Daily Trading & Social Commentary for Nov. 4

Don't know if this has already been posted. It seems that the Treasury Dept wants to get to know some financial bloggers and invited a select few to Washington. I hope no one ate or drank anything while there.

"Naked Capitalism"'s blogger was on the list and discusses the meeting:

http://www.nakedcapitalism.com/2009/11/curious-mee...

p.s. Glad Ms Cara is doing better.
spot

Cara Community is listed.

http://thereformedbroker.com/2009/11/02/the-period...

In your recent post you stated:

"I personally think the commentary part of caracommunity (such as this) is a complete waste of time and Bill would be better off making his commentaries and daily reports and leave it at that. If you can't garner what he is saying with these comments you have no place trading these markets.

I am sorry Bill but I would venture to say that other than you, Vad and the occasional comment by Kaimu this site is populated by jokes masquerading as day traders."

But not too long ago you posted, as a very new arrival:

'Kaimu. This is really getting old for me I am sorry to say. How about some solutions rather than the usual polemic, commentary and complaining. I don't see not even one solution from you on how we can change this system just that the systems sucks. Yea we got that part.'

While I'm glad that at some point you finally recognized that Kaimu is a valued contributor to this blog, your own posts which mostly consist of bragging about your life in Thailand with your very young wife have contributed nothing and suggest you are just a self-important arrogant windbag. So before you condemn the contributions and posts of many others, please consider just going away...

KC

I gotta say, I love having the market review + chat posted after market close rather than before market open the next day. I think its an awesome change, since my reading of same is now when I'm fully awake, giving me 12+ hours to think about things before the next market day opens.

Read this article on strategic defaults today. What struck me was the spin inherent in the writing:

http://www.usatoday.com/money/economy/housing/2009...

In it, an economist is quoted as saying:

"The most disturbing aspect of this is that it's becoming acceptable to do," says Joel Naroff, an economist with Naroff Economic Advisors. "What does that mean down the road for housing and the economy if people are happy to walk away and destroy their credit? They're saying, 'Why pay a high amount if they can get something, even a rental, for less?' "

The banks have counted on the fact that homeowners have been "irrational actors", placing an absurdly high value on a credit score. Now that homeowners are becoming more rational actors, economists are becoming "disturbed." I thought economic theory said that all actors in the economy were rational, price minimizing creatures? They should be overjoyed, not disturbed. Economics is starting to work!

Which professional investor would worry for more than two seconds about walking away from an underwater investment, if they could do so at no loss to themselves? Yet the language of this article suggesting that homeowners might be ashamed by such an action crops up here:

"Janet Speer, 51, isn't happy to be walking away from her 200-year-old home in Royersford, Pa., but she doesn't feel ashamed. Speer says she was paying about $1,400 a month for her home, which was appraised at about $155,000."

The double standard - the same action should make homeowners feel ashamed while professional investors would take in a New York minute is quickly coming to an end. And I think it's about time.

I know someone seriously underwater, and she is having a very emotional time coming to terms with leaving behind her $200k underwater place. Its brainwashing, pure and simple. "Do as we say, not as we do" say the bankers.

Sorry didn't realize the new CC for today was up, so re-posting here.

Bill, and all those interested in charts.

I've seen a few of the videos from Wordens and have been impressed with most of them, but not this one.
Although I agree with the basic conclusion of Peter Wordens video, I don't agree with his method for the following reasons.

1- The 10 month charts are in linear not log format, thus any trend line you draw represents a constant incremental rise, or in other terms a diminishing rate of return line. I agree the rate of this rally has been slowing for some time, even while it has been setting higher highs and higher lows. The trendline cross actually happened a little earlier if you plot the same line on log chart.

Actually this is quite normal for stocks in an uptrend to have varying rates of positive returns, we just have to decide when to ride the more powerful trends and look elsewhere during the long slow trends.

2- The trend line is established by two points, (Mar & July), not usually enough for a valid trend line. Then I'm sure I heard the statement at least twice that this trendline has not been violated since the beginning of the trend in March, until now. Well of course it hasn't, it was drawn between the only two low points on the line between then and now. We could have just as easily drawn the trend line from March to the Nov low and stated that we have just in the last few days successfully bounced of the long term trend line from Mar which has never been violated.

3- TSV volume on the SPY. I agree volume and price are important parameters, however I disagree on using any volume data on an index tracking product. The SPY is designed by Spiders to proportionally track the price of the S&P-500 index. I have never seen any tracking product which states it can also track the volume proportionally.

This volume issue has been a sore spot for some time as I see many chartists applying price and volume to these tracking products when they should be trading them but looking at the underlying chart for the TA analysis. IMO.

Attached please find a quick chart I put together of the $SPX and SPY, the price sections were scaled and overlayed and as you can see they are almost exact. Below I've shown the volume for the $SPX and then the SPY, with a 50 EMA added to both volume charts. As you can see the volume spikes above and below the 50 EMA are quite different, also the long term trend in volume is quite different.

So in the end if the action of the SPY is driving the $SPX, then you should use its price volume for TA. But if the SPY is just a price tracking product then trade the SPY but use the $SPX for the TA analysis and signals.

Note some are having problems seeing the video, the link is in the top scrolling banner once the freestockcharts website starts. Also note that the site runs under Microsoft Silverlight software and if you don't have it installed I doubt you will be able to see the video.

Thanks to Fox1, for posting the following more direct link, although I think you will still have to have Silverlight installed.
http://www.freestockcharts.com/?WatchSP500Video

FD: (I like the Wordens Telecharts service but don't subscribe to it, I do subscribe to Stockcharts).

Edit PS: Glad to hear Stef Cara is doing better.

Golong, there is more to life than the world of money. How you treat people matters. I feel it is the mark of an evolved soul to treat people who have less experience with understanding, compassion, and tolerance.

In my work on trading floors, I noticed that many traders tend to have poor self control, and treat others around them with incredible disrespect. Perhaps it was just poorly managed stress, but who wants to interact with someone like that on a daily basis? Life is too short.

Of course with your wealth you do not need to treat people well. Not this lifetime. But if you practice it now, when you don't really need the skill, think of how useful it might be next life when you are not in nearly as nice a position. Just a thought.

EDIT: oh well I guess he will not learn this new skill here. he's probably a better fit elsewhere.

While I think China has a good chance of being the next economic superpower, No One, and I mean No One escapes the business cycle, and am very nervous about China's uninterrupted 8% annual growth to infinity. I know someone that lives in Shanghai China. I had sent the recent John Mauldin article about China Real Estate and asked them what they thought. Here was the reply:

I was doing some hands on research here and found one condo in a mid-level part of town that costs $165K USD for a down payment and a 25 yr mortgage needs a payment of $2K USD a month but it can only bring in $1,250 USD a month in rent! The mortgage payment is WAY higher than the rent! Thats because you hope to make money on it when you sell it and the price is much higher than the deficit that the rent brings. A friend of mine bought a house a year and a half ago and it was $144K USD, now it is worth $288K! yea, and my friend only makes about $700 a month! And that is an entry level white collar job. Certainly the market can't persist like this forever.

So I just closed out the "long gold" part of the trade, now I'm just making a directional trade on oil. Overall the trade worked out, but not the way I expected: I expected oil to tank, but instead gold went through the roof.

I pulled the trigger on this one because both oil and gold made dojis today on pretty high volume - and with a substantially lower dollar that closed near its lows. Thus I'm betting that the lower high from oil will hold. I think a drop in the equity market (which feels in the cards to me) will help spur oil off the cliff as well.

If I were a brave man I'd short silver, but that's a little bit too much directionality for my level of risk taking right now. Perhaps if it tips over tomorrow I'll jump in. Whoever it was here that talked about H&S pattern on silver, I totally see the same thing possibly forming as well. The only thing not confirming it is volume, which should be less on the trailing shoulder. Compared to the formation of GLD and you have a very clear picture of the market screaming "reduced risk" - GLD has made higher highs, while SLV and USO have not.

;)

I couldn't have said it better myself !

For those having problems viewing the SPY video Bill referred to at
www.FreeStockCharts.com
Open the above site in Internet Explorer(not Firefox ), then install the Microsoft Silverlight program(install prog. pops up).It should then play the Video of the SPY.
Good luck,
John

I think I was a bit late in responding, so I repost.

------------

Re: *WHY* would the Fed need to employ 400 traders?

cheapy,

If in fact this is what is now happening (And I am no longer surprised at anything.) it simply points out to me that we need a massive public outcry (Tea parties, marches on Washington, tax boycott — whatever gets attention).

While I would like to think Bill's call for the FBI to investigate the FOMC or Kaimu's desire to vote out the incumbents will come to pass, I have absolutely no faith either will happen. Congress funds the FBI (the power of the purse) and incumbents can be replaced by more of the same (Bush replaced by Obama).

Ron Paul's bill to audit the Fed has just hit the stone wall of the internal Congressional tactics to circumvent any who choose to play in their sandbox.

We need to amend the U.S. Constitution and take away the powers they have amassed over the past couple of centuries. Their present situation is a great illustration of how, "Absolute power corrupts absolutely"!

We shall see how much "buying" is done into this "news"

another half a million people out of a job, out of income, and wont be spending.

We have all seen buybacks before. Is RIM doing this to bolster the stock ? Using surplus cash , looks that way !
RIM will open like Jack In The Box. (pop!) Bid amount jumping by the second.

OK Is this sustainable ? Personally I think not, but where is the Russian High Priest when we need him ?

AMAT - estimates boosted at UBS through 2010. Company likely seeing higher silicon orders from Taiwan. Buy rating and $17 price target.

CSCO - numbers raised at Goldman. Shares of CSCO now seen reaching $26. Estimates also boosted, to reflect a recovery in enterprise spending. Neutral rating.

GRMN - estimates boosted at Government Sachs through 2011. Company is seeing higher margins, but smartphones are starting to cannibalize the business. Sell rating and $26 price target.

QCOM - estimates, target lowered at FBR. Shares of QCOM now seen reaching $48. Estimates also reduced, to match the company's new guidance. Outperform rating.

WFMI - estimates raised at Morgan Stanley through 2012. Company is realizing better margins across the board. Equal-weight rating.

Ticker is H

Not open yet. Not touching it.

off 21%. 7 bucks + which is 8X the average daily move. Nov/Dec max pain is 35. Sticking a buy limit order in at 27.03 is the LOD minus 1/3 the average move. If not executed by 11 AM, will pull and trail a 30 cent buy stop.

Do your own homework.

Is that volume right? 41 million.

Really interested where INTC and IBM finish..

Hola,, 4 . 8 mil approaching 5 mil

Number2son,

Good call

"Sunpower (SPWRA): Deutsche Bank upgrades Sunpower to Buy from Hold with a $31 target price due to its impressive market position."

Naz 37.2
SPX 17.96
DJIA 153

I'm always concerned when the averages hit their 10 day ATR in the first hour.

FWIW, your mileage may vary, etc.

Good call bs-eye

usually means that a down correction will occur so, back to Bill's Monday comments.

ps, nicknames make no sense.
Allen GG

Team,

Do you still own appl ?

AP

Majority leader: House will pass health bill
http://finance.yahoo.com/news/Majority-leader-Hous...

Time to buy AET?

I might change my nickname to TRADE THE KOOLAID

Released on 11/5/2009 10:30:00 AM For wk10/30, 2009
Prior Actual
Weekly Change 25 bcf 29 bcf

Highlights
Natural gas in storage rose 29 billion cubic feet in the Oct. 30 week.

UNG is up .13 to 9.92. I'm in Dec 8 call

now trading below the open. The nimble traders bought the gap down open and sold it for a nice gain. I'm not that nimble. Still waiting.

wanna sell it so bad I can taste it. Watching the 15 min/hourly charts.

FD:long

capitulation trade. Watching for an entry.

This country is becoming a welfare nation.
http://bit.ly/1JVWUW

"Thousands of borrowers on the verge of foreclosure will soon have the option of renting their homes from Fannie Mae, under a policy announced Thursday.

The government-controlled company, through its new "Deed for Lease" program, will allow borrowers to transfer ownership to Fannie Mae and sign a one-year lease, with month-to-month extensions after that.

The program will "eliminate some of the uncertainty of foreclosure, keeps families and tenants in their homes during a transitional period, and helps to stabilize neighborhoods and communities," Jay Ryan, a Fannie Mae vice president, said in a statement."

EDIT:
Karl Denninger states on his blog:

"This has exactly nothing to do with helping "homeowners."

It is entirely about Fannie not having to recognize the written-down value of these houses - that is, allowing them to hold the "mark" on the loan at it's original value, rather than recognize the loss.

I can't see to find the latest thread:

Bills thesis newSubmitted by TN_blogger (411 comments) on Thu, 11/05/2009 - 11:38 #51838
If Bill is correct about a sell off after a pop to the trend line approximately 1060, does the dollar have to go down?

I am into UUP. I was noticing it seems to be holding up well so far. I will not sell unless it breaks 22 at any rate...have hidden stop.

What do you guy/gals think about this security? I seems to be correlated with $trin positively. Does anyone have an opinion on the dollar and/or the $trin?

TIA

edit: Also, CNBC trader said after close that $ was sure to have a pop soon because of the crowded dollar short...did not trade off this, but disconcerting nontheless.

hi yes, I want the government to istitute a FICO that lowers your interest payments on debt as you pay off your government morgage, lol

I am having difficulty locating a consistent thread that the majority of participants are on like it used to be. Did Bill change the MO or am I just an out in the cold this day?

I know he said some will not read this note by him past night or so, but I am used to at least seeing some activity, even if it is lunch time.

TIA

Hola BSI looking at 5 years, isn't this really a $30 stock ?

Maybe we're all going to sink down, to reality.
EXample RIM is a $60 CDN stock, trading today ('cause RIM sail it "allocated" the right to seriously consider, under the right circumstances after the 3rd phase of the moon) at $62-63 with a P/E of >16:1
When Bill said: "which is one of the reasons I sounded the alarm" that was enough warning for me.
My belief is that HB&B have discovered that the Mom & Pop investor market is a bottomless pit, and which is why G-S makes tons of money.

I cut my teeth in the 'lending business" and the large financials constantly look for ways to separate fools from money.

If I can make it to West End I have stories to tell, , wish the conference was on New Providence, haven't been there for years.

To Bill, how's the Butler family doing ?
Allen

I think there's some danger is saying any stock is worth X dollars. The anchoring effect in play. If you take the 200 week MA, the average is 33 bucks. The 20 week BB range is 32.60 - 40.

All I know is max pain is showing 36 bucks for November and my order executed at 29 and if I make 7 bucks or even a couple by Nov 21, that'd be a good trade.

Long at 28.90

If you read the following, it's a wonder we can tie our own shoes.

http://en.wikipedia.org/wiki/List_of_cognitive_biases

So all hb&b have to do now is sell their risky portfolio of mortgages to Fannie Mae.

ALOHA !!

HERE is how I view bloggers ... like an ICEberg! We all have lives to lead and we all have responsibilities. Some of us are all up into "trading" while others are only occasional traders, or dare I say, buy and holders. Some of us have no debt and some of us are betting the farm to get out of debt. Some of us have jobs and some of us don't. Some are retired and some are just out of high school! So our outlooks are totally diverse. Nobody thinks like you do! Nobody sees the World like you! IT IS WHAT IT IS ...

So when I read comments whether it is about trading or some social issue or politics or government spending or the mortgage market I just read the comments and do not heap huge judgments onto some "cyberspace handle" that I have never even met before. For all I know "bazz22" could be Obama. Or vanillabean could be the Ben half of Ben and Jerry's ... To judge some information as "useless" is to be shut down to knowledge and opportunity. Arrogance and judging are one in the same.

During CTA 2009 I met some of you but only for a few hours at best, so having met you for a few hours is really nothing. Can I form a judgment as to your worth as a human being in a few short hours? NO! Here is the part that I find staggering ... WHY JUDGE? Who here is God? Who here is a perfect human specimen? In fact if anything its been damned embarrassing to be a human being on this planet, especially lately! Whooop te do! WHO CARES ... I try to live my life so that when that day comes, when I am lying on my deathbed that I can say I did not just spend my life taking people and judging people. At some point your life ends then what? Will you lay there with a final twinkle in your eye and say, "Wow, I had a really great life judging people as the inferior slobs they are! YEAH BABY-Y-Y ... YOW-W-W-W!!" I mean I don't get it! For me ... I just don't get it!

In truth I have come to realize that when I meet people who judge others I am cautious, because judging others as it says in the BIG BOOK is a character defect, its a sign of low self esteem. If you must judge others as less than you then that means you feel less than. I try to stay away from all that as best I can.

As for me I post here on subjects that are monetary related and trades that are monetary related, because in the end everything boils down to money. Its the blood of politics and economics and right now the American blood is full of Hepatitis ABC&D and a little leukemia thrown in! In terms of my total portfolio I probably post on about 40% of what I do. The rest is tied up in private projects some big and some small, from movie deals to orchid nurseries in Ghana. So some 60% of what I am about you guys never know ... Its just not "tradable", none of it fits on a computer screen, none of it is sanitized by brokerage fees and to be honest I really don't want it known.

I shared my trades that were based on my Jan 2008 "research" trip to Perth, Western Australia both here on the blog and at the CTA Conference 2009, SLR and SRL. Both have been very profitable for me, perhaps some here made a few bucks on them as well. I do not share everything just as I am sure probably 99.9% of the bloggers here do not share everything either.

Isn't it absurd to judge people and their comments here based on so little actual knowledge of who they really are? I think so, but if you insist on insecurity then JUDGE ON mates.

That's what I believe!

IT IS WHAT IT IS!

nice kangaroo tail reversal on the 15 min chart.

Buy limit 5.75

do your own homework

I have just started to use the "LEVEL 11" information provided by my brokerage firm.

Can anyone suggest a site I can refer to get information/learn how to use such data from a "trader's" perspective?

TIA

My TDWaterhouse CA broker has sent notice that trading is halted on UUP. Anyone finding the same?

May the trade winds be with you

Something is up with UUP. scottrade bid/ask shows 0:00, which means trading may have been halted. May be enough of the $ correction and time for $ rebound.

UUP is back up. Jumped from22.49 to 22.91 and now settling around 22.70.

May the trade winds be with you

The timing on this PR seems about right.

PRESS RELEASE
Nov. 5, 2009, 1:31 p.m. EST · Recommend (1) · Post:
DB Commodity Services Files with the SEC to Register 100 Million Additional Shares of PowerShares DB US Dollar Index Bullish Fund

NEW YORK, Nov 05, 2009 (BUSINESS WIRE) -- DB Commodity Services LLC today announced it has filed a registration statement with the US Securities and Exchange Commission (SEC) to register 100,000,000 additional shares of PowerShares DB US Dollar Index Bullish Fund (NYSE Arca: UUP) in order to meet investor demand. Creations of new shares in the fund are temporarily suspended pending clearance of the registration statement by the SEC, the Financial Industry Regulatory Authority and the National Futures Association and declaration of the effectiveness of the registration statement.

If one looks carefully, at SEC website, they recently released 10Q's as well as todays sec, finra, etc stuff. You will notice that they invest in futures and something to do with D bank. I think they may be related to DBV in some ways...not clear on this...others with currency expertise are welcome to elaborate...just feel lucky to have emerged from the dark tunnel (ie. the halt earlier...did not like it, but thus is securities risk).

:-)...my extra 200 shares I picked up yesterday have paid off.

set tight stop expecting to be taken out so I can buy back if they end down especially on a low RSI

Also they roll forward their contracts a week before I think the third week, or on the second weak (weak before third week), each quarter. I learn so much on this site...could not get from book, that is for sure. The disgruntled poster who dissed bill, et al was definately smoking something or not participating here...take your pick.

Just got taken out at 22.9105 for small proffit...beets watching it all disapear...besides another opportunity will present itself soon.

OK V-B bienvenidos a Mazatlan.
For: the weather ? the food? the bonita chicas ?

Boring place. Weather is always predictable.
Fresh veggies, mariscos, carne, always fresh y barrata (cheap)

You get used to seeing all of the above, I'm only going to stay another 25 years.

But, there are problems in paradise, When I remember, I'll email you.

Allen

When my ship (USS Gridley) stopped their in 1989 or 1990, I remember the white beaches the most...was only for R & R and one night however.

Sorry, I was talking about Mazalon Mexico...not cali...that is were I was at 32 street.

My prediction is that regular banks will get into the business of operating real estate.

http://www.chartsandcoffee.com/2009/11/fannie-mae-...

there is no : Mazalon Mexico, try Google

Mazatlan, north of Puerta Vallarta, and directly east of Cabo San Lucas is a 400+ yr old city. Beaches go on, and on.
Soon it will be a major port to compete with the Panama Canal. Fed Gobieno here is infusing a lot of dinero. Hotel chains like the Riu and Emporio are spending lots of money and slowly getting the tourists. Yes usual others here too !
Flights have increased 5+ times since I've been coming here.
A good investment ? I think so.

Allen

While I was tempted to reshort this afternoon, after getting stopped out of my shorts early this morning, I decided to stay flat into the jobs data tomorrow morning. Yesterday was a good shorting opportunity cuz of the divergences in the financials, transports, and russell, but today is a much stronger day with relatively equal participation from all sectors.

What a shock & an unpleasant surprise (for me who was net short as of yesterday's close) to see such a market chart today after seeing quite red futures last night. Since a spike up in $USD did not materialize, I decided to close the FCX short I re-opened last Friday with a total hit of about 0.9% to my portfolio. Also, I sold at $21.90 1/2 of my FAZ position.

At the same time, I would also like to note that IWM ran up today EXACTLY to its close on October 2, which was its previous low. There is a theory that the safest place to open shorts is during a downtrend that rallies to some previous key support level, while placing a stop order just above that support level. So I just opened a medium-sized position in TZA, and will close it tomorrow if IWM rises above October 2nd low. XLF is in a similar situation right now, and I will close my remaining FAZ position if XLF breaks above its October 2 low tomorrow.

I uderstand that there may be gold there, joking, but you will hear this and by the way its best rendered Mazatlán, good luck with the spelling function to catch your errors today.

Kaimu: Here, Here !!!!

Kaimu
Beautiful. And your posts are never boring, no matter what the topic.

normally that would be bearish forming a lower high/right shoulder on the backtest of the uptrend break.

But this is now...

Very good discussion of breakouts false and real by (Wall)street smart Jeff Cooper. At one point he hints that "they" know which way they are going to take it tomorrow, and it's down if "they" so decide.

Which way the dollar?
Supposedly a lot of shorts, but also break down the doors volume in UUP. Tomorrow will be interesting.

http://www.minyanville.com/articles/markets-trade-...

With the government having 400 traders that can look in the future. With GS front running the market and their clients, I feel like I'm playing Russian roulette. The government and the market has a real credibility problem.

Weird action on our side with money flowing to bonds this afternoon. Suggests sideliners are getting in again? FNMA 4.5% is up 22 bps today.

If unemployment figures are less than 200,000 and total is less than 10%, I will be long till Dow 11,200...

If these numbers are such (tomorrow), I will start buying BAC, AA, INTC, immediately (as in 8:30:01 ), and in that order, followed by GE, HON, BA, and probably HP. Cisco (although more corporate oriented ) lit the fuse, and Windows 7 is coming... A good report tomorrow may be all the bulls need till mDecember...