Good morning from Cape Town

Phew – what a tumultuous week! Once again, the fall-out of the subprime mess had a lot to do with it. For some variety, however, it was not only financials that were in the limelight, but also commodities that corrected sharply.

Read all about this in my regular weekly blog post, highlighting a market review and some thought-provoking quotes from market commentators during the past week.

Here is the link to the “Words from the Wise”: http://tinyurl.com/2op36j

Enjoy the read.

The morning is not starting well for the old Bull Hunter.

One of my small holdings, AYR, announced that it is cutting its dividend by 64%.

I expected a dividend cut, but not one this large, thinking that a dividend cut was already priced into the stock. Ooops.

I'll look to cost average down if panic selling ensues. Otherwise, I'm bilked.

Live and learn.

BSC: I asked here last wk. if it wasn't a good short given the $2 deal. I guess the market has answered that, at least for today. But upping the buyout either means:
1) BSC is undervalued at $2, or
2)JPM has much to lose if BSC fails (counterparty risk?) and this is Mr Markets way of calling their bluff.
Choice #2 seems to ring true to me, but I havn't bet either way.

The lawyers "sucking and blowing" in the market until a deal is no longer a deal are not working for free . . . they are being paid to advocate positions on behalf of their clients.

And just who are those clients?

The same financial big-wigs who got us into this mess in the first place. They are the ones that want to undermine deals . . . the lawyers are just carrying their water.

[Bill Cara comment: Jagvocate, you are absolutely right in saying that the client is ultimately responsible for the decision, but this case has the potential to be the mother of all lawsuits and the principals, who are under extreme duress, have sought counsel from their lawyers. My point is that the underlying principle of capital markets, ie, a deal is a deal, will be destroyed when it turns out that a deal is not a deal, but can be re-engineered to suit certain parties. This process of re-engineering the Bear Stearns deal is a slippery slope with all the wrong potential outcomes. I hope that the people in charge and their regulators take a deep breath before they all move from one panic into another, much larger one.]

Bull, sorry about AYR. If it makes you feel any better I'm still long GLD,SLV. I don't know what the opposite of a day trader is, but sometimes its easier to see way down the road even though the near term view is foggy

Bull Hunter, yeh the market is a minefield right now, full of regrets. I've paid my class fees, too this year.

JRPauley....maybe BSC is really a bailout of JPM...

BSC Halted, news pending

Argh... why didn't my bid for $3.75 get hit on BSC last Monday. :)

"Five-year credit default swaps on Bear Stearns tightened by about 35 basis points to 330 basis points, or $330,000 a year to protect $10 million of debt, according to data from Phoenix Partners Group."

http://tinyurl.com/2q9cka

Anyone know of a web site which provides quotes on CDS over time? This would have helped me catch the Berkshire downturn over the last month.

It's been reported that part of the reason for the new $10 BSC talk is that in the haste to get the deal done, JPM's lawyers (Wachtel Lipton)missed a single sentence in the deal memo stating that JPM had to buy a portion of BSC's toxic paper if the deal was not approved by BSC's shareholders. Apparently, Jamie Dimond went ballistic upon hearing this (according to reports) and that's the primary reason to up the bid. So, in fact, the new price may be lawyer malpractice, not lawyer ingenuity.

ALOHA !!

There is something fundamentally wrong with the globalization concept when "farmers" are commiting mass suicide in one of the most powerful BRIC countries. Something similar happened here in the USA back in the 1980s, but there is a cultural difference whereby US farmers mostly moved on without such drastic measures. Then there was FARM AID!

Even still when your country has to have a FARM AID or the backbone of your country's food production is committing mass suicide then you can count on the "usual suspects" to be involved. In my mind the wealthiest and most prosperous segment of any community should be those that produce food. Not because I am a farmer, but because I like to eat! HA!! Globalization will bailout failed financial institutions 24/7 365 days a year, but hardly a mention goes to farming. How can globalization suceed when agriculture fails? I see agriculture failing because "fiat" is failing worldwide. Globalization is based on "promises" of global fiat and global banking is collapsing, so what does that tell you about their "paper promises"?

In this article about farmers in India many are committing suicide over debts of less than $10,000USD. Obviously debt means more to people in India than it does to Americans. Many Americans would love to have just $10,000 worth of debt! How many farmers could Oprah or Beckham or the CEO of Monsanto save with their monthly salaries? When you corner the "seed" market there will be unexpected casualties that I am sure nobody on the Board could foresee. Then you have the wisdom of government ... "the top suspect" in any crime!

Right now the death toll of farmers commiting suicide in India is nearing 90,000 since 2002, or 15,000 annually. Obviously the Indian government is rushing to take immediate six year action!

I have commented here on the plight of farmers in China as well. Farmers in China do not commit suicide they protest and riot and are shot if the riots get out of hand. China and India need to re-examine their priorities. If I was running a government with billions of citizens I would not treat my farmers that way! Farmers would be the richest and happiest citizens in my country not the poorest and discontented.

Where's CSI-INDIA?

READ ON:
March 23, 2008
The San Francisco Chronicle
India’s Debt-Ridden Farmers Committing Suicide
By Jason Motlagh

Nashik, India — On a recent afternoon, Seetabai Atthre heard a faint cry from the edge of a vineyard that her family has cultivated for more than 40 years. Through the furrows, she found her husband, Vishal, smoldering on the ground next to an empty can of kerosene. He had lit himself on fire and died three days later in a local hospital.

Atthre attributes her husband’s suicide to a $5,600 debt. The farm located on the arid plains of northern Maharashtra state near the town of Nashik had not turned a profit in more than two years, and 65-year-old Vishal could no longer secure a bank loan to pay off interest on the debt.”This is wrong, and it’s killing us,” Sanjay Gangode said at a gathering of debt-ridden grape farmers in the region. “There is no future here.”

While India’s economy surges forward on the crest of globalization, thousands of farmers are taking their own lives every year to escape mounting debt and an uncertain future. According to the National Crime Records Bureau, at least 87,567 farmers committed suicide between 2002 and 2006. In Maharashtra state, there were 4,453 suicides in 2006, the last year for which statistics were made available, an increase of 527 compared with 2005. Sharp increases have also been reported in Andhra Pradesh and Chhattisgarh states.

Last year, Prime Minister Manmohan Singh pledged more than $930 million in relief to bail out struggling Maharashtra farmers and “relieve the misery.”

Possible causes of suicides

Analysts cite several factors for the suicides, including crop failure due to agrochemicals and climate change, lower prices due to U.S. farm subsidies, state restrictions on export trade, and the dumping of surplus crops in an oversaturated domestic market.

“The phenomena of indebtedness will recur as long as policies to depress agricultural prices continue,” said Sharad Joshi, founder of Shetkari Sanghatana, a leading farmers’ rights organization.

Ironically, many farmers are facing a backlash of their own remarkable transformation.

In the 1960s, India underwent a green revolution in favor of high-yield farming to counter acute food shortages. Plant breeding, irrigation development and the use of synthetic fertilizers ramped up production. Today, India is a major exporter of rice, and the world’s second-largest producer of fruits and vegetables after the United States.

The changes caused higher operating costs and production that created a market glut exceeding demand at home and abroad. To remain in business, many farmers were forced to take out loans at high interest rates. Once credit had been exhausted, they turned to private lenders, who charged even more exorbitant interest rates.

And that’s when the suicides started, most activists say.

“Suicide has become so common that no one takes it seriously anymore,” said Giridhar Patil, an agricultural activist in Nashik.

Link: http://tinyurl.com/2aa42j

BullHunter, Sorry to hear that.

KRY up 11% at 2.56. Volume 4 million +

ALOHA !!

Bill ... Totally agree. The markets and more to the point the participants are becoming more and more alarmed at the lack of integrity in US markets. In one word "CONFIDENCE"! The march towards systemic failure in the USA continues. These are significant "red flags" not to be ignored. They're adding up ... Now that we know this what happens when LEH fails? Will it be $2 or $10? Only the insiders know for sure!

IRX up to 0.79% yield this morning. Money flowing back into stocks?

not my kind of open...not into chasing strength (bias is to go long)...

Kaimu, why farm when you can just buy grain futures? The farmers on wall st. are making the money, and no dirty hands or sore backs at the end of the day. I also think instead of inventing the wheel, cavemen should've just started a hedge fund and bought Ford futures. :)

JP MORGAN ANNOUNCING A REVISED MERGER AGREEMENT; JPM TO PURCHASE 39.5% OF BSC
- Under the revised terms, each share of Bear Stearns common stock would be exchanged for 0.21753 shares of JPMorgan Chase common stock (up from 0.05473 shares), reflecting an implied value of approximately $10 per share of Bear Stearns common stock based on the closing price of JPMorgan Chase common stock on the New York Stock Exchange on March 20, 2008.
- The Federal Reserve Bank of New York''s $30B special financing associated with the transaction has also been amended so that JPMorgan Chase will bear the first $1B of any losses associated with the Bear Stearns assets being financed and the Fed will fund the remaining $29B on a non-recourse basis to JPMorgan Chase.
- CEO: "We believe the amended terms are fair to all sides and reflect the value and risks of the Bear Stearns franchise, and bring more certainty for our respective shareholders, clients, and the marketplace. We look forward to a prompt closing and being able to operate as one company."
- JPMorgan Chase has also agreed to guarantee Bear Stearns' borrowings from the Federal Reserve Bank of New York.

CIT- the panic buying in the last 5 minutes tells me significant number of shorts on board...

across the board short squeeze...

Added DUG. It looks to be testing the major resistance at $40.40 but I think the oil majors are ready for at least a breather over the next few weeks.

Correction.....that $40.40 on DUG would be actually be support as opposed to resistance.

Looking at skf for a nice entry point. between $86 - $95. Waiting to see if macd & stochastics turn over from the downtrend.

Good morning all....

I've got some fat in the fire with a couple juniors that is causing me some concern. A little strength here is helping some but I made a mistake and we know what that means.....

I'm trying to not resemble all those descriptions EEM gave us over the weekend...I'm not Bill Gross or Bill Gates so can't afford to pretend....

Maybe best to step aside here, bail out what I can on any strength and wait in cash for better entries.

I hope everyone is doing better than I am. Time to sit, wait, read, hold cash, get my @hit together.

underwater in srs and skf
got some back in sndk
will hold them for few days

Craig,

I'm in some "situations", as well. I'm not happy about it, but also don't believe this is the market bottom.

IMHO, FETV, HB &B and the Fed are pulling off one of the biggest swindles since "prosperity is just around the corner".

Will stand my ground, looking to add to ultra shorts when this rally is exposed as fraud.

Good luck.

Regards

Agree w/ Bull, short term rally. When does the ToGa party start? Hope last wks. TLT high wasn't it

BH/vinod- be careful with your SKF/SRS-> not trying to cause undue anxiety here, but what if financials/homebuilders have already bottomed, at least for a few months...

Added more XLY/RTH leap puts. I think year 2008 will be for XLY/RTH what year 2007 was for XHB/XLF. Not sure about timing and using longer term puts.

Visa is already weakening, so I wouldn't expect much more out of this rally. Most of the people short financials have probably covered by now.

Check out COF at 57.29.

Now we all know that all this intervention and manipulation are great for BSC, MER, JPM, LEH, MS, GS and the Fannie Freddie limit increases are good for UBS, C, CFC, WM. You could even argue all this is good for MBI and ABK if Mortgage bonds start to turn around for awhile.

But how is any of this going to help people pay off their credit cards? Last time I checked COF was the credit card for the sub-prime and nothing has improved with their situation.

They're just rising with the tide. So, when this rally finally peters out, I'm jumping on them with a huge short.

What do you guys think? Am I right or crazy or both?

Rob.

Craig, ditto for me, I got too big in the head and in pm's. Was thinking last night I might pick up some BSC and selectively sell some pms but several million other smarter guys thought the same about BSc and I can't trade premarket sooo...I'll let go a couple pm's into some strength. Maybe not.
Long NRN, RMK, RVS, EGO, WGW, STA.
peace

A board acquaintance---board name Ajasky-- who does Gann cycle charting (one E-wave adaptation…among millions) called Jan. drop and this bear rally within days. He posts here
tinyurl.com/3x4b9k
an old MF site (check back over his old posts…), and has started his own site (smallish fee) here
tinyurl.com/34ltyl
I have no “skin” in this game—except my own. DYOD

goodmorning,
I find this bail out of Bear Stearns UNBelieveable. When country wide finacials went down there was not much of a peep from the Feds. Maybe some people could help me get this story straight. My understanding is if the fed did not come into help Bear Stearns they would of been Bankrupt on Monday March 17th. The ramification of this would of been a domino effect throughout the finiacial sector as bank started to request money to pay debts obligations. The fed came in to put there finger in the dyke with a 2 dollars a share deal. The fed did not want to give more since it would seem like a bailout for shareholders of a bankrupt stock. However, the money players(large shareholders) did not like this deal and starting threatening to vote NO on the deal. This caused JPM, BSC and the fed to go back to the bargining table with a revise offer of 10 dollars per share.

What I read into this is that the government has lost control of the economy. I see a of panic from the feds side, since they wanting this deal done and done quick. The fed obviously did not care about using taxpayer money to bail out a bank.

So here is my suggestion, instead of giving my tax dollars to the fed why don't I just give it to the banks, and cut out the middle man. JMHO.

2nd

I do understand your view.
My feeling is nothing has change in financial
and this is going down, may take few days
hard to believe that everything is rosy and
ecomony is good and sound
this is my first loosing trade, and now I know how it feels

2nd,

If the financial media is right and old BH is wrong, then I'll have to take my lumps. IMHO, its just a matter of time before another Big Boy goes down.

I have a longer time horizon than many in here, investing in medium to longer term trends. Then again, maybe I'm just trying to put the best face on this temporary(?) rally.

Listening to Tom Petty's "I Won't Back Down". :^)

Regards

Even if everything is good again, this Fin rally has been too far, too fast. There's going to be some profit-taking shortly. I picked up 200 shares of SKF at 99.90.

Personally I am waiting until the teeth of resistance and trend exhaustion to short. Too much strength, even if it is short covering. Also, it seems too many traders have been caught short with no chance to cover. It pays to play the long side once we are very oversold and the market reverses.

Lehman is weakening noticeably. The issues haven't gone away but the market is ignoring them for now and the smart money is selling quietly.

Treasuries yielding 0.68% this morning, double of last Thursday:

http://finance.yahoo.com/bonds

Just wondering where the support is now for gold and at what price would be be a good place to buy physical gold?

AYR now only $.16 less than my buy price. Looks like cutting the dividend in favor of buying more jets is being looked at in a favorable light.

Amazing.

ksobo2000, SKF is looking good to me at this level, and I am giving it serious consideration. Of course, I have been out of synch with SKF, not so much from losses, but on giving up right before the huge run up to 140. You can't catch all of them, I suppose.

But doesn't this say everything that needs to be said?

"JPMorgan Chase boosts its offer for Bear Stearns to $10 per share. S&P lowers its outlook on financials."

Also added TMW (Russell 2000 Ultrashort) this morning.

finding no real entries whatsoever...thanks to Vadym, practicing the art of scalping in the meantime, mainly on BSC...

not sensing the financials moving into weak hands right now-> be careful...

BSC at 12.34...

I was looking for strength this week so that I could pick up a few more puts on Japan. As far as I can tell, nothing has changed for the longer term.

regarding bonds,

the XBB and XSB, 2 large bond ETF's in canada, are looking toppy.

yeilds on the 10 year ($TNX) still basing
but looking more positive:

http://jglobal.blogspot.com

Excerpt from today's Weiss bulletin:

"... Most worrisome of all, at each successive phase, the effectiveness of the Fed's actions seems to be diminishing.

At best, it is able to bring credit crisis indicators like the high-yield spread back down to their previous highs. But so far, the Fed has been consistently unable to restore the credit markets to the stability witnessed in the previous phase.

Our conclusions are simple:

The crisis is far from over.

It's likely to get a lot worse.

To prevent a massive collapse, the Fed will have to continually escalate its response, injecting ever greater quantities of cash into the banking system.

If you haven't done so already, you must get your money to safety now..." (T-bills, T-only MMF, Foreign currency ETFs FXY, GLD, Inverse ETFs.)

fundamentals look bad right now...but possibly already been priced into financials/homebuilders and then some?...entirely possible we grind lower while those sectors continue to move up....

I'm finding it a lot easier to sit on cash and nibble away in small increments just so I pay attention to what's happening. Aurator gave excerpts from Weiss (who I read as well), and then I read Jeffrey Saut's Monday morning missive and he is bullish.

excerpts from Jeffrey Saut's weekly investment strategy
{. . . “Double Nine-To-One” bullish signal. As Mark Hulbert states, “This indicator is based on the volume of all NYSE-listed stocks that go up on a given day, expressed as a percentage of the total volume of all stocks that rose or fell on that day.” When two 9:1 Up Days occur within a relatively short period of time, the signal is called a “Double Nine-To-One” signal; and, it is bullish.

How bullish are “Double Nine-To-One” signals? According to professor David Aronson, as reprised by Mark Hulbert, “[we used] data from the beginning of 1942 through fall of 2006, and looked at what happens in the stock market in the 60-trading-day period following a . . . Double Nine-To-One signal, versus what happens the rest of the time. In those 60-trading-day windows, the S&P 500 index produced an average annualized return of over 22%, on the assumption that an investor entered the market on the close the day after the Double Nine-To-One signal was triggered and held until the end of the 60th trading day. In the non-signal periods the return averaged 4.5% annualized.” When we combine the “Double Nine-To-One” signal, the 90% Upside Day, the observed downside non-confirmations, the most bearish sentiment readings in 15 years (read: bullishly), and a host of positive finger-to-wallet ratios, we can’t help but remain bullish in the short/intermediate term, thinking the downside retest of the January “lows” will be successful.

Well, tactically our two largest trading positions remain the ProShares Ultra S&P 500 (SSO/$66.40) and 5.5% yielding ProShares Ultra Real Estate (URE/$33.30).}

Full article here:
http://www.raymondjames.com/inv_strat.htm

It feels like too many are short and the market might grind higher for a few weeks. The bottom calling by the pundits is giving free reign to the permabulls as well.

Tickerforum is a good read for bearish sentiment. There are a bunch of people there stubbornly short, trying to figure out why the market is rallying, and afraid to look at their account balance. When the site quiets down and bears get depressed the next top might be in. I saw this behavior last time.

McHugh was also saying that the market almost always rallied back to the midpoint of the weekly bollinger bands and he was stunned it hasn't done so. Maybe now is the time? This would be S&P 1390.

You could be right 2nd. I'm not seeing the reversal I expected. This may run for a little while yet. I going to sell my SKF and wait.

2nd,

Brother, I highly respect and enjoy reading your posts, but I'm not buying into this bottom for financials/homebuilders for one minute.

The average house price is dropping. Just watched Nouriel Roubini on CNBC who said that housing prices will continue to drop.

This will cause more inbalance in housing equity for homeowners, who IMHO, will walk away/be foreclosed from their homes in record numbers. This will put a further strain on lenders and homebuilders. You can also add higher utility, fuel and food costs into the equation.

This rally is nothing more than irrational exuberance over the Fed bailout of BSC. They put a band-aid on a festering sore. There is plenty more pain to come.

Being a daytrader, you can no doubt profit from this bounce. As a longer term trader, my view of the economy hasn't changed one bit.

Just my 2 cents.

Regards

Good job, Ben.

http://ronsen.blogspot.com/2008/03/its-all-about-ben-jammins.html

ksobo- probably a good move...don't think holders have any reason to sell right now...

BH- i understand your point...just wish you had taken at least partial profits last monday....

2nd,

I tried to. I put in a limit order to sell SKF and QID when leaving for work. It never got hit.

My bad. A valuable but expensive lesson.

Regards

90% up days - I'm beginning to think one can discard events such as these that are clearly caused by intervention. Market technicals are supposed to reflect the sentiment and money flows based on normal market pressures. When these jokers goose the avearges, I find the technicals can be misleading.

Also think in these times of near-hyperinflation, that the chart patterns are not reliable unless they are inflation adjusted.

McHugh has recognized this iand has started to add comments similar to: the pattern may not complete due to the Fed hyperinflating to bail out this sick economy.

Maybe I'm thinking too hard.

I don't see any bottom in homebuilders. Wish I did, being a homebuilder myself and having nothing better to do than participate on this blog. Where I live in NC there are tons of high end homes unsold and sellers psychology have a long way to go before folks realize the price these million dollar homes are going to have to fall to, not to mention the downward pressure on the rest of the market. A tech bubble can rise & pop and people put it behind them. Sore wounds towards home value declines take years to soothe. In 1981 the ratio of gold/median house was around 50:1. Today, even with $1000 gold the ratio is around 200:1. I see more upside in gold; more downside in median prices to go.

Yes Aurator, it was one of Jim Puplava's guests Saturday (Axel merk maybe?) that said in markets like this you can throw out the technicals. News driven, government intereventions like we are seeing screw up one's setups and render them ineffctive. I am paraphrasing here so not exact quotes.

Been hearing several commentators talk about the manufactured 1270 bottom.

CIT- short squeeze underway...

Asymptotic exponential rise to 12,600. That must have been the number Hank phoned to the PPT. They should pick some oddball values to cover their tracks.

For anyone interested, here's today's Roubini vs. Naroff debate on CNBC:

http://tinyurl.com/3ccp4n

JRPauley: You hit the nail on the head (or maybe it was an air nailer.)

Have heard discussions that "by the time all this is over" a home can be bought with 20 to 40 oz Gold bullion. Going to make it a point to have set aside an amount in that range. Got mostly silver now, and the box has hit it's weight limit.

Took Schiffs advice and bailed from the home market years ago. Far cheaper to rent.

Silver expert Ted Butler seems to think that last week's sharp sell-off in silver is a precursor to a major upward move that is right around the corner.

Enjoy - Fireworks

http://tinyurl.com/2xmeho

no one believes in this rally, right, to the point of calling it manufactured- that would be, in my book, the primary reason not to be short right now...there is no doubt that bernanke and paulson got it done...question becomes, is it possible they also got it right?

My favorite rally-er has a great article - less about the market and more about smart business:
http://www.wowowow.com/post/if-you-are-not-born-rich-how-do-you-become-millionaire

2nd,

If the federal government got something right, it'll be the first time. :^)

Regards

As soon as I capitulate to the long side, that will knock the stuffing out of the market. Just look at the carnage in SWC when I went long. Will take bribes to stay away...

Fundamentally you are right. 200/50DMA's all negative, all signals negative, and so longterm it will come to you but technically a retest of 12400 and then 12800 was always possible and if we close above 12400 we'll probably approach 12800. Look at the daily chart for at least 6 mos. Same for the XLF. Since they both broke the 50 DMA and the down trendline we have to see if they have the oomph to make resistance at DJIA 12756/XLF 27.80-28.11 THAT would be something.....in the meantime it might be good for a couple hundred points....with tight stops.

Held over weekend for nice gains, out of : DIG, SNDK 22.5 calls

Holding small postions in COF 55 puts/SKF

waiting to add later in the week...

2nd -

I agree with you that the risk level in short side play in RE is much higher than it was in 2007. But I do not buy quick recovery in IYR/XHB (especially XHB). The only thing in my investing experience that resembles the current real estate situation is the telecom boom and overcapacity built in late 90s. It took about 2.5 years and way more drastic drop in equipment manufacturer's valuations to recognize the bottom. What we see in real estate overcapacity is in my opinion much worse and it will not be a bottom until half of the home builders are gone either via bankruptcy or consolidation. All that said I am much less aggressive shorting RE than I was six month ago. I believe shorting XLY/RTH is a less riskier play now (timing aside).

As far as financials go - I am staying away from that sector altogether, long or short. I do not trust a single line in their SEC filings. This is by far the most rigged table in the casino.

I don't call this a definitive breakout of the Dow's decling trend channel, yet, but it's darn close.

I'm just amazed that people fighting over the remaining crumbs of a great institution that imploded from it's own greed, is the inspiration driving markets higher. Just like a pigeon feasting on a dropped french fry triggers the spring migration.

I was supposed to point out that XLF has been stalled most of the day at 27.11 or so.....those in SKF have undergone little damage.

Fox Biz commentator McDowell slamming Gold as a terrible investment. "Lost 10% of your money; that doesn't happen in the stock market." hehe

French fries...really? Cool.

Don't forget, the FED is in on the deal for $30 billion of Bear's assets and they (Fed) get *any* profits....We of course will bear the losses.....

I can personally testify that McDowell doesn't know what he's talking about.....

In for some June 50 puts COF. Sure a lot of red in my options account today. According to the charts, I should be better than I am.

What's this I read about various central banks planning to buy Mortgage backed securities (to turn the market around once and for all, as the norwegian newspaper writes...)
Not such a good idea being short financials then, no matter what the fundamental situation...

So who bought all that XOM I shorted this morning?

Gold up nearly 50% in six months - that is a 100% annualized return - but no one in the media will talk about it. Remember, the dollar is the stock of the US, so gold is showing the declining value of that stock.

When these commentators breathlessly exclaim that gold is going much higher and nothing can stop it, like they did in the tech boom and the homebuilder boom, it will be time to sell.

end of quarter is next monday...odds of closing above 13,300 to boost J6P's psyche when he opens his statements in april?

I'm in on CIT squeeze at 13. This is a rocket. Already made 10%. I'm guessing it has legs to the 20 DMA at $18. What do you think 2nd?

moab- CIT up on buyout rumor:

Midnight Trader
1:26 p.m. 03/24/2008


Boston, Mar 24, 2008 (MidnightTrader via COMTEX) -- CIT Group (CIT) is higher by 19% as Stifel Nicolaus said the co. may be a takeover target, Bloomberg News reported.

CIT lost 37% last week after it tapped $7.3 bln of emergency credit lines last week.

CIT said today it has provided $230 mln in financing to Wyle Laboratories for the acquisition of RS Information Systems.

Price: 12.29, Change: +2.66, Percent Change: +27.62

Copyright (C) 2008 MidnightTrader.com. All rights reserved. Unauthorized reproduction is strictly prohibited.

moab- i'm out at 14.15...

2nd I am not sure I can reasonable divide up those that are still bearish vs. those that are bearish to figure out where we are right now. All I know is the primary trend is down and short term setups are useless the past week. Very Manic as it usually is in a bear market.

Re: Aircastle

With regards to the airline industry, I would avoid any consideration on a declining oil price bolstering earnings in that sector until at least the beginning of august. There is far too much overcapacity in the system and overbuilt airports, yet the ground equipment can be at least fourty years old.

The whole airline sector is deeply dependent on the credit cycle, some are tied to the viability of the municipal bond market, and none are immune to predations. No oil price, no matter how favourable will assist the airlines. The entire sector is deeply dependant on some form of subsidy, legal or illegal and raising money in financial markets. All associated with this industry are subject to credit derivatives and secondary lien markets.

A recent article on Aircastle mentions smaller jets being parked while larger jets are providing all of the revenue. This is due to internal predations of market share against operational subsidiaries in domestic markets, yield management in others.

Creative accounting is the watchword for this industry.

BSC- wondering what it's 'worth?' nothing, 10, 20, 50? JPM would not be bidding 10 if they didn't think it was worth 'at least' 10, right...volume of 119m shares today, is it all short-covering...

geck- good point...as long as we close flat by EOD guess we're OK..(reposting earlier response from Skype...didn't realize you were not signed on)...

2nd: You could be right of course. But if BSC were a bargain, somebody like Buffett would have chimed it at $3. I still gotta hunch JPM is only covering an exposed backside which would get exposed if BSC failed. I don't think the FED would bail out BSC for BSC's sake, but bailing out BSC might be an indirect bailout of JPM. My nose smells 2 worthless banks. Someone posted about that provision in the deal forcing JPM to buy "assets" if the deal failed. I'd be careful going long after today. I don't know anything obviously, just pointing out more than 1 possible reason why JPM ups its bid. I'd be suspicious of the CIT buyout rumor too. Sounds a little like pump and dump. Good luck however you play it.

JPM can't let BSC derivative portfolio be marked to market. If it is their (JPM) derivative portfolio will also have to be "marked to market.....if that happens.....

JPM has the largest exposure by far of any bank.

Shhh....lets keep this secret.....maybe it will go away.

Hidden in plain sight.....

I can't understand why Jaime Dimon doesn't tell Bernanke and Bear to take a flying leap. Yea, probably two worthless banks.

"Somethin' strange, in the marketplace.
Who ya' gonna call?

GoldBusters!

Somethin' wierd, and it don't look Good.
Who ya'gonna call?

GoldBusters.

I ain't afraid of no Gold. ..."

Rick Moranis for Fed chairman.

Debt markets making a huge recovery today. Ever seen 3 month Treasuries double their yield in a day?

How come when I listen to CNBC anymore it seems like the interviewers are the ones giving the advice and the so-called experts are just filler. Maria is the absolute worst, just let her tell you what's going on and you will not even need experts anymore as she is the one trick pony. Dylan is not to far behind either.

FNM is rolling over.

CNBC says we hit the bottom. And we have to go long financials, short commodities.
Also, housing bottomed, and financials bottomed.
All is well.

This is great news!!

What is Behind This Sharp Correction in Gold
Kitco commentaries:
http://tinyurl.com/ysgpds

CNBC also forgot to mention they are giving away 2008 model yr ferrari's for 120 yr loans at 1% interest!!!

Get yours fast!

I have heard the best places to buy gold is from a jeweler. Since it is easy to sell and trade physical gold this way. Other suggest gold coins, but is this wise, considering the mark up and discount give at resale?
Anyway, no the best way to own gold?

Watch out for turnaround Tuesday tomorrow.

OOps, know
English is a 2nd language

Picked up some SKF @ 100.39 earlier today. The BSC/JPM/Fed goings-on are giving me faint echoes of market reaction to AMBAC/MBIA. Honeymoon first, details later. Things aren't finalized yet, and it's smelling fishier. The whole thing is like a drunken amorous encounter, and we're at around midnight.

This is the second time SKF has pulled back precipitously, and as earlier, I don't think sentiment was sufficiently bearish to be calling a bottom.

Vol today was weak too.

FattyarBuckle:

Who do you think will bite their arm off first in the morning? JPM, BSC or the Fed?

:)

Moab has a point: Look at 5min/1day chart of DJIA/XLF/XLK, etc. etc. All started topping at about 10:55, macd crossed and stayed that way into the close. This is no way to run a rally...

There has been some questioning of the legality of what the Fed is doing on the Bear Sternes issue, and perhaps a stand against such action might in itself help to prevent such tax fund givaways in the future. In any case, I saw this link and thought it might be worth mentioning here:

Articles of Impeachment? Bear Stearns Buyout Illegal?
http://market-ticker.denninger.net/

Follow CNBC and do opposite to what CNBC and Cramer has to say

If you were one night stand Ben and had a little too much punch, who would you want to wake up with coyote ugly and a little hung over....Bear or Morgan? Is that the question?

Craig -

Correct, but also Tuesday has lately been a countertrend day. Plus we are overbought here on a 60 minute timeframe.

Haha, EEM. The problem is the Fed can just keep coming up with more money for lipstick and booze...

Anyone have a comment on huge last hour volume for WGW?

Bean506 re WGW
I'm showing the the following trades that represent the bulk of the shares traded
15.19 407,600 @ 3.10
15.27 500,000 @ 3.10
I see no news
ronK

There was no dip today for traders to buy so rally ran out of steam. Tomorrow's selloff will probably be bought and rally continue at least for a little bit IMO.

WGW - looks like short covering of the long majors/short miners variety. See the charts of GSS and MFN for Thursday.

Ok guys, tired of the games?

http://financialpetition.org

It is a call to IMPEACH George Bush for the unlawful act of going around the black-letter law of the Federal Reserve Act with the Bear bailout.

Yes, that's right - in my analysis, its ILLEGAL.

I'm not alone in this belief - John Hussmann also believes it is.

Either we speak up now or don't bother speaking up at all.

WGW showing huge volume.

It must be Bill getting the first royalty check from his book. He's putting away for those future grandkids.

Anybody hear the pop around 2:15pm in GLD & SLV?

Does anyone understand what happened to TWM today (Ultra-short Russell 2000)?

As the market closed, TWM was down about 7.05%; the Russell 2000 was up 2.9%; this would seem to call for a correction benefitting TWM by approx. 1.25%, or about a dollar.

Instead, TWM went DOWN about 70 cents.

Is that correction (and other ultra-shorts) cranked in BEFORE the close or AT the close?

Anyone know????

Almost bought some WGW as the chart setup based on RSI was looking good. Still might.

Best performers today of what I did buy were:
USU +10% SUF +9.8% RTK +8.4% TIE +5%
(ALL alternative energy plays.)

Stinker SDRG -11.4%.

i've seen similar discrepancies btw ultrashorts and the underlying indexes-> a) a reverse ETF will not always perform exactly as intended, which is usually stated in the prospectus, and b)it oftens 'corrects' the following day at the open, presumably b/c the derivatives/options on which performance is based trade only during market hours...just my take...

IWM rallied 40 cents into the close (up 4%!) so TWM action seems reasonable.

vinod- suspect the reason the above trade you suggest works so well is that veteran traders make a lot of their money fading beginning traders...

Valero Sees 1Q Income Below Expectations

http://tinyurl.com/2moq6v

Shares getting knocked down in AH.

Tanashian charts:

http://tinyurl.com/3b9zbr

Kaimu:

Thanks for the article about 90,000 Indian farmers committing suicide since 2002. I had not heard about that problem. These are the kind of numbers we see reported in regard to wars. Maybe we should think of this as a financial war with real winners and losers.

I have spent the last two weeks working on my farm that my wife and I bought last year. We are in investment phase. Things are going well. Soon I will return to the day job that pays for all this. Fortunately the investment is not too excessive. I am trying to build real value going forward. I think I find farming easier to understand than finance!

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/03/23/ccfed123.xml&page=3

Re: Gold/Silver ratio:

The gold/silver ratio had a massive up-gap over the 89-week EMA, so this game is not yet over. I have filled in the chart on an OHLC, with the pi-cycle dates added.

stockchart.com

http://tinyurl.com/3xjodk

Pi-cycle turn dates also occurred in Jan, 06, and Dec, 05.

FranSix: How do I use that chart to trade?

Certainly not at the end of the credit bubble yet...that's for sure..

http://www.valueinvestingcongress.com/pdf/T2Partners_mortgages_bond.pdf

In case you missed it, the USA is not leading the markets down. It's China & India who have taken the lead in '08.

http://seekingalpha.com/article/69724-u-s-decouples-from-global-markets-in-reverse

A MUST READ:

The Hussman article:

Why is Bear Stearns trading at $6 instead of $2?

http://www.hussmanfunds.com/wmc/wmc080324.htm

kaimu- reference your 939a post- back in 1972, recall thinking "Easy to be Hard" was an astute indictment of the self-absorbed social activists of the time-

How can people be so heartless
How can people be so cruel
Easy to be hard
Easy to be cold

How can people have no feelings
How can they ignore their friends
Easy to be proud
Easy to say no

And especially people
Who care about strangers
Who care about evil
And social injustice
Do you only
Care about the bleeding crowd?
How about a needing friend?
I need a friend

now that i'm older, i'm wondering what it is about wealth that makes it so easy for otherwise decent human beings to dismiss the plight of the impoverished...

it's human nature to be self-absorbed and in denial about situations that would require our resources or time (and farmers in india or AIDS patients in africa are really beyond the reach of the average citizen)...also human nature that when we try to help, we find it's much more complicated than that-> maybe it's resented/not wanted, maybe they want too much, or maybe we just end up lining the pockets of the local politicians...personally, i've always found it easier to help those in my own backyard-> so in a way, it goes back to 1972- if i take care of those around me, that karma eventually wends its way to india and africa...JMHO...

maromatics- thanks for your 719p link...i believe the numbers, and (to a lesser extent) the potential consequences averted by the BSC bail-out...not sure why i'm reluctant to believe it was the only way out, however-> the story is probably good enough that it will remain the official historical justification for the bail-out, but then that's exactly why they came up with that story...of course, i'm not qualified in any way to make that judgment, and maybe i've just been reading too much ;)

Magazine cover like Forbes
Weekly like Barrons
CNBC
And all financial reports and expert are saying we have hit the bottom?
Means Bottom is yet to come
Read Barron's Technical columnist, Michael Kahn,
Financial Stock Phoenix or Dead Cat?
today's post at online barrons
i do not know how to put link here

I agree with helping those we can help, though they may mostly be in our backyards. Also, perhaps there are ways of helping people that seem easier or more difficult depending on one's own personality. I used to volunteer by assisting men and women in obtaining domestic violence restraining orders, but I had to stop after a year because it became more difficult psychologically on me than I could handle. I also re-learned another lesson in helping people: the primary responsibility for anyone is oneself. We can help one another with tools and skills, but "bailouts" fail when people don't use those tools and skills themselves and fall back to destructive habits. That's why I find Bill's site to be so helpful, as he's teaching us how to identify, execute, and exit trades on our own. It's on us when we fail to use the RSI system and blow up our accounts.

2nd,
Are you kidding? Check out the charitable giving and volunteerism in the US.
"Americans increased their charitable donations significantly in 2006 to more than $295 billion -- a record, according to a study released June 25 by the Giving USA Foundation, which reports on charitable contributions.

The overwhelming majority of this money was donated by individuals, not corporations or foundations, according to the chairman of Giving USA, Richard Jolly. Donations from individuals, including bequests, accounted for 83.3 percent of total giving last year, or $245.8 billion, he told USINFO.

“The total amount of money that was given to nonprofit institutions is remarkable,” Jolly said. “What we see is when people feel engaged, when they feel a need is legitimate, when they are asked to support it, they do.”

Americans have a long tradition of charitable giving and volunteerism -- the donation of time and labor on behalf of a cause. When disasters happen or a social need arises, government clearly has a responsibility, Jolly said. “But it’s also obvious Americans believe they, too, can make a difference, and they reflect that in terms of giving away a lot of money.”

With whose giving habits are you unsatisifed?

jaketh- hey, i'm (sincerely) happy to hear that! having recently read '28' (where it's clear africans unable to afford even heavily discounted drugs die every day, and relief funds are routinely diverted) and 'untapped' (where it's again clear that [oil rights] money targeted for public education and infrastructure usually ends up instead paying for private schools and residences), my thinking is probably unduly biased...

Re: EEMTrader

Those charts are weekly, so they are more or less meant for people with a perspective on fundamentals, rather than technical trade on prices.

But what the Gold/Silver ratio weekly chart portrays, is the possibility that Silver has to make up the gap technically speaking.

F6: Got it .so SLV has to catch up in price?.thx..I look at weekly charts...:)

Whats you take on GDX or do you pay attention to it at all, or $XAU?

Sorry, also Gold/Silver ratio?

Didn't load that chart correctly, this is the proper one, showing OHLC overrunning the 89-week EMA during previous pi-cycle dates:

http://tinyurl.com/2er6m8

jaketh- to answer your question, i'm unhappy with the roadblocks (monetary, proprietary, or other) certain drug companies have in place that prevent (truly) affordable access to life-saving medications, and with those who divert funds for personal use...would it make sense for individuals in the US to (attempt to) intervene in either case? in a general sense, yes...but probably ahead of indigenous problems, of which there are many...(again, i'm truly impressed with those numbers)...

but probably NOT ahead of indigenous problem...

Re: SLV

I'm not so sure on ETFs. Haven't done the required due diligence.

Frank Holmes recommends holding equal portions of bullion(or imo, sterling) and PM mining shares, because this is the way to own the underlying equity.

The ETFs may still be solvent for quite some time, so they might make good trading vehicles, especially if the price movement in the commodity favours the particular ETF in question.

If Silver has some catchup to do, then I would say, Yes SLV has a good chance of catching an updraft.

It might be worthwhile to avoid ETFs relying solely on leverage, with no equity value in its vault.

F6: I bit off some SLW today, think I was a $1 early..but that stock has been good trading its cycles..its geting down there...what bothers me is sliver was up today and SLW down..so ...the question..

no I dont trade or own the SLV or GLD ETF.

SteveC- you make an excellent point re assistance vs bailouts...similar distinctions apply to learning from failure vs not being allowed to fail, or assistance vs entitlements...

Chevron moving into 'technical support agreements' with the Iraqi oil industry:

http://tinyurl.com/2vurto

home sales (unexpectedly) rose in february?

http://tinyurl.com/2qtth8

Re: SLW

Yes, I think the blow off in large cap precious metals mining and ETFs may have people a bit winded with the tumble.

Home sales, Jim Sinclair’s Commentary
This was the first headline.

U.S. Economy: Existing-Home Sales Rise, Prices Fall
By Courtney Schlisserman

March 24 (Bloomberg) -- Sales of existing homes in the U.S. unexpectedly rose in February as prices fell by the most in four decades.

Jim Sinclair’s Commentary
The headline was quickly changed to the following, dropping the note about falling prices.

Existing Home Sales in U.S. Unexpectedly Increased (Update1)
By Courtney Schlisserman

March 24 (Bloomberg) -- Sales of existing homes in the U.S. unexpectedly rose in February for the first time in seven months, easing concern credit restrictions and falling prices would hurt demand.

LOL- nice catch...

SteveC,

Nice catch, indeed.

Reads like some Orwell passage from 1984:

War is Peace
Freedom is Slavery
Ignorance is Strength
Falling Prices are Good For Homeowners
Bailing Out Investment Banks Shows Financial Strength

Regards

There does appear to be a substantial double standard when it comes to public assistance.
Marx is apparently the tool of the wealthy.

If only needy families could get timely assistance like Bear Stearns/ JP Morgan (we'll have those foodstamps there on Sunday!) and Halliburton and KBR had to wait in line at your local unemployment office to get their check.

Hey, it's only (Y)OUR money.

Hear, Hear, Craig,

It took 5 days for the federal government to get water into New Orleans. It took less than 24 hours for Haliburton to get the contract to clean up a nearby military base.

As a friend, who was former NSA, used to always say, "make no mistake about it, the government considers you as so much fodder".

Regards

Silver has taken more of a beating than Gold. And Gold is, of course, more malleable.

It just has a higher beta. Silver is used both as an industrial metal and as a store of wealth. Most PMs are. When Silver is flying and Pt is as well, there's a gold bull raging.

Historical Au/Ag ratio said to load up on silver, and that's what I did. Still way ahead after the modest sell off. And off the cuff, I took a Big Gulp of Palladium. Next time it's more Pt before the morons in Govt concoct some new, impossible emissions standard that is totally unnecessary, and drive the price to $10K.

~~~ we diverge here... To Autos and the clueless public: ~~~ This is gonna be a bit biased, but I swaer to you in my 50 years as a scientist, this is absolutely accurate! ~~~

I used to design emissions systems for a major auto company, and they are all a political sham. We could have doubled the mileage easily had that been the objective. (And saved our oil reserves.) The objective was a mindless mandated schedule of emissions targets that required Pt Pd catalysts, that required running the engine at 14.7:1 AF ratio, wasting a huge amount of fuel (the so called stoichiometric AF ratio). That is the current standard for emissions reductions. It is all nonsense IMHO. We could have run in excess of 20:1 easily, with focus on catalyzing NOx; and maybe even not. That wasted another 25% of our fuel for no other purpose than meeting the requirements our clueless lawmakers passed and required. That's how dangerous these people are.

You can only screw up by that magnitude once, when God has given us only one slug of energy reserves. And By God, They Did! We have squandered the only cheap and easy reserve God gave us, while we were supposed to figure out the expensive and difficult solution. Wall street profiteers may look good now, but they are the source of our ultimate destruction and shame. So they are estatic, we all suffer. What would Franklin and the founders have thought?

These morons could have cut fuel consumption in half at least, had they not been so tree-huggingly demented. Like the mega-leveraged hypsters on Wall Street who scalped the system and will never be accountable, the EPA and other Tree Huggers have done the same to our Petroleum reserves, and screwed our country for generations.

You simply never asked our engineers for fuel economy, you asked for clean emissions. Wrong!

WRONG! And Still Wrong!!!

Wrong at the concept, wrong at the execution. Just like massive Govt intervention is almost always wrong at every turn.

Now, there's no going back. We have reached peak oil, and the tree-huggers will be shown for the emotional psycopaths they are. Let the engineers handle this, and get the politicians the heck out of the way.

Now, you have no choice but to cry whilst your Suburban (and mine) decays in the driveway, like the reminants of communist Russia. Sans the Vodka. Destined to be stonehenge sculptures rather than soccer transporters. Scrap metal bonanzas.

You got what you asked for. I was there. You were there. Be careful what you ask for. And be careful who you vote for.

The energy crisis, as it emerges, was totally predictable and totally unnecessary. At least as to how it affects the USA. Economically powerful, plus clueless is not a recipe for success.

They wanted to enrich the oil barrons one last time before the collapse, and they have.

The Bush's are movint to a farm in Paraguay guarede by the US military.

The rest of us are going to have to flounder the in ashes again until the Fed_Phoenix, when we will no longer use US Dollars. I'm sick over it.

http://www.guardian.co.uk/world/2006/oct/23/mainsection.tomphillips

I will happly appear in front of Congress should I be asked to testify to my knowledge of how the clueless EPA destroyed the US energy reserves on a BTU basis, versus what we could have maximized by conserving energy, based on the destructive effects of the clueless tree-hugging emissions lobby and poor mandates by the EPA. They were somply clueless and wrong. We knew this back in 1980, when I worked for GM. You pay expenses, I will testify free.

Somebody posted:

"It took 5 days for the federal government to get water into New Orleans. It took less than 24 hours for Haliburton to get the contract to clean up a nearby military base"

And I'll ad it was less than a day before Ben and Co had concocted the entire BSC bailout;

From a healthy bank to a smouldering carcass in the matter of a weekend.

That's how long it took them to deliberate about how to spend ~~ 30 Billion ~~ of your hard earned tax dollars. How many man hours did it take to earn and pay these?

Ahem! 'guess I' a bit vocal tonight.
Sorry. I just care and it kills me.

Aurator,
I presume you didn't live in L.A.
Frankly, I don't think you have the right to dump trash over the fence on to my property, nor to trash my share of air.
I find it curious for an engineer to justify moving 2 tons of material in order to carry a kid or two to soccer. Also find it curious that the Japanese and German engineers managed to reduce emissions and improve gas consumption.

CYD:

You do not understand, and I do not wish to insult. You do what you think you need to do.

My father & family in in Yorba Linda and I know all the LA, OC fluff. LA, OC is not the solution, believe me. You and San Fran are the cause of misinformation that is inexcusable. It doesn't take an Einstein to separate the wheat from the chaff. I know what ruins and economy, and you shall soon.

And at that, I will stop. We are too far off topic. Sorry if I made you think. And I'm sorry if I wasted bandwidth.

2nd,

Yes, truth is the first casualty on times like these. Anyway that news appeared like some sort of an "historical document" to me. in the sense that it portraits how the facts are being fed to the public, regardless of how real or not the news is.

You know, having re-read the previous paragraph, I am realising how sceptical I am becoming of all this.... maybe I should have more "faith" in modern journalism....

Cheers mate!

Good morning.

Here are your Cara 100 Ratings Changes at this time:

Upgrade:

YHOO - to Buy @ Citigroup

Target Price Raised:

NUE - $80 to $83 @ Citigroup

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

Have a great day.

Regarding the BSC bailout and lawyers:

Unfortunately, lawyers are a fact of life in the US-Dimon may have been facing protracted legal action. Having said that, If you look at BSC, of what are it's assets composed? People, money, financial instruments and infrastructure (bricks&mortar and IT). Jamie Dimon bought them all. Now, at $2.50 a share-wasn't that basically the value of the BSC building? At that price, none of the human assets would get anything. They had been wiped out. Should they have been? Not my call. Dimon has to decide how he values those human assets. Hey, if the human assets feel they've been abused in the deal-they leave. Perhaps Dimon thought it was worth the money.

One more question: As has been theorized, sub-prime may just be the tip of the iceberg of toxic derivative instruments. Could it be the Fed was worried about BSC's other derivative plays (some estimates put them at 2.5 trillion) causing a cascade across the financial world?