Cara's Commentary & Community Chat, Wednesday, Jul. 15, 2009

Slw pr last night was a full two trading sessions after the same pr from gg.

Regardless, gold is finally moving. But is it only because of sympathy with the broader move?

Ya know when you're a little short at the end of the month and realize you need to pawn that gold rolex just to make it through? No? Ok. Well, that's kind of what happened to me yesterday, referring to the screwdoodling I received, sans lubricant, selling Yamana at the close yesterday. After crossing the 20-day and holding, Yaman spiked to 9.09 near the highs of the day. The darn thing SHOULD have risen, if ever a stock should ever do anything. Then a half hour later somebody was selling the shares they'd stolen from me at 9.20 aftermarket.

Into the close the damn thing dropped to 904, 905 where I sold it because let's face it...Had I held the stock overnight gold would be DOWN 12 bucks instead of up...You know what I mean. Things always work out when you don't "need" them to, and NEVER work out when you do.

Since I had a massive position I got massively robbed from. And I'm pissed.

Where the heck is Bill?

QID- to 25% of allocation @ 31.97
FAZ- to 25% of allocation @ 45.53
SRS- opening a position @ 19.94

Still holding a small position in INTC July 17 calls

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

http://tinyurl.com/3s4b38

When you find yourself in danger,
When you're threatened by a stranger,
When it looks like you will take a lickin', . . .

"When you find yourself in danger,
When you're threatened by a stranger,
When it looks like you will take a lickin', . . ."

Personally, I would run like hell. (Is that a Super Chicken?)

JNJ - PT Raised from $54 to $60 @ RBC. Sector Perform

JNPR - Upgraded to Hold @ BWS Financial.

"A story last week in the Telegraph, a British paper, describes how the city of Flint, Mich., a former industrial powerhouse now facing depopulation and plummeting home values, is dealing with vacant housing.

The solution? Bulldoze entire districts, returning the land to nature, and concentrate the population in the urban core."

http://features.csmonitor.com/environment/2009/06/...

"Technical traders keying off the much discussed heads and shoulders formation were burned badly as the false breakdown below the neckline quickly reversed, forcing most of us to cover short positions at a loss. An impulse wave carrying the S&P above the last swing high at 930 could paint a picture of diabolical symmetry, lathering up Bulls just as prices were about to turn down. In this market it pays to expect the unexpected."

This is total deja vu. Can't remember the year but the situation is like recurrent dream: everyone and their brother is talking about head and shoulders, CNBC talking heads draw it and explain the formation, all of a sudden it becomes the "phrase of the day" and remains at the front pages for weeks. You would think there is a new religion or cult, The Great Head-and-Shoulder or something... Of course the next thing to happen is jump up burning all newly turned chartists who suddenly discovered H&S...

For the technically inclined.....
"Random Thoughts:

Not a tremendous amount of follow through on Tuesday but futures
are strong pre-market.

However, it still looks like the indices and most sectors have
topped.

So far, the Market doesn't seem to care what I think.

As usual, one day at a time.

The database continues to produce a plethora of shorts and
virtually no meaningful longs. I'm seeing setups in Energies,
Internet, Manufacturing, Selected Health Services, Financials, and
Leisure.

Again, futures are up big pre-market. For the aggressive, watch for
opening gap reversals (OGRes)---see lessons at www.davelandry.com
and read "discretionary rules" at
http://www.davelandry.com/servicesample.htm"

im not buying the action in gold at this point.

we have seen many times before the spike into the market open followed by a downward consolidation and next day plunge many times before after larger down moves.

until gold can clear the $950 range, and show confirmation with some decent volume in the miners im sitting back. there was a nice spike the last few hours, but with the market about to open there is a drift down, if it bounces back and continues its move up then mabey 1000-gold-ville is really just at the next highway stop, though i have the feeling most of us are using out-dated maps. careful here.

USD would need to take a dump towards low 79 or high 78 to break out of its upward wedge pattern on the daily chart. this will likley result in a downard MACD crossover and the RSI 7/14 will both turn down proper. TA will look bad but becareful, we have seen this here before.

remember, if its the big move, the one all the gold bugs wont talk much about but secretly hope it happens one morning, we will all know about it, there will be no mistaking it. the current climate has tricked us with the feeling that we need to jump on board or we will miss the move only to buy on spikes and cry on breakdowns.... so lets just watch before we get excited.

Hi, vad.... you might be thinking of Dec. 2004 - Feb. 2005, with lower line in late April 2005... cakewalk up to 14,000....

.......

If I had any super-vision, do you think I'd be running around dressed like this?

...

...

Wave amplitudes follow prime number sequences, so the same should apply to the gold chart. The Elliot Wave analysis of numbering waves in fives allows us to organize our outlook on a target value for the peak of the gold bull market, as it has already advanced well along its life cycle. The gold bull market will not last forever, the best that can be expected is that gold will reside in its inflation adjusted value from some time before the gold window was closed in 1971. I am assuming that we are now in a '5 wave' up, and that the gold bull market is going to go parabolic.

Jim Sinclair's assessment of the price peak of $1650 may be very accurate.

The following chart shows the prime number sequence 1 - 3- 3, resulting in a peak value of $1626.81/oz, but there is another possibility that the wave amplitude prime number sequence may reach 1 - 3 - 5, leading to a possible peak value of gold of $2711.35/oz. How long the gold price advance takes to repair itself after reaching a major correction along the way, especially after ~$1650 will be our indicator whether the price moves higher after reaching it. We will not see a wave amplitude of 1 - 3 - 1, where the gold price levels out at ~$542/oz., because the number has been unceremoniously left in the dust.

Given that currency devaluation is a probable outcome of the depression should sovereign bond markets collapse, then the adjusted value of gold will not deviate much from these two possible outcomes.

Grym - Ever see a poor politician? Hmmmm . . . Free money for whom?

...

...

Sounding a little better now.

some has to do with clearance ( and arbs ) of their buy of Australian fields... some to do with their natural gas hedges... some with Goldman's neutral rating last week.... be patient, as their coal will be in demand for some time.

baz - my thinking is that if oil was manipulated higher and most likely won't be spiking higher any time soon, then alt energy will be subdued. that means coal will still be ok even despite clean energy initiatives, which take forever to gain any momentum. also, with china hoarding natural resources coal will probably still be in demand for some time to come...with that being said, I don't like ACI's balance sheet at all...

SRS above water.
QID/TYP treading water.
FAZ getting pulled out with the rip tide.

GLD - sell AUG 92 calls and 92 puts @ 4.5 credit. Small position to enter. My breakeven is 87.47-96.6 which is a nice range between areas of both support and resistance. If gold remains rangebound this is a good place to be. If not, then violation of the 50,10 dMA or the 22 weekly MA to the downside will cause an adjustment. A breakout over 95 on momentum to the upside will also cause an adjustment.

The straddle is close to delta neutral but slightly negative.

Very near term, RSI(2) on the GLD daily chart is very overbought at 97.25 and OnBalanceVolume is leveling off. So, I expect a pullback on GLD to around 90.5-91.5.

I'm with you 2nd...you can see the yellow fin of my submerged Cadillac from where you are....keep the faith, patience is a virtue.
down 3% on FAZ, not so much...LOL!
It's like a TDF sprint, they have to run out of gas sooner or later.

I'll add a few more if we get back to 43.31
Have a stink bid on QID at the 52 wk low. Come get me coppers!

Until coal can be mined with less damage to the environment, and burned with less than the now horrendous amounts of carbon, mercury and metal emmisions, I have to keep away.
Simple: it's bad news for the planet.
"Clean Coal Technology" is years away, and the price may prove prohibitive.
I'm all for nuclear generation, with the nuke being already in operation and 93 million miles distant.

Ciao, Z.

Vadym, send over the ambulance. I got the oxygen and the party favors. We're bringing 2nd ave over to Bill's house by helicopter in order to effect a 6-week market intervention, to disabuse him of the idea of buying short etf's when the banks are doing the proverbial moonshot. Hell, even C is having a day of it.

And BTW...Where are you when I need to sell a position? Nowhere to be found:)

shark- Chill, man. I'm only up to 25-30% of allocation in the ultrashorts. As of right now, the portfolio is down < 0.5%. Save the O2 for when I really need it.

Hello Fransix!!

I'm very interested in learning about Elliot Wave Assessments. I can do the standard wiki search and buy books from Amazon. Do you have any recommendations as to the best book or resource for learning the basics? If it matters, my background includes a strong base in mathematics.

Thanks in advance.

Shannon

for those gamblers out there...anyone have a sense this is going higher only because everyone thinks its going lower?

I'm chill. Not as chill as faz/sds,....They are deep-freeze yo.

ALOHA !!

IB ...

Many smarter men and women than me look to the first 2 weeks of the 2nd half of the year to establish an "opening range", the divergence therefrom will often set the tone for the 2nd half.

No need to be surprised by what mr.market's doing...mr. dollar has gone to the nursing home and is presently spoiling the sheets.

My girl Meredith told me banks were going to be on a roll, at least in the short term. I'm going to believe her. All those write-ups of MBS securities are going to make them look awfully good. And in advance of this, I'm absolutely not going short. Maybe AFTER earnings I will...

"well I like mine on the rocks. And right now, FAZ IS on the rocks."

Put it in a martini glass and call it Super-Sauce!!! Present tense would be: Super-Sauced, as in: I'm Super Sauced, Super Chicken!!!.

Shannon
I have seen many EW traders referred to this book as their Elliot Wave Bible.
http://tinyurl.com/boqwqr

AIG is apparently being controlled by the high-frequency traders. Among other things, it means you cannot believe that the charts are reflecting the behavior (intentions and emotions) of 'real buyers/sellers.'

If you haven't been paying attention to what Goldman, Morgan and a few others are doing vis-a-vis high-frequency trading and most especially why they are doing it, you should.

http://zerohedge.blogspot.com/2009/07/guest-post-h...

I would think they're doing it to make money. A program is an intellect that trades a given strategy, sans emotion. Now, if they're doing something illegal, that's a problem.

...wish I could trade without emotion.

Nemo - Wow, I really appreciate the snarky sarcasm but you obviously have no idea what they are doing and why you might want to care about it.

Goldman and a very few other companies are so-called liquidity providers (see Supplemental Liquidity Provider). For providing this wonderful service they are being paid ~.05 cents per transaction by the NYSE. This payment to them comes from you and all the other traders.

However, they are not really providing liquidity because they are merely buying and selling from each other at the same price. But they pocket the transaction fee.

The other nifty thing about being a liquidity provider is that you get to front-run the market. So, in many cases, Goldman, et.al., becomes the counterparty who knows exactly what the order flow of the entire exchange is. This information is made available to their order desks.

Is it illegal - no... should it be?

Is it like both the SPYders and the VIX will close positive?

plain english: stocks ^

Was it here that I saw a graph showing that if both VIX and SPY were up on the same day that percentages were high that the next day would be down? (Maybe from Bev?) If not, I'll have to try to find it as (if memory serves correctly) there was only one occurrence in the time frame shown where it didn't work.

Found it - page 6, chart 1.9
http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID3308244&cmd=show[s165583398]&disp=O

SPY at this time is up 2.44% while $VIX is up 1.2%. I don't follow VIX much. Why would $VIX be up 1.2% while the August VIX futures contract is down 4.13%?

out of the frying pan and into the fire ?

another hs top possible?
now that no one expects one....

Craig- That's pretty much my mental stop. Unwilling to take further losses.

Well, exactly how do they front run other than any orders they process? They would have to have access to all the exchange data from all the market makers to do that, I think.

I think you're describing the rebate strategy..perhaps there are others out there.

vinod- Well I'm glad you took those OEX puts off the table early in the week.

There are two different issues and two distinctly different kind of program trades going on...

1. The liquidity program trades have degenerated into the ultra-fast machines from one company trading furiously against another company for very close to a zero difference in price but, as noted, they pocket the transaction fee. Speed is so important that the corporate servers physically reside next to the NYSE servers so Goldman, et. al., actually have their computers inside the exchange itself and their computers share the same order flow as does the NYSE machines. This could not work otherwise.

There are millions of these kinds trades happening each day and it is a very lucrative, essentially no-risk play for a very few elites.

2. Not all trades are of the fake-liquidity kind and those are handled quite differently algorithmically. They are not necessarily aware of the NYSE order flow, but they are absolutely aware of the order flow of say, Goldman's customers. When you sign a Goldman contract, it explicitly says that you give them the right to mine whatever information (trades, etc) they want and will, at their discretion, make counter trades that are not necessarily beneficial to you.

3. You may recall several days ago about the arrest of a former employee of Goldman who allegedly stole code that dealt with high-frequency trading. In a press release, the U.S. attorney's office said that this code was very dangerous because it could be used to 'manipulate' the market. This same line was also used by a Goldman V.P who handles press releases. So Goldman themselves said and also informed the government that they have code that manipulates markets - but only in the wrong hands, of course.

From that arrest has come hundreds of articles detailing the real nature of what Supplemental Liquidity Providers actually do...it's pretty easy to follow up on if you are interested.

knifec, VIX options are dangerous, you think you have something but you actually don't. I once had a call about $10 in the money, but could not sell it for $2, all calls behaved like that. That's something I stay away from. JMO.

Craig- What if we had gambled on teamonfuego to keep the streak going? That's what I usually do at the gaming table. My mistake is thinking the stock market is NOT a casino. Let's face it- same game, same players, same psychology, no?

I'm even thinking about doing it now >>QLD/FAS/URE. That's where major gains can be made.

I've been reading much. Servers are in the same building, or located nearby. That's not illegal. This is no different except from a technological point of view of what the Japanese trader Homma did with his signal flagmen between his office and the exchange.

Now, when I started trading, fees were, well, exhorbitant compared to the average $.025/share I pay now.

Now, pinging orders, is no different than some of the trade executions written about in Levevre's book on Lawrence Livermore.

I am all for feretting out nefarious and illegal behavior, and market manipulation has been a fact of life since Kennedy's day (Joe that is), and probably well before.

I agree with your comment about the order flow through a given broker and the ability to trade against that, but until they restructure the financial industry to eliminate that architecture, which Bill has railed against, you have to trade it. Law of the jungle.

..but he's got his arm around teamonfuego with chips all over the table...can't even figure out what he has on.

Yes, but I (we) should have done that earlier....I usually reverse too late and take the other side of the blade as it reverses on me.

I will if we break 930 and it holds, maybe, but it seems like resistance here.

Hard to chase a 24 S&P /226 DJIA move without a little pullback.

Keeping a close eye on UUP/VIX/S&P to see.
I see room already on a few of my watchlist.

If I had listened to TOF I'd be up an s-load today. I can't begin to tell you....had COST/TCK/SNDK/TBT/UNG....a few more...ARRRRGGGGGG!
Took tiny profits on each. Coulda, shoulda, woulda...

Craig- That's what I love about this game. It's real time. No second takes. No 'wait a second, let me put my shoes on.'

COST/TCK/SNDK/TBT/UNG? Hey, If I had bought 100 contracts of the July 17 calls (at 0.30, -NQGS would have set me back only 3 grand), instead of 10 contracts....

...

pook it's an understatement to say that we're a tad overbought...

http://stockcharts.com/h-sc/ui?s=SPY&p=60&yr=0&mn=...

some negative divergence occurring with MACDh.

still, SPXU the 3x S&P bear just keeps on dropping. If this holds to closing I will short overnight.

Nemo - can you put your servers inside the NYSE? Can you put your flagmen inside the exchange? Do you have access to order flow? What would happen to you if you tried any of the above? Do you think it would be illegal?

Why is it legal for Goldman/Morgan, whomever, but illegal for you? After all, there isn't supposed to any difference in what we are all doing - buying and selling financial instruments in an open market.

Ain't really about what's legal or illegal, is it? I'm not naive and I recognize it has never been a level playing field. My concern is that the cheating has never been so blatant and the cheaters have never had so much control or been less afraid of consequences. Or at least since the early 1900's.

How about this: we are almost certainly going to get a transaction tax and also new Medicare taxes on capital gains. From what I know so far, guess who is quite likely to be exempt from these taxes? Hint: not you, starts with a 'G' because they are providing such a vital service, you know.

So add these taxes and remember that what Goldman is doing now in the name of liquidity is also, in and of itself, a tax on your profits. Are you getting pissed off yet or is it still just the law of the jungle?

That was yesterday's close.

The stock chart of SPY I just made shows RSI 7 at 75 at close yesterday. That's a significant difference.

??

Thank you, Dave M, for pointing out how to access daily writings from David Rosenberg. This is the kind of a reading I like, as it teaches me about how to form a big pictures.

Here are some interesting excerpts from David Rosenberg this morning, where he comments on yesterday's retail sales report:

"What was key in the June retail sales data for the U.S. was the 0.1% MoM dip in what is called the “core” figure, which excludes gas, autos and building materials. With the downward revisions, this was the fourth decline in a row, and while spending is nowhere near as weak as it was at the start of the year when Armageddon fears were setting in, it is troubling that the consumer is still fractionally in reverse in the face of the massive tax stimulus that the Obama team offered the household sector over the last quarter. And, while there may well be some lagged impacts, by and large, the fiscal stimulus, at least directly on the income side, has basically run its course. There is more than just a remote prospect of a consumer relapse as summer moves to autumn because organic wage-based income has declined in three of the last four months and without more financial help from Uncle Sam, we would look for more negative retail sales data in coming months.

For all the calls of the recession being over, we have the “core” (retail control) retail sales number running at -2.7% at an annual rate in 2Q and we have a fractional negative 0.4% print (annualized) being “built in” so far for the third quarter. Let’s just go on the record as saying that at no point in the past four decades has a recession been stopped in its tracks with core retail sales in contraction mode.

What is fascinating is to hear forecasts of the recession ending when so far, three of the four major ingredients — real sales, industrial production and employment — have yet to hit bottom (and real organic income, the fourth variable, is struggling to carve one out)."

How is liquidity rebate a tax on our profit? What's the mechanics of that?

This is an idea whose time has come again. Right on Kaimu. Did you ever see the photo of Henry Ford (about 1938)taking a sledge hammer to the body of a car he built with Hemp? Hemp oil, is runs your car, good for humans. The uses are endless. It is legal to plant it in Canada, but I think permits are required. But we should develop this thought.

It takes two steps for a retest of the previous highs/lows:

1. Take out previuos high (ideally with lighter volume)
2. Close below the previous high.

SPX already met step 1, and all we need is for today's close to be below 931.92 in order to confirm a failure of the retest.

Fujisan

Vadym - I referenced article earlier and it's a great case as to how this supposed enhanced liquidity looks. The Supplemental Liquidity Providers are paid a transaction fee by the NYSE. This fee is subsequently passed on to everyone who (indirectly or not) trades on the NYSE. It is an additional cost of trading and, to me, a tax.

Also note that ultra-high speed trading generally causes volatility to rise in whatever they are targeting and therefore making things like options more expensive to buy. It's not too far a leap to imagine if I'm the one responsible for an increase in volatility via high-speed trading to also want to sell those options and also to magically know when volatility will very rapidly contract.

It's a sweetheart deal any way you look at it.

So, is the market really more liquid with the millions and millions of transactions per day we are paying for? Have spreads contracted? Are formally illiquid stocks liquid now? Even better question - was the broad market so illiquid to begin with? Why do we need Supplemental Liquidity Providers?

I referenced this article earlier but I'll print it out this time: what's going on with AIG is a perfect example of what is really happening. It looks suspiciously like enhancing liquidity has little to do with anything and a whole to do with price manipulation.

"Submitted By Joe Saluzzi of Themis Trading

There has been a lot of talk over the past few weeks about high frequency trading. We have argued that the volume these high frequency traders are creating is not beneficial to the market. Lets take a closer look at what a high frequency favorite stock looks like. The poster boy for HFT this week is none other than 80% U.S. government owned, AIG. AIG recently underwent a 1 for 20 reverse split since the “issuer” wanted to make their stock look more attractive to institutional clients. You would have expected volume in this stock to be reduced by 20x. Instead, volume has remained at a consistent pre split level of 75 million shares/day. How could this be? Did something change to attract more institutional buyers? Did the black hole of AIG liabilities somehow close? No, the answer here is that the High Frequency traders found a new stock to play in.

How do we know that AIG is a HFT darling? We look for three prime characteristics: high volume, a quick early morning ramp in the stock and then a constant bid throughout the rest of the day that will hold the stock at the top of the ramp. To graphically view this, look at the July 13th intraday chart of AIG.

Volume exploded in the morning and the stock ramped to $14. This level was now the “point”. The HFT’s defended this level all day (and collected liquidity rebates for this privilege). Throughout the day there were mini spikes higher that allowed the HFT’s to sell at a higher price all the stock they had been accumulating at the $14 level (again, they collected a liquidity rebate from their exchange/ecn “partners” for this privilege). What caused these mini-spikes throughout the day? It seems now that the HFT’s have attracted a new partner – the day trader. They now have caught onto the game and realize they can “leech” off the back of the HFT and make a small profit during the mini spikes (http://www.smbtraining.com/blog/?p=1401)

Going forward, we will begin noting these HFT situations and start posting them to our blog regularly."

After selling my KGC at $19.64 a couple of weeks ago, I re-loaded 2/5 of that position at $17.92 last week. Now, with KGC at $19.63 again, I just sold August $20 covered calls against these shares at $1.05, which would give me a sales price of $21.05 -- above the 1-year high observed so far. On the other hand, this position is reasonably small and I don't feel the pressure to sell it now. In fact, I actually *want* KGC to go down to $17 so that I could sell more $17.50 puts on it and acquire more KGC shares.

There you go Dave...very strong into the close. Up 1.5% in last 15 minutes.

I commented a day or two ago on this or similar article, it suddenly became some kind of new cult in the conspiracy land... I absolutely disagree with notion of HFT and/or liquidity providing being some kind of devilish scheme, and in that response of mine I explained why (http://caracommunity.com/content/caras-commentary-...), but that's not the point.

I would like to delve into this particular aspect. I read about this alleged tax on our trading about 25 times over last few days yet not once did I see any explanation to it. I am not convinced by general statement like "The Supplemental Liquidity Providers are paid a transaction fee by the NYSE. This fee is subsequently passed on to everyone who (indirectly or not) trades on the NYSE. It is an additional cost of trading and, to me, a tax." I look at the things overall and see this:

- I used to pay $25 per trade per side; now it's more like $5;
- I used to pay $30/month for Level II access, now it's what, $10 or even free with many brokers?
- there was no way to get free real time charts or ECN books; now it's common place
- my ECN fees never went up and in some cases went down
- my exchange fees never went up
- I receive ECN rebate if I add liquidity, and this rebate never went down
- the only thing that went up is SEC fee - and whatever we think of SEC and their fees, it has nothing to do with payments to liquidity providers

So, where do those liquidity rebates come from? ECNs and exchanges pay them out of their profits in order to attract business? Let them, what do I care as a trader? If anything, I have more counterparts to my orders and have to whom to sell or from whom to buy - which is exactly the purpose of attracting liquidity.

I guess I just want to see evidence, not general statements...

MarkW - Hey I didn't see that! How nice is that?

I unloaded my July TBT 54 puts I wrote long ago earlier today - at breakeven. Even though they were two bucks underwater, I didn't lose money, which was a minor miracle given I wrote them at, what, 55 or so? Even if you're way early, put writing really is lower risk as compared to going long. Just more proof today for me. I wrote them at 55, closed them out at 52, and ended up breaking even because of premium.

The reason I bailed out of the puts is all about position size: I had too much TBT. I feel comfortable with my current position. And its even above water too!

After a nice gain on SDS last week (sold at 60.84) I have tried two times to get short this week and I stopped out quickly for second time today with short positions SDS & SKF...."stop the bleeding b4 it needs more than a band aid" is a good motto from someone here. I ended up selling KGC and TBT today into the strength(early of course). I picked up some TIP again today at 99.95(which I have been trading for 50 to 100$ little gainers), if I dont get the spike up to sell, I will just collect the 4.75% yield which is much better than the rate Im getting in my MM account.

I will be looking for re-entry to TBT and miners as always. If I could just ride the trend for longer than the 3 to 5% gainers with my mining trades I would be a rich man as all but one have been successful this year if my recollection is correct.

S&P closed above support and this could be bullish for the longer trend. I might just sit tight for a day or two to see if the trend is confirmed.

I have to pay attention to the 'last dancer off the floor' trade.

the note on stockcharts about a stealth correction is now a bookmark for me to check multiple times a day. http://tinyurl.com/mkofny (checking to see if the trendline breaks to the upside or is strong resistance.)

Today's close on the S&P, while volume wasn't spectacular, was higher than the previous two days, macd histogram printed a positive bar, macd bullish crossover, closed above 50 day, and above 931.

if the rally confirms i will watch if it can or cannot reach 950. My only hope is that metals will rally harder than expected along with everything else.

This sure smells like a stealth correction, rounding up mom and pop before 1 last visit to the basement.

I can almost hear all the phones buzzing on the broker's desks.
"Let me help you get some of it back"
"Are you going to tell your wife you missed this up move or should I?"

After hours at $13.10, expanding my current position by 50%. The 6-month SLV chart suggests that now is a good time to buy: a large correction recently took place and it seems like it is over and SLV is starting to go up again. At the same time, SLV is still very low and so provides a good "hedge" on my short positions: if the market keeps going up, then SLV should move up strongly as well. If the market goes down, then SLV should not fall that much since it is still very low.

With that said, I'm still cautious that the market rally could continue immediately (no July opex mean reversion), leaving some people itching on the sidelines for what would be a loooong Q3. I consider it less likely but potentially devestating to many, so important to consider in the realm of all possible outcomes.

For some reason I don't feel bad for them.

"CIT Says U.S. Support Unlikely, Studies Options With Advisers"
http://tinyurl.com/m7q8jn

I have a hard time believing we don't go down tomorrow. However, after watching a dozen reds cross the tape, who doesn't want to bet black? Been there many times. It could hit red another half dozen times. After that, it will hit '00' twice just to make sure you get the message, which is to remember who's in charge, and who's getting played.

Barry Ritholtz on a rumor that CALPERS is preparing to sue the ratings agencies:

I poked around with some law firms in California, and started to pick up the rumor that California Public Employees’ Retirement System (CALPERS) was going to drop the bomb on S&P, Moody’s and Fitch. No one would say anything on the record, but it was clear that litigation was being considered as an option against the Ratings Agencies.

...

The goal of the litigation (as I see it) isn’t to make the rating agencies pay a financial penalty; rather, it is to publicly try them just as the regulatory rules are being rewritten. I also predict that CALPERS is going to attempt to not just win, but humiliate these agencies, call them out in the most embarrassing way possible, trash the senior executives, and make things very uncomfortable in general for these firms.

http://www.ritholtz.com/blog/2009/07/calpers-ratin...

Wrong-

(a) Allowed directional bias to dictate trading.
(b) Averaged down.

Right-

(a) Kept position sizes small.
(b) Did not hesitate when it came time to exercise the mental stop(s). As soon as the real time balances in my accounts entered the alert zone (I can pretty much 'tell' what they are at almost any time during the day, as I seem to be one of those people who can't help mentally track my balances every few minutes), everything was sold at the market.
(c) Turned my trades around and went the other way. True, I should have done it earlier, but even late in the game it was good for a few gains. If the market had stayed open another hour or two (one big difference btw the market and most casinos), I have no doubt we would have hit 940 (from a psychological perspective).

Craig- One last comment (preaching to the choir, of course): The last thing on our minds should be trying to make it back tomorrow. The best advice may in fact be to take a day off. The truth is, there is nothing to make back. My ending balance today is all that counts right now. (The 0.7% is technically not a big deal- but for some reason I feel as drained as if I'd taken a much larger hit.) The goal is to trade appropriately going forward, and for me that probably means taking a pass on Thursday.

To start off, today was a "Bradley Turn Date" and it looks like it continued that U turn upwards that began Monday . Now with both the $VIX & S&P closing up big today, odds are, we will gap down at the open tomorrow. There is a gap at 906-910 that may or may not get filled tomorrow, but I suspect at some point we will rally into Friday to finish the week up. As for the road map as where we go from here, it looks to me, we are at a fork in the road with no road sign. Depending on which Elliott Wave guru you read, we are either still in "B" of the A-B-C correction off the March 6th lows, which mean the highs of June 11th ["A"] are in and we will correct downward still before starting the final surge upwards ["C"]. Or we did finish the corrective downward leg "B" last week and we have started the final surge upwards ["C"] before the next corrective wave downwards "3" begins. Targets for "C" seem to range from a min of S&P1000 / Dow 9500 to a max of S&P1100 / Dow 10+K.

[Here is an outdated chart from Sunday to those who would like to see a general outline of the A-B-C corrective wave.]

So let's see...2nd makes the smart move and lightens up on my UNG PM @ 12.80. Then Shark takes over 2nd's account and flips the ultras at half time. No wonder I always have someone prof read my important work documents. And that's exactly why I post my trades. Got some great prof readers here.

2nd
When I don’t understand what the hell is going on in the market. I stay away. I even don’t watch until it closed.
Still holding my 200 SRS and didn’t add any more. Look like it will go up more until everyone is frustrated about it and clean up all short ETF holders and take most of short to cleaner.
But will start to load up short ETF soon. I usually start with 100 and see what happens.

Oh, I couldn't agree more....preach away! I'll settle my QID position for whatever and I'm a handsitter for the duration unless something becomes obvious...but THAT never happens (what is obvious everyone will know, so it isn't an edge at all) so I'll find something else to do this week and wait for the next move.

DAG triple RSI buy

EEV accumulation zone

FD: no positions...yet

"Good traders don't try to predict what The market will do; instead they look at The indications of what the market is Doing." - Curtis M. Faith

So What Happened?
I first want to apologize to my readers for my dour nature today. I'm kind of a depressive chap to begin with, and three days of the bulls pushing their horns into my eyeballs doesn't help my already flimsy spirit. So that's probably seeped through quite a bit, particularly today. Take note of the new logo.

But I hope you can understand. This week has been the worst three days of my trading life so far. I've slipped down 8% of my overall portfolio, and it's more demoralizing than I can say to have multiple weeks' worth of extremely hard work destroyed in short a short amount of time. Climbing my way up Profit Mountain doesn't mean anything if I'm kicked down into the valley so quickly.

The only trade I'm really upset at myself about, of course, is TBT. That was a really good long play, and I blew it. I really hope others made good money on that idea, because it was solid. But otherwise, the simple fact of the matter is that I was on the wrong side of the market in a very big way. I loaded up on shorts and puts all over the place, and the 500 point rise in the Dow so far this week has been agonizing.

I don't think I'll feel like uttering the words "head" and "shoulders" any time in the near future. That was a massive fakeout, and it really hurt a lot of bears.

Tim Knight

Or, in other words: Trade what you see, not what you think

Well, I just watched the video. Not sure what it proves or explains - same guy repeats same things that he already said in that article. And of course refers to that same blog that made his article known to the world in a first place... shrug.

My questions remain:

- what is wrong with whole HFT/liquidity providing thing?
- how is it harming anyone now or potentially in the future?
- if ECN/exchange share profit with them, what do I care? It's not like they would give it to me if not to them.

I don't see how the fact that trading becomes cheaper in a fairly short span of time is not germane, as you put it, to the alleged "tax on our trades" issue... if they tax me and I pay less - tax me more please. I wish all taxes worked like that...

Finally, remember what you started with? Claim that AIG becomes unreadable in usual terms of chart patterns because of these HFTraders... well, I happen to trade it today: http://www.realitytrader.com/tradinglog/, staring with:

[13:21] {Threei} Long Setup: AIG .10 break
[13:21] {Threei} if stays above 14

Take a look at intraday chart - absolutely standard chart formation, one that I play for years - and worked like charm, exactly on a day when it was cited by them as prime example of how those HFT/rebate guys ruin trading patterns? Sorry... I am afraid I'll need more convincing that that :)

Don't get me wrong, I am not trying to prove that everything is pinky, rather asking honest questions - as I said in my very first post on this which I linked earlier today, if there is something unseemly going on, we need to know. But so far everything presented is more like yelling "fire"...

Why do we jump from one conspiracy to another? A few weeks ago it was false liquidity provided by quant funds - remember? Today it's HFT. Tomorrow it will be next big discovery. It starts looking like conspiracy in itself - either distracting us from real issues or attempting to make a name by creating a battle and becoming a leader... and most likely both. What is really happening while we fight those windmills?

I'd rather have NO information than bad information that purports to be good information. In one case, you know that you don't know. In the other, you're just clueless.

I agree with your analysis though, it will lead to confusion in the short to medium term.

MarkW - Chartwise, TBT is right up to its 200 day MA, and 56 and 60 seem like good resistance points.

Normally TBT moves in tandem with the market. Market up, TBT up. If I'm right about the eventual default of the US, a day will come when TBT moves up while the S&P moves down. So the "US Default" paired trade here is, long TBT, short S&P.

ALOHA !!

SPROTT ASSETS ...

I do not follow them at all, but once in awhile I run across info from their company.

Now, a friend of mine from Maine sent me this report from SPROTT ASSETS that even mentions US TREASURY DAILY STATEMENTS, something I have been covering for over a year now following the EMPIRE OF DEBT. This report may have been published here before, but it is the first time I have read it.

In every EMPIRE it has been the DEBT that kills the golden goose. DEBT is really the end result of "human hubris", living beyond our means ... When you have a monetary system based on the human condition what do you expect to happen? The American Empire is no different. The privilege of RESERVE CURRENCY and the two party politico has embedded cronyism and welfare into what was once one of the major manufacturing engines of the World. Now we operate as a CONSUMER FRAUD NATION ... Given the fact that DEBT levels in the USA have been constantly rising ever since 1835 and every President and Congress since then has done nothing to stand in the way of SPENDING, which begets DEBT, it is obvious to me that the DEBT is crushing the EMPIRE. As I mentioned prior ... GUARANTEES AND PROMISES are running thin. Without those "guarantees and promises" does anyone here really believe that Americans will gladly accept poverty without so much as a whimper? Raised on the GOOD LIFE does not breed much "self sufficiency", which is what America lacks. Look around you and tell me where you see RESILIENT COMMUNITIES? They exist but not enough ... I have pointed out that where I live most of my neighbors have no electricity or cable or county sewage or even county water. They live off the GRID ... If not for me they would not even have a telephone. Obviously in my community nobody really has very far to fall, since most of us are already living in poverty. Yep, Hawaii is America and my neighbors are Americans, but they live like Third Worlders, which in my eyes has always been a great experience for me. I have worked my entire life to keep my footprint as small as I can. If you visited me here you would see that my wife and I have a bedroom that is not even 100 sq ft in size, slightly larger than prison cells that I have built. Maybe even Bernie's cell is larger ... We decided to DOWNSIZE our comfort level voluntarily and have no regrets. Too bad AL GORE, OPRAH and BONO can't work on that! Hypocrites abound in America ...

TRACKING ... Oopps ...

LINK: http://www.sprott.com/Docs/MarketsataGlance/June_2...

The above link is a JUNE 2009 SPECIAL ISSUE ...

What SPROTT has done different than I is they have been tracking the net buyers and sellers of US DEBT. I honestly believe this is not INFLATION VS DEFLATION its the C WORD in play, as I have said all along. To debate money supply or falling asset prices and multipliers is like debating if you will die of cancer, swine flu or old age. Waiting for "signals" or "inflection points" is a fool's game in my opinion. It may work for trading SLW or GOOG but it does not work for a monetary crisis.

So I track US TAX REVENUES and US TREASURY DEBT ... As you know, I have shown that US TAX REVENUES have been thoroughly CRUSHED, while US DEBT has been shooting up like a rocket ship to the moon! OBAMA may get on TV and brag about the 150,000 jobs he created but the TAX REVENUES tell the truth. This Sprott report chimes in with the buyers of US DEBT, without which, America would be Third World like Argentina. We have all been seeing comments about US DEBT holders diversifying and as a participant on the ASX I have seen CHINA and INDIA buying up resource companies. Nobody can tell me that CHINA has NOT been diversifying in numerous ways. They would be idiots not to! So that leaves me with one unanswered question and that is "when" will those who have been consistent US DEBT buyers either quit or slow their US DEBT purchases? This SPROTT article attempts to answer that question.

Because American voters have been so narrow-minded for so long and locked into the two party mentality we have afforded each administration, whether REP or DEM, the "privilege" of destroying our kids future on our behalf. None of the President's or their administrations have ever made any half-ass attempt to quit SPENDING. As I have shown OBAMA & BIDEN make BUSH & CHENEY look like paupers when it comes to SPENDING our future.

In a monetary crisis it does not matter if GS is at 150 or 1500 per share. It won't matter if you trade in USD or CAD or CHF or AUD ...

I think this word HUBRIS needs to be examined further within the context of America and the POLITBANK ... Here is how the Greeks defined HUBRIS:

Hubris (/hjuːbrɪs/) (ancient Greek ὕβρις) is a term used in modern English to indicate overweening pride, superciliousness, or arrogance, often resulting in fatal retribution or nemesis. In ancient Greece, hubris referred to actions which, intentionally or not, shamed and humiliated the victim, and frequently the perpetrator as well. It was most evident in the public and private actions of the powerful and rich. The word was also used to describe actions of those who challenged the gods or their laws, especially in Greek tragedy, resulting in the protagonist's downfall.

Hubris, though not specifically defined, was a legal term and was considered a crime in classical Athens. It was also considered the greatest sin of the ancient Greek world. That was so because it was not only proof of excessive pride, but also resulted in violent acts by or to those involved. The category of acts constituting hubris for the ancient Greeks apparently broadened from the original specific reference to mutilation of a corpse, or a humiliation of a defeated foe, or irreverent "outrageous treatment" in general.

The meaning was eventually further generalized in its modern English usage to apply to any outrageous act or exhibition of pride or disregard for basic moral laws. Such an act may be referred to as an "act of hubris", or the person committing the act may be said to be hubristic. Ate|Atë, ancient Greek for "ruin, folly, delusion," is the action performed by the hero, usually because of his/her hubris, or great pride, that leads to his/her death or downfall.

Aristotle defined hubris as shaming the victim, not because anything happened to you or might happen to you, but merely for your own gratification. Hubris is not the requital of past injuries—that's revenge. As for the pleasure in hubris, its cause is this: men think that by ill-treating others they make their own superiority the greater.

Crucial to this definition are the ancient Greek concepts of honor (τιμή, timē) and shame (αἰδώς, aidōs). The concept of honor included not only the exaltation of the one receiving honor, but also the shaming of the one overcome by the act of hubris. This concept of honor is akin to a zero-sum game. Rush Rehm simplifies this definition to the contemporary concept of "insolence, contempt, and excessive violence".

So where are we in terms of the Greeks ... in terms of our Founding Fathers? Are we so much technologically advanced and civilized that we cannot fail? Talk about the concept of TOO BIG TO FAIL ...

The ever lengthening "long train of abuses" is growing ever longer ...

ALL OUR BEST THINKING GOT US HERE ...

Thank you for the link bsi. I never understood the significance of gapping and filling these gaps until now.

kaimu-

The ancient Greek concept of hubris> man, that's fascinating. Thanks for the post.

Vad - your honest interpretation is refreshing and all the more reason for us to trade what we see and to not anticipate the anticipators.

I sure hope this happens.

What is worse than a life jacket full of rocks?

They should also go for the Congressional Oversight Committees.

Good morning.

Upgrades:

DIS - to Outperform @ Bernstein
INTC - to Buy @ Argus. PT = $21

New Coverage:

CSCO - Auriga U.S.A. Initiates with a Hold. PT = $21
QCOM - RBC Initiates with an Outperform. PT = $55

"...if they get taken down, what mechanism is out there that can provide the info necessary for the little guy to make informed decisions"

These were totally MIS-informed decisions — just like putting a cookie recipe on a bottle of poison. It's the "little guys" who are still suffering. †he big boys take care of each other and we need to do the same.

IMO, Shooting is too quick for these outfits. Get rid of them.

edit: I have never placed any credence in S&P, Morningstar, gurus. You are better off flipping a coin — at least the coin has no hidden agenda.

"Normally TBT moves in tandem with the market. Market up, TBT up."

A week or so back someone recommended a balancing act with TLT/TBT which I am currently doing and it's working so far. (Watching closely) My thanks to whomever...

I'm convinced Ts will continue to do well until the job market reverses and don't want to keep jumping in and out, just lightening and reloading my WHOSX while picking up profits in my trading account with the ETFs.