With respect to the use of pedagogical, I have to admit my understanding and usage of the word were similar to johojo's. However, in the spirit of equanimity, one must check the facts to allow that another's point of view may have some merit. I have consulted Webster's New Universal Unabridged Dictionary and find that omphalos perhaps is relying on the more colored view of pedague: "as person who is pendantic, dogmatic and formal" (which johojo acknowledges). I suppose, too, that given that the definitions also speak of a 'child's teacher' that perhaps this variation of the definition downgrades the more ideal form of the word that some of us hold.

It appears to me, that a simple and polite notation of another definition and/or a clarification of one's special erudition or experience that connote a different understanding of the word and or its usage would have been appropriate. We did not get that (and certainly this community and johojo deserved it). That is poor form (and just plain bad manners).

Far more egregious than bad manners is bad punctuation (and I'm sure I've some examples here). Signing 'Pendantically Yours' shows a blatant disregard for proper punctuation (lower case 'y' is the correct form); accordingly this poor form (in addition to behavior) colors the credibility of omphalos' righteously held opinion that perhaps his/her understanding of 'pedagogue' is somehow superior to that of others.

I did glance around the two pages of the dictionary and found and interesting word: peculate. It means to steal or take dishonestly (embezzlement), particularly entrusted funds--making public money private.

Bill,
Despite the need to calm financial markets,
evidence, so far this year, points to a poor economic performance.
I have posted the YTD charts of Retail Sales, CPI, Wages and Employment.
There is enough evidence of a significant slowdown to justify rate cuts.

THE FED and THE FED-UP

A rate cut with a shoeshine and a smile
http://www.atimes.com/atimes/Global_Economy/II18Dj02.html

Either way, it could be an unkind cut
http://www.atimes.com/atimes/Global_Economy/II18Dj05.html

What an early-bird you are this am, Bill. This after what was at most a half of a vacation.

Here's a piece from Hussman on Fed rates.

http://www.hussmanfunds.com/wmc/wmc070917.htm

Thanks for sharing your "wealth".

US economy: R or no R?

One of the most perplexing and widely-debated investment issues is whether the US economy will experience the dreaded R (= recession) in the current cycle. This article features a number of interesting snippets to cast some light on the issue. Here is the link:

http://investmentpostcards.wordpress.com/2007/09/17/us-economy-r-or-no-r/

What do you guys make the odds?

Hoosier/Quentusrex

I resolved the problem I was having with the spreadsheet by saving and renaming the file.

I also noticed that when I first openned the file, and while it was updating, it had the #xxxxx in all cells. After it finished updating it returned to the normal config.

However, I noticed that the following tickers still have "#N/A" for monthly RSI.

CHA
GOL
GOOG
IBKR
OXPS
SLW
TCK
TGP
TS

tkx for the help.

Dab

NORTHERN ROCK ROLLS OVER, PLAYS DEAD

If Uncle Ben needs any more excuses, he'll have 'em tomorrow when LEH drops the bomb. Say hello to $740 gold.

I don't know if we have any PGH holders, but they lowered their div by 10%. Those with this co in their accounts may want to keep an eye on it.

I mentioned DEEP a week or so ago. An article by Dallas news titled Rig owners leave gulf for longer-term deals could be what’s causing this stock to be so heavy as the majority of their business is in the Gulf.

Full article is here for those interested.

http://www.dallasnews.com/sharedcontent/dws/bus/stories/091707dnbusgulfdrilling.2a5a40d.html

I see Bloomberg's Caroline Baum agrees with my take on Alan Greenspan, although she doesn't use my colorful language.

I find it interesting that he thinks he must comment on the economy in order to "do his job".

When did doing his current job at Pimco involve public statements on economic issues? The guy is a crackpot. He is certainly entitled to such statements, but he should expect to see vigorous responses to his seemingly unwanted (and unneeded) comments now that he is not a public official. His lack of understanding this issue goes even further in supporting my "stupid" diagnosis.

I bought GSS this morning at $3.5475

HOV-exiting at 11.50

shark-until tuesday, still think the shorts are more at risk than longs....pressing the long side until close today...plan is to be out by EOD

At any rate, Ron put up a pretty darn good post.

2nd ave,,,,you have any thoughts on NFI(Novastar fin.)

MU-adding at 10.85...

Re etymology of pedagogical

johojo, omphalos and Leisa,

Funny how word usage differs, or eventually comes to differ. Coming from the place where the word originated (Greece) I can affirm that I immediately read johojo's note as the highest form of appraisal, one of attributing higher motives, morals and 'ethos' (ethics/values) to the 'paedagogos'(roughly meaning educator), elements without which 'paedia' (roughly meaning education, with emphasis on accompanying high moral standards, irrespectively of the specific subject taught at hand) would be impossible.

Omphalos - I guess you know already, but your nickname is (among other things) the mythical center of the ancient Greek world, at Delphi. I understand why you jumped the gun given your interpretation of johojo's sentence, but at least to this native speaker of the original tongue his comment was only the highest and sincerest form of compliment.

This what happens when white ends up somehow meaning black, or the other way around. Now where's Kaimu to comment on the risks of arbitrary systems of reference, monetary or not, that we grow up considering universal, albeit subjectively? :-)

NFI- dab, over 90% of the float is short? wow, i'm taking a (long) position just for the h--- of it...

NFI- dab, over 90% of the float is short? wow, i'm taking a (long) position just for the h--- of it...

Re Oil and Gold Prices,

Thanks Bill and Shark Attack for your comments yesterday on why gold and oil prices could well move in opposite directions over the coming period.

Bill, I greatly respect the work you are doing here and your knowledge of the market. That is why I'd like to drill into this a bit more. I am a long time holder of many energy companies with substantial gains to protect and my plan was to hold onto these until will saw a run-up in the valuations of these companies like in the early 80's or early 90's and that would be my cue to sell. Do you think we won't see that final run-up in energy equity prices that I am looking for or is your call more of a trading call that would see a pullback now and the opportunity to get in at lower prices for a final run?

Appreciate your comments.

I'm long MU, but the charts don't look good short term. But 2nd, you've been more right than I have on these things lately.

I shorted BSC this morning. The chart is breaking down. I traded the negative divergence on the hourly and what I see as the trade off between poor earnings against the anticipated .25 cut by the Fed. I'm targeting a retest of the August lows.

All the froufrou over 'pedagogical?

Has Greenspan learned how to think and communicate clearly under the incentive of book royalties?

Frankly, to quote the late Speaker John McCormack, I hold him in 'minimal high regard'.

Ron

LOL! You're too nice Ron and so was Mr. McCormack. He appears to be communicating clearly that he is a self admitted hack. The royalties must be substantial enough to outweigh such admissions.

One utterance I find interesting...how he answers charges of being a social climber. He claims all people seek approval and this approval is expressed as promotion and social climbing. My question is: Who's approval?

Those with wealth, power and influence enough to appoint the Fed, or THE PEOPLE?

I think we have that answer.

Results from the poll last week:

150 votes received.

Fed rates:

60% said rates will drop 0.25%
24% said rates will stay the same
12% said rates will drop 0.50%
2% said the rates will go up

Gold price:

50% $725
18% $750
13% $700
5% $675
3% $800 or >
3% $650
2% $775
0.7% $625
0.7% $600 or <

Full results are at the same site (http://stats2008.googlepages.com/poll), plus maps showing where in the world the votes came from. The Cara community is truly global.

Many thanks to all who kindly participated.

n2son re your short on BSC:

I originally intended to let those strike 95 Sept puts I sold in the August swoon expire Friday/Saturday; however with the FOMC and BSC earnings due Thursday, it seemed more prudent to take the 93% profit this a.m. Not interested in having BSC shares put to me at this point.

I usually do not comment here, I just try to take in the vast amount of information from all the group.
So, speaking of energy stocks, take a look at CLL.

http://www.connacheroil.com/

I think Canadian oil sands is where the rest of the world will come to rely on a stable flow of oil from a politically stable country. This company has it all- good management, an oil refinery (Montana Refining Company), a large acreage of oil sands leases and natural gas.
My thinking is....wait until all those rickshaws get traded in for cars, the demand for oil will will be great indeed.
I am invested long in CLL so I am biased!!

Tim

Si02

thx for sharing . . . like the maps . . can see Kaimu's vote, Craig up in the NW and even one day when maybe the "Fly" voted from China.

Greenspan makes a footnote to his Iraq war for oil comment. He made the case to the WH for going to war over oil not the other way around, which is the way it is being interpreted by MSM and blogosphere. Not that I care or even want to debate something that has already happened.

"I was not saying that that's the administration's motive," Greenspan said in an interview Saturday, "I'm just saying that if somebody asked me, 'Are we fortunate in taking out Saddam?' I would say it was essential."

There's really no excuse for my trolling last night and I'm sorry. I had a hair up my a$$ and feel ashamed for taking it out on Johojo. Next time I'll stick to market commentary.

Case, thanks for the lesson in Greek. As I've amply demonstrated, a little knowledge is a dangerous thing: I once thought a pedophile was someone with a foot fetish.

Thanks Bill, appreciate that.

I saw you were posting last night at 11:40, then had the Monday morning report out by 6:35, so can't do anything about the 48 hour days, but at least you must be able to get by on very little sleep!

Here's a little more on my thinking.

If you look at the valuations of your average E&P company, they are currently trading at a P/CF which is about have of their proven RLI. For example, Talisman Energy - RLI 9.1 years, P/CF 4.8; Devon Energy RLI 10.5 years, P/CF 5.5.

If you assume constant oil prices, and do a PV calc of just their proven RLI using 10% interest, these companies are pretty much all trading at about a 15% discount to just the cash which could be generated just from proven reserves.

I think that before the current bull run in oil and oil companies is over, that these companies would be trading at a premium to there reserve value, based on the fact that the value of these reserves will go up over time due to a lower dollar and the fact that is getting more and more difficult for companies to find oil.

I was playing around last week with a script I wrote to process Yahoo Finance data, and I ended up setting it up to spit the data out onto a webpage. Right now I have it showing the daily/weekly/monthly RSI-7 for the Cara 100 in a sortable/filterable table, and you can click on the tickers for graphs. Note that it doesn't automatically update, and I haven't decided if I am going to update it on a daily basis anyway. I believe it is currently using Friday's close data, but I know what's up there isn't the absolute last run I did, so who knows?

Anyway, this is probably less useful than the RSI spreadsheet, and not much more useful than the RSI values that Bill posts every day, but I thought I'd pass it on and see if there is anything someone would want out of it. I figure if nothing else, this can be used by anyone, whereas the RSI spreadsheet runs on my work computer, but not on my home one (since I run linux at home).

http://rsi.korvus.net/

Peter Shiff makes the case for the dollar getting halved from here and the global boom expanding at the US consumers expense. Do my children really have so little to look forward too? I mine as well pack up the family and move to the Pacific rim.

http://www.kitco.com/ind/Schiff/sep142007.html

There were several votes from islands around the world, and actually two votes each from Hawaii and the Bahamas. Kaimu and Bill are in good company.

Is anyone willing to share any particular strategy for tomorrow? I am holding both IWM Calls and Puts, expecting to have fun whichever way it goes until Friday, perhaps a roller coaster. Or maybe nothing will happen.

The fly in the ointment would be slowing global growth and accompanying lower demand, less demand leading to falling reserve valuations.

Interesting opposing calls today, with some calling for $45 oil and Gold man looking for $90.

That's some spread.

HOV - Those "expensive" Sep 10 calls (.60 last Thursday) are now trading @ $1.50 bid/$1.60 ask.

omphalos, it's a mark of good character to own up to one's mistakes.

I also appreciate your positive contributions to this discussion.

"I once thought a pedophile was someone with a foot fetish." A healthy sense of humor and self-deprecation are the most noble of human qualities--You've amply displayed those in your post, omphalos.

stupid stock trick (akin to Letterman's stupid pet tricks): I shorted Deere today--very stupid.

Anyone watching the oils? Iran war talk is sending the PPB higher.

OT: on my drive to work this a.m. on the main road (I-580) through ultra-liberal Berkely I saw a large banner for Ron Paul. That says to me his appeal extends beyond fiscal conservatives. If only he would acknowledge the thread of global warming -- something that should be a serious issue for everyone -- then I'd give him serious consideration.

ALOHA !!

PMI GOLD-PMV.V/PMVGF.PK
UP 16% today at $0.28C

Latest news release out today shows that Nevsun is now the largest shareholder in PMI GOLD and that PMI now owns the Kubi gold deposit with a 43-101 showing close to 920,000 gold ounces with over 604,000 ounces in the indicated category.

This does not include my prior estimation of 3 million ounces so now we are looking closer to 4 mil ounces of gold in past procducing mines on one of the most prolific gold belts in the World.

Link: http://tinyurl.com/296rf3

Douglas R. MacQuarrie, President and CEO commented: "The Kubi NI43-101 compliant Mineral Resource ounces in combination with the large underground exploration target at our past producing Obotan project, the long term upward trending gold market, and Ghana as a destination of choice for mining investment, should over the next few years provide the backdrop for a new gold producer in Ghana. Previous metallurgical tests indicate that the gold mineralization at both Kubi and Obotan are non-refractory, free-milling, and have very high recoveries using conventional circuits. PMI Gold believes that a near term production decision will be possible. Significant further capital will be required to complete the above program, to be raised through a combination of equity and project financing, and which will be dependant on further positive engineering reports. A full pre-feasibility study on bringing Kubi into production will be commissioned as soon as possible. PMI Gold looks forward to moving these projects ahead – a win win for Ghana and the Nevsun and PMI Gold shareholders. We look forward to having Nevsun as our single largest shareholder.”

Anyone watching the oils? Iran war talk is sending the PPB higher.

OT: on my drive to work this a.m. on the main road (I-580) through ultra-liberal Berkely I saw a large banner for Ron Paul. That says to me his appeal extends beyond fiscal conservatives. If only he would acknowledge the thread of global warming -- something that should be a serious issue for everyone -- then I'd give him serious consideration.

bb:

I am interested in your thesis. Please, will you help this neophyte understand?

Is RLI an acronym for 'reserve life'?

And, does 'reserve life' mean how many years the proven reserves will last assuming annual production is unchanged from the current/most recent production levels?

tx.
regards

joey

Anyone watching the oils? Iran war talk is sending the PPB higher.

OT: on my drive to work this a.m. on the main road (I-580) through ultra-liberal Berkely I saw a large banner for Ron Paul. That says to me his appeal extends beyond fiscal conservatives. If only he would acknowledge the thread of global warming -- something that should be a serious issue for everyone -- then I'd give him serious consideration.

OT?
Any fans of sci fi out there? Heroes is network.My wife and I are catching up on it by dvd. The usual good vs evil or is this more aimed at topical events? It's popularity may mark a shift in sentiment held by even the more ardent supporters of Bush. Love your country, always mistrust your government.

GDX: is it going to continue its spike or is this resistance? Personally, going to feel thankful that I protected some profit and will wait for another buying opp, but the buzz and chart of gdm:gld has me thinking my buying is done...the next sell off will be part of the bear.

BB's question about oil and gold is interesting. Could the price of oil moderate slightly, but only slightly due to geopolitical manipulation while oil service stocks come down harder? Oil and transports used to track too until growth became suspect. Does this all get back to the issue discussed earlier about whether or not global demand for energy will trump the diminished american consumer?

Are there two Bill Cara's? Where does he get the energy to play, write, and work? So many questions.

Geckojb,
Not that his predictions are very accurate, but Greenspan is calling for the Euro to become the world reserve currency.

If Schiff is correct that may well come to pass.

#2son, I think it's interesting how Ron Paul and Dennis Kucinich have similar platforms. What is the world coming to? We may have gone full circle enough that the extremes are meeting in the middle.

Korvus,

This note may not be of interest to many within this blog ( and by the way it is the only blog that I follow on a daily basis; it is simply the GREATEST)
but if you run Linux, the the OpenOffice.org website will be of interest to you. They provide an Excel spreadsheet equivalent. I cannot say that I have used it, but I can state that their PowerPoint (slideshow) program works. Hope this helps.

"GDX: is it going to continue its spike or is this resistance? Personally, going to feel thankful that I protected some profit and will wait for another buying opp, but the buzz and chart of gdm:gld has me thinking my buying is done...the next sell off will be part of the bear."

jasper- agree completely...

a question for Bill or anyone else who wishes to elucidate:

In the april 14 WIR, Bill wrote:

"I happen to think that the Dow Transports moved higher as and when Warren Buffett’s Berkshire (BRK) made a major acquisition in the railroad industry (10.9 pct of Burlington Northern Santa Fe BNI), and traders hopped aboard other trains and transport.

For short-term traders (ie, unlike Buffett), I’d be careful with BNI here. The average price on a volume basis is about 78 in the past ten months, but the price has zoomed in the past month from 77 to 92 (closing Friday at 90.69)."

My question: where does Bill get "the average price on a volume basis is about 78..."?

Was this an eyeball estimate of a 'volume by price overlay' as in the following weekly chart for BNI? Or is there an indicator?

http://stockcharts.com/h-sc/ui

regards

joey

Australian TV reports on the US subprime mess.
http://tinyurl.com/3y9ub8

BNI chart again...

http://stockcharts.com/h-sc/ui?s=BNI&p=W&yr=1&mn=0&dy=0&id=p55865883126

sry. with my undeveloped computer skills, I cut and paste the URL of the stockcharts page...didn't work...

joey

"Are there two Bill Cara's? Where does he get the energy to play, write, and work? So many questions."

i think the guy has fun doing all of the above, so it's all play..

"HOV - Those "expensive" Sep 10 calls (.60 last Thursday) are now trading @ $1.50 bid/$1.60 ask."

OG, is that comment for me? Ok, thank you, I will comment.

Blogs are nice... Actually OG said last Thursday:
"HOV - Sep 10 Calls (currently .65 bid/.70 ask) a limited risk way to play Tuesday's Fed action."
http://www.billcara.com/archives/2007/09/caras_commentary_community_cha_28.html
So 1.50 - 0.70 = 0.80 (buying at ask and selling at bid like we have to)

I still maintain my stance that those calls were expensive. And I agree with your numerical analysis last Thurs about the total cost of at-the-money vs deep in-the-money calls which you provided. But your analysis and strategy was based on what the FED would due tomorrow. It seemed your view (since your example was that the stock might go to $8) was there there would be a pop or a crash of HOV. If you were expecting a crash or pop, then is it seems like a straddle (some calls and some puts) might be a better strategy, granted costlier.

As with any investment decision, it really depends on ones view of the market, the stock and your tolerance for risk. I didn't say, but I am (was) mildly bullish on HOV, which is why I was suggesting the deep calls with a little more time. Personally I don't think the FED news is going to do anything to HOV - the interest rate cut is all 'factored in.' I also think the market will be disappointed (at least temporarily) no matter what the FED says.

I too have been in and out of HOV (successfully) with the stock and options a few times since HOV hit the accumulation zone a few months ago - each time it gets oversold I am in with a small position.

I also have the expectation that HOV (and many of the other builders and lenders) are going to experience a significant end-of-year tax loss effect (selling followed by buying in early 2008) not unlike GM at the end of 2005. Something I will be watching for.

OG, I know that you completely understand how options work, but just wanted to provide an alternative view and some discussion on the use of options for those here that do not...

TG

P.S. If you would have bought my deep ITM calls one could have made more (4.20-3.10=$1.10) since the delta of my deep calls was 0.85 (and is now 0.9) whereas your ATM calls was only 0.5 :)

PSS - Man, I hope I didn't make too many grammatical mistakes!

OldGoat -

Congrats on your successful pick. Yet I am not sure that it relates in a substantive way to the relative cost of the call option as of last Thursday. It looked expensive, but the stock moved in the right direction and in a sufficient fashion this time.

JML

2nd....so right, when it's fun it's effortless

Joey,

The Reserve Life Index (RLI) represents a static measure of the number of years it would take to produce our reserves at the current rate of production. The RLI does not account for reserve additions through exploration or acquistion activity. The RLI is calculated using the most current proven reserves data divided by the latest reported daily production (annualized).

So, if you take take a company's RLI (say 10 years), and then look at their previous 12 months cash flow, you could just multiple that cash flow amount by the 10 years to show how much cash the company would generate if they just pumped their oil and, 2 key assumptions, (1) Oil prices stayed the same and (2) Production costs stayed the same. You'd want to do a present value calc on this to include time cost of money of course to get a more accurate value.

You would think at the end of an oil boom that these companies would be trading at a premium to their values as investors tend to extrapolate a trend (like rising oil prices) farther into the future than is realistic. But when you still have the CEO of Exxon saying oil shouldn't be $45 per barrel and no major acquisitions going on, it makes me think that this run has a lot further to go on the upside.

TimG:
grammatical note - it's PPS (Post Post Script)

Cyder... Thanks, it's also "do tomorrow" and not "due tomorrow" lol

bb:
Another question on RLI - does it use raw reserves or recoverable reserves (takes a lot to squeeze out the last drop!)?

Leisa -

You scratched a itch I am fighting every day as we are getting to levels of momentum stupidity IMO. I may miss a short play here, but I plan to hold off for another few weeks or a boost $10 higher with PE over 20.

JML

USU- down 9% and looking interesting again...is there anyone following this company?

TimG - Thanks for your thoughful comments, in response to which I offer the following:

"...buying at ask and selling at bid like we have to" --In my experience, it ain't necessarily so. In fact, at the time I made my post, a trade had just taken place at the bid/ask midpoint.

I do in fact think the upward move in HOV on Friday, and again today, may well have been in anticipation of Tuesday's Fed action (as well as short covering and other factors).

Not trying to start (or perpetuate) an argument; just offering my perspective.

bb:

thank you. lucidly explained...

Given what I've heard and read, I believe that spiralling production costs and, more recently, lower natural gas prices have been the balls and chains for the Cdn oil and gas companies, with Cdn resources.

And, as with the spot price of gold, oil and natural gas is priced in $US; so Cdn producers will be taking a hit on the revenue. I doubt that even the big operators would have hedges that could have fully buffered the currency effect, given how quickly the US/Cdn $ differential changed. And the intermediates and juniors? And the oil and gas services? Awful, awful, awful...

Whining here, as I own a goodly cross section of these victims...

regards,

joey

2nd . . .FWIW, I use to follow USU more in the past . . . in and out successful long positions. . saw poor future fundamentals and left it in the spring. . . meant to revisit in June and short but it fell off the radar. . .

Recent news includes an outperform by Freidman Billings, but there's also pricing this week for issuance of another 18 million shares on or about 9/24. Has a tendency to overshoot both ways so opportunity is there.

more USU . . think the Monthly RSI7 will soon join the Weekly and Daily below 30

Regarding the subject of valuations in the oil sector, Kurt Wulff of www.mcdep.com provides some good stats on reserves,production,etc.

He covers Big oil through Canadian oil trusts.

Might be helpful to Cara investors.

2nd...USU is a good example of a commodity for which I wish there was a respectable etf index that tracks $gyx/industrial metal prices. It's below its 200dma. Lots of "despair" in the stock; would rather buy the index. Wow, what a great first half year position.

Anybody following this "potential war with Iran" news? That could really spike the gold price. The French foreign minister says that they must be prepared to go to war against Iran if Iran continues to enrich uranium. That's pretty tough talk coming from the French! Is there any credibility in these rumors? Do you think the market has already factored this possibility into the gold price?

ALOHA !!

accourant ... You would think so, but remember the London Subway bombings? The gold price went down that day. Everytime there is some sort of ominous news event or FED action or option expirations that would be positive for GOLD the PPT go into action prior to bring the POG down. I believe if there was going to be an attcak on Iran you would see POG go down a few days or week before the actual event happened.

todays Globe and Mail some high profile oil men
have a mmeting in Calgary , US National Petroleum Council projects energy demand to grow by 50% into 2030.....buy the pullbacks
http://www.theglobeandmail.com/servlet/story/RTGAM.20070917.wrmorgan17/BNStory/Business/columnists

Bill you may want to consider Aeromechanical Services tse:ama for your penny dredful list or small caps, your frien Hugh Cleland on Northernriver Funds seems to like it quite a bit. And the presentation says it can save ailines 100K per year per plane...seems saleable to me.

excuse all the spelling mistakes I didn't proof read.

kaimu,

If that is the case and the PPT are out to sell gold, do you also then think they will be out in force tomorrow trying to stem the tide?

I am still wondering if tomorrow will be a sell the news day for gold or a day of realization...

kn

NFI- dab, after-hours action taking it down to 6 and change...i'm going to play this one on the long side...let the shorts take it down at the open and watch for an entry...would be surprised if there is no upside spike leading into the Fed announcement....

Midnight Trader
6:37 p.m. 09/17/2007


Boston, Sep 17, 2007 (MidnightTrader via COMTEX) -- Novastar Financial (NFI): Stock recorded moderate downside pressure after coming off an after-hours halt, setting off on a steady descent from 7.42 to its evening low of 6.12. Buyers nibbled at the issue off the bottom, edging it up from 6.16 to a late high of 6.87. While buy momentum late tonight wasn't vigorous it was enough for us to consider NFI may have some legs to attempt to get back to 7. As a result, shorts may want to look for potential downside entry points in the 7.30 to 7.00 range, levels where some of the strongest negative liquidity was recorded early tonight.

Price: 6.89, Change: -1.35, Percent Change: -16.3

Regarding the energy service companies - these are a horrible business for being an income trust. Energy service is very cyclical and they make loads of money at the top and struggle to break even at the bottom. Putting them into income trusts was just a way for management to generate big payouts as their stocks would jump and for HB&B (Canada version) to generate big fees. Again, everybody won except the small investor.

What's interesting at this juncture is how the global, US based energy service companies are now the highest rated part of the energy business by the global brokerages, but the Canadian energy services companies (mainly domestic gas drillers) are the lowest rated part of the Canadian energy business by the Canadian brokerages.

The two best ways I see to play energy now are to either buy the companies who will help find and get the oil out of the ground in the difficult places where it is now being found. Companies with a strong team and good technology (like a SLB or a HAL) should do well at this. The second way is to buy E&P companies with long life reserves in politically safe environments like the Canadian Oil Sands companies and these should do well as the value of these reserves increase over time with higher oil prices or even stable oil prices and increased production. Companies like Suncor which are producing 260,000 barrels per day and are looking to expand to 380,000 barrels per day by 2013 with decades of reserves or Canadian Natural Resources who have 6 billion barrels of recoverable oil and the Horizon project working well with 230,000 barrels per day coming on stream in 2012.

Having said all this, I do own 2 energy service companies in Canada - AKT.A and ESN.UN. I think if you are careful here and go for well-managed companies, you can start buying energy services as they are all down substantially, and we will get a cold winter again (some year) and Natural Gas will go back up in price and these companies will be able to make a good return again.

Bill,
Enjoyed the pictures posted last week. Please remember to wear sunscreen.
Jim

"NovaStar Financial (NFI) said it will not proceed with plans to declare a common stock dividend, causing its status as a real estate investment trust to be terminated, retroactive to Jan. 1, 2006.

NovaStar said that it cannot create enough value through the issuance of preferred securities to satisfy the Real Estate Investment Trust distribution requirement because of a substantial decline in its market capitalization during recent months, combined with its inability to consummate a planned rights offering and demands on the company's liquidity."

One consequence of losing its REIT status is losing the its federal income tax status:

"The company has elected to be taxed as a real estate investment trust (REIT). As a REIT, the company is not subject to federal income tax to the extent that it distributes at least 90% of its taxable income to its shareholders."

Goldman calling for $85 oil for end 2007 and to average $85 for 2008 ending the year at $95.

Hope this call works out better than their $100 call in 2005 which pretty much marked the peak of that cycle.

a positive open tomorrow would be difficult to play...think a sharply negative open would allow anxiety about a rate cut or its size to dissipate a little and open a few opportunities on the long side...however, i would want to be completely out prior to the announcement, and then allow the actual annoucement + the initial reaction and counter-reaction(s) to inform trading decisions: whether to trade, which way, and position size...sometimes it's better to react than to anticipate...

npmg -

I actually use OpenOffice.org, but I'd be skeptical of it running Excel extensions and based on the SMF_Addin Yahoo Group, it looks like the extension is known to not work on OSX (using Excel), so that makes me extra skeptical. Sounds like it calls some external Windows DLL.

Anyway, I personally get more functionality with my script than the Excel spreadsheet (which I can run at work). It's just what I put on the webpage has a subset of what the script itself will do, so I'm not sure if that is useful to anyone.

Re: Agriculture ETF: MOO.

From Jeff Saut (Raymond James):

"Currently, I am particularly emphasizing agriculture and gold. Interestingly, soybeans rallied 6.6% last week, cotton was up 5.9%, and wheat improved by 2.7%. While my firm owns a number of the ag-based stocks, for those investors looking for new agricultural names the recently created Van Eck Vectors Agribusiness ETF (MOO) is a good approach to the agricultural sector... and I continue to invest accordingly. "

http://www.minyanville.com/articles/MOO-Fed-gold-soybeans-Northern+Rock/index/a/14121

Northvan: MOO=$gkx. The primary index is parabolic. Can you trust buying at this level? Would now be the time to find small caps companies with international exposure that help cultivate new land for agriculture. More food, requires more land. Just a thought. Like in the old gold rush days, don't look for the gold, sell the pick and ax. How I wish MOO was around when I trying to make DBA work for me.

Seamus mentioned a group of agri stocks some months ago....likely overbought then and now. This is even beyond my preference for buy high, sell higher.

Is 324 on the crb index going to start central banks selling gold?

Another positive for gold, but you have to wonder what these government banks are thinking when they are selling all year as gold is in the process of breaking out. Glad they're not manageing my money!

Spanish gold move boost for bullion

The Bank of Spain, the largest seller of gold this year under the central banks’ gold agreement, plans no more significant sales of the precious metal in a move that is likely to fuel further the recent surge in prices.

People familiar with the pact said Spain’s central bank had already achieved the bulk of its planned bullion disposals.

http://www.ft.com/cms/s/0/22f4ab90-6546-11dc-bf89-0000779fd2ac.html

NFI down over 11% at $7.28. 50 day MA at $12.75. Maybe it is worth looking at as a long play. Caveat: A little knowledge is a dangerous thing. And, that's what I have :-)

Bill, nice pictures of you & your wife. She looks like a very nice lady. Beautiful shots of the resort also.