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August 1, 2007

Cara’s Daily Commentary, Wed., August 1, 2007, 1:19 PM

Market Chat

Even though I was in the middle of other business yesterday, I did have continuous access to the Internet, and could sense late day weakness in large cap stocks.

Unable to get through the TypeKey barrier sometime after 2:30pm yesterday to alert you to the possibility of a triple-digit DJIA loss, even though the Dow Industrials were down just some -25 points at the time, I used my blog publishing system to insert a second Addendum.

At the end of the day I could see that American Home Mortgage Investment Corp (AHM) is likely to liquidate its assets after failing to meet margin calls, and that drove the market lower. The morning gains, pushed up by earnings from General Motors, were erased as credit market worries overcame the supposedly better economics data that included the chain store sales index (+1.1 pct), quarterly employment cost index, retail sales index, Chicago purchasing managers index (53.4), consumer confidence index (112.6), new construction spending (-0.3 pct), and PCE figures (Personal Income: +0.4 pct, PCE Core Yearly: +1.9 pct).

In M&A news, Rupert Murdoch (News Corp) has a deal in place for the buyout of Dow Jones. Also, Marathon Oil announced it will purchase Western Oil Sands Inc.

As the equity market drifted down, safe-haven buying (of bonds) returned. The US Dollar reversed direction against the Yen and Euro in the afternoon while hovering near all time lows against the Pound Sterling.

Gold and silver gave back most of their early gains, while copper remained firm.

This morning I needed to use the system at Starbucks and it was – once again – out of service when I tried to log on. But the good news is that the system is now up at my hotel (Yahoo!), so my day has brightened. The cost is $12/day, but at least I’m online.

The US equity market opened a little stronger this morning, and bonds are a tad softer, but traders are on the fence.

Clearly, last week’s market action resulted in significant technical weakness overall. In particular, I was looking at charts of the first and second tier retailers in the US, where the losses over the past 15 to 30 days have been severe. Consumer spending must have hit the wall.

Surprising then that (i) the recovery of US auto sales, (ii) the US Administration-generated economic data (core inflation at lowest level in 3 years), and (iii) the Consumer Confidence data (highest since 9/11,2001) were not having any seriously positive impact on overall spending by the American consumer. Otherwise, we would be seeing it in the retailing industry.

Within the US retail group I monitor, for instance, there are 15 sub-groups, and almost 60 stocks, as follows:

Men/general apparel
GAP (NYSE: GPS)
Abercrombie & Fitch (ANF)
Urban Outfitters (URBN)
Men’s Warehouse (MW)

Women’s apparel
Ann Taylor (ANN)
The Limited (LTD)
Bebe Stores (BEBE)
Cache Inc. (CACH)
Dress Barn (DBRN)
Intimate Brands (IBI)
Talbot’s (NYSE: TLB)
Coldwater Creek (CWTR)
Guess? (GES)

Tween/Teen Apparel
The Buckle (BKE)
Pacific Sunwear (PSUN)
Tween Brands Too (TWB)
Hot Topic (HOTT)

Department stores
May (MAY)
Kohl’s (KSS)
Dillard’s (DDS)
J.C. Penney (JCP)
Sears (SHLD)

High-end department stores
Nordstrom (JWN)
Saks (SKS)

Discount stores
Wal-Mart (WMT)
Target (TGT)
Family Dollar (FDO)
Ross Stores (ROST)
T.J. Maxx/Marshall’s (TJX)
Fred’s Inc. (FRED)

Warehouse clubs
B.J.’s Wholesale (BJ)
Costco (COST)
Sam’s Club (WMT)

Home improvement stores
Home Depot (HD)
Lowe’s (LOW)

Home Furnishings
Ethan Allen (ETH)
Pier 1 Imports (PIR)
Williams-Sonoma (WSM)
Bed Bath & Beyond (BBBY)

Drug stores
CVS (CVS)
Walgreen Corp. (WAG)
Rite Aid (RAD)

Grocery stores
Kroger (KR)
Safeway (SWY)
Whole Food Markets (WFMI)

Electronics retailers
Best Buy (BBY)
Circuit City (CC)
Radio Shack (RSH)

Shoe retailers
Payless Shoe Source (PSS)

Books/music
Amazon.com (AMZN)
Barnes & Noble (BKS)

Specialty/other
eBay (EBAY)
Starbucks (SBUX)
Tiffany & Co. (TIF)
West Marine (WMAR)

When people go shopping for women’s clothes, maybe they go to Ann Taylor or maybe to The Limited. When they pop into a department store, maybe it’s Sears, JC Penny, May, Kohl’s or Dillards. Shoppers’ dollars go into cash registers and eventually fall to the bottom line, affecting stock prices. Within a sub-group, it is hard for one retailer to be having an awful time of it while a competitor is enjoying good fortune. If the majority of the share prices of the majority of the sub-groups are down as they have been in July, then that is cause for concern.

So here is what I would do to stay on top of this situation. I would click on http://BillCara2.com and on the right side column, into the box for “Summary” paste the strings of ticker symbols I have listed below. As there are almost 60 and the window takes a maximum of 30, you need to do it twice.

After hitting Entry for each list, you will see the charts. You can view them by Daily, Weekly or Monthly data by selecting the different periods. You can add technical indicators for RSI, MACD and so forth. It is a wonderful tool to give you an immediate snapshot and impression of what the market is saying. In this case it is the individual Retailers, but it could be any list (of up to 30 stocks) under review.

In the following lists, you can see a couple of these stocks doing well whereas the rest are dreadful at this point (July 31). Whenever I see recent share price behavior that is out of the ordinary, I go to http://finance.yahoo.com and click on that stock’s ticker symbol and look for recent news. Usually I find the answer. What I’m looking for is a pattern of trading that is common to the group and sub-groups. For US retailing, you could, if you wish, eliminate the major stocks because they are global powerhouses, and maybe a slowdown in America in this case has been offset by sales and profit growth elsewhere.

But, let’s not put too fine a point on it.

These charts will tell you what you want to see. Watch the MACD, which is a trend-based indicator whereas the RSI and %K Stochastic tools are momentum indicators.

At this point, we know market momentum has slowed; we need to establish in our mind whether the bullish trend of the US market since 4Q2002 is reversing, so we look at MACD to spot commonality in the performance of that indicator across the whole group of stocks.

After I noted the GM sales and profit performance, I looked at this view very briefly in the time I had available yesterday afternoon, and became quite concerned that the retailer stocks were not recovering in the face of news that would suggest otherwise.

My mind’s eye quickly ran through trendlines drawn from the cycle peak to the trough of the Daily price data, and the turnabout scenario was happening, but probably not much more than some rational short covering. I immediately thought that if the broad market indexes dipped sharply into the close (rather than firming up) yesterday, there could be a bloodbath, and that (-150 points on the DJIA) is basically what happened.

This whole experience of being out of sync (no multiple monitors, or full TV markets coverage, etc) has made me think how confining it is for the people who work at jobs like teaching, healthcare, and so forth, who don’t have much, if any, intra-day access to markets. These traders are forced to take very long views on portfolio management, or else they probably have to be positioned in lower yielding fixed income instruments, or managed fund products or services.

I thought of that as I have been missing the minute-by-minute action in the market for the past month. But we all have priorities in life, and right now mine is to transition to a new lifestyle in a new country. I chose this road. Soon, I expect, that objective will be met and I can return to my daily journey in the markets. Being mostly in cash (via Distribution Zone and Sell Alert protocols I follow) has made the task easier. Still, I am concerned for the readers and wish I could do more.

In any case, here are the ticker symbol strings for the data I recommend looking at by inserting the symbol list in the Summaries box in the home page at http://BillCara2.com. You can access some of the data without cost, including the technical indicators, fundamentals and share price performance over many periods.

Unfortunately, the page of all charts-in-one costs money (by paying Investertech.com), which I just discovered when I didn’t use my password. I used it yesterday and got the charts by putting the list in 10 at a time in the Tech charts window. Disappointing. However, you can get a free 30-day trial if you wish to check it out.

List #1: Men/general apparel (4), Woman’s apparel (9), Tween/Teen Apparel (4), High-end department stores (2), Department Stores (5), and Discount stores (6)

GPS ANF URBN MW ANN LTD BEBE CACH DBRN IBI TLB CWTR GES BKE PSUN TOO HOTT JWN SKS MAY KSS DDS JCP SHLD WMT TGT FDO ROST TJX FRED

List #2: Warehouse clubs (3), Home improvement stores (2), Home Furnishings (4), Drug stores (3), Grocery stores (3), Electronics retailers (3), Shoe retailers (1), Books/music (3), Specialty/other (4)

BJ COST WMT HD LOW ETH PIR WSM BBBY CVS WAG RAD KR SWY WFMI BBY CC RSH PSS AMZN BKS MLG EBAY SBUX TIF WMAR

Here is the list (ten at a time) to insert into the

AMZN ANF ANN BBBY BBY BEBE BJ BKE BKS CACH

CC COST CVS CWTR DBRN DDS EBAY ETH FDO FRED

GES GPS HD HOTT IBI JCP JWN KR KSS LOW

LTD MAY MLG MW PIR PSS PSUN RAD ROST RSH

SBUX SHLD SKS SWY TGT TIF TJX TLB TOO URBN

WAG WFMI WMAR WMT WMT WSM

You can switch any of these ticker symbols for others, perhaps from your portfolio, if you wish. You can try different indicators, time periods, etc.

Btw, Cara 100 Starbucks (SBUX) – my second home this past month -- has been suffering a tough time for a long time in the market. You know that I often say in the blog that when I watch the CEO’s of big name companies go on TV, usually hitting the whole media circuit at once, I then expect the peak of their stock cycle to occur at about that same time. Well, last year when I saw the Starbucks CEO everywhere I looked, cocky to the point (I thought) of arrogance at how well his company was doing, I was disappointed. That was the top. I don’t want to see CEO’s entertaining us on TV. I’d rather have them at the office doing business.

I have seen this kind of thing all the time over the years. A classic was watching Michael Armstrong of AT&T (T) go over-the-top in his TV performances a few years ago. I remarked on it at the time. The stock crashed after that. Another was Fast Eddie Lampert, the Connecticut hedge fund manager who took control of Sears, turning it into Sears Holding (SHLD), going on every TV show, including Cramer, right before the stock died. How about the guy who pushed Krispy Kreme right through the roof before his donuts went flat. Others, and a few come to mind, like Dennis Kozlowski, headed off to jail in the year or two after they did their thing with the media.

It’s almost like these people are being pushed and pulled by a puppeteer (read: the big financial interests behind the stock) to do their dance for the public as large blocks of stock are being dumped.

In any event, watch for it. I learned the concept some 30 years ago when the owner of a small printing house told me that he always got his biggest orders for marketing jobs right before companies declared bankruptcy and didn’t pay him. What happens in life, happens in the market. The market is us.

Don’t forget that saying. If the American consumer stops going to the cash register at the retailers of their choice, then the economy will slow (forget the +3.6 pct annualized growth of the past quarter as that super-sized figure will be downsized next month!). A US economy that hits the skids can be observed through the retailers. Let’s watch for it in the charts.

The Cara Global 100 Stockwatch

Here are the Monday session Cara 100 gainers.

Here are Cara 100 losers.

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

Here are the Cara 100 stocks that had extreme volume changes. It pays to watch the price and volume extremes, ie, Money Flow, especially when markets start trending.

Key Stocks plus Cara 100 In Focus


The folks at KNOBIAS, Inc provided the Cara 100 watchlists.

Relative Strength Index (RSI) analysis of the Cara 100 company stocks .

Here are the charts of up to a dozen stocks with RSI-7 above 70 and below 30, from Tuesday.


RSI > 70 (2)

RSI < 30 (12 of 36)

Here are the Cara 100 stocks trading with the highest and lowest RSI-7, sorted by (i) daily and (ii) monthly values, for Tuesday:

“Chris,” used BillCara2.com data that is unsmoothed, unlike the data from Worden used by “David”.

International Economics Review

Econoday Weekly International Report

US Economic Calendar for next week

US Equity Markets Review

DJIA (interactive) chart

The DJIA collapsed at the end of the day, falling almost -150 points by the close. There was a partial recovery this morning, but after 12pm, the market started heading south and is now (at 1:15 pm negative on the session).

NASDAQ Composite (interactive) chart

I advise keeping a close eye on the FTSE 100 index of the UK market, in itself a concern for the US market.

There is a lot of technical support in the Dow 12750-12800 area (May-June-07 trading). There is even more support down at about the 12050 level of March-07. However, if the Dow 12750 level is broken this week, I believe there will be a dramatic sell-off down at least to 12000. If that level doesn’t hold, then there could be a rapid decline, somewhat like 1987, with the Dow falling below 10000.

International Equity Markets Review

Here is the latest session data for the exchanges of the Americas.

Here is the latest session data for the Toronto Stock Exchange composite index.

Here is the latest chart for the Brazilian Bovespa stock exchange in Sao Paulo.

Asia-Pacific

Here is the latest session data for the Asia-Pacific stock exchanges.

These exchange indexes were all down, as one would expect after the late day sell-off in the US market.

The ability of the market to hold these levels after a major shock is crucial. I still expect by the end of the week that there will be a resolution one way or the other.

Here is the latest chart for the Japanese Nikkei 225 index.

The Nikkei 225 was down -378 points (-2.19 pct) to 16870 earlier today, which is getting close to the first technical support level. If that is violated, then a major sell-off can be expected.

The Mar-07 16600 support level for the Nikkei 225 of the very important Japanese market is the critical one to watch this summer. I set mental stops no worse than -8 pct from the cycle high, which, in the case of the Nikkei 225 index just happens to be near the 16600 technical support level.

Here is the latest chart for the Singapore index .

Today, there was a large sell-off in Singapore as well, down -3.27 pct to 3432.

Here is the latest chart for the Shanghai Composite index .


Shanghai was much lower – down -170 points (-3.81 pct) -- to close at 4300.

Here is the latest chart for the Hong Kong Heng Seng index .



Here is the latest chart for the India BSE 30 index .

Today, the volatile Bombay Stock Exchange BSE 30 Sensex index suffered a huge loss of -615 points (-3.96 pct) to close at 14936.

Download Astaire Weekly Report on India (dated July 31) courtesy of Deepak Lalwani.

Europe>

Here is the latest session data for the bourses of Europe.

Here is the latest chart for the UK FTSE 100 index.

Last Wednesday, the FTSE dropped below the first level of technical support in the 6400-6500 April and June levels to close at 6215. The second level of support for the FTSE appears to be the 6000 level of March-07. If the FTSE 6000 level is taken out by a falling UK market, I suspect that the global Bear has started.

Today, the FTSE was down -110 points (-1.72 pct) to 6251. The index suffered a huge loss at the open and then tried to recover, but failed.

I do not yet see a recovery, but merely a holding action.

Watching the trends and cycles of UK-listed stocks in their morning session is necessary to help do your daily set-up for North American listed stocks. With ADRs and all, many of these companies have inter-listed stocks, and also increasingly every company’s business is becoming global in scope. As capital markets do not operate in a vacuum, traders have to be aware of (i) what is happening to prices in other markets (ii) the causes of those price changes, and (iii) the potential impact on your portfolio.

Bonds & Yields Review

Here is the $USB 30-year Treasury Bond chart.

The US long bond moved up to 110.03 as capital fled equities.

The low this month was 106.0 and the cycle low (closing basis) in mid-June was 104.88.

US Dollar Review

Here is the chart of the end of the week trading.

The trade-weighted USD is sidetracking today to this point (12:30pm ET) to 80.771.

Should the US equity market continue its longer-term upward bias, I do think the $USD will weaken again, and drop below 80.

Commodities Review

Interactive Charts of the CRB Commodities Index:

$CRB Index

The index level is presently 319.67, down on the day, but where it has been.

I don’t see how commodity prices can drop much below the crucial 320 level, and if it rises much above 320, I do think the Fed will have no option but to lift rates or squeeze the banking credit system, which I am sure they are loathe to do presently. So, this is a crucial level.

Oil Review

Interactive Chart of Weekly Crude Oil:

Here is the e-miNY Sept-07 Crude Oil chart.



This morning (11:30am ET), the e-mini September contracts are at 76.975, down -1.6 pct on the day. This continues to be a nervous energy market.

Hopefully we don’t have to worry about hurricanes this year because, as you know, I’d take that kinda personally. (LOL) Actually, I see a storm is brewing in the southern Caribbean. People here have their antennae on, for sure – mostly because it’s a small island. But the truth is there is a much greater probability of suffering a bad storm anywhere in the US from the Mexican border to North Carolina.

Gold & Precious Metals Review

Here is the Recent Spot Gold chart.


Gold (spot) is at 664.6 at 1:00pm ET. I don't particularly like the action, but, at least for now, it seems not to be falling.

If the gold market is to move “Onwards and upwards to 750 this quarter” then it may have to move counter-cyclically to the broad equity market for a while.

Here is my take. President Bush believes he is the most misunderstood leader in the history of America. He does not want to leve a legacy of disaster at the NYSE, particularly after he hired the financial industry’s most important global player in Hank Paulson to head up Treasury.

I think we are about to see evidence of Professor Bernanke throwing USD from helicopters. I think that is going to happen until the Beijing Summer Games are concluded next year, and if and when the equity market dies at that point, he can blame it on the Chinese authorities for closing their economic shop following the Olympics.

You see, after Pres. Clinton left office, doing essentially the same thing (pumping the equity market until his final days in office), leaving his legacy intact and setting a barren table for his predecessor George Bush, I think Pres. Bush learned the game, and will try to do the same.

So, I still think traders ought to look for gold prices to move up over $700, and for the goldminer stocks to lift again. Obviously, I could be very wrong. But something tells me that this US Administration is not going to let me down.

As I opined, for last week, “this is not the free market at work. It’s the Plunge Protection Team, plus short-term oriented profit takers. There will soon be a time to buy the dip.”

Here is the Recent Spot Silver chart.


Silver (spot) is recovering a bit here. It was at 12.93 (1:00pm ET) today, but not strong.

More volatile than gold, the silver metal is a precious metals bellwether.

Here is the Recent Goldminer share index chart.


The $XAU index is at 146.00, down -1.81 pct so far today.

I still believe that share prices of the precious metal miners are headed higher. But at the cycle peak, that is probably the end of this 2002-2007 Bull market. After the peak, I am not so sure the market will come down fast. It could be like 1973-74, which was a protracted Bear market.

Community Chat

I accomplished a lot yesterday, but still no word on a residence. I have a back-up plan in case the primary one doesn’t work out. But, the loss of time is difficult. The Nassau Harbour Club is going over to the Ritz-Carlton people today. When I returned last evening, I noticed that the owner’s suite next to me had been cleaned out. Maybe R-C will want my room too as it is one of the best here. They did say I could stay a month longer if I wanted, but didn’t promise me this room. Anyway, it’s been a slice and I’d like to move asap into my own place close to here. My back-up is on Paradise Island. I’ll check it out today.

I still carry my passport around with me every day, and people who notice that have a good laugh. I still feel like a transient. Relaxed, in a balcony room in a nice marina for a month, but not quite on vacation.

Have a good day.


Posted by Posted by Bill Cara on August 1, 2007 01:19:06 PM | Category: Cara's Daily Commentary

Discourse

U.S. yield curve inversion in August 2006 predicts stock market weakness this year. See "Is the Yield Curve Useful Beyond Predicting Recession?" at:
http://www.2globalmarkets.com/2GMPages/MktComm.htm

Posted by: JWibbs [TypeKey Profile Page] at August 1, 2007 1:49 PM [link]

Interesting concept to watch the CEO's of big name companies appearing on multiple TV shows and use this as one tool to predict the (possible) peak of their stock cycle. That seems very astute and I'm going to use it. Thanks Bill.

Nice pictures you're getting.

Posted by: NT [TypeKey Profile Page] at August 1, 2007 1:52 PM [link]

Is anyone here still in KRY? These past few days have been a complete bloodbath.

Posted by: fourier123 [TypeKey Profile Page] at August 1, 2007 2:01 PM [link]

I could kick myself for not buying AHM.

Bill, take heart, it's a great time to be having computer problems; wish I had more computer problems. Woulda saved me a few bucks. lol

Posted by: shark_attack [TypeKey Profile Page] at August 1, 2007 2:05 PM [link]

I haven't re-entered since I got out at 3.38 at the beginning of last week.

It's not looking pretty at the moment, but if and when that permit comes, all of us who got out will probably be frowning.

Posted by: Fazeli [TypeKey Profile Page] at August 1, 2007 2:06 PM [link]

Does anyone believe you should get out of Chinese stocks before the Summer Olympics are held? Will the end of that event shut down their growth substantially? This might be a silly question, but for a novice in financial markets it's a small worry. Actually I'm in a BRIC mutual fund.

Posted by: NT [TypeKey Profile Page] at August 1, 2007 2:07 PM [link]

Fourier123, I have some KRY & have held it since April '06. I'm holding tight. Even Cramer is starting to get back onboard.

Posted by: NT [TypeKey Profile Page] at August 1, 2007 2:10 PM [link]

Fourier123,
I'm holding a good chunk of KRY. I bought some more recently (out of spite). Please, don't tell anyone.

Posted by: Fred [TypeKey Profile Page] at August 1, 2007 2:25 PM [link]

I'm thinking of getting into KRY...

Posted by: shark_attack [TypeKey Profile Page] at August 1, 2007 2:30 PM [link]

KRY-I'm adding here...

Posted by: 2nd_ave [TypeKey Profile Page] at August 1, 2007 2:33 PM [link]

chris, you might get another shot here at AHM...

Posted by: 2nd_ave [TypeKey Profile Page] at August 1, 2007 2:36 PM [link]

Hey guys, if you like the frustration and action of KRY but want to make $$$, why not get into TNH (Terra Nitrogen)around 92?

Down around 16% today at 92-93. It was at 140 at it's high. Also a $12 dividend and a cash distribution coming up.

I'm scaling in a few as I type.

Posted by: Craig [TypeKey Profile Page] at August 1, 2007 2:36 PM [link]

GRS - Just added some more.

Posted by: Fred [TypeKey Profile Page] at August 1, 2007 2:40 PM [link]

the gloom's pretty thick right now..if you're a ST trader, you could buy almost anything and be assured of a bounce...

Posted by: 2nd_ave [TypeKey Profile Page] at August 1, 2007 2:44 PM [link]

ARU - Took half a position.

Posted by: Fred [TypeKey Profile Page] at August 1, 2007 2:48 PM [link]

Craig,

FYI, re TNH, the following was posted on RealMoney (no opinion myself):


I Have Effectively Sold All My Terra Nitrogen And Why
8/1/2007 1:38 PM EDT
During the recent earnings conference call for Terra Industries (TRA), I was shocked to discover that the earnings split between TRA and its wholy owned Terra Nitrogen (TNH) factory -- TNH is an MLP, and TRA is the GP that runs TNH -- will swing massively soon against TNH shareholders.

Much like a hedge fund has a high water mark to meet before it earns its typical 20%-25% performance fees, so too had a lack of earnings at TNH in the past created almost $200 million in 'deficiencies' that had to be earned back before TRA could get a better split. Thus, TRA has only been receiving 1% of earnings and the balance hes been given to TNH shareholders.

Now that earnings at TNH have surged (over $3 last quarter) and look very strong in coming quarters, the $8.18 per share deficiency could be covered in the next 3-4 quarters. Once this is done, TRA begins to take 50% of all earnings at TNH over $1.045!

I called TRA management to discuss this and see if this was correct, and they confirmed it and in fact are concerned enough about it that they decided to post this old information in their new 10-Q to cover themselves and make sure they have the high ground on this issue. Here is the latest 10-Q. Notice the splits information clearly outlined at the bottom.

I don't believe the current $100 price on TNH reflects this fact yet. TNH shareholders will pretty much get the next $8.18 to themselves, but thereafter, big dividends will get split with TRA cutting the divvy as much as 40%-50% going forward.

So what is TNH worth? Well, if natural gas prices soar or fertilizer prices fall, TNH can go to single digits in a hurry (traded at $2 back in 2002). At the other extreme, if current conditions hold and TNH can generate $10 in earnings annually going forward (low natural gas prices and high fertilizer prices stay constant), shareholders will no longer get that $10 in divvies and will instead get something more like $5.50 or so. Since there are straight plays on natural gas like San Juan Basin Royalty Trust (SJT), which yields 11% currently while a typical MLP that owns pipelines or is highly hedged in energy production yields 5%, I can't see how TNH can trade any lower than 7% yield.

Back when I was a raging bull on TNH and predicted $3+ quarterly earnings in future (lower in winter) and perhaps $10 annually, I assumed shareholders would get that $10 and thus at a 6% yield would equate to $166 and at a 7% yield would equate to $140. But if the best case long term is for shareholders to get $5.50 or so, then at 6% yield, that's a price of $91 and at a 7% yield, you get $79.

Keep in mind this price range of $80 to $90 is what I think TNH is worth with everything going perfectly (high fertilizer prices/low natural gas costs) like we have now. Since this is unlikely to hold forever, a fair value is something between single digits and $90.

Ironically, this is NOT a good reason to buy TRA either! TRA owns 75% of TNH stock, and since the companies are similar in size, TNH makes up a huge portion of TRA's market cap. If you assume $2.50 earnings every quarter going forward at TNH and new splits kick in, it's only worth about 10%-15% more cash flow to TRA. I believe the potential massive downside to TNH share price/loss of balance sheet strength at TRA outweighs the small incremental amount of cash flow it will receive from the new TNH split. In short, when you already get 75% of the dividends because you own 75% of the stock, you don't make a lot more cash flow if your split goes from 1% to 50%.

I'm out of TRA and now have a net short position in TNH as I expect when the upcoming huge change to splits in profits of TNH gets more discovered, the longs will flee. I worry that retail holders may be the last to know, so I'm out here waving the flag to them especially.

To me, being long TNH is kind of like the old "heads I win, tails you lose." The details of the TRA/TNH partnership can be found on the company website for those who want to delve into the details.

I highly recommend Potash Corporation of Saskatchewan (POT) as a replacement for TRA/TNH. POT dominates the global potash marketplace, and the company announced price hikes for its product going forward that can easily stick given the portion of market it controls. Royal Bank of Canada just came out Friday and gave POT a BUY with a $93 price target.

Position: Long POT; short TNH

Posted by: bb [TypeKey Profile Page] at August 1, 2007 2:48 PM [link]

You know 2nd...there are drinks riding on this....LOL!

Posted by: Craig [TypeKey Profile Page] at August 1, 2007 2:52 PM [link]

A couple days ago (or was it just yesterday?) that GM produced a sparkling earnings report with clear inferences that auto sales were rebounding. I couldn't square it with the housing slump, the high gas prices and the recent US retail sales picture, so I spent a great deal of time showing you how I look at the retailers.

So guess what? I wasn't wrong after all. I was merely misled. So what's new other than there should be new jails made for these people?

GM's July sales fell by -22 pct; Ford's by -19 pct, and Chrysler's by -8.4 pct. Even Toyota saw its US sales drop by -7.3 pct for July.

If you think the broad US market might be going up here, or down sharply, keep your eye on the 55-odd retailers I listed today. If consumers have no tickee, at least they won't have to pay to hear the obese woman sing.

Posted by: Bill Cara [TypeKey Profile Page] at August 1, 2007 2:59 PM [link]

one last stab at AHM at 1.38

Posted by: 2nd_ave [TypeKey Profile Page] at August 1, 2007 3:01 PM [link]

A year ago we organized a Team Bally Fitness to research the company. It was a management disaster. They have now filed bankruptcy. I hope its Chapter 7 and we never have to watch a re-run.

Posted by: Bill Cara [TypeKey Profile Page] at August 1, 2007 3:05 PM [link]

Geez, now I owe BB drinks too!

Many thanks for the info. I'm out on a small profit, better than the alternative.

Posted by: Craig [TypeKey Profile Page] at August 1, 2007 3:07 PM [link]

You guys wear me out. You really do. I cannot keep up with what you are doing.

Anyway, are people finding this commentary helpful? Like when I say a retest should be coming before they try to take it back up, like this morning? Or when I tell you the breadth is horrible on the advance and there's nothing holding it up? Does that clue you in as to how you might also want to look at things or think? (Not that I have all the answers.)

The reason I ask is this takes a lot of my time and attention and distracts me from the girls so I want to know.

Posted by: MarkM [TypeKey Profile Page] at August 1, 2007 3:09 PM [link]

TSX is down more than 300 points today. Almost as bad as last Thursday. I think that I took an even harder hit today. Better dust off my resume and hit the pavement.

Posted by: Fred [TypeKey Profile Page] at August 1, 2007 3:09 PM [link]

craig-if i try putting myself into the shoes of the average fund holder, i get that "throw in the towel" feeling...that has usually been a good buy point..not saying it's going to happen...but buying some OIH now...

Posted by: 2nd_ave [TypeKey Profile Page] at August 1, 2007 3:11 PM [link]

Markm,

It's not the women one has known that occupy his daydreams...it's those delicate birds that escaped his exquisite grasp that haunt him 'till his dying day...


Imagine what would be happening if there WEREN'T a Plunge Protectiont Team.........

Posted by: shark_attack [TypeKey Profile Page] at August 1, 2007 3:14 PM [link]

and taking a little SOHU..

Posted by: 2nd_ave [TypeKey Profile Page] at August 1, 2007 3:14 PM [link]


Anybody looking at PNRA? I am thinking of taking my losses and getting out. Any opinion on the stock out there?

Posted by: floyd20 [TypeKey Profile Page] at August 1, 2007 3:15 PM [link]

MarkM, I sure enjoy your commentary. Much of it echoes my own thinking, and you usually post it before I think to.

TIKI has twice hit my magic +26 level today, so I think the PPT is finally showing up to the party.

I'm curious about what the market's reaction will be tomorrow if BOE or the ECB raises rates. I think it unlikely, but certainly not a scenario to dismiss.

Posted by: omphalos [TypeKey Profile Page] at August 1, 2007 3:22 PM [link]

markm-don't mistake any of my buys at this point for optimism...i'm simply playing against the negativity and taking advantage of closing short positions to make a few extra bucks...my overall outlook is the same as yours...and i'm largely in cash due to the caution both you and bill espouse right now...

does anyone else think there's a slim chance sohu helps to spark another overnight rally in shanghai?

Posted by: 2nd_ave [TypeKey Profile Page] at August 1, 2007 3:22 PM [link]

Bill, any thoughts on how long/how far down gold stocks will go after they complete the 2002-2007 bull market cycle?

Posted by: bc101 [TypeKey Profile Page] at August 1, 2007 3:23 PM [link]

Your comments help A LOT, MarkM.

Keep 'em coming. Please!

PS: For people new to this board, "the girls" are MarkM's delightful daughters.

Posted by: GemmaStar [TypeKey Profile Page] at August 1, 2007 3:27 PM [link]

bear market or not, MU finally back to a point where i'm going to take a LT position...

Posted by: 2nd_ave [TypeKey Profile Page] at August 1, 2007 3:29 PM [link]

FYI

Anyone owning Central Fund of Canada CEF....
currently trading at $9.07, a premium of slightly under 5% which is below average of
8-10%.

This fund is a convenient way to own a 50/50 mix of gold and silver bullion.

Posted by: astral25 [TypeKey Profile Page] at August 1, 2007 3:32 PM [link]

MarkM-
I find your commentary very helpful.

Bill-
ditto. thx for the lesson about watching the retailers.

regards
joey

Posted by: joey [TypeKey Profile Page] at August 1, 2007 3:35 PM [link]

holding overnight feels good today...there will be an opportunity to cash in tomorrow...

Posted by: 2nd_ave [TypeKey Profile Page] at August 1, 2007 3:36 PM [link]

I am ok with my KRY position being underwater. If one is not in the stock at any price, how can one be in place for permit news? Bought 4K shares of KOOL today at 2.25. Open orders on 3K BMD @ 3.01 and 3K WGDFF @ 2.45. stk

Posted by: stktrader [TypeKey Profile Page] at August 1, 2007 3:38 PM [link]

MarkM,
Your comments valuable and helpful.
But how is it that we are wearing you out?

Posted by: JogyP [TypeKey Profile Page] at August 1, 2007 3:38 PM [link]

Your comments are very helpful MarkM. Thanks!

I covered my MBIA short after making 10% in two weeks.

Something I learned today from minyanville is that a third lower high that fails can sometimes lead to a waterfall decline - see the weekly chart for BZH. I wish I had shorted it at 35. I waited a little too long.

Posted by: moab [TypeKey Profile Page] at August 1, 2007 3:45 PM [link]

Markm,

Very much appreciate your commentary as well. Has stopped me from making a couple of poor trades over the last couple of days.

Posted by: bb [TypeKey Profile Page] at August 1, 2007 3:45 PM [link]

Mark,
Don't let my stupidity distract you from helping the list.

I'm playing with a small amount of $, I'm largely in cash. (over 50% of my portfolio).
More than 33% of my total funds are presently in FDIC insured CD's making 5-6%, not in investment acct's.

Posted by: Craig [TypeKey Profile Page] at August 1, 2007 3:49 PM [link]

Mark,
Don't let my stupidity distract you from helping the list.

I'm playing with a small amount of $, I'm largely in cash. (over 50% of my portfolio).
More than 33% of my total funds are presently in FDIC insured CD's making 5-6%, not in investment acct's.

Posted by: Craig [TypeKey Profile Page] at August 1, 2007 3:49 PM [link]

MarkM:

Your postings along with several other charter member contributions( which have become rarer), are greatly appreciated; without them, Bill’s blog offers at best a ‘chat-room’ format while the ‘Coach’ is disconnected.

Posted by: C.Note [TypeKey Profile Page] at August 1, 2007 3:50 PM [link]

MarkM,

I appreciate your analysis and hope to benefit from your comments when I am able to divest. Much of my portfolio is in good story stocks which are currently stuck underwater with low volumes and ugly gaps.

Posted by: Fred [TypeKey Profile Page] at August 1, 2007 3:55 PM [link]

MarkM,

I appreciate your analysis and hope to benefit from your comments when I am able to divest. Much of my portfolio is in good story stocks which are currently stuck underwater with low volumes and ugly gaps.

Posted by: Fred [TypeKey Profile Page] at August 1, 2007 3:57 PM [link]

Markm,

Very much appreciate your commentary as well. Has stopped me from making a couple of poor trades over the last couple of days.

Posted by: bb [TypeKey Profile Page] at August 1, 2007 3:59 PM [link]

Here is a good website to see the momentum indicators, that MarkM is talking about:

http://www2.barchart.com/momentum.asp

Mark and Bill's comments have helped me greatly to learn how to analyze and make decisions in the market and I know others also appreciate it.

Posted by: bbcmoney [TypeKey Profile Page] at August 1, 2007 4:00 PM [link]

Here is a good website to see the momentum indicators, that MarkM is talking about:

http://www2.barchart.com/momentum.asp

Mark and Bill's comments have helped me greatly to learn how to analyze and make decisions in the market and I know others also appreciate it.

Posted by: bbcmoney [TypeKey Profile Page] at August 1, 2007 4:00 PM [link]

This rally is utter crap... so engineered... I love how the last 30 minutes of trading can see a 220 point turn on the DOW.

MarkM: appreciated as always...

Posted by: Fazeli [TypeKey Profile Page] at August 1, 2007 4:00 PM [link]

Bill-
ditto. thx for the lesson about watching the retailers.

regards, joey

To which I also add my thanks.


Posted by: GemmaStar [TypeKey Profile Page] at August 1, 2007 4:01 PM [link]

2nd ave,

Nice call on the strong finish today. Wish I had taken your advice!

Posted by: bb [TypeKey Profile Page] at August 1, 2007 4:07 PM [link]

MarkM

Thanks for taking your time to add valuable input.


Posted by: tony [TypeKey Profile Page] at August 1, 2007 4:10 PM [link]

I am glad the market end up in green, but the last 20 minutes looks engineered by the concerned group(PPT?). My thanks to them.

2nd,
You are firing on all cylinders for the past two days! Congrats!

Posted by: JogyP [TypeKey Profile Page] at August 1, 2007 4:12 PM [link]

Mark-

Though my time frame is beyong most discussion here, I appreciate the thoughtful insights you provide. You have pointed out stats a number of times that I was ignoring in regards to internals. I am not aligned with the group here as to the market direction, but the perspective is much appreciated.

Looks like internals got so BAD... they were too GOOD to pass up at the close. Good luck to all.

Posted by: Namkcots [TypeKey Profile Page] at August 1, 2007 4:14 PM [link]

Possible Reason for the Gammon (GRS) weakness
(Closed nealy 8% down at 10.34)

http://biz.yahoo.com/prnews/070801/mo454.html?.v=1

Posted by: JogyP [TypeKey Profile Page] at August 1, 2007 4:17 PM [link]

I have mentioned Geologix, GIX.V on this board before. It is my biggest holding and I believe my best potential for the future.

For those who are interested, the following was sent to me by a friend. It is freely available from Kaiser's website. This report mirrors my own due diligence and I believe the stock will be over $10 in the next couple of years. Geologix still have a lot of drilling ahead of them and this stock may take some time for the market to realise the full potential. I am not risking missing the boat if it does take off and have my full allocation already. I suggest buying on any weakness.

http://www.kaiserbottomfish.com/s/Trackers.asp?ReportID=194392&_Type=Trackers&_Title=Tracker-2007-05-Understanding-the-quirks-and-upside-potential-of-San-Agusti...

Mark M, Please keep posting. I am learning a lot from you. Even though my time horizon is a lot longer than yours, I am learning the intricacies of the market which will make me a better trader. When I am pushed for time and can't read all the comments in the discourse section, I scan for yours and Kaimu's comments.

Posted by: Aussieontop [TypeKey Profile Page] at August 1, 2007 4:17 PM [link]

Mark M,

Your posts are always appreciated. I don't post much but do read often and always look for your comments.

Posted by: ToddL [TypeKey Profile Page] at August 1, 2007 4:22 PM [link]

That was a remarkable close. Was it short covering or HB&B or the PPT trying to force the shorts to cover before the market sags yet again?

Did the credit market problems just go away? What happened there anyway?

I see the Utilities took off and bond yields dipped, while the Goldminer stocks had a terrible session despite the bullion faring ok on the day.

Btw, whenever there is a triple-digit rally or pullback in the DJIA, I spend a few minutes looking at the StockCharts market summary: http://tinyurl.com/4d9kq

You can see the Small Caps did not participate in the rally, so this was not the public buying stock after 3:30pm today.

Posted by: Bill Cara [TypeKey Profile Page] at August 1, 2007 4:22 PM [link]

JogyP,

Re: GRS - A $3 million lawsuit isn't a threat to a $1.2 billion company.

Posted by: Fred [TypeKey Profile Page] at August 1, 2007 4:22 PM [link]

2nd, I'm cracking up at your MU call, which if you look, closed @ 12.10, now at 11.80 or so.

Just before you posted I did the same as I've been in and watching MU since Bill's call a while back.
I've done very well with MU.

Sorry for the multiple posts, the blog was freaking out at the close.

Mama gets a new pair of shoes on SBUX too.
Mama Thanks Bill a lot!

We should all get together and do something for the girls. Their Dad is pretty cool.

Posted by: Craig [TypeKey Profile Page] at August 1, 2007 4:23 PM [link]

I bought Crystallex (for the first time since it was over 4 bucks a month ago) at $3.16....for no particular reason......(cmon permit.......)

Also, I was right, we did get a little bounce in here. At least a bounce. Now the Chinese and the Japanese can chew on this chow mein tonight.

Posted by: shark_attack [TypeKey Profile Page] at August 1, 2007 4:23 PM [link]

Investigating ways to watch the retailers as Bill suggests, I came upon and I post the following charts:

http://stockcharts.com/h-sc/ui?s=$bpdisc&listNum=5

http://stockcharts.com/def/servlet/SC.pnf?c=$BPDISC,P&listNum=5

Bullish %age charts of the S&P Consumer Discretionary Index, which reversed from highs of 70+% in March and 70+% in June to 38.71% yesterday.

regards

joey

Posted by: joey [TypeKey Profile Page] at August 1, 2007 4:30 PM [link]

whoops...76+% in march...

joey

Posted by: joey [TypeKey Profile Page] at August 1, 2007 4:33 PM [link]

Fred,
GRS:
I agree.I hope that was the reason for the GRS drop.
Before the earnings last Q, GRS was trading at 16+. I am still holding GRS from those levels and recently added more at 13 and 11s. I have too many now, so do not want to add here. If the earning come out OK, we could easily go back up.

Posted by: JogyP [TypeKey Profile Page] at August 1, 2007 4:35 PM [link]

I have been a lurker on this board for several months now and very much apprechate Bills lessons (todays seemes particurly relevent re Retailers) And yes MarkM keep 'em comming when you can. That goes for the rest of the community as well. I take all the wisdom & insite I can get. Which brings me to my question. I am a freshman trader and while I have learned alot I have a very long way to go in mastering my methodology so.....I have had MU on my watch list since before I knew it saw a Cara100 Co. But never traded it because with my limited experience at Fundimintal Research it seems to me that MU's Fundies SSSUUUCCCKKK!!! (sorry don't mean to be vulgar but...)Obviously since it is a Cara100 company I am missing something. So the actual question is;What should I be looking for in a Tech company? Because frankly I dont see many with Fundies I would buy with YOUR money.
Pls Excuse typos & Thanks for any insite into this aspect of the Great Game

Posted by: Lazarus [TypeKey Profile Page] at August 1, 2007 4:50 PM [link]

Aussieontop:
glad to spot your post...
firstly, a belated thanks for responding to me a few weeks ago with commentary about your 'stop loss' education - notably your trials with ATR...

I recognize stop loss strategies to be a tool which will benefit me hugely to incorporate - last week/month/year - many $ ago.

On your recommendation - and remembering the endorsements also of Bill and Jock - I contributed to Amazon's top line by ordering the 2 Elder books. I'm hoping - as appears to be the case from Jock's contribution to the WIR - that Elder will help me learn about identifying sector rotation.

Right now, I am working my way through (and highly recommend ) Dorsey's book on Point & Figure Charting. It too has some stop loss strategies which resonate with me. I must find ways to take my subjectivity out of the equation - to latch onto - in Dorsey's words a "soulless baromater".

finally, Aussie - that was the script of my good friend's personalized Ontario automobile licence plate, which he turned into the M of Trans. before immigrating to Australia a few months ago (Mystery Bay) - I appreciate your post about GIX which I have been watching for several months and wished I'd bought 50% ago...I noticed it traded @$1.75 within the past few days, being the price at which Pinetree Capital added 1000's more shares on its 3rd tranche(at least) of buying. I respect your (and Kaimu's ) endorsement and hope to get some; though I'm feeling very skittish today (tho' happy to report that I parted with Northern Dynasty shares today at $16.50, as I don't wish to wait 'til 2015 for operating mine cash flow and a shareholder enriching takeover is now unlikely).

regards

joey

Posted by: joey [TypeKey Profile Page] at August 1, 2007 5:04 PM [link]

JogyP,
I've been long Gammon since reading the BMO Gold Report linked on this site many weeks ago (and bought some more today). Like you, I've got all that I can carry now. It hurts to have a paper loss but, GRS is a tangible producer with decent future projections. I think the drop today was mainly due to dissappointment with the Kinross report (escalating costs) and concern that the GRS report due August 9 could be weaker than expected.

Posted by: Fred [TypeKey Profile Page] at August 1, 2007 5:12 PM [link]

Bill:
a great link...
a wilted thanks, tho', as my eyes are glazing over at yet another piece to check out and periodically consider...
my next sacrifice may have to be drinking, so that alcohol induced stupefaction will not detract from my market education...
tomorrow, tho' time now for cranberry generic..

regards
joey

Posted by: joey [TypeKey Profile Page] at August 1, 2007 5:16 PM [link]

Barrick does EPS of .46 vs street estimate of .42. good leverage. Copper cash cost of .77. Nice results.

Posted by: bc101 [TypeKey Profile Page] at August 1, 2007 5:32 PM [link]

Joey, No worries mate,

It's hard to know whether to get into GIX.V now or wait a while longer.

The daily charts do show a positive divergence on the MACD and increasing 22 EMA which is very bullish. The weekly charts however are still bearish. Is the dsily chart showing us a turning point for the weekly to higher prices?

I also note that they just put out positive press release today with further trenching results. Not earth shattering results, but it does show consistency of results and an extension of the boundary of this orebody by another couple of hundred metres.

In the past the trenching has been a good indicator of mineralisation as determined by follow up drilling. Read the Kaiser report to see why I think they will continue the trench sampling over the next while to understand the orebody while they are concentrating their drilling in certain areas for resource definition drilling rather than resource expansion drilling.


Posted by: Aussieontop [TypeKey Profile Page] at August 1, 2007 5:35 PM [link]

Aussie: yes, thanks. I appreciate your experience - informed commentary about the press release.

another theme, about the chart to which you refer...
Aussie, Bill, Kaimu, lurking technicians:
this is not a GIX specific question; but GIX offers an example:
30 day price history:
http://investdb.theglobeandmail.com/invest/investSQL/gx.price_history?pi_symbol=GIX-X
average trading volume is 190,000 shares so less than $400,000 daily.
help, please? how do charts facilitate buy/sell decisions for a stock such as this? I remember Bill's post from a few months ago, which I translated to mean that the price action is helpful to discern 'promotion'...

Input anyone? big ears listening here...

regards
joey

Posted by: joey [TypeKey Profile Page] at August 1, 2007 6:01 PM [link]

GRS has missed a bunch of production targets and replaced their management team, including the CEO. It is still uncertain whether new management can reach old managements agressive targets. Until progress is made the stock will flounder. Seems like a great pick for bottom feeders though. I don't remember the specific details since I read about it a month ago.

Posted by: moab [TypeKey Profile Page] at August 1, 2007 6:01 PM [link]

I have to admit I missed all the excitement. I was at the park with the girls digging holes in this enormous sandpile they discovered. They are attempting to dig all the way to China I think. I promised to bring them back tomorrow.

When I came back -- Viola!-- one of the most curious charts I have ever seen. Make that two in a row! Yesterday we have a 280 point turn; today 220! Not exactly normal behavior.

Thanks for the kind words. I will probably not do as much intra-day. I am not really much of a daytrader and,like I said, I can't even follow what most of you are doing.

So I will have to dig to see what that little spike was all about.

Posted by: MarkM [TypeKey Profile Page] at August 1, 2007 6:27 PM [link]

http://www.ft.com/cms/s/46fe1d80-4063-11dc-9d0c-0000779fd2ac.html

Key sentence:

"Concerns about a lasting credit crunch are leading to expectations that central banks will have to step in to ease the sudden lack of liquidity."

Posted by: bbcmoney [TypeKey Profile Page] at August 1, 2007 6:36 PM [link]

Worth consideration for those with longer time frame:

Insider Buy:Sell as tracked by Insiderscore.com hit the highest level since 8/2004 this week (they issue these numbers weekly on Wed). Keep in mind that insiders are not traders, they are value buyers with long time frames.

COT data continues to show commercials at multi year highs on long exposure. Specs at multi year lows on long exposure.

It is not uncommon that when internals are at multi year lows (by many measurements)... that smart money takes advantage of stocks in their 'accumulation zone' while shorter term traders step aside.

What happened to that Peter fellow anyway?

Posted by: Namkcots [TypeKey Profile Page] at August 1, 2007 6:40 PM [link]

Today's 30 minute rally was the 6th biggest 30 minute rally ever for the DOW.
According to a guest on Bloomberg's "taking stock", it was caused by a large number of buy orders for the Blue chip stocks in the last 20 minutes which created an order inbalance which the specialists could not handle.

Posted by: JogyP [TypeKey Profile Page] at August 1, 2007 7:16 PM [link]

Concur it was buying of the blue chips and nothing else. The rest of the market was being distributed all day long.

NYSE Bullish % --DOWN

NYSE Summation Index---DOWN

NYSE New 52 Week Lows --UP

NYSE Net Highs-Lows ----DOWN

So anything that wasn't big and strong was not getting any love. Very similar to the spikes that were producing the record high closes a little while ago.

So... what does it mean? Are the strong hands scooping up the big caps and distributing the crap underneath? If so, who are they selling it to since Joe and Jane are not in this market? Or was there just a bunch of new monthly money to invest and 3:30pm just provided the best point of the day to do it?

Posted by: MarkM [TypeKey Profile Page] at August 1, 2007 7:45 PM [link]

craig-probably a good thing i left for lunch around 1230 (kid you not) =330pm EDT, or MU would have changed into a day trade LOL....

SOHU up modestly post-earnings-hoping it pops tomorrow after an overnight rally in Shanghai...

holding OIH/KRY/short-term position in BMD/SLW overnight...sold most of the AHM after hours at 1.52/1.53...keeping some on the table in the event GS comes up with a plan tomorrow....

Posted by: 2nd_ave [TypeKey Profile Page] at August 1, 2007 7:49 PM [link]

Hi,
Big thanks to Bill Cara and MarkM.
Although, I should of sold more on the upward movement still was able to reduce my position at a plus.
Questions? The sub-prime mess is obviously a lot bigger than a lot of the talking heads will lead us to believe. With more finanical insitutions going under the equity markets do not stand much of a chance of rebounding. The fed may step in, however, with the enormity of this problem will the fed or HB&B be able to contain things. In addition, when the equity markets sell off is this not a short term boost to the USD, since most equity when sold in US will be converted to dollars? Thus, where does this leave Gold?
TIA

Posted by: indptrader [TypeKey Profile Page] at August 1, 2007 8:03 PM [link]

MarkM,

I scan this blog and only read 3-4 reader's comments. BillC, Moab, Kaimu, and you.

I hate reading that this blog keeps you away from your daughters,
but until Bill gets settled, we need your daily input.

with guilt and appreciation,

Sarah-Hadassah

Posted by: SH [TypeKey Profile Page] at August 1, 2007 8:41 PM [link]

News:
3 dead as Mississippi River bridge falls amid rush hour in Minneapolis
http://www.cnn.com/2007/US/08/01/bridge.collapse/index.html

My nephew had just passed through the bridge a few minutes before the collapse. Scary!

Posted by: JogyP [TypeKey Profile Page] at August 1, 2007 9:51 PM [link]

jogyp-the photos are reminiscent of those of the Bay Bridge and Cypress Overpass following the Loma Prieta...close call for your nephew, glad to hear he's OK...do they know what caused it?

Posted by: 2nd_ave [TypeKey Profile Page] at August 1, 2007 10:50 PM [link]

Shanghai Composite back over 4400...this thing just won't stop...will not be surprised to wake up to a new high...

Posted by: 2nd_ave [TypeKey Profile Page] at August 1, 2007 11:04 PM [link]

ALOHA !!

Well, I just got back from Hilo ... grocery shopping and such and while I was in KTA I ran into an old friend of mine who was a very close friend to my Uncle, Geoffrey Beene. She is an authority on Taisho era Japanese antiques and has written several books and also buys and sells for museums worldwide. She is amazed at how much fish has gone up and roe(fish eggs)and said that China food products even in Japan have deteriorated in quality and are being avoided. Even the fish imported from China is now replaced with Japanese and costs twice as much. It got me thinking on how dependant the entire world is on Chinese exports, even fish. Back in the 1970's when I was in college at the University Of Western Australia in Perth I used to go down to the port of Fremantle and watch the Japanese fishermen chum the waters with fish debris. They always had big shark jaws hanging up to dry. The Japanese and Chinese eat every part of a fish including the fin ... sharkfin soup ... is very popular. What's with the Japanese fishing fleets ... have they given up and let the Chinese take over because they can't compete? The Japanese fishing fleets were amoung the biggest in the world at one time. The latest bad press for Chinese industry was the pet food scare here in the USA. I then read a report that said the Chinese quality control is riffe with bribes and it is causing severe reduction in quality to a point that Chinese products are being rejected no matter how cheap they are. The Chinese Minister of Food and Drugs, the equivalent of our FDA was executed recently for taking bribes. Imagine if we executed all the politicians and public service employees who got caught taking bribes! I doubt we'd have any left after a year or two!!!

Link: http://news.yahoo.com/s/afp/20070710/wl_afp/chinapolitics

I recall way back in the 1960's that Japan had a giant PR problem regarding the quality of their exports. The stamp "MADE IN JAPAN" was synonymous with poor quality back then. My how things have changed! Naturally I am sure China, facing the same PR now, will turn things around as well in time. Their future depends on it!

Posted by: kaimu [TypeKey Profile Page] at August 2, 2007 12:36 AM [link]

The Nikkei has slip another 193 points and looks like it will close at 16677. I wonder if this recent market sell off will be contained.

Posted by: indptrader [TypeKey Profile Page] at August 2, 2007 1:03 AM [link]

Have a look at SWC. This is one extremely oversold stock, poised for a strong rebounce and post earnings rally. SWC is the only US based platinum group metals producer.

SWC will release Q2 quarterly earnings on monday, Aug. 6th. My estimate says 27.9 cents per share profit. That's huge for SWC which now stands at $9 a share.

So watch it out!
http://messages.finance.yahoo.com/Stocks_%28A_to_Z%29/Stocks_S/threadview?m=te&bn=17484&tid=22808&mid=22808&tof=1&frt=2#22808

Posted by: JJ2000426 [TypeKey Profile Page] at August 2, 2007 1:09 AM [link]

Amazingly, the Nikkei has recovered most of it losses.

Posted by: indptrader [TypeKey Profile Page] at August 2, 2007 1:25 AM [link]

JJ2000426 - How about PAL (north american palladium)? Isn't that another US based platinum group metals producer?

Posted by: Jock [TypeKey Profile Page] at August 2, 2007 1:50 AM [link]

ALOHA !!

Aussieontop ... G'day mate! Yep, I'm on board the GIX train!!! Read all the reports already. I still don't like the agreement with SSRI, but it seems they may negotiate their way around it, besides they're in for 50% no matter what happens. Quartermainne is sharp and I have to follow the people tree on that one!


ECU SILVER AND PMI GOLD UPDATE

ECU SILVER
Also ECU SILVER-ECU.V/ECUXF is very close to AZ. I would also buy ECU on dips. If they don't end up with at least a 500mil Ag and 4mil Au reserves on their 43-101 I'll eat poi!!! The Au saga ... With two seperate stockworks grading 2.4 to 10g/tAu as well as two major minerilzed skarns grading 18.6 g/t Au running over 4mil Au ounces, already 800,000 Au ounce 43-101 on every 100mil Ag ounces. This is only Santa Juana not including San Mateo and Chicago. Even though the name only has "SILVER" there is also gold!

PMI GOLD
I spoke with the CEO of PMI GOLD-PMV.V/PMVGF yesterday and he told me that he just got back from Europe and they're still cutting core so the final assays won't be in until Sept 1. He also told me an analyst report is coming out soon with a +$1CDN target. Perhaps someone(not me)got a preview of the report today ... up some 9% on better than 400k volume. He also metioned they are expecting to add to their already large land package in the Ashanti/Asarkrangwa gold belts in Ghana. As I have reported recently I have participated in the latest PMI GOLD Private Placement.

Posted by: kaimu [TypeKey Profile Page] at August 2, 2007 2:03 AM [link]

Posted by: Ron [TypeKey Profile Page] at August 2, 2007 6:52 AM [link]

Well, THIS would explain the odd trading! From Bloomberg:


`Fat Finger'

The Dow average erased a 79-point drop in the U.S. yesterday spurred by concern mortgage losses are spreading after Bear Stearns Cos. suspended withdrawals from a hedge fund. The Standard & Poor's 500 Index climbed after falling below its 200- day moving average for the first time in a year.

Some traders said the late rally may have been triggered by an erroneous order to sell futures in the S&P 500 that later needed to be undone. ``We've heard the rumor that there was a fat finger trade on the S&P futures market last night,'' said Simon Carter, who helps oversee $3 billion as head of North American equities at Aegon Asset Management in Edinburgh.

Jeremy Hughes, a spokesman for the Chicago Mercantile Exchange in London, declined to comment. A person who answered a call to the Chicago office, where the futures trade, wouldn't comment or identify himself."

Full story:
http://www.bloomberg.com/apps/news?pid=20601087&sid=ayF8i5Vy1DIg&refer=home

Makes sense to me. So much for the "bargain hunting" and "value" BS that was floated yesterday afternoon by the pundits. But it is what it is: a 150 point rise in the Indices while they were strongly diverging from the braoder market. Now, can the bulls take that sand castle and pass it off as the Taj Mahal? We'll see.

I won't be around much today. I am spending most of it with the girls. And no "shark attack", that does not mean I will be out chasing skirt.

Posted by: MarkM [TypeKey Profile Page] at August 2, 2007 7:13 AM [link]

Enjoy the time with your kids while they are young MarkM - it goes so fast and you'll never get that time back. Mine are all teenagers now and I have lots of time to spend on the markets (lol).

Posted by: bb [TypeKey Profile Page] at August 2, 2007 8:06 AM [link]

Looking at the closing ramp on the BKX and especially NLY... makes me wonder if the bankrupcies getting closer with homebuilders has traders thinking the fed will be forced to provide some type of relief.

It did make me feel better that Cramerica is talking 'preserving your $'... 'use rallies to sell financials'.

I would be in the camp that feels troughs take time to form... 4-8 weeks would get us in that Sept-Oct window when troughs are frequently seen. But the decline to yesterday's lows looks pretty typical for the summer dip in percentage terms.

Posted by: Namkcots [TypeKey Profile Page] at August 2, 2007 8:08 AM [link]

Typical summer dip in percentage terms? Is there a "season" for bankruptcies and credit freeze-ups? I wasn't aware of such.

Posted by: MarkM [TypeKey Profile Page] at August 2, 2007 8:23 AM [link]

AHM-sold the last of it pre-market at 1.75...

Posted by: 2nd_ave [TypeKey Profile Page] at August 2, 2007 8:25 AM [link]

MarkM,
From the market summary you could see the largest int'l bluechips, consumer staples, utilities and telecom were the target of whatever that was yesterday. It would seem that finger may cover several buttons at once.

The chips are large importers of foreign funds and very large and stable so that's easy enough to understand (if you think this wreck is over or are large enough to produce one).

The telecoms I have no idea of other than most people have to keep paying their phone bill in bad times or good. Same for consumer staples.

The utilities would seem to me to be a bond yield replacement at the right price. The Utes pay good dividends so that would appear to be the motivation there.

If this is the case then shouldn't we be watching Bill's retail list (and that pesky S&P 200 dma) but these sectors especially, as they may be where we see institutional money flowing into the market if and when that happens?

It sure seems like alot of $ going into utilties and the defensive sectors.

Posted by: Craig [TypeKey Profile Page] at August 2, 2007 8:35 AM [link]

MarkM - Your commentary always helps me look at the market in a more structured mode. I was looking at the bullish indictors from stock charts and I thought this chart was interesting. I get the feeling we are not in Kansas anymore..

Miggs

http://stockcharts.com/h-sc/ui?s=$BPINDU&p=M&b=5&g=0&id=p28163515269

Posted by: Miggs [TypeKey Profile Page] at August 2, 2007 8:40 AM [link]

Miggs, all the mkt internal charts look more or less like that! Watch out for falling houses!

Posted by: Craig [TypeKey Profile Page] at August 2, 2007 8:44 AM [link]

Craig-

Same with the rally the other day. Same kind of breadth too. So yes, if your focus is anywhere it should be on High Quality Blue Chips. That means stable revenues, consistent eranings growth. Low debt. If it has foreign exposure all the better.

With that, I am out the door.

Posted by: MarkM [TypeKey Profile Page] at August 2, 2007 8:45 AM [link]

2nd,Looks like your MU is now going long, eh?

You have been on quite a tear. Good job!

Posted by: Craig [TypeKey Profile Page] at August 2, 2007 8:49 AM [link]

There are are good reasons for most extremes. They come along and while we may peer over the brink, the apocalypse is USUALLY avoided (or at least delayed).

Perhaps this is the time we fall over the edge into the abyss? Anything is possible. Its a question of odds when placing one's bet I suppose.

Time frame is everything- short term bears have the edge, but bulls have the advantage long term.

Posted by: Namkcots [TypeKey Profile Page] at August 2, 2007 8:51 AM [link]

craig-streaks only last so long...probably time to push away from the table and get some perspective...cash still looks good..

Posted by: 2nd_ave [TypeKey Profile Page] at August 2, 2007 9:09 AM [link]

CMG's CEO was all over TV yesterday and they were downgraded today by morgan Keegan.

I wonder, will this one follow the Starbucks model Bill showed us yesterday?

Posted by: Craig [TypeKey Profile Page] at August 2, 2007 9:14 AM [link]

MKt Vane Bull % falls to 56 (7/31). The chart looks alot like that Miggs link- If we remain in a bull market these types of dips offer an opportunity... which usually occurs at least once a year.

If on the other hand we are going over the brink as in 2000-2002... plenty of room to fall.

Posted by: Namkcots [TypeKey Profile Page] at August 2, 2007 9:28 AM [link]

LEND...down another 29%...

Posted by: 2nd_ave [TypeKey Profile Page] at August 2, 2007 9:34 AM [link]

OIH/MU/SLW...out for now..

Posted by: 2nd_ave [TypeKey Profile Page] at August 2, 2007 9:39 AM [link]

MU/GME out for a dip.
FSLR short and loving it.

Good luck 2nd. Cash is our friend.

I have been making a habit of NOT watching CNBC, but I accident;y saw some of Fast Money last night and I was struck at the bearishness of the usually overly bullish Eric Bolling. A sign? Karma?

Posted by: Craig [TypeKey Profile Page] at August 2, 2007 9:57 AM [link]

Craig,
Did you make that FSLR trade from Bollings short sell comment? Would you share what amount of allocation you apply to this type of trade? I tend to shy away from high price stocks. Although I understand one is looking for a percentage move, I still have a mind block to stay away from them, long or short. I'm sure others would be interested in a comment.

Posted by: stktrader [TypeKey Profile Page] at August 2, 2007 10:20 AM [link]

BIll has a new post up.

Posted by: writersblock [TypeKey Profile Page] at August 2, 2007 10:22 AM [link]

Cleavage:
With all of the talk about Hillary and Nancy's "peek", I find it interesting that Erin has her blouse open as far as tv will allow. Maybe that is why she is beating Maria in the ratings. Maria got married, got happy and gained weight. Not that there is anything wrong with that!

Posted by: stktrader [TypeKey Profile Page] at August 2, 2007 10:24 AM [link]

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