Good morning

As I am traveling at the moment, this week’s edition of "Words from the Wise" is shorter than usual, but still includes some thought-provoking news items and quotes from market commentators during the past week.

Here is the link to “Words from the Wise”: http://tinyurl.com/6dkd8z

That’s the way it looks from Cape Town (or Ireland for this week).

I think I finally figured out the reason long term (10 – 30 yr Treasuries) interest rates have not gone up.

By any measure we all know that with inflation at the highest levels we have seen in decades and with our balance of payments deficit showing no signs of abating, that both the ten year and the long bond should be priced to yield at least 6%. Maybe more.

So why hasn’t this happened? It’s partly because of the $300 Billion or so of Auction rate securities that are still “out there”.

At a 6% yield, a 30 year 4.5% coupon would be worth about $800. A ten year 3.86% coupon would be worth about $840 to yield roughly 6%. Almost all of the Auction rate securities are backed by long term stuff that trade at some spread off of the treasury markets. Liquidation of this stuff needs to be done at levels that do not inflict too much pain on their originators. This requires low long term rates.

The auction rate market is busted. Probably forever. All of the $300 billion of assets backing these things must be liquidated. Somehow HB&B, working together and with Treasury and Fed has kept long term rates at levels that helps price the underlying assets higher than they would otherwise be priced. (This applies to all other long debt also.)

The assets underlying this paper, some of which is of dubious quality, are going to get “bid down” under any circumstances. If long term treasury yields were at 6% they would get bid down another 15 – 20%. HB&B can not absorb another $40-60 Billion hit in addition to all the other problems they have.

The halls and walls in NY are full of people working overtime to place the underlying securities with long term investors (where they should have been sold in the first place).
This process is probably moving at a good pace, thanks partly to the low level of interest rates and the recent strong dollar. After this process is finished, and as soon as more of the other CDO/SIV shit is moved offshore, I believe rates are due to make a big run. This means bond prices drop, maybe significantly.

Can anyone tell me why I should not buy TBT, the UltraShort Lehman 20+ Year Treasury ProShares ETF? This is an Inverse interest rate ETF that I have been watching since its introduction and I think it tracks treasuries as good as can be expected.

You guys ponder this question - I am off to the golf course. Have a great day!

Mr Cara

If oil drops below 110 and then below 100, do you still see the markets going to 10000/2000?

[Bill Cara note:

Lower oil prices have helped stimulate the market, unquestionably. But there will still be a major Bear unfold because of personal debts and lack of savings and credit availability of the average person, and because of the massive write-offs required by the banks and insurance companies. These bigger credit market issues need to be worked through before the equity market becomes unshackled, in my view. Only when equity prices reach a depressed state will traders feel good again about taking risk, I believe. Today they feel good leaving that risk with the stakeholders of the big financial services companies, and don't seem inclined to share it.]

Good morning.

Here are your Cara 100 Ratings Changes:

ABX - Target Price Lowered from $48 to $45 @ RBC

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

Have a great day.

QT,

My guess would be it is not oil going to $110 or $100 to take the market to $10000 but the other way around. A falling market will take oil with it.

Again, just a guess.

[Bill Cara note:

Agreed. Falling oil prices will ease the fall in equity prices. But for the same reasons other sectors will decline, so too will Energy. It's in part credit contraction and less spending, and partly shrinking velocity of money and less risk taking as people become more defensive. This is a grinding process that takes market prices through a series of lower lows and lower highs -- until, at a cycle bottom, enough of them feel that the risk:reward ratio is in their favor to put capital to work.]

Mr Cara & RosevilleBill

Thanks!

Anyone noticing the collapse of TNX? What is going on, this is a huge move?

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,
Your comments cause me to ponder...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 shoe-inn for this office. Getting a lot of 22 year old's to vote for you is not the same thing as building a constituency. It's true the man can give a speech. But Bill Clinton left us weary and skeptical of fresh faces touting "change" without specifying what change they're talking about other than raising taxes. 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.

I can't stand the failed policies of the previous 8 years any more than you can. But an end to HB and B's problems? Troops coming home? In the previous race I saw that son-of-a Nazi Karl Rove paint a war hero as a traitor and a draft-dodging coke-sniffer as a national hero. The bigger the lie, the more who will believe it. What I'm saying is, don't tie the yellow ribbons just yet, this thing 'aint over.

[Bill Cara note:

I have no dog in that fight and I have no ribbons to tie. The politics is interesting, that's all. Whoever wins in November, I do believe there will be major changes in the Administration. Most Americans are fed up with all politicians and corporate leaders, but on balance I think America is presently in better shape than Europe or Japan. As to Fannie-Freddie getting fixed; it will because it must. Without an effective mortgage market in the US, I think there would be a depression. I'm just waiting for the proposed solution and the cost of it, whether borne by taxpayers or present stakeholders. If it's the latter, then America is in good shape, but if the taxpayer and American youth are forced to bear the brunt of the mistakes and fraud caused by HB&B, I'm afraid there will be a public revolt.]

Ted Kennedy and rooms full of teenagers don't tend to be very accurate in picking the next president.

shark, read this from Bloomburg:

http://www.bloomberg.com/apps/news?pid=20601087&sid=auFdzt9Pbsrk&refer=home

It's not just first-time voters who will make the difference this year.

While I fully expect the Republicans to lie and again try to cheat their way into the White House, I just don't think they can pull it off this time.

The Rove-style politics work when people think they are doing well economically. Or can be made to think that. That's how Reagan got re-elected and Bush I didn't.

But now there is just too much incontrovertible evidence of the damage the Republicans have done. And many people are feeling real pain. No swiftboating is going to change that in the mind of voters.

AES,

Excellent daily discourse on the bond market:

http://acrossthecurve.com/

The writer,whose career began at the Open Market Desk of the Federal Reserve Bank of New York, is a 30year veteran of the bond market. He spent the rest of the time trading (Treasuries) or selling high grade fixed income product for some of the largest primary dealer firms.

QT, I 2nd (no pun) Roseville and Bill.

What we've seen most recently is probably speculation deflation. Now with economies tanking we'll see movements in oil price affected by fundamentals as well.

I concede that it's the Democrat's turn to ruin things. However, at the bottom of it all, I have a hard time seeing all the old ladies in Florida and Indiana and Ohio getting off the bus, going into the polling place and electing Barry and Michelle Obama. I just don't see it yet, but I'll let you know when/if I do.

Cara 100 Update:

GOL - Upgraded to Neutral @ UBS

TLT at a 3-4 month high, back above 94...so naturally, TBT, which has only been trading 3-4 months, at a low...not sure i would be in a hurry to pick any up...

Sharkster:

I don't think it matter's who is in office given the financial situation. They'll be hamstrung. Even if we back off military adventurism, the fall in tax revenues at all levels will be very difficult to deal with because any new initiatives will have to be financed, and that means getting foreigners to pay for it while we're shafting them with what we've been selling them already

I'm thinking about starting a position in MSFT. I think Bill is right on adding it to the CARA 100. Anyone care to come up with a number to look for as an entry point. I think the RSI is in the mid 40's at the moment.
I retired from IT a few years back. I look at the training structure on Cisco and MSFT products as one of the main reasons these systems will be around for some time.
Any time frame on having the CARA 20?

[Bill Cara note:

I haven't added Microsoft to the Cara 100 -- at least not yet. I'm too busy doing other things. Same goes for a Cara 20, which in fact would be a tradeable 20 as opposed to a quality 20 or quality 100 as the Cara 100 are.]

You may be right Nemo, but that's not the question I was addressing. We're talking about the silly season, a time of political adventurism and hot air. I am pondering the identity of the next traitor-in-chief, not his/her policy problems.

If the DOW will be falling, then why wouldn't bonds (TLT) rise? I would anticipate a flight to bonds with a falling market...

Oh...

shark- UAUA setting up...don't let the phone call that kept you from making the last departure keep you from catching another flight...

Rosevill, there is no buy signal on MSFT yet, not close at all on the monthly or weekly, in fact the weekly is closer to DZ. Why not wait?

Here's a good example of your tax dollars at work:

"The Federal Bureau of Investigation predicted the mortgage crisis as early as September 2004, but failed to do much to prevent it. The FBI is supposed to watch out for and prosecute illegal banking and other white-collar activity. By 2004, FBI officials had noticed that the then-booming mortgage business was attracting some shady dealers, and noted that, if left unchecked, the mortgage fallout could be as bad as the savings-and-loan bailout of the 1980s and early 90s. As it turned out, the cost of the global mortgage meltdown dwarfs that of the S&L crisis. The FBI blames its inactivity on a shift in resources away from white-collar crime. "Nobody wanted to listen," said Sharon Ormsby, the head of the FBI's financial crimes section. (Los Angeles Times)"

"Nobody wanted to listen" Now there's a lame excuse if ever I've heard one!

I can't buy UAUA right now. Oil's gotta drop a lot first. The phone call's out of my mind, and I blocked my phone anyway.

Didn't UAUA announce some bad fundamental news plus it's made an A-down today?

shark- and definitely don't let politics keep you from making a few bucks..

market powers down at key reversal time of 10 am. look for a potentially bad day.

DJIA 10000- now that the media has 10000 in its sights, maybe what we need to is a reversal to 12000 to set it up...

Pookster:

2004 it was all about Al Quaida and Saddam.

Regarding UAUA: Seems Vadym made a statement about UAUA/oil not working anymore. So, one has to wonder as Sharkie points out, at what price level do the fundamentals begin to outweigh the speculators trying to push the stock up. It would probably be a reasonable bet to buy for Wednesday's oil report, but I'm not sure it would necessarily skyrocket.

Si02,

I agree on waiting, the RSI on MSFT is closer to the mid and upper 50's. Also, I seem to remember that September can be one of the worst times for stocks. I just have a feeling if (when) we have another drop, then will be the time to start buying.

Everyone has their own setup(s) that they like to buy/sell into, this just doesn't happen to me mine. Doesn't mean it won't work out.

Andy Xie's comment

http://tinyurl.com/0

He used to work for Morgan and was forced out due to some comments on Singapore government.

nemo- as they say, it doesn't work until it doesn't not work ;)

UAUA- out at 12.41...since i didn't post the buy in real-time, i'll leave that unsaid...

2nd, I agree, it just seems to be getting squeezed more.

nemo - My point is the FBI is responsible to investigate and act on illegal activity, not just to shout out warnings. I'm still waiting for an arrest of a multimillionaire(s), who else could have orchestrated this mess? I don't believe simply arresting a couple of wallstreet traders is an appropriate response.

Arrest Paulson, Greenspan, and for good measure, Cheney. Then I might consider a small portion of my tax dollars well spent.

market direction- it looks to me as if HB&B wants a green close today, so they'll probably get one...(would not, of course, be trading on this...but may very well NOT be trading based on that)...

DTO - What's wrong with DTO/DXO for an oil play?

Pookster, I hear ya' and I go back to one of my favorite quotes:

Steal a hook, hang as a crook. Steal a kingdom, be made a duke.

CP- did you watch LA Confidential? they don't arrest people who bleed blue (or maybe green in this case), they take care of them...the ones that get arrested are clueless small-timers who will be well-rewarded for taking the hit...

2nd,

I am very glad UAUA did work out for you.

What industry is Buffet interested in?

In last friday's interview, Buffet said he was rejected by a Chinese company when he made a half billion dollars bid. He refused to disclose which company and what industry.

Anyone interested? And take a guess?

Browsing BNN interviews over the weekend, I learned that energy costs make up about 1/3 of the operating expense of a mine. Something to be aware of when investing in miners.

that is one hell of a reversal in gold miners...

10:05 am : Just hitting the wires, the National Association of Realtors said existing home sales in July rose 3.1%

UYG- taking a shot at 19.78...

UAUA- shark, take a look...from a longer-term perspective (maybe 3-4 days), may be headed back to 15?

TTM at 9.60...

2nd and shark,

On UAUA, yea, it's a reasonable bet (maybe more than reasonable) that oil report on Wednesday would be bullish for UAUA

Chicken, the good news about resales is that prices are coming down and buyers are nibbling. But we still have a long, long way to go before this is over.

Demand still isn't keeping pace with rising inventories (now due to foreclosures). And mortgage rates (if you can qualify for a loan) are not helping the affordability equation at all.

apollo7 - I'm sure it wouldn't be be LDK or JASO... These are both worth more than $500M. How about CSUN?

Shark,

As a life long conservative I must say that I see very little difference in either party anymore. On the truly important issues there is only perpetual sparing in order to make us think they are earning their great pay packages. (except for a few members who have little power)

Phil Graham correctly identified our problems as imaginary. Obama imagines "We are (he is) who we've been waiting for!" and that he can/will "change" things.

McCain's lack of imagination regarding the economy promises "change" will be all that is left in our pockets.

I think the Republicans (wisely) have written off the next four years a loser for whomever is elected and we'll possibly see a one-termer like Carter's time.

After 70 all of life is re-runs, but Americans have short memories and seem ever hopeful. They watch American Idol while more workers become Americans idle.

Grym,love your play on words. Sadly, it is too true.

Throwing it out there:

It seems the solar stocks have decoupled from the price of oil at the moment. Perhaps they'll trade more on fundamentals. Having said that, if oil does break downward resistance, does it resume.

The same people disparaging Senator Obama now voted down Gore and Kerry. If you think there is no difference between Democrats and Replectocrats, then vote for McBush again.

David, my man...what was your sell limit, 13.30? it hit 13.24...yet another reason to get up early...

wouldn't that be the ultimate rerun- 2008-12 a replay of 1976-80...

Chickenpookie,

I am not sure. based on the time line, he won't be interested in energy stocks as he wants to buy something cheap. at the time frame, energy stocks were hot. And if he wants to play energy, why did he sell out PetraChina last year.

I am thinking about more strategic assets.

I have no clue right now. But I am curious why the CEO rejected his bid? I think it is a political reason. He made too much money one Petra China. Chinese is not happy about it.

"As a life long conservative I must say that I see very little difference in either party anymore."

I completely disagree. But I'm not surprised it is getting play now that the neo-conservatives have so thoroughly balled things up.

Aside from the fact that the Democrats have been mau-maued towards the center over the past 30 years, this argument really isn't true at all.

When I think back on how close we came to having Al Gore as President in 2000 (and how at the time I dismissed the stolen election by thinking that Bush really wasn't that different), I now despair at what a huge turning point this was in recent history. A course that it will take many, many years to correct.

True conservatives would have to agree there is, in fact, a big difference.

[Bill Cara note:

Whether you are conservative, liberal or centrist in your general view of the world and how it should be, I think it matters less than being on a team that gets the job done. Look at the US Olympic Games B-ball team. No matter what the talent level, had they not gotten together three years ago and worked together with team goals and objectives, they would not have won the gold. How do I know? Because the players themselves said it. I think the winner in November will be the candidate who most impresses the US voter that he is a team leader. At this point I do give the edge to Obama because he is the most inspirational orator among the candidates, but great speeches may not be enough to get elected. The public's perception of teamwork is what I think will be the critical factor in November.]

UAUA- scaling back into a half position at 12.69...

Both sides of the political arena have skeletons in their closets and their effectiveness is mediocre at best. Nothing can happen until the lobbyists are all lined up and shot, and politicians start working for the people, as the people expect them to.

You can vote for McWhomever, I'm writing in Ron Paul.

This could be the "start of" the sell off. We are sure not testing what was support before.

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

Disclosure:Qid/TWM/SRS/TSO [<-- will dump it Wednesday]

apollo

I dont think the link to Andy Xie comments is working.

off to an all day meeting- exiting UAUA at 12.65, UYG at 19.59, TTM at 19.53...taking the losses and back to 100% cash...

While the correlation between USO and UAUA has dropped slightly, it it is still there. The correlation since Aug 1 was -0.94, in the last 10 days it has been -0.77.

For those interested in market correlations, here's a correlation table between oil, gold, silver, currencies, and the major markets/ETFs: http://tinyurl.com/6o4s6a

Correlation map shows the relationships graphically: http://tinyurl.com/3jdtc2

Correlation is very useful for hedging and diversification. You can see from the tables above that there are clear high correlations between currencies, oil, gold and our friend UAUA which is quite a popularly correlated fellow with many friends and enemies.

Ooops, don't know how to make.

Don't blame me, Bill. At least I try.

Here it is.
http://xieguozhong.blog.sohu.com/97530446.html

SiO2,

Is there somewhere to access the tool that creates the tables?

apollo7 - I see your point, the Chinese must believe Buffett is only interested in making profit for himself, and would not bring value for the long term. Is Petra China now better off with or without Buffett? Was the relationship beneficial? I also hear Chinese investors are trading only price, without interest in investment. Do you think this is true?

apollo7 -> tinyurl.com

yes, i think it is very likely true. most investors in China have no clue about compounded return. They want quick bucks.

There is one guy (money manager) called Zhao, Danyang. He adapted Buffet's style and made a huge return since 2005 to 2007. Last year, he shut down his funds and returned the money to his unitholders and said there was no value in China market.

Last month, he bid a charity lunch with Buffet. Do you know what is the price? US$ 2M!!!

I seriously doubt whether Zhao is a true value investor. I think he is a marketer. I won't invest in his fund.

Hehe... you can see how cheap I am.

You guys need to appreciate something...

Fannie and Freddie are for-profit government agencies that are absolutely going broke, as in out of business. Barry Obama is going to do the bailout of all bailouts which should destroy the value of the U.S. Peso and cause Kaimu's gold to go to 2000 bucks an ounce for starters. The country is dying, H B and B's business model of money mismangaement is totally broken and I heartily disagree with Bill that this fall will bring positive changes. This fall will bring nevative changes, those which I've stated above. God help this once-great nation, we're going under like Rome, Like Greece, Like Egypt. Adios American Dream.

And I don't want to hear ANYONE talking about buying real estate unless it's a million dollar house for 300 thousand.

Sharkster:

I'd never buy a house. I think there'll be plenty to squat in soon.

We need to let housing utterly fail and cause million dollar houses to be sold for 100 thousand cash. We need to complete the bankruptcy of the American wageslave and bleed this sick financial system of the infection that it suffers from.

We need to bring affordability back to housing and nooses to the government traitors who work against us.

your right nemo. what I meant was a million dollar house for a hundred k cash.

"True conservatives would have to agree there is, in fact, a big difference."

I consider myself more conservative than most. But what's the diff? Both parties overspend what they don't have. Both parties say what they have to to get elected. Both parties have scandals. They may say different things, but they have acted the same over the last 8 years.

thoughts on Pres. McCain -

I'm thinking McCain will be a one-term president, not trying to please anyone but himself. (it's hard to imagine him running for a second term at age 76!)

Maybe in the matter of Wall St.'s misdeeds, this will be good. I suspect Obama might be swayed by fast-talking Wall St. Yalies and Harvard grads.

McCain possibly less so.

On the other hand, McCain comes from a long line of military men. He may try to outdo his dad's invasion of the Dominican Republic and "bomb, bomb, bomb Iran".

Having crossed various cultures, Obama might know better how to avoid war in dealing with "the other side".

What do people think?

bkgrnd: NY Times had an in-depth article on McCain's wealth - it's all hers! She owns 10 residences, 5 rentals, 5 of which they occupy. She's absentee owner of the Bud distributor which has 2/3 of the beer market in Arizona. She takes home about $5M/yr. She financed McCain's key first electoral races.

and we all know people in Arizona don't drink any beer...much....(prior to going out in the desert and shooting their fully-auto's like they was Rambo or somebody)

Especially for friends of The Band
Take a Load Off, Fannie....
http://tinyurl.com/6kwusq

I'm not sure what the fuss is about McCain's money. It's common knowledge it was his wife's. I get a kick out of everybody's focus on his comment on the number of houses he has. He probably doesn't care. They're probably hers, and the same accountants that take care of the distributorship take care of all those issues.

Of course, because the stock market's activity bears little or no relation to fundamental realities, FRE is rallying big time today.

Interesting on UAUA:

Oil should be down, but the $ is, so oil is up, therefore UAUA is going down.

I agree Nemo,

Ya know what I call a wife who has Cindy McCain's money and (once) looks who weighs less than 180 pounds?

I call it a screaming good deal, don't you?

APWR is looking really good from a long term perspective right here.

I TOLD you boys this market's headed south in a handbasket.

2nd...what happened to H B and B's green close?

Did something come across the newswires? S&P just lost 5 points in 5 minutes.

Oh yeah, no doubt about it. McCain hit the jackpot on that one. They've been together for along time, so they must have a good relationship.

Mmmmmmmh...that really makes me question his intelligence. Plenty of money. A beautiful wife with whom he gets along, and he wants to be Captain of a sinking ship?!!!

in fact today could be the thousand point-down day

black monday

Re: CARA 100

On friday, Teekay LNG Partners TGP gave a Buy signal, after several days in the accumulation zone. (See Daily Report of Saturday.

Started scaling in at 22.34 on Friday.

I'm taking Bill's advice about staying focused in these volatile markets. This is critical for me as manager of my own retirement portfolio. It's taken me over a year to break free of bad trading habits/practices, i.e. NO discipline, NO plan. Still suffer from impatience > early to a trade > 'buying on weakness' has led me astray > nothing new under the sun here; I'm sure many can relate.

So I stick to my knitting and that is the CARA 100 and precious metals.
Despite the news of TGP restating earnings for five years back, I feel less discomfort on this buy than I would on
the other buy signal on WFMI. Not impressed with it.

I thank all of you here for sharing and especially
Bill for the cogent advice and perspectives I've found in recent WIRs. It's all a tremendous antidote to the flood of news and views out there.

cheers from SoFla...

APWR is at it's 200 day. Maybe you want to see if it bounces off and the RSIs head higher. MACD is still downward. A/D and stochastics also.

To me the next level of support for $INDU 11340ish.

kp84,

You might want to check out his WIR and his comments on shipping. I think he thinks they're in trouble.

Re: TGP,

I saw it break multi-year support at 23 and view it more as a short for the short term as it doesn't seem to have bottomed yet. It spent a month and a half churning at 23 so the break there seems significant, although it could be a fakeout breakdown.

Mmmmh, interesting too. Oil up (on $) but oil service companies down.

shark - let's keep the discussion rational here. we all understand you think everything is going to hell in a handbasket, but let's look at things from a trading perspective...

i'm scaling into DTO. i considered APWR because of it's oversold status, but i think oil is set for a precipitous drop due to demand destruction in the BRIC countries. DTO is the inverse of USO.

Team,

I respect your perspective. Rather than respond directly to your comment, I will let the market speak for itself. However, the implication that my comment isn't rational will be proven wrong by the market and by events.

Dear teamonfuego:

If I remember, sharkster is Italian (as am I so it's not prejudicial) there's a certain emotional/theatrical level of expression that comes with the background.

Notice how the TRIN on Friday was above 1.0 until the last 1/2 hour despite the rally. It smelled of distribution in hindsight.

Actually only my mother is Italian. But as I say, half is better than nothing.

shark - your comments all day have been doomsday type comments. i think we all agree that the U.S. and the rest of the world as a result, is in a tight spot. but let's focus on the trading opportunities out there, not on ideas like "TODAYS the CRASH!" "Dow going down 1,000 points", etc.,

Yeah, you, me and Bill are half-breeds. Irish on the other side for me.

A very interesting chart for the Russell 2000.

I had loaded up on TWM last week. I just hope I have the patience to hold on for the next month or two.

http://tinyurl.com/6g3fjj

shark_attack said:

"in fact today could be the thousand point-down day"

Would the PPT ever allow that to happen ? Probably not.

-300 in one day? absolutely

-400 in one day? sure

-500 in one day? believable

-700 in one day? possible

-1000 in one day? not likely

Even if, it's not time, IMO.

ALOHA !!

I am also writing in RON PAUL ...

Look, it took two aristocratic political parties, not one, to get America where it is today ... BROKE! Even the non-partisan GAO - US Comptroller General ... the guy that neither party can influence has gone on 60 Minutes and announced the US government is essentially BROKE. The US government has been living beyonds its means for decades. You cannot spend your way to prosperity like FDR tried to do. You can WAR your way to UNITY though ...

Having OBAMA in control will do nothing. Having McCain in control will also do nothing. The OBAMA campaign finances have been run by Penny Pritzner who practically invented CDOs and bank failures. The bank she and her wealthy family owned collapsed and, shock of shocks, they made millions on the US TAXPAYER bailout(I have posted on this earlier this year). I ask you ... WHAT SORT OF CHANGE IS THAT?

This is KEY ... mark my words ... If the USA ever pulls out of Iraq or Afghanistan then Bin Laden and Al Qaeda will make another major US city smoke! They are now a hop-skip-and-jump from owning the nuclear weapons of Pakistan. This is what makes Pakistan so dangerous. Look at all the "fronts" the US military is now facing. Heck the Kremlin may as well call Venezuela "El Kremlino"! While the USA has spent trillions invading and occupying the Russians and Chinese have spent billions buying up assets and tying down production in contracts, not with a M1 tank cannon pointed at anyone's head!

Now BIDEN is suppose to have impressive Foreign Policy credentials. OH PLEASE-E-E !!! Any politician who wants to lay claim to totally failed policy, which is pretty much how its been since Korea, as an attribute is stupider than a US Voter! The only correct US Foreign Policy should be to not have any! Before you write that off as being a crazy idea go read the issues and the resolution which were the lyrics for the Marine Hymn and note the verse about "Tripoli". The Barbary Wars were our first incursion into the Middle East on behalf of "US trade" and that dates back to 1801. Why should US Foreign Policy be any different now? Back then our government knew the folly of "occupying" anything!

OBAMA ... McCAIN is not the choice? Neither is the choice in Nov 2008, Reps or Dems? The true choice is HB&B or HB&B?

Mayer Amschel Rothchild(founder of the banking dynasty that financed WAR) could have told you that over 230 years ago. IT'S THE MONEY STUPID! Why can't US Voters figure that out?

Actually, aren't there breakers on how much the index can drop?

I wonder what teamonfuego thinks of Kaimu :)

It is a little weird how much Kaimu and
I agree about stuff.

I just threw out the number 1000. If it went 500 I would feel vindicated. Actually if it closed 250...And would somebody please make that fat cow Sue Herrera SHUT UP! Her lips are in perpetual pucker from kissing the fanny of the securities business.

nemo, Excel can be used but it requires a couple of external packages. I am working on a Google version, but it has a ways to go.

If you, or anybody else, give me a list of stocks I can easily generate the correlations.

moab

TRIN looks real ugly today the way it is climbing. Lookout if TICK starts to spike downwards especially towards -1200, there'll be blood in the streets today.

Thank you Sio2,

On Naked Short Selling:

AgFeed (FEED) Addresses Naked Short Sellers - Stock up 17%

AgFeed (FEED) is a small cap Chinese company that today took an unusual step. It's stock is up 17%. Now someone might say this is due to their reiterating guidance but as we have seen in this market that means nothing. They bought 4 pig farms - again I find that highly doubtful for a pop of that magnitude. But they put the naked short sellers on notice, and as those locusts scrambled away the stock is popping. It is quite a sad statement really - again I don't mind, nor should any investor mind, when they make a bad stock selection or bad news comes out and their stock drops. But as I watch some of these stocks on the regulation SHO list sit hammered for months on end, and then I watch when a company actually drops a warning shot against the naked short sellers - to see how violently the stock reacts - this shows you how 'rigged' things are in the small cap world especially. (although naked short selling can be done anywhere to any stock - it affects smaller names disproportionally) If you don't have institutional support on the long side you are just a plaything for certain "pools of capital".

I usually don't bother with these things and frankly have found most companies who comment on this sort of thing to be making excuses for bad execution. And maybe I am making excuses but to see some of these small companies shoot lights out, and continuously retract in price makes one scratch their head. And why is a company like this gaining 1/5th of their market cap almost instantly just by saying these sort of statements?

* AgFeed has received numerous calls from concerned shareholders over the recent stock activity. AgFeed is not aware of any negative events that could impact its fundamental business or financial projections.
* AgFeed has noticed however significant discrepancies between the shares that appear to be listed the electronic DTC system and the shares that actually exist on the shareholder records held by AgFeed's transfer agent -- potentially as a result of heavy naked short selling in FEED. In contrast to an ordinary short sale where the seller borrows a stock and sells it, with the understanding that the loan must be repaid by buying the stock in the market (hopefully at a lower price), in a naked short sale, the seller doesn't actually borrow the stock, and fails to deliver it to the buyer. Last month, the Securities and Exchange Commission (SEC) said that it wants to ban the practice of naked short selling, and it announced a temporary ban on naked short sales of certain company shares. The SEC said that the practice is sometimes used to manipulate the price of a company's stock. SEC officials said that this procedure may have been used to drive down shares of various companies' price. The seller continuously hits the bid price and seeks to buy back shares from nervous shareholders who may sell simply because of a declining market price.
* In this regard, AgFeed believes that it may be a victim of this practice and has duly notified regulators, including the SEC. Meanwhile, shareholders may contact their stock brokers and request that their stocks not be used to assist short sellers.
* Songyan Li, Ph.D., AgFeed's Chairman, commented: "Contrary to false market rumors, AgFeed's management and board members have not sold one single share of our stock. Our role as managers is to execute on our business plan and continue to deliver superb financial results. Our responsibility as corporate officers is to ensure that the best interest of our shareholders is protected and not continue to be hurt by stock manipulators. AgFeed is fully cooperating with regulatory agencies and shall provide full assistance in any possible investigation of these market manipulative actions."

Stock up big time on such news? Coincidence? I think not. But extrapolate this across hundreds if not thousands of little no name companies that struggle to see the light of day - especially the ones executing and one has to question why we are not allowed an even playing field. It seems only a blockbuster announcement, which leads to a rash of short covering at once can shake these folks off.

Again - normal short selling = good. Useful. Needed. Naked short selling = against rules, but allowed since rules are not enforced.

On APWR:

A-Power Energy (APWR) Earnings/Guidance Remain in Line - Wind Business On Track

A-Power Energy Generation (APWR) will disappoint the "momentum" crowd today as it simply reported in line numbers for its quarter and did not raise guidance any further. So I'd expect a rash of them to exit to move on to the next gamble Tuesday morning. This remains a 2009-2010 story as the wind business looks to be on track and to add meaningful revenue at that point, while their core business remains firm. Backlog did dip from $700M to $650M, but the increase from December 07 to April 08 was so immense ($400M to $700M) this is predictable as this is still quite a small company with lumpy type of contract signings. This is over a year and a half worth of business and I expect more contract announcements over the next 6-9 months. But this is a market of 6-9 hours, if not 6-9 minutes so the stock most likely won't do much. All in all solid, but not enough to get the type of excitement necessary to draw in any hot money.

Ironically if there was a profitable American "future wind" company such as this, it would probably trade 3x the valuation on hype alone. We do see what appears to be a temporary hit to gross margins due to what stage they are in current projects and some increased expenses for hiring and listing on US stock exchange.

EDIT: on conference call guidance of $2.00 (with upside to $2.50) for 2009. Excellent CFO. Very conservative guidance the $300M Thai contract is NOT in their backlog as stated today. They really should put this stuff into the press releases because it's where most people get their info. Even more bullish after this call.

* For the three months ended June 30, 2008, A-Power’s revenue was $65.7 million, an increase of 21.5% from $54.1 million for the three months ended June 30, 2007. The increase was due to continued growth in A-Power’s core distributed power generation business and the relatively larger size of projects under construction compared with the prior period.
* Gross margin decreased during the three months ended June 30, 2008 to 12.1% from 14.5% in the same period of the prior year. The decrease in gross margin was primarily due to costs that were incurred in the construction phase of projects during the second quarter. Once these projects progress to equipment delivery and installation phases, gross margin should return to approximately 14%.
* Net income for the three months ended June 30, 2008 amounted to $6.2 million, an increase of 3.9% compared to $6.0 million for the three months ended June 30, 2007. Excluding a stock option charge of $280,000, net income stood at approximately $6.5 million with a net profit margin of approximately 10% and EPS of approximately $0.20.
* General and administrative expenses amounted to approximately $2.0 million for the three months ended June 30, 2008, an increase of approximately $1.1 million compared to approximately $0.9 million in the same period of the prior year. This increase was primarily due to the addition of key technical and managerial talent and direct expenses associated with being a publicly listed company in the U.S.

Holds guidance firm

* Mr. Jinxiang Lu, A-Power’s Chairman and CEO commented, “As expected, our financial results continued to accelerate during the second quarter and based on the projected timelines associated with our ongoing distributed power generation projects and wind turbine production, we are on-track to make our 2008 earnings guidance of $35 to $45 million.

Update on wind business

* In July, we completed the construction of our 310,000 square foot facility in Shenyang, China and announced our plan to commence construction in October of this year on our second wind turbine production facility – a 290,000 square foot facility strategically located in Bayan Nur City, in the heart of Inner Mongolia’s wind belt. We expect to complete the construction of this facility in July 2009.
* These two facilities will have a combined annual capacity to produce over 1,800 MW of wind turbines. With this capacity, our licensed foreign technology and our strong government support, we expect to become one of the leading wind turbine producers in China.

Component sourcing

* I am also excited to report that we successfully sourced all of the components necessary to produce the 2.5 MW and 750 kW wind turbines from suppliers based in China and Europe. We are currently in the process of finalizing agreements with these suppliers and are having components for the first ten 2.5 MW wind turbine components shipped to our facility in Shenyang. As a result, we expect to begin producing the 2.5 MW and 750 kW wind turbines at our Shenyang facility in the fourth quarter of 2008.
* We also expect to begin turning our previously announced LOIs for 380 of the 2.5 MW wind turbines into firm purchase orders and will make announcements as soon as these purchase orders are received.

China's energy situation

* During the first six months of 2008, power supply shortages continued throughout China and Southeast Asia and widespread blackouts and brownouts occurred even more frequently than in the previous periods. This reflects the need now, more than ever, for local power generation to create an efficient and cost-effective power supply throughout China and Southeast Asia. With this substantial market opportunity and our proven success in China, and now in the international market, we feel our distributed power generation business will continue to accelerate.

Re: TGP
nemo, moab
Your points are noted. From the purely technical chart reading side, this is where my weakness lies, thus I tend to favor the RSI AZ/DZ model. Obviously, there is more to it than just that. So I chose a small position to trade and with a tight stop.

As for the macroeconomic view, is LNG and LPG demand forecasted to decrease? Yes, there is declining annual growth projected
by EIA.
I look at the supply of ships as well. There are newbuildings and there are demolitions.
There are also current problems with a particular containment system on ships. This takes ships out of the market.
TGP ships do not appear to have these problems.

Management just raised the dividend in the face of the restatement fiasco.
They are also stating that further increases are warranted based on new fixed, long term contracts.

Thanks for the input. all is appreciated.

nemo - i would be significantly more bullish on APWR if i thought oil was going to stay around the $115 level. but with the world entering a recession on a whole and the whole thesis for strong oil being predicated on unmitigated demand from the BRIC countries, i can't buy into that. an interesting pairs trade could be long APWR and long DTO.

Nemo, thanks for the memo on FEED.

I'm long FEED, btw. Pork is THE meat of choice in China and that market is quite fragmented. FEED is building an integrated business - starting with premix feed and now purchasing hog farms.

Teamonfuego,

I think APWR may make sense... also long term, but it will get hurt short-term if oil continues to go lower...it may go possibly down around 12.00. Weekly and Daily charts looks like more downside to come.

If Paulson's got a Bazooka in his pocket he shouldn't let Barney Frank know about it.

nemo,

Any idea what AgFeed did to "put the naked short sellers on notice" that other companies hammered by naked shorts have not done?

Obama's embrace of Pritzker is, in a nutshell, why I will have nothing to do with this guy.

The same goes for many of his other economic 'advisors'

John Corzine - just so no one forgets that Goldman Sachs has their hooks deeply embedded into Mr Obama's cheek, too. (Goldman is also the top contributing organization to the Obama campaign, according to OpenSecrets.org)

Eric Schmidt - representing the 'let's help a totalitarian government repress, jail and kill people for cash and market share' contingent. Yeah! Don't be evil, people!

And Joe Biden - Don't forget, the American people have seen Biden up close and personal in more than one presidential campaign. We spell BIDEN L-O-S-E-R. Nice choice.

Once again, the Dems will muff a 'gimmee' and we'll get 4 more years of burgeoning fascism.

Just ask all those angry, irrational Hillary supporters. They don't really seem to mind eternal war, bomb, bomb, bomb, iran and the rest of it, after all. And that, in a nutshell, symbolizes why she is completely unsuited for the job, too.

On Agfeed:

http://biz.yahoo.com/iw/080825/0427752.html

More specifically:

"Commenting on Recent Unusual Market Activities

AgFeed has received numerous calls from concerned shareholders over the recent stock activity. AgFeed is not aware of any negative events that could impact its fundamental business or financial projections. AgFeed has noticed however significant discrepancies between the shares that appear to be listed the electronic DTC system and the shares that actually exist on the shareholder records held by AgFeed's transfer agent -- potentially as a result of heavy naked short selling in FEED. In contrast to an ordinary short sale where the seller borrows a stock and sells it, with the understanding that the loan must be repaid by buying the stock in the market (hopefully at a lower price), in a naked short sale, the seller doesn't actually borrow the stock, and fails to deliver it to the buyer. Last month, the Securities and Exchange Commission (SEC) said that it wants to ban the practice of naked short selling, and it announced a temporary ban on naked short sales of certain company shares. The SEC said that the practice is sometimes used to manipulate the price of a company's stock. SEC officials said that this procedure may have been used to drive down shares of various companies' price. The seller continuously hits the bid price and seeks to buy back shares from nervous shareholders who may sell simply because of a declining market price. In this regard, AgFeed believes that it may be a victim of this practice and has duly notified regulators, including the SEC. Meanwhile, shareholders may contact their stock brokers and request that their stocks not be used to assist short sellers.

Songyan Li, Ph.D., AgFeed's Chairman, commented: "Contrary to false market rumors, AgFeed's management and board members have not sold one single share of our stock. Our role as managers is to execute on our business plan and continue to deliver superb financial results. Our responsibility as corporate officers is to ensure that the best interest of our shareholders is protected and not continue to be hurt by stock manipulators. AgFeed is fully cooperating with regulatory agencies and shall provide full assistance in any possible investigation of these market manipulative actions."

Bill,

I just wanted to express my appreciation for this week's WIR. Reading it is an education! However, I feel that I still have a very long way to go in trying to absorb your perspective on markets, but at least I could begin to faintly hear the music above the voices and the clanging of plates--viz,

www.youtube.com/watch?v=fqBaFGlLqFE&feature=related

Regarding the US vs Europe, I have a hard time seeing how Europe could be at a disadvantage to the US. They have functioning infrastructure, consume their own products, do not have to channel all their surplus into the military, run relatively small deficits and, in fact their economic problems seem to be the direct result of having been duped by American toxic waste and trying to rescue the dollar.

I like Ambac right here

shark - i'm the dummy that bought ABK at $1.40 and sold it at $2.2. then bought it again at $2.20 after it went up, then down to $1.50 and sold it at $2.00. and i bought a lot of it....

i'm hoping that will come down to the $2 range. keep in mind that there is a TON of uncertainty around those companies from investors perspective so it is bound to be EXTREMELY volatile. i think long term this will be one of the survivors that can return 20 times your money.

RE: TGP
I received a very nice dividend 2 weeks ago on TGP. Around 9% (I can't get that at the bank). TGP is going to raise 3rd quarter dividends. I read on their website they are ahead in the drydock issues. If I recall only one ship needs to be drydocked till the end of the year. I am expecting to hold this stock for awhile. I also hope they (Not sure who all they are) build the LNG pipeline from Florida to the Bahamas. Teekay will be in the mix if it happens.

RosevilleBill,
I might be able to help you with your trading. I am in the Nevada City ATT yellow pages under Handyman. Barry

TGP

There are two LNG projects in the mix in Florida:
Port Dolphin, backed by Hoegh LNG, and Calypso Deepwater, backed by Suez Energy.
Both would be offshore mooring points for discharge to an underwater pipeline running into Port Manatee and Ft. Lauderdale,respectively.
The cross-Strait pipeline plan from Bahamas has fallen off the radar. Don't know about that one.

The NIMBY's are vocal and Gov. Crist gets to weigh in on the outcome.
Both projects' mooring points would be out of sight of any beachgoer standing on the shoreline.

"If Paulson's got a Bazooka in his pocket he shouldn't let Barney Frank know about it."

Q: Why doesn't Barney Frank use bookmarks?

A: He prefers bent over pages.

Sorry, :^)

Oil dropping, UAUA dropping.

++AOD @ 11.76 - Trading ex-div today w/ 18% yield

DTO - establishing position @$33.26

Pookster,

You think oil is going up?

DTO- double short on USO!

number2son,

If you consider Bush to be a conservative, or any of the current prominent Republicans we are working off a different song sheet.

Various administrations of both parties have brought us to this sorry state of the Union.

Bush is NOT a conservative, just as Bill Clinton is not a liberal. In my view a conservative must adhere to the Constitution, first and foremost.

Even his economics are not conservative. The people touting Free Markets, Free Trade and against "protectionism" are not conserving our jobs, our lifestyle or our heritage.

There is little or no national loyalty — only a quest for big financial gains for a favored few.

I would gladly vote for anyone — of any party —who I could believe would work for the goals listed in the Preamble to the U.S. Constitution.

chicken - good to see someone else on the trade with me. i got in this morning. i almost bought it at $30 on friday morning but got scared and wanted to make sure the trend of lower oil was in tact.

Guess I'll weigh in on the earlier political discussion. I voted for Bush (both actually) and on GW's watch my husbands GE job got outsourced to India. Our lifestyle has changed dramatically because of this. I'm independent politically voting for the candidate, his character and his ideas.

Barack is solid, he's tenacious, smart as a whip, quiet, thoughtful and will move forward in the global community, not stay stuck in old ways (this coming from a senior citizen). The old ways are not the best ways in a global environment. He's about negotiation not global bullying. He doesn't practice gotcha politics unless dragged into it and defends his positions. No one's perfect but he fits the job at this time. jmo

"If you consider Bush to be a conservative, or any of the current prominent Republicans we are working off a different song sheet."

Grym, I agree completely with all that you wrote.

Re: Posted by: number2son at August 25, 2008 9:23 AM [link]

I so agree with you.

It must be that Tropical Storm causing oil up. Place your bets!!!

teamonfuego - I will be playing DTO as oil sinks to $80/bbl. then switch to DXO. I should have started this back at $145.... Not too late though.

Bank Holiday Poem: The Dollar

Dollar! Dollar! burning bright
In the markets of the night
What subtle hand has bolstered thee
And caused the woeful buck's rally?

In what distant deep or land
Dwells the invisible hand?
Or as Europe sinks in the mire
Have euros been thrown in the fire?

Was it the ifo? GDP?
That caused the euro bulls to see?
Or was it oil? The fall of gold,
That turned the dollar bear trend old?

Who's the hammer? Make it plain,
Behind the rally, who's the brain?
Or is it just the P & L
Of the market, gone to hell?

When the market ran the stops,
And turned the dollar bears to flops,
Did the dollar start to smile,
To see itself now back in style?

Dollar! Dollar! burning bright
In the markets of the night
What subtle hand has bolstered thee
And caused the woeful buck's rally?

http://macro-man.blogspot.com/2008/08/bank-holiday-poem-dollar.html

NT,

Not disagreeing with any of your Obama specifics, but if you actually KNOW that Obama fits the job at this time as you say, then you know one hell of a lot more than I do. And I wonder HOW you know. And yes, the Ambac trade didn't work out, I lost 4 cents per share on 300 shares.

chicken - i agree with you completely. i don't see any reason why oil will go up in the near to medium term. the other economies in the world are actually worse off than the US, which is propping up the $ and china/india/etc are all slowing down dramatically.

Bill said "if the taxpayer and American youth are forced to bear the brunt of the mistakes and fraud caused by HB&B, I'm afraid there will be a public revolt."

If it comes to a revolt, you WILL see me on the mall in front of the nations capitol building with a bag of feathers, a large bucket of tar, and a cotton floor mop. I promise you that! I'll be the one wearing the bright red shirt.

28 billion in Christmas money for the good folks at HB and B in 2007.

Wonder what they'll have the BALLS to pay themselves this year while they dip further into the public trough?

"David, my man...what was your sell limit, 13.30? it hit 13.24...yet another reason to get up early..."

2nd_ave, my current position in UAUA is small (2.5% of my portfolio), and I have raised my limit to $14.30, following Bill's idea about dollar going up and commodities going down. At this point, UAUA is just a hedge on my PM positions, and so I can wait a little longer before taking profit. If it falls to 11.50, then I'll double my position, and will place a sell limit order at $12.50 for the shares I'll buy at $11.50 (in the spirit of keeping a core position and trading around it).

I am willing

Shark, well for one thing I have lived through many political campaigns and candidates going back to Eisenhower. I read a lot, online & offline, of all types of stuff, not just material of any particular political persuasion. Of couse gut-level intuition from a lifetime of experience comes into play.

So, from our current choices, he seems like the best one to move us forward. We are mired in another Vietnam type war, our resources are depleted, we owe foreign countries money to pay for this war. I think there's something wrong with this picture.

I like and respect Sen. John McCain, but he's too old (trust me I know about this) and he's too much like President George W. Bush in many areas.

I want to add one thing. I don't think anybody will easily persuade Barack Obama, he holds his cards close to the vest and he plays his game first and foremost as he weighs the options. Kind of the opposite of President Bush who listened too long and too close to advisors, like Cheney, Rumsfelt, Rove, etc.

I hope you're right. But without any specifics I remain unconvinced. All Obama's promised to do is raise taxes on those making over 200k. I feel like we've been here and done this with Bill Clinton and I don't want a repeat.

Sold SKF @ 131.20

Ratface Bush had his day on 9/11, and he blew it by not taking out Bin-Ladden + 100k other things done wrong by the administration since. I can only think of one positive thing accomplished. The travesties were aided and abetted by the DEM party also, IMO. If a presidential candidate were to take some hard sensible policies and make them public (as Ron Paul has done), that's when I'll start listening. So far, Obama's just another one of the pretty boys on Capitol Hill.

Entering a "hedged" trade: buying SWC at $6.87 and UAUA at $12.10, placing a sell limit order on UAUA at $13.10 and on SWC at $7.80. If the USD continues to move up in the short term, the UAUA trade should come through. If it reverses, the SWC trade should come through.

Long term, I think buying SWC near its 5-year support level is safe, especially given the fact that it held during the recent death plunge in SWC.

I must say, despite 8 years of failed policies and a look-alike/sound alike in McCain, I find little genuine enthusiasm for Obama among my more democratically minded friends. In '92 a Clinton win was PALPABLE and clearly in the cards by July of that year. I feel no similar destiny for Obama. He acts as though it's his to lose, and I feel it's just the opposite. America is still a deeply racist country, and I don't yet feel that the pendulum has really swung Obama's way, save for the young and people of color. Of course, Kaimu's out canvassing his neighborhood drumming up support:)

"America is still a deeply racist country, and I don't yet feel that the pendulum has really swung Obama's way........"

IMHO, this is why McCain got the GOP nod. He appears to be the exact opposite of Obama.... very white and old.

The GOP is banking on America being a racist nation.

Regards

For anyone that would like to review Senator Carl Levin's response to an objection of the recently passed Housing Bill follow the link. It is quite detailed.

http://tinyurl.com/5sslgc

BH - Precisely my point... Why aren't the real issues being discussed? Wow, now there's another example of how our political parties think and act. An election solely based on ethnic/age/gender biases. How truly pitiful.

NT, Shark, Chickenpookie,

I actually voted for Obama in the primary when he was up for the Senate. (This is the only time I ever asked for a Democratic Ballot.) I knew little about him, but as usual the other guy was not someone I wanted, so...

Since then I have seen nothing from him, just heard him — talk and no action. If he has done anything for those of us in Illinois it is a well kept secret.

I am less impressed the more he says. I think he is just another slick politician who has always been working on his next move without paying much attention to the job at hand. I hope I am wrong because I think he is the most likely winner.

The media, political commentators and I would guess Las Vegas give him points for style, money raised and appeal to various voter segments, but winning this race is not the test. I have read all the candidates website promises and listened to what they say. To me it looks like a typical "tell the people what they want to hear" campaign with little practical regard for what is affordable, wise or can get through congress.

I just think our problems are big enough now that we need a shoot-from-the-hip consensus-builder, a Teddy Roosevelt type. This is a bad year for the social engineers and media elites to try to racially integrate the top office, IMHO.

"Wonder what they'll have the BALLS to pay themselves this year while they dip further into the public trough?"

are you kidding- you are talking about people whose sole purpose in life is to make money, and they are surrounded by like-minded colleagues...they don't work 40-hour weeks, they work 40-hour days, and if/when they have the time to consider those of us outside the profession, it might be to express a fleeting sense of pity at the lack of intellect and/or ambition that keeps us outside their polished windows...their goal is not to rob the public, it is simply to outperform the guy down the hall; if it involves dipping into the public trough, it's the means to an end...it has nothing to do with having the balls to rip someone off; they're simply using the most effective weapon (at any point in time) in the competition to win...

if the next president decides to get serious about change on wall street, he could do worse than resurrect spitzer from his all-too-early retirement...we don't seek perfection even in our on-screen heroes, i don't understand the need for one in real life...spitzer can nap in the bed he made, but he needs to hire someone to get him out of that hotel...

...it should also be noted that those whose sole purpose in life is to make money are useful citizens when under proper direction; we NEED people like them...

What Spitzer pulled on Joe Bruno was reprehensible and disgusting. I don't care how white everyone thinks Spitzers hat is, he showed his hand as a thouroughly amoral punk.

BTW, Bruno is, in my book, complete trash as well. It doesn't matter.

have you wondered why the best bosses defer to their employees, frequently and publicly extolling them and often standing in their (employees') shadows? or should i ask why the best string-pullers defer to their puppets? if/when the time comes to come down on wall street, spitzer (like him or not) is the one chess piece that can get it done immediately...david walker tried it his way and it resounded NOT with the public...

David- fyi "Stocks with aggressive September option implied volatility & liquid volume: FRE September volatility at 263, FNM-260, LEH-152, LCC-148, DAL-147, NWA-146 UAUA-142 according to Track Data"

selling puts on UAUA may be the way to go...

...iow, i don't know if the guy in the white hat can do it...sometimes you have to spring the guy in black to clean things up...the CIA has funded enough black hats in S America and Africa, why can't the white house do the same?

Anyone care to comment on the use of RSI numbers on stocks outside the Cara 100? Specifically I note that CDE and GSS were "buys" a few days ago. I have had positions in each of these in the past, but none now.

using daily/weekly/monthly RSI numbers to gauge AZ/DZ ranges should work with any stock, IMO...of course, it's only one tool among many- if you agree with bill's larger context, then buying miners might still be premature..but probably not by much...

Would RSI numbers be expected to work with ETFs? I'm just playing around with this and also find NLR had a buy signal 3 days ago. I have no position in this.

IMO oil will probably be static this week to positive until the new storm in the Caribbean plays out. Which I would think is negative for UAUA

re:RSI numbers.

Works great with ETF's, bonds, equities,etc. Makes sense - buying anything at a 7 day/week/month low increases probability it'll go up.

Still need to use other tools to gauge the upside vs the downside.

For instance the miners are giving buy signals but my indicators aren't showing much upside at this point. JMO.

Thanks, 2nd_ave and bsi87. I also noted NAK as another miner that met the criteria for a buy 3 days ago, but that looked like catching a falling knife. Surprisingly (for me, anyway), the signals would have worked, at least in the short term.

RSI - enough on its own?

It's a great indicator, but it ONLY considers price vrs. its own price history.

MACD, and stochastics are also price-only indicators. On stocks where volume has meaning (probably NOT large caps subject to program trading, or most Cara 100's) I think volume trends HAVE to matter.

For example, I'd have more confidence in a stock whose RSI 7 daily rises above the AZ on MASSIVE volume (2x avg) versus one rising on LOW volume (1/2 avg)?

As Tim Ord says, volume is energy, the energy which propels a price move.

I wish the Buy and Holders would learn Bill's objectives -- along with one more: know when you're going to sell before you buy. And then actually sell there. There's a reason for doing so, and its a very, very good one.

People NEVER seem to do that, and traders consider it obvious. Its NOT obvious to those moving to trading from a Buy and Hold environment.

kents

I have been looking at buying TGP. The RSI is signalling a buy. My question is: should I be waiting for MACD to cross the zero line before buying - at the moment the MACD is away below the line.

One of my colleagues at work must have leaked to the powers-that-be that I have an interest in stocks/trading. Now I find myself in charge of the "Trading Club" at our school. Given that I am just a neophyte at this game myself, the thought of what I could teach these senior high school students in the short space of one semester is starting to fill me with dread.

Anyone have any thoughts on what the focus of 15 short lessons should be? What do you wish you had been taught about trading at the tender age of 17-18?

[Bill Cara note:

I too had quite an experience with teenagers this evening. We sat in seats JJ56-57 at the Bassett Theatre at the Metro Convention Centre in Toronto to watch the Final Four of Canadian Idol. Such a headache! The young girl who sat in front of me -- the one with the three foot sign screaming, "I love you Drew" was a bit over the top. But what the heck. We are only here once -- should experience everything. But we gave away the tickets to go backstage with the judges and entertainers in order to come back, relax and watch the show on TV. Now, if I can just clear my head, I'll be ready for the Daily Review in the morning.]

re rsi, macd, and volume

http://stockcharts.com/school/doku.php?id=chart_school:trading_strategies:multicollinearity

I interpret that as when momentum fades the trend is in doubt and volume confirms. jmho

Tbar says:
"re rsi, macd, and volume

http://stockcharts.com/school/doku.php?id=chart_school:trading_strategies:multicollinearity

I interpret that as when momentum fades the trend is in doubt and volume confirms. jmho"

I remember reading something like that awhile back. I then decided on MACD, Slow Stochastics, and Volume (either raw or something like Chalkin Money Flow) as 3 independent and fairly exhaustive indicators. Of course, I look at RSI 7-D, 14-D, and 21-D now also due to Bill's research :).

Mackinaw,

It seems you cant beat selling a high rsi and buying a low rsi that has a divergence in the momentum and trend indicators with a capitulation volume into the low.

Moving on from a once loved to a new flame is the tough part, for most.As traders we must.I am guilty...

Tbar,

I think that just about sums up this game. By "divergence in the momentum and trend indicators", I presume you are referring to positive divergences that also coincide with an overall improving market (in whatever time-frame you are focusing)?

TGP is still in a downtrend. RSI is the only indicator that I follow that gives a buy signal. You could put a buy stop at 22.36 followed by a stop loss at 21.68.

Mackinaw,
Pretty much, I am looking for a higher rsi with a lower price and the macd histograms close to the trigger line/o and also higher than the last price low. Increasing volume and price at that point at horizontal/fib etc support and it is a buy for me. jmho.

That all seems sound, cyderman - let the price show you some strength up to $22.36. I have TGP on my watch list from the RSI buy signal of a day ago, also.
Problem I have with this company is the shaky Balance/Income Sheets. They have lost money 3 of the last 4 years. Shareholder Equity is only $699 million (declining) out of $3.2 billion assets. They are also highly correlated with UNG, of course. Is UNG basing yet?

Tbar says:
"...horizontal/fib etc support and it is a buy for me. jmho."
Despite being a mathematician and appreciating Golden Rules and Fibbonaci, etc., I just can't rationalize Fib-retracements yet. For the most part, can't you just rely on 50-MA, 200-MA, resistances, and supports, to achieve the same confidence without having to trust the "magic" of Fib?

ALOHA !!

Supply and demand for what? Oil? Maybe we should consider the supply of money not the supply of oil when predictinging future prices.

Go to this chart and try to work in the supply and demand factor ... Notice the price of oil prior to 1971 versus after 1971. Even WW2 is a minor BLIP compared to what's going on now!

Link: http://tinyurl.com/67wu2y

Next study this ... I read military, political and monetary issues driving major oil price moves, not so much supply and demand from consumers and definitely NOT "speculators"! Who is the largest fuel burning entity on the planet? The US MILITARY!

Link: http://tinyurl.com/6y4lwe

2nd,

You offer the most gracious rationalization of the pay practices (and practices in general) of those who've brought our nation it's knees that I have read in all my years on this blog.

Tomorrow’s WSJ Heard on the Street column 2 short articles (subscription may be required)

---Miners' Run Seems Over

“ either the shares are undervalued or investors believe miners' run of profit growth can't continue.

The latter looks most likely. Even if commodities prices don't fall further, rising costs could be enough to squeeze profit margins and slow earnings growth -- even if the volumes shipped by the biggest companies continue to rise.”

---Those Who Hesitated Have Lost Even More

“A year into the credit crunch, banks should have learned a lesson: It pays to be first.”
“E*Trade Financial looks lucky to have unloaded $3 billion of toxic mortgage assets to hedge fund Citadel in November.”

http://tinyurl.com/65yyu3

Re: Miners

Its a little late in the evening for this, but we won't know how the fourth quarter will look until gold, oil and copper make their moves in the next couple of weeks. I'm one to believe that we'll see $90 oil soon, but not $777 gold. I believe that gold has completed its requirements for the correction here.

But for the miners themselves, and especially exploration stocks, you have to be able to differentiate between precious metals and base metals.

The miners have had their speculative run-up, to be sure, but they have also had their speculative run-down, where everything commodity/resource related was shorted heavily. Based on the assumption that "commodities are so over, dude" is that mostly pertaining to base metals prices collapse, rising costs, or economics of grade and disposition or even supply/demand? Or is it just a generality pertaining to the decline in markets overall?

This means that the CDNX will be something to watch closely against the performance of any individual mining stock. Only comparisons of performance will assist here.

Many junior miners will be loathe to add to their floats, as they have to face the end of their ability to finance further, and many buyers are looking for bargains but with no access to participate in financings by offering money for shares in private placements. So this means buying on the open markets for any capital concern considering an investment stake.

A participant can either buy on the open market, lend, offer services and the like in order to obtain an equity position, which is an odd situation to be in for a large capital concern, considering the amount of shorting that has gone on. They would much rather acquire their investment through private placements rather than by buying on the open market. It may be the only avenue left, to speculate long on undervalued assets, of which there are many.

One feature of the last several years has been the highs prior to 2006 set in 2004/2005, to which many charts have seen their prices return to, with the notable exceptions of copper, aluminum and gold. Many charts including metals prices/mining shares have returned to their respective values for that time.

$CDNX stockcharts.com

http://tinyurl.com/67ad37

A prime example of the kind of thing I'm trying to explain is the chart of DNT.TO:

finance.yahoo.com

http://tinyurl.com/59gnpx

F6 - CDNX vrs. specific juniors?

Interesting post! - But is CDNX really the index to judge a junior's price behavior against? Isn't CDNX 40% energy juniors?

What about PNP.TO, as a diversified bag of juniors? 78% is PM's, base metals, uranium and moly. The rest is divided between 4 other areas.

Plus, it's certainly where a lot of retail investors go. What do you think?

I would say use the CDNX to compare against a company like PNP.TO. PNP.TO is not a mining company per se, but is heavily exposed to equity in the junior sector.

I'm not sure that the TSX will make a good measure to go by. Although overlaying the TSX yields some pretty interesting results if you use that instead of the $CDNX against copper and oil. The major gold miners appear well indexed to the gold price itself, so the correction overall in the markets is very interesting, because of the numerous sectors across the board affected by it.

A stock outperforming the CDNX is the one to watch, I'm assuming, since the coolest heads are proclaiming the "death of the commodities," though really its a correction and always a mixed bag of bears.

"selling puts on UAUA may be the way to go..."

2nd_ave: I like to think of selling puts as a long-term trade, where I either buy the stock cheaper than the current price (if I sell out of the money puts) or pocket the money at the expiration time. If I keep my position size small, then more money can be made by trading shares shares as opposed to holding options for the same number of shares or trading them. But thanks for the idea -- I appreciate the thought...

Mackinaw:
" I just can't rationalize Fib-retracements yet. For the most part, can't you just rely on 50-MA, 200-MA, resistances, and supports, to achieve the same confidence without having to trust the "magic" of Fib?"

Nothing can be relied on completely, as a tool all of the things you mention are good for me. Golds recent run from 772.70 has a fifty % fib level of 805.74 and gold has a fairly reliable habit of doing 50% retraces. That area is right at the downtrend from June 21 high and just above horizontal support so taken together the odds are pretty good buying will appear there.
If that holds it will be a great looking inverted head and shoulder that is probably already in play with the usd making new highs and gold holding 30$ off it's low. jmho

For those that like the UAUA/oil play, looks like Gustav is headed into the Gulf:

http://hurricane.accuweather.com/hurricane/index.asp?partner=accuweather&traveler=0

F6,

I notice the dollar is up against the Euro at 145.8 cents per euro. Meanwhile gold is at 808$. This suggests that gold is running inverse to the dollar vs euro and thus gold's bottom will be dependant on how the dollar behaves. When you say that we will not see $777 gold, is that because you feel the dollar's upward course against the euro will be limited?

Didn't we see 780 gold recently?

MacKinaw, speaking of "magic" numbers, the same could be said for MA. Why not 45 MA instead of 50, or 175 or 237 instead of 200MA? None of this is exact science.

The point is you cannot rely on just a few magic invented indicators. Bill's RSI method also asks you to look at sectors and other things, like management.

Just bought some more UAUA at 11.10. Placing a sell limit order at 12.10. As oil price declines over the medium term, there bound to be short-term bumps in it, and I believe we are seeing one of them.