.

"This is no blue sky rally. The bear market is taking a rain-check while equities undergo a period of hopeful exuberance. Unemployment is rising, however, and the economy contracting — albeit at a slower pace. Rallies are not always driven by improving fundamentals, but those that are not seldom last. Bear market rallies are mostly sparked by the contraction of short interest as an initial price surge forces shorts to cover. But unless joined by long-term investors, spurred by improving fundamentals, they soon run out of steam as the short interest dwindles."

My thesis is the same, but I'm not fueling the rally with outright shorts I might be forced to cover. Best to use ultras that are based on derivatives instead of short positions. Still holding my small ultra positions.

Best to be careful as Twiggs warns much the same as Bill:

"The current up-trend has shown more stamina and cannot be dismissed as a typical bear market rally. Some long-term investors have obviously drunk the Kool-Aid. But how long will this last?"

"This is not a typical recession. Our global monetary (and banking) system is broken and we will have to invent a new one. The US, UK and Japan are accumulating debt at an alarming pace, with no serious prospect of repayment — other than monetizing the debt, which would cause hyper-inflation. The situation is massively unstable."

"Enjoy the rally while it lasts. But bear in mind that it could end badly. And keep your stops tight."

Party like it's 1987?

CP I agree with you about paper gold. Paper gold is just another trade. I'm out of most of my paper gold. As dr.cosa points out at the slightest provocation, gold did poorly during the last move down. Is it likely to do better this time around?

Physical gold is another matter. I think the debt default will eventually end badly. It might end very badly. I think a default is just a matter of time. When that happens, paper gold holdings will probably default as well (except maybe CEF) but even CEF holdings might get confiscated by a desperate bankrupt government.

There might be an interlude where paper gold skyrockets, but I'd guess a paper gold default will follow quickly upon any big move up.

Excellent points Grym. I think this is why many of us have been continually suprised by the relentless upside moves of this market.

Grym, Not that I disagree, but BOTH government and those benefiting from government are the same threat, one using the other as a tool for their dominance. Thus corporations use government and their lackey's to sell you CRAP food that is developed here but rejected in many parts of the world.

Could there be a war on obesity if we weren't all duped into buying the $hit they call food in this corporate nightmare we call a country?

If we hadn't allowed our government to be the tools of crap food pushers to begin with then we wouldn't need to react to that force with an opposing force.

You can't have one with out the other. Our freedom to buy decent food and have the USDA and FDA SERVE THE PEOPLE was the first casualty, not a war on obesity.
THEY fired the first shot.

Mackinaw - thanks for the kind words!

I'm pretty much in agreement with your analysis. Absent a Fed audit, these guys can print money at will and nobody but them and their tame primary dealers will know. All in the name of "saving the country" I'm sure. And so no auction will fail.

Come out roll was a seven>> Pay the line. That leaves FXP on the pass line.

Where The Crisis Came From
By Robert G. Wilmers
Monday, July 27, 2009

Over the past three decades, there has been a sea change in the way that credit is extended in America, creating the problems -- and the need for reforms -- that we face today.

At the heart of the financial crisis lie the complex, opaque derivative securities created not by traditional Main Street banks but by Wall Street, and with the passive complicity of regulators.

Wall Street created, originated and sold an alphabet soup of derivative securities, and it was such synthetic instruments -- not traditional mortgage loans, small-business loans or other standard lending originated by banks -- that unleashed a flood of credit, created a vast excess of housing, weakened the capital structure of the banking industry and undermined popular confidence in banks.

In previous generations, home buyers obtained mortgages and other loans from local, or Main Street, banks, which typically held those loans until they were fully repaid -- and therefore had an interest in making loans that borrowers could afford.

But then Wall Street started slicing, dicing and packaging mortgages into bundles that served as the basis for bonds sold in the securities markets. Traditional bank deposits were no longer the primary funding source for credit. Instead, loans were being financed by the capital markets and packaged and sold by Wall Street. Mortgages were originated by one firm, packaged by another, sold by a third and serviced by yet another -- but none of them worried about whether the mortgages would be repaid, because they didn't hold the loans on their books.

Securitized debt grew nearly 50-fold from 1980 to 2000 -- compared with a mere 3.7-fold increase for bank loans. In 1998, traditional bank lending was surpassed by securitized debt for the first time. By the end of 2007, Wall Street accounted for two-thirds of all private U.S. debt. This growing market for synthetic mortgage-backed securities inundated the country with credit that, combined with historically low interest rates and exotic new mortgage products, fueled the housing bubble and turned our financial markets into a virtual casino. In the collapse that followed, billions of dollars' worth of mortgage-backed securities were written off.

But the public continues to think of banks as the primary source of credit -- and to blame banks for the credit crunch. Public officials contribute to the confusion by criticizing banks -- while allowing Wall Street to operate this "shadow banking industry," which exists outside the standards for safety and soundness that apply to banks and without obligation to make clear the extent of such firms' debt, leverage, capital or reserves.

Many Wall Street firms played significant and contributory roles in the evolution of this crisis. Wall Street's most prominent investment bank, Goldman Sachs, historically the industry leader, was at the forefront of the creation, origination and sales of derivative securities -- and also spent $40.6 million on lobbying and campaign contributions from 1998 to 2008. In 2008 alone, Goldman spent $8.97 million in this way -- almost 11 percent more than the Financial Services Roundtable, a trade organization that represents 150 top financial institutions.

The conversion of this investment bank into a giant hedge fund went unchecked by legislators and regulators, despite constituting a radical change to our financial system. And it has received billions upon billions in taxpayer bailout funding to keep it alive.

By contrast, consider how regulators treat Main Street banks compared with the way they deal with this highly connected investment bank: When M&T Bank applied for regulatory approval to acquire a modest-size bank in Utica, N.Y., it took 10 weeks and a promise to divest three branches before permission was granted. When this Wall Street investment house decided to seek a commercial bank charter in the midst of the financial storm, permission was granted in less than a week.

By obtaining this charter, Goldman Sachs received access to the Federal Reserve Discount Window and the Federal Deposit Insurance Corp., which has long been funded by dues from thousands of community-based banks across the United States -- and which has since guaranteed $28 billion of the investment bank's debt securities. That's equal to 10 percent of all funds guaranteed under the government's Temporary Liquidity Guarantee Program.

The same could be said of many other large financial firms that are also big spenders in Washington. The 10 largest recipients of federal Troubled Assets Relief Program funds -- including two Wall Street investment banks and three other, non-bank institutions that participated -- spent $82.4 million on lobbying and campaign contributions in 2008 and $523.6 million over the past 10 years.

This sort of behavior is simply wrong. Corporate leaders have an obligation to set the right tone -- a moral tone -- lest public confidence in our private enterprise system erode.

Also, we must restore the balance of regulatory oversight between commercial banks and other parts of the financial services industry. We should do so not only to be fair to banks but because the nation's ailments won't be cured unless solutions are directed at the entire financial system, not just one-third of it.

The writer is chairman and chief executive of M&T Bank, one of the 20 largest U.S. bank holding companies.

Wow ... Lewis leaves no doubt. His glib apologia hardens the case against the evil squid.

...

Well, gold has discovered strong support this morning, both GDX&GLD now higher than the opening price... [edit] Well, maybe not...

Just waiting for dr.cosa's scheduled China update... [edit] I see it above, thanks doc! ;)

Bock, bock, bock, errr ah errrr ah errrrrrrr!, Good morning all! ;)

Les- You need to work on your titles. Hot Jazz. Jazz it Up. All That Jazz.

Think it's related to the permanent ban on naked short selling?

I followed you on this on 2nd. I am out of most of my longs at this point. Mostly cash and starting to scale into shorts very lightly

Also, want to mention that we are getting hurt in property management here on the pennisula. I can give you numbers if you are interested but things have been worsening since Jan. Now it is peak season we are begging for renters and keep lowering our prices in desperation

BRE is our competitor and they are hurting too.

Edited - backreading last night's comments. FYI I have to forward the phones to the cell and answer it every time otherwise I miss a potential client. I got the ticket since I answered the cell phone and it was my boss. lol. I guess he gets to pay the ticket?????????? ( Or get the ear piece I suppose )

later

vb

Econoday reports:

The Conference Board's consumer confidence index fell 5-1/2 points in June to 49.3. June's decline had followed notable improvement the prior two months. The reversal in June was due to declines in both the present situation and expectations indexes. The expectations index, however, is still relatively high, indicating that consumers still see recovery not far down the road. But for now, the jobs picture still has consumers nervous and the current conditions index could keep the overall index down in the near term

I don't put much faith in surveys. This one happens to be negative, and it was worth perhaps 5 S&P points over a 10 minute period following the release.

There's got to be a pretty good cash money business getting this information ahead of the crowd.

EDIT: Oil took the news badly, gold and silver slightly less so. The buck rallied hard on the news.

Had to make a picture of this news release because it would not let me copy.
I made some highlights of the interesting points.

CP- I'd built up a pretty good position here at .42, so in light of the toppy nature of the overall market, I took profits @ .47 this morning.

This could be a popular release for Microsoft. The O.S. has been getting positive buzz in the geekosphere. Time will tell, of course.

do believe the worm will turn,,,, will start to buying the junior miners earlier than I had planned ( September/October frame )....

1. Reduce corporate power over our vital resources, including food.
2. Reduce corporate power and lobbying in OUR government.
3. Increase government responsibility to, and representation of THE PEOPLE.
4. Increase personal responsibility and accountability (this applies to individuals that make up corporations).
5. Reverse the concept that corporations have rights. They should NOT. They ARE NOT citizens. There is no word "corporation" in the Constitution. Corporations are simply individuals forming a group, the group should have no specific rights other than that expressed by INDIVIDUALS. In short, ONE MAN, ONE VOTE.
6. Remove ANY politician that doesn't serve the people or is confused about his/her loyalty and Oath to defend the Constitution. You know, that old saw about "of, by and for the PEOPLE.

7. The media should be returned back to the people from the corporations.
Rupert Murdoch, GE and Jeff Emelt and Bloomberg should go to HE- double hockey sticks.

Example: Mort Zuckerman on Bloomberg today. I notice they have him on on a down day when consumer confidence takes a beating. A muzzle would be too kind. Why do we let schmucks MAKE news. He isn't news, he's a book talker.
8. For sure Kaimu's resolution, desolve the FED, the source of our heartache.

Craig - How is this accomplished?

"Made 7 cents in Yamana"

Love it Sharkie! At least you end the misery on a positive note...definitely got a laugh from me. LOL!

Mac,

I think that is at least part of it. Many people have not withdrawn from their "managed accounts". I have read, however that programmed trades went from 27% to 41% of market activity and money managers are in a position that they must be invested. I the market moves up without them their job is at risk, but if an event like last year, "which nobody could have seen coming" happens and they all tank, that's OK.

Dear Mr. Mayor:

My concerns for our city are the same as those for our state and nation. There seems to be a disconnect between the ordinary citizens and those elected or appointed to make the most significant decisions affecting us all.

Our present economic malaise, city to national, has resulted from at least a couple of decades of ignoring the plundering of US jobs. Government and corporate interests have decimated manufacturing through the lobbyist system.

Globalization is nothing new, Queen Isabella sent Columbus in search of riches and markets outside the then known world. What has changed is the power shift to businesses without national loyalty.

My first observation of this shift was in the mid-1980s when Elco, one of my many long time Rockford clients, began buying instead of making their "standard" fasteners. They began buying ordinary screws and bolts from Taiwan, then India and finally China. Just like the NAFTA claims that only "the low-end would be lost" this off-shoring soon spread to nearly all categories.

My business of forty years continued to evaporate as Amerock, Greenlee, Barber-Colman, Sundstrand, and finally Clarcor (in their centennial year) sold out, moved out or simply went out of business leaving no more than a shadow of our once thriving manufacturing employers. By the time Woodward Gov. moved their HQ I was fortunately on Social Security. I was among the lucky ones.

While concerning ourselves with graffiti, the handwriting on the wall has been ignored. Jobs are the primary issue.

Our official, admitted unemployment is now at over 14%. We talk of cutting police and firemen hours and library pension contributions, but continue spending on ineffective downtown revitalization schemes. The $23 million MetroCentre drain should have been avoided, but instead it is being maintained in the face of the worst economy ever.

This time it is worse than 1929 because we have little to sell other countries to balance the trade deficit. Service jobs are mostly local. Tech jobs are low labor intensity. The average hourly wage (inflation adjusted) and spendable income has been dropping since the 1970s. Benefits have been shifting to employee responsibility since the 401(K) replaced pension plans in the early '80s.

Most people have experienced the seriousness of the times either directly or through a friend or relative. People will not and cannot spend what they don't have.

Yet, the local spending goes on. The mall removal is "expected" to do the same downtown improvement which its installation was to do. Extra money is devoted to brick sidewalks at a higher price than a simple concrete one. The River Walk is still a live option. We seek "tourist dollars" — essentially competing with US neighbors for a fraction of what exportable products used to offer. The latest announcement of new jobs is with a company trying to collect unpaid debts (a growing market at least).

This week I read that we are borrowing $10 million in "tax anticipation warrants". Anticipating tax from where? What makes anyone think it will be any better by the end of next May? Our tax base is declining and the homeowner is the last remaining source as sales fall and companies continue to lose business. Look at the empty box stores in shopping malls while expansion continues on Route 173. Is there any overall planning in the area?

I realize some of these issues are the responsibility of various agencies, but the money comes from the same pockets.

It is my guess that part of the reason for this spending dichotomy is that those in office (at all levels) have never lost a paycheck or experienced a down year in earnings.

Sincerely concerned,

all roads lead to inflation "... Bill Fleckenstein..... This is December, 2008 all over again.....wonder how the spin will go this time ? I am sure Bubblevision will be up to the task...

In a statement, USEC Inc. CEO John Welch said that the Bethesda, Md.-based company was advised of the U.S. Department of Energy's decision, which he described as shocking and disappointing.

USEC has been developing the American Centrifuge project in Piketon, about 65 miles south of Columbus, at the site of a former gaseous diffusion plant that enriched uranium during the Cold War. The company says the project would have created thousands of jobs.

USEC spokeswoman Elizabeth Stuckle said Tuesday that the company would try to find other financing, though she said that's tough in the current economy.

The company applied for the loan 11 months ago under a U.S. Department of Energy program launched by former President George W. Bush.

The project was announced five years ago. It was supposed to open in 2011 and employ about 400 when completed.

Democratic Gov. Ted Strickland wrote to President Barack Obama in March, saying that "thousands of new jobs currently being created will be delayed or perhaps lost" without timely approval of the loan guarantee.

Rob Portman, a Republican candidate for the U.S. Senate and a former congressman from Cincinnati whose district included Piketon, also recently wrote to Obama urging quick approval of the loan guarantee.

Obama was supportive when he campaigned in southern Ohio last year.

Research for the plant has been underway in Oakridge, Tenn. END

Obama - to guarantee or not to guarantee. I suggest loan guarantees will be found.

DYODD etc.

Interesting to note that at the end of last week the 100 DMA crossed up through the 200 DMA at none other than our recently tested support level of S&P 870.

I agree to a point Grym. The question then becomes, who pays for the care of these idiots? Say a kid doesn't ride his bike with a helmet because his parents are morons. He is under 18 and is the responsiblity of the parents but they are unemployed because of corporate greed. He falls and suffers severe brain damage rendering him a veggie. Where are the funds going to come from to support this person? YOU? ME? That IS where they come from.

The trouble is we, as a society can't support stupidity and we can't tolerate it either. so we MAKE parents GET A CLUE and MAKE them legally responsible in order to actually SAVE us the expense.

To do what you ask, while I don't totally disagree in most cases, is impossible.

You're damned if you do and damned if you don't. We could take this to extremes. How about education? Do we want firemen and police to be able to read road signs and understand addresses so they can find your house to put out your fire or arrest a criminal or are you prepared to out put your own fires and prevent crimes against you and your family at all times? Do you really think the average American could educate their own children knowing how stupid they are resulting in our current predicament? And work at the same time? It's simply NOT going to happen. We also do not live in a vaccuum. We compete on a global scale and other countries educate their kids, most better than we do, and that leaves us, all of us, at a severe disadvantage.
should we educate and build schools or not and spend 1000X as much on prisons for the tardo's? Should we be penny wise or dollar foolish?
I assume you will need educated workers in Ohio....maybe not?

Responsibility on this level is not as simple as it sounds.

maybe James Surowiecki can tell us more on the wisdom of the crowds....

SLV was quite overbought on the RSI(2) and failed to take out the 50dMA yesterday so exiting the short put side of an inverse straddle for now for a decent gain. Looking to reload with OCT 13 short puts @ somewhere around .75 cents in the next day or so.

"Those too stupid to watch out for themselves (assuming they are not mentally deficient) deserve what they get and natural selection will make the population improve without them and their progeny."

Those too stupid to watch out for themselves are, by definition, mentally deficient.

I argue against general mental health...(surprised?):):):)

People are in fact HIGHLY irrational and inconsistent AT BEST.

Further, implicit in your idea is the notion that the vaguaries of post-modern free-market Capitalism ARE in fact negotiable by the average (or below-average) Shmoe.....an idea I soundly reject and which the facts suggest is incorrect.

Capitalism is like any other spectacular thing.....It works, inasmuch as it does work, for the benefit of a few at the expense of the many. Such would be the way with any economic ideology, followed in fact or in word. I just don't think we should cloak ouselves in the illusive notion that this economic system can take meet the real needs of real people, of institutions, of armies, and of empires.

For every Warren Buffet there are twenty thousand Wal-Mart clerks making 6 bucks an hour.....Twas ever thus. Twill always be. Twitter on this.

Craig,

I certainly agree with most of your points listed. As for Mort Zuckerman, I haven't been able to find what he said today, but a month ago both he and Stephen Roach of Morgan Stanley had some pretty strong criticism of the "Green Shoots" TV talk.

Mort is no dummy. I don't always agree with his ideas, but here again, I'm all for free speech and individual acceptance or rejection of the content.

Is there an expert in the field of genetic analysis here in the commuity?

I´ve been looking at buying SQNM, but would like to hear some informed opinion on the potential of their new platform for genetic analysis; MassARRAY Compact 96. Does anyone have an opinion of its market potential? Competition? How unique is it? Can it be easily copied?

SQNM is now up 22% over the last five trading days. Trading has been marked by large blocks of buying at the opening of each session. Could this be large institutions accummulating shares?

I've placed an update there with address for two misplaced logs and (admittedly fake) reason for not moving them back in trading log. No complaints, whole last week and so far this one is an uninterrupted winning streak (there, now I probably jinxed it) albeit on a boring side except for couple days... but what else would one expect from this time of the year.

GG is down 6%
might be a good entry for long position

Craig,

"The question then becomes, who pays for the care of these idiots? Say a kid doesn't ride his bike with a helmet because his parents are morons."

Funny thing, until a few years ago I don't remember that being a "problem". So why is it now? The same for firemen and reading.

It seems to me these became "our problems" when education became a right rather than a privilege. When political correctness and quotas prevented expelling kids from school. When someone else's unwed daughter "took a village" to care for it.

Immigrants were allowed in after close examination and expected to learn English.

We used to turn out kids with better educations than the rest of the world. During WWII we provided arms and supplies to millions — now we buy Italian pistols and couldn't provide replacement parts for Humvees or enough flack jackets for 125,000 troops.

We put a man on the moon. Discovered a prevention for Polio. US inventions were in demand everywhere.

But... people were freer and government protection was only for important things like food free from contamination (pre-globalization days), toys without lead, counterfeit meds.

AND a dollar based on PM to at least some small degree.

Our basic disagreement seems to be — who owns the problem. I say basic education as long as you obey the rules and emergency aid only, the rest is the individuals responsibility.

Craig - That is a very mainstream argument and I find it offends the idea of responsibility in the highest order. In order to survive and excel, we must embrace 'Responsibility on this level . . .'

You are right, as a society we cannot support stupidity. So why would you expect that the public treasury should? That counters to your proposed solution of personal responsibility. If a person is irresponsible, they and those for whom they are responsible have to live with the consequence. Is this not a truth of life. We as traders experience this daily, no?

Are you saying that without public education, we will not be able to find public servants who can read? (As an aside, in California, I know they issue drivers licenses to immigrants who cannot read english.) How about testing public servants and only hiring those who qualify? Again, if a person is irresponsible, they and those for whom they are responsible have to live with the consequence. If they choose not to educate, then they do the 'jobs other Americans would not do' and I bet there they would likley find incentive to educate.

Also, why do we have to compete on a global scale? Are we not in the most fertile and resource rich land? Are we not capable of self sufficiency?

Perhaps we would accomplish more with give and take for mutual benefit on a global scale.

""(there, now I probably jinxed it)"
LOL! Vad, tell us you aren't the superstitious trader!
I am....:>) Sometimes it works!"

Kidding? No trade of mine is initiated without sacrificing chicken entrails to trading gods. Must be done at midnight, full moon, on the intersection of two cemetery trails, bat's tail in the left pocket, spitting three times over left shoulder, chanting "O Goldman Sachs almighty, bless this entry, flash it over to the dark pools, for I am faithful worshiper of high frequency profits"...

Vad said: Kidding? No trade of mine is initiated without sacrificing chicken entrails to trading gods...

Heathen!

Or is that Pagan? I get so confused.

http://www.calculatedriskblog.com/2009/07/case-shi...

Dang, I feel so irreverent.....I only stir chicken entrails with a stick to derive the inner message from the Gods of trading GS.

accidental duplicate entry

RE:>Nuclear power hasn't been getting the big wet kiss I thought it might this time around, more like the cold shoulder.

as a scalp USU would have made a great trade nonetheless CP. I understand what it is to be "under-capitalised". With 25 in capital and safety off the daytrade trigger I would have made a very handsome profit there. Life's a bitch. One day it'll be my turn to cut'n'run.

and that certainly did a number on TLT!

Hit reverse, buy TBT/FAS

Sold SPNG at .155 that I bought at .099.
Sold AIG ITM calls (too early) at $1.55 that I bought at $1.18 and moved a portion of them to OTM calls (again, too early) as a lottery ticket.
Bought WEN at $4.33
Bought IMMR at $4.25 just now.
Watching IYR for possible short/long dated puts.

They're buying Mr. Softy, too.

This is how USU looked at the close of yesterday.
When I tried to short it some months ago, there was no share available.

Pascal

By the way, thanks for the link to those Paul Tudor Jones videos. Great stuff, although it made me nervous watching him get nervous. I'm inspired by the man but inspired not to live his life.

Wasn't it a couple of weeks ago that Don Coxe said that when KRE starts outperforming KBE things will start getting interesting?

last 5 days: KRE +15%, KBE +7%

The guy's a gambler. Much more so than even me ;) Somehow I can't imagine CTAB traders behaving that way- most professionals carry themselves differently than Jones did (and wouldn't be caught dead on a video).

I don't know who these guys are but their results are pretty much in line with what Kaimu says: http://www.zerohedge.com/sites/default/files/Silve...

Had a small change in the McClellan Oscillator Monday & last Friday. In the past this resulted in a large price move with in a few days. Feels like the market is a snake coiling up getting ready to strike [up? or down?]. The last small change in the $NYMO resulted in a intra day reading on the DOW of 200+ pts if memory serves me correctly.[Just a heads up.]

From Wikipedia (http://en.wikipedia.org/wiki/Paul_Tudor_Jones):

"As reported in Market Wizards, Jones futures trading style and beliefs are summarized as follows [8]:

"Contrarian attempt to buy and sell turning points. Keeps trying the single trade idea until he changes his mind, fundamentally. Otherwise, he keeps cutting his position size down. Then he trades the smallest amount when his trading is at its worst.
Considers himself as a premier market opportunist. When he develops an idea he pursues it from a very-low-risk standpoint until he has been proven wrong repeatedly, or until he changes his viewpoint.
Swing trader, the best money is made at the market turns. Has missed a lot of meat in the middle, but catches a lot of tops and bottoms.
Spends his day making himself happy and relaxed. Gets out if a losing position is making him uncomfortable. Nothing’s better than a fresh start. Key is to play great defense, not great offense.
Never average losers. Decreases his trading size when he is doing poorly, increase when he is trading well.
He has mental stops. If it hits that number, he is out no matter what. He uses not only price stops, but time stops.
Monitors the whole portfolio equity (risk) in realtime.
He believes prices move first and fundamentals come second.
He doesn’t care about mistakes made 3 seconds ago, but what he is going to do from the next moment on.
Don't be a hero. Don't have an ego. Always question yourself and your ability. Don’t ever feel that you are very good. The second you do, you are dead."

Hi Mackinaw, I did mention about Bill Carrigan, on Wed, 07/15/2009 as below,the link is different to the one you posted here and mentions his other stockpicks besides Tech. as of 2009-07-02.

Further to Bill Cara,s mention about Bill Carrigan in 4 July WIR, I found a site that lists his latest stock picks,he also mentions Tech. as the theme for the next 5 years due to BRIC expansion,link below for anyone interested.

http://tinyurl.com/3s4b38

...

'This is where we part in our logic...

"I don't know where that point is where we decide who dies and who lives..."

WE don't decide — each individual should decide for himself and those for whom HE is responsible."

For the most part this will be true.
There will be some people (mainly children) that will not have such a choice and who will be victims and I can assure you, without some social net they will live or die without a choice. What would have happened to you, an only child, were something to happen to your parents? You wouldn't have much say, in fact, none.

We don't all fit the same mold my friend. THAT was where the social net started, it just got carried away to everything.
There are and should be limits to both sides. We need to be compassionate or, for example, many would have perished entirely in the great depression due to no fault of their own, and the opposite, there are some situations where personal responsibility is abused and we shouldn't.

I wouldn't have one bit of a problem with these scumbag bankers going belly-up, but I have a big problem saying YOU or your family should pay, sacrifice or starve due to their greed. I'd save you, but not them. They were irresponsible, you weren't. There's a difference.

pascal, where can I get that sort of information?

Bill - "When you see a (cash flow stable) Microsoft drop -10% in a day or a McDonald's -5%, how can anybody commit 100% of their capital to such a market environment. I know I cannot."

Well sure, instability is a great reason to be in the most stable place possible in terms of reducing risk. We all can't remain in suspended animation for eternity, our burn rates are too high. In general, the larger the animal is, the slower is its resting heart rate. Great whales (the
largest animals) have resting heart rates around 7 beats per minute (bpm).

QID 29.87 >> 26.87, of course.

This guy is an inspiration to me.

2nd you gonna make it out east this summer or what? I'm thinking of blasting up to Cape Cod w/or w/o you so that Vinod can hook me up:)

From Bespoke on banning leveraged ETFs:

"..........FINRA and the Massachusetts Attorney General warned that these securities were unsuitable for investors to hold for more than a day.

FINRA's warning seems to have struck a chord as several firms have begun to ban or severely curtail the ability of investors to buy and sell these securities in their accounts. In the last few weeks, we have seen outright bans or severe restrictions put in place by firms such as Edward Jones, LPL Financial, Ameriprise Financial, and most recently UBS. Now that the ball has been put in motion, investors in these ETFs should be aware that as more and more firms ban trading in them, liquidity is likely to fall, causing higher trading costs through larger bid ask spreads."

http://tinyurl.com/lt9a2e

As of 9/30/08. Warren Buffett owns 6,715,060 shares of M&T Bank, which makes (made) up 0.86% of the $69.89 billion portfolio of Berkshire Hathaway. David Dreman owns 7,230 shares, a decrease of 40.88% of from the previous quarter.

I think the other guy just sold his shares. They are a solid wholesale lender. Their 'connections' must come in handy when it's time to package up the resale boxes for Fannie, Freddie and Ginnie.

Seeing some serious anguish/distress on some of the other blogs on the part of shorts. Are we talking about misjudgments/missteps (large position sizes, lack of stops) on their part? That's part of it. Beyond that, the market is (so far) disallowing a pull back significant enough to relieve any pain. I don't need to be short to identify with their dilemma, which is to choose between having a limb taken off or being stripped of hope one day at a time. Some players are so fully leveraged they no longer post.

If you're not using stops (mental or otherwise), you have to start. If I had not (re)learned here to take losses quickly and without hesitation, I have no doubt I would be in serious trouble.

If you're not sure what's happening in the market right now (and that would include me), don't overlook the option of standing aside. If you hear gunfire outside and see people keeling over, would you rush out to join the party? Of course not. I would urge you read a few other blogs right now. You have to read between the lines, but many 'smart traders' are keeling over right now.

CP,

That's fine for the first offense, then we should get tough :-)

ALOHA !!

Tons of things are RIGHT with AMERICANS, its just the American government that is a fiscal failure. If I recall most people in America wanted the US government to let the banks fail and urged their reps in Congress to vote NO of the PAULSON BAILOUT, but since we have no representation in Washington DC we got the opposite.

I believe that a lot of Americans are basically good, but they got lost in the "free money" free-for-all and the American Dream scam, where you rent from a bank forever!

Now if the average American could figure out the monetary scam at the US FED then Bernanke would be keel-hauled behind a Kenworth. Instead he puts on this pompous Dog & Pony Show playing FDR with the cozy fireside chat to retirees. He needs to get his stand-up act in front of the Chinese students at the Beijing Improv! What a contrast between Ben's stand-up act and David Walker's reality bites ... Ben may as well learn to moonwalk ...

Americans are just asleep at the monetary wheel ...

I was talking to a NFIB rep today and she said ... IT IS WHAT IT IS!

Interesting article in the NY Times yesterday on the role of hunches in perceiving dangers. In relation to markets, I think we can all attest to their power. We assilimate so much diverse information in this pursuit and cannot rely entirely on any one, fixed, objective set of indicators indefinitely (e.g. "Trader's Effect"). As such there's a role for hunches; call it experience, feeling, inductive logic, whatever you like. Fact is, the human brain processes far more information - and faster - that we can ever consciously understand or communicate. I know some of my best moves over the last two years resulted from a good combination of hard work and heeding my feelings. On the other hand feelings have betrayed me a couple of times, luckily leading mostly to errors of omission, rather than commission. Nevertheless, I think incorporating our "feelings" into our trading methodology - however much weighted or achieved - is our only edge against the algorithmic trading programs.

http://www.nytimes.com/2009/07/28/health/research/...

Mac- Beautiful! The human mind is more than an 'edge.' It's what we all rely on every day for survival.

"Still, high-tech gear, while helping to reduce casualties, remains a mere supplement to the most sensitive detection system of all — the human brain. Troops on the ground, using only their senses and experience, are responsible for foiling many I.E.D. attacks, and, like Sergeant Tierney, they often cite a gut feeling or a hunch as their first clue.

"Everyone has hunches — about friends’ motives, about the stock market, about when to fold a hand of poker and when to hold it. But United States troops are now at the center of a large effort to understand how it is that in a life-or-death situation, some people’s brains can sense danger and act on it well before others’ do.

“Not long ago people thought of emotions as old stuff, as just feelings — feelings that had little to do with rational decision making, or that got in the way of it,” said Dr. Antonio Damasio, director of the Brain and Creativity Institute at the University of Southern California. “Now that position has reversed. We understand emotions as practical action programs that work to solve a problem, often before we’re conscious of it. These processes are at work continually, in pilots, leaders of expeditions, parents, all of us.”

"As the brain tallies cues, big and small, consciously and not, it may send out an alarm before a person fully understands why.

"In a landmark experiment in 1997, researchers at the University of Iowa had people gamble on a simple card game. Each participant was spotted $2,000 and had to choose cards from any of four decks. The cards offered immediate rewards, of $50 or $100, and the occasional card carried a penalty. But the game was rigged: the penalties in two of the decks were modest and in the other two decks were large.

"The pattern was unpredictable, but on average the players reported “liking” some decks better than others by the 50th card to the 80th card drawn before they could fully explain why. Their bodies usually tensed up — subtly, but significantly, according to careful measures of sweat — in a few people as early as about the 10th card drawn, according to the authors, Dr. Damasio; his wife, Dr. Hanna Damasio; Dr. Antoine Bechara; and Dr. Daniel Tranel."

Sure, it might end well. But how many of you think it will?

Want to know what I think, 2nd? I think all Global equity markets are in the process of retracing to approximately their pre Lehman-debacle levels. Several have already done it. There, I've said it. So, I guess I'm anticipating an easy 1100 on S&P 500 before year end. Will it go up in a straight line? Of course not. And, what happens when they all reach that level - well, that's a whole other kettle of fish! :P

Good thing you haven't named any of those blogs so I can express what I think without stepping on anyone's toes.

That's not just this error or that mistake, like misjudging direction or not applying stops... this is fundamentally wrong approach to the market and trading, wrong philosophy. It's "I know what should happen - if something different's happening, this is wrong, this is manipulation, this is someone's fault". Surefire way to trigger ego, get angry, try to take revenge, dig even deeper hole, get frustrated, live in misery...

Compare it to "If A happens - I do B; if C happens - I do D". If - Then scenarios, no predictions, no feeling of self-worth committed, no ego triggered, no precious self to protect... See setup - take setup - let the market decide an outcome. Analyze, correct if strategy doesn't work over statistically valid period of time. Hone it, start making profits, apply it until market changes, make new corrections... No frustration, no anger - just work + passion. Finish trading day, enjoy life.

Grym, did your grandpa get any medical care from the owner of that coal mine?

I think I'll leave that up to Bill's Commentary tommorow where, hopefully, we'll get a positive update regarding 'ol Montezuma.

So, where are we on Mamis’ Sentiment Cycle? Was the March low discouragement or aversion? If discouragement, then are we not climbing the wall of worry and an aversion downdraft is yet to come? Could it be that we are moving through denial and on our way to returning confidence? I guess anything is possible. I can’t help but believe we’re close to that first pivot high within anxiety that touches the horizontal line of resistance.

Or we just take a stance with reasonable loss limits and stick to the plan. There's been a lot of job loss and people can't make their mortgage payments so housing and CRE are falling off big time while consumption is tanking and longer term it looks like we'll be going lower. Cash for clunkers seems like the beginnings of desperate attempts and the mortgage rescue efforts are gaining more attention but now it's too late IMO, there's a mountain of downside momentum that took too long to address. Meanwhile we've been going up briefly and I'm long for the ride with dry powder loaded in both short barrels for immediate deployment should I observe a change in trend.

One key is to buy low, we're low when RSI7 is under 30 and turning up near 52Wk prices. These are lower risk conditions and we're just not in low risk territory anymore so initial long positions if taken, should be kept smallish. We're not high enough yet for me to feel comfortable with taking a short position but if after a couple of days we're not moving higher I probably will go short for a day. I'm observing equities prices moving up in some cases and down in others at the moment, a mixture of indecisive moves indicating confusion. I sense increasing sensitivity and nervous pause.

Increasing mergers and acquisitions are considered a positive sign by some as well.

fox,

overt warning

/

Mackinaw,

Much thanks for the article on Benford's Law. What a great application of the rules of logarithms, and a great website as well! Are you a mathematician?

Mackinaw,

if I am oversimplifying, it's just that we are talking of general philosophy of trading, not about all the components of decision-making with each cog involved. General approach to trading wise, philosophy wise, mindset wise - no, I am not really. The distinction I made in my post is about right approach that allows a trader to stay emotionally detached instead of investing his feeling of self-worth in his trading decisions.

As far as "feeling" goes, well... feeling is not a supernatural phenomenon, it's just a manifestation of all your previous experiences collected and internalized to the degree where they allow you to arrive at the decision without going over each logical step time and again. You just know - because you've seen it many times before. I accept some signals because some necessary components are there; I dismiss others because some of them do not look right. It's all being verified against that internal "database" of zillion of standard situations. Beginning trader feels lost because he has too few of those recognizable situations under his belt, thus his "feeling" is not based on anything real. Sorry if it sounds too utilitarian... :)

RE:>It's all being verified against that internal "database" of zillion of standard situations. Beginning trader feels lost because he has too few of those recognizable situations under his belt, thus his "feeling" is not based on anything real.

I can relate to that, having gone through the process in the army. I can recall being in recruit training and not having a clue about anything. 5 years later and I recall being finely honed. We remarked on having a sixth sense, an awareness that wasn't merely assertainable from sight or sound, and in sleep an ability to return to a state of alert in seconds. The personal pinnacle was being lead scout of the platoon, patrolling against our own soldiers in wet dismal conditions and I came into contact without them seeing us, laying up an attack formation within 20 metres of them and systematically destroying them. Happily/unhappily I never saw active duty but I imagine that would put a fine hone on a soldiers ability.

I suspect its the same skill build up and facility towards making decision making in all walks of life. The IT geeks here, paramedics, day traders. Tis why I am set on developing a coherent strategy framework ASAP. The skill comes with applying a coherent working framework or strategy over years of accumulated experience. I can still remember the sergeant putting the boot up my butt when I was 17. Now I do that to myself to get me where I want to be.

Chinese markets plunge in late trade, Shanghai Composite down over 7%

Shanghai (and Shenzhen) are the "Wild East". I wouldn't get too excited about one day's action in those markets considering, e.g., Shanghai is up 130% over the last 8 months. The important Asian Markets were much more subdued and I see Europe is all green and S&P 500 futures are basically flat.

http://quotes.ino.com/chart/?s=INDEX_DJSH&v=d12

More green. Some pretty solid High-Speed and Voice numbers from Time Warner Cable.

Time Warner Cable 2nd-quarter profit rises
5 minutes ago
(AP:NEW YORK) Time Warner Cable Inc., one of the nation's biggest cable TV system operators, said Wednesday higher subscription revenue helped boost its second-quarter profit by 14 percent, beating Wall Street expectations.

Quarterly profit rose to $316 million, or 89 cents per share, in the three months ended June 30, up from $277 million, or 85 cents per share, a year ago.

Excluding restructuring and separation related costs and other one-time items, it says net income totaled 91 cents per share. That tops the 78 cents a share analysts polled by Thomson Reuters, on average, expected.

Revenue rose 4 percent to $4.47 billion _ up from $4.3 billion a year ago and above the $4.44 billion analysts expected. Subscription revenue rose 6 percent.

Video revenue rose 3 percent to $2.7 billion, boosted by video-price increases and higher digital video subscribers, partly offset by a year-over-year decline in basic video subscribers and premium channel subscribers.

High-speed data revenue rose 9 percent to $1.1 billion helped by new subscriptions. Voice revenue grew 19 percent to $471 million as digital phone subscribers grew, offset by lower average revenue per subscriber.

Advertising revenue fell 25 percent to $174 million.

http://news.ino.com/headlines/?newsid=68997928071714

Aesthetically pleasing. Based on pattern alone, I guess the upside target is $19.50. Based on other considerations, it looks a bit sticky in the $17.00-$18.00 range. Closed yesterday at $13.17.

http://stockcharts.com/h-sc/ui?s=MAS&p=D&b=2&g=0&i...

FD: I have no position and likely won't. DYODD.

Thinking more about that MAS chart a few posts back...Wouldn't it be interesting if MAS was a poster child for S&P 500 generally? Maybe a model of what could happen once S&P 500 enters that no-supply zone?

Here's another chart, this time of S&P 500 with it's price-by-volume and MAS overlaid as a thin line behind.

http://tinyurl.com/krwasw

I believe it was Bev pointing out the supply-gap a few days back?