Bill Cara: Bill Cara's Community Chat, Sat., May 3, 2008, 5:22am ET

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May 3, 2008

Bill Cara's Community Chat, Sat., May 3, 2008, 5:22am ET

Since this is a travel weekend, I plan to write the WIR today and have it published early Sunday before returning to The Bahamas. Earlier this morning I added the following text to yesterday’s Community Chat:

Shortly after I wrote this piece, I learned that the Fed had intervened in a major way, again:
(New York: AP: ...The Fed said Friday it would boost the amount of emergency reserves it supplies to U.S. banks to $150 billion in May, from the $100 billion it supplied in April. The Fed took this action and several other moves to boost credit in coordination with the European Central Bank and the Swiss National Bank....The Fed has committed about $600 billion in loans to banks, an amount that represents perhaps half of all the distressed debt in the market, said Lehman Brothers credit strategist Amitabh Arora. This helps moderate the risk that a struggling bank might have to auction off its investments to avoid bankruptcy, he said.

Two-thirds of the Fed's balance sheet is now in worthless paper. Should the price of homes continue to fall and the foreclosure rate rise, it will not be long before the Fed's balance sheet is, for all practical purposes in terms of its use for monetary policy, worthless. In fact, after dropping the key lending rate among banks seven times in seven months from 5.25% to 2.0%, the Fed will soon have to admit that money is free -- coming on trees planted by American children who are not even born yet.

This travesty -- the continued intervention by the Fed to come to the rescue of the commercial and now investment banks -- is behind my observation in the capital market at times like this morning that prices have gone crazy. Without even knowing when or how, I see it in the current prices. Regretably, it is the bankers -- the biggest ones -- who know the when and the how, and they take advantage of it. Inside knowledge is power. The public should be saying that insider trading actions are illegal; what's good for the sheep ought to be good for the shepherd.

The capital market is no longer a free capital market where independent traders set prices in search of value. Prices today are manufactured by bankers in order to protect their interests. As the bankers' banker, the Fed, is itself almost bankrupt, the market prices we see today will continue only as long as the American people are kept dummied down to idiot level or until they wise up and collectively scream "no mas, no mas!"

I think it’s time that all of America, and owners of capital all over the world, wake up and smell kaimu’s wonderful orchids. His is a clarion call for independence. The People have been marched into slavery by bankers, and the irony is not lost on me that they seem to be turning to Barack Obama to lead them in changing the system… back to the intentions of those who penned the Constitution of the United States.

"We shall all be free. We shall all be free. We shall all be free some day."
--Martin Luther King

Have a great day. Onwards and upwards.

All Tables

Table 1: Cara ETF List

Sorted by 1-Week Price Performance
Symbol Close 1Day
Change 1Day
%Change 1W
%Change 2W
%Change 4W
%Change YTD
%Change 3M
%Change 6M
%Change 12M
%Change

IYZ 26.08 -0.17 -0.65% 4.78% 8.76% 8.08% -10.59% -1.81% -17.47% -18.96%

XLK 24.79 -0.03 -0.12% 3.29% 4.07% 6.67% -5.09% 5.49% -12.03% 0.49%

SMH 31.79 0.16 0.51% 2.68% 4.57% 4.43% 1.37% 5.13% -7.18% -14.34%

XLF 27.67 0.11 0.40% 2.60% 4.61% 4.97% -2.43% -6.39% -13.15% -25.70%

XLY 33.19 -0.07 -0.21% 2.56% 3.49% 3.56% 3.07% 1.19% -7.00% -15.95%

XLU 41.02 0.53 1.31% 1.69% 1.26% 4.72% -2.54% 1.94% -2.15% -2.84%

XLI 38.90 0.15 0.39% 1.38% 1.51% 1.30% 1.01% 2.77% -3.16% 3.27%

SPY 141.51 0.40 0.28% 1.37% 2.19% 3.37% -2.36% 1.38% -6.44% -5.39%

IYH 64.51 0.07 0.11% 0.73% 1.29% 0.50% -7.97% -4.96% -8.76% -10.18%

XLP 28.11 -0.04 -0.13% 0.65% 0.54% -0.91% -0.98% 2.34% 0.36% 2.97%

XLE 81.47 1.51 1.89% -1.70% -2.69% 5.38% 2.48% 14.18% 7.74% 26.94%

XLB 42.57 0.56 1.33% -3.14% -4.04% -0.79% 3.08% 4.03% -0.14% 9.38%

Table 2: Senior oil & gas equities

Sorted by 1-Week Price Performance
Symbol Close 1Day
Change 1Day
%Change 1W
%Change 2W
%Change 4W
%Change YTD
%Change 3M
%Change 6M
%Change 12M
%Change

STO 37.07 1.46 4.10% 6.83% 9.67% 19.23% 18.66% 36.94% 10.89% 28.23%

PTR 156.97 4.12 2.70% 5.00% 24.43% 15.78% -9.61% 4.82% -38.46% 36.77%

CVX 95.32 0.38 0.40% 2.84% 2.30% 8.26% 1.99% 15.55% 7.73% 21.21%

TOT 84.05 0.92 1.11% 2.25% 3.56% 10.22% 0.92% 13.55% 6.10% 11.90%

CEO 176.00 -3.94 -2.19% 1.60% -1.30% 10.81% 5.12% 14.87% -14.98% 100.46%

PBR 124.42 2.47 2.03% 0.88% -0.85% 12.29% 4.72% 10.05% 33.35% 143.82%

RIG 151.92 6.16 4.23% -1.82% -4.27% 5.84% 4.09% 21.11% 22.09% 70.29%

SLB 99.63 1.28 1.30% -3.03% -2.18% 9.04% -0.94% 27.27% 0.82% 34.71%

XOM 89.61 -0.09 -0.10% -3.08% -4.67% 0.98% -4.17% 4.26% 1.91% 12.27%

SU 111.54 2.82 2.59% -3.12% -4.02% 9.30% 1.15% 17.56% 2.76% 36.14%

IMO 55.40 -1.76 -3.08% -3.20% -6.02% 4.55% 0.87% 10.20% 0.69% 44.99%

ECA 78.86 1.12 1.44% -3.74% -8.55% 2.83% 13.29% 16.35% 8.80% 46.44%

Table 3: Senior metals and steel equities

Sorted by 1-Week Price Performance
Symbol Close 1Day
Change 1Day
%Change 1W
%Change 2W
%Change 4W
%Change YTD
%Change 3M
%Change 6M
%Change 12M
%Change

GGB 41.79 2.11 5.32% 12.55% 12.16% 15.60% 45.61% 56.40% 38.75% 105.86%

RIO 39.91 1.64 4.29% 5.25% 5.22% 8.84% 22.01% 26.18% 9.70% -4.20%

TS 53.91 0.21 0.39% 3.51% -0.72% 5.71% 21.45% 31.68% 4.66% 16.69%

VCP 31.49 -0.55 -1.72% 1.65% 0.25% 1.16% 6.03% 4.10% 0.03% 55.51%

AA 36.11 1.39 4.00% 1.09% -0.41% -7.41% -0.06% 5.34% -6.35% 3.53%

PKX 124.64 1.09 0.88% 0.63% 7.02% -7.03% -14.90% -9.03% -25.10% 16.50%

MT 89.15 1.55 1.77% 0.21% 0.39% 4.67% 16.69% 24.77% 17.74% 64.12%

DOW 40.79 0.39 0.97% -0.17% 2.03% 4.99% 5.26% 2.26% -7.23% -7.88%

BHP 84.00 4.00 5.00% -0.59% 3.75% 14.72% 19.30% 13.94% 0.32% 69.22%

NUE 74.30 0.48 0.65% -1.89% 0.51% 5.33% 28.17% 24.71% 28.30% 14.89%

RTP 484.37 20.37 4.39% -3.28% -1.21% 6.57% 15.41% 9.83% 30.65% 95.32%

TCK 43.63 0.98 2.30% -4.05% -8.40% -2.76% 20.39% 24.02% -10.12% -44.43%

Table 4: Senior capital goods makers and transportation

Sorted by 1-Week Price Performance
Symbol Close 1Day
Change 1Day
%Change 1W
%Change 2W
%Change 4W
%Change YTD
%Change 3M
%Change 6M
%Change 12M
%Change

UTX 75.10 0.60 0.81% 3.33% 3.57% 4.70% -0.15% 1.32% -0.73% 9.80%

ABB 30.88 -0.16 -0.52% 2.69% 10.40% 12.74% 7.82% 18.77% 0.36% 51.89%

FDX 96.86 -1.79 -1.81% 2.54% 0.16% -0.01% 12.42% 3.68% -5.44% -10.07%

BA 85.69 0.28 0.33% 1.00% 8.94% 13.27% -1.07% 3.54% -12.35% -8.68%

TXT 62.00 0.27 0.44% 0.99% 1.69% 6.84% -7.20% 8.28% -10.78% 21.00%

MMM 78.55 0.71 0.91% 0.94% -5.25% -2.45% -5.03% -3.28% -7.47% -6.95%

UPS 73.28 -0.30 -0.41% 0.77% 0.12% -1.52% 5.96% -0.68% -1.01% 3.59%

ERJ 42.08 -1.08 -2.50% 0.77% -0.33% 1.50% -6.76% -5.65% -12.11% -13.22%

CAT 82.80 0.45 0.55% 0.67% -2.91% 6.39% 17.23% 15.38% 10.75% 12.81%

HON 60.63 -0.04 -0.07% 0.23% -0.59% 4.05% 1.22% 0.70% 2.16% 9.24%

GE 33.34 0.22 0.66% 0.03% 1.99% -11.24% -9.30% -7.80% -17.33% -10.64%

FLR 152.82 1.96 1.30% -5.36% -4.55% -0.05% 5.83% 21.12% 2.39% 57.37%

Table 5: Senior consumer discretionary equities

Sorted by 1-Week Price Performance
Symbol Close 1Day
Change 1Day
%Change 1W
%Change 2W
%Change 4W
%Change YTD
%Change 3M
%Change 6M
%Change 12M
%Change

GOL 17.16 -0.67 -3.76% 14.40% 12.89% 8.68% -28.47% -13.81% -35.66% -40.64%

CCL 41.94 0.39 0.94% 6.31% -1.27% 0.67% -3.94% -6.34% -9.02% -14.23%

JCP 45.18 1.24 2.82% 4.58% 12.14% 12.44% 8.48% -6.85% -15.22% -43.31%

DIS 33.49 0.19 0.57% 3.49% 6.89% 7.20% 5.18% 9.23% -1.27% -6.19%

TM 104.94 1.87 1.81% 2.82% 3.34% 7.03% -1.43% -4.43% -7.13% -12.78%

BC 16.81 -0.14 -0.83% 2.81% 4.74% -3.45% -0.65% -12.81% -24.04% -49.06%

BDK 67.61 0.48 0.72% 0.04% -1.05% -4.36% -3.32% -7.50% -21.90% -26.27%

TGT 53.91 -0.33 -0.61% -0.13% -1.26% 2.35% 8.89% -5.50% -9.14% -8.55%

EBAY 31.11 -0.67 -2.11% -0.61% -1.89% -5.56% -4.25% 7.98% -11.17% -7.74%

BBBY 33.10 -0.57 -1.69% -0.99% 2.19% 4.75% 16.71% 2.22% 1.60% -19.66%

WHR 75.60 0.62 0.83% -1.05% -7.82% -17.11% -5.36% -11.81% -4.46% -33.18%

NKE 67.66 -0.15 -0.22% -1.57% -0.34% -1.24% 6.92% 8.24% 5.93% 26.51%

Table 6: Senior consumer staples equities

Sorted by 1-Week Price Performance
Symbol Close 1Day
Change 1Day
%Change 1W
%Change 2W
%Change 4W
%Change YTD
%Change 3M
%Change 6M
%Change 12M
%Change

WFMI 34.98 0.20 0.58% 12.15% 6.16% 3.22% -12.02% -14.18% -28.48% -23.36%

PDA 58.80 3.00 5.38% 11.53% 16.04% 17.81% 22.17% 26.72% 10.36% 89.68%

ABV 78.91 1.86 2.41% 7.14% 2.76% -1.45% 8.87% 4.20% -4.33% 30.99%

BUD 50.28 0.59 1.19% 6.64% 4.86% 3.69% -2.61% 4.62% -0.75% 0.78%

SBUX 16.46 -0.19 -1.14% 3.78% -9.96% -11.03% -14.76% -14.36% -35.53% -47.33%

KR 27.37 -0.45 -1.62% 3.71% 9.48% 8.61% 6.62% 5.35% -3.39% -8.06%

PEP 69.10 0.60 0.88% 2.19% -2.12% -3.40% -8.22% 0.39% -5.32% 3.10%

DEO 82.37 -0.43 -0.52% 0.54% -0.89% -4.21% -3.16% 0.44% -10.22% -3.34%

PG 66.80 -0.23 -0.34% 0.38% -0.55% -5.38% -7.62% 1.14% -3.95% 7.10%

WMT 57.50 -0.57 -0.98% -0.26% 2.11% 5.70% 22.60% 12.35% 30.12% 19.10%

WAG 35.28 -0.41 -1.15% -0.59% -1.89% -6.91% -5.52% -2.86% -9.79% -20.86%

KO 58.77 -0.32 -0.54% -0.94% -2.23% -2.46% -3.80% -0.83% -2.88% 11.50%

Table 7: Senior healthcare equities

Sorted by 1-Week Price Performance
Symbol Close 1Day
Change 1Day
%Change 1W
%Change 2W
%Change 4W
%Change YTD
%Change 3M
%Change 6M
%Change 12M
%Change

BMY 23.35 0.41 1.79% 5.42% 5.66% 5.23% -10.64% -2.55% -19.15% -18.64%

AMGN 42.93 -0.30 -0.69% 1.61% -0.33% 3.37% -7.88% -9.35% -24.18% -34.02%

JNJ 68.26 0.45 0.66% 1.41% 2.63% 3.85% 3.57% 7.73% 5.37% 5.86%

NVS 51.19 0.77 1.53% 1.17% 7.11% -1.78% -6.19% 1.51% -2.70% -12.53%

PFE 20.61 0.17 0.83% 0.88% 0.68% -3.47% -10.04% -12.63% -12.93% -22.52%

GSK 45.36 0.44 0.98% 0.53% 4.71% 0.07% -9.59% -3.51% -10.74% -21.36%

WLP 51.33 0.39 0.77% 0.51% 5.97% 11.10% -41.00% -34.96% -34.45% -36.70%

NVO 67.07 -1.64 -2.39% 0.03% -5.80% -4.34% 5.13% 7.54% -45.27% -36.23%

MDT 49.25 -0.61 -1.22% -0.34% -1.48% -0.81% -0.51% 2.93% 5.06% -8.88%

UNH 33.47 0.57 1.73% -1.53% -10.15% -8.30% -40.94% -33.19% -31.61% -37.78%

AET 42.99 -0.17 -0.39% -2.10% 2.87% 2.19% -24.10% -19.22% -20.95% -10.94%

DNA 67.24 -1.11 -1.62% -6.57% -7.54% -15.67% -0.24% -5.04% -10.14% -18.13%

Table 8: Senior financial company equities

Sorted by 1-Week Price Performance
Symbol Close 1Day
Change 1Day
%Change 1W
%Change 2W
%Change 4W
%Change YTD
%Change 3M
%Change 6M
%Change 12M
%Change

BBD 24.60 0.19 0.78% 11.11% 13.47% -17.75% -19.16% -7.66% -24.98% 12.53%

MER 52.71 0.32 0.61% 6.18% 11.32% 13.97% -0.09% -9.74% -7.98% -42.20%

GS 200.27 1.22 0.61% 4.31% 11.30% 14.18% -3.53% -3.61% -12.77% -8.76%

HBC 87.67 0.12 0.14% 2.20% 3.32% 3.45% 6.34% 13.61% -7.45% -6.39%

JPM 48.66 -0.59 -1.20% 1.82% 6.34% 6.78% 15.39% 0.85% 12.77% -7.40%

CS 55.49 0.38 0.69% 1.06% 3.82% -0.96% -7.02% -4.87% -11.93% -29.57%

DB 120.98 -1.17 -0.96% 0.52% -0.49% 2.75% -6.26% 4.43% -4.40% -21.53%

LEH 47.02 0.09 0.19% 0.32% 3.34% 6.74% -24.39% -28.76% -21.79% -37.71%

IBN 46.90 1.15 2.51% -0.64% 11.19% 20.47% -24.54% -24.67% -31.98% 13.86%

MS 50.31 -0.02 -0.04% -0.67% 5.32% 5.69% -1.26% 4.27% -14.58% -40.36%

C 26.39 0.40 1.54% -0.79% 5.10% 9.59% -8.75% -11.11% -30.06% -51.40%

UBS 34.80 0.11 0.32% -3.33% -1.47% 3.42% -24.00% -17.22% -29.37% -46.83%

Table 9: Senior technology equities

Sorted by 1-Week Price Performance
Symbol Close 1Day
Change 1Day
%Change 1W
%Change 2W
%Change 4W
%Change YTD
%Change 3M
%Change 6M
%Change 12M
%Change

RIMM 131.92 3.92 3.06% 9.90% 7.06% 9.94% 16.01% 43.02% 3.92% 197.92%

ADBE 40.38 1.37 3.51% 9.46% 11.33% 9.22% -3.19% 17.11% -15.66% -2.72%

SNDK 29.19 0.16 0.55% 8.76% 6.53% 12.96% -12.00% 5.95% -34.30% -31.32%

AAPL 180.94 0.94 0.52% 6.60% 12.36% 18.20% -7.13% 35.28% -3.69% 80.24%

CTSH 33.06 0.84 2.61% 5.79% 6.78% 12.49% 2.58% 10.79% -19.17% -21.62%

INTC 23.58 0.29 1.25% 4.52% 4.57% 7.82% -6.98% 8.31% -12.01% 7.52%

CSCO 26.75 0.08 0.30% 4.49% 9.14% 9.68% 0.79% 7.26% -17.72% -3.32%

INFY 44.94 0.70 1.58% 4.22% 4.32% 21.95% 1.15% 3.31% -11.22% -16.33%

QCOM 44.33 -0.03 -0.07% 2.52% 4.18% 5.42% 15.47% 5.05% 7.23% 0.14%

ADSK 39.42 0.11 0.28% 0.10% 18.49% 16.52% -18.28% -6.05% -19.24% -5.99%

ORCL 21.51 -0.31 -1.42% -0.37% -1.33% 5.70% -4.36% 4.01% -2.36% 14.05%

SAP 50.01 -0.70 -1.38% -3.55% -3.73% -4.29% -1.42% 3.86% -6.08% 4.17%

Table 10: Yahoo Finance U.S. Treasury Debt, Municipal and Corporate Bond Yields

US Treasury Bonds
Maturity Yield Yesterday Last Week Last Month

3 Month 1.44 1.35 1.29 1.30

6 Month 1.63 1.56 1.65 1.51

2 Year 2.45 2.37 2.41 1.89

3 Year 2.37 2.29 2.33 1.77

5 Year 3.17 3.08 3.17 2.73

10 Year 3.86 3.77 3.87 3.60

30 Year 4.58 4.50 4.59 4.40

Municipal Bonds
Maturity Yield Yesterday Last Week Last Month

2yr AA 2.39 2.77 2.47 2.52

2yr AAA 2.28 2.39 2.42 2.45

2yr A 2.74 2.67 2.79 2.88

5yr AAA 2.92 2.90 3.10 2.98

5yr AA 3.00 2.97 3.11 3.19

5yr A 3.49 3.48 3.35 3.26

10yr AAA 3.70 3.70 3.74 3.72

10yr AA 3.79 3.68 3.64 3.73

10yr A 3.79 3.87 4.03 4.19

20yr AAA 4.64 4.58 4.45 4.72

20yr AA 4.34 4.40 4.84 4.91

20yr A 4.50 4.63 4.66 4.88

Corporate Bonds
Maturity Yield Yesterday Last Week Last Month

2yr AA 4.09 4.10 4.30 3.93

2yr A 3.75 3.74 3.97 3.87

5yr AAA 4.46 4.48 4.35 4.15

5yr AA 4.82 4.83 5.01 4.37

5yr A 4.88 4.99 5.02 5.12

10yr AAA 5.69 5.27 5.56 5.57

10yr AA 5.81 5.79 5.92 5.91

10yr A 5.46 5.42 5.55 5.50

20yr AAA 6.03 5.97 6.50 6.59

20yr AA 5.97 6.36 6.09 5.92

20yr A 6.28 6.23 6.37 6.46

Table 11: Interest-sensitive securities

Sorted by 1-Week Price Performance.
Symbol Close 1Day
Change 1Day
%Change 1W
%Change 2W
%Change 4W
%Change YTD
%Change 3M
%Change 6M
%Change 12M
%Change

CFC 5.980 -0.070 -1.16% 2.40% 5.28% 1.36% -33.56% -21.32% -58.33% -83.95%

DRE 25.75 1.09 4.42% 0.98% 7.34% 4.12% 0.51% 5.53% -14.08% -40.26%

AGG 101.93 -0.20 -0.20% 0.52% -0.07% -0.52% 0.28% -1.03% 1.37% 1.88%

AVB 105.37 1.37 1.32% 0.47% 4.21% 1.31% 15.35% 6.22% -6.06% -12.33%

TIP 106.32 -0.27 -0.25% -0.09% -1.15% -2.37% -0.30% -2.53% 2.24% 5.34%

TLT 91.61 -1.17 -1.26% -0.23% -1.25% -3.77% -2.93% -3.80% 0.63% 3.58%

SHY 82.91 -0.14 -0.17% -0.26% -0.54% -1.04% 0.69% -0.56% 1.89% 3.47%

EQR 43.63 0.64 1.49% -0.39% 2.93% 0.79% 19.76% 12.59% 11.56% -5.87%

IEF 88.16 -0.66 -0.74% -0.46% -1.43% -3.09% 0.60% -1.98% 3.61% 6.40%

NLY 16.99 -0.34 -1.96% -0.59% 0.18% 7.06% -6.13% -15.01% 0.30% 7.80%

FRE 27.09 0.32 1.20% -3.04% 0.11% -1.85% -17.26% -16.52% -43.95% -59.13%

FNM 29.50 -0.25 -0.84% -4.62% 3.33% -2.77% -21.25% -16.67% -43.93% -50.69%

Table 12: Senior gold equities

Sorted by 1-Week Price Performance
Symbol Close 1Day
Change 1Day
%Change 1W
%Change 2W
%Change 4W
%Change YTD
%Change 3M
%Change 6M
%Change 12M
%Change

AEM 62.53 1.48 2.42% 0.29% -13.36% -10.02% 10.63% 0.66% 8.94% 75.25%

EGO 6.600 -0.170 -2.51% -0.15% -11.17% -7.82% 6.45% 2.80% 0.30% 13.79%

NEM 44.51 1.28 2.96% -0.49% -3.80% -4.93% -15.04% -16.38% -13.76% 6.56%

LIHR 28.17 0.28 1.00% -0.67% -5.91% -13.14% -15.07% -13.88% -29.70% 14.98%

GG 35.89 0.78 2.22% -1.91% -13.64% -11.36% -2.05% -2.34% 0.48% 45.36%

KGC 19.00 0.38 2.04% -2.36% -20.24% -18.66% -5.71% -13.48% -6.82% 38.69%

HMY 11.53 0.07 0.61% -3.03% -3.84% -0.95% 7.26% 18.01% 3.13% -28.39%

AUY 12.89 -0.01 -0.08% -3.73% -11.04% -13.66% -7.07% -18.88% -13.95% -7.33%

BVN 60.46 0.48 0.80% -4.94% -14.57% -13.79% -0.69% -7.79% 4.67% 78.98%

ABX 37.56 0.20 0.54% -5.32% -14.17% -13.97% -18.38% -26.21% -17.67% 26.98%

GFI 13.11 0.01 0.08% -5.41% -8.45% -4.38% -14.87% -6.89% -26.18% -28.44%

AU 33.85 0.42 1.26% -5.92% -8.91% -4.32% -26.19% -16.91% -21.17% -25.31%

Table 13: International equities perspective

Sorted by 1-Week Price Performance
Symbol Close 1Day
Change 1Day
%Change 1W
%Change 2W
%Change 4W
%Change YTD
%Change 3M
%Change 6M
%Change 12M
%Change

EWZ 93.40 1.49 1.62% 6.57% 6.41% 11.59% 15.38% 19.82% 12.39% 74.29%

IFN 52.00 0.70 1.36% 4.23% 5.54% 12.46% -15.99% -3.92% -17.92% 27.42%

EWH 20.04 0.24 1.21% 3.14% 6.99% 6.43% -8.03% -0.30% -12.64% 19.78%

EWJ 13.37 -0.03 -0.22% 2.06% 2.06% 4.62% 1.06% 4.05% -5.51% -6.89%

EWS 13.95 0.20 1.45% 2.05% 2.12% 4.34% 3.41% 13.05% -8.10% 6.41%

EWA 28.43 0.47 1.68% 1.79% 3.87% 3.04% -1.22% 0.00% -15.74% 2.78%

TRF 59.59 0.53 0.90% 1.67% -3.18% 2.37% -18.91% -5.07% -18.18% -15.22%

EWC 32.91 0.55 1.70% 0.80% -0.72% 4.08% 1.57% 6.44% -8.35% 17.70%

EWU 23.18 0.18 0.78% 0.70% 0.70% 2.34% -2.93% 3.21% -13.60% -7.17%

EWQ 36.75 -0.04 -0.11% 0.25% 0.27% 1.83% -3.14% 6.18% -6.63% -3.47%

EWG 32.93 -0.22 -0.66% 0.21% 0.52% 1.92% -6.95% 4.71% -8.53% 4.37%

Table 14: Dow 30 List

Sorted by 1-Week Price Performance
Symbol Close 1Day
Change 1Day
%Change 1W
%Change 2W
%Change 4W
%Change YTD
%Change 3M
%Change 6M
%Change 12M
%Change

GM 23.20 0.01 0.04% 8.51% 15.25% 12.73% -4.96% -19.94% -37.28% -28.48%

VZ 39.59 0.27 0.69% 6.88% 9.88% 6.03% -8.38% 2.17% -10.79% -0.03%

AXP 50.40 -0.93 -1.81% 5.51% 10.70% 9.30% -1.25% 1.61% -13.73% -19.67%

INTC 23.58 0.29 1.25% 4.52% 4.57% 7.82% -6.98% 8.31% -12.01% 7.52%

T 40.13 0.19 0.48% 4.02% 6.98% 4.29% -2.12% 4.83% -0.72% 3.75%

BAC 39.79 0.40 1.02% 3.89% 3.19% 0.96% -1.90% -11.64% -11.79% -22.00%

DIS 33.49 0.19 0.57% 3.49% 6.89% 7.20% 5.18% 9.23% -1.27% -6.19%

UTX 75.10 0.60 0.81% 3.33% 3.57% 4.70% -0.15% 1.32% -0.73% 9.80%

AIG 49.04 0.89 1.85% 3.18% 1.68% 3.68% -12.90% -12.00% -17.05% -30.36%

CVX 95.32 0.38 0.40% 2.84% 2.30% 8.26% 1.99% 15.55% 7.73% 21.21%

MCD 60.95 0.03 0.05% 2.15% 4.55% 9.39% 4.91% 12.41% 3.27% 21.85%

HPQ 48.36 0.33 0.69% 1.92% 0.37% 4.22% -2.91% 8.87% -7.71% 12.65%

JPM 48.66 -0.59 -1.20% 1.82% 6.34% 6.78% 15.39% 0.85% 12.77% -7.40%

JNJ 68.26 0.45 0.66% 1.41% 2.63% 3.85% 3.57% 7.73% 5.37% 5.86%

HD 30.12 0.25 0.84% 1.14% 5.02% 4.62% 15.36% -1.08% -0.92% -22.27%

AA 36.11 1.39 4.00% 1.09% -0.41% -7.41% -0.06% 5.34% -6.35% 3.53%

BA 85.69 0.28 0.33% 1.00% 8.94% 13.27% -1.07% 3.54% -12.35% -8.68%

MMM 78.55 0.71 0.91% 0.94% -5.25% -2.45% -5.03% -3.28% -7.47% -6.95%

PFE 20.61 0.17 0.83% 0.88% 0.68% -3.47% -10.04% -12.63% -12.93% -22.52%

CAT 82.80 0.45 0.55% 0.67% -2.91% 6.39% 17.23% 15.38% 10.75% 12.81%

PG 66.80 -0.23 -0.34% 0.38% -0.55% -5.38% -7.62% 1.14% -3.95% 7.10%

IBM 123.18 -0.43 -0.35% 0.08% -0.98% 6.41% 17.66% 12.93% 7.50% 20.50%

GE 33.34 0.22 0.66% 0.03% 1.99% -11.24% -9.30% -7.80% -17.33% -10.64%

DD 49.86 0.92 1.88% -0.04% -4.15% 0.73% 13.99% 8.51% 3.96% -1.35%

WMT 57.50 -0.57 -0.98% -0.26% 2.11% 5.70% 22.60% 12.35% 30.12% 19.10%

C 26.39 0.40 1.54% -0.79% 5.10% 9.59% -8.75% -11.11% -30.06% -51.40%

KO 58.77 -0.32 -0.54% -0.94% -2.23% -2.46% -3.80% -0.83% -2.88% 11.50%

MSFT 29.24 -0.16 -0.54% -1.98% -2.53% 0.27% -16.98% -3.97% -21.10% -4.48%

XOM 89.61 -0.09 -0.10% -3.08% -4.67% 0.98% -4.17% 4.26% 1.91% 12.27%

MRK 39.37 0.42 1.08% -3.32% -0.98% -1.58% -31.38% -14.38% -29.75% -23.15%

Knobias Cara100 Tables For Friday

Portfolio GAINERS

SYMB	LAST	CHG	%C	VOL
YHOO	28.670	+1.855	+6.9	79.2M
PDA	58.800	+3.000	+5.4	282.5K
GGB	41.790	+2.110	+5.3	4.4M
BHP	84.000	+4.000	+5	4.3M
RIO	39.910	+1.640	+4.3	26.1M
STO	37.070	+1.460	+4.1	1.6M
WBK	121.630	+4.660	+4	41.6K
ADBE	40.380	+1.370	+3.5	8.9M
RIMM	131.920	+3.920	+3.1	18.9M
JCP	45.180	+1.240	+2.8	5.5M
PTR	156.970	+4.120	+2.7	1.2M
CTSH	33.060	+0.840	+2.6	2.9M
SU	111.540	+2.820	+2.6	2.2M
IBN	46.900	+1.150	+2.5	3.3M
ABV	78.910	+1.860	+2.4	1.1M
KSS	50.110	+1.130	+2.3	5.7M
TCK	43.630	+0.980	+2.3	850K
SLW	13.270	+0.290	+2.2	4.8M
GG	35.890	+0.780	+2.2	6.6M
PBR	124.420	+2.470	+2	9.4M
TEF	88.950	+1.630	+1.9	397.4K
TM	104.940	+1.870	+1.8	863.5K
BMY	23.350	+0.410	+1.8	10.1M
RY	49.120	+0.850	+1.8	637.9K
INFY	44.940	+0.700	+1.6	2.2M

Portfolio LOSERS

SYMB	LAST	CHG	%C	VOL
GOL	17.160	-0.670	-3.8	1.7M
IMO	55.390	-1.770	-3.1	399.3K
ERJ	42.080	-1.080	-2.5	556K
NOK	29.780	-0.700	-2.3	26M
CEO	176.000	-3.940	-2.2	642.1K
GOOG	581.290	-11.790	-2	7M
KB	70.030	-1.230	-1.7	747.4K
VCP	31.490	-0.550	-1.7	524.1K
BBBY	33.100	-0.570	-1.7	7.1M
DNA	67.240	-1.110	-1.6	4.3M
MBT	75.150	-1.210	-1.6	2.2M
MICC	114.350	-1.800	-1.5	862.3K
LLTC	35.350	-0.550	-1.5	5.5M
ORCL	21.510	-0.310	-1.4	36.8M
WAG	35.280	-0.410	-1.1	6.2M
SBUX	16.460	-0.190	-1.1	15.8M
ATVI	27.160	-0.270	-1	3.2M
WMT	57.500	-0.570	-1	19.3M
EXC	86.060	-0.850	-1	2.8M
DB	120.980	-1.170	-1	548.6K
IBKR	31.850	-0.300	-0.9	851.1K
BC	16.810	-0.140	-0.8	1.4M
GRMN	42.770	-0.350	-0.8	5.3M
TGT	53.910	-0.330	-0.6	8.7M
KO	58.770	-0.320	-0.5	8.3M

Portfolio 52-Wk HIGHS

SYMB	DAY HIGH	LAST	CHG	%CHG	VOL
PDA	60.670	58.800	+3.000	+5.38	282.52K
GGB	42.450	41.790	+2.110	+5.32	4.38M
STO	37.180	37.070	+1.460	+4.10	1.60M
BBD	25.240	24.600	+0.190	+0.78	17.31M
NTES	24.180	23.260	+0.160	+0.69	1.58M
CHRW	66.960	65.460	-0.150	-0.23	1.91M

Portfolio 52-Wk LOWS

SYMB	DAY LOW	LAST	CHG	%CHG	VOL
NONE FOUND.

Portfolio VOLUME

SYMB	LAST	%C	VOL	%ADSV
YHOO	28.670	+6.9	79.2M	+203
NTES	23.260	+0.7	1.6M	+124
GOL	17.160	-3.8	1.7M	+113
BBD	24.600	+0.8	17.3M	+98
OXPS	22.680	+1.5	1.3M	+84
PDA	58.800	+5.4	282.5K	+71
ABV	78.910	+2.4	1.1M	+65
GGB	41.790	+5.3	4.4M	+62
ADBE	40.380	+3.5	8.9M	+41
CEO	176.000	-2.2	642.1K	+38
NOK	29.780	-2.3	26M	+36
CSCO	26.750	+0.3	67.2M	+36
SLW	13.270	+2.2	4.8M	+35
JCP	45.180	+2.8	5.5M	+33
IBN	46.900	+2.5	3.3M	+32
HDB	117.690	-0.2	656.5K	+32
TEF	88.950	+1.9	397.4K	+25
ERTS	53.170	-0	3.5M	+23
TOT	84.050	+1.1	2.1M	+23
WBK	121.630	+4	41.6K	+21
DB	120.980	-1	548.6K	+21
MBT	75.150	-1.6	2.2M	+20
JNJ	68.260	+0.7	12.4M	+20
WFMI	34.980	+0.6	3M	+20
WAG	35.280	-1.1	6.2M	+20

Analysts UPGRADES

SYMB	ANALYST	OLD	NEW	BEFORE	AFTER
NONE FOUND.
• PREVIOUS SESSION
NONE FOUND.

Analysts DOWNGRADES

SYMB	ANALYST	OLD	NEW	BEFORE	AFTER
STO	ING Barings	---	---	Hold	Sell
IMO	Merrill Lynch	---	---	Neutral	Sell
• PREVIOUS SESSION
XOM	JP Morgan	---	---	Overweight	Neutral
GRMN	JMP Sec	---	---	Mkt Outperform	Mkt Perform
GRMN	Merrill Lynch	---	---	Buy	Neutral

Cara 100 Daily RSI-7 Charts

At least one RSI value >70:
rsi

Ticker	Last	RSI-7M	RSI-7W	RSI-7D	Zone
SYT	58.96	88.05	55.74	37.49	Sell alert (trig. 8 days ago [on 2008-04-23 at $61.87, -4.70% chg], after a 5 day DZ)
GGB	41.79	83.91	79.75	75.79	Distribution Zone (for 1 days)
PBR	124.42	83.81	64.39	58.90	Sell alert (trig. 8 days ago [on 2008-04-23 at $126.18, -1.39% chg], after a 2 day DZ)
RIO	39.91	80.65	70.83	64.68	Sell alert (trig. 7 days ago [on 2008-04-24 at $37.33, +6.91% chg], after a 2 day DZ)
PDA	58.80	79.99	74.18	75.50	Distribution Zone (for 1 days)
WMT	57.50	77.32	80.15	56.80	Sell alert (trig. 3 days ago [on 2008-04-30 at $57.98, -0.83% chg], after a 6 day DZ)
ECA	78.86	76.82	55.87	41.87
EXC	86.06	76.81	67.66	55.44
RIMM	131.92	75.68	71.25	68.37
NUE	74.30	75.66	68.94	51.78	Sell alert (trig. 4 days ago [on 2008-04-29 at $75.08, -1.04% chg], after a 1 day DZ)
TT	46.60	75.05	66.65	63.20
COST	72.14	74.62	72.80	76.20	Distribution Zone (for 3 days)
ABB	30.88	74.26	73.93	76.46	Distribution Zone (for 7 days)
CHRW	65.46	72.85	81.45	79.55	Distribution Zone (for 2 days)
BHP	84.00	72.79	71.52	61.75
VCP	31.49	71.97	57.59	52.90
NKE	67.66	71.14	60.95	50.84
BBD	24.60	70.81	76.34	79.61	Distribution Zone (for 1 days)
STO	37.07	70.28	78.03	70.66	Distribution Zone (for 1 days)
CVX	95.32	68.38	71.17	66.42
NTES	23.26	67.86	74.43	91.20
JNJ	68.26	66.86	75.72	82.93
TOT	84.05	66.82	70.63	67.82
CHL	88.14	66.51	72.73	66.93	Sell alert (trig. 7 days ago [on 2008-04-24 at $88.17, -0.03% chg], after a 1 day DZ)
MICC	114.35	63.84	65.47	71.83
QCOM	44.33	62.86	67.50	70.04
LLTC	35.35	62.57	73.82	69.20
HDB	117.69	60.91	64.65	75.96
UTX	75.10	60.69	65.67	73.53
IBKR	31.85	60.30	58.69	74.42
WBK	121.63	59.66	63.09	75.00
DIS	33.49	57.54	66.33	78.70
HBC	87.67	57.06	76.88	81.87
GOOG	581.29	56.19	68.02	74.69
CHA	69.88	55.41	56.11	71.20
INTC	23.58	53.81	64.21	71.33
ADBE	40.38	52.88	69.91	79.38
ERTS	53.17	52.01	63.09	72.27
PAYX	37.11	51.82	66.79	75.07
PTR	156.97	51.38	62.24	81.27
GS	200.27	51.23	64.02	81.64
INFY	44.94	50.93	69.27	76.04
CSCO	26.75	50.11	64.79	78.16
RY	49.12	49.13	57.34	70.67
BA	85.69	48.09	64.78	79.73
CTSH	33.06	46.26	62.26	75.58
OXPS	22.68	39.98	49.21	80.50
BMY	23.35	39.45	59.42	76.06
TM	104.94	39.29	54.56	74.01
GSK	45.36	38.24	56.82	73.11
SNDK	29.19	36.20	61.68	71.16
JCP	45.18	36.11	58.69	73.23
WFMI	34.98	34.27	52.14	72.77
GOL	17.16	32.58	51.51	70.26	Buy alert (trig. 7 days ago [on 2008-04-24 at $14.69, +16.81% chg], after a 1 day AZ)

At least one RSI value <30:
rsi

Ticker Last RSI-7M RSI-7W RSI-7D Zone

SBUX 16.46 16.00 37.85 43.13 Buy alert (trig. 6 days ago [on 2008-04-25 at $15.86, +3.78% chg], after a 1 day AZ)

GRMN 42.77 25.52 20.37 39.10 Buy alert (trig. 2 days ago [on 2008-05-01 at $43.12, -0.81% chg], after a 1 day AZ)

UBS 34.80 27.39 48.48 52.91

BC 16.81 27.89 50.24 63.04

DELL 19.32 28.14 42.10 58.77

GFI 13.11 31.64 34.04 27.81

DNA 67.24 36.35 25.88 21.64

ABX 37.56 44.72 30.13 29.10

SLW 13.27 46.04 30.69 29.67

Posted by Posted by Bill Cara on May 3, 2008 05:22:27 AM | Category: Community Chat

Discourse

Bill,

You were early this morning!

Would you please comment on the Wal Mart long sell alert of a few days ago. How would you treat this signal at this time. Do you use any other varaiables to confirm that signal? Your comments would give me a better understanding of the RSI(7) system

The Word

Posted by: The Word at May 3, 2008 6:38 AM [link]

Re: ¥/$ Trade

The ¥/$ trade is a pretty good portrayal of the overall market since 2002. If it weren't for the overbought conditions not being relieved on the monthly chart, I would say that this will resume its course upwards in very short order. A bond rout over a week ago in the JGB seemed to have suggested that the ¥ will continue to appreciate against the $, but that hasn't occurred yet. JCB rates weren't raised this week despite ongoing inflation and food shortages.

stockcharts.com

http://tinyurl.com/5y6hqp

Posted by: FranSix at May 3, 2008 7:00 AM [link]

KBR: Contractors Gone Wild

The practice of stealing equipment and supplies destined for the U.S. military was so pervasive that KBR employees invented a slang term to describe it: "drug deals."

http://tinyurl.com/6mgjuj

Posted by: jk484 at May 3, 2008 7:16 AM [link]

Re: Goldsource (gxs.v)

Coal investors turn their sights on Canada's prairie province
Posted: May 01, 2008, 1:00 PM by David Pett
Mining

First there was potash, then oil and now its coal that has investors turning their sights on Saskatchewan.

Take the meteoric rise this week in Saturn Minerals Inc. shares for example. Thanks to the filing of new applications for coal permits in east central Saskatchewan, Saturn stock jumped from 15 cents to 27 1/2 cents Wednesday on volumes over 7-million trades. Then on Thursday it doubled to 55 cents with -- get this -- more than 17 million shares trading hands.

So, why all the fuss? First off, the coal permits filed are in the same area of Goldsource Mines Inc.'s recently announced coal discovery. Shares in Vancouver-based Goldsource shot up last week after the company said that, as part of its ongoing diamond exploration 50 kilometres north of Hudson Bay, Saskatchewan, coal intercepts were encountered in two core holes.

While company representatives stressed that more analysis was required to determine the quality of the coal, early visual indications suggests the coal to be sub-bituminous or bituminous grade as opposed to low grade lignite. In other words, the good stuff when it comes to producing energy. Before the discovery, Goldsource shares were trading at 37 1/2 cents. On Thursday afternoon the stock was at $4.39 and rising.

Overseeing this frenzy of course is the phenomenal rise in coal prices over the past few months. A supply crunch recently drove spot prices above US$300 a tonne, well above last year's benchmark of US$98.

David Pett

http://network.nationalpost.com/np/blogs/tradingdesk/archive/2008/05/02/168277.aspx

Posted by: FranSix at May 3, 2008 8:11 AM [link]

Shell, Repsol seek way out of Iran gas deal

MADRID - European oil groups Royal Dutch Shell and Repsol YPF are under pressure from the United States to end talks with Iran about a multi-billion dollar natural gas deal, the Expansion newspaper reported Saturday.

It said that Russia's Gazprom, Indian Oil Corporation and Chinese groups could be waiting to move in if British-Dutch group Shell and Spain's Repsol pulled out.

http://tinyurl.com/45dvtu

Posted by: jk484 at May 3, 2008 8:13 AM [link]

Google and IBM are bonding in a serious way
PC era fading, cloud computing rising -- watch out, Microsoft?

http://tinyurl.com/6xtp4g

Posted by: jk484 at May 3, 2008 8:13 AM [link]

here is an interesting graphical representation of corporate america: http://blog.kiwitobes.com/?p=57 - A network graph of Corporate America - which claims to show companies that are connected by shared board members through SEC data...

Posted by: sergio at May 3, 2008 8:38 AM [link]

http://tinyurl.com/5srzcm

Have you controlled your risk today?

Posted by: Ron at May 3, 2008 9:42 AM [link]

I was planning a detailed Year (2007) in review report today. Not going to happen as planned because something more important has come up. Not enough time to blog and I think we are at an inflection point here in the market.

Some background: At the end of September 2007 I bailed out of the stock market and have been mostly in cash for six, long, boring months. Had to spend my time reading books recommended by Caraistas and checking out some to the links/web sites mentioned here in this blog. Time well spent to understand myself and how I interface with the decisions I make in this market.

Sitting in cash may not help my returns, but it has certainly been a boon to the bottom line. The one thing I wanted to say that was bad about this blog is that most of the focus for 2007 was on the mining stocks and that struck me when I looked at the stocks I bought last year. Not a complaint as the stocks I held did well for me. What did concern me is that I did not diversify into the five basic sectors of the market. The mining sector is great for big returns and it can also take away your capital in a big way.

When I left the PDAC convention in Toronto, I had a greater fear for the mining sector. To believe that the value of a stock is based on the value of a commodity or the resource in the ground is a false assumption. Just because the price of gold goes up does not make a stock more valuable. What I heard on my way around the convention floor was shocking to me. That the good man who made me take a day's vacation to go on the Monday (to a show that I really did not want to attend because of a lack of interest) saved my bacon. My plan was to start buying in a big way the juniors after the show, as my belief was that there would be good news and hype for stocks at this show. But as I left that Monday, I could only think of the safety of my cash and to not buy any of the juniors on my list. I started writing a report on the show and the more I wrote the more negative I became. Seeing the names of some of the stocks mentioned in the blog and the need to buy by others disturbed me. I kept waiting for some of the other attendees to report back on the show. I kept thinking I must be wrong about the state of affairs in the mining industry. But no one wrote any feedback on what they saw at the show. What I heard from some of the candid conversations I had with the most junior of the miners (and I appreciate how candid the individuals were at the show - one reason I am glad I did not publish the report) was a revelation of difficult times. I looked at the charts of some of these juniors since the date of that show and it is down, down, down to hell for traders. I can only thank whatever compelled me to go to PDAC for this revelation.

But in saying that, I think that a short-term positive up move may be in the works. The Fed coming out and saying that interest rates have bottomed and no further cuts are necessary is a big plus for 'trading' the juniors. We need to see how long the rates stay put. Once the fed moves to raise the rate up by even a quarter percent, then all hell will break loose. This will be the warning shot that inflation is the greater fear. The junior miners, no matter what the hell they are worth, will dance upwards. My plan is to spread my cash into a few juniors with a majority in the major producers. I have mentioned a few of these stocks and some of the other Caraistas have mentioned a number of stocks I think will blast off as well.

We hear mention of the ToG [Trade of a Generation]. My belief is that if we look over our shoulder, the ToG started some time behind us and we are in the early stages of this trade. There will be a series of these trades over the next two years (or whatever the time frame is). Who cares if this Trade is one, two, three, four or five years. And who cares if it is 50%, 100%, 200% or a gazillion%. And who cares if it starts on a Tuesday just after 1:30pm and it lasts until some Thursday at 2:01 am in the morning in another part of the world. Just recognize that it is here and now. And this trade may be broad and long. If we keep it simple and stick to our knitting with Gold and Silver, then we don't have to make it so complicated that we have to wade through the 50 Technical Indicators that everyone wants to shout about in our face. We have the tools, each one of us is smart enough to be our own wizards and we don't need the Gurus, talking heads or bloggers to tell us what, when, where and why to buy. You don't even need me to write this commentary (I need to do it for my own sanity in a strange way - a catharsis). Read the signs. We each have our own roads to travel and we can make it there on our own. I know I am ready. Like Rocky I have been in training here for the last two years. And I have not done the training by paper trading or by day trading. I would say that 97% of the silent majority reading this blog are the moms and pops who want to hold for the ride ahead and who have no interest in the day trading. That is one pet peeve of this blog. There should be a way to separate the day trading and the mom and pop commentary. I sure would not want to be a new reader coming to this blog for the first time and find myself in a whirl-wind of thought and ideas, that are important but would depress and insinuate lunacy of the person.

And Bill keep your head on your shoulders. I have noticed a frustration of other well-known bloggers of the attacks they are suffering form the ill-informed and negative aginers out there. Stick to the message as it is important to remind us that the world has turned upside down and we need to take back any dignity and/or control of our capital (if we ever did have this). And keep your message short during the week. I like it that way. On the weekend, your can do your lesson by example. I enjoy those more than a comment that this stock went up and that stock went down. And I like that I can have a different opinion and still have respect. We are all here to learn from each other and not to 'diss' or 'piss' each other off.

Fear is all around in this market. Keep your head on because after six months of meditating I am going to buy. PDAC showed me that all is not well, but the good players have the companies for us to put our money in and go for the ride. My view is that the ride is going to be short at times and you just have to get back into cash for the next ride. Be glad that you are one of the few in the world that have been given some lessons from the trading wizard. And if the ride turns sour, then sell and take a loss. Stick with the best companies and jockeys. They haven't thrown in the towel and retired to leave us holding the bag. It is not all doom and gloom out there. And I post this more in a selfish way for myself to remind me that I have a responsibility to work hard and make sense of all the crap that the other side had been throwing at me as if they know what is best for me. After two years I know better and I am bitter about the false truths the STREET has fed me for their own enrichment. I hope this revelation gives promise for the generation behind me. Those in their 20's, 30's need this message more than I do. I have done well in this world, and have done more to insure my capital in the last two years. And I can only hope that I am on the road less travelled that paves a way to prosperity of mind, soul and capital.

----
jock: Looks like I will be buying some SEABRIDGE GOLD INC soon (SEA.v - Toronto Venture Exchange). Sellers are loosing control of 'price'. Whereas Vista Gold Corp (VGZ.to - Toronto Stock Exchange) still shows not sign of a buy yet. Sellers are in control of 'price'. But, I will watch this stock as this market can turn on a dime. If the dance picks up to a fast up-tempo, then this stock may just join in for the heck of it. (I am using Technical Analysis and sentiment in my decision-making. Most times I am early to the dance.)
----
kaimu: I bought a very, very, small position back on March 28. I wanted a position so I could have some 'passion' to follow the stock. Sellers are loosing control and I will be buying soon.

Silver and Gold have corrected down and I sense without proof that we could see gold take the lead up and oil take the lead down "short-term".
====
May 2008 is the second anniversary of my joining this Blog. This post is better than the 2007 year in review that I had planned. I need a coffee. Good trading to all. [036]

Posted by: BernardF at May 3, 2008 9:44 AM [link]

watching DGP and using GLD as the gauge; daily stoch rolled up but weekly still pointing down.

Posted by: NYUgrad at May 3, 2008 10:22 AM [link]

I've questioned the connection of the $ to oil for a while. Since the G7 meeting the dollar had firmed and has since climbed a bit. Now, oil dropped this week until Friday. Now, may there be some fall in oil in the future as the Euro and Pound fall against the dollar as it looks they might? Interesting comment from XOM this week after their earnings announcement. They're production is down 5% from last year. That does seem to be the trend among producers, yet we know demand out of the emerging markets (Chindia to be specific) and other producer countries is growing. That would indicate price is more related to S&D than the $.

Posted by: nemo at May 3, 2008 10:28 AM [link]

I am not surprised that the FED continues worrying about the financial system.
I have shown that the Industrial Production Index corresponding to Business Equipment relative to Consumer Goods is about to turn lower creating even more loan problems for the banking system.
See
http://wrahal.blogspot.com/2008/05/business-sector-to-follow-consumer.html

Posted by: Will Rahal at May 3, 2008 11:16 AM [link]

Here is a 2 year chart of the HUI index to date
with my comments. We are at a critical pivot point. Jim Sinclair believes gold's drop will be worked through by the first or second week of May, next weeks price action is critical.

If the gold shares follow the POG upwards on strong volume we may see the return of shares out-performance of the metal.

http://jglobal.blogspot.com

Posted by: dr.cosa at May 3, 2008 11:17 AM [link]

Bernard F - Seabridge, Vista, gold ....

I agree. In a bubbling market, all kinds of juniors could succeed. (McEwan's a star; I'll vote for him, with or without defined resources!) But in a skittish market, it's different.

Let's compare Vista and Seabridge a little further. To succeed, each has to execute well on their strategy:

- Vista must profitably move into production two mines on two continents. Maybe then, the market will acknowledge the value of their 10M oz. measured and indicated.

- Seabridge must sell off a couple of non-core mines, use the proceeds for stock buyback, then conduct an auction between the seniors for their 2 deposits in Canada. Then, the market will have acknowledged the value of their 30M oz. M&I.

While Vista HAS production talent, putting a mine into profitable production is a long, hard slog. Seabridge just has to close a few deals. Before this last PDAC, I wouldn't have been differentiating risk the way I now am.

And I think when investors come back to the juniors, they'll also have more in mind minimizing risk than maximizing "blue sky".

I did just buy McEwan's UXG - but only a bit, and only because price was below its weekly Bollinger Band.

Posted by: Jock at May 3, 2008 11:47 AM [link]

Thanks Bill!

As we called it last weekend the Dow reached the sma200 target and the S&P 500 is lagging behind but ready to tag it’s sma200 next week. Overall the upward trend is appearing to be a bit tired. We would expect to see some consolidation next week, even some possible testing of supports, as this market refuels for more upside to come in the coming weeks.

Breadth for the market overall last week was in the range of +25% which is fairly strong. This week the broadest based buying (on a percentage basis) was in Transportation, Semiconductors, Utilities, Financials and Pharmaceuticals among many others. The broadest based selling was in Tobacco, Materials, Energy and Oil.

Our FREE report will give you all the detail you need.

Good Trading All…
Ralph
http://successfulonlinetrading.com/blogs

Posted by: RalphSE at May 3, 2008 11:55 AM [link]

kaimu: "I bought a very, very, small position back on March 28."

Would help if I mentioned the stock was GIX.v (Canadian venture exchange) GEOLOGIX EXPLORATIONS INC. [037]

Posted by: BernardF at May 3, 2008 11:57 AM [link]

Jock: (for some reason I keep using the lower case j) Thanks, appreciate the extra leg-work you do in your stock analysis. It helps others do their DD (Due Diligence) in the stocks mentioned in the Blog.

I 'second' your buy on UXG - I use Bollinger Bands but as a complementary indicator to MACD. I will look at the chart as I want to add to my small position on any comfirmation gold is going up. [038]

Posted by: BernardF at May 3, 2008 12:09 PM [link]

jock,

not sure if you got my email from last week,
ive been having account problems,

re: junior project updates,

you can get me at borsatoj at hotmail.com
if you need any help at this point.

thx

Posted by: dr.cosa at May 3, 2008 12:43 PM [link]

Re: Precious Metals Junior Entry Points

I hit upon a way of looking at possible precious metals junior entry points using the Monthly chart. This is a price-determined method, so any stock you buy must have all of the basics.

1. Drill results pending for May

2. Should be trading under NAV (10% of the estimated value of the precious metals in the ground. Depending on the region, it could be as high as $70 - $100/oz. for gold.)

3. Nicely indexed against the silver/gold ratio, trading below $CDNX.

4. Not on the downside of a large speculative run-up.

5. Good investor participation in the stock, especially funds and investors which participate in that sector.

6. Insider buying.

7. Stock should be in a very serious correction since the last high some time ago. Avoid 'market darlings.' Hold your nose if your going to buy a dog.

8. Trading below both the 50-day and 200-day MA.

As long as the fundamentals are solidly in place, then risk is reduced. There are a few of these hiding around.

So here's my rule of thumb. Take the Monthly chart of the stock and draw a fibonnaci retracement over it starting with the last peak value. Since these stocks are assumed to have zero value ignoring metal in the ground, then use ZERO as your end point. This will give you a way of assessing where the decline may stop, especially if the price had registered at the 38% retracement level.

Here is an example of what I'm talking about. ICI.TO is a great stock with a good prospect in China. I missed many entry points, but kept watching it. I believe it has seen the highs and will retrace, so I placed a fibonnaci overlay using my method of assuming ZERO as the ultimate endpoint of the correction:

stockcharts.com ICI.TO:

http://tinyurl.com/6xlvg6

Even by the monthly chart, you can see that the eventuality is that a cheaper stock can be bought without having to rush in, though developments may change that this year. Its always been the case with ICI.TO to not have a clue where the price might be given that its not indexed to gold, silver/gold ratio, or the CDNX.

Posted by: FranSix at May 3, 2008 1:00 PM [link]

unfortunately, bad news for bears from colin twiggs:

http://tinyurl.com/54qccl

looks like Vad and vinod were right...that limits my longer-term trades to shorting bonds...

Posted by: 2nd_ave at May 3, 2008 2:06 PM [link]

i like the quote at the bottom of twiggs' diary also:

Life is a school of probability.

~ Walter Bagehot

Posted by: 2nd_ave at May 3, 2008 2:08 PM [link]

Re: Vista Gold

Vista Gold seems like a great junior to get involved in. My only real concern are the low grades of the deposits.

There's more gold in the ground in large, low grade deposits than the higher grade kind. Its a rare metal that people desire to see in very large deposits, but in the main its a rare element and its frequency of occurrence in the earth's crust, that means its ECONOMIC extraction can only be feasible and sustainable with a decent grade. Most people don't get this, and will buy into large deposits without considering the grade, because the numbers just look so damn good.

There is also the upfront development costs which I would presume to be pricing in to the stock.

It is trading far below its 38% retracement, even if you take into account a theoretical zero value limit. A buy here, but this company is long past its exploration upside. I like it because they kept their float very tight throughout the exploration phase. But this is no longer a speculator's stock as the exploration phase is probably over.

stockcharts.com

http://tinyurl.com/3l9d3v

Re: Seabridge

You're not going to like what I have to say.

Seabridge is one of a few companies with a very similar profile in Northern B.C. and Alaska. Should any company in this region come under environmental review, then it will jeopardize all of the others.

They are very large COPPER/Gold porphyry deposits. They tend to be very large, low grade deposits. Gold is not the primary asset here. It only comes out of the ground as part of the COPPER MINE. So these kind of deposits are actually a large scale PRIMARY COPPER PLAY.

The warning on these mining plays so far is developmental cost, environmental concerns, and the capacity for COPPER to retain its notional value in any correction. Should all equity and commodity prices correct like the housing market, then consider whether the COPPER operation is feasible with a substantial cut to the copper price.

Very hard to predict also is the effect of currency on profit. For instance, if the dollar collapses, and your costs are in $C, then this will eat into the nominal cost of operation.

The grade of COPPER has to be high enough so that the IRR is not sensitive to a base case scenario of a sharp decline in COPPER prices.

Please be reminded that companies like Seabridge and Vista will have seen their speculative phase and have had their respective run-ups.

Will welcome any comments!

Posted by: FranSix at May 3, 2008 2:29 PM [link]

Hi,

I am long gold at 856 spot since Friday, with stop at 940 spot, expecting a price rally due to oversold conditions and short covering.

The chosen vehicle was Dec 08 Call warrants with strike 850.

Cheers!

Posted by: maromatics at May 3, 2008 3:08 PM [link]

Mistake: my mental stop is 840, of course. Please excuse the typo.

Posted by: maromatics at May 3, 2008 3:09 PM [link]

F-6: Seabridge gold/copper, environmental

Per my write-up, "Seabridge's largest deposit (KSM with 19M oz. M&I, and 14M oz. indicated) is 100 kms. from Galore in N.W. British Columbia. Also low-grade, high-tonnage, it is often compared to Galore. However, KSM revenues will be 75% gold, 25% copper, Mr. Fronk notes, the near inverse of
Galore. KSM's economics, he maintains, are incomparably better."

Fronk also maintained that KSM was in good shape vs. Galore on environmental permitting. He said Galore and other large deposits nearby would involve Alaska and thus US regulators, while KSM's (he maintained) involved only BC regulators.

I agree that neither Vista (cap $121M) nor Seabridge (cap $779M) offer the huge upside potential of a greenfields explorer, but nor do they involve the level of risk.

FWIW

Posted by: Jock at May 3, 2008 3:22 PM [link]

Thank you Jock.

I just want to point out that under no circumstances is a 1/2g/t gold deposit containing 50m oz. in anyone's interest to develop, nor can they defend any remediation plan after the hole is dug, 'cause it'll be visible from the moon.

People are just all greedy and googly-eyed over the 50m. oz. Well, the entire earth, if it were run through a crushing mill and leached on the moon would produce billions of oz. How about that?

You have to remember that the constituency in B.C. is thoroughly pro-business, but anti-mining and anti-forestry. The middle class considers its responsibility to take on the resource industry and the enfant terrible of the B.C. economy. Politics will be the key. B.C. was one of the last frontiers and the native population are co-directing provincial politics and have huge interests in remote locations.

The main risk here, is not whether politics are favourable, or the gold is there, but CURRENCY RISK.

Posted by: FranSix at May 3, 2008 3:33 PM [link]

Jock,
Where does a company like KRY and GRZ go from here? With no permits, KRY especially has no income stream in the future outlook. They make very little from the current production. Maybe they can settle for a return on the dollar for current investment in Venezuela. Then what? I believe that they just recieved 60 million from the last placement. What can they do with that? Can they re-invent themselves in other safer countries? Or do they go under? I direct this to you since you seem to have Latin American business dealings.

Posted by: stktrader at May 3, 2008 4:16 PM [link]

Here's a good article by Addision Wiggins of the Daily Reckoning 5/1/08 on the Dollar Demise. I think it may be of interest to most Caraistas

HOW TO SELL THE DOLLAR, PART II
by Addison Wiggin

Seeking to spur the economy to growth, the Fed and the Treasury have been actively devaluing the dollar. Many dubious excuses are given – protecting American exports, saving jobs, preventing deflation, for instance – but there is no question that Capitol Hill is actively engineering the dollar’s demise: 18 rate cuts since 2001, three tax cuts, massive deficits, and record money creation bear cold witness to its manipulations.

You don’t spend your way to prosperity; no nation ever has or ever will. But guess what? That very idea is the basis of U.S. and Fed monetary policy. Never in U.S. history have the imbalances in the economy been so pronounced, or so dangerous. “My experience as an emerging markets analyst in the 1990s taught me to be on the lookout for signs of financial vulnerability,” observed analyst Hernando Cortina in a Morgan Stanley research note. [The signs] include ballooning current-account and fiscal deficits, overvalued currencies, dependence on foreign portfolio flows, optimistic stock market valuations coupled with murky earnings, questionable corporate governance, and acrimonious political landscapes. Any one of these signals in an emerging market usually raises a red flag, and a market that combines all of them is almost surely best avoided or at least underweighted. I didn’t imagine back then that one day these indicators would all be flashing red for the world’s biggest and most important market – the U.S. A by-the-numbers analysis of America’s macro accounts in a global context doesn’t paint a flattering picture.”

Yet for growth-starved financial markets, perceptions and hope are often more important than economic reality. According to the macro indicators that the International Monetary Fund (IMF) uses to assess emerging-market economies, the United States fell between Turkey and Brazil.

Hernando Cortina politely concluded: “Investors contemplating the purchase of U.S. dollar-denominated assets would be wise to factor in significant dollar depreciation over the next few years.”

“Households have been on a borrowing spree,” added Northern Trust economist Asha Bangalore. Household borrowing as a percentage of disposable personal income hit a new high of 12.4 percent in the second quarter of 2003. This measure of household borrowing reflects mortgage borrowing, credit card borrowing, borrowing from banks, and the like.

Household borrowing is not only at a record high but a new aspect has emerged – household borrowing advanced during the recession unlike in every other postwar recession when households reduced borrowing. The good news is that consumer demand continues to advance with the support from borrowing.

The bad news is that no economy has ever borrowed its way to prosperity. Despite the conspiracy against it, the dollar has avoided a downright free fall. That’s because dollar investors across the globe are still convinced that, given favorable credit conditions, the U.S. economy will surely reenter the heyday of the late 1990s, taking dollar – denominated assets to new heights. But someday soon, we think, investors will be disabused of their illusions. Sure, the stock market rallied briskly in the recent past, but the U.S. economy continues to struggle. Unemployment persists. And the twin deficits loom larger and larger. If and when America’s creditors – domestic and foreign – decide the country’s massive, record-breaking level of debt is reason enough to get out of their dollar investments, the dollar will have nowhere to go but down, precipitously.

We don’t know when the exact moment of truth will arrive, but we know it cannot be far off. Excessive debt is not the only ominous development in the U.S. economy. Just as foreboding is the American consumers’persistent belief that they are wealthier than they actually are. U.S. financial assets are, once again, in the grip of a large bubble. Take stocks, for instance: It may not be 1999, but investors are sure partying as if it were. If the S & P 500 – an index made up of the country’s largest companies – were to trade at its historical fair value, or at a price-earnings (P/E) ratio of 15, it would have to decline by 50 percent off its high. But bull markets don’t typically start at fair value. If a new bull market were really starting – and stocks were actually undervalued – the S & P would be trading 67 percent lower, at a P/E of 10. But it’s been so long since investors have seen P/E ratios in this range, they seem to believe stocks will never descend from their lofty heights.

The U.S. stock market is once again in the grip of a bubble. The Fed’s frantic reflation campaign, government’s tax cuts, and easy credit have worked their way into stocks, causing the market to burgeon and billow outward in a way completely dissociated from any real measure of value.

In fact, the rally in stocks has been so strong that it has rekindled investors’belief in a new bull market, full economic recovery in the United States, and a return to the glory days of the 1990s. But a funny thing has started to happen. The U.S. stock market is soaring. Normally, that means the dollar would go with it; when a country’s stock market goes up, demand for its financial assets usually goes up, too. But the dollar is being dragged down by debt – government debt, personal debt, and corporate debt. Investors want a bull market, and so they’re making one. But the dollar reflects the real state of the American economy...and it knows better.

Foreign investors are especially burned when stocks and the dollar part company. At first blush, the rallying U.S. stock market seems like a very inviting place for their capital. All denominations are welcome, but not all guests are treated equally well. For example, the S & P 500 soared 26.4 percent in 2004, in U.S. dollar terms. Yet euro – based investors in U.S. stocks would have realized only a 6 percent gain for the year.

Foreign bondholders are faring no better. Foreign central bank holdings of Treasury and agency securities total over $ 1 trillion. So, roughly speaking, every 10 percent drop in the dollar’s value impoverishes our foreign creditors by about $ 100 billion on their U.S. Treasury holdings alone! That’s real money.

How is it possible that stocks continue their winning ways, even while the dollar continues its losing ways? These two inimical trends are strange bedfellows indeed. What makes the pairing particularly bizarre is the fact that our nation relies so heavily upon the enthusiasm of foreign investors for U.S. assets. What is the Fed doing, and why? One writer has pegged the answer:

“The Federal Reserve Board is working to raise the inflation rate, while the U.S. Treasury is trying to talk down the dollar exchange rate. Not every day does the world’s hegemonic power pursue a policy of currency debasement. Still less frequently does it have the courtesy to tell its creditors what it’s doing to them.”

Indeed. The Fed and Treasury are engaged in a kind of collusion to lower the dollar’s value. And that’s a very dangerous game to play, especially for a country like the United States, which relies so heavily upon foreign capital to finance its economy. It has become fashionable in the corridors of power in Washington to advocate “market-based” exchange rates – code for “weak dollar.” A weak dollar, it is widely believed, will lead to a strong economy. Hmm.

In the olden days, of course, the Fed was supposed to pursue “monetary stability.” But in the enlightened twenty-first century, the Fed has much grander designs. It imagines itself a kind of marionette master to the world’s largest economy, making it dance whenever it wishes, simply by tugging on one little interest rate, or by tugging on the dollar. And so it tugs, and tugs, hoping to revive the economy.

The U.S. Treasury Department is also conspiring with the Fed to weaken the dollar. Hasn’t Treasury Secretary Snow touted the weak dollar as a surefire cure for the struggling U.S. manufacturing sector?

And hasn’t the dollar been tumbling? And yet, isn’t the manufacturing sector struggling just as much as it was when the price of a euro was only 83 cents, instead of $ 1.25? It’s obvious to almost every citizen who does not live in Washington, D.C., that devaluing the dollar to stimulate economic growth is a fool’s mission. A couple of years ago, 255 dollar bills purchased one ounce of gold. Today, an ounce of gold costs more than 400 dollar bills. And on the day that an ounce of gold costs 1,000 dollar bills, our manufacturers will have become so competitive that they will be exporting firecrackers to the Chinese, or so the gang on Capitol Hill believes. But in fact, we will all be poorer for embracing the idiocy of “competitive devaluations.” The problem is, once a devaluation trend begins, it is almost impossible to stop.

The solution comes from repositioning, and the best cues for when, how, and where are found in the gold market – which prospers during times of geopolitical uncertainty and traditionally rises in value when the dollar falls. The gold price has jumped 367 percent from April 2001 to January 2008, from $ 255 to $ 936. The metal’s impressive rise inspired a dramatic rally in gold shares that has vaulted the XAU Index of gold stocks to an all-time high of $197.3 on January 14, 2008.

What does the gold market know? That the Fed’s reflation campaign will succeed too well? A little bit of inflation – like a little wildfire – is a difficult thing to contain. And the gold market seems to have caught a whiff of inflationary smoke.

Or does the gold market know that Iraq will continue to serve as a breeding ground for terrorists and a habitat for anti-American terrorist acts? As the Iraq situation continues, the dollar will suffer...a lot. Or maybe the gold market knows only that U.S. financial assets are very expensive, and worries, therefore, that U.S. stocks selling for 35 times earnings and U.S. bonds yielding 4.5 percent are all too pricey for risk-averse investors to own in large quantities. A vicious cycle is hard to stop. The dollar’s descent is the most worrisome – and influential – trend in the financial markets today. And yet, as long as Cisco is “breaking out to the upside,” few investors seem to care about the dollar’s slide into the dustbin of monetary history. The dollar’ s demise is not inevitable, just highly likely.

When a currency falls, in theory anyway, interest rates usually rise. A government whose currency is falling apart tries to make assets denominated in that currency more attractive by paying higher rates of interest to potential investors. And if the government doesn’t raise rates, the market will do it by selling off bonds and driving yields up. And so, in theory, you would normally expect to see a falling U.S. dollar accompanied by rising U.S. interest rates. The difficulty from the Bush/Greenspan/Bernanke perspective is that rising long-term rates pose an enormous problem: They make it significantly more expensive for debtors – from U.S. consumers to the U.S. government – to service their obligations. And these costs are not negligible.

In fiscal year 2007, for example, the government was obliged to pay out a whopping $ 429 billion in interest expense on the public debt outstanding. At a 1 percent rise in interest rates, that would add $ 43 billion in interest expense. And to meet this added interest expense, the government would, of course, have to float even more bonds, and at the higher interest rate.

This scenario is the government’s nightmare. When the falling dollar eventually pushes interest rates up, the Treasury will have to issue more debt at higher interest rates simply to pay off its existing debt. But if the Asian economic juggernaut were to discontinue recycling its excess dollars into U.S. government bonds and Fannie Mae debt, the dollar would suffer mightily. How much longer until our luck runs out?

In some way, shape, or form foreigners lend our consumption-crazed nation $ 1 trillion every year. We Americans, in turn, use the money they send our way to buy SUVs, plasma TVs, and costly military campaigns in distant lands. However, we do not forget to repay our creditors with ever-cheaper dollars. Someday soon, foreigners must lose interest in subsidizing our consumption habit. That the dollar’s decline comes at the urging of the same nation that prints the things is an irony that is not lost on the world’s largest dollar holders. Reading the tea leaves, many Asian central banks are still exploring ways to lighten up on their U.S. dollar holdings.

“The Chinese aren’t lapping up our Treasury paper for its great investment attributes,” writes Stephanie Pomboy of MacroMavens, “but [rather] because of a mechanical need to maintain the yuan/dollar peg.”

The dollar is a currency fated to tumble. The dollar’s resistance to its debt load, fueled by the machinations of central banks and the misguided faith of dollar investors, undoubtedly qualifies as a trend whose premise is false. Sometime soon this trend will be discredited.

Regards,

Addison Wiggin

Posted by: astral25 at May 3, 2008 4:21 PM [link]

Financial are moving higher and we were wondering why?
Fundamental are bad but they were moving higher

Now we know why, fed were injecting massive liquidity in the market
And HB&B new about fed action and we knew later on from news

How do we play market if it is being manipulated?
Same way I think GOLD price also being manipulated, it started going down after G7 meeting in Washington. And also it looks like they decided to pop up dollar at G7
Otherwise if FED cut rate and dollar goes up never happens

For some reason more oil is going in government reserve even price is at sky high
If they stop oil going in reserve temporarily, oil price will crash

In this situation how do we play market if it moves up and down is not base on fundamental and free market economy?

Posted by: vinod at May 3, 2008 4:54 PM [link]

vinod:

You asked "In this situation how do we play market if it moves up and down is not base on fundamental and free market economy?"

When is the market movement in the short term based on fundamentals? If there are more buyers than sellers in a given day, the market moves up.

Posted by: Teich at May 3, 2008 6:05 PM [link]

Below is a commentary on gold from Frank Holmes, CEO and chief investment officer of US Global Investors (GROW), and John Derrick, director of research.

****

The price of gold has corrected by close to 20 percent since peaking on March 17. If you have been listening to the popular press and business TV, you may be convinced that the gold and commodity "bubbles" have popped.

Once you back away from the day-to-day noise and put things into perspective, we believe this correction in gold, while painful in the short term, is just another pause in a long-term secular bull market. As it has been said, bull markets climb a wall of worry.

Over the past year, gold bottomed around $640 per ounce in late June. As the financial crisis unfolded, it staged a spectacular rally, surging more than 60 percent to $1,032. Gold has since pulled back, but given that the long-term fundamentals remain intact, we believe it is setting the stage for the next leg up.

Here are some of the reasons why:

Negative real interest rates

The macro environment for gold is still supportive based on negative real interest rates. The one-year Treasury bill is offering just 2 percent, while the official inflation rate is around 4 percent.

Negative interest rates make gold look more attractive compared with other safe investment alternatives, such as T-bills and certificates of deposit.

We believe the Federal Reserve will keep interest rates below the rate of nominal economic growth in order to support a fragile economy in an election year.

Negative real rates between mid-2001 and spring 2005 powered gold’s biggest bull run in decades, with prices rising from $255 to $455 per ounce.

Real inflation is underreported

The official inflation rate is around 4 percent, but when you include the rapidly rising prices for food and energy and understated housing costs, the real inflation rate is even higher.

One of the best ways to protect yourself against inflation is to participate in it by investing in commodities such as oil and agricultural products. Historically, gold also has proven to be a viable hedge against rising inflation because it maintains its purchasing power.

We agree with those who estimate that the actual inflation rate is close to double digits due to the Fed’s massive injection of new money into the economy to avert a recession. MZM (money zero maturity), the amount of money in the economy that’s easily accessible for spending, is up 15 percent compared with the same time last year.

ETF redemptions

The current correction in gold has been led by sizable ETF redemptions.

The StreetTracks Gold Shares ETF (ticker GLD) lost 1.3 million ounces of gold over the past two weeks, with nearly a third of that amount being redeemed this Tuesday alone. This may mark the first-ever ETF-led gold correction.

This correction is not surprising, given the strong acceleration in the first quarter of 2008 and typical seasonal trends. Some short-term profit-taking is likely, along with speculation that prospects have improved in financials and technology.

But in our opinion, this move out of gold is not indicative of the smart money, as momentum investors chased performance on the way up. The price action appears to be signaling a rotation from weak gold holders, perhaps back into the broader equity market.

Other factors

On top of the factors above, there are other fundamental factors that we believe will drive the price of gold higher over the longer term.

Declining output from existing mines, particularly in South Africa, and a virtual absence of large new discoveries will reduce the supply of gold available in the market.

At the same time that gold supply is falling, demand is increasing due to rising wealth levels in China, India and other nations with cultural affinity for gold.

In addition, history suggests that jewelry demand, which fell off when gold surpassed the $1,000 mark, is likely to pick up again during a gold-price retrenchment.

It’s easy for investors to get swept up in the emotion of a strong rally or a significant correction. In these volatile times, we suggest that investors protect themselves from suboptimal decision-making by not losing sight of their long-term asset allocation strategy.

****

DavidV

Posted by: David at May 3, 2008 6:26 PM [link]

What is the Feds balance sheet and since it is a government entity what does its condition really mater?

I have been asking myself this question for the last few weeks, ever since Bill made mention of the Feds balance sheet (I had never thought of the Fed in balance sheet terms before).

The issue can be discussed in philosophical terms, but in reality what does it affect.

mlg

Posted by: gademsky at May 3, 2008 6:27 PM [link]

Re: POG forecast

I always take a peek at now and futures.com for their gold price forecast:

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

Posted by: FranSix at May 3, 2008 7:03 PM [link]

FranSix,

I understand what you are getting at when describing an open pit operation at 1/2 g/ton gold can be seen from the moon but think that is rather inflamatory. I thoroughly agree that the idea of opening an operating mine at that grade is just not in the cards, BC or elsewhere in the current economic climate.

You are painting BC with a very broad brush, one that I do not entirely agree with. Politics will rule the roost there, agreed. The first nations are very much pro development and are proactively involved. It is the NDP that are easily lobbyed into hyper conservative stances i.e.: the pulling of exploration permits in the 80's after granting them.

I have worked in the mining industry in BC and have acquaintences who have just recently negotiated permitting and Impact benefits agreements with the local First Nations government for an open pit copper development in northern BC.

Posted by: rugger09 at May 3, 2008 7:44 PM [link]

As long as sustainable methods are used, I don't see what the problem is.

The NDP can't be held solely responsible, they were acting on their constituents, not out of fiat. The mining industry got a needed boost when they were voted out. But then again, the Liberals placed a moratorium on uranium, and they're the old corrupt conservative socreds.

The economy in B.C. needs a way to be less dependant on resource extraction and more focussed on value added industry. Any recession and the incumbent party is saddled with the failures of the resource industry to survive the downturns.

I think that kind of outlook would suit just about all of Canada.

That's why I think its very important to due diligence the economic fundamentals rather than following investments which have seen their heyday and made great investments perhaps 6 years ago.

Posted by: FranSix at May 3, 2008 8:16 PM [link]

I laughed hard at: "and they are the old corrupt conservative socreds." So true.

My view on the wheels of an economy is one of balance. You need natural resources to form the base of real wealth generation which then supports heavy and light indusrty which then supports the services. Intertwined in all that is the financial industry (insert "bloodsucking" where you see fit).

One quote that I must reiterate: If it cannot be mined, it must be grown.

Now, I must get something to eat and watch my Flyers mop up the Habs!

Enjoy the rest of the weekend. I'm working in a mining camp in the middle of the arctic away from family but the weather is absolutely stunningly beautiful today.

Cheers

Posted by: rugger09 at May 3, 2008 8:53 PM [link]

RE: Collin Twiggs' logic that a DOW breakout above 13000 implies a move toward 14000.

2nd_ave: didn’t you say that when everyone gets convinced that this rally is “real”, THAT’s when the sell-off will start? Isn’t a breakout above 13000 supposed to convince everyone that this rally is real?

What do others think?

DavidV

Posted by: David at May 3, 2008 9:29 PM [link]

Re. the comments by Mr. Holmes, posted by David Re. ETF redemptions. Those arguments and similar conspiracies have been posted several times here before. What makes people believe that the price of gold is declining because the ETFs are being sold? If the price of gold declines, a natural consequence is for ETF holders to starts cashing in locking their profits, and/or selling their holdings and avoiding further losses.

Posted by: SiO2 at May 3, 2008 9:45 PM [link]

stktrader - KRY, GRZ

As Bill pointed out many times, KRY didn't seem a serious player once Todd Bruce left. Their VP/IR was NOT convincing about how they were playng their hand.

GRZ, by contrast, seemed to have played the political game well, for example, agreeing (unlike KRY) to gov't. requests to process copper from their deposit, and to share infrastructure with KRY.

So, I was disappointed today to read in tradingmarkets.com, " 'It's all very confusing,' said Doug Belanger, Gold Reserve's president.
Company officials have discussed the situation with Venezuelan officials by phone, but they are awaiting more details in the formal notification, Belanger said."

That's not how you handle bet-your-company projects in Latin America. You have to be high-touch, staying close to those who will decide your fate. I expected GRZ would have well-connected senior people on the ground, would have heard in advance, and fixed things before anything came public. The minute ANYTHING seemed awry, Belanger should have been on a plane to Caracas.

Both companies seemed caught flat-footed. Unless GRZ can overturn their decision right away (unlikely)their stock will probably be at best dead money.

I think Valgold has been smarter about gov't relations (their largest shareholder is Gustavo Cisneros, VZ media barron and richest man). Half their land is in Guyana - diversifying risk.

At some point, las Brisas and las Cristinas will be developed, probably by a company close to the gov't.

Maybe Rusoro? - majority-owned by a Russian group, with 6 years experience in VZ, and operators of the Chaco 10 mine, bought from Goldfields. A possible stalking horse for Russia's Polyus?

Who knows? I'll watch the chart of VAL.V, RML.V - patiently.

Posted by: Jock at May 3, 2008 11:01 PM [link]

Buffett spills the beans in this article. He pretty much admits that JPM had to takeover Bear or else they would go down.

You really realize who the regulatory bodies work for when they allow banks and brokerages to have such a tight alliance or "monopoly" if you will that if one small one should fail it would compromise the entire financial system.

You would think in a country of 250Million people we would have a banking system that wasn't so weak and compromised, even after the FED had pumped 600B+ into the banking system, while they have been raising mortgage and credit card rates on us. Aren't they making enough money yet?

How much do they need?? Likely an endless amount.

http://tinyurl.com/6l2f5v

"Buffett, 77, said he was contacted in March before JPMorgan, the third-biggest U.S. bank by assets, agreed to buy Bear Stearns. The person calling him, whom he wouldn't identify, was ``someone responsible'' and wasn't from the Federal Reserve or the Treasury. The call lasted about half an hour, Buffett said.

Too Big for Buffett

``As I understand it, Bear Stearns had $65 billion due on Monday and I didn't have $65 billion,'' Buffett said. ``I couldn't get my mind around that situation in the required time.'' New York-based JPMorgan was the right buyer for Bear Stearns, he added.

Berkshire had about $35 billion in cash as of March 31, according to a regulatory filing yesterday. "

Rob.

Posted by: Finger Lakes at May 4, 2008 1:37 AM [link]

Gademsky,
The FED is literally a private corporation of bankers that regulate the other bankers with the government's approval.

Congress has also given the FED many other responsibilities outlined in the constitution to be decided only by Congress. But Election concerns trumped responsibility which makes the FED easy to Blame, even while the FED is executing Congress's plan.

Rob.

Posted by: Finger Lakes at May 4, 2008 1:48 AM [link]

The abbreviation for the Federal Reserve is "the Fed", with the lower case "e" and "d".

http://en.wikipedia.org/wiki/Federal_Reserve_System

Posted by: Teich at May 4, 2008 2:58 AM [link]

maromatics:

This past week (or more?) my financial path seemed to be wandering without your helpful postings. I feel grounded now that your 3:08PM contribution has been digested notwithstanding our teacher’s well deserved vacation, relocation, and other distracting activities removing him from the daily rigors of direction he once provided during the course of NY market action.

Posted by: C.Note at May 4, 2008 7:13 AM [link]

http://tinyurl.com/52m8et

Jerry's Skids and More (daily charts of the monthly oversold CARA 100 stocks)

Posted by: Ron at May 4, 2008 7:28 AM [link]

Besides "buy low and sell high" few other axioms are more widely propagated than "sell in May and go away". This blog post investigates whether this axiom actually has any scientific basis at all.

The URL is: http://tinyurl.com/4cu2vy

Posted by: prieur at May 4, 2008 8:42 AM [link]

ALOHA !!

F6 ... The N&F Chart you posted shows the "override" which corresponds to the various bank meltdowns since Aug 2007 to March 2008. In essence you can translate the chart by saying that the chart is expecting renewed "override" to propel the POG near $1200USD. That means some sort of major financial disaster is coming, which is why the PPT has taken the POG down. Everytime a major move down in gold occurs some financial sector negative surfaces later. All this verifies is that, as Bill says, the FED(a group of private banks)are illegal "inside traders"!

It is amazing that even with the big US Bank HB&B huge advantage of being "inside traders" with their King Paulson sitting at the helm of the US Treasury that these guys can't live off their double and triple digit $million bonuses. They have to get even more greedy and create derivatives so they can leverage RISK to the inifinite degree. Now think in terms of the US government and all the US State governments. I especially focus on California since I lived there for so long. We are being taxed at the highest rate ever in our history as a Nation and yet still these governments are constantly broke and constantly raising the debt ceiling while asking for more and more tax revenues! There is NEVER enough money for these people we elect into power ... Therein lies the BIG flaw in the fiat monetary system.. It is the HUMAN CONDITION ... We are now witnessing how a Nation acts when there are no brakes on spending and debt! A gold based monetary system supplies the brakes needed to "override" the basic human condition of "fear"! Isn't it "fear" that drives the emotional insecurity of feeling you will "never have enough"? Fear drives one to all sorts of insecure behavior like hoarding rice or buying the top of the line BMW or invading Iraq! What is it the Buddhists say "Life is suffering"? Yes, it is suffering ... suffering through the many pains of being human! Why do we US Taxpayers make our lives much more sufferable than it needs to be by continuously voting into power the most insecure people on the Planet? You can tell a politician is insecure by one simple test. DO THEY EXPAND GOVERNMENT? So far every one of the three major Presidential 2008 contenders have a track record of GOVERNEMNT EXPANSION ... Only one has a track record and ran on a platform of SHRINKING GOVERNMENT ... RON PAUL!

YOU GET WHAT YOU VOTE FOR !!!

Posted by: kaimu at May 4, 2008 9:13 AM [link]

ALOHA !!

ON BUFFET
Warren Buffet ... "The worst of the crisis in Wall Street is over,'' Buffett said today on Bloomberg Television. ``In terms of people with individual mortgages, there's a lot of pain left to come.''

Of course the stock market will LOVE THAT come Monday morning!!! The "Oracle" has spoken ... but I doubt that is true and I wonder who paid him to say that? If according to the BIS there were less derivatives left to unwind than there were in August 2007 then I would agree with Buffet! But there's more not less ...

How can there ever be a crisis for Wall Street banks when they have the "lender of last resort" backing them ... the US TAXPAYER?

No need to hedge the US Peso he says so long as you buy foreign companies. Did the IMF pay him to say that? Well, how do you hedge the Euro then? Buy a Japanese company? Then how do you hedge the Yen? Buy a Brazilian company? How do you hedge the Real? Buy a Chinese company? With a global fiat monetary system its just a big game of Russian Roulette ... How do you hedge "fiat" Warren?

Posted by: kaimu at May 4, 2008 9:43 AM [link]

JPMorgan says no near end to financial crisis: report

JPMorgan Chase & Co does not expect the U.S. financial crisis to end soon and will remain very cautious, its top executive said in comments published by a German weekly on Saturday.

http://www.reuters.com/article/ousiv/idUSL0353675920080503

Posted by: jk484 at May 4, 2008 10:05 AM [link]

Book:

In the Last Gilded Age, People Stood Up to Greed -- Why Aren’t We?

Mark Twain would feel right at home today. Crony capitalism, the main object of his satirical wit in The Gilded Age, is thriving. Incestuous plots as outsized as the one in which the Union Pacific Railroad's chief investors conspired with a wagon-load of government officials, including Ulysses S. Grant's vice president, to loot the federal treasury once again lubricate the machinery of public policy-making. A cronyism that would have been familiar to Twain has made the wheels go round in these terminal years of the Bush administration. Even the invasion and decimation of Iraq was conceived and carried out as an exercise in grand-strategic cronyism; call it cronyism with a vengeance. All of this has been going on since Ronald Reagan brought back morning to America.

http://www.alternet.org/workplace/83668/

Posted by: jk484 at May 4, 2008 10:06 AM [link]

Bill - Your words: “ ... your broker-dealer is part of the central bank-HB&B network. They know your orders, they know your financial resources; they know your trading style; and, sadly, they – your trusted advisors – trade against you. They continuously create bursts of volatility to shake out stop positions. They do it to take your money to put into their pockets.”

I ran across this chart (hrly) yesterday and started to post it but couldn’t find the words to describe what the chart showed. You did, and, here is another of your “proofs of concept”.

Clorox (CLX) hourly for Friday. Looks to me like a fairly blatant use of pre-open knowledge of where the stops were located and then a strong squeeze to follow. Nice $5 up move ($5mil for each 5mil shares). Spending money to go to the Hamptons for the select few in the room.
http://tinyurl.com/5p675x

Posted by: spot at May 4, 2008 10:20 AM [link]

Bill,

This is none of my business of course, but I fail to appreciate, on it's face, the idea of staying in Canada in the winter and the Bahamas in the summer months. I would have imagined you'd do it the other way 'round.

Happy travels anyway.....

[Bill Cara note: Sharkie, I understand you go to the library when you have to. I ask no questions, and just assume you know what you are doing.

btw, Bahamas is beautiful any time of the year -- a little too humid for many visitors in the "rainy season", which starts in mid-May. Not that it's rainy -- just humid, like south Florida. But I'll tell you, coming into Nassau today on the plane, there should have been a local camera crew. It was a gorgeous day and the oohs and the aahs of the rubber-neckers craning to see the magnificent colors of the waters below was truly an endorsement of this place.

When I brought the world famous architect here to re-do the British Colonial hotel in the mid-90's, I chartered a small plane for a day, taking he and I just a few hundred feet above the water to the Out Islands and back -- Staniel Cay (Exumas) for lunch at the SCYC and Harbour Island (north Eleuthera) for dinner at Pink Sands. He said to me, wide-eyed at the water below -- I have built huge buildings all over the world and I have never seen anything so beautiful. He agreed to do the job.

But, I told him in reply, "Michael, the astronauts have never seen anything like this. There is nothing like it in the world."

Ask any yachter who goes to the Caribbean and back, where their favorite place happens to be, and the answer is likely to be the northern Exumas, just 75-125 miles southeast of Nassau.

When I landed today, it was probably my 150th time here in the 41 years I have been coming. I can go anywhere, winter or summer, and I always come here. But, The Bahamas isn't one square mile of casino-centred Paradise Island; it is 100,000 square miles of hundreds of beautiful islands, many of which have distinctly different cultures and history. The place is a treasure trove.]

Posted by: shark_attack at May 4, 2008 11:34 AM [link]

Be very careful buying here folks.

On an internals basis the market is severely overbought, the ISEE Put/Call indicator shows retail sheepie are buying CALLs like they are being outlawed tomorrow, and protection is non-existant against downward moves.

This, of course, is precisely when the floor disappears.

Bubble TV is not your friend, as Bill has noted. Reality is this - Dimon has said in Germany this weekend that "its not over" and Berkshire missed forecasts by a country mile. Seems that Mr. "Financial WMD" wrote himself more than a few ultra-long OTC (not exchange traded) "specials" and, well, now he's joined the ranks of the Pigmen trying to make damn sure they don't bankrupt him.

Niiiice.

Mister Softee did exactly what I predicted they would, tell Yahoo to get stuffed.

The news flow this weekend wasn't bad, it was horrible. In addition Friday had all the hallmarks of a key reversal - gap higher at the open followed by a bleed up until noon, when the volume simply VANISHED. "Float higher" is the usual result when that occurs, and it was what we saw.

But if you pick a HB&B stock, the XLF, or most of the major indices you see potential gravestones, hammer reversals or shooting stars all over the charts. These are very strong warning signs, and if you've been playing the long side, they should be all you need to be very cautious.

I agree with Bill that paper stops rather than real ones are wise here. I've pulled my stops and am trading them by hand, because the game has gotten to the point where there is no other way to have your positions clearly delineated and under your control.

Be careful - the sharks are out.

Posted by: Genesis at May 4, 2008 12:11 PM [link]

I found 2 clips from Louise Yamada on CNBC discussing gold in March 2008 and commodities last week.

http://jglobal.blogspot.com

Posted by: dr.cosa at May 4, 2008 12:16 PM [link]

Genesis

Thanks for the heads up. You post was informative.

Posted by: QT at May 4, 2008 12:45 PM [link]

Your [not you]

Sunday AM typos have started already ;-(

Posted by: QT at May 4, 2008 12:46 PM [link]

jk484,

Re: "cronyism" and "All of this has been going on since Ronald Reagan brought back morning to America."

I would push the most egregious onset of latterday cronyism back to the rise of Lyndon Baines Johnson from the corporate machinations of Brown & Root (and others in the Halliburton constellation of global defense enterprises). But I agree, Reagan certainly gave it all an entitlement franchise cloaked in the warm and fuzzy "morning in America" sales pitch. Too bad the American people are so inured to commercial propaganda they accepted the "Great Communicator's" advertising slogan as truth in action. And too bad commercial media has no inkling of actual truth in action. Now "it's 3:00 AM in America and where are our children?"

Posted by: johojo at May 4, 2008 1:21 PM [link]

I think Fed should create Yahoo Lending Facility
to support Yahoo stock on monday?

Posted by: vinod at May 4, 2008 1:30 PM [link]

Re: Negative Silver Leases

Silver leases are still in the negative, so there must be some explanation of supply which would otherwise be diverted elsewhere. The same refiners that supply industrial silver products must have a buildup of inventory which can't be used, so the excess is refined into sterling and sold.

Posted by: FranSix at May 4, 2008 3:12 PM [link]

David- 'Bernanke to Paulson, “So, Hank, when do you need the Dow at 14000?”'

What's in the way of imagining "where do we want the SSEC by August?"

day-trading and gaming those who are gaming the players seem to be the only useful "strategies" left...i think playing against sentiment/reversion to the mean/using your instincts will allow you a few gains while waiting for a longer-term trend to emerge...

obviously, i think interest rates are headed up and shanghai is headed up...beyond that, i would keep positions to an intraday horizon...

Posted by: 2nd_ave at May 4, 2008 3:55 PM [link]

Re: Louise Yamada

Louise Yamada's website has a more recent short discussion on commodities with CNBC from May 2. The party line is unmistakeable:

http://www.cnbc.com/id/15840232?video=729345948&play=1

http://www.lyadvisors.com/recentevents.htm

Posted by: FranSix at May 4, 2008 5:07 PM [link]

Analyst recommendations on gold stocks -

I came across a Zacks ranking of analysts' consensus recommmendations covering strong buys&buys (listed in descending order):

1.Aurizon
2.Seabridge
3.Central Sun
4.GoldCorp
5.Nevson
6.Orezone
7.Exeter Resources
8.Western Goldfields
9.LIHIR Gold
10.Agnico Eagle
11.Northgate Minerals
12.Eldorado Gold
13.Crystallex
14.Midway Gold

I was surprised by the number of juniors, by Seabridge as no. 2, and especially by unlucky no. 13th (!) which just humpty-dumptied ....

Posted by: Jock at May 4, 2008 5:42 PM [link]

David- the market did not play out according to my expectations, which are, after all, only guesses...doesn't mean i can't/didn't profit from market movement to the extent it did meet my expectations, or that it won't sell off on monday...no one knows...we all have the option (the obligation, even) to change our minds on a dime in the face of continuously changing dynamics, and an (unexpected) dow theory signal changes things, right...we need to be aware of what others are thinking, the news that may influence their thinking, and adjust our positions accordingly...right now, there is no doubt in my mind we will sell off at some point (maybe even monday) in the face of the breakout confirmation- it would be too easy to buy on that signal...

Posted by: 2nd_ave at May 4, 2008 5:53 PM [link]

Posted by: 2nd_ave:

"right now, there is no doubt in my mind we will sell off at some point (maybe even monday) in the face of the breakout confirmation- it would be too easy to buy on that signal..."

I remember that when DOW first went below the 12800 support level, I opened a large short position. To my surprise, the next day DOW bounced up and reached about 13000 a few days later. I was able to hold my shorts through that surprise, and the "break of support" logic prevailed, as we all saw. I am suspecting that it might be the same this time, even if we are headed to 14000. That is, we might very well have a sell-off below 13000 to trap the early bulls and then the market might turn around once more and go up to trap the early bears who shorted the market thinking "the resistance at 13000 held."

DavidV

Posted by: David at May 4, 2008 7:01 PM [link]

Chief Falling Knives-

Watch yesterday's trades.

Posted by: MarkM at May 4, 2008 7:01 PM [link]

David and 2nd,

It's for the above implied reasons contained in your posts that my ideal trade lasts between 5 minutes and a day and why I almost never hold stocks overnight.

Oldgoat: If Jesse Livermore were alive today he'd be a day trader!

Posted by: shark_attack at May 4, 2008 7:04 PM [link]

Bill,

Your comments re: Bahamas make sense. But doesn't August get really steamy and isn't Canada cold as ice in winter? That was my only point.

Posted by: shark_attack at May 4, 2008 7:06 PM [link]

Mark M,
Glad to see that you are alive and well. About 13 to 14 months ago we had a little discourse on Obama and his chances for winning the nomination. Back then I thought he would win it for sure but now it appears to me that he peaked a little soon and the old school war room politics (carville and rove) has caught up with him.

It appears to me that Obama will lay a big turd this Tuesday and Hilary will get the nomination in Denver. Only then will things get real ugly. I suspect Hilary will try to diffuse things by offering Obama the veep position.

Do you have any line of sight on the convention?

Posted by: cb at May 4, 2008 7:20 PM [link]

Hey Bill, any mining jobs in the Bahamas?

Posted by: rugger09 at May 4, 2008 7:42 PM [link]

cb, if Clinto wins the Democratic nomination, I won't bother voting for President. This would be the first time in my life I have not voted. But at this point, I'd rather not vote at all than help to perpetuate a corrupt system. Forget the nonsense about voting the lesser of two evils, McCain and Clinton are two sides of the same coin.

Posted by: number2son at May 4, 2008 8:05 PM [link]

Doesn't McCain have a trump card? If he's trailing in Oct, Cheney can pull a "Gulf of Tonkin" by trumping up an Iranian provocation, and/or can OK an Israeli air-strike against Iranian nuclear sites. Ahmadinejad would hit US convoys in S. Iraq, and threaten to blockade the straits

Would America then elect a visionary to "bring us together", or an old warrior to kick a**?

At least McCain at age 76 would be unlikely to run for a 2nd term.

Posted by: Jock at May 4, 2008 9:41 PM [link]

Anyone here ever read E.E. Schattschneider's
"The Semi-Sovereign People"? Read it and you'll never vote Republocrat again.

Posted by: shark_attack at May 4, 2008 9:55 PM [link]

The global wheat crop is crucial this year due to extreme shortages and yet problems are already being reported with the U.S. crop...

"The risk of significant yield loss in Kansas wheat fields due to leaf rust and other foliar diseases has increased dramatically this past week, according to Kansas State University Research and Extension."

http://tinyurl.com/4ssgoc

Posted by: fireworks at May 4, 2008 10:04 PM [link]

Discussion "Lessons From The Trader Wizard"

Bill mentioned a rule of thumb that when the 10 week moving average crosses a flat 40 week moving average, a trend change is confirmed. Right now the $SPX 10 week moving average is way below the 40 week moving average. I'd want to see those cross before I trade on the bullish side.

Posted by: SteveC at May 4, 2008 10:30 PM [link]

Bill,

I appreciate your WIR. As an American with boots on the ground, there is one thing I wish to add to your description of possible interest rate pressure on the housing market. In my estimation:

1) Everyone who ever even thought about buying a house (or 2) has done so, enticed by Greenspan's interest rates post 911 (if they didn't get in earlier). The vast majority of folks able to qualify to borrow have done so, absorbing perhaps a decades worth of future housing demand.

2) Now, because a housing bust is occurring, most reasonable, intelligent people able to qualify know that to purchase a home in a market that is not appreciating fairly quickly is a bad economic decision considering property taxes, upkeep, and the uncertaintain future for the market for houses.

3) Demographic trends here (aging baby boomers seeking to cash out, newly minted worker with no hope of affording the excesses of the past centuries' boom) auger for a supply demand equation that is decidedly unfavorable for sellers going forward.

What we've seen in housing is not a correction, but rather, the "big one", the death-knell of the great and historic post war housing boom that's been booming for 60 years. Future problems in the sector are all but certain because future workers' ability to pay is highly questionable. The number of participants now in our national Ponzi scheme (or musical chairs, if you prefer) is at an historic high. Therefore, pressure on the mortgage business and further deflation of the credit bubble over the foreseeable is a near-certainty. We are going into a golden age for renters. Renting will become the new owning, the most profitable, least risky and most cost effective means of living. Think about it. Owning a home was, for 60 years, a no-brainer investment, the individuals single best wealth creation mechanism, the surest path to prosperity, blah blah blah. And we ALL know enuff about marketS to know that THAT simply cannot last forever. Because in every market, for EVERY WINNER THERE IS AN EQUAL AND OPPOSITE LOSER.

Just wanted to add my thoughts. Have an awesome time.

Posted by: shark_attack at May 5, 2008 12:03 AM [link]

MarkM:

Gotcha ! Had to scratch my head a few minutes before the light turned on ;)

Chief Falling Knives

Posted by: C.Note at May 5, 2008 4:54 AM [link]

cb-

Obama likely wins NC on demographics alone. If so, does that change your thinking?

The Democratic Party cannot afford to broker a deal against a black candidate who is ahead in the vote totals, no matter what the spin, if that candidate doesn't somehow acquiesce. The Clinton camp will desperately try to force an error, either politically or strategically, that allows the brokered deal. They have from now until the convention to do it. Their prospects will make this the most exciting and meaningful convention since the 60s.

Posted by: MarkM at May 5, 2008 6:14 AM [link]

shark: I don't believe real estate is a zero sum game, there dies not have to be equal losses, does there? Todays pain is important, but not unlimited. At some point things will bottom and move forward. 2015 is my guess at the low, just from historical gold/median house price p.o.v ..

Voting republican: The problem is w/parties in general, both parties. Don't you think Ms Pelosi runs a nasty back room operation, turning screws on anyone who steps out of line? I'm sure there are genuine folks in both parties, but what you have to do to get elected (taking special interest $) and stay elected (don't tick off the party machinery) is a losing proposition for the people. I would vote for anyone who shows financial independence and willingness to cross party lines. If you vote along partisan lines you are likely to sweep plenty of duds into office w/ absolutely no scrutiny other than party affiliation. This is particulary true for small, local elections that are thinly voted to begin with

Posted by: JRPauley at May 5, 2008 6:43 AM [link]

Mark M,
I think it is unlikely that Obama wins NC. If he does I agree that it will be politically incorrect for hilary to get the nomination; however, Bill and Hilary will be calling in all their chips and promising the moon to the super delegates and I am convinced that she will get the nod.

When vying for the most powerful job in the world, I am certain that political correctness will not prevail.

Posted by: cb at May 5, 2008 8:30 AM [link]

Housing is almost close to a bottom at least in the tristate NY area. i would say 2012 estimate. I am getting ready to buy an affordable condo which also would make a profit if i rented out in a couple years, 1 hour away from manhattan.

but i also read there is a 15 yr supply in miami! Yet my two rental properties in Raleigh NC went up in 2007. So i think it really will be location specific. the troubled areas of Cali, AZ, Vegas, Miami will continue to drag as people migrate out and foreclosures continue. but people with cash are out there looking for bargains now. i think the avg consumer follows in 2012.

Posted by: NYUgrad at May 5, 2008 8:33 AM [link]

Emergency question: When Bill writes about the Dow theory buy signal, EXACTLY what is the trigger for the signal? I looked it up and am having trouble determining what exactly that means. I read about Dow Theory, just nothing to do with buy signals. Which indexes are doing what to qualify for this and for how long?

Also: NYUGRAD---If you think housing in the tri-state area is near a bottom, then what you've been smoking is a hell of a lot better than what I've been smnoking...I live in Westport. We haven't even begun to correct, but with LEH laying of more, UBS announcing 8000 today, NB doing several hundred at least, dude, in all love and candor, this thing HASN'T EVEN GOTTEN STARTED YET!!!!!

Posted by: shark_attack at May 5, 2008 8:41 AM [link]

Good morning.

Here are your Cara 100 Ratings Changes:

Downgrade:

YHOO - to Sell @ Citigroup

Target Price Raised:

GOOG - $610 to $675 @ Stifel Nicolaus
INFY - $44 to $50 @ Susquehanna Financial

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

Have a great and profitable week.

Posted by: Bull Hunter at May 5, 2008 8:45 AM [link]

Adjusted for inflation, and taking taxes and interest costs into account, real estate is, over the long term and particularly starting now considering the credit deflation and dirth of new qualifiers, a zero sum game. Every dollar I take out of my house is 3 dollars someone else has to put in, taking interest expenses into account. As our friend Kaimu would say, it worked until it didn't.

Posted by: shark_attack at May 5, 2008 8:47 AM [link]

and now it wont.

Posted by: shark_attack at May 5, 2008 8:50 AM [link]

Economist/YouGov poll shows McCain way ahead of Hillary and Obama on war in Iraq and dealing with terrorism attack. Ergo, McCain will be the next president.

I'm reading a very interesting book on Putin, and if you think democracy is threatened here, you ain't seen nothing. Russia is completely run by the KGB (now the FSB) and the Russian mafia. Putin is a great admirer of Dzherzinsky, the founder of the KGB.

Posted by: aucourant at May 5, 2008 9:02 AM [link]

McCain WILL be the next president. I have a record of picking the winner going back to Jimmy Carter and I've never been wrong. Obama is a black guy in a racist country, and Hillary, while formidable, is wrong on all of the issues except health care.

Posted by: shark_attack at May 5, 2008 9:10 AM [link]

In addition, everything Bill C. had going for him in '92 (fresh-faced charming guy, political outsider, change agent in an era of calcification) Hilary has working against her. And I think people are uncomfortable about annointing another familial political dynasty post-Bush.

Posted by: shark_attack at May 5, 2008 9:12 AM [link]

Geez, I can hear the sound of sheep in my own pasture.....

Notice how the race of Hillary vs McCain the "media" was predicting, what, a couple of years ago has some how magically manifested itself?

Do you suppose the bought and paid for media propagandists (it is what it is) are worried about ratings or outcome for their masters?

If (LOL) we get the pre-ordained outcome of Clinton vs McCain, then I will fulfill my obligation as a U.S. Citizen and write-in Ron Paul.

In my mind the demoblican/republicrat parties are dead.

Posted by: Craig at May 5, 2008 9:27 AM [link]

aucourant

As bad as the Iraq situation is, I think voters are focused at this moment in time on the economy--keeping their jobs, food, fuel and overall inflation; many are also tired of the Iraq quagmire and vote to cut losses. Of course, people can always be scared into voting perceived security differences between candidates as noted in the past.

re Putin There was an excellent documentary film @ 1998-1999, about a Milwaukee woman who went back to Kiev to see how her mother died in an explosion blamed on the Chenchens. Keeping it short, her efforts investigating the circumstances around her mother's death evolved into a government setup to bring Putin to power.
Unfortunately, unable to recall the title, but it was very insightful into the manuvering behind Putin's rise. Recommended if you can find it.

Posted by: Seamus at May 5, 2008 9:27 AM [link]

Coincidental to today's political discussion, two weeks ago I began reading "Plain Speaking." I had seen some pithy quotes in Colin Twigg's blog from the book and at $2 on Amazon it seemed like a deal. I grew up hearing my father say that the last great American President was probably Truman. Half way through the book, I am afraid my father was right.

Posted by: alan at May 5, 2008 9:30 AM [link]

Luckily I closed out of YHOO position last week. Just bought small position back at $23.

Posted by: BillySundance at May 5, 2008 9:32 AM [link]

Question to the group:

Goldcorp released its 1Q net earnings - they were up 84% and revenue up 32% on the back of record high gold prices (avg of 932/oz).

My question is: if what Bill has been saying about gold and the US Peso is correct (USD up and gold Down), then would it be reasonable and likely to 'bet against' the bullish updraft of such a strong result from Goldcorp? I'm new to this and REALLY want to learn the other options with trading besides the 'buy and hold' strategy. I'm on page 75 of Bill's book and can't wait to get through his options section.

Thanks in advance

Posted by: rugger09 at May 5, 2008 9:32 AM [link]

shark, bottoming to me is a process. i didnt say we are at the bottom. but people with big money are shopping now. i did say the consumer would come back to the market to shop in 2012. its only 2008.

Posted by: NYUgrad at May 5, 2008 9:46 AM [link]

People with big money can't save the American housing market. It's gotta be people with medium and small money who do that job. And by 2012 they may be living in tents and cooking over campfires for all we can tell.

Posted by: shark_attack at May 5, 2008 9:54 AM [link]

Finally, some good news for the old Bull Hunter....AirCastle (AYR) shining this morning. In the black after a torturous mid-term hold.

Posted by: Bull Hunter at May 5, 2008 10:00 AM [link]

Does no one know how this Dow buy signal works?

[Bill Cara note: This is the best educational link to Dow Theory signals: http://tinyurl.com/38zdbw ]

Posted by: shark_attack at May 5, 2008 11:17 AM [link]

"Buffett 'castigates' wall street, bankers for blunders"...Bloomberg.

Dang, 'castigate', just a few letters from my real wish.

Posted by: Craig at May 5, 2008 11:28 AM [link]

ALOHA !!

This news can't be good for the Euro or the future of the US Air Force megatanker based in Alabama. Production problems indeed! Delivering order 18 months late is a BIG problem! If AirBus has orders for 193 aircraft and can only do 13 per year that means some of their current customers will have to wait up to 14 years for delivery! YIKES ... who will wait that long? I know the US Air Force would not ... Good news for Boeing it seems! If German business and banking suffers there goes the Euro!

READ ON:
BERLIN - Franco-German aircraft maker Airbus has written to clients warning them of more possible delays in deliveries of its A380 superjumbo, a German magazine report says.

The company will "nearly" manage to deliver 13 of the aircraft this year as planned, the weekly Wirtschaftswoche today cited unnamed insiders as saying, but it will definitely not be able to deliver the promised 25 in 2009.

It is also highly questionable "whether we will be able to manage to produce four (A380) aircraft a month as planned in the foreseeable future," the magazine cited its source as saying.
A spokeswoman for Airbus contacted by AFP declined to comment, reiterating that the company's chief executive of nine months Thomas Anders was currently conducting a review of the A380 program.

Airbus, a unit of EADS, delivered the first A380 to Singapore Airlines last October - 18 months late - due to production problems.
Seventeen airlines, including Australia's Qantas, have so far ordered or committed to ordering 193 A380s, the world's largest passenger airliner.END

Posted by: kaimu at May 5, 2008 11:37 AM [link]

Hillary has threatened to "obliterate Iran" in the event they should attack Israel; and now she expresses no regret for the statement.

I didn't think ANY CIVILIZED HUMAN BEING would make such a statement in any public forum, in spite of what they might THINK. Any "leader" worth his/her salt should be castigated (and/or castr..ed) for such obvious pandering and inflammatory utterance.

But, then....this IS Hillary.....and she couldn't even wear FDR's leg brace!!!

Posted by: ronbon at May 5, 2008 11:37 AM [link]

But technically should could be castrated....

Posted by: Craig at May 5, 2008 11:40 AM [link]

BTW, it isn't pandering to some.
Last I checked the Presidential oath was to protect and defend the constitution of the United States.

Where did we get sidetracked carrying Israel's lunchbox and books? They have a few nukes and seem aggressive enough to defend themselves, I say give em' a pat on the butt and wish em' luck.

Posted by: Craig at May 5, 2008 11:43 AM [link]

should could? No,no,no...

'She' could be....

Posted by: Craig at May 5, 2008 11:50 AM [link]

ALOHA !!

Notice the difference ... In Australia their government is admitting that inflation is a problem. When I was there in Jan 2008 there were big front page ads and TV news of the newly appointed PM to resolve the inflation issue as their NUMBER ONE economic issue!

The first step to recovery even for drunks in AA is to "admit you have a problem"! I guess our government and the FED is still in the "denial" stages, which pretty much sums up about 98% of Americans when it comes to the real causes of price inflation!

Here in the USA "inflation" is a barely audible whisper and even that is just "core" noise!

In essence the IRAQ WAR is the US economy! At some point most of America will figure that out! Perhaps when we have to invade Caracas to secure enough fuel to fly our troops back from Iraq and Afghanistan!

As I posted the other day the US MILITARY is consuming our economy, so therefore WAR IS OUR ECONOMY! What one single entity consumes the most of our World's resources? The US MILITARY! Once Russia and China climb on board, which they are now seriously ramping up their military spending then along with industrialization there will be no more supply edficits for any resource ... Why do you think China runs all over the World buying and locking up resources? They plan LONG TERM! What is WAR in terms of inflation? EXTREMELY INFLATIONARY!

READ ON:
CANBERRA - Federal treasurer Wayne Swan has accused Malcolm Turnbull of being out of touch with average Australian families for criticising government plans to rein in government spending in an attempt to curb inflation.

Mr Swan says the opposition treasury spokesman's criticism of the Labor's strategy proves he is "completely out of touch".
"Mr Turnbull doesn't seem to understand the impact of inflation and rising prices on working families," Mr Swan told ABC radio today.
"And if he doesn't understand that, it just proves he is completely out of touch with what's going on with average Australian families."
Yesterday, Mr Turnbull said the government would have to make massive cuts to have any effect on inflation and that would be unwise. But Mr Swan hit back this morning, saying spending cuts were essential because of the Howard government's financial legacy.

Mr Swan said fighting inflation was "the most important thing we need to do in this budget".
He denied there was a risk the cuts could stall the economy, saying the government would "get the balance right".END

Posted by: kaimu at May 5, 2008 11:52 AM [link]

shart_attack -- Dow Theory “Buy Signals”.

Yes, I know enough not to use it except in the background when I am evaluating charts, but I believe in being a day trader to avoid large down drafts on my funds when I am wrong.

To use it well, I would advise you first to study Eliott Wave theory until you are comfortable with your results because it will help you to recognize a Buy signal when you see it in accordance with your interpretation of applied Dow Theory.

The basics of Dow Theory in short: 1) long term chart action, not short term; 2) and last major trend was down; 3) and Dow Industrial and Dow Transportation averages now close above a prior rally peak in which the last low was a higher low than the minor move before it; 4) and this up move trend is on strong volume in both averages..

Someone else can probably add more, but the above basics won’t change. Hope this helps. You might want to research Richard Russell’s newsletter and comments.

[Bill Cara note: This is the best educational link to Dow Theory signals: http://tinyurl.com/38zdbw ]

Posted by: spot at May 5, 2008 12:07 PM [link]

Kaimu

I am not an expert on politics or military
But as common man I can say that spending on military is the reason Russian went Bankrupt and brought end to communism

May be same will happen with china

Posted by: vinod at May 5, 2008 12:21 PM [link]

ALOHA !!

vinod ... Exactly! More likely the USA is already BANKRUPT!

Essentailly Wars are about resources and trade so I am sure China knows that and has taken the smarter strategy of buying them instead of occupying them!

Russia in the 1980s proved occupying resources does not work. Germany and Japan proved that in WW2 ... Guess who is next to prove it?

Posted by: kaimu at May 5, 2008 12:38 PM [link]

The Chinese have read Sun-Tzu.
Our 'leader' prides himself a non-reader.

A losing strategery no matter how it's sliced.

Posted by: Craig at May 5, 2008 12:52 PM [link]

Re: real estate bottoming

Per Case-Shiller it took 6 years for the last bust: http://tinyurl.com/337l49

The OFHEO data assumes closer to 4 years, for both the bust in '90 and the earlier one in the early 80s. It's in the appendix of this cool Federal Reserve paper on housing prices & monetary policy: http://tinyurl.com/3g3sjr

After you look @ home price runups across europe, australia... I don't feel so bad. Yikes!

So, since home prices in '05 were ramping up faster than the previous busts, somewhat emulating the hyperbolic nasdaq ca. 1999, it's safe to assume this bust will be worse than the previous couple. That said, I'm comfortable assuming at least 4-6 years of housing downturn, from 2005/2006.

Given consumer financial health is abysmal, there's a decent probability of an even more prolonged downturn.

Posted by: FattyArbuckle at May 5, 2008 1:13 PM [link]

Craig:

Regarding
The Chinese have read Sun-Tzu.

Being a Taoist, Quite a bit of my history is tied to china.

Sun Tzu might have been from china.

But know China has destroy 90% of its history in its cultural revolutions and now works towards being modeled after the western economic conditions. Very similar to how the Japanese re-invented themselves after 1860 and 1945 towards the American model.

Go to any temple in china and you will find not the true versions of Taoism or etc.. but instead find tourist shows... its very sad.

The real point is...

As a result expect China to make quite a few economic mistakes as they learn the ropes.

Strangely sometimes the fool wins... because ehey are the fool!

The role of the fool has served Bush well as people continue to under-estimate what is really going on right now.

Posted by: Casey Kochmer at May 5, 2008 1:24 PM [link]

In our free breadth based sector performance report a clear pattern showed transports up (broadest buying) and energy down (broadest selling) ... notice the reversal of this in progress as energy cant stay down too long

On the indexes lookin for first test of supports in SP500 at approx 1398 and DJ30 at 12,890 ... depending on action at these levels may be a good place to start accumulating longs again, we'll be watching breadth behavior closely there...

good trading,
Ralph
http://successfulonlinetrading.com/blogs

Posted by: RalphSE at May 5, 2008 2:04 PM [link]

Casey Kochmer

"as people continue to under-estimate what is really going on right now."

What is really going on could you elaborate?

Posted by: Zeto at May 5, 2008 2:07 PM [link]

Great commentary today. I got to bring up the other side of the coin to bring balance to the conversation.

First of all. Ask any serviceman who serves in the armed forces if our military is underfunded. It is, this is unfortunate however the "peace years" during the nineties put us in this precarious situation. Goverment spending of the federal debt was rampant during those times in comparison to our GDP. Today we can argue that goverment spending, waste of money in Iraq or the tax cuts have increased in dollars (real dollars?) but the TRUTH is they have. Decreased as a percentage over the past two decades and still falling. Govrement defense purchases are going down since 911, which it would be my belief to not sacrifice for the near term political gains and work towards the future. Remember something as many of us may have forgot those who are in charge of defense are more qualified than those who run and control the money. The masterminds behind the defense are moves ahead of the rest on the chess board, the theories have not changed over the past 2500 years.
As far as GW not reading the art, I would be worried his dad is in charge anyways and remember he was the head of the cia in the 70s. Fought in ww2 and was under Reagan in the 80s.
What is a concern in that globalization/deflation are theories that are now being played out and the ones who are in charge of the money are new to what potentially lies ahead. They are not "experts" because the fundementals have changed war fundemental do not change.
As long as we have our chess pieces placed on the board it is their move. Remember we have a fleet patrolling almost every choke punt on the globe they are our seas.
Our military is still light years ahead of those of Russia and China. I don't see that changing anytime soon. Our technology is out there don't believe what propaganda the media brings up. When was the last time you heard good news?
Bad news sells. People love drama.

The farmland buffs are going to love this thought.

Topic of China.
China is eating the RICE BOWL instead of the rice. They have 25% of the worlds ppl and less than 7% of the arable farmland that is drastically declining. This will ultimately cause the inside to collapse. The have built 85000 dams in less than 50 years. The water is sent to the cities not the land. The farmers don't own the land, the get a sub-lease from someone who got the lease from the govrement. The one who got the original lease was a friend or family of the goverment who in turn subs the land for a profit. Think the USA is corrupt? Not even close to this.... So one might ask what is the problem with that? The is no incentive to give back to the land because of no ownership. The farmers take for the quick buck much like western corporations. The Chinese gov owns the land and the demands of the population growth has enticed the farming policies. There are worst stories developing such as the non-renewable groundwater reserves have been cut in half since the 70s. In fact the yellow river does not get to the ocean for 8 months a year. The yangtze river may not reach the sea in the next ten years. The same story can be applied to logging and other agriculture but heck they are buying all the worlds gold and our debt.
They can't feed their own people when the crops are insufficient to feed the local population they must import at a higher price than the domestic advantage. Wages must incease to supprt the import prices and NOW their advantage of cheap labor will no longer be there. The peasants will revolt again and changes will need to be made.
Their motto "agriculture is the foundation of the economy, grain is the basis of that foundation" will change as the over populated country will be in serious trouble. By 2010 per the china Nat develop & reform commission, china will import 6% of the USA corn harvest which is just over 25% of the worlds exports of corn.

Believe what you want to. The USA is the greatest country in the world and may be losing some clout but those that try to catch is in a half century or less will fail. Pigs get slaughtered.

The "Masons" know what they are doing.

We should have more pride of our country and of those that have made sacrifices before us.

If not what they did was all for nothing.

Money, politics and war are all related but remember what your expertise are in. Jack of all? Master of none? Or don't debate with conviction what we may not really know.

Norm

Posted by: norm at May 5, 2008 2:16 PM [link]

"The masons" may know what they are doing, but they are doing it for their own selfish financial reasons, not for the benefit of the people of the US in general.

Norm, if you are going to post political propaganda here you may want to at least check the facts. Government defense spending has exploded since 2001: "Since the terrorist attacks of 2001, the defense budget has ballooned about 35 percent in real terms."

http://www.csmonitor.com/2008/0206/p02s02-usmi.html

Most of that spending is directed to weapons systems, not to soldiers. The Pentagon itself says many of those weapons systems are not needed. Why are they funded? So "the masons" can make a fortune off the US taxpayer. At the moment Jim Webb is trying to pass an GI Bill with better education benefits for soldiers but it likely won't get passed, because only the little guy benefits from it.

Your prescription seems to be more even military spending. That just means a quicker bankruptcy for the US, which is the epitome of insecurity. We can not impose our will on the rest of the world indefinitely.

General Eisenhower warned that our democracy was threatened by the military-industrial complex, and he was right.

Posted by: moab at May 5, 2008 2:35 PM [link]

Norm: "Or don't debate with conviction what we may not really know."

Sometimes it is best to follow one's own advice.

Since the invasion of Iraq your main argument of military expertise is done like dinner. So much for expertise as the military is now a political department of the government. We have Generals politiking for failed Presidents. A person doesn't have to be an expert or genius to SEE the results.

People don't take the time to criticize (read try to improve) those things they don't find dear...or worth improving.

Norm, You severely underestimate Love of Country.
Now if we bailed and said nothing you should then be worried because that would be proof we don't give a crap.

First and foremost patriots died to defend our right to criticize and petition our own government. To confuse that with criticizing foreign policy, war vs peace, "greatest country on earth" is idiotic.
To dare to question that fundamental right is...well....the MOST un-American act.

Choose your label.

If America is as you say, "The Greatest Nation on Earth", then words are harmless against that notion. We should act the part and stop being whining pussies when we hear 'bad words' and criticisms and stop tattling to mommy. Greatest anythings don't whine, they overcome.
Greatest countries aren't afraid to talk to anyone, anywhere.

Fear of criticism and small mindedness are the only powers that can harm the U.S.A.

Posted by: Craig at May 5, 2008 2:44 PM [link]

just to add to this discussion about military expenditures.

its difficult to estimate the actual defense department spending, akin to infationary stats, they are highly doctored and footnoted and the actual numbers reported in the media are rarely an accurate gauge of whats being spent.

budgetary approvals announced in congress for x amount of military spending typically dont include year over year costs for maintenance and upgrading of existing equipment. anyone who is familiar with maintaining a piece of heavy machinery in a theater of combat knows both the time and money needed to keep things moving.

the US military consumes so much energy and funds its astronomical when you look at the flow through spending, not just the headlines.
they eclispe the 2nd and 3rd largest military nations, its almost laughable when the US gets upset about a nation like china or russia ramps up military spending, its drops in a bucket in comparison to the american military industrial complex.

Posted by: dr.cosa at May 5, 2008 2:56 PM [link]

The defense budget (%of GDP) has fallen since the 80s until 2001, but then it started going back up, acorrding to this White House report, (p.56) http://tinyurl.com/2hkqu

And I don't think this includes all those "supplementals" that have financed most of the Iraq war.

As for masterminds behind national defense, if we take an overall view... (talking management, here) Osama's still out there. Al-Qaeda is still active. Our involvement in, (and future pullout from) Iraq breeds more terrorists, not less. By the terrorism yardstick, our national defense has been mismanaged.

We can't discount Russia / China's military so easily, either. What we can discount is the probability of open military conflict. China would stop buying T-bills before throwing so much as a stone @ the US, and would do a lot more damage.

Not to get down on the USA, I want to see the country and the ideals succeed. But since the dominant medium of political persuasion in this country has been reduced to the 30-second television spot, this is telling me that the US's fall is getting closer.

"the sun never sets on the British Empire."

Posted by: FattyArbuckle at May 5, 2008 3:04 PM [link]

Moab,
Good points. Let me rephrase.
Real defense purchaves have gone down on a year over year basis since 2003. Furthermore our federal debt as a percentage of how much this country produces has went from 49% in 1995 to 36% in 2007. Our country is producing more and spending more just the top line is more on a percentage basis than it was before. The trend is positive but STILL a problem. Even at 36% we are chugging alone at an 18% deficit in terms of GDP.
Should we spend more on the military?
Yes! But first why don't we send E&Y to audit the last 7 years of defense military spending and have KPMG audit their work. It would be safe to say the we would find the problem isn't spend more it is manage what is spent. The whole military budget process, spend it or lose it however there is a lot more corruption behind it. Has to be, the wars should cost that much. The issue is the audit wouldn't really happen just as our deficit won't ever go away.

One thing is we can always plan for the worst and hope for the best.

I believe that as it may appear we are nibbling the rice bowl and eating the rice vs eating the bowl completely.

We have problems that are unraveling.
as one might assume USA is not decoupled from the world and when those problems unravel our deficit won't be the only problem.

Posted by: norm at May 5, 2008 3:08 PM [link]

BLACKMAIL Continuation

Countrywide Falls

Countrywide lost 95 cents to $5.03. Bank of America will probably reduce its per-share offer to the ``$0 to $2 level'' from about $7, Friedman Billings Ramsey analyst Paul Miller wrote in a research note. The second-biggest U.S. bank by assets may have to write down the value of Countrywide's loans by $20 billion to $30 billion when it closes the takeover deal, Miller wrote. Bank of America shares declined 81 cents to $38.98.

[Bill Cara note: At least you all know what I have been saying about this deal from the start. For new members, read this:

Cara's Commentary & Community Chat, Fri., Jan. 11, 2008, 7:19am ET
...Another reality is that the $2 billion investment that Bank of America put into Countrywide Financial (CFC) in August, amid trumpets and fanfare as the CFC price sat at $21.82, turned out to be – take your pick -- money sent to heaven or hell, but has nothing to do with prudent investing. Two days ago, CFC hit a low of $4.43 and is even now, after the rumors and chatter, just $7.73.

I said at the time (in mid August) that NOBODY knows if Countrywide or its peers are actually solvent, so how could a major financial institution like Bank of America have any confidence in their investment decision. The whole episode struck me as part of the HB&B bravado thing going down in the summer in their collective effort to try to impress the public that the financial system was still strong.

Now there is talk that BofA could inject a further $3 billion. If true, that’s probably bad money after good. Better the bank should write off its $2 billion, fire the decision-makers, and move on.

In time, the more you closely observe the actions of HB&B, the Fed and government, you wonder how it is that these people got their jobs. Surely, if any of us ran a business or family budget or a securities portfolio in the same fashion, we’d be soon bankrupt.

Traders need to be grounded in reality. Those suffering from credulity syndrome are the first to transfer wealth to others.

Have a great day, but try to avoid getting caught up in the rumor and hope that vested interests are peddling.

Remember, in Bear markets, there is nothing wrong with the perspective that the glass is half empty.]

Posted by: viso at May 5, 2008 3:26 PM [link]

Less wasteful military spending I can agree with. But I think you will find, and has been validated by intelligence reports, that foreign aid is much better money spent than military spending. You see this in Latin America where many support Hugo Chavez because he spends billions every year on food and health care throughout South and Central America. The US only sends a hospital ship for a few days to several ports. Not to mention Chavez is helping the poor in the US with subsidized heating oil! No American oil company would give a cent to this program due to "profit concerns". You see where American priorities are - profit over people.

If we would just commit to a huge alternative energy research project, the middle east might lose its tactical importance and this huge waste of men and treasure would be unnecessary.

In 2003, the US military budget account for nearly half of all military spending on the planet earth. I ask, is that reasonable?

Posted by: moab at May 5, 2008 3:32 PM [link]

Allen

We need your Black Swan to come home and nest. FXP is moving too slow for me.

Posted by: QT at May 5, 2008 3:33 PM [link]

David- i agree with your comments...the market will trap as many traders as possible either way...no trades today, and i'm not really watching, but right now it's looking like a bear trap...good luck...

Posted by: 2nd_ave at May 5, 2008 3:34 PM [link]

Zeto:

Fortunately I am not in the various inner power circles to tell you what the bigger game is. I have been watching for years: From various political and economic earthquakes you can determine parts of the inner game.

I think Peak oil while base on several good truths is also based on a very subtle lie and so It will be curious to watch that unfold... since the peak oil fear is being used to manipulable people. Which leads me to question the deeper nature of the credit bubbles we are in.

All of the credit bubbles are all so massive and controlled. One can't help feel: they have become economic weapons. The question then becomes who will burst the bubbles and for what reason.

Its so controlled, that no matter where we might be when it bursts, we all will feel it. It reminds me of MAD with nuclear weapons, but it is in credit now. So instead I live wisely to my life and instead invest in strength, follow my gut feelings and use this site and Bill's advice as further guidance to navigate around the current chaos.

I lived through the cold war, learned to live each day as the day and will move my life with kindness and wonder...

Posted by: Casey Kochmer at May 5, 2008 3:35 PM [link]

Casey Kochmer

Thank you for your insight. I too lived through the cold war.

Posted by: Zeto at May 5, 2008 3:38 PM [link]

Defense Budget:

If we consider the wars in Iraq and Afghanistan together -- which we might as well do, since we and our children and grandchildren will be paying for them together into the distant future -- a conservative single-week estimate comes to $3.5 billion. Remember, that's per week!

For example, to hear the howling of the white-collar warriors in Washington every time anyone suggests knocking a nickel off administration war-spending requests, you would think that the weekly $3.5 billion outlay is all "for the troops." In fact, only 10% of it, or under $350 million per week, goes to pay and benefits for uniformed military personnel. That's less than a quarter of the weekly $1.4 billion that goes to war contractors to pay for everything from bullets to bombers. As a slogan, insisting that we need to keep the current flood of military outlays flowing "for Boeing and Lockheed Martin" just doesn't quite have the same ring to it.

http://www.tomdispatch.com/post/174902/william_hartung_the_cost_of_a_week_in_hell

Posted by: jk484 at May 5, 2008 3:40 PM [link]

A Submarine to Fight al-Qaida’s Navy

the $81-billion submarine pushed by Sen. Joseph Lieberman, presumably to fight al-Qaida’s navy.

http://tinyurl.com/3yx7z2

Posted by: jk484 at May 5, 2008 3:50 PM [link]

Thanks spot for the Dow theory info.

I am proud to have been the first to announce the massive layoffs on Wall Street. What the street has done to themselves and to the American economy has a name. It's called "screwing the pooch".

And since I cleared 10 dollars today, who am I to complain?

Posted by: shark_attack at May 5, 2008 3:50 PM [link]

Zeto:

The other comment I will make is to question assumptions right now. That is the Market can be successfully manipulated since most people act and live to assumptions which are false.

So the assumption that Bush is a fool. Is an example of this. He plays the fool very well but he is part of something larger and that larger group, is playing a game very well to their own advantage.

We are living in a time of change. that truly means all rules are shifting now. That all assumptions based on older rules... go out the door right now.

So I follow my Taoist teachings. Live now, act in the now and know truth is always relative. The truth of what is happening now won't be the truth that we discover it to be in 3 years.

So if this is the case: Make your own rules now rather than living to the rules been fed to us through the media, other sources or what we have learn to be true over the last 80 years.

It's all shifting so it's a time to be brave enough to shift into what you would like to be rather than what "the larger powers" are trying to define or scare us to be right now.

From my perspective that's the "larger unseen game" right now that I mentioned before.

Most of the readers here see this and are working actively towards their own form of personal freedom. Its one reason I joined in to the group

Posted by: Casey Kochmer at May 5, 2008 3:54 PM [link]

Craig,

Good.

Here is my thought, the total time in the ground portion of the Iraq war was less than 10 days. That would include both invasions. I say invasions, not the police effort that we could say isn't gaining any momentum. Classify the Iraq and afgan campaigns as wars but I couldn't agree. With the media and propaganda is it will never be our war/campaign to win. I don't believe we could debate a solution. Withdrawl? Shows the world that we were wrong and weak. Staying shows the world that we don't get it.
Keep in mind something, before we armchair qb what a general knows. The military trains to attack destory an objective this whole police thing is quite new especially in mount enviroments. I couldn't imagine how difficult their challnge is.
Granted they are now training for these enviroments but it isn't traditional.

if it were easy they would just destroy everything just like the Romans did.however that would be to easy and uncivil. Give military brass some credit as the were given the wrong hand for the game. They are doing their best job trying to ensure that our kids make it home.
Also what results are we seeing? We see what our media delivers to us. Never good news, turn on the 10 o'clock news not good news but locally there has to be good things going. I believe there is.
Perception is reality.

Failed president (I voted for Gore).
I can't agree (this statement won't sit well with many but it is my opinion)
We do have the right to criticize whoever whenever.
It is easy to point the blame on one. Who knows maybe things would be better if we didn't reelect or elect the current.
I do know that being president it is not an easy job.

I'll totally disagree with smallmindedness comment.

Quite frankly I think I have a large melon on my neck full of crap to my eyes.

Posted by: norm at May 5, 2008 4:02 PM [link]

Casey Kochmer

In Taoist teachings, if truth is relative, then you do what is right in your own eyes?

Posted by: Zeto at May 5, 2008 4:13 PM [link]

Has this been posted here?:

"The Bank of England has imposed a permanent news blackout on its £50bn-plus plan to ease the credit crunch.

Ferocious and unprecedented secrecy means taxpayers will never know the names of the banks that have been supported through the special liquidity scheme, which was unveiled by Bank Governor Mervyn King last week.

Requests under the Freedom of Information Act are to be denied. Details will be kept secret even after 30 years - the period after which all but the most sensitive state documents are released."

...

"The £50bn or more of Treasury bills involved will dwarf the £17.6bn currently in issue, but the authorities are adamant this will not destabilise the Government debt market."

http://tinyurl.com/4jzsdu

Sounds like the situation is catastrophic if even after 30 years the actions of the English central bank will not be released. The next crisis is described in the last paragraph. Whenever authorities are adamant they are scared.

Posted by: moab at May 5, 2008 4:14 PM [link]

Norm, anti-terror police actions such as Afg/Iraq are the face of war in this next century as the globe matures. The fundamentals of war *do* change, as technology "improves" and lethality increases. The crossbow, the atom bomb, the IED.

This is why we're failing: As you stated, it's tough adjusting to asymmetric warfare. So what do we do? We hire Blackwater and pay one of their guys 20x the salary average army grunt. And so if it was their decision, I can't give the military brass any "credit."

Posted by: FattyArbuckle at May 5, 2008 4:18 PM [link]

Moab: that was posted last week.

Scares me slightly actually to see that action. I am still pondering the implications

Zeto, We should continue the conversation offline :personaltao@gmail.com

The Quick Taoist answer: is to act in kindness, Truth is immaterial always being defined after the fact to fit the "facts".

Posted by: Casey Kochmer at May 5, 2008 4:21 PM [link]

I Should also add. Everyone here is acting in kindness:

sharing information, insights and resources

in that everyone benefits and it becomes possible to navigate around this mess.

I only hope as I learn more to add to the valuable feedback.

Posted by: Casey Kochmer at May 5, 2008 4:27 PM [link]

Another thing that might be of interest concerning Putin. Evidently, there were two American submarines hiding from the Russians during the military exercises in Sept 2000,involving their most advanced sub, the Koursk, that the Russians were staging for their Chinise visitors in order to sell them hardware. The American subs were the Toledo and the Memphis. The Toledo apparently rammed the Koursk, possibly due to trying to get too close, but the water was shallow and there was no way of gauging the distance. The Toledo then backed off and the Memphis fired on the Koursk, blowing a hole in its torpedo compartment. Evidently, the Russians were hoping to demonstrate a new torpedo, the Svkhal to the Chinise, a torpedo that can go through water at 500 km/hr. This is also known to be lethal to our aircraft carriers and had the potential to completely shift the balance of power of US/Taiwan vs China. Needless to say, according to this book I mentioned, neither the Russians nor the Americans wanted American subs implicated in the disaster. Putin and Clinton agreed on that. Whether any of this is true or not, I have read elsewhere that the Koursk incident nearly caused WWIII. Evidently the Chinese already have Svkhal but the Koursk version was more recent. The Russians were reluctant to rescue the sailers in the Kursk and at first spurned foreign help. They then spun the story that an older type of torpedo, no longer used, blew up in the Koursk, causing all the damage. I find all of this fascinating, but you never know who to believe. Everyone has an ax to grind.

Posted by: aucourant at May 5, 2008 8:17 PM [link]

aucourant

Checkout these pictures of the Koursk.

http://www.englishrussia.com/?p=845

This fellow [haven't read all of it yet] tends to backs up your story.

http://tinyurl.com/4fzumn

Posted by: QT at May 5, 2008 8:59 PM [link]

Norm,

Re "We should have more pride of our country and of those that have made sacrifices before us.

If not what they did was all for nothing. "

Of what should we be proud--of shameful acts and corrupt policies? Should we celebrate self-aggrandizing exploitation of entire populations to feed the greed of elitist power mongers? Should we applaud the diminution of liberating traditions of rational exchange and cooperative betterment of common weal? Who should we admire among these "public servants serving themselves" or in the "think tanks" and lobbies that displace an Enlightenment heritage of rational discourse with self-serving rationalization acting out deception, misdirection and opportunities for plunder. "Pride goeth before the fall" as in "The Rise and the Fall of the American Empire."

Posted by: johojo at May 5, 2008 9:02 PM [link]

Forget about Masonic conspiracies and just look at the "fuzzy numbers" according to the US gubm't.

Google this and look at the budgets of the US and other interesting tidbits.
1990..2010 site:whitehouse.gov budget filetype:xls

The fuzzy inflation calculator could help out too.

http://www.westegg.com/inflation/infl.cgi

According to the 2012 estimate we should be headed for a decent (read pitiful) recovery to surplus out of the current recession. Losing 400% and then gaining back 62% doesn't mean you actually gained back 62% of your money, as I know all too well from my stock holdings.

Note that Homeland Security accounts for 7% of the entire 2007 IT budget. If you include it and Vet affairs and NASA in the defense budget (not sure if you would, but hey, we want to prove that there is more military spending than non) you end up with almost $40 billion in IT spend on military and $25 bil in civilian spend, where some of the civilian spend could also be considered military.

Could IT spend be considered a good indicator of growth? 2007 total investment saw a jump of 3% over 2006's 1% jump. That's not much of a raise in the IT world.

26% of IT spend for FY2007 fell into 6 categories. That's out of 4000+ line items.

They only spent $62M on Microsoft licenses for 2007? Good thing MS didn't buy Yahoo.

There's lots of fuzzy facts out there to enforce any truth.

Something tells me next year's budget will include funding for a big suit of iron with a cool mask and thrusters.

Master Chief anyone?

http://tinyurl.com/5n96t8

Posted by: wavesmash at May 5, 2008 9:30 PM [link]

ALOHA !!

We as Americans had our chance to be GREAT but instead we voted BIG into power instead. There is a vast difference between GREAT and BIG. When we voted for BIG we turned our backs on our Founding Fathers and they warned us against such choices over 230 years ago. In fact our Founding Fathers knew there was a good chance we would be weak against the moneychangers and they gave us ... We The People the legal right to rectify that mistake in the Declaration Of Independence. There remains only one real question and that is ... "Do we believe in our hearts as Americans that we deserve the right to throw out of power those that have been advocating BIG for so many decades and reinstate GREATNESS again"! Will we be GREAT or will we vote for the USSA?

Posted by: kaimu at May 5, 2008 9:38 PM [link]

Norm,
I will agree the Afghanistan campaign was the right thing to do. Pulling troops from Afghanistan to send them to Iraq and essentially letting Bin Laden go was pure folly though. Now we seem bogged down in both countries.

On the level of importance to our country equivalent to life saving medical proceedures, Afghanistan was a quadruple heart by-pass and Iraq was a hang nail.

The question is how a hang nail got in the way of our by-pass. And if the war on cardio terrorism is that important, shouldn't we get focused on saving our lives?

If however, this is about oil, and having it or not, and we are in Dick Cheney's version of Mad Max, then I think focusing the American inventive spirit on energy independence would be an appropriate choice and offer far greater return on investment in real security than offensive military operations with long supply lines, high equipment maintenance and replacement, inhospitable fractious aboriginal population(s), inhospitable environment,
under equipped and undertrained force to acheive 'political' objective in military stance positioned between two or three opposing fanatic religious factions.

The only thing that could possibly make it worse is if we get an actual miraculous sign from Allah, and he is pissed at us like everyone else.

But we joke. George and Dick seem to want to stay in Iraq forever. And John has no time limit to exit Iraq what so ever. They say it would be accepting defeat to leave.

I say they are failing to accept winning and leave.
Right or wrong, when you're done you're done.

They don't seem to accept they overthrew Saddam a few years ago now. Mission accomplished already.

Now they are throwing rocks at the Iran hornet nest? Whose army is going to fight that one?
Ours isn't in tip top form..... and resources....we can't respond to natural disasters here at home because we are running on National Guard troops in Iraq, not "professional military" like the government propagandists would have us believe. That and hired Blackwater mercenaries.

In my estimation Iraq is a corrupt sucking hole of lost human and financial resources on an unimaginable scale. An entire country run on American cash and flat out, no holds barred graft and corruption.
George and Dick, true to their vision, are giving the Iraqi's U.S. style democracy in THEIR image. Corrupt, torturous, and evil to the very core.

Posted by: Craig at May 5, 2008 11:18 PM [link]

Sheesh! After reading todays banter, there ought to be penalty flags laying all over, for 20 Troy Ounces or half the distance to the nearest Bollinger Band.

I was called out for some weak posts while suffering from a slow, miserable illness.
Fighting it.

I can't blame Bill for wanting a break. He's A1 in my book, and a true benefactor.

I'm off to Vegas Thursday for some fun and the Money Show next week. May the rest of you attending find it fruitful and post your ideas.

I am holding a huge number of gold and PM miners, DGP, RRPIX and the other short bond plays, and some CAF. Puts on USO and calls on DUG that have been + and - and not looking too hot today.

Either the confirmed H&S in the Dow or in Gold should fail. On the Gold+ side today. It's a real mess. I don't even think the technical charts will work, after 200 years of trend lines, now with an M3 growth of 17+%. How can Gold, Oil, the Dow or more properly the Wilshire 5000 be disjointed, unconfirming, throwing Hindenberg Omens, massive H&S technical failure patterns, and still have complete disagreement as to what is actually going on. Top or bottom?

My tie breaker is Peter Schiff and the like minded micro-Lemmings. Dollar collapse and ensuing chaos. We know the end game, just not the exact route as the Govt is known to use decoys along the way. I can now spot a liar, because they are the ones with mouths open on Financial TV. I would not have believed I'd ever see this in my lifetime in the USA.

Good luck to you all!

Posted by: Aurator at May 6, 2008 3:58 AM [link]

Since the middle of March we have been in intense rally mode in the indices. Looking back, at that point (mid-March) dozens of individual stocks met the criteria for accumulation that has been discussed on these pages for years. How many took advantage of that, pulled the trigger and have nice gains to show for it? How many succumbed to fear, went all cash or short? How many had mapped out a plan BEFOREHAND and stuck to it? How many went "by feel"? Despite what may or may not happen to the indices AT THIS POINT, how many recognize the value of having a SYSTEM in times like these, to help make the hard trade? (Fearful when others are greedy; greedy when others are fearful) Anyway, these are interesting questions to ask oneself in evaluating the past few months and whether one's trading is assisted by what one is reading or doing or hampered by it. Not that I am perfect in this regard. Not at all.

Good luck to all.

Posted by: MarkM at May 6, 2008 5:34 AM [link]

MarkM:
Thanks for finding time to drop in now and then again. As for me, I've gone away, it's MAY ;)

Posted by: C.Note at May 6, 2008 6:31 AM [link]

http://tinyurl.com/64nz2r

Some Cara100 stocks with ADX(8) > 50 and other stuff. India wants to halt grain futures trading and
200 economists sign a petition recommending against gas tax holiday. Free markets, eh?

Posted by: Ron at May 6, 2008 6:37 AM [link]

Good morning group.
Heads up on GIX.

Over the last 90 days, insiders as a group at Geologix Explorations (GIX) have bought 56,400 shares in the public market.
Leading the public market buying was CEO Craig Dunham who bought 25,000 shares between February 12th and April 4th
at prices ranging from $1.54 to $2.35. In addition, CFO Evelyn Abbott bought 11,000 shares at $1.37 on April 30th. The
most recent public market transaction took place on May 1st when the vice president of exploration bought 3,800 shares at
$1.40.
The largest accumulator of stock over the past three months was an officer who exercised 340,000 options early on March
11th at prices ranging between 42 cents and $1.30 and did not sell any shares. It is often considered a sign of optimism when
insiders exercise options but do not sell immediately.

Posted by: Canadiansailor at May 6, 2008 8:31 AM [link]

Good morning.

One Cara 100 Ratings Change to report:

HBC downgraded to Neutral @ UBS

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

Have a great day.

Posted by: Bull Hunter at May 6, 2008 8:36 AM [link]

Canadiansailor- thanks for that. I noticed GIX has been pretty resilient over the past few days while plenty of juniors have been taking a drubbing. This may help explain it. Small position.

Posted by: RH at May 6, 2008 8:40 AM [link]

RH: Your most welcome. I too have a small position,
but am considering to add to that. I think Kaimu and Jock have a high regard for GIX. (Please jump in here and correct me if necessary!)

Posted by: Canadiansailor at May 6, 2008 9:02 AM [link]

Cara 100 Update:

Price Target Lowered:

GG - $51 to $50 @ RBC
YHOO - $31 to $24 @ Cantor Fitzgerald

Posted by: Bull Hunter at May 6, 2008 9:18 AM [link]

Hey 2nd_ave, it's good to see you back in the action -- it's hard to leave the market game copmletely, isn't it? :) What does your intuition tell you about the latest market action? Does it feel like a double top forming for DOW in the 13000-13100 range or does it feel like a final break through 13000 on its way to 14000?

What do others think?

DavidV

Posted by: David at May 6, 2008 3:15 PM [link]

May 3, 2008

Bill Cara's Community Chat, Sat., May 3, 2008, 5:22am ET

All Tables

Knobias Cara100 Tables For Friday

Cara 100 Daily RSI-7 Charts

Discourse

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