With the recent arrests, it looks to me there are some frantic actions taking place on the part of the FBI. These are only in response to angry protest concerning the fleecing of America. The operative word is response. As too often is the case, this unfortunately was not a proactive action.

Democracy is two wolves and a lamb voting on what to have for lunch. Liberty is a well armed lamb contesting the vote. - Benjamin Franklin

june options/futures expire today..

Perhaps community members would be more comfortable shorting via some of the short and ultra-short vehicles available as more of a standard type trade. Others will cite issues with these ETF's but we're traders, right?
That means we wouldn't be longterm holders and would be taking profits.

Example: entered SKF trade at the close last night.

The reason I would be taking profits is the psychology/basic premise that there would be desperate sellers at a bottoming (so we could cover our short positions) while the ultras would be at a high and buyers harder to find unless they were chasers.

[Bill Cara note: I personally would feel more comfortable if the 2% of you who participate in the Discourse would discuss the topic more frequently.

As they say, anybody can buy, but selling is harder. Short selling is a magnitude of difficulty higher than that for most of you. Like anything, though, your comfort will come via experience.]

QT,
Looks like they're not ready to dump their longs on Oil yet. I may buy a couple calls on DIG, since we seem to be bouncing around this level quite a bit.

I could see a hard rally taking us to the election but it appears we'll go down first.

Who knows, maybe there won't be a rally because the "conventional wisdom" assumes there will be a rally and a break in commodity prices for the election.

Doesn't higher commodities, lower dollar and lower stocks seem like the avenue of the most pain still?

But can the politicians afford to have such a pissed off electorate go to the polls? Most of Congress isn't up for re-election so maybe they don't care.

Can financials fall much more with the sovereign wealth funds and other recent investors like Hank Greenburg in LEH so far underwater?

Today, likely won't give us any clues as it is quadruple witching.

Rob.

What ammo do they have to stop it Rob?
Is Ben going to blow bubbles too? LOL!

Good morning. It's looking ugly on Wall Street.

Here are your Cara 100 Ratings Changes:

Downgrade:

SNDK - to Hold @ Citigroup

Coverage Resumed:

BA - Neutral @ Banc of America Securities

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

Have a wonderful day and a better weekend.

Many Thanks to go34 for the heads up on the TOG.
Sold RRPIX yesterday.

I'm taking my profits and partying in the Netherlands....see Bloomberg headline/ticker....
(that's an early AM joke).

BH- that's right...wall street is looking ugly...those for whom the market is a goomah, some of us actually prefer a schifosa...(thanks to shark for broadening our vocabulary)..

[Bill Cara note: So too is the state of America according to Dr. Ron Paul, who is saying that big business (and banking) is getting far too cosy with government. This is an excellent video: http://www.youtube.com/watch?v=Jbi-0Tg1b_g ]

I have been a reader of the discourse for several months now and would like to express my appreciation for the insight that all of you give on a daily basis. It has opened my eyes up to many things.

I am just getting started as a "trader" and have been an "investor" since 18 yrs old.....now 33.

In addition to the valuable information here and Bill's book, what other resources would the community recommend to become a seasoned pro like many of you are?

[Bill Cara note: Welcome aboard the Discourse. For education, the technical stuff I like comes from Martin Pring. The classic from Edwards & McGee is also favored. For fundamentals, the classics from Benjamin Graham and his work with Dodd are timeless. For trading, why not look at Amazon or Ebay for all the works of Dr. Alex Elder. People here also favor Vad Graifer's work as well. I'm sure others will chime in because there are so many good sources of reading materials. Also, don't skip John Murphy's technical work, and his educational material at StockCharts.com.]

Finger Lakes

Rob

My cost basis with commissions [incl selling]is 27.90. I am going to gut it out for the long awaited profit taking in the energy sector. At some point they are going to get nervous and start to pull the tigger. Maybe today, if there is a big general sell off in the market, possibly at the end of the day. For me it is a waiting game like a lion hunting its prey. I just cannot see how the economies of the world can operate on the price of oil any higher than it is now. That's how I see it.

QT- sounds good..as long as you keep positions within your emotional tolerance range, it will work out...when it drops, it won't be dropping just a few percentage points at at time (IMO)...

2nd

I hear you... This DUG and FXP trade has made me a "Navy SEAL". I am numb to the sight of "RED numbers" which in the past would inflict emotional pain. [LOL]

Craig,

Could you point me to where go34 provided a heads up on TOG. Thanks.

Rob- so the path of maximum pain seems to be commodities higher/USD and market lower? the key would have to be knowing who's betting where, which i don't know...still leaning towards a rally, and a gap down beats a gap up in that regard...we'll see...

referring to the open, of course...

I would love to know who's betting where. It would make this so much easier. At least if we knew how Goldman was betting, that's probably all we'd need.

I also could see a rebound today after a sharply lower open. The good thing about DUG on days like today is that if the market really tanks, the oil companies will too.

How about MF? That stock has been acting crazy lately. How do they make their money? By clearing futures trades for people? It may be worth a nibble if we do see a rally soon.

Rob.

Chickenpookie

Stating frantic actions by the FBI is not accurate.

First of all, these are task force operations involving different agencies bringing different investigative skill sets to the table. Frankly, the FBI alone does not have the expertise to conduct this many investigations in a timely, efficient manner. The media will have you believe it’s just the FBI as the bureau has a very effective PIO (media communication office). If you look at the substance of an investigation you will see who did the the work of a joint task force.

These investigations have been going on for quite some time with indictments and arrests by different federal law enforcement agencies and local task forces on a regular basis. Beyond local coverage (i.e. Memphis, Miami, Los Angeles, etc.) you probably don’t hear about it.

Pressure comes from the administration, congressmen and senators who are under the gun from the media and public. They pressure the Department of Justice (Attorney General) who prioritizes these types of investigations and sends out the marching orders (encourages) to the U.S. Attorneys. They set up task forces if they’re smart and start to publicize cases, some of which are already pending in court. DOJ HDQ then coordinates a target date for a national roundup day for these financial bandits to show the public something is being done. The old “perp walk.”

Will they get everyone? No. Will this one day announcement be the end? No. Is it a perfect system? No, but it could be a lot worse.

The key is this extent of fraud could have been prevented or limited through effective regulation, but that involves others who are responsible including the Fed, FDIC, Treasury, etc. etc. They allowed the gates to the henhouse unguarded; sometimes, it seems they laid out the red carpet.

Time to go. Markets are opening and I have a meeting this a.m.

bOss

You bought FXP [@77.xx] at the end of yesterday if I remember correctly. Good move!

So, Citibank downgrades SNDK and MER downgrades a bunch of financials.

Why do any traders believe any of them? How is it that any of these companies still have credibility with investors? Are most investors so clueless they still rely on these analysts to make their decisions?

Rob.

I started shorting stocks in 2006 because it seemed like the most reward for the risk. I started by shorting homebuilders and a few banks. It paid well for the most part.

In late 2007 I started using SKF and SRS as vehicles to go short. As I read here and on Calculated Risk and a few other sites it seemed short those areas was the greatest reward for risk.

I've done okay.

Shorting is harder in my mind but at times like these what else can one do?

I hold for weeks to months usually. I've gotten used to being underwater at times.

If anything I should trade more often but one never knows when the feces will hit the fan.

I'm hoping the market clears itself of the banking fraud mess and I can go long with a greater chance of reward than shorting. Until then my account balance says I've made the right move.

Also, due to the inability to make fast transactions and the general market my 401k is in a vanguard money market fund (that doesn't invest in real estate). Strictly capital preservation there.

Posted since Mr. Cara asked posters to comment on shorting.

liking the sell-off...

opening NOT.V...

Regarding shorting, my strategy has been to find obviously overvalued stocks with no strategic value around 52 week highs. I would not short oil, steel, GSEs as some actually do important work or have a big friend. The PPT is not going to save Chipotle. I scale into the position with LEAPS..always try to allow for 2-3 times the time I think I need for the move to allow me to sleep. Current/successful shorts have been all the homebuilders/lenders (made me a millionaire) as well as JCG, URBN, IBM, CMG, WHR.

Cara 100 Update:

ECA - Target Price Raised from $120 to $130 @ UBS

trying a little ROM, moving to 40% on UYG...

Addendum to previous post. I used in-the-money LEAPS to minimize premium.

jragusa:

"If you shorted the long bond when I posted the idea in March on the trendline break to the downside, you may want to look at taking some or all of the trade off now. (pats himself on the back..lol).

As always, do your own dd.

Posted by: g034 at June 18, 2008 5:24 PM [link]"

"The PPT is not going to save Chipotle."

Brett - maybe its just b/c its Friday and I am a little delirious from one too many Smithwicks last night but that is friggin' hilarious.

Welcome Schleppy, per your request...just as with trading also goes this question, what time frame are you asking about? Daily trading or longer term research?
Daily
I open the comp to The Hunger Site to donate on a daily basis. I check cnn then al jezerra or London news. Before Cara I scan The Knight Trader and the Kirk Report, two sites that comment on pre market futures. I open google finance to confirm the opening direction. I open my trading platform-IB- to see if any trailing stops were hit on gaps down at open. Then, I read Cara . Then I open StockCharts to remind me where I am on a particular holding and if it should be sold. Good selling is harder. I sold eslr close of business wednesday after modest short term gains. Then I read Cara again. Repeat as often as time allows.....
As to Bills request to comment on tactics, I still am mostly a long trader. the shorting comes in theform of short ETFs for me. I have learned more here than anywhere although I pay subscribe to two other sites.
I currently have 12 positions open...kind of tops for me. UW 7
Peace from North Puget Sound

long evergreen after the scary drop

QT,
See even the oil stocks are getting sold today. DUG is currently higher than DIG even though OIL is up 2.8%.

I'm thinking when I get out of this trade a better way to play OIL might be just sticking with DIG, since it holds the actual stocks instead of the swaps. Oil down would be buying puts on DIG or shorting it. Up would be the opposite.

USO would be another option.

I just don't think DUG performs as good as it should, probably because of relying on the swaps.

Rob.

To clarify, if anyone wants to buy Bill's book from Amazon, you can just click on the picture of his book on the front page.

gold keeps going up. hmmmm. still agree with bill tho

Forget options on DIG. There's no volume.

So buying it or shorting it would be the only way to play it.

And USO carries all futures and options like DUG.

Rob.

well that's over with

Joining 2nd in ROM
Scaling into SBUX
Don't see oil cooling, scaling into PGH on this dip.
Louise Yamada on Bloomberg says there is no resistance for oil.

I actually have a short bias. I started investing in the mid 1990's when stocks were overvalued and they have been overvalued most of that time so I actually feel more comfortable being short.

With all the propaganda out there I like to short companies with weak fundamentals, such as the financials, because if they are not going to make a profit for the next two years there is no impetus to buy except for the uninformed. They have been a relatively safe short on any spike higher. With these, I use overbought indicators on the hourly charts and some analysis of the volume. If the volume comes on the upside than there may be a temporary bottom with no real impetus to go lower for at least a few days.

I will be reading Elder's book Sell and Sell Short.

the dumb thing is I was goona go short at 12.20 which I obviously should have done, then stupidly went long after the down-bias for the day had alreay been established. Typical stupid counter trend amateur bullshit. I could get in long but there would need to be some real strength.

Man, what an ugly market. I was looking at TSO today (down over 50% since the beginning of the year), but I'm just not brave enough to try it yet because it's almost certain we're going to get the March lows on the Dow and S&P.

If you have long positions, you gotta hedge them with some SDS at this point. Of course, smart money has already done so (or gone to cash). I'm not smart and I'm just sorry I waited this long to re-buy some SDS.

Of course, this is quad witching and the market could bounce back on Monday. If it does, I'll likely add to my SDS. Aside from a few notable exceptions in individual stocks, I just don't see any reason to be positive right now.

Stephen1985: thanks for posting the Embry link yesterday, that was useful to me since I have used Embry's analysis to make decisions.

Kaimu: thanks for your rant yesterday, that was great!

Question for la gente on this forum: "Technical Analysis of Stock Trends", 8th Edition by Robert D. Edwards and John Magee, 1st Edition published in 1948. I know an older guy who used this book as the basis for his trading/investment career and did pretty well. Is this book still a reasonable read? I still haven't gotten my hands on Bill's book, which I will, but I'm wondering if anyone can make some comparisions and contrasts.

[Bill Cara note: My book is "Lessons" of every type, and technical analysis is only a small part of it. These lessons were learned and applied over 40 years. But it was only 27 years ago that I got turned onto technical analysis, and only because of Ian Notley. His work on Trends & Cycles was life-changing for me, but I always stuck to the belief that I had to be a complete student of markets in order to attain success. I hope you all do the same.]

Anyone notice the ratings agencies waited until the second quarter was over for investment banks before downgrading MBIA and Ambac? And then they always seem to do these downgrade late Thursday or Friday to give the weekend for the public to forget about it.

Third quarter should be ugly as they remove the insurance valuation on these instruments or they actually trade at a price.

Doesn't this chart show that people were either buying or selling more calls than puts from Mid-March until the beginning of June. Since then there's been much more put buying and selling.

It also looks like the put buying and selling has to peak alot higher before we have a turnaround if the March low was a valid example of panic-put buying.

http://tinyurl.com/5ak9lb

Rob.

Somebody was asking recently about ills affecting GFI

"South Africa's current account deficit widened to a 26-year high of 9.0% of GDP in the first quarter of 2008 while the portfolio inflows key to funding it turned negative, central bank data showed on Thursday."

http://www.fin24.com/articles/default/display_article.aspx?ArticleId=1518-25_2343658

Reporting from the front lines here in South Africa.

Much as I like GFI, I would be buying after the Rand gaps down.

I just dig out this article on shorting. Pure trader's take, nothing to do with fundamentals.

http://www.realitytrader.com/darkside.html

Why does anyone still believe anything the ratings agencies say?

Do most investors follow what the ratings agencies and analysts say because they're so used to doing it that it's second nature.

Or maybe it's more likely crowd mentality at work. Even though rating agencies and analysts besides Whitney have no credibility investors are in denial until the agencies or analysts downgrade.

It will probably be the same with the recession. Everyone knows we're in one but won't drop the market 20% until the BLS makes it official.

Rob.

Finger Lakes

Rob...remember DUG is more a play on oil producers and oil service companies.

Are you still holding DUG?

Remember Mr Cara's post today.. "Today is a triple witching, which can lead to extreme trading volatility in mid-session." This afternoon could get real ugly and there could be some serious profit taking in the energy sector.

WIN.to up 10% today. They are suing RIM and Motorola for patent infringement.

QT,

I have been getting lucky with trading FXP. Almost everyday 2nd tells everyone that China is a buy. It scares me just a little bit, but I stick to my guns.

Out of FXP @ $82.50 ($77 cost yesterday)

bOss

You'll have a good weekened! Hope you backed up the truck yesterday and loaded up. :-)

b0ss- keep in mind my time frame for CAF is the beginning of august...congrats on the FXP daytrade...

when shorting, just remember, unlike going long, it is possible to lose more than your initial investment so keep that stop loss in place or your head may be handed to you on a plater

Vad,

Cool article on shorting. Will you only short stocks in downtrends on a daily chart, or do you also short high prices when they are correcting?

Financials are being pumped.

Reloaded most of the SWC position @ 11.35 that I sold into yesterdays frenzy. I believe there is someone deeply short here that is trying to figure out how to escape.

RE: Financials

I am thinking that the short financials play is just way to "obvious" right now. Makes me think financials are ripe for a hard bounce to clear out some of the short positions before they can go significantly lower.

Just kidding with you 2nd, you have helped me make a bunch of good trades. I rode SNDK/INTC/ESLR, etc. a few times up with you after you bought into them. I always enjoy reading everyones comments. I am waiting on a big rally next week, so I can short a few stocks like CMG. The financial stocks look like they are ready for a ST bounce.

Have a great weekend everyone,

100% cash getting ready for next week

Yeah - I see signs of short term bottoms in some of the financials. The downside momentum is not there right now. The S&P is also oversold now on the daily chart so a bounce would be expected.

$BKX, banking index is testing lows of 2002 at 60.87 and 60.6.

Also finding support at a FIB 61.8 retracement of 61.83 on monthly.

XLF Options at Thursday's close:
July 25 calls: 297,929
July 25 puts: 62,658

We are at a very important junction. If you have a big set go long XLF here with a tight stop for a trade. I’ll wait for more evidence, but someone seems to want this thing to rise and is putting their money down.

QT,
That's why DUG is stable today. Most stocks are weak, including oil company stocks.

What I was saying is that DIG would be a more stable more predictable and maybe even a better trade than DUG as it hold mostly stocks with fewer options.

DIG 97.78% Stocks the rest: Swaps, options, futures
DUG 66.67% Stock the rest: Swaps, options, futures.

With MF Global on the ropes I'm getting leery of positions dependent on layers of options and futures.

Rob.

Correction:$BKX, banking index is testing lows of 2002 at 60.87 and 60.36.

Finger Lakes

I see your point.

Shark,

it's just that this particular article was on downtrend since that's the markets we are looking at presently. If you noticed it says part II - part I was about trend reversal shorting but I can't find it, lol.

Short jist of shorting for reversal:

- I avoid discretionary shorting of new highs based on "just because it's too high"; market can remain irrational longer than I can stay solvent, and momentum is powerful thing;
- for shorting highs I want to see a particluar setup that gives me a)signs of reversal and b)clear idea of trade failure for stop placement;
- to illustrate the above, let's take double top setup. I will short the breakdown of the low between two tops as a confirmation of topping out; high of the tops will be my stop indication as going over it shows trade failure.
- there are two kinds of setups I use for reversal shorting. One is Trend Reversal setups: double top, head and shoulder. Another is Continuation Failure - meaning, when trend continuation setup fails I may short it. Fir instance, JBE setup failure is break of the lower limit of consolidation range; Cup and Handle failure is break under handle's bottom.
- as with all setups, there are different ways of entry- regular, conservative and aggressive. Using that same double setup, regular way would be shorting the breakdown of the low between tops; aggressive would be an entry near second top; conservative would be letting breakdown go and shorting on bounce if new resistance holds. More on that and pro and contras for each at http://www.realitytrader.com/blog/2007/07/how-aggressive-are-you.html

I hope all above easy to visualize since all the examples I cite are chart formation. If I ever manage to dig out that first part, I'll post it :)

Another view to ponder:

[From McHugh's mid email]

Stocks fell sharply Friday morning, the Industrials down 188 points at one point, hitting 11,875. This is getting close to being a decisive move below the 34 year long-term rising trend-channel's bottom boundary shown this week, so if prices sink this afternoon and close in the 11,700 area, that would argue a 34 year Bull market is over. That would suggest a multi-year Bear market was just getting started, believe it or not............ We noted in Thursday's market update that the 30 minute chart's full stochastic suggested Friday could see prices drop. Since the Hindenburg Omen potential stock market crash signal was confirmed on Monday, June 16th this week, the Industrials have fallen 394 points. Friday's decline looks impulsive, the speed dramatic, so we could be hitting the sweet spot of a bunch of wave threes down we have been showing in our charts this week. Today is options expiration day, so anything can happen this afternoon. A corrective bounce started late this morning. There is a gap up to 12,000, so maybe a correction will take us that high. The 30 minute chart's full stochastic is oversold already, supporting a corrective bounce. However, if this is a waterfall decline, oversold won't matter

"Using that same double setup" should be "Using that same double top setup"... and in case you wondered what "jist" was, it was "gist" :)

Every time I think my typing hit rock bottom, I seem to find the way to dig deeper

I just saw that Rusoro is buying up Hecla's projects in Venezuela. Chavez and Rusoro have to be in some sort of collaboration or else who would be financing multi-million $ purcahses of potentially worthless mineral rights? So, is this just Chavez's way of making the "nationalization" of VZ's minerals look slightly legitimate? How long until Rusoro buy's the crumbled remains of Crystallex?

head on a platter- more evidence things get out of hand at the top...is it too much trouble to walk to the back door for a head on a stick...and who's going to use the platter afterwards...

Telestar:

My limited understanding of options is that most options expire worthless, so the money is made by selling them. Therefore, in the case of XLF could it be that the smart money is selling those calls because they know something bad is about to happen, like LEH or MER going belly up?

[Bill Cara note: Generally speaking, I wouldn't advise the practice of selling naked calls. If you believed a company was going to go belly-up, you wouldn't even sell covered calls, you'd sell the stock and buy puts.]

Thanks BillySundance!

Most of the options that expire worthless are those that are traded in the current month. Use them to get leverage in the right direction and take your profits with 3 months left.

JesseSLC, I'm a novice on options at best, but this has ratio of 4.8 calls to puts. This must be telling us something.

If someone went long the XLF, where to place a stop?

Today's lows or a % stop loss.

This is a battle royal at this juncture.

Option question: If someone writes a call (selling) the XLF Jul 25 call, does this show up in call volume or put volume?

It may be a dumb question, but I ask since it would be a sell to open. TIA

Thanks, I understand your logic now. I don't dabble in options, yet, for good reason.

Shorting:

1. Shorts and Flat highly recommended mode for bear markets....by Schultz, etc.

2. The beauty of shorts is that they move very fast, and faster in bear markets - freeing up your time and capital for other pursuits.

3. Try a small size and watch that the price is peaking and that volume is dropping, use both.

In this market I short many times. Good Luck.

Apex Silver Mines SIL, -75.5% since Oct 07.

Silver Bullion 24.85% since Oct 07. Wow!!!

Question to those who use fast or slow stochastics, what does this show you for UNG:

http://nexalogic.com/ung.jpg

TIA.

Bill,

When I try to order your book from The Netherlands then Amazon tell's me : This item can't be shipped to your selected destination.

What to do ?

Thanks.
Mark

Directed to Rob aka Finger Lakes :

I am looking at property outside of Ithaca with a view to repatriating myself. Do you have any input on whether the market has cracked locally or is patience to be rewarded?

Telestar3d,

My understanding is if you sold a call, it would show up in call volume.

toptrader9, why don't you email Amazon and find out if they can ship to a different
address in the Netherlands or if Amazon Canada or Amazon UK or Amazon France can get it to you

Bill & Photogray,

I appreciate your insight and advice.....I plan on studying and learning as much as I can.

Currently long SRS, DUG, GE (long term hold), and EWZ....all under water by the way. Shows I need some improvement.

ALOHA!!

Your basic "non-money" trades require short term profit taking, which is what many of the frequent posters here do.

My strategy has been different. I play what I call "money-trades", which by my definition is a long term play on money cycles. This may be the last generational play in this sector since I believe the current "global" fiat monetary system will collapse and it will be replaced by some form of value that backs currency with more than "hollow political promises"! According to Jim Sinclair it will be the gold ratio and to others like Richard Maybury it will be a dual currency and others believe something like an Amero. Whatever it is after the collapse it will not be pure 100% "fiat" like we now have.

I started this in 2001 with the purchase of gold and silver coins and bullion. I actually started in 1979, but I did restart until 2001. So far every year since then I have been making a minimum 23% return without even selling a single ounce and just buying dips. Its because this is a trend, a long term trend. I believe what we are seeing with oil prices(POO) is a similar trend however much more compressed. OIL IS MONEY! Thats why it is staying up. In the past the OPEC rulers have sold oil and been content to hold US Pesos or buy US Treasuries and other assets such as US Bank shares or US real estate. Now they are no longer content with oil markets based in US Pesos. To compensate them for what they(OPEC)believes oil should trade at to stay above inflation they are buying up oil futures and parking it there long term! Thats what you're up against and thats why cheap oil denominated in US Pesos is no more. The Arabs and Russians and Venezuelans who virtually used to give away their oil to America for peanuts now want a more than fair return and they have discovered how to do that through the "backdoor" so as not to be visibly in opposition to America, who also acts like a Mafioso, in exchange for US Peso denomination, grants "protection" to the likes of the Saudi Royal Family. I believe Russia's Putin regime is behind a lot of this! He would like nothing better than to do the same thing that the Reagan regime did to him via oil prices and Afghanistan in the 1980s! Now the US Congress is onto this and they are now proposing "limits" or "bans" on oil futures. The foreigners are getting the idea like China did back in 2005 when they tried to buy Unocal. If the US Congress is successful in "limiting" futures then YES the oil price will come down, but then the OPEC guys will be really pissed off(in a private way). They are looking for real returns and value for their product. These guys are not stupid people. They see the inflationary pressures at work and even though they may have bought into the false US data of CPI and BLS in the past they no longer do as they also see real inflation in their country, especially those pegged to a US Peso. Even one of the Royals mentioned publicly that if Saudis raised oil production then the US government must cut spending! UNREAL ... he just defined the problem in public! The problem is the US government's doing! The OPEC guys will no longer want to rescue failing US Banks as they now see no matter how much of their oil money they pump into these banks it is doing no good ... it is an endless money pit and they see the US FED along with the US Treasury is prepared to dig that pit to China if need be to salvage their power base.

If the US Congress is successful in their attempt to limit futures, then I believe OPEC will start moving into monetary metals like gold and silver in earnest. They will also move into the companies that hold those metals in the ground, both miners and juniors. I do not have to tell most here how small a market that is. I looked Petro China outstanding shares of 1.1 trillion compared to GoldCorp or Royal Gold or Seabridge or US Gold.

Now even if the US Congress is unsuccessful in limiting oil futures it will demonstrate to Americans and foreigners alike the lack of credibility of US markets, which is already lacking prior to this new Congressional oversight! Even people in the past who doubted my USSA stance will see how burdensome BIG GOVERNMENT can get. Like a bull in a china shop politicians will mow down our markets and our rights in a New York minute if they believe their power is in jeopardy.

Nobody and I mean nobody is talking about why all the foreigners are displeased and panicky with their returns. It is easy to see ... WW3 has started. There is a mad dash for resources and a mad dash for safety. Look at inflation rates during and after the Vietnam War. WAR=HIGH INFLATION ... period ... end of story!

The Vietnam War for America lasted 16 years from 1959 to 1975. We are now in the fifth year of WW3 ... the WAR ON TERROR. We have a long way to go and I guarantee you OBAMA and OSAMA will not let us out until we as a Nation are destitute. Yesterday while driving around Hilo I listened to some Rush Limbaugh substitute hack on about how the Bush War Policy has worked quite well since we have not been attacked again after 9-11. He fails to understand as most do that this is what BinLaden wants. BinLaden wants us in Iraq and Afghanistan so he can do to us what he did to Russia. Its that simple!!! If we try to leave then BinLaden will do another 9-11 only worse so that we will jump right back into the frying pan! Bush and Cheney fell for that hook, line and sinker and so did 90% of US citizens. We blew our chance to take the high road and save our kids and our own financial future! We were not fair with how we meted out punishment of the 11 terrorists mostly from Saudi Arabia and the Middle Easterners are mad about that! They see this as more an OIL GRAB than revenge ... I think they are right! Israel could not have hoped for a more pleasant out come for America than 9-11 and the invasions of Afghanistan and Iraq. What will Israel do when we are broke and cannot afford a SuperPower military? We will eventually leave Iraq but it will be on BinLaden's terms, which is BROKE and impotent.

Lets say we do leave Iraq, look at inflation rates during the Vietnam War and after. During the Vietnam War inflation was at lows of 2-3% in the early sixties. Within eight years it was up to 6-7% by the time we were leaving 8-9% then five years after we left in 1975 the rates were at 18-20%. Now the US government with the aid of the US FED have done their best to fool people with their manipulated CPI data and BLS numbers but people are seeing it has been a hoax all along. Even TV shows like the DAILY SHOW and LENO are making jokes about US data! So if you use Vietnam as an example we are a very long way from leaving Iraq and we are just beginning to see real inflation rates rise. Throw in the failure of the US financial system and real estate and the coming baby-boomer debacle and I believe we will dwarf inflation rates we saw in the early 1980s, either that or collapse! Neither are good options, however both will benefit gold and silver and the PM shares. FIAT MONEY(false wealth)will seek real value and foreigners will seek "real wealth"!

As Empires decline the fraud and corruption and the value of our money will only get worse. Don't be fooled ... OPEC is not! Hard assets only ...

Move along folks ... another CRIME SCENE! Where's my yellow tape? Our paper money should read "IN CRIME WE TRUST"!

Avanti buys Kitsault moly mine in Northern B.C.

The Kitsault mine is located within a couple of kilometres of tidewater on Alice Arm in the Skeena mining division of British Columbia. The mine was a producer of molybdenum between 1967 and 1972, processing a total of 9,329,669 tonnes of ore grading 0.112% Mo. From 1981 to 1982, under the ownership of Amax, Inc., 4,069,548 tonnes of stockpiled and newly mined ore were milled, grading 0.076% Mo. Total production on the property during both periods was approximately 30 million pounds of molybdenum. Kitsault has developed road access to the mine site and is serviced by the BC Hydro transmission grid. The mine ceased operations in 1982 due to low molybdenum prices, but considerable historical reserves remained in place. Based on Amax Inc.'s 10-K Report dated December 31, 1985, proven and probable reserves were 104,316,500 tonnes grading 0.112% Mo, containing approximately 258 million pounds of molybdenum. These reserves are historic in nature, but Avanti believes this estimate is both relevant and reliable. Based upon its assessment of the calculation methodology and classification of these reserves, Avanti believes that it can produce an NI 43-101 compliant measured and indicated resource that will form the basis of a new feasibility study that it plans to initiate immediately thereafter.

http://tinyurl.com/45gj6q

Brett:

You said "Most of the options that expire worthless are those that are traded in the current month."

You mean June options are expiring soon? No kidding :)

Hi Vadym.

Any thoughts on AMD? I have been building up a medium-size SHORT position with cost basis $7.34.

Thanks,
Teich

Btw, AMD seems to be pinned at the $7 strike today.

Finger Lakes

Still holding DUG? :-)

long eslr after the previous scary drop

short

Ja, majority of volume of options written front month...those are the ones that expire.

Tough for non pro trader to trade front/near month options successfully consistently imo. I almost always buy itm with lots of time. Close them out long before expiration.

Teich,

AMD released their new card today. I would say it should of popped up a $.25 on that news alone. But it is going down with the whole market. They are never going to make any money and will need more capital before the end of the year to stay going. Their GPU's are very good this time around, as good as NVDA's. I don't think the CPU business is doing anything for them as INTC is beating them hands down by over 9 months lead. The only reason the stock is up recently is because other countries are saying that INTC used its monoploy illegally. I think they might have paid rebates back to some companies that used Intel exclusively. AMD "might" get about $1 billion from Intel next year. So that will keep them going for another 4 or 5 months.

Markets are a falling...anyone going to try and catch a falling knife at EOD? I will...

MF Global down once again today - 20%. I wonder how loss of faith in this firm will affect commodities.

QT,
Holding strong. I'm getting pretty psyched about a panic sell-off in Oil stocks soon.

Many people think if MF goes under repercussions will be severe. They are by far the largest clearing house for futures and other derivatives.

What I don't understand is why they're losing money. Isn't futures and derivative trading volume going through the roof?

Rob.

Robbie Fields,
Except for NYC and a few Western New York suburbs, like Amherst and Pittsford, we really never experienced a property boom here.

I'm sure many people were still taking out all the option loans and home equity loans like crazy but it never got too extended here because property values never rose that much except for those few neighborhoods.

So, if you're looking to move to the Finger Lakes, now is as good a time as any. Just be ready to take the high tax punch to the gut when you get here. I don't know where you're coming from but our taxes here are pretty much out of control. But if you can get past that aspect and get yourself some nice land in the woods, it's pretty awesome here.

Rob.

Welcome to summer, solstice officially 25 minutes ago.

Market watch headlines:

5 minutes ago: "Bears skin financial stocks"

now: "Bears scrape bark off stocks"

Who comes up with this stuff? LMAO!

Port manager just mentioned SWC, and it's up 2% since. I am long and suffering on this one.

Rob:
I live in Pittsford. Bought my home in '78 for $69.9. My neighbor just sold one like mine across the street for $189.9

To me, that doesn't seem like a property boom; but I'm just one data point.
Dick

Avanti Mining Inc

80% UP

SiO2:

Ira Epstein teaches on his website (iepsteindotcom) that when the slow stochastic is above 80 and then crosses below 80 that is a sell signal. I believe Bill also uses this as one of multiple indicators for a sell signal.

[Bill Cara note: This is actually a very good point. But a better one is to apply the guideline to a box of say 4 or 5 heavily-weighted stocks within an industry group, eg, broker-dealers, banks, retailers, airlines, and so forth. When there is a common pattern where the slow stochastic is breaking down through 80, that would be a good time to buy puts or sell your stocks in that group.]

gold not looking strong breaking through and above $900. it seems to be just hanging in
for a close around that mark.

the shares havent moved much at all and im wondering if the overall drag from the rest of the market is hurting the mining shares here, and if they may continue their underperformance should gold make a run against the USD in the next few months.

im really perplexed at all this. are the mining stocks as a way to play gold a dated paradigm w/ the overall market having more of a pull than the metal itself as liquidation hits all sectors? ( save the speculative jr's for those w/ high risk tolerance)

its no small irony that Jim Sinclair's own company TRE is making multi year lows the past few days against gold strenght.

just seems like nothing is going right for gold miners right now and im dying to find a reason to stick with them over the metal right now....

Thank you, Rob (and Dick).

Looking at purchasing a modest house in Trumansburg or in a similar location on the remarkable local bus network. I will have plenty of money for a car ... not so sure about future availability of fuel.

I am currently in South Africa where property taxes have also become relatively burdensome, too, for those who cannot plead poverty for an exemption.

QT, Boss,

I've done the same thing as Boss over the past 10 days: a couple of RTs on FXP, selling with an average of $1.50 a share gain. I still hold 1000 shares waiting for something bigger to happen. Also am just holding RRPIX and TBT for the past several weeks. At this point, I've actually made a significant gain with FXP despite all that earlier pain.

I don't think the Chinese markets will decouple when the big drop happens in the US.

I'm underwater on NOT.V (3% of portfolio when I bought it), and have a small profit on GXEXF. I intend to just hold these til the PMs recover and take off.

if bulls haven't thrown in the towel yet, i think they're getting close...11750 is twiggs' target...

Anyone thinking about playing GE for a bounce upward Monday?

Dick,
I was talking about the recent boom from 2002 until 2005 or 2006 depending on who you talk to.

And, if you'll see above I did mention Pittsford as one of the higher appreciating areas in Western New York in that recent boom.

Rob.

Dr. Cosa - gold stocks vs. metals per Tim Ord:

http://decisionpoint.com/TAC/ORD.html

thoughtful analysis on why gold stocks are underprices vrs. gold, at a point where stox rally.

FWIW

FETV is making today out to be the major crisis selloff. Am I missing something? Isn't this just another options friday sell off? 200 dow points doesn't seem excessive after the cheerleading on 400 point days. Splain it to me please.

[Bill Cara note: When (i) three of four consecutive days are triple digit losses in the DJIA (ii) when today's witching day started underwater by over 100 points in the DJIA, and (iii) the major loser are Financial (XLF) and Consumer Discretionary (XLY) each of these losing days, which indicates the Bear is ripping the heart out of this Bull, I don't attribute today's losses to witching.]

Put/call ratio currently 1.29, the same it was around April 13th when the S&P turned up for a few weeks.

Now the question is will it go higher towards the March high or turn around here?

March high was 1.47 on the 17th "Bear Day"

Rob.

Jess, thanks. Miadhach kindly responded on Skype too to look for a break on the channel: http://nexalogic.com/ung3.jpg, and also to look at weekly instead of daily for trends.

Here's another company, except oversold and with gas worth more than $5 to $10 per share (GMR.V)

http://nexalogic.com/gmr.jpg

Is the pain trade up or down?

Long BSV, GSS and GFI, FXY, CNY, VIX call spreads
and some losers

b0ss:

I agree with what you said about AMD's fundamentals.

Btw, I wrote July $7 puts against my shorted shares for $0.50 credit :)

hey jock, thx for the link, ive always enjoyed tim ord's work, but that link is from a june/18 report that isnt anything about gold, might be the wrong one.

(did you get my email by the way about a JR exec who emailed me for updates on the mining project?)

Teich - I was thinking about buying AMD at $7 and selling calls @ $.50 for a 7% one month yield...But I didn't want to be locked in to a bad company that long.

QT- just bought some GE JUL 28 calls @ $.80

XLF, DIA calls on both...Hoping for a bounce on Monday!

Hanging onto long position LAYN. . . showing resilence here in a weak market. Higher highs, higher lows . . . moving back up now on increasing volume on a 12 minute chart.

Reloaded YHOO @ 21.95

boss

Pick up a little GE at 27.35. Will sell Monday if it bounces up.

b0ss:

Yes, I wrote the puts because I too like the volatility. My cost basis for shorting AMD is now raised to $7.84 :)

Supreme court rules in favor of BCE. Stock up 9% in AH. July 35s were selling for $2 this AM.

What happened with Golden Star Resources in the last half hour? Huge buying took it up 7%. I don't see any news.

Finger Lakes

Maybe some serious profit taking in the energy sector next week.

Oil May Fall on U.S. Consumption Drop, Survey Shows:

http://tinyurl.com/5vbwtx

``The crude-oil market looks like it may, finally, be willing to take notice of faltering demand,'' said Tim Evans, an energy analyst for Citi Futures Perspective in New York. ``Any confirmed production increase from Saudi Arabia out of Sunday's producer- consumer summit would likely tip the market more firmly to the downside.''

I recently posted something about Guyana Goldfields (GUY.TO) (and got the name wrong, sorry Bill!), and there's been some curious action in it this last 2 weeks.

It's rallied hard from a low of $4.12 on June 9th to a high today of $5.38 (+30%). I got out at $4.80 (raising cash) and kicked myself in the butt for it as I watched it continue to rise. Then today about 250K shares (150% avg. daily volume) traded after hours (4:10) for $4.50 (down 14%)

This just a big investor getting out (not that $1M is particularly big)? Are big trades like this arranged in advance at a set price?

thx

Hey Moab,

Check out CDE, same thing, up 11% on 25 million shares, mostly last half hour. Crazy stuff seems to happen on options expiration, especially to out of favor stocks that are heavily shorted.

Dr. Cosa - Ord on Gold

If you scroll down to the 3rd chart in ord's link, that chart, and the text below it, are about gold.

Yes I did get your email; I'll write you on the side about that.

QT/Rob- short oil/long china/bear rally...no plans to sell any of my positions (airlines/refiners/CAF/SMN/DUG) anytime soon, but i can only post my take(s) so long before calling them wrong...

so i've been wrong the last few days, with a nice -2.4% hit to the port (-4.8% on invested capital) to show for it...ouch...(can't be posting the good and leaving out the bad, right)...

hope you guys are doing better...

ALOHA !!

Just got this notice from IB regarding OPTIONS! Are they seeing some possible "issues"?

READ ON:
Effective with the June 21, 2008 standard equity expiration and all equity expirations thereafter, The Options Clearing Corporation (OCC) will change the threshold by which in-the-money equity options will be automatically exercised from $0.05 to $0.01. Any customer holding long US stock options which expire $0.01 or more in-the-money and who do not wish to have such contracts automatically exercised by the OCC will need to provide contrary instructions through the TWS Option Exercise window. Also note that any account which does not have sufficient maintenance margin following the delivery of stock positions from an option exercise will be subject to automatic liquidation upon the market open on the following business day.

Additional details are available in the following document: http://www.optionsclearing.com/market/infomemos/2008/jun/24525.pdf

ALOHA !!

Just got this notice from IB regarding OPTIONS! Are they seeing some possible "issues"?

READ ON:
Effective with the June 21, 2008 standard equity expiration and all equity expirations thereafter, The Options Clearing Corporation (OCC) will change the threshold by which in-the-money equity options will be automatically exercised from $0.05 to $0.01. Any customer holding long US stock options which expire $0.01 or more in-the-money and who do not wish to have such contracts automatically exercised by the OCC will need to provide contrary instructions through the TWS Option Exercise window. Also note that any account which does not have sufficient maintenance margin following the delivery of stock positions from an option exercise will be subject to automatic liquidation upon the market open on the following business day.

Additional details are available in the following document: http://www.optionsclearing.com/market/infomemos/2008/jun/24525.pdf

ALOHA !!

Just got this notice from IB regarding OPTIONS! Are they seeing some possible "issues"?

READ ON:
Effective with the June 21, 2008 standard equity expiration and all equity expirations thereafter, The Options Clearing Corporation (OCC) will change the threshold by which in-the-money equity options will be automatically exercised from $0.05 to $0.01. Any customer holding long US stock options which expire $0.01 or more in-the-money and who do not wish to have such contracts automatically exercised by the OCC will need to provide contrary instructions through the TWS Option Exercise window. Also note that any account which does not have sufficient maintenance margin following the delivery of stock positions from an option exercise will be subject to automatic liquidation upon the market open on the following business day.

Additional details are available in the following document: http://www.optionsclearing.com/market/infomemos/2008/jun/24525.pdf

ALOHA !!

WOW ... I posted three! My mistake ...

Re: Canadian Based Mining Juniors (especially gold sector)

One might speculate on naked shorting and hedge funds trying to avoid a haircut, but the overriding factor in the decline of Canadian-based mining juniors, and especially the gold sector, is the rise of the $C.

The currency peaked at a time when these companies were in decline.

If, however a decline in oil prices is in the cards, as forecast by the bond rout, then overbought conditions in oil and some markets like the Bovespa will exhaust themselves.

Even with crazed oil prices dominating the headlines, one company failed to finance their oil refinery:

Altius shares down as refiner files for bankruptcy

http://www.thestar.com/Business/article/446629

(really, it sucks for Altius shareholders - just look at their chart. ALS.TO )

One chart which really disappointed was the ¥/$ trade:

http://tinyurl.com/62ulcy

Sorry, here's the Altius chart:

http://tinyurl.com/6j4a32

F6

QT,
We can only hope that the oil market cracks soon. At this point I'll be happy if it comes down to it's 50 day moving average at around 127. Any more than that and we'd have to bow to the market gods and thank them.

Rob.

2nd,
Thanks for sharing your good and bad. I'm still sitting on my deep underwater LEH October calls. Seeing them daily forces me to be more careful.

But we can't always have winning trades or else we'd be retired on the Big Island or The Bahamas.

I really think your short oil/long China/Bear Rally theory will work really soon. We're already seeing the cracks in oil and China seems to follow the US and the Put/Call ratio today hit the highest since the March 17th Bear scare.

We could always see a few hundred more down points before it turns, since the Jan down spike took us to a Put/Call ratio of 1.53. But we're nearing the point of another rally, which I think will bring commodities down and strengthen the dollar and the stock market just in time for the election as our leaders have as much if not more reason to have our market soar than China's.

Rob.

2nd: Hard/expensive to fight the trend.
Oil up, financials down with tight stops all around.

We know you like the counter trend but in this berry eating market you have to take what Mr. Ranger gives you.
Sorry to hear about the pain....We have no doubt you will get your pic-i-nic basket back come hell or high water....

Boo boo and Yogi.

Take a look at the put buying (or actually lack thereof) in financials.....not a good sign if you are looking for any upside. Way better for the downside.

Saudi Arabia might surprise, (200,000 barrels) but I bet any dip gets bought.

Look at the international markets...it isn't only the U.S. with inflation/oil issues.
What else is there but the consumable commodities and *real* hard currencies?
(Food, oil, fert, etc.)

Craig,
I just took a look at the put buying in financials. There were way more puts sold for C, MER, LEH, MS, BAC, WB, MBI, UBS, HBC and XLF(for most months).

Some that had higher or equal calls to puts GS, WM(had way more calls than puts sold), KEY, JPM.

I didn't look up any more. Were you talking about any specific financials?

Rob.

NWPX - Anyone here holding? I think it will make a huge gain monday...

ALOHA !!

This is from an article about the two Bear Stearns hedge fund execs who were arrested ... If you go to the FDIC website you will read that it is official FDIC policy not to announce any bank failure to the public prior to the FDIC seizing the failed bank and its assets.

The head of the GAO-Comptroller General quit because of Enronesque accounting tactics being forced onto him by the US Congress. Supplemental funds? Off balance sheet entries? The US government's Fiscal Budget is a hodge podge of deceit that has more holes than Swiss cheese!

When does our own government go to jail? Why this Orwellian double standard for the STATE? Who is policing the STATE? It surely is not the US VOTERS ... We're literally begging these crooks to rule us!

If this isn't calling the kettle black????

READ ON:
The U.S. government's base claim is a simple one: Cioffi and Tannin deceived investors by not disclosing to them how badly their funds were doing in a desperate bid to keep fretful investors from heading for the exits.

ALOHA !!

WOW ... KATRINA DEJA VU!!! Where's GOOD JOB BROWNIE?

Will the USA ever be able afford to rebuild Katrina and now IOWA? What about all the bridges that heed repairs? Did all that just get dropped?

God help us if a hurricane wipes out TEXAS CITY! Gas will be $20USD/gallon!

Why do Americans always believe what their government tells them? I mean how many failures must we endure before we wake up and CLEAN HOUSE in Washington DC? Sweep out all Reps and Dems and HIRE THE MAD MONEY MONKEY!!! Jeez, a circus monkey with a dartboard could make better choices! How hard is it to bankrupt a country?

READ ON:
FEMA Flood-Risk Maps Failed Residents in Midwest
by Tammy Webber and Maria Sudekum Fisher

June 20, 2008

GULFPORT, Ill. - Juli Parks didn’t worry when water began creeping up the levee that shields this town of about 750 from the Mississippi River — not even when volunteers began piling on sandbags.0620 04

After all, local officials had assured townspeople in 1999 that the levee was sturdy enough to withstand a historic flood, and FEMA had agreed. In fact, some relieved homeowners dropped their flood insurance, and others applied for permits to build new houses and businesses.

Then on Tuesday, the worst happened: The levee burst, and Gulfport was submerged in 10 feet of water. Only 28 property owners were insured against the damage.

“They all told us, ‘The levees are good. You can go ahead and build,’ ” said Parks, who did not buy flood coverage because her bank no longer required it. “We had so much confidence in those levees.”

http://www.box.net/shared/static/b0lnxcgsgc.xls

Updated Weekly Sector Spreadsheet for the week ending 06.20.08

Re: Bond Rout

There's been several bond routs over the years, none of which indicated that inflation was in the cards, due to declining interest rates. So I assume that the same macro is involved, because interest rates are not aggressively advancing.

This chart shows the USB price over several years. The bond rout occurred just prior to the housing collapse in the U.S., so I am assuming that the latest bond rout is not an indicator to inflation, but a sectoral rotation in order to raise capital.

Note that the oil price rises to a peak right after the latest bond rout, much like the housing sector:

Stockcharts.com:

http://tinyurl.com/3op29d

IMHO, Donald Coxe's weekly audiocast is the BEST 30 minutes you can spend learning about the market.

http://tinyurl.com/ysk7wu

this week, 2 major insights:

1. If corn and wheat REALLY rise, like to $15, demand from China/India for OTHER commodities will fall, and bear stock markets will be assured.

2. Gold retreated after the Fed guaranteed the survival of the investment banks; with the (inevitable) next financial crisis, gold will zoom.

Still, the way he tells his story is SO compelling and common-sensical, that it's worth hearing.

PS: Coxe spoke some time ago about the growing risk of crop failures (which had not occurred for 17 years, but which made the '70s commodity situation more intense). With Midwest flooding, crop failures may be upon us.

Fransix-

I wish I could understand your charts, but they are SO full of squiggles, I can't pick them apart.

Charts are colour-coded and on a weekly basis, so if any confusion arises, labels for each colour are provided in the upper left hand corner. Note that the chart is weekly and linear scale.

Bond prices are in pink, so you will notice each occasion for a bond rout is clearly when the price of a related indice peaks and then declines. Housing is a prominent example, and I believe that oil is also a very prominent example.

If you get my analogy, it follows that oil markets will follow the oil price through a correction much like the housing sector corrected on the heels of a bond rout.

The housing collapse is deflationary, and could not have been a sign of imminent and aggressive rises in price. So my belief is that we are seeing a consistent expansion of credit and contraction, only to be repeated.

The entire commodities sector is strongly attached to oil prices.

Follow each index by colour with the mouse pointer across the chart to compare the performance of the indice with the others on the chart through the years.

I took out the moving averages to simplify the colour coded list:

http://tinyurl.com/5lkvvx

Here are the several peaks:

Nasdaq, US Dollar, US Bonds, Housing, Oil => and?

Note that the spread between 2 year bonds and treasuries peaks at the exact same time as bonds. A bond rout occurred just weeks before the peak of the HGX, and I believe we are seeing the same for oil prices.

There have also been chronic, repetitive peaks of USB prices.

F6, I post rarely and have never given kudos to other posters, but your charts this am took some time to absorb and I compliment you on your thought process. It certainly enlightened my thinking and it's simple & elegant and to the point. Nicely done!

thanx, f6, that helps. i'll go through the chart a couple of times. Donald Coxe too is concluding that a bond rout is on the way.

I like the big picture and inter-relationships of sectors on the macro scale. It tells you the iron logic of market movements.