Cara's Commentary & Community Chat, Tuesday, Sept. 8, 2009

Good morning.

BRCM - Upgraded to Buy @ Roth Capital. PT Raised from $22 to $34

QCOM - PT Raised from $52 to $56 @ Oppenheimer. Outperform

RIMM - PT Raised from $90 to $94 @ Oppenheimer. Outperform

bandied around by analysts yet Bill warns that the lights might soon go out. How to remedy the two apparent conflicting scenarios. Well, someone went and charted the largest 25 monthly percentage moves in the last 120 months this weekend. Although top place does not go to a 40% move, it is enough to scalp the bears good and proper at least once. For your consideration:

http://chart.ly/zn79rp

edit: I should mention that the down moves in percentage terms are the ones that could massacre the bulls...

edit: I should mention that ToddinFL is on the same page up there with the best of them for best of weekend charts - great charts mate!:

http://blog.chart.ly/2009/09/06/best-of-chart-ly-w...

Bill,
I have been wondering if there one major event in your life that radicalized you for this cause?

Was there an event that precipitated your interest in changing the way big broker-dealers and banks do business?

I thought for a minute that I was on the wrong site for minute there! Or the site had been hacked! Time for the coffee to kick in!

Grym- Please continue to comment. I'll let Bill clarify his position, but I don't think his intention is to clear the posting landscape of all personal/anecdotal content. Even the WSJ has commentary that includes levity and occasional references to non-market topics that interest the majority of readers. We just need to use good judgment when deciding what to post.

Absolutely. Nor does managing/mismanaging other people's money for exorbitant salaries and bonuses necessarily entitle one to high status. It's amazing how often we assign power and/or attribute higher intelligence to people with money.

Set to open at $4.40

Hope you hang around awhile.

25% life of mine from Pasqua-Lama project which is located on Chile-Argentina border plus some other Barrick silver mine producers. Total cost-$625 million.

Conference call at noon today at SLW web site. This deal is supposed to increase silver reserve by 43% and cash flow by 35%.

Mens Wearhouse Oct 25 puts. I think several retail stocks are ripe BBBY, JCG, TIF come to mind to buy puts. The mid tier casual dining stocks have had a short covering run as well look at BWLD and RRGB. These stocks have fantasy PE ratios. It seems no lesson has been learned.

Taking a hit (-0.2% of portfolio) on the FXP/QID I bought after hours last Friday. Going with the 'bears get clocked' thesis I posted earlier this morning.

As an aside, I'm finding that taking losses has become a relaxed (as in expected and therefore acceptable) and natural part of the trading process. All that practice cutting losses quickly over the summer is paying off.

Quasi
LOL.... Thanks!

seems to be lighter volume. if we dont reach 500M shares traded mid day, and we cant reach 1B shares traded by 4pm, this would be a new trend.

So given today's volume in SLW is already (after 30 minutes) an entire normal days trading volume, and SLW's price is not far from its open, I'm seeing the daily chart for SLW looking like a distribution day for SLW. Of course it could change depending on how SLV moves, but so far it feels like the big players are selling.

Looks like pretty strong resistance at 11.90.

From July 26,2007
~~~~~~~~~
"As to the overall market and gold specifically, the gold trend and cycle is a known lagging indicator of a broad-based Bull market. In a Bull fight, the Bear takes down the paper-backed securities first (credit market based interest-sensitive stocks) because they are the weakest storehouses of value. Next to come are the stocks of the companies that hold assets comprised of brand and patents and so forth because these companies have products and services people always need and use to some degree through thick or thin. Finally comes the commodity-based producing companies, which because of their control of the supply-demand economics can stay stronger longer. The strongest of course is the goldminer producing companies because gold is real money – a permanent storehouse of value. So, when the Gold Bear arrives on the scene, it is almost always a case of having desert to end the meal. By then, the rest of the market has already been consumed.

In the current market cycle, US Treasury Secretary Paulson and Fed Chief Bernanke have managed to support the financials longer (in their price trend and cycle) than most of their predecessors. But, in the end, the free market will prevail over intervention because the free market is based on natural law, where ultimately human nature will drive people to do what they are going to do in any event, with the passage of time.

So the focus on gold, unfortunately, means the market is quite late in its long-term cycle.

After a market pull-back through a complete Bear cycle, the Financials will be the seeds that first sprout as drivers of the next Bull. That happens because Bear markets send interest rates (ie, the price of money) down. We then borrow that money to build economically productive assets (ie, wealth); and the Bull then thrives and the Bear dies.

As I say, there is a rhythm to all prices. The market is a dance. Gold is the last one out on the dance floor before the music stops."
[Mr Cara]

So for those of us who are bearish, China is a nice leveraged play on SPX. SPX has gone up slightly in the past few days, while FXI has really spiked up. It now has a daily RSI of 71, and is now within a few percentage points of its old high.

The intraday chart doesn't show a short entry to me yet, but I'm watching for one sometime today. I'm going to bet China won't break above its high, and it will lead us lower as gold exits the floor.

Did you see the 100-1 reverse split they are doing Sept 22?

Yes, been on TIE also... ATI definitely strong on earnings power... rumor floating today that MT is interested... picked up on ATI board at Yahoo...

baz22 agreed, TIE, ATI, and RTI should all be monitored for opportunity. The Boeing dreamliner (dream-nightmare) news on 8/27/09 kick started these three.

sold at .15

2nd - Your argument is a matter of leverage. The unleveraged player does not have the same concerns.

I intend to retreat into a place of trading solitude for the rest of the day, but by way of explanation, I bought SLW as it breached it's previous high in a most interesting way. I was in at 11.97 and I took full profits at 12.07 3 minutes later.

For this is a good example of why posting trades is usually folly...except to gratify my ego. It's often too late to get involved, this game moves so fast.

I also really like natural gas for the next 3 months and especially CHK and NE.

Have a good day.

Oh I see here on my alert that Gasco energy just hit 34 cents.......This cold be a big winner in the coming months.

I have debated on whether to post this, as I wrote it on 9/6/09. I decided to post.

Cara 090609

It is clear Bill Cara is frustrated and aggravated about the direction of Cara Community: Capital Markets and Social Equity; Perspective and Discussion.

I do not intend to be part of that frustration going forward and the way I intend to do this is the following: I only intend to comment on Cara 100 stocks per the RSI tool list (see attachment) as of 090609. I also intend to only comment on indices, technical indicators and sectors. I frequently trade stocks in gold and oil and do not want to be limited to just (GG, KGC, IMO, XOM, PTR, SU, ECA). I trade other oil and gold equities and since it’s a short-term dance with price, the purity of the company’s fundamental quality (per the Cara 100 screen) is not an issue to me.

As to Social Equity, I think that option is what gives rise to a broad array of topics which seems to be a cause of flash points. So no comments on any other topic other then the above Cara 100 list unless Bill Cara raises the topic and asks for comments, but even then I will most likely refrain.

That said, I’m generally not a wordy person or a gifted writer, but it amazes me how many people want to know why you made the trade and think that some 2 or 3 paragraph’s are going to give them the key to the kingdom of stock profits. Self education and study is the way along with mentorship when your lucky enough to find one (Bill fits that description to a T).

How many books has a person read? Here is my list see attachment (plus maybe 20 or so more including Bill’s, but I have not updated this in three years or so). Of this list 10 or 15 is all you need as it is generally just more of the same. And still at times with respect to the market I think I know nothing.

As to fundamental analyses, what are the chances that I’m going to discover something that an army of HBB analysts have not already un-earthed? This is why I prefer technical analysis and charts. With respect to options, I understand the basics and I’m a novice.

Whenever you buy a stock, regardless of any research you have done, after you have pulled the trigger, the result is unknown, with the exception of the inner circle that can basically move any stock any way they want. Learning to sell and developing a set of sell rules is one of the best uses of your time for your long positions (vise versa for shorts) and neglected by most.

That’s it from my perspective. From this moment forward I pledge to abide by paragraph’s two and three and if I falter please call me on it.

If Bill decides not to do this blog anymore, so be it.

Peace T3D

P.S. Having extra sets of eye balls or perhaps tens of thousands of extra eyeballs sounds great in theory. The problem is that everyone thinks that their stock is the one that is going to lead to that pot of gold. The reality is that we are a disparate group other than one main common interest.

Ron, I've quickly found that Vad's illustration of the mechanics of trades have been the psychological handcuffs needed to let winners run. I understand and rely more on the charts now instead of my own ideas of what is good or bad. See example of last two sessions. ARNA failed. CGA is in accumulation/consolidation and will probably bounce this arvo. Do not want to see further erosion of support.

volume has become big part of trading picture.

edit: CGA just failed as well. Took my stop.

Bev - you made me laugh...

Below is a screenshot of what's available widget wise for us "world-time" impaired souls. Most came from Apple...Some are cross platform (and I have running) on Vista as well - I put them together when originally trying to learn FX session times.

Perhaps a starting point idea for others to build their own heads up quickie market display?

http://tinyurl.com/nz6x4k

to all ).... around 11:00 am today, they announce a plant closing and cut rev.'s forecast by more than 10 %... yet, the related solar's, being pumped in print, are up big time today... It is SO dangerous out there....

what we are seeing imho is the reluctance of those long gold to stay long.
once bitten, twice shy.

even w/ the USD falling heavily we are seeing gold fall from its highs today quickly. this happened after several days of gold rising along side a flat USD. these things always balance themselves out if they get too too far out of whack.

when people were saying gold was moving up while the USD was flat thought a sea change was occuring. it was not and likley never will. gold will move up as the USD weakens to varying degree's but this relationship is fairly certain.

those hoping to see gold miners jump in the face of a collapsing market will equally be disappointed as all things revert to some sort of mean.

what im looking for to see if this rally has legs:

1. is gold moving up in most currencies?

2. is there volume on the mining shares on the way up and weaker volume on down days?

3. most TA indicators will be stay in an overbought range during large price run ups, i dont use these as a guide during a potential parabolic or longer term run. that being said, if the volume is not there in gold and gold miners and we see the SPY rolling over we need to take heed of the damage broken trendlines and RSI's moving down can do to the masses.

4. can we look to gold-bugs for an answer if this is a top or not? we know that there are any measure of ways to justify falling gold prices and put a good spin on them. right now we are told its a small sharp pull back before the real blast off. we forget how many times weve heard it and been wrong.

we are also told that after such a quick run up its normal to consolidate. this is in fact myth. look at an 8 year chart of gold, you will see a host of different scenario's that preceeded large rises, we saw slow consolidations, sudden explosive moves up, rises followed by re-test's of support. there is nothing we can say definitively about gold's move here in either direction in the abscence of volume.

5. will the FED jawbone gold lower? pretty much anything king Ben says will be taken as such if gold moves down. lets drop the conspiracy nonsense and admit that if GATA had sources that allegedly know something, they would have either been able to make enough money to stop asking people to pay for their services on their website or they would have been proven right by a source eventually showing actual evidence. instead we have nothing but conjecture and years of innuendo.

6. does gold bounce back quickly and close above $1000 by the end of the week? if so, it makes for great looking charts and makes even non-gold bugs wonder if this is it. especially w/ the USD looking to move below the critical 76-77 mark.

7. will the fed intervene to keep the dollar from sliding as Bill and others have suggested? this is more difficult to answer than we may suspect.

implicit to any action by the fed would be the time factor. how fast and how far will they go to react and how fast and how far must the USDX plunge before they decide to move. the USD has been in secular bear market for years and the FED has for all intents and purposes done nothing to stop the slide. why start at 74 on the USDX? especially if the broad market is still going up?

______________

good luck gang.

"I fear that high volatility is causing so much profit by HB&B and so much loss by Mom & Pop that they will pull their assets out of capital markets and put it into gold and collectables. To grow a healthy economy, the world needs that capital to be put to work." Bill Cara

2 years later: would you agree that Mom and Pop are on the ropes, ie., in the US cash flow crisis? So their capital is effectively sidelined. HB&B has drained the cash cow. Which suggests that our economy is being run by the big players including external sources of capital. What happens if 'this thing' drags out another two + years? Will we all need to learn Chinese or just tape reading? Perhaps it's time to take your lessons to tomorrow's investors now...the twelve year olds who will inherit this debacle?

aiki100

Interesting set up. When you master all those flashing signals on a busy trading day then I guess the attached will be your next set up. ;-)

davefairtex, I went through the same thing you did, that day. I'm still surprised I fell for it. I picked up some more shares at the beginning of the day, then dumped them later on... partly because I just needed some emotional relief and partly because I thought I'd have the opportunity to re-buy them at an even lower level, within the next 24 hours, which I did... but I couldn't pull the trigger. What a mess we become, when the daily RSI of a stock we're too committed to hits 10 (I was trading HNU).

I wonder... did the RSI on UNG go a fair bit lower than HNU because the premium was crumbling apart as well?

Ron,

Did you happen to watch Consuela Mac Wealthtrack this weekend? Watch the Jason Zwieg interview. He describes the problem I have to a Tee. Perhaps you suffer from the same affliction, ie letting the emotions call the trades completely wrong? He theorizes that its literally built into our brains to react the way we do. I need to learn to USE and CONTROL this flaw for PROFIT rather than suffer with it for losses and reduced gains, LOL.

I didn't realise the industry ran in such a manner Bill. I thought Todd Harrison over at Minyanville was spinning a good 'yarn', but embellishing the conflict and crap he took in the job. I see why you are HB&B enemy number 1.

Good Will eventually defeat evil, but at what cost, I don't know... A complete collapse of government and society ? One of my favorite books, ever ( read in college 30+ years ago ), was ' Anatomy of a Revolution ', by Crane Brinton.... Thanks for all, Bill......

T3D,

Glad you decided to post. I, for one, always appreciate comments regarding
specific trades because they can help speed up the learning process. For instance, if you tell me you just bought XYZ and leave it at that, then I,
not knowing your trading style, would need to scroll through various
time frames to possibly find what you were seeing. If, one the other hand,
one mentions the daily, 5 minute or whatever chart, the reader can quickly
access the information.

danielj

"But looking at what the daily chart will show, I still see distribution here. Big distribution. Look at price and volume 3 days ago - the stock moved an entire point under less volume that its had today by 1 pm ET."

Sorry, but I disagree. Pull up a weekly chart and take a peek...SLW is good. These things are rising on lower volume because the underlying is rallying. It's really a misnomer that it's buying and selling that causes prices to change.

What really causes prices to change is an imbalance between buyers and sellers, in this case a level where most folks won't sell the stock. That's why it's rising, and doing so on lower volume. Is this the IDEAL time to go long? Of course not. It's never the ideal time. But last week the writing was on the wall. And this stock is being accumulated, if anything.

I should addd that I totally do not subscribe to the oft-stated notion that $1000 is going to be a top for gold, or a good selling oppty, and all that stuff about leaving the dance floor. That was true last time we were here, but not this time, probably.

Stocks are going up for darn good reasons having to do with the levels they fell to and their behavior since that time plus the dollar droppping, and that trend is still in place.

The time to sell gold will be when Obama's looking to be defeated and replaced by a strong-dollar talking Repub.

Dave - I am inclined to think that the very high volume has more to do with the financing done today (Purchasers of the bought deal financing had likely hedged themselves in the options market in order to reduce risk). Those hedges are being unwound today now that the deal has been completed.

So I don't make much of the higher volume today. Were the high volume to have occured without the financing deal, I'd have a greater concern over today's action.

I'm not ruling out the possibility that Ben and friends are priming the liquidity squeegee for a good mopping (bull trap) which would hit metals and equities alike, but the signs are not evident to me yet.

:-)

GASCO ENERGY GSX looking good. I will buy if/when it says howdy to the 200 day.

The charts are saying to me, "now may be a good time to sell" given the daily RSI of 78, the weekly RSI of 79, and that possible medium reliability reversal candlestick together with the high volume. Its a percentages thing for me. Its more likely for me that this is close to the top, than we have a lot more upside left ahead of us.

Silver is such an industrial metal. Remember what it did during last year's crash? Look at the gold:silver ratio. It's at its low for the year - it may be forming a double bottom. This is also influencing my thinking here.

I'm talking my book. I sold out my SLW today at 12.03 right after the failed breakout at around 11:00.

I've seen the miners move at similar % rates to the underlying metal for quite some time now. The fall from their highs was spectacular when it took place a couple years ago, so it seems to me there's a lot of room to run at least to some of those highs once again in a quick parabolic fashion. Even if we stay in the $950 to $1000 gold range ($15-$20 for silver / and copper higher too), I would think these prices would go straight to juicing the miners' bottom lines. I would say the upside potential in miners is still much greater than downside right now.

- What would trigger such a quick rise to these previous higher levels, if anything?

- Wouldn't "selling risk" on the miners right now potentially miss a major move that has a fair chance of coming to fruition soon?

.................

Nice trade dave. Certainly can't fault anyone for taking a nice profit.

I've been playing HL and SLW long since middle of last week when I started seeing PMs and miners diverge from broader markets. Got lucky and saw this morning's selloff in SLW premarket and added some at $11.40. Unloaded some of the HL on the morning euphoria (some too early at mid $3.70s - before the real euphoria) for a nice profit and just added a small bit back into HL @ $3.73. Still riding the SLW as well.

Added some short exposure via SRS as a hedge (sold $15 Oct covered calls against to counteract erosion). Going in to today I had no net short exposure so leaning a bit more cautiously.

Upward is still the path of least resistance from my vantage point. There are too many people being left out of this rally due to extreme caution earlier in the year. Makes me think the only end to this broad rally may be upward capitulation (as unjustified as that may be on a "value" basis, it seems inevitable on a "price" basis).

As always, reserving the right to change my view on a dime!

White House Holding USD Back, Pushing Gold Higher:
http://www.resourcestockguide.com/home_page.php?dr...

On Friday I wrote that Tuesday will be the judgment day. A weak market would have moved down today, which would be a very strong TA signal for the start of the downtrend. Instead, the market moved up today. In the spirit of practicing "trading what I see," I sold all my TZA today with a hit of another 0.25% to my portfolio. My plan is to start *holding* a 3X ultra-short only when the downtrend is confirmed -- otherwise, I will be jumping in and out.

On the other hand, a buy limit order was triggered at $12 for a little more SRS today, and I have set a sell limit order at $12.50 for these shares.

Finally, I bought 10 contracts of UNG October $10 puts, which is a bet on contango erosion for UNG and also on its premium disappearing within the next month or so. UNG is up 7.2% now while October NG futures are up only 3.7% now, so its premium will increase today a lot.

to answer your question:

never.

there is no "leverage" in miners to gold.
there is only relative moves of the miners compared to a rise in the gold price.

the past 2 years or so have given us a clear and lucid example of the dislocation of the value of gold miners to their underlying product: copper.

as Fransix has pointed out before, very often miners like Yamana are by proxy subject more to copper pricing fluctuations than gold in that much of what they actually mine is copper. poor hedging in currencies and base metals has given us a host of problems w/ the gold mining group.

as we have seen, miners have lost most of their hedge books the past few years in order to benefit from a run up in gold, and yet with gold at $1000 many are at the same price they were when gold was much lower.

this is not leverage. it is perception.
miners tend to go up more %-wise during rises in the gold price and fall more during price dumps. but this relationship has varied for so long, especially the past few years that it is impossible to fairly refer to this relationship as "leverage".

some miners will go up more than others, and it is very difficult to predict which ones. i am of the belief that the jr. market is so heavily manipulated and full of crooks that they will only go up as momentum plays as a group and that a few select jr.'s will emerge but picking them has been at best a scratch and win contest.

having gone to the PDAC for the past 3 or 4 years I can attest to the multitude of men in nice suits pushing their wares while their stocks have done nothing but go down the past 3 years. they will be there next march too saying the same nonsense hoping the "leverage" play will make us buy.

miners are subject to so many different forces that it is a mugs game to hold these thinking they will at some point be free enough of problems to move up enencumbered by the variety of hedging issues they face. currency/base metals/precious metals/43-101 and financing. hence they have eroded in value because people move to gold in times of financial instability, not gold miners. this is not 2006...sadly.

Thank you Dr. Cosa,

I've appreciated all your posts, and the cold water you throw on the PM bull arguments and how wrong they've been most of the time. That being said, what's to prevent us from going quickly back to 2006? I see many reasons for PMs to hold, and possibly increase, in value. It seems the jr. miners' "stories" could soon be retold once again with a shred of believability.

Looking at the daily chart, I see silver has had a big run up - $2 in the past 6 trading days, or 14%., without a loss. Its daily RSI is 89, and the weekly is 73, Could it go farther? Sure. But historically during this last rally, silver has peaked with at an RSI right around 90.

I think we're in seriously dangerous territory here. At the very least, silver needs to rest for a bit before resuming its upward climb.

I agree with Dr. Cosa about miners not being the best way to obtain leverage to gold now. The broad market is very vulnerable to a sell-off now or at least to a long period of sideways motion. Miners tend to follow the broad market to a large extent. Thus, my personal strategy is to obtain leverage to gold via buying deep in-the-money calls on GLD, which can give the precise desired amount of leverage.

Tomorrow we have:

7:00 am MBA Purchase Applications
7:45 am ICSC Store Sales
1:00 pm 10 Year Note Auction

Not sure how to proceed here after a rather confusing weekend. Like when an old Boss we once had, who periodically railed at us all when a few stepped-out of line, I'm unsure if I'm a guilty party or not.

Anyway, following up on some research regarding cycles that I started after Gold did it's 'lil surge last week, I read the following paper this weekend:

"Dynamic Strategic Asset Allocation: Risk and Return across Economic Regimes"

(see attachment #1)

Among other things, I found it interesting that Commodities had their "best runs" during the recovery and expansion phases of the economic cycle (Table 4). It made me take a look at DBC today, for the first time in a long time: it certainly doesn't look too overbought, does it?

Also, using the St. Louis Fed site, I was able to recreate 3/4 of the paper's regime indicator (unemployment, credit, and ISM Index) but I don't understand the 4th component: Earnings Yield %. Perhaps someone has some insight?

I found the historical chart on Credit Spread (Aaa vs Bbb) to be most interesting, explaining well why overweight in high yield corporates (in Canada) have been such a winner since December. Basically, we had an unprecendented, seismic, +5-sigma event. The spread is still a bit above normal but rapidly closing.

(see attachment #2)

Mac-

So I find myself pondering the long view.

(a) What if I had simply gone all-in at the height of negativity (which I did, the first week of March '09) and stayed in? What if Doug Kass' call of a 'generational low' was correct (it probably was), and I could have left the buy-and-hold half alone for twenty years? What made me so sure that clearing the table at DJIA 8000 in mid-May was a smart move?

(b) (Speaking of seismic) What if I had bought income property in San Francisco's Marina district in the months/years following Loma Prieta (I could have)?

(c) What if I had bought C @ 1, TCK+SLW+BAC under 3, or shorted oil @ 140?

Why is it so easy to plan these moves from afar, yet impossible to act on them when at hand? Frustrating, no?

So what are the 5-sigma events unfolding now? Are there any?

(d) Is NGas under 3 a long-term buy?

(e) Is the $USD a buy?

(f) Should I be shorting bonds with a 5-year horizon?

(g) Should I have refinanced for 30 years @ 4.875%? (I did, and I still think that was a good move.)

I can't pull the trigger on (d), (e), and (f). Probably for the same reason I was unable to pull the trigger on (b) and (c).

Is anyone sitting on positions in (d), (e), and/or (f), with a multi-year horizon, and holding with conviction? If so, I'd like to hear about position sizes (percentage-wise), and if you've been holding longer than a few weeks, how you manage the volatility (emotionally).

Let me add-

(h) How many think property values/real estate prices right now in San Diego, Miami and Las Vegas represent (or at least approach) 'generational lows?'

(And if the answer is 'No,' did you think likewise when TCK/SLW/BAC were under 3? When the SPX was at 667?)

for XOMA, that will have an impact on share price.....

Hey 2nd,

This kind of stuff always interests me, so I'll bite.

Quick bit of research shows median resale home price by county for July 2009 ranges from 300-435K. Variability within counties can be huge.
http://www.dqnews.com/Charts/Monthly-Charts/SDUT-C...

Hard to find hard numbers, but looks like median income in San Diego is $45K/person or about $75K per household.

That gives a best case scenario of house price to income ratio of 4 (300/75), which is already above average. Use any other combination of numbers and it gets worse. But the historical average might be higher in San Diego

300K mortgage means about $1600/month mortgage. Plus property taxes and upkeep, I'm guessing brings it close to $2000/month

Quick search indicates average rent for 2 bedroom apartment is $1200. No idea how accurate that is or how that scales to house rental.

My feeling is that it could be made to work, but I think the numbers will get more favorable in the future. In other words, I think prices will fall more. If nothing else, prices are highly unlikely to jump, giving you the sensation of having 'missed the boat'.

Just my 2 cents...

Being a mid-westerner all my life, I have always thought RE on both coasts was insanely priced and so do I today. The faster it goes up the harder it falls. Its like a high beta stock nowadays.

re: Nat gas --- I don't see a short or intermediate term upside. Too much gas too soon. Thats why I have a short going on with a small, predominantly gas producer. But that is a hedge because of my bigger oil producers.

re: Money Market and bonds --- both not good but what you gonna do until you wait for the price of that elusive, growth and dividend paying stock to come to you?

to one more convoluted and contrarian economic theory, to one more person quoting a guru and describing what HAS to happen, I'm gonna shoot myself in the head.

It isn't about guru's ruminations or bizarre fiscal figurings.....

the answer my friends is inside of you. Which is good news. That means you can beat this thing.

http://tinyurl.com/nd6thf
"The hedge has been an albatross around their neck. The higher the price of gold got the deeper they were in the hole," Ing said.

ALOHA !!

DUH ... With a partner like JP Morgan who can go wrong?

Greg et all,

That is the essence of why I am here. Thats my belated response to Bill's question from last week. His comments and simple RSI tool are ongoing gifts which I wish I had received years ago. Buy and hold, in the new paradigm, is dead as many recognize. Unless you are super rich but even those folks have had a big decrease in wealth.

"...keep the price of cars higher or as "one" said to keep the bias inflationary rather than deflationary. By eliminating the new car inventory and disposing of all of the usable cars turned in it creates demand and maintains prices for automakers."

Problem is, that only worked for 2 months or so, and artificially pulled demand forward. I bet we hit an 8 million annual car sales rate in some month before the year is done.

Wouldn't doubt if the $8K house credit has similar consequences.

Shark said

"If I have to listne to one more convoluted and contrarian economic theory, to one more person quoting a guru and describing what HAS to happen, I'm gonna shoot myself in the head."

amen

:0

Time to put the prehistoric graphs and charts that used to work in the 90's in grand ma's attic.

It's a day trade until we get a global currency.

You have to be Street "Shark" to trade this market.

that my vanilla beans

vb

...sees NG in a meltdown, speaks with real people who are 40% down in clients asking "what recovery?", remarks on the implications of El Nino and looks at the big money rush to buy land and agro/chemical companies (huh, the new trend is in and a new bubble already forming)

http://blog.madhedgefundtrader.com/

For a real example of acquisition, see attached. Look where investor volume by price is - BANG! Someone with money just put a new floor under CRESY (Argentinian farming/real estate) on the 60 min. chart. The daily offers a little more hope of a pullback but you get an inkling of the reflation trade already at work and under the radar of the retail investor and general public. Gold ain't the only game in town. Although I have not checked, investments in the companies quoted in Mad Hedge Fund and here COULD be a reflection of investor uncertainty in ETF's given the pressure building upon them.

ALOHA !!

ABX management have called it wrong since day #1 ...

Not only have they failed miserably to capture the POG upside over the past five years but they have just now come to the conclusion that gold has more upside as the POG hits $1000USD. What was ABX management thinking when POG first went over $400USD? $500USD? $600USD? $700USD? $800USD? Or were they listening to JP Morgan?

Read this statement here in the news release about their new decision to buy back their hedge book.

"Barrick has made this strategic decision to gain full leverage to the gold price on all future production due to:

- an increasingly positive outlook on the gold price. The Company expects global monetary and fiscal reflation will be necessary for years to come, resulting in an increased risk of higher inflation and a future negative impact on the value of global currencies; and

- continuing robust gold supply/demand fundamentals.END

How much do these guys get paid ... and for what?

Then there is this little beauty...

"The gold hedge book has been a particular concern among our shareholders and the broader market which we believe has obscured the many positive developments within the company ..."END

Pardon me ABX, but what business is it you are in? I think I would be concerned as a shareholder of ABX if POG was at $1000USD while management had me locked into contracts to sell gold at $375!

What about ABX financials, all reported in GAAP except for the footnotes are all NON-GAAP! HA!! Where's the KoolAid?

So now ABX will dilute like hell and sell off all their assets to SLW and somehow that is creating "value"? SLW is the industry "carperbagger" for all the under funded bogus business models. What does ABX owe SLW in the event they fail to produce, known as force majeure?

Another concern comes to my mind and that is this out of the blue $3B DILUTION DEAL with the prima donna deluxe bankers ... Why is the ABX management picking this time to dilute if they truly believe they have more upside by de-hedging or is all their massive CAPEX catching up to them?

Now if I see the CEO, Aaron Regent, suddenly announce he is leaving the company to spend more time with his "family" then I will go JEFFREY SKILLING and short ABX like the GOLD ENRON it truly is!! HA!!

BIGGER IS NOT BETTER ... BIGGER IS DANGEROUS!

Thank you Bill for removing ABX from the CARA 100 ...

For the first time in years, the FHA funding reserve has fallen to 3%. In 2007 that reserve was 6.4%. Legally, the FHA funding reserve cannot fall below 2% or they have to stop funding. Interestingly, the Fed has determined they won't be propping up FHA further, at least for now. The reason may be due to higher FHA foreclosures with such banks as Wells Fargo, Bank of America and their recent acquisitions who specialized in FHA and Sub Prime. Those same major banks, if you recall, just pulled a number of their riskier products off the rank (manufactured home loans, construction loans, condo loans) and raised their credit standards. Underwriters are now cherry picking files and denying borrowers who clearly fit FHA profiles, just not THAT investor's view. Is there any question why HB&B want to start their own government backed loan program? FHA has proven to be a tough guarantor, wanting proof for everything imaginable and prosecuting banks like Taylor Bean Whitaker who fell afoul of their systems by closing them down with little warning.

The whipping boy in all these government guaranteed scenarios is the US Tax Payer. WE are the ones guaranteeing loans to banks so THEY don't lose when borrowers default. This is rather simplified. It's very real. As Kaimu called it: the US Taxpayer net = a marked deck!

Kaimu, we received an email like that every other day from the WAMU's to theTaylor Bean's for the last two years. Often it was just an Account Executive farewell with no explanation, followed by the news release. When TBW went down if you had a locked loan on funding the funds never appeared and other opportunist lenders offered to close our 'fallouts'. A painful explanation for the stack of new closing papers to one's exhausted borrower followed with profuse bowing and scraping to the Realtors tapping their fingers, Senderra and similar named mortgage banks often sold their loans to the chartered banks like Wells and Chase. No co-inki-dink? GS was the bagman. Or in this case, the re-bagger.

Resistance:
Just watching price movement it is obvious that the market is resisting upward pressure.
Curious, from 2:PM to close yesterday I plotted up/down NYSE volume as follows:
2:00PM
up = 419.35M, down = 292.67M: net positive vol = 126.68M
2:30PM
up = 457.13M, down = 296.20M: net positive vol = 160.93M
3:00PM
up = 508.52M, down = 318.35M: net positive vol = 190.17M
3:30PM
up = 559.23M, down = 335.42M: net positive vol = 223.81M
3:55PM
up = 732.00M, down = 436.27M: net positive vol = 295.73M
Close
up = 860.91M, down = 446.23M: net positive vol = 414.68M

One would thing that with such an increase in positive volume that the market would have surged higher. I did not.

Does anyone have data showing the ratio of residential and commercial real estate?

Billy I noticed that you plan to amend your return. Is this the normal way to get the $8000? My son just purchased a repo and was thinking that he'd apply the purchase to his 2009 return - is this not correct?

TIA
Dave

Europe. Quick fakeout to start the day? I like Bill's idea on the GDX group - thanks.

Here's a chart from John Lee. Note the symmetrical triangle. Let GLD fall a little, don't know if it will fall back into the triangle and then another opportunity to go long.

http://chart.ly/kx926b

jdb633,

As I understand it is possible to amend a 2008 return in order to get the $8000 expedited. I have not yet sat down with my accountant to find out the details but I understand that it is possible to amend the 2008 return. Maybe loannetter can shed some light?

back in at $4.01 on the equity raising. I think this will be viewed positively.

Also bought a few September $14 calls on GE at $.80.

Mr Cara... I remember you mentioning once that you held a position in UXG. Any chance I could get you to share your thoughts on where you think this stock is headed?

bullish or bearish?

Bev - you were asking where UXG was going. My take - descending triangle (if it is that) is bearish and offering the long opportunity soon enough. The brief mention given to this was to help others like yourself decide what you want to do with the miners you're holding.

UXG on the 15 min chart seems to have found a bottom at 3.25 (2 cents below present price) but what is next support following that if gold drops heavily overnight? Do you want to hold or sell now and reestablish a new long position? (rhetorical question for yourself).

I question bullish or bearish nature because 64% of the time breakdown occurs:

http://thepatternsite.com/dt.html

Probably a given answer I suspect because of the upside resistance at the moment and Bill's comments. Sorry - I have bad habit of not fleshing out my comments sufficiently to be crystal clear. I hope this is more useful to you.

Nice foreclosure story Billysundance! Sorry I had to sleep! I'll repost on Wednesday. Most foreclosures (Realtors have so many listed they can't keep them up) are in need of cleaning up but it's definately buyer beware. I've heard of pipes filled with concrete by the angry departing owner. The $8000 Tax CREDIT is for April 08-December 09 purchases. One wonders what the hue and cry will eventually create come April 2010 for the earlier credit that has to be paid BACK?

Exerpt from IRS RELEASE:
For 2008 Home Purchases
The Housing and Economic Recovery Act of 2008 established a tax credit for first-time homebuyers that can be worth up to $7,500. For homes purchased in 2008, the credit is similar to a no-interest loan and must be repaid in 15 equal, annual installments beginning with the 2010 income tax year.

For 2009 Home Purchases
The American Recovery and Reinvestment Act of 2009 expanded the first-time homebuyer credit by increasing the credit amount to $8,000 for purchases made in 2009 before Dec. 1.

For home purchased in 2009, the credit does not have to be paid back unless the home ceases to be the taxpayer's main residence within a three-year period following the purchase.

http://www.irs.gov/newsroom/article/0,,id=204671,0...