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February 7, 2008
Cara's Commentary & Community Chat, Thurs., Feb. 7, 2008, 7:30am ET
Back at the cycle peak of the US equity market, I wrote on Sept 28 that the Fed was pumping in liquidity in order to replace the disappearing bids underlying the previous market boom. I warned that XLF (34.46 at the time) was pointing to a cycle bottom of 26, and that if it crossed down through 31.26 “the US equity market (and undoubtedly the UK/Europe/Japanese markets too) will be doomed to a Bear market cycle of immense proportions.”
On Jan 22, XLF hit a low of 24.11. That was a loss in the XLF in less than four months of -30.0 pct, which in my eyes is ‘proof of concept’.
In that Sept 28 Daily Report, I wrote another alert: “The New Highs list is growing. Watch the Distribution Zone for Sell Alerts. Successful traders sell into strength (and buy into weakness), like any businessperson would do.”
Note that I did not say “investor”, but used the word “businessperson”. What I’m trying to do is wean you off the nonsense thinking that comes from HB&B.
In the following Table of 52-week highs, you will note Cisco (CSCO) at 33.29, and I was saying, “Sell into strength”. CSCO closed in after-market trades last evening at $21.24, which is a loss of -36.2 pct, again in less than four months.
I could be saying “Who’s your Daddy!” or some other inane remark, but let’s get serious. You are either getting it by now or you won’t. You pick quality companies and you sell the shares high and buy them low, and you do so as long as the company does not “break”.
Did Cisco the company break down? Judge for yourself from the info in today’s AP article, which I edited to make it flow the way you need to read it, rather than the form these reporters and their editors wrote it.
Cisco Shares Fall on Gloomy 3rd-Quarter Outlook, Signs of Tech Spending Slowdown(AP) -- Cisco Systems Inc. CEO John Chambers' troubling assessment of the health of U.S. technology spending late last year triggered a stock sell-off that chopped Cisco's market value by one-third. The plunge continued Wednesday on signs in Cisco's second-quarter financial report that economic uncertainty will continue to hurt sales growth at the world's largest Internet networking supplier.
Cisco shares fell $1.84, or 8 percent, to $21.24 in after-hours trading after the company posted second-quarter results that matched Wall Street's subdued expectations but gave disappointing guidance. The stock had slipped 18 cents to close at $23.08 in regular trading.
The San Jose-based company's forecast of 10 percent sales growth in the third fiscal quarter fell below the 15 percent projection of Wall Street analysts. The forecast spooked investors, who viewed it as a sign technology spending will continue to weaken as companies gird for a possible recession in the U.S. Investors have punished Cisco's stock severely in recent months on fears the company isn't as insulated from U.S. economic pressures as previously thought.
Cisco executives acknowledged many companies are being cautious about investing in new Internet equipment, but they predicted growth will soon pick up again, helped by surging demand in emerging markets. "It's important to keep in perspective that even in these economic times, we're seeing solid growth on a year-over-year basis," said Dennis Powell, Cisco's chief financial officer. Powell said Cisco experienced sudden slowdowns in January in several markets in the U.S. and Europe. Uncertainty about how long the slump will continue prompted the company to be "prudently conservative" with its guidance, he said.
In most of 2006 and 2007, investors flocked to Cisco's stock, doubling its price to top $34 and sending the company's market value above $200 billion. (But) the stock price has fallen by more than 30 percent since Chambers warned in November that weakening demand among major customers would probably slow Cisco's growth. He made the comments while discussing the first-quarter report. …Economic jitters have caused many corporations and Internet service providers to tighten their purse-strings.
(However) Cisco's second-quarter report showed the company continues to profit from heavy Internet investment. Cisco is in the sweet spot of providing the networking gear companies need to handle a deepening flood of bandwidth-intensive Internet traffic. Its net income was $2.06 billion, or 33 cents per share, during the three months ended Jan. 26, up 7 percent from $1.92 billion, or 31 cents per share, in the same period a year earlier. Cisco's profit in the first half of the fiscal year was 21 percent higher than a year earlier. Excluding one-time charges, Cisco made a profit of 38 cents per share, matching the figure predicted by analysts polled by Thomson Financial. Sales climbed more than 16 percent during the latest period, rising from $8.44 billion to $9.83 billion. Analysts were expecting $9.8 billion.
I ask you, from the last paragraph, can anybody say that Cisco is a broken company? I think not.
What has happened here is that last October CSCO was over-priced relative to market risk and economic conditions, which is what a soundly-thinking CEO was pointing out. Nothing more.
Now, CEO’s like John Chambers put their companies into the Cara 100. Boeing’s (BA) McNerney is another. These guys (and women) perform. They don’t prance around like the Eddie Lampert’s and Harry Stonecipher’s, and so many others. But, that’s another story.
My point is that Cisco is a world-class company in a rapidly growing market, run by a prudent CEO, having a sound balance sheet and operating metrics that are peer-beating. What’s not to like? The only thing left is to recognize that economic conditions cycle through good times and bad, leading to swings in the share prices of these quality companies, which gives traders the opportunity of selling high and buying low.
Good traders are investors who understand that portfolio management is a matter of avoiding risk and trading prices.
How did I know last Fall, other than looking at the 52-week highs list for the Cara 100, that the price of CSCO was very high was look to the Monthly-Weekly-Daily price series values for Relative Strength Index (RSI). At the close on Sept 27, the M-W-D RSI-7 was 86.76/76.76/75.67. As you know a Sell Alert in the Cara System would occur as the Daily RSI-7 broke down through the 70 line. A couple days later it did.
The warnings were there. In fact, I want you to re-read my Market chat of the following Daily Report Tuesday, Oct 2, and repeat what I was saying at the time about the nonsense coming out of HB&B as the market was selling off.
Now look down at the RSI tables, and see that CSCO had given a Sell Alert that Monday. Moreover, here is what I even put in print: “If Tech is so strong, why did Cisco (CSCO), Qualcom (QCOM) and SanDisk (SNDK), three leading lights of US technology, and the Nasdaq 100/Composite, all fall today when the DJIA gained +192 points (+1.38 pct) and the Nasdaq Composite gained +39.5 points (+1.46 pct)? “
I really hope you are getting this because I cannot do more to put the power of capital markets into your hands.
On Oct 1, CSCO’s open-hi-lo-close was: 33.01/33.33/32.97/32.99 on volume of more than 40 million shares. You could have sold at 33. Moreover, in the month that followed, there was an average of probably 40 million shares of CSCO traded and on most days you could have sold for 33, and now you could have bought, less than three or four months later for a 33 pct discount. Sell high; Buy low. Don’t try to pick tops and bottoms. In other words, don’t be greedy.
Now for the coup de gras. Look at the trading in CSCO over three days of Nov 7 to 9. Look at the extreme volume at 150 million shares a day average. Look at the multi-year record high price of over 34 on Nov 6 and 7. There was Motley Fool pumping CSCO in a headline article “Stocks Worth Buying Again” (Nov 6, 2007). How much was the timing of that article influenced by HB&B? But, I won’t go there other than to say that if anybody wants to push me into doing the research on “pump and dump” with friends in the media serving (perhaps unwittingly) as the take-out functionaries, then I have a dozen or more books to write.
And there was Cramer on Nov 12: Cramer's 'Mad Money Lightning Round': Cisco Sizzles, 11/12/07 - 07:18 PM EST. I’m not making this up !!
How about the Cramer video on Nov 13 (Wall Street Confidential Tue 11/13/07 12:43 PM EST -- Jim Cramer & Brittany Umar) telling his interviewer (hmmm… Brittany??) that Tech including CSCO was a Strong Buy. He even had the arrogance to say that professionals knew what they were doing and amateurs did not. (“That’s why they are amateurs.”) And he said that his “proprietary oscillator” was negative and telling him “I want to buy tech!”.
Again, I’m not making this up !! Right at the top, Cramer’s proprietary oscillator made him do it. (LOL) “Proof of concept.”
As if Cramer wasn’t enough on Nov 13, there was Motley Fool again: “Time for Tech? Yes! By Tim Beyers November 13, 2007”
And there in the Forbes Market Outlook: Bernie Schaeffer, Option Advisor 11.12.07, 3:30 PM ET, “A Bit More Fear Would Help Stocks”. Here was the market’s biggest self-promoter telling you his proprietary quant indicators were saying that intermediate and long term investors were in good shape because his system signaled a Buy the previous week on Nov 8.
[Dow open-hi-lo-close: 8-Nov-07, 13,299.70/13,463.66/13,001.93/13,266.29]
Hmmm…. Flash forward to today.
[Dow open-hi-lo-close: 6-Feb-08, 12,257.25/12,436.33/12,142.14/12,200.10]
Three months: A loss of 1066 Dow points !! Go get ‘m Bernie. :-)
(Bernie writing his own column on Nov 12)”My associate, Chris Prybal, from our quantitative analysis department, looked at the market's returns for the past 20 years when this level of retail bearishness is seen. Returns from this signal date back to July of 1987, when the AAII first began conducting this survey. The results going forward from there are quite impressive. There have been 15 signals during this time, including the one just hit Nov. 8. Looking five days past this signal, 66.7% returns have been positive. Twenty days out, 86.7% of the subsequent returns are positive; 92.9% have been positive looking 50 trading days out. For the five-, 20-, and 50-day periods, the average percentage return is 3.7%, 8.2%, and 18.3%. Tack on the fact that November to January is a historically strong period for equities, and that the third year of a presidential term is usually a strong one, and there is a bit of a tailwind in our favor. Since 1950, the S&P has averaged returns of 1.8% in November, 1.7% in December, and an additional 1.4% in January, according to the Stock Traders Almanac.
Unfortunately, when somebody starts throwing names like “delta hedges” and Hindenburg at me I want to cringe. Sorry Bernie, I can only take so many stylistic marketing devices in a single paragraph before I up-chuck.
I say, if you want to be entertained, you listen and watch all that stuff… CNBC, Cramer, Schaeffer, Motley Fool, Prechter, HB&B; it’s all noise.
Stop the noise, and get back to the simple principles of successful trading.
Finally, at the close yesterday, and before the post-close sell-off, CSCO was close to a long-term Buy on the Cara System:
CSCO Last: 23.26, M-W-D RSI-7: 32.45/21.96/31.29
In after-market trading, CSCO was $21.24. You should have been a buyer of the stock then, or into weakness today. You could buy the long calls and/or write the 20 puts. You could even make the premium income and cost a wash, with the worst case being that you end up with CSCO at 20. How bad is that?
The mainstream media is going to shake up the weak hands in CSCO today, many of them professionals. Now is your time to pounce.
Don’t think this Bear market is over however; it has a way to go. So when you commit to a CSCO for example, if it’s for the long-term, you dip your toe in. Maybe take a half position.
In time, I believe you will likely earn an annual 26+ pct Total Return from decisions like this. That’s all I’m saying. Let’s come back and revisit this column a year from now.
Posted by Posted by Bill Cara on February 7, 2008 07:30:01 AM | Category: Community Chat
Discourse
The BoE cut rates 25 bp to 5.25%, but the ECB did not cut rates from the current 4%.
Did anyone hold puts over night?
Posted by: Quentusrex ![[TypeKey Profile Page]](http://www.billcara.com/nav-commenters.gif)
at
February 7, 2008 8:05 AM [link]
"Unfortunately, when somebody starts throwing names like “delta hedges” and Hindenburg at me I want to cringe. Sorry Bernie, I can only take so many stylistic marketing devices in a single paragraph before I up-chuck."
Excellent....
And the line about "Bernie" being the market's biggest self promoter is ....well.....spot on!
Keep up the great work.
Posted by: maggy at
February 7, 2008 8:06 AM [link]
david- (with more time on my hands), thanks for your comments yesterday->however, would like to add the following to set the record straight:
despite years of trading, would not characterize myself as "an experienced trader..." i tend to reserve that designation for those who trade for a living...for me it's been an 'education,' and continues to be...
being early- my "fascination" with crowd psychology leads me to enjoy (attempts at) playing against the crowd->i trade with a pronounced contrarian bias (which tends to make me early...i'm used to that, and my posts should be read with that in mind)...
i keep position sizes manageable (if there's any 'secret' to succeeding with ST trading, this may be at the top of the list), and with a nod to the fact that i am invariably early, scale into them using 20-25% allotments of a (preordained) percentage exposure..occasionally i take out-sized positions, but they are generally for brief periods of time (usually intra-day), and only with sector (ETF) funds (ie, single stock exposure of that kind not recommended)...
cutting losses quickly? absolutely..but buying on weakness and against the crowd cuts down on the need to do so, IMO...of course, every trader will need to assess his own tolerance...
finally->luck...wouldn't want anyone to confuse any of my recent gains with skill...in the market environment that has prevailed the past few months, for ST traders 'luck' has been synonymous with volatility...ergo, good performance numbers (reminds of buying real estate in california in the early nineties->do not let anyone who bought get away with telling you how shrewd they were...we were just all in the right place at the right time)...
best wishes
Posted by: 2nd_ave at
February 7, 2008 8:20 AM [link]
Bill - excellent "proof of concept" on CSCO. I've been day-trading CSCO recently and there's been an immense amount of selling pressure (along with MSFT and other techs). Let's see if the buyers step in, in the next few days.
Posted by: sergio at
February 7, 2008 8:23 AM [link]
speaking of california real estate, anyone who is buying CSCO/SNDK/or any other Cara 100 in the AZ is essentially doing the same thing with company stock prices...concept plays out exactly the same way, in a more condensed time frame...
Posted by: 2nd_ave at
February 7, 2008 8:28 AM [link]
Hello group: In yesterday discourse Bill commented that, at a certain time frame, sell bonds and hold physical gold. What is the closest thing one can do
in a Canadian self directed RRSP account short of holding the real stuff?
Posted by: Canadiansailor at
February 7, 2008 8:30 AM [link]
great! how much longer can Cramer continue this? Its insane. One minute buy everything,the next minute sell everything. Is there any doubt why he isnt running a hedge fund anymore?
Posted by: jaketex at
February 7, 2008 8:31 AM [link]
New Jobless claim consensus: 343k
New Jobless claim Consensus Range:330K to 360K
New Jobless claim actual: 356k
Posted by: Quentusrex at
February 7, 2008 8:33 AM [link]
CSCO- scaling in at 21.03...
Posted by: 2nd_ave at
February 7, 2008 8:34 AM [link]
Well, if investor sentiment is any guide, I donned my hazmat suit and entered the Yahoo message board for CSCO. It's hysterically negative at the moment, with countless variations of vulgar epithets directed at CEO Chambers.
Posted by: I_Loser at
February 7, 2008 8:35 AM [link]
ECB left rates at 4%, but euro is weakening fast against the $USD from 1.465 to 1.4515 now, while US treasuries have strengthened.
As a result, spot gold looks set to trend lower. I'm guessing Trichet's speech may have dropped the hawkish rhetoric.
I'm glad to be out of PM's at the moment.
Posted by: French_Canuck at
February 7, 2008 8:44 AM [link]
Yawn...Good morning all.
Right behind you 2nd. See you in a year with SNDK/CSCO.
There will be some bargains on SNDK today as well. I intend to fill out my position in the IRA.
Posted by: Craig at
February 7, 2008 8:44 AM [link]
il- that's great, man...since you live in the bay area, you probably know people who work for csco...i've been following the company for almost 12 years, watched their billboards from time to time driving N on 101, and recall being impressed with chambers during interviews on NBR in the mid-late nineties...i certainly know people who work for INTC...
adding to SNDK at 25.50
scaling into INTC at 19.45
it's not all about day-trading, right...it's picking up property from distressed sellers...
Posted by: 2nd_ave at
February 7, 2008 8:45 AM [link]
and sometimes it's not about the indexes...it's about picking the right company at the right time...CSCO/SNDK/INTC->mentally sweeping them into LT status (i can hear jasper laughing)...tag this post for retrospective review in a year, as bill points out->could see 10-15% drop(s) but 50-100% gains...
Posted by: 2nd_ave at
February 7, 2008 8:49 AM [link]
but hey, back to QLD/UYG/FXI->2 out of 3 not looking too bad...can we rally anytime? sure...the negativity on CSCO almost guarantees it...(but i wouldn't be opening any positions on that) LOL
Posted by: 2nd_ave at
February 7, 2008 8:52 AM [link]
Relatively new to the Cara community here (i.e lurker)and novice to short/intermediate trading. Basically cutting my teeth with online hyothetical trading port. However after going over Bill's comments yesterday on the "trade of the generation" re sell bond & buy gold.....looking for some sage instruction of said strategy in simple execution for my novice abilities (etf utilization ?). *Caveat being, if there is a simple or basic instrument to execute this trade for the novice type!!
Also just wanted to reiterate as so many others have expressed, by far the best financial investment site available for public consumption!!!
Posted by: Geezer52 at
February 7, 2008 8:53 AM [link]
Looks like the arbs are active with the YHOO buyout by MSFT, now trading with a 28 handle. Softie's D-W-M RSI 7 14.6, 20.7 & 41.7
No position, just observation.
Leisa Saw your post on the trannies. Does look overbought since mid January. Recent publicity about Bufett purchases in the railroads bringing followers. In a slowing economy, expect pullbacks; however, contracts with exporting agriculture grain companies providing income. (Port Rupert) No positions at this time as I agree with you. However favor the market positioning of Canadian rr CNI & CP and will keep on the watch list.
Posted by: Seamus at
February 7, 2008 8:54 AM [link]
craig- i can understand your yawn...see you posting at 201am (EDT) and again at 844am...i see your favorite hangout (COST) is reporting good numbers..
Posted by: 2nd_ave at
February 7, 2008 9:01 AM [link]
Quentusrex
As per my posting yesterday I held QID (inverse ultra short ETF for Q's) overnight and am looking forward to additional gains today. :^)
Posted by: johngeorge at
February 7, 2008 9:02 AM [link]
just wanted to post some thoughts for the Canadian Gold Bugs about Paul Vaneeden's recent appearence on BNN 2 days ago. (and the die hard americans who follow Vaneeden and BNN in Canada)
Paul Vaneeden was a regular guest on BNN and one of the more popular ones as he specialized in Jr. Exploration Companies. He was also fond of outlinging his thesis from a broader economic perspective. His website contained free monthly commentary that i always found enlightening and succinct.
his calls on gold for some time were fairly spot on.
then he disappeared from the public eye for a while, the commentary stopped for non-subscribers to his site, and JR gold stocks went down while gold was making new highs.
Vaneeden came out of nowhere on BNN 2 days ago for their evening Market call segment, he was extremely bearish, noted this is not the time to own JR exploration companies, or any other stocks accept your most beloved ones, and to hold gold bullion/cash.
he seemed curt and unabashed in his comments to the host of the show, but i admire anyone who can tell people not to invest in the vehicles he himself specializes in due to the market climate. i wonder if Mr. vaneeden is a bellwheather for stormy times ahead for gold mining companies, or if this is a signal that the level of bearishness is so high for JR Miner's that the time to buy and benefit from their historical leverage to gold is approaching.
Posted by: dr.cosa at
February 7, 2008 9:03 AM [link]
I was thinking the same thing...sentiment is down with gusto right now...FXI approaching it's usual low buy point. We're still above 12000-11800 where I think we would pause/bounce unless we see flat out panic.
Not there yet mind you, but we may be getting there.
I have to go to Phoenix tomorrow for the weekend.
I'm hoping we find a bit of a floor today as I don't want to miss the big sale while I'm on the road. The port is in the conversion stage of ST trades to longer term so I'm looking for downside now to add as opposed to daily moves in and out. Won't that be nice?
Posted by: Craig at
February 7, 2008 9:03 AM [link]
The Coalition Against Phantom Trading (CAPT) ran advertisements this week in two DC News publications that are heavily read by the members of Congress. Roll Call and the Politico.
Take a look at the advertisement.
My feeling is that at these levels INTC, SNDK are good buys for the *very, very* long term (3-5 years into the future), and possibly for short trades. CSCO too, but it has a good chunk of its business in a tougher market (enterprise) which is quite difficult in recessions.
I bought INTC at 19.80 and sold at 21.40 in a week, will look to repeat. At the same time I sold the Jan 15 2010 Call I mention here at the time ($6.90 was the cost at the time), may reenter if the price drops a lot.
If you look at the Fed data from yesterday, it looks like there are a lot of banks that are plain broke. So are MBIA and ABK. I believe these will be eventually bailed out, but because of the trillions involved, it will have to be ultimately with public funds. Otherwise the system collapses, which cannot be allowed to happen. So someone will pay for this well into the future.
Not going long in this market. Just my unexpert opinion.
I urge everyone to view the Van Eeden video posted yesterday, just the first and last minutes. I believe he liquidated his positions. http://broadband.bnn.ca/bnn/?id=2122&vid=30193
Posted by: SiO2 at
February 7, 2008 9:05 AM [link]
Good morning.
Here are your Cara 100 Ratings Changes:
Downgrades:
CSCO - to Neutral @ JP Morgan
CSCO - to Neutral @ Robert W. Baird
Target Price Lowered"
CCJ - $44 to $41 @ Friedman Billings
CSCO - $37 to $30 @ Lehman Bros.
_________________________________________________
Have a great and proftable day.
Posted by: Bull Hunter at
February 7, 2008 9:12 AM [link]
The discourse isn't showing up for me on the Skype client.
Would it be prudent to buy Jan 09 CALLS on CSCO and also sell Jan 09 PUTS on CSCO simultaneously to partially offset the cost of buying the CALLS? If you want to own the stock, and 1 year seems like a good timeline to see a bull market again, aren't you likely to keep the PUT premium and be able to buy your shares at a discount?
To offset the risk of the PUTS, I'd sell PUTS on 17.5 and buy CALLS on 20. I've actually never played options like this before, so wanted any feedback regarding the concept.
Posted by: Fazeli at
February 7, 2008 9:14 AM [link]
Hey SiO2, that link has crash my Firefox browser three times now.
I surrender.
BTW, I thought that only happened with IE? ;)
P.S. to 2nd, I'm in the East Bay -- far, far away from the techubernerds down in the penninsula.
Posted by: I_Loser at
February 7, 2008 9:14 AM [link]
Canadiansailor,
To my knowledge, bullion or foreign currencies cannot be held within an RRSP. Bullion-related contracts may also be prohibited. Check this out before you trade. Any confirmations out there?
Posted by: TerryC at
February 7, 2008 9:15 AM [link]
2nd,
Are you watching the Q's and surrounding ultras?
Seems to be buying happening PreMkt.
QID back to 54.80 +/- and the same move inverse in QLD...
Posted by: Craig at
February 7, 2008 9:16 AM [link]
Loser, it does not crash my Firefox, but it makes it awfully slow. I watched with IE, it works fine.
Posted by: SiO2 at
February 7, 2008 9:16 AM [link]
Canadiansailor,
As you probably know, some foreign content is allowed in your RRSP, so you can consider gold index funds on other exchanges, but probably the most direct way to hold gold in a Canadian account is through CEF.A, a TSX-listed fund that basically just holds gold and silver bullion.
Posted by: manx928 at
February 7, 2008 9:19 AM [link]
Geezer52: whatever you do please read 2nd ave's early morning post about positioning sizing.
The single largest mistake novice traders make, well there's two. The first taking on too much risk usually by allocating high percentages of their money to a single idea or stock. The second is not doing their own homework and blindly following others. Other ideas for just starting out:
--Understand the reasons for why you are buying or selling something.
--What's your time frame for investment? Do you need money in next week, month, year, decade?
--What is your risk tolerance? How much pain are you wiling to go through and hold? Or have pre-determined stops in place to automatically sell. It's about time frames.
--no large positions please!
I have other thoughts but the market is opening, gotta run.
For Gold ideas others can talk to you about GLD, GDX, physical, mutual funds.
Posted by: geckojb at
February 7, 2008 9:34 AM [link]
Hi,
Gold is merely testing 900 again, and holding.
Posted by: maromatics at
February 7, 2008 9:36 AM [link]
Let's see....take the 3.5% from CSCO or let it ride....up or down.....
Whaddaya say 2nd? Do we get another shot at 20-21?
Posted by: Craig at
February 7, 2008 9:37 AM [link]
Bloomberg talking about how techs in general and CSCO in particular, are being "hammered" at the open. No mention of the strong bounce now underway from after-hours and pre-market levels. Misleading.
Posted by: OldGoat at
February 7, 2008 9:37 AM [link]
Goat...
Not misleading...just reading the teleprompters on text that was prepared an hour ago...
Seems Mr. Market is answering my question...
Posted by: Craig at
February 7, 2008 9:39 AM [link]
what a comeback for CSCO...
Posted by: 2nd_ave at
February 7, 2008 9:45 AM [link]
re gold investments within an RRSP. fwiw I held IAU within an RRSP until ScotiaMcleod gave me the choice of selling or replacing it as the trustee did not view it as qualified investment. I sold it for a small gain and fortunately did not get penalised.
cheers
GW
Posted by: gwuk at
February 7, 2008 9:46 AM [link]
"Blue light special in the CSCO aisle"
Posted by: DaveB at
February 7, 2008 9:46 AM [link]
OK- i admit it...took CSCO off at 22.54, but with an eye on reopening soon...
Posted by: 2nd_ave at
February 7, 2008 9:51 AM [link]
CSCO...gotta take 7% in a few mins.
Looks volatile enough to come to me again.
Posted by: Craig at
February 7, 2008 9:53 AM [link]
Today's "lesson" using CSCO as the example of what you have been teaching us is for the books.
Thank you for this terrific commentary.
Posted by: GemmaStar at
February 7, 2008 9:55 AM [link]
Cara 100 - GSK - being pulverized.
Posted by: Bull Hunter at
February 7, 2008 10:01 AM [link]
Walmart misses it's forecasts. They were expecting 2% and only hit .5%. I would say this is a pretty good indicator of just how pinched Joe Sixpack is becoming.
Posted by: Zenob at
February 7, 2008 10:08 AM [link]
Bob Hoye 1hr. interview on Commodity Watch Radio:
http://commoditywatch.podbean.com/2008/02/06/bob-hoye-is-back/
There is an obvious debate here about whether silver is prepared for an advance. I would say that if silver did advance against gold in this climate of credit contraction, then be prepared that a correction not unlike May 2006 would occur.
Bob may well be correct, that silver will see declines against gold, since we see that in 1998 silver advanced very smartly against gold and began a long decline once the boom was over:
Stockcharts.com
Silver is also encumbered with massively short trades which could see some unwinding there. The very extreme "buy point" on the Wilder's ADX, the Aroon crossover, the MACD crossover, the juxtaposition of the short term yields resorting to steepening behind the long term yield curve steepening all suggest that silver prices are to advance for the short term. Seasonality also suggests that silver prices are set for an advance.
I'm not necessarily well positioned in this scenario since I'm holding a gold junior stock, but I would almost certainly NOT be going short anything silver.
Posted by: FranSix at
February 7, 2008 10:09 AM [link]
Canadiansailor:
If you have an RSP acct with Questrade, you can buy physical gold and it is stored at the Royal Canadian Mint where you pay a small monthly storage fee. The only caveat is that it is not allocated in your name though, it is in Questrade's name. It is also not marginable. CEF.A and GTU.UN are the next closest I'd say. There are also ETF's, either in U.S. (GLD, SLV) or in Canada (HBU - 2X bullion up, or HBD - 2X bullion down). Kaimu's reservations apply.
gwuk posted about problems holding IAU. I've never had a problem but obviously will research this more. Posts from anyone else with experience would be appreciated.
Posted by: bobj at
February 7, 2008 10:15 AM [link]
May be early, but selling into strength, taking profits on ag company ANDE. (Actually was a swing trade purchased back around Jan.15)
Will look to reenter after market drop when it's thrown out with the bathwater.
Posted by: Seamus at
February 7, 2008 10:22 AM [link]
Out of ETFC@4.71
Something Bill keeps saying keeps banging around in my head "Don’t think this Bear market is over however; it has a way to go."
That could become an understatement with all the mortgage defaults and loss of jobs going on.
I'm content with small short term profits, rather then holding long in these business times!
It's is my wooden nickel after all.
Good trading to everyone today.
And spot on today BILL. Is PUMP AND DUMP code for being WAY BEHIND THE EIGHT BALL?
Posted by: bigwad at
February 7, 2008 10:27 AM [link]
I'm with Seamus, selling into strength.
It was nice for gold and miners to come back this AM. Gave me a chance to lighten the load there to better position for TOAG.
Refilled partial CSCO at 22.25 and off it went.
I am patient.
Posted by: Craig at
February 7, 2008 10:27 AM [link]
RRSP Qualified investments are defined with Rev Can Bulletin IT-320R3. http://tinyurl.com/229nw7
I have read that Gold can be held but can't find it referenced in this bulletin. However, foreign currency can now be held apparantly. My beef with Canadian Banks is they will not allow you to hold US accounts within an RRSP. One said it is coming but they sure are dragging their feet!
I believe some ebrokers are offering this?
GW
Posted by: gwuk at
February 7, 2008 10:29 AM [link]
This story is worth a read about ARM's:
http://bloomberg.com/apps/news?pid=20601109&sid=azjDaDjddBE8&refer=home
Posted by: Quentusrex at
February 7, 2008 10:31 AM [link]
Bah! 30 minutes and no discourse. C'mon people, I need my fix.
Posted by: FattyArbuckle at
February 7, 2008 11:00 AM [link]
happy (chinese) new year to all- it's the year of the rat (one of the canniest creatures on the planet...if a rat could trade, i'd hire one to run my fund)...
Posted by: 2nd_ave at
February 7, 2008 11:01 AM [link]
2nd, GS has a den of them!
Posted by: Seamus at
February 7, 2008 11:03 AM [link]
Rats do trade....HB&B rats. Gotta give it to rats, they are very smart.
Anyone keeping their eye on GFI?
It's getting in the zone....
Posted by: Craig at
February 7, 2008 11:04 AM [link]
My feeling is that natural gas is heading down to $7 from the current $8. Expected storage at the end of heating season is 1.3 to 1.4Tcf. We are still at 2Tcf. There will be fluctuations due to weather, but it is too risky at the moment. I have just unloaded all my positions.
Posted by: SiO2 at
February 7, 2008 11:06 AM [link]
re gold: 900 spot held.
Posted by: maromatics at
February 7, 2008 11:08 AM [link]
Another W bottom forming? Seems like a replay of January 23rd.
Posted by: moab at
February 7, 2008 11:11 AM [link]
HELLO ALL,
Are people over at the "skype"?
I tried downloading when we were told but couldn't get it to work so I uninstalled it. I sure would like to try again today since I am waiting for some green with high expectations if not today then surely tomorrow. does anyone have that link? TIA
Also, my XOM post last nightis not my opinion. I posted for perspective. A way of seeing the spin.
I'm really bored today. Too scared to buy and got nothing to sell.
Hurry up and wait!!
Posted by: moneygenie at
February 7, 2008 11:15 AM [link]
gold strong in the face of rising USD the past 2 days,
we sit close to .77 on the USD and gold is holding $900.
for now.
would like to see gold close on the high for the session to really convince me that $900 is the base, not the pivot for a move down.
Posted by: dr.cosa at
February 7, 2008 11:17 AM [link]
Thinking out loud.
Watching GFI and reading about the on again, off again, real problems with electircal infrastructure, I also think about the SA rand which has been shaky. Not long ago it had a 6 handle, now around 7.76 or so. Everbank's Chuck Butler opines he wouldn't be surprised to see an 8 handle.
POG must be skyrocketing vs the rand. Wondering how the weak currency is affecting GFI.
Posted by: Seamus at
February 7, 2008 11:19 AM [link]
While the current Adv / Decl seems comperable, our current Put Vol is much much less than the 23rd.
So I wouldn't think we're setting up for another big run like, 01/23. But I'm a newb, and definitely more wrong than right for the past week or so...
Posted by: FattyArbuckle at
February 7, 2008 11:20 AM [link]
Speaking of currencies, Warren Buffett is banking on Brazilian reals vs USD. FWIW.
Posted by: Seamus at
February 7, 2008 11:22 AM [link]
No worries MG re: XOM post. It was whacky alright!
Good luck to you today.
Posted by: Craig at
February 7, 2008 11:25 AM [link]
mg - Link is http://nexalogic.com/skype.html
Posted by: OldGoat at
February 7, 2008 11:26 AM [link]
Si02,
Thanks for Van Eeden reminder...chilling!
Also, FWIW, re natural gas, I received this recommendation today....
"Recent energy price trends are bullish for natural gas. Natural gas prices been going up while oil prices have been going down. Also favoring Nat Gas is uniquely and steadily high coal prices, which could cause flight to Nat Gas near term. A stock well leveraged to the price of natural gas is XTO Energy (XTO),....... "
Disc: just looking
Posted by: Jaketh at
February 7, 2008 11:27 AM [link]
"U.S. Treasury Secretary Paulson reiterated that he does not believe the U.S. economy is in recession, according to Reuters."
amazing
Posted by: DaveB at
February 7, 2008 11:30 AM [link]
Sirf looks broken to me. #'s were horrible, forward outlook was desperate.
Trouble is, all these new GPS phones coming on the market... they need the chips to make them work properly.
I realize chip makers are all hurting with low margins, (swks,rfmd,intl,mvl,amd,etc.) but I still think sirf would be a good candidate for the auction block. If not another chip maker, maybe garmin or tomtom.
Just thinking out loud.
Posted by: bigwad at
February 7, 2008 11:32 AM [link]
Sold the Jan 09 20 CSCO puts. So, should CSCO be put to me at 20, my cost basis will be 18.13. If it is not put to me, my 'payment' for assuming the 'risk' of being assigned CSCO at multi-year lows is 1.87/share.
Getting it, Bill. Getting it.
BTW, I think I mentioned going short CMG not too long ago. That trade is on FIRE! Sold calls, bought puts when it was well above 115. Sold the 135 call for $380 time premium. They will expire worthless in a couple of weeks, or I can cover them for .15 now. And the 115 strike puts are firmly ITM and are proceeding to pull in the cash.
There is a LOT more downside to come here, but with the huge short interest and recent large drop, be wary of your entry point right now.
I expect this one to be the gift that keeps on giving. What more can you want than a damn burrito shop trading at 60 times earnings in a consumer led pullback and a bear market??? That's something like twice the nearest p/e of any other restaurant. I don't care how fresh and tasty they are.
This is the CROX of the moment. The CROX I called an overpriced fad stock when it was at 70 and climbing last summer. Someone tell me how CMG is not overpriced? It seems so obvious I need to hear a contrary view.
I expect a short covering or some other kind of rally here at some point. The minute that happens I will be selling more CMG calls.
Posted by: MikeNYC at
February 7, 2008 11:39 AM [link]
What are the comps to other similar restaurants....Fresh Mex, Sierras, etc?
These places are fast, fresh and inexpensive.
Very popular in the west. Good food for under $5.
No position.
Posted by: Craig at
February 7, 2008 11:44 AM [link]
dr. cosa,
"gold strong in the face of rising USD the past 2 days,
we sit close to .77 on the USD and gold is holding $900.
for now."
You read my thoughts. The gold bulls and bears seem to be in equilibrium at this point. However, Bill's crystal ball is proving accurate once again as $USD continues to pick up strength. EUR/USD now down to 1.4484 from an opening high of 1.465. I'm thinking gold may probe lower than $900 to find a bottom while money sits on the sidelines.
We should use this respite to put heads together for a strategy to plan Bill's trade of a generation before the next FOMC.
Posted by: French_Canuck at
February 7, 2008 11:48 AM [link]
From "Budget 2005 - Tax Measures Supplementary Information"
Qualified RRSP Investments
The budget proposes to add to the list of qualified investments, investment-grade gold and silver bullion coins and bars, and certificates on such investments. Investment-grade gold must have a purity of at least 99.5 per cent, while investment-grade silver must have a purity of at least 99.9 per cent.
Legal tender bullion coins will qualify if they are produced by the Royal Canadian Mint and all or substantially all of their fair market value is attributable to their precious metal content. Bullion bars will qualify if they are produced by a metal refinery accredited by the London Bullion Market Association, as evidenced by a hallmark identifying the refiner, purity and weight. Certificates will qualify if they are issued by a federally or provincially regulated financial institution and represent a claim on precious metal holdings of the issuing institution. For all such investments—that is, coins, bars and certificates—the investment must be acquired either from the producer of the investment or from a regulated financial institution.
These changes will be effective for investments made on or after February 23, 2005."
gwux, I seem to be plugging Questrade, but in their RSP's they allow you to hold USD in the account and you decide if you want to settle purchases in CAD or USD.
Posted by: bobj at
February 7, 2008 11:48 AM [link]
Minyanville is a great resource for traders but even they are no match for this site. Today they highlighted Cisco as a possible short - after its been beaten for 40% in four months. Doesn't make any sense.
I'm watching UBS as it is in the accumulation zone with a potential double bottom on the dailies. It's RSI(7) monthly is 15 according to stockcharts.com.
Posted by: moab at
February 7, 2008 11:50 AM [link]
Well, CMG WAS over 60 times earnings when I started. After the past few days it's more like 53. :-)
That muffled screaming you hear? CMG longs shouting pain through a mouthful of carnitas. Minus 15% in five days. Is that a lot?
CSCO: It's pulling back from the lows. Did Bill just call a bottom?
Posted by: MikeNYC at
February 7, 2008 11:52 AM [link]
FXI-> closed out...
Posted by: 2nd_ave at
February 7, 2008 11:55 AM [link]
Re: VenEeden
Bill has called a bear market in the juniors and John Kaiser is expecting an absolute washout to setup a roaring bull market in 2009. When the market finds its footing and people feel more confident in speculating they will come back.
Its still early. iTulip had an interview with an anonymous hedge fund manager who invests in junior golds. He says that they laugh at him on Wall Street when he tries to raise funds. His fund has gained 27,000% since 2001 - I don't understand why they are laughing. One of his picks is Luna Gold, which has very experienced management and two late stage gold mines in Brazil.
Posted by: moab at
February 7, 2008 12:00 PM [link]
Craig,
When I screen against the restaurant segment as a whole, not another company comes close to that price level. I did not look expressly at 'Fresh-Mex' type places, but I will. Thanks for the comment.
The chart was looking ugly when I took the trade, dropping like a rock from 135 to about 120 or so before I got in, higher if you go back a few more months. I think it was up to around 150 not too long ago.
The company also issued some news that they were facing tough times due to rising costs of inputs (ag inflation.) If that impacts earnings we will find out soon as they release on the 15th, I think.
I visited one myself to see. Tasty, fresh, nice clean interior. A small line was forming but in midtown that's nothing special.
The food and stores are nice. But at the end of the day, there's nothing that to keep anyone else from opening the same thing. Oh, I see they already are:
"With one-of-a-kind offerings like Qdoba Signature Burritos, Qdoba won over customers and critics alike. Denver's Gabby Gourmet restaurant critic named Qdoba one of the top 15 inexpensive restaurants in Colorado. And both the Denver Post and Westword named Qdoba "Best Burrito."
Obviously, it was an idea whose time had come. Fast, fresh Mexican flavors that were anything but old-fashioned refried beans and Spanish rice, prepared right in front of the patrons with only the freshest ingredients.
In just a few years, we've grown to include nearly 400 Qdoba Mexican Grills from coast to coast. And plenty more are on the way."
Posted by: MikeNYC at
February 7, 2008 12:03 PM [link]
My plan for eod today (as it stands now)
1) close my NDX ultrashort
2) redeploy to split between NDX ultralong & XAU
or
2) if NDX has a huge surge down this afternoon I'll simply go into cash
Posted by: DaveB at
February 7, 2008 12:04 PM [link]
Dollar & Gold reaching for new highs at the same time? Can anyone explain?
Posted by: onlineaces at
February 7, 2008 12:05 PM [link]
bobj
Thanks for the bullion info. No problem with you promoting Questrade however I am somewhat reluctant to trusting my money with anyone other than a bank in Canada. However, it is probaably time to look at the actual differences in risk between Banks Ebrokers.
GW
Posted by: gwuk at
February 7, 2008 12:05 PM [link]
I listened to the Cisco conference call yesterday and came away thinking that Chambers has a lot of integrity and that Cisco is still a great long-term holding for relative stability. That being said, I went back through my transaction history and saw that I bought Cisco 5 years ago for about $14 and unloaded it a year and a half ago for about $21. Has it hit a bottom now? I don't know. It certainly looks low when you look at a 1 year chart. When you look at a 5 year chart it looks pretty high. Current P/E is 17 I believe and growth of 10%. That's the fundamentals as I see them.
Posted by: Fred at
February 7, 2008 12:11 PM [link]
I've been to Qdoba, not impressed. It is a burrito place, more like a better decorated Taco Del Mar.
These other places are "mexican grills" serving what is known as "Baja Style" food. More lime, mesquite grilling, lighter seasoning (includes traditional Mayan/Inca seasonings), salsa bars.
Not like Tex Mex or even the usual California fare.
The better comps would be Fresh Mex, Chevy's.
Posted by: Craig at
February 7, 2008 12:14 PM [link]
Huge volume in CSCO today. Combined with monthly rsi reading, seems like a potential spike boytom.
Anyone else looking at UBS?
Posted by: moab at
February 7, 2008 12:16 PM [link]
I opened a 1/3rd call position on CSCO 25 strike, VYCAE, this morning @2.10.
Its been green since.
So far, the market is tell me the position is correct. Thanks Bill for your added gui-dance this morning...
Posted by: onlineaces at
February 7, 2008 12:19 PM [link]
A follow-up on a possible "short bonds - long Gold" from Bill yesterday. I just checked the VGM EFT, and it looks like large sellers are already there.
http://www.willain.com/EV/content/Reports/VGM.jpg
This is my first post here. Hope to be able to contribute from time to time.
Posted by: Pascal at
February 7, 2008 12:21 PM [link]
moab, have been wanting to take position in UBS but won't due to uncertainty of future writeoffs and capitalization. I know the RSI get low for a reason and you never find the perfect buy zone stock but I would be more inclined to take a position if the stock was able to break the downtrending channel and go thru resistance line that began 12/10/07. just my take.
Posted by: geckojb at
February 7, 2008 12:22 PM [link]
Another excellent fresh mex comp, and maybe a good investment, would be El Pollo Loco.
This one is off-the-scale popular in So. Cal.
Posted by: Craig at
February 7, 2008 12:24 PM [link]
moab,
I'm looking at UBS, AEG, AXA, ING, HBC, and CS for the long-term. All closing in on AZ. All at prices I never thought I'd see. Shell shocked by the market right now though and paralyzed. Another 10% drop could loosen me up!
Posted by: Fred at
February 7, 2008 12:31 PM [link]
I'm looking at UBS for a short term trade like the spike from January 23rd. I want to rent the financials now, not own.
Posted by: moab at
February 7, 2008 12:33 PM [link]
Hi,
Re POG
My intuition here is that POG will nudge higher up to 930.
It may even make a fake breakout, which would be a bull trap.
If this happens, then I would expect a retest of 890. If that level holds, then the coast will be clear on the upside.
In this light, I am looking to close my gold longs if, as and when POG touches 930 again, looking to buy lower in a couple of weeks.
Cheers,
Posted by: maromatics at
February 7, 2008 12:43 PM [link]
Been to an El Pollo Loco. It was pretty good.
All this burrito talk had me walking around the office asking for ideas for a lunch order (good burritos are hard to come by in Manhattan.) Chipotle came up several times, and folks mentioned they had visited one. Pretty funny - in every case I said "How was it?" "Ehhhh. It was alright, I guess, but..."
Craig, the fact that this is a crowded market segment tells me something, too.
But it almost doesn't matter if it's any good. For whatever the reason, the stock is falling like a rock and I'm along for the ride.
Posted by: MikeNYC at
February 7, 2008 1:04 PM [link]
We trade prices Mike. Go for it and good luck!
Posted by: Craig at
February 7, 2008 1:12 PM [link]
Thanks for all the remarks on the Cdn RRSP/Gold.I am
hoping to meet some of the people here at PDAC.
I received the "Bar Code" via email the other day.
I hope the Canadian banks are a little more secure
regarding the safety of RRSP's.
Posted by: Canadiansailor at
February 7, 2008 1:23 PM [link]
Skype help.
Entered billcara.com and skype returns no contacts found.
Does anyone know what name I should be searching for?
TIA
Posted by: Telestar3d at
February 7, 2008 1:25 PM [link]
TORONTO, ONTARIO--(Marketwire - Feb. 7, 2008) - Noront Resources Ltd. ("Noront") (TSX VENTURE:NOT) has closed a private placement of 6,500,000 units of Noront for aggregate gross proceeds of $26,000,000. Noront is very pleased to announce that Rosseau Asset Management; Pinetree Capital Ltd.; Robert McEwen, President, Evanachan Limited; Pierre Lassonde, Chairman, Franco-Nevada Corporation; Sprott Asset Management; and Northfield Capital Corporation purchased a substantial portion of the units in this private placement.
http://tinyurl.com/2ejtbw
Same guys that bought BMK are buying NOT. Disclosure: Long NOT and BMK.
Posted by: Fred at
February 7, 2008 1:26 PM [link]
Super rich Romney curtsies to McCain.
Posted by: bigwad at
February 7, 2008 1:26 PM [link]
Telestar: add user nexalogic to your skype contacts.
Posted by: SiO2 at
February 7, 2008 1:27 PM [link]
Super arrogant wealthy out of touch Romney makes insider deal with McCain, likely through Rush.
Posted by: Craig at
February 7, 2008 1:32 PM [link]
Exactly, Craig.
One thing, though: I'm finding that some fundamental knowledge or edge, combined WITH trading price action, seems a pretty powerful combination. Unfortunately, that combo is hard to find/create.
CSCO:
Everyone green and happy on this trade? Once again, Bill makes bank. Can I loosely quote our host after his truly great and potentially lucrative XOM top-call? "What do I have to do? Write you a check?"
Posted by: MikeNYC at
February 7, 2008 1:37 PM [link]
I wouldn't be too quick to the punch hoping for a rally. The DOW has met stiff resistance all three times it tried to go above Thursday's low of 12249. I think we'll have to below 12K before we see any rally of substance. Unless, of course we close above Thursday's low.
Rob.
Posted by: Finger Lakes at
February 7, 2008 1:39 PM [link]
Bill, Jock
just in case if you don't have it
U.S. Department of the Interior
U.S. Geological Survey
MINERAL COMMODITY SUMMARIES 2008
Posted by: jk484 at
February 7, 2008 1:46 PM [link]
Looks like I spoke too soon. The 4th try the DOW broke through. Let's see if it holds. If it does, I'll switch sides and go long.
Rob.
Posted by: Finger Lakes at
February 7, 2008 1:46 PM [link]
onlineaces:
couldn't the UK rate cut boost the dollar and gold at the same time?
As far as gold being "strong" today - For me, the vol is getting to the point that I no longer think of ten dollar price movements as anything but noise. A year ago a ten dollar day was something. Now it has to get towards $15 to get my attention.
Posted by: MikeNYC at
February 7, 2008 1:48 PM [link]
MikeNYC -
Even if Feb. expiration is tantalizingly close, you should protect your good CMG trade from a Valentine Day's earnings hangover. To wit, the initial reaction to AMZN ho-hum earnings. Imagine the market makers salivating at rendering a bunch of open interest worthless in less than a day. In a bear market, secure your gains when possible.
More generally, re: put writing strategy. Without full knowledge of Bill's approach, I am forced to pause when I see you take a short put position on LEAPs or longer term options (say beyond 3-6 months). So building from multi-year lows takes longer than a fall back down (see charts for a lot of financials & retailers). A year ago, would you have been happy to write puts on C for a net of $32.5/$35 basis. Painful experience, if you had...
JML
Posted by: Jumble at
February 7, 2008 1:49 PM [link]
Sold QID @ $53.06. Still long UNG and am now even. Still short GDX with a small profit. GDX is a day to day hold.
Will continue to hold UNG until at least mid February or perhaps much longer. Will know in the fulness of time.
Posted by: johngeorge at
February 7, 2008 1:55 PM [link]
my concern regarding gold is that we could see a sudden upward or downward explosion in the price,
too fast for those of us not glued to the screen minute to minute to anticipate and clear out or get in...
as well i am concerned (but in a good way) to see golds holding of the $900 level the past few days with the rising dollar. this could be noise as someone just pointed out, or the start of something big if and when the US dollar turns back down...
Posted by: dr.cosa at
February 7, 2008 2:02 PM [link]
Jumble,
Closing out before earnings is something I'm considering and have been since I entered the trade. The call I sold expires in Feb. The put I own expires in Mar. The call I might close before, and the put, if I still even own it then, which I may not, I have no problem keeping through earnings.
I'm also considering buying a handful of supercheap straddles on the 14th, just for that kind of earnings surprise. I suspect it will move in one direction or the other. A disappointment will bring the shorts out of the woodwork on this one.
CSCO put expiring in January? Well, no one says I need to own the put forever. And if I own the shares at 18.17 when it gets put to me at 20, that's cool too. Frankly the closer in expiries weren't selling at enough premium to interest me.
I can't plan all my trades as if they are sitting on several trillion dollars in rotten assets, so I'm not sure the C comparison holds up.
Posted by: MikeNYC at
February 7, 2008 2:06 PM [link]
QLD-> off the table at 71...
Posted by: 2nd_ave at
February 7, 2008 2:08 PM [link]
Jumble:
Thanks for getting me thinking. I closed the CMG Feb call I sold. There was .15 residual value on an option I sold for 3.80. That .15 is not worth keeping the trade open when there is even a small risk of an earnings surprise. There just isn't a lot more value to wring out of that sorry call.
cosa:
That is why trading gold is so hard, and part of why I think it is heavily manipulated. It grinds along and grinds along and suddenly within minutes it jumps or drops 8-10 bucks. Or reverses on a dime. It's gotten worse lately, which is why the straddle strategy works well now. Is there anything else, in any market, that trades like gold?
Posted by: MikeNYC at
February 7, 2008 2:13 PM [link]
Faz - I have confirmed, but cannot explain, 3-minute RSI(14) computational differences between Fidelity and IB charts. (My laptop w/ Skype just died, so posting this here.) In any event, lo! -- that which the 3-minute RSI foretold is now coming to pass.
Posted by: OldGoat at
February 7, 2008 2:17 PM [link]
Re: (Cara 100) Cameco Corp.
(CCO-T, CCJ-N) C$32.19
TD has a research note out, as follows:
-------------------------------------------
Port Hope Drags Down Q4; No Catalyst on the Horizon
Event
Cameco reported Q4/07 adjusted EPS of C$0.18, well below our estimate of C$0.50 and consensus of $0.46.
Impact
Negative – There is no way to spin yesterday’s results as positive in our view, although the higher costs and lower revenue at Port Hope appear to be at least partly due to higher than expected remediation costs and lower realized prices for conversion services –some which should reverse over the next several quarters as the operation is returned to service in Q3/08. The uranium and nuclear businesses performed more or less in-line with our expectations. We have adjusted our estimates to reflect higher osts for the fuel services division and for the uranium operations (as per company guidance). As a result of these changes, we have lowered our estimates for 2008 and 2009. We have reduced our target price to C$39.00 (from C$44.00) and we are leaving our BUY recommendation unchanged.
Posted by: Bill Cara at
February 7, 2008 2:22 PM [link]
MikeNYC -
Even a clairvoyant short would have cracked a smile at C's price today. I am just trying to illustrate that risk management on longer term positions is a tougher game than with a 3-month horizon. Where do you set your stop loss to buy your puts back in case things turn sour before then?
JML
Posted by: Jumble at
February 7, 2008 2:23 PM [link]
Taking 2nd's call a step further...scaling into QID.
Since I'm gone tomorrow it's probably best to take profits and come back fresh on Monday.
I see resistance held so far and I think we all get a few more shots at new lows. A drag but it's in the charts.
I'll hold the CSCO I have, QID, BRK and a few miners. SNDK is coming back to me already.
Posted by: Craig at
February 7, 2008 2:25 PM [link]
MikeNYC -
Yes, UK cut depreciates relative to the USD$...
I also agree with your other points...there is a lot of noise right now and a straddle on Gold positions are likely the best strategy.
from dailyfx.com:
Our GBPUSD SSI reading flipped into net-long territory just two weeks ago and predicted a noteworthy decline in the currency pair. Since then, the ratio has only grown further into net-long territory, as long positions are 11.5% higher than yesterday and 18.5% stronger since last week. Short positions are 6.2% lower than yesterday and 20.3% stronger since last week. Open interest is 3.6% stronger than yesterday and 20.5% above its monthly average. The SSI is a contrarian indicator and signals more GBPUSD losses.
Posted by: onlineaces at
February 7, 2008 2:25 PM [link]
A stealth deterioration in stocks is occurring: the major averages are rallying yet the number of very weak stocks is expanding. Therefore we continue to believe that the upside is capped and the market will struggle to hold its rally...then suddenly the downtrend will resume as bids evaporate...stay tuned!
Posted by: JWibbs at
February 7, 2008 2:27 PM [link]
just wondering- for those of use unable to 'skype' while at work..are we missing out on potentially valuable information? if so, is it possible to create a link to chat content for later review...
Posted by: 2nd_ave at
February 7, 2008 2:27 PM [link]
2nd:
There are a handful of us who do chat at times at a much higher frequency because the system allows for it, but it's typically about immediate actions and market events.
However, there has been discourse on options trading strategies in several sessions.
For those who can use it, I highly recommend doing so. As for whether we can publish the history for later review, you'd have to ask Nexalogic for that one!
Posted by: Fazeli at
February 7, 2008 2:32 PM [link]
Thursday, February 7, 2008 9:39 AM
By: Ronald Kessler
Guarding presidential candidates 24 hours a day, Secret Service agents know better than almost anyone what they are really like. Among Secret Service agents, no protectee evokes more disdain than Hillary Clinton.
Secret Service agents assigned at various points to guarding Hillary during her campaign for the Senate were dismayed to find her two-faced and perpetually angry.
“During the listening tour, she planned ‘impromptu’ visits at diners and local hangouts,” a former Secret Service agent told me for my book “A Matter of Character: Inside the White House of George W. Bush.” [Editor's Note: Get Ronald Kessler's book — go here now.]
“The events were all staged, and the questions were screened,” the former agent said. “She would stop off at diners. The campaign would tell them three days ahead that they were coming. They would talk to the owner and tell him to invite everyone and bring his friends. Hillary flew into rages when she thought her campaign staff had not corralled enough onlookers beforehand. Hillary had an explosive temper.”
Publicly, Hillary courted law enforcement organizations, but privately she had disdain for police. “She did not want police officers in sight,” a former agent said. “How do you explain that to the police? She did not want Secret Service protection near. She wanted state troopers and local police to wear suits and stay in unmarked cars. If there were an incident, that could pose a big problem. People don’t know police are in the area unless officers wear uniforms and drive police cars. If they are unaware of a police presence, people are more likely to get out of control.”
In Syracuse, a bearded man who aggressively sought autographs accosted Hillary as she went for a walk outside her hotel during her Senate race.
“He grabbed her,” an agent said. “She was livid. But she had insisted she did not want us near her.”
For her Senate campaign, the Secret Service purchased three Cadillac De Villes.
“She decided they were not compatible with her down-home image. They were used once or twice,” an agent said. “She wanted a conversion van with picture windows and two captain chairs. So we purchased three of them, each outfitted with armor, bulletproof glass, and a system to supply clean air. Each was positioned around New York State to help reduce travel time.”
Like her husband and his White House staff, Hillary and her staff were disorganized and habitually late. “She had children running her campaign,” an agent said. “She had a lack of organization and a lack of maturity. She could not keep a schedule.”
When she stayed at the houses of Democratic supporters, “We would show up at their homes at 2 a.m., and she would sleep in the master bedroom,” he said.
During her “listening tour,” Hillary’s campaign staff planned a visit to a 4-H Club in dairy farm country in upstate New York. As they approached the outdoor event and she saw people dressed in jeans and surrounded by cows, Hillary became livid.
“She turned to a staffer and said, ‘What the [expletive] did we come here for? There’s no money here,’” a former Secret Service agent said.
As the Secret Service and White House residence staff saw it, Hillary and Bill Clinton had a business relationship, not a marriage. “They would talk on an encrypted phone,” an agent said. “He would give her advice. It was a political alliance. She portrayed herself as devastated by the revelations of Monica [Lewinsky]. I doubt she cared.”
The Clintons’ home in Chappaqua allowed Hillary to establish a residence in New York State and run for the Senate. They keep an apartment in New York, but Hillary lives mainly in Georgetown. They use the Chappaqua home for fundraisers.
“Chappaqua was because she had to be a resident of New York,” an agent said. “That was the main reason for taking it. The only reason she ran for the Senate is to be president.”
Everyone on the White House residence staff recalled what happened when Christopher B. Emery, a White House usher, returned Barbara Bush’s call after she had left the White House. Emery had helped Barbara learn to use her laptop. Now she was having computer trouble. Twice, Emery helped her out. For that, Hillary Clinton fired him.
The father of four, Emery could not find another job for a year. Yet on TV, Hillary speaks of her compassion for the little people. In her book “Living History,” Hillary Clinton wrote of her gratitude to the White House staff.
The truth is, said a Secret Service agent, “Hillary did not speak to us. We spent years with her. She never said thank you.”
In contrast, “Barack Obama is a decent guy,” says an agent. “Like President Bush, he treats the people around him with respect.”
Posted by: bigwad at
February 7, 2008 2:42 PM [link]
Uranium -
U.S. nuclear power plants to get more Russia uranium
For years, the U.S. government has restricted Russian uranium shipments, fearing Russia would dump uranium in the U.S. market and financially hurt the major American uranium supplier, USEC Inc.
Under the deal, Russian uranium exports to the United States would increase slowly over a 10-year period, beginning in 2011, when shipments would be allowed to reach 16,559 tons.
http://www.reuters.com/article/topNews/idUSN0146993820080202?feedType=RSS&feedName=topNews&sp=true
Posted by: jk484 at
February 7, 2008 2:43 PM [link]
Taking a 1/3rd short position on natural gas. I use natural gas to park cash instead of money market. Payouts have been consistently in the 10% range every 30 to 60 days. Risky, yes, but so is leaving money in money market :-)
Posted by: SiO2 at
February 7, 2008 2:44 PM [link]
onlineaces at February 7, 2008 12:05 PM
Maybe it's a one day wonder but I don't think so. I suggested this would happen a few weeks ago. 30yr down,usd up,pms up. What I had said was that during the hui's impulsive bull runs over the past 8 yrs it has been fairly common to see the usd rally with the pms but always during a fall in bond prices. jmo
Posted by: Tbar at
February 7, 2008 2:49 PM [link]
if the above portrait is accurate, i would absolutely weight the portrayal in making election decisions...in my experience, whatever your profession/occupation->an even temperament, humility, and (heartfelt) respect for anyone you come into contact with (peers, family, clients/customers, subordinates) is hands down the best predictor/marker for how effective a leader you will be/are...no joke...
Posted by: 2nd_ave at
February 7, 2008 2:50 PM [link]
(last post referencing to the 242pm post)...
Posted by: 2nd_ave at
February 7, 2008 2:51 PM [link]
Thanks, jk484 for the link, and Moab for mentioning Luna gold.
Van Eeden did say he kept 4 juniors, but would not be a buyer now: alteras, cavanac (sp?) Miranda Gold and Mirasol. Anyone know those juniors?
I searched for "free" Van Eeden materials, and found a 2006 draconian statement on how to value junior explorers:
He gives ZERO valuation credit for resources in the ground, values only management and their ability to attract senior producers as JV partners.
He seems a guy with rather extreme views!
Wait, C is pretty much flat today, so I'm not getting what you mean.
BUT, in setting my stops on option trades, I look at the price action of the underlying and recent resistance and price channels. I also tend to give options more leeway to fluctuate and keep my positions small, to reduce my risk.
I also only write puts on companies I think have value and that I would not regret owning. To go back to your example, C would never have made my list at any time, even during the banking boom years.
For example, I have written puts on RIO 25 June. Cost basis if it gets put to me at 25 is 23.60. There is resistance at 20. That's my stop.
Posted by: MikeNYC at
February 7, 2008 2:53 PM [link]
I personally have found that to be true but I also know individuals that are non-compromising perfectionists that it pays to be that way.
My wife's doctor comes to mind. Hell on wheels to staff if not on the ball, but lives depend on it and his results so far....perfect.
I imagine someone like Hillary is pretty demanding. I have talked to personal friends of hers....(dog business you know) and have heard much the same thing from those close to her.
Chalk one up to the 6 degrees.
Posted by: Craig at
February 7, 2008 2:55 PM [link]
craig- you could be right...leaning towards a sell-off in the final hour...all ST longs are off the table for now...enjoy your trip to phoenix tomorrow..
Posted by: 2nd_ave at
February 7, 2008 2:55 PM [link]
Bonds are selling off. The Treasury Auction didn't go well today, I hear. Foreign buyers are pulling back. It seems they have had their fill of wooden nickels.
Posted by: moab at
February 7, 2008 2:56 PM [link]
Charts look to be making the 3:00 u turn....
Posted by: Craig at
February 7, 2008 2:57 PM [link]
I'm getting widely differing bid/ask quotes from Fidelity and IB.
Posted by: OldGoat at
February 7, 2008 2:58 PM [link]
Bigwad - Please provide a cite for your post. Where was it published? who is the author? Is it "objective"?
Don't get me wrong, I too have doubts about Hillary. Like, how does she (after a life in "public" service) have $5M at hand to loan her campaign? How does the couple (with a career in "public service") file a wealth statement of up to $51M?
But mine are questions. The statements you post need to be fully attributed, so they can be properly judged. Thanks in advance.
craig- let me amend my comment re temperament to apply (especially) to positions where your accomplishments depend (almost entirely) on your ability to manage people...for an MD/artist/any other profession where your expertise in a particular skill/procedure is paramount, i would correspondingly back off from my earlier statement...
Posted by: 2nd_ave at
February 7, 2008 3:00 PM [link]
Support at 20, is what I meant to say.
Posted by: MikeNYC at
February 7, 2008 3:01 PM [link]
MikeNYC/Tbar/All -
To expand further on my earlier comments -
Gold has managed to recapture a key technical level I am looking at and it did it in the face of the Euro weakening the the USD strengthening, despite the ECB not cutting their rate.
To compound the "bizarre" counter trend rally in Gold, we have the UK also weakening.
For me, Gold must stay strong the remainder of the day and be supported over night by Asia to bulster the Bulls and make the shorts more nervous in spite of the USD$ growing stronger.
I also think that Silver is being supported by the the great strength of Copper today as I look at their respective futures' markets. Platinum made another record high as well as well as palladium with its own record. Perhaps, money that was in Gold is going to the other metals markets ralling stronger today and so Gold is not as strong in relative terms. Thus our perception of these events can be interpreted the "noise"...
Posted by: onlineaces at
February 7, 2008 3:01 PM [link]
Posted by: bigwad at
February 7, 2008 3:04 PM [link]
No worries 2nd...I suspected as much. LOL!
Posted by: Craig at
February 7, 2008 3:09 PM [link]
CSCO coming off since 2:30pm, breaking today's trend line.
Posted by: Bill Cara at
February 7, 2008 3:10 PM [link]
The Euro is probably weakening because the European Union is under increasing stress because of the strength of the Euro. France, Spain and Italy are screaming for a weaker currency and the Germans are ignoring them. This calls into question the viability of the Euro currency.
Posted by: moab at
February 7, 2008 3:13 PM [link]
I should have referenced the fact that the DJIA and Nasdaq started to sell off at 2:10pm, about 20 minutes before CSCO started down. The Algo traders are moving this market, which means if you are trading short-term, you pretty much need to be watching your screens by the minute. Tough on the kidneys, but that's part of the deal.
Posted by: Bill Cara at
February 7, 2008 3:16 PM [link]
CSCO: Yep, right around 23.25.
I'm now out but have stink bids in should CSCO or SNDK come to me at my price while I'm gone.
Gotta love computers.
Bill, I can't thank you enough. Made good $ on CSCO today and will in the future.
7% in a matter of minutes, reloaded and made a few pts more. If it comes to me it shouldn't take long to turn 26% since I'm 1/3 the way there in one day.
Posted by: Craig at
February 7, 2008 3:28 PM [link]
nice work Craig!
Looks like my plan for eod trades will be:
close ultrashort NDX
open ultralong 2X NDX
open long XAU
Posted by: DaveB at
February 7, 2008 3:37 PM [link]
Jock,
Van Eeden mentioned holding Rimfire (RFM), Miranda (MAD), Mirasol (MRZ), Kaminak (KAM), Wildrose (WRS) and Altius (ALS). Except for Altius they are all very small with market caps between $14 million and $32 million. Except for Altius they are all trading near their 52 week lows. I quickly scanned Stockchase.com to see if there are any reviews on these companies. Altius has its fans and critics. Van Eeden is the only name reviewing the other companies except for Miranda. Miranda was also recommended by Jay Taylor and Lawrence Roulston.
Posted by: Fred at
February 7, 2008 3:43 PM [link]
I see on Bloomberg McCain is trying to assure the extreme of his party that his IQ isn't too high and he will model himself after the current failure.
That's like Hillary cowtowing to Al Sharpton.
Now we defines himself as a flip-flopper running away from his senate record. (and essentially running on Bush?) If that's what they want....
Posted by: Craig at
February 7, 2008 3:43 PM [link]
Craig,
You have to admit, it IS fun watching the republicans self destruct. They've been savaging the country for a decade now, it's only fair that they take their turn under the teeth.
Posted by: Zenob at
February 7, 2008 3:47 PM [link]
bigwad's story on Hillary - know the source!
Thanks for the cite. Wikipedia says this about the source, Newsmax:
"Christopher W. Ruddy started Newsmax.com on September 16, 1998, supported by a group of conservative investors, including the family of the late CIA Director William J. Casey. Later Richard Mellon Scaife, his former employer at the Pittsburgh Tribune-Review and a supporter of conservative causes, invested in the fledging company.[2] One of the initial board members was author James Dale Davidson who edited a financial newsletter that had shared Ruddy's interest in the Vincent Foster case. Davidson's co-editor, Lord Rees-Mogg, former editor of the The Times and Vice Chair of the BBC, later became chairman of Newsmax Media."
___________________________________________
Hardly a news source, more like viscious, hard-right propaganda! Anywhere I see Richard Mellon Scaife, that's what's happening, IMHO.
fred - Thnx for clarifying VAN Eeden's remaining holdings. Except for KAM they are at or below their weekly bolllinger band.
Bargains? or on their last legs?
Any chance I could convince you to review them for the juniors project?
Seems like a W-bottom, although a sloppy one. But the volatility is amazing and doesn't portend well.
Posted by: moab at
February 7, 2008 4:01 PM [link]
Jock,
I'm no Hillary fan, and suspect there is some truth in that article, but I agree about NewsMax. While it's often hard to tell what's true or false in politics, I've read enough articles there that seemed to be at odds with the facts that I usually discredit outright anything I read there.
Hi,
So the puzzle pieces keep aligning for the trade of a generation.
Bloomberg is reporting that today's treasury auction did not go well. Consequently Bonds sold off.
Cash is not going:
- to equities (no way)
- to time deposits (no way)
- to commodities in general (too risky and too expensive)
So, the cash will go to gold.
Today POG rose to 910 spot (more or less), on a day when the USD shorts were squeezed.
Tomorrow continuation is expected, and it will be a great selling opportunity. Yes, you read it well: selling.
My point is that there is not yet enough technical momentum for the upward explosion needed to jump to 1.000, and breakout.
So, I am expecting POG tomorrow over 915, probably touching 930 before coming back to establish support.
The trade of a generation may be no more than a couple of weeks away, but not quite there yet.
Enjoy.
Cheers,
Posted by: maromatics at
February 7, 2008 4:05 PM [link]
And still couldn't break the intraday....
Weak.
Thank you again to John Wibbs on the internals.
Posted by: Craig at
February 7, 2008 4:07 PM [link]
thanks jock on the newsmax farce. I have not decided who will get my vote. But it will surely be a Democrat instead of a demagogue from the gop. Stanley Fish wrote an interesting blog in the NY Times on just this type of hate-mongering this week.
February 3, 2008, 8:02 pm
All You Need Is Hate
I have been thinking about writing this column for some time, but I have hesitated because of a fear that it would advance the agenda that is its target. That is the agenda of Hillary Clinton-hating.
Its existence is hardly news — it is routinely referred to by commentators on the present campaign and it has been documented in essays and books — but the details of it can still startle when you encounter them up close. In the January issue of GQ, Jason Horowitz described the world of Hillary haters, many of whom he has interviewed. Horowitz finds that the hostile characterizations of Clinton do not add up to a coherent account of her hatefulness. She is vilified for being a feminist and for not being one, for being an extreme leftist and for being a “warmongering hawk,” for being godless and for being “frighteningly fundamentalist,” for being the victim of her husband’s peccadilloes and for enabling them. “She is,” Horowitz concludes, “an empty vessel into which [her detractors] can pour everything they detest.” (In this she is the counterpart of George W. Bush, who serves much the same function for many liberals.)
This is not to say that there are no rational, well-considered reasons for opposing Clinton’s candidacy. You may dislike her policies (which she has not been reluctant to explain in great detail). You may not be able to get past her vote to authorize the Iraq war. You may think her personality unsuited to the tasks of inspiring and uniting the American people. You may believe that if this is truly a change election, she is not the one to bring about real change.
But the people and groups Horowitz surveys have brought criticism of Clinton to what sportswriters call “the next level,” in this case to the level of personal vituperation unconnected to, and often unconcerned with, the facts. These people are obsessed with things like her hair styles, the “strangeness” of her eyes — “Analysis of Clinton’s eyes is a favorite motif among her most rabid adversaries” — and they retail and recycle items from what Horowitz calls “The Crazy Files”: she’s Osama bin Laden’s candidate; she kills cats; she’s a witch (this is not meant metaphorically).
But this list, however loony-tunes it may be, does not begin to touch the craziness of the hardcore members of this cult. Back in November, I wrote a column on Clinton’s response to a question about giving driver’s licenses to illegal immigrants. My reward was to pick up an e-mail pal who has to date sent me 24 lengthy documents culled from what he calls his “Hillary File.” If you take that file on faith, Hillary Clinton is a murderer, a burglar, a destroyer of property, a blackmailer, a psychological rapist, a white-collar criminal, an adulteress, a blasphemer, a liar, the proprietor of a secret police, a predatory lender, a misogynist, a witness tamperer, a street criminal, a criminal intimidator, a harasser and a sociopath. These accusations are “supported” by innuendo, tortured logic, strained conclusions and photographs that are declared to tell their own story, but don’t.
Compared to this, the Swift Boat campaign against John Kerry was a model of objectivity. When the heading of a section of the “Hillary File” reads “Have the Clintons ever murdered anyone?” — and it turns out to be a rhetorical question like “Is the Pope Catholic?” — you know that you’ve entered cuckooland.
Horowitz warns that as the campaign heats up, this “type of discourse will likely not stay on the fringes for long,” and he predicts that some of it will be made use of by Republican operatives. But he is behind the curve, for the spirit informing it has already made its way into mainstream media. Respected political commentators devote precious network time to deep analyses of her laugh. Everyone blames her for what her husband does or for what he doesn’t do. (This is what the compound “Billary” is all about.) If she answers questions aggressively, she is shrill. If she moderates her tone, she’s just play-acting. If she cries, she’s faking. If she doesn’t, she’s too masculine. If she dresses conservatively, she’s dowdy. If she doesn’t, she’s inappropriately provocative.
None of those who say and write these things is an official Hillary Clinton-hater (some profess to like and admire her), but they are surely doing the group’s work.
One almost prefers an up-front hater (although he tells Horowitz that he doesn’t like the word) like Dick Morris, who writes in a recent New York Post op-ed of the Clintons’ “reprehensible politics of personal destruction” (does he think he’s throwing bouquets?), and accuses them of invading the privacy of opponents, of blackmailing and threatening women, and of “whatever slimy tactics they felt they needed.” Morris calls Harold Ickes, a Clinton aide, a “hit man” for the president, and he calls the president “Hillary’s hit man.”
This is exactly the language of the most vicious anti-Hillary Web sites, and here it is baptized by its appearance in a major newspaper.
Horowitz observes that there is an “inexhaustible fertile market of Clinton hostility,” but that “the search for a unifying theory of what drives Hillary’s most fanatical opponents is a futile one.” The reason is that nothing drives it; it is that most sought-after thing, a self-replenishing, perpetual-energy machine.
The closest analogy is to anti-Semitism. But before you hit the comment button, I don’t mean that the two are alike either in their significance or in the damage they do. It’s just that they both feed on air and flourish independently of anything external to their obsessions. Anti-Semitism doesn’t need Jews and anti-Hillaryism doesn’t need Hillary, except as a figment of its collective imagination. However this campaign turns out, Hillary-hating, like rock ‘n’ roll, is here to stay.
Posted by: northforker at
February 7, 2008 4:08 PM [link]
Jock,
I'm sorry. I've been mandated by my girlfriend to find paying work and to get my investments into blue chips or out of the market. Researching more juniors isn't part of the strategy.
Posted by: Fred at
February 7, 2008 4:09 PM [link]
"...a former Secret Service agent told me for my book “A Matter of Character: Inside the White House of George W. Bush.”"
So the author really wanted to include this information about Hillary Clinton for his book about Bush's White House? That, and it's 100% character assassination from some unnamed source. Fishy.
Posted by: FattyArbuckle at
February 7, 2008 4:10 PM [link]
MikeNYC -
I wasn't pointing out C's trading today, but trying to make the point that even an optimistic C short wouldn't have anticipated sub-$30 handle last June, even last September. So, even with the situation deteriorating, could one have been comfortable with shorting Jan. 2008 $30/35 puts (below multi-year lows by a good distance)? With knowledge of what unwound next, it's hard to admit that one could have been suckered into such a position to great damage to one's portfolio.
Re. your stops. Again, I'm no risk specialist, but your RIO example leaves me with the impression that you may be taking risks greater than you are paid for. For $1.40 premium, a $20 stop on the underlying would mean that your short put would be worth at least 4 times your original proceeds i.e. a 75%+ loss. quite aggressive in my book.
JML
Posted by: Jumble at
February 7, 2008 4:36 PM [link]
In my opinion our rating agencies have incorrecly rated the subprime morgage loans and their subsequent amalgamations. How can we trust their recommendations any more? Perhaps we need Warren Buffet to start a new rating agency.
Regards
Posted by: bob at
February 7, 2008 4:48 PM [link]
Fred -
I understand: the key strategy is the HOME strategy.
No sense trying to explain to a non-market-following GF that blue chips aren't always safe.
"Bill, I can't thank you enough. Made good $ on CSCO today and will in the future."
second your sentiments, craig...it was pretty much bill's opening commentary that provided the impetus/confidence for buying CSCO pre-market...
Posted by: 2nd_ave at
February 7, 2008 4:57 PM [link]
Korvus -
I define quality news sources as those which are at least TRYING to overcome their prejudices and the corporate easy-way-out of saying nothing.
Ever notice how broadcast networks NEVER overtly offer opinion (where are the edward r. murrows, the eric sevareids?) while cable seems ONLY to offer opinion?
Also, I'd like to see coverage of where the IMPORTANT voices stand on various issues - the corporate lobbyists. Industry vs. industry, for example.
Never saw any coverage of concentration in broadcast media or spectrum, for example.
Exxon is fighting back with Hugo Chavez This could get interesting!
NEW YORK, Feb 7 (Reuters) - Exxon Mobil Corp (XOM.N: Quote, Profile, Research) has moved to freeze up to $36 billion in Venezuelan assets around the world as the U.S. company fights for payment in return for the state's takeover of a huge oil project last year. The company said it has received a British court order that prohibits Venezuela state oil firm PDVSA from selling any of its worldwide assets up to a value of $12 billion.
http://tinyurl.com/369gva
Posted by: Fred at
February 7, 2008 5:01 PM [link]
Very good article on the role of Quant trading systems in the markets today. Gives some idea of what we are up against!
http://www.forbes.com/2008/02/06/croesus-chronicles-darkpools-oped-cz_rl_0207croesus_print.html
Posted by: DaveB at
February 7, 2008 5:05 PM [link]
938 looks like a good possibility for gold, an ihs that is break out . The divergence with the usd rally was welcome today
Posted by: Tbar at
February 7, 2008 5:14 PM [link]
DaveB,
Yes, Forbes points out the reason for huge volatility in these markets, but if we're smart, we can effectively compete.
Who knows, rather than the headline that reads "Watch out for the Quants", it might one day state "Watch out for the Caraistas". (LOL)
At the end of the day, it's the hedge funds that drive much of the quant business. So, show me ("I'm from Missouri" -- well Jock is!) what pct of hedge funds are beating +26 pct annual Total Performance returns? And if I add the words, "and having fun doing it!"), I'll bet they are few and far between.
Seriously, though, I do agree that regulators have to get their wooden heads around the issue of alternative market systems. If we are not all using the same price discovery, then some of us (and you know who) are getting screwed.
Posted by: Bill Cara at
February 7, 2008 6:02 PM [link]
I got a call from my IRA retirement agent at JP Morgan today. His message alerted me that my trade for GLD was outside the guidelines of the firm and sees it as "aggressive". I was instructed to call him as soon as possible to "sign" some kind of form . Has anyone else had a similar experience and what can I expect when I call them tomorrow?
Posted by: onlineaces at
February 7, 2008 6:47 PM [link]
My retirement account broker has called me before regarding "speculative" trades. I simply had to affirm over the phone that the account objectives included speculation. Your broker may require you to check a box on a form indicating speculation is one of the account objective.
Another option is to transfer your IRA to a specialty speculation broker. I trust mine any day over HB&B.
Posted by: SteveC at
February 7, 2008 6:57 PM [link]
Geezer52 -
Your Question:
"However after going over Bill's comments yesterday on the "trade of the generation" re sell bond & buy gold.....looking for some sage instruction of said strategy in simple execution for my novice abilities."
My Answer:
I don't think anyone really answered your question here. I'll give you mine, but in doing so, it raised my own questions!
Very often I find myself "missing" a good trade and I obviously don't want to miss the "Trade of the Generation". I immediately started a paper trade to start the process of determining an ideal entry.
TLT 5-Feb-08 @95.41
GLD 5-Feb-08 @87.90
So, if I really took this trade, I would be up today +2.9% on TLT and +2.2% on GLD.
I'm not sure if this is what Bill had in mind, but I think it might be close.
I took a look at the put options available on TLT on Feb 5. There were virtually ZERO "open interest" put positions across strikes ranging btw 90-110. Today open interest exists for every strike near the money up to 10,000 in volume and the % chg from yesterday...well those now range btw +9% to +400%. There was ZERO interest on Feb 5 and very little volatility so those puts were a steal.
I'm thinking of starting a position tomorrow and just manage it. I'll start small. The market will tell me if I am correct. If I'm not, I'll either adjust it accordingly or abandon it if the market tells me I'm incorrect.
I've already missed some of the "Trade of the Generation" and I don't want to miss anymore.
Any feedback is most welcome!
Posted by: onlineaces at
February 7, 2008 7:10 PM [link]
geezer52- if you have a retirement account that does not allow you to short the long bond, try RRPIX, which is a 'long' fund that will give you 1.25x the inverse the daily return of the long bond...
Posted by: 2nd_ave at
February 7, 2008 7:20 PM [link]
"the inverse OF the daily return"
Posted by: 2nd_ave at
February 7, 2008 7:22 PM [link]
Re: Shorting the long bond
Prof. Antal Fekete suggests in "The Shadow Pyramid" that derivatives will cause the long bond to continue appreciating.
http://tinyurl.com/3coxqa
"The foregoing explains how bullish bond speculation has been made virtually risk-free by the government through the inverted pyramid of derivatives. The outcome was a falling trend in the yield of 30-year bonds, from 16 percent in 1981 to 4 percent 25 years later, in 2006. Every time the rate of interest is halved, bond prices approximately double. Every time the rate of interest is cut back to one-quarter, bond prices approximately quadruple, as it has between 1981 and 2006. It is quite a windfall, with interest income at the rate of 16 percent kicked in as a bonus. Capital gains like this are not to be ridiculed, especially if they are available risk-free.
"It is an open question whether the falling trend of interest rates will continue on its own, or it will be necessary to repeat the prestidigitation of 1980, printing another slate of 30-year bonds with 16 percent coupons attached to them. Let me suggest that the existence of the shadow pyramid makes this unnecessary. The pump has been primed already. The key ingredient, demand for T-bonds, is already given."
Posted by: SteveC at
February 7, 2008 7:31 PM [link]
The Gov't's big treasury refunding auction was a bust. Seems not many were interested in the low yields stemming from Ben's cutting. Any guess as to the next move by the Gov't to get things up and running again.
Posted by: watermelon at
February 7, 2008 7:36 PM [link]
onlineaces,
Your RR is doing a cover-the-firms-behind exercise. If you complete the Account form with the following statement: "Speculator," they won't bother you. What you need to do, however, is tell them precisely what you need and have them agree to do it. Then expect them to deliver to that contract.
You should encourage open dialogue with your RR so that your advisor and you are on the same wavelength and that person can call you day or night to explain why you are receiving a request for info of that sort.
Posted by: Bill Cara at
February 7, 2008 8:07 PM [link]
I'm doing some research into the 30 year bond and I've been able to find this regarding the 30 year US treasury bill. The high point of the interest rate was ~15% in Sept. 81.
The price of those have increased almost 500% and have had a 15% interest payment(not accounting for inflation).
Now, since we are going to make the trade of the generation. :) Let's all make sure we know well how the bond market works, because I'm sure that many of us have done a lot of research already into Gold and junior Gold miners.
Posted by: Quentusrex at
February 7, 2008 8:21 PM [link]
Like Bill, Mish is targeting a significant drop in the Euro, to around 1.41 and then around 1.29.
http://tinyurl.com/34snvz
Posted by: SteveC at
February 7, 2008 8:35 PM [link]
just started reading this. great blog. what is the thesis behind the tlt short / long gld trade? what is the time frame? am i late to the short tlt party? anyone else looking at longer term puts on the FXE? and what significance does the poor fed auction today have on everything? sorry for so many questions - mike
Posted by: teamonfuego at
February 7, 2008 8:50 PM [link]
"Very often I find myself "missing" a good trade and I obviously don't want to miss the "Trade of the Generation". I immediately started a paper trade to start the process of determining an ideal entry.
TLT 5-Feb-08 @95.41
GLD 5-Feb-08 @87.90
So, if I really took this trade, I would be up today +2.9% on TLT and +2.2% on GLD."
Posted by: onlineaces [TypeKey Profile Page] at February 7, 2008 7:10 PM
6 month chart comparing GLD and RRPIX:
->just pointing out that timing of the trade will be critical, and subject to the conditions bill outlined in his 2/6 commentary...
Posted by: 2nd_ave at
February 7, 2008 8:54 PM [link]
teamonfuego- pasting bill's comments:
"Traders are now looking at the Federal Reserve banking system of the US as the focal point of their concerns. A YouTube video from Los Angeles-based Commodity Trading Advisor (CTA) Greenrush Capital Management, LLC, highlights the problem. Be sure to watch all three parts, which will take about 25 minutes.
The actual data from the Fed is linked here.
The data seems to point to a conclusion that the US banking system is now fully dependent on the Fed for borrowed reserves in that the banks now owe their depositors more money than they could meet from reserves or their ability to borrow from the Fed to meet the demands of depositors.
When there was the bank reserve ratio crisis back in December, the Fed arranged a massive short-term, temporary loan package. I asked at the time if there would ever be transparency to the point the public would discover if those borrowed reserves were repaid. Apparently they can’t be repaid, which has never happened before.
Not knowing what to make of this situation, the global capital markets are clearly in turmoil.
My recent statement is that we are nearing the Trade of the Generation, which will be to Sell Bonds and Buy Gold. I also opined that the international monetary authorities, including the G-20 finance ministers and central bankers, would step in soon to take severe action to suppress the pressures against fiat money, including the $USD. They could do that by lowering the banking system reserve ratio and simultaneously increase the margin requirements in the commodity markets with respect to precious metals and oil. The Fed could reduce the Discount Window to zero, making it easier for troubled banks to arrange Fed loans.
In effect those actions would be a final attempt to draw a line in the sand. Interest rates would drop to the maximum allowable limit and bonds would soar to their highest possible level.
AT THAT POINT, WE MAKE THE TRADE OF THE GENERATION: WE SELL BONDS AND BUY PHYSICAL GOLD.
Posted by Posted by Bill Cara on February 6, 2008 06:58:58 AM | Category: Community Chat
Posted by: 2nd_ave at
February 7, 2008 8:56 PM [link]
if you wish to watch the video, link available in the post referenced above...
Posted by: 2nd_ave at
February 7, 2008 8:58 PM [link]
"simultaneously increase the margin requirements in the commodity markets with respect to precious metals and oil."
how does this create a surging gold price? wouldn't increased margin requirements cause people to liquidate their positions, thereby dropping the price of gold?
Posted by: teamonfuego at
February 7, 2008 9:00 PM [link]
Teamonfuego, causality. The surging price of gold would cause bankers to raise the margin, which would put downward pressure on gold. not the other way around.
Posted by: Quentusrex at
February 7, 2008 9:12 PM [link]
Here's the link to the youtube video:
http://tinyurl.com/2ppxad
Posted by: Quentusrex at
February 7, 2008 9:14 PM [link]
tof- you want to buy gold on weakness, not strength...
Posted by: 2nd_ave at
February 7, 2008 9:21 PM [link]
geckojb..onlineaces..2nd_ave
Thanks so much for the responses!!! Onlineaces, as you posted re the "trade of the generation" I was seeking a simple trading strategy to conduct a little DD to ascertain if it could work within my investment framework. As I'm full time employed and don't have access to a computer/market action on hour by hour basis I'm was seeking etf/funds that I could start small positions in and manage/track from more of a daily basis vs hour-to-hour. My initial thoughts that a combination of GLD/GDX/RRPIX (thanks 2nd)would work best for me and my current investment framework. Will begin my due dilligence asap!! Again thanks for the advise and input
Posted by: Geezer52 at
February 7, 2008 9:25 PM [link]
Also, I'd like to start discussing the history that lead us to the problem we are about to have.
Just like this link discusses the different views, plus the historical facts surrounding the Great Depression; I would like to help hash out a 'current state of the world markets' and also a 'what in history lead us to where we are'.
http://en.wikipedia.org/wiki/Causes_of_the_Great_Depression
(the link is narrower than the default width of the page. So tinyurl won't change anything.)
Here are some starter questions:
1. So, Bill says that the trade of the generation will be to soon sell bonds and buy gold. Why is that?
2. What will be the cause of the bond prices to fall? How will they fall? How will interventionists try to stop this? From where to where will they fall? What will stop them at the bottom?
3. What will be the cause of gold to go higher? How will it rise? How will interventionists try to stop this? From where to where will it rise? What will stop it at the top?
4. How does the market work right now? Atleast how does it work in regards to how will it break when things go bad? Will bond insurance companies losing their ratings be the next domino? What will be the cause of this? What caused that cause?
5. Who will be directly effected by the bond insurers crisis? Who will be most effected? Who will be effected first? and afterwards?
6. With the rise of bond coupon rates, and the loss of ratings of the bond insurers, what will this do to the markets? Who will be effected most? Why?
7. In 20 years, how should the world have recovered from this crisis?
8. What dangers do stupid(ignorant) politicians pose the the whole process(crisis through recovery)? What would be the biggest dangers? Will we have to worry about another Smoot-Hawley tariff act?
http://en.wikipedia.org/wiki/Smoot-Hawley_Tariff
9. Where can data be found to determine how much US currency is held outside the US? Such as forex reserves?
Posted by: Quentusrex at
February 7, 2008 9:41 PM [link]
Lest we take ourselves too seriously here, the following observation from GK Chesterton:
"The whole modern world has divided itself into Conservatives and Progressives. The business of Progressives is to go on making mistakes. The business of the Conservatives is to prevent the mistakes from being corrected."
jaketh-
so which is preferable- to live life having a good time as a Progressive (making sure, of course, that you elect Convervatives to maintain the status quo)...or to live life as a Conservative benefiting from the mistakes of the Progressives (making sure, of course, that you allow enough Progressives in the House to maintain the status quo)...LOL
Posted by: 2nd_ave at
February 7, 2008 10:14 PM [link]
Quentusrex,
I really found the Skype conversation today on one of your options strategies facinating.
Would you mind taking the conversation deeper offline? If so, could you shoot me an email at reenzo@yahoo.com?
Even if not, thanks for the thought provocation!
Posted by: reenzo at
February 7, 2008 10:15 PM [link]
Compare this financial slow-roll crisis to 1998:
In the Russian/Long-term capital management, the crisis came, the muckety-mucks went into a room, and presto a solution!
By contrast, this slow-role, ever expanding problem has taught us one new sadness after another: sub-prime,cdo's, siv's, bond ratings, bond insurers. The gov't convenes big banks for a "super-siv" which fizzles. We hear of a rescue attempt of bond insurers - which seems to go nowhere. The FED cuts, the ECB doesn't.
Is this problem just too big for Paulson to get his arms around? Or is it that Paulson is no Robert Rubin? or that there is no Larry Summers?
Somehow, this gang doesn't seem to be shooting straight. There was no joy in Davos! And I think the longer the wounds fester untreated, the more blood that will be lost.
KRY in a coiling pattern.. Appears poised to explode!
Posted by: GWHatesMidgets at
February 7, 2008 10:23 PM [link]
Geezer52...geckojb..onlineaces..2nd_ave and Quentusrex,
Today was for me one of those back-breakers for trying to answer 500+ e-mail's. It's almost 10:30pm and my day started at 4:30am. I'm whipped. Thank you for zeroing in on the most significant discussion any of us can have for the next couple months.
Implicit in my call for the TRADE OF THE GENERATION, ie, sell Bonds and buy physical gold, is (i) a presumption that no BIG trade goes down without HB&B participating on the profitable side, and (ii) timing is crucial, I think you are asking the right questions and looking in all the right places for answers.
I have stated that although I think this trade opportunity will soon occur, I don't know when. I do think it will happen when the Interventionists make it happen and, sadly, that will happen when those people, Family & Friends, are well positioned.
For the skeptics, please don't belittle everything I am trying to do here by suggesting that I am just another conspiracy theorist. Don't waste anybody's time by going down that road.
The fact is that capital markets are not transparent and they are manipulated. We know by whom.
Mitt Romney was prepared to spend a couple hundred millions of his own money to put him in control of "them" and today he had to admit that the people yanking the chain of a 72 y.o. former warrior are the Gnomes in control. So they already decided that the power of the Exec Office is not going to Mitt.
The Gnomes only have nine months of power to pull the chain of their President, and they will decide when they are ready to spike bonds higher and gold lower, and set up themselves (and their future generations) with immense wealth by making that TRADE OF THE GENERATION.
Not being in the room, we are not in the deal. All we can do is watch the POG and the $TYX.
When those prices spike in opposite directions, I say put your pedal to the (yellow) metal. You (and "they") will be rewarded beyond belief. Yes, we are about to see the biggest transfer of wealth (from the masses to the classes) in the history of the world.
As a trader, I will totally ignore the disinformation on Financial Entertainment TV at the time this trade is going down, and I will be 100-pct focused on the price data. You must be as well.
Posted by: Bill Cara at
February 7, 2008 10:27 PM [link]
Add to the list of questions above:
How will derivatives be used by HB&B to augment their positions? We might be able to also watch the derivatives for signs of this same movement.
Posted by: Quentusrex at
February 7, 2008 10:37 PM [link]
"Mitt Romney was prepared to spend a couple hundred millions of his own money to put him in control of "them" and today he had to admit that the people yanking the chain of a 72 y.o. former warrior are the Gnomes in control. So they already decided that the power of the Exec Office is not going to Mitt."
Bill,
Re: above quote, Larry Kudlow said out loud on his show today that "the market went up because Mitt Romney is out and McCaine will be the next president and that is good for the markets".
Maybe someone can find a video???
Posted by: moneygenie at
February 7, 2008 10:47 PM [link]
ok. i'm a little late on this. what is hb&b? also, so the theory is that gold will first drop significantly then the trade of the generation (TOG) is on, right? by significantly i'm assuming a 10 to 15% drop right?
one thing i was thinking of today is this: if the reserves have gone negative and everyone knows about it, then surely the president knows about it. why not just throw the $150 Billion stimulus package their way? is it b/c it would create a scare/panic?
Posted by: teamonfuego at
February 7, 2008 11:33 PM [link]
I found it!!
Mitt's Out & Stocks Up
Stocks closed up for the first day in the last four, with Jerry Bowyer, Benchmark Financial Network; Quentin Hardy, Forbes Silicon Valley bureau chief; Jeff Kleintop, LPL Financial chief market strategist; Doug Kass, Seabreeze Partners Management president; and CNBC's Larry Kudlow.Last Update: Thurs. Feb. 7 2008 | 7:03 PM
Posted by: moneygenie at
February 7, 2008 11:43 PM [link]
teamonfuego,
hb&b = humungous bank & broker
on the other question, go into a few of Bill's archived week in reviews and first posts on daily commentary. You'll get the levels being scrutinized.....
Posted by: reenzo at
February 7, 2008 11:49 PM [link]
Why the price of 'peak oil' is famine
By Ambrose Evans-Pritchard International Business Editor
Last Updated: 1:22am GMT 07/02/2008
Vulnerable regions of the world face the risk of famine over the next three years as rising energy costs spill over into a food crunch, according to US investment bank Goldman Sachs.
"We've never been at a point in commodities where we are today," said Jeff Currie, the bank's commodity chief and closely watched oil guru……..
Mr Currie said investment cycles in energy typically last about 10 to 12 years as producers struggle to catch up with demand. However, this cycle has been short-circuited by politicians after barely six years.
"The political environment is extremely hostile. The world is looking like the 17th century under mercantilism when countries saw economics as a zero-sum game. They exported as much as they could to get gold, and erected enormous barriers. China looks like that, so does Russia, the Mid-East and most of Africa and Latin America," he said.
While the West has much of the skill for developing energy projects, it is blocked by nationalist petro-states from investing directly.
Posted by: moneygenie at
February 7, 2008 11:52 PM [link]
ECB may follow Fed and BoE in rate cut
By Ambrose Evans-Pritchard, International Business Editor
Last Updated: 2:35am GMT 08/02/2008
The European Central Bank has ditched its bias towards interest rate rises, preparing to join the US Federal Reserve and the Bank of England in easing monetary policy to head off a sharp downturn.
Jean-Claude Trichet, the ECB's president, acknowledged that risks are now largely on the "downside" after January's precipitous fall in Italy and Spain's services index.
"It is a total capitulation," said Jacques Cailloux, eurozone economist at the Royal Bank of Scotland.
"The ECB was wrong in thinking that Europe could decouple from the US and has misjudged the loss of momentum. We think they will start cutting rates in April," he said.
Ken Wattret, an economist at BNP Paribas, said cuts could come as soon as March, warning of a "vicious spiral" as the credit squeeze and sliding confidence feed on each other.
The euro plummeted to $1.4450 against the dollar as Mr Trichet's comments flashed across traders' screens. Funds have taken massive 'short' positions, betting that the euro's six-year march to record highs is over.
Posted by: moneygenie at
February 7, 2008 11:58 PM [link]
This chart compares the ^TYX to GLD at yahoo. It might just be a matter of scale, but it sure looks like the the past 6 months the two have been drifting apart.
Posted by: Quentusrex at
February 8, 2008 12:05 AM [link]
Thinking about the anticipated spike in bonds and drop in gold, followed by a drop in bond prices and rising interest rates, readers will have to factor selling the fixed income side of their portfolio (beyond '08 maturity?) if applicable.
Qustion: TIPS, inflation protected bonds. What will happen to them in this scenario?
Please get some rest Bill. The community needs you. Thanks as always.
Posted by: Seamus at
February 8, 2008 12:05 AM [link]
Iraq in joint venture offer to foreign investors
By Roland Gribben
Last Updated: 3:11am GMT 08/02/2008
Foreign investors are being offered joint venture and production-sharing agreements in 400 state-owned factories and plants in Iraq in an effort to break the industrial reconstruction log jam.
Forty contracts, described as the "most productive and lucrative", are being offered in an initial programme that Fawzi Hariri, minister of industry and minerals, hopes will yield $2bn in foreign investment. Priority is being given to cement plants crucial to rebuilding and modernising factories in a war-ravaged economy………
John Lyons, a US consultant who has been providing advice to the Iraqi government for four years, said: "Yes, security is a concern, but things are improving and there are many factories in areas free of terrorist activity."
Posted by: moneygenie at
February 8, 2008 12:07 AM [link]
Trade of the Century:
This chart seems to say two things -
1) The Trade of the Century is on and we may have missed the first 5 or 6 very lucrative months of it.(The "easy money?")
2) We are at an entry point.
(this is the $GOLD/30 year bond spread as priced in the June 2008 contracts for each.)
I don't know about you, but my Spidey sense was kicking in when I read Bill's post and then immediately pulled up this chart.
Am I missing something? Is it on? And doesn't that chart look bullish and ready for entry?
On or not, this trade would have made you some serious dough since Sept.
Posted by: MikeNYC at
February 8, 2008 12:28 AM [link]
Posted by: MikeNYC at
February 8, 2008 12:42 AM [link]
Re the trade of the generation and a nod to Kaimu...If its long gold are the ETFs the best vehicle for that?
2nd or anyone, as IB-my trade platform-doesnt do mutual funds, is there another way to short bonds?
also
reenzo. its not safe to post your email. Spybots mine the net for the "at" sign. Safer to post your address as reenzo[at]yahoo.com. Stay safe its a jungle out there.
TIA
peace from north Puget sound
Gray
RRSPs & USD - you can buy a USD MM with TD Waterhouse to hold USD, then do a wash trade into a stock, then wash back out to MM. Should be similar to a USD account with higher rate of interest.
Outside of RRSP, Scotia now has a Euro account. HSBC has Euro & Yen accts.
What's with all the Mexican food talk today? I was looking at CASA awhile back... I see they're up 6% today but still KRY is up 9%.... so maybe Venezuelan food is better...
Am I looking at another entry point for KRY tomorrow? Probably not with Exxon getting ticked off at VZ... don't mess with Exxon.
Still happy I didn't buy MSFT.... but it's coming to me again I think. I'm in at $25.
Money flow on GLD went vertical just before the close today... what's going on? Looks like a pullback after that one...
Something tells me I don't want to touch anything until after March.
"Fitch on Tuesday said it was considering a change in methodology that would probably hit ratings of $75 billion worth of synthetic CDOs the hardest, leading to an average downgrade of five notches. [ID:nL05824281]
CDOs are portfolios of credits divided into tranches, or slices, by degree of risk. Synthetic CDOs are created from credit default swaps (CDS) typically on investment-grade borrowers. CDS are bets on whether a company will default.
Fitch was reacting to widespread criticism that CDO ratings played a role in creating the credit crisis.
The rating agency said it was seeking feedback from the market and would publish a final version by March 31"
What's a notch? 5 notches sounds like a lot.
Feedback from the market.... "don't do it! you're crazy!"
That Mexican food smell is me feasting on CMG. Taking a big greezyy bite out of their share price is waayyyy tastier than their burritos.
Posted by: MikeNYC at
February 8, 2008 1:34 AM [link]
ALOHA !!
I am back at home on the Big Island of Hawaii and I just missed some of the most monumental rainfall ever! Over 42 inches so far for the year and usually we average 11!!! YIKES !!! WATER ANYONE? I may have escaped the rainfall but not the damage ... Oh well, that's farming! It never fails ... Go away for a month vacation and you come home to two months of headaches! This seals my fate aside from the roof damage and greenhouse damage I also have to deal with a torn rotator cuff, so there's too much on my plate to make it to PDAC! Sorry to Bill and the PDAC gang but the luck and timing sucks! Next year ...
Coming back from just an amazing trip across the entire BIGGER ISLAND of Australia has given me new perspective on certain monetary issues. I have been studying FDR and the monetary regime of the 1930s and 1940s. In the past I have made fleeting comments about FDR ... Now seeing the US Presidential candidates and the whole Super Tuesday circus has reinforced in me the desire to get out of DODGE! Way back before all these debates Bill asked me who I thought would be the next US President. In actuality it does not matter, but I answered a direct question with a direct answer and said Oprah, er I mean Obama and Hillary!! Even though I am voting for the RIGHT person for the RIGHT TIME ... RON PAUL! Sadly my fellow US taxpayers are not. Their children will pay dearly for their entusiastic undoing.
Here's the deal ... even though 98% of the US voters are blind the elite in charge are not. While in Australia this trip I met up with a friend of mine from some 35 years ago who now has cancer. We went on a weekend group outing to Mandurah(south of Perth)and stayed at a friends house surrounded by kangaroos. We talked until about 2am one night and he told me now that he has cancer he finds it a great, but strange, source of freedom ... He now has the freedom to look at life from a different perspective he never had before. He's free from the 9-5 blinders he has worn for some 40 years now. Later I thought about that in the context of a cancerous monetary system. I actually believe now, from his perspective, that a total US Dollar crash would be cleansing and in a sense freedom, so long as people saw "fiat" for what it really was ... a huge tax on our future.
Today I was speaking with my friend in Florida and we were onto the topic of dual currencies and the Amero(BOZO). FDR had established dual currencies. Out of the blue I was opening a huge stack of mail and I ran across a newsletter from Richard Maybury(Feb 2008)and he was talking about dual currencies and also about the current state of War the USA is engaged in. He seems to be the only person I follow that realizes the super impact this whole WAR ON TERROR(WW3)will have. I never hear a peep about the War from anyone who analysis the stock market and monetary issues. Its almost as if the economic impact of the War, not just in the USA but the World, is neglible and non-existant. Maybury always talks about how Americans are the least educated in terms of money and economics. The US government only has three options to finance their power ... TAX ... BORROW ... COUNTERFEIT ...
Back to dual currencies ... So FDR set this system up that lasted from 1933 to 1971. What is dual currency? It is where there is one US Dollar for Americans and another US Dollar for Foreigners. WHAT? In 1933 Americans were no longer allowed to own gold. It was confiscated. That meant that Americans no longer held dollars backed by gold. The US government could not confiscate the gold of foreigners so countries like France could come to the US Treasury with US Dollars and exchange them for gold. Foreigners held gold backed US Dollars and Americans did not. That's a dual currency. Since there is nothing new under a FIAT SUN ... this was the way that FDR dealt with keeping a flood of dollars coming back to the USA from foreign countries. Well, the current illustrious FED is in the same predicament. How does the FED keep the foreigners satisfied with their greenbacks and not flood the US Treasury with unwanted and highly inflationary US Dollars? Dual currency was used in the past.
RICHARD MAYBURY: "Until 1933, a dollar was a warehouse receipt for gold. Any American or foreigner who had paper dollars could take them to the US Treasury and exchange them for gold."
Note: The dollar wasn't the money the gold was.
"But under legal tender laws Americans were forced to accept paper money as if it were backed by gold." This enabled the US government to have a loose monetary policy inside the USA to print their way out of a depression(WPA) while it allowed a tight monetary policy outside the USA to keep US Dollars from flooding our shores. FDR let the bankers get a bigger toe hold and we have been paying for that treason ever since. Nixon slammed the door on us and the rest of the World in 1971 and now we are all locked into "free floating" FIAT!
GOVERNMENT IS ONLY AS HONEST AS ITS MONEY ...
Bought back my GDX short in late afternoon for a profit. Looking to go long GDX today and/or Monday.
Still long UNG and trade is looking better and better.
Posted by: johngeorge at
February 8, 2008 4:00 AM [link]
Kaimu wrote:
"Back to dual currencies ... So FDR set this system up that lasted from 1933 to 1971. What is dual currency? It is where there is one US Dollar for Americans and another US Dollar for Foreigners. WHAT? In 1933 Americans were no longer allowed to own gold. It was confiscated. That meant that Americans no longer held dollars backed by gold. The US government could not confiscate the gold of foreigners so countries like France could come to the US Treasury with US Dollars and exchange them for gold. Foreigners held gold backed US Dollars and Americans did not. That's a dual currency. Since there is nothing new under a FIAT SUN ... this was the way that FDR dealt with keeping a flood of dollars coming back to the USA from foreign countries. Well, the current illustrious FED is in the same predicament. How does the FED keep the foreigners satisfied with their greenbacks and not flood the US Treasury with unwanted and highly inflationary US Dollars? Dual currency was used in the past."
In 1933, the U S dollar was neither the reserve currency of the world nor the principal trading currency. The world was not awash in U.S. currency and furthermore, the U.S. ran a trade surplus during the course of the Great Depression.
Due to deflationary pressures bank deposits grew in value over the course of the depression. Farm prices collapsed long before 1929.
Today sees a complete opposite set of circumstances. Farm prices are spiking, just one of a plethora of inflationary pressures.
The world is awash in dollars. We cannot redeem them ... billions, ok, but not trillions. At a certain point, the populace will cry foul as all viable U S assets are bought up by sovereign funds.
Gold will be used by the USA to solve this conundrum.
Yes, there is scope for a dual currency as Kaimu points out. But from 1933-1971, the value of gold was set at an artificially low rate in terms of dollars and fixed (save for some periodic adjustments). It was only because the world became awash with dollars during the Vietnam adventure that the U S reneged on its theoretical promise to redeem foreign holdings of dollars for physical gold.
Sounds familiar?
But this time around, the U S Treasury will have the option of setting the redemption price of gold at an artificially _higher_ rate than the prevailing spot rate. A new gold backed dual currency will be introduced but once again I see U S citizens prohibited from owning physical gold.
Coupled with a nifty debt moratorium (we're already talking about such for the little guy), yes the U.S.A. declaring a moratorium on payments on its sovereign debt (but handily excluding U S citizens!), the foreigners will be left holding the multi trillion bag but will decide to keep on trading with the USA for the new gold backed currency.
Posted by: Robbie Fields at
February 8, 2008 6:13 AM [link]
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terrific comments Bill, thanks. It couldn't be clearer.
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February 7, 2008 7:47 AM [link]