Good morning Team Cara - quick question for the group and it ties into BC's question about additional info for new tables..... Can anyone suggest a site that will show correlation(s) between different securities - ex. 10 different ETF's ? Could i plug in 10 different ETF's and have it show 3 yr correlation ? Any suggestions, thanks in advance ! rk

Buying partial position in Cara 100 GSK on buy alert. Nice dividend too.

Financials (broker/dealers) downgraded by Meredith Whitney. See XLF go down.

Along the lines of rk's question, does anyone know of a site (free or pay) where one can plot historical data for a BASKET of stocks, etfs, etc with %'s of each entry in order to do some back testing of baskets?

I apparently do not know how to read news. To me Buffett's buyout clearly came w/ the caveat of no CDO's, so he is only interested in the good stuff. I view that as confirmation that nobody in their right mind is gonna bail out these guys. Yet the market loved the news. Todays retair sales up 0.3% and the futures immediately go up, yet reading the data it appears most of the increase was due to higher gas and food prices. This seems to me to mean higher inflation which is squeezing people which is more negative news. Yet the market zooms. Is there a "happy pill" or something I should be taking?

QID/FXP->49.90/94...betting a 250 point gain in the DJIA is unsustainable for the moment...

Craig, who the heck is Meredith Whitney and why are they messin' with my long XLF trade???

LOL

Meredith Whitney is the woman that nailed CITI and most of the financials on this CDO/SIV extreme loss deal they are experiencing now.
Calling for more.

Highly respected...and accurate...got death threats on her C call. I would tend to tilt/list to her side.

Dick Bove, analyst at Punk Ziegel recently upgraded Financials(MER, GS, LEH). Bove has a better track record than Meredith IMO.
Long UYG, MER, GS

Okay 2nd...I'm your wing man today. QID @ 49.80.
Small bite of UXG at 3.36.

Okay. Put up a 12 mo. chart of C and ask yourself where Bove told you to buy.

How's that working for you? LOL!

There's a 20% chance of eTrade going bankrupt... don't have any timelines on that though... could be 2020...

Anyone have opinions on CNR.TO? Seems to be hitting some resistance... but strong since I looked at it 3 weeks ago.

"Bove has a better track record than Meredith IMO."

Not lately.

Yes while I respect Bove, or at least have in the past I do believe he said that Citi was in no way in danger of cutting their divy...oops.

The real problem is that market events are happening much quicker which makes it difficult for even the best to predict out past a few hours and days.

Absent any new news on anything economic or credit related everything makes perfect sense me :)

track record: looks like Meredith (who does appear to have an excellent record) made her famous call on Nov 2 2007. I exited long-term holding July 6th into cash.

I beat her to it by about 10% in financials.

...but then again these analysts have a very different set of goals and standards than I.

All that said, I'm getting beat up in my long XLF trade today, and I don't like her interfering with a downgrade. So there!

Dave

What worries me is the great majority of those appearing on CNBC are in complete agreement that this is a bear market rally. Maybe 2nd Ave can use his gut feel to tell me if the majority are wrong.

DaveB..rumors of GS write downs...smacking the stock., watch the XLF trendline on a 5-day and the 5dma...also watch the vix today at 25.3 or 50 dma area...kinda bouncy....

Just released sentiment numbers are signaling that the downside risk in the U.S. stock market is very high over the next few weeks but then a major bottom could be made. We're are closely watching the markets internals for confirmations that the downside is in play again.

If the number of very weak stocks begins to expand and outnumbers the strong stocks then any rallies in the market will be capped and the line of least resistance for prices will be down.

EEMTrader - thanks for the info. BTW I hope all here understand the "humor" of my posts this am - just havin' some fun...while losin' some money!

Dave

I don't know if anyone has posted this 'news'; but in response to whomever posted yesterday about the drop in the price of wheat futures, the CBOT increased the margin requirements as of close of trading Feb11; so...

while on the ag. front, I own shares in and like - fundamentally and technically - and follow and have mentioned before Hanfeng Evergreen - HF.TO - a progressive, profitable fertilizer manufacturer operating in China. (Agrium bought in last year and is a 10+% shh). They're reporting next week. (Another Cdn fertilizer manufacturer,Migao, also operating in China, reported good results last week.).
Anyway, about HF - 2 recent 'developments':
- yesterday, there was a double top break out on the PnF chart;
- the other day, one of the insider executives exercised 300,000 options (at a lowly price) and sold nary a one. So, bought 'em to hold.

regards

joey

Craig,
Thanks for the description of the charts you use. That was great. Do you use the %K stoch or the %D stoch? I'm trying to get better at following the intra-day volatility.

Rob.

geckojb- it's a bear market rally up to 12,800-13,000...after that, by definition it will be something else...

might check will rahal's site...he's looking for a major rally..

thanks for pointing out the majority take on CNBC, even if it's only anecdotal...hate betting with the crowd..but i also know once in awhile the crowd is right...

Yes that's what I think too 2nd. Rally to neck line, the down trending support line or 50 day MA, whichever. If the market breaks these on good volume I will look to go long, longer term.

Rob, I use both in the same indicator/study.
So my charts have a %K (14) and a %D (3).

^^Downtrending "resistance" line ^^ it should of read.

Craig,
Thanks!! And why the 5 minute instead of the 3 minute or 1 minute chart?

Rob.

Craig,

I would like to thank you for responding to my inquiry on charts.

Best wishes and good trading.

Bove vs Whitney:

Richard Bove Analyst Scorecard:
http://biz.yahoo.com/a/9/91273.html

Meredith Whitney Analyst Scorecard:
http://biz.yahoo.com/a/6/62828.html

I said 'In My Opinion' Bove has a better track record.
Bove has issued numerous recommendations over the past year and I beleive overall he has a good track record.
Don't understand 'LOL'ing based on 1 or 2 recommendations which at this point looks bad.

Dean Foods sales up 25%, profits down 55%, stock down 7%. Company hurt by rising commodity prices.
Stick to the producers! No position.

Would anyone here know who manufactures ice cream packaging?

Faster charts would have me jumping like a scalded chimp! LOL!

I'm trying to get in on the middle of a move more than trying to catch the beginning or exact top, even intraday. I think the slower chart gives the trend time to develop and still gives me all the info I need to follow on with some wind at my back.

If I'm really pushing I might run a shorter chart and maybe include volume or money flow, but it's usually for an informational look, not so much to trade on.

The Williams %R is pretty fast and when confirmed with an opposing chart and the indices indicators gives me most of what I want.

another mortgage hit (MTG):
Feb. 13 (Bloomberg) -- MGIC Investment Corp., the largest U.S. mortgage insurer, fell the most in a month after posting a record quarterly loss of $1.47 billion and said it hired an adviser to raise capital.

MGIC's fourth-quarter net loss was $18.17 a share, compared with a profit of $122 million, or $1.47, a year earlier, the Milwaukee-based company said in a statement today. Excluding investment losses, the insurer lost $18.09 a share, worse than the $8.13 average loss estimate of seven analysts compiled by Bloomberg.

this may be out of left field but i just bought
some Petro Canada shares on the TSX @ $44.55

its building a nice technical profile
w/ macd crossing over, RSI 7 moving up above 30,
slow STO moving upwards.

the 50MA is below the 200MA, which has also turned own, so this is a quick short term trade

stops set at $44, exit is $47.

this strays from my usual XGD trading but it caught my eye adn im sitting on cash waiting for gold to settle down so i figured its nice to give energy a go.

2nd_ave -

I interpreted Will's comments as expecting a short-term rally, not a big multi-week move.

Jogy:
I'm not married to anyone's opinions, my own included. We all make mistakes including the two analysts mentioned.

My point is that MW has been very accurate on this particular topic and that Bove issued a buy and said the div was safe and ended up dead wrong while the stock continued to tank. MW has so far been verified by the tape and the div cut. Then I have to run it through my own experiences and knowledge, technical analysis, fundamentals, Bill's calls, Colin Twiggs, etc.

Sorry, no crystal ball. I hope the LOL indicates I can have a sense of humor about these things. As good as Bove is, it's funny to me that on this one he isn't. That's all. Certainly not laughing at anyone here.

Craig, if you have any "pull" with Meredith would you ask her to lighten up a bit on that financials downgrade" A retraction would be nice!

BTW, looks like Meredith is married to the professional "wrestler" known as "JBL". It's a crazy world...

gray g - See Craig's comment posted yesterday, February 13, 2008 9:08AM

Ah, I see Will did say he expects a major rally to start and will post when he sees it kickoff. We shall see. The credit markets are still in disarray so count me skeptical about the strength.

Late start to the morning, just now read an article at yahoo on retail sales http://tinyurl.com/24zkzt

"In another sign of unexpected strength, the Commerce Department said that businesses built up their stockpiles of merchandise in December at the fastest pace in 17 months. Inventories rose by 0.6 percent in December, slightly higher than the 0.5 percent gain that economists had been expecting."

Um, how is inventory buildup a sign of economic strength? That wouldn't have anything to do with dropping sales would it? Any benefit to GDP will only be paid back in future quarters.

Hmm, if increasing stockpiles is good, the housing market must be in great shape!!

Craig - Thanks for explaining your LOL.

Dave, I have no pull anywhere! Even my old dogs don't come when called anymore....

Looks like you are getting an intraday bounce....
Look for it to reverse at or near 27.25. If it breaks that then I might press it.

Good luck to you.

Wavesmash
I would suspect TD Waterhouse or Schwab will reap the profits in Etrade before they go under.
After all they are running $212,000 per day in trade commissions.
I say 20% chance Etrade falls victim to corporate attrition just like AmeriTrade did a few years back.

For a trade, BQI is strong today.

Jogy...anytime. We're here to help one another.

Exited my CMG shorts (sold calls, bought puts) early this AM before it ran up 3.5% in less than 2 hours. That burrito been berry berry good to me.

FXI testing a breaout of the down trend line from Jan 10. This might be getting interesting - I recal Shanghai Fly mentioning he expects upside (help me with my memory if you recall differently)

Dave

GS back from the shrinks office...focused on bonuses again...

Nice one Mike.

Dave, is that the trendline drawn through the Feb 4 high? It's indeed right there....

Yes, that's my recollection too.

HANS - coiling up in a descending triangle. Absent buyout from KO and good earnings in two weeks this one may be worth watching for break...down.

EEM - if we assume that GS hold up for the rest of ther day today...

The candle it will print will be a big ole' hammer. Look at the other recent big ole' hammer prints GS has put in over the past year. Almost guaranteed upside, so I'd say that looks to be forming a high probability trade.

Dave

Craig re: FXI - yes Jan 10 through Feb 4. The rest of this day will tell me much (FXI, GS , many others)

CMG: The OI on the 115 puts and calls is pretty big. Earnings are Thursday after market, the options expire Friday.

I was going to look at taking straddles or strangles on Thursday, if they got cheap enough, to trade a breakout on either bad or good news.

Now I'm wondering if the size of the OI is indicating piling in on the trade, somewhat negating it?

I also think this big move back up to 110 is to get the price as close to 115 as possible, thereby expiring that big pile of options worthless.

I remain wary.

DaveB..in it since $178...:)..I feel the need...the need for GREED...!!

We just need a pull back otherwise...no juice to pop that 2/05 gap on the $SPX, QQQQs etc...so 'mon back with the indices...bring on a higher low and reloading. Or we have to depend on the futures guys to pop it above the 2/05 lows. I actually hope the arket comes down a little here...was too chicken to fully load up earlier..Got ammo ..now give me a low !!

I see cups and handle formations everywhere..and break out of triangles...I am salivating...

HANS - that's a pretty ugly chart.

Here's something funny:
I opened the HANS chart in Google Finance. On the right, among the news stories, was a headline from Business Week, dated Jan 1. "Hot Stocks of the Year: HANS, CROX, GRMN"

Oh yeah, you coulda had yourself quite a portfolio there! What a way to ring in the year.

The best part: When I click on the story, I get a 404 - Not Found and so far, searching the Business Week site, I can't find it. I guess it got dropped down the memory hole....

I'd want to hide that one, too.

Si02 :Here is a packaging company in London, Ont,
Canada.

http://www.jonespackaging.com/consumer/index.html

I think they do ice cream containers.
(There is a major ice cream producer here in London)
Aside from the views on the smaller 1.6 ish size, it's good for my waistline!! (As opposed to the 2l size) Off topic here, but I allways thought "Farmers Icecream) from NovaScotia was the best!

Hi,

It seems that the rude elephant has left the gold trading room, and things appear to be back to normal, for he time being.

:-)

Cheers,

Hello Bill, I am a long-time reader of your blog and live in Alberta Canada. I'm a long-term investor that follows dividend paying Canadian stocks. I would really like to see a table of Canadian dividend achievers on your site. Thank you for all the hard work you've been doing over the years. I truly could not function without your blog.

Boyz...

Got me thinking Strong bounce in GS....

I went ahead and sold a put...

Strong bounce off the low today....

nice to see the Qs lead again...

taking (LT) positions in SNDK/CSCO/INTC off for now...

dow bull bear case, ihs since jan 1st or hs top since Jan 25,looks like we will find out soon.

2nd...you're letting csco go? can I ask why? I have had my hand over the BUY trigger to add to my position. I often sell too fast...WAG perfect example
gray

2nd: Added QID here. Totally speculative...not on a chart....gut.

Sold SNDK. 5% in a day? nice.

Watch DJIA RSI....from 32 to 26 in the last few mins.

gray- giving in to the trading mentality for now...sitting on a 10% gain in CSCO, and with the DJIA having retraced >300 pts in two days->could have gone either way, i suppose, but still leaning towards a correction...

FXI just printed higher high. Loooking good thus far.

Long ultra FXI fund since eod yesterday.

nice SNDK Craig! 5% in a day is usually my breakpoint too - too many times I've eroded profits hanging onto them after a big single day.

John Hussman (of Hussman Funds) has reviewed yesterday what a bear market feels like, so as we don't forget and are prepared for a wide range of scenarios:

"The following are actual figures and headlines from the 1973-74 bear market. At the January 1973 market peak, earnings had hit a new high, and stock prices were selling at a P/E multiple of 20, which is extreme on the basis of record earnings. Over the next 2 years, corporate earnings grew by 56%, yet the market fell by half. The 73-74 bear market teaches that stock prices can decline from rich valuations even if earnings grow dramatically:

Suppose you own stock. You have decided to be a "long term investor." Stock prices rise to a new all-time high. You feel vindicated. The economy looks great. Although market breadth has deteriorated, your commitment is firm. "I can't afford to keep my life savings out of the stock market." “Buy-and-hold” is your motto.

Then, after a modest rise in interest rates, the market sells off -12.3% in just over 2 months time. Ouch. A correction. Buy on the dip. These things happen from time to time. You're a long term investor. Buy-and-hold is your motto.

Sure enough, prices recover. Somewhat. A 4.8% advance, but already, you think, you're on your way to new highs again. Then, you lose it all in a -10.2% decline. Two months later, you've given back your advance, and you're at a lower low. Alright, another correction. Maybe you buy on the dip. Bargain prices. Buy-and-hold is your motto.

And it's already paying off. A month later, you're up 7.8% from the low. But then a -9.1% selloff takes your portfolio even lower than the first two drops. The market is down -19% overall. You start to question the amount of risk you're taking, but how much lower can it go?

Thank goodness. 15.8% advance over the next few months! Should have bought more on the last decline. Earnings are still growing strongly. You decide not to wait. You buy more on the advance, confident that you'll be rewarded by new highs. Then the market plunges -20% over the following 4 weeks. You stare at your statement and feel sick. You've held on for a year and your reward is a new low in your portfolio. This really is a bear market.

Now some volatility. Up 12% over a few months. Then you lose it all a few months later in another decline. Then another 11% advance, followed by a -12% plunge to a new low. Seven times now, you've seen your portfolio collapse by more than -10%. With every recovery, a fresh disappointment. And the months march on. It's a year and a half since the peak. You've lost nearly 30% of your wealth. Price/earnings ratios look low, but they looked low before the last decline, too. But maybe it's the bottom. After all, the average bear market takes stocks down about 30%. Holding your calculator, you realize how that works. A -30% decline wipes out a 43% gain. Didn't really consider that at the top.

Stocks rebound a little over the next month. Just 6%. You're still clinging to the bottom. Then, the bottom drops out. Not just 10%, or 15%, but a real free-fall. Over the next 6 weeks your portfolio plunges by -27%. You're another -23% down from the previous low! Almost 2 years of nothing but losses! Major ones. You've lost almost half your retirement, now. Half your life savings! And the economy has turned bad. Everybody knows that stocks were overpriced at the top! It was so obvious! Greed. Valuations were so high. Everyone was so optimistic. Why didn't you see it at the time? You decide you can't afford the risk. Sell half. See if things recover, then get back in.

Well, prices do recover. More than 15%. But then you lose it all in another selloff! Another new low! The market has lost half its value! Nine major plunges. Nearly every one to a lower low, and getting worse. This market has no support. Where are the buyers going to come from in an economy like this? People are unemployed. They don't have the income to invest! And certainly not in the stock market. The financial headlines trumpet "The Real Recession is Yet to Come", and "The Coming Dividend Crisis." Some of the less diversified mutual funds are down as much as -80% from their highs! 80%! Every $100 has collapsed to $20. If it could happen to them, it could still happen to you. This is too risky. After all, you think, "I can't afford to keep my life savings in the stock market."

"Better safe than sorry" is your motto.

That's what a bear market feels like, but we all have a tendency to forget."

What lessons can we learn from this? So far, many of the traders on this blog have done well shorting this market. But we didn't have 15% rallies in DOW yet. I saw people scaling into SKF right after the surprise rate cut and being determined to ride out the rally that occurred after it. Would you still stick with your short position, seeing it gradually deteriorate for a month, losing 30-40% (for those who are playing ultra-shorts, that’s how much they can lose after a month-long market advance)? I think that it is critical to have a strategy in place for managing shorts, because if you don’t have one, then you will give up and close your shorts with a huge loss at the top of a large rebound rally in an ongoing bear market. And even though I would like to think that I will be smart enough to recognize that this is just a rebound rally in a bear market, in reality I may succumb to the feeling that the bear market is over (and close my shorts with a huge loss at the top), since bull markets start simply with investor’s optimism and do not need an economic justification for them. Bear market arguments are always more believable because they have logical justifications, while bull markets can start and keep going simply on wishful thinking. So if you decide to use the strategy of keeping shorts until the bear market will logically end, you will probably miss the end and keep them until the real bull market begins, and will be forced to close your shorts with HUGE losses. So what is the right strategy to use?

Yeah Dave, I hate to give it back.
Another pullback will come along.

Maybe selling the stimulus news?

XLF stoch crossed and rolling, macd touching, RSI pointing down. W%R in the moving up...into 50's.

Teeter totter?

COuld be Craig.

I'm beggin' ya - please call Meredith on my behalf! lol

Good point David. In a market like this I think you shorten everything. Someone asked 2nd why he was closing out his CSCO trade. For one person he was looking for entry for a long term purchase and the other was taking the 10% because he can't guarantee this 10% will hold.

Two investors with different time horizons. It took me a few months of being here that my time frames for an investment may be different than someone else's.

If you are willing to hold on for the very long term than it doesn't matter if you're buying a quality CARA 100 company at a good price right?

Likewise if you are a shorter term trader it's also fine to take your gains when you got em long or short.

For now long term investing is trash as is anything outside of a week or two. In these markets it's better to shorten your times frames, again unless you are willing to sit n hold through thick and thin.

Just my thoughts.

Yep, my father still holds through thick and thin, and he is only 90 years old!!

The opposite of buying dips David.
We short the run-ups and cover on dips.

A relatively safe intraday short?
Look at the XLF right now. W%R rising quite nicely...in the 70's-80's now.

And with W talking the markets tend to go down.

Great post David. I get the feeling everytime I turn on CNBC that a real bear mkt is something few have seen

David: money management is the key (IMO). Take profits as they accrue, and put less and less at risk as the bear wears on.

Dave

Case in point on SNDK that someone mentioned. I see SNDK coming real close to bumping against resistance around 27.60. For a shorter term trader that got in when the Cara system showed buy you would of gotten in 1 or 2 points ago good enough for a 5-10% ror. This trader may watch to see if it can break resistance. If not sell.

A longer term trader not interested in following a bunch of lines on a screen could decide this was a long term purchase and the price that was paid was a good price. This investor will tuck it away and wait for an RSI sell signal which could take a lot longer to show up.

Again just one persons interpretation.

DJIA W%R 100
XLF W%R 100

Look out below.

Exactly Gecko.
I got in on the SNDK buy late (25.50) ran it to 27+ sold, reloaded at 25.90 and ran it today another 5%+ and sold.

Will wait and attempt again.
Very important to know timelines are different depending on temperament.

A person could buy a core position at the low and trade around it too.

Thanks for all who have responded to my concerns (Re: bear market review)!

Craig, you suggest shorting the run-ups. So what do you do if you take a small short position and it moves against you? It seems like the strategy used by you and 2nd_ave is to scale a little more into that position. If it keeps moving against you, do you stop scaling in at some point and just wait? Do you start scaling out at some point? Or will you close all your shorts simultaneously at a large loss?

David- thanks for the Hussman post...

the safest way i know to manage the ultrashorts (unless you are blessed with supreme confidence) is to close flat each day...i don't always follow this rule, of course, but more than once (actually, countless times), that discipline has saved me from a rout the following morning...

David- i believe craig's number one rule is not to lose money, so would be surprised if he sticks around long enough for a large loss...for me losses are limited by position size(s), which i maintain at a manageable level->so if am faced with a hit, it's a dent and not a major claim...

2nd_ave, so what do you do if you scale into SKF a couple of times during the day and it keeps going against you? Do you close your whole SKF position at the end of the day at a loss? If you keep it overnight and you get another market rally the next day, like we got today after yesterday's unwarranted rally, what do you do?

David: Look at XLF right now. I mentioned when I would have shorted it a few mins ago.
Pretty safe move currently. That's my kind of short. Short term and likely to be out at the close or a reversal.
This must be in conjunction with overall market direction, just as long positions are chosen.

Like longs, stop losses must be respected.
The idea isn't to win every trade. Nobody's that good. The idea is to have more winners than losers and to cut loses as soon as possible.

I would likely take the small loss up front and if the move is convincing, take the other side immediately.

DaveB:That was it? release some pressure on the 10 min and back up? Dang this is strong if its true...

David- if i had two positions in SKF (which would typically be 40% of the allocated amount), and it moved against me- a lot of cross-currents to consider, and i wouldn't want to be mechanical about it...still holding 20% allocations of FXP/QID from this morning, and both have moved against me..still hoping things go my way (and can't say i wasn't watching when FXP hit 96 and change earlier today)...if not, will probably close both by EOD and start flat tomorrow...

2nd can answer for me! LOL!
I also use position size as well.

The same for pressing...up or down. sometimes you get momentum up or down and adding becomes a bit safer.

Right now I'd be sitting on the edge of my chair watching technicals on XLF near this ST support of 26.88 to see if I have to bail on my short.
MACD is still with me but DJIA W%R is now in 50's, which is about 50/50 chance. I'd probably be ready to take profits here.

can't shake the bull-trap scenario...exactly what kind of reassurance has crept into the market the past two days that would spark the end of the downturn- can we make a U-turn in the absence (IMO) of capitulation?

what if we end the day in the red (just throwing it out there)?

should hasten to add i do NOT sense a red close LOL

Dave: you need a PERSONAL framework , a model ..a pair of sunglasses to view a bull or bear market and its relationships with the outside world.

I think G034 mentioned legs of a stool yesterday...or you can use Hussman's overbought, overvalued, unfavorable market conditions as a framework to evaluate the market.

Then decide are you a trend trader, countertrend trader that trades trrading ranges or breakout/breakdown trader.

The next most important thing..is TIMMEFRAME has to match you ( your temperament and goals) and the markets time frame. Wide ranging days operate on a different time frame then smooth and trending days.

Then you need TRADING rules...entry, exit, stop. and how to know when its off..not going the way you had envisioned . Whether you use indicators or chart patterns...but beware the chart that has many indicators..:)IF it did...then results will be consistent for all traders that follow the same indicators.and ...its not.

Then stock selection...this may be the easiest part. the stock has to match your personality too you know...how volatile..slow or steady..strong fundamentals/valuation..a trading stock ..a long term holding. ( define long term for yourself)

Then make this whole system personal...and take it live. Fine tune it. let the market slap you around a bit..keep buying high and selling low till you realize trading is not intellectual. :)

Then condition yourself, work on your mind..why do you sell too soon, buy too late, or buy too early? ( You may not do all of this)

then whether its a bull or bear doesnt matter..because you have rules that match who you are, the stocks you trade, the timeframe you trade in and the market conditions that work best. you have alignment..mind-market-method

Be like water...not the cup. Good luck to you, and dont be afraid to lose money...:) just dont fall in love with the habit.

Cheers.

There's the actual example. I'd be out a few pennies ago (about XLF 26.90). Not a big gainer, not a big loser.
So-so but not a loss and a small gain with an ultra like SKF. More/less depending on position size. If it has dropped below 26.88 I would have likely added a bit.

The cue to sell was the DJIA rising and lower W%R. Sure enough the XLF followed.

This last hour today will be a real nice bellweather IMO.

I've been close to pulling the ripcord on my market short position all day. ( emotion ) That usually means the market is going to move in the other direction. I don't see where the fundamentals have changed. I suspect as many here on the board have said, this is just a mini rally in a bear market. However, I think a close above 12,400 on the DOW may signal some follow through short term to the upside with the next resting point, resistance level 12,800.
I'm going to hold on to the short and give it some room.

Long: DXD,SDS,QID, and FXP

Craig, 2nd_ave: thanks for your explanations! Unfortunately, I don't have the time to watch the market intraday and so I will need to figure out how to apply your advices to multi-day trades. The right strategy is probably to scale into shorts gradually, scale out if some profit is made, and if the position keeps moving against me, then stop adding shorts at some point, wait for a sell-off and close shorts at the end of the sell-off, even if I have to close them higher than I opened them. If I simply put a buy-to-cover stop order a certain percentage amount above the current price, then most of the time I will be closing positions at the top of a short rally. And as you say, I should never let the total size of my short position grow larger than 1/2 or even 1/3 of my long position, so that if I don't recognize the end of the bear market and keep shorting the beginning of the bull market, my total portfolio value will still grow. Does this sound reasonable?

EEM: "Then make this whole system personal...and take it live. Fine tune it. let the market slap you around a bit..keep buying high and selling low till you realize trading is not intellectual."

Where were you when I needed to learn this? LOL!
For the longest time I though I needed to outsmart the market....guess who won that battle?

Thank you for your advice, EEMTRADER. My previous post describes my personalized trading strategy in its current form (it keeps evolving over time), after a couple of years of experimentation. Do you see some obvious ways in which it can be improved while still trading each security at most once per day?

For you folks doing the xlf/skf tango--

"Now for a look at Financial Select SPDR (AMEX: XLF), which technically indicates that we should expect renewed price recovery. Components Bank of America (NYSE: BAC), JP Morgan (NYSE: JPM) and Wells Fargo (NYSE: WFC) all exhibit similar chart structures that argue for higher prices in the financial sector.

My near and intermediate-term work indicate that the pullback in the XLF from the 1/31 recovery high at 29.93 into Monday's low at 26.28 is complete and that all of the action since then represents a minor base-like pattern that will thrust prices to the upside (28.50/90 next) in continuation of the larger recovery period off of the 1/22 low at 24.11.

Read more and view the technical chart analysis at http://www.mptrader.com/markets.php

Craig...human beings with our need to BE RIGHT, BE SMART,BE SECURE and our egos...rationalization, justifications...are not meant to be traders...this is the hardest thing I have ever done...!! Totally counterintuitive

Flow with the market..very zen like and peaceful...hahahahaha

David..talk later...makret will fall apart or romp anyminute..but that is not a trading strategy...that is a thought. :)

David, I think your strategy lacks something to stand behind. I am not sure how succesful you will be at gaming on gut instinct alone. 2nd does it but I think that's a rarity. How's your Techinical Analysis? I ask because I think you need something like that or some simple oscilator if your going to be swing trading like you want. have you traded this time frame before or is this a new strategy for you? How's success been in the past?

Why not Bill's system of RSI, MACD D and Stochastic? Plenty of info to get you started above.

This is awful tough market to be trying a new strategy in. It's a bear market and most people will lose money in this market, even the greats.

I could be misreading your situation or want you want to accomplish.

FXI moving up again - watching for a possible reversal from 3:30 - 4:00

counter-intuitive is right...but you can try stacking the odds in your favor by going back to rules that fit with your trading preference(s)...if trading counter-trend, then buying on weakness automatically minimizes a great deal of risk (assuming diversification and position size, of course)...if you're always buying lower than the majority of holders with your time frame, hopefully you won't be getting slapped around as much LOL

Good afternoon Team Cara - quick question for the group and it ties into BC's question about additional info for new tables..... Can anyone suggest a site that will show correlation(s) between different securities - ex. 10 different ETF's ? Could i plug in 10 different ETF's and have it show 3 yr correlation ? Any suggestions, thanks in advance ! rk

this spike has the feel of a short-squeeze...

rjk9 - Stockcharts will allow you do do comparison charts with multiples

yes 2nd - that's why I have to watch for a pullback (if it is nothing more than short squeeze)

2nd,

agree.

EEM...you are killing me! Oh yes, very peaceful and Zen like....Hilarious. I turn myself inside out each morning....

2nd helped me with this alot. When I got here I'd be freaking out and he would be buying.
Now if it's crashing I'm looking for deals and if it's on a run I tend to be selling. It took a while to turn my fear off/down. Thanks again 2nd!

David: Hard to short LT in-between. Best to wait for extremes in buying at/near resistance levels if your timeline is longer or you are unable to watch daily. Don't forget automated stops and sells. You can set them up for each buy/short to execute as you wish if you aren't there min to min. Use extremes to your advantage/safety.

have to wonder who's buying- momentum players, trapped shorts->neither of whom i'd be following...or do we look back in 2 months and give recognition to 'smart' buyers who caught the beginning of the turn-around...

I've pared back my trading considerably this week as weird things happen during Op ex. Heck, who am I kidding. Weird things happen every week.

But this week is especially weird. I went in and out of a trade in TWM when I realized I was on the wrong side of the market. And I trimmed back some of my HB shorts.

I like the VIX pulling back -- and I'll look forward to reloading on my CTX short soon.

All the indexes have broken through key resistance levels on the short-term charts, so this thing could continue for another few days.

I'll wait, enjoy the rebound in a few of my tech "long-term" holdings, and watch for what appears when the dust settles next week.

Hindsight is always 20-20, 2nd. But I just don't buy the notion that this bear market has already exhausted itself. There are so many problems in the credit markets right now, it's going to put a strain on the world economy for quite a while.

The consumer spending numbers are nonsense when you consider the rise was attributable solely to the high cost of gasoline. So where's the good news? Really? Where is it?

The only thing I'm comfortable holding long are emerging growth companies that are relatively debt free.

Sold the SKF today for +6% since the buy. Decided to hold SRS and bought puts on IYR. The RE situation is hopeless IMHO, and the commercials are the next bowling pins.

the 'zen' comment is interesting- it's not hard to 'acquire' the ability to stay focused and calm->you 'buy' the zen by following your trading rules...can honestly say i'm watching the squeeze with no anxiety whatsoever due to position size- inclined to at least hold overnight, if not add to the positions...

IMO, there will need to be another successful test of S&P 1270/1320 to put a bottom in. In 1998, the bottom was confirmed 6 to 8 weeks later. Although I don't expect the bottom will hold this time, though who knows, I think the retest will come in March.

Meanwhile, if you loaded up on Cara 100 buy alerts you have some inventory to sell on this upleg. Homebuilders and financials seem to be putting in a higher low.

Fundamentals are worse then ever, except suddenly everyone is aware of it, which lessens the downside. When the public turns optimistic that the worse is over, the selling will resume.

Would you guys call today's action in CMG a short squeeze? It ran straight up 6 bucks (about 6.5%) right from the opening bell and has pulled back two bucks to 110.

I wonder if, like me, the huge short interest saw the opening bell action and decided enough was enough, take the profits.

I think you guys are right.
Added a bit more QID.

2nd...what do you think of FXI here?

We are building the right shoulder on the DOW and SPX. There should be more to go, but I'll be watching the pattern closely. NDX beaten so badly it probably won't form a full shoulder before the major indicies violate theirs. Target DOW 9750.

Ooops...I mean FXP

Aurator, I hope you are right about CRE. My CRE puts (GGP) are stagnating. GGP just won't go down. (I'd make a joke about the parallels to my love life, but this is a family blog....)

Dave..you still there? How do I use skype ?if you still want to chat real time..or use yahoo messenger?

craig- more inclined to add QID than FXP...one day post return to trading in shanghai doesn't tell me enough the sentiment there...

QID- adding a second 20% to QID at 48.95...

speaking of lessons you can learn in vegas- we all know the odds of red in roulette after a string of a dozen blacks is still 50%, right (actually, <50% due to the 0/00)...however, the odds of a successive string of the same color is quite different...let's see how far they can take the DJIA w/o a pull-back...

FXI did the job of breaking that downtrend line from Jan 10, so I'm holding my ultralong China fund

XLF - still holding ultralong XLF tracking fund, since "I have faith!" and it hasn't breached my stop...

Note to self: call Meredith about her financials markets call, beg her to retract...

FXI, better trendline break in PTR, IMO.

GFI near support on daily, watching MACD histogram.

IBN finding support at 50% from Aug low.

geckojb: given the current high level of market volatility and the fact that a new bull market is unlikely to begin soon (which means that we will be trading sideways or down for a while), I think buying low and selling high, while at the same time shorting high and covering low is the safest technical analysis concept to follow (as opposed to finding trends and getting into them), and that's what I am trying to do when opening positions. It is basically the same as Bill's overbought/oversold concept, except that instead of buying once when RSI rises above 30, I may start to scale in when it drops below 30 and keep scaling in once or twice more (and do the opposite on the short side).

I read somewhere that the market is like a street seller, who comes to you every day with a different price. If you don't like the price one day, you don't have to take it, and you can simply wait for the next day. It is kind of like the Zen approach the EEMTRADER mentioned. :)

on FXI I'm looking for it to fill the Feb 4 gap which would be 154ish - only 7 points away - then I'll have another decision to make - or maybe we'll reverse tomorrow - I dunno, but I'll watch it happen

Yes 2nd, look at the DJIA daily. A long day up.
Hard to keep it up with financials finishing lower on the day and weak technicals. Confirming weakness AH.

Got a few FXP at 91 and decided you were right and sold 91.70

There's always tomorrow!

I'm off to COST, see you all in a few hours.
Hope you all had a great day.

That "psuedo" buy signal on CCJ that I mentioned the other day is working out well.

long CCJ

Re: Roulette

A Martingale system has a positive expected value on an infinite basis w/no strings attached. It can't keep coming up black forever... It's the damn max table bets that screw ya over.

The retail sales data today was flat if you take inflation into account. Buffet wants only the good stuff, obviously that other debt is toxic. Dare I say that this market has gone a little irrational? We might be one more positive news article / yahoo buyout away from 12,800+, but I can stay solvent for a while.

Still holding QID, didn't add @ EOD, though.

DaveB,

What is the ultralong FXI fund? I haven't seen a leveraged long ETF for china.

JB

I'm still holding firm on my SKF and SRS. They've managed to jawbone the market back up, but reality will take over again eventually. Not to mention it's worth noting that the XLF is failing to lift with the broader market now. If it can't get any traction in an upwards moving market, can you imagine what it's going to do when the market resumes it's downward trend?

It would probably help many readers here if we included the stock name and symbol when we post.

Just a thought.

JB - new funds just opened at ProFunds - not ETFs - they are mutual funds that track china ultralong or ultrashort. That's why I trade always eod - because I'm using ProFunds for this trading. The site is Profunds.com

All longer-term stuff is in cash yet.

Also, how about some reasoning behind: "going long XYZ"...at least tell all what timeframe chart - daily, 5 min, etc.

Thanks Dave, I missed the eod part...

FXI was telling us something today -- BIDU up 10% in after hours trading on earnings release.

go34 probably a good idea if not in the flurry of action (at least for me)then later.

So...to start, Bought QID after gains in UYG evaporated over several days. (I cannot trade every day), I added to my QID at eod after it continued to drop and I AM convinced this stock market will turn down, perhaps sharply. I had bought ICO early in the day after seeing it again on T. Lo's website (http://tiny.pl/l1qt). Coal is a steadily growing energy source. stock had low price, lo pe and was trending up ema. Almost sold ICO at eod but looked at trending charts and held
I am not expert chartist so I leave those intricacies to others. I use Yhoo and stockcharts. If any here have pointers on using those or the charts at IB, that would be greatly appreciated.
And finally to Bill, Thank you daily. For your effort, your making this space available and your own network whom I would not have access to otherwise.
peace from North Puget sound
Gray
ps your turn

disclosure..long NOT, WGW, ECU, CPTC, U., QID(a short).
Sold CSCO today 6.5% up

Interesting reaction to news: BIDU beats but guidance on revenues is considerably lower yet the stock is up 10% afterhours. Other stocks a few days ago in a scarier tape were beaten senseless for the same. Risk appetites seem to be coming back.

Dave:

Define your time frame..bull and bear markets exist in all time frames...if you read the posts here...someone is going long or short. Dont worry if you read Bill Cara's WIR often enough..you wont miss either a bull or a bear market.:)

here is what I would modify to your trading strategy...

Define your risk.e.g. %.5 of portfolio = $200

Pick a stock or ETF.

Look up the stock's average True range in the 30min and daily time frame to determine volatility. There are other ways.

Determine if the volatility suits your risk tolerance ( $200) , if not..choose a different time frame or a different stock or ETF.:)

Go open a fidelity account.

Use their active trader pro program.

Load up pivot high and pivot low indicator in the timeframe with the stock you have chosen.
Follow the arrows , red down , green up - that helps with direction.

Pick a time frame lower than the first timeframe and look for the same green and red arrows.

Go long only when both green arrows occur on the two different time frames. This will train you to follow the trend, or direction of prices.

Buy ONLY at support, short only at RESISTANCE. If you violate this rule, you will pay. Your wife will diovrce you or your girlfriend will mandate you quit. :)

Put a stop that is $1 below your buy point. buy no more than 200 shares.

Asses your reward..hope you get a better than 1.5x your $ at risk or pass on the opportunity. Think REWARD/RISK and probability.

BEWARE of using 2X leveraged ETFs .

Discipline yourself to follow the arrows and tweak your time frames.

Until you believe you are a disciplined trader as demonstrated by CONSISTENCY of PROFITS and are willing to follow trading rules that define:

What stock you trade

what risk you will accept,

Identify ENTRY and EXIT points...what price levels that you can visibly see as support/resistance and

build experience on identifying high probability patterns, fundamentals or indicators or whatever( Why you are buying and selling )

and able to ruthlessly execute without fear, guilt, remorse or self-doubt...

I would not trade once a day.

MAYBE once a month during overbought or oversold market conditions ( and they always occur - ALWAYS )

Lots of ways to make money..only ONE way to LOSE IT. ONLY one..until you get a grip on that one way of losing money. DO NOT TRADE ONCE a DAY..

That is after tax capital that you have saved.

AND this is FREE advice, so if those arrows dont work..blame Fidelity, :). I still use it...even though I trade on another platform now.

David..I admire your willingness to listen to people you hardly know...but its YOUR capital.

So if you dont follow what I outlined here..I wont be offended!! :) ...and we can go meet women neither of us hardly know one of these days.

:)

EEMTRADER,

Thanks for sharing your trading strategy. The one item that resonated with me, and is certainly something I should be more careful to follow is:

"Buy ONLY at support, short only at RESISTANCE."

You always hear to cut losses and keep tight stops, but this is more difficult if you buy in at any time other than support or resistance. If trade goes against you, you end up needing to decide if you should double down or get out with no clear indication from the charts.

What I mean is, if you buy at support/resistance, you will quickly know if you made the right decision or not (at least with higher probability that mid-trend). If the stock trades through or bounces off support/resistence, probability is high it will continue in that direction. If it's against your bet, cut losses. If with your bet, let it ride.

Thanks again!

Proudpapa...you nailed it..the market action should immediately show ( well on a 3 min chart) whether the reversal occured..especialy if i wait for the second bar...

and GLORY ...when it start doing the stair stepping pullback..motion towards the direction of the reversal...then pile it in ...when reversal is confirmed by price pattern and volume..

WHY DIDNT THEY TEACH US THIS IN HIGHSCHOOL?

:)

"It's the damn max table bets that screw ya over."

fatty- exactly...bet smart and small..

re QID- today's action (IMO), is the kind you want to short into...if you're into counter-trend trading...

why a position in QID should not worry you->i have great faith in human nature->ie, great faith in fear and greed (not to be confused with the worship of either LOL)->if the market is 'us,' then i trust that 'we' will act in predictable ways to unwind/correct the rally...if you're not in good hands with Allstate (and you can be assured you are not), even more so with momentum players and panicked shorts->they are NOT renowned for being 'stronger hands-'

JMHO...

Thanks EEMTRADER for your insight.

craig
Trade tip for ya......forget qid, short Alpo, a beagle just won best of breed last night at the big doggy show.

I'm wondering if there are any individuals who keep a historical dataset of economic data of the major economies of the World. I would like to begin to keep track of this information and wanted to know if anyone out there is already doing such a thing. Storing the data and receiving regular updates etc. Maybe a recommendation of services and software being used. Are there any real-time (or close to) data services which provide comprehensive economic datasets?

Something I've been researching lately and hopefully can get routed much quicker through the Cara network...thanks

is there some way to isolate one person's posts for future reference? the best advice one can get is from a trader who's having a good day, typing with no constraints, and there is a relaxed stream-of-consciousness flow of thoughts (did someone say Zen?)...

EEMTRADER had a good day...if you're looking to trade with the trend (and we all do at some point), might want to paste some stuff that will help you out when you're struggling in real-time...

"I apparently do not know how to read news. To me Buffett's buyout clearly came w/ the caveat of no CDO's, so he is only interested in the good stuff. I view that as confirmation that nobody in their right mind is gonna bail out these guys. Yet the market loved the news."
Posted by: JRPauley [TypeKey Profile Page] at February 13, 2008 10:03 AM

here's someone who agrees with your take on the bailout:

http://tinyurl.com/3x5uyk

excerpts:

"Depending on Ambac and MBIA is senseless. They are bankrupt and everyone knows it. Their guarantees are worthless. The reason one monoline turned down Buffett's "gracious" offer already is because they know it would be the end of the line for them. So instead they cling to a miracle that will never happen.

Buffett will cherry pick the good debt and leave Ambac and MBIA with the garbage, it’s as simple as that. Anyone who thinks this is a bailout for the monolines is mistaken."

"Inquiring minds may also with to consider Municipal Bonds The Next Shoe To Drop, also by professor Sedacca.

Can Buffett add liquidity to the municipal bond market? You bet. The price will be the kiss of death for the monolines themselves."

sf chronicle on rupert murdoch's newscorp + yahoo:

http://tinyurl.com/3yykt5

2nd,
my very low tech solution is to copy and paste the posts into MsWord along with the link to the day so I can get back easy...
Obvious, but I've come up with nothing better and have wanted the same thing as you.
TimG

"craig
Trade tip for ya......forget qid, short Alpo, a beagle just won best of breed last night at the big doggy show."

Posted by: bigwad at February 13, 2008 6:43 PM

Bigwad, as Jon Stewart just reported, the Beagle winning is part of the war on Terrier.

I wrote:
"David: Hard to short LT in-between. Best to wait for extremes in buying at/near resistance levels if your timeline is longer or you are unable to watch daily."

EEM's is a much better description. More Zen, more detail, more accurate. Good advice.

I tried to pack too much into too little.

The point is, you won't be caught short in a bull if you short resistance and cover (stop out)if it breaks to the upside.

2nd: Agree with your sentiment. How many times do we see 3 days up 300+ points in a bear rally and not correct?

Hi,

In early morning casual browsing I have found the following article on a gold forum.

It was written by James Sinclair & Harry Schultz in 2002 and is tremendously actual and informing.

Basketguy,

Later on, when I have some availab

WHY THE GOLD CARTEL WILL FAIL TO PREVENT A PRIMARY GOLD BULL MARKET
THE REAL WHY THEY ARE TRYING TO PREVENT IT

By James Sinclair & Harry Schultz
2002

1. JP Morgan/Chase appears to be the main members by accident or by intention of the Gold Dealers short seller's club.

2. JPM (NYSE Symbol for JP Morgan/Chase) has received, in our opinion, from Central Banks, lease agreements, whereby they are able to receive physical bullion from the central bank paying now 3/4 of 1% per annum. JPM and/or their clients are free to use or sell this gold in any manner they want. JPM themselves or on behalf of their clients appear to have used it to sell violently at key technical points. $312.50 to $314.80 (today) -$315 & $329.50-$330, thereby depressing the gold price.

3. Recently, Moody's Credit Rating Service downgraded JP Morgan/Chase's credit rating. Following that, Standard & Poors Credit Service downgraded JP Morgan/Chase's credit standing based on specific derivative positions.

4. The actual figure of derivative positions on the book of JP Morgan/Chase can be found registered at the office of the Controller of the US Currency. The Controller of the US Currency reports to the IMF which shares its data with the BIS.

5. Therefore the positions carried by JP Morgan/Chase is public but the public has no real idea on how to find it. (Or what it means)

6. The total of all derivatives on the books of JP Morgan/Chase on all underlying assets is
$24 Trillion US dollars. Yes, 74 Trillion.

7. The size of the Gold Derivatives on JP Morgans/Chase's books is $46,000,000,000 - $60,000,000,000, depending on valuation methods. Yes, $46 to $60 Billion.

8. All gold derivative dealers use "Risk Control Software" to manage their gold positions. This program maintains the risk of the gold derivative to the dealer according to the risk percentage that are decided upon by the trading management at the inception of the transactions.

9. All the gold derivatives on the books of JP Morgan are short spreads. That means short of gold. If they were not short spreads then JP Morgan/Chase would be extraordinarily pleased by the rise in the gold price and publically bullish in their reports (which they are not).

10. The size of the total international position of short spread gold derivatives is US Dollars $300,000,000,000 according to IMF and BIS reports. If you convert $300,000,000,000 into ounces of gold at the present gold price it equates to 900,000,000 ounces.

11. As gold hit $305, it triggered the logic of the "Risk Control Programs" to buy gold to maintain the risk exposure of the gold derivative short spreads for the gold dealers cabal/cartel of which J.P. Morgan is, in our opinion, a major player, if not the main player. As gold, with the help of the cartel, dropped from the high $320s, "Risk Control Programs" triggered selling of gold for the same reason. At $302-$305 "Risk control Programs" returned to neutral. Now you can understand the action of the gold market clearly.

12. If Gold closes above $330, the "Risk Control Programs" will start to demand that for each ounce of gold sold short in the short gold spreads the dealers must own long approximately .623 ounces of gold.

13. At a close at/or above $354 the gold dealers cabal/cartel's "Risk Control Programs" will call for approximately .986 ounces of gold long for each ounce short on the gold derivative short spreads.

14. .986 ounces is practically one to one - one ounce short to one ounce long required to maintain solvency by "Risk Control Prpograms" at $354 gold.

15. If you equate the demand to the number of ounces of gold that would be created by a close at or above $354 by the "Risk Control Program" used by all commercial banks, gold banks and gold dealers in the gold derivative business, the number comes out to slightly above 886,325,000 ounces of gold. That number exceeds all the gold that all the central banks on the planet have in their possession including all the gold they have leased and not accounted for. Therefore at $354 gold will have to go ballistic in price &/or the greatest bankruptcy in history will occur for the gold derivative dealers.

16. It is not the gold derivative position that worries the major investment banks that are the parents of the subsidiaries which are the exposed gold dealers. It is not the $47 billion to $60 billion in gold derivatives on the books of JP Morgan/Chase that worries them. It is the effect of an explosion in the gold derivatives on the balance of the US Dollar 23.7 Tillion in other derivatives on the books of JP Morgan that worries JP Morgan/Chase, IMO.

17. This is why J.P. Morgan/Chase and their other gold dealer cartel members are stopping gold at $312.50 to $314.80 today (as this is written) with the help, IMO, of central banks.

18. Such a manipulation to prevent the gold market from rising above $354 will fail because history tells us that no manipulation ever attempted has stopped a primary fundamentally- driven bull or bear market in anything.

19. The two greatest traders that ever lived, (both expired), Bertram J. Seligman and Jesse Livermore taught that a successful manipulation must always be in the direction that the market wants to take --fundamentally and technically. Any other manipulation not only fails. A manipulation against the fundamental and technical desire of a market will create a coiled market that goes further in the direction of its intention than it would have gone in the first place. Therefore the result of the attempt by the gold cartel to hold the market down will be to propel it higher than it would have gone earlier.

20. To complicate the problem, most gold derivatives outstanding today are as follows:
a. Non-transparent.
b. Unregulated.
c. Unlisted.
d. Not clearinghouse funded.
e. Not market priced.
f. Generally non-transferable as many are specific performance contractual obligations.
g. Without standard so that closing can't be made at will.
i. Totally dependent on the balance sheet of the granting entity.
j. Granting gold bank entities generally non-guaranteed as to trade debt, subsidiaries of international investment and commercial banks holding companies.
k. Now totaling $300,000,000 notional value internationally.
l. Approximately 89% of these transaction have been done with entities that have nothing to do with the mining industry as counter party to the gold bank derivative dealer.
Therefore the gold market has come under continued selling by those entities
(gold banks/gold dealers) who will suffer the most, assuming, and we do that gold is in a Primary Fundamental Gold Market based on the "5 Fundamental Reasons" that sustain such an event.

The 5 Keys to a Long Term Bull Market in Gold www.financialsense.com

A. The US Current Account must be in a deficit position and growing. Yes, this is a present condition and shows no fundamental signs of reversing for a significant time. This is the account that measures the amount of US dollars in the hands of non-US entities. It is usually invested primarily in US Federal Debt instruments.

B. An intact negative trend in the US Dollar overall must exist. It should have the characteristics of a bear market. This is in fact true for the US Dollar today. We have a classic long-term top called a Head & Shoulders formation, which was subsequently confirmed by price and volume action. Even dollar bulls now are looking only for the dollar to stabilize at lower levels. This criterion is in place for a long-term bull market in gold.

C. The general commodity market is showing in many ways, both fundamentally and technically, that it is in a base formation from which one can expect higher prices. We shall discuss the technical characteristics further to sustain that this ingredient has begun to support gold long term.

D. Trust in paper assets must be waning for gold to assume an investment role internationally. We see the recent decision against Andersen, the comments on GE & IBM accounting practices and Enron as examples of causative items, which have turned investors away from the absolute belief, in existence from 1980 until now, that paper assets were storehouses of value. We believe this ingredient is in favor of gold's long-term bull market.

E. The momentum in the appreciation of the bond market must be decelerating. We see this ingredient as becoming positive now to a long-term bull market in gold.

These five items as they gain in strength will further accelerate the underpinnings of a long-term market in gold. It was the forming of these constituents of a long-term bull market in gold that has given rise to the move of gold from $260 to $330.
Therefore the Gold Cartel is in Harms Way. A bankruptcy of the derivative dealers who represent, in part, 72 Trillion Dollars of derivative positions (called by Buffett - "Sewage") of the highest mountain of debt ever created on Earth is the reason why gold could go to $1450 -- $1700.

When gold reached $887.50 in March of 1980, $900 was the price that would have balanced the balance sheet of the USA defined as the comparison between Federal asset gold and external debt obligations. If a derivative failure was to happen in the next 5 years it would, depending on when it happened, produce a number between $1450 and $1700 on gold to balance the balance sheet of the US as described above.

Basketguy,

Later on, when I have some available time, I will look into the public info at the US currency controller's website to find the level of short interest held by JP Morgan and others, and maybe we can roughly estimate what is going on.

Hi again,

Taking the above article into consideration, it it is still true, then we would have some sort of tentative explanation theory for what happened over the last few days, as the 800 pound gorilla entered the gold trading room again.

As gold hit $850, it triggered the logic of the "Risk Control Programs" to buy gold to maintain the risk exposure of the gold derivative short spreads for the gold dealers cabal/cartel.

Inversely, as gold, stopped its march at around $940s, "Risk Control Programs" triggered selling of gold for the same reason.

Now, as $900 has shown to be a support, "Risk control Programs" returned to neutral.

So, if Gold closes above its $940 new highs, the "Risk Control Programs" will start to demand that for each ounce of gold sold short in the short gold spreads the dealers must own long again.

This is just a theory, I have no proof to the matter.

DYODD and do not trade on the basis of this.

But again I repeat what I have been saying here for the last few days: serious short covering may be in the cards.

We will know soon enough.

Cheers

maromatics, thanks for posting the articles, and your analysis.

maromatics -

I find your postings of great value.

Thank you.

A total of 190 fund managers running $587 billion in assets participated in the February survey.
"Fears over the economy and corporate profitability have stimulated a rise in portfolio cash levels," said David Bowers, independent consultant to Merrill Lynch.
The survey showed that 41% of fund managers are now overweight cash, up from 32% in January and 26% in December. This is the highest reading since September 2001 when investors reacted to the terrorist attacks on the U.S.

maromatics:
I continue to follow your writing.
thanks always.
regards
joey