Good Morning bill,
Your date is off by a day. It's the 10th today. At the risk of adding one liners, let me just encourage people to look at premkt deals in view of this mornings blog commentary.

Moin from Germany,

almost $ 270 billion liquidity injection from Central Banks around the world....

Havn´t heard the word "contained" for a long time......

The FAZ in Germany is out with a rumor that another bank in Germany (a public one) has similar problems like the IKB with their conduit.

Total economy novice question here: If the central banks keep injecting liquidity into the system, what will happen to interest rates on savings and CDs, and what will happen to the POG? Seems to me that interest rates would fall again, inflation would reaccellerate, and the POG would go up?

That's my take. POG is up this AM.

BTW, rock on Canada! You guys don't suffer from debt or energy dependence, so you have the nuts to tell Russia to take a hike, RE: the North Pole. Good on you O'Canada! Keep setting a good example.

Fed accepting mortgage backed securities, from AP: "Early Friday, the Fed announced a three-day repurchase agreement, or "repo," to inject liquidity into the market. The Fed said early Friday it would accept $19 billion in mortgage backed securities."

You have to wonder about the value of those securities.

HL got an upgrade this AM for those interested.

On a morning like this, LEND announces regulatory approval for the Lone Star deal, so naturally it's up 27%...

craig-i hear you...reminder to keep position sizes small...i've found that to be hands down the axiom that will save your --s when being whipsawed...you can then press the bet as direction becomes clear...

According to Bloomberg, "the Fed has added $19 Billion in temporary funds to the banking system, through the purchase of Mortgage backed securities to help meet demand for cash amid a rout in bonds backed by home loans to riskier borrowers". Should be an interesting day, to say the least!

Thank You 2nd, I am extremely cautious right now and waited to see POG come off the AM lows before I looked at something like GFI at 14.67. Bullion was also on sale earlier. Disclaimer: traded on price and historic action and POG fundamentals and on news the Fed is injecting 19 billion into the system to keep Fed funds at 5.25%. Your results may vary.

Mortgage insurer MGIC (MTG) looks like a screaming short. The stock was strangely up yesterday, making its potential imminent fall larger. Yesterday was a great time to buy the puts, but it may still have a long way to go. Any opinions to the contrary?

2ndAve, may have to add LEND to the list now.

SiO2-agree with your outlook on LEND, but the table is crowded, so i would be careful shorting that one...

Thanks for the update on HL Craig.

Hemosol is back in business. I wonder if that means my HMSL & LPBP stock will go past the $0.06/shr mark.

http://tinyurl.com/2p6ucr

Looks like a nice bounce in some stocks today - BC is up 5% in premarket.

Anyone have opinions on SNE (Sony)? Stock is looking more resonable, though prices of LCDs are going to drop.

http://tinyurl.com/2uxjyz

does anyone else feel the dip-buying mentality which has worked so well recently needs to be snuffed out before we're really ready to move up...

To have the ECB inject $215 Billion of reserves into the banking system in 24 hours and call it a "fine-tuning" operation is a farce. The euro money markets seized up and the ECB was forced by its operating procedures to defend its target rate. Eventually, the additional liquidity injections will come at a cost: inflation.

We suggested in Tuesday's post that "we believe that the intermediate-term downtrend that started mid-July will resume within a few days after today's Fed meeting." Historical precedence suggests the stock market decline has a lot further to go: see our March07 research report "Is the Yield Curve Useful Beyond Predicting Recession?" at http://tinyurl.com/ypw9dm

GRS:
Came out with disappointing Q2 results yesterday (Low production, Cash cost of $614). I thought the Q1 was bad because the new CEO was cleaning out all the bad news. Q2 looks worse.

The BMO report on cash costs for GRS looks suspicious given the fact that they were undersriting a secondary offer at that time.

Does anyone think GRS is worth holding here?

I got out of GRS and moved to WGDFF, which is on sale presently.

reference 2nd comment

"does anyone else feel the dip-buying mentality which has worked so well recently needs to be snuffed out before we're really ready to move up..."

I think the big money is looking for capitulation, exhaustion.

I don't see it across the board but there are appearances of pockets. Looking at one of yesterday's stocks commented on--PKD shows some big downside volume days which may be construed as capitulation, but we'll have to see how the next few days go.

On the other hand the RSI7 has a long ways to go before crossing back into accumulation zone for those of us longer trading oriented. The chart also looks like it could drop further. Do your own DD.

MU-taking a position at 11.87...this stock showed some real strength yesterday around 12.50, and the drop today seems a little "orchestrated.."

take a look at Penn Energy Trust (PWE)...a Canadian oil and NG trust...a 12-13% dividend yield + trading near the low of its cyclical swings...wife opened a position yesterday, and plan to take one here

MU - 2nd - Nice entry point. 3-min RSI(14) dipped below 30 [22.32] and STO(30,5) crossed to the upside just before you placed your trade. I wasn't watching at the time; unfortunately, don't have auto-alert system capable of identifying such moments as they occur.

Agree on Penn West (and own it at higher). One of the cheaper energy companies on a valuation basis, good yield, excellent management and far more growth potential than most energy trusts. They own quite a bit of land and do their own exploration as opposed to a lot of trusts which just buy assets for the cash flow. Personally, I almost consider it a high yielding E&P company as opposed to a cash flow trust.

SiO2:
Re:MTG
I follow MTG as I hold Jan65 puts.
Imo, MTG has been undeservedly resiliant...but the market cares not a wit about my opinion.
I believe the positive reversal of the past few days has to do with the MTG's statements about backing out of the merger with Radian...MTG rebounded; Radian tanked worse...

As for shorting, I don't think I would - today - as there is some uncertainty about interest rates...obvoiusly, lower rates won't be as damaging for the resets...

regards
joey

2nd, PWE (PWT on TSX) is definitely on my radar screen also for wife's long term hodings, but it seems to be trading at Jul 05 levels, breaking through resistance. I think I'd wait for RSIs to raise.

Joey, thank you. That makes sense. Wouldn't the uncertainty also be with what they will have to pay to cover mortgage defaults? I am taking half position off the table on MTG. I think 300% in about 80 minutes is as high as I will ever see.

I like to buy some AMX and BA for my IRA account.

any feedback would be appreciated.

TIA

If we go through S&P 1416 easily today, look out below according to Jeff Cooper:

http://www.minyanville.com/articles/index.php?a=13651

I will go long SDS if that happens to go net short until we find a base.

The R2K (symbol IWM) is again staying fairly firm today as the DOW, NAZ, and S&P 500 plunge the depths.

I am wondering if it is the case that the short space in IWM is just too crowded to follow the crowd downward. Perhaps some imploding hedge funds trying to hedge their portfolios all looked to the R2K as an area that was a sure thing to implode with the market.

The kind of movement we've seen this week has gotten to be wreaking havoc on the risk modeling at many of these funds. The tide will head back out soon enough and we'll see who's swimming naked.

craig-agree with you on WGDFF...production starts jan 08...still have plans to visit the mesquite mine in september...will be lowering my cost basis every chance i get...

But watch out for a surprise rate cut. The liquidity injections by the FED and ECB are occuring even as the market is up this year. What are they so worried about?

Bill's coutercyclical gold call is certainly in place today (see his other thread today). KGC and GG doing very well.

Buckle up kids, we're going to OZ shortly.

Look @ gold and the XAU.

When in September? I need to visit Mom and I owe you drinks!

Fed adds 16 billion in second operation

Quote Bloomberg

Looks to me like the miners are getting bought on high volume and gold is soaring.

A thought for the day from Jesse Livermore:

One day my friend came to me and asked me, "Have you covered?" "Why should I?" I said. "For the best reason in the world." "What reason is that?" "To make money. They've touched bottom and what goes down must come up. Isn't that so?" "Yes," I answered. "First they sink to the bottom. Then they come up; but not right away. They've got to be good and dead a couple of days. It isn't time for these corpses to rise to the surface. They are not quite dead yet."

REgarding interest rate cuts or increases: it seems to me they can't do either, and that they're signaling precisely that by injecting all this money into the system. I think they're trapped, and that they'll continue to try to find ways around doing either as they have in the last 24 hours. As a side note, yesterday I checked the 7 month CD rate at my bank - it was at 5% APY, and again, this morning, it was the same. But when I looked again just now, it was suddenly up to 5.25% for the same CD. To me this signals that they need cash locked in right now, whereever they can get it, perhaps to pay back some of these repos that will come due next week.

One other thing - and, again, I'm a novice at reading the economy here, so I'm probably way off base - but it seems to me that the Fed is basically bailing out the banks and the lenders by buying all these mortgage-backed securities. Add this worthless pile of paper to the already blossoming war debt, and what comes to mind is, when they fail, who will bail them out??

Anyone know why International Royalty (ROY, IRC.TO) is doing so poorly?

All,

Something in the WSJ re-cap of the Bush press conference from earlier this week (great timing on that one!) rung a familiar bell with me.

WSJ 8/9:

``Asked whether he was concerned that the shakeout could spread, Mr. Bush said it "all depends on if you're a glass-half-full or a glass-half-empty kind of guy." ``

Bill Cara 8/2 (apologies for the long quote but this really slammed me at the time...):

``But something else occured to me as I watched the news from Minneapolis. America seems to move from one boondoggle to the next, from the Enron collapse, the devastation of New Orleans, the Mexican border issues that CNN’s Lou Dobbs talks about nightly, the 9/11 disaster and the follow on wasteful spending on so-called Homeland Security, the obvious political conflicts and incursions in the War On Terrorism military effort at every level, the Liar Loan sub-prime mortgage debt crisis, and on and on.``

``While Americans are so busy telling themselves that the glass is half full, they ought to be focused on why it is half empty.''

Wow. A PRE-buttal, if you will.

The President and so many others apparently think that optimism in itself is the sine qua non of American society.

How about plain old competence, honesty, hard work and just rewards, treating others with respect, and rising to the challenges that face us? Not so much.

-Motts

writersblock, Re. "... but it seems to me that the Fed is basically bailing out the banks and the lenders by buying all these mortgage-backed securities. Add this worthless pile of paper to the already blossoming war debt, and what comes to mind is, when they fail, who will bail them out??"

Good question (seems to have Kaimu written all over it). My question is, can it actually fail? They own the printing presses, they claim to have gold buried somewhere that they can sell at any time. Can it fail?

I think that is a very good question

Writersblock,
Let's see, banks fail and the FDIC, that is, the good faith and credit of the United States, which last I checked, is US.

We will pay, pay, pay. The government just keeps putting it on the super MASTERcard.
Hence that snazzy .80 cent USD, soon to be in the 70's.

I caught a glimpse of Cramer on NBC news last night and then another glimpse of someone with a GS banner in the background on PBS doing their standup commedy routines for the need to have the Fed move in favor of "little people's mortgage problems [my words and interpretation]". Strange, I thought, no words of "containment"? It's almost like they are trying to panic those of the "little people" who invest.

I then thought of some of the "preemptive/emergency Fed rate cuts" that I have seen through the years and went to Google and found this interesting article by Zeal, written in OCTOBER, 2002 <--- [just for emphasis}.

The whole article, plus charts, is prime reading for those who want to track the possibility that the Fed will NOT wait until October before helping some friends and political cronies.

Snip from Adam Hamilton, ZEAL, Oct 2002:
"... Other than the post-9/11 Fed panic inter-meeting cut, the Fed has been remarkably consistent in when it launches its short-rate manipulations. It seems to prefer to make emergency inter-meeting rate cuts only when a few powerful market forces converge in harmony.

First, the short yield spread has been inverted. This is inevitably a direct response to the second factor, that flight capital has been hemorrhaging out of stocks and deluging into bonds at immense speeds. The liquidation of equities spawns sharp drops in US equity prices, evident in the S&P 500 above. The Fed seems to like to wait until after it thinks an oversold fear-driven bounce has started before it pulls Keynes’ levers and manipulates the price Americans must pay for money. This same pattern occurred back in 1998 as well, as the previous graph shows.

It is really provocative that these emergency rate cuts always seem to occur after an apparent short-term market bottom. We believe it is strong evidence that the Fed carefully monitors crucial US stock market technical levels like a hawk. Since attempting to actively manipulate the free markets is tough business that can easily backfire, the Fed seems to hold back its ammunition until it is relatively sure it is riding with the short-term uptrend before pulling the trigger.

The secretive smoke-filled Fed backroom is full of mere mortals just like you and I who don’t like to be wrong any more than we do. In order to minimize their probability of looking like fools, they seem to time their emergency inter-meeting rate cuts with oversold bear market rallies with remarkable technical precision. This saves the central planners from the bowel-shaking earthquakes of doubt and remorse that would surely assail them if the markets continued plunging on the short-term bullish news of an emergency rate cut. ..."

http://tinyurl.com/289pz8

BillySundance -

R2K got the long awaited correction complete (I believe) on Monday and retraced 50% by Wed. close. So, in most traders' eyes, it would seem that they have accomplished what was expected. Easy flush has been purged (and a lot of the components properly slaughtered and squeezed back up within days). If credit really becomes an issue (as it is likely), small caps should suffer in a disportionate fashion vs. larger caps. So a fundamental leg down may be next as these companies would be past peak earnings and vying for limited credit in a tougher environment. I'll be watching Q3 and most likely Q4 warning/earnings season very carefully.

Re. liquidity injections.

I cannot help but harboring a lingering suspicion that the Primary Dealers' pockets are a bit leaky with the monies borrowed from NY FRB's open markets. While I trust that they are generally seeking to relieve interbank lending, I am sure that some hands are out from trading desks under pressure in the hope of stabilizing the front before the weekend.

JML

got so caught up in the gold rush my posts ended up on the wrong date (lol):

gold now up $14, and gdx catching a bid...

Posted by: 2nd_ave [TypeKey Profile Page] at August 10, 2007 10:59 AM

i'm leaning into the bid and pressing trades on the gold and oil sectors: NBR/RIG/OIH/GDX/GFI

Posted by: 2nd_ave [TypeKey Profile Page] at August 10, 2007 11:01 AM

wavesmash-cannot tell you how pleased i am for you and n2son: HL is finally catching one hell of a bid...

Posted by: 2nd_ave [TypeKey Profile Page] at August 10, 2007 11:07 AM

NGAS-buying on the basis of a 5.5% drop to wednesday's break-out zone (7.75)....

Posted by: 2nd_ave [TypeKey Profile Page] at August 10, 2007 11:10 AM

writersblock -

The mortgage-backed debt is just collateral for the short term loans, not a purchase by the NY FRB. That would be the job of Fannie & Freddie if Dems & Bush agree on a legislative package on these two.

But, at the end of the day, if the "too big to fail" dogma comes back in fashion, you may start hearing about the creation of a dedicated mop-up/bail-out fund to buy and settle the messy garbage strewn throught the banking system a la S&L or Credit Lyonnais in Europe in the early 90's.

JML

craig-the oldest one is starting school at UC Irvine mid-September...now that Southwest is flying out of SFO, we can't decide whether to just have him fly down, or if we should all drive him down...if we drive and the timing works out, we plan to hit Imperial County on the way back...sometimes physically walking on a site can boost your understanding of a company's prospects..(and apologies for an otherwise irrelevant post)...

OldGoat-thanks for the Livermore quote-very apropos...just can't decide whether it will take longer than a day for the gold sector to recover..for now, continuing to press the bet until it doesn't work...

PWE now nicely in the green...Nymex Sep NG futures still positive and not sure why UNG is down=a buying oppty so i'm back in at 41.69...the volume yesterday did not even come close to 1m, and the close was shy of 42, but odds are good we see an end to the downtrend in a few days...

have now cleared the table, and back to no take on market direction into the close...

Jumble - the R2K rally today is just mind boggling! It marched right up to the $80 mark for a moment from mid $76s earlier today. MAybe someone set the liquidity pumping machine on "ludicrous" speed for too long (sorry - I can't pass up a chance for a Mel Brooks' Spaceballs reference!).

To see strength like that in the market given the current climate seems unfathomable. I am guessing that there are many money managers looking at their screens saying the same thing right now.

Took profits into strength, almost a clear table.
I still have small positions in GDX, NZT, PGH, SLW, WGDFF and P&G in the IRA.

Waiting for better direction.
Possible short/ultrashort going into close.
My feeling is no one wants ot hold positions over the weekend waiting for more shoes to drop.

Wavesmash,

Here's an article on Sony from almost a year ago that did not at all paint a pretty picture for Sony:

http://ce.seekingalpha.com/article/17605

Granted much might have changed for Sony in the last year. However, much has and will likely continue to change in consumers ability/willingness to consume. If credit crunch continues, deflation is felt worst in manufactured goods. And with all the supply coming online in China, you could probably kiss margins goodbye.

Haven't looked at chart, but regardless I'd probably avoid Sony...

Looking at GE as kind of a market proxie, it failed to close the gap and dies at 38 fib retracement. GE is the baby with bath water and hedges are dumping it to raise money for Aug 15th redemptions. I would doubt any rally that wasn't confirmed by the general.38.61 first resistance, then 39.15 is where the 50% retrace and 20day ma and 20 hr ma. I think if GE got through that,convincingly I'd by BX which has been solid.

Another paraphrased quote from my commodities-trader acquaintance:

"If the top is in, you shouldn't get a second [or third!] chance to sell the high."

GLD - today marks 3rd trip up to 66.90-67.00 range within the past 5 days; SLV, on the other hand, has yet to make 3rd trip back up to 130-131 range.

UNG-natural gas Sep futures edging towards $7....if yesterday's spike didn't catch your attn, today's spike on volume of 900k so far should...

Wow - SWC smashed down to $9 today after holding in the mid-$10 range earlier in the day. This stock is a text book case of suspicious movement!

Wow - SWC smashed down to $9 today after holding in the mid-$10 range earlier in the day. This stock is a text book case of suspicious movement!

Jumble, thanks for clearing that up.

BillySundance -

With all the talk about liquidation @ quant and/or market neutral funds as well as paring down of risk, I came to think that some players are/were very short R2K (with likely profitable or breakeven positions) to offset other longs (energy? financials? materials?). As long lose steam, they may be forced to offset losses with gains from that short (hence R2K relative stability in the 780-800 - BTW 800 is the 50% retracement of the recent move) or to prevent a short bias in their portfolio.

JML

Spot, I have the feeling they're trying to panic the masses, too (though not without reason), and are waiting to wade in and scoop up the bargains, be they lowered share prices, and, therefore, lower prices for buyouts and takeovers (newly funded by sudden re-increase in global liquidity), or the increase in fees generated by the uptick in day-trading by those of us who have BOS. (that would not be me! :-)) And thanks for the link to the interesting article.

(repeated here)
Hooray for me. At the open as soon as I saw that Gammon had bad news I sold my position. Didn't really care that it was identified earlier as one of few outperformers and that it was down 10 percent on the open. 'Cause it kept going down this morning and these miners get punished big time for a long time. EGO though is recovering. Harmony is not.
Thanks to Bill I replaced it with the impressive iamgold, which is now substantially higher than at the open.
Since following gold this spring, first time that miner stocks have gone counter to the equity mkt when the latter was this crummy. Great insight of Bill that this was possible and even likely.

My fav image inspired by Bill is the one with gold bricks in my pockets as i walk across treacherous waters. One to remember into rallies of any asset class that I'm holding.

Second ave..
perhaps you could help me with this. Could not agree with Bill more that one HAS to manage risk. My brain is so wired to sell with the bend in the trend (your turn of phrase) that I'm squandering gains and accept that I need to learn another way. Thick as a brick I do not understand how selling a partial position into a rally reduces "cost basis." For example if I sell 50 of 100 shares, the remaining 50 shares still have the same cost per share. Though, if the position had doubled in value I've used my profits to pay for the original investment...now, playing with house money. Is this the intent? (Caution, on narcotics past few days as I wait for a root canal evaluation.)

PKD/HL/UXG-n2son, every one of your holdings is outperforming today...don't know if you're around to see it all, but i know you've quoted some version of "buy despair, sell hope" and won't be surprised when you return ;)

SLV/GLD - Watching 3-min RSI(14) decline towards 20; not there yet. Looks like SLV will get there first.

PKD/HL/UXG-n2son, every one of your holdings is outperforming today...don't know if you're around to see it all, but i know you've quoted some version of "buy despair, sell hope" and won't be surprised when you return ;)

jasper-i don't like making portfolio recommendations unless i'm very certain it's the right move...i was very certain selling XAU at 158 when you were saying your "port" was ahead of the benchmark would be a good thing, and if i recall correctly you did cash out a portion...with XAU at 144 and Bill calling for another rally, i'm not certain at all which way things will go...so i would stay put...

Hmmm, a THIRD round of liquidity injection on Bloomberg over the weekend...no figure provided.

I was looking for a pop from XAU on that news, but not yet.

Still sitting at a predominantly clear table. Don't trust this mkt at all.

PKD - Up 8.67% today. 3-min RSI(14) hit 20 this morning @ 9:36EST. Price at that time was 7.03. Now @ 7.79/3-min RSI(14)>80.

OldGoat-do you have a target for PKD-incredible range for this stock today...if you're saying you traded the 3-min RSI(14) numbers, then i think you've hit upon an intra-day strategy i plan to try out...

Exited @ 7.79 based on 3-min RSI(14)>80. Trying to follow my plan.

Another exit technique would be to use PSAR-based stops, in which case I'd still be in @ 7.89 with stop @ 7.84.

I've tried getting IB to display short-term RSI-based alerts, but can't figure out how to make it work, so I'm reduced to scanning charts for patterns. Can't follow more than 30 or so charts, and even so, I miss more opportunities than I spot.

LEND-short squeeze is on...OldGoat-out of curiosity, are you able to provide opening and current 3-min RSI(14) numbers for LEND?

Jumble

Sounds like you are thinking along the same lines as I am. Lots of fund managers crowding into the same hedge (short R2K) to offest their large long positions in blue chips/big caps. Lots of bewilderment at the breakdown in correlations between indices.

I wonder if we will start hearing about some problems at hedge funds that are not directly related to subprime, but secondarily affected by the degree of market instability?

On another note, check out the volatility in the last few days on JBX (jack-in-the-box). I admittedly got this one wrong but am holding on as I believe there is extreme value to be unlocked. Down to 53 this morning and back up close to 60 this afternoon. Crazy.

Bloomberg: ``The Fed has almost unlimited ability to supply liquidity if they feel that is appropriate...".

BTW, was JC calling for Ben to intervene (as in increasing liquidity) or to lower rates? The man may be more powerful than we thought. Or his bosses.

Venezuela orders takeover of Colombian cement co.
Fri Aug 10, 2007 1:36PM EDT

http://www.reuters.com/article/marketsNews/idUKN1024475020070810?rpc=44

Looks like Hugo woke up on the wrong side of the bed again............

2nd -- I would add that, most of the time, when I ignore the 3-min RSI(14)>80 exit indicator, a retracement ensues shortly thereafter and I end up exiting less well, or--far worse--holding into a decline. Better to take the money and wait for another opportunity.

The RSI(14) exit point can be treated as a pending exit alert, to be acted upon when the STO(30,5) crosses to the downside. Sometimes the exit point will be better; other times not.

As an example of "failure to exit", I'd be better off had I exited GFI @ 11:03 this morning when RSI hit 77.88 (not 80, but close) and price was at 15.36. Stochastic x-over occurred at 11:18, at which time price range was 15.26-15.36.

BTW, GFI now @ 15.03 and 3-min RSI(14)=28.04 and falling.

Another example -- DVY 3-min RSI(14)=81.07 @ 12:21 today, with price at daily high of 68.94. Sto(30,5) x-over occurred @ 12:27 @ price=68.62. PSAR exit would've been 68.36. Decline to interim low [thus far] of 67.52 ensued.

SiO2 -

Cramer is just a clownish squawk box for G-man to share their demands to the outside authorities and endear the retail investor to the unbearable plight of HB&B. BTW, I am growing impatient as my account does not show any wire transfer from Ben. Should I worry that he forgot us?

IMHO, I fear that temporary open market operations may not restore liquidity for most mortgage banks soon enough. Yet they are in a prisoner's game: if they go knocking to the discount window, they would likely suffer a run and early demise. Best to wait for the trickle down hoping it comes before margin calls start to cascade. (At this stage, a rate cut would baffle me since it would cement the utter infeodation of the Fed to HB&B. We have a crunch not a price problem here.)

JML

Infeodation [Neat word!]

\In`feo*da"tion\, n. (Law) See Infeudation.

Infeudation

\In`feu*da"tion\, n. [LL. infeudatio, fr. infeudare to enfeoff: cf. F. inf['e]odation. See Feud a fief.]
1. (Law) The act of putting one in possession of an estate in fee. --Sir M. Hale.
2. The granting of tithes to laymen. --Blackstone.

It's that time of the day where we could see a 100 point move in DOW.

Bill, I was wondering if your opinion on GRS changed after the Q2 results.

Thank you Bill for the Gold report. The stocks mentioned are a good core group to follow. Interesting to note the stocks that were not mentioned in the report. Will uranium be your next report?

Investing and trading for me is a lot of work. This is good. Before this Blog I was in a hobby mode and at times like this week I would 'stick my head in the sands'. But the investing ideas mentioned in this Blog by you and others have and will continue to make me a better investor. As a recent poster to the Blog I find that my interest is mainly to read and learn from others here about the long-term nature of investing. I do appreciate the separation of the short-term commentary from the medium to long-term. Some day I may want to know what is happening minute by minute for individual stocks, but not now.

Currently, I want to know as much about technical analysis as I can absorb. I hope contributors would provide details in their commentary if they use this method of stock trading. Peter's comments to me on Wednesday night re his evaluation of Gold prices was helpful, as I do not know how to use TA for commodities. I am not interested in venturing there as well. I just don't have time.

KRY(TSX) - Crystallex International Corp - $3.43CDN

Preface: This is not a recommendation. Posted for only to illustrate how a novice is using technical analysis to manage a small position. This is a stock that I would determine to be a 'Casino Stock'. My viewpoint is only technical in nature. Only traders should be into this stock and only with a small position.

I have been waiting for a second confirming buy signal and previously over the last week TA projected buying prices of $3.19, $3.12 and lastly $3.01 based on price and volume. The gold sector has been hit this week but this stock has resisted to follow sentiment. Not unusual as it has already fallen because of other reasons. TA hopefully filters this out. The stock has traded around $3.40 this week. On my charts, I look at the daily movement of stock prices using Candles. I like this because I can see the range the stock traded and especially the open and close. Other than this representation of prices I don't use Candles to tell me when to buy or sell. I find candle stick patterns to be interesting but I don't fully understand the patterns once we move from Chapter One descriptions. A prudent investor would wait for a few more days of trading data and also see what happens in the gold market before making a trade. For me sentiment has changed in the stock price. Also a new TA I am learning, RSI, looks favourable for a trade. I will draw a line in the sand on this stock. First at $3.20 and then at $3.01. I will be concerned if it moves down to these levels. Without emotion I should sell. Period. End of story.

Confident as I am, bought ($3.45) today the 1/3 holding I previously sold (April 2007) to now own 100% of what I am willing to hold. Also initiated a new holding ($3.46) in my retirement account. In April 2007 I sold 100% of my retirement holding in this stock.

It is interesting to note which brokerage firms are buyers and sellers of this stock. Watching the action occurring around my stock limit price was 'precious' to watch. Go to www_TSX_com to see the last 10 trades of this or any other stock. My broker is still giving me access to level 2 quotes. I usually don't look at this. Today I did for a period of over 2 hours form the time I placed my limit orders and execution. This was also 'precious' There were a lot of small trades and buyers were
snapping up the shares on offer below $3.50. There was strong action on the buy side in my opinion. But who really knows? Only time will determine whether this will become a good trade. As this is a 'Casino Stock', there is no knowing what can happen to upset the cart. If the market 'tanks' here, I am betting that gold stocks will not trade with the trend down. I will use a mental stop to sell if it falls from here. Also, I will not be providing a day-to-day commentary on this stock. It would not be useful to this Blog. Comments in the future will only be if I sell, as I doubt I will buy more unless we get some good (factual) news. Otherwise I am trading price here not the story.

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AET.UN(TSX) = ARC Energy Trust Units - $20.10CDN

Another stock I have been following and will now also consider (for diversification) as a place to park cash. (Previously I used Penn West Energy Trust [PWT.UN-TSX]). Also I did a projection based on the data up to Thursday August 9 2007 on PWT_UN and obtained a figure of $29.85. No buy signal on this stock and I would be very 'cautious' in buying it. The downtrend is too wicked to buy now. Also beware; there is no knowing how many own this stock on margin. Talk about carry-trade. You can borrow at 5% to 6% on margin to earn 13%. ?!!? Would worry that margin calls could hit this stock. Just an observation and opinion.

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Commentary:

Words that I don't think are appropriate from the media: Plunge, plummet, fell, dropped, market turmoil, fallout, sank, meltdown, Dot-Bomb rubble(?), crushing. I could go on. Just say up or down. There is no added value to us to use these words. "click" - is that the sound of us tuning out. I hope so. If we look at a 10-year or 20-year chart, I can't even see the above words in the wiggle at the end of the trend line.

ECB, Fed Inject Cash to Ease Fears:

Not concerned about this smoke and mirror trick. Yes, these are large amounts, but the market needs reassurance and these actions look good. We all know we will bear this burden and not HB&B. Need to see just how much is really needed WHEN all the screaming dies down. And if you really believe this is bad, then sell the market short. Be glad Bill has told you about Puts!
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Information on a stock in Bill's gold report: from TradingMarkets.com

Eldorado Gold (NYSE:EGO)
EGO's PowerRating is 2 - Bearish

5+ Consecutive Up Days: These are stocks that have made a higher high for five or more consecutive days and are trading below their 200-day moving average. Our research shows that stocks trading below their 200-day moving average that make higher highs for five or more days have shown negative returns, on average, 1-day, 2-days and 1-week later. Historically, these stocks have provided traders with a significant edge. [009]

I have written a lot today. Forgive the spelling and grammar.

Kaimu posted on the other thread, thought I'd move it over here for him since he is an appreciated regular...

ALOHA !!

Somebody please explain how the Euro is any better than a US Dollar? Both fiat currencies are busy sponging up unprecedented debt while they sell off assets like manufacturing, infrastructure and gold. Remember some entity was buying all that gold they have been selling! I believe those entities are China(Asia), Russia and OPEC countries.

I love the logic ... SAVE THE DEBT-SELL THE GOLD!

It is nice to know that when I retire my Social Security Trust Fund will be full of IOUs from Fannie Mae and Freddie Mac! It behoves all Americans to consider not having any Social Security checks to look forward to ... like Katrina refugees ... WE'RE ON OUR OWN! Beware your 401ks could be taxed at ever higher rates in the future via capital gains tax in excess of 28%. I make no contributions to my retirement account. Desperate and corrupt governments commit desperate and corrupt deeds!

GOVERNMENT IS ONLY AS HONEST AS ITS MONEY ...

READ ON:
ECB, Fed Inject Cash to Ease Fears

The European Central Bank scrambled to head off a potential financial crisis on Thursday by making an emergency injection of E94.8 billion worth of funds into the region's money markets, after signs that liquidity was drying up.

The level of funds markedly exceeded the ECB's only previous major intervention on the day after 9/11, when it lent E69 billion followed by E40 billion over subsequent days. Even more striking was its one-day pledge to meet 100 percent of all funding requests from financial institutions ...

Link: http://biz.yahoo.com/ap/070810/europe_market_jitters.html?.v=11

Like Bill says this weekend the G20 are looking at ways to avert a disaster and that means pound gold! It is a battle royale ... paper vs gold!

Posted by: kaimu at August 10, 2007 1:28 PM

BernardF -- Please note that the short-term trading technique I've described above can be applied to other time frames as well, and differs very little in concept from Bill's RSI(30)-RSI(70) methodology. Whether you use 3-minute, 15-minute, hourly, daily or weekly charts, the objective is the same: to identify oversold stocks likely to move higher, to acquire them at good price points, and to hold them until they become overbought, sell them, and redeploy one's capital into more promising areas.

This is toooo good! Be sure to read for a smile. From: The Big Picture

"Constant Obligation Leveraged Originated Structured Oscillating Money Bridged Asset Guarantees
Friday, August 10, 2007 | 03:30 PM"

http://bigpicture.typepad.com/
spot

OldGoat-I see the (streaming) RSI(14) for PKD was bumping up agst the mid-nineties near the close at 8.50, then promptly dropped to 52.05 as it dropped to close at 8.27...difficult to trade the RSI when it's in rapid motion, but otherwise a beautiful system!

NYMEX Uranium contracts were down across the board with the Jan '08 contract closing at $99 today. I think there may still be some downside, but we may be able to see the "whites of their eyes" soon.

Still keeping my eyes on CCJ, SXR.to, and PDN.to -though I am partial to SXR.to. I think the market has fully devalued the cost of their recent acquisitions and they are now unlikely to make any larger dilutive acquisitions until they can fully digest EMU.

BillySundance, Re. Uranium: also accumulating LAM.to in addition to the three you mention (sxr, ccj and pdn), trading outside of its normal range.

jasper-apologize for missing the question embedded in your earlier post, but i think you got it right. if you buy (for instance) UNG at 40 and either write covered calls (or sell puts) for a premium of 2/share, then you have reduced your basis to 38. alternatively, if you sell half your position on strength at 42, and then re-enter that half-position when it drops back to 38 on weakness, you have reduced your basis on the total position each time by 1/share...and again own a position with a basis of 38. if you're lucky enough to do either of the above 20 consecutive times, your basis becomes zero, and you're either Bill Cara or a genius! ;)

I was on a conference call with a popular Market Neutral fund manager who's fund along with other long-short and mkt neutral funds were down big for a two day period earlier late last week and earlier this week. He was talking about how illquid small cap and other stocks he was short had a huge short covering rally to the likes he has never seen in his career.

If you recall this coincides with the massive one day rally we had a few days back. He went on to tell us about a private non disclosed conference call he and other hedge fund managers were on together. Across the board all the hedgies and long shorts are de-leveraging right now straight to US treasuries. This may be a no-duh moment but I think the take-away here is that huge rally the other day along with today's seemingly strong close + huge treasury buying is nothing more than massive short covering.

Personally I think this market should of been down 600 to 1,000 the past two days given the magnitude of the issues, the unknown risks and fear. I find it hard to believe that an investment house would want to be buying stocks and holding them going into the weekend. Just my take.

"Man, I've traded and faded more in the last three weeks than anytime in recent memory (which perhaps isn't saying much given my A.D.D.-ness). Sometimes right, sometimes wrong, always stressful. Hey, this is the life we've chosen, right?"

-Todd Harrison, August 10, 2007

Hello and Happy Friday
To BernardF I liked ayour post, one line in particular jumped out at me regarding the ECB cash infusion....
"We all know we will bear this burden and not HB&B.
Although I don't know how, I agree with you.
Secondly, has anyone noticed the Nikkei in nearing Bills Danger level of 16660.
My fear is the cash will disappear and only put off a really bad day.
peace
Gray

ALOHA !!

Today, Friday, August 10th, the central banks of Malaysia, Indonesia and the Philippines intervened to support their currencies by selling their US Dollar reserves. This is the type of selling ... starting off with smaller banks ... that can trigger a major currency crisis(confidence crisis).

As the Western central banks today, mainly pumped liquidity(debt)into the markets these smaller central banks were busy selling the main culprit of their financial and inflationary woes ... the US Dollar.

Link: http://tinyurl.com/38mak7

I guarantee you somewhere in the global banking world a large entity is in trouble ... The SEC is investigating books of five large US investment banks such as Goldman Sachs and Merrill Lynch.

Yesterday and today I bought British Gold Sovereigns. I have not cashed out of any of my PM shares.

GREAT JOB on the comments today guys. I am certain that Bill noticed how all of you were stepping up with ideas and strategies too.