"If you were a skilled day trader, you were able to make your quarter in four days."

Right on, Bill. But for those of us who have neither the time nor inclination to day trade, the best course of action is to do nothing. In my view it is impossible to successfully trade markets that move this fast and this abruptly if you can't sit on the ticker.

Off track and not answering Bill question but just to help lighten up - from the recent issue of Euromoney

Bull market: A random market movement causing an investor to mistake himself for a financial genius

Bear market: Eight months when the kids get no allowance, the wife gets no jewellery and the husband gets no sex

Broker: The person that you trust with thousands of your hard-earned dollars

Broker: What my broker has made me

EBIT: Earnings before irregularities and tampering

EBITDA: Earnings before I tricked the dumb auditor

Momentum investing: The art of buying high and selling low

Value investing: The art of buying low and selling lower

unloading half of my UYG premkt. Somebody lit a fire under LEH.

letting the remainder ride through Jackson Hole.

Korean Development Bank supposedly to buy Lehman.

the detail of the buyout unclear but shares jumping pre-market.

FA- nice move...

David- UAUA unlikely to hit your bid of 10.50...on the other hand, you should be happy with your current position, as pre-market bids are up 6%...

KRY back in business.

KRY a step closer - see press release - vindication for the longs??

nemo- Jaco's driving bass always reminded me of Jack Casady's playing for the Airplane (listening to 'Somebody to Love' is always a pleasure with the bass turned up)...Jaco's talent and youth combined with uppers and downers probably made it easy for him to get carried away, and I think one story that made the rounds was he had just enough training in martial arts to think he could pull off a confrontation...at least he went out at the top-> once watched a film about chet baker, and the images of him after his descent into drugs and obscurity kind of ruined his earlier recordings for me..

File under: Hindsight is 20/20

Last month Chavez had a come-to-jesus meeting with business leaders/entrepreneurs about investing and developing Venezuela. Of course, he then nationalizes CEMEX last week. One has to wonder if KRY, being in the nascent stage, will be allowed to move forward: 1)To look like a positive step supporting business by gov't, and 2) Once developed, it becomes another easily nationalized operation. I would think GOLD is a strategic resource.

Sounds like a good bet. Although, there was a posting by one of the CTAs in the last month regarding the political relationships between parties in KRY and the gov't, that wouldn't necessarily bode well for the endeavor.

As Bill says, I guess that's why there are markets.

I just read the KRY release out of morbid curiosity. So the VZ authorities are going to string the company along further, seeking more money for social projects and asking them to fund remediation of damage caused by illegal miners. Illegal mining, mind you, that has been conducted while KRY has been forced to sit on the sidelines.

What a complete joke.

It's like getting hit in the face and answering, "Thank you, sir. Please, may I have some more?"

I wouldn't invest a nickel in that country.

Agree Bill, they seem to be using the price of OIL to create volatility for needed trading moves, look at Goldman's call for $150, who does that but also says dollar will get stronger? GS has traders in the know, and they are the HB/B that are behind most of this illusion called a free market.

Everyday, we wake up to price gaps, 5-10% on many stocks in airlines, metals, oil, etc - and in a desert of fees, no bubble to pump, Goldman's pal in the White House, they make money - look no further than oil price crashing into last month's options expiry with concomitant Iran-Israel muting on a dime, that play lasted
you all guessed it, right through options expiry this month until GS puts out their OIL 150 call.

GG - Tight stop limit under my GG
UYG - Why not hold if LEH is on fire?, sell SKF?

Thanks 2nd. I need more of them. Equity curve still negative for the year...

n2s - I throughly agree. I can think of at least one other country which I wouldn't trust either.. In the northern hemisphere.

Bill, thanks again for the note on banking complex watching retail %'s and privacy, its not a level playing field as most things are in markets that are purported to be free but arent.

I think these HB/B are about as un American as you can get, I dont know where it happened, maybe the virus started as Nixon removed gold standard to allow debt monster baby to grow, but one can see how virulent the disease of greed and selfishness has become by remembering what the WHouse said after 9/11
"Do your Patriotic duty and Shop". Wow..not many recall or thought about that
To me, the biggest reveal for it shows just where the priorities are and what the leadership thinks is "American".

CP: I'd love to hold my full position in UYG right now, but I got back well above water on the trade & wanted to reduce my margin exposure.

Trying to get myself into a more swing trading mindset... I'd prefer to day trade: cut losses immediately, and bet on whatever current short term situation becomes convincing. But I'd burn through 3 day trades in several hours, let alone 5 days.

Good morning.

There are NO Cara 100 Ratings Changes to report at this time.

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

Have a great day and a better weekend.

Has anyone seen or planning to see the I.O.U.S.A documentary that was released on a limited basis yesterday?

Sounds like it might hit on a few of themes that is often discussed here.

FA - I hear ya, I'm a big turtle on the highway when it comes to attempting day trade in this environment.

UAUA-> took the 6% pre-market...back in if it drops at the open...

Schleppy - I heard the main theme of Buffetts, is how the US is going broke. It fits almost to a T, with kaimu's observations.

oil dropping fast, man...

SKF - I feel an historic event unfolding, got my finger on the sell button...again.

Here is link to official site if interested...looks like it's worth checking out.

http://www.iousathemovie.com/

IOUSA release could be a contrarian event, if you notice Americans savings rates are climbing fast in the past year. Furthermore, as Mike Shedlock has postulated, the future is one of frugality, after the credit bust, and this will affect alot of Americans' mentality w.r.t consumption.

NGas- in case anyone missed it yesterday, here's a real-time exchange on the Cara blog yesterday that illustrates how valuable posting can be:

"This is the opportunity 2nd. Inventories higher than expected by 30-40Bcf. NG is just riding on to the back of oil.
Posted by: SiO2 at August 21, 2008 11:10 AM"

"making a foray into NGas...
Posted by: 2nd_ave at August 21, 2008 11:10 AM"

"SiO2- LOL...OK, thanks for saving my a--...exited immediately...
Posted by: 2nd_ave at August 21, 2008 11:15 AM"

backed up with real-time commentary:

[Bill Cara note:

I believe the present weakness in the $USD and strength in commodities is the test I spoke of in the past two WIR's. This has set up a nice trade for the short-term, but in the medium term, I believe the $USD will strengthen and commodities weaken again to test their cycle bottoms. Longer-term, I believe the $USD, interest rates and commodity prices will move higher in tandem, which will be a break from the past.]

CP- can you train the webcam on your mouse so we get a postcard of the historic event?

I had a dream that fannie mae is going to go up big

Is anyone following Lee Adler's assessments of bond and stock markets. He makes the correlation between FED money supply, Treasury financing need and the stock market prices pretty transparent. Below a few excerpt regarding his outlook for next week. What do you think of his reports?

The Treasury dropped another bomb on the market, announcing another big and unexpected CMB
auction to be held next week. Not including the 4 week bill to be announced Monday, the Treasury
will be raising $31 billion in new cash, and has so far overshot the TBAC borrowing needs estimate by $17 billion on the week. This supply pounding can continue without a massive rise in interest rates only as long as the mass panic into Treasuries continues to enable what is essentially a government Ponzi scheme........

His conclusion at the end...
This is really getting out of hand. Thanks the general panic in the credit markets, cash continues to flood into Treasuries, so we aren’t seeing any upside pressure on T-bill rates. The US government has been incredibly lucky. Nothing like a panic to keep a Ponzi scheme on track. Who knows when this is going to end, but when it does, it’s going to be ugly. Given the size of the slug new of short term supply that will hit the market next week, the pressure is going to show up somewhere, and it could be either or both bonds and stocks.

Wabrew - thanks for the laugh.

I suppose everyone is aware of Benerke's speech at 10am ET.

apparantly many other had the same dream:)

Benerke's speech at 10am ET

Has there been any leaks or thoughts to what he might say?

Hello to all I knew before and to all I have not met. I have a high regard for Bill, his skills and his efforts on the behalf of individual investors. I also appreciate his down to earth approach. Finally, I want to rebuild my portfolio. I am moving away from stocks, which have become a fertile ground for colluders and inside traders. I have witnessed outright theft with the bailout of BNP Paribas in January, Bear Sterns in March and Fannie just last month. Today, I am witnessing a double pronged attack in the Lehman rumors and the Buffet pronouncements on the health of the dollar and US equities.

and a lot of the move happened in that annoying 15 minute window during which most of us shlubs aren't allowed to trade for some god forsaken reason.

i think this bloomberg headline encapsulates the absurdity of financial media punditry:

--------------------
Aug. 22 (Bloomberg)

The U.K. economy stagnated UNEXPECTEDLY in the second quarter, ending the nation's longest stretch of economic growth in more than a century.

2nd - The mousecam would only provide a distorted view, as it seems only the red gun in the CRT is functioning of late. I must first tweak the bias and once accomplished, the momentus event will have passed. Sorry,

The yen has move 1.37 percent since 5pm EST yesterday, the start of the currency trading cycle. The Swiss Franc has moved up .7 percent. The yen move is vertical and unusual. So is the chf move.

USO down 2%, UAUA up 10%...what we have here is an ultra-short on USO...

Finally out of SKF.

2nd, I don';t think I saw this one, on Skype:

"[21/08/2008 12:19:29 PM] Nexalogic says: Speaking of which, picked up some UAUA calls.

[21/08/2008 12:21:49 PM] 2nd_ave says:

back into UAUA at 11.63...

[21/08/2008 12:23:12 PM] Nexalogic says: man, we are in synch.

You are right on UAUA.

Stopped out of GG

usd/jpy now up1.4 percent.. these are not currency like moves.

2nd_ave

Thank you for your insight on UAUA. The price movement / oil very tradable.

Bot yesterday @ 11.55 out today 12.12.

Thanks to Bill Cara for our community.

Tony

Buy 100 Shares of SKF
Details Filled at $126.80

SiO2- glad your calls are working out...thanks again for keeping me from taking a tumble on HNU.to...

BUY SKF $127

usd/jpy looks to be rolling over at last,

as is the usd/chf

Mmmmmh? SKF buy today, before Bernanke. You think what he says will drive financials down?

Dear Bill, and I quote:

"As much as I don’t like to say this; trading is a war. "

Related but off topic:

First line, 5th verse, Tao Te Ching

Nature is unkind, it treats the myriad things like straw dogs"

I don't know about temples in the US, but the first thing you see upon entering a Taoist temple in China is a rack of weapons and battle standards, representative of the battle that is life.

memo
Bernanke is at the HOLE
trying to get out of the financial HOLE
but going deeper in to it

skf is too choppy now to figure out

So much for the fannie dream...got in at 4.89 and held for like 20 minutes, lost 1 penny literally on 300 shares went home.

re SKF

This was my initial trade and plan on adding to the position when there is weakness. In my opinion this is a mini sucker rally and Fridays have been tough days for the market YTD. I don't expect the rally to hold short term but definately not long term. These short term rallies in financials are a laugher.

Just for a bit of fun ...

Over the past few days I conducted a snap poll on the performance of Messrs Bernanke and Paulson over the past year, i.e. the first year of the credit crisis. The poll was devised in order broadly to gauge readers’ sentiments regarding the gentlemen’s actions during testing times. This post discusses the results.

The link is: http://tinyurl.com/64tgov

Duh? sorry Schleppy, I'm thinking day trade scalping.

Any suggestions where to park $300K short term for safest return in taxable account Split among 3 banks to get FDIC protection? Money is now sitting in MMKT.
John

tony- you're welcome...it's friday, so i'll raise one to you after work ;)

nemo....I am a total hack at this to this point so no need to apologize....as you can see so far it was a bad entry level.

Back into DZZ

SKF - I figure we're getting down to the wire and Bernanke and Paulson finally have to get off their duffs to accomplish something or else. They've been very quiet lately and so I'm guessing have another innovative plan up their sleeves...

John - I'd split it amongst 4 banks so that you have room for capital appreciation. And I wouldn't buy anything for the long term until the price of the S&P 500 moves at least 2% above it's 200 day moving average.

I still believe you can outperform the market significantly by buying SPY when the S&P 500 crossing 2% or more above it's 200 day MA and selling SPY when it falls 2% or more below its 200 day MA. I've tested this out and it works. You avoid the massive downside moves like we're currently having (I personally sold out of my S&P 500 index fund back in December and am waiting to get back in) and while you're waiting it out you're earning 3% on your money (while the market is going down 15%+). And you right the massive up moves like we had in the 80's, 90's, and from 2003 to 2007.

Should have said "And you ride the massive up moves like we had in the 80's, 90's, and from 2003 to 2007."

CP...well said. I'm sure something is cooking up in their house of cards.

John, split between banks, or a trading account, which is insured for $500k, I believe. Cash is king, until the markets begin to show some degree of stability.... If ever.

Not Financial advice, please do your own due diligence.

Sold all my SKF 2pmcdt yesterday.
I think too soon to consider re-entry.
Often it peaks on Thu or Fri — crashes by Tue

Going to UYG ST

im watching gold minute to minute right now wondering when it is going to fall off a cliff.

but its not.

my instincts may be wrong on the historic knee-jerk post-bernanke speech dump in gold...

a move up from here and i am watching the 200 MA for the next battle. a move down from here and im going to barf.

Grym - You da man, homeslice!

set up contingent order. If DJIA trades at or above 11663 (resistance), buy DXD at market

2nd
looking at OEX oct put
like OEXVS. because of low VIX, premium is low
lets see what market does today

drcosa - You do of course realize what Bill has been saying re:gold lately. He sees some downside over them there hills!!!

If trading is war, then we need to be warriors and have tactics and strategy that play to our strengths.

One of our greatest strengths as traders is our flexibility, our nimbleness. We can get in and out of contracts at will and HB&B is not going to worry one bit about our 1000 shares here or 500 there.

I neglected my nibleness advantage in one area: Gold Stocks.

I took a pretty sizable loss this week by *finally* unloading some of my underwater gold miners into strength--the stocks had been underwater for a while and I "held on" because gold and gold miners, for me, were psychologically different than other contracts I've traded.

It feels good to have them out. The pyschological reasons that traders don't take the initial, smaller loss and hold on for the big loss are legion. But for me, I'm going to look at taking an initial loss as the perfect use of my tactical advantage--nimbleness.

"Holding on" and ignoring a stop negates one of our trading advantages, and we need all the advantages we can get.

Yes, however Eric Sprott is very bullish on gold, with forty percent between metal and miners, as a percentage of his portfolio. Another forty in energy. This is different from what Bill is saying. I would like to know if he read the article and his comments!

[Bill Cara note:

I didn't read the article, but I have stated here that (i) I am a trader and Sprott, in running a Fund, takes positions (ii) both Sprott and I are negative on the market for the short-term and positive on gold for the mid and long term. I called a pull-back in the precious metals recently and then I opined that starting Monday morning of this week there would likely be the beginning of a cycle bottom process, which I say may take a few weeks or possibly months, and that during this time long-term oriented accounts could start to average down or scale into new positions. If you want to know what I am thinking right now at 11am Friday Aug 22, that's too much to ask--but I'll tell you anyway: I think the $USD will resume its strength and precious metal prices to start re-testing the lows of last Thursday and Friday. But, whether I am right or wrong or different in view than Sprott is of no consequence here because we are all part of a market, and I am hoping that we agree to be independent and objective in the contributions of our knowledge and insights here so that a great many people will benefit in a way they won't by reading media stories.

By the way, I missed it this morning but I hear that Warren Buffett made a memorable remark CNBC's Squawk Box this morning....

Apparently, on September 9 at the Red Sox's Fenway Park in Boston he is throwing out the opening pitch to former General Electric CEO Jack Welch as the catcher....

Warren says that "whatever pitch Welch calls for, even if it is the pitch that is supposed to bounce several times before it reaches the plate...I will throw that pitch".]

looking to enter DUG.

I appreciate the call for collaboration Bill. I took a hit on CNQ this AM. It's hard to watch a runaway train, not being on board. I should have listened to those of you who did nothing yesterday!
Took a position just now in DB at $85.45

BP - I see your nimble fingers are up to par with mnie toady.

"I neglected my nibleness advantage in one area: Gold Stocks."

There's something primeval about gold which only those of us less evolved could comprehend. The others will have to catch up later in the process, I suppose.

Chicken,

Although I've been watching SKF closely for nearly a year, it has become even more volatile lately. I had been just using mental stops, but missed the last plunge and have gradually been recouping. (+22k this week) It felt too good to let it drop, so when I saw the Korean bank's interest in Lehman (I check the int'l mkts early each AM.) I figured they'd all go up.

I'm not buying without a stop from here on — both SKF and UYG.

Gordon Genko be damned with his greed is good stuff ;-)

Since I brought 100 skf at 126.80 markets is up 120 point more but skf is still around 126.00
Means financial are not driving market up?

Out of UYG

Found the double short of USO i was looking for:

DTO

vinod- what happens if the market rallies even harder on the heels of bernanke's speech and kills the shorts?

Grym, I hear ya, don't blink cause there's only one stop light! Glad you're making up for the red, UYG is helping me out today, and GG the past few.

I could not give a damn how much you are up this week.

That is exactly the kind of self serving talk I want to not see.,

vinod...I had the same observation.

Out of SKF at small loss over a couple of weeks. Do not trust BB and heads not to Fix problem today or over weekend.
Will reload or move on, being out is more sane for me at this time
Protect yourself, job one
peace

David- you need to wake up, man...UAUA is now falling below your first entry at 12.30...

crystallex at a dollar five

I 2nd photogray. Staying long over the weekend? My hair's all gray anyway (and fallin' out). By the way, I too appreciate Bill's call to arms, but as you can see from his commentary, I can't yet think my way out of a paper bag. It makes me think of those pictures of that office he set up for Cannacord. How do you do that virtually, and with someone like me who is, at best, apprentice material?

Believe me Bill, I greatly appreciate the heavy lifting you do, and wish I could bear more of the burden, but if I've learned anything over the years is I've often thought I know more than I actually do.

Te morituri salutamos!

Dipping toe in the water back into UYG.

For all of the SKF traders here, here's a one minute chart from today, showing the "Squeeze" indicator that MikeNYC brought to the board a while back ... a pretty good entry point:

http://tinyurl.com/6kssj9

So let's talk tactics.

Bill makes an important point about the anticipated magnitude of reversals/bounces during a secular bear. He had mentioned this very point a week or so ago and it has stuck in my head since then because even adhering to his view, I have still botched some trades by not exiting after the bounce.

These errors on my part are largely due to my use of stops as an exit strategy. In a secular bull, I am looking for strong names within strong sectors, and buying them on oversold conditions or pullbacks to meaningful support levels. I will tend to trail a stop to logical support levels once it is moving in my favor and will tighten the stops up when approaching overbought levels or obvious resistance. I usually let the stops take me out unless there is some anomaly like a giant move in my favor on thin volume, then I will often use a discretionary/manual exit.

Now, contrast this with secular bear conditions from the long side. Trailing stops and tightening them up as you anticipate an exit doesn't work that well in a bear. The market is more volatile than a bull phase and when trying to exploit only a portion of a move that is only 5-10% to beign with (we're never going to be hitting exact bottoms and tops), we have problems. Using a trail stop exit, often the names will gap through the stop level and your entire gain evaporates or you even incur a loss.

I believe that having most (not all) of your trading system running on set rules is important. But this is just one example of matching those rules/tactics to the current market conditions. I sat on some names that I don't mind holding long term that are currently slight gains or slight losses. If I had been using say a 7% target and target number of days for the move(s), I would have exited all those stocks for between 3% and 15% gains, would be in cash waiting for new set-ups and wouldn't be kicking myself for not adjusting tactics when I KNEW full well that I needed to before I even entered those trades.

Why didn't I do what I intellectually knew I should? A question for the ages and one you will repeatedly face as a trader.

The "Tick & Trin" reading looks like we are headed bearish.

http://tinyurl.com/7ygy2

Note the Trin.

[The TRIN has a median line, which is 1.0. When the TRIN rises above 1.0, it is a negative environment for the market. When the TRIN declines and drops below 1.0, it is considered a positive environment for stocks.]

Alaskan Pete:

Why you didn't. Kinda' Vadym's words: We're emotional beings first, rational 2nd.

What I get from what you said. Bull markets, people are comfortable that stocks are likely to go higher.

Bear markets, people want to get out before everybody else does and are willing to take less over a shorter period of time.

Correlation between VIX and DIA since July 1 is -0.88 (+1 or -1 indicates a perfect direct or inverse correlation). VIX acts as a measure of bullishness not volatility. For volatility miadhach suggest using ATR.

Bill mentioned JCP on his amazing WIR last weekend. I bought the puts on Monday and swapped them on yesterday for UNG puts. Now I am looking at reversing the trade exactly.

Coincidentally, the correlation between UNG and JCP since end of July: -0.88 as well.

QT: I don't have the TRN, but it would make sense on a Friday that things would taper unless there is some bowl over good news. Having said that, is there a good or bad reason to paint the direction of the tape this afternoon?

nemo

It doesn't show up on the bottom of the graph that I linked tp?

Also for Tick

....when the NYSE TICK drops to -1,000 the market is oversold. If it plunges below -1,200, it shows exteme fear and often capitulation occurs....

Average True Range (ATR): An indicator that measures a security's volatility. High ATR values indicate high volatility and may be an indication of panic selling or panic buying. Low ATR readings indicate sideways movement by the stock.

For instance SKF ATR over the last 14 days is 9.24. It can be expected to move that much in one day, one way or the other. A scan can be setup in Stockcharts or other charting software that will produce a list based in the input parameters. Here is one I use for Stockcharts:

[country = us] and [daily sma(60,daily volume) > 1000000] and [ATR(14) > 5] and [ATR(14) 40.0] and [Close < 200.0]

It produces a list of about 28 stocks or ETF's. That list is then whittled down eliminating duplicate sector or industry stocks to give the most probable stocks to trade intra day.

Sell 100 Shares of SKF
Details Filled at $129.00

Miadhach....thanks for the insight.

BP

FWIW, I clicked the P&F chart (at the bottom of your stockcharts link) for SKF. Shows High Pole warning, August 22, 2008.

http://tinyurl.com/5sn4nr

Miadhach, Si02 thanks as always

AlaskanPete - I think that describes my problem with stop limits quite well. A "good" learning experience for me, stop limits are counterintuitive to the way my brain functions (consider my experience is bear-market limited), still trying to get my head around the subject.

"matching those rules/tactics to the current market conditions"

So very true. Different tactics for different types of market. You don't do defense by offense rules or visa versa.

- Higher volatility calls for shorter time frame if you want to capture profits.
- Trends allow for longer holds than ranging moves;
- The narrower the range the smaller your timeframe needs to be, up to the point where too narrow range will make you stay on a sideline until the range is broken and new trend emerges;
- Uptrends have generally less volatility than downtrends do;
- Uptrends are generally more forgiving to errors on entries than downtrends are;

etc etc. Observations of this kind provide the punches to roll with... OK, scientifically speaking, they provide a framework within wich you design your specific trading tactics for particular market. They are mostly common sense... but, you know, "there is nothing common about common sense" :)

BTW, speaking of particular stocks and trading tactics for them... everyone noticed USO/UAUA pair is not working today? Every trick works until it doesn't (in my best g034 voice)

Alaskan Pete, a few days ago i posted about a similar dilema on Paladin Resources, which was up over 20% on Cigar Lake flooding. Went from 4.40 to high of almost 5.40, but I held on, figuring there would just be a higher trading range. Well the next day pdn.to dropped as low as $4.70, so if nothing else, could have sold and reloaded. Anyhow, pdn.to now around $5, so maybe there is a new higher trading range, but still hurts. Still holding...

Learning from that experience, I bought the plunge on cameco with some calls, but was quick to sell the bounce cause i hate time decay on those... Maybe expensive lessons in options can actually make you appreciate taking profits more quickly :)

teamonfuego & chickenpookie thanks for your input. Much appreciated.
John

Vad- i see that...UAUA/USO may be moving towards the different scenario of both oil and airlines down on lower demand...

I get a little chafed when the Humongous Black Bear comes daily to nibble on the berries in my port. His trick seems to work every time. I should just exit and study equities while waiting for $80 oil.

Question: What web site does the community use to post a picture of a graph from some outside source?

long DXD at 60.86

calvino & schleppy

so? (don't read what is addressed to someone else then)

Also, since we've been looking at keltner channels and squeezes, VLO is in one. Over last month looks like it's forming a rising wedge, which I believe is bad, and portends more downside. RSI (and STO) is also a rising wedge and hasn't been able to crack 60. Maybe just waits to touch the 50dma before next leg down? thoughts? disclosure: long vlo

crystallex out at a buck 15

CP,

Many of the better brokerages offer simulated or "paper" trading--it's the easiest way to "protect those berries" while learning some tricks of the trade at the same time. It's not the same as trading and having "a skin in the game", but the losses don't hurt at all.

QT,

The only method I know is to be a member of Stockcharts.com, they have a feature on their charts called "Linkable Version" . . . hence, one can make a chart accessible to others on the internets. ;-)

Another way to look at ATR is to divide it by the Close. That is to say, which equities will give the biggest swing for the buck. Postion sizing must be applied accordingly. This scan provides a list of about 40 today. Parameters can be adjusted to narrow the list. In general, the lower the ATR/Close number is the bigger bang for the buck. For instance UYG=12.09, while SKF=13.95 indicating the more preferable trade would be UYG.

[[[Close]/[ATR (14)]] 2,999,999] and [Close > 2]

There are some familiar names on the list.

Actually, don't need to be member of Stockcharts.com to be able to create linkable version. The link to 'linkable version' is just under the chart, next to Print-Annotate-Send

That scan did not come through

[[[Close]/[ATR (14)]] 2,999,999] and [Close > 2]

Try this

John - BTW, SSO will double your pleasure and double your fun over SPY, but the market is still trending downward from here. The SSO path has twice as much ice on which to slip downhill.

QT, re charts

When linking to charts on Stockcharts, make sure to click the linkable version button just below the chart before you copy the URL, it will then have more coding in it and a "p xxx" number at the end.

As for linking to pictures of charts etc, see the link I gave you the other day, it has some suggestions.
http://tinyurl.com/29fv5t

Quasi

Chicken, I might try SSO when time is right. I like to play the 2x inverse like SKF
John

Blowout Preventer - It is a non Stockcharts chart

Quasi - Thanks for the link [this one is different from the 2 posted yesterday].

For Scan formula and results here are the links Thanks to SiO2

http://nexalogic.com/Scan.jpg

http://nexalogic.com/ScanResults.jpg

The left scan is from ATR/Close and the right is from ATR as discussed above

selling positions into this rally

Posted by 2nd_ave: "David- you need to wake up, man...UAUA is now falling below your first entry at 12.30..."

I am up! :) UAUA is $12.40 now, and this morning it hit my limit price of $12.50 for the shares I bought yesterday at $11.50. Now I have a limit of $13.30 for the shares I bought at $12.30. This was an easy trade for me, as I did it just to hedge my exposure to PMs after they had a rebound rally and had a high probability of going down, as it did happen today. I was morally ready for UAUA to go down to $8, as long as it would take SLV above $16. :)

The pendulum of higher/lower commodities swings back and forth. When commodities are falling, I am buying them on the way down and at the same time taking profit on my hedges (selling UAUA, VLO, covering FXE short). When commodities are rising, I am selling the shares that I was buying at the lower price (which I have been doing for the past few days) and buying hedges (UAUA, VLO, increasing FXE short). I stop buying hedges when I feel that my portfolio is close to being neutral on the direction of commodities. I believe in them long-term and don’t want to be net short on commodities. As long as I am using small position sizes, I should be able to make money off all commodity moves, up or down. Let’s see how this strategy plays out in the future. :)

If it’s true that “A Few Speculators Dominate Vast Market for Oil Trading” in the likes of Vitol as per the article from the Washington Post, then all that would take is the opinion of one decision maker within that company to decide how to set the price of oil to achieve a desire outcome. Having so much power in the hands of a few leaves the majority of players in the sidelines trying to figure out what move to make in what it looks like a fixed game.
“But when the Commodity Futures Trading Commission examined Vitol's books last month, it found that the firm was in fact more of a speculator, holding oil contracts as a profit-making investment rather than a means of lining up the actual delivery of fuel. Even more surprising to the commodities markets was the massive size of Vitol's portfolio -- at one point in July, the firm held 11 percent of all the oil contracts on the regulated New York Mercantile Exchange. “

The link to the full article
http://www.washingtonpost.com/wp-dyn/content/article/2008/08/20/AR2008082003898.html?nav=rss_business

my own impression at this point is gold is basing around the $825 mark give or take, but the shares are down, and appear to be drifting slightly lower on light volume.

i dont see how this is any kind of indication of an impending upside run. im concerned this action is indicative of past plunges where the shares drift downwards if gold isnt breaking out, and then plunge ferociously if gold falls in any measure.

holding whats left of my cash posiiton for gold until either we bounce off last weeks lows, or we break above the 200 MA w/ conviction and volume in the shares.

Dr. Cosa:
Colin Twiggs' latest comments may be of interest to you:
http://tinyurl.com/59kkdb

Grym...my comment was not directed at the post above mine at 11:05 am from Calvino. It was in response to Vinod's post stating the financials were not leading the rally today.

In response to your success (or anyone else that wants to share them) it's nice to see for me who is relatively new at this and gives me a positive outlook that it may someday be me saying Cha-Ching!

You had me at "What a bunch of bunk!"

http://tinyurl.com/5svjwr

Via The Big Picture today, Danielle Park on BNN.

I'm with Barry - I never heard of this woman, but wow, what a smart, savvy, straight shooter.

This is a great clip. As Bill has mentioned numerous times, this is the kind of analyst CNBC just won't ever show, or at a minimum, would not invite back.

Can you imagine a fund manager/talking head on CNBC saying "We have zero exposure to equities at his time. We had some gold and energy equities and sold them in January."

I have numerous news alerts on various topics, but this is the only one I'm setting up for a person. I want to follow what she has to say in the future.

Plus I think I have a little bit of a crush on her now. She's got a little spunky, smart, tell it like it is thing going on.

Bill, with you two both being Canadian and all, I'm sure you must know each other. Can you get me an introduction?

;-)

[Bill Cara note:

There were a few exceptions that I'd take regarding her BNN presentation today, but by and large I agree with her. I also like her self-confidence, and her educational/work background, but I don't see a track record here, so I cannot comment. The firm is located in Barrie ON, a large town or small city about 50 miles north of Toronto, not at all known as a financial center although that may be a help.

Where I found her lacking is that she says her firm has zero long positions in equities, yet she says that being on the right side of trend is so important. She talked about the new bull cycle in the $USD, and the downturn in commodities, but she must have missed the +20% to 40+% rally in stocks like Brunswick (BC) or Carnival Cruiselines (CCL) that we talked about here. Clearly she is an asset allocator and not a trader, yet she talks about trading concepts as being her strength.

Having said all that, she is, as you say, precisely the kind of guest that BNN ought to have on TV. She's personable, well-spoken, forthright, and attractive. What's not to like? She's a winner.

No, I have never met her.]

TTM Squeeze:
1. Do not use this as the sole source of a trading signal. It will generate too many false positives. Use filters and other indicators, or even your own discretion. As a mechanical signal it's not rigorous enough. As a warning that 'something' may be about to happen, it's pretty good.

2. The chart posted appeared to have one leg of the BB inside the KC. The channel needs to fully engulf the bands, top and bottom, for a squeeze to be on. When one leg pops out, that's the signal.

"I was morally ready for UAUA to go down to $8, as long as it would take SLV above $16. :)"

David- now I know what my problem is, man...I just haven't been morally ready for the downswings...but then, when you're playing against inherently immoral opponents, sometimes you need to get down to their level...

Her blog entry today:

"Governments and financial industry- thick like thieves

I think it is sometimes hard for people to imagine the nepotism of governments and the financial industry. For some, it may seem to dark to believe. I have written of this dynamic in the past, and in Juggling Dynamite.

This nepotism is one of the main reasons that financial regulators typically fail to regulate the financial industry responsibly until after implosions have scorched the earth; after Main Street has suffered real hardship.

If you ever wondered why governments seem so late to see each crisis, or why regulatory enforcers seem largely toothless, watch this clip: NY State's Economic Emergency, about the financial crisis now hitting New York's tax revenues from this past year's downturn on Wall Street.

While the tax dollars are rolling in politicians tend to opt for the collect first and ask questions later approach. Perhaps this will always be thus. Galbraith must be shaking his head from his grave. "

Sounds familiar.

http://www.jugglingdynamite.com/

MikeNYC,

Thanks for the continued insight. I use MACD and ROC(12) to try to help figure out if the movement will be up or not. As far as engulfing, I think this chart of ANR shows a better squeeze:

http://tinyurl.com/57xs24

" "something" may be about to happen" is right ;-)

I just got into a pissing match with either a telemarketer or so kind of juiced up collection agent. They threatened to come over and kick my ass, I threatened to ventilate them with my "12 gauge" (don't actually own a gun, but whatever) if they did. I thought for good measure I ought to call our local police on the non-emergency line, and guess what? Those doughnut-eating taser weilding jerks were so busy chasing cars or whatever that they wouldn't even LISTEN to my story. I wanted them to pull the phone records on these guys and to follow up but that's apparantly too much actual police work for them. And for this we pay taxes?

Oh and the point of the story is, because of all that I missed the breakout in USUA which I was about to buy into at 12.50-something. Jerkoffs.

I was watching Buffett interview. He is always optimistic. I am very curious whether he really think it will be okay or he has to think it will be okay.

Also I still don't understand why he is a democrat.

[Bill Cara note:

I don't have these answers, but I do know that Buffett studies companies in great detail. For our purposes, today is the biggest day of the quarter as Value Line has reported on six (6) components of the DJIA index. None of them are Cara 100 companies (although Microsoft would be closest), but they are deserving of your review.

American International Group [GICS 40, Dow 30]
http://www.valueline.com/dow30/f465.pdf

American Express [GICS 40, Dow 30]
http://www.valueline.com/dow30/f443.pdf

Bank of America [GICS 40, Dow 30]
http://www.valueline.com/dow30/f6291.pdf

Citigroup [GICS 40, Dow 30]
http://www.valueline.com/dow30/f9055.pdf

JP Morgan [GICS 40, Dow 30]
http://www.valueline.com/dow30/f1899.pdf

Microsoft [GICS 45, Dow 30]
http://www.valueline.com/dow30/f5905.pdf ]

Ronbon and others,

I was looking at the second chart of Colin Twiggs which has several years of gold data and I notice that he was using trendlines to find support and resistance levels on a chart with a linear y-axis rather than a logarithmic y-axis. Wouldn't it make more sense to use a log y-axis with such a long time period?

Regarding technical analysis, I find I am somewhat unsettled at deriving just about all of our indicaters from the price series alone. Does anyone else have this feeling? It begins to seem like RSI, stochastics, ATR, MACD, etc are basically just a way of saying, for example, "This stock has gone up or down too fast during the given time interval." Certainly, in the spirit of what Bill said about our enemy in this war, HB&B, they are "onto" this milking of data from the price series alone. Of course one could always counter "Yes, but it works, nonetheless." However, aside from things like Elder's force index, which incorporates volume, practically everything is based on measurements using only one source of data.

Finally, another query which I would like to pose. I read Elder's trading room book with great interest but was surprised at the end, in his examples, that he seemed to be capturing very small moves such as in his illustration of how to use the MACD histogram. I was left thinking that his techniques were useful for trades lasting a few days or weeks at the most. Perhaps they are less valid for longer time periods. I get the impression that many on this blog are in for longer time periods, but that the discussion seems to be generally centered on very short time periods. It would be nice to see more discussion of longer time periods as well. For example, I am only able to trade my IRA and the commissions I pay on Canadian stocks in particular do not admit short term trades.

Lottery tickets going fast: 7,800 LEH 5 puts for $0.11 sold today, plus 5,400 10s.

Bought a strangle 10/21. If there a major move either way next week the idea is to cash big time. One week play only.

BAC 25 puts still a very hot item, with another 10,000 bought today.

Sold short some LEH today, following Bill's comments about LEH being toast unless the rates are lowered, which is unlikely. I used to be scared of shorting the weak financials, which could double/triple if things came back to normal, but now after trading UAUA, which is just as dangerous, I figured I can have some fun with LEH as well, as long as I keep my position size small and aim to make just enough money on each trade to buy a case of Armenian brandy to share with my russian friends. :)

SiO2- UNG now down 6% to 36.53...do you have a downside target?

David- you're closing 1-2 trades a day...how many cases of Armenian brandy do you need?

Another view:

"Markets are enjoying a nice rally as Fed Chief Bernanke talks, we've seen this scenario a thousand times before. Today's rally is finishing a small degree wave 2 up, as shown in last night's report, and the very short-term pattern intraday shows that upside momentum has stalled, and there may be an ending diagonal termination top underway, suggesting a top should arrive today. The 30 minute and 15 minute full stochastics are very overbought"
Bob McHugh

aucourant,

I place a lot of trust in long term charts. Fibs from top to bottom of long term tops and bottoms will rule the roost till multiyear highs or lows are broken out of. Just my opinion. I did nail the usd low and gold within a few dollars.
The monthly chart fibs I use have not been changed and will not be changed simply because that is what they have been for 30yrs roughly. Working from that base down to the daily's and intraday depending on the trader works as far as I am concerned. Ie; expecting 831 to be a resistence point last night. If you want a link to those charts just ask but I dont want to promote them shamlessly or whatever.It's just my opinion anyways.

There is a strong case for 730 gold and 78.43 usd according to the long term charts and I will remain wary of that. If it isnt sooner I believe it will be later and that is the question as I see it according to long term fibs and support/resistence.

Caveat; I am a LOUSY trader ..g..

2nd, I am holding 34puts. NG with a 6 handle would be a buy (watch out for Fays/Hugos/Vladimirs, the atmospheric and political hurricanes; you have to keep an eye on that radar screen and get out once the noaa bubbles turn red, an orange one showed up today on a bad course so I think I am just going to get out, plus holding on weekends is not usually a good idea).

Sold USO puts and trying to get JCP puts, no luck so far.

Taking advantage of some weakness in the BZ real today to place some sideline cash in BZF @ 26.40.

As info, the real is not part of the USD index. Looking to beat a MM rate for cash with appreciation in the real vs USD.

Couple of thoughts:

The recent strength in the USD may be due to foreign banks covering their USD shorts which they used as a hedge for their USD investments in CDOs. FWIW, heard Don Coxe has mentioned this recently and believes USD will weaken again.

Beneath the radar, a couple of days ago, Reuters reported;

SAO PAULO, Aug 19 (Reuters) - Bradesco, Brazil's largest
private-sector bank, said on Tuesday it signed an agreement with Mitsubishi UFJ Financial Group to sell funds that invest in Brazilian assets to Japanese retail investors.

So what does the BBD/MTU deal have to do with BZF?

As Everbank’s Daily Pfennig also surmised, Japanese investors looking for yield contributed to the big runs of Aussie and New Zealand currencies in the past. I’m looking at the BBD/MTU agreement as a tell where Japanese investors may look next for yield.

Only time will tell. DOYDD

Re: "commodities"

The word commodities have been a euphemism for "I am right in my point of view" regardless of whether the outlook is for a continued bull market, or a bear market, or some kind of immunity from the overwhelming banking crisis in the U.S., lumping all commodities into one generality.

I would say that Danielle Park knows her indeces, rather than her commodities per se. She made her decision divest from "commodities" or equity in the resource sector based on declines in the $CDNX. So she is correct in her argument that resource sector stocks are in decline compared with the index.

Its fairly certain that short sellers in the industry painting the tape in their favourite short sale are depending on precisely the same reasoning.

The bearish MA crossovers in the $CDNX are a dead giveaway to a bear market and you would have been right that resource sector stocks would be crushed, but not whether "commodities" would underperform.

But then again, putting this money into treasuries may be the wrong trade, since all central banks are now massively bailing out their respective banking industries with treasuries, reducing governmental credit-worthiness. For instance, why place your money into Canadian treasury bonds when the loonie is in decline, and oil prices are to come down and Canada has been bailing out its banking sector?

I'm not one to talk about making the wrong trade, since my gold junior play is being crushed into oblivion. But it makes a fairly good example of how the index is being played in the context of a singular, non-differentiated point of view on what "commodities" are doing. One feature of this small company is that it followed the index to a fault.

So the argument now becomes, really how "commodites" have fared. In the last month, Gold has notably underperformed oil and copper in the correction, while the $CDNX has vastly underperformed.

But there is no consensus on whether there is really a massive bear market under way, since copper is the best indicator. In order for the gold market to come alive it will have to outperform both oil and copper. The expected differentiation between a monetary instrument and its earthly cousins has not yet occurred.

Its therefore very easy to throw gold in with the rest, because in reality it has not outperformed other commodities. There is also no guarantee that mining companies in development will perform along with gold, since they haven't in the past.

Stockcharts.com

http://tinyurl.com/6qrnxs

"I just got into a pissing match with either a telemarketer or so[me] kind of juiced up collection agent."

shark- about 10 years the police discovered a car pulled over on an isolated stretch of 280 around 6am with a man slumped over...a young stockbroker in a BMW...they never solved the crime, but conjecture was he pissed someone off on the road...and of course, Jaco ended up pissing someone off while inebriated and unable to defend himself...telemarketers aren't worth it...

I am raising my sell limit on UAUA from $13.30 to $14.30. Since the rebound rally in commodities has failed, then they are very likely to return to the level from which the rebound had started, and hence UAUA should return to its recent high of $15. Besides, I still have some SLW, SWC and SLV in my portfolio, and I don't want to eliminate my UAUA "hedge" on the falling commodity prices too soon.

Placing a buy to cover limit at $14.56 for the 500 shares of LEH I shorted today at $15.56. I am limiting my profit to $500, but that would be enough for TWO cases of Armenian brandy -- twice my original goal. :)

Aucourant - Elder; volume indicators; L-T trades

Alex Elder has always been a swing trader at most. He is now incorporating a strategic dimension. It seems to me there is no reason that MACD-H viewed monthly, and weekly, wouldn't give good signals for L-T trades.

You are SO right that MACD, RSI, Stochastics, etc. are different ways of looking at price movement. While Alex developed the "force index" (=price change x volume) it's not as integral to his trading style as are Moving averages and MACD-H, both of which, as you point out, are price-only indicators. If Alex sees force index stair-stepping up or down, it will, however, influence a trading decision in a major way.

Even force index incorporates price. If you want to see volume given "separate but equal status" with price, you might look at the work of Tim Ord. To me, there's an appeal to looking at volume independently, and over time. Here is Tim's current free (weekly) post:

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

In Ord's posts, he mentions his new book, which is excellent. Tim basically looks at volume at swing points and during the legs between swing points to guide his trading decisions. He sells software with a zoom feature. I expect you can look at short or long-term swings (but haven't tried his software yet).

Ord believes that such volume signals are particularly accurate with low-volume stocks. Tim is not (in my view) as clear or succinct a writer as Alex; his charts and graphics are more cluttered, but his insights are powerful, and worth the effort to grasp. I hope this helps.

held DZZ and UYG into the close, keeping plenty of powder dry for monday. have a great weekend, all...

Hey 2nd_ You mean Jaco Pastorius? He had a history of that in Boston too.

"David- you're closing 1-2 trades a day...how many cases of Armenian brandy do you need?"

You are right, I don't need that much. As long as I have several bottles handy, I am all set. It is just that making money for the sake of money does not feel right. During the years of communist rule in Russia, when everone had the same minimal salary, people focused on giving meaning to their lives through cultural development and personal relations, and many people are still not used to judging the success of their lives by the money they are making. Contractors doing manual labor in those years were often PAID in bottles of vodka for their work. So any Russian now, living in Russia or abroad, still understands and appreciates the concept of vodka (or cognac for the lucky ones) as hard currency and a guide in decision making. :)

schleppy,

I apologize. I see that now, Duh!

I'm relatively new here too and I don't know if violated some protocal or the other guy's just having a bad day.

I was just feeling pretty good after having been way down on that fund for the last month.

Holding UYG, sold SKF and GG earlier.

Surprised the rally held today. Almost added to SKF but will wait till next week. Maybe Obama will announce his running mate is Elliot Spitzer, really scare the h@ll out of financials.

nemo- yes..guess you missed the post i addressed to you at 829am...

UNG - downside target

Short trading history; twice in '07, it bounced off of 33.50. Wouldn't that have to be the downside target?

I think even that 13th Century Italian would agree!

ALOHA!!

Add this to a very long list of US FED drivel that makes no sense in the real world!

BEN SAYS:
Bernanke Says U.S. Inflation Should Slow Into 2009
By Craig Torres and Scott Lanman

Aug. 22 (Bloomberg) -- Federal Reserve Chairman Ben S. Bernanke said inflation should ease later this year and in 2009, while warning that policy makers will act if price increases don't slow over the ``medium term.''

A recovery in the dollar and declines in commodity prices ``should lead inflation to moderate,'' Bernanke said in a speech to the annual Fed conference in Jackson Hole, Wyoming today. The Fed ``is committed to achieving medium-term price stability and will act as necessary to obtain that objective,'' he said. END

The first paragraph says it all! Here is a Princeton professor of Economics who can't say for sure what inflation will do, so he says it will "ease" but then he says if it doesn't that "policy makers will act"! HA !!! He has been saying this same stuff when gas was at $2.30 all the way up to $4.00! Why can't his Princeton Economics degrees predict anything 100% accurately like the sciences of physics and biology and chemistry can? I say again ... Economics is not a science then! Its a study of human behavior and counting beans ... beans that nobody in power wants counted anyway! HA!!

He later agrees the US Treasury should bailout banks, which is inflationary ... along with a long list of other US government SPENDING PROJECTS and military excursions ... all inflationary in nature, but yet inflation will "ease" well into 2009. What's his definition of inflation? Is it shorting gold and commodities and jawboning currencies to come up with a "price driven" definition? All these tactics the US FED and the US Treasury are employing are all designed to DELAY monetary problems, not SOLVE them! Can inflation be solved by SPENDING EXCESSIVELY year after year? Is debasing currency really a long term plan for anything other than impoverishing the masses? How can a consumer driven economy that depends on foreign imports and loans turn around if consumers are broke?

Like the Dallas Fed Governor Richard Fisher has stated ... we are facing a $99.2trilUSD(he can't even count those beans?)unfunded liability alone in just Social Security and Medicare. I am a baby-boomer and there are 70mil like me in America who will be retiring in mass over the next ten years. WE DO NOT CARE A RATS ASS WHAT THE LIABILITIES ARE WE BETTER BE ABLE TO RETIRE OR ELSE! We were PROMISED the AMERICAN DREAM would be there for us all our lives! I personally have paid into the Social Security and Medicare system hundreds of thousands of dollars from my pay checks over the past 40 years! Most of us boomers are thinking this but not saying it yet ... THERE BETTER BE A NICE RETIREMENT FOR ME AT THE END OF ALL THIS OR I'M MOVING TO WASHINGTON DC TO MAKE EVERY POLITICIAN'S LIFE A LIVING HELL! The first baby-boomers started retiring last year. Many of us bought homes back in the 1970s and 1980s and don't need such big homes any more. This will bring a renewed flood of inventory back onto the US real estate markets. Who will be able to afford a 4 or 5 bedroom home working for McDonalds? Many baby-boomers have been led to believe there will be buyers for our homes when it comes time to sell in order to finance our retirement. Will there? I guarantee not at the current prices! This means there has to be either a huge increase in salaries across the board in the USA or baby-boomers selling homes will have to take less or perhaps nothing! Any increase in salaries is highly inflationary and the US Congress has already given the go ahead by voting minimum wage increases. You cannot have 70milllion angry US Voters ... period! These are the 70 million who will actually vote and who will write and protest. Many of us have already been into the streets of America over Vietnam! Many of us are already warning the younger generations not to trust the US government or its money and to dump both the REPS and the DEMS! Those in power in Washington DC know that if the younger generations see the older generation fail financially then there will be massive riots to overthrow the system! What will those in power then turn to in order to solve these social and financial issues? Prisons?

QUESTION AUTHORITY !!!

These guys did everything from threatening my life to impersonating a police officer in another call to me.

How much pain are telemarkets in right now?

Re: Canada's Investment Climate

Canada's investment reputation on line, panel warns
Enforcement 'shortcomings' under scrutiny

TORONTO - Canada's international reputation in the fallout from the global credit crisis and the "shortcomings" in the enforcement of stock market rules are key concerns emerging as a federally mandated panel to improve regulation makes its way across the country.

The Expert Panel on Securities Regulation, established by Finance Minister Jim Flaherty in February, has also made stops in Washington, New York and London.

"The international context has surged to a much higher profile" since the last large-scale probe of Canada's securities regime in 2006, the panel said in an interim report released yesterday.

http://tinyurl.com/6dkzky

imo, Canada is very pro-banking and very anti-development.

Tbar, Jock thanks for your responces to my post. Jock, the Tim Ord site looks very interesting and I plan on getting his book.

I'm in the middle of a report published by Barclays the was in the The Journal of Investing titled "The Future Shock of Retirement". It's been very interesting so far and hits on many of themes that kaimu often speaks of.

One thing I always think about when discussing retirement, social security, medicare etc. is that too many people think it's our birth right to have these things. At 34 years old I am not counting on SS or Medicare. I hope I am able to have a long and comfortable retirement but if not, big deal. Most people of previous generations worked to the day they died. If that's what happens to me, so be it. There are worse things in life than work.

Like Bon Jovi and telemarketers....right shark.

The Big 3 Detroit-based automakers are seeking about $25 billion in federal loans as they struggle to ride out a steep downturn in U.S. auto sales, The Wall Street Journal reported on Friday

Line is getting longer -seeking bailout

now they wants
Aug. 22 (Bloomberg) -- General Motors Corp., Ford Motor Co., Chrysler LLC and U.S. auto-parts makers are seeking $50 billion in government-backed loans, double their initial request, to develop and build more fuel-efficient vehicles

I think they should give them 100B
we can always print one billion $ note like some african country do

ALOHA !!

here are part of Mish's insights on the LEH Korean connection! Back to the old "death spiral" game. Has anyone noticed there are not many "repeat" buyer of US Bank assets? China buys into one and loses their ass then Dabai buys one and loses and Temesek buys one and loses and I guess sooner or later the buyer dry up and so that leaves the US TAXPAYER to the rescue. We are so ignorant that we don't even know enough to put in a "death spiral" clause when we buy "junk"!

READ ON:
Korea Back In The Game

Bloomberg is reporting Lehman Rises After Korea Bank Comment on Investment.

Aug. 22 (Bloomberg) -- Lehman Brothers Holdings Inc., the fourth-largest U.S. securities firm, rose the most in two weeks in New York trading after Korea Development Bank said it's "considering" an investment in the company.

Lehman climbed $1.44 to $15.16 at 11:43 a.m. in New York Stock Exchange composite trading, after reaching $15.93. Shares of the New York-based firm dropped almost 80 percent this year before today, the worst-performer on the 11-company Amex Securities Broker/Dealer Index.

"KDB is considering all kinds of options, including Lehman Brothers," a KDB spokesman said today, declining to elaborate. A Reuters report earlier today cited a spokesman saying that the government-controlled bank is "open to" possibilities, including a purchase of Lehman.

"I would be very surprised by any deal that would lead to complete control," said Stuart Eizenstat, a partner at Covington & Burling LLP in Washington and former U.S. Deputy Secretary of the Treasury. "That would elicit a lot of questions and political blowback. I'm sure that's not going to happen."

Is This Good News?

The stock is reacting as if this is good news. Most likely it is not. If the deal happens, and that is a big if, it is likely to cause massive shareholder dilution at a price far lower than $15 per share. Didn't we just go through this at $28 a share?

One key point here that none of the articles above have addressed is that it's not just Lehman that has lost control. The Treasury and the Fed have lost control as well. If there are no US buyers, and I believe it would be a good thing if there are not, neither the Treasury or the Fed is in a position to bail out Lehman.

The reality, if one thinks about it closely, is the Fed and the Treasury never had control of anything in the first place. It was all an illusion that has now been unmasked.

The Fed and Treasury may not like it one bit, but the flood of dollars those dollars foreigners are sitting on eventually have to come home. And they will come home by buying US assets. That is the price the US has to pay for the unsustainable US credit binge we have been on. So if a huge deal with Korea is announced, expect to see the Treasury begging Congress to approve it.

In June 2008, Bernanke Blamed Saving Glut For Housing Bubble. It is amazing that anyone, let alone a Fed Chairman, can possibly think that a crack-up consumption boom in the US, financed by cheap credit from foreigners can constitute a "savings glut". Bernake is clearly incompetent.

In the past few months, Singapore, Abu Dhabi, and now South Korea have or are considering "bailing out" US corporations. This is what's become of Bernanke's ridiculous "savings glut" theory.

Mike "Mish" Shedlock END

Once again I am joined in my belief that Bernanke and all his Economics degrees are a failure. Ben is proving what a US Ivy League Economic degree can do in the real world! Its sadly embarrassing for Princeton! Economics is a "science" because those who control global fiat monetary systems need the masses to believe so. They need Americans to believe that they know what they are doing because they are the experts with the Economic and MBA degrees. Bernanke is suppose to be a master and expert at Economics, problem is the Economics he was taught is wrong. We are all trading and planning for our futures based on failed and erroneous data and education.

Winston Churchill on Keynes:
"If you put two economists in a room, you get two opinions, unless one of them is Lord Keynes, in which case you get three opinions."

OPINIONS ... is that a science?

Danielle Park has a blog at:
http://www.jugglingdynamite.com/

[Bill Cara note:

Good stuff there. Thanks.]

Re: Danielle Park

I haven't watched her latest appearance.

After hearing her speak at the NYC Hard Assets conference in May, I made a point of meeting her and I picked up her book - Juggling Dynamite ..... and after reading it, it's clear that she's one of the few that 'gets it' and has actually taken the time to learn from others that have much insight to offer throughout financial history. In that respect she's not at all in the league of Dr. Marc Faber nor David Hackett Fischer (The Great Wave: Price Revolutions Throughout History), but for what she does - manage money, I think she probably does well within that defined lower risk strategy.

I would have to agree that she is an asset allocator and focused on preserving capital through long strategies. I don't always agree with her opinions - she has a blog, but I do think her conservative, investment style would be popular with many of my risk averse friends who are constantly asking me to manage their money, but have no desire or knowledge of how markets work and thus low risk tolerance.

ALOHA !!

MER needs to come up with $8.5bil USD to pay back ARS investors. China ... want some more MER? Temesek ... more MER? US TAXPAYERS ... more junk? This article claims that the deal is not settled with the SEC yet.

Now ... since all those profits were made fraudulently, what say those top managers pay back those hefty bonuses that were based on those fraudulent profits? MER shareholders should be on that ... like flies on stink!

"Hey SEC ... When do we read about criminal prosecutions for MER managers?"

READ ON:
UPDATE: SEC Reaches Preliminary ARS Settlement With Merrill
Dow Jones
August 22, 2008: 05:20 PM EST

(Adds comment from SEC, background on state settlements and details on buybacks beginning in the third paragraph.)

By Judith Burns

Of DOW JONES NEWSWIRES

WASHINGTON -(Dow Jones)- The Securities and Exchange Commission said Friday that its enforcement division has reached a preliminary settlement agreement with Merrill Lynch & Co. (MER) under which the Wall Street firm would buy back at least $7 billion of auction-rate securities it sold to customers.

Under the agreement, which is still subject to approval by the five-member commission, Merrill would buy back $7 billion of auction-rate securities from individual investors, small businesses and charities and use its "best efforts" to repurchase another $1.5 billion worth of securities sold to other businesses and institutional customers.

The SEC's provisional agreement follows one announced Thursday by state regulators that fines Merrill $125 million. David Rosenfeld, an associate director in the SEC's enforcement division in New York, said the agreements are identical but for the penalty.

Unlike the states, the SEC is reserving judgment on whether a fine is warranted, and will base its decision in part on how Merrill handles the buyback program. Although state regulators estimated the agreement would apply to $10 billion or $12 billion of auction-rate securities, the $7 billion figure takes into account securities that already have been redeemed.

Merrill is the latest bank to strike a deal to resolve claims it misrepresented auction-rate securities as safe, highly liquid investments similar to money-market instruments. The securities are typically long-term debt instruments whose interest rate is reset frequently at auctions.

"Merrill Lynch did not make adequate disclosures that the liquidity of these securities was based on Merrill Lynch supporting the auctions it managed when there was not enough demand. Investors were left holding illiquid securities when Merrill Lynch stopped supporting auctions in February 2008," the SEC said.

Even though Merrill became aware of "liquidity risks" before the market for auction-rate securities seized up in February, it continued to promote them to its customers, the SEC also claimed.

"Merrill Lynch's conduct harmed tens of thousands of investors who will have the opportunity to get their money back through this agreement pending Commission approval," SEC enforcement director Linda Thomsen said in a statement.

Rosenfeld said the SEC is continuing to investigate individuals involved in the auction-rate securities sales and declined to predict when the settlement with the company might be finalized.(more)

I just read a terrific article (on Bloomberg) about an enormously successful currency trader, John Taylor. His models are showing that the dollar might fall 40% over the next three years. Makes Jim Sinclair look like Mr. Fluffy.

vinod- it's pathetic the way these companies scramble for hand-outs (that's what they really are)...i'm sure working 25 years for An Wang was a much different experience, where success was justly rewarded, and failure was an acceptable outcome when taking risks...

Hey 2nd:

Oh...yeah, poor Jaco, a little knowledge always gets you in trouble. Just a thought on Chet Baker, it's kinda' the thought I have on one-hit-wonders:

For some reason the powers that be allow momentary flourishes of creativity and artistry to bloom. One of the best guitarists I ever knew, who's senior performance at Berklee is legendary, never became anyone famous. He used to talk about the music he wrote as, "this i what I'm hearing." He felt it wasn't him writing it, he was just the vessel through which it came. Humans love longevity as a measure of supremacy, unfortunately those brief flourishes are not what we define as greatness according to various definitions of success. Was Mozart a failure because he died @ 33? By all accounts, no. Yet his career was so short. i'm just happy the artistic product I have heard, seen and read, made their way here.

nemo- agree...some of the best musicians, writers, artists, dancers, ball players, physicists, researchers, you name it are never heard/read/seen, never acknowledged, never recognized..some barely realize their own talents, some don't care, some have better things to do, some have no time to do what they're best at..in the end, we all make trade-offs that either make sense to us or are required of us, and we're thankful to have done our best...success or failure is in the eye of the beholder-> it's wise to consider only the opinions of those enlightened enough to know the truth...

Kaimu,

I think you are being kind and generous in your view that Bernanke is incompetent. I strongly believe both he and Greenspan have been fully aware of the causes and the culprits of the U.S. economic debacle we are facing.

Some of our biggest corporations and financial institutions have sucked the country dry and we are well on our way to being a former "super power."

Those agencies charged with maintaining an honest financial system are either too dumb or too involved to stop the biggest fraud in history. The wagons on Wall Street have been circled and they will get to keep their loot.

Bill has pointed out the blatant conflicts of interest which go unchallenged

Instead of Helicopter Ben and his chopper — a guillotine is what we need. A few heads rolling would put an end to it.

Aucourant - the importance of volume indicators

I hope Ord is helpful to you.

By way of follow-on, I have read Bill stating that volume is a less revealing indicator for large cap stocks (like Cara 100s) than for low-volume, small-caps. I think Alex would agree. (From my experience of 1 week-long seminar and numerous "webinars", Alex tends to stay away from large caps as a rule.)

Another point is that Ord never touches upon position sizing (also called money management or risk control) - an area Alex Elder (rightly) stresses. Ord limits his focus to price and volume as indicators of price swings.

I have thought and thought about the problems of brokers and financial planners. To me, it comes down to the concept of being a fiduciary. And I'm not talking about some watered down language of "using professional judgment and practices" in handling a clients' affairs.

I'm talking about an older, more honorable practice. I'm talking about the standard from Judge Cardozo, who laid down the law that fiduciaries had "the most special honor" of placing the client's interests before their own.

This concept might as well have been bundled up on Explorer 1 and shot into outer space 50 years ago, because we have completely forgotten what it means to have fiduciary duty.

If one's brokerage is an HB&B and they require one to make them an "attorney in fact" to handle one's account, then the broker owes a fiduciary duty. The front-running, the funny accounting, the "buy" recommendations that favor big clients who are distributing, these are just the tip of the iceberg of fiduciary breaches.

We have three methods of enforcing a true fiduciary concept: 1) Private enforcement (via lawsuit); 2) Private enforcement (via competition in the marketplace); and 3) Government enforcement.

I see #1 and #3 as unlikely to make any real changes. Fortunately, the financial storms that will blow through the markets may cleanse the B.S. and give hope to a return to honest fiduciary standards. At least until the next bull market.

Talking heads talking about lowered price inflation to come, as a result of the business cycle slowing. As if that's some sort of good thing.

What's going unsaid, and on my mind: What if instead it's the beginning of the coming massive deflation called for by Mish and the rest of the Austrians?

Seriously. I've been wondering for a while now how there can be such huge credit-based balance sheet 'asset' destruction as we are seeing now and there not be more serious ramifications. Now that prices are falling in a more obvious manner, I really wonder if we're cresting a huge price/credit blowoff top.

If the Austrians are right we're in for a world of hurt.

Nemo,

I went to Berklee for a couple of semesters back in the 80's.

BP: You definitely do not have option #1 in dealing with your brokerage.

I saw Ute Lemper sing Kurt Weil at Berklee in the 80s. Yeah.

And drank with lots of Berklee students in the, well, recently as not that long ago, actually.

And here's my favorite drummer kicking some a, recorded live at Berklee in the early 80s.

http://www.youtube.com/watch?v=kRAVnSo2twM

1:06-1:12!

Grym, Don't feel bad, I was celebrating your victory with you! Considering Bill's last sentence from the opening post, you should feel great! I haven't lost out too bad, thanks to selling off my GG. I hope to pick it up again around $30 or below.

BP- "I'm talking about the standard from Judge Cardozo, who laid down the law that fiduciaries had "the most special honor" of placing the client's interests before their own."

The only imaginable way (IMO) for someone outside one's family to achieve this state of mind (on a consistent basis) is for that person to have already attained financial independence...even then, the person would have to have a real interest in your well-being...the concept is nice, but almost impossible to fulfill...i'm reminded of small businesses where only family employees are permitted to handle the finances...

Jock,

Looking over Ord's website, I can see how he is using volume data, but I'm not sure how he is getting the figures he places on his plots to show, on a given plot for example, that an up volume is one half of a preceding down volume. His system seems to be rule based but I wonder if some of his rules could be transformed into a formula instead. Regarding position sizing, it is hard to imagine anything more important and I learned a lot about that reading Van Tharp. I especially like Tharp's incorporating ATR into position sizing. That said, I've been a complete null in actually using this idea and have lost money as a result. I've found that part of the reason for this is the god-awful commissions I'm forced to pay in my IRA account on Canadian stocks or stocks under $5, plus lousy executions on Canadian stocks by my US based broker, making me extremely reluctant to sell. Instead, my money management has been to feed money into the account to make up the losses.

BP--interesting that you bring up Judge Cardozo. I studied him in taking a course from Jan Deutsch at Yale Law School. I feel that it was a different world when Cardozo wrote his opinions--ethical standards were much higher than now. It's almost as if we are now living in a mafia dominated society where the golden rule is "do unto others before they do unto you." Until times change, Cardozo's correct definition of fiduciary responsibility will remain a relic. By the way, nobody could interpret cases better than Deutsch! Have you heard of him?

Dear 2nd and BoP (Blowout Preventer)

It would seem fiduciary responsibility requires a certain moral code not necessarily (not at all) prevalent in the broader mechanisms of society. It is often talked about in regards to financial issues, but it seems fiduciary responsibility really speaks to the core of how one conducts his affairs and interactions with others. If it's not a core component of one's internal value system, then it will only exist imperfectly, under the penalty of law.

Perhaps it's the natural cycle of a society to decay in all its facets as it seems all do.

MikeNYC

I am also increasingly concerned about the massive deflation Mish Shedlock is predicting. Anyone else here have any thoughts? If it comes to pass then is cash king?

Also went to Berklee, in '68, '69.

Wooly,

Hard assets will likely be king; what will pieces of paper be worth? Especially if it happens on a global scale?

Nemo,

Hard assets won't include real estate. Can gold and silver deflate too?
I am in the rare musical instrument business and I am seeing slight signs of declining prices. I don't think buyers will be lining up to buy rare Strats if deflation hits.

Schleppy, retirement:

I'd like to tell you what I tell my sons and hope you can all have a more secure retirement.

I'm a little over twice your age, was first self employed at age 19 and except for my military service and 3 years with a medium size company was self employed until I was retired due to manufacturing clients leaving for cheap labor.

Many of my friends were hit very hard by the 2000 market drop. They had trusted their money to mutual funds and still have not totally recovered.

I paid my self-employment tax (Social Security with a more accurate label) all those years, never believing it would be there when I came of age. I therefore have always been a saver and investor. In 2000 my mutual funds dropped 30% on average between Sep 2000 and Jan 2001 — I sold all, went to trading and got lucky on Krispy Kreme Donuts (KKD).

Now that I have more time I am a much more aggressive investor and even more convinced than ever that nobody really cares about your money except you!

It is not that I want to have more things, do more things or look more prosperous...

The big problem is the U.S. and other nations who have had it so good, for so long, are being distilled into a two class economy. We are developing into the very well off and the rest of us. (There is a third class which unfortunately will be either ignored, imprisoned or killed. — What the Nazis tried to do militarily is being accomplished economically.)

We can look forward to high inflation as currencies are debased even further and creativity in taxing beyond our worst dreams. National sovereignty will disappear (in large part it already has) as global corporations form alliances independent of governmental (citizens) wishes.

I reread Huxley's "Brave New World" last year and it was like the current news. The more "They" promise us, the more we must be on guard. The is no Free Lunch, no Free Market, and less freedom of all kinds as the masses become more controlled and manipulated from the top.

Short of a miracle, I can see no alternative.

Chickenpookie,

Congratz on GG

I got stopped out of UYG and think I'll wait a while. I expect SKF to begin another rise before long. Sometimes I do better by doing nothing. Patience is something I want to develop... and I want it right now! :-)

colin twiggs:

http://tinyurl.com/54qccl

"The crude oil rally encountered resistance at $120/$122 per barrel. Expect sellers to force another test of support at $110. A fall below $110 would signify a clear breakout from the trend channel, warning of a primary trend reversal. And penetration of the key psychological barrier of $100 would confirm."

"The bear market in stocks is unlikely to end, however, even if we see a primary trend change in crude oil. Not until there is a clear bottom in the housing market."

"The Dow is headed for another test of the band of resistance between 11750 and 11850. Low volume indicates that resistance is likely to hold — followed by a further test of 11000."

"The Russell 2000 Small Caps index are out-performing the large cap Russell 1000. I repeat the three possible reasons mentioned last week:

1. institutional holdings and margin trading are concentrated in large cap stocks leaving small caps relatively untouched by the liquidity crisis;
2. short sales are concentrated in larger cap stocks; and
3. falling energy stocks have greater representation in the Russell 1000."

Aucourant - Ord, volume, position sizing, brokers

Ord has software which identifies swing tops and bottoms, and then compiles volume during the up and down legs, and also reports volume at swing points. His rules come from years of study re how much volume change is needed to indicate a powerful swing. It's explained in detail in his book. Not all "ordians" use his software or explicitly total volume during legs. You can sometimes eyeball volume bars and see when volume is advancing or receding.

Indeed, I agree that you need to place stops on positions considering ATR's. Otherwise, you'll be stopped out way too often, and end up with lots of small losses and commissions.

FWIW, I have found Schwab commissions to be OK on Canadian juniors. They do add 1 cent for juniors under $1 and 2 cents for juniors over $1 to cover currency and canadian brokerage charges. So, a junior selling for below .50 has >2% charge atop the normal $8.95 commission.

BTW, Schwab is NOT economical for trades in some other countries (Australia). IB is the best for commissions globally, but there are no local offices, and thus no local "necks you can wring" when they're inattentive.

http://tinyurl.com/5cnt9w

I've compiled some market, sector and stock leaders that might be worth bookmarking for future reference. Or not. From the terrific Stockcharts platform.

Have a great weekend.

It has been reported that Fannie and Freddie have over 200 Billion in bonds coming due at the end of the third quarter which is about 38 days from today.

Who is going to buy this toilet paper? China?
Japan? Europeans? Arab Sheiks? Russia? Will Paulson have to use the unlimited checkbook he has been granted by Congress in the recent housing legislation.(Some also claim this would be unconstitutional)

If this action takes place, what are the consequences... destruction of the US government's credit rating? Dollar destruction? Gold prices higher? Higher interest rates? Further stress on the housing market? Could this event be the trigger for Bill's trade of the generation? Or will it be ignored and it will be business as usual?

Comments anyone?

Grym,
Thanks for your 8:37am post, you put some real soul into your words, which I admire.

I'm considering a switch from financials into commodities,etc. because it seems HB&B have coordinated some strong defensive techniques bolstered by FED support. EXAMPLE: One bank down, three up... The sector doesn't move in unison any more. Will attempt to squeeze a few more drops from UYG and move on, weary of enabling HB&B success.

Coxe on Putin as big oil's baddest boy!

In his weekly audiocast, Coxe points out that Putin is the most important man in global oil.

After destroying Shell's reserve numbers (by forcing Shell out of their JV on Shaklin Island) he has allowed BP to be mauled by their JV partners, making something like 30% of their reported reserves look rather dubious.

Invasion of Georgia now puts the oil and planned gas pipelines through Georgia at some risk. (These pipelines were routed through Georgia in order to avoid transiting Russia - and thus depending upon the goodwill of Putin.)

Personally, I'm not sure "backing the grizzly into a corner" through NATO expansion, missile deals with Czech Repubic and Poland, and US and Israeli military training for Georgia was the right way to encourage better behaviour. I don't think bears respond to threats, except with claws!

Coxe's takeaway is that Putin (combined with Chavez, Nigeria, etc.) is making drilling off US shores virtually inevitable, as it gives western oil companies the first time in decades to build major owned reserves, and thus a long-term future.

Beneficiaries will be experienced offshore drillers and operators, according to Coxe. CVX and RIG (from what I understand) would be the bluest of such chips. FWIW, DYODD, and timing is always THE question, but do listen to:

http://tinyurl.com/2htvq3

Taken from Bloomberg article entitled "Paulson Risks Goldman Standard as Fannie, Freddie Shares Erode"...

"Paulson sold his 3.23 million shares in Goldman, worth about $500 million at the time, when he took the Treasury job, according to regulatory filings. He was exempted from paying capital gains tax on the sale of those stakes under a rule meant to avoid penalizing wealthy people who take government jobs and are forced to sell assets."

http://tinyurl.com/4zdroo

austral25 - Faulty and Fraudie - I do recall a few months ago the CEO of China Investment Corporation saying they had $200B to invest. Makes me wonder if/when they have plans to buy some toilet paper...

astral25 - Fannie and Freddie's (t)issues

Since the US gov't has explicitly backed up "faulty and fraudy" their nasty paper is safe for anyone to buy.

I read Bill Gross jfust bought a pack of 12 rolls of it. Why not take the extra yield over Treasuries, if the Treasury is backing it up?

So, it will be biz as usual, and as usual, the bill will be passed to our kids and grandkids.

astral25
The Big Freddie Mac

McDonald’s Corp. held a press conference today to unveil its latest sandwich: the Big Freddie Mac. Priced at 50 cents, the Big Freddie Mac is the first fast food hamburger to be subsidized by the federal government.

“The economy - not that there’s anything wrong with it - is causing Americans to cut back on eating hamburgers,” explained McDonald’s spokesperson Donald McDonald (no relation). “Washington has decided that the burger is too big to fail, so the Treasury Department has agreed to kick in three bucks for every Big Freddie Mac sold.”

The Big Freddie Mac, while similar in appearance, is significantly different from the McDonald’s mainstay - the Big Mac. Big Freddie’s bun is inflated to look twice as large as it actually is, while the two all-beef patties are actually one all-beef patty sliced in half width-wise and pumped up by puffy lettuce. The “special” sauce is French dressing which is this week’s “special” at the dollar store next to McDonald’s headquarters. The number of sesame seeds has been reduced to one with a promise of more in two years if the burger market bubble continues. Each Big Freddie Mac comes in a special wrapper printed with suggestions on how to “flip the burger” for profit by selling it to people who are new to fast foods or kids who haven’t learned to read yet.

“The Big Freddie Mac program does not mean we will be bailing out other fast food menu items,” said Federal Reserve Chairman Ben Bernanke. “As they say in the business, it’s for a ‘limited time only’.” However, he did not rule out a similar plan to help Starbucks, which has recently been forced to close 600 stores. Rumors out of Starbucks headquarters in Seattle hint that the company is about to roll out a government-subsidized coffee called the Frappe Mae

post is from Rob, the founder of Business Pundit, now with Capitalist Banter:

astra,

Who is going to buy this toilet paper? China?
Japan? Europeans? Arab Sheiks? Russia? Will Paulson have to use the unlimited checkbook he has been granted by Congress in the recent housing legislation.(Some also claim this would be unconstitutional)

I would call it taxation without representation, since shareholders/taxpayers have no one on our side and decisions costing billions (trillions?) of tax dollars are being made by appointed rather than elected representatives.

Schleppy,

I was thinking more along the lines o precious metals. Homes will depreciate, but if you own it, you have it. We might find alcohol having much greater value also. Strats-luxury items. I think many collectibles will go down hill.

Re: NDM.TO

Have followed the story on NDM.TO for quite some time, dropping in every once in a while. If any chart tells the story on how mining stocks have plummeted, this one does:

http://tinyurl.com/4jbwgs

http://www.nytimes.com/2008/08/23/us/23alaska.html?pagewanted=1

aucourant,

Deutsch is a giant of jurisprudence. I learned of him in a class I took years ago called "Legal Method" . . . back before I knew much about anything. ;-)

Grym, I appreciate your thoughts and totally agree with your comment of taxation without representation. I have that thought each time I hear someone say they sent a letter to a politician and all they ever get is a form letter in return....pathetic.

http://tinyurl.com/3usm2p

A follow up to our water / Boone Pickens discussion of a few days ago.

Jock,
If offshore drilling legislation were passed, CPST should also see some benefit IMO. The microturbines are used on the offshore drill rigs for electric power generation from waste gas collected from the well. This is one of the new green features of next-gen drilling platforms, where the large (leaky) diesel tanks are eliminated.

BOP - It will be a sad day if Pickens' plan to pump the Richards county / west Tx. Aquifer over to Dallas were to succeed. These folks are in the dessert, practically, and have fertile farmland that's completely dependent on that aquifer. No water, no farmland. It's a similar story now as the water wars between N.CALIF and S.CALIF. I'll have to check if Greenpeace supports Pickens' water plan.

Anatomy of a Canadian junior mining promotion -

Today is another installment in Otto Rock's story. At the bottom of today's are links to the earlier posts. It's best to read from the start.

http://tinyurl.com/56yo73

Pookie -

I didn't know that about CPST's turbines. Thanx. Do you know if they have a significant amount of business from this? Do you have any in-depth info on this? thnx in advance.

Pookster:

CPST is facing a potential need for financing to expand production on a new model turbine. In this environment financing might end up being a new share offering. They should know by the end of October whether they'll go forward with the new product.

CP,

The real tragedy is that the Ogallala aquifer runs all the way to SOUTH DAKOTA. That's a lot of real estate and potentially a lot of folks' water supplies involved from a politically savvy power grab down here in the Lone Star State. A tragedy of the commons indeed.

Jock -
Announcement on microturbine to burn wellhead gas on offshore rig. There's a ton of info all over the i-net on uses for microturbines.

http://tinyurl.com/6awt9o

nemo - I'm aware of the financing issues CPST has, and their CEO had indicated that they weren't going to dilute shares. I think the offshore rig and possibly green(er) transportation might draw in the required financing. Anyway, if the offshore drilling proposal happens, we should be prepared to act accordingly... That means having your short list ready to go. I wonder if anyone here is planning ahead - what's on your short list?

BOP - Get a rope!

ALOHA !!

ON NDM
F6 ... That is why I sold out of NDM at the $8 and $9 range. I was actually tipped off about these environmental issues years ago by a CEO of another company there. I would also check other companies in that vicinity as to their viability in the short term. One that comes to mind is FMM.V!

On the other side of this issue the State of Alaska could be setting itself up for a major lawsuit from some of the biggest mining companies in the World. Ask yourself why Alaska would be granting permits ten years ago in environmentally sensitive areas? I think a good attorney could come up with enough bribes and evidence to make the State of Alaska pay back all the incurred costs NDM and Anglo and Rio Tinto has poured into this venture. If a State issues a PERMIT for exploration would they not assume someday a mine might be built? DU-H-H??? Once again BIG GOVERNMENT is a failure ... Just thinking outside the boring as hell ... box!

ALOHA !!

Not that anyone cares but another bank failed this weekend. Some $1.4bil in assets(?) and deposits. So how much do you have to lose to collapse a $1.4bil tiny bank? Apart from the obvious drug lord ties ... HA! Figure at least 10 times losses ... which would be conservative given the way US Banks leverage themselves(fractional reserve)today! And the GOVERNATOR of California is worried about a measly $15.2 billion budget shortfall! Are California State workers still making minimum wage?

Now I read where the FDIC is in the "mortgage business" and they are canceling "bad mortgages"(contracts)and giving homeowners more leeway by lowering rates. Pretty soon everyone with a mortgage will want the FDIC to take over their banks! Essentially in America a contract isn't worth the paper its written on! Why not just GIVE away houses for free? Cancel all the mortgages! I'll bet I could run for President on that one single platform and get elected muy rapido! Why can't we just legislate free houses? The banks created free money to create mortgages! Seriously ... how did a bank "earn" the funds it loans out? Every single bank in the World loans out more than they have in deposits! All the banks do is "mouse click" money ... "MOUSE MONEY"! Unreal ...

Why would anyone name a bank in Kansas ... "Columbian"? I'd be nervous about opening an account ... What's next the CHAVEZ BANK & TRUST?

READ ON:
Columbian Bank and Trust of Kansas Closed by U.S. Regulators

By Alison Vekshin and Ari Levy

Aug. 23 (Bloomberg) -- Columbian Bank and Trust Co. of Topeka, Kansas, was closed by U.S. regulators, the nation's ninth bank to collapse this year amid bad real-estate loans and writedowns stemming from a drop in home prices.

The bank, with $752 million in assets and $622 million in total deposits, was shuttered by the Kansas state bank commissioner's office and the Federal Deposit Insurance Corp., the FDIC said yesterday in a statement.

Citizens Bank and Trust will assume the failed bank's insured deposits. Columbian Bank's nine branches will open Aug. 25 as Citizens Bank and Trust offices, the FDIC said. Customers can access their accounts over the weekend by writing checks or using ATM or debit cards. (more)

Kaimu,

Correct me if I'm wrong, but Columbian's "$622 million in total deposits" means that they were allowed, under our fractional banking system, to have as much as $5.6 billion in loans outstanding.

In this econ climate, is it any wonder that so few banks have failed? I mean, if a loan shark or pawn shop loans money, they at least have to have it on hand to "lend." Banks have no such constraint, they're running at a 9x or 10x leverage.

Pshaw!

ALOHA !!

BOP ... Remember though that the Columbian Bank is at the top of the inverted pyramid of money supply inflation. Depends on the "assets" which I have in (?) and to what degree those assets have been leveraged. Banks are in the leverage business!

To see how $100 of reserves can generate $10,000 of loans go here ... For that MONEY MAGIC you can thank the US Federal Reserve!

Link: http://tinyurl.com/5ssntt

ALOHA !!

Ron Paul grilled Alan Greenspan on regulating derivatives years ago. Greenspan insisted that the derivatives market(which is used to leverage bank assets)needed no regulation.

Now Bernanke says the derivatives market needs a complete overhaul! Who do we believe? Why does one "economist" say one thing and another one the complete opposite? If you add in Hank Paulson to the mix you get the THREE STOOGES!

READ ON:
Fed chief calls for derivatives overhaul
By Krishna Guha in Jackson Hole
Published: August 22 2008

Ben Bernanke on Friday called for a far-reaching overhaul of the giant credit derivatives and triparty repo markets as part of a push to strengthen the financial system and reduce systemic risk.

The Federal Reserve chairman, speaking at the start of the Fed’s annual retreat in Jackson Hole, said changes were needed to minimise the “moral hazard” that might otherwise result from the rescue of Bear Stearns and other efforts to combat the credit crisis.

Mr Bernanke also endorsed the idea that the authorities would need to adopt a new “macroprudential” approach to regulation that puts greater emphasis on the systemic consequences of decisions taken by individual firms.(more)

Keen sense of the obvious

http://ronsen.blogspot.com/2008/08/sunday-morning-coffee-keen-sense-of.html

Schleppy,

Form letters!

I began writing my congressman about the effects of NAFTA in November, 1993. After explaining the job losses were bound to be far more then "low-end, low-pay" and that only the wealthy Mexicans and large US corp. would benefit, I referred to it as Not A Fine Thing, America!

For more than 10 years I got replies bragging of our increasing exports. Sure to US companies we used to ship to in the US.

Now, he's up for another re-election (He had promised to serve only six years.) and he's says he is concerned about US job losses to cheap foreign labor! Our city, formerly a machine tool center, is at over 10% unemployment as of last week.

I doing what I can to oppose his election.

Kaimu,

The "Maestro" has always talked very slowly because he's so in love with the sound of his own voice. I seem to recall he once said he thought the derivatives were "good" for the markets. (I may be wrong depending on the translator of his blathering.)
In vaudeville they would get the hook and yank him off the stage.

Kaimu, you're going to be in Otto Rock's bad book - the South American country is ColOmbia.
http://tinyurl.com/5hgffa

[Bill Cara note:

This reminds me of an associate who drove his car from British Columbia to Florida, and was stopped by a traffic cop who remarked that he didn't know that was how the Canadians spelled Colombia.

Anyway, what with Beijing Games closing ceremonies, and an F-1 car race to watch, and now a family BBQ to leave for, it will be quite a while today before I finish the WIR--probably about 8pm.]

Re: Fraudulent Mining Promotions

Just so that you know, the fraud in mining promotions don't necessarily come from the lack of having a deposit. Mining exploration companies sometimes do take out moose pasture, but often there's a deposit.

Most deposits in the world are known, and have been known for 20 years. In that time, much emphasis was given to the stock market and banking sectors, and none to materials. So now that you have a surge into the commodities because of economic fundamentals favouring the move into real things, rather than fantasy paper, mining concessions will become valuable as an asset.

The whole problem with mining promotion is that on the way up, people will believe their story no matter what because the share price appreciates. But when it crashes, its all fraud, despite the fact that a company has a significant find and can be a profitable business after feasibility.

The thing that most don't know is that the vast majority of investors have no access to the same ability to short sell the stocks they own, because of huge margin requirements. The brokerages however, have unlimited access to shorting a stock, so its like shooting fish in a barrel when the market turns down.

A broker can pocket a quick gain on a short term trade shorting a mining stock with very little money and yet bring down the market cap of a stock by tens of millions, and possibly forcing a viable prospect into bankruptcy.

This is what the Canadian market is like, its the wild west, the fraud may not necessarily occur with the mining stocks, its in the brokerages themselves. When a mining company bucks the trend, its because the promotion occurs within the brokerages.

Canada is pro-banking/brokerages and anti-development. For instance, with the mining company I own, the Department Of Fisheries And Oceans, a federal concern, has declared an industrial site with a licensed tailings management facility a fish habitat. There are fish apparently swimming in the tailings management facility, so they are calling it a lake and attempting to shut down any mining operation in the area. The site has been a tailings management facility for over 20 years, but they suddenly decided it was a fish habitat.

Canada is as corrupt a country as Venezuela.

re ndm.

I recently bought in thinking it is overdone to the downside and at support.

http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID2984294&cmd=show[s149087989]&disp=P

Re: NDM.TO/Tbar

Certainly looks like a very good chart, I would say that the 2004 highs were very important in the mining shares.

This looks like a capitulation low, so you would wait to buy in when certain technical indicators turn positive. Some would be looking at the daily chart watching for an impulse leg closing above the previous six days' close at this point.

Keep in mind that we are in tax loss selling season come Sept., but also most come back to work in the first week after labour day, so its possible that bargains are for the taking.

Its an interesting play, because the prices of copper, gold and oil will affect the outlook. I will stick with my "fair trade coffee" gold mine because its a very small mining concern and is environmentally benign.

Another perspective.

http://tinyurl.com/644mkm
[Click pic to make clearer]

McHugh's comment: We show a larger Rising Bearish Wedge from July 15th through August 11th. The bottom boundary of that wedge had seven touches, all acting as support. This told us it was an important support boundary line. Once breached, we would have solid evidence that wave 3 down had started. That breach occurred August 18th. It is not unusual for prices to want to retest an important bottom boundary, after such a breach, and in fact that is precisely what happened Friday with the huge Bernanke rally. But, but, but, that very same trend-line that acted as strong support acted as resistance Friday, stopping the rally cold. This is significant. If prices fail to rally back above that trend-line Monday or Tuesday, then we could see a dramatic decline start.

I'm not planning to answer the phone EVER again, the only phone discussions I am willing to participate in will be ones that I initiate.

CP, BoP re: Ogallala aquifer

Appears this water issue involves multiple states. As soon as adjoining states realize what's happening, I'd expect legal activity.

Issues of water rights are historically settled in Federal Appeals court or the U.S. Supreme Court where the case will be adjudicated on its legal merit based on current law and past decisions. The state of Texas could be dragged in as a defendant along with the "Pickens' municipality."

Here's a link to an ongoing case involving an underground acquifer in Tennessee-Mississippi-Arkansas.

http://www.uswaternews.com/archives/arcrights/8misswate8.html

Sharkster:

Don't take any offense, I just can't help myself (Remind me to tell you a girlfriend story about not being able to help myself).

GROW A SET!!!

I apologize...:)

post-olympics china:

http://tinyurl.com/5kcavx

apologies for the long excerpt:

" Merrill Lynch in a recent strategy note cited a veteran money manager's comments that domestic investors believed the market could be manipulated by the government and were very disappointed it had not done so prior to the Olympics. It reckoned the government knew its ability to intervene was limited, and if it failed, it would look even worse than not doing anything.
Added to this, the stakes would surely be raised if the government went as far as investing a chunk of its near US$2 trillion of foreign reserves in A-shares -- another rumor circulating recently.
Then, domestic investors would realize their government is no more omniscient than the Wizard of Oz himself. Or perhaps a better analogy would be "the president has no clothes."
A problem mentioned in the Merrill report was the behavior of China's investors. They do not do value-investing. They wait for the trend to change. And this is not only the 100-million-odd retail account holders, but also China's nascent fund management community. Last year, we heard reports of quarterly culls of the weak performers among mainland money managers.
This means finding a market bottom is particularly fraught. The same fund manager said he thought you wouldn't lose buying A-shares today on a 12-month view, but forget a 10% stop loss because the index could still go much lower.
If investors did start to look at valuations, there is encouragement. China is now cheaper than Taiwan, with the mainland's 2009 earnings multiple at 10.3x, compared to Taiwan's 12.3x, according to Merrill estimates.
What happens in A-shares has been also having a knock-on effect in Hong Kong, as the discount of H-shares listed there has narrowed considerably or disappeared in some cases. Last week, for instance, dual-listed Ping An Insurance (HK:2318: news, chart, profile) said its next fund-raising efforts might well be in Hong Kong, rather than on Shanghai's A-share market.
Many would argue China's leaders should stick to focusing on the economy and let the market take care of itself. For one thing, they need to keep dismantling price controls which torment investors with their unpredictable distortions. As China's consumer price index is now edging lower than its producer price index, one conclusion is that corporates are swallowing the gap in their margins.
Prior to the Olympics, China's priority had been curbing inflation, with bank reserve ratio requirements rising progressively to 17.5%.
Now, with talk of new stimulus packages, we appear to have swung 180 degrees to worrying about a growth slowdown.
But if mainland authorities are contemplating some Keynesian pump-priming, they are not alone in having a rethink.
Merrill Lynch says that for 4 out of 5 investors spoken to during a recent marketing trip, the focus has shifted from inflation to global growth slowdown, and "that as consensus shifts to a global slowdown and its implications, more investors are worrying if instead of inflation, we get deflation."
In such circumstances, perhaps the mainland government would be forgiven if it came up with a stimulus package and it failed. Doing nothing might not be an option.
But promising a stock-market rescue looks to be asking for trouble. And that wisdom comes from none other than Asia's wealthiest tycoon, who has pulled a few rabbits out of his hat over the years. Hutchison Whampoa (HK:13: news, chart, profile) Chairman Li Ka-shing, dubbed "Superman" by Hong Kong locals for his business savvy, cautioned last week: "Don't bet on the mainland government being able to rescue the stock market."

I say what I do about the phone nemo because if I'd just let it ring and done what I wanted to I would have bought 1000 uaua at 12.54 and sold it around 12.90 five minutes later. That phone call cost me at least 300 bucks. In addition, I've noticed it's been a long time since anyone called that I want to speak with. That's what I'm thinking. I have no interest in the hecklers and psychos who call me so I'm not taking their calls.

What happened to Bill's weekly review?

Well, if you look at Bill's schedule today, there was a bit of partyin', so, don't get your hopes up.

Sharkster: I understand and have experienced it. My condolences.

Absolutely awesome Mike! Danielle = credible. Her interview on bnn alone is worth checking out the site.

Her blog entry today:

"Governments and financial industry- thick like thieves

I think it is sometimes hard for people to imagine the nepotism of governments and the financial industry. For some, it may seem to dark to believe. I have written of this dynamic in the past, and in Juggling Dynamite.

This nepotism is one of the main reasons that financial regulators typically fail to regulate the financial industry responsibly until after implosions have scorched the earth; after Main Street has suffered real hardship.

If you ever wondered why governments seem so late to see each crisis, or why regulatory enforcers seem largely toothless, watch this clip: NY State's Economic Emergency, about the financial crisis now hitting New York's tax revenues from this past year's downturn on Wall Street.

While the tax dollars are rolling in politicians tend to opt for the collect first and ask questions later approach. Perhaps this will always be thus. Galbraith must be shaking his head from his grave. "

Sounds familiar.

http://www.jugglingdynamite.com/

Posted by: MikeNYC [TypeKey Profile Page] at August 22, 2008 2:16 PM"

Bill - Nice calls this last week, you helped me get out of some hot water by the skin of my teeth.

How about that bank failure? I knew it would happen as soon as I gave up my short position. Now I suppose the financial index(s) will "stabilize" as HB&B practices self preservation at the expense of anything and everything else.

Bill,

Perhaps Fannie and Freddie going "under" will be the catalyst that will break the housing market price-wise, which in turn will begin to sow the seeds for a recovery, eventually. I don't see how we can avoid the day of reckoning that is-a-coming. And here in the U.S., House prices GOTTA plummet and become affordable, good buys again for a new generation of wage'slaves, those lucky enough to have a job.

Also, what you wrote the other day is absolutely true, the best and hungriest traders work for HB and B. But remember that is the richest, most supportive environment for them to work in and with trading, it's always possible to do everything right, and when you do it, you know it.

All I want to do is to learn to be good while not losing my stake. In the long run, provided one is able to stick it out to see the long run, I have complete belief in myself and in this activity that I love simply for it's own sake. Making good, competent trades (or for that matter fantastically profitable ones) brings a sense of satisfaction that I don't know is available anywhere else. If I worked for Goldman and were an otherwise promising trader/good trader who lost twenty thousand bucks ONE day, it would be no big deal. Here it would be devastating. My different risk characteristics sets up different reward characteristics. Here we give Toyotas for year end bonuses, not Ferrari's:)

UYG - Bid limit @$18.5

This is from a very cautious site:
http://hussmanfunds.com/wmc/wmc080825.htm

We observe that complacency in the continued low level of option volatilities. Much of the value of options is in the small probability of very large moves. If you remove that tail risk, option premiums become much less expensive, and that's how options are trading at present. Unfortunately, implied volatilities tend not to be terribly good predictors of actual subsequent market volatility, so we can't take the low VIX as any sort of "collective intelligence" about market prospects. Typically, low volatilities are observed prior to poor market performance, with the worst performance often following a low VIX that breaks out moderately to the upside. For that reason, fluctuations in the VIX, particularly any move beyond 25-27, are worth watching here.

Bill,

In your WIR (which is great as always)you wrote:

"I can’t believe there will not be major changes in store for DC this winter.

i) a resolution to the HB&B problems and light shining on the ending of the credit crunch,
(ii) a new Fanny-Freddie,
(iii) a new regulatory regime,
(iv) soldiers coming home and being put to work on needed infrastructure jobs that will make America more efficient,
(v) advancements in alternative energy, and lower oil and gas prices,..."

You comment causes me to ask, firstly...What POSSIBLE reolution to the HB and B problems do you see coming from what I am inferring from your list is an Obama presidency.

I am not getting the sense, here at the end of August, that Obama is a whoe-inn for this office. Getting a lot of 22 year old's asses in a political uproar is not the same thing as building a true constituency. It's true the man can give a speech. But Bill Clinton's left us weary and skeptical of fresh faces touting "change" without specifying what they're talking about. By picking Biden Obama fails to walk the walk of bringing change to Washington; it's more like bringing a Democrat dinasour to Washington, except he doesn't have to bring him, the T-Rex has been in town since 1973!

All it does is reinforce the notion that Obama needs a great white daddy type to actually run the county while Obama goes out and gives speeches. Believe me. I can't stand the failed policies of the previous 8 years. But an end to HB and B's problems? Troops coming home? Don't tie the yellow ribbons just yet, this thing 'aint over.

That's "shoe-inn" not who-inn. (who dat?)