Sentiment in financial markets took a turn for the worse during the past week, i.e. a "rush-to-safety" week as Bill has described it. This week promises to be a key week for financial markets.

I have just published my regular weekly article highlighting some memorable / thought-provoking quotes from market commentators during the past week, and briefly reviewing the week’s market action on the basis of economic statistics and a few performance charts.

Here is the link to the "words/pictures from the investment wise": http://tinyurl.com/2m8eml

Don Coxe Weekly Webcast:

http://tinyurl.com/yf9un2

Bill,

Just finished reading "Traders Gun & Money: Knowns & Unknowns in the Dazzling World of Derivatives" by Satyajit Das. Amazon has it.I would recommend it to the community. Das is one of the worlds foremost derivative experts, written countless academic tomes. This book is hilarious, it gives a fly on the wall perspective of how HB&B create, structure and market these things to an unsupecting financial community.Fabulous insights.I read it with your words about HB&B ringing in my ears. Don't know whether to laugh or cry.

Large cap banks further downgraded by CIBC

Some of the equities Bill listed in the WIR are looking a little green this AM. don't forget to "watch these like a hawk".

MSFT got a downgrade. Interesting. Will they ever hold a $30 handle again?

Gold would be a nice buy in the mid 700's wouldn't it?

2nd,
I'm looking at currency ETF's. I like the FXF Swiss Franc and I'll bet Seamus is liking the FXY these days. These may be easier and less restrictive then the currency CD's @ everbank.

Thanks for the Coxe link, sergio.

PMs pulling back in earnest early today. U.S. futures going positive. Curious beginning to what will be another "interesting" week.

BTW, the answer to last week's question: Who will be the next finance co. to announce big write-off's?

This AM's Bloomberg ticker...."Goldman held bigger share of level 3 assets than Citi and Merrill".

craig- i'll add FXF to the watchlist...
also looking at UUP for a ST move in the USD..

craig- reposting todd harrison's estimates of Level III assets:

http://tinyurl.com/2mzzvu

excerpt:

"If we look at the major institutions and divide their Level III assets by their equity capital base, we arrive at the following calculations:

Citigroup: Equity base: $128 billion, Level III: $135 billion. Ratio: 105%
Goldman: $39 billion, Level III: $72 billion. Ratio: 185%.
Morgan Stanley: $35 billion. Level III: $88 billion. Ratio: 251%.
Bear Stearns: $13 billion. Level III: $20 billion. Ratio: 154%.
Merrill Lynch: $42 billion. Level III: $16 billion. Ratio: 38%."

Craig, here is the full article about GS
http://tinyurl.com/33seho

2nd_ave, lets also include Level 2.
http://tinyurl.com/243utl (chart)

Thanks 2nd, I don't trust any of these clowns!

What are you doing with the ultras?
I still have a position in QID and SKF.

Are you thinking of taking any profits there on strength today and reloading or are you "long short"?

FXI looks to open down, so thinking about unloading half to all of my FXP and/or EEV-> 6-7% move is a pretty decent gain, no need to press it further at this point with the risk of a bounce lurking in the corner...how about you?

Monday Morning Quarterback: Containment Spreads to Contagion
Todd Harrison Nov 12, 2007 8:42 am

http://tinyurl.com/3davt3

Since prices are holding on QID and SKF in premkt I reset stops to lock in gains and will let them sort it out.

If the mkt takes off then I'll stop out and look for a reentry.

FXI was @175 this AM and then rose a bit from there so you're going through the same process....August low was 107 or so, but I don't think we go there instantly. You are still doing great compared to the Friday close.

Gold getting hammered, if it breaks $800, look out below to $750, where a very large Australian will be quietly waiting with a shovel a wheelbarrow and a large cheesy grin.

Sergio

Thanks for the Coxe link!

Since I'm just catching up on my weekend BillCara.com reading, I thought I'd answer this here:

-----
Korvus,

Just wanna say thanks for the great RSI Application you developed. One question about it : why is the trading price of securities from outside the US one day behind ?

Mark
-----

It's probably a limitation of Yahoo Finance. When the prices look old, go to http://finance.yahoo.com/q/hp?s= and see what the date of the most recent price is (or just get a quote on Yahoo Finance and click on Historical Prices for the same page). I've seen some problems with Canadian stocks there (some only have a few months of data -- not enough to calculate my RSI values). I'm going to look around and see if I can find any better sources of raw data. If anyone has suggestions, let me know. Yahoo Finance just seems to cover the most stocks, and does a pretty good job overall, but I could always make my code fall back to a different service for certain exchanges or if I can't get enough data from Yahoo.

I've gotten some good feedback on the new page, and hopefully I'll get around to making some fixes this week. First priorities are to clean up my zone calculation and make some performance improvements that I already have planned. I'll also try to update the Cara 100 list I have before the week is over.

craig- FXP exceeded my expectations->unloaded all of it at an average around 89, nice 11% gain ;)

Blackstone Group earnings call this morning...

www.blackstone.com

Interesting to see how the taxation issue is progressing... they managed to avoid paying most corporate taxes in the US so far.

http://tinyurl.com/2bp4js

Mulroney is a director of Blackstone.
http://tinyurl.com/2vhfjl

China has substantial holdings in Blackstone.
http://tinyurl.com/2e93q3

nice info on 2x ETFs:

http://www.dailyspeculations.com/wordpress/?p=2393

Well I took a screwing today.
Set my stop, SKF shot up to 100.50, reset my stop, it fell to 99, I tried to cancel and sell. My cancel order never was accepted. I tried everything, Scottrade didn't accept any input for anything. I got on the phone while I was losing $$.

My nice $580 profit fell to about $100 while I held on the phone to find out what the F was going on. Of course it clears while I'm on hold.....near the daily low....OOOOOHHHHH I'm so pissed.

At least it looks to be giving me a chance to reload lower, but WTF is with these electronic brokerages? They only seem to fail when it's NOT in my favor.

Any ETFC millionaires out there today? Nov 8 puts up to 3.80 from 0.15. Not me!

I always hate to try and trade a day when only 1/2 the players are at work...

With the bond market closed...My buy(short) orders are on hold...

I will play wait and see...

Gold was in backwardation this morning by ~$2, so we are probably going to see some support here. The gold basis has been a fairly normal $4 to very tight, meaning more chronic demand. That fellow who called $805 was spot-on.

If the Yen continues to appreciate against the $US, this will also be very supportive of the $US bullion price.

http://www.flickr.com/photo_zoom.gne?id=1978450058&size=o

http://www.flickr.com/photo_zoom.gne?id=1984368411&size=o

top juniors according to newsletter writer adrian day:
http://www.thestockadvisors.com/content/view/1614/33/

this is a good site for finding out newsletter picks, btw (although they are delayed). get the rss feed!

EEV- clearing the table at 82.15...
QID- taking 1/2 off at 41.35...

closing my etrade account now. what a bunch of crooks.

This is the first time in a while where, when I'm short, I've been able to look at a rally and think, NO WAY

I'm not falling for it.

STAYIN SHORT

This is the first time in a while where, when I'm short, I've been able to look at a rally and think, NO WAY

I'm not falling for it.

STAYIN SHORT

2nd_ave...

Remebering 1987 Sucess story......

The path of least resistance may be up, but I think the QID will find a ton of support in this 40.00 area and I feel it will press to 55.00-60.00 in short order...I am happy to hold the QID until then..

bg- in no way giving up the short side...had a 3/5 position in QID last friday, now at 3/10->plan is to be back to a full position sometime this week...FXI and EEM are just volatile indexes, so not feeling bad about trading the swings on FXP and EEV...

John Hussman is out with a recession call. Excerpts:

"...In recent months, I've repeatedly noted that while recession risks were gradually increasing, there was not sufficient evidence to expect an imminent economic downturn. Most economists still believe this. On Saturday, the consensus of economists surveyed by Blue Chip Economic Indicators indicated expectations that growth will be sluggish into next year, but that there will be no recession. Unfortunately, the economic consensus has never accurately anticipated a recession. For my part, the outlook has changed. I expect that a U.S. economic recession is immediately ahead...."

"...Few things in investing or economics are certain, but my impression is that current evidence moves recession risk from "possible" to "probable."

Full text here: http://www.hussmanfunds.com/wmc/wmc071112.htm

I take this to be a significant warning. Not sure if Mark M comments here anymore, but I think he'd agree.

"the economic consensus has never accurately anticipated a recession."

nothing wrong with a recession, right? sometimes it seems we feel entitled to having a good year every year...and if we don't, something's "wrong." we all have good days and bad days, and if we party too hard one night, we make up for it the following morning. life is full of cycles, and since the business cycle is determined by human beings, there's no exemption. it's been a heady 5 years made possible by booming real estate and credit expansion->now we go the other way->i would have to say "economic consensus" almost has to anticipate a recession?

Any 'Mercans looking at FXC? (Canadian dollar).
It's fallen 2.6% today.

Sorry my Canadian friends.......

Crisis warning chart at Now And Futures has had quite a run-up:

http://www.nowandfutures.com/images/predict_crisis_short_term_with_gold.png

Blackstone Group - BX - Tax legislation in Congress issue came up... comments from call.

BX is very focused on both sides of the aisle in Congress (Dems & Repubs) and neither sides can agree on legislation, both internally & externally. BX doesn't know what's going to happen, but they believe implementing this bill would limit entrepreneurial growth & capital spending in US.

However,
"They need tax revenues down there, and they are going to get it from somewhere."

BX said the models used by analysts are taking into account them paying corporate taxes in 5 years.

Isn't this similar to what happened up here in Canada with the Income Trust issue?

"I think the pull-down of prices going into the close on Friday was a set up for a rally attempt on Monday."

Bill,

I would never have seen this coming, given the weekend subprime news and Asian markets selloff, but have learned to trust your crystal ball.

Good call.

I can't help but sit in wonder at the gall Wall Street con-analysts display under any circumstances. Case in point this morning, Citigroup analyst Prashant Bhatia downgrades ETFC from Hold to Sell; he is suddenly concerned by the broker's real estate exposure and predicting a 15% chance of ultimate bankruptcy.

First, what stunning development did surprise him so much? ETFC exposed to mortgages?

Just remind me: who does he work for? Will he see the light as to the shaky ground onto which his desk is set and flee his own ship?

JML

Citigroup is up almost 5% today.

Looks like there's problems with Yahoo... getting Friday's info in the summary.

Thanks everyone for the discussions, they've been great.

I just wanted to pass this along... It's about time for a second one of these:

http://teaparty07.com/

SKF Players,

What is the reload number? Does the bank strength continue thru the day? Into tomorrow?

Enquiring minds want to know. :^)

Stockhouse.com (based in Canada) is a good source for both U.S. and Canadian stocks. I am not sure if it will provide raw data in bulk, though.

Jumble, I had a similar thought, i.e., who was getting the most heat last week? Citigroup. So now they come out with this knock on Etrade, perhaps to divert a little attention from their own bad book. But that's not to say Etrade doesn't have a problem.

I have a question about Goldman Sachs. Why is GS trading at their 50 Day when all of the other investment banks and brokerages are well below their 50 Day and most are at or below their 200 Day. Is it only because Goldman has their people everywhere or is there something else I don't know. If it's just a premium based on their exposure to CDO's or how they're still going to earn 24 bucks a share this year then I think they still have a huge crash ahead of them. The December or Jan 210 puts are looking pretty good. Let me know what you all think.

Rob.

Thanks everyone for the discussions, they've been great.

I just wanted to pass this along... It's about time for a second one of these:

http://teaparty07.com/

Hope you all saw Meredith Whitney from CIBC on Bloomberg.

This unwinding financial mess is going to snowball. She says her downgrade of the banks to sector underperform is based on CAPITAL concerns, not immediate write downs or earnings.
Write downs lead to credit quality ratings cuts, lower assets, leads to more write downs, more credit ratings cuts, and on and on.

I reloaded SKF on the way down to the intraday low and am a bit UW, but I'm going with this crisis. Remember the password.....

HELLO,

Anyone in UNG, or only me ???

TIA

Also I'm looking for an entry point in SDD. Any thoughts?

Holding my ABX puts!!! But KGC Jan calls taking a beating. got time so am okay.

cara100 SBUX approaching the rsi30 accumulation zone at 27.5

i'm in UNG around 38

Also holding UNG. As for gold, I have a straddle GG puts with KGC calls. The puts are up 4.5X, the calls are near zero, so will cash in and leave profits in play. In this kind of market this strategy may pay off.

Craig

What would be a good entry point for SKF?

UNG - Small position 39.03.

SBUX - 12 month target: Goldman 35, S&P 40, Argus 23.

Argus stated: We are downgrading Starbucks Corp. (NGS: SBUX) from BUY to HOLD. We believe
that Starbucks is facing challenges in the current macroeconomic environment and that the
company's large size will make future growth more difficult. We also believe that
Starbucks is seeing increased competition from both Dunkin Donuts and McDonald's, as
consumers 'trade down' to cheaper coffee, and note that same-store sales growth has been
at the lower end of management's oft-cited 3%-7% guidance range. Although the
company should benefit from the increased use of debit cards, expanded lunch menus, and
extended hours, we also expect rising dairy and coffee costs and higher store rents to limit
earnings growth in the near term.
While Starbucks benefits from unprecedented brand loyalty as well as from economies
of scale, we note that its plans to open 2600 stores next year could prove difficult given
heightened competition and slower consumer spending. At the same time, we expect to see
further international expansion in markets where initial results have been promising. In
particular, Starbucks has received a positive response to its stores in China and is now
focusing on small to mid-sized Chinese cities. Management believes that it must increase its
store count in China beyond the current 184 locations before competitors enter the market.

The price and chart look good here (near the intraday low). MACD just turned up and RSI and STOCH are well up.

Depends on your pain tolerance. So far I didn't get my full profit and got in a bit early, so it seems I might not be the best to ask ST, but LT I'm sticking to my guns.

SKF: I also use XLF against it to confirm.
XLF is topped out at 31.15 and hasn't been able to break it yet.

Craig

Thanks for the help.

After last week, pain is all I know... so what's a little more! :-)

FWIW, TWM is much more liquid than SDD.

Dow Theory sell signal will activate at 12845...i'm adding to my short positions and buy Jan Puts DITM.

Onlineaces...

Deep in the the money puts on what? Index funds individual stocks...??

Where are you pressing?

moneygenie et al:
Bought UNG several times past six months at avg of $47.38 US.

davidtr4
Thanks for the SBUX analyst info. 7 day rsi now at 28.6

Hey...What happened with that Ameritrade Etrade possible merger?

Etrade taken Bernake money and havin a BON FIRE TODAY...

Got my graham crackers and Marshmellows...Anyone spare a few dimes for some chocolate?

Today's action almost feels like a stealth risk unwinding trade: cover financial & retail shorts, sell material, commodity (and some tech) leaders. Nothing works better for the ailing U.S. banking stocks than their being closed for the holiday ;-)

JML

basketguy:

I have DITM puts on IWM which I am adding to as the market rallys. I don't want to miss the deep plunge down. Besides agreeing with Bill not too long ago saying that this next plunge should be brutal, I, separately, am expecting a 40%-60% deep plunge in the market very soon. But what do I know. I'm only trading on what I can afford to lose. Everyone should, because no one know for sure how this will play out. This time, I know the odd are in my favor for many of the reasons expressed on this blog and my own dd.

As of last Wed. I have 25 puts on IWM Nov 81 (got in at 2.3). Initial position was at 50, but sold half. I've been using Tim Knight's fib retracements and that trade has yielded great returns. I suggest his site for technical assitance.

I am short on MER from 55.97. I think the banks will roll over tomorrow and I will not get another chanse to do so... I also have SKF @93.28 and QID @ 40.7

Other puts I have are on IWM 73,74,75 strikes.
HANS Dec 45 puts as well.

LA Times today: Gold shines as many see a lackluster economy
http://tinyurl.com/34nd2c

Waiting for ETFC to come to me... the knife is falling...

Should bounce back? There's an 85% chance it's not going bankrupt... I likes dem odds.

Might be a good short term play up to options expiry day.

ETFC has traded 174 million shares so far today. I wonder if ETFC is at least capturing some of the commissions from that volume. :-)

The following alert is posted to my trading account...

November 12, 2007

This is a challenging time for the financial services industry. Bad news in the credit, housing, and stock markets continues to dominate and E*TRADE is not immune to these market conditions.

However, you, our customers, should know that we continue to be well capitalized by regulatory standards. As a matter of fact, we could absorb an immediate write down in excess of $1 billion and still remain well capitalized. Nobody knows for certain what the ultimate impact will be from these markets, but it is our expectation that news in the market will get worse before it gets better and, armed with these expectations, we are taking prudent measures to effectively manage the company's balance sheet.

We will continue to earn your confidence, providing state-of-the-art asset protection, including E*TRADE's Complete Protection Guarantee, SIPC Protection for E*TRADE Securities customers and FDIC Insurance for E*TRADE Bank customers.

We appreciate the opportunity to continue to serve you and your investing needs.
Jarrett Lilien
—Jarrett Lilien
President, COO and Director, E*TRADE FINANCIAL

I was expecting a massive rally today....and nothing. I expect this to get nasty sooner than I expected.

Online,,

Thanks...IWM great way to trade on the short side...Love Tim knight also...

Tim has gotten a little afraid recently...It is always funny(strange) when the market finally starts to sell off in a drastic way, some permabears like Tim that have been calling for such a decline for months if not years are shuddered in the corner..The last two pullbacks tim left ALOT OF $$$$$$$ on the table...

Maybe his positions were a little more than he could handle, maybe when bears start making $$$ they are not used to it...(Been a long time)Is this just HUMAN Psyche...The market making us bears so afraid to hold a position..?

I love the fact that you are pressing on the short side...Like many others here..but only risking what you can afford to lose.

You will be rewarded richly

Online,,

Thanks...IWM great way to trade on the short side...Love Tim knight also...

Tim has gotten a little afraid recently...It is always funny(strange) when the market finally starts to sell off in a drastic way, some permabears like Tim that have been calling for such a decline for months if not years are shuddered in the corner..The last two pullbacks tim left ALOT OF $$$$$$$ on the table...

Maybe his positions were a little more than he could handle, maybe when bears start making $$$ they are not used to it...(Been a long time)Is this just HUMAN Psyche...The market making us bears so afraid to hold a position..?

I love the fact that you are pressing on the short side...Like many others here..but only risking what you can afford to lose.

You will be rewarded richly

QID- here we go...

The Citigroup analyst Prashant Bhatia likes giving haircuts..

http://tinyurl.com/yscv89

Remember, the market is US. Are we buyers? LOL!

I was hoping to solicit some input from you options traders out there. While I understand the concepts of options and their strategies, I have strictly traded common equities and the like, and as such, am not too familiar with the actual APPLICATION of the concepts (e.g., deciphering the calls/puts screens, how to execute trades, etc.). What sources would you recommend as the best comprehensive guide to start pulling the trigger on these trades? I need less of the "Why" and "What" questions answered and just more of the "How".

TIA

Hilarious Wavesmash!

wavesmash,

That was priceless.

wavesmash... thank you. Priceless.

I nominate your haircut post as the funniest of 2007.

Today's main talking points on BubbleVision:

1) We are at or near a bottom.

2) People are starting to buy the subprime.

CNBC Talking Heads = The Poster Children For Myopia.

:^)

Craig et al re: Short Positions

Reloaded the SKF position today 'near' the day's low;
Holding QID for over a week and riding 'til the
red sky at dawn.

I want to increase my percentage of gold/metals in my portfolio and see today as an opportunity.
Looking at GLD and IAU.
Still unable to wrap my head around prudently choosing junior miners at this point. In it for the long term leg.

AlanM

Re options trading background reading. For starters I would recommend taking a look at the learning tools at the Chicago options board, CBOE. Just look under the learning tab, their "Options Institute" is quite good for the basic background.

Recommend you paper trade for a while to get used to them, quite different from stocks, the time decay will kill you.

http://www.cboe.com/default.aspx

onlineaces, basketguy,
ARE YOU TALKING

RE: iShares Russell 2000 Index FundNYSE Arca:IWM

if you are I don't think you can buy:
IWM 73,74,75 strikes, must be even #, no?

I don't see those strikes on TD Ameritrade.

Just checking. TIA

This is surprising weakness today although given the strength in the dollar perhaps it is not surprising. I was actually hoping for a rally to add to my shorts. Oil and materials are rolling over, so there is no leadership left and they have a ways to fall.

This is the reason I loath CNBC - they keep giving people hope rather than both sides of the debate. There will not be bottom until capitulation happens, which is a ways off. You will recognize it clearly, although CNBC will then start telling everyone to sell short.

Jeff Cooper thinks 10% fall from here is needed for a sustainable bottom.

I've put in a bunch of stink bids for gold and ag plays in case the market collapses and I can not get to my brokers website.

Any opinions of Oil Field Service Companies?

i.e. HAL, BHI, SLB etc...

Think they still have a way to drop?

Moab,
If we fall 10% from here we will get a DOW sell signal at 12,846. I doubt that will be a bottom.

Just let some QID go and raise stops with tighter triggers. At supports for the tech giants: $640ish for GOOG (mid Oct. breakout) and $100 RIMM (earnings breakout). Although AAPL broke 50DMA ($160ish), it just came back to Q3 closing prices in the mid-150s. I keep repeating my new mantra: I don't trust this market either way. I don't trust...

I can't imagine that the parade of analyst defenses will be too much more delayed. We are talking really brutal moves in the last four days. Just be careful out there.

JML

Well I took the plunge. I bought 5 Goldman Sachs December 210 puts for 11.20 each. If they drop even somewhat close to their 200 day like the rest of the investment banks, I'll be psyched.

Rob.

The finger pointing and back stabbing has begun.

http://tinyurl.com/yrfqd7

Nov 12 (Reuters) - Morgan Stanley initiated coverage of Europe's biggest bank HSBC Holdings (HSBA.L: Quote, Profile , Research) with a "underweight" rating and a price target of 800 pence on its stock.

The brokerage said it thinks the $2.1 billion provision made at the time of the profit warning against the $45 billion mortgage services business is insufficient.

The real threat to numbers is the $49 billion branch originated subprime real estate book and the remaining $83 billion of unsecured personal debt, the brokerage added. (Reporting by Shamik Paul in Bangalore; Editing by Bernard Orr)

Bill wanted me to mention Greentree Gas and Oil (GGO.V). They are applying Powerwave (http://www.youtube.com/watch?v=QVMRu7GjR7o) an EOR/IOR process to the Rodney South oil field in Ontario.

The Economist says that the Majors are struggling to pump more oil and gas. On average, the majors produced 9% less oil production in Q3/07 versus the same period last year.

Companies like Encana, Energex, ARG Resources, PenGrowth, Halliburton and a Top 5 global producer are already using Powerwave.

Greentree has the best leverage to the successful application of Powerwave as their production increase could be significant relative to their total. They have just turned on 8 Powerwave injectors and 2 horizontal producers. The eagerly anticipated results should be released shortly.

If you're a reservoir engineer, physicist or hydrogeologist you can read about the theory here: http://tinyurl.com/2e9qeo

I'm a paid consultant to both Greentree Gas and Oil (GGO.V) and Wavefront Energy and Environmental Services (WEE.V)

You can download my articles as PDF files below.
Greentree article - http://tinyurl.com/2gf4wk
Wavefront article - http://tinyurl.com/28rg4w

Oops - the link to the Powerwave video didn't turn up in the last post... here it is:
http://www.youtube.com/watch?v=QVMRu7GjR7o

Alan M

Options are nothing more than derivatives of their underlying stocks. You would not want to start trading them until you really understand how the effects of time to expiration, volatility of underlying stock, and interest rates affect their pricing. A good primer can be had on many option websites. You might want to read up on the following "greek" calculations before you attemt to trade them.

Delta is the change in an option’s premium relative to a change in the price of the underlying asset. Delta on call options varies between 0 and 1. Put options have negative delta. An option with a delta of .50 will move a half-point for every 1-point move in the underlying asset.

Gamma is the change in delta relative to a change in the underlying asset. Unlike delta, which is highest for deep in-the-money (ITM) options, gamma is highest for at-the-money (ATM) options and lowest for deep ITM and out-of-the-money (OTM) options.

Rho measures the change in option premium relative to the change in the risk-free interest rate. You can also think of rho as the sensitivity of option premium to the cost money.

Theta measures the rate at which the option premium decays each day (the rate of time decay). Theta increases as the option gets closer its expiration date.

Vega reflects how much an option’s premium changes with each 1-percent change in implied volatility.

Each of these measures give you a handle on how your option position value will change based on asset price changes (delta and gamma), interest rate changes (rho), time to expiration (theta) and volatility (vega). Try the website volitality trading dot net for an indepth discussion on each of these concepts. If you need more just google option greeks - you will get more than you need.

If you really do understand all the above, then your question on the how will depend on the trading platform you use.

Quasi - Thanks much. I'll check it out.

....and thanks for your comments as well, wabrew!

Plugging my nose and in @ $3.53 on ETFC.

moneygenie...

You can buy strikes on IWM on every dollar amount from 57.00 to 105.00 at every dollar 57,58,59 etc... This is for Nov Exp...

Jan strikes go down to 40.00 the first are 40 45 50 55 then 58,58,60 dollar all the way to 95.00...

Does anyone know where I can go to pull up charts and draw trend lines - looking for free service. Thanks.

NXG owners/traders - read #5

http://www.minyanville.com/articles/index.php?a=14835

re: Jeff Cooper's bottom, I think he means an intermediate term bottom like August 17th. Nothing goes down in a straight line, 1987 excluded!

S&P 1450 level being defended...but for how long

ETFC just traded over half its float. En route for 10% of Nasdaq volume. Last week, C made >10% of NYSE. Just amazing how broad the portfolio unwinding under way is.

JML

Ameritrade is up nearly 7%. I wonder if their eTrade merger is going to turn into an acquisition?

http://finance.yahoo.com/q?s=AMTD&d=t

Shorts are covering & getting ready for an evening on the town with ETFC...

QID- have to agree with JML about the ST picture...can see it going either way...still waiting for an entry to add to QID...

SKF- would like to jump in, but is the expectation for a downdraft on thursday getting too crowded?

remember to let things come to you...MarkM's caution on not trying to make your year on shorts starting to echo...

UUU really beaten up, took small position. Also got some ETFC puts this AM at 4.03, if wavesmash is right I'll just take profits. I'd think ETFC has a long ways to go down, like MER and C.

This market is going down at the close it looks like...

1450 has been breached!!!!!!!!!!

S&P broke 1450 right now..

Nibbled very small position in AUY as it's down 9%+. I'd be adding if it falls more, which it will.

Still hanging with QID and SKF, UW SKF a hair although it jumped up a bit here. I think the financials get many more downgrades.

2nd,
Check out FXI.....

AlanM,

I started trading options a month or so ago. I've found Michael Thomasett's _Getting Started in Options_ [ http://tinyurl.com/2drl6k ] very helpful in my initial trades. So far, so good.

As I get farther into it I am also looking at more advanced strategies in Guy Cohen's _Options Made Easy_ [ http://tinyurl.com/18r ].

I've found both of these to be very lucid presentation for a rank beginner such as I am. I hope you find this helpful; good luck!

gold breaking 800 for the 2nd time today

Craig, check out FXP.

Found an interesting small cap water play - Layne Christensen LAYN. It has three other divisions besides water treatment - one providing drilling services to the mineral exploration industry and a natural gas production group. The fourth group provides specialty energy services. This firm certainly has the wind at its back.

Found an interesting small cap water play - Layne Christensen LAYN. It has three other divisions besides water treatment - one providing drilling services to the mineral exploration industry and a natural gas production group. The fourth group provides specialty energy services. This firm certainly has the wind at its back.

Toronto's HGD double gold miner inverse ETF is up 9.5% today on record volume of over 800K shares so far. I took a position in this last week while raising stops on my longs, which have since all been stopped out.

Although $GOLD hasn't done so yet, it looks like XGD.TO, GDX, $XAU have all broken their uptrend lines from the August lows. It will be interesting to see how much further the spot might fall back. $775 is the 31.8% retracement of the August bottom to this month's top, and I'll be looking (hoping) for at least that before reloading my longs. $750 and $727 are the 50% and 68.2% retracements, respectively.

What's going down?

this board must be a real anomaly out there- full of people afraid to be left behind on the (ultra-short) train down...LOL

Everybody's got a second chance for ETFC @ $3.53...

wow...a waterfall

geckojb at November 12, 2007 2:58 PM

"Does anyone know where I can go to pull up charts and draw trend lines - looking for free service"

I would recommend Stockcharts.com for starters. I have been a paid member for many years and highly recommend them. However if you want real time streaming charts you will have to try something else but they do offer real time for an extra charge they are just not streaming. Not a problem for me as I'm not a daytrader so don't need the streaming option.

Their chart annotation tool is quite nice, the only problem would be as a free member you won't be able to save the chart, which is a nice option if you want to modify it later. Although you can always save it by way of a screen shot but you won't be able to modify it easily in the future. Another option is to save the chart as an image file and then use another edit program to do the annotations, I like the Paint.net program for that type of stuff.

hope that gives you some ideas

Out of SKF @98.30, not repeating this AM's stupidity.

Also QID with a decent profit.

Still holding...Still short...

Can someone direct me to the report posted some weeks ago regarding junior, intermediate, and senior gold mining companies and their leverage when gold is in the $600s and $700s? I'm having difficulty searching for it. Thanks.

Thought about selling my 5 GS December 210 puts just before the close for 13.40, which would have been a nice 2.20 gain on each one but, with the indexes crashing into the close, and GS the only investment bank that hasn't taken the trip to it's 200 day, I decided to hold on until tomorrow or Wednesday. Hopefully the uncertainty alone building up to Thursday will be enough to crush it.

Rob.

Closed below 13000, next stop 12,846 and then look out below.....

Plenty of chances to get back into SKF/QID.

Si02, checked it out but can't chase it even though FXI and China overall is due for the big one. Should have been looking at the open today.
We can't get them all.

I've maintained all my short positions. I think the market will continue to gap down until Thursday, where it has a 30% chance of a rebound.

gold spiking sharply downward after the close

FXI - I don't see any support until 154. Long FXP

November 12, 2007 Charles Kirk Mid-day Quote:

"An interesting start of the week so far. After dropping below 1450 in the S&P at the open, we then saw a bounce, a quick retest, and then some strength in an relatively choppy trading. Now the true test is whether they can manage a strong close this afternoon and include more sectors within the strength. A late day failure, especially below 1450 in the S&P, would be a big problem"

In FT, Co-CEO of goldman sachs int'l writes that since 1990 cross-border capital flows have increased 10% annually. And, within this, flows to emerging markets have increased twice as fast as to dev't markets.

50% of foreign direct investment (FDI) goes to developing countries, compared with 20% in 1990. Excluding China, the amount doubled from 16% to 32%.

I just found out what happened to gold...

Take a look

http://www.youtube.com/watch?v=BB4qrhhirEI

Took the stairs to 850.00 and on the back of that rocket bike back down to who knows where

basketguy- congrats...i tried to game it and left half my (potential) gains for the day on the table...

craig- "We can't get them all." that's right...keep reminding myself i was originally going to wait out the correction in cash...any plays on the short side->learning opportunities...also no shortage of 2nd chances...

If anyone wants to see how much overhead supply the leaders have above them here we go:

GOOG Current Price: 632.25 15.4% off high.
BIDU Current Price: 300.85 30% off high.
AAPL Current Price: 153.77 20.2% off high.
RIMM Current Price: 102.40 25% off high.
CSCO Current Price: 29.19 14.4% off high.
QCOM Current Price: 38.03 20.3% off high.
AMZN Current Price: 78.27 22.6% off high.
ORCL Current Price: 19.44 15.5% off high.
GS Current Price: 214.30 14.5% off high.
FSLR Current Price: 177.70 22.7% off high.

The way I see it, even if the bulls want to run, there's a ton of people caught holding the bag on these stocks who will be happy to sell if they try to reach their highs again soon. Looks like bears in the driver's seat for now.

Rob.

I will be watchin for a bounce around that 12850 level...

Like Bill Says I think the Bulls got one last fight left in them...

Today was not to be, but they will defend that 12850 level like H-ll...

Gotta run Warmed up here in Chicago want to take my kid to the park...

Bill,

Once again, you called the shots!

The bulls started the day trying to draw a line, but the selling momentum blasted it once Europe closed.

I guess it is just too many years experience before one can see this clearly.

Cheers,

Question: in the case ETFC files for bankruptcy, at what point do options stop trading?

BTW, everyone I know with accounts there placed orders to transfer all their cash out of it. Do you think they will declare how much cash will be transferred out? The thing is, they likely won't have the funds, so it will be very interesting. How fast can a company declared bankruptcy or file for chapter 11? Can they do this in one or 2 days? Thanks.

Bill,

I totally agree with your assessment of Wal Mart. I have been slowly building a position in my Long term portfolio. I was reading today (seeking alpha) about Wal-Mart de Mexico SA. I was wondering if you had any insight into WMMVF.PK. I know this is an OTC stock. But it has over 8.5 billion shares outstanding. Giving it a market cap of over $31 Billion. No small pink sheet play. As I understand it, there are many large International companies and ADR's that trade on the OTC's. Wal-Mart de Mexico is a direct subsidiary of Wal Mart based on the same successful busines model and managed by the same top level management.

This might be a great play on a solid long term company.

Thanks. jfs

Making a little money shorting gold. I expect this will not be the last time I say that.

Bill,

You deserve a rest.

Congratulations for your clear vision, and please accept my gratitude for sharing it.

WMT - only surprise in Valueline was that only 3% of their retail space is in int'l division. (maybe that excludes Canada and Mexico?) Still, I'd have expected WMT to be more internationalized by this point.

disclosure: short jan '09 40 puts, and have been for a while.

Jock

Just a follow up.

Wal Mart is the largest private employer in Mexico. Thirty % of Wal Mart's 2760 foreign units are in Mexico. They have created more than 53,000 new jobs in Mexico. Sales represent about 2% of Mexico's domestic gross product and it controls about 30% of all supermarket food sales in Mexico and about 6% of all retail sales.

Just an FYI.

Anyone own Northgate Minerals NXG? Read this (#5) ASAP:

http://www.minyanville.com/articles/index.php?a=14835

They have $71 million debt securities that are not trading yet they value them at 100% with the expectation that they can be sold in the next year.

Here is the chart of the € vs. $ with gold prices overlaid:

http://www.flickr.com/photo_zoom.gne?id=1988207729&size=o

An interesting comment on the $US price of bullion.

Any one of those factors would have dinged gold. But when you see them all come together like that, it's time to get the heck out of the way. Talk about a 'perfect storm' hitting gold!

Another factor I didn't see in Bill's list, though it's implied in the Yen trade unwind, is the selling of gold to meet margin calls when everything else is blowing up.

My gold trading account is up 20% in the last 24 hours, but it would have been up even more had I not blown the timing on one short entry (I rushed it because I'm at work and having a busy day.) It came out OK eventually, but I missed one wave up and back down that might have had me up 25% or more.

I'll be at my screen tonight for the asian open to catch forex action with the Yen and/or gold. At some point gold will reverse a little and then go into grinding sideways action to recover from the drops. I just don't know if we are there yet. Meanwhile I'm scalping away, short, long, whatever I'm given.

jfs - I knew WMT was big in MX, but wow. Still, their strength there - in an economy that's almost an appendage of the US, and within easy trucking distance of Long Beach - makes me wonder if they have really learned how to operate internationally.

I remember reading how they had stubbed their lil toe in Korea (and maybe I read about China as well).

But, won't their future growth depend upon operating successfully in China, India, Brazil, etc. ?

I have an E-Trade account with considerably less than the SIPC insured amount. Is there a legitimate/rational reason to transfer the funds to another brokerage (which would take several weeks since I don't want to liquidate the equity positions in order to close my account)? If E-Trade went bankrupt tomorrow, wouldn't my account be safe?

Broker insured amount for Canada
I just looked today to see what was covered. The following is from my broker and then from the Canadian Investor Protection Fund (CIPF) website. As I read it, members of the CIPF will cover up to $1 million/account, with additional insurance above that through Penson Financial Services for brokerages using Penson.

The question to be answered is, "When would your money be returned from a broker that went into bankruptcy?". I believe it would have to go through bankruptcy court and god only knows how long that would take.
Bob

"Questrade Inc. is a member of the Canadian Investor Protection Fund (CIPF). In the event of an insolvency of a Member, CIPF provides coverage for your general accounts equal to $1 million Cdn for losses related to securities and cash balances. Your separate accounts are each entitled to the maximum coverage of $1 million Cdn unless they are combined with other separate accounts.

Additional Insurance
Additional insurance coverage is available through our carrying broker, Penson Financial Services. The additional securities insurance policy from the Lloyd's of London may protect clients from net equity losses in excess of the CIPF limits, up to a maximum of $9 million CDN per client, per separate account, as determined by the CIPF, and is subject to certain maximum aggregate insurance coverage limits applicable to Penson."

Canadian Investor Protection Fund website
http://www.cipf.ca/c_explore_coverage.htm

MAXIMUM LIMITS OF COVERAGE
A limit has been placed by CIPF on the coverage provided for a customer's General Account, and each Separate Account after combination with other Separate Accounts as described below, equal to $1 million for losses of securities, commodity and futures contracts, segregated insurance funds and cash.

COVERAGE
CIPF covers customers of Members who have suffered or may suffer financial loss solely as a result of the insolvency of a Member. Such loss must be in respect of a claim for the failure of the Member to return or account for securities, cash balances, commodities, futures contracts, segregated insurance funds [or other property] received, acquired or held by the Member in an account for the customer. The Board of Governors of CIPF may exercise its discretion in respect of determining the customers eligible for protection and the financial loss suffered.

DETERMINATION OF CUSTOMER LOSSES
The date at which the financial loss of a customer is determined shall be fixed by the Governors as the date of bankruptcy of the Member, if applicable, or the date on which, in the opinion of the Governors, the Member became insolvent. The 180-day period for filing a claim to CIPF commences on, but does not include, the date of bankruptcy.

The maximum amount of financial loss that CIPF may pay to a customer of an insolvent firm shall be calculated after taking into account both the delivery of any available securities, commodity and futures contracts, segregated insurance funds and cash to which the customer is entitled and the distribution of any assets of the insolvent Member, less any amounts owed by the customer to the Member. The Governors may rely on the trustee in bankruptcy or the receiver under applicable law in determining the amount and validity of claims of a customer and for the purpose of calculating financial loss.

The amount of securities delivered to a customer in satisfaction of a claim shall be the amount to which the customer was entitled as at the date for determining financial loss without regard to subsequent market fluctuations. Where the securities are not available to be delivered, cash in an amount equal to their value as at the date for determining financial loss may be paid to the customer even though the amount of such cash may not be equal to the value of such securities as at the date of payment.

Magnolia, re E-Trade and the safety of your account.

I have no idea, you are probably right you have insurance, but would you have access to control what's going on. I think the insurance would only cover cash not the value of securities. If the securities tanked and you did not have access to sell them that would be your loss.

My guess is that it would take more than a few weeks to transfer the account if they went bankrupt and how long would the line be at the insurance office.

I would look into it and get plan B ready to implement.

SiO2 at November 12, 2007 4:43 PM

"Question: in the case ETFC files for bankruptcy, at what point do options stop trading?"

A while back I was doing some research on option adjustments for special distributions and I do remember the following;

- Options "usually" stop trading when the underlying stock stops trading. Exercising the option may also have some conditions put on it, ie it might only be exercisable at expiry or a few days before.

So this brings up an interesting situation for say a company in trouble and the stock stops trading. If you are short the stock, just keep the cash until your broker requests you to cover, at which point you will have to track down some share certificates, (maybe on E-Bay, look under wallpaper). On the other hand say you bought puts (naked, not to protect your own shares), planning to flip them in the money later. So now they are deep in the money but you can't sell them, trading is halted. You could exercise them at expiry and put the stock onto the other guy at that high price, but remember these were naked puts, you don’t have any stock to put to him.

Interesting times, I will have to do some more research on this one to figure out what all the various scenarios could be. I find the best place for this stuff is either the CBOE or the Options Clearing Corporation websites.

Larry Kudlow "we are missing the deflationary trends that occur during these temporary credit crunches". Where does Larry & minions see this deflation?
Cheap CD players, faster CPUs and mp3s are cheaper.

Larry certainly knows better so I can only divine that he's carrying water for Bernanke. Why?

Joe Battapaglia is the only one with a clue on that show. He knows you can't eat CD players. He knows you can't fuel your car with intel chips. He knows you can't clothe your children with music.

The coming US inflation is going to be a doozie...

Was intrigued to read that cardboard boxes are going up.

Dad likes to eat at Outback and their salads are noticeably smaller. Anyone else in the USA seeing inflation that isn't really talked about?

Thanks Quasi, interesting indeed. I see the danger.

Bill, it's almost as if you have psychic powers, I can see why you'd be so tired. You were awesome today. Thank you.

What happened to those posts from earlier in the day?

I forget who called it, but perfectly called the DOW closing below 13000...

Sorry, I was confusing a post on Roubini's blog...

if anyone cares: http://www.rgemonitor.com/blog/roubini/226072

this guy called it this morning (and then tooted his own horn at 4:05 est)

carry on

Oh, and thanks Bill. I appreciate all that you are doing with this blog.

SiO2

One more danger you might find interesting about options is the policy of auto-exercise or more correctly known as exercise by exception. I noticed this one when my broker sent me an update that the threshold had been reduced from 0.25 to 0.05 ITM. (in the money).
Basically the Montreal options clearing house and the Options Clearing house in the US have a standard policy that any equity option at expiry that is ITM by 0.05 will be auto exercised, (index option threshold is 0.01). Now you can still elect to not exercise an ITM option at these levels or greater, but you will have to call your broker and provide those instructions before the time deadline.

About a year ago I discussed with my broker the theoretical case of a naked put which for some reason I failed to close out and not being worth much I thought it would just expire. Well be careful as the clearing house would request the strike price from the other guy and they would come to my broker requesting the stock, now as I didn't have the stock in my account I would be in trouble and would have to come up with it immediately. They also said if they couldn’t get ahold of me they would probably just supply the stock if they could and I would then just be short the stock which I would have to cover later. Note the same thing would happen if I owned calls that ended up 0.05 ITM, they would be receiving the stock and requesting I supply the strike price money.

Anyway just a few comments, as options do have a few more required decision points than plain old stocks.

This is the CBOE page explaining exercise
http://www.cboe.com/LearnCenter/Concepts/Basics/exercise.aspx

Quasi, this did indeed happen to me once (and only once, you learn when it happens). I had Call options auto exercised, my account went horribly cash negative to pay for the shares, broker called me to sell them, I actually sold the shares at a profit, however, the broker charged exorbitant fees that somehow made my trade unprofitable. I pay close attention to all my accounts during expiration week now and try to get rid of everything in advance. Thanks.

Looking at gold spot and near futures, we are seeing backwardation yet again. The Euro/$US sold off, so we are seeing a direct correlation in the $US gold price.

Mostly happened in overnight trading last night and this evening, so the action is entirely in Hong Kong & Europe, which means relationship with Euro.

I surmise that the £UK gold price is about to go through resistance, so there is probably heavy profit taking going on, along with some unexpected central bank gold sales.

So on the open this evening on the access market, we are seeing a rise in the spot price.

http://www.gold.org/value/stats/statistics/images/dailyshort_4.gif

DoGood, deflation by definition is a contraction in credit so yes deflation is a very valid argument to what might be in store for the US. I see both arguments as being valid. I suggest reading Mish as he is a pretty well known deflationist. Here is a post he made that might help to see the other argument. search deflation in his blog you will find a plenty..

http://tinyurl.com/2vzwzk

I think if people would accept you can have a worldwide deflationary boom and a decline in asset value, you're on the first step to recovery.

Mish has lots of examples of deflationary prices/reductions in money supply.

A feature of deflation/deflationary boom is the demand for liquid assets.

Gold Continuous Contract

http://www.flickr.com/photo_zoom.gne?id=1993675934&size=o

Wild market ??, Not Yet.

Just had a conversation with a friend who was commenting on the wild swings in the stock market.

I agreed with him but said it wasn't that bad yet and then put together the following chart on the Dow, Nasdaq and S&P500 from back in early 2000.

Yes we have had some 300 point days on the Dow but back then a 300 point day was quite normal, the wild days were 500-700 point swings. The next several months are gonna get real interesting.

Chart, dow Naz and S&P from 2000
http://tinyurl.com/ysjbbj

Hey SiO2, sorry to hear that auto exercise option was a learning experience that cost you money. Its one area in options that people forget, they think of it as rights and obligations. If they own the rights they control all the cards, problem is when things go into exercise mode the guy with the rights also has obligations, these things are contracts and a little more complicated than just buying and selling a stock.

asia down right now.

Nikkei Article
http://tinyurl.com/2hmvyg

Heng Seng 1 day chart thus far
http://tinyurl.com/26uava

For anyone that is interested in more information from a junior mining and exploration company, there are going to a number of them in a three day conference in Yellowknife, Northwest Territories. This is where the majority of exploration drilling is now taking place (in Canada).

I'll be one of the presenters and will be chatting with the other constituents during the course of the conference. It's not the PDAC, but it is definitely more grass roots.

For a listing of the personalities and companies presenting, have a look at the link:

http://www.nwtgeoscience.ca/forum/

I will readily make inquiries on your behalf; just let me know what you want to know. It's the least I can do for this growing community. Send enquiries to rugger09 at hotmail dot com.

FYI, I'll be presenting the extraction sequencing of a unique diamond mine.

Cheers All

U/D of interest to Cara Community:

Upgrades: YHOO, AUY

New Target: GOL $26>>$29

http://tinyurl.com/24hpqu

A great and profitable day to all.

Cool! Bought a few AUY yesterday to restart my position. I'll take the upgrade!

Came close to my GLD call as I had a buy in at 78.00. Came within a dime but I was busy taking profits from SKF and QID so missed the drop/opportunity.

Oh well, I still think it's going lower although some could say we saw a gold correction at 793.

Craig,

Just be careful Re:AUY...

Here are some notes from Gary..Who likes Auy

http://biiwii.blogspot.com/

If gold is to fail at support, then auy will follow

As someone said: "What's not to like about WMT?"

The Crystal ball is in fine shape Bill.
wmt beats a .02, up a few pts already and pushing the futures for today's open.

Thank you for the warning BG, much appreciated but no worries, I expect more gold pullback where I would be adding AUY but we are in that difficult to guage middle ground where we either reverse or get a bounce and then resume the plunge. Hard to know. My current position is hardly worth mentioning (just an opening position), but I'll still take the upgrade and a few bucks my way today. I might be out of this before today's close.

Craig...

Trading around gold is not for the faint of heart...We all know that..

Just take a look at the gold price pullback in summer 2006...

With the dollar trading at where it is today..I (like Bill) feel a sharp correction back to the 200 DMA...Can happen real fast...

It is only a 15% haircut...Heck take a look at GOOG APPL BIDU RIMM A 15% haircut can happen in 1-3 days...

This Bill Cara thing works way too well...

I sold some WMT Puts back in Sept...Sold the Nov 42.50 for 1.25....I was really hoping they were going to get put too me...

Guess not...Maybe I will have another chance, but that WMT chart has a nice series of higher lows going all the way back to Sept '05...

Maybe it's time to start buying calls?...I've made enough money selling the puts...

LOL! That's why I kept my position tiny! After a few negative days (and watching AUY price action for some time) you gotta sometimes time the bounce in ST sentiment and take a contrary ST view for a day or an hour.

I sold QID and SKF on that as well. I expect we'll see a bounce today where I can take profits on yesterdays buys and reload and resume my bearish position with QID and SKF.
I didn't have the stones to do it with gold, but played it instead with a smaller holding in AUY which looked oversold to me compared to all the other miners I screen and the XAU. I was looking for GLD at 78. Heck and dang.

Today the bulls are going to use Walmart to run.
Maybe tomorrow too. Let the battle begin!

Good luck to everyone.

I find it hard to believe that that the USD is already coming under pressure. Is a 2 day rally all it can muster?