I wouldn't be surprised if the talking heads and markets continue to feign disbelief even during today's trading. The equity markets are so set on breaking records daily that it seems nothing can stand in the way...

The professional liars in the financial media are hard at work today, spinning home builder Lennar's disasterous 4th quarter and miserable guidance into a positive. Manipulators are taking the opportunity to run all these dogs early today.

This market is simply sick.

I too share disbelief that margin deterioration was a surprise. That's one of the things that I find so difficult is that reasonable, logical, knowable things really are not priced into a stock as much has the theory of "all known things are priced in the market and stock prices." It's an old saw that ought to be banished due to its disengenuousness.

KRY taking a beating after falling out of favor with JJC.

Leisa, I don't know if Cramer isn't front-running for buddies looking to cover short positions or buy low (it wouldn't surprise me if he were), but I do know that the longer the VZ gov't holds out on KRY the easier it is for manipulations like this to happen.

"About oil, just remember that at extreme ends of the price cycle, it's not economics or politics driving the price; it's pro traders (mostly NYMEX) stretching the envelope."

I believe it is politics, that is middle east politics. The Saudi's are using their most potent weapon against Iran since they apparently have no military option to use regarding the massacre of Sunnis.

http://www.msnbc.msn.com/id/16656642/

This website tracks what experts on ROBTV are saying about gold stocks:

http://robtvgold.blogspot.com/

via Brett Steenbarger

number2,

Does anyone know how much cash KRY has on hand? I was once told the burn rate is $3 million per month. My fear is that we could be in for a long game of rope a dope with Chavez which will meaningfully reduce KRY's cash and force a very dilutive offering - all pre permit. Any thoughts on this issue or am I off base?

With regards...

noodle,

there is too much propoganda and i rather not add more, regardless of which side i am on. My recommendation is to call Richard Marshall and get the answers you need to make an investment decision from the source.

Richard Marshall, VP Investor Relations
Tel: (800) 738-1577
Tel: 416-203-2448

Best of luck

KRY is a speculative holding, and we should treat it as such. That way, we can ignore all the noise and wait for the position to move on its own time. Until there's meaningful activity reported by the company, I don't think anyone's commentary (including JJC's) holds any more weight than anyone else's. IMHO.

Noodle,
KRY cash position was 43.38 million USD as of Sept. 30 2006. At a burn rate of 3 mil/month you figure they have enough cash to last them till end of 2007.

Adonis,

Thank you for the data. Very helpful. The problem is now clear. The Company either gets a permit soon or KRY will be forced into a very dilutive financing as financing sources (if there are any the have not already been promoted in CA and USA ) will exact considerable pain the closer the company gets to running out of cash. Thus for example if KRY has no permit and comes into my office looking for cash say 4-6 months BEFORE it actually runs out - well that would be a mighty unpleasant conversation for KRY and its shareholders. That's my point. We are getting nearer to a going concern danger zone.

With regards...

That will be very painful to shareholders.

Regarding KRY - the greater the risk, the greater the reward, especially when the perceived risk may be much higher than the actual risk.

What I don't understand is why Cramer repeatedly denigrates the stock. Is there sufficient regulatory oversight to insure that he is not trashing the stock in public and buying it in private?

Unfortunately God Cramer is only being a good upstanding US citizen and therefore must denounce the communist Chavez. The SEC should step in and investigate his comments.

Re JJC--I generally believe that it is bad form to speculate on motives of others. Perhaps I'm naive, but I'd like to believe that his declarations are based in hubris (which is none to pretty at times) rather than in an attempt to influence the market on behalf of other's interests.

2nd_ave says it well: KRY is speculative.

JCC must have more market power than one would suspect...on a day when KRY is off 6.15%, GRZ (which requires the same VZ permit as KRY)is only off 2.76% and VNT, the VZ telco, which is the focus of renationalization efforts is up plus 3.5%!

Re: KRY
I sold half my position on Monday to lock in those profits. I felt I had too much invested for the country risk. However I also could not sell it all as the reward from the price exploding upwards if Chavez threw a bone to the mining industry I felt outweighed the risk of the price collapsing. I probably should have bought that half back this morning and said, "Thanks JJC", but that's hindsight. I still could, but I feel much more relaxed with the lower dollar amount invested. When I made my first purchase of KRY stock I considered it "mad money". If it went to the sky, marvelous, if it went to nothing, oh well. But then I kept adding on, and on, and it finally dawned on me that it wasn't a "mad money" or small investment situation any longer. Now it is back to a level where following the stock price minute by minute isn't a priority. Still have a big bet it goes up, but can still buy groceries if it goes down.

Leisa, normally I would agree. But in this case, Cramer has gone well out of his way to bash KRY. Something really stinks here.

Hugo Chavez: Providing Profitable Investment Opportunities

http://telecom.seekingalpha.com/article/23948

I end up buying more and more KRY.

Another reason KRY is taking a dive is the breaking news from VZ
that CNBC is highlighting today and yesterday. One of their reporters is broardcasting live and interviewing business owners.

Another reason KRY is taking a dive is the breaking news from VZ
that CNBC is highlighting today and yesterday. One of their reporters is broardcasting live and interviewing business owners.

Just in case the talking heads at tout tv are getting you overly bullish consider these risks highted by Seeking Alpha-sorry couldn't get the charts to print.Seven Reasons Why It's Time To Sell
Posted on Jan 17th, 2007

Paul J. Lamont submits: We have pinpointed the seven reasons why investors should be currently selling their stock and mutual fund portfolio. As Marc Faber has been saying recently:

“In a selling panic you should buy, but in the buying mania that we have now the wisest course of action is to liquidate."

After discussing reasons to sell, we will recommend what steps you should take with your cash to protect value. But first, the seven reasons:

1. Sentiment

Sentiment surveys allow an investor to gauge the emotional enthusiasm of the market. The Daily Sentiment Index from MBH Commodities has been tracking the percentage of bulls and bears for 19 years. In mid-December, this survey recorded its highest long-term bullish reading ever. We called Jake Bernstein, President of MBH Commodities, to personally confirm these numbers. More traders are bullish towards the S&P 500 (91%) than at the peak of the NASDAQ in 2000 (83%). Remember delusional investors were buying tech ‘ideas' in 2000. Now there is even more consensus that markets can only go higher (see below). This suggests a major correction.

In addition, all 14 ‘Strategists' at the largest Wall Street Firms are calling for a higher market in 2007. The last time this bullish consensus occurred was at the start of 2001. The DJIA subsequently fell ~40% over the next 2 years.

"A pack of lemmings looks like a group of rugged individualists compared with Wall Street when it gets a concept in its teeth." Warren Buffet

2. Insider Selling

Corporate insiders (see chart below) are selling shares in their companies at the highest rate in over 10 years. In fact according to Elliotwave.com, it's the highest rate since right before the crash of 1987. Executives are the most knowledgeable people about the future prospects of their companies. If they are selling, then why should you be holding shares of their companies?

3. Mutual Fund Cash

click to enlarge

Mutual fund managers are not immune from the emotions of the market. Due to the long term record of their positions, we can inspect their behavior at significant market turns. Looking at the chart above, mutual fund managers hold little cash in their funds at market tops and large amounts at bottoms. This of course is the opposite of what a wise investor should be doing, but fortunately it gives us a reliable contrarian indicator. Notice that mutual fund managers are presently holding the least amount of cash in 33 years.

4. Dow Theory Sell Signal

Dow Theory is used by market technicians to study the health of the overall trend by comparing the Dow Industrial, Utility, and Transportation indexes. To summarize, if the historical Dow indexes are rallying together, then the trend is healthy. If an index is left behind, such as is occurring now, then it is described as a ‘broken' market and warns of future weakness. The chart below from Tim Wood, one of the most studied on the subject of Dow Theory, shows that the indexes have been diverging for the last 6 months. The chart also shows the successful forecast for weakness in 2000.

5. Inverted Yield Curve

The chart above, from Agora Financial's Survival Report, shows an inverted yield curve (short term rates are higher than long term rates) implying that investors expect a slowdown in growth in the future. According to the Federal Reserve, the inverted yield curve “has borne a consistent negative relationship with subsequent real economic activity in the United States, with a lead time of about four to six quarters….The yield curve has predicted essentially every U.S. recession since 1950 with only one ‘false' signal, which proceeded the credit crunch and slowdown in production in 1967.� Recently, the inverted yield curve warned investors in mid-2000 of the coming market decline. It has now been constantly inverted since mid-2006.

6. 20 Year Cycle Stretches the 4 Year Cycle

click to enlarge

The emotional investing herd fluctuates from greed to fear, creating cycles through time. The most correlative rhythm to the Dow Jones Industrial Average is the 4 year cycle. The chart above shows the reoccurrence of this notable low every 4 years. Notice the overdue sell-off expected in late 2006. Only one other year in this fifty year stretch has the cycle extended past schedule: 1987. It seems history is repeating. A sensible explanation would be that a larger cycle was coming to conclusion, influencing the market to extend past this 4 year rhythm. Our recent research of the 20 year crash cycle lends evidence to this theory.

Below, we have expanded the list of financial panics compiled by Ldcr. David Williams in 1984. He observed a 56 year cycle in which he noted a reoccurrence of a crash every 20, 20, and 16 years. Notice the pattern (1761 + 20 = 1781 + 20 = 1801 + 16) then repeat. After three crashes, the cycle resets:

1761 1781 1801

1817 1837 1857

1873 1893 1913

1929 1949 1969

1987 2007? 2027?

After 1969, an odd thing occurred. There was no crash in 1985, as predicted by this cycle: 1969 + 16. Analysts would also have expected the smaller 4 year cycle to appear in 1986. Instead the market rose into 1987, crashing that autumn almost 40%. We are now coming upon the 20 year anniversary of the 1987 crash. We believe the 4 year cycle is again extending to align with the larger 20 year cycle much like it did in 1987, to produce a significant downdraft this year.

The year 2007 also marks the 10th anniversary (1/2 cycle of 20yr) of the 1997 Asian Crisis. As another example, the Japanese market topped in 1990, ten years before the U.S. markets in 2000. The Nikkei 225 Index is still below half of its peak value.

7. Low Volatility

Over the last few years, there has been a complete collapse in volatility in the stock market. Generally, volatility drops when markets rise and increases when investors nervously sell shares. Low volatility warns investors of an environment rife with complacency and lack of fear (which is needed for markets to rise). As you can see from the chart above from Tim Wood, the Volatility Index or ‘fear index' is at 13 year lows. We believe that volatility will return to the market this year with the downward pull of the 4 and 20 year cycles.

Why Is Selling The Hardest Part?

In “Hard-wired to Fail: Why We Need Contrarian Managers�, Doug Wakefield, President of Best Minds Inc., explains the influence of emotion in investing:

“In short, the basal ganglia and limbic system are the parts of the brain that guide the behaviors that are required for self-preservation, and since money is something we need to survive, these emotional and instinctual forces exert a very strong influence on our investment decisions. To make matters worse, research shows that these two parts of the brain do not learn from experience. Also, since flocking or herding is part of the self-preservation dynamic in mammals, going against the crowd is completely unnatural. This is why it is easy to intellectually agree with Buffet's or Templeton's admonitions to invest oppositely of the crowd, and so extremely difficult to actually do it.�

“Capitalism demands the best of every man- his rationality -and rewards him accordingly.� Ayn Rand

Investors have been emotionally conditioned (and rewarded) during their entire investing careers by buying and holding stocks. Unfortunately, market trends and valuations change. ‘Buy and Hold' was also the mantra in the late 1920's. Therefore we hope you are able to shrug off the need to follow the crowd, look at the evidence rationally, and protect your assets.

What To Do

In a credit crunch, optimism turns to fear, risk is re-priced, and the rush to liquidate assets begins. Prices fall and cash is the only haven of value. This is what happened from 2000 to 2002. The same will happen soon and will surely happen again in the future. With the cash you have raised from selling assets, we recommend a portfolio of 3 month U.S. Treasury Bills, which protect principal. We do provide this service, but we want to stress that you can call your financial consultant tomorrow to allocate everything into a U.S. Government-only money market fund. While this is not ideal, it will initially protect investors, until more evidence demands further preservation and our services. History shows that most investors will not take action, but those that do, will be able to eventually buy assets at bargain prices.

To your point optionoracle,

the credit crunch on the consumer level has begun, albeit silently! Chase Member services sent me a letter telling me my card's apr would be going from a low fixed rate, to a higher one as of Feb XX, 2007, unless I mailed in a letter rejecting this offer. So when i called i was pretty heated and proceeded to threaten to cancel a card that i have used responsibly and have always paid well in advance. she than told me it was not personal and i was not the only one who received it. in fact millions of americans did. The penalty for opting out of the higher rate was zero. but for those complacent americans who dont send their letters or ignore mail from credit cards in fear of not having enough to pay, they will be paying much more interest and wont know what hit them.

the credit tightening has begun, but someone forgot to announce it.

optionoracle-

Thank you for that brief respite from the "All KRY, all the time" financial channel. Here's the link for those who want to see the chart:

http://usmarket.seekingalpha.com/article/24363

Interesting to see the reaction to AAPLs earnings. AAPL has been one of the stellar performers in this bull rally and a negative reaction could lead to a capitulation in the overall markets. Also of note for those interested in technicals - GOOG appears to have double topped. $513 high on Nov 22nd was met yesterday exactly and now its fallen below $500. I cross my fingers when I say this since I am short GOOG ( even though it'll probably be at $1000 + in a couple of yrs.

TheAdonis,

I am actually using google as my retirement fund. every time the pps tanks/dips i buy 1 share. and every share will be held until retirement. :)

I should track against 'what if' 401k plans and compare after retirement.

On the topic of earnings season.....

WAMU just reported a "great" quarter releasing $1.10 earnings v. 0.88 estimates. Stock expected to rally on news.

Devil is in the details though as $400 million of their $1B profit in the quarter came from sale of their mutual fund business. Cut that out and they made ~600M v. 750M last quarter.

What were the key drivers for the poor operating performance? Their LOAN BUSINESS lost $120M in the quarter due to deteriorating subprime loan performance AND they doubled their loan loss provisions from $160M to $344M.

The impact of declining home prices on the lenders and thus Humungous Bank and Broker is key to understanding the markets in 2007 and 2008.

FYI.

Best regards,

BG

The Adonis -

You may want to read this regarding GOOG to get the bull perspective:

http://www.minyanville.com/articles/index.php?a=11935

Would like to see the Euro moving back over 1.30 vs. the USD; that would help gold and silver, which had decent moves today with oil bounce.

Japanese yen weak, allowing goods to remain cheap and compete w/China. BOJ meets tomorrow and it will be interesting to see if rates are changed. If so, may be some unwinding of the carry trade. Market influence?

In another unrelated area, I let one slip the last two days as I was concentrating elsewhere. With more recent news out of Spain re Castro's health decline, closed end fund CUBA had a nice 36% move since the close last Friday. Normally don't deal w/ closed end funds, but knew this fund was prepared for life after Castro and due for a move. Horse is out of the barn.

moab,

Thanks for the link. I always appreciate to different viewpoints. I must say I remain very bearish on google from a standpoint of fundamentals.

WOW. Apple blew away all projections and the stock is down 1% in AH. People are overly concerned with quarterly earnings when in reality its forward guidance that moves the stock. AAPL is behaving the same as last yr when it moved up 20% in a few weeks prior to earnings, blew out estimates but their guidance was on the low side and the stock price went south. I think AAPL Feb 80 puts look very attractive.

Concerning Google. Great company, exceptional growth rate and well managed . However their their market cap is $150 BILLION + . Not too many 150 billion companies can command the multiples GOOG does off 60x earnings. The problem with high growth, high multiple companies is that they are usually the first, to get a price cut when the overall economy slows and we enter a bear market.

i used to be a bitter bear until after a lot of hard work i decided to stop being a bear and start being nothing. ( oh and i lost a lot of money on puts)

i told myself i would

A) not pick tops
B) not pick tops
c) ignore the fed
d) ignore cnBS
e) ignore inflation
f) ignore deflation

i've also stopped reading 90% of the blogs i used to read except for a few and then even still ignore any bear slant or bull bias.

so i've just been reading a lot about goog, apple and intc and i have to say anyone who buys into these train wrecks and prepares to hold through earnings .... well they most likely will get crushed.

when the monkeys rotate, let them rotate and enjoy the ride but son't be hanging out to shut the light off.

Bill Cara is a shining light. His experience is amazing. To share his insight with folks for free is a testament to what I think he means when he promotes Social Equity.

I await the new Bill Cara premium site.

One of the things that I have picked up from Bill is the RSI (I use 5, 10, 20 <30) in the dumpster readings for good companies. I have deployed this tactic on a few names, and I have found that it has been very helpful in cementing my fortitude largely due to my feeling more technically confident that the downside (on these stocks which I think are good)is more limited.

This tactic (I don't wish this post to sound as if I have deployed it widely, but I have on a few names) has helped me to enter positions more advantageously and more confidently. That advantage/confidence has allowed me to not get fall out of the tree when it gets shaken. I've come to realize that shakeouts are a very real part of other people trying to part me with my money. I wish I had understood that sooner.

Ditto on the RSI. For me, it has been one of the really valuable take-aways from Bill's terrific site.

For those of you who aren't paying attention to the RSI indicator, may I say that I think you're missing something?

I learn a lot from everyone of you as well! thanks for sharing your opinions, links, and knowledge.

Hopefully I can meet some of you in the future. I often have thought playing poker with some of you would be a very fun way to spend several hours.

i use a mix of 10% rsi, adx , a special MACD for exit / entry and moving averages .... 90% price action.

What's up with KRY? Just dropped like a rock ~15% Anyone know the news?

It was the immediate reaction to Chavez wanting to have the power to enact laws by decree.

I figure the stops got triggered, and it fell to 2.22... a nightmare, but now picking up... I should have bought at 2.22