Good morning.

Here are your Cara 100 Ratings Changes:

Downgrade:

UBS - to Neutral @ Credit Suisse

New Coverage:

DNA - Buy @ Deutsche Securities

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

Have a great day.

http://tinyurl.com/65sr46

Great stuff (not mine...that goes without saying)

ESLR- n2s, nice to see adding on weakness is paying off for you...(wish i had gotten back in)...

the short oil play, on the other hand, has been fun only for masochists...

2nd...it's not too late to get back into eslr...we can short the opening gap...maybe.

Gartman is bullish on gold again, accept for the first time in a few years is suggesting mining shares as well as the GLD.

ive never seen him make this recommendation for a looong time, i dont want to put too much weight on his new take as he was well off the mark with a recent short attempt on gold, but i wonder if this is a signal of sorts that the mining shares are finally awakening from their multi-year coma.

w/ respect to the JR's the one i follow the closest is Miranda (an old Paul Van eeden workhorse) which is showing some signs of basing, not having fallen materially during the recent dump from above $900 to the $860 level. i hope this is indicative of others, and this is not financial advice. for gold investing i feel like a prisoner who's been locked up for years and just found a crack in the walls of his cell and is enjoying a tiny ray of sunlight, wondering if more cracks will appear...

good luck.

trying a little UYG pre-market...

Gold rising again fast in short time frame

HUN - A good buy @12.25?

Wow 2nd,

That would have worked, too.

SWC is raging - bottom is likely in

You're so right about shorting Oil being very frustrating. But you know as soon as QT and I switch to the long side the bottom will drop out.

So where's the crowd now? Short, Long, or Neutral?

Rob.

Thanks, 2nd. So far, so good. Today is ESLR's investors day. This may prove a short-term crescendo for the stock price or the start of a run to new highs (which would be something given the overall market). The key in my view is how they handle financing their growth.

selling spot silver at 17.5

shark- if you find your instincts are on target, i would use 'em...

Rob- it would be ironic (and therefore appropriate) if oil were to drop on bad news in nigeria...

TSO reminds me of SNDK-> the selling is relentless...

Finger Lakes

You took the words right out of my mouth.

I still can't figure where the new money is coming in from, to pump up the oil sector even higher.

2nd....

'ppreciate your post dr.cosa and glad to hear Gartman (nervous trader) is recommending gold again and now mining stocks. My favorite happens to be San Gold (SGR.V / SGRCF.PK) which happens to be Brent Cook's pick, though I was in before. Brent works with Paul Van Eeden as you know and is one of the best geologists in the business.

didn't use em..the fundamentals had me buffaloaded. the new contract doubles the companies prospects essentially, I didn't hgave the "stugots" to go short. it is becoming my preferred direction though.

Finger Lakes

If there is a big sell off today, traders might get nervous and take their profits in the oil sector, which should send DUG soaring [hopefully].

Just my 2 cents.

Back in w/ a nibble on NOT.V

"I still can't figure where the new money is coming in from, to pump up the oil sector even higher."

QT-> reposting last night's link to Hulbert...speculation by hedge funds probably plays a larger role than we'll ever know:

[Hulbert out with John Dessauer's take on the price of oil:

http://tinyurl.com/4vantb

" One adviser who has focused on these issues is John Dessauer, editor of the Investors World newsletter. In a recent communication to subscribers, he discussed the impact on the price of oil of the Commodity Futures Modernization Act, which Congress passed in December 2000. One consequence of that legislation, according to Dessauer, is that "the oil market has been grossly distorted."
By how much?
Dessauer estimates that if the government rolled back the regulatory changes made in that legislation, oil's price could fall back all the way to $80 per barrel. That would represent a 40% drop from where crude closed on Tuesday."

"...arbitrageurs do not play the role in practice that theory says they would. In practice, the arbitrage role is mostly fulfilled by a relatively small number of institutional investors such as hedge funds, which invest other peoples' money and often are highly leveraged. For both reasons, according to researchers who have studied arbitrageurs' behavior, they cannot afford to hold onto a short sale if it takes too long for it turn a profit.
As John Maynard Keynes famously once put it, "the market can remain irrational longer than you can remain solvent."
If you have any doubt about the wisdom of Keynes' comment, just remember Long Term Capital Management, which went bankrupt in 1998 with investments that -- if held long enough -- would eventually have been profitable.
What role, then, do arbitrageurs actually play in practice? According to a famous study conducted in the mid 1990s by Harvard economist Andrei Schleifer and University of Chicago professor Robert Vishny, they more often become momentum players rather than hedgers: Rather than betting against an apparently obvious mispricing, they often will bet that a mispricing will continue and become even more extreme."]

Posted by: 2nd_ave at June 18, 2008 8:49 PM [link]

"TSO reminds me of SNDK-> the selling is relentless..."

2nd--When I see that developing (unless there is a really good reason like collapsing due to financial shennanigens--TYCO comes to mind) I start checking the put options for opportunities. It worked in the past for me with SNDK.

Already in refiner HOC, so just monitoring TSO and others now.

Maybe we should have a contest to see who can pick the high for oil between now and Labor Day? Of course, a hurricane could really throw things in a tizzy.

Prior post--"I start checking the put options for opportunities. It worked in the past for me with SNDK."

Opportunity is SELLING puts.

2nd

Thanks for the link. I didn't check the late posts from yesterday's chat.

You are right about the unknown role of hedge fund in all of this. But I would of thought the momentum players would of gotten in once oil zoomed past $100/bbl. For me and I guess Rob too, it is a waiting game now.

[Bill Cara note: The mutual fund managers are the ones who need to protect against falling prices, and I believe mutual funds are many times bigger than hedge funds. Also, much of the trading of a hedge fund is to hedge within a sector, with little impact on sector momentum.]

seamus- thanks for the idea...unfortunately, already at 100% allocation for refiners...

Speaking of relentless selling, anyone look at Cara 100 Embraer (ERJ) lately? 12 days in the AZ, increasing volume to the downside. Yikes.

Gold - follow up to post two days ago; the price oscillators have indeed turned higher, RSI 7 now is over 50 and the down trendline has been broken (for now):

http://stockcharts.com/h-sc/ui?s=$GOLD&p=D&yr=1&mn=0&dy=0&id=p96993160488&a=143001592

$SPX - flirting with the 23.6% retracement support again...if broken, we may see a run at the March lows.

[Bill Cara note: all the precious metal spot prices are getting a boost today, against the grain of a rising $USD. Something has to give.]

China raising the price of petrol.

"NEW YORK (AP) -- Oil prices dropped Thursday morning on reports that China is raising fuel prices, a move that could dampen the booming Asian nation's oil consumption. Retail gas prices slid overnight.

Light, sweet crude for July delivery fell $2.80 to $133.88 a barrel on the New York Mercantile Exchange, but dipped more than $3 at times.

China disclosed that it will raise the prices of refined oil and coal, used extensively for electricity generation. It was not immediately clear if it also would reduce subsidies."

---------
If other heavily subsidized nations follow, we could see accelerated demand destruction and likely increased civil unrest.

BRK.B not doing very well today... guess they don't want to see BUD disappear.

Si02-> sell off in UNG...nat gas might be a leading indicator of sorts for oil...

Here’s a guy who knows inflation. (Source is today’s Everbank’s Daily Pfennig email).

Brazil's Central Banker, Meirelles: "We have an inflation problem, we are aware of it and we will use the main tool at our disposal- interest rates- to make sure it doesn't spiral out of control.”

Retaining BZF position picked up right before SFO trip a few weeks ago. Although there may be some CB jawboning USD strength, real is standing on its own IMO. FWIW, it’s not part of the USD index.

Also like the Australian dollar (FXA) here, although playing some of that thru closed end fund FAX as posted here in the past and on skype last week. DOYDD.

2nd: inventories released at 10:35, +43Bcf, pretty close to 5 year average (-52Bcf below). UNG may start to move in the next few weeks.

QT,
Someone surely seems to step in and catch the falling Oil price just when it looks like it will crash below support.

I could see it being mutual fund managers, since many of them can be long only and they'd want to protect their positions.

And our crappy 401K even started offering an energy fund last summer. So, if there's alot of 401K's doing the same that could add to buying pressure as well.

What I'm waiting for is the two day $15 run-up in prices a couple of weeks ago to correct. And also, I would think that eventually people would want to take profits from their Oil Sector holdings.

Rob.

If MER breaks 40 I'm going hugely short on it. They haven't even released their date to report earnings yet. And Meredith Whitney thinks they have way more problems than LEH and we all saw what happened to LEH recently. I'm thinking that they'll be the next major brokerage to fail. I'll be buying Jan 09 puts.

Rob.

Rob - do you mean when it breaks below $36.40?

Holy cow

STILLWATER MNG CO(NYSE: SWC)
NEW Real-time: 12.615 1.38(12.23%) 11:28am EThelp

Gold Eagle Mine CEO on BNN

http://watch.bnn.ca/clip61039#clip61039

Low-key, logistical commentary on the large high-grade, underwater discovery at Redlake, which is right next to Goldcorp, and often considered a likely acquisition for Goldcorp.

disclosure: no position

closed out dgp. waiting for gold pullback to load the boat

Gold Eagle Mines CEO on BNN

http://watch.bnn.ca/clip61039#clip61039

Low-key, geological and logistical commentary on the large high-grade, Bruce Channel underwater discovery at Redlake, which is right next to Goldcorp, and often considered a likely acquisition for Goldcorp.

They have $100M in the bank to fund drilling. At 7.5, it's well below its 10 high of early '07

disclosure: no position; do your own DD

Shine on, DUG you crazy diamond...

"Gold will recover stronger and faster than ever”, June 20, 2008

John Embry

http://tinyurl.com/5ths7m

Finger Lakes [Rob]

Did you see this healine?

"Oil prices dropped Thursday after China said it will raise fuel prices, a move that could dampen the booming Asian nation's oil consumption."

"And also, I would think that eventually people would want to take profits from their Oil Sector holdings." <----my feeling EXACTLY!

Looks like they might be taking some profits... DUG has made up some serious ground today. When DUG does take off have you decided on an exit point yet?

Calls on DUG, Call on SWC, reload put DIA, bailed SMN, HTE for the div. More SUF.
Binocs out for Hindenburg.

Added CDE on the reversal.

anyone trade ESLR today 2nd? I went long after it corrected and caught part of the move

Aurator

What do you make of this Hindenburg Omen theory by McHugh?

back in eslr long

back out

2nd

An FYI for you. Another view on China:

Shanghai Surprise: China's Stock Boom Deflating Ahead of Olympics

China's Shanghai Composite tumbled 6.5% overnight and has now fallen 11 of the past 12 trading days. With the index now down more than 50% from its all-time high in October, it's clear the conventional wisdom about China "holding up" the market before the Olympics was wrong -- as it often is.

Darren Chervitz, Co-Manager of the Jacob Internet Fund, has taken an unconventional view of China, long expressing concern about the sustainability of its economic boom -- especially in the face of a U.S. slowdown.

But Chervitz notes the action in Shanghai does not necessarily correlate to the performance of Chinese ADRs like Sina.com and Sohu.com, which are among his fund's biggest holdings

Got out of this morning:

DIA JUN puts (50% gain)

FXP $79 ($1 gain)

Might reload these at EOD or wait until tomorrow to do anything else. I will be busy at work for a few hours until close to closing bell. I think we might go up for the next day or so.

100% cash

Elvis has left the building.

QT: The HO has been an indicator I follow as a heads up for BIG trouble ahead. It shows the market is unhealthy by a divergence of new highs and new lows. There has never been a crash without the conformed HO, but getting the HO is only an indication of much higher risk.

With everything else I see going wrong in the economy, I think we will either see the outright crash, or prolonged crash-like declines. Would not be surprised to see one more rally before the big trouble. Possible a rally from about 11600 on the DOW back to 12000 and then a failure. Just a hunch.

I think it will be clear eventually that all the HBBs are broke, and the RE market will continue to deteriorate for over a decade. FNM will go bust. The FED will be so toxic that the integrity of the USD will be questioned. That plus Energy and the further collapse of the USD into the mid-60s should be enough to break the DOW out of the 34 year trend channel. I expect the PM stocks to recover and do well through the end of the year in the face of 1300 Gold.

Bought more physical silver yesterday.

ESLR shorts getting squeezed like a fat ripe grapefruit under a semi today. Long overdue imho.

Anybody know why transports are soaring? is it just because of the prospect of declining oil? Played IYT puts before but liquidity/spreads are brutal.

Looking at Ryder (R) as possible short as mentioned here by someone else (Rob I think). Looks like a short squeeze today (up 4%). Yahoo shows 10% short float and daily RSI went from something like 20 to 70 in a week. If todays high doesn't hold, would be third lower high over last month.

Fundamentally, even if oil drops, wouldn't a recession hammer these types of stocks?

Still have IYT puts and betting on a double top. Railroads have been strong. Might be wrong but I don't see it holding up. China has ST shutdown to try and clear the air for the Olympics. Retail will drop once the checks are spent.

huh, spreads and volume aren't great on ryder puts either. Anyone know of a short transports etf?

Paulson yapping about the PWG or President's working group, aka PPT. Greasing the axles of the Trojan Horse. "Market stability regulator", what a mess.

ALL:
Big story last night on local FOX station RE: BOTS.
40% of computers in U.S. are infected with BOTS picked up from web pages, Youtube, which track keystrokes, passwords, SS#'s, etc.

Make sure you are updating your spybot programs, firewalls and virus protection on at least a weekly basis.

Regarding the Hindenburg Omen:

From Wikipedia:

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

"Looking back at historical data, the probability of a move greater than 5% to the downside after a confirmed Hindenburg Omen within the next 41 days after its occurrence was 77%, the probability of a panic sellout was 41% and the probability of a major stock market crash was 24%. The occurrence of a confirmed Hindenburg Omen does not necessarily mean that the stock market will go down, although every NYSE crash since 1985 has been preceded by a Hindenburg Omen.

Because of the very specific and seemingly random nature of the Hindenburg Omen criteria, it is possible that this phenomenon is simply a case of overfitting. That is, if one backtests through a large data set and tries enough different variables, eventually correlations are bound to be found that don't really have any predictive significance.

However, the fact remains that out of the previous 25 confirmed signals only 8% (two) have failed to predict at least a mild (2-4.9%) decline."

I guess that answers my question: How many times has the HO actually pointed out a bottom?

Not enough sample data for a good probability test, imo.

Railroads(CSX) have been strong because of the transporting of coal(ETF: KOL). Both up 50% in less than 6 months!

Aurator

I tend to agree with you one last big rally scenario before the final fall.

Paulson talking about transparency...how about transparency on how HB&B trades against it's own client order flow? How about transparency into the Working Group/PPT? How about your involvement in the sub-prime/derivative mess?

I can't even watch this guy anymore...it makes me sick.

"This Omen has appeared before all of the stock market crashes, or panic events, of the past 21 years. All of them. No panic sell-off occurred over the past 21 years without the presence of a Hindenburg Omen. The way Peter Eliades put it in a recent Daily Update, September 21, 2005 (Peter is well worth the read, believe me), "The rationale behind the indicator is that, under normal conditions, either a substantial number of stocks establish new annual highs or a large number set new lows - but not both." When both new highs and new lows are large, "it indicates the market is undergoing a period of extreme divergence — many stocks establishing new highs and many setting new lows as well. Such divergence is not usually conducive to future rising prices. A healthy market requires some semblance of internal uniformity, and it doesn't matter what direction that uniformity takes. Many new highs and very few lows is obviously bullish, but so is a great many new lows accompanied by few or no new highs. This is the condition that leads to important market bottoms."

tradergirl,
No, I'll wait until it goes over 40. I never buy puts when something is going down only when it's going up. The same goes for calls. Only buy them when the stock is going down.

This strategy can often get you on the wrong side for awhile if you jump too early but I always use long-dated options so my theory has time to play out.

Doesn't look like I'll be getting them today since MER is tanking.

Rob.

QT,
I did see that headline. Great news for us. Hopefully we can get more fears about demand destruction from the recession and there will be a mad stampede to cover underwater long positions as everyone sells.

Probably too optimistic of a view but there it is.

My target is 30 bucks for DUG.

g034 "I can't even watch this guy anymore...it makes me sick."

That's why I went to lunch and missed it <;)

G034,
You're so right. I still can't understand why anyone believes anything he or Bernacke says or believes anything the ratings agencies say or believes anything any of the brokerages say about stocks they're "researching".

I think the whole system has a huge credibility problem because of all the blatant fraud that is so present everywhere that no one even bothers to cover it up anymore.

Rob.

Here is an insightful interview of Nick Barisheff titled Gold Bullion: Currency for the Times. I have never heard of him before, but I like much of his thought process.

http://tinyurl.com/6mhy5p

By the way Bill, this does take us off site to someone else’s blog I suppose, so if you object to these kinds of posting’s by me here, let me know. And as always appreciate all the hard work you do to make Cara Community such a success.

[Bill Cara note: T3d, when somebody who is well regarded in the community posts a link and adds a judgment call, I think that adds value and hope to see a lot of it. The only thing that bothers me is when people post a section of someone else's work or a link to it and then leave it here with no further comment.]

Circuit City (CC) bounced off oversold RSI today... anyone touching that dog?

What’s Wrong With The VIX?

Over the past week though, the VIX has been behaving rather oddly. On Friday June 6, the VIX jumped over 26 percent as the market took its nosedive. Then, this past Wednesday when the Dow dropped another 200 points, the VIX was only up four percent.
http://tinyurl.com/5zclwk

:) beginning to cash out

holding onto gold miners for a week or so and all other holdings to cash by end of tomorrow.

Breaking even so time to re-examine how I want to move ahead this weekend.

"the Omen" "Hindenburg" two interesting movies to combine into this new "Hindenburg Omen" flick.

Let me guess Paulson is the star?

Follow-up on Ron’s post at June 19, 2008 8:39 AM

“The data is not the economy.”

Concerning the psychology of the times, we are
constantly amused, dismayed, shocked, exasperated,
dumb-struck et al as we listen to and read of other's
views of the economy. All tell us that this economy is
doomed to failure, and as one blogster wrote on Friday,
"This [economy] is much worse than anything we have
experienced since the Great Depression. Plus there is no
sign that it is abating either." He, or she, is simply and
utterly wrong. The present economy is not even as bad
as it was in the depths of the recession of '00-'01
following the dot. com bust and it certainly pales to the
depths of the recession in the early 80's, and of course it
truly pales when compared to the grand-daddy of all post
World War II recessions, that of '73-'75.
Lets consider a few things comparing today to that of
'73-'75. For example, average weekly hours worked in
manufacturing: today 41.3 hours; then 38.9. Average
weekly claims for unemployment: today approximately
350,000; then 550,000. Vendor performance, slow
deliveries diffusion index: today, approximately 50; then,
18. The Ratio of manufacturing and trade inventories to
sales (the smaller the number, the better, in this case):
today, 1.32; then 1.45. The Ratio of civilian employment
to population of working age: today, 62.9%; then, 56%.
Civilian unemployment rate: today, 5.5%; then 9%. And
we could go on and on and on and on, but we think our
case is made: things economic these days are
measurably and demonstrably better than they were in
the early 70's and certainly things are not "worse than
anything we have experienced since the Great
Depression." People, and commentators, who make
these outlandish statements are simply wrong, and their
wrongness needs to be shown and discussed at length
and often.
Things certainly can become worse; but things can also
become a good deal better. Certainly we take exception
to those who argue that the US economy is in a terminal
downward spiral, but we also we take exception too to
those who would have us believe that things are not
turning around, nor shall. Clearly there are problems
ahead regarding housing, for it shall take months... if not
years.... to work our way through the inventories of
excess housing that exist presently; but we will eventually
work through them (unless the likes of Pat Buchanan,
Lou Dobbs, Rep. Tancredo, and the like succeed in
closing the US borders and impede the inflow of
immigrants who want to make their lives here; then we
shall become very concerned indeed), for we always
have and we always shall. That is the nature of America,
and to have bet against the elastic nature of the
American consumer has been, and shall continue to be,
a very bad bet long into the future:

Via Gartman letter 16 Jun 08.

These arguments/comparisons never seem to take into acct we weren't in a housing bubble crisis and the manufacturing base of the country was massive compared to today....even with a large part manufacturing military/government contracts.

Inflation was measured quite differently as was unemployment. Apples to oranges again.

FITB and AIG were looking attractive at levels this morning....shoulda, woulda, coulda put money to work.

Craig said “Apples to oranges again.”

Well Craig history never repeats exactly, but it usually rhymes.

Is Roger Federer better than Bill Tilden?

Is Mohammad Ali better than Rocky Marciano?

Those questions can never be answered with certainty, different times, different eras.

These are extremely hard times for many people.

A good book is “The Great Wave” Price revolutions and the rhythm of history by David Hackett Fischer.

The only constant in life is change.

ALOHA !!

Only part of Paulson's yadda-yadda! So now the US Banks are NOT too big to fail! I love how he trots out the lady from the FDIC who essentially wants to limit exposure to failing banks.

CAN ANYONE ADD 1+1? In other words if you want to preserve what few US Pesos you have left then you better move to a private bank outside the USA because FDIC and SIPC means nothing! They are admitting they won't be able to meet their government mandated charter to rescue your savings accounts.

I recall RON PAUL grilled GREENSPAN on this very topic many times!!!! "NO PROBLEMO with the DERIVATIVOS RONIO PAULIO!" said Greenspan. May as well start learning Spanish so we can all swim the Rio Grande for work in Mexico!

Once again the "problem" is rewarded ... I am telling you ELIMINATE the FED before it eliminates US! As US TAXPAYERS we need to form a UNION and GO ON STRIKE! We need to clean house top to bottom and get rid of all the welfare addicts that infest Washington DC, from the lobbyists and special interests to the bankers to the unions and then sweep out the two party aristocracy in their entirety and start over! Why is it again we need these people ruling us? Follow the example of our Founding Fathers for once ...

Come on HANK and BIG GOVERNMENT ... SAVE US! We are so helpless and just little babies who cannot live without your superior and masterful guru financial brain power that envelopes the entire Universe with its omnipotent healing powers of such incredible gargantuan incredibleness!

TAKE IT AWAY HANK!!

Winding Down

``There still seems to be uncertainty surrounding the process by which a large complex institution is wound down and what impact it would have on the overall financial system,'' Paulson said. Regulators should determine whether to assign a specific agency to oversee resolutions, he said.

FDIC Failure

Bair, whose agency insures deposits at 8,534 commercial banks, told reporters yesterday the FDIC ``would not turn it down'' if Congress gave it the authority to shut down failing investment banks. She said last month the FDIC's authority to set up bridge banks to take over and sell assets of failed banks offered a ``good model'' for what's needed for investment banks.

To Big To Fail

``We must limit the perception that some institutions are either too big or too interconnected to fail,'' Paulson said at the Women in Housing and Finance annual luncheon. ``If we are to do that credibly, we must address the reality that some are.''

Derivatives Markets

Paulson also today called for improvements in the derivatives and repurchase markets to prevent bottlenecks that could roil the financial system.

``Given the massive scale of the over-the-counter derivatives market, we need to enhance trade processing with more automation, clear the backlog and create utilities and protocols that will make the process more efficient,'' Paulson said.

Repos are one of Wall Street's main financing channels. The Fed uses repos for its open market operations to keep the rate on overnight loans between banks close to the target set by policy makers.

The Treasury chief said ``we must address risks associated with a potential counterparty failure and the risk associated with the potential disruption of a clearing bank'' in the repo market.

Paulson said he was ``very hopeful'' that Congress would pass legislation to strengthen the regulation of government- chartered companies including Fannie Mae and Freddie Mac, the two largest sources of U.S. house financing. Still, some of the provisions in the Senate's version of the housing bill are ``objectionable,'' he said.

NOT is on sale at 3.32.

Gartman's boast about not betting against the consumer doesn't make sense to me. The consumer has been spending his home equity and/or his credit lines. Now he can't pay them back. Default rates are soaring. How Gartman thinks this is going to turn around in a jiffy is beyond me.

Sinclair's downward economic spiral makes sense. I already see it happening. I know several nannies that have been laid off because their employer lost his job on Wall Street. Trickle down economics of another sort.

Two days ago I wrote:

"Guys, when I look at the chart of $WTIC (oil)
I notice an upper shadow a day or 2 ago combined with what appear to be negative divergences in both the macd and the slow stochastic."

Posted by: shark_attack at June 17, 2008 9:47 PM [link]

ALOHA !!

telestar3d ... Contrast what Gartman says to what Mr. Guru Moral Hazard is saying and it seems Gartman is out of touch with reality. When you have the HEAD of the US TREASURY saying US Banks are not too BIG to fail ... that is UNPRECEDENTED ... even during the Great Depression! I mean look at all the proposals HANKY is pushing ... is that signaling anything other than a doomed outlook? Look Gartman has no worries, he gets his BIG FAT subscription money whether he is right or wrong. I guarantee you he will convince his followers he was right even when a loaf of bread is $50!

Thats why I predict "many fortunes will be lost trading the markets successfully ..."

ITS THE MONEY STUPID!!

If your BANKS are failing then so is your economy. You cannot separate the two, especially when you have a US Peso and a US Economy based on DEBT! Who issues DEBT? Where do you go to get a loan? It's not 7-11! Its not Exxon!

Gartman plainly refuses to admit that the quality of our money now is far less than any of those past events he cites. This economy is a symptom of corrupt money. ITS THE MONEY!!!

When it comes to fiat ... VELOCITY determines VALUE ... Interest rates are useless! Look at Zimbabwe now ... whats their central bank rate at 4500%??? Look ... they raised rates! I think they raise rates ever hour!

It all boils down to the "C" word again and that is what determines VELOCITY! Hank just upped VELOCITY major ...

OBAMA can come in and do a FDR 2 routine and PAULSON can come in and "clean up" the failing banks and you can revamp the SEC a gazillion times but nothing will change until you remove the "fiat" from our money and eliminate BIG GOVERNMENT by eliminating the two vehicles that allows BIG GOVERNMENT to flourish ... the US FED and the IRS! Only an educated and united(union) citizenry can make a REAL ... CHANGE!!!!!

Moab said: “Gartman's boast about not betting against the consumer doesn't make sense to me.”

I hear you, I do not agree with many things he say’s and he can be verbose. I think his point is that it has been wrong in the past to bet against the consumer and will be in the future. I do not know and just have to see how things play out.

I have been worried about debt levels of consumers for 3 to 5 years now. The manor does seem to be hitting the fan.

Got Gold?

ALOHA !!

What is STING talking about?

“His books have helped me better understand something that has been puzzling me for a long time: Why have so many resource-rich countries in the developing world remained steadfastly poor?”

- STING

kaimu

Don't know which book he/she reads, but the answer to "Why have so many resource-rich countries in the developing world remained steadfastly poor?”

Read The Secret History of the American Empire or Confessions of an Economic Hitman both by John Perkins.

ALOHA !!

Seamus ... WOW ... unless you are 120 years old deaf, dumb and blind and own no modern electronic device for disseminating mirth, merriment and disdain then I will give you a clue ... STING is a "he"! HA!!!

Then there is a clue in those books as to why oil is going up and staying up denominated in US Pesos, as I have been saying all along. If you want to really make the USA suffer then start denominating oil in Euros! The global markets are using oil to measure US Pesos. It appears US Pesos are not very popular or else oil would never have risen past $50USP/bbl. When the USP(US Peso) is not popular then VELOCITY rises, because the pesos are changing hands more rapidly.

Gartman sounds like a typical insulated Wall Street momentum trader. I have never seen a comment of his that was particularly insightful.

Contrast this with Mike Morgan, a real estate broker and analyst on the ground in Florida who has been writing about the real estate crash for years. His tone has gotten markedly more severe to the point where he is now seeing a depression coming. He is personally seeing extremely disturbing things regarding banks every day. And he has been right in most everything he has written so far.

http://realestateandhousing2.blogspot.com/

[Bill Cara note: Dennis is excellent at self-marketing, but his trading rules make me choke. Re Mike Morgan, I think you're onto something good there. Terrific. I wish he'd join the Discourse here. ]

UAUA-> it's about time, man ;)

Kaimu, is Sting the girl who sang "Message in a Bottle?"

BTW, if you read the Barisheff interview which I linked earlier his views on money velocity mirror mine. Here's the link again.

http://tinyurl.com/6mhy5p

Kaimu OH!!! That Sting!! LOL. Thought you were writing about another poster named beeSting or something . . . think I knew a woman somewhere in the past with that nickname or reputation.

They've been propping the US peso index in this low 70 area now for some time. You obviously see it crashing below 70 some day. BRIC country currencies continue to progress vs USD and move to their own beat outside the USD index. As stated before, like the BR real and $Aus at this moment in time.

RE-entered 1/2 postion in FXP @ $77

A few stocks I am wanting to short, but I will wait until tomorrow. I wonder if oil is rolling over for a big market jump?

Hindenburg Omen-

are (artificially) high oil prices enough to explain the simultaneous occurrence of (substantial numbers of) new highs and new lows? does anyone have a listing of the sectors at new highs/lows? if XLE/XLB components are setting new highs while financials/airlines/refiners/transports are setting new lows, is that ominous, or just the playing out of normal relationships under a high oil price scenario?

not much of a Sting fan, but i've always thought Fields of Gold was a great ballad...

Finger Lakes

Nice day for DUG a low of 26.43 to a high 28.15

Maybe tomorrow it will really take off.

Still holding here.

(continuation of last post)-> ...and is it possible the HO resolves itself as oil prices drop-> in which case the market rallies rather than corrects? (naturally, i have a vested interest in seeing SMN/DUG/airlines/refiners/CAF all spike up simultaneously as oil drops...so my theory is highly biased)...

SIO2 - re NOT, Noront

It's on sale today, but looks like fire-sale prices tomorrow. Check the weekly chart.

NOT hasn't found a bottom, and looks unlikely to above 3. I say this based upon past bottoms and the lower weekly bollinger band.

Gold was breaking out in the morning, but $HUI and GDX did not confirm a breakout. Then they all fell and gold closed below the downtrend line again.

Hindenburg Omen, new highs and lows, a quick google search of nyse new highs brings the WSJ http://tinyurl.com/4slagt

SIO2 - BMK to bottom quicker?

Now check the weekly of BMK. Twice before it's bottomed twice near today's closing price.

Why my faith in charts? why no discussion of fundamentals? No McFauld's player has defined resources, so what is there really to go on but charts?

BTW, no faith in charts (or anything else), but I do think past support increases your odds. One could enter at today's close, put a stop however many % below which your loss budget allows.

Both stocks have enough volume so that a stop could be relied upon for a trade (up to 20K shares of BMK, 50K of NOT); rule of thumb is at 1-2% of daily volume, there's a good chance of getting out at your stop price without too much "slippage").

FWIW --

I'm still holding too. Like I said my target is 30 then I'm out.

I do think the market will rally if the oil drop is for real this time and not another head-fake.

People who have been holding oil related stocks must be nearing a point where they will rotate out of oil and into something else.

Rob.

Jock, then maybe it will just be halted again pending news. It's a trade, just lowering ACB. I think I have done it over 20 times this year. BTW, FNC and NOT are diverging, took 50% out of FNC yesterday, taking profits. Goal is an ACB of zero, which is not too far.

FNC best land, BMK best investors, NOT best results and marketing, FWR best wishes. Your choice!

ALOHA !!

ON ECU SILVER

More drill results from their Valdernas properties and more typical high grade veins showing over 1,000 to 3,000g/t Ag. All these veins are widening and extending at depth just like all the others are wherever they drill forming a mineral corridor that management always disclaims as of "unknown economic viability until a pre-feasibility study is complete". Yada-yada!

We've got five drills going 25/8 but the "economics" are unknown! We've been drilling these uneconomic deposits for years now but they're uneconomic until we stop drilling and pay MICRON to tell you they're economic! Nevermind that we still keep getting funding for these uneconomic high grade holes! Apparently the banks think its economical for some reason.

Oh yeah ... I forgot to mention ... Its "economics are unknown" but we're currently mining them and shipping concentrates economically! In fact, we are tired of the Mexican smelters and the Chinese are offering us a better deal even though they're 12,000 miles away!

Move along folks ... there's nothing to see here! No photos please or "H" and his shades will have to do some serious butt kicking! FOLKS ... this is a CRIME SCENE! Rope it off and outline the ore bodies! HA!!! It's a CRIME SCENE!!! An "uneconomical" one!

LINK: http://tinyurl.com/67xweh

SiO2 - Interesting. Not sure I can "samba" fast enough to keep up with this. Prefer a cheap price on a junior that has huge 43-101 compliant resources. buy cheap and hold ...

GE down 34% since last October 2nd -

CEO, Jeff In-melt-down ...

Bill - a few folks have told me about you, and I noticed your reference to me today. Until today I have not had the time to check things out. Today I am under the weather, with a bit of time to chill out, so here I am. I started a Depression Index about two years ago. It crept up above 50% this year, and two weeks ago I pegged it at a 100% chance of a Depression. I base that on my work with banks. My perspectie is unique because I have regional and international institutions as clients, but I also have a Florida based real estate brokerage for consumers. I don't think anyone in the world has a double barreled crystal ball like I do. I'm no genius, but I aced Economics 101 in high school. A Depression is inevitable just based on the value of what the banks think they own. I've written quite a bit for clients, and shared some publicly on my blog http://realestateandhousing2.blogspot.com/ I will check in more often and if you would like, I will advance you some of the material I prepare. Ciao for now.

[Bill Cara note: Mike, I hope you become a regular here. Dr. John says he has lots of respect for you and Dr John is #1 in my books]

Bill
Purchased the book by Stephen McClellan
'Full of Bull'
Very well written and full of practical advice.
Thanks.

ALOHA !!

Jock ... I recall hearing somewhere that Bill O'Reilly of the NO SPIN ZONE fame has it our for Immelt and his gang. How the heck did Immelt get so damn unpopular and why is GE a villain? Obviously some one is selling. I just assumed it was because of all their GE Capital mortgage game antics going bad! Is there more to the "badness" than just O'Reilly and mortgages?

Just so you know how pervasive GE Capital got into the now defunct homeowners ... they financed a very large amount of landscape and pool loans all over the "hot spot" residential real estate zones of So Cal and Vegas and Florida! Some of the loans just for pools and landscaping were over $200k! I know because my Father-In-Law wrote them, mainly in San Diego and LA!

Maybe Mr. Morgan can assist on this point ... Explain the following and the "possible" abuses that occur regarding:

- Back Of Settlement
- Back points

During escrow these were bonuses to brokers from the lenders were they not? What were the mechanics and do you think the homeowners were well informed and knowledgeable on this topic or do you think it was "glossed over" at escrow? What are these bonuses to the brokers worth on average?

Move along again folks!!! More CRIME SCENES!!! Holly crap ... we're gonna run out of that yellow tape here in the USA at this rate! They need to rope off the US Congress and the US Treasury ... the FED and the IRS!

Who manufactures that yellow tape anyway? Are they public? HA!!!

Is anyone interested in GE at these prices for the long term?

"China's Shanghai Composite tumbled 6.5% overnight and has now fallen 11 of the past 12 trading days. With the index now down more than 50% from its all-time high in October, it's clear the conventional wisdom about China "holding up" the market before the Olympics was wrong -- as it often is."

QT- thanks for the info...

as you know, i tend to eschew conventional wisdom when trading...however, that china WANTS its market up before the Olympics is not 'conventional wisdom,' it's 100% certain...how could they NOT want their market up? so i still think they find a way to do it-> the path they take may indeed be UNconventional...look at how they've played their cards so far-> they raise reserve requirements near the low of the year and take it DOWN...just when it looks like it's falling apart, they raise fuel prices 17% and start to send crude down, which may in turn finally lift the index...i would have to give them high marks for playing (if indeed they are playing)...

Per the discussion on Gartman today and comparisons of 08 with 78.....

My point is, we had a completely different economy in the 70's and our information wasn't as hacked/manipulated.

Citing manufacturing job losses as less then the 70's/80's is inaccurate as we had far more manufacturing jobs to lose then. So Gartman saying the numbers lost today don't indicate recession is rediculous. If the new basis starts at a much lower number of jobs then the the percentage of lost jobs will also reflect the lower base. IE: We have less manufacturing jobs to lose so of course there will be less in total number lost now.
When he starts citing lost burger flipping/bank/Real Estate/building/consumer goods/Circuit City/auto sales/service jobs in comparison and includes lost/lower wages and higher inflation/puny dollar then we'll be getting closer to a real comparison.
If he wants to count lost manufacturing jobs he'll have to go to Mexico and China as we shipped most manufacturing jobs to those places. If he wants to count service jobs then India, Costa Rica and Ireland will be the places to look for those losses. We gave those away to line the pockets of the WS fat cats.
Counting lost jobs in Ohio would be silly, those haven't been around for sometime.

At the present his comparison is completely disingenuous.

As our friend TD3 accurately points out, it might not be the same but it usually rhymes...if you have the honesty to really look and make accurate comparisons. I don't think Mr. Gartman made much effort to look or make it rhyme as it does.

When are we going to start the American Citizens Union Kaimu? I'm ready to be a charter member.
The purpose will be to eliminate the Fed and the IRS....and as a result, end irresponsible government and strengthen our currency by STAYING HOME and minding our own business for a change. What a great idea.

ALOHA !!

2nd_ave ... Meanwhile China's Shanghai Metals Index has only fallen 14% from highs and has been relatively stable and flatlining in a range most of this month between 32,000 and 29,000.

Meanwhile the CRB keeps hitting record highs ...

!

Kaimu: That yellow tape is going to be in short supply seeing how they wrapped up about 402 schmucks in it today. Do they make handcuffs out of that stuff? Those guys sure had pretty suits and bracelets today!

As Bill wrote some time ago, there will many arrests, trials and inprisoning of mortgage and banking crooks.

Did anyone waste a few minutes watching Krudlow today? I was kinda surprised by Ken Langone's take.

ALOHA !!

Like a true union boss ... "HEY Craig ... I'm on it ... start sending me your dues ASAP bruddah!!!

Address:
DA BEACH DOWN DA ROAD
GREEN BOTTLES STREET
BIG ISLAND, HAWAII USA 96778

Leave da chek blank ... I fill in da numbas!!!

ALOHA !!

402 schmucks? You mean gray suit schmucks?

I thought they got only two from Bear Stearns! Wow ... 402 ... really? I guess GITMO will dump out the terrorists and fill it up with brokers and bankers! How many people will jump off the Golden Gate thanks to these guys?

I know lots of "folks" lied but if all you need is a "pulse" then you have to blame those who lowered the qualifications for loans and the idiot who dropped the Fed Funds rate to 1%!! Greenie? Ever been to Cuba?

GE, LatAm juniors -

Kaimu - I think In-melt-down is to Jack Welch as Bernanke is to Greenspan = the guy who got left holding the bag.

Fortune mag discovered only a year after Welch departed GE that Welch had pumped earnings by under-reserving their re-insurance operation.

Hey, In-melt-down is GREEN, just like Kermit. What's not to like, or to pity?

re LatAm juniors, Otto Rock, USbanker/blogger in Lima today further praises PCU, comparing its price action (favorably) with FCX, then lists his favorite juniors: MDR, ARU, CSI, FVI, VEM.

http://incakolanews.blogspot.com/

(Use bigcharts.com to view charts, and you don't have hassle with which Canadian exchange they're on, just CA:VEM, for example.

VEM is the only one I can add info on. Its founder, Juan Vegara, is Peruvian, a former Microsoftie. A smart Harvard MBA centi-millionaire friend of mine met Vegara on a plane and was mightily impressed. I tried at PDAC to meet Vegara, but he was doing deals the whole time. VEM has several different minerals (coal, gold, uranium) on different properties, and has listed something like 10% of their shares in Lima. Smart move. I don't own any, but the chart looks inviting.

Food for thought for Kaimu: sometimes political risk leads to under-pricing. I think Peru, Brazil, and Colombia are safe for N. American companies, and Venezuela is safe for Russians like Rusoro (RML) ?

Las Cristinas + las Brisas + land in-between probably contain 40M oz of cheaply minable gold - close to hydro, and deep-water port; diesel costs .08/gal. in VZ! - Can that be matched anywhere?

(no positions in any of the above, except Aurelian)

2nd

I bet at the end, you will be proven right on your "China - Olympic" trade scenario. Have to admit I was very surprised [and happy] today when they hiked their fuel prices 17%.

Huntsman - Bit a little HUN today, couldn't resist... it's a primeval thing.. Best performer in my portfolio today!!! (up +4.9%)

Congrats for ESLR today. It seemed too easy so I passed it up again... booohooo

shanghai opens up 2.26%...

Bill,
Thank you for the Canadian market analysis! Precise and to the point as usual.

Apparently Louise Yamada was talking about Dow 10,000 today. This is no surprise to readers here as we were warned by the Oracle of this blog much earlier!

Mike Morgan love to hear more posts from you here. Thank you.

Liked GE @ $31.90 after the dip.

Don't like it as much at $29.00.

Probably won't like it at all at $25.00

Will like it again at $23.00

Waiting for the dividend... for some reason...

Good blog for those that follow GE.

http://tinyurl.com/5kq3bb

"Jeff Immelt announced today that he was putting ANOTHER $3.5 million of his OWN money into GE...this is both honorable and unusual. It demonstrates he believes that GE is a bargain and will increase in value, but is unusual since he is making such a public display of his commitment.

I don't know Jeff...but I am pleased he is so convinced that he has the right strategy and it will meet investor and stockholder expectations... I HOPE HE IS RIGHT."

I wonder if he'll be right at $29 or $23?

Question - if insiders exercise options at $26 and sell at $28 wouldn't that bring the price down, depending on the amount of shares sold?

His average purchase price was around the $30.60 range.

Lots of options being exercised - insider selling almost matching buying.

http://tinyurl.com/56uc5z

Robert Wright sold 3x what Jeff bought the month before... guess he didn't make enough flipping his $14M condo in NY last Nov.

http://tinyurl.com/5p7trf

shanghai now down 1.6%...was the open a selling opportunity, or is it now a buying opportunity...

Read that wrong... he exercised 690,000 options.

Yep, 400 gray suits and the 2 BSC related crooks.
Yellow tape all-round! What will be fun is to keep a running tally of all the arrests and convictions for bankers, brokers, ex-CEO's and mortgage brokers, assessors, agents, and those hawking SIVs, CMO's, and other off-book junk paper.

It's an election year you know. The FBI and US Attorney have to appear to be doing their job you know.

All the while the Fed, Mr. Hanky, and their HB&B buddies disappear into the woodwork ala Abu Ghraib.

RE Greenspan and 1% interest rates....

Was it Greenspan or the "investors" who set the lending guidelines for mortgages?
As i recall it wasn't Greenspan who underwrote my loan for my casa. It wasn't Greenspan who made those guidelines and set the criteria for Loan to value, debt to income, work capacity and credit score.
Granted money was lose in monetary policy however it was those "investors" who decided it would be OK to allow someone will a below national average credit score and debts that exceed half their income with no money out of pocket to go ahead and buy their second home or investment property.

To me (way extreme) that is blaming greenspan for a cloudy day in seattle.

When anyone who has a pulse can sign up for a mortgage, do you think that is a problem ???
Do you have breathing problems? No... good you can have the keys to your brand new home!
Be sure to make one payment, foreclose and we can blame everyone!

in the 20s everyone had margin and what do you get the crash, all the sudden information can flow quickly and everyone wants to pass info through tech and what do we have ideas IPO'n for billions and what did we get? crash.... Pulse, yes... ok here are you keys to your house - crash. Now we have every nation trying to build and develop hoarding natural resources, what are we going to get? GLOBAL RECESSION. Not just the usa, global.
HBB is global and the whole world will feel the wrath because we know greedy pigs with lipstick will get slaughtered.

I remember I was in Spain and France in December of 2k7. From our hotel room we counted 28 huge cranes building stuff in Barcelona, on the train across Spain and France we saw huge cranes building stuff everywhere, In January when I was in Central America, what did i see? Huge cranes building stuff everywhere....
Fed, no fed, irs no irs..... it doesnt' matter the whole world is F'd and corrupt. The only winners will be those who bend the rules because no one can put them in check.
Yeah the bear sterns guys went down today but for every 2 people who get caught there are 1000s who get a way with it.

Craig,

For example.... in the year 2008 alone. Mortgage bankers association stated that there would have to be over 200,000 jobs in the (mortgage, not real estate) industry that would have to go to meet the demand for loans.
The officers of the investors, originators, bankers, processors, assistants, underwriters, appraisers, real estate agents, escrow officers and title officers that get arrested by the Feds will only be window dressing compared to the sheer numbers of individuals who were in the industry who committed "wrong doing".
Some people who worked in the industry probably didn't know better as they just needed a job; not only did they give keys to people who had just a pulse but they also hired people who could breathe too... fascinating stuff.

Either way the industry has already begun to clean itself up by investors being "more responsible" for their lending guidelines. As they say now the money is tight because no one really wants to be holding on the paper in the secondary market.

To really clean up the industry they should make originating banker hold on to the loans for 12 months. Not allow the paper to be sold for a long period of time. You can bet your pale bottom skin that those will be better loans.

10,000 is a reasonable downside target, but does anyone else think we rally on all cylinders before that happens?

shanghai back up 1.9%...if i had to guess, it closes up near 2900...3000 is not out of the question...

"10,000 is a reasonable downside target, but does anyone else think we rally on all cylinders before that happens?"

Yes. If we hit 10,000, I think we'll have a couple of decent bear market rallies on the way there. Some of those bear market rallies can be huge as shorts run to cover, media turns up the hype of the start of a bull, etc.

The question is will we reach a 10K type level in a short time shocking plunge or will it be a grueling, gut wrenching, drawn out process?

Don't know. Prefer the quick plunge death but have a hunch this may be drawn out for even a couple of years with intermittent strong rallies.

Craig & Kaimu. I already am a card carrying member. Sitting with friends at a campfire up at Deception Pass this weekend, the economy was the complaint. I said, partially based on what I assimilate here was, "What are you (and we) going to do about the coming problems?"
I wanted to alert people that the unease they felt actually meant something is happening we may not be prepared for

Wasn't this supposed to be a big deal a couple months back? Strange no one is talking about it now.

Moody's downgrades Aaa rating of Ambac, MBIA
http://tinyurl.com/5es2ut

Good idea Norm! Just make those originating carry the paper and they will suddenly become responsible lenders as we know who's arse will be on the line.

This is just a twist on the junk bond/S&L fiasco.
Hardly a new scam. Where the hell was the Fed when it came to regulating the bankers selling the junk? Big Al knew darned well if he cut rates to next to nothing it would blow a bubble somewhere and it was his job to regulate. The guys not stupid, he's a shill for those in office...of both parties, and the bankers that were making the big bucks on those loans. He did the same for Clinton as he did for Bush.
He was an expert bubble blower.

Remember Bubbles the clown? :>) (My brother loves the Bubbles joke...)

It's going to be interesting to see how mortgages are financed in the future.

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