have fun Bill

"The weakness right now is obviously in QID rather than QQQQ." David- I don't know what to make of QID...you're a sharp guy-> maybe you can design a spreadsheet program that displays the effect of each day's resetting on QID prices, so one can tell just how 'weak' it really is...right now, i'm not sure how helpful it is to look at charts of ultrashorts...

i know what you mean about not being able to daytrade...can't always keep an eye on things myself, so it usually ends up being a watered down version, and maybe full-time traders have learned to use certain times of the (work) day against us...

all i can say is you learn more each day about the game and about yourself...hopefully one day we'll be a gaming club with a bad winning problem...;)

Heading up to the west shore of Michigan for the weekend . . . will check back later for WIR.

Fuel report: Neighborhood (Chicago) gas station about 2 blocks away--regular at $4.249 . . . that's why on these trips, I fill up in Indiana or Michigan which is usually .20 cheaper . . prices seem to be changing at the pump every other day if not daily . . glad we don't drive much except for trips to MI.

Beautiful day @ Wrigley yesterday :)

Re: Oil/gold ratio.
David, no doubt oil could fall in price to return the ratio towards the "norm". I personally doubt that we'll see much of a decline in consumption, so I doubt we'll see a big price decline. As I understand it there are fairly substantial positions in the far out months at higher prices, the implication being that physical consumers (such as airlines) are expecting these price levels to hold, whereas speculative activity is typically in the near months.
If oil were to fall, then there's some implication that the price of gold does not fall (or fall as much). I don't trade commodities, but I don't think a stable gold price at these levels is fully factored into the prices of the senior gold miners, and a fall in the price of oil would benefit the big open pit miners.
Disclosure - I own a couple of Canroys and a lot of miners.

Kaimu -

thnx for explanation of delivery issue on gold/silver shorts.

Kind of like the threat of a "bank run". I wonder if there are agreements for gold from Fort Knox to back up paper certificates.

Then, GATA questions how much gold there really IS at Fort Knox.

Thank God we have the full faith and credit of George W. Bush to back this all up !!!

Re: Gold Market

Here is the "Commodity Futures Trading" website weekly gold chart. Look at the Chaikin Money Flow indicator for the last few weeks and compare it with the lowest ebb of the summer of 2006.

The present correction in gold was counter to seasonality according to the seasonality overlay, so a rally in gold prices at this point would also be counter to seasonality. Chaikin Money Flow has improved this week, we'll see during the next week how the gold price fares with increased money entering the picture:

http://www.flickr.com/photos/11747277@N07/2499544466/

http://www.timingcharts.com/index.php

ALOHA !!

F6 posted yesterday ... "Take note of the forecast that investor demand will continue to rise. (but I personally believe this will not guarantee rising prices, gold can still be under great demand at much lower levels even if there is a deflationary recession.)"

Bill posted yesterday ... "We traders need to sell as much as we buy and we can only do that if we remain independent and objective and focused on the data.]"

My take is that all the "market stuff" works quite well until there is an actual "monetary crisis"(until it doesn't). That is what nobody in America seems to have planned for. While in 1929 the stock market melted down and then in the 1930s we had a depression, but when FDR staved off a "monetary crisis" by confiscating the citizens gold we never met that fate ... yet! Remember though even back in those doom and gloom years we and the World were still on a gold standard.

This is why I keep saying we are in uncharted monetary waters now, since in all of human history there has never been an Empire whose reserve currency was backed by nothing! The US EMPIRE is the Worlds first "fiat based" reserve currency. Given the fact we are all human "fiat based" translates to "debt based". More "debt" means more monetary inflation and I have some 95 years to back that statement up! Why? Because the debt based fiat system only works when debt slash "money" is growing. Like a monetary virus if you will ...

To me with the derivatives markets imploding the US Banks and the global money masters attempting to print their way out of doom which begets irreversible inflationary cycles fed further with the $3 trillion War On Terror and the increasing military build up of China and Russia and not forgetting that nearly half of the US government's tax base is soon attempting to retire the horizon looks vastly more like a "monetary crisis" will finally visit the shores of America. When that happens the same "monetary crisis" will visit the rest of the fiat based currencies. As I have said before a "monetary crisis" is a crisis in CONFIDENCE that there is no store of value left in one's currency. Once CONFIDENCE is lost there is no quick fix! Sometimes I believe we Americans believe in a "quick fix" as much or more than our own US PESO! The blinders are not only "on" but they have been permanently surgically implanted by 95 years of FED monetary brainwashing the masses through their statist factory public schools of propaganda. Sounds a lot like 1984!

Gold, silver and producing farmland guarantee long term survival. Make no mistake I am a "survivalist more than a trader". I believe in tangible hard assets that have survived the test of time. I do not believe in paper and iPods!

IT ALL WORKS UNTIL IT DOESN'T ... ITS A BRAVE NEW WORLD!

ALOHA !!

Seamus ... I often wonder why Hawaii gas, imported much further than oil from the Gulf and Venezuela is so much lower than where you are. Perhaps it has to do with the fuel requirements of the US Navy and US Air Force based here, which is a substantial military presence.

ALOHA !!

Jock ... I believe the Ft. Knox gold is spent or lent! If it were not then the gold price would still be at $300USD!

Nobody here ever sees who buys all this gold the FED and ECB is selling!

Gold sector comment based on chart data

Friday's close broke the daily downtrend from the March and April tops for gold, HUI, XAU, GDX. The April pullback in the gold sector occurred when they were all near their upper bollinger bands, and right now there is some room to go higher before nearing the upper bollinger bands again. Furthermore, the May 1 bottom was accomplished with bullish divergences which should have been bought by an alert and aggressive trader on May 2.

The moral of the story for me is make decisions based primarily on price data, not any person's opinion.

I expect the GDX puts I sold at the end of April to expire worthless, or they will be put to me at a cost basis under $38.

Something must be up. Jim Sinclair has put on notice that those with sell orders for gold should cancel them before Asia markets open.

http://www.jsmineset.com/

http://tinyurl.com/62mxjn

An overview of some 'timing' mechanisms.

Posted by: 2nd_ave: "maybe you can design a spreadsheet program that displays the effect of each day's resetting on QID prices, so one can tell just how 'weak' it really is..."

My first "alarming" simulation of the ultrashort behavior considered the case when the underlying index has daily returns of plus or minus 10%, in which case the ultrashort declines fast even if the index oscillates in place. Now I tried a more realistic scenario, where the daily returns of the underlying index are small. First, I analyzed the case where closing price of the underlying index declines in a zig-zag fashion, dropping by 1%, rising by 0.5%, dropping again by 1%, etc. Then, after 9 days the index is down by 3% and the 2X ultrashort is up by 6.09%. If the index goes through the reverse of this sequence and is up by 3% after 9 days, then the ultrashort will be down by 6.09%. If the index drops by 1% and then comes back, drops by 0.5% and comes back, drops again by 1% and comes back, etc., then after 8 days the 2X ultrashort will be down by 0.15% and after 20 days it will be down by 0.38%. So if the daily returns of the underlying index are small, then its oscillations have a little effect on the ultrashort over a period of a week or two.

Yahoo charts show that over the past month QQQQ is up by 10% and QID is down by about 17%. Over the past 3 months, QQQQ is up by 15% and QID is down by 27%. So QID buyers should be happy rather than disappointed. :)

Coming back to the question of the right strategy for trading a manipulated market. Is the lesson here to simply stay away from such markets if one cannot do daytrading? Or is scaling into QID (or gradually increasing a short position in QQQQ) a reasonable strategy now, given that the economy is heading into a recession? [We may be in a recession now, but it has not been officially recognized yet, and so there is a possibility of an abrupt drop in the stock market once this realization becomes official.]

DavidV

Thanks Bill…

Our FREE breadth based sector performance reports shows the broadest buying in the Transportation, Energy & Oil, Semiconductors, Materials, Retail, Real Estate and Utility Sectors (among many others). You will also notice that only 13 sectors failed to have stronger than 0% breadth, this is a very strong signal.

It looks to us like the market used up a great deal of its energy this week just in arriving at the sma200. Overall, we would expect some consolidation next week. There are probably so many traders out there expecting the blast through to happen next week that what might happen is a head fake early in the week above the sma200’s and then back under for more consolidation.

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

David- my understanding is that in retrospect, the market indexes will have led the actual recession by 6-9 months, so i don't know that a headline making it official will have much effect on prices...

so based on your simulations, buying QID right now would in fact be on weakness...personally, i'm probably not going to take a position, simply b/c negative sentiment still seems to favor the bulls...my one long position right now is china, where the SSEC is still down 40% from last year's high, and i still think beijing has every reason to work it higher...

speaking of china, here's an interesting take comparing the earthquake in china with the 9/11 attacks in the US as a sentiment-changing event:

http://tinyurl.com/5lavhk

excerpts:

"China's deadliest earthquake in a generation has jarred Chinese who expected to be reveling in anticipation of the Beijing Olympics. In less dramatic ways, the disaster is shifting perceptions between China and the world, deflating the contentiousness building around the games.

Newspaper front pages and all-news television around the world have filled with sympathetic coverage since the quake battered a vast, mountainous area, killing tens of thousands. The authoritarian Chinese government's rapid, full-throttle rescue and the unprecedented flow of news it has allowed have enabled ordinary Chinese and foreigners to share in the immense tragedy.

More than just knocking bad press about the Beijing games out of the news, the disaster has given China and the world a chance to reassess.

Foreign audiences, especially in the West, are empathizing with the Chinese perhaps more than any at time since democracy demonstrators occupied Tiananmen Square 19 years ago. At the same time, the quake's devastation has diminished the importance for Chinese of Olympics in August and the accolades from abroad that a spectacular Games was supposed to bring.

"This is a turning point. We're seeing a reconciliation," said Wenran Jiang, a Chinese politics expert at the University of Alberta.

Foreign leaders are sending condolences and aid, instead of discussing boycotts of the Olympics.
The comparison that some Chinese make is to Sept. 11, 2001, when a spirit of volunteerism and patriotism buoyed Americans after the terror attacks.

Many overseas in the West may not be ready to accept the communist leadership as a force for good; it still persecutes people for political activism or religious beliefs. But in the wake of earthquake, it is being recognized for doing some good."

Usually if dollar goes down gold and oil goes up
But lately oil is up dollar is also up and gold went down
This is unusal. So, oil has to go down

But demand is there and oil may not go down
Yesterday Unemployment in MA came at 3.3%
Because of Olympic and earthquake restructuring demand in china will be there
There is national election coming up in India and ruling party
Will do everything to pop up economy more to win the election

I think recession never started in us. So there is no issue that it ended.
So, I think market is going up for a while and gold, oil, dollar will maintain there position
Where it is

vinod- interesting take...that would have to be the ultimate fake-out, if in fact no recession occurs in the US, and the indexes simply go on an extended topping process...

John Embry - "Last call to board gold train at USD 1000"

Thanks Bill, FranSix, Kaimu, others for posting on the Embry article. I've made some big decisions this year in regard to staying long silver based on his statements, so I appreciate some perspective from billcara.com on Embry's views.

Huh. Long John Silver. That's a character from Robert Louis Stevenson's "Treasure Island". How apropos.

Yeah, I'm kind of underwater on that long call right now.

2nd

will watch tech and S&P
and I hope we ente qid/smn/dug at right time
look like money to be made if we hit it right

No matter how you define a recession, it just
not looking good.
I have shown NBER's four favorite yardstick to measure slowdowns and there are four looking charts.

No matter how you define a recession, it is just
not looking good.
I have shown NBER's four favorite yardsticks to measure slowdowns and they are four ugly looking charts.

Moyers: 'Democracy in America Is a Series of Narrow Escapes, and We May Be Running Out of Luck'

By Bill Moyers, Doubleday. Posted May 17, 2008.

For all of America's shortcomings, we keep telling ourselves, "The system works." Now all bets are off.

The following is an excerpt from Bill Moyers' new book, "Moyers on Democracy" (Doubleday, 2008).

Democracy in America is a series of narrow escapes, and we may be running out of luck. The reigning presumption about the American experience, as the historian Lawrence Goodwyn has written, is grounded in the idea of progress, the conviction that the present is "better" than the past and the future will bring even more improvement. For all of its shortcomings, we keep telling ourselves, "The system works."

Now all bets are off. We have fallen under the spell of money, faction, and fear, and the great American experience in creating a different future together has been subjugated to individual cunning in the pursuit of wealth and power -and to the claims of empire, with its ravenous demands and stuporous distractions. A sense of political impotence pervades the country -- a mass resignation defined by Goodwyn as "believing the dogma of 'democracy' on a superficial public level but not believing it privately." We hold elections, knowing they are unlikely to bring the corporate state under popular control. There is considerable vigor at local levels, but it has not been translated into new vistas of social possibility or the political will to address our most intractable challenges. Hope no longer seems the operative dynamic of America, and without hope we lose the talent and drive to cooperate in the shaping of our destiny.

The earth we share as our common gift, to be passed on in good condition to our children's children, is being despoiled. Private wealth is growing as public needs increase apace. Our Constitution is perilously close to being consigned to the valley of the shadow of death, betrayed by a powerful cabal of secrecy-obsessed authoritarians. Terms like "liberty" and "individual freedom" invoked by generations of Americans who battled to widen the 1787 promise to "promote the general welfare" have been perverted to create a government primarily dedicated to the welfare of the state and the political class that runs it. Yes, Virginia, there is a class war and ordinary people are losing it. It isn't necessary to be a Jeremiah crying aloud to a sinful Jerusalem that the Lord is about to afflict them for their sins of idolatry, or Cassandra, making a nuisance of herself as she wanders around King Priam's palace grounds wailing "The Greeks are coming." Or Socrates, the gadfly, stinging the rump of power with jabs of truth. Or even Paul Revere, if horses were still in fashion. You need only be a reporter with your eyes open to see what's happening to our democracy. I have been lucky enough to spend my adult life as a journalist, acquiring a priceless education in the ways of the world, actually getting paid to practice one of my craft's essential imperatives: connect the dots.

The conclusion that we are in trouble is unavoidable. I report the assault on nature evidenced in coal mining that tears the tops off mountains and dumps them into rivers, sacrificing the health and lives of those in the river valleys to short-term profit, and I see a link between that process and the stock-market frenzy which scorns long-term investments -- genuine savings -- in favor of quick turnovers and speculative bubbles whose inevitable bursting leaves insiders with stuffed pockets and millions of small stockholders, pensioners, and employees out of work, out of luck, and out of hope.

And then I see a connection between those disasters and the repeal of sixty-year-old banking and securities regulations designed during the Great Depression to prevent exactly that kind of human and economic damage. Who pushed for the removal of that firewall? An administration and Congress who are the political marionettes of the speculators, and who are well rewarded for their efforts with indispensable campaign contributions. Even honorable opponents of the practice get trapped in the web of an electoral system that effectively limits competition to those who can afford to spend millions in their run for office. Like it or not, candidates know that the largesse on which their political futures depend will last only as long as their votes are satisfactory to the sleek "bundlers" who turn the spigots of cash on and off.

The property qualifications for federal office that the framers of the Constitution expressly chose to exclude for demonstrating an unseemly "veneration for wealth" are now de facto in force and higher than the Founding Fathers could have imagined. "Money rules Our laws are the output of a system which clothes rascals in robes and honesty in rags. The parties lie to us and the political speakers mislead us." Those words were spoken by Populist orator Mary Elizabeth Lease during the prairie revolt that swept the Great Plains slightly more than 120 years after the Constitution was signed. They are true today, and that too, spells trouble.

Then I draw a line to the statistics that show real wages lagging behind prices, the compensation of corporate barons soaring to heights unequaled anywhere among industrialized democracies, the relentless cheeseparing of federal funds devoted to public schools, to retraining for workers whose jobs have been exported, and to programs of food assistance and health care for poor children, all of which snatch away the ladder by which Americans with scant means but willing hands and hearts could work and save their way upward to middle-class independence. And I connect those numbers to our triumphant reactionaries' campaigns against labor unions and higher minimum wages, and to their success in reframing the tax codes so as to strip them of their progressive character, laying the burdens of Atlas on a shrinking middle class awash in credit card debt as wage earners struggle to keep up with rising costs for health care, for college tuitions, for affordable housing -- while huge inheritances go untouched, tax shelters abroad are legalized, rates on capital gains are slashed, and the rich get richer and with each increase in their wealth are able to buy themselves more influence over those who make and those who carry out the laws.

Edward R. Murrow told his generation of journalists: "No one can eliminate prejudices -- just recognize them." Here is my bias: extremes of wealth and poverty cannot be reconciled with a genuinely democratic politics. When the state becomes the guardian of power and privilege to the neglect of justice for the people as a whole, it mocks the very concept of government as proclaimed in the preamble to our Constitution; mocks Lincoln's sacred belief in "government of the people, by the people, and for the people"; mocks the democratic notion of government as "a voluntary union for the common good" embodied in the great wave of reform that produced the Progressive Era and the two Roosevelts. In contrast, the philosophy popularized in the last quarter century that "freedom" simply means freedom to choose among competing brands of consumer goods, that taxes are an unfair theft from the pockets of the successful to reward the incompetent, and that the market will meet all human needs while government itself becomes the enabler of privilege -- the philosophy of an earlier social Darwinism and laissez-faire capitalism dressed in new togs -- is as subversive as Benedict Arnold's betrayal of the Revolution he had once served. Again, Mary Lease: "The great evils which are cursing American society and undermining the foundations of the republic flow not from the legitimate operation of the great human government which our fathers gave us, but they come from tramping its plain provisions underfoot."

Our democracy has prospered most when it was firmly anchored in the idea that "We the People" -- not just a favored few -- would identify and remedy common distempers and dilemmas and win the gamble our forebears undertook when they espoused the radical idea that people could govern themselves wisely. Whatever and whoever tries to supplant that with notions of a wholly privatized society of competitive consumers undermines a country that, as Gordon S. Wood puts it in his landmark book The Radicalism of the American Revolution, discovered its greatness "by creating a prosperous free society belonging to obscure people with their workaday concerns and their pecuniary pursuits of happiness" -- a democracy that changed the lives of "hitherto neglected and despised masses of common laboring people."

I wish I could say that journalists in general are showing the same interest in uncovering the dangerous linkages thwarting this democracy. It is not for lack of honest and courageous individuals who would risk their careers to speak truth to power -- a modest risk compared to those of some journalists in authoritarian countries who have been jailed or murdered for the identical "crime." But our journalists are not in control of the instruments they play. As conglomerates swallow up newspapers, magazines, publishing houses, and networks, and profit rather than product becomes the focus of corporate effort, news organizations -- particularly in television -- are folded into entertainment divisions. The "news hole" in the print media shrinks to make room for advertisements, and stories needed by informed citizens working together are pulled in favor of the latest celebrity scandals because the media moguls have decided that uncovering the inner workings of public and private power is boring and will drive viewers and readers away to greener pastures of pabulum. Good reporters and editors confront walls of resistance in trying to place serious and informative reports over which they have long labored. Media owners who should be sounding the trumpets of alarm on the battlements of democracy instead blow popular ditties through tin horns, undercutting the basis for their existence and their First Amendment rights.

the link for the above article:

http://www.alternet.org/democracy/85521/

The 10 corperations that own all media in the U.S.

http://www.thenation.com/special/bigten.html

ALOHA !!

As you read this article on Putin think of the $55bil Bear Stearns bailout of JP MORGAN! YES ... you read that right! Essentially Bear Stearns collapsed so JP MORGAN could be bailed out on the down low! Then think about the other $200bil+ US Taxpayer money the FED has publicly handed over to US Banks, while not even a peep is heard from the Average Joe on this pilaging of public funds.

This article is all about corruption in Russia that actually reflects the same corrupt governments of the West, even though I am sure that was not the BBC reporter's intent!

The BIG PICTURE is mentioned only briefly in this article. The BIG PICTURE still reflects the 20+ years where the search for new reserves for all commodities, especially metals, were supressed by the combination of futures markets, corrupt government policies, brutal dictatorships and misaligned investor mania into the false wealth of consumerism and financial oligarchs, which now rule the World's monetary resources and faux-GDPs.

The World is now turning its attentions to the long forgotten "real wealth" of resources and monetary metals and realizing for the first time that supplies will not be in the seemingly unending, plentiful supply they once were. While ever rising global populations of humans and new BRIC industrializations are symptoms the real reason is the cost to produce and search for new reserves has taken a back seat to the global governments propensity for larger fiat reserves! Its all a bank coup-de-tait but not for the reasons they want you to see.

READ ON:
Russia: A totalitarian regime in thrall to a Tsar who's creating the new Facist empire
By JONATHAN DIMBLEBY

17th May 2008

As ex-President Putin settles in to his new role as Prime Minister, he has every reason to congratulate himself.

After all, he has not only written the script for his constitutional coup d'etat, but staged the play and given himself the starring role as well.

Of course, he has given a walk-on role to Dmitry Medvedev, his personally anointed successor.

But the transfer of power from Putin to his Little Sir Echo, Medvedev, and the show of military strength with those soldiers and clapped-out missiles in Red Square on Victory Day which followed it last week, made it clear who is really in charge.

No decision of any significance for the Russian people or the rest of us will be made in the foreseeable future without the say - so of Medvedev's unsmiling master.

Just before he stood down as President, Putin declared: "I have worked like a galley slave throughout these eight years, morning til night, and I have given all I could to this work. I am happy with the results." (more)

Link: http://tinyurl.com/6fxu5g

I imagine George Bush must look out onto his Kingdom and say much the same ... As do the Titans Of Wall Street! Is the World not littered with such egomaniacs? No power hungry insecure democratic dictator works their entire life like a "galley slave" to gain power over the masses and then does not use it! That includes the fear mongers that now control the US Treasury and the President of the USSA ...

In the interest of discerning lessons about "country risk" I suggest you read the entire article. In my opinion "country risk" is quickly trumping "management" in terms of due diligence criteria. Hence my move to Australia for resource companies.

http://tinyurl.com/5hlpzz

If you've fixed the problem Doctor Bernanke, then why do we need to increase the treatment? Sunday
Morning coffee.

ALOHA !!

Bill posted on WIR ... "Disney under the latest CEO Robert Iger is an impressive story. The business needs good management because they deal with discretionary purchasing consumers who have lots of options. TV (ABC and ESPN) is 42% of revenues; Theme Parks, Resorts and Cruises are 30%; Films are 21% and Stores at 7%. The brand is strong."

Having watched DISNEY grow over the decades from the inside out I believe DIS has covered its bases on the wide array of consumer choices to "distract themselves from the pain of their real world"! Well ... we all have to have some "fun" ... its not all about WORK is it?

I grew up in the FantasyLand of movies and theme parks running amok on the backlots of Desilu and Warner Bros and the original DisneyLand in Anaheim, California. I know all about distractions! I am always amazed at how I ended up here isolated from the World in the "distraction free" jungles of Hawaii. Even so, I am still connected to DISNEY in that DISNEY STUDIOS is one of my flower customers.

Here is my prediction for the belegured American consumer who will still value "distractions"! As discretionary income evaporates the USA will become more Third World like. One of the top distractions of any Third World country that I have ever lived in or visited has been "movies". Go to Mexico or India or even Fiji and the movie theatres are always jam packed! Now Americans may be able to afford TV as their main form of "fun" but more and more as cable costs rise and incomes don't those on the lower end of the financial totem pole will not be able to afford the escalating $48 per month bill. As Americans forgo normal vacations to all points of the globe due to cost, especially foreign vacations to Europe, they will stay at home more which means more revenues for TV. If you can't physically take a vacation then you can in your mind even if it is only a couple hours!

The outlook for movies becomes better than ever during recessions and depressions. Profit margins will certainly shrink(Angelina & Brad will have to take a pay cut)in a depression but at that point survival is the key.

Movies have always survived or should I say "pain medication"! HA! That's about what it all boils down to ... Buddah said "Life is suffering .." The first media mogul and he didn't even know it!

jk484,

Thanks for posting the excerpt from Bill Moyers new book, _Moyers On Democracy_. His assessment rings true to me; I fear that the "American experiment" is on the verge of imploding into crassly commercial despotism.

I like Bill Moyers. He is smart and honest, but that does not mean he is right. This country has survived and prospered in the face of much greater challenges than we face today. The Civil War, the great depression and the second world war are just 3 examples.

The flaw in Moyer's argument is that he fails to compare alternative places to live.

I do not think many will emigrate to China. Even Jimmy Rogers is not in China even though he sold his Manhattan townhouse ostensibly to move there.

Every country in Europe has greater problems than the US without enjoying the status of superpower.

Africa - never.

Australia might be an option but it is not capable physically (drought) or politically of accepting large numbers of immigrants. Furthermore, its proximity to China while a blessing in boom times can be a serious drawback if China pursues its expansionist agenda.

IMO the US, in spite of all its drawbacks, is the one country that will remain the beacon of hope and will attract the best and brightest. That dwarfs all the negatives. Of course the crooks have to get punished again and the laws will have to be changed again in order to restore the necessary sense of hope, but it will happen this time as it has always happened before.

Roger Nausbaum (Random Roger) often has some interesting comments about ETN’s and ETF’s, and he recently discussed Wisdom Tree’s new currency ETF’s. In his commentary, he included this comment about the Chinese Yuan ETN (CNY) that is offered by Van Eck:

“ .. I might be missing something but according to the Van Eck site CNY should track the S&P Chinese Renminbi Index less the fee. In the year ending March 31 this index was up 8.68%. The actual exchange rate in that time saw the yuan rise 10%, a 1.32% lag for the index.

The market for yuan is complicated and that sort of variance is not shocking. But in just two months the variance between the [CNY]fund and the actual exchange rate has been more than 3% and to look at the chart the correlation looks like it is negative.[chart shown at link below] ... .
– more at link --
http://tinyurl.com/5gh2ww

My comment follows. ETN’s of course don’t own any currencies,etc;, the fund merely *promises* to track an index and puts up bonds (whose and what type of bonds??) to back up the ETN. It is my understanding that if the underlying bonds lose value then the ETN will reflect that change in addition to any changes in the index to be tracked. I may be wrong, but I do not own any ETN’s.

If Wisdom Tree’s NEW currency ETF’s show a better tracking record with good volume, I probably will trade those ETF’s - no position currently.

there are many people who sit back and watch as their lives go downhill, then get it together just in time...how many westerns spend the first 90 minutes taking apart a life or a town, before someone puts on a badge and cleans things up...the US can be like that sometimes-> those with the ability to cleans things up get interested when things get bad...

wonder how many calls/letters spitzer receives every day asking for his help...what did they have on him that made his resignation inevitable...it's easier to overlook the sheriff's boozing and womanizing when yahoos are looting and terrorizing your town...

maybe "don't get interested until things get bad" works better....

ALOHA !!

Okay folks ...

Here it is! If you think you're an expert politico now you can "profit" from it ...

If you you are a weather nut you can now profit ...

Earthquake futures anyone?
Bird Flu futures?

Its all here and possibly this will be the next GOOGLE of the futures world ... Hummmmmm???

IN TRADE

Link: http://www.intrade.com/

ALOHA !!

lessmore posted ... "This country has survived and prospered in the face of much greater challenges than we face today. The Civil War, the great depression and the second world war are just 3 examples."

Problem there is you are comparing apples to oranges! Each one of those past catastrophes happened when our money was still under a gold standard ... Money was still honest!

Honest money no longer exists and that is the point I have been trying to make at this blog for years yet even today nobody really sees that literally ALL BETS ARE OFF!! Due to a World reserve currency that is purely fiat and with no other global currency that isn't purely fiat the entire global financial system exists in an ether of "faith and credit" ... its all DEBT! And will someone please inform me when DEBT has ever saved anything historically? We are in a BRAVE NEW FIATWORLD! And guess what? Historically FIAT has never survived! This has been my call to arms for AMERICA for years now! Only one political US PRESIDENTIAL candidate for 2008 has ever spoke of this matter ... RON PAUL!

Once again, as a patriotic American, who believes fervently in the US Constitution and the Bill Of Rights and the Declaration Of Independence, where is OUR GOLD? WE THE PEOPLE used to have the largest gold reserve on Earth, do we still? Why is it the US government does not make that info transparent. Do WE THE PEOPLE not have the right to audit our own gold reserves?

When the FED and the ECB sell off huge amounts of gold WHO IS THE BUYER?

The basis for financial survival is the life blood of finance and that blood is "money"! Our money is tainted and has been for decades now. Survival ... a true cure ... will require a complete transfusion of the monetary system. Without that everything else is just a band-aid!

Kaimu

Reference gas prices: Illinois has a higher state tax on gasoline than most if not all states. In addition, the City of Chicago has a tax on gasoline. Haven’t checked, but I think the county also gets their piece of the pie. Have noticed in my travels over the years, the San Francisco bay area seems high at times also, but maybe that was when there was an Oakland area refinery fire. 2nd and N2son could probably verify.

Reference cable costs, you wrote: “as cable costs rise and incomes don't those on the lower end of the financial totem pole will not be able to afford the escalating $48 per month bill.”

Don’t know if you were just throwing a figure out there, but $48 per month looks cheap from these seats. Companies charge more after enticing consumers in with special 6-12 month pricing, and then jack it up quickly. Think some local taxes added to that bill also. Thankfully, there are two providers where we live.

Key to cable for consumers is to have competition. If a town or city only has one provider, the cable company takes full advantage. Consumers who want cable access have no other choice. Have always believed in a minimum 2 company availability choice for the public. Unfortunately, some jurisdictions in the country have accepted only one provider after collecting an exclusive licensing fee from a deep pockets company like Comcast for example. Then their citizens are trapped with high fees.

Bill wrote about preferred financial stocks on Friday. Didn't have time to comment then, but here's my 2 cents for those looking at fixed income preferreds.

Know some may be tempted by those high dividend paying preferred bank shares Bill mentioned Friday, but can’t agree more now is not the time. Lots of land mines in the financial preferred area and you have to read the small print.

Usually after issuance the price drifts down, just check some that came out last fall or early winter at price of 25 with a 6% dividend like one of FITB’s preferreds. (This is all from recollection) Maybe they’re down to 20-21-22 (from 25 issuance price) now paying a yield equivalent to the current offers of others at 8%, but they dropped quickly after issuance before that. I'd expect the same from recent issues when more bad news comes out, perhaps when losses on equity loans and credit cards show up.

Another thing, just last week, IMB suspended, yes, suspended, their preferred dividend. It can happen. Check Santoli's article in this week's Barron's which also mentions stock dillution by IMB through it direct stock purchase program. Feel sorry for the "widows and orphans" who bought this one.

Looking elsewhere for some fixed income? Some of the telephone companies have some high paying preferreds, but a lot of them have huge debt. Don’t have any notes with me, but off the top of my head recall TDS has at least two preferreds, TDA and TDI, that pay some high dividend rates. But you have to do your own due diligence (doydd) to see how viable and competitive the company is. Imagine S, VZ and T may also have some preferred out there.

Don’t watch Craemer much if at all, but recall him mentioning an F preferred over the F common stock. May even have been a convertible also. But again that’s the auto business and you have to doydd.

Only preferred stock I have personally owned (and still do) is a Fortune 500 company in the agriculture area, along with an energy component. It has no common stock, but a preferred, CHSCP, paying @ 7.8-8% yield, depending on purchase price. I’ve mentioned it before, not much volume, trading between 25-26 most of the time, although recall it dipping for a very short time below 25 around February when farmers from their cooperative usually cash in preferred stock to buy farm equipment (per a CHS spokesperson). Beats a money market when having cash on the sidelines. Also, in the U.S., you pay less tax on the dividend than on the mm interest. But again please doydd.

Kaimu,

I see that all bets are off. Please take a shot at answering your own question. Who IS buying all the gold that central banks are selling?

vinod: why do you think the US may not even have a recession? Just because the market has been going up in the past 2 months? If so, then we are at the point now when the market has faked enough people to actually "buy" the "no recession" story, which should indicate the end of this rally.

How can anyone decide that the worst is behind us when the major economic factors have not started to bottom out yet? The consumer is getting squeezed more and more every month, the industrial production keeps falling, the real estate market is getting worse and worse, draging down both the consumer and the financial sectors, so how can the worst be behind us? Unless the oil prices start heading south, I will keep treating this as a bear market.

If anyone thinks that we have seen the bottom of the stock market for the next few years, can you please share your reasons?

Thanks,

DavidV

Good evening Kaimu:
I read your answer, and frankly I do not agree with your one dimensional single theme (gold) approach here. Gold is not and has never been what makes the US the great country it is. It is the quality of its people that makes this country great and the unique opportunity that the country offers the best and brightest minds from around the world.
Regards,

"The flaw in Moyer's argument is that he fails to compare alternative places to live."

Was Paul Revere looking for another place to live?

The "comparative" argument is a red herring and means nothing. It's only relevant if you are in a race to the bottom or are a complete fool, which we have to trust is not the case.....

What man in financial straits takes solace in comparing his bankruptcy with that of his neighbor? His neighbor is completely irrelevant, unless it is his boss or majority account...which may be the case here. It remains to be seen, which drowning man will throw the other a life ring?

Moyer's isn't *moving* to somewhere in Europe or Asia, he's trying to warns us to resolve the problem(s) before it is too late.
It's the logic of a patriot, not a cut and runner. The only comparison is the country before, and the country now, and how to put it back in the hands of the citizenry and take it out of the hands of corporations and tycoons.

david
Right now us economy is diverse. And when one sector of economy is down (housing)
It does not take whole economy down but produce result like slowdown.

Housing is down while export is up and demand for us product is going up and
There is no slow down in it.

High productivity of us worker keeps inflation in check
And many have said do not fight fed

Many has given opinion that recession, started, started six month ago, we are near end, it will end in six month, they have no idea about this

John Mauldin writes about the retail sales that "supposedly" increased in April:

"Many commentators, looking for a bullish lifeline, have pointed to the fact that retail sales grew in April by 1.8% over this time last year. But that is truly grasping at straws. Just last November they were growing at 6% year over year and have been dropping relentlessly for the last six months. And as good friend and data maven Greg Weldon points out, retail sales last November were 1.3% over inflation and now are a negative 2.1% below inflation. Retail sales are clearly headed down. (www.weldononline.com, a must-read for those who need in-depth analysis of all things and data economic)

But there was growth. Gasoline sales were up 16.3%. And food sales were up 6.1%. 77% of the increase in retail sales this year has been from increases in food and gas sales. If you take out food and gas, retail sales are down by about 2% in the last three months.

The consumer is getting squeezed."

If consumer represents about 70% of the economy and is greatly cutting his/her spending, while industrial/manufacturing, which represents 20-30% of the economy is also going down (industrial production reading this week was much worse than expected), how can the worst be behind us?

There were 3 bear market rallies of 20% during 2001-2002, so it might not be wise to use the recent market rally as an indicator that we are out of a recession that was never officially recognized.

DavidV

To counter my own view that we haven't seen the bottom of the market yet, there may be good reasons for turning bullish now, which I have deduced by studying the trading rules of the famous trader Dennis Gartman (copied below). I think the point of these rules is that by adding to winning positions and cutting the losing positions one will gain a lot when the market volatility is low and will keep losing a little while the market volatility is high and no clear trend is present. Over long periods of time this might be a safer strategy than scaling in on weakness and waiting to sell into strength. The latter strategy might work well for day traders (and 2nd_ave gives us an example of it working well), but eventually might lead to ruin those who are planning to keep the losing positions until they become profitable. What do others think?

******

1. Never, Ever, Ever, Under Any Circumstance, Add to a Losing Position... not ever, not never! Adding to losing positions is trading's carcinogen; it is trading's driving while intoxicated. It will lead to ruin. Count on it!

2. Trade Like a Wizened Mercenary Soldier: We must fight on the winning side, not on the side we may believe to be correct economically.

3. Mental Capital Trumps Real Capital: Capital comes in two types, mental and real, and the former is far more valuable than the latter. Holding losing positions costs measurable real capital, but it costs immeasurable mental capital.

4. This Is Not a Business of Buying Low and Selling High; it is, however, a business of buying high and selling higher. Strength tends to beget strength, and weakness, weakness.

5. In Bull Markets One Can Only Be Long or Neutral, and in bear markets, one can only be short or neutral. This may seem self-evident; few understand it however, and fewer still embrace it.

6. "Markets Can Remain Illogical Far Longer Than You or I Can Remain Solvent." These are Keynes' words, and illogic does often reign, despite what the academics would have us believe.

7. Buy Markets That Show the Greatest Strength; Sell Markets That Show the Greatest Weakness: Metaphorically, when bearish we need to throw rocks into the wettest paper sacks, for they break most easily. When bullish we need to sail the strongest winds, for they carry the farthest.

8. Think Like a Fundamentalist; Trade Like a Simple Technician: The fundamentals may drive a market and we need to understand them, but if the chart is not bullish, why be bullish? Be bullish when the technicals and fundamentals, as you understand them, run in tandem.

9. Trading Runs in Cycles, Some Good, Most Bad: Trade large and aggressively when trading well; trade small and ever smaller when trading poorly. In "good times," even errors turn to profits; in "bad times," the most well-researched trade will go awry. This is the nature of trading; accept it and move on.

10. Keep Your Technical Systems Simple: Complicated systems breed confusion; simplicity breeds elegance. The great traders we've known have the simplest methods of trading. There is a correlation here!

11. In Trading/Investing, An Understanding of Mass Psychology Is Often More Important Than an Understanding of Economics: Simply put, "When they are cryin', you should be buyin'! And when they are yellin', you should be sellin'!"

12. Bear Market Corrections Are More Violent and Far Swifter Than Bull Market Corrections: Why they are is still a mystery to us, but they are; we accept it as fact and we move on.

13. There Is Never Just One Cockroach: The lesson of bad news on most stocks is that more shall follow... usually hard upon and always with detrimental effect upon price, until such time as panic prevails and the weakest hands finally exit their positions.

14. Be Patient with Winning Trades; Be Enormously Impatient with Losing Trades: The older we get, the more small losses we take each year... and our profits grow accordingly.

15. Do More of That Which Is Working and Less of That Which Is Not: This works in life as well as trading. Do the things that have been proven of merit. Add to winning trades; cut back or eliminate losing ones. If there is a "secret" to trading (and of life), this is it.

16. All Rules Are Meant To Be Broken.... but only very, very infrequently. Genius comes in knowing how truly infrequently one can do so and still prosper.

David- a bear market rally is still a rally-> if you're long, the gains are real, and if you're short, the losses are real...what if we adjust the 'gains' in the DJIA the past five years for the decline in the USD- would that make the 'rally' look different? the indexes climbed in 2006 and 2007 despite the flow of bad news...we finally got some good drops january through march of this year...there's still bad news in the headlines on a daily basis, and insistence on the part of many that the market needs to go down-> personally, i agree that the market 'should' be lower, but it's not-> i've seen this happen many times over the years, sometimes with an index, and quite often with stocks...the example that comes to mind is herb greenberg relentlessly quoting fleckenstein in the mid-nineties about the bear case for DELL Computer-> the case was good enough for me to sell DELL for a split-adjusted price of under a dollar in 1995...5 years later it was the equivalent of a 100-bagger! (i'm guessing 'fleck' was short DELL, in which case the day he closed his position would not be his happiest)...so looking around today i would say it looks and feels like a recession, but the DJIA is at 12986, about where it was a year ago and quite a bit higher than it was two years ago..i will daytrade DXD/SDS/QID, but i'm not about to make any long term bets it all goes down from here...

David- Gartman's 11, 10 and 3 ring true, and would be 1, 2 and 3 on his list for me...as for his first rule, i'm way past three strikes for DUI while trading LOL...

David,

thre rules you quoted constitute trader's bible, IMO. Interesting thing about them is, one may read them and agree with them to one's heart content, but they are going to be internalized only after one gathers enough of real life experience of following them (and be rewarded) and not following them (and be punished).

I, for one, have never seen anyone who would adopt those ideas just by theory, without going against them first and crash and burn. And even then, not many manage to take those rules to heart and atert following them in practice.

note also that if you seriously practice gartman's rule #11, you will inevitably be in conflict with 1, 2, 3, 4 and 7 much of the time...

"Was Paul Revere looking for another place to live?"
The USA was not a superpower in Paul Revere's time. It is now because it is the primary beacon of hope for many very talented people such as the parents of Google's co-founder who left Russia in the 1970s to escape government imposed anti-semitism. ( http://tinyurl.com/6flujd ) - as it was for many German refugees in the 1930s who contributed to the US's dominance in technology - as it has been throughout the 20th century for many oppressed individuals who caused a brain drain in the countries of their origin.
Things alone do not make a country rich and great - The countries in the middle east with most of the world's oil reserves may be rich temporarily but they are not great nations.

ALOHA !!

lessmore ... Its not about the quality of Americans it is the quality of our government and its money.

My point has always been that politicians and bankers are more dishonest under a fiat regime than a gold standard. How many more examples of failures both in government policy and US banking policy do you need to live through?

What's one dimensional is this continual "bailout" of one failure after another and then re-electing the same old tired "irredeemable promises" from the two party aristocracy! To be a willing and eager taxpayer under the US FED's corrupt monetary system ... Now that is stupifyingly one dimensional!

If having honest money is one dimensional then I will be proud to own that title!

GOVERNMENT IS ONLY AS HONEST AS ITS MONEY ...

shark ... I already answered that questions a couple weeks ago ...

Russia and China and India and OPEC ... Does anyone here really believe the BRIC countries and OPEC will go on taking US PESOS blindly into infinity?

By Sandra Hernandez

May 19 (Bloomberg) -- Treasury bond traders are telling Americans to stop fretting about inflation.

Consumers expect prices to rise 5.2 percent in the next 12 months, according to a monthly survey by the University of Michigan in Ann Arbor, the most pessimistic they've been since 1982. Treasury Inflation Protected Securities, or TIPS, show traders anticipate inflation of about 2.9 percent by January, in line with its average of 3.1 percent the last 20 years.

The disparity has never been wider. While consumers grapple with gasoline above $3.70 a gallon, record rice prices and the escalating cost of wheat, TIPS say the commodities market is a bubble about to burst. A commodity slump would worsen losses in the $500 billion TIPS market, where investors lost 2.35 percent in April, the most since December 2006.

``There's a lot of people who just don't believe the economy's going to stay strong enough to keep prices of things where they are,'' said Chris McReynolds, who trades TIPS in New York at Barclays Plc, the largest dealer of the securities. ``Part of what's going on here is a lot of people view this price rise in oil, a lot of commodities, as being somewhat bubbleish and that they'll come off again very quickly.''

Crude oil, which ended last week at $126.29 a barrel, has doubled in the past 12 months. The Reuters/Jefferies CRB Index of 19 commodities including coffee and corn has surged 31 percent in the 12 months ended April 30. Yet in the same period, consumer prices rose by 3.9 percent, the slowest pace since October, the Labor Department said May 14 in Washington.

"note also that if you seriously practice gartman's rule #11, you will inevitably be in conflict with 1, 2, 3, 4 and 7 much of the time..."

2nd,

not necessary. If you interpret his "cryin' and yellin'" as reference to panic selloffs or buying frenzy, then yes, there is a contradiction in there. I, however, read it as "buy when masses are scared of barrage of bad news" and sell when masses are recklessly elated in amidst overy optimistic outlook" - then it's your usual contrarian approach which we witnessed to be winning so many times, including last couple months. Of course bad news by itself is not a reason to buy (or good news - to sell) - one still needs a chart confirmation of contrarian angle taking over but that's what #8 takes care of.

Vad- fair enough...someday i'll learn to read music, but for now i'll have to play by ear...

Here's a scientific theory based on observations in astrophysics as to how gold originated in the universe:

http://antwrp.gsfc.nasa.gov/apod/ap080518.html

"Vad- fair enough...someday i'll learn to read music, but for now i'll have to play by ear..."

Hah! Keeping humble, aren't we :)

From what I see in your posts, you play it like flute, music sheets or ear.

I also do not see much contradiction in your "buy weakness, sell strength" approach and Gartman's Buy high, Sell higher. Both are valid in according markets. To me (and I can't stress "to me" part strong enough since trading is highly individualized endeavor), in ranging markets it's "Buy Low Sell High"; in uptrending markets it's "Buy High Sell Higher"; in downtrend it's "Sell Low, Cover Lower". To avoid confusion, it's also important to add that buying pullback in uptrending market is not buying low to me - it's just aggressive entry within the same Buy High strategy.

Hopefully I haven't caused more confusion :)

Food prices

Anyone can check out futures prices at ino.com, and see that the near term Sept 2008 hard red spring wheat contract is down nearly 40% in 3 months and the near term July 2008 rough rice contract is down 20% in a month. Perhaps they are like gold and will resume bull runs, though this seems like a lesson in being cautious when the sell side has stories blaring about world food crisis. Perhaps the current oil blow off will follow a similar pattern as wheat and rice.

"Things alone do not make a country rich and great - The countries in the middle east with most of the world's oil reserves may be rich temporarily but they are not great nations."

I totally agree. This is NOT about money or wealth per se. One document sets us apart from the rest of the world. That document is our promise to ourselves and inspiration to the rest of the world. That document is the Constitution. We started losing our influence as a moral leader in the world the day GW Bush started attacking our Constitutionally guaranteed liberty and rights.

Bill Moyer is pointing out the structural circumvention of our Constitution by corporations, which has lead to fewer and fewer media outlets and more and more of OUR public servants subverting our government and resources for the gain of a very few and to the detriment of the country. Certainly this is to obtain wealth and resources, but it is the structural problem that enables the circumvention and thus the hijacking of our government and resources.

Thus comparing to other countries is irrelevant/mute. None has the US Constitution or the specific structural/legal problems we have.
It's Moyer's job to connect those dots, to inform us as to the problem.

It's our job to take it seriously and to plug the gaps in the laws that allow corporate schills to corrupt the government of, by, and for, the people. Once we are back in control of our own government the Constitutional process takes care of the other problems. The Constitution is nothing more than a structural chart and set of directions for running the country.

Our Constitution is not a comparitive document and it is not relative to any other country.

In short, our current Constitutional crisis cannot be resolved by comparisons or by moving.
These things get resolved by concerned citizens.

The roof is leaking. We aren't moving, but we need to fix the roof. That doesn't mean we have a crappy house, it just means it's getting a little wet. No one said it isn't one of the nicer homes on the block, but even a great home needs maintenance.

nicely said, craig...

Thank you 2nd. This Constitution thing is one of my passions.

Almost all problems in organizations stem from Constitutional/By-laws issues and people trying to get around the structure for their own interests.

IMO, if we fix this one problem (granted it's a doozy) a lot of our other more sizeable issues will be resolved in turn.

You probably noticed....Shanghai closed today.