Reams of articles and comments have appeared over the past few days on the Bear Stearns debacle. A particularly interesting viewpoint has just been penned by John Mauldin and is republished in this post.

Here is the link: http://tinyurl.com/yqo2fb

Need some humor after all this heavy stuff? Follow this link: http://tinyurl.com/2opvk9

Oldgoat, Adam: I too had questions about account safety. This does not cover pensions (could your HR department at your former place of employment answer your questions? Or at least refer you to the US govt. “regulatory” agency ?)

Nevertheless, this article covers brokerage accounts & cash therein.
http://tinyurl.com/27j7rh

WSJ 3-18-208
“To the extent that the firm doesn't have the funds and securities to cover those claims -- either because of misappropriation or negligence -- the Securities Investor Protection Corp. will step in to cover losses up to $500,000 per account, including $100,000 for claims for cash. Beyond the SIPC coverage, some brokerage firms may offer additional insurance….

In general, any securities that a customer holds at a brokerage firm are legally the investor's property -- and aren't exposed to the claims of the firm's creditors. But while investors still own those underlying holdings, they may have trouble trading them in the event of a bankruptcy because of a disruption in service, says Rob Hegarty, managing director at TowerGroup in Needham, Mass. Investors also aren't protected against a decline in market value of the securities they own, he adds.
Many brokerage-firm clients also have their uninvested cash automatically swept to a bank-deposit account or other cash alternative. If cash is swept to a bank savings accounts, the funds have up to $100,000 in coverage from the Federal Deposit Insurance Corp. Cash that is swept into a money-market mutual fund is covered by the SIPC.

Investors worried about their brokerage firm should verify that it has SIPC coverage and determine what the firm's excess coverage might be.

LONG LIVE GS ! LONG LIVE LEH ! :)

Here are the numbers to watch for from LEH:

http://tinyurl.com/2spyym

Bill, really looking forward to your book, and then, to your advisory services. Thanks again for helping us keep our wits about us, in these troubling times.

Number to watch? French Canuck..sold GS for $16 gain...enjoy the FOMC day. I am going to bed.

Thanks for the post on brokerage safety. I've been worried my AMTD cash might get "swept" somewhere I don't want. Gotta wonder about an account named sweep.

caution -
In my opinion SIPC is yet another form of CDO and we know how well CDOs work now :). Better not rely on it.

Good Morning.

Here are your Cara 100 Ratings Changes:

Upgrades:

GS - to Outperform @ Wachovia
VIP - to Hold @ Citigroup

Target Price Raised:

ECA - $73 to $78 @ Lehman Bros.

-------------------------------------------------

Have a great day and remember that Uncle Ben is watching out for us little guys. :^)

EEMt- what about paris hilton and heather locklear?

Latest UXG price 2.51 -17%
Buying or Crying time?

GS earnings $3.23 compared to $6.67 last year and LEH earnings $0.81 compared to $1.96 last year are cause for great joy in the financial arena.

I expect the second coming of Rod Serling at any moment. :^)

2nd Ave: LOL....should have bought LEH as well as GS . Dang it..getting conservative in my old age.!!

PAris and Heather?..not as important when it comes to FAST WOODEN NICKELS. I know my priorities...this weekend...I'll reverse my priorities. I love wooden nickels !!

Thank goodness JRPauley didnt buy those LEH puts..

Have a great day..going to sleep off my hubris...LONG LIVE GS !!

EEMt,

Re your 8:10 AM post "sold GS for $16 gain"

Just curious which broker you use for after-hours trading ?

French Canuck : I use Schwab..thats $16/share...

wholesale inflation up .3 but core up .5

getting harder to game the cut...maybe EEM is right...go to sleep...

I don't know if this is appropriate, for the content style of this forum, but I feel some news never gets reported if it protects the status quo. This will generally put aside the grandstanding notion of moral hazard in the real estate collapse. A BBC news item about tent cities springing up in California:

http://www.boingboing.net/2008/03/17/americas-new-subprim.html

Also, get a load of the spin on the housing numbers on CNBC. And they had Ara Hovnanian, poster child for all the hype, hoopla and disastrous executive decisions that have characterized the housing bubble crash.

And now CNBC is referring to the mood "Post The Bear Stearns Crisis of Confidence". As if it is a minor problem that has passed like so many slightly gray rain clouds.

And the dollar keeps falling.

Incredible. Sleep sounds good.

FranSix,

Thanks for the video link to Hooverville 2008. It's a real eye opener.

Regards

How the hell did GS "reduce" its leveraged loan commitments by $20B this quarter? Did they just evaporate?

Something stinks to high heaven.

One must pay attentition to detail. This is where I think the markets are at this point and I am not alone in this analysis
http://wallastoninvestments.com/client-9-charts-and-commodities-double-topping

The expression, "hoisted on their own petard" Bill used has a very colorful origin.

In the days of sailing ships - ships of wood and men of iron - sails were help up by ropes, and the ropes were looped around petards, along the sides of the ship. A petard is a round dowel with a shaped handle on the top, and was inserted into a board through a hole.

The ropes were looped under and then over the petard. The idea was that in an emergency, you could rush over, and lift the petard quickly, and thereby free the sail.

However, if you were not fast enough, or if the sail had too much force (common in an emergency of course) you would pull the petard, but the rope would NOT come free, and you and your petard would get hauled up on a quick ride topside!

Hence, "hoisted by your own petard" was originally a very precise description of a bad state of affairs. It is more figurative today, but still descriptive of a bad state of affairs, as BS found out.

Cara 100 Update:

AMAT upgraded to Buy @ Caris & Co.

WPeyton,

Here's an another explanation of the origin of that phrase, including a reference to W Shakespeare:

http://www.phrases.org.uk/meanings/hoist%20by%20your%20own%20petard.html

david driscoll was on market call last nite talking about paychex.... he likes it a little cheaper than it is here and says during bad times it acts very well. i guess i bought it too early.

INVESTMENT RESEARCH:

Fortis metals monthly
March 2008

http://www.virtualmetals.co.uk/pdf/FEM0308.pdf

The newest Chinese export: Companies

Unlike the Japanese, whose high-profile arrival in the United States in the 1980s was at first greeted as a threat, Chinese businesses are being courted by states including Michigan, California, Illinois and Georgia.

http://tinyurl.com/32dwaj

opening appears to have been powered by shorts-> no positions right now, and no plans to open any prior to FOMC...

Jock at March 18, 2008 1:57 AM

http://img215.imageshack.us/img215/9470/techfl5.gif

thanks Jock, thats a great animated gif, its a keeper for the TA scrapbook. Will have to pull out the old candlestick books by Morris and Nison, I think they missed that one. Maybe Stockcharts should create another indicator.

humor?

An Eco-Friendly War?

http://solveclimate.com/blog/20080310/eco-friendly-war

2nd: Ditto.

Looking for entries in SRS in the low 100's.
Maybe other ultras if they come to me.
Standing aside and drinking coffee is harmless.
No interest in financials....

Gold or silver on a pullback. See CT's report this AM.
I'm letting the Globetrotters and Generals fight it out.

Number2son has the correct origin of petard - "... For 'tis the sport to have the enginer
hoist with his own petard...". It's an unpredictable bomb with a short fuse, kinda like my girlfriend.

Crazy, I somehow erroneously clicked on the chat from March 11th, the 400 point up day and started reading the postings and I totally thought it was today's. I didn't notice it was from March 11th until half way through. The funny thing is I think I could just continue to read that chat transcript and I am not sure the mood or the result would change. I am not fully through my morning coffee yet so it takes me a while to get it going.

Gecko,

Glado to find I am not the only morning slow starter in the universe....

Craig - Remember the game many years ago that the Generals actually won?

NASDAQ has completed a triangle wave 4 and has broken out into a wave 5 down, according to McHugh. {5}, 5, iii.

Dow has triggered a H&S pattern that completes at 9750. {2}up, 3 of iii down, reversal Wed?

The PPT indicator has enteded the area where meddling is likely.

Martin Weiss has issued an alert to sell half GLD and half REW while maintaining a core physical bullion position.

Odd to see stock price basically suspended in time. Looks like everyone has their position, waiting for the Fed.

BSC- another short squeeze underway...was off monday->made the equivalent of two weeks' salary playing BSC ;)...should've stayed home today too

Bargain shopping yesterday in the Blue Light Special aisle netted refiners TSO, VLO, FTO that are strong today. Accumulating energy shares as the carnage unfolds as I expect them to be longer term holds as demand outstrips supply the second half of the year. 2M BPD deficit will eventually "evaporate" ready supply. Expect fireworks as peak oil (the real problem) replaces global warming (junk science) IMHO.

2 thoughts:

1) we should start some rumors about EEMTrader while he's asleep

2) How dies this afternoons rate cut mean anything but bad for the dollar and anything but good for PM prices?

can't recall the last time i saw shorts blasted that badly...maybe TASR...

Thanks for the link Fransix. That is not something you will see on corporate media. They have to keep up the pretense that the American dream is alive and well for everyone, even minorities.

One word springs to mind: Hooverville.

Number2son,
I think Goldman de-leveraged using the Term Securities Lending Facility, which means they're only temporarily de-leveraged unless the TSLF becomes permanent and us taxpayers and our children eat the garbage paper.

I'm assuming the same thing is making LEH look not so bad today.

I'm on the sidelines still. It would be great if this rally could hold until DOW 12700. That would make it an easy short.

Rob.

MF dead cat bounce:

stockcharts.com

http://tinyurl.com/yujpx4

We've got a double bottom in SPY until we don't.

WIND- soros up to 6.7% position...

any bets where BSC closes today? single or double digits...

2nd, BSC is a zombie from a Stephen King movie. Run!

LOL- some people like zombies, man...

Anyone see the picture of Bear's front door from yesterday:

http://calculatedrisk.blogspot.com/2008/03/bear-stearns-building-today.html

Hey,
I need everyone to help me figure something out.

JPM bought Bear for .05473 of JPM's stock per Bear share.

Currently JPM is at 42.70 which equals a Bear value of 2.34.

But we all see Bear trading for 7.34.

Is this a no-brainer short or am I missing something?

Maybe people are expecting JPM to go to 134.11 before the deal closes??

Rob.

Oh,

I guess people are expecting big Bear investors to reject the deal for a higher price.

Well I can't see that happening unless Wall Street wants the "credit ring" to be broken. JPM only has 1.2 Trillion of liquid assets so they can't afford to pay much more. And the FED can't commit much more than the 30 Billion they have already, since they need to save firepower for ABK, MBI, WM, C, and others who will be lining up to be saved.

Rob.

Anyone know why GOL has been beaten senseless over the last year? A buy alert will probably be triggered today.

Analysts at Avondale Partners downgrade GOL Linhas Aereas Inteligentes (GOL) from "market perform" to "market underperform." The target price is set to $9.

It's not too late to short more here at $15. Will be a nice and easy trade down to 9...

I am not shorting it though!

Note Prieur's link to Mauldin's article on Bear. Mauldin notes that this intervention had to occur to contain a financial collapse that would affect millions of people. I agree. Although we can all be pissed off for what happened in the past (many of us saw what was happening at the time), we can only move forward in an effort to get through this mess. That means more government action, likely a stairstep down in the stock market with massive liquidity added in various ways in an effort to stave off major deflation. Many of us have stated that they should let the sheet hit the fan and allow the market to work itself out, but this is a systemic crisis that works in a domino effect - that wouldn't be good for anyone but the shorts, and sorry, but for the good of the people, IMO, the government needs to limit an unemployment spike.

As Bill has stated many times over the past months, real wealth will not be created until all the writedowns have been priced into the market. The stock market will likely bottom before that time (when most have been written off already), looking months ahead. Sensing the economic trough, the areas that have historically performed the best at that part of the cycle are:

Consumer Cyclical - apparel, auto, construction, entertainment, printing, retail, hotels.

Financials - banks, trading, real estate.

And some others, I am sure.

Until that time, Bill recommends that most traders stay mostly in cash because when the market bottoms, the gains on the longs purchased with that cash will provide great gains.

IMO, aggressive traders can trade this market mostly from the short side, with smaller positions than normal. I am guessing the biggest lessons that will be learned in the future months will be from the traders who took short positions of too much size only to see the market rally beyond their expectations.

I think the most successful traders will be the ones that understand the big picture, but measure their probabilities from the TA side. Blindly shorting the market because it "should" collapse will take money from your pockets.

In case you missed it, in Bill's WIR, he mentioned his "best of breed" stocks to be purchased at the bottom: XOM, GG, TM, ABB, DEO, GSK, IBN, GOOG, NOK, EXC. Of course things could change by then.

Good luck Caraistas!

moab, there is new competition for GOL coming up. However, it is still a very good company.

Re my 1:52 PM post yesterday ...

Insiders made a fortune on LEH up by 39% since yesterday. http://tinyurl.com/yq4wuz

Are we to believe that yesterday's rumors in the financial press of imminent LEH collapse were purposely leaked to squeeze the shorts ?

Naah ... that would be manipulation.-)

Short into strength for higher probabilities of winning trades.

GOL is affected by fuel prices. I have no idea about GOL, but if an airline hasn't hedged it's fuel prices correctly, it's earnings will suffer. Also, if the economy slows, what does that do to revenue?

55% return today on BSC money. Somebody could make their retirement fund gambling this thing...

Of course it just dropped $1 in less than 15 minutes. What does it mean when large caps turn to penny stock volatility?

Is there a metric where BSC has to stay above $1B market cap in order to stay in a certain index, or is this just reversion to the mean?

Perhaps Joe in Bahamas will get some of his BSC money back...

"Mauldin notes that this intervention had to occur to contain a financial collapse that would affect millions of people."

Really? How does the failure of an investment bank hurt millions?

This is a myth that the pigmen of Wall Street are circulating to justify the bailout.

As Jim Rogers has noted, all the banks in Japan failed in 1969(?) and the economy went on to unprecedented growth. What makes a Wall Street IB special?

Sorry, but this argument stinks of self-interested bull shit.

ALOHA !!

EEMTRADER ... By all means if you make 20% in a day off LEH or GS or APPL good work! Clever people deserve a reward. You have beat the bloody casino mate!

I would view the analyst downgrade of GOL as a buy signal. It sounds like they capitulated based on fighting the chart for too long. Analysts don't know how to trade.

The decline of the last few weeks was based on diminishing volume, so perhaps it hasn't bottomed yet.

n2son - IMO, it is about the derivative chain. It's a daisy chain. A break in the chain has the chance of breaking the whole chain because the mountain of derivatives is in the hundreds of trillions of dollars. This has no historic precedent. I disdain HB&B as much as anyone, but I don't want the financial system to collapse. Btw, I first read about this from gold bugs years ago...they hate the banks.

g034, what's wrong unwinding that daisy chain of toxic derivatives!? The lie is that unwinding all those bad investments will break the system. It will only break those who made bad investment decisions.

Instead, the crap is being swept under the Fed rug to fester and rot for years to come. And that WILL affect millions. And for a long time.

id like some thoughts about the Canadian Central fund (gold/silver holding) as ive started to move some money into this as opposed to buying more gold shares.

its had a great run but im wondering if its silver component may make it behave radically different should the silver/gold ratio breakout.

any opinions appreciated.

What about the pension plans and the ability for FDIC and SPIC to insure all the money market failures?

At what point do we even begin to agree on off balance sheet transactions as systemic fraud, and that this had negatively affected economies worldwide, brought large corporations into bankruptcy prematurely, caused jobs layoffs and burst bubbles, wage deflation, possibly wars, killed pensions and that this is essentially the worst thing you can bring about on any collection of societies? The trains will still run because they're essential to an economy, but the derivatives will all be tossed on the garbage heap.

SIPC

ALOHA !!

g034 ... Goldbugs hate "fiat" not banks. It used to be banks held only gold and silver, back when money was money way before I was born. Now they don't!

I agree about the derivatives chain ...

Number2son ... Unfortunately our money, the US Peso, is based on how sound our financial system is which would include the banks that hold those toxic derivatives. Our Sovereign credit rating is on the line! If only we didn't depend on imports ...

"We are totally confident in LEH"

Guess who said that? Goldman Sachs CEO in the conf. call today.

"They are a strong and healthy competitor".

Guess what would happen to GS stock if LEH went under...

BTW, did they take advantage of the new 20 days facilities in order to avoid declaring higher losses?

KAIMU : Thank you , that was 10% not 20%, and I sold too early.

Sleep was good, except when Britney's mom showed up, prefer Paris and Heather to myself.

Ahh..but its a new trading day. Watching the currency markets

ALOHA !!

Imagine if Goldcorp GG, announced they met lowered expectations with a 57% loss? Would GG rally 30%? Double standars anyone?

Problem is Goldcorp has real earnings on real wealth and are held to higher standards ...

number2son,

If the #1 export of the US is financial products, wouldn't this unwinding of toxic (and probably non-toxic too) derivatives collapse the US economy (being the system, or perhaps just the stock markets)?

It would be a good time to be a lawyer though... with all those contracts unwinding & shareholder value being destroyed at the Fed's whims. Kind of like what happened in the 70s with Nixon's spur-of-the-moment gold standard default.

There's a lot of crap under the rug already... The credit bubble rivals the tulip bulb bubble, and in the end there's not even a flower to plant...

Hey Kaimu, your right, it's the greedy bankers that got us into the mess that we all have issue with and what's the difference right now? Who wants to put their money in these "banks"?

CEF might be better than GLD and SLV as it avoids some of the pitfalls that have been written here regarding ETFs not being tightly coupled to bullion. Canadian dollar likely to be protective as well.

Last I looked Ag seemed to have peaked in early Mar wrt the GLD/SLV ratio.

Personally I'm spreading the PM allocation around; out of GLD and SLV. Accumulating juniors and looking for a pull back to add CEF.

Using DGP as the trading vehicle now (sold yesterday).

GDX/GLD ratio bottomed in early Feb and is headed in the right direction, but the overall market is still a Bear and it will take the gainers (larger PM stocks) down with it. Juniors have gone nowhere and seem to be less vulnerable.

REMEMBER _

Banks can lie on their SEC filings if it's in the best interest of the government.

LEH, GS

thx aurator

what are the tax consequences for US holders of CEF?

Moab: You made some money on XHB...RIGHT ON!!!

BIG WAD: CFC !! Thats another 10% ...!!

Taxes for US CEF

http://www.centralfund.com/pfic/PFIC2007.pdf

By the look of the financial sector today, I'm surprised the talking heads aren't out saying that the crisis is over and everything is good again. Talk about a coiled spring.

Rob.

I can't decide whether to take the quick profits on XHB or stick it out a day or two more as the chart looks promising. Just wish I had been braver with Lehman.

I hope everyone realizes that the credit markets continue to deteriorate. One of the best profs at minyanville is saying that three big dealers are telling him they have 'no balance sheet'.

Yawn.........

Maybe they should only open the market at 2:00 EDST on Fed announcement days(daze). :^)

I've heard that CEF is taxed at the foreign funds rate as opposed to the collectibles rate. Plus the bullion is held in Canada. This, combined with the problems Kaimu points out with the ETFs, make CEF the way to invest in bullion for me.

3mo. treasury yield @ 0.68%

CEF, if you do not want exposure to silver, they have GTU which is just gold.

Go34,

Agree with your above remarks.

Cheers!

Zack's analysis of new Cara 100 member, SYT:

http://tinyurl.com/2msyxq

Re: Moab's "I hope everyone realizes that the credit markets continue to deteriorate"

Agree totally that the end-game is a bull trap by week's end. The sacrificial slaughter of BSC and subsequent bogus LEH scare of yesterday followed by today's 'surprise' better-than-expected results from GS and LEH was set up to sustain a rally going into Thrursday's VISA IPO to top up the banks with fresh cash.

Hopefully, by putting our heads together, we can see through the lies and rumors concocted to suck money from the small investor.

moab-
To take advantage of special tax treatment of CEF you have to file form 8621 (rarely used form, not part of turbotax) making a PFIC election in the same year you buy CEF and also keep filing it (I believe) every year you hold it.

Thanks for the tax info on CEF, I just thought it should be disclosed for all here.

I must add that the credit markets may turn around at some point, even for just a few weeks. That might result in a big rally in equities. We should keep our eyes out for this.

There is most likely more pain to come but the question is when.

Thanks Occam for the info. I had read that but forgot about it.

French Canuck :

Out of curiosity..what analysis should someone perform to tell the difference between a rumor from a lie? Separate the why from the who , especially in this market?

How did that perso know last tuesday to buy those 55,000 puts? What will make someone believe Lehman is going under , but instead reported better than expected ?( read not as feared and reflected in the stock price )

What proof of a double standard ?

If you dont have a method in this market.you aare in Kaimu's casino, with memories of trading the Nasdaq, and no longer trading.

The much-awaited Visa IPO is today.

That could easily be the reason for the huge rally.

The banks hold most of Visa and will unload it to investors today.

And they would never want to do that in a down market.

Rob.

Covered my FXP short this morning at $107. Just went long FXP again at $103. This rally is too much too fast for the short-term. Chinese indices had only a slight recovery last night. Not nearly enough to justify the size of the recovery IMHO.

Here is the link to the article:

http://tinyurl.com/395vo7

If this is the reason for the rally, which seems logical so the banks can collect as much as posssible, we can expect a morning pop tomorrow that could be a great entry point for short positions.

Rob.

BTW French Canuck..this community was giving plenty of signs that a rally was taking shape today..from Moab's post about a double bottom...to my question about buying Lehman.s put to JR Pauley..but...

if someone's mind is amde up...and reached a conclusion before the market plays out...then they are not trading the tape..they are trading their beliefs about the market...that..is a casino.

Watch...what happens after the fed announces....and the all too eager beavers to jump in when the market has not shown its hand but just emotional trading..poisitoning and gaming before the move...that...is gambling...but hey..everyone has their own'method'

BSC at one point was up over 65%, together with LEH,GS,*BS* and a concerted push in financials, that could do a lot for the indices.....but go34's point is still well founded....dbl bottom in the S&P and it's still under the 50DMA with a negative MACD.

Now might be a good time to revisit Colin Twiggs last diary entry on the markets. I think it was entitled Bull Trap.

It feels like they are setting up for a "disappointment" up 300pts +/- already.
If not will it be able to sustain itself?

FranSix,
Thanks for the link to Bushville 2008.It should be on the evening news tonight! Bob.

hi eemtrader, enjoy reading your comments. this is what i'm trying to avoid. i don't wish to gamble but learn how to trade the real way. hope i make sense and sorry for interrupting the flow ;)

I find it disconcerting that equities are pricing in a full point cut, and yet gold is just laying there like a big lazy dog.

What is that telling us?

TLT - Assuming .75 or 1.00 Fed cut, think TLT will pop ==> shorting oppty?

"If the #1 export of the US is financial products, wouldn't this unwinding of toxic (and probably non-toxic too) derivatives collapse the US economy (being the system, or perhaps just the stock markets)?"

Folks, if this is the #1 export of the U.S. then the economy has already collapsed.

g034, I respect your point of view very much, but I don't buy the argument that a proper undwinding of the MBS derivative mess would ruin pension funds. It is part of the argument used to scare the public to provide support for the bailout of the people who are truly to blame and at greatest risk.

OldGoat...wait till tommorow..it wont hurt your returns....let it settle..:) Plenty of time to short bonds...

uh oh...

Craig,
I agree with you. This is a huge bull-trap.

Think about it. What has fundamentally changed since Friday?

HB&B is still in trouble and the FED and Visa IPO won't give them enough money to repair their balance sheets.

Was it G34 that said earlier that the market won't find a true bottom until most of the garbage has been written off.

Well JPM and the FED just slowed down that process by swallowing Bear.

So, we may see a rally that squeezes the shorts and lures in some suckers. The rally could even last into next week and may even print a higher high to go along with the double bottom.

But, in the end, those are just technical signals and from what I've seen intervention and manipulation have been trumping technicals since August.

I'm happy to sit out however long the banks want to run the market up. It won't be that long unless Ben has a new trick that can fix compromised balance sheets.

Rob.

EEM - Uh oh what!

stand aside...OG...dont trade this tape...yet

if i had to guess (and who isn't trying), would say we...wait, i don't want to upset EEMt...

let's put it this way- keep in mind what Vad had to say...

2nd Ave: Stop...I shut up now....

*FOMC CUTS TARGET RATE 75 BPS TO 2.25%

n2son - we're all in this together and we agree on 95% of the issues. The only reason why I disagree with you on the unwinding is because I have been reading about this for 5 years or so and it is finally coming to fruition. The intelligent analysts of years past were screaming into the wind with no one listening. The fact that they saw this coming so long ago, leads me to rely on their analysis - truth be told, I am not an expert in this field, nor do I have any inside information. Better safe than sorry I say.

3/4 cut.

i say we rally beyond the 250+ we already have and kill the bears...

OUTLOOK FOR ECONOMIC ACTIVITY HAS WEAKENED FURTHER
- Vote 8-2, Fisher, Plosser dissented
- Financial markets are under considerable stress

I hear you 2nd.

Is this all the banks have??

Come on!! I was hoping for a 500 point Dow day!!

Maybe they're too scared because they also know the fundamentals haven't changed.

Rob.

So huge volume spike on the indexes few minutes prior to announcement works yet again when forecasting the decision.

How did you see the huge volume spike before the announcement? I see one after, but not before, on my feed. What are you using?

So, why is GOLD falling off a cliff right after the FED decision?

That seems unusual.

Rob.

They left a lot of room to cut rates further should any other calamities arise. Looks as if the toolbox is being emptied. If they cut another 150 basis points according to short term yields, which they can do, they are at the limit the Japanese find themselves.

http://finance.yahoo.com/bonds

Writers - if my system is correct I see at 2:14 a block of 3.2 m shares. I am not sure how these decisions get out or who announces it first.

geckcojb, thanks - on which index?

Mine shows the spike later. GUess I need a new one! :-) Vad had the info here at 2:14.

FOMC decision came out at 2:14... I see no volume spikes before the announcement, FWIW

I suspect real time feeds are influenced by the speed of one's connection, even to the point of reporting the wrong time.

You know I think something is screwy with the timing on my charting system now that I look at it. Here I think I am stealing signs but really just late.

Hi,

Re PoG:

Great support for gold just below 1.000.

Very good news.

Re FOMC:

So hyperinflation is the name of the game.

God help the US middle class.

Cheers!

ANyone here using FIOS? If so, is it reliable? I've been thinking of upgrading.

agreed maromatics.... so long as support just below $990 holds.

i think so many traders and gold bugs are obsessed with the notoin that gold is due for a huge correction, a slide below this mark could trigger the sell off many, including Bill have said time and time again.

the question is, if everyone seems to be calling for it, even the gold camps who are typically uber bullish and the editor of 321gold himself issues a warning as such,

could the opposite actually happen because not enough irrational exhuberance exists for gold yet????

12,400?

Dr Cosa,

Agree: lets see what happens.

One thing is for certain, I have been watching the tape on futures this afternoon, and so far there is a wall of buying gold futures below 1.000, and that is real, not an opinion.

Lets see how it ends today, and more importantly what will happen in Asia overnight.

Experience tells me that the "real" market reaction to FOMC days comes a little bit later.

Misworded "#1 export is financial products"

Should be "#1 exporter of financial services"

So what does the US sell if it can't sell derivatives or airplanes?

More DIA puts here. Party's over. Irrational exhuberance.

i cant argue with your calls, especially lately.
i keep perspective thx to guys like Jim Sinclair who consider this nothing but a blip on the way to $1650.

spot is sitting at $992 right now. i cant for the life of me understand why it dumped after this announcement, along with it the gold shares that were sinking all day (what else is new)

on a bright note a few of my jr's didnt budge down on this fall which could be the start of something wonderful.

but im cautious until the next few days play out.

dr.cosa-
I am 99% certain the gold move is plain and simple intervention. More to come this week.

Spot Gold just broke $990.

Gold going down and oil going up. What's up - or down with that?

Even stranger when you consider that silver lease rates are negative right now.

shark sez:

"Tell the guys on the blog I'm totally freaking right about the $1000 top in gold!"

(I say "For now")

He also sez: "Eat my dust, eat my shorts, you guys are stoopid, I'm smarter than you and my girfriends are prettier and cooler than yours. And I'm the king of the wooorrllldddd!!!"

Actually, I made up that last part.

I say: "Shark! Fix your damn computer and get back on the blog, man!"

Back into SKF @ 120.75 and SRS @ 107.

Fed running out of bullets now.

intervention in PMs sounds right. something fishy

TLT - Did pop from 95.5 or so to 96.16; now back down to 95.25.

hi,

Yep, intervention it seems.

Re: dr. cosa "spot is sitting at $992 right now. i cant for the life of me understand why it dumped after this announcement"

$USD is highly oversold right now, with RSI < 30 for a few weeks, currently at 17. The FED just put a floor under $USD with a 75 bsps, while the market was anticipating 100 bsps. For proof, go to http://www.dailyfx.com/ and see USD/JPY rising to 99 when it was 95 a few days ago. Same with EUR/USD falling back towards 1.55. $USD rising means POG/$USD falling. POG may not be the same chart if priced in any other currency.

Here is some additional info on credit market dislocations and how they haven't changed this week so far:

http://bespokeinvest.typepad.com/bespoke/2008/03/high-yield-sp-1.html

frenchie,

i cant understand how a 3/4 point cut would be bullish for the US dollar on the basis of it being 1/4 less than what many were expecting.

i cant argue w/ the tape im just amazed that a cut this large could be considered puttig a floor under the dollar.

When you apply "English" to the table in pinball, you want to bump the table in the direction, more or less, as the angle the ball is traveling. That way you have momentum in your favor.

If gold is manipulated, and it is, my observations tell me that 'they' are aware of this phenomenon.

"im just amazed that a cut this large could be considered puttig a floor under the dollar."

Because a move of 100 bps was expected and has been priced in already.

dr. C,
dr. C,

"how a 3/4 point cut would be bullish for the US dollar ?"

Likely a mix of these factors:

1. Prior to the FED decision, and on yesterday's scare with BSC, FFF had already priced 100 bsps cut. Today's 75 bsps simply lifts $USD back from that low.

2. At RSI 17, $USD will use any excuse to rally from here.

3. PMs dropping at this point may simply be reflective of money flowing back into equities, especially financials which have recently been oversold. See RSI on XLF / HFU.

The real question is how long can $USD and financials rally while PMs decline? I think this will be an opportunity to acquire PMs, either bullion or miners. Bill gave some excellent insight on this recently, as have others on this post.

Here are the gainers on
NYSE
http://tinyurl.com/24o6bx

Nasdaq
http://tinyurl.com/29r4hk

AMEX
http://tinyurl.com/259jpj

Well I put some money on the line with some May 123 Dow puts.

Rob.

Seem like an interim top in that GG, AEM and other overextended golds are getting absolutely drilled, although they are holding their trendlines so far.

They can only do this so long. I am basically sitting on the side waiting for skf, sdd and qid to come to me.

buying a couple of FXP..bearish RSI divergence on 30 min chart on FXI for an overnight hold....( Downside ) QQQQs not quite at 43.34..potential resistance...MAverick engage..taking the shot

Wall st really wants that 400pts huh?!!

The meme getting floated is that the Fed has re-established its credibility with its actions over the past two weeks.

I can smell that one all the way here on the other coast.

This is gonna be fun to short after it runs its course.

Next on the agenda is hype about how over-subscribed and successful is the VISA IPO. That should stoke the asian markets to keep the rally going for more short squeeze.

A while back someone here said that from 600's to 900's he saw no entrance to gold and missed the move.

I respectfully disagree with the interpretation, as I think there were entrances.

While I may be proven wrong this time, and especially since I put it in writing, but almost every one of the 20-30+ point drops over the past six months have been marvelous entries.

ALOHA !!

EEMTRADER ... "If you dont have a method in this market you aare in Kaimu's casino, with memories of trading the Nasdaq, and no longer trading."

You totally miss my point ... Debt is the casino ... You take "casino" to mean just trading stocks. I see the casino as the entire way we Americans choose to live our lives in continuous debt! Working our life away to pay bills ... Its looking more like a debtors prison around here than a casino! At least at a casino there is an aire of "hope"! What good is winning a few trades if you turn around and hand it all to your mortgage and car payments? You need a method for life not just day trading! In one phrase I could say the solution to America's problem is ... "Live within your means"! If that means downsizing then do it! If that means working five jobs then do it! What I have learned is there needs to be a cut-off where quality of life means something. I am a workaholic and I have to remind myself to live life. Many times I find myself too engaged even here on five acres in the jungles of paradise! When I leave the computer and walk outside I am in a tropical jungle. I see no neighbors, I see no freeways, I see no buildings, I see no parking lots, I see no smog, I see no gangs, I see no jets, I see no police cars or ambulances ... Its quiet and peaceful and secluded and full of flowers. I have no drama other than what I create on my own! Believe me thats plenty! I've got a full plate ...

We choose debt. Quit choosing it ... Quit choosing it for yourself and for your country. If banks had to make a living off me they'd starve to death! US Banks have nothing I want ...

Kaimu: If I want life advice, trading advice I will pay for it from pros...

(edited, however I have explained to the complainant that these are stessful times and every community goes through periods of dissonance. My objective here is to keep 100% of the discourse intact, so I am reluctant to edit. A community that operates on the basis of mutual respect will be able to keep moving upwards and onwards, as I say. Then these incidents will fall away and we can get on to the real challenges. I hope you agree.
/Bill)

2nd - your crystal ball is working again...nice call on the bear slaughter...

Huge trading in March and April XLF calls. Hmmm...

Kaimu,
I love your awesome posts. I've been to the Big Island twice and it truly is paradise. When I look out my window I see what you see (except no flowers right now, just snow) It's to bad we can't explain the points you made to people without them getting defensive. I think one must come to these realizations on their own.

I have sent a letter to our host about the remark at 4:24. Unbelievable. Thank god Kaimu has the stones to brush off crap like this. Kaimu has my support for sure, not that he needs it, but perhaps its nice to know it when you are needlessly flamed.

ALOHA !!

EEMTRADER ... Mention "debt" around here and some people get bent out of shape! If you're going to misquote me then I have a right to correct it.

"Please do not read my posts as they are irrelvant , unprofitable, untimely to your life pursuits."

You don't? Not everybody day trades. Just as not everybody owns gold or tropical land.

Most of my post was about Americans in general. I guess its only about you if you choose it to be about you. Like they say in AA "Take what you want and leave the rest"! It's all happening, so let it flow ... let it flow! Life's too short ... besides how do you know I'm not a "PRO"? HA!!

All the best bruddah!

Everybody lives amongst bugs and animals....some just behave themselves more than others, so some of us don't notice. Until they read a post they don't like and then we find out they need their shots.

It's safer here in the woods where the local animals don't overreact so much....

EEMTRADER,

You may not agree with Kaimu, but it would be nice if you could discourse in a more gentlemanly fashion. I have only noticed your handle on this site for a while now. Kaimu has been offering GOOD advice for quite some time and you will be hard-pressed to be his match.

EEM, what relationship do you see in FXP vs QQQQ? Trying to understand your last post, or what do you see in QQQQ that leads you to enter FXP?

Kaimu,
I liked the post and the Jungle Book image. Thanks.

News from trading room
Market may go up tomorrow
But will be down on Thursday
Because of three days of holiday weekend
Many people may not want to be in market
During three days off. Any thing can happen in those three days
How market opens next Monday will be interesting

I, like many of you, are wedded to the short case. I still think the market will decline but this post is food for thought:

http://www.tickerforum.org/cgi-ticker/akcs-www?post=33740

If the credit markets recover we may see another 4 sigma rally. If it is not off the bottom it will have more credence for me.

Kaimu,
I feel like we're brothers even though we've never met. We think so alike it's scary.

My main goal once I started working was to get out of debt and the rat race as soon as possible.

We're almost there now with 85% equity in our house and the student loans being paid off soon.

Long-term vision is sorely needed in our society.

Rob.

I value what Kaimu and EEM have to say. Hope both of you stick around.

http://www.nytimes.com/2008/03/18/business/18bear.html?_r=2&ref=business&oref=slogin&oref=slogin

"For James E. Cayne, the firm’s chairman and former chief executive, holding on to his Bear stock was a point of pride, and he rarely, if ever, sold. A billionaire just over a year ago when Bear’s stock soared past $160, his 5.8 million shares are now worth about $28 million at Monday’s closing price of $4.81."

...

"Across the firm, executives and employees declined to speak publicly, a reflection of the fluid events as well as a reluctance to anger their prospective bosses from JPMorgan who were already on the premises Monday, appraising their new investment.

But privately they expressed raw dismay, their voices heavy with sadness and shock.

My life has been flushed down the drain,” said one person. There was talk Monday that with their life savings nearly depleted, some executives had moved quickly, putting their weekend homes on the market."

...

"Bear also told employees that grief counselors were standing by."

Deflation is stock prices -> deflation in high priced homes -> economic downturn

Vinod, or it could go like this:

News from trading room
Market may go down tomorrow
But will be up on Thursday
Because of three days of holiday weekend
Many people may not want to be short in market
During three days off. Any thing can happen in those three days
How market opens next Monday will be interesting

EEMtrader,
I get a lot out of your posts. They are very beneficial to me and many others. I didn't see the big deal about your "original" post before it was changed, but we need to keep it a little friendly around here.

100% cash for today, but ready to pounce in the market after it runs up to ride it down. I was too busy at work today to keep an eye on what was happening.

Good luck, and happy trading...

ALOHA !!

vinod ... What a World where you can't even trust the markets for a weekend or a three day holiday! It wasn't always this way ...

I wonder how many HB&B employees were dumping their own company shares today? Surely a 57% loss does not instill a lot of confidence in their future at the bank! A lot of people dusting off their resumes over at Wall Street just in case!

My wife starts her new job at Hilo Hospital tomorrow. With a gazillion baby-boomers there's a sector that won't be seeing a recession any time soon! Many countries are in the same boat with their large aging populations.

Lose the stress ...

Today's actions may have left people with a lulled sense of satisfaction that the futures market will remain open at all costs.

I am just nauseated by the market action today! Can anyone tell me a reason I should consider the notion that this was not another bear market rally? Every single one of these monster 1-day rallies over the last few months has just set up a new point for us to resume the bloodletting. Has anything really changed here? Is today any different? Can a multi-billion dollar international investment bank not turn into a pile of rubble overnight again? Is that all in the past?

Billy-

I felt the saw way yesterday, before EEM roasted me and told me I shouldn't be trading these markets.....

dfinvest said, "...before EEM roasted me and told me I shouldn't be trading these markets....."

I think he saved you from making a mistake, as you said you couldn't believe the markets were up yesterday(implying you would be shorting the market). He was warning you about how the markets could explode up today. He was right on, good job EEM!

How many here should be trading this market? Not me. Bill told us gold was looking toppy.

So, from where do we order the book?

I just started Murphy's "Technical Analysis of the Financial Markets." And you know after 500 pages of that I'm going to need a change of pace. Bill's book sounds just about right.

Woolybear1 said, “I value what Kaimu and EEM have to say. Hope both of you stick around.”

Me too!

Let’s not start attacking more people here, like some gentleman attack Vinod a while back. I was actually outraged at that person’s post. Living in Hawaii is a melting pot of people and cultures and it was clear to all who cared to see that English was his second language. I wish I could speak Spanish as well as he does English.

My point is that I appreciate different points of views here expressed by all and do not want “group think” as that just makes me less of a thinking human being.

Peace to all.

I would like to affirm the post of Telestar3d. I have respect all who post here, regardless of whether I agree with them or not. Capital Markets & Social Equity,.... discourse among gentlemen and gentlewomen!
As Kaimu says ALOHA ...(means affection, love, peace, compassion, mercy, goodbye, and hello, among other sentiments of a similar nature.)

vinod's original post may in fact be the way it plays out...think about it-> no faith in this rally? then no top...

the last 400 point rally was driven by believers (ie, bulls)...this rally was driven by shorts (ie, trapped bears all the way up)...

negative sentiment may drive the DJIA a lot higher tomorrow for the simple reason it hurts the most people...(as maromatics would say, do NOT trade on this opinion, just being honest about which way i think the market's headed->may well head the other way)...

haven't read Vad's blog ye?t-> posting the link again: http://www.realitytrader.com/blog/

Some of the financials are still trading like crazy, after hours. Could this be due to Visa pricing up?

can anyone confirm it was another 9-to-1 up day? if so, does anyone with a copy of marty weiss' 'winning on wall street' recall what he says about two 9-to-1 up days within 'x' days of eachother?

Winning on Wall Street, I think is by Martin Zweig.

So, if the futures trade is re-established with today's market, and there is little risk going forward that it will seize up in the next few days, and panic was averted, then a stock like MF Global is undervalued, no?

All that's required is an RSI(7) of 30+?

stockcharts.com

http://tinyurl.com/2g48uj

The timing of events pumping this rally is incredible. I wonder who wrote the script ?

"Visa priced the hotly anticipated offering of 406 million shares at $44 a share, topping the previously estimated range of $37 to $42 a share ..." http://tinyurl.com/2thgzt

right- Zweig it is...thanks...

French_Canuck,

Yes it seems all too good, don't it?
'V' was priced after 2:15pm surely.

Some may expect it to be a 'bellweather'.

Don't know if it will really strengthen the balance sheets of its beneficiaries to a material degree.

I would expect to see Joe Saunders, CEO of Visa ring the opening bell tomorrow.
He just might flash a 'V for Victory' finger salute, a la Nixon on August 9, 1974!

I think the markets are emotionally draining to even the best traders right now. Emotions are running high, it's all normal.

Telestar..I think I was the doofus that got the Vinod story wrong...I am sorry...I am sorry...what can I say.

British mortgage woes:

http://www.telegraph.co.uk/news/main.jhtml?xml=/news/2008/03/17/nmortgage417.xml