Cara's Commentary & Community Chat, Wed., May 27, 2009

There is another freedom fighter now trying to get into the Senate. Rand Paul or Ron Paul's son is going for the Kentucky senate seat opening up.

Also, the people are slowly being educated...YAL or young Americans for Liberty and other grass roots organizations, and I hope your prediction of the great fall of HB&B comes true...I hope they (American Citizens) realize how important this is!

Lots of hope for sure!

but today feels like it could turn bearish.

Hey...Anybody got any good trading ideas?

hi shark,

I'm thinking more miners. northgate minerals? NXG

NXG is overbought with RSI 75. IMHO you might be chasing it here. Just my 2C's.

DYOD

french,

thanks, will hold.

Speaking of miners: Is anyone planning on attending the presentation sessions for Goldcorp and Agnico?

Speaking of weather: -19 with the wind and light flurries this morning.

Some pretty crazy price movements in the home builders this morning. Lennar first up 5%, now flat, within 30 minutes, on big volume.

Bill's comments of late have been very interesting, and readers need to pay particular attention to the news we're currently been fed, and how the market reacts. It does appear fishy.

In Wednesday's daily report, Bill said:

"The speed with which the S&P futures rallied, and the sectors targeted for purchase, really makes one wonder if some large institutions knew the contents of the Consumer Confidence report, and had lined up the scripts to send to the mass media outlets they control."

I read a LOT of commentary over the long holiday weekend on the economy and the markets, and the general consensus was overall quite bearish. One comment that caught my eye on Monday in a different forum was "everyone sounds bearish, so the market will probably rally on Tuesday."

Don't think that those in control don't peruse the various forums and discourse to gauge the sentiment of the populace. It seems well within the realm of possibility to me that the news articles on shopping malls being either very slow or being closed, are published with intent to sway opinion.

With all the advantages that the internet brings to individual investors (instantaneous access to news, prices, etc), those in control can just as easily use it against us.

All this said, it would not surprise me to see the market burst out of the small congestion range of the last 2 1/2 weeks, and then fall back. See the action in very early January of this year for a similar setup where the market broke out of a 3 week consolidation and subsequently failed.

We need to be careful how we interpret what we read, what we see on TV, and balance it with common sense and solid logic. This forum that Bill Cara has formed and nurtured is an excellent starting point. Thanks again, Bill.

take care all/ToddinFL

?

I was cruising through the CNBS's, Bloomberg's, etc. last night and caught Cramer saying we should now be buying the dips.

That usually means 666 is just around the corner.

Booyah.

Dr. "C",

Check your oral temperature, it may be Gold Fever! ;-)

Bill, thanks again for your latest comments and analysis....today was a light bulb "click on" type of day.......I hope your site is growing in popularity and that your business model catches on all over the globe......what's that older expression...."power to the people".....

Dream/premoniton doesn't matter, $1107 sounds good to me!

Another commentator who seems to have integrity is the bond wrap guy at "Seeking Alpha.com"...last name Jansen....his wrap up yesterday was interesting regarding the sale of treasuries....it dove tails with Bill's comments today....it was entitled...."Something's A Foot" IMSO (S for small)

Pretty brisk gold volume this morning. Attempts to give gold a beat down were met with big buying pressure.

Heh at least that's how I see it anyway. :)

80k futures contracts traded today and so far we're only an hour into the trading day. Sometimes that's the entire daily volume!

Wow, and there it just took off - gold +2.

Yes, I noticed BDK had some crazy moves also.

FD: long

GG took out resistance and KGC is at resistance, if your are long and want to protect gains why not set stops, mental or hard, and let the market take you out. Maybe others here could give options ideas such as selling calls if you think that momentum is waning.

One has to remember that the 2000 recession was officially over by the end of 2001 yet the stocks sinked till late 2002 (reference: http://en.wikipedia.org/wiki/Early_2000s_recession).

Same with the leading economic indicator. It is rising now giving a huge boost to this rally, yet everyone forgets that the leading indicator went up a lot between 2001-2002 followed by another bust.

Bill hit the nail with the sentiment being a lagging indicator. Actually, it correlates fairly well with equity and is useless, except for a contrarian trade.

http://tinyurl.com/qkc86s

Guess they don't need to be educated. There won't be diddly squat jobs for them anyway. See how the state (children) and feds (your soldiers) throw away their most precious resources - human beings.

Still, plenty of privately educated kids to inherit the thrones of finance and political power.

The US ain't finished yet.

Hey Dave- "People trying to get into their positions prior to a possible treasury auction failure?" That's my guess. So... pressing the bet on TBT (adding @ 55.15).

Also took OCLS profits and added to UNG @ 13.52. Kinda like using this "house money" thing.

Mackinaw,

I posted this in reply to your query yesterday, reposting in case you didn't see it:

Some quick digging found this site with a bunch of stats for last 5 years:

http://www.euromonitor.com/factfile.aspx?country=US

numbers in millions
annual disposable income 2008: 10,279,820.75
gdp 2008: 14,493,188.56

Which works out to the oft quoted 70% consumption making up GDP, assuming 0% savings which was pretty much the cast.

so 1% of disposable income = 102,798 million, or 0.7% of GDP

They say savings rate is now at something like 4% vs 0% a few years ago, so technically this would subtract 2.8% from GDP (if disposable income stayed the same).

monthly disposable income per capita figures:

http://www.bea.gov/briefrm/percapin.htm

Not sure how disposable income has been rising the last few months given the multi-million dollar layoffs. Maybe just cause fuel has gotten cheaper? Can't see that sustaining. And if it doesn't, there will be combination of declining disposable income AND increased savings, thus an even bigger bite out of GDP...

So what happened to UNG at 10:20 (approx) eastern? It was going down hard, and then abruptly reversed course, all the moves taking place on above average volume for the day. BTW nice buy-in point, Mark, house money or no house money!

The market is behaving very strangely today. Things are afoot.

gotta take it to a specialist association to look after it.

Bloody thing keeps biting me.

night all.

ps. see its another same old same old. U can't touch this...

rinse and repeat.

dr.cosa - Perhaps you need to take some time off. But don't go without first taking a substantial position in PM's. I also have dreams while sleeping but very rarely remember anything about them. Maybe I sleep better that way...

http://www.minyanville.com/articles/AAPL-rimm-UDN-...

"The market: There's a strong tendency for the market to rally on the Friday ahead of long weekends. The failure of the market to hold up on Friday scoring the second consecutive weekly close at/near the low of the weekly range had many players, myself included, leaning long. I personally had some longs and shorts, as reflected by my swing positions, but the initial down open and immediate reversal triggered some new shorts which I was then stopped out of. Although the strength was attributed to the nice consumer confidence numbers, the market had already reversed from the get go, with the turbo chargers being turned on following the release of the consumer confidence report.

Call me a cynic, but it looks to me like there was an agenda by someone somewhere. If it looks, feels, and smells like a trap, it usually is. And Turnaround Tuesday had the fingerprints of a panty raid by Hoofy early on.

The moral of the story: We’ve all seen this film before, and when you walk into the new week and get hit in the back of the head with a 2X4, the best course of action is to duck and bang some offers yourself."

CP- Still holding FTWR? This might be a good profit point. If credit tightens again that will cost them.

Nice follow through today after yesterdays big move. FD-long

Mark - Absolutely I've still got FTWR! This is an infrastructure play from my perspective, the Obama stimulus hasn't been rolled out yet has it?

I'm coming closeer to a double bagger on this and wishing I'd've bought more even though the position is my second largest. Will probably feel the same way about CHK and DOW going into the future...

May 27 (Bloomberg) -- Federal Deposit Insurance Corp. Chairman Sheila Bair said banks involved in the U.S. Public- Private Investment Program won’t be permitted to buy their own impaired assets as a way to cleanse their balance sheets.

“There should be no confusion: Banks will not be able to bid on their own assets,” Bair said today at a Washington news briefing to discuss first-quarter U.S. bank earnings. There is “no structure” for such purchases, she said.

The FDIC is helping the Treasury Department set up and run the PPIP, which will use $75 billion to $100 billion of Troubled Asset Relief Program funds to entice private investors to buy as much as $1 trillion in distressed mortgage-backed securities and other assets.
http://bit.ly/1lDSnO

I purchased a second AAPL put...QAA SC at 2.00 this day.

I could be early, but I will see.

Someone should explain to Bair that where there's a will, there's a way. Bair is either naive, or she's aiding and abetting the plan. HB&B will find a way to buy their own "toxic" assets while offing the losses onto someone else if that's their goal. That's the purpose of this entire exercise involving the global economic meltdown.

Well they've been selling gold ever since noon, and boy this thing will simply explode at the slightest touch. The 5 minute RSI is 6.5!

These auction days are exciting! :)

I'll take the teenie I guess. Probably should double up here, but trying to cut down some risk.

not surprising, i think too much bearishness was baked in the cake for bond sales that people had dire visions of that didnt come true, so gold is backing off the panic hype.

that being said, weve got longer dated treasuries thursday, the levels of Central Bank buying will be a critical indicator as people seem to believe as long as non-US central banks are buying thats "foreign purchases" when in reality its other CB's just cannibalizing eachother's bonds.

"people had dire visions"

Agree. It's like the media overreacting to information or what may happen.

I've opined about this before, but I suspect a gradual erosion in longer term Treasury sales . . . . eventually it will increase more noticeably (as the snowball rolls down the hill), but it takes awhile to reach there . . . not a NY minute like most traders are focusing on.

What happened? I was worried my stops would bet hit on my short positions when suddenly the markets tanked hard.

To me it looks just like the action in the first week in June 2008. Third and final push up against the resistance followed by a sharp sell off with a new lower low.

It appears today's treasury auction was better than anticipated, and perhaps sentiment has changed in the face of tomorrow's auction but I have to believe tomorrow's auction, while being longer term notes, now has a much better chance of following the trend. Perhaps something else is afoot...

Barry Ritholz had an article a few weeks back about "countertrend tuesdays". You shorts, stay frosty! Anything could happen tomorrow.

For me, I'm playing short billy ball. When I get 4% - 6% move in my short, I close it out, and wait for another opportunity. When I get greedy and look for more, I almost always get caught in a reversal, and I have to wait it out.

One pattern I have noticed is a reverse-U shaped daily chart. Great example: JWN today. They tank the stock on the open (probably popping the stocks of anyone who is long, but I dunno, since I'm not long), and then drive it up to 3-4% gain, enough to surpass the high of yesterday (popping the stops of anyone who went short the previous day), and then it either goes horizontal or drops down to close basically where it opened.

They do this not daily, but every 3-4 days.

i have seen this more times than I can count. After the first time, I started to put my stops much further up, and I've become much pickier on my entry points. I haven't been stopped out since - but my risk is certainly higher.

EDIT: actually, I use two different stops. The first is the "entry point stop" which is quite tight, for picking the top of the U. The second is the interday stop, which I set after market close, to avoid HB&B's stop hunting games. I often get stopped out before I get a good entry point, but I don't lose very much. I have not yet been stopped out on my inter-day stops.

Short billy ball. It's the only way I've found to play the game with HB&B while short.

FD: short retailers, REITs, and the XLF.

There was another compelling evidence on that posted on Traderfeed:
http://traderfeed.blogspot.com/2009/05/is-suppleme...

His is not into conspiracy theories but concluded:
"Given the concentration of this program activity in the last hour, a skeptic might be led to conclude that this trading is more designed to aid the liquidity of participating trading firms than the liquidity of the marketplace. There is nothing wrong with this--unless the activity is funded in part or whole by a stock exchange working in conjunction with financial institutions backstopped by the government, creating a less than level playing field for independent traders and investors."

speaking on solar... Sunpower ( spwra ) is the system in use there, and panels were displayed behind him..........

ALOHA !!

One of my suppliers is being forced to quit using ADVANTA credit card. He is one of the guys who makes money off credit cards by paying off his balance every month and getting rebates. He tells me he makes $1500USD per year off ADVANTA rebates. Now he is looking at CAPITAL ONE as his next choice for rebates. But how long can the rebate model last in this enviroment?

ADVANTA has informed him that they are currently running a 20%+ default rate and to make up for that they have raised interest rates to 36% for those who still carry balances. EARTH TO ADVANTA CEO!

May 31, 2009 will be the last day he can have charges applied to his ADVANTA card. On June 1, 2009 ADVANTA will no longer use a credit card model, but a debt collection model. Not sure how long a credit card company can exist on just DEBT COLLECTION when default rates are rising above 20%.

What sort of short action is on ADVANTA and other credit card companies that have these rebate models, like CAPITAL ONE? By the way I get COMEON OFFERS from CAPITAL ONE for my business almost every day. It is ridiculous that
this has been going on for years now ... What a waste of trees! In fact that is the main reason I would never consider CAPITAL ONE, they are way too agressive and wasteful. Their marketing dept seems clueless when it comes to "mailers"!

ADVANTA its time for TARP WARP ...

ditto...sold SRS early, but have a stop set on FAZ @5.27, profit is locked hoping it runs to close.

edit: enough is enough took FAZ off @ 5.40

edit 2: trying some SCO @ 21.10 for swing trade.....doji reversal trade hopefully

Oh I see (a bit late), the long end went crashing again today. Oops, is that a freight train barreling down the track???

I dunno vanillabean, bac wasn't exactly a screamer today as far as I can tell... Perhaps they will be when their portfolio of mortgages reverses polarity due to a depreciated currency?

Aside from perhaps 5yr notes, I'm experiencing difficulty identifying anything of consequence that increased in "value" today...

I recall several months ago, Bill had mentioned a play in the bond markets involving a "trade of a generation". With much dislocation now occurring in the bond markets, coupled with strength in precious metals, perhaps we are at the initial phase of Bill's earlier but very noteworthy call?

Fireworks, do you have that link? Thx

hey check out
>>> http://www.iamned.com allowing free link submissions for finance/economics related blogs/websites

Interesting link>>> http://www.iamned.com

Lots of intriguing finance articles. Great website. I seriously suggest you bookmark it.

each of the last five economic recoveries. ETF vehicles include DSV, VBR, PWY, IWN, RZV, JKL

and UVT.

Wish we had a botnet to take him offline. I wonder how much it would cost. :)

USA Today reports:

Federal tax revenue plunged $138 billion, or 34%, in April vs. a year ago — the biggest April drop since 1981, a study released Tuesday by the American Institute for Economic Research says.

http://www.usatoday.com/money/perfi/taxes/2009-05-...

And we still think GDP is only down 6% annualized, and we still think unemployment is only 8.9%?

Wait, don't tell me. Tax receipts are a lagging indicator. We should be looking forward six months. Maybe we'll all buy cars then! Consumer sentiment surveys are what matters! It's time for another rally!

Now I gotta say it: it all works until it doesn't! HA!

Golly, wonder if they can make up those lost revenues by increasing volume?

thx, i remember reading it all last year. Now time to go back and do some more analysis. This is all rinse and repeat happening in the market, so there could be some nuggets of information from the older posts still very useful.

A few posts here and elsewhere ( http://rurl.org/1l8p and http://rurl.org/1l8q ) talk of the dislocation in the bond markets and quantitative easing. I don't understand either of these two terms. People seem to imply that these are major events. I'd be very grateful if people could post some useful pointers that can help me understand these. Thanks !

IMHO, this is a good read on the issue:
http://pensionpulse.blogspot.com/2009/05/liquidity...

TOG is coming and he is waiting.

I tried to raise this topic to no response a 2 or few weeks ago. Said something like...bonds are near 30 yr highs, a fall through the 2nd blue channel from the top would likely be bearish. A bounce at 110 seems likely. I dunno it just looks so sensible to me when you factor in the f.a.
But what will the driver be I think was the question at the time and still is. Likely more than apparent when it comes to be.

ps; does the double bottom at 104.81 and subsequent fib extention off that level suggest a top at 142.66? Jmho it does.

vinod - I just fell out of my chair laughing!

Chickenpookie
did you notice this
Yesterday CNBC had a BREAKING NEWS: MARKET SURGES alert for 4 hours straight, for some odd reason the MARKET PLUNGES alert is nowhere to be found today

i had the same thought, looking at all the bond charts, they all look still bullish. What does the bond yield are factoring in (inflation? Risk? Competitive returns of stock or corporate bonds?). Overall the financial scenario has worsened and the LT bond yields are less than what they were 2 years ago. Confuses the heck out of me, this bond subject....

Bill:

What do you think this will do to the markets?

http://tinyurl.com/yuc4st

California, the only proposition that passed was the one preventing the legislature from getting pay increases if there is a budget deficit.
Some odd observations that I had this morning (I'm in Boston, we have a budget issue of our own, so I was comparing it to the problems in California):
California budget deficit, 21 billion. Massachusetts

Cool site check it out folks. Tons of informative articles. Interesting Finance & Economic Articles free link submissions for economics, finance, and technical analysis articles from bloggers/websites

"From Business Week:

Southwestern Energy (SWN)...................3,662%
Celgene (CELG).........................................2,607%
XTO Energy (XTO).....................................2,088%
Stericycle (SRCL)......................................1,503%
Gilead Sciences (GILD).............................1,491%
Denbury Resources (DNR)........................1,271%
FLIR Systems (FLIR).................................1,190%
Ventas (VTR)..............................................1,127%
Range Resources (RRC)............................1,124%
Lab Corp of America (LH).........................1,107%
Quest Diagnostics (DGX).............................835%
Chesapeake Energy (CHK)..........................813%
C.H. Robinson (CHRW).................................692%
Varian Medical Systems (VAR)....................677%
Occidental Petroleum (OXY).......................634%
EOG Resources (EOG).................................599%
Express Scripts (ESRX)................................595%
EQT Corp (EQT)...........................................540%
Apache Corp (APA)......................................486%
CONSOL Energy (CNX)...............................486%

(Note: BW restricted the list to S&P 500 members with betas less than 1.)

Posted by Eddy at 8:22 AM | Permalink"

Lots of natural gas stocks there and some biotechs/medical.

CP/VB- Thanks for the props...But of course OCLS ended the day +266%. No complaints, my plan was to sell on the news and I stuck with the plan. I was able to trade it a few times latter for a few shekels before I had to leave.

Now the hard part for TBT. How long before the FED comes out, AGAIN, and issues a statement they will purchase more treasuries. Frankly, I don't think it will be too long.

CP- No magic in the moonshine. The trick is to get the counter party to partake.

UNG- No new news here for me, other than the clock is ticking louder and louder. Now at 70% and thinking of increasing positions size to 125%. Volume sure looks like accumulation to me.

Dave, your the volume Guru. What's your take?

Under the anti-proliferation treaty, nuclear powers have a legal obligation to reduce numbers of warheads, which is in return for non-nuclear states staying that way. Of course, the nuclear states have largely ignored their obligation.

A US first strike against North Korea would, IMHO, not be rational. It would send the world the message that "might makes right" and that international law doesn't matter. Why the global sheriff would undermine the law (as Bush did) escapes me.

A first strike against North Korea would likely increase the resolve of all non-nuclear states to go nuclear ASAP.

BTW, who is the "Turner Radio Network"? Do they deserve to be taken seriously? highlighted in this blog?

I'm not too concerned about this yet, although I do know a few south Koreans who probably are.

This article closely mirrors how I understand the subject:

http://tinyurl.com/q99tyq

I don't think it wise to consult Hal Turner for anything, let alone an investment strategy.

BILL!!! THIS IS A SPAMMER!!! SECOND DAY IN A ROW THE SAME ENTRY HAS BEEN POSTED. BAN THE IP ADDRESS....

Ah...please :)

SAME GUY!! GIVE HIM THE PRIEUR TREATMENT

well I will have a Ice Tea with that Nuclear War

Seesh...

Is it any wonder I threw my tv and news watching out the door... Lets get serious and have a few ice teas at the beach...

Its life... live it

not fear it or worry over what wont happen...

im sick and tired of the non-stop nuclear war propaganda coming from american media, theyve returned to 1950's style bomb-shelter in your backyard-style fear mongering.

Iran is not going to bomb the US, they have no plans to do so, the rhetoric coming from the media is always in response to the same question trick that everyone eats up:

"if you were attacked or were certain of an attack would you strike back",

as a politician you must proclaim to defend your nation and answer yes to a possible attack, but you also must answer yes to the possibility of an impending attack. so the media simply takes it out of context and makes the headline "iran threatens to us nukes against isreal!!" or "iran wont remove nuclear option in a possible attack", even though the article will say near the bottom that it was in response to the question of being attacked, the damage is done. add to that terrorism and bomb experts being asked pointed questions on the news networks like "so if iran was to use the bomb, what possible targets would they hit? new york? chicago? anytown usa??", or the classic "so we know iran is a nuclear armed nation, not afraid to use it as their recent comments indicate, what does this mean for american policy in the region?".

ugh, i dont understand how people dont totally laugh at such attempts to distract us. yes north korea may have set off a nuclear bomb. india did it not too long ago either, and so did pakistan in testing, but people are only worried about the taliban getting their hands on the bombs. as if they would have to take over a nation w/ one of the worlds largest standing armies as opposed to buying WMD's on the black market which have been proven to be floating around. the taliban has no viable chance at taking pakistans arsenal anymore than al-queda did when they attacked the pentagon, the nerve center of the american military. so all the talk about "the taliban are 50 miles from the capital" are hogwash designed to make you think a threat exists that doesnt, at least not at the moment.

none of these states that so many americans think are the "enemy" actually are. most iranians just want a normal life like everyone else, the rhetoric is just the media taking the piss out of everyone as they run around panicking about bombs taht arent going off.

malaria kills more people than bombs and war every year, why no panic for this very treatable and preventable disease for pete's sake!!!?!

lets drop all this pointless nuclear talk driving prices, gold went down after an alleged bomb blast, so lets stop attributing every gold price rise to global instability day to day. its not consistent. golds moving at its own pace.

What a midnight treat for me to read :)
*Make sure to google the headline and click on 1st link for entire article.

http://tinyurl.com/oknf2w

WASHINGTON -- A government program designed to rid banks of bad loans, part of a broader effort once viewed as central to tackling the financial crisis, is stalling and may soon be put on hold, according to people familiar with the matter.

The Legacy Loans Program, being crafted by the Federal Deposit Insurance Corp., is part of the $1 trillion Public Private Investment Program the Obama administration announced in March as a way to encourage banks to sell securities and loans weighing on their balance sheets to willing investors.

But prospective buyers and sellers have expressed reluctance to the FDIC ...

"When I get offers in the mail, I always try to return the self addressed envelope empty. It's my small way of saying No Thanks!"

I do the same thing (with most junk mail, when I have the energy to do more than rip it up and drop it in the trash can), except I stuff the envelope full of whatever crap they sent me, plus any trash lying around.

Juvenile perhaps, but it makes me feel better...

KC

You have a lunatic (Kim J Il) who has a big gun, who hates S. Korea and U.S.A, withdraws itself from the 1953 armistice. Don't be suprised if our military assets are already there, in addition to the ones stationed in S Korea prior, and ready to move 1st. Nothing like a war to bring together (distract) a financially instable America.

My gut is the situation with North Korea wont just pass like gas. It will need to come out and reach a decisive conclusion. My opinion is that the U.N should ask China to help reach a peaceful resolutionwith N. Korea; China supplies 90 percent of North Korea’s oil demand, 80 percent of consumer goods and 45 percent of its food.

"Alert level raised on North Korea"
http://tinyurl.com/ohb3bz

Shiva,
Bingo!! It's all about sector rotation. Hedge funds are "scalping" now like some of us. Look at the action in OCLS today. Average volume 30,000 shares. Today, 16.3M. Come on. Don't underestimate the energy play though. This is the real deal LT. We (USA) had a small window to make a difference, and of course, we did nothing. Obama refuses to acknowledge the only possible bridge fuel we have is NG because he dosen't want to offend the left. Sorry, I have to stop. No need to get upset on a good day for me.

What's with all the span recently?? I've been here a year and remember maybe 5 total.

Shiva, If you can get it, CHK looks like a great entry point at 20.00.

As Vinod said earlier, the price of success. I have for the first time elected to ignore user. How aptly named is that?...user
peace from North Puget Sound

profit taking, or to quote our "beloved leader" (no, not Kym - Obama!), is it change that we can believe in?

Interesting book written by economist who has interest in pirates.

you can tie in the democratic and functioning economic system created by pirates without aid (or more rightly put - interference) of government with the URL I posted the other day about Adam Smith's moral philosophy and the free market. The author of this book on pirates elaborates on how Smith's self-interest works to the advantage of pirates as a community - and he does go into some detail in the interview on the mechanics of a pirate ship's political functioning. Worth a listen

http://www.abc.net.au/rn/latenightlive/stories/200...

I'm coming round to Kaimu's understanding of big, centralised government as a hindrance to the orderly economic (and for that matter, social) functioning of society.

ALOHA !!

Les ... So, if you are coming around to that aspect of government then you will surely be onboard with my philosophy of FIAT ... Without a fiat monetary system this kind of government and US FED intervention and control could never have been sustained.

There are 52 weeks in a year and the average work hours of 40 per week, so that totals to annual work hours of 2080. The average American spends 54% of his income on taxation of some sort(income, payroll, excise, sales, property, etc)so that is a total of 1,123 hours we spend working for various government. Thats 28 weeks in governmental servitude!

Then on the other side of that equation you have Obama and the US CONgress spending near $33BIL per day($7.8tril/239days). So far for FY 2009(eight months)this spending has indebted every man, woman and child in the USA with nearly $25,490USD. This also is a tax, a hidden tax, on our future quality of life.

This brings one to the only possible conclusion, which is what Ludwig Von Mises said decades ago ... "Government is essentially the negation of liberty." Of course it is ... How much "liberty" can you have when you spend 28 weeks in servitude while the US government piles $25,490USD of DEBT on top of you at the same time?

What must it cost to intervene in domestic and international markets 25/8?

This is not liberty and little time is left after government servitude to pursue any happiness!

ELIMINATE THE US FED ...
ELIMINATE US INCOME TAXES ...

Funny, I look at Korea's action in an economic sense now, less the military strategy. Bill has forced me to see things differently.

Korea's actions are certainly one way to deflate attempted market based recoveries at the moment.

Looking at Yahoo finance's main page, and those bozos at Fox questioning "how to handle Korea's nukes?" (what, 1, 2, maybe 5 warheads?) and I'm left wondering, who is playing who is playing who?

Keeping global economies in turmoil will certainly help little Kym's drug smuggling, money laundering, counterfeiting and other efforts.

http://ronsen.blogspot.com/2009/05/where-to-draw-l...

New currency coming?
Distribution (higher volume, lower price) under the radar.
Relative strength (20 and 5 day)
6 by 60 charts

"They're selling make believe and we don't buy that here." - John Rich

There's no mutual assured destruction policy with n. Korea, these guys can barely splash a missile past Japan, much less hit it. All this missile/nuke rhetoric is Kim's way of getting attention, lest everyone in the world ignore his crappy regime (as it should). If there is a threat from n. Korea, its a ground attack/chemical weapons attack against Seoul, not nuclear technology from the early 1950s.

Yesterday, after the 1pm 7yr auction there was a selloff of long-term treasuries. The 10 year went up 25bp. From the news I reviewed, it says in the 7 year auction $7B was USFed and there was a note that said $5b may have been foreign central bank buying (sorry I don't have that more detailed or reliable). The Fed's ability to shift long-term rate (and mortgages) with funny money may be hitting a wall. (a checkpoint on this will be the next 10 and 30 year auctions on 6/10 and 6/11 respectively)

Checking into that I learned a new term "mortgage convexity" which has to do with mortgage debt holders hedging with long term treasuries. The gist that I got (and I could be wrong) was that the size of the mortgage debt market and the hedging needs (against default, refinances, early payment) makes it a significant factor in long-term Treasury pricing and that that was part of the move after 1pm. Still digesting that.

---------------------------------
Credit Cards/Advanta

I read a good article that talked about how credit cards actually provide two types of credit: transactional and revolving. They make their money on the revolving credit (the idiots who carry balances and pay lots of fees). The likely impact of the credit card bill recently passed will be to make transactional credit more expensive. Personally, all my credit cards are a) no annual fee b) cash back. I expect cash back programs to be cut back severely if not terminated outright. Also raises and in some cases returns of annual fees. I expect to close some infrequently used cards when they send notice of an annual fee.

----------------------------------
North Korea

As was noted on the thread, North Korea is a Chinese cat's paw. However, I think that may backfire big time. I don't mean the apocalyptic scenarios. Japan has already set post-WWII precedent by sending JDF to the Iraqi theatre. Under active consideration now is legalizing weapons exports. The area I saw under consideration was robotics and drones. The huge swing under consideration is for Japan to go nuclear. That is the backfire I'm talking about for China. China wants to be the regional superpower, but NK missiles overflying Japan may extinguish the post-WWII pacifism and lead to Japan militarizing.

Mark: I've received two 0 % offers in the last couple days from our debtors at BAC and C. BAC offers me two cards, one with cash back and the other lower rates.

Nukes:
N. Korea, Iran, and who ever else trying to get a nuke know one thing and learn; monkey see, monkey do, from US.

What reason does everyone have to let us get away with all the bullying we do, the currency manipulation (while we accuse China, Japan and Europe) and all the other blackmail?

They want what we have because nukes are more than defense, they are economic weapons of blackmail.

We can no longer ask Saddam, but the leaders of Pakistan and Afghanistan got a snoot full of our sabre rattling after 9/11. After that everyone wants a nuke...er....ACE up their sleeve.

Good morning.

GGB - Downgraded to Hold @ Citigroup

New Coverage:

ADBE - Janney Montgomery Scott Initiates Coverage with a Neutral. Price Target = $19

CVX - Collins Stewart Initiates Coverage with a Hold

ERTS - ThinkEquity Initiates Coverage with an Accumulate

PBR - Collins Stewart Initiates Coverage with a Hold

SLB - HSBC Initiates Coverage with a Neutral. Price Target = $62

XOM - Collins Stewart Initiates Coverage with a Hold

Dave,

I hope we don't, but I remember when Truman announced the "Police Action" in Korea in 1950. We didn't have the troops then either. Most we in Japan Occupation Forces which were late WWII draftees and a few Regulars, had practically no combat experience and were short on weapons and ammo.

Rumsfeld had us invade Iraq with one-quarter the number of troops CENTCOM's ten years of "with-if" planning called for.

(A side comment: Today it is nearly impossible to buy ammo commercially. Where is it going? Remington says they are still producing and working extra shifts.)

UPDATE 1-RESEARCH ALERT-Goldman Sachs ups SanDisk to buy

Here we go again....

Martin Crutsinger, AP Economics Writer
On Thursday May 28, 2009, 8:35 am EDT

Buzz up! Print WASHINGTON (AP) -- The government says demand for big-ticket manufactured goods soared by the largest amount in 16 months in April, the second increase in the past three months.

Read More:
http://tinyurl.com/p69mmx

Marine forces Okinawa.

Recall US agreeing to withdraw some or all forces to Guam.

http://www.usfj.mil/Links/pacific_bases.html

VB,

"More than 90 percent of economists surveyed by the National Association for Business Economics are predicting that the current recession, now the longest since World War II, will end either in the third quarter or by the fourth quarter of this year."

Unfortunately, this is as much as most people take the time to notice.

(Note: A long standing figure is that 10 times as many people read headlines as read body copy.)

"The strength for durable goods orders in April came in a number of areas. Transportation orders rose by 5.4 percent as orders for motor vehicles and parts jumped by 2.7 percent, the biggest one-month gain since July 2007."

With no mention of actual vehicle count — For some dealers this may have been single digit sales. Dealers here who have been dropped by Chrysler and GM had to accept delivery and sell at up to 25% losses.

The old joke is, "Sure, we're losing a lot on each individual sale, but we'll make it up on volume."

Like you say, "Buzz up!"

daytrading be damned. If gold spikes at 980 plus today, I'll sell it and replace it with calls.

Is it the drug laws???

http://www.nrc.nl/international/article2246821.ece...

happy weed for everyone. And they don't get arrested for it.

Americans fell behind on their mortgages and banks seized homes at a record pace in the fourth quarter as unemployment rose to a 15-year high and real estate values tumbled.

Mortgage delinquencies increased to a seasonally adjusted 7.88 percent of all loans, the highest in records going back to 1972, the Mortgage Bankers Association said today. Loans in foreclosure rose to 3.30 percent, also an all-time high.

http://www.bloomberg.com/apps/news?pid=20601087&si...

Two trades, risking only 2% of the portfolio, netted twice what I will make at the day job today, in less than 45 minutes.

EEV- in 21.62, out 22.32
FAZ- in 5.25, out 5.44

Keeping it simple.

vertical like a rocket!

just a little runup into a number that was disappointing...nothing to get xcited @

EDIT FEATURE: (Don't listen to this man...he's got his head up his ...
Wrong more often than right, this "stopped clock" is good for nothing more than winning money from in golf:)

has been going up in May but not much of action in DRYS etc

been getting long yamana

And gold up +10!

I will NEVER work another day in my life in any other business than this one.

And what a great feeling that is:)

EDIT: Of course, I was totally wrong on the UNG thing but then again I didn't lay any sheckles on the line either. Sorry though for those who may have missed out.

Oh how I miss your company...

Back into the longer end of treasuries today, the FED must've twisted some more central bankers arms.

yep, now we have to wait for a pullback.

How longs long, shark couple hours,days ,weeks,months.Am rueing selling all my PMs now.

Wow...

Yes Dave it is and i am wondering just how high it will spike, have played this last move with HGU, one of those double funds on the tsx, first time i tried them out and am seriously considering selling here soon, dont want to get greedy and any profit is a good profit. Tomorrow is the last day of the month, funds would like to stay somewhat in the black and i believe that come Monday we could see the reversal that Bill has been talking about.

Pressing the bet @ 14.46

Otis,

http://www.realitytrader.com/blog/2007/04/stops-wh...

WOW!!!! Has sanity gone out the window? Why is the SPX still rallying when we are long overdue for at least a near term correction as low as 835.
And look at gold and silver. Gold is near its resistance of 967, currently at 964 and silver has broken out over 15 with an expected near term top of 16. Consolidation can be expected because I think it is unlikely for a moonshot over the symbolic 1000 gold.
In the mean time I am making tons of money with AUY and SLW, primarily trading multiple times (I am a day trader for sure!!). now that AUY is $11.13 and SLW 9.90, I will not be a hero but simply raise my stop losses to guarantee gains. Retracements intraday (recycles) always happen! Good luck!

so where is it going dave?

another spike, or will it find support? I'm holding $15 covered calls on UNG. Wondering if I can be deft enough to sell above my present holding price - 14.76 and keep the covered calls as an early christmas present since opex is another 4 weeks away

Vegas? This is better than Vegas.

Waiting for David to wake up and smell the bacon.

Stops hit at $11.19 for AUY and $9.96 for SLW. They can run higher but I'll wait for re-entry. Good luck to everyone still holding.

Me too...took profits on 5-26-09 at AUY $10.64 & SLW $9.3217

I did keep small core positions in SLW,AUY,AEM,GG,KGC

Us nat gas injection was 106 Bcf versus expectation of 111Bcf.
Total gas in storage is now 2213Bcf vs. 5yr average of 1820Bcf.

Will likely close up, but not above open IMO.

Les - I'm holding $15 covered calls on UNG

The candles I see are a "bullish morning star" (more or less) which is a high reliability reversal pattern.

http://www.candlesticker.com/Cs59.asp

If the price action today holds, if this isn't a day trade, just hang on for the ride. Trend reversals are the thing we wait for. I was momentarily tempted to sell that blow off top, but then I remembered just in time I wasn't doing this for a day trade. :)

If you have UNG long, and you're short the calls against it, just let everything stay where it is and pretend you don't have the calls or UNG anymore. Once UNG goes above 15, its as if you've sold that UNG off, although you still are taking risk if it drops below 15. If you hold them to expiration, you'll get the full value from your written options premium.

Or did you buy UNG calls? If you are long UNG calls, well then you're a happy man! If you're in this for longer than a day, hang on for the ride. The candlesticks say, trend change, with a volume confirmation, and last time UNG was in its trend it lasted for - a couple of weeks? And now we've done a double bottom here. Might go for a while. Figuring out when to sell is always a challenge. Watch volume and price action for your clues.

And if the market tanks UNG might follow it. That's my only concern on this trade. "Subject to the performance of the economy."

Thanks Dave but made the call. I want UNG but have an email from fellow trader here outlining options plan based on bearish outlook these next few months. I'm hoping for reentry into UNG with house money and much cheaper than what it is now.

Prefer to be cash for short term trades. As you suggested, market's gotta take the body blow sooner or later. I'll wait for UNG to come to me.

Hey I totally understand I was close to selling my UNG long also. Longer term means more risk, and plenty is the money I've lost while "holding on for the longer run."

Well, there's always the expression that the markets can stay irrational longer than you can stay solvent ;-) Something that I learnt very painfully and am recovering from that in this trader's market, where return to fundamentals is taking too long for me to profit from. Glad to note that you are managing risk and losses in a more mature way!

CP - not sure in what context you meant this. In my looking glass (look at attached pic) there’s an inverse head and shoulder (almost) at around 12 year market bottom levels for the DJIA. It takes a lot of courage to start buying at the low of 6440 and now they have pushed it to around 8300. Also note that since 06 May, when it broke out from the neck, it hasn’t fallen below the neckline. If I am reading the charts correctly we could see 9k+ on DOW. From monthly charts, 50% retracement from the previous significant top should take Dow 9150 levels. Any TA specialists care to validate?

Have done same with HGU.to, all out at this point. HGU can provide good returns when you are fairly confident of gold / gold miners' short term trend, but can fall sharply to the downside when trend reverses.

Notice how today's high on HGU so far has come to within 1 cent shy of the previous high of $13.86 set about 10 days ago, before falling back. Am heeding Bill's advice of possible short-term hit to PMs as oversold $USD is defended. If it plays out, I would not expect HGU.to to fall too far, possibly finding support @ $13 based on P&F: http://stockcharts.com/charts/gallery.html?hgu.to.

If / when HUG bounces off $13, I will seek to re-enter on MACD upwards cross. Right now, MACD looking toppish.

** All prices in $CDN

Was busy during excitement but sold my lower cost buys at $C $6.50, $6.65, and $6.75, all at a profit. Still holding units bought higher.

Frenchy, I prefer to use the technicals of the individual companies that comprise the HGU, they can be found at Horizons on the net, rather than those of the fund itself cause i find that due to decay it is difficult to get a good read, they all seem to move pretty much in tandem.

Thanks for your explanation Shark about your time frame for being long, I am waiting for a better entry point to get a truelly long position on AUY and others,I am being disciplined and waiting for the price to come to me again, which it will at some point.Being disciplined and sticking to my plan for trading is the hardest part,resisting chasing prices of stocks and commodities but I will wait as my account is,nt really setup for day trading .I have printed out and pinned to the wall next to my monitor this phrase below , I am sure many have seen it before ,but it is so true,I will not be HB&Bs fool.

"What beat me was not having brains enough to stick to my own game — that is, to play the market only when I was satisfied that precedents favoured my play. There is the plain fool, who does the wrong thing at all times everywhere, but there is also the Wall Street fool, who thinks he must trade all the time."

~ Jesse Livermore

Upon examination of the various charts and comparing the product charts against the producer charts, it appears to me that producer valuations are more predictable than the product. I've noticed the same is true for GLD vs. GDX as well. Just my observations, anyone is welcome to blow holes in this theory. ;)

A nice day for trading. Took a quick profit on the HNU.TO train, then just sold the YRI I've been accumulating for a while. A respectable 3% and 12%.
Looking for a long term position on YRI when it retreats.

Using UUP as a dollar proxy, it appears we are actually in the 4th day of a very gradually sloping uptrend for the $USD. It looks to be retracing a huge dollar plunge and subsequent chart gap that occured last Thursday. I am keeping my eyes peeled as to how the $USD acts as this gap is closed. If we see it close the gap and run higher, I think it could act as the pin-prick that pops this rally and sends us below that S&P 875 inflection point.

Consequently, should the $USD retrace the gap and then reverse and begin to weaken, the rally should continue and perhaps retest the recent S&P 920-30ish area (I find this scenario less likely but am not ruling anything out in these markets!). Feels to me like we are just in the exhaustion stages of the short squeeze where those who were early to short the market are getting chewed up and spit out on fast hard up moves that quickly teeter out.

Interesting chart. UUP had another one of these bottom-looking events May 11th. That didn't go so well. However weekly RSI shows 30.66 along with daily RSI at 32.4 and rising. It sure could be as you say. I think I'll watch this one too. :)

UUP: comprised entirely of USDX futures contracts, which are designed to replicate the performance of being long the US Dollar against the following currencies: Euro, Japanese Yen, British Pound, Canadian Dollar, Swedish Krona and Swiss Franc.

Actually, he's just forwarding a message from one of my favorite guys, Mr. Mortgage (Mark Hansen). No consumer surveys get him excited, only real data:

"With respect to yesterday’s episode in the mortgage market -- yes, it is as bad as you can imagine. Yesterday, the mortgage market was so volatile that banks and mortgage bankers across the nation issued multiple midday price changes for the worse, leading many to ultimately shut down the ability to lock loans around 1pm PST.

Lenders that maintained the ability to lock loans had rates UP as much as 75bps in a single day.

A good friend in the center of all of the mortgage capital markets turmoil said to me yesterday “feels like they [the Fed] have lost the battle...pretty obvious from the start but kind of scary to live through it ... today felt like LTCM with respect to liquidity”.

http://globaleconomicanalysis.blogspot.com/2009/05...

According to Mish: the 5.5% rate is pretty much for the "perfect borrower" with a FICO score of 740 or higher and a 20% down payment. Jumbos are hovering near 8% with 1.5% points.

Loannetter - can you confirm?

True, This was a result of extreme weakness in the long end of the treasury market.

Looking at this strictly from TA of candlesticks & volume, I see the first two of a three-candle pattern called a "bullish unique three river bottom" from price action in TLT.

http://www.candlesticker.com/Cs57.asp

Massive volume would serve to confirm the bottom, much as it did in UNG earlier this week.

Perhaps this would be an entry point for aggressive traders today?

Or at the very least, think about letting go of your TBT. :)

FD: no position

Now I know what Bernanke was speaking of...

http://tinyurl.com/l2e6jm

"Waiting for David to wake up and smell the bacon."

:)

My joy over this rally has been muted, as I have almost completely hedged myself with the FCX short and with SKF a couple of weeks ago. My portfolio grew maybe only a few percent over the past couple of weeks (despite my long positions making large advances).

I am going to Moscow tomorrow with my family to see our parents, and will then present a paper at a conference in Dublin, coming back on June 22. Until then, I probably won't have the time to read carefully through this blog and post many comments. I hope the market pleases our community in the next few weeks! :)

Not from my perspective, TOG is still in play. I could be wrong, but I'm staying away from falling knives until a trend develops.

"I am going to Moscow tomorrow with my family to see our parents, and will then present a paper at a conference in Dublin, coming back on June 22."

David- Both of which are highly important parts of (your) life, much more so than trading. Enjoy your trip!

CP,

I guess that is why there is a market. From my perspective TOG is a wonderful, exciting concept. On the other hand, TOM ( Trade of the Month ) is reality for me. I only hope to do more winners where it is possible to have a return of a little under 20% in about a month on a quality company I can afford to hold onto for the longer term if the trade goes against me. I still have "dead money" stocks that are in the "non-performing" category but the overall net return on my portfolio is still far in excess of indexes, most managed-money taking measured risk, etc. I'm still using trading profits to pay down mortgage debt and am on track with my personal goal time horizon. To the hard core traders out there it may not make a lot of sense to use capital returning over 15% to pay down debt costing over 5% but there you have it - the overriding need to be debt-free and answerable to nobody but the guy in the mirror. It works for me.

"To the hard core traders out there it may not make a lot of sense to use capital returning over 15% to pay down debt costing over 5% but there you have it - the overriding need to be debt-free and answerable to nobody but the guy in the mirror."

I am one of the "little people", rather than a hard core trader, but it sure makes sense to me. The peace of mind with being debt free is worth more that a somewhat higher rate of return.

I traded for the TOG, because I don't have the talent to trade as often as some. At one time, I had lost 2/3 of the amount in my trading account at January 2008. While not happy over that, I lost no sleep, because I had no debts. Today, for the first time in more than a year, I am back to my Jan 2008 amount and slightly above. I was able to hang in there, because I really believed the PMs would return and I was not under intense pressure to recover the amount.

Thanks, Seamus, I'll check it out.

Grym, You know what Albert Einstein said, and it's quite true. I'll just add that research is the DD we all must perform as part of the decision making process.

Let us know what you decide, might tag along for the ride.

TerryC - To the hard core traders out there it may not make a lot of sense to use capital returning over 15% to pay down debt costing over 5% but there you have it - the overriding need to be debt-free and answerable to nobody but the guy in the mirror.

Terry, I'm a trader, and I'm also debt free. I totally understand what you mean. Something in me has always hated debt. If you can use your trading profits to pay down your debt, I say that's awesome.

Shiva - "gold closed down today but goldminers are up."

I seem to remember spot gold a bit lower this time yesterday, by about $10 or so...

Vinod,

Good job on the VNDA trade this morning.

do realize that there are

"At one time, I had lost 2/3 of the amount in my trading account at January 2008. While not happy over that, I lost no sleep, because I had no debts. Today, for the first time in more than a year, I am back to my Jan 2008 amount and slightly above. I was able to hang in there, because I really believed the PMs would return and I was not under intense pressure to recover the amount."

OT- Now that's inspiring! I'm going to down a cold one in honor of your perseverance- congratulations.

johnuk - "the documents show that Former Treasury Secretary Hank Paulson gave the nine bailed-out banks NO CHOICE but to accept the government’s cash-for-equity deal."

This has been the word on the streets and in the news for weeks, if not months now. HB&B has managed to perpetrate the largest scam in history, if these banks didn't want or need the bailout funds then why are they now having difficulty repaying these apparently interest-free loans? Massive losses from the housing debacle scam (+ who knows what else) they lobbied through congress have been offed onto the public debt until they can scrounge enough to "repay". I'm reasonably certain there won't be much if any of the normal tax receipts paid in to the treasury during this period.

I'm prepared for a mean period of currency devaluation with perfect knowledge the opposite could occur if the recovery effort "fails".

All this leveraged phony money was used to buy extravagant items and support a lifestyle beyond the magnitude of actual value creation.

"We may have to change the program here to stop mail to approve the first two or three comments."

It's always my goal to share knowledge through discussion and example, for knowledge and ability to apply working knowledge empowers those who will ultimately win the war for social equity. I don't concern myself with the possibility of empowering someone who may not contribute to the cause, my belief is they are a minority.

Looking For a Bottom…
and Considering the Recovery
http://tinyurl.com/n5le6f

A question for those familiar with the US tax code, or even may have been in a similar situation.
I sold the "Rights" issued on my PDS - didn't want to increase my position. So is this treated as ordinary income, a change in my PDS basis or ???

TIA
Chris