The Financial Times had the following article: (In honor of copyrights, I'm providing the link and just the headline and first paragraph:

Given the sophistication of these instruments, there may be some who are "surprised" by the costs of some of these derivatives if the hedged position moves against them. So perhaps the "shock" that some expect is not in the failure of the derivative web, but rather the impact that it might have on the financial statements. I do not pretend to understand it well enough to opine on it, but I do understand it well enough to watch it and increase my understanding of it.
------------------------------------------------
Risks of derivatives 'not fully evaluated'

By Saskia Scholtes andRichard Beales in New York

Published: March 26 2007 03:00 | Last updated: March 26 2007 03:00

Fewer than half of global financial institutions account sufficiently for complex financial and commodity exposures in assessing the riskiness of their holdings, according to a survey by Deloitte.
-------------------------------------------------
http://www.ft.com/cms/s/92f9a7d6-db2d-11db-ba4d-000b5df10621.html

hello from germany,

housing outlook 2007 from PIMCO

plus

an overview about how the rolling bubble is effecting the commercial german real estate market
(almost as important including a funny homer simpson clip....)

http://immobilienblasen.blogspot.com/

iran seems to be a non event.....

Please Bill
(or anyone else)
Could you explain better the concept about the pullback on gold and precious metals that had to do with the London LME?
Thanks for your help. I love learning!

I'm interested in your opinions on the following investment strategy decision.

1. If the broad market has a major correction or goes in to a major bear phase (which seems so likely....), all equities, including GLD and PM miners, will drop. We saw in the dip two weeks ago that the PM sector dropped significantly along with the market.
2. Does this mean that one would do better going mainly to cash/shortest term bonds until after the correction to the equity market is underway?

I currently hold a lot of PM equities, and am debating going to mostly cash for a while...

Opinions are welcome....

Help!!!

So I have asked this before, but not gotten response. I usually post later in the day so that could explain things. I am looking to the "community " to share some knowledge. I find Bill's RSI <30 strategy very interesting and I wanted to see how it performs beyond the Cara 100. To efficiently do that it seems one would need a stock screen that has the ability to screen Daily, Weekly, Monthly RSI < 30. Does anyone know of any site that offers this capability? Also, if anyone uses a similar strategy I would like to here how you come up with a population of potential stocks to invest in...

Doh.... I would like to hear....

Big Bill,

investertech.com will give you the RSI 7s and 14s on the tech RSI screen, choose daily, weekly or monthly as you wish. For example, here are some tech stocks I follow:

http://www.investertech.com/tkchart/tkchart.asp?stkname=AAPL,GOOG,SNDK,RACK,NETL,NWRE,MRVL,NFLX,AMZN,EBAY,YHOO,BRCM&prt=0&ind=rsi

Now, Bill does not only look at RSI, but also at other factors, e.g., industry, as well as quality of the company (hence the CARA100).

New home sales report today is a disaster. The only saving grace is it for February, which is a slow month.

But the rise in inventories and the dramatic downward adjustment to earlier reports has sent the builders and the market into a tailspin.

http://www.marketwatch.com/news/story/new-home-sales-fall-7-year-low/story.aspx?guid=%7BA1D8CD82%2D1EB9%2D4E46%2DBDF5%2DDB0BA246F1DE%7D

t4k,

i followed your lead last thursday and am now back in the black on sds...thanks

2nd

Number2son--this is precisely the sort of story that causes me to wonder out loud "How can this possibly be a surprise to the market?" I'm staying with my thesis that mortgage lending (['m refusing to call it sub-prime; I think that subprime is just wedge (as opposed to a slice) of the pie], has not been fully priced in, its tentacles are wrapped around unmentionables of the credit market.

As Bill noted in WIR, we'll smell the smoke (I think some of us have seen it) when the lenders start ponying up to the loan losses--as their experience rates increase. IF you read the SEC filings for some of these folks, you'll see that loan losses are based on "current delinquencies" and "historical averages" Currently, as I've said here ad nauseum, the banks (system-wide) are still benefiting from low loan loss ratios--Go to FRED and see the %. Currently it is about .05% system wide--when things get bad, it goes to 1.5%--if my math is right, that's 3 x the current rate. . A show of hands as to who thinks that this is priced into the market.

Im new here, could someone explain what RSI is

Dear Leisa

from .o5 % to 1.5% would be 30x increase.

Have a good day

Satyen

http://stockcharts.com/school/doku.php?id=chart_school:technical_indicators:relative_strength_index_rsi

rwedoomed?...ominous moniker. No, we're not doomed, nor are you doomed to languish without the benefit of an RSI definition. See link above.

RSI = Relative Strength Index. Basically a measure of increasing trends against decreasing trends. Value over 50 means generally positive momentum, under 50 negative. Over 70 can mean overbought, under 30 oversold. Use daily/weekly/monthly according to your timeframe. I.e. long term investors would wait for low monthly RSI, with ideal entry point when all three are low. Short-term traders could buy on extreme oversold daily for quick pop.

Did a quick search and found this collection of predefined stock screen which include:

Overbought with a Declining RSI
Oversold with an Improving RSI

I think they are using daily RSI(14)

http://stockcharts.com/def/servlet/SC.scan

GLD doing ok, but, again, miners get hit. I put gfi and gld on a 2 yr weekly chart. Both end up 50% up, while the miner is more volatile the correlation looks good enough. I'm late to purchasing in the accumulation range but I will continue to be a buyer, or maybe it's time to stop and wait for the dust to settle. EPP, where australia is the largest weighted country, shows the best relative strength. Ummm, australia...strong currency, metals, banks that profit from mining? Anyone else following developed asia?

Agreed, Leisa. I think there's just an enormous amount of denial out there, despite all the accumulating smoke.

FWIW, I'm short a couple of the Alt-A lenders (NDE and DSL). Also short CFC.

Sio2 - I use investertech now for checking RSIs, but I basically pick a stock and then see if the RSI was below 30 on the three time frames. What I want to try and do is check all companies with RSIs < 30 and then search out quality companies, etc.

Proud Popa - Seems like this is closer to what I want. I think if I sign up I might be able to create custom scans using RSI.

2nd-

Did you take profit? Looks like today's new home sales "disaster" is about to trigger another melt-up. {"You don't need to see his identification ... these aren't the droids you're looking for."}

Bill's rule#1: watch the tape.

Anyone else hesitant to participate lately?

t4k

MU, up and mkt down. Positive divergence with rsi. Bill expressed reluctance to accumulate. Maybe, looking better. More news about expansion into china.The semi group, though, is sickly. Not much sector power.

Quick comments:

Gold can move up while miners move down along with general stock market for various reasons. If you want gold and don't care about the leverage, just buy gold instead of shares.

The stock market is ridiculous. All bulls talk about is the massive amounts of liquidity in the system being bullish. They talk like it is that simple. Many rallies are simply squeezing shorts hard which drives upside price movement. I think the bulls are simply betting that the PPT will support the market, squeeze shorts etc. If they aren't on board, they miss out. If the market turns lower, so what, everyone gets hurt.

just my $0.02

Yep T4K...
I've been using any stength to get to cash, some very short term trades on volatility.

This AM was fine with me (I was positioned) and I expect a Ben bounce when he opens his mouth later.

Disclosure: 85% cash, 15% equities, tight stops.
I'm waiting.

ALOHA !!

Leisa ... I agree not much is "allowed" to be priced into the markets due to FED interventions. I have found that the more complex anything is, much less derivatives, the more room there is for manipulations. Yet manipulations can only last for so long until the "smoke" turns into a "fire". My first clue was about three years ago when Alan Greenspan reported to Congress that derivatives need no "regulation". Which Congressman was proposing "derivative regulation"? Ron Paul ... one of the only fiscally responsible politicians in DC! Who, by the way, is running for President in 2008.

Yes, of course ... as the cost to "insure" risk goes up it cuts into the bottom line of HB&B. Get yourself a list of the banks most exposed to derivatives and you'll have a list of where your savings and ETFs should not be as well as a "go-to" list of best banks to short! Here's a clue ... Citibank is high on that list!

Aleisen ... I am holding my PM positions, but I bought them a long time ago so my basis is quite low. Add in that a lot of them are either near production or are sitting on some major deposits. I know that three of them are being visited by major producers. I smell some buys or at the very least major JVs. Then again I do not own a lot of the HUI/XAU stocks so it seems my pics are less connected anyway. As a matter of fact over half my posutuins are either unchanged or up today while the DOW is down over 100 points. Also the HUI/XAU is little changed as well.

Watch the TIC since it really does not matter what the FED says about interest rates because once foreigners stop buying Treasurys the rates will go up. That would kill the real estate and stock market and add fuel to the derivatives smoke and with the US deficits I believe there would be selling of the US dollar. Rising rates and a falling US dollar with the USA in full blown recession ... an exact copy of the late 1970s and early 1980s when the stage was set for huge PM increases.

I have posted this chart before but it is worth seeing again for those of you wondering what happens to PM shares when the DOW tanks ... Just remember when the trend reverses don't be on the sidelines!

Link: http://www.nowandfutures.com/download/dow_goldstocks19472000.png

I have sold off all my mutual funds and am totally out of any tech, financials, retailers, etc. I only hold oil and PM/Metal shares and cash.

Satyen, thanks for the correction. Indeed, .05 to 1.5 is 30x; but the relationship and numbers I had intended to express was 1/2 % to 1.5%--so 3x. Sorry for the careless typing.

ALOHA !!

OH MY GOD !!! Where is the "spell check" for this site?

WHAT? "posutuins" should have been spelled "positions"! WOW ... what "proff-reding"?

ALOHA !!

Regarding the TIC Report ... when you see unusually high participation by the "Caribbean" I would suspect FED intervention. Given the manipulations of the stock markets and gold and forex it would not be beyond the realm for the USA to buy its own debt!

I mean what's next ... the FED starts buying homes in key markets to drive up home prices? I mean when you own the printing presses anything is possible!

Kaimu, thanks for re-posting that chart as well as for your (frankly scary) insights.

Leisa, your comments, as always, are interesting and useful. I've also bookmarked your blog.

And Bill? THANK YOU FOR EVERYTHING!!!!

Good afternoon, Bill and blog readers. Looks like miners(slw,paas,hl,auy)holding upwell.

I've started to accumulate shares of bsx. RSIs in the 20s.

t4k,

yes, i closed the entire position...partly due to MarkM's take on short-term direction...he's been the best "tell" we have on mkt direction recently

2d

Morning move down to former resistance has met with the all too predictable bounce. This is being played like a TA textbook. Are only the programs left in this market?

2dave-

I'm complimented but I certanly don't have all the answers here. Frankly I am surprised this pig hasn't run off a cliff. Traders have got to be thinking that this whole move up was based on a dream.

Good luck and good trading.

kaimu,

I'm in a similar position as you: no techs, financials, retailers, etc. Only some oil and the rest is in PM and cash. Waiting to see if we get a melt-up, at which point I intend to cash out my PM miners, keep the bullion, and wait for the buying opportunities in techs, financials, etc.

DBA...agriculture
anyone know why this would go down with rising oil?
i have a full position to date, fwiw.

Big Bill,

Worden Bros, telechart program, TC2007 will do multiple time frame, RSI scans. Be careful with investertech's RSI calculations.

Investertech does not use TRUE Wilder's RSI smoothing and as a result, their numbers vary quite a bit from the traditional Wilder 30/70 formulations.

...david...

jasper-

Looks to be pretty tight lately indeed:

http://stockcharts.com/h-sc/ui?s=DBA&p=D&b=5&g=0&id=p19992176199

Can't help you on reason. Could just be a one off.

kaimu, thanks for the comments. My inclination is to sell about 1/2 of my PM miner positions and buy GLD instead. I'd hold until after a correction or a few weeks into a decline. I have mostly GG, SLW, MDG, HMY, and KRY. My hunch is that these would go down along with the market, while GLD would stay steady, or would be down less. Then the idea would be to sell some GLD and buy miners.

mark m,

i hear that it's sugar that dropped, i looked at $gkx as proxyy for dba...tempted to add more, but there's a double bottom, hard to say if i'm buying at support or not

any one see wgdf...wow, news on reserve estimate

I'm curious to know what this board thinks in regard to the possibility of a new war (with Iran)? Given the current state of our US economy, how would the markets respond? What would happen to Gold and the PMs? Could this new war (being setup) be the distraction that is required to bring our delusional economy back to reality? I was not an investor at the time of when prior wars began, so I'm curious to know your , given this markets current state of affairs, what could war w/Iran do our market, specifically, and to the global markets in your opinion?

Back in January bill provided a write up on WGI. He said "what's not to like" and I said to myself "and I like it too". Nice 10% pop today. They start pumping out the gold next month.

Here is some fuel to the fire as talking heads begin to talk about an interest rate cut to help the economy. Here is the relevant paragraph

We also know that millions of households are not saving enough for retirement, banking on equity in their homes which in many cases will not be there. We best help these people by allowing house prices to adjust as quickly as possible. With these cautions, the Fed should certainly look to try to support the economy, even at the risk of higher inflation, in order to offset the damage from the collapse of the housing bubble.

You can read all of it here
http://www.prospect.org/deanbaker/2007/03/larry_summers_says_lets_not_wo.html

onlineaces. Before America undertakes any further wild excursions into unknown territory perhaps the following should be carefully reviewed by all concerned.

http://nationalpriorities.org/index.php?option=com_wrapper&Itemid=182

jasper...oil products needed for fertilizers and pesticides...plus those tractors etc. eat up lots of fuel...

QID and SDS coming up again on short range scanner Cap'n.

"Stay on target, stay on target"
(the Star Wars references just keep coming today)

One rule on trading these inverse ETFs is, buy only when the corresponding volatility index is moving UP.

t4k

re Western Goldfields:

nice pop today? check the daily chart - like, between 12:30 and 1:30?

a top pick today - again - of Hugh Cleland on ROBTV; he has a loyal following because he is a successful stock picker...

http://www.bnn.ca/shows/past_archive.tv?day=mon

to listen, it's the 1:25 time slot.

Nice moves by CDE Coeur D'Alene (up 6%) and SLW (2.8%), with SLV up 1.5%. Long both miners.

See, there's no "disaster" in housing, or anything else! Eeeeevryyyyything is fiiiiiine...

May the force be with all of you, and especially with Mr. Cara.

t4k

"You can't fight the PPT".

Ridiculous.

onlineaces -

Markets were exuberant and spreads between emerging market and British debt were very small days before WWI broke out. Investors had been hearing about the threat of war for so long that they no longer responded to it. Even after Arch-Duke Ferdinand was killed investors acted as if war would not break out. When it did, markets across Europe closed as panic set in. Hard assets - gold - fled to the US. Markets sometimes do not adequately price risk.

Gold and energy will gap up if war breaks out in the Mid East.

g034 said: "You can't fight the PPT".

Ridiculous."

This has moved past comprehension. Well, no, I know exactly what they are doing. They are running The Playbook. Have you looked at the trenddline on the 30 minute chart for the last 5 days or so and see how today's action lines up so BEAUTIFULLY with it? ;)

So we got the short sharp move down I talked about and the ram higher. Someone (or something) wants us to believe in this market VERY BADLY.

Maybe Citigroup needs to start issuing credit cards to illegal immigrants...

It is amazing to me that with the housing numbers this morning, along with worries about: Iran, the auto makers, the subprime market, derivitive risk misjudged, hell, just about anything you can think of is a ticking time bomb... and yet we once again get support and an afternoon rally.
As Mark says someone really NEEDS these markets to appear healthy, but that someone MUST be feeling an increasing amount of heat. No matter how much they may be beholding to the new Fed Chief and/or the whitehouse, at some point these BSD's will put self-interest above politics. After all, politics is just a means to an end for these guys.
When that happens, there will be a huge transfer of wealth. Let's hope we will all be on the right side of that trade.
The junior PM stocks that have done best for me are: RNO, GSS and (thanks Kaimu) ANO.
I also like NAK longer term.
Check them out, RNO is up 12% today.
All of them need to be watched for a proper entry.

Muckdog. I hate that phrase "illegal immigrant". I oftem wonder what would have happened to America if the had closed it's doors to the Irish, Germans, Italians, Poles and Jews etc. etc. There was nothing legal about them when they arrived at Ellis Island. The people today are no different to the ones who came a long time ago and who are probaly "all" our forefathers. They are adventerous new residents and should be treated with dignity and respect. I'm sure many are in the market for credit cards and many more will buy up vacant homes and keep the American economy moving.

thanks moab.

Horatio,
I am with you on this one. I live in San Diego county. As hispanic as it gets. Lets see what Lou Dobbs has to say if all of the illegals were gone in one day. Who would wash his car, mow his lawn, clean his house, serve him Mexican food, pick the fruit and vegetables that he eats as well as the beef, chicken and pork on his plate. Whites and blacks will not do that kind of work; believe me! $15/hour would not bring them in.

There is alot of window dressing going on for the end of month/qtr.

Watch out below come next Monday.

Also getting into tax season and cash needs to be raised,,,,,IMO.