Good morning

The gyrations of financial markets ahead of the Labor Day weekend tested the patience of bulls and bears alike. Nervousness about the financial system was still paramount as investors realized that none of the problems were likely to be fixed anytime soon.

None the wiser, I also did not succeed in capturing a leprechaun and finding the gold during my visit last week to the Emerald Isle.

I do believe we are still in a primary bear market where stock markets are, at best, faced with a prolonged convalescence period characterized by sub-optimal returns.

However, in the short term I give the nascent stock market rallies the benefit of the doubt provided the mid-July lows are sustained. For any rally to become more enduring will require further base building and an eventual shift in central bank policy to targeting GDP growth rather than inflation.

Read all about this in my weekly review: http://tinyurl.com/5u4tfb

That's the way it looks from Cape Town.

Good morning.

Here are your Cara 100 Ratings Changes:

Target Price Lowered:

GOOG - from $675 to $600 @ Stifel Nicolaus
VIP - from $45 to $35 @ HSBC

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

Have a great day.

spot gold 797, silver 12.75, NYMEX NGas Oct 7.32, light sweet crude 107.36...

FRE/FNM/LEH up 14%/8%/7%...

you have to love this market..

SLV bid/ask 12.57/12.61...

The 12m forward price return forecast for the SPX: {via http://macro-man.blogspot.com/]

http://tinyurl.com/SPX-FORECAST

have to wonder how much of the oil/NGas sell off is (panicked) unwinding of the hurricane play...

UNG traded briefly at 33.85 before recovering to 34.30...

SLV 12.43...

GLD 78.01..

DZZ set to break it's august 15th high...

clearing off the second half of the FNM trade @ 7.37...faster trains leaving the station...

Shark:

We got edited...Anyway, Bill answered your question about Gold in the daily review. With the slowing of all economies, all currencies will be facing downward pressure, reducing the value of the assets denominated in those currencies on an absolute basis and relative to other currencies and stores of value.

Sooner or later, traders will recognize this and move to PMs. Oil is a possibility, but due to a bit of cloudiness on the supply/demand forecasts (although the EIA is expecting continue global consumption increases) how that will fare as an investment is uknown.

[Bill Cara note:

I sent sharkie an e-mail about Gov Palin and the letters I am getting about his behavior in that regard, which he answered only by his ridiculous additions to the Discourse. If anybody wants to carry on like that, they will be banned. I don't have time to baby sit. ]

USD index now at 78.20...

52wk High 81.136 52wk High Date 2007-09-04

52wk Low 70.698 52wk Low Date 2008-03-17

part of me wants to get this downward action in gold over with.

so the plunge from $835 to $792 over the course of the weekend may hopefully bring on the bottom most of us are looking for sooner than later.

a bounce off the august panic low's may prove to be the launch pad. but part of me wonders if the outright bullishness of far too many newsletter writers and the like must be truly washed away to reflect a "blood in the streets" mentality that will set the stage for the next gold run.

i remember jim sinclair writing over and over early this year that gold will broach $1000 a second time and likely fail, the subsequent fall would be cited as a "double top" and be proclaimed the end of the gold bull market. i bleieve this has happened in many ways.

i think the truth of such a statement will be fully realized when the last of the "last chance to buy gold at these discount prices" type newsletter writers fall off the map.

good luck

dr.cosa- colin twiggs expects a test of primary support at 770, with a long(er)-term target for the down-trend of 700:

http://tinyurl.com/54qccl

Bill,

I don't find my Palin Haiku any more or less offensive then a lot of things I read (and write) here, but I apolgize to the dear reader who finds my Weimar-era German allusion offensive.

Regarding trading, I think FRE may be poking up through the 20 day and could catch a little rally here.

1st time post.
Request comment on 9/2 article "Where are the bank failures?" http://seekingalpha.com/article/93449-where-are-the-bank-failures-in-this-financial-crisis?source=d_email

Only 10 failures/$40B so far. Is this just Lag Time or is the "crisis" overblown?

Dr. Cosa,

The blood in the streets mentality makes sense as a bottom, but I wonder if the turning point will be a bit more subtle.

With economic contraction undeniable, commodities are unlikely to go parabolic as they have in this previous run. I wonder, if because as Bill says, the change will come with the realization that all fiat currencies are falling, that's a more background phenomena than OIL SHORTAGE. It might take a bit longer to take off.

Dr. Cosa,
Your thoughts on PM: Perhaps investors take comfort in a rising/strengthening dollar and then return to the "who needs PM" mentality.
J

Cara 100 Update:

GOOG - Upgraded to Buy @ Stanford Research

HNU.to- taking a position at 12.36 (USD)...

USO Strangle:

93P $7.70
94C $1.60

ROI +11.1%

taking a shot at SKF here for a quick trade, 300 @ 109.30.

BA - Selling @$68
UYG - Selling @$22.61
FRO - Ouch!!!

out of SKF at 110.30

AP
Korea Development Bank may buy Lehman Brothers

http://tinyurl.com/6bkf55

Re: Dollar

The curiosity that goes along with the rise in the dollar is the cheerleading going on at how this supposedly co-incides with a rise in the markets.

Or that somehow, the U.S. markets are "strong," and foreign exchange, because they are now "weak" is the cause. Nothing could be further from the truth, as there are far more banking failures in the U.S. than anywhere else.

There are no indicators of a massive bond sell off, either.

A strong dollar is a very bad sign, since it appears to be directly related to the oil price rout. The entire oil market has been set up like some sort of Enron trading platform with most of the liquidity set out by the Fed draining into it.

This from the guy at Fundmymutualfund.com:

I'm sure some of you have read him, but he does some nice analysis...this on the GDP report last week:

Q2 Gross Domestic Product (GDP) is a Fraud

I'm sorry, I just have to call out this specific item even more than the normal fraudulent activity from the "number crunchers". Now while it is silly to call a technical recession only if "there are 2 quarters of back to back negative GDP" that is the conventional wisdom so it's in "their" interest to make sure that does not happen. Or at least it does not happen until after an election eh? Certainly we can be in a domestic recession without such "statistics" but let's go with that thesis.

First we believe the inflation data from the Bureau of Labor Statistics is a fabrication in itself - we've pointed this out in stark detail many times in the blog. It's at the point we just mention the "official" number in passing while making snarky comments. We import everything, and our import prices are up 20% year over year but until a few months ago inflation was below 4%? Right.

But let's assume those inflation numbers are anywhere near reality (they are not). Remember, back in Quarter 1 the New York Post [May 1: Is it an Official Recession? NY Post Says it Should Be] called out the fact that the +0.9% GDP figure was faulty because instead of using the Bureau of Labor Statistics data (the "official keeper"), which at the end of Q1 was 4%, the Commerce Department said we're going to use our own number - let's call it 2.6%.

So 4.0% (official) - 2.6% (we pulled this out of our...) = 1.4% understatement in inflation leading to over statement in GDP.

and your first quarter GDP -0.4% (using government inflation figures) turns into +0.9% (using made up inflation figure). Whew! Another quarter we don't need to deal with a potential recession.

Now folks, I believe inflation is north of 8% (easy) so even using 4% is a massive understatement in my book. If you measured inflation the same way the government used to before they made "adjustments" in the 90s/00s (i.e. ways to dampen inflation so we don't have to pay cost of living adjustments in a fair way to our Social Security recipients) it would be approaching 13%.

But the Commerce Department who produces GDP says it was only 2.6% in Q1 2008. And hence you avoid a negative quarter.

******************

Last week we had a huge rally because of a +3.3% GDP figure in Quarter 2. Now, 3.1% of that 3.3% was exports so the "domestic" economy was only +0.2% (with $160B thrown at it in rebate checks which is a few % of GDP alone). But nevermind that - the fate of Americans is not useful when we need to drive up the market and tell everyone it's ok. As long as multinationals profits are shooting up the "trickle on"... err "trickle down" economics means we all win.

So a reader asked what the inflation rate was in Q2 since the Q1 inflation number was so fudged. I decided to look. Now keep in mind as of June 2008, the Bureau of Labor Statistics (official keeper of inflation data) said inflation is 5.0%. (you can see it on page 3 on the link)

I still think that is low, but let's say it's "valid".

What did the Commerce Department, who creates GDP (but not inflation) say inflation was in the 2nd quarter? Certainly they would not go with that fraudulent 2.6% again right? Not with oil $140s for most of the quarter, not with food inflation ripping higher... no way...

What did the Commerce Department report as inflation? (page 14 of the pdf, GDP price index)

1.2%

Yes, you heard me, according to this department inflation fell more than half from what they stated in Q1 - and a full 3.8% below the 5.0% the Bureau of Labor Statistics reported.

Because, if they had used that 5.0% inflation rate your +3.3% turns into a -0.5%. And if they had used the government's own inflation statistics this quarter and last quarter what would we of had? 2 back to back negative quarters of GDP - a recession by "technical measure". And the government wants the sheep not to think we are in one. The 1.2% rate for Q2 2008 is the lowest inflation figure on the entire table which goes back to 2005. So they are saying inflation is the lowest it's been in at least 4 years.... seriously.

Even more despairing - that 3.3% (really -0.5%) was in a quarter where most of the $160B we borrowed from our grandchildren hit (rebate checks). So we can clap like seals like CNBC pundits. Or we can see the reality under the surface. I honestly cannot believe someone can show their face saying inflation was 1.2% in Q2, but this is how you generate numbers that create an illusion. I'm not a grassy knoll type of guy, but you sometimes cannot believe what exactly is going on behind the curtain.

Folks, I cannot make this stuff up - as they say, sometimes fact is scarier than fiction. Now try to imagine if my figure of 8% inflation or the "government's old data" of 13% is the true cost of inflation.

adding to SKF @ 110.59

JohnE - The bank failures are coming one at a time, Somewhere around 100 at last check. I expect Bill's right, this isn't likely to become Armageddon, as HB&B has the cool tools to keep themselves afloat.

Being on the right side of the daily trade, and not owning any bankruptcies (kinda hard to find 100 out of 8000, but wamu is on my failure list) is the way to go IMO.

Welcome to Bill's blog.

Its an interesting comparison to observe Bill's approach with that of Jim Sinclair regarding gold. Both see the fundamentals behind gold but approach the trade differently. I have found it beneficial and enlightening to watch both.

It certainly seems that the views of those on the fringe are slowly becoming mainstream. However, it is a slow change at this point with the potential to become rapid. The mainstream, however, is still deluding itself and is, unfortunately, hoping that a new presidential candidate will solve their problems. I believe personal responsibility, individual empowerment, collaboration and independence of government are our best options. For those who are enlightened to and have accepted the reality of today's politics, economics and financial markets, it is sometimes a challenge to coexist. At the same time we must always consider the possibility that we might be wrong. But fact are facts and where they present themselves we should use them to improve our world. I like the approach here. Where opinions are welcomed so long as they are well thought out, provided without emotion and supported with facts so that we may all benefit.

Sorry, I meant ~100 bank failures in queue.

Thank you Chickenpookie.
Also, SiO2 I bought the posted USO Strangle: 9/20/08 93P $7.10 93C $1.80 hoping for ROI +11.1%

A little blast from the past:

THURS:
-----------------------------------------
Don't trade the storm hype. Trade the reaction to the storm hype.

Had I the dry powder, ATM crude puts is where I'd be sniffing.

Posted by: MikeNYC at August 27, 2008 4:01 PM [link]

FRI:
----------------------------------------
cosa,
my opinion, posted a day or two ago - get in position for the inevitable post-storm letdown, not the hype/price runup that occurs pre-storm.

this worked even after Katrina.

Posted by: MikeNYC at August 28, 2008 12:39 PM [link]

FRI:

Special energy trading day:
A day to day-trade and run up the futures, and then use the proceeds to purchase just out of the money Oct crude puts.

As long as the Independence complex stays clear of damage, expect gas, especially, to drop nicely once the damage is determined to be less than h(y)/(o)ped for.

Posted by: MikeNYC at August 31, 2008 11:41 PM [link]

Results:

October 115 puts (just out of the money) at close on Friday:

$4900

Oct 115 CL puts on Tuesday morning (so far:)

$9150

There's your conceptual proof, right there.

Don't trade the storm, use the hype to get in position for the post storm reversion.

JohnE, the 11.1% was the result of the strangle posted last Friday. 93/94 is significantly off-balance now since the price is around 88.

JohnE
The FDIC went on a hiring spree a number of months ago on the expectation of 300 bank failures. They clearly have information that the writer of the article doesn't. Also note that IndyMac wasn't on their list of banks in trouble.

There are reasons that only 10 banks have failed so far. One of them is that the majority of home mortgages were securitized and sold to investors, with only a portion being held by most banks as part of their balance sheets. Many of the regional banks are holding commercial loans as assets; commercial loans are only beginning to fail.

kiron - It's also important to take into account the FDIC has become more proactive following the IndyMac failure, but I WOULDN'T go so far as to say they've got their arms totally around the situation yet.

Also, recently the FDIC raised insurance rates, correct?

Bottom line, this whole thing is a huge mess created by HB&B, wonder who will come out ahead - HB&B or the TAX payer? I'm betting it won't be the taxpayer...

These are of course my personal observations, please advise if I am incorrect.

HNU.to-> adding at 11.67 USD...

Does anyone have a recommendation on "reverse" bond trades, to take advantage of falling bond prices?

Good information about the banks.
SiO2 - Thanks - hard/embarassing lessons are easy to remember. I can unwind now with little damage.

AMR looking better than UAUA

GIX - Finally, Bob Moriarty comments on GIX (he likes it!)

http://preview.tinyurl.com/6bp929

Tennessee Fool:

* The ProShares UltraShort Lehman 7-10 Year Treasury ETF (AMEX: PST)
* The ProShares UltraShort Lehman 20+ Year Treasury ETF (AMEX: TBT)

DUG -

Anyone looking at this for a short position? After all, the hurricane season has just started.

Usd is hitting strong resistence

herehttp://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID2984294&cmd=show&disp=p

How long can financials defy gravity? Good day to initiate a position in MOO?

Chickenpookie,

I was trying to address the conclusion of the article that JohnE asked us to discuss. The article suggested that since only 10 banks have failed, perhaps the credit crisis is overblown, especially since we are near the bottom of the housing crisis.

I disagree with the article's conclusions. I find them a bit naive. Time will tell.

I agree that the FDIC doesn't necessarily "have their arms around the situation". As long as the FDIC can cover account claims from their assets the taxpayer is off the hook. The concern is that they will run out of money and will need to get federal assistance as they did in the S&L crisis.

Re: $WTIC

WTIC rout is likely to cause some delay in the exertion of some fundamental changes, because of the sudden demand for dollars.

The extremes of the carry trade can be defined by the €/¥ trade. Very likely all that is needed is a moderation of inflation for that trade to come off. If there are rate cuts in the cards, this may exaggerate the move.

FRO - Adding to position @$52.53

FRO:-7.77 today, at a purchase price of 60 a decline to 45 would represent a
-25% loss of capital. Add in the 20% div if held one year, a -5% return.

Fib retracements come in at:

.50 52.80
.618 48.25
.764 42.61

FRO is also right on the 200 day ma. So we have two small reason’s why stock should hold here, the .50 and 200 ma, but my gut says it will not hold. Based on this thinking I will not add here.

EWT broke down to new lows. Sold all, no need to be a hero.

Only RIG shows much relative strength, probably based on drill, drill, drill.

kiron - I agree completely, the article doesn't begin to scratch the surface.... Although banking probably has yet to see a bottom, there will be failure and success stories alike. My pessimistic side says the FDIC more likely than not will need federal assistance to cover all losses, and my optimistic side says buy UYG's low when/if LEH/WM hits the skids. I envision big banks as the guys with the tools needed to generate revenue streams, and those that don't are in a world of hurt.

qqqq's cratering

Good morning! :) So what happened while I was sleeping? The buy limit order for SKF was triggered at $110 and for ESLR at $8.90 (I sold the previous bunch of ESLR at a limit of 9.90 a few weeks ago). The sell limit for 1/2 of the UAUA shares I purchased at around $12.20 was triggered at $13.50 (even though I placed it at $13.10 -- cool!). Finally, the FXE buy to cover limit was triggered at $145.30 for A LOT of shares I shorted at $148.30. But now reading Bill's comments, I am thinking that I should open that short once again on the next up day in FXE.

Now I am switching my focus to shorting the financials. My sell short stop limit for FNM was not triggered this morning, as FNM opened high, but I have just shorted it in real time at $6.88. Bill did write in his WIR that "during the next large market decline in the next month or two or three ..." -- let's see how financials will behave themself in the light of such prospects...

Now let's hope refinery startups don't produce any "surprises".

Telestar3D - You're probably right on FRO, it's more difficult (based on my limited experience) to extract cash from the big boys.

Pookie, who knows!

I basically hardly ever add to losing position, only very rarely if I think I have a good catalyst and the second add would have an ultra tight stop.

I do not mind taking losses, it has saved my bacon more times than I can count.

Screwy market.

re FRO - it is trading ex-div today so subtract $3 from the losses.

Seems as if someone is accumulating AWP today as it is much stronger than AOD. I sold all my AWP into strength and will see if I can rebuy on weakness.

[Bill Cara note:

I discern the nervousness here. But there is nothing surprising happening. I wrote about this situation in the WIR. To paraphrase Ecclesiastes, "There is a time to protect your portfolio if you are a long-only trader." Now is the time. ]

UNG/HNU- high volume...

Bill..I don't think I saw that in Ecclesiastes, was that like one of those un-adopted gospels? Yeah, just answered my own question...

...the Financial Gospel according to Bill.

c3 said re: DUG,

"Anyone looking at this for a short position? After all, the hurricane season has just started."

The inverse of DUG is DIG; much easier than trying to find shares to short for DUG.

I'm currently long DUG for the time being.

H&S bottom in SKF ? We shall see ...

Long SKF in the 115s.

SKF just turned green

Increasing my SLW position by 25% at $10.73. Placing a sell limit order on these shares at $11.60

Placing a sell limit order at $119.90 for the SKF shares I purchased today at $110. Even though I think SKF will go much higher than $119.90, it may not get there in a straight line, and so after selling these shares at $119.90 I might get a chance to buy them back at $115.

Barring any miracle in the next 30 mins, today has been pretty convincing. VIX broke out of its downtrend, authoritatively. Lots of selling into morning strength. Volume is up a bit. Summer rally finishes on cue.

Last week was very quiet for me, I sat on DZZ all week through the Gustav mania and, like a humpback breaching, sold this morning. I also held onto the final half of my UYG position through much of the week, but unloaded it back on Thursday. Picked up a starter position in SKF this morning @ 110. After looking at that gap up this morning and last week's XLF performance, I'm kicking myself for only buying 30 shares. I'm not used to scaling in as gains increase, so I didn't have the guts to keep adding. Today was a lesson learned, but at least I didn't have to pay tuition for it... Sitting on cash, nowhere else to go.

2nd_ave: do you think NG is fundamentally oversold now? Or are you buying it today because of the panic selling and are hoping to sell tomorrow? I see that UNG broke below the 2-year support level today...

bought some UNG today @ 33.51

brought -UNEAF 5 at 4.90

also bought WGW @ 1.52 and KGC @ 14.99

slw 400 at 10.70

OT Old School tip of the day:
Like the flavor of coke before all that messing around with formulas and high fructose corn syrup?

Just run on down to your local Costco (cara 100 COST) and buy the case of Mexican Coke, made like the old days with cane sugar.

ABK - Spiking in AH!!

Ambac gets Wisconsin OK to reactivate Connie Lee unit

By Alistair Barr
Last update: 4:01 p.m. EDT Sept. 2, 2008Comments: 1
SAN FRANCISCO (MarketWatch) -- Wisconsin Insurance Commissioner Sean Dilweg said on Tuesday that he approved plans by Ambac Financial (ABK:AMBAC Inc
News, chart, profile, more
Last: 7.07-0.09-1.26%

4:00pm 09/02/2008

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ABK 7.07, -0.09, -1.3%) to re-start the company's Connie Lee Insurance Company subsidiary as a new municipal bond insurer. "There is clearly a need for new players in the market," Dilweg said in a statement that was e-mailed to MarketWatch. "Ambac's strategy to reactivate its subsidiary Connie Lee is one way to provide additional insurance capacity in the municipal bond market

Http://tinyurl.com/562srq

August first month in 100 years with no sunspots recorded.

Better get the sweatshirts ready as it could be a cold winter?

It seems that scientists "practice" their craft as no one has a handle on what is really going on.

Interesting read, what will it mean?

The solar stocks were crushed flat as a squirrel under a semi today. Some stocks down over 10%. This in a sector that hasn't exactly been setting the house on fire lately.

Unless we get an incredible bounce tomorrow, I'll be covering my ESLR hedge early in the a.m. I'm not sure just how many more dips like this the market is going to throw my way, but I'll take them when they come.

News flash came across Fidelity on Ambac significant benefit 2Q change in Fair Value of credit derivatives

number2son:

MMmmhhh...eslr touched right on it's trend line today

Hi all!

Gradually I am starting to get up to speed, and expect to be at my best again by year end.

Meanwhile, I would like to thank you all for your friendship.

Further, I would like to make a comment about PoG which you know I love to keep my eye on:

- Gold is in a process of retracing back to somewhere between 650 and 700. The actual price of the low will actually depend on when it gets there. You see, price and time, are related entities.

- Meanwhile, starting very soon I expect that an upmove will kick in in gold. Targets for this (spot) are 876 and eventually 900, not more.

- Once this retracement is done with, waterfall in PoG is likely to go on untill the new bottom starts to form around those levels.

- At that low price, you are out of your mind not to buy, as that will be the first leg of Bill's ToG.

- Price target for the upmove in late 2009 and beyond is around 1.400, with less volatility.

As usual, Bill is completely right.

Disclosure: I am long gold as I got caught by the speed of the move being away from the computer and the office. Never mind, I plan to sell and sell short if, as, and when PoG touches 900 in the coming weeks.

Just my opinion. Please do not trade on this.

Cheers mates!

[Bill Cara note:

maro, I can speak for us all in hoping your health returns and your participation here gets back to speed.

What do you think of this very very low volume in equity markets? Do you find the same situation exists in Europe?

btw, I don't see low volume rallies in precious metals in the cards. The Bulls will need to show their bids.]

It is so quiet today. what's the matter?

sunspot is the scariest thought. If the theory is correct, we will see a very cold period, I mean for a decade.

I am loading up natural gas stocks. ECA below 70 is a bargain. This stock has done so much for me. It consistently increases dividend. my div yield is 5% now.

Apollo

Why is it scary? Suspots.

Great post below that comment.

HI Bill,

Thanks!

Summer in Europe is always light on the volume side, and I expect volume to start picking up as most decision makers come back into the office.

Car traffic coming into the city here where I live is still as light as in the peak of summer (very light), and will only pick up when children go back to school next Monday.

So people will get back to their desks, look at their portfolios, and start making decisions and money managment which will be apparent in growing volume by the second half of the month.

Now, having said this, I can also report on a serious fight for cash among banks in Southern Europe. Really bloody. To give you an idea, commercial banks are actively calling their costumers offering 100 basis points and up to as much as 200 basis points above 6 months Euribor for 6 month time deposits (above 1 Mio€). This is a strategy aimed solely at securing cash in the books, even loosing up to 200 bps on every single deal. Think what this will do to a bank with, say, 1 or 2 Bn€ being secured in the books like this...

In one word: carnage.

As the end of the year approaches, especially by mid October and into November, I expect the dry dry dry balance sheets to justify volume selling of long positinos into falling prices.

So, this is why I expect volume to pick up.

Now, as far as the bear market rally:

The bear market rally I am expecting to come for gold in the coming weeks will be mostly profit taking for shorts.

Banks have heavily increased their short gold positions, as you can see at the link below, and those positions will be partialy unwound for a profit, in an ever drying environment:

http://www.cftc.gov/marketreports/bankparticipation/index.htm

Talk of shortages in bullion is not real: there are plenty of the large bars to come around. These shortages may happen only in the smaller retail specimen, and the global economy is slowing bery rapidly, so forget about the dream of "sustained phisical demand": it will not happen.

Cheers!

norm

because of the low solar activity, very negative consequence will approach us. We will have low agriculture yield, virus easilier live due to limited sunlight exposure.

I am subscribed to Don Coxe's theory.

Ospraie Fund, a big commodities fund partly owned by Lehman Brothers Holdings, is closing down and will return money to investors after incurring big losses this year.
People close to the fund, which had nearly $4 billion in assets, said the losses resulted from bad bets in copper and natural gas, causing the flagship fund to lose 38% since the beginning of the year.

apollo7- i can understand wanting to load up on NGas stocks (and i have no problem starting to buy now either), but NGas seems to be headed into the 6+ range, so you may want to wait until to back up the truck...the 1-y correlation between UNG and ECA is 0.92 (fwiw, the 1-yr correlation btw UNG and XLF is -0.56)...

wait until 'then'...

Maromatics:

a bonus on a great day (unrelated to markets) to catch your posts...

thanks so much.

awaiting your full bodied return...

regards
joey

2nd_ave

thanks for your reminder. I will follow your advice. Sometimes I can not control myself when I wait for too long. I accumulate ECA since 2005.

apollo7- 2005? OK then..i should be listening to you instead ;)

2nd
Wanted to do something today
And brought SLW and UNG call

I am spending more time on what is posted here and trying to understand it
And will go from there

2nd
This is really a free market
No direction/trend, is not base on fundamental
I think its movement is base on nothing

vinod- all the more reason, IMO, to buy only on weakness...at least you have a fighting chance ;)

For those interested in Google technology - the latest addition is chrome - their new web browser - go here to download:

http://www.google.com/chrome

today was the official release date...

NGas investors- just throwing out a couple of price forecasts (i'm sure there are better sources, would appreciate any links):

http://tinyurl.com/56t3mt

http://tinyurl.com/5p9ckn

"The historical oil/gas relationship is about a 7.5:1 ratio of a barrel of oil to a GJ, or MMBtu, of gas. That means that with oil [at $110, gas should be about $ 14.67 per GJ]."

2nd - In terms of US production, I think it's a good idea to wait on nat gas at least until we see divergence from crude, if that happens. Otherwise, if the parallelism remains constant, the $80 crude range is where I might be adding to my nat gas position.

I have another theory as to why domestic nat gas might not join crude on the way back up, having to do with discovery of additional domestic supply while poking around for domestic crude (which is what we're observing some of now, I suspect). If US export approval were to happen (not likely), domestic nat gas could explode on the news (pun intended).

If you have time, take a look at after-hours activity on MXC and tell me if you detect something unusual....

CP- the first things that jump out re MXC are (a) an average volume of only 71,000, (b) 65% insider ownership, versus (c) only 7.5% institutional ownership-> the high beta of 3.01 does not surprise me at all...what's your take on the AH activity?

2nd - There was a huge gap down into this morning, and it looks that was made back to the penny in AH today. I'm not sure what to make of it.

I'm watching a few of these W.Tx. boys cause there's a lot of poking around going on out there. If you've ever been there you'd know there were hydrocarbons there just by the smell.

now we have TD Gustav, TS Hanna, TS Ike and TS Josephine showing on the Atlantic map at the same time...

CP- if you're referring the 'AH' price in yahoo finance, note the time stamp...

of course, with a trading volume of 28,000 today, that could have been one insider making a down payment on a yacht...

2nd - Oh yea, mine eyes deceive me. My broker site reports $25.99 and I thought it showed the same closing price as YHO. duh...

was shanghai really at 6100 10 months ago? having fallen 62% from the high, it would now take a 266% gain to recover that loss...no pain, no gain?

CP- the only reason i noticed it is b/c the same thing has happened to me...

speaking of 'no pain, no gain'- i don't buy into that philosophy...it should be 'no sacrifice/compromise/persistence/hard work, no gain,' but that doesn't rhyme- have to wonder how many otherwise intelligent people have endured serious injuries to body or portfolio based on a literal application of that overused phrase?

re "no pain, no gain"

I prefer "less is more" :)

Applies to trading in this environment for sure. Also applies to exercise in that it is easy to overdo it, and pushing too hard makes it less likely one will stick with it...

CP- re NGas, the 'other' reason to consider parking some money in it is the moderate negative correlation to XLF noted above...it MAY provide a (modest) hedge, hopefully (at this point) with less risk than shorting financials...

Hello all,

Well if the market could not rally with the normal bullish tone at month-end and holiday trading and it moved down the last two trading sessions, then the market is telling us it is weak and the path of least resistance is down.

Technically, the market tried to repair itself after the S&P 500 made a new low on July 15th at 1200.44. Four weeks later the Index had rallied almost 11% to a high of 1313.15 just six days after the most recent FOMC meeting. Unfortunately, the rally did not produce a major expansion in the number of very strong performing stocks. The decline of the last 2 trading days has once again producted an environment where the number of very weak stocks is greater than the number of very strong stocks. That means that the downside is in play and the upside is capped for now.

Here is our lastest macro view for the months ahead: expect a major, final move down in stock prices during the 4Q08 that should prove to be a fantastic buying opportunity. Stock prices will then undergo a massive rally into early 2009. Next, a re-test of the major low (from the 4Q08) will occur. The market should then turn up and begin a major bull trend that should last for the next few years. Nine or ten months after the bottom in the stock market, the U.S. economy should begin to recover. A few months after that, residential real estate in the U.S. will finally bottom and also begin to recover.

best,
JWibbs
http://www.2globalmarkets.com

proudPapa- LOL...how about 'when i get the urge to exercise i lie down until it goes away'...there have been days i would have been happier had i turned the computer off...

2nd_ave, that is correct. It was about 6000 10 months ago. Unfortunately, normal chinese do not understand investment concept. Or I should blame government more. they are screwing up the market. And normal chinese know it. But they still jump into market.

Give you typical example. Bill always complain about the market manipulate by major investment banks in US. if you look at China, that is a true casino. Talking heads in Chinese financial TV/media purchase some stocks first and then promote the stocks. Normal chinese listen to them and jump in and get killed. My father is a very typical example. Listening to the talking heads and purchase a Tourist stock in Beijing at RMB 40. and say there is a uptrend before April because of Olympics. Guess what! Since then it never return to RMB 40. Right now it is RMB 8.

Bill is promoting the trading. I am still half agree and half disagree. Some stocks should be valued at bonds and hold for a long time. When I purchase ECA, it pais 40 cents per year. Right now, it pays 1.60 per year. for 3 years, dividend jumps by 3 folds. I love this kind of stocks.

JWibbs- thanks...whether or not things play out exactly as envisioned, i think the capitulation->rally->shakeout->recovery (including housing/real estate) scenario is correct, and for those of us who play it just right, may provide one short cut to financial independence...

2nd,

my preferred version: "No pain? Good!"

Apollo,

such blatant and open manipulation is a gift for a trader, don't you think so?... observe this game played couple times, make sure their hype causes buying and spike, then buy when they start their hype, sell when stock spikes... money from the sky. Or, if your observation shows that they accumulate well in advance of hype and start selling hard immediately not giving a stock any chance to rise, sell short when they start (not sure shorting is allowed in the market you mention though, too bad if not). Manipulation (to me) is not to complain about, it's to use and utilize.

(And, as is the case with a lot of discussions, there is a need to agree what constitutes manipulation.... different people put very different meaning into this term)

apollo7- you realize, of course (and maybe this is exactly what you've been doing), that given the relatively predictable behavior you describe, the shanghai market would be like picking money off trees (for a contrarian)...;)

wishing you a speedy recovery maromatics...

"my preferred version: "No pain? Good!"

Vad- i don't care what they say about you, you da man! that and the fact that we have no problem picking money off trees or out of the sky...LOL

2nd_ave, You're welcome...and I always enjoy reading your posts. As for financial independence, I apply a margin-of-safety principle to all of my investment ideas; that is, I do my best analytic work to develop price targets and then I adjust my targets in both time and extent to account for the short-term explosive moves in stock prices that usually occur at major bottoms and tops. The margin-of-saftey accounts for the moves in prices that always occur beyond what I expect. The objective is to minimize the psychological pain of being wrong and early (in the short-term) in order to avoid stopping-out a position with losses that later would have turned profitable had it been held all along.

2nd - Good point, I'll take another look at those correlations and get back to you...

XLF -> SJF 1yr correlation is -0.94

Some info on the FERC website regarding LNG terminals. I know there was a lot of discussion about this a couple of weeks ago.

http://tinyurl.com/5c9ukz

Best wishes for recovery to maromatics.

Chickenpookie regarding LNG facilities:

The only LNG liquefaction and loading facilities in North America are in Trinidad and Tobago.

There are a handful of regasification facilities in North America. More have been proposed (especially after Katrina) but very few if any have been approved.

It seems NIMBY, terorist and the safety considerations have thwarted many attempts to build new LNG unloading facilities.

Liquefaction is far more dangerous than regasification (huge explosion in Algeria a few years ago.

I was following this a couple years ago after Katrina and Rita. I know this is not an in depth analysis but don't hold your breath for a LNG liquefaction facility in the USA.

You can get some info here:

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

Lots of information is on the Web.

The natural gas market will be limited to North American production with a small (guessing 5% max) amount of imports for many years. North American production may have turned to an increase the last year or two....from 2002-2005 it was declining slightly and it looked like peak natural gas may have been reached.

Natural gas is much like electricity, difficult and expensive to transport with transportation depending mostly on land (pipelines and compressor stations) access in North America. You can however, unlike electricity, store the stuff.

If production does and has been increasing and demand drops there is nothing to do once storage is full except drop the price in North America.

Warning...I haven't seriously researched for a couple years, I've just 'kept track' anecdotally.

Whoops, posted above while port2013 posted his link. Didn't see the link until afterwards.

Remember Liquefaction and Regasification are completely different facilities.

port2013's data is more current but the essence of my post remains true.

Thanks.

Good morning.

Here are your Cara 100 Ratings Changes:

UTX - Upgraded to Buy @ UBS

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

Have a great day.

Vinod,

I suspect the movement is mostly based on what we are doing here (along with thousands of others). We need more participation in the markets to establish a clear direction.

Several stocks I've watched for years are picking a direction and reversing between 9 & 10 EDST. Traders during a slow volume period are moving them based only on immediate expectations.

The big drop in oil yesterday, then started up about 10.

Early news from Europe showed financials up (SKF down until about 9, then up).

No iron clad guaranty true for all stocks, just something I've observed on ones I watch.

2nd,

"...now we have TD Gustav, TS Hanna, TS Ike and TS Josephine showing on the Atlantic map at the same time..."

If they move up the E. coast what can we expect to be affected?

Big commodities fund to close!
http://xrl.us/op3dx
http://xrl.us/op3d3
"Ospraie Management, the US hedge fund firm run by commodities trader Dwight Anderson and part owned by Lehman Brothers, is to shut down its flagship fund and return money to investors after the fund suffered heavy losses in August."
Maybe they are partially behind the big fall of commodities?!?

Grym- until seasonality kicks in, assuming only a supply/demand shock (plants shut/severe weather) would cause a spike in NGas...none of the tropical storms are forecasted to move into the gulf at this time, so the appearance of hanna, ike, and josephine just keeps traders on their toes...