Cara's Commentary & Community Chat, Wed., Jan. 7, 2009

The major commodities indices are being rebalanced, and I am forced once again to question their timing.

Recall the last major rebalance: At the time, I had been challenged by Larry Kudlow to find a smoking gun for the sudden 2006 collapse of Oil prices a month or two before the mid-term election.

That challenge led us to discover the actual mechanism — the GSCI rebalancing. Just 3 months prior to the election, GS decided to significantly lower the weight of Oil and Natural Gas, effective a month prior to the election. Prices plummeted, albeit temporarily.

There was a cost to this: Subsequent performance of the index, reweighted with less energy, was negatively impacted, as energy prices for the following 2 years boomed, until Oil peaked at $147. The reweighted indices performed much wore than they would have had they not been changed in ‘06.

Bill King noted yesterday:

The weightings for both indices are released ahead of time, but begin to kick in the first few working days of the new year. In the case of the DJ-AIGCI — which JP Morgan estimates has $25bn in funds tracking it — the new weightings come into force during the roll period that begins January 9th. The S&P GSCI index weightings kick-in after its January roll which commences January 8th. JP Morgan estimates about $50 bn of investment into that index… Accordingly, JP Morgan sees the most significant change coming in the DJ-AIGCI rebalance. Here the market weight of crude oil is expected to increase from 9.6 per cent to 13.8 per cent, gold from 10.8 per cent to 7.9 per cent, copper (COMEX) from 4.5 per cent to 7.3 per cent, live cattle from 6.4 per cent to 4.3 per cent and sugar from 4.7 per cent to 3.0 per cent. Meanwhile, S&P GSCI crude oil weight will go from 32 per cent to 33.8 per cent…Nevertheless, gold tanked on Monday on expectation of a weighting reduction of gold in the DJ-AIGCI Index …This harkens memories of July 2006 when Goldman greatly reduced the weighting of gasoline, which precipitated a huge collapse in gasoline prices ahead of the 2006 midterm elections.

I have no idea why the managers of these indices made these changes, but they are certainly curious.

I consider these contra-indicated: In a time of massive Fed credit creation and Treasury money printing, they oddly want less exposure to Gold. And with the worldwide recession getting worse, they want more exposure to Oil. Both of these are poorly timed macro-trades.

There are two things I can tell you about the index rebalancing: First, the last such contra-indicated changes were steamrolled over by the market, and cost investors in these indices to miss out on a huge move in Oil via the lower weightings.

Second, it won’t take long before people start to consider the political ramifications of goosing energy stocks 2 weeks before the Obama administration is sworn in.

I have no clue what the motivation is for these moves, nor do I knows what what they were in 2006. But they are looking increasingly curious and ill timed. Once is a coincidence. Twice makes you pay close attention. After the third such move, expect to see the index managers dragged before a Congressional panel . . .

Good morning.

PTR - Downgraded to Hold @ Standpoint

New Coverage:

AMAT - Buy @ Wunderlich. Price Target = $15
QCOM - Buy @ Collins Stewart. Price Target = $45

MSFT* - Price Target Lowered from $28 to $26 @ Jefferies & Co.

* Bill mentioned as future addition (if I remember correctly).

I happened to mention a few days ago that everybody and his dog is recommending gold and that consensus made me nervous. At last, one of those I listen to (who predicted that gold would reach $1,000 in 2008), is now somewhat bearish on the yellow metal. But I am still not happy. The newfound gold bear is none other than mr doom and gloom, marc faber. Yikes.

I remember. It reminds me of when I almost bought the farthest out of the money Bear Stearns puts for .20 each but passed when the climbed to .25....I would have made hundreds of thousands of dollars but since I mostly sell options I just couldn't pull the trigger. I should have known because I knew about the terrible option ARM loans EMC Mortgage (Bear Stearns) was writing in Florida....coulda, shoulda, woulda

Maybe we should make a decision to at least put some money to play if we smell a rat...

Is BAC's sale of China Construction Bank stock a cause for alarm? Why wouldn't they just get free TARP money? I read European banks will probably be selling stakes in Chinese banks to raise cash? Is this a bad omen for FXI?

Any of your opinions would be greatly appreciated.

Sounds like theater continues for the time being, anybody planning to short oil/energy soon?

obviously more bad numbers. at this point its no longer news in my view, until the trend is reversed. Which might take a while.
http://tinyurl.com/6sem37

ALOHA !!

Thanks nemo ... As I have always said fiat currencies are essentially built on constantly shifting sands and the markets based on fiat are no different! This speaks to why none of the baby-boomers entering retirement have been able to plan worth a crap for the long term! This also is the key ingredient as to why global governments are at a loss for planning long term as well. It will only get worse for boomers because most of them sank their life savings into residential real estate with the false belief that they could sell their homes at a substantial profit and downsize and live like a king.

Another "re-weighting" is coming down the pike for 2009 all through 2012. RESETS FOR OPTION ARMS and INTEREST ONLY(IO), something like $1.2tril combined value. Now what happened to the stock markets and real estate when the sub-prime hit was only worth $615bil. What is coming over the next few years is DOUBLE that! According to the Credit Suisse chart I am looking at these resets begin to gain strength starting Q1 2009 and accelerate almost vertically in Q42009 and into 2010 then go massively UP in 2011 then fall off a cliff in Q3 2012. Question is who will survive this and the amount of inventory coming onto the real estate market over the next year and a half is staggering! All this coincides with baby-boomers who are looking to downsize and retire, so even if you have no mortgage you will be faced with huge equity losses compared to the boom years. Of course the US government on OBAMA'S watch will intervene in a massive way to support prices, but there is no "real wealth"(manufacturing/saving)base left in America only the false wealth of paper receipts and paper shuffling for short term gains. Combine this effect with the $101.2tril unfunded liabilities of SS and MED ... Going into this I will remind you that the FDIC/SIPC, PBGC and all other "guarantees" are close to broke already. Real estate will not return until hyper-inflation returns. All this will be a huge drag on US payroll taxes and income taxes for both Fed and States and not to mention the huge drag on the USDX(USA stock certificate) ... MORE DEBT on top of MORE DEBT on top of MORE DEBT!! That is historically how EMPIRES collapse! FORTUNES WILL BE LOST TRADING THE MARKETS SUCCESSFULLY ...

That effect I predict will cause massive government intervention that makes the government intervention today look like Seasame Street! What governments are trying to do is maintain price levels so the masses are placated. They are failing miserably because global governments teamed up with short term traders known as the US FED/BANKS/WALL STREET(notice investment banks and commercial banks have merged for the BAILOUT so there is no difference, never was), where profits are short term(the ME GENERATION)but placating masses requires long term strategies. It was a partnership doomed to fail and still is no matter what OBAMA says or does the die is cast! The US government has been selling out to US BANKS since 1913. ITS GENERATIONAL!! The US CONgress strategy of stealing from the masses who produce real wealth has a limited life span! Within three years that will be a done deal! I predict "rioting in the streets"(recall Helmut Schmidt's opinion of OBAMA)!

IT ALL BOILS DOWN TO SHORT TERM TRADERS! As the fiat system collapses the SHORT TERM will get ever SHORTER! Every political leader and financial leader in America is SHORT TERM minded and that will never succeed where it counts ... LONG TERM!

The US EMPIRE is unwinding ... That is okay, it is what all EMPIRES do! I just wish we would allow capitalism and free markets to make that shift and not crony-socialism via governments and central banks! The pain for the masses will last much, much longer!

GOVERNMENT IS ONLY AS HONEST AS ITS MONEY ...

http://tinyurl.com/7wefrh

Courtesy of Jesse's site.

ALOHA !!

Based on your chart the "Running to Treasuries" could also be titled "Bankrupting US TAXPAYERS", because who will ultimately hold the sell off of agency debt like FNM and FRE? YEP ... thanks HANK AND BEN!!

ELIMINATE THE US FED!

more gaps being filled and back filled in HGU/GDX

im not convinced of much in either direction until we break one way or the other.

spot gold not looking strong right now but the USD has been taking a hit.

finger is on the trigger to go long again if gold spikes upward.

anyone see a reason for 10% slide in EZ Pawn?

that's been building...we could close red, but we could also close very green...

2nd, Looks like if we hold here at 918 that we may close green, but if we break support here, we could go to 850 or so. Add the rule of round numbers and support is more like 900, so you might have some wiggle room.

Banks anyone?
http://tinyurl.com/9auz49

Last year Westjet flew direct from Calgary, but not this year it seems. I was looking yesterday and 1 way from Calgary - Nassau was $229. Now today they have the big sale on -- $269! Some seat sale!

FD:I missed out on the 11/21 low, too much going on the home scene. But I've got some longs and some shorts, picking them up when the market gets giddy or depressed.

I don't think it's worthwhile to characterize the action from 11/21. Depends on one's trading time frame and risk profile.

When I have run various indices against volatility measures, put/call ratios, etc, market risk has been increasing.

When I run scans of the Cara 100, the Cara Oct 10 list, large lists of ETF's, I found very few long opportunities. I also check a RSI scan site and the list of those under RSI 30 had been declining thru the rally.

Of course, I looked at my longs yesterday and thought I should take something off the table, WFMI with almost 20% gain. And buy some EEV, Oh well.

The 10 day ATR for the averages have been shrinking. I heard on the radio that yesterday's 60 Dow pt move was strong, 238 was the average 10 day ATR. It was nuthin.

On the flip side, the inverse ETF's have not gotten into accumulation/buying mode in the RSI scan and the max pain isn't showing enough potential for me to put a short trade on.

Just sitting and watching the circus come to town (and the big boys got some bonus to boot).

Yep. And I was about 2 hours too early on my TZA buy yesterday. It promptly dropped and I got stopped out before the fun began.

Yet another lesson in properly gauging stops. So it goes.

Stopped out @$6.25

craig- thanks...IMO, the market needs to test the resolve of the bulls before moving higher-> can't avoid a little fear/volatility at this point...

When it drops it drops fast, hod is doing great, thanks for the heads up yesterday Bill.

10 day ATR for TZA is 7.13. A day and half's worth of trading would be (1.5*7.13) or 10.70. Yesterday's closing price was 42.86. Your stop would be about 24% of your position. Losing 24% of a position on a continual basis isn't healthy.

If u reduce the stop from 10.70, it's likely u get stopped out since the stock can swing 7 pts easily intraday.

Position size and good entry points are more important (IMO) than even stock selection.

GL.

The MACD on the hourly just rolled over. I moved up my stop.

I agree with others that we may see more volatility. The VIX is moving up today - north of 40 again.

shark-that's actually a great idea; recording the presentations/seminars for replay on youtube?

Ditto on TZA, being stopped out at 42 yesterday. I'm royally pissed about it, too. In retrospect, the right good move was to re enter at the close yesterday or premarket today.
At least my DZZ is working today.

Is anyone reloading oil and copper after some correction?

For your viewing pleasure: http://tinyurl.com/8m9ftt

Well, while I shorted gold recently for a short term play, I think Faber is very positive on gold miners (and oil and commodities) according to his 2009/1/1 newsletter. Did I read it incorrectly?

Westjet is still running flights between Calgary and Nassau ($900 but $450 on specials), also Ottawa & Toronto direct to Nassau (less than $400 return regular fare and much less on specials). It's a great no-frills, no first-class, no biz-class airline - leather seats with curl-around headrests to facilitate snoozing, upbeat service on the plane. If you have only carry-on luggage you can book, choose your seat and print your own boarding pass and proceed directly to security without stopping at the counter. If you buy a ticket and fares fall, or a special is offered as your departure date approaches, you can exchange for the lesser fare and get a rebate, no cost.

FD: Not employed by WestJet.

I agree...there's no way on God's green earth that you can make 50 billion disappear...except in the stock market!

Looking at the 1 hr chart on DRYS I'd stay away for now. Bias is down. May come back to 12's?

Where is the money?

Its gone. The money taken in was distributed to the first ones in the door and so on down the line. That's how a ponzi scheme works. Ponzi schemes end abruptly when money no longer comes in the door. If they distributed 12% yoy, then they would have to take in net 12% more yoy. This is why it was long-lived. Many ponzi schemes run 20% - 30% distributions.

Madoff must have had a certain number of net redemptions that could not be sustained. The people receiving 12% use that money to support their affluent lifestyles. My concern is why the preferential treatment and the light hand of justice?

I am kind of interested in AKS

I'm long DOW @ 16.00 as of yesterday; mental stop @ 14.90 and it seems to be holding up for now.

Looking forward to the new Cara Carib. Program.
Westjet (WJA.TO) is a great airline; shoulda bought it a couple of months ago!
JR

"I do believe in using hard stops but probably not when buying frightening drops...there's too much bullshit that can happen with the bids getting swung around...for example, my 13.70 stop got executed at 13.83. That's not kosher!"

It's not... and it's one of reasons I hate hard stops for fast intraday trading. I use them only when I have to leave my computer while having open position. Couple scenarios where hard stops will work against you:

1. Your stop is at $20. There is 1,000,000 shares combined bids at that level. Stock downticks to it, offer is lousy 100 shares, someone sells 100 shares at the bid price - your hard stop is triggered. Were you to execute it manually, you would have never sold until and unless you saw those bids at 20 getting seriously hit.
2. Stock drops into your stop level sharply with looooong tail. More often than not such move leads to immediate bounce. Knowing that you'd rather wait to see if you can get better price to exit on bounce while hard stop will take you our indiscretionary. For a very fresh example, have a look at 1 min chart UAUA, 11:22 candle... and imagine you had your stop at 12.

There is truth to old traders saying: best stop is at your fingertips.

shark,
There will always be some bad eggs in the market. It all come down to the level of monitoring required. Excessive will stifle companies with good intention.But in this case, there appears to be a blatant violation and cooking of books. A breakdown of the system. What were the external auditors doing as they audited the books ?

To your point , you do not need inspiration from anyone to do that. Just a bad intention and a dirty mind which does not care about others -- investors, creditors , government etc. They tarnish thier reputation and that of the country and cause undue hardship to everyone else.

by the way, "Satyam" is a sanskrit word which means 'truth'. How ironic that truth eventually prevailed albeit a little late!

My low bid $35 for USO got hit, same with JJC (at 21.5). I'm counting on the index rebalancing act. We will see.

Well, if you wanted to run some sort of ponzi scheme with real longevity, you would need to ensure the returns are good enough to draw "investors" and low enough to guarantee that money can be distributed. Its an interesting experiment which failed. But this scheme is solely intended to defraud investors, one from the other.

Once the net redemptions eat into the intake, which has to be more than the capital plan, the plan starts to lose money and its game over. Obviously Madoff used some form of capital plan to ensure that net redemptions from time to time get taken into account.

I can't help but think that using credit derivatives is just like a reverse-ponzi scheme, a ponzi-scheme applied to borrowing, except the returns are so much lower, and the lenders, who are holding the swaps, can demand ever increasing interest payments to avoid that anyone actually pays off their debt.

In today's Daily Report, Bill wrote: "We sense an imminent large move in precious metals and are positioning ourselves to profit from the anticipated move. But, we do expect a few curve balls before the real move in gold and silver commences."

Can anyone point me to Bill's thesis for this? I know I've seen his writing somewhere in the past few weeks and should have bookmarked it.

For what its worth, I completely agree with it, I'd just like to know if my reasoning is anywhere in the same ballpark as Bill's.

Thanks.

Mark

Feb 25's pay $1.55 and you'll probably pocket the premiums IMO. If not a basis of 23.45 ain't too shabby and if you're an options seller the covered calls you could write after the stock is put to you would be pretty nice too.

"Suicide is not an option. Changing one’s lifestyle is."

Hard to comprehend how a loss to $9B from $13B might impose devastating impact to lifestyle. Wouldn't it be great seeing Madoff placed in a pillary while awaiting sentencing? There's the lifestyle change imaged in my mind....

Thanks Blue. I have asks on both, but there is a long line ahead of me.

Yesterday BC had what I believed to be a good set up (in the 60 min chart) in several indicators for a drop. Still looks weak in that time frame.
Short at $5.94

Looking for an entry...

That does look like a good price range for a cover and then buy

Bull Hunter are you an Eagles or Steeler fan? Am thinking the Eagles....:-)

I don't find anything twisted about honest discussion.

It is really something to see how Israel has fashioned their culture's previous victimization into an unassailable American public image. So much so that even speaking of an alternative is labled "twisted", while said former victims enter their next day of military offensive mainly against civilians impoverished by their immediate neighbor.
It's simple. People living with social equity do not blow themselves up on buses or nightclubs. They don't launch rockets into neighboring countries.

In the meantime all resistance, justified or not, is labelled "terrorism" in the press, one side or the other holding that label depending on who is controlling the press.

The poor Palestinians. They don't have control of the press or an un-resisted massive genocidal victimization to fashion into unassailable self righteousness. No, we see them throwing rocks and launching primitive rockets from makeshift launchers while their crappy little barrio gets flattened by a modern military. Their genocide is one of imposed poverty and dehumanization. It's less obvious and much slower.

Something is twisted alright.

In "The Pause of Mr. Claus" Arlo Gutherie talks about how comforting it is to know there are people that have it worse than us, but asks the rhetorical question..."what about the last guy, he doesn't have a road to lay down in for a truck to run him over".

That poor man Merckel was not the last guy though he might have perceived himself so.
The last guy lives in a swath from sub-Saharan Africa to Pakistan.

It is a tragedy when an individual borrower defaults on the mortgage and loses his/her home. The tragedy is magnified when the borrower is a small business owner, employing from 1 to 10 employees. The loss of jobs related to mortgage defaults and the resulting business failures will further weaken our economy and prolong the recession.

On December 14, 2008, CBS’s "60 Minutes" had a segment on the 2nd Wave of Foreclosures. They indicated that experts were expecting another wave of mortgage defaults on ALT-A and Option ARMs mortgages which will dwarf the Subprime Mortgage Crisis. CBS MISSED A VERY IMPORTANT FACT!

Many fail to realize that there are millions of self-employed smaller businesses, who employ from 1-10 employees, that are holding the mortgages that are going to reset in 2009 through 2012. These borrowers are Prime and Near-Prime borrowers who hold ALT-A, Option ARMs, Interest-Only mortgages. There are $1 Trillion ALT-As, and $500-600 Billion Option ARMs.

So, here we have a major problem… Not only will these small business owners lose their homes, but there will be the resulting JOB LOSSES on their business failure. Note, although President-Elect Obama is stressing the need to create 3 million new jobs, we must understand that “JOB RETENTION IS AS IMPORTANT AS JOB CREATION”.

I authored a survey which was conducted by the National Association for the Self-Employed (NASE) to its national membership. The NASE Survey disclosed disturbing facts. The NASE survey is at http://www.nase.org . See the NASE News for the Survey on Toxic Mortgages. Please read my Commentary.

According to this survey, it is estimated that 3,709,800 small business owners hold Alt-A and other toxic mortgages, and 1,279,800 are already delinquent as they have missed one to three or more monthly mortgage payments at mid-November, before the expected Resets that are scheduled to begin in 4th Quarter 2008 through 2012.

The solution lies in the hands of Congress as they meet in January to structure an economic stimulus package. Congress should take note of this survey and be “proactive” in addressing the situation, rather than “reactive” as the case has been in the Subprime Mortgage Crisis.

We can’t afford another shock to our economic system at this time. This 2nd Wave of Foreclosures which will be caused by the ALT-A and Option ARMs will not only result in Foreclosures, but also Job Loss.

Just filled short PUT GG Jan 16 27.5 for $1.00.

Very funny.

With the attachment

ALOHA !!

Great domino action Prof ... Thanks for tying in yet another domino into the toxic mix that the short term profiteers created over there in NYC and DC!! As if small business in America does not have plenty of other hurdles to jump ...

What will OBAMA do with small business? Too early to tell yet, but no matter what you want to call it I call it "intervention" the same old playbook the Bush regime and the Clinton regime and all the other regimes prior have been playing! Talk about the "bridge to nowhere"! That describes the two party political system here in America to a tee! THE VOTE TO NOWHERE!

In terms of starting a small business you have better incentives in Panama or Ghana!

Kaimu,

Would you be able to post or provide a link to the Credit Suisse chart for resets?
TIA

Prof. Samuel D. - Do you conclude the impact from Alt-A and Option ARM defaults aren't adequately figured into stock market prices?

UCO @ 14

We are seeing some financings going on in the Merchant Banking sector. What is important is that they are able to raise cash here and will probably use their money to lend to the resource sector.

PNP.TO

http://finance.yahoo.com/q?s=PNP.TO

QC.TO

http://finance.yahoo.com/q?s=QC.TO

EDV.TO

http://finance.yahoo.com/q?s=EDV.TO

right on, vinod...in the process of trying to double the march 5 calls right now...

Does anyone have any solid ideas as to why gold, oil the dollar and stocks are all tanking today? Are the Indians selling their gold to pay for the Satyam issue? What the HECK is going on?

Gray - The question I'd ask myself if I were you (after I bailed on my losing position) is why I felt compelled to enter ANY long position on a day when the overall market (for which I use ES [SPX futures] as a proxy) was in the process of rolling over after a multi-day uptrend, as evidenced by its 30-minute EMA(12), EMA(25) and SMA(50). I'd think it better (meaning more profitable) to wait until overall market conditions were more favorable to my trade.

[Confession: I've asked myself the above question far too many times....]

As for a longer-term investment in DOW (or most anything else), I'd wait at least until price (of the security in question) was above the daily EMA(12), and ideally until the EMA(12) crossed above the EMA(25).

Bear in mind that my idea of "longer term" is significantly shorter than most people's.

~OG

Agreed! TNA @ 33.77

That's not fair. What I suggested is that the government people tip off the money people so that they can get positioned. It would be crazy not to, which is why I suggested it. Actually I am now inclined to think that YOU are the reason the market's falling.

There are lots of places on the web where this "liberal" can go to encounter hate. I was hoping for something different here.

Adios

Interesting thing...

When trying to do a search for QT's posts so that I might find one to use against him the way he did me, I discovered that you must have at least 3 letters to do a search. In other words, his posts are not searchable. Interesting, eh?

seriously...

What a hit to UCO today! Placing a buy limit order for 100 shares of UCO at $13.80 -- who knows if these prices will be around tomorrow... Maybe my limit order at $13 will not get hit at all...

The buy limit order at $13.80 was just triggered for 100 shares. Now I can rest for today. :)

Seriously Dr. Cosa, the market is what it is, but you have to love trading around the volitility.

Why don't we focus on things that UNITE us and leave things that divide us to forums devoted to those topics? It's not like there is lack of such forums.

I am pretty sure no one making any money or any friends while argues here over things that, in my experience, never led to any kind of cordial agreement on any of forums where those things were/are being discussed. Nor cordial disagreement - cordial being imperative word.

vinod- i'm comfortable buying today...sometimes you have to think ahead a few steps...(for instance, i like the way bsi87 was stockpiling BGZ the past few days in preparation for the sell-off)...

As an American who moved here 5 years ago, I offer a couple of comments for the community's information.

1) The decision to withdraw from Gaza was made my the Left wing of the government. In withdrawing from Gaza, 35,000 Israelis were forced to leave communities they had lived in for 40 years. Many of them still have not been resettled and live in temporary housing.

The Left felt that providing autonomy to Gaza was a first step toward implementing the Oslo Accords, which the Left supported and which were opposed by the Right.

The communities were farming communities and provided nearly 50% of Israeli produce. Gaza is some of the richest farmland in the country.

2) Since the withdrawal the farms have been dismantled and looted, despite an obviously well armed Palestinian police force that could have prevented this. The farms could easily have provided sufficient food for the Palestinian population of Gaza.

As a point of information, when Israel was first founded the leadership put an inordinate amount of focus on building the nation's agriculture, as it realized first you must feed your people.

3) Since the withdrawal 5000 rockets have been fired from Gaza into Israel reeking havoc on the surrounding cities of Israel.

I would suggest that any civilized nation that showed as much forbearance as Israel has should be given the benefit of the doubt. Instead we get a series of vicious posts about the Apartheid state.

Israel is not an Apartheid state 12% of the members of Israel's Kenesset are Arab, which corresponds the the 12% of the country's Arab population.

The Arab population of Israel has the highest per capita income and the lowest infant mortality rate of any Arab community in any country in the Middle East.

I live in the North in a city called Nahariya. The grocery store we shop in is owned by an Arab and I would happily trade net worth with him.

For any of you that have been long time readers you will recall an instance a few years ago when there was trouble in the middle east, same parties same area, any and all comments almost ruined the blog, it was very detrimental to what we are supposed to be doing here, and that is learning and teaching. I for one dont appreciate having to rumage through posts to get to the relevant ones and would appreciate if any interested parties in such discussions would just do it through the contact author button, or better still set up your own chat room. Having said that i can disclose that i have no ties to the people of the area and would wish good health and prosperity to the people of the area, but for God's sake man, i wish that they would work out their problems like adults, children throw stones and then cry when they get hit by one.

Bought some @27

MY order got filled at 27 for GG

I am trying to smoke out my next trade. back to money making ideas for trading please :)

Daily RSI 7 now under 40.
50DMA rising.
Unless the DJI is positive tomorrow the news media will announce that first 5 days are negative and therefore the world is about to fall apart etc. etc.
will be buying as the RSI goes back thru 40 with volume.

ATVI -- I'm in. Showed up a few minutes ago on my bottom-feeder scan.

I meant to post this earlier, but got caught up in other things. They reiterated guidance last night (at $1.77/share) and approved a 10% stock buyback. Keep in mind that this company has $9.30/share in cash and no debt so it's trading at about $7/share ex-cash or roughly 4 times earnings ex-cash. I like this one a lot. It is an infrastructure play.

Fairfax Financial Holdings, (FFH.TO) announced that it would acquire more units of JAZ.UN.TO last month. JAZ.UN.TO now tops the list for insider buys:

http://www.tmxmoney.com/HttpController?GetPage=Ins...

Note how in the daily chart, this airline stock followed the decline in the oil price vs. the $CAD.

Got TZA at 35 and got out at 38. Reloaded TNA at 33.5. Got some more oil (uco=14) in addition to my old fashioned USO.

What is remarkable today is that $USD and TLT did not go up on a major down day. Is the deleveraging and/or powerful dollar over for good?

BTW, please no politics or religion!

For companies cross listed US and Can the exchange rate is baked in and any difference in the stock price cross boarder will quickly be taken care of by the arbitrage traders.

Personally I trade many that are cross listed and I go where the liquidity is higher, just easier to trade. I also look at the location which has a liquid options market for the stock, usually the US as the Montreal options exchange volume is pretty low for most stocks.

Only 9 of 208 Morningstar's sub-industry groups were up today.

The down-draft in Precious metal stocks took Silver off its perch to no. 2 performer since the 11/20 bottom - up 116%, but now trailing semi-conductor memory, which is up 123%.

Gold stocks at no. 16 of the 208 are up 61% since 11/20.

I want to apologize for bringing up subject matter today which inspired many responses and counter responses, diverging meaningfully from the purpose of this blog.

If my rant kept a single one of you from going long stocks today then it was time well spent:)

I have noticed that I seem to have a particular sensitivity to certain market conditions; I get very edgy around important market turns. So what is the real meaning of todays economic events?

First of all, the unemployment report augers states that employers drastically cut payrolls in December, suggesting greater weakness in the economy than had been feared. These cuts will impact economic recovery going forward, as far a housing, and the consumer economy are concerned.

Volatility was up about 12% today, and it was obvious that today's selling was accomplished with gusto.

The Satyam scam has investors wondering just how many more Jack-in-the-boxes are out there waiting to jump out and scare us with phony accounting.

My conclusion.....It FEELS to me like the world's falling apart at the seams. I am beginning to wonder if we are heading, not out of a recession, but rather, INTO a depression. At least I'm depressed.

Thanks a lot! Mid Nov 03 and Aug 04 were good points to be long followed +10% spikes. I know that history doesn't repeat, but who knows?

I for one was not surprised by the figures, kind of expected it, this all gets blown out of proportion once it is reported, we all know the king had no clothes but just didnt want anyone telling us because that s when we seem to believe it. I have personally been through worse, massive layoffs in the 80 s and early 90 s, company restructering in the new millenium, it seemed like all my life was lived in economic depression, but i put my nose to the grindstone, got out and did what i had to do to support a family and pay off my home, now im on the verge of paying it off a second time :), i for one will not let this get to me.

My summary of Sprott Article:

"The Apocalypse is here and gold is the only investment that will work in 2009. And, whaddya know, we have great precious metals funds you may be interested in."

This article is filled with all sorts of backward looking information. After reading Bill for the last couple years, I feel keenly aware of when:

A) Someone is trying to use their literary skills to help others become a better more astute/aware investors

B) Someone is yelling fire in a crowded movie theater

I am certainly not saying things are rosy, but give me a break Sprott!

Good point. There is one important distinction to be made between this and traditional recessions...Don't call me a Commie 'cause I'm not one, but I think that this period, much like the '29 period does represent a...well lets' call it an

*total systematic failure of unregulated free market Capitalism*

In that way this does mirror the '29 period, but I will bear your thoughful comments in mind.

I certainly agree that the article is suspect because of the interest he has in hawking his funds. However, what about the points he is making? Should they just be dismissed as an exercise of his literary gifts?

Rusoro's CEO today promoted his offer for GRZ, and made explicit his aim to consolidate the major gold deposits in Bolivar State, Venezuela:

http://www.reuters.com/article/innovationNews/idUS...

disclosure: long Rusoro

Shark,

No need for an apology. The topic is very relevant to worldwide markets. Public opinion and discussion is important. War affects people and markets besides being a moral issue.

I still hold an opinion that the hard line antics of Sharon were one of the contributing factors to bringing on the last recession. Very unsettling.

QT went off the rail in calling you antisemitic. That's the final poker card he could play.

*total systematic failure of unregulated free market Capitalism*

IMO, it's a bit more complicated than that... We didn't have unregulated market, we had/have misplaced regulations and deregulations. Pushing down the ladder lending practices "to anyone with pulse" was kind of shadow regulation - not in a written form but marching orders nonetheless. So was installation of FRE/FNM logistics behind the mortgages. Lifting leverage limits in fractional reserve system on the other side of equation was deregulation that magnified the negative effect. So did the refusal to regulate the derivatives.

In another example, no one cared to look into ungodly bonuses of shaky financial firms... yet, on another side of spectrum it was deemed necessary to install 25K rule for day traders which is anything but "free unregulated market", and brought a lot of harm in many regards.

I guess, examples of misplaced regulations and lack of such can be much longer, those are the ones on the top of mind

One reason that the tender offer will not go through is the fact that the GRZ shareholders and the RML speculators will head for the sell door at the same time to close their respective positions. Considering that the average daily volume is only 350K shares a day on the TSX and under 30K on the Pink Sheets in the USA, how will they liquidate their new Rusoro shares without devastating the stock price? And these sellers need to get it done quickly before the BOD and "other interested parties" obsorb the Gold Reserves 100 million cash register. Remember Rusoro spent 40 million of their 60 million cash position between June 1 and August 31 of '08. Rusoro can clean out those Gold Reserves current assets easily in 7 months. GRZ shareholders clearly know this and Rusoro is just trying to put lipstick on a pig in these last two weeks. If they do not get control of GRZ, RML is out of business. They are going to say and do anything at this juncture.

ALOHA !!

I cannot post the RESET charts of Credit Suisse as it is a private report! I am sure other charts exist that are similar. I think I have seen them at Now and Future before.

Sorry, but I do not have time to get permission ...

kaimu - Thanks for the response. I understand.... I'm sure I can find it somewhere.

I survived a big round of layoffs today where I work. Some really, really good people were let go. Smart, capable, efficient. Parents. One friend of mine who was laid off recently lost her husband to a long illness. Another is quietly and doggedly fighting cancer. These people were already fighting tough realities. It puts a terrible pit in the gut. Never thought I'd feel so awful after not losing a job.

My wife also recently survived a round of layoffs where she works, but expects this to be just the first phase of a waning tide there, inevitably ending in closed doors. We are fortunate that we both have our jobs at the moment, and I am able to do my job and trade to augment that income, but the many human stories unfolding all around me has started to make me more angry than I want to be, and I fear that all this fraud and incompetence will largely go unpunished. I fear there will be no indictments, and that enough time will pass that the public will tire, and lose the seemingly (and shockingly) small degree of outrage that does exist today. Those of us who go about our lives doing the right thing for our kids, family, and employers, are the ones paying the price.

I know, I know.... "I fear, I fear, I worry, what if, etc..."

It's why I read Bill so eagerly every morning. He's talking hope, hope, hope while understanding the economic circumstances far more deeply than I do. But the faces I saw today and the tears shed today put a hole in my hope tank.

As far as trades go, I only briefly watched today's action. I stared with dim eyes at 5-minute intraday charts of my AGU and SLW. I probably should have trimmed, being up in both. Still learning how to be willing to be more nimble, trading more to preserve gains instead of holding through swings in the name of Confidence In The Position.

Looking forward to reading the SLW report.

Oil is just basing and will expierience the whipsaw action that the broader went through for the last couple of months.

First day and first 5 days of New Year will tell how market is going to perform rest of year
We know first day was up and fifth day is tomorrow
Market movement tomorrow will be important to see where we will be going.

What a crook, being in the company for 20 years and you don't know what is going around with your books! Such a discourage to the company and the country itself.

(pdf document)
http://tinyurl.com/953c6d

Great work, I'm joining in once I see the opening tomorrow...

illini

"QT went off the rail in calling you antisemitic. That's the final poker card he could play'

You are a LIAR! Back up your comment...I did no such thing. I made one post today and it was just a repost of what Shark said the other day. There were other posts calling him that, but none of them were made by me.

The problem with these discussions is nobody really knows the entirety of what goes on. Napoleon had a great saying, "History is merely a fantasy upon which we all agree." Each side has righteousness on their side. Just ask anyone who agrees with them.

David, Blue Bluff or others...

Looking at long-dated calls (as my broker requires wayyyy too much equity to be able to write uncovered puts, i'm thinking covered calls on stock i own may be a nifty idea).

eg= USO, currently 33.27 option chain=OLLAI, current bid 11.10

buy 100 shares -3327 write 1 contract +1110

1)not exercised = $1110 gain and still holding USO. alternative view; cost basis of 22.27 per share

2)exercised = +3500 (+1110 initial) = 4610 for a gain of 38.6% or annualized at around 17.7% if exercised in Jan /11. (assuming USO bought with cash, not margin), otherwise if bought on 30% margin, % gains are even higher. not too bad really, but for the misery of having to hold USO the whole time when it could be trading at $60 for eg.

questions: 1) am i missing something?
2)do these long dated calls usually get exercised in a reasonable time-frame. ie if USO rises to $40 next week, will majority of these 'long-daters' get exercised? or do i have to hold and watch my non-profits rise and rise yet again?
3)who are your options brokers (in Canada hopefully) Cheers!

Sorry QT,

And I apologize for the misquote. A "find" search tells me it was actually someone named Quote270. A new poster? Maybe on the staff of AIPAC.

I do offer my sincerest mea culpa.

Kaimu, please put a sock in it. We need to come together as a people and solve the serious issues our fine elected officials have gotten us into by our own collusion and greed. Teamwork works best when members show respect for each other. I don't care what other people think...I think you are better than political slurs and bum jokes. Your admirer, loannetter

Placing $4.50 stink bid on TCK

8-Skate rotate, baby needs a new pair of shoes!

Don't forget ECA (Encana), Pook. Albeit only a 60% gain since the nightmare, but still considered to be Canada's Crown Jewel. :)

Great SLW report!

I was wondering, has anyone out there looked at Gold Wheaton? From the bit of research I've done, I know they have bought gold streams from First Uranium's new mine and a mine from FNX, and a company called RedCorp. If I understand correctly FNX mining holds a majority stake (part of the deal for the gold stream). Haven't had time to do much more research but I saw that someone involved with SLW is getting involved in management of GLW - can't find article link off-hand.

"There was an error opening this document. This file cannot be found".

Any help from anyone would be appreciated.

I had similar problem. If you're on Vista, my apologies. Click on the start icon circle, double click on your name, open downloads to find SLW. Move to wherever

Shark,

"Get a grip"! That's what the Roman generals said to their embattled troops. If they failed they were decimated (1 in 10 killed). We today are warriors of a different sort. Its only money. 10%,that's not bad.

Hope your Mom is doing as well as can be expected.

Thanks for asking, she's doing great, I have a real nurse coming in twice a day to check blood levels, gives insulin and pills, it's been working out. As for her condition, she has, thus far, made a recovery that could be accurately described as remarkable. Times like these remind me to be thankful for all that is good. And I do have the best cat in the whole wide world.

I also want to mention to the poster Alan, from much earlier today, I appreciate your informative and thoughful post.

To Chickenpookie,
I don't believe that the stock market is aware that there are possibly millions of "underwater" and "Negatively Amortized" small business owners who may fail and spike the ranks of the unemployed for their 1-10 employees. One thing that we can ill afford is a large increase in the unemployment rate.

In my discussions with respected economists, they admitted that nobody has looked at the Foreclosure and "Toxic" mortgage crisis from this angle. I hope that Congress will recognize that we must address this issue, soon.

"Kaimu, please put a sock in it."

loannetter - So we shouldn't be attempting to assess the economic damage and point out where we believe mistakes are being made? You had mentioned something about Feb 5th being an important date, I'm still waiting to hear why... I didn't get the moratorium memo.....

End of Nov. I tried to save, then had to swap a 4 year old dead Dell. Days on the phone to India with Dell and MS. (BTW, both now do have smart, trained people on the phone. Old PCs' problems are just too bloody complicated).

Only now are things back together. Now I can post again! And MOST of my files and settings are transferred, and software now installed. Still hassling with a too-sophisticated wireless printer.

They want to sell new gear, right, so why is it such a HASSLE to switch, 25 years into the "PC revolution" ?

Presenting Peter Schiff!!

http://watch.bnn.ca/trading-day/january-2009/tradi...

As kaimu would say: ALOHA!!!! OUCHIES on EVERYBODY!!!! EVERYBODY!!!!

Nice handlebars. I couldn't watch - all night downloading a video over modem. :(

Quasi

You were right, "Mr. Softy" indeed would not let me open the SLW report. I gave up, went in through Firefox and had no problem. Heads up to anyone else who has a problem, try Firefox.

Great report. I needed that after today :-)

I got very long SLW late November under $3.00, have taken nothing off.

I figured that I should divide my bets on a rising oil price into two categories: long-term core position and a short-term speculative position (which I will increase as the price falls and decrease to 0 as the price rises). Now, because of the value erosion in ultra-long ETFs, I figured that I should hold my long-term core position in USO, and the short-term trading position can be in UCO. Since I have some UCO shares already, I am canceling my buy limit orders on UCO and instead placing a buy limit order for 200 shares of USO at $31.

ALOHA !!

When the US TAXPAYERS bailout JP MORGAN who are they bailing out? If you go to this link you will see JP MORGAN "PARENT" but then look at the 276 pages of various other JP MORGAN holdings all over the USA and around the World.

No wonder the US FED is not disclosing who got what? They probably don't even know! Wouldn't it be embarrassing for Ben to say, "Sorry, but we lost track of who got what bailout money, because we can't keep track of what bank owns what!!" You'd have to hire an army of CPAs to just track all the money flows from all the various JP MORGAN entities listed in the HIERARCHY REPORT at the NIC. The link is below ...

UNREAL !!! What CPA could sort out any of this and yet JP MORGAN sits as administrator and custodian of practically every ETF in the known World!

This link is from the NIC-National Information Center who collects and compiles data for the US Federal Reserve.

Link: http://tinyurl.com/758nmf

Bailout Gone Wild

http://tinyurl.com/7rkdhs

Its good that you still have the ability to care. Its not easy looking for a job these days. Congrats on managing to survive another round. All I've got left is my investments, now, and it feels a lot riskier when there is no income or free healthcare, so I'm taking a lot less risk, probably at the worst possible time to be doing so.

Pook, you have unmasked my dart in and out habit. Work in the world here. Februar 5th prediction is when astronomical clashes with our overhead clear space...making decisions for us according to Madeline Gerwick:

"Since May 2000 an economic revolution has been unfolding .... this forty-year cycle of economic revolution, we’re now in the midst of a sixteen year cycle to transform the economy...you probably noticed the lower prices for gasoline and oil, but also the lower prices for nearly any item you can imagine, as evidenced by the many sales we had right before the holidays....Saturn quincunx Neptune (150 degree aspect). This cycle is basically a downward adjustment in prices, but it’s very temporary. It started back in late October and we had it through the holidays. It begins separating or lessening on December 31st and it moves out of this pattern completely by February 5th.Saturn opposes Uranus exactly for the second of five times on February 5th. Do you or your company have situations which have become intolerable and need changing? The Universe is here to help! You’re about to make those changes, whether you’re ready or not. Time’s up! If you don’t make the changes needed, the Universe will provide your world with a mini-quake to make them for you." http://www.polarisbusinessguide.com