Bill Cara: Cara’s Daily Commentary, Thursday, June 28, 2007, 8:29 AM

« Cara’s Daily Commentary, Wed., June 27, 2007, 7:58 AM | Main | Cara’s Daily Commentary, Fri., June 29, 2007, 9:30 AM »

June 28, 2007

Cara’s Daily Commentary, Thursday, June 28, 2007, 8:29 AM

Market Chat

Yesterday I wrote, “Today is starting in better shape, but then again the lead story appears to be about (debt-market related) bail-out problems at Bear Stearns.” The debt market issue is far, far greater than anything to do with Bear Stearns (a high-quality company in my books), and will not be quickly resolved.

Interest rates, in the interim, will have to rise because (i) capital risk must be re-priced, and (ii) global economic growth driven by BRIC economies will demand liquidity at a time that central banks have a need to contract credit. Interest rates are today at historically relatively low levels, but, unfortunately, credit quality is also very, very low.

The answer to market direction lies with the Fed, which today reports on their decision and statement as to policy. The policy statement is, for the most part, useless as a guide to the market, and something I call a sham. Regretably, the Fed is not required to release their strategy and tactical plan, which is released to the banks via buy and sell orders from the FOMC trading desk.

The public is not privy to this Fed-HB&B insider trading, and so we have to wait for (i) the market action, and (ii) the spin from the bankers, to try to figure out for ourselves what’s happening. This juvenile process makes for difficult decision-making by the independent owners and managers of capital, and leads to accusations that the system is rigged.

Yesterday, Treasury Secretary Paulson said that he intends to change the system. I say Hank Paulson is the last person on earth that we need to fix anything on our behalf. He, as much as anybody, through his direct actions of past years is the culprit.

Let’s take a look at yesterday’s trading. It seems that almost always when the FOMC meets the market turns bullish and the usual bullish suspects are the banks and technology. That was the case yesterday as the Dow turned around the sour notes into almost triple-digit music.

What can the FOMC trading desk do when action is needed? They can buy back some bonds from HB&B, which floods capital into the banks, which is then multiplied several times under the reserve banking rules, in the form of more loans. Bonds are then purchased in the public market, pushing up prices and lowering yields.

Yesterday, the 30-year Treasury Bond ($USB) lifted +0.32 pct to 107.12, and the yield dropped -0.61 pct to 5.189 pct. The yield on the US 10-year dropped to 5.07 pct. Happy days, the banks are smiling.

Crude oil ($WTIC) jumped +1.77 pct, however, partly because OPEC leaders are not prepared to take USD comprised of twenty wooden nickels for their valuable natural resource.

Gold ($GOLD), unfortunately, remained flat (for the day anyway), losing 50 cents (ten wooden nickels) to 644.80. The misfortune, of course, is ours since the Fed also sold gold. We have to guess at that of course because transparency in capital markets, preached from on high, is merely pretence.

So, within this arcade, or shall I say charade, the usual suspects lifted. REITs ($DJR) jumped +2.10 pct and Broker-Dealers ($XBD) went higher too (+1.51 pct). There were no losers on the session because even the goldminer traders figured out what was going down, and pushed the $XAU index up by +1.74 pct.

The day’s big industry winners were the Semi-conductors ($SOX) and Biotechs ($BTK), each up +2.19 pct. For the ten GICS sectors, the winner was Energy (XLE +1.55 pct), although Financials (XLF +1.50 pct) and Utilities (XLU +1.47 pct) were not far behind. The laggards were the defensives, Consumer Staples (XLP +0.78 pct) and Healthcare (IYH, XLV +0.83 pct).

All around, a pretty good day for Messrs Bernanke and Paulson. The rest of us were herded like lambs to the slaughter.

But, I cannot complain. Precious metals cannot be held down in this environment.

International Economics Review

US Economic Calendar

Monday’s report on US Existing Home Sales for May

Wednesday’s report on US Durable Goods Orders for May

Today’s report on Final 1Q07 US Gross Domestic Product (GDP)

Fri. June 29 report to come on US Personal Income & Outlays for May

And of course, today at 2:15pm ET, we get the much-hyped statement of the Fed.

US Equity Markets Review

DJIA (interactive) chart

NASDAQ Composite (interactive) chart

The Cara Global 100 Stockwatch

This data is supplied every day by the folks at KNOBIAS, Inc.

Here are the previous session’s Cara 100 gainers. Interactive charts of the top 12 Watch List gainers.

Here are the previous session’s Cara 100 losers. Interactive charts of the top 12 Watch List losers.

Here are the Cara 100 stocks that hit 52-week intra-day highs or lows in the previous session.

Yesterday I wrote that HOV was still in a downtrend, but was extremely oversold. Read again what I had to say, “So, despite a Daily RSI-7 value of 7.9, there is still time to buy the HOV’s. It’s times like this that writing puts on extreme down days (in the stocks of quality companies that have been beaten down) makes sense.”

HOV was up +4.8 pct on the day, and those put writes (for income purposes) worked out better than T-Bills (LOL).

Here are the Cara 100 stocks that had extreme volume changes in the previous session. This is a good list to watch anytime markets start trending in the extreme. It pays to watch the price and volume extremes. That btw is called Money Flow.

Yesterday I wrote, “ORCL was hammered for no good reason. http://tinyurl.com/2phlgp”

Late, on the basis of that good news, ORCL became my 7th biggest winner on the day (+2.8 pct).

The #1 winner however was Nike (NKE +8.3 pct) on huge volume increase (+245 pct). Do you recall me writing repeatedly that Nike was running ahead of the pack, week after week.

Here is the Nike story, from Dow Jones News: http://tinyurl.com/36tyv4

In Focus

I find the timing of the “Gold”man upgrading of Toyota Lexus ™ from Neutral to Buy to be astounding. Anyway, here’s their thinking: http://tinyurl.com/2ke6xx

Other Recent Wall Street upgrades

Other Recent Wall Street downgrades

There are various sources for up/down grades by broker-dealers. One is at Briefing.com. Traders ought to check everyday for ratings changes. That website is updated later in the morning.

The big story here, in my books anyway, is that Citigroup downgraded to SELL three energy sector stocks including SUN (one of their previous favorites, which I have written up), VLO and TSO. So, take note.

Here is the current Relative Strength Index (RSI) analysis of the Cara 100 company stocks

Here, from “Chris”, are the interactive charts of up to a dozen stocks with (unsmoothed) RSI-7 above 70 and below 30:

RSI > 70 (4)

RSI < 30 (7)

“Chris” takes this data from BillCara2.com, which is not smoothed like David’s data (from Worden). I ought to be able to introduce a Wilder Smoother to this data in upcoming months.

Btw, Chris is moving into a new home tomorrow, so his reports may be missing for a day or so. Good luck Chris, who lives in Indianapolis.

Here, from “David” in upper New York State, are the stocks in the Cara 100 trading with the highest and lowest RSI-7 sorted by (i) daily and (ii) monthly values, for the previous session.

Global Equity Markets Review

Here’s the closing data of the Asia-Pacific equity markets..

There was volatility today in Asia-Pacific markets. The Yen rally stopped in its tracks (The Fed can’t have a global equity sell-off can they?), and that helped assuage some traders.

But that Japanese currency situation cannot go on too long. A declining yen makes imports that much more costly, and I don’t think the econ growth in Japan will sustain those price increases for too much longer without share prices being hit.

Yes, they were up today, but the currency situation is going to cause stress.

Here’s the chart of the Japanese Nikkei 225..

The Nikkei Dow gained +83 points (+0.46 pct) today.

Here’s the chart of the Shanghai equity market..

Shanghai lost -164 points (-4.03 pct), which is quite a see-saw. More like a casino.

Here’s the chart of the Bombay India Sensex 30 index..

The Indian equity market (BSE 30) was up +73.5 points (+0.51 pct) today in sporadic trading.

This chart looks worse than my ECG yesterday.

Here’s the latest session data for the bourses of Europe.

Stocks are strong in Europe today (as of 8:17 am ET).

This is Fed inspiration.

Gold & Precious Metals Review

Spot gold at 8:17am ET today is 645.8, up from 641.3 yesterday morning.

I like what I see.

Here is the Recent Spot Gold chart.

At 8:19am ET this morning, the Spot silver (AG) was 12.40, up from 12.19 yesterday morning at this time. I like what I see.

I continue to believe and say, “I think this (pull-back) (is) another buying opportunity.” But this is a long-term perspective. Obviously there are day traders who disagree.

Here is the Recent Spot Silver chart.

This morning at 8:20am ET, Spot platinum is at 1274, up from 1263 yesterday morning and back to Tuesday morning’s price before the pre-Fed meeting selling. Or should I say, “set-up!”

I continue to write, “I remain positive despite all the screaming around me.” That is also a longer-term perspective, through the summer. The thing is we are all looking at the broad market for the moment, and waiting for some reaction by the Fed.

Here is the Recent Spot Platinum chart.

Palladium (at 8:22am ET) is at 363.25, down 75 cents from this time yesterday.

I still think “We need to see a 372 floor before PD will lift”…. And “I continue to believe we will be looking at 380+ in the next week or two.”

Here is the Recent Spot Palladium chart.

Community Chat

Having called Crystallex (KRY) my “Stock of the Year” for 2007, I am afraid I must attend their AGM, which starts in 60 minutes downtown. I haven’t eaten breakfast or shaved and showered yet.

That seems to be the course of my life.

Have a good day. I have a luncheon after Crystallex with other people, so it will be at the end of the day before I get back to you.

Posted by Posted by Bill Cara on June 28, 2007 08:29:27 AM | Category: Cara's Daily Commentary

Discourse

Moin from Germany,

more "contained" news from the trucking sector...

The American Trucking Associations’ advanced seasonally adjusted For-Hire Truck Tonnage Index decreased 1.3 percent in May, marking the second consecutive month-to-month drop. In April, tonnage fell 2.2 percent

On a seasonally adjusted basis, the tonnage index declined to a six-month low of 110.6 (2000 = 100) in May from 112.1 the previous month. Compared with a year earlier, tonnage was down 3.6 percent, the largest year-over-year drop since January 2007. The not seasonally adjusted index increased 6.8 percent from April to 117.9.

“The fact that the year-over-year comparison for truck tonnage worsened to a negative 3.6 percent from April’s minus 2.7 percent is troubling

Posted by: jmf at June 28, 2007 8:35 AM [link]

Does anybody have some information about this company: KRX.V (Copper Ridge Explorations Inc.). The President is Mr Gerald Carlson (I think he was at Nevada Star Resource before it became Pure Nickel Inc.). The company is into exploration and acquisition of properties about copper and precious metals, mainly in Canada and is well financed. Here from Italy where I live it's difficult to find any other info.

Posted by: Lelik at June 28, 2007 8:45 AM [link]

MDG: what's happening with Meridian Gold-up 20%..happy to see ANY miner up that big this week...

Posted by: 2nd_ave at June 28, 2007 9:37 AM [link]

MDG getting a bid from AUY...

Posted by: 2nd_ave at June 28, 2007 9:38 AM [link]

2nd_ave,
Meridian Gold, Northern, and Orion set to make a three way merger. Cheers

Posted by: yaba at June 28, 2007 9:51 AM [link]

Foods: After CDS, toys and software, China is now exporting pirated meat to Europe and Russia, chinese meat that the chinese claim to be of Brazilian origin. They are packaged as being Brazilian and even come with fake certificates in Portuguese. Brazil and China have been sparring because the Chinese are imposing import restrictions on Brazilian products, including meat. The Brazilians are warming up to the Indians after the Chinese flooded the Brazilian market with cheap imports.

Brazilians are interested in the Chinese market because the average personal meat consumption in China is expected to increase from 50Kg/year to 80Kg/year by year 2030. That's an extra consumption of 30 Billion Kg per year. Brazilian meat exports in May hit a record at USD 443M.

Long SDA and PDA. Source (in portuguese http://tinyurl.com/ypytoq )

Posted by: SiO2 at June 28, 2007 9:52 AM [link]

oops,
Yamana gold, northern orion and meridian gold getting set for a merger

Posted by: yaba at June 28, 2007 9:54 AM [link]

sio2
EWZ/brazil is up circa 70% from nov 2006...and your food stocks up 100%. Can't see risk reward in taking a position now, but certainly points out importance of global equity in one's universe of choices and value of doing thematic research. At what point did you enter, and curious as to how you these two on your radar?

Posted by: jasper at June 28, 2007 10:02 AM [link]

SBUX:
"Starbucks upgraded at Thomas Weisel Partners to Overweight from Market Weight. The stock price, along with management's expectations, more than accounts for the challenging consumer environment and rising operating costs. $34 price target"

Posted by: JogyP at June 28, 2007 10:06 AM [link]

Morning People,

Anybody know what time the KRY thing begins?

Posted by: shark_attack at June 28, 2007 10:08 AM [link]

It just started. You can listen live through the website. They are just reading the forward looking statements.

I couldn't make it, so I'm listening instead.

Posted by: Fazeli at June 28, 2007 10:11 AM [link]

A confession to make.........I nibbled at some Blackstone (BX) for a trade this morning. I think the IPO just came on an especially bad day and once the initial flush is complete there will be a nice bounce. Still underwater on my IPO allotment of IBKR but sticking with that one for the LT!

Posted by: BillySundance at June 28, 2007 10:17 AM [link]

Jasper, I just have a recent entry position. I mentioned before here, if there is a severe downturn on the markets I expected them to be hit and then offer a much better entry point. They appeared on my radar because I am investing in food producers (food prices will continue to rise due to new increased global consumption - not due to Ethanol, and maybe the bees too :-)). Keep in mind also that the Brazilian currency has greatly appreciated vs the USD, so that is part of the rise on these stocks.

Posted by: SiO2 at June 28, 2007 10:18 AM [link]

I ask myself...what can KRY say today that the market will react to positively? Not much, I think. This morning was a nice selling oppty.
I sold later, the little double top. Will rebuy on crash which will follow Gordon Thompson's comments...lol

Posted by: shark_attack at June 28, 2007 10:22 AM [link]

BX:
I was listening to Bloombergs' "taking stock" last night, and both of the guests were of the opinion that BX IPO was way overpriced.

One of the money managers (Jerry Jordan) mentioned that GS has a business similar to Blackstone's and if we value GS based on the BX IPO value, GS should be trading much much higher.

Posted by: JogyP at June 28, 2007 10:24 AM [link]

JogyP-coffee/oil/gas...wars have been fought over all three

Posted by: 2nd_ave at June 28, 2007 10:24 AM [link]

Regarding HOV, Bill, the trouble with writing those puts is they might actually get exercised. ;)

Kidding aside, news today from two major builders: KB Home reported 2Q earnings today that included a large loss -- but with the sale of their French unit they should have enough cash to carry on for a few more quarters. They are, however, engaged in a deadly spiral with other builders to convert their over-investment in land and unsold homes to cash. Competition is fierce and they are driving ASP lower and lower.

Patient home buyers will be the ultimate winners as this scenario will play out for at least another few quarters.

In other news, Beazer reported in an SEC filing that they fired their chief accounting officer for destroying documents. Obviously, an accounting scandal is the last thing this company needs. But this goes double for a company in this sector. BZH is leading the home builder pack lower today.

I'm short both KBH and BZH (and CTX and XHB, too, fwiw).

Posted by: number2son at June 28, 2007 10:26 AM [link]

...coffee/oil/GOLD

Posted by: 2nd_ave at June 28, 2007 10:37 AM [link]

UXG on the move..

Posted by: 2nd_ave at June 28, 2007 10:57 AM [link]

Kremlin lays claim to huge chunk of oil-rich North Pole

http://www.guardian.co.uk/russia/article/0,,2113289,00.html

Posted by: jk484 at June 28, 2007 11:00 AM [link]

chris-nice call..

Posted by: 2nd_ave at June 28, 2007 11:02 AM [link]

Thanks bro...wondering when to re-buy...do you know what happened in the meeting?

Posted by: shark_attack at June 28, 2007 11:03 AM [link]

no idea..not worried unless it spikes down again..in which case it's a buying oppty...but i think it goes up..

Posted by: 2nd_ave at June 28, 2007 11:07 AM [link]

Jogy - won't even try to do a comparison between Blackstone and GSachs as I think there is a lack of transparency on BX as far as future earnings.

I thought the IPO came on a generally bad market day and the whole Waxman story, trying to halt the IPO was a bunch of false worry. Taxation changes like that don't take place on a whim and you could bet Schwarzman would fight tooth and nail. I'd bet that Schwarzmann has friends in higher places that most members of U.S. Congress - as disturbing as that is.

Well, really just looking for the technical bounce back around the IPO price - so far so good

Posted by: BillySundance at June 28, 2007 11:09 AM [link]

back in at 4.17 but I'm watchin' it close

Posted by: shark_attack at June 28, 2007 11:09 AM [link]

gold does not look like it wants to go down today...so head fakes could be to the downside..

Posted by: 2nd_ave at June 28, 2007 11:20 AM [link]

Kudos are in order...I forget the guys name, but do you remember the guy who went short UAY at 1270-something, saying that he liked to go against the crowd?

Posted by: shark_attack at June 28, 2007 11:26 AM [link]

Lots of excitement today in Inca Pacific Resources (IPR). It's a Moly play. Sprott owns 53% of the company and bought about 15 million shares at $2.00 per share a few weeks ago. They announced today that they've been given an extension until the end of July to submit important documents to the government of Peru or they could lose their rights to a mine. Has fallen .50 today to 1.20. Very thin trading. I cashed out a week ago and bought back in today. Have a look and decide for yourself.

Posted by: Fred at June 28, 2007 12:05 PM [link]

GFI:
Even with $7 spike in POG, GFI has not moved.
Bought some at 15.6 hoping for a late day bounce.

Posted by: JogyP at June 28, 2007 12:05 PM [link]

Inca Pacific Resources press release.
http://tinyurl.com/2e2sfd

Posted by: Fred at June 28, 2007 12:20 PM [link]

GFI was @15.46 pre-mkt. This has been a decent trading day so far....

Posted by: Craig at June 28, 2007 12:21 PM [link]

I was early and I'm out at a 3 cent loss

I HATE being early, and I'm early so often!

Posted by: shark_attack at June 28, 2007 12:24 PM [link]

si02,
The jim rogers's of the world have been underscoring just the point you are making about food. It resonates with me but I have been too dissatisfied with commodity etfs to tap into it. Stocks are something I have stayed away from, though stray back to. Fundies are a weak point of mine. FWIW, when examining the food theme half year ago...SFD came up. A retired military person told me that the navy had a large contract with them to operate their bio disel run subs. Re currency issue for your brazilian positions, i assume that you are saying that as long as us$ doesn't move north these company prices are not as extended as they may seem on a price chart? Thanks for sharing your process in this narrow sector.

Posted by: jasper at June 28, 2007 12:30 PM [link]

Thinking out loud is sometimes danger, but danger is my middle name.

In reflecting on the news about some of the highly leveraged deals are running into trouble, I couldn't help but have a chin on hand "HMMMMMMMMMMM" moment with SLM's acquisition.

Posted by: Leisa at June 28, 2007 12:37 PM [link]

EWC--on fidelity only 54 shortable shares.

Posted by: Leisa at June 28, 2007 12:39 PM [link]

kgc, grs, gfi all playing dumb... i think the traders are waiting for the fed announcement to decide what to do.

Posted by: chas at June 28, 2007 12:50 PM [link]

Leisa,
Meaning it's REALLY shorted?
Like, you were trying to short EWC but there weren't any?

Posted by: Craig at June 28, 2007 12:55 PM [link]

leisa,
i got stopped out of my position of ewc two days ago.What's the implication of your figure? Sorry, i plead ignorance. thx for any education here.

Posted by: jasper at June 28, 2007 12:55 PM [link]

Hmmm, indices seem to be rolling over here...esp the nasq.

Posted by: Craig at June 28, 2007 1:11 PM [link]

Jasper:

When there are just a handful of shares available (My Fidelity generally shows 10K+), it generally means that it is heavily shorted. HOwever there are some issues that are just illiquid (NOT EWC) so shortable shares cannot be scrounged. Hope that helps.

Posted by: Leisa at June 28, 2007 1:14 PM [link]

As advised yeasterday, I faded this move but will exit if the PPT shows up. :)

Posted by: MarkM at June 28, 2007 1:25 PM [link]

As per 2nd: Nice reversal....

Looks like they aren't waiting for the statment to push this dog and pony show higher.

Mark, doesn't look like the PPT is suited up.
Of course they can always surprise us, but so far that isn't their style.

Posted by: Craig at June 28, 2007 1:56 PM [link]

Leisa, et.al. re shorting ETF's

It seems that institutions can short ETF's, but it's hard for individuals to do so. Dave Fry has lamented and lobbied on this issue (paid site: etfdigest.com)

It's because the issuers are happy to issue new shares for an institution to short, but apparently brokers don't help individuals to short.

Posted by: Jock at June 28, 2007 1:58 PM [link]

craig-BMD: opened a secondary position yesterday and taking partial profits today...

Posted by: 2nd_ave at June 28, 2007 2:01 PM [link]

I wouldn't fade this move. The TICKs been almost completely positive all day. Wouldn't mind a better A/D on the Nasdaq, though. No sign of PPT from my perspective.

Posted by: omphalos at June 28, 2007 2:02 PM [link]

Jasper,

As an example, the 1y return for SDA in R$ was 66%, while in USD it was 91%. When I was in Brazil in December, the exchange was 1USD = R2.28, today it's 1USD = 1.97. Roughly 25% of the move is due to the USD going down the drain. My informants tell me both are very healthy companies.

Stock chart for the local Bovespa, in R$: http://tinyurl.com/267a5c

Posted by: SiO2 at June 28, 2007 2:02 PM [link]

MarkM,
Can you share with us how you "faded this move"?
I am interested in doing it tomorrow before close.

Posted by: JogyP at June 28, 2007 2:06 PM [link]

oomph-

Yep. I see that. I am waiting for the inevitable Fed blast off. Meant to say "will fade". As of yet no "move" to fade!:) My measures have the Naz really overbought at this point.

Posted by: MarkM at June 28, 2007 2:10 PM [link]

Nice move 2nd, I'm holding BMD for the long run.

I have been in and out of GME, SLW, TNH, AAPL today. Reloaded on all and am back up.

No complaints from me today. Welllllll, KRY could get a permit....and I wouldn't complain if GFI got a bump.

Posted by: Craig at June 28, 2007 2:13 PM [link]

wgdf new high for the yr

Posted by: chas at June 28, 2007 2:22 PM [link]

Ever notice how when the bid/ask sizes and prices start to flash in an obvious bid for your attention, it's usually a lousy idea to buy?

Posted by: shark_attack at June 28, 2007 2:29 PM [link]

Brazil - always full of surprises!

BBC some months ago reported on a privately held brazilian company which reportedly supplies one in five glasses of orange juice drunk in the WORLD - both not-from-concentrate, and from-concentrate.

Brazil is the largest exporter of beef; Sadia the largest exporter of frozen chickens; brazil the largest sugar, coffee, and iron ore producer in the world as well.

Plus, Brazil achieved energy independence from sugar-based ethanol and oil finds off their coast.

Now, if they can just make government work, and tackle their immense social problems ...

Posted by: Jock at June 28, 2007 2:30 PM [link]

Jogy-

Sorry my post confused. The plan was to short the most overbought index thinking it likely to give up its gains. Right now I am short the Naz (reason as per my last). I'll have to see if it works out. My track record on shorting is about as good as everyone else's. I'm going to the park with my girls. Ooomph, you are hereby appointed to tell me if I blew it. :) I'll return after hours. These usually take a few days to work off though.

Posted by: MarkM at June 28, 2007 2:31 PM [link]

Added DXD @ 49.99

Posted by: Leisa at June 28, 2007 2:33 PM [link]

Anyone else keeping an eye on NYMEX gas futures? They have had a steady decline over the past few weeks and today it looks like a toilet flush. Could be a good entry. Buy the property insurers and hedge with gas futures?

Posted by: BillySundance at June 28, 2007 2:33 PM [link]

Si02, Jasper---Keep in mind meat companies can hedge just like the miners. SFD did hedge, but those hedges are now coming off and offers opportunity for the fture. Unknown if SDA & PDA hedge.

Brazil is big in soybeans. I play it thru a preferred U.S. stock that has a soybean subsidiary there. Biodiesel fuel from sugar cane and soybeans also big in Brazil and a better bargain all around when compared to corn ethanol.

Brazilian stocks have been on a tear for some time. I've been in and out of RIO in the distant past and the Brazilian stocks always reacted negatively to any hint of US rate increase.

Posted by: Seamus at June 28, 2007 2:41 PM [link]

Si02, Jasper---Keep in mind meat companies can hedge just like the miners. SFD did hedge, but those hedges are now coming off and offers opportunity for the fture. Unknown if SDA & PDA hedge.

Brazilian stocks have been on a tear for some time. I've been in and out of RIO in the distant past and the Brazilian stocks always reacted negatively to any hint of US rate increase.

Posted by: Seamus at June 28, 2007 2:42 PM [link]

bought some kgc at 11.38, about half of what i'm willing to put in it. i'll average down around 10.50-10.75 if that point comes

Posted by: chas at June 28, 2007 2:43 PM [link]

Hey do any of you know an online brokerage that charges flat rates for Canadian equities? Sick of being unable to buy some of the penny dreadfuls that Bill talks about.

Posted by: chas at June 28, 2007 2:46 PM [link]

Me too chas? Cheap and simple brokerage service for Canadian stuff, eh!

$5k initial deposit for IB is a bit high, I think that this is way more than a Nevada Hick like myself might need.

Steve

Posted by: agaunv at June 28, 2007 2:55 PM [link]

Billy--I have a position in UNG. It seemed to find a floor at $42. A better price than where I'm holding.

Posted by: Leisa at June 28, 2007 3:14 PM [link]

Re a brokerage - I'm in a similar boat. Scottrade charges 54/RT on Canadians. IB is more than I need right now. Do any of the other major online discount brokerages have a better deal?

I'm looking for the answer too, and if I find out I will post it.

Posted by: MikeNYC at June 28, 2007 3:20 PM [link]

kgc looks very oversold here...and should outperform the average miner when the sector recovers...

Posted by: 2nd_ave at June 28, 2007 3:29 PM [link]

n a major new filing, ProShares has petitioned the Securities and Exchange Commission (SEC) for the right to launch twenty-five new leveraged, inverse and inverse-leveraged exchange-traded funds (ETFs), including the first-ever ProShares international and fixed-income products. The funds are designed to provide 200%, negative 100% and negative 200% exposure to the daily movement of their benchmark indexes. Like all ProShares ETFs, they change 0.95% in expenses....excerpt.

But what's the point if liquidity is so low? sans Leisa, of course.

Posted by: jasper at June 28, 2007 3:30 PM [link]

Jock.....I've found shares through Fidelity to short on some ETF's. I really don't do alot of shorting. If I go long on stocks that I short, I'd have much better investment results. I did short SCS and MLHR recently with good results. But having been in that industry for 10 years, I felt that I had good insight (having gone through 2 recessions at a commercial furniture dealership--NO FUN). Good results with both.

Posted by: Leisa at June 28, 2007 3:32 PM [link]

Alright guys, any notion of MU after the bell?

Posted by: Craig at June 28, 2007 3:33 PM [link]

Schwab lets you trade the Canadians, if they are listed OTC, for $12.95. One was not listed OTC and cost me $35 as I had to place the order by phone.

Posted by: moab at June 28, 2007 3:34 PM [link]

i think this rally continues tomorrow...i was a little skeptical of the gold run-up this morning, but i think that continues also...setting stops on all ST positions, but my take is the risk is to be caught short or underexposed in the event of an upside move to end the quarter...no one's going to want to spoil the july 4 celebrations...

Posted by: 2nd_ave at June 28, 2007 3:42 PM [link]

I have a Schwab account and see Valgold on the OTC, but it shows no bid/ask. Is that because it is just linked to the Canadian one somehow? I don't want to put in an order and have it be hit really high or low.

Posted by: chas at June 28, 2007 3:50 PM [link]

Two big buys on KGC late in the day, 125k and 80k. Here's hoping it was big boys starting to buy it up

Posted by: chas at June 28, 2007 3:52 PM [link]

2nd-Av If memory serves me, wasn't that Kim Jong Il who wanted to spoil the 4th celebrations last year?

Posted by: Seamus at June 28, 2007 3:55 PM [link]

Chas -

The OTC is not directly linked to the canadian listing. You will only see the last price that someone paid for the OTC ticker. You have to fly blind a little. I go off of the last price on the Canadian ticker from Yahoo.

Posted by: moab at June 28, 2007 3:59 PM [link]

chas, it won't show a bid/ask. However, you can call Schwab and find out what the bid/ask is and immediately enter your own order if you wish at your regular electronic transition cost.

Posted by: Seamus at June 28, 2007 4:00 PM [link]

Ok 2nd what rally, darn, if Beanie Ben couldn't get one going who will get it going tomorrow? Very little arbitrage available in the big indexes right now,, these BSD guys are fighting each other for pennies.

Maybe bonds get the lipstick tomorrow???

Posted by: agaunv at June 28, 2007 4:10 PM [link]

There wasn't much new at the Crystallex meeting. Robt Fung talked a bit about the Internet as being (if my hearing was right) a “rancid” place. To paraphrase he said that “absolutely nothing can be done… except there have (he says) been recent lawsuits against libel and slander by bloggers”.

What Mr Fung does not yet understand apparently, is that the Web is different than the Internet and that the Web is a many-to-many communications tool among bloggers. They are speaking to themselves, and if he wishes to challenge freedom of speech, so be it.

Where he has a point is that if somebody is expressing an opinion, and supports that opinion with inaccurate data, that is wrong. If that data is in fact deliberate misinformation, or disinformation, then I believe there is a legitimate complaint.

But bloggers are not one-to-many publishers unless they issue reports for money, and hence there is a difference between a publisher and a blogger.

About the Mainstream Media, he said that the Company has complained to the securities exchanges and govt regulators, but apparently was told they do not have the resources to follow up. I suspect he has very little to complain about.

Mr. Fung did, however, say that he cannot fight back (“Even my mother is offended”) because of disclosure rules, and that if he goes down that slippery slope (my words), he would have to follow up and go all the way. In other words, he cannot win against media.

I suggest that “full, true and plain disclosure” wins.

There were some other interesting elements of his discussion, particularly with respect to Venezuelan bureaucrats that occasionally get offside with Ministerial policy, unlike would be tolerated of civil servants in North America, but there is nothing foreign interests can do about it.

The bottom line however is that the Company is doing the right thing in Venezuela to establish and maintain a “fit and proper” presence. I see no reason why Venezuela and Crystallex should ever be at odds. Venezuela owns the natural resource and has conceded to Crystallex the right to mine it, pending environmental approvals. Take it at face value; those approvals are forthcoming.

As I understand it, the final permit will be a technical and legal document of perhaps 50 pages in length. It’s like a banking agreement. The Company has submitted all its plans, and the government has completed the required due diligence and approved the process, pending documentation. That document includes, for example, GPS co-ordinates on every physical element of the plan, like roads, pits, infrastructure and so forth. This will be one of the world’s major gold mines, and these details take time to document. There is no shortage of effort going on here, on the part of the Company or the govt side.

The issue of Copper did come up, and we were told that the in-situ copper resource is averaging a grade of 0.11 pct whereas the lowest grade commercial copper mining operation in the world is 0.17 pct (in Australia). What wasn’t stated, but is a fact is that a mine plan requires the optimization of mining the resource. In this case, to produce copper would sub-optimize the gold processing, so there would be a net loss to try both. In any event, the govt has retained ownership and all rights to the copper that is there at Las Cristinas.

A question from the audience was directed to Mr Fung, questioning if the Company has ever held any discussions with the govt of Venezuela as to govt owning shares or proposing to buy shares in KRY, and he denied it. He says that he has made about six trips to Venezuela in the past three months, and is on top of all discussions.

Dr. Richard Spencer, who I believe to be a highly professional, ethical executive talked about the recent drilling, which he says had increased the size of the resource at Las Cristinas. Rather than the permit, this is where traders have to focus. In a month or two, the Company will release new resource totals. At $350 gold, the Company estimates a resource of 14 million oz of gold. Those figures were used in calculations two years ago. At $450 gold, that reserve estimate would be higher because more of the property would be economically mineable, which is what he stated today.

But gold is now in the $650-plus range, and the recent drilling has proved up additional resources, so now the picture is significantly better than 14 million oz.

Richard Spencer also stated that this resource is on surface and is open at depth. In other words, this is an elephant property, clearly one of the world’s biggest gold resources.

The Company stated today and in the past that there is enough data for them to continue with the original mine plan (20,000 tons of material per day for which the production plant components have been 90+ pct engineered and purchased, ready to ship to Venezuela) to produce 270,000 oz/year for 40 years.

But, as I see it, that will not happen. As a minimum, this property will be mined at the rate of 40,000 tons of material per day, possibly higher.

The most inspiring statement today was made by Robt Fung when he said that he “looked the Minister in the eye and told him that 24 to 48 hours after receipt of the final permit, Crystallex people would be at work on the property to prepare it for production”.

In April this year, Crystallex issued 14.375 million shares at C$4.25/share for gross proceeds of C$61,093,750, which Robt Fung said could “easily” have been doubled. An additional financing will be lined up before the end of the year, and the Company is looking at various options.

Could one of those options be to sell the company to a well-funded major?

The Notice of Meeting material states that Robt Fung, the Chairman, owns just 19,500 common shares “beneficially owned, directly or indirectly, or controlled or directed”. I believe that these figures must include all shares owned in offshore family trusts. I am surprised – no, I am shocked – that Mr Fung, and his immediate family, owns so few shares.

There were statements and inferences made today that ex-CEO Todd Bruce and ex-CFO Dan Hamilton decided on their own to pursue other opportunities in the mining business because the permit was so long in coming. When I heard that, I almost retched in the front row. That would have been a dry heave because I had to skip breakfast in order to get to the meeting on time.

It’s not my place to lecture Robt Fung, but it is he who is complaining about the media and bloggers. At the end of the day, a person earns respect for many reasons. A couple of them in my books are transparency and straight-forwardness. There should never be a doubt about it. There was in my view a lack of that regarding Messrs Bruce and Hamilton. That’s my opinion, anyway.

All in all, I still think Crystallex is the Stock of the Year for 2007. I am glad I changed my opinion to one of being one of their top supporters. As you know, prior to my meeting Todd Bruce, I had been very skeptical.

But, like others, I am surprised this company gets so much discussion in the chat-rooms. It has become the trading world’s Paris Hilton and Ana Nicole Smith. There is little pin-stripe here except the quality of the property and the hard work done by employees like Dr. Spencer (VP Exploration), Richard Marshall (VP Investor Relations) and others.

In a couple weeks, your patience in holding long positions in KRY will be rewarded, I believe.

Finally, there were at least half a dozen of you who came up to talk to me at the meeting. That's great. Thank you. Unfortunately, I had to go to a luncheon meeting with Andrew Cheung, CEO of a tiny company called 01 Communique (TSX:ONE) (http://www.01com.com). They have some interesting technology patents, and are involved in a rather large lawsuit against Citrix.

Now this one is a company I might get involved with after I do my due diligence. Maybe some of you would care to share the DD?

Posted by: Bill Cara at June 28, 2007 4:19 PM [link]

Here is today's Astaire Report on India courtesy of Deepak Lalwani:

http://tinyurl.com/2722xt

Posted by: Bill Cara at June 28, 2007 4:53 PM [link]

Bill:
Thanks for the pithy update on KRY. I have ridden this stock through mucho rough seas and glad you agree it may be worth the pain and wait. Much surprised at the few shares owned by Mr. Fung. Doesnt fill my heart with confidence. Thanks again. I enjoy your website very much. David

Posted by: David at June 28, 2007 5:07 PM [link]

Mr. Fung gets an annual grant of 25,000 'cashless' options, meaning if he surrenders the shares to the corporation he gets shares without paying anything. I take this to mean that he has sold most of his option grants.

Very peculiar IMO.

Posted by: moab at June 28, 2007 5:23 PM [link]

David,

The insiders hold less than 0.3% of the company. its all public info on Sedi. Follow this path to see for yourself...

http://tinyurl.com/2mmmu8

Type in "Crystallex" and hit "Search" at the bottom.

Then choose "View" once the page loads.

Good luck.

Posted by: NYUgrad at June 28, 2007 5:26 PM [link]

Thank you Bill! I think we need you in Canada where you can attend more meetings!

I got long KRY at the end of day, paid a couple cents too much.
Call me a three-headed hedgehog (it's certainly been said of me before), but the fact that KRY insiders are getting free stock and not investing their own money is, in my opinion, not totally out of the relm of reason given the circumstances of this high stakes crapshoot.

Posted by: shark_attack at June 28, 2007 5:31 PM [link]

Realm of reason

Posted by: shark_attack at June 28, 2007 5:32 PM [link]

Sharkie,

We're going to hold some of those meetings in Bahamas!

Besides I will be back for the Cambrige Gold show and the PDAC 2008.

Posted by: Bill Cara at June 28, 2007 5:55 PM [link]

So what did Leisa and I make on our fades today? A couple of Starbucks coffees? Anyway, it was the correct call and it's nice to have the KMart Knockoff Crystal Ball come through again. Trouble is, I haven't the slightest as to what this means. Bulls definitely wanted a followthrough day and no such luck. Bears have their close. Now what? Crystal Ball is silent.

Posted by: MarkM at June 28, 2007 6:05 PM [link]

How about that (former) Cara100 company RIM?

Mike
NYC

Posted by: MikeNYC at June 28, 2007 6:08 PM [link]

I have discovered the secret Fed/Bernanke plan and revealed it on my site (above)...

Damn the truth hurts.

Posted by: Ron at June 28, 2007 6:19 PM [link]

Does anyone follow Anooraq ANO? Does anyone know what has happened after hours? Yahoo is reporting a 30% drop. It may be a "typo", but if it ain't, what is going on?
No position.

Posted by: Rigdon at June 28, 2007 6:45 PM [link]

seamus-you're right..N Korea launched their missiles during the White House July 4 party...in life, truth really is stranger than fiction-would anyone have picked this guy as a world leader...

NGAS..gave in and picked some up today..if it holds steady on a day UNG drops 6%, maybe the sellers are done...

what rally into the close..well, it was only a call on my part...still think we go up tomorrow, and the weak close may have provided more short fuel, i don't know..i just think when the "odds" are 50/50 on which way it goes, it tends to go up, as people like buying more than selling...how's that for sophisticated analysis...

Re KRY: truly happy to read these two comments from bill:

(1) "All in all, I still think Crystallex is the Stock of the Year for 2007. I am glad I changed my opinion to one of being one of their top supporters. As you know, prior to my meeting Todd Bruce, I had been very skeptical."

(2) "In a couple weeks, your patience in holding long positions in KRY will be rewarded, I believe."

..and this one from chris

(3) "I got long KRY at the end of day,.."

tomorrow should be a good day...and if it's not... it's friday..

Posted by: 2nd_ave at June 28, 2007 7:15 PM [link]

Rigdon,
Re: Anooraq, my online broker lists Bid 2.63, Ask 2.72 and Last 2.68 Cdn.$

Posted by: Fred at June 28, 2007 8:01 PM [link]

Thanks, Fred... time for bed.

Posted by: Rigdon at June 28, 2007 9:09 PM [link]

Soulek1-re your 12:49 post today in the "Goldminer Report" section:

["A conspiracy theory that I think we are falling victim to on this board is that we are attributing the failure of gold to break out and hit new highs over the past 12 months to a "conspiracy" by the Federal Reserve and the US government along with other International Central Banks to suppress the price. I do not argue that their dealings are "secret" and not transparent. I don't even argue that they are attempting to manipulate the gold price through central bank sales of bullion.

What I am saying though is that it is difficult if not impossible to TRADE / INVEST off of that information. In other words, and I speak for myself - it is pointless for me to wake up in the morning and see Gold down $10 an ounce and conclude that the Fed is selling gold again, or if gold is instead going up in price conclude that the Fed has stopped selling."]

I don't disagree at all with that. I think investing is all mid- to long-term. If you were to take the entire universe of very "successful" investors, I would wager that none of them would be short-term traders. So that leaves us with mid- to long-term forecasts and strategies. I like Bill's strategy of buy and sell points for its simplicity and the fact that it doesn't try to predict anything. I think it's when we venture into "forecasting" that we run into trouble. I don't think anyone can say they've predicted much of anything in the market...if they're right, was it really b/c of their line of reasoning...life and the markets are full of unforeseen events.

When I step outside "investing" and into "trading," I prefer the psychological perspective. This actually makes the "game" more interesting, and more "understandable," at least to me (of course, I may be deluding myself). I try to trust my [subconscious] instincts, which probably stem from the collective sifting of information and emotions that arise each day. To a great extent, my decisions to enter even long-term positions are unconscious, and my attempts to explain them to myself or others fall short. Right now, I simply "want" to own gold, oil and other hard assets: my wife and I recently decided to invest in a real estate project in the Midwest...we've taken positions in oil and gold that we think will perform well through 2010...I don't own any bonds right now...I like a few individual companies for their prospects (eg, BMD)...I trade a few short-term positions (mainly gold right now) with what recently seems like increasingly shorter time horizons...and that's really about it.

I don't believe making money today is much different than it's been in the past...the same basic principles apply...if there are conspiracies in the market, well, there are conspiracies in many other areas of life also, and we do our best to "succeed" despite them...life is unfair, but in the end, I believe it is fair in the sense that succeed to the extent we successfully handle whatever comes our way...

Posted by: 2nd_ave at June 28, 2007 10:13 PM [link]

...that we succeed to the extent we successfully handle whatever comes our way..

Posted by: 2nd_ave at June 28, 2007 10:15 PM [link]

Chicago hedge fund has accounts frozen.

http://tinyurl.com/2mbccf

Posted by: Seamus at June 28, 2007 11:28 PM [link]

2nd-ave, you are right in the sense that we all have to find our own way in the market with time horizon being an important differentiator.

With respect to you saying: “I don’t believe making money today is much different than in the past.” I think the mechanics of the markets are very different today from 20 or 30 years ago. The large use of algorithms to trade is one that comes to mind.

However, the most prominent change that I have noticed over this time frame is the compression of price movements. Stock price movements that would take say 9 months to two years to play out now happen in days/weeks. I think you would be hard pressed to find any veteran stock trader/investor to disagree with the compression reality.

Posted by: Telestar3d at June 29, 2007 12:15 AM [link]

RE: Noodling

Ask and you shall receive....

Bank regulators agree on subprime rules: sources

http://news.yahoo.com/s/nm/20070628/bs_nm/usa_subprime_regulation_dc_2

Posted by: cb at June 29, 2007 2:27 AM [link]