SandraT- it’s the changing of the seasons

In October we dust off the winter coats, take the 4WD in for service, and start to look at heating bills…in the summer, it’s T-shirts, the convertible, and servicing the A/C…

With gold at 750, the boss kisses his wife good-bye, drives the black Mercedes, and watches the monthly bills pile up on 1-800-CASH4GOLD…

When gold hits 1500, he’ll drive the silver BMW, switch the lines over to 1-800-GOLD4EVER, and take his wife out to dinner 3 times a week…

Business as usual, and thanks for the info ;)

Clear, concise and to the point, transmission complete!!!

TWICE DAILY MEETING OF THE "PROFESSIONAL" KNIFE CATCHERS ASSOCIATION CONVENING TODAY

Ever try catching falling knives? Well, roll up your sleeves and join us for the special anniversary 911 knife-catch. Meeting at 9:30 am over at the Lehman post.

2nd
Will be looking to buy OEX call either today or tomorrow let the market go down.
They might cook up something this weekend and market might move up on Monday
Too bad I did not buy OEX put yesterday

ESLR- opening a position at 5.55...

2nd ave.

You got me thinking yesterday about just how bad the gold miners fall has been. So I looked at the 87 crash.

The miners over the yr preceding and to the low after the crash had a net gain of 50% !

To put that in perspective in the last yr currently miners have crashed and wiped out nearly 3 yrs gains !
I have charted out the comparisom at the stockcharts page, no wonder I feel ill!

Well Pookster:

UYG @ 19.20 would have been good today. Congrats. I just have small cojones.

Tbar- i took a look at the link you provided...nice work, haven't had time to digest all the info yet...

BH- you have your 5 handle back..

shark - At this point I can only be the knife thrower! Good luck with your knives, I wish you the very best; I don't have enough dry powder today!

Huh? Walk away for a minute and now I look like a genius on UYG

small = pequenos -> cojones pequenos. Hey, like you say, there'll be more opportunity cause all the shoes have not yet fallen. I'm just wondering when/if we'll see UYG @$19 again... It's the price delta that counts, not necessarily the price itself. I've been thinking if I played a SKF/UYG strattle I might be able to take advantage of those gaps.

Huh? Back for a minute, back to my normal state as a moron on UYG. DENSA Unite!

nemo- i caught jesse colin young in 1968 at the santa clara county fairgrounds...it was the spring of my last year in middle school (8th grade), and three of us decided to take the train to san jose on saturday...the youngbloods were one of the opening acts, and after closing out the audience asked for an encore...after consulting with eachother, young goes to the mike and laughs, "We didn't really expect to do an encore, so we have no more songs to play...do you guys want to hear 'get together' again?" LOL

(everything ended on a bad note when jim morrison kept the audience waiting for 90 minutes, showed up drunk, retreated to a folding chair with his head down during instrumentals, and occasionally spat onto the platform while maintaing his BAC)...

Somebody said the other day they had Puts in LEH @ 5.....probably basking in a sunny locale right now or driving a new Benz. Well done.

Haven't heard hide nor hair of jesse in years. Saw CSNY last year.

Pookster: CAF might be a play as a straddle on the FXP rocket today.

Whenever this market does rally I would think it's going to be big. There has to be a TON of cash on the sidelines right now.

The last Cali concert I caught was the Stones in Oakland a few years back. B-52's in Austin was even better. In case you haven't guessed, I'm both Bubba and Bohemian rolled into one. Don't you think Primus sucks?

Common to see promotions in the oil & gas area like below. Same can occur in the PM arena. Bottom line: Buyer beware.

EEI

Sharesleuth out with revealing piece w/video.

http://tinyurl.com/5kfbfv

CAVEAT EMPTOR!

Whee can we get a listing of those junior 0&G players?

OK i'll try to catch a blood stained knife- GG @ 25

CORRECTION

EEI NOT the symbol for Energy Exploration International.

EEI belongs to Ecology and Enviornment Inc. No relation to energy company mentioned.

Sorry.

SLV capitulation

Nemo,
I think Bill wants us to do our own due dilligence in finding the junior oil$gas players. I've been going through his old blogs for clues. The ones I found by myself on the web so far have no volume whatsoever. What would you consider as a market cap to be considered a junior?

that was SiO2 with the LEH puts...

Tigermaple - You got a great deal on that GG, that's one of today's best knife tricks (Unless shark does you one up).

I gotta tell ya, I really appreciate blogging with this group.

Roseville: I actually need to kick myself in the rear. I had a short-list from a broker friend of mine who has customers in the domestic US small energy company industry. He was echoing Bill's sentiment last week. Of course, I misplaced that list.

Looking at EP and HK on the US side: under $10 Billion cap.

Scottraders

This morning I caught the bottom on SLW but only got 1/3 of my order filled. If I go in and modify the bid price on the original remaining order will I have to pay another $7 commission?

Oil&gas juniors - I've been watching MXC,KOG,FFP,RSG off the top of my head.

bsi87,

I thought you were waiting for RSI(7) on the daily to go below 10 for capitulation on SLW. Did I miss something?

Folks: Gotta' another theory.

I'm not sure (not that any of us are-besides Bill:)
that SKF will return to the stratospheric levels of before. There is no doubt financials are in trouble for the forseeable future, which would point to a bull market in SKF. Is SKF, though, subject to the same dynamics as other bull markets like the commodities and thus have peaked for the time being? Also, is the psychology of the market becoming somewhat numb to the financials, "Oh, another bank failure, pass the salt please."

Nemo, re O&G players

Try GlobeInvestor, they have a filter. The link below is for O&G producers trading on the TSE, sorted by market cap, you can also filter for stocks on the Ventures exchange if you like.

http://tinyurl.com/5fn93a

Anyway just one place to start your own DD.

Quasi

Question on junior oil and gas:

How will the loonie and the USD trade over the investment time horizon? Would it make sense as an American to invest in junior american companies or is the currency risk overstated?

QT: No, you can modify and not incur more fees.
At least it has worked for me in the past.

Thanks Quasi, is that short for Quasimodo?

Craig

Thanks...I'll give it a shot.

nemo - Yes, I agree. My expectation is for XLF volaity to decrease from here.

A couple oil sands plays I've used in the past are PWE, PGH. Many pay pretty good divs.

I am currently building a position in PGH and will round out my holdings with a large cap like SU.

I've been pondering.........Does Goldman Sachs have the firepower to do a buyout of Lehman this weekend? Would the FED/Paulson think twice about providing some backing? Would that ultimately free up enough liquidity in the market to stabilize and begin another interim rally? Would this also mean a near term top for the USD/near term bottom for commodities?

Seems like a takeover, if possible, would be the best route as to preserve the counterparty stability since Lehman is in the middle of the tangled mess of credit derivatives........I don't think that the FED or HBB really wants to see what happens if Lehman fails

[Bill Cara note:

Goldman could buy LEH in a heartbeat but Paulson would have to underwrite $50 billion. Then there would be another market rally -- until the next one fails! At the end of the day, the US taxpayer will be asked to clean up the disaster laid on the equity market by our friends on the credit side. Stupid move and it ain't fair, but that's why Paulson was parachuted into the White House.]

ESLR down another 7% at the open, this time joined by the entire solar sector.

Today, Bloomberg reports that McCain is going to promote nuclear. Another nail in alt energy's coffin by the oil, gas and nuclear interests that are out to kill solar.

They succeeded thirty years ago. And it looks like they are going to do it again.

And still people thing there is no difference between the Republicans and Democrats. I'm not sure if I could produce any more compelling evidence than what we have seen in the last week.

But hey, as I hear refrained here with sickening frequency, "if McCain doesn't raise my taxes, it's A-O-K!"

SKF is probably suffering from the unwinding of the short dollar/financials, long commodities trade that was kicked off by the naked short rule. I'm thinking the selling accelerates soon once the short covering is done. Bill also said a few days ago that the time to short financials/con. disc. is close. I'm looking at JCP for signs of reversal.

SLW- note that a Buy Alert was triggered yesterday at 8.43 (after 1 day in the AZ)...

SLV capitulated, roughly 8.

SLW at RSI 21.45, RSI 7 day.

Long SLV, trailing buy stop on SSRI (also capitulated)

trailing buy stop on ESLR

Looks like a whale just bought up some GLD, big volume spike. I know it wasn't Kaimu, no ETFs for him...

UNG and USO obviously don't give a ---t about Ike...

Maybe Kaimu's buying through a proxy :-)

Father Graifer: UAUA/oil back on today-figures

father graifer...like that one..

oh boy...

Am I preaching too much?? :)

let's change it to godfather graifer..;)

2nd, NG inventories came a little over expectation, in spite of Gustav last week. Inventories are high, getting close to last year's numbers. Next week we may have Ike's influence.

Sold these LEH 5 puts today after an enormous aggravation with the broker (they changed the option symbol today). The FED or GS can save LEH all they want now.

Seamus on Skype today pointed out KGC under $12. I was trading KGC around $12 over a year ago. Now however, you get Aurelian throw in for free. What a deal for the long term. These who disliked the Aurelian deal could perhaps buy KGC and will make a ton of money eventually. Just a thought.

Don Graifer
Patron Graifer

For a long-term hold, I picked up a bunch of JQC. It's ex-div today, trading at an 18% discount to NAV and has a 12% yield.

Re: Gold/Oil

Very curious to see how the vast majority will cling to their oil trade as if it were gold. Oil still has a very long way to go in its correction, while gold is very near its fair value and at the end of its correction.

Re: Denver Gold Forum

Some of the companies covered in the TD Waterhouse morning action notes are: AEM.TO, YRI.TO, ELD.TO, IMG.TO, CG.TO, NGX.TO, GAM.TO.

Imo, if the gold price stages any recovery, then IMG.TO and CG.TO present trading opportunities.

will LEH go down by next Monday? Right now, it is $4+. It is very interesting, if there is another bailout. F&F just get bail out last friday.

nemo- LOL..the day we turn Vad into a patron saint and pray for salvation i'll know we're done...

For your reading enjoyment, the opening statement in today's Colin Twigg's Trading Diary report.

Recession - Coming To Your Neighbourhood Soon

The takeover of Fannie Mae and Freddie Mac may provide welcome relief to financial markets in the short term, but this will not save the economy from the approaching credit crunch. Estimates of write-downs from the mortgage crisis range between $500 billion and $1 trillion. Replacement equity has dried up as the solvency crisis deepens and further potential losses from falling housing prices cast a shadow over the market. In the same way that banks can increase lending by $10 for every $1 increase in reserves, the opposite is likely to occur with any decrease in reserves. A $500 billion write-off from reserves, with no ready means of replacement, will force a $5 trillion contraction in bank credit. Roughly equal to the entire mortgage portfolio of Fannie Mae and Freddie Mac — or 10 times the annual GDP of Australia. On top of that we face gradual contraction of the two GSE's mortgage portfolios over the next four to five years as Treasury attempts to bring them back under control. And there's more. The financial sector still faces further contraction of off-balance sheet funding structures as well. While the above calculations are rough and ready, we can be sure that the global credit contraction will be a big number. And neither the Fed nor Treasury have the resources to continually come to the rescue.

The only bright spot is falling oil prices as G7 economies head for a recession. Crude is testing the key psychological level of $100 and failure would confirm the primary down-trend. OPEC resolved to cut production by 500,000 barrels a day, in order to support the current price level (Bloomberg). But that is unlikely, on its own, to divert the primary down-trend. Recession in both the Chinese and US economies could lead to crude testing support at the 2007 low of $50/barrel.

Hi number2son,

I think the Democrat and Republican parties have similar ideologies with regards to what Frederic Bastiat refers to as "lawful plunder" in his book "The Law". Bastiat states that the proper role of a just government is to do only what individuals have a natural and lawful right to do: to protect persons, liberties, and properties. He also states that government perverts the law when it has converted plunder into a right, and that the law has been perverted by the influence of two entirely different causes: stupid greed and false philanthropy. Through taxation, borrowing, or other means, and driven by collusions with special interests, both the Democrat and Republican parties condone and promote "lawful plunder" -- the differences between the parties are typically in how the loot is divided and spent. Under a just government, Bastiat opines that "nobody plunders anybody".

I would highly recommend reading at least the first ten sections of "The Law", which can be found (gratis) at http://bastiat.org/en/the_law.html .

Gold/Silver

why not buy gold/silver now rather than miners since they are more subject to financial conditions

tim ord's update this week.

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

GLD just broke to the upside, on volume, a morning flag / triangle / call it what you want.

Holding DGP. Was getting worried this morning.

That is the most bearish forecast I have read so far.

For writeoff $500b reserves part, it may not be true as Fed has loan banks the money and shore up their reserves.

you can go to fed web site and check banks' non borrowed reserve. It is stunning.

Gold/Silver

Why not wait and see if there's another 10-15% drop in Gold/Silver?

P&F chart didn't see a very good bottom above $700.

As stocks are liquidated, gold should get it too. (since it's ETFs will be hit)

Where are safe haven stocks with low volatility?

re: RSI 7 day.

Observations.

When the Triple RSI screen bottoms at 30 AND the 7 day RSI breaks back above AND closes above 30, it has been pretty reliable buy signal.

When the RSI Triple screen is in accumulation mode and 7 day RSI < 30, I've found that the stock can drift sideways or drop further.

When the RSI 7 day ONLY<10, it's been a pretty good indicator for capitulation and good for a ST trade.

I do use other indications to calculate upside potential before taking on the risk.

Well sourced rumor that Goldman is taking over Lehman in next few days:

http://www.nakedcapitalism.com/2008/09/lehman-end-imminent.html

Has anyone come up with any well capitalized junior oil and gas companies from Western Canda that Bill referenced in today's daily report?

FattyArbuckle, are you watching a 1min chart? Looking at a 10min chart, GLD still in a short term (2 day) downtrend. Needs to break 73.70 IMO

so everyone sold their gold at 950 right?

Moab - a GS takeover of LEH would be a fitting grand finale for Paulson, right?

I think this GS takeover plan has likely been in the FED/GS long term plan for almost a year now.

AdamG, BQI. It is next to Sucor. I will buy this stock at heart beat at this price level.

Disclosure: I start to accumulate BQI since 2006. I own them and continue to buy. Bill is right. Today's price is the price I paid in 2006. At that time, oil is $60.

I try to look @ as many timeframes as possible. It happened to become apparent while I was looking @ the 3-min chart.

After that breakout, GLD now seems like it's having trouble getting over this morning's high.

Ah, now, do I go and get lunch, or do I plant my rear end in front of the screen for another hour??

Oy, I must notice these disparities between ultras & standard ETFs only when I'm on the wrong side of them. I have to profit from them sometime... right?? right??

procol - I sold my gold before 950 and got back in before 768.

STO is up right now 25+, it closed up yesterday. Could just be Ike.

GG, AEM, NEM, ABX all gap to new 52 week lows, break above the opening range. I'm now looking to buy pullbacks with stops at new lows for the session.

Thanks Apollo! I was coming up with stocks of very thinly traded volume.

can someone please explain to me this:

why did i buy shares of LEH at 5.20?

"Well sourced rumor that Goldman is taking over Lehman in next few days."
It is obvious that the smartest men in the room are counter party and have not been taking appropriate writedowns. If Feds sponser this bull crap. Just leaves me speechless. Might as well go long GS they are THE HOUSE. Would anyone have the guts to short them.

FranSix (or anyone that may wish to respond);

Yesterday you commented on Capitulation and referred several times to a 55 day rule. Could you please elaborate and/or indicate where I might read more about it? TIA

teamonfuego - You bought LEH @$5.20 because you thought there would be a buyout soon?

Thank-you, optionoracle

Re: Gold Miners

At this point, investors would have to consider which of their miners are actually gold miners, and which have significant exposure to base metals.

All of the prominent gold miners took out huge investments in copper deposits, some have base metals production. The rule of thumb was to invest in a "spread" of commodities, ABX is still investing in that with its investment in an oil play.

The caution on the largest players is to measure their exposure to anything other than gold, only smaller players have a defined purpose towards producing gold at a certain cost.

It wouldn't surprise me if Goldman merged with the Treasury Department.

Oh, that already happened. How can they lose?

The gyrations are wild today. TICK from -750 to +750 on the 5 minute chart.

aha! thanks chicken! i'd have to imagine that in order to save their own house from a collapsing LEH, GS will do it's part in salvaging the company....

at, that's the rationale in an irrational world. or is it rational?

*at least that's the rational...*

bobbyo - UYG contains components of all of these thieves and crooks, my plan if I had powder is to sell their rallies. (disc: no powder/position).

teamonfuego - I knew that's what you were thinking, hey - it might just work... I've seen a similar pattern before somewhere.

KAHALA, Hawaii -- Whole Foods Market opened its first Hawaii store Wednesday at Kahala Mall.

Seems to me that GS would probably want to take over LEH w/o having to air all the dirty laundry for everyone to see right now.

1) Paulson engineers a back room takeover that involves a FED backstop on potential losses while GS buys LEH and gets to pick at the bones of the rotting LEH corpse in the meantime.

2) By the time the FED has to write down real losses, GS has had enough time clean up the GS/LEH counterparty transactions from the LEH portfolio, and the FED gets stuck with a dry cleaning bill.

3) Paulson returns to the corporate world at GS or something that is arms length to GS to help manage the newly cleaned up GS derivative portfolio.

rinse and repeat

BTW.....is there any FED data as to the value of assets backed in the JPM/BSC deal? Estimate of potential losses/gains(HA!).

Ike, man...thought i heard UNG/USO say Ike-y...i'd be putting money on Ike to change that tune, but i'm only willing to throw one chip a day on bets, and i've got one riding on ESLR...

ALOHA !!

The "C" WORD is fast approaching ... We're in the home stretch to another FRIDAY and then the FOMC next week so I don;t see much chance of a gold rally before then, but I do see a chance of a BANK FAILURE! Then there comes to mind this ... "Define the word FAILURE!"

Kaimu:

Really going out on the limb on a bank failure this weekend...:)

If anyone is interested I'm looking to buy NEM @36.85, ABX @26.6, AEM @45.45. While the action MAY have been climatic and constitute a key reversal the jury is still out. Trading ORB's can be very profitable though on a very short term basis so I'll give it a go. The miners have resisted the downside bias of the underlying metal the past few days and that is a positive divergence. What I don't love about the trade is the stocks didn't quite get low enough to hit my targets-thus only taking a small (25%) position. From all I read the XAU/GLD ratio is at historic lows so if the equity side seems to stall I will short the GLD against the miners. Today's close will be important. Good trading to all.

David- moving more funds into GDX/SLV/GG/SLW...

At lunch time, heard that even GS can be in trouble too

BANK FAILURE - Is that what happens when one hiccups, or when one coughs? It could be fatal, but does the physician treat the cause or the symptom....

With GG, ABX and the like you have defined risk at the recent lows, rather than having to catch a falling knife.

moab - If the list includes bullion, my port is about 50%, and that ain't the small cube you drop in your stew pot I'm referring to...

GG selling off now on dwindling volume, which is what you want to see for signs of reversal. Might take a stab at it near 25.

Pookie: I will be with you if there is a run up like the Bear stearns 'fix'.

Vinod: of coarse GS is in trouble for all the reasons Billy Sundance illustrated.

XAU intraday low 110.70? that has to be close to a bottom..

[Bill Cara note:

This really is the most interesting market I have ever seen. As for $XAU, watch the bottoming of the Euro -- any day now. Any major bank failure in the US, may bring about that Euro:USD reversal for the intermediate term cycle. Any short, intermediate or long term trader could make good money with the metals and precious metals producers after that. The junior explorers and developers will come back, but they also could drop another 10-20% from here, so the mid and long-term oriented traders will do well there, I believe, but the short-term traders may want to wait for oil to fall a little further. Also, the faster/further oil falls here, the sooner the next Bull market starts.]

bobbyo & chicken - thats what i thought was happening this morning as the stock approached $5.50. what happened? well, it looks like i bought it .10 below it's high (or .70 above it's current price, depending on how you view the world)!

CP- thank you...with your handle, that's the kind of clarification we need...;)

Lehman Sachs anyone?

[Bill Cara note:

It's possible as I suggested earlier today with tongue in cheek. I said that the Treasury would first have to agree to a $50 billion Lehman bail-out first, and then set their appointment book to hear the whiners from Merrill Lynch, Wachovia to whomever. Bear Stearns was stupid Mr. Treasury Secretary; so what do you do for an encore?]

re: SKF
It's already been covered above, but yesterday Jim Chanos, noted short seller of Kynikos Associates (a $5B fund), gave a lengthy interview on CNBC:
http://www.cnbc.com//id/26643849
It is almost 17 minutes and remarkably void of useful trading info (and no specifics), but he said he is the least short in financials that he's been in years. He is concentrating on shorting specific materials stocks, cement, and construction companies operating in the developing world. He also mentioned he is short some auction houses; the art market isn't what it used to be (that diamond-encrusted skull didn't sell; imagine that)!

Joanne Hruska is on BNN market call tomorrow.

Brian Acker was on today. He says LEH is gone, and doubts AIG will be around much longer. From a quantitative analyst, he likes Oxidental Petroleum (OXY) in the Canadian oil sands, with a model price of around $130 (current is $68).

I now have a straddle on LEH. However, if you bought LEH, there is a chance that your trades may not settle, as it takes 3 days to settle shares (if LEH disappears tonight or tomorrow). Stock can go to $0 or to $10 if GS/FED pay $10. Don't know what would happen with puts as they give you the right to sell the shares (which would no longer exist?).

PetroCanada (PCA) is also severely undervalued.

For oils royalties, I have a position in CBV.V. They have a current revenue stream and no exploration expenses. They are like SLW, and collect royalties on their wells. You can pick it up around 0.30. Current earnings are 0.15/share (!), expect 0.30 next year.

I also like NAE.UN for natural gas, it pays you 13.55% yield while you wait. However, last board meeting they were discussing whether to cut dividends or not given the fall of NG prices. (for other income trusts picks/possibilities see http://shockedinvestor.blogspot.com )

Finally, miad on skype points out that this is Thursday ahead of expirations and maybe the market misdirection day. Also, if you take a look at maxpain you will see that we are currently well below maxpain values. http://nexalogic.com/maxpain.html . Be careful out there!

Good morning!

So, gold fell through the 770 support -- that's not good... On the bright side, SLW is still above $8, and my lowest purchase price was $7.75. So I have experienced more pain with SLW than I am having now. :)

VLO has listened to my reasoning about oil being down much more than retail gasoline prices (in percentage terms) since its peak, and hit my sell limit order today at $32.80 for the shares I purchased on Tuesday at $30.80.

Also, ABK has finally hit my buy to cover limit order at $6.16 for the shares I shorted at $7.16. But I still have the put options I purchased when ABK was $8.80, and those puts have almost doubled by now. The MER puts I purchased a couple of weeks ago have more than doubled already.

I am testing a new strategy for shorting something, which is that of buying puts gradually on the way up. This gives me a much better night sleep than the strategy of increasing a short position on the way up, as my losses from "bad" shorts can be arbitrarily large, while with puts, I will lose the little money I put into them in the worst case. If I buy puts at large enough intervals, then even if the security keeps going up for a long time and the first two purchases expire, then when I finally hit the top, the last bunch of puts will give me a manyfold profit, covering compensating for those puts that expired and probably leaving more profit as well.

Reuters:

Goldman Sachs Is Not Buying Lehman:

http://tinyurl.com/6ko8w7

RDR

$50-100 million

for picture

http://tinyurl.com/26qvxs

Re: Denver Gold Forum

Here's the link to the Denver Gold Forum video for Sept. 11:

BNN

http://watch.bnn.ca/commodities-report/september-2008/commodities-september-11-2008/#clip91678

Very short discussion at the beginning of the clip on the Denver Gold Forum.

A possible improvement to my strategy of buying puts on the way up is to wait until the uptrend chart shows a sign of reversal. I am waiting for such a reversal (or a double top or something like that) on XHB to buy puts on it. Bill did say that the residential construction companies are overbought, so buying puts on them at the right time will provide a great reward (XHB rallied 50% since its bottom on July 14). Looking at it from a macro perspective, the time to short XHB will probably come when the oil price stops falling and possibly starts rising. That will definitely kill all hopes for XHB.

2nd - Side note - Chickens can go cannibalistic when stressed, sounds like a familiar bazooka theme, doesn't it?

* Super Chicken
* GI Joe Action figure (inc. giant bazooka)
* The A-Teams Mr-T

(Batteries not included)

Have been lurking some time on this blog but have not posted. I really enjoy the commentary here!!

I saved this comment from Bill that he posted a while back, but don't know the exact date.

Bill Cara note:
The technical indicators have broken to the downside and are basically in free-fall at this point for gold and the goldminers. Look, for example, at the Point & Figure chart for GLD. This is what some people refer to as a falling knife. There needs to be some x's on the board before most technically-oriented traders will start to bid for GLD again.
http://tinyurl.com/2mcf52
Same thing for the RSI studies; there needs to be a Daily RSI-7 reverting to above 30, and probably a Weekly doing the same before technical traders will bid for GLD. Another widely followed technical indicator is MACD. This indicator, although a trend follower, needs to be turning up before many traders will get back in. Then you have the Elliot Wave people, the Copock Curve people, and so forth. Unless, there is a sign of encouragement, these traders will stay on the sidelines, and the lack of bids will, unfortunately for the Bulls, be met with more offers, and the price will continue to fall. For GLD, 760-780 looks like a reasonable level for a short-term bottom, and if the bids return, there could be a flood of technical signals that turn up the heat on GLD. Even the Bulls who trade on a fundamental basis are psychologically biased, and are prone to buying more as prices rally.]

If you look at the P&F chart there is some support at 72 (the 06 high) but the major support does not come until 68 (which formed a quadruple top in the first half of 07), if you look at the 2 year chart you will see that reflected.

May the trade winds be with you.

who will buy GS if they are in trouble?

Bull Hunter - That brings up another point about why the system is so interconnected and how the failure of one broker bank can start the cascading dominos. I think it all goes back to Bills conflict and disclosure policy because if full disclosures and conflicts are available to the market, then we'd never have been put into this situation.

The more things change, the more they stay the same...

The only people left ... those holding gold!

vinod - chinese or middle easterns?

LEH - Is sale price around $5B? Maybe a bargain?

Everyone throwing money at the problem! Now Russia is getting into the act.!

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

Russia ready to tap wealth fund

By Charles Clover and Catherine Belton in Moscow and Rachel Morarjee in London

Published: September 11 2008 09:48 | Last updated: September 11 2008 18:58

Russia is considering using money from its $32bn national wealth fund and from pension reserves to support financial markets, Alexei Kudrin, finance minister, said on Thursday.

His comments indicate the government is under pressure to react to the collapsing stock market. It has tumbled almost 50 per cent since May and lost an additional 2.7 per cent on Thursday.

Yes, QT, I will never understand art even tho it is an "investment" of the sort that Jim Chanos and others with fortunes find fascinating. The "artist" who created the diamond-encrusted skull, Damien Hirst, has a multi-page feature article in this week's Time Magazine. He "is one of the richest and most famous artists in the world". He is planning to sell next week for an estimated $14.6M to $22M "The Golden Calf". Again, per Time Mag: "The Golden Calf is a white bullock preserved in formaldehyde that's mounted on a marble plinth. His hooves and horns are 18-karat gold. His head is crowned by a gold Egyptian solar disk....The Golden Calf is a nimble concoction, designed all at once to beguile, flatter and parody the big-swinging billionaires who are likely to bid on it."
I think I'll pass.

RE: Reuters Goldman/Lehman article

Its always great to hear what "sources familiar with the situation" have to say. The best part is there is no one to hold accountable if they are lying through their teeth.

Not to say that a GS deal is a sure thing, just that the Reuters article is void of any journalistic integrity whatsoever, but hey, whats new?

GM is up big time today up over 11% as I type.

Is this move just a juicing of the ^DJIA or what? Aside from JPM, up about 4% nothing else in the DOW30 has very impressive gains today.

RDR - Reminds me of the Texas Turd Bird. I saw one in the Austin airport gift shop... Almost bought it.

Has the bandwagon (party cart?) been righted yet?

MDW is a junior gold having a outside day today (+25%) after big volume fall yesterday. Disclosure: I owned until April of this year, No new position yet because no divergence in any of my indicators so I am waiting until tomorrow to see if it has follow through.

Chickenpookie, it's one thing to buy junk for a gag for under $10, but to put some gold on a dead animal, preserve it in formaldehyde, and sell it to a billionaire for $20M....I guess if it isn't art, it's pure genious. If only I had thought of it first!

RDR,CP,

I was an art major and not quite with the program. In an art history class I pointed out the terribly bad pespective in a famous painting and was told, "They hadn't worked out a method of constructing perspective yet." To which I replied, "Couldn't he see?"

In a class where the prof had told me I was "too commercial" (I later made my living as a commercial artist.) I summited a frammed printing press blotter with smears from cleaning an ink knife — I got an A.

The value of anything is what someone is willing pay. Something the mortgage hiking guys all knew.

RDR

I'll have to check out this week's Time magz.

I like the looks of CSX for more downside. (right now at 60.60)

A double top formation is currently playing out. Heavy volume on the breakdown. Fundamental headwinds, too.

$50 or $55 Nov. puts seem like a nice way to play a $52 target, resistance somewhat stronger at $50.

Good point, Grym. There is a parallel between overpriced "art" and overpriced homes.

An imaginary letter from the CEO of Goldman Sachs to the CEO of Lehman Brothers, Richard Fuld.

Dear Richard Fuld,

I know that recently your company is not going very well.
I also know that your 2009 bonus is at risk (at risk of not being payed).

It would be a real tragedy if you could not change your 2008 Porsche with the new Ferrari that will be presented roughly at the same time of the payment of your 2009 bonus.

In this difficult moment, I hope you would like to take in consideration the following proposal.

I offer to wire you 100 Million $ on a Bahamas secret account, the account will be in the name of a Netherland Antilles company, property of a Cayman-based vehicle, owned by a Virgin Islands Trust.
You’ll be obviously the only final beneficiary of the Trust.

In change of this I will ask you to declare your company bankrupt. I think that given its actual financial conditions, it should not be too difficult.

I want you to know that the same letter that you are reading has been sent to Washington Mutual’s CEO. He has expressed a positive opinion on our proposal. The bankrupcy of his company should be announced on the 17th of september.

Lehman should ask chapter 11 during this week-end.

Be advised that Paulson and Bernanke are aware of this and the BCE president, Trichet, has been informed as well.

You can imagine what will be the reaction of all the poor people that bought structured products and unit links with capital protected by the issuer. And the issuer was Lehman.

They will remain without a cent. I know this products have been sold worldwide. Imagine how many people will remain without money and they thought they were protected…

At that point, can you imagine what could happen next Monday or Tuesday? Not to mention next Wednesday when Washington Mutual will fail as well.

On the CDS market (credit default swaps) there will be blood.
And the stock market will sink. The USD will crash and Oil will go up again.

The classic perfect storm, with the climax on next Friday, the Triple Witching.

We estimate that we Goldman Sachs together with JP Morgan and Citigroup we may close our put positions for roughly 200 billion USD of profits around next Wednesday and at that point we should be able to buy 300 billions of devaluated assets around the world.

At that point, both the BCE and the FED will cut the interest rates (also thanks to the economical deflationary datas coming up in October).

We spoke about this at our secret meeting last week. The protective net should work and all this should provide us another 60 billions profit.

We’re sorry for the millions of people that will lose so much money in the stock market. You know, the situation is very difficult and we need this money to fix the balance sheets of our banks.
We calculated that the bonus of the next years could be the double if compared to now, thanks to this operation.

Dear Richard, you won’t have a bad time, don’t worry… I am sure. And also, with that money we’ll give you, you’ll be able to make some great speculations, next week.

The cards have been marked, the greatest speculation of the last 20 years is ready to start.

I hope to get an answer from you before tomorrow night. If you agree, you are invited to dinner in the private room of the Waldorf.

Yours Faithfully,

Lloyd Blankfein

Chief Executive Officer
Goldman Sachs Group Inc.

I forgot to mention that my buy limit order for SWC was triggered this morning at $6.20, and I am placing a sell limit order on these shares at $7.20.

MikeNYC,

I will follow you on that CSX trade:

30- CSX Nov $50 puts @ $1.65

It seems like retail and home builder's have been ralling for a while. I might short MTH tomorrow or next week if it rises a few more bucks.

QT, you can check it out online. Here's the calf:
http://tinyurl.com/54nw8p
And here is the article. He is expected to make over $200M in next week's auction!
http://tinyurl.com/5cpeva
Get your bids in now!

How come I can't be the broker that sets the prices on these materpieces. That is the job I want.

And here we're trying to scalp a few dollars per share of stock, when we could gild a dead animal and sell it for millions.

Have you ever noticed how much Henry Paulson resembles Dr. Evil from Austin Powers?

[Bill Cara note:

If you look even closer, and happen to be standing on a corner outside the Lehman Brothers building this hour, you will see him behind the wheel of the limo that is bringing in the drunken sailors from Bank of America.]

I just started reading through today's discourse and I am wondering: why did people start catching the GG knife today? Gold broke through $770 and is going down to $700. Bill said that oil is going down to $80-85, which might bring gold into $600's. There will be downgrades of major mining companies based on the new metal prices. So unless you want to make a short-term trade in GG, the time to buy long-term will be in a month, IMO.

[Bill Cara note:

I recommended that long-term oriented accounts start buying. In three years these accounts will be very profitable, in my view, and it makes no sense to be worrying about the day to day volatility. Short-term oriented traders study volatility and have tactics that try to take advantage of it. Then you have day traders who are watching the 1-3-5-15min stochastics to catch those turns. So, timing is up to the individual.]

This just crossed the wire:

UAUA: WSJ: SEC BEGINS INQUIRY INTO STOCK DROP EARLIER THIS WEEK
- reminder: the stock dropped as much as 70% after a paper owned by Tribune reportedly ran a 6 year old story about United declaring bankruptcy

RDR

Thanks!

Here's Paul Van Eeden's discussion on the presumed 'fair value' of gold and says its around $760/oz.

http://watch.bnn.ca/trading-day/august-2008/trading-day-august-19-2008/#clip84424

We're seeing ~$740 right now.

well, I put 1/100th of my portfolio into gold today--for the long haul

What's with the rocket launch in the last hour?

So Ladies and Gentleman.....what are your thoughts on the conviction of that close?

Short covering???

Nice Christmas Goose coming early! WHat a joke!

SEC should be all over these guys.. them leaking BAC buying Lehman! SUCH BS!!!!

More Declining Than Advancing stock

More 52 week Low than HIGH

Volume: more decling than Advancing

This is a sucker rally But I like the action

Cash coming off the sideline from someone at the close. For example:

GE Last 5 minutes, big jump in volume (over 6.3 mil) and jump up in price.
(Disclosure: long position)

Sold 60 covered Oct calls strike 5 on just over half of speculative long position in F.

In this market, if you walk away during the day, things make a roller coaster U-turn!

The market is closed already and I didn't even finish reading today's discussion yet! I guess I need to start waking up a little earlier...

Posted by 2nd_ave: "David- moving more funds into GDX/SLV/GG/SLW..."

I thought you are willing to make only one bet per day, and you got ESLR today. :) What motivated you to through more chips in today?

Thanks for the point yesterday about trusting in people who call the gold bull alive -- in Bill we trust! :)

I currently have a buy limit order on SLW at $7.05, as my lowest purchase price was $7.75. I don't want to buy senior gold miners yet -- I think SLV and SLW have been hit harder and provide a greater potential upside when the recovery does happen.

vinod

Agree. More 52 week lows a great clue IMO.

Would like to monior new lows on an hourly basis thinking first trading hour, maybe 90 minutes, would be a clue to how things will go rest of day.

Anyone have a real time listing or link of $NYLOWs throughout the day?.

• Having a “good supply of cash on hand at all times in reserve is important” to take advantage of market declines and major crashes
Bernard Baruch

Seamus
Is TER is a good buy now?

Bill, I can't seem to put 2 and 2 together: your comment about buying GG now for the long-term accounts and about senior mining companies having a sure downside from here as they get downgraded in the next month or two and as oil drops to $85.

Are you trying to say that even in the face of the downgrades, dropping oil and gold prices, GG might have only a limited downside left and there is a good chance that it will be higher in a month?

Thanks...

Just wanted to point out the irony...people continue to talk about who might jump in and buy LEH and in a separate breath say how the HB&B are too big...doesn't consolidation of the bad investment banks just create even larger weaker HB&B's....

bigboyz - HB&B size counts, yes, but so do sound business practices, honesty, and integrity. Take US HB&B's current situation as an example.

WLC - Here is a tout by management for a company I ended up with as a spin off from WUC-V (by the way it has tanked lately): We control the largest known lithium deposit in North America. According to Chevron reports, their drilling program in the late 1980's identified approximately 24 billion pounds of lithium carbonate in a series of distinct mineralized zones within the McDermitt Caldera volcanic feature. (Note: This figure is not considered NI 43-101 compliant and should not be relied upon). Subsequent work by Western Lithium is supportive of this estimate. At today's prices, 24 billion pounds of lithium carbonate has a value in excess of $80 billion
Happy Trading All

Reuters
BofA in talks to buy Lehman: WSJ citing source
Thursday September 11, 4:17 pm ET

(Reuters) - Bank of America Corp (NYSE:BAC - News) is in talks to buy Lehman Brothers, the Wall Street Journal, citing a source, said on Thursday .

* Declines comment on Lehman buyout talks report

* WSJ citing unnamed sources, reports any Lehman deal far from certain

I have to admit, the bird in the airport gift shop did leave an impression on me and so years later I picked up a brightly painted all-metal version at a yard sale for almost nothing... Ok, so it doesn't have quite the "appeal" of the real thing, but it's close enough to represent the thought of ingenuity behind the concept.

GS, LEH, MER -

MER is down a big chunk today too. GS downgraded MER a week ago, whilst MER upgraded GS two days later. Mayhaps there is a chance that GS is buying MER and LEH will be taken over by FDIC and subsequently sold to GS. No moral hazard on the surface, and then we can rally really hard from here on?

CP,

Well, trading T-bonds has worked out well for me several times in the past ten years. My best was +30% in 3 months.
Here is a recent comment on the subject with another reason to buy them if deflation surfaces. (Not sure if this is so.)

Ian McAvity, March 06, 2008

For the typical American, you go directly to Treasury Bills. The dollar’s losing value; you’ve got a negative cost to carry, but the value of a Treasury Bill is that’s the final form of paper that the government cannot tinker with. Because the 91-day T-Bill auction is what keeps the wheels of the system turning. If you had a one-year note, you might suddenly discover some sort of emergency declared and be told that your one-year note’s now a five-year note. They couldn’t possibly do that with a 91-day T-Bill or the system comes to a halt.

When I get people saying, “Why should I own a Treasury Bill; it’s only going to pay me 2%, and that’s taxable?” the point I make is that the Treasury Bill is 100 cents on the dollar of buying power when everything has fallen 50%.


handy site for after hours and overnite futures charts
http://tinyurl.com/3ukcr5

As an alternative to looking only at the GDX historical chart or at the XAU:Gold ratio, Frank Holmes provides a chart of historical 1 year forward P/E ratio for miners in his September 9th blog entry: http://www.usfunds.com/franktalk/. I am not sure what 1 year forward prices for natural resources (those that make up miner's costs (e.g., oil) and those that are being sold by the miners) were used to calculate the forward P/E ratio, but if that was done correctly, then the chart does show that the 1 year forward P/E for the miners is much lower now than it has been at any point since 2002. THAT is a convincing argument to buy now.

Vinod

TER 52 week low today @ 8.64, but moved up at close with overall market with increased volume buying over last 20 minutes. Daily RSI at 38, weekly & monthly both under 30. It does look cheap, but there is a reason.

Customers are not buying semiconductor equipment with the deep trouble in memory market. See this week’s Barron’s page 43. FWIW, Morgan Stanley claims street too optimistic in equipment demand later this year.

Picture is bleak near term, but sometimes that can be the time to buy for long term when everyone is so down on an industry if you believe it is a good company. Scaling in may work out here; however, if Bill is correct about further market decline, you can probably get it at a better price.

It’s cheap enough that if there is a bear market rally (which can really move), it may be worth a short term trade.

Don’t like put options at strike price 7.50, so wouldn’t sell any puts. However, SMH (25.99) had HUGE volume (44752) today on Jan calls at 26 strike price so some think semis may move by then, although it’s virtually at that price now. Watching these SMH calls may provide some clues for TER, IMO.

Your contacts at TER would have a better feel for the business cycle, but this recession sure doesn’t help.

I’m not buying here as there are other opportunities, but will try to monitor. Sometimes it can be profitable to catch something like TER when it’s off everyone else’s radar. Just my 2 cents.

Credit Suisse head of commodity research:

"Battered gold may have finally hit bottom"

http://www.marketwatch.com/news/story/story.aspx?guid={48819178-EA85-491F-80C5-B46605FB6460}&siteid=rss

"...could lead to material deposit outflows..."

4:49PM Downey Fincl: S&P downgrades Downey Financial, takes off watch (DSL) 1.54 -0.08 : Standard & Poor's Ratings Services said that it lowered its long-term counterparty credit rating on Downey Financial to 'B-' from 'B+' and removed the ratings from CreditWatch Negative where they were placed June 3, 2008. The outlook is negative. "We took this action because of our increased concern about Downey's asset quality-induced weak financial profile, which continues to erode its franchise and resulted in material regulatory restrictions contained in a recently released cease-and-desist order," said Standard & Poor's credit analyst Robert B. Hoban, Jr... Despite Downey's current adequate liquidity profile, we are also concerned that continued publicity of Downey's problems could lead to material deposit outflows that would overwhelm Downey's liquidity and/or result in further adverse regulatory action. With dividends to the holding company from the bank cut off for the foreseeable future, the holding company must rely on its own free cash to meet its obligations, principally servicing the rated $200 million senior debt issue.

Good news for Gold Investors:

U.S. dollar woes bad for financial stability: Expert
September 11, 2008 | Mark Noble

The long, steady decline of the U.S. dollar, particularly over the last year, has one internationally recognized economist worried that recent bailouts will do little to ensure depositors and investors keep their money in institutions like Fannie Mae and Freddie Mac.

Dr. Ben Steil, director of international economics at the Council of Foreign Relations in New York, told attendees at the World Alternative Investment Summit Canada in Niagara Falls, Ontario, that the world's dominant reserve currency is starting to show similarities to the rest of the world's currencies in how it behaves with respect to the laws of supply and demand. Steil warned this could have a destabilizing effect on the world economy.
http://tinyurl.com/4ha9fa
Picked up some G.To at the close today.

"Fed, Treasury arranging sale of Lehman Brothers: report"

per MarketWatch--

"I thought you are willing to make only one bet per day, and you got ESLR today. :) What motivated you to through more chips in today?"

David- SLW/SLV/GDX/GG are trades on the pass line with good odds, and with SLW i'm stacking the chips behind the original play for a larger payoff...ESLR is the hi-lo bet at 15:1 odds...

vinod- so you loaded up on OEX calls this morning and too polite to post your gains amidst all the gloom?

Today looks like it will be an ugly candlestick on the USD index, (weak after 4PM) and Gold tested & held 740 three times.

Hmmmmmmmmmm

eh, enough of this. time for dinner.

2nd: Even with the downward trending oil prices and the fogginess around the alternative energy credit, you think eslr (I go up to Devens once a month) is a good probability right now? I guess, "Why?" is in order.

It just boggles my mind (only one neuron anyway) how much distilled analysis and information Bill provides on this site.

By the way folks, thanks to you too. It's very helpful.

Have you ever noticed how much Henry Paulson resembles Dr. Evil from Austin Powers?

[Bill Cara note:

If you look even closer, and happen to be standing on a corner outside the Lehman Brothers building this hour, you will see him behind the wheel of the limo that is bringing in the drunken sailors from Bank of America.]

Yes I can see Dr. Evil saying, "You can have Lehman Brothers and all their 'assets' for ONE MILLLION DOLLARS!"

Re: Ya, Getting Bored

Ok, so here is a very interesting interview of the kind of action needed if the Fed wanted to roll up its sleeves and take care inflationary problems. I think it would raise a few eyebrows, since we are so used to seeing interest rates effectively below inflation:

http://watch.bnn.ca/clip91796#clip91796

CP, yesterday I somehow missed your reply to me on XRAY. Thanks for the insight.

Taking a look in my account, and what do I find to my amazement? Fresh powder!!! duh...

Grym,
I guess I'll really have to concentrate on the bond stuff, I guess in your case a 30% gain came from selling at a higher than basis price, meaning you got in before prices rose?

We need to keep in mind that the TOG involves selling bonds (by holding TBT) which is contrary to this strategy, so it's necessary to think this through very carefully before jumping in...

notes in the thought process:

Inflation means your dollar buys less, so move out of the dollar into inflation and buy the dollar into deflation.

For TOG, selling bonds (holding TBT) anticipates falling bond prices because money is moving out of bonds and somewhere else (perhaps into the market).

Question:
I believe you must have bought bonds just prior to or during a market decline, is that what happened?

Fitch downgrades WAMU per Bloomberg radio

nemo- i just think the selling has stopped on ESLR...no way of knowing for sure, of course, but a company that's signed a couple of significant European contracts, expanding capacity, and hiring workers does not sound like the kind of operation that will be declaring bankruptcy, right...if it closes below a 5 handle, watch out-> my understanding is (some) funds are prohibited from owning stocks under 5...but i really don't think that's going to happen...

BAC made a huge bet on CFC, and is about to make another one on LEH? talk about cojones, all or nothing...

CP- LOL, you must be referring to the 3-day reload...

Thanks 2nd. I like ESLR, I was just asking your opinion.

I got this out of Robert Hsu's CHina newsletter:

"Over $2 trillion in global "hot money" move in and out of asset classes and financial markets. So much of the sell-off in emerging market stocks can be attributed to the outflow of funds that invested in these stocks during the past two years. Since August, many large hedge funds have closed or are facing huge redemptions, and their liquidation has exacerbated the decline. And my sources in the hedge fund industry inform me that this trend is continuing, and may go on until year-end"

That continueing until year end could be problematic unless we're headed for the tail end

2nd: That top heavy candlestick on high volume today in eslr is often a bullish (at least short term) technical indicator, no?

nemo- i'm not a technician, but glad to hear that...

Re: BA to buy Lehman

Marketwatch:

http://tinyurl.com/4sp9la

"EEI

Sharesleuth out with revealing piece w/video.

CAVEAT EMPTOR!

CORRECTION

EEI NOT the symbol for Energy Exploration International.

EEI belongs to Ecology and Enviornment Inc. No relation to energy company mentioned.

Sorry."

LOL. As a long-time lurker and employee of EEI (the environmental firm), this made my day. And thanks for the quick correction. Although we do work for energy companies, we are in no way affiliated with that other firm.

Seamus
I do go at TER once a month on weekend to work on server.
But do not have contact with other people and their server are managed from India
They also move from expense building near financial district of Boston to suburb

Only issue I have is they have very old equipment in their IT department,
Like old server from digital equipment corp.—alpha server and old Compaq dl 300
Beside that I do not see any change
Thanks for taking time to post

Re: LEH Engineered Buyout

WSJ:

http://online.wsj.com/article/SB122116292232524671.html?mod=googlenews_wsj

Kitco is desperate for your silver

In order to reflect the current strong demand for Silver Maples and Silver Eagles, Kitco is temporarily increasing its current bid (buyback) price for these particular products. Please visit our Selling to Kitco page for more details.

CP,

I started buying when the 30 year was around 7%, then as rates began dropping, I began selling. When the 30 year was dropped there was a big drop in rates (for some reason unknown to me) and that is when I sold what I had only bought 3 months earlier. I later bought into the 10 year between 4 to 4.5% and when they were in the 3 to 3.5% range. I have none right now.

They brought the 30 year back and if we did go into a secular deflation phase the rate might look good. My 90 year old neighbor bought the 30 back in the early 1980s when they were paying double digit returns. I never even considered it then — DUH!

I read Bill's high opinion of McAvity last week and when I googled him, got the quote I sent you. I would like to know if that makes sense about being out of the reach of the Fed's interference.

About ESLR
I called a guy I know there
There is no change in their business, still hiring employee
Incentive from gov. has no impact
It is going down with rest of solar but all solar are not equal
Do your own research

2nd
I did buy OEX put at closed OEBVL 10 @ 10
And OEBUL 10 @ 3.20

I notice that from yester high to today's low difference was
Around 350 point
And today's low to closed different is around 350 pint
So, did not buy call in morning but did little trade
Here they are
Buy 200 Shares of AIG
Order Number:I11BHFQS Details Filled at $15.74
Sell 100 Shares of SKF
Order Number:I11BJJST Details Verified Canceled

Buy 100 Shares of VLO
Details Filled at $31.8699
Sell 100 Shares of VLO
Details Filled at $32.96
Buy 100 Shares of SRS
Details Filled at $83.76
Sell 100 Shares of SRS
Details Filled at $84.94

Buy 100 Shares of SKF
Details Filled at $112.34
Buy to Open Put 2 Contracts of -CSXWM
Details Filled at $7.60

Well the warnings Bill has given about how bad this system has become for opm is coming to fruition. I am really disgusted with just how bad. I never would have believed it could be SO bad but after having been through this chapter I am sadly completely convinced. Losing a fortune because you are not a good trader and thought the fundamentals would save your butt is not easy.

Sandra- have you bought or sold coins through Kitco, and would you recommend them?

Tbar- to be fair, bill's recommendation for non-traders has been 100% cash...

If and when LEH/WM and other are droped from S&P 500 because of market cap. it will be more bad news for them

"I am wondering: why did people start catching the GG knife today? Gold broke through $770 and is going down to $700. Bill said that oil is going down to $80-85, which might bring gold into $600's."

David- what if it doesn't hit the 600s? is 740 good enough? and when it starts bouncing around the 1400-1600 range, will 1500 be sufficient? the perspective from a plane is far different than it is on the ground, and if you're parachuting you're happy just to be landing in a field and away from the trees...

2nd - haven't used Kitco but did few transactions with APMEX recently, no problems so far.

David...for the sake of argument, let's say we could buy and hold the gold sector today for a 100-200% return in 3 years...or we could trade the gold sector for the next 3 years for a 200-400% return...which path would you take?

2nd,
Bill's advice has been the best their is bar none,sorry if you thought I meant anything other than that.I just wish I had listened.

o_r- thanks for the feedback...haven't gotten around to buying coins/bullion, but for the sake of diversification (away from paper) and the pleasure of holding some in my hands i'm starting to research a few sites...

Tbar- no, i was just addressing the point about losing a fortune if one is not a good trader...just pointing out that for all practical purposes the best alternative for most of us would have been to simply be in cash...you would have avoided the entire correction with no stress...;)

2nd: No I haven't, but I hear they are reputable and have been in the business for a very long time. I believed they are based here in Montreal, but I'm sure they must have an office in New York. Are you contemplating in selling your silver?

Here's something new they added to their bullion store site:

Kitco is working diligently to fulfill all existing client orders. We apologize for any delays in order fulfillment which are a result of production and delivery delays imposed by certain mints and by our suppliers.

The following products have been temporarily removed from our Precious Metal Store until further notice due to production and delivery delays that retailers are currently facing; 1 oz Gold bars, 1 oz Kitco Gold bars, 10 oz Gold bars, 1 oz Silver Eagles, 1 oz Silver Maples, 100 oz Silver bars and 1 oz Palladium Maples.

These products will be relisted and available for order as soon as fresh inventory is readily available. In the interim, we will focus on completing pending orders as our top priority.

Please note that all remaining products listed in our Precious Metal Store are available for immediate delivery including a very healthy inventory of 1000 oz Silver bars and Austrian 1 oz Silver Philharmonic coins.

Re: BNN interview

Howie "Wowie" Green speaks to Armando Falcon, CEO, Canonbury Advisors and former director of the Office of Federal Housing Enterprise Oversight.

http://watch.bnn.ca/headline/september-2008/headline-september-11-2008/#clip91869

Sandra- no, i'd be buying...you're right, they seem to be out of products most of us would want to buy...(can you imagine lugging a 1000 oz silver bar to the bank or back while trying to remain incognito?)...LOL

2nd: I can recommend CNI, having been a customer for a couple of years now. An excellent service, IMO.

2nd,

I suppose if I could back my truck up to the discount window and borrow billions with the taxpayer holding the risk I would be doing just what BAC is reported to be doing. I can't see how the Koreans or anyone other than a standing member of the HB&B club, chaired by GS, would be given a pass into the game.

Question for the board
Can anyone recommend a book on technical analysis that is short, sweet and to the point and has practical application? Thanks for any help.

valleyrat- thank you...for future reference, here they are in one location:

Kitco: http://tinyurl.com/ms8gq

Apmex: http://tinyurl.com/2xfsak

CNI: http://tinyurl.com/penf

Learner2- http://tinyurl.com/4fbcpu

2nd: I wanted to buy 10 oz gold, and 2 100 bars silver, just to keep at home locked up for future insurance. Planning to keep forever, if only I could find some at these prices. I don't usually go for tinfoil hat theories, but maybe they don't want the people on the street to exchange fiat for real currency, or they bought too high and didn't hedge. Does that make sense?

Oh, and I don't want to wait 3 to 6 months for delivery either (hehehe)

I see that Vinod has jumped on the CSX "MikeNYC" trade. On Fast Money they said NOT to buy the jump in the stock. I wish that Vinod would have said buy the OEX calls in the morning and not wait, I would have hopped on them in a second. I was feeling the market was going to jump with LEH @ $3.88, because of the government would be forced to throw in $50 billion or so. I got my chance to buy SLW under $8, DGP under $14, but not more of WGW(which I have 6000 @ $1.15)

I know that Bill has been calling for a bear market all year long. He has also said to stay out of the market if you don't have the time or will to day trade. I know that a few here trade the market prices UP or down, short term. I put my 403B all in bonds out of the S&P500 after finding this site around Dec '07, and I have done very well this year in that account up 6% (could of been a big loss at averaging down in the S&P). My Roth IRA is up over 25% this year because of Bill's insight, and the many site members' recommendations. I got lucky in 2007 my buying oil options to go up. I was up 200%, but then took a 50% hit some how listening to Jim Cramer that the bull market was going up higher and higher. I had never bet on stocks to go down until I found this site and members. It took me a bit to go the other direction. I was betting on INTC and NVDA to go up after they fell 30% this year. Wrong move.

Thanks again Bill for this site. I still have another 9 years to work in the states until I see you in Paradise Island, Atlantis!

2nd-Did you read it?

Sandra- someone earlier this year (may have been MikeNYC) made the point that reputable dealers make money on the spread and don't need to play games...agree with your 'insurance' line of thought, you never know...

Learner2- not yet, but based on the posts I've read here from Vad and on his blog (www.realitytrader.com), I would probably find it a smooth read...i'm just a lazy bum who works too hard/blogs too much, and haven't gotten around to it..;)

Re: Puke Point

Couple of articles on "puke point"

http://news.google.ca/news?hl=en&ned=ca&q=puke.point&btnG=Search+News

Is anyone else bugged by the inconsistency and overall glitchiness of INO's charts? Switching btwn timeframes, chart options, results in different quotes at different times... actual candlesticks are looking different, too. I checked the USD index, and it had a long upper tail on the daily (peaked @ 80.35). Now, that tail is no longer there. Their axes appear almost non-linear sometimes. Guidelines at random places... bah.

Anyway. USD index broke below 80, came back for another retest, & seems to be hanging around there now. EUR/USD @ 1.40... If what I'm seeing is the latest stuff. Looking @ that USD index chart, we've retraced a year's worth of losses in a month. And now we're @ 80, which appears to be a support/resistance level from a year ago. Overbought big time. Oil rally off of 100?

Eh, whatever the prices tell me tomorrow... something to sleep on. Hopefully gold doesn't get pounded @ the London open again.

Learner, 2nd... to be precise, that is not a book focussed on technical analysis. Just don't want people to be disappointed simply because that was somewhat other angle than what they looked for :)

Also, as a fair warning (I am knowm to hurt my own sales by fair warnings, LOL): most (not all) of the book content will be included in online course, currently in works, that will be available through Bill's website (also in works)

Re: Another Article On "Puke Point"

Kitco.com

http://www.kitco.com/ind/Wiegand/sep102008.html

One thing I find curious is how anxious people are for a bottom in oil prices as opposed to a bottom in gold prices. Oil is nowhere near to the bottom, or its fair value, while gold is ostensibly trading below.

Furthermore, Oil prices still have approximately a month to go in its 55 day price rout, but gold prices have completed 48 days.

re Kitco: I have dealt with them as recently as last Feb and found them to be very reliable and professional.

If a chart is just an opinion then below is mine.

In the 2003 and 2005 time frame silver hugged the fibonacci fan line for about a year and a half before moving up. Short term Silver may be due for a bounce.

http://tinyurl.com/4sehzg

If the chart plays out perhaps I can print it out on parchment and auction it off with the Golden Calf.

Tbar- re your charts

http://tinyurl.com/4cvf3w

interesting to see multi-year charts of GOLD/XAU/WTIC/XOI stacked up for comparison...if i interpret your question correctly ("..oil broke out of its 1980 high 3.5 yrs before gold did. Does oil bake inflation into the cake? Or is it just so highly manipulated that oil is now the canary?") as being whether gold (eventually) follows oil to similar heights (based on an inflationary forecast?) or whether it follows oil down in 'real time,' i see no clues in those charts (do you?)...i can see oil has been the performer; gold is the kid brother who's been trying but isn't old enough, XAU is the bipolar cousin who exaggerates moves either way, and XOI is the spoiled brat who has to go his own way...LOL...seriously, appreciate your sharing the link...

ALOHA !!

I was looking at the overall consensus of analysts on four companies. They are rated on a scale of 1 to 5 where 5 is a SELL and 1 is a STRONG BUY. A 3 rating is HOLD and anything over a 3 means it is approaching a SELL.

MER = 3.4
LEH = 3.36
WM = 3.68

GG = 3.24

With this kind of rating you'd swear that GoldCorp was heavily invested in toxic derivatives and mired in the sub-prime looking desperately for a bailout from the FED! Would GG be allowed a US TAXPAYER bailout? All the "real wealth" companies are on their own while all the "false wealth" companies are "back stopped" by the US Treasury, The US Federal Reserve, the US Taxpayers and they're still failing! Why do Americans always elect losers to back losers! These are predatory companies that have spread US fraud across the entire globe and yet both presidential candidates agree that these companies need to be saved.

YOU GET WHAT YOU VOTE FOR!

[Bill Cara note:

kaimu, how would you rate, for example, two pretty good services: (i) the 5-star hotels you stay in while visiting the Big Island, and (ii) the kaimu orchids? I see them both as 5-star, but you probably rate the hotels as 4-star when comparing them against your orchids. There is always going to be a bias when your own interests are involved. I am positive for example that the week before Bear Stearns died, their own analysts would not have rated themselves below a 2.5. Isn't this topic exactly why we need the independence and objectivity I preach about? Regardless of the steps taken by the SEC to correct this problem after the 2000-2002 Bear market (when 98% of ratings for DJIA components were Strong Buy, Buy or Hold), we continue to get fraudulent ratings from our so-called advisors because as principals they have vested interests in the deal. You are right; HB&B will never rate the average $XAU component as high as the average HB&B component because they are in the business of selling paper and $XAU companies are selling physicals.]

excerpted from a bloomberg story on tonite's asia trading:

Mitsui & Co., which generates more than half its profit from commodities trading, rallied 5.7 percent after volatility on a benchmark gauge of raw-material prices rose to the highest since 1973, a signal that declines may be over.

Mitsui advanced 5.7 percent to 1,620 yen in Tokyo. BHP Billiton Ltd., the world's biggest mining company, added 2.3 percent to A$35.27 in Sydney.

The weekly historical volatility for the Reuters/Jefferies CRB Index of 19 raw materials rose to 27 percent yesterday, on a 10-week basis. The only other time the volatility measure has risen above 25 percent was in August 1973. After peaking at 32 on Sept. 7, 1973, it began a four-week decline of 12 percent and headed for a three-month low in November of that year.

Vadym and Bill
I just finished reading The Master Profit Plan.
I am now putting my trading plan together. This book is a big help in understanding the total frame work I need as a trader. I have been in the markets for over 30 years and now I see the key pieces that I have been missing. I recomend this book along with Bill's. I have Lessons From The Trader Wizard also.
thank you both for writing these books.

http://sunshinesilver.com/ has some.

APMEX is cleaned out. Their silver section is bags of shot and some goofy stuff at crazy premium. Some Eagles at 14.95 or something.

Places that have silver have much larger spreads lately, like Sunshine.

They have 100 oz bars, but at 14.15/oz. Ouch.

I love those super shiny mirror-like 1 oz bars from Sunshine and have several bags of them in my sock drawer. I was going to buy more, but at 18/oz when silver has a 10 handle....nah.

I just don't think silver is at a supportable long term price. The retail market certainly doesn't seem to be taking to 10 and 11 dollar silver.

I suspect we are getting to the point that some long-dated call spreads can be set up for pocket change that could pay in multiples. Maybe not a Ferarri for xmas '09, but for sure a used Civic.

CSX: I'd rather be associated with the oil and EURUSD home-run trades I was mentioning, but let's see how this plays out. I see a weakening chart, plus all that hedge fund vote nonsense this summer, a slowing economy, and face it, CSX was kind of a fad stock for a while. I love, love, love fad stocks unwinding.

shark- why wait till next july (not happening anyway, my friend ;)...buy the books now, and maybe you'll be the one who buys a truckload of ESLR at 5 and sells it at 25...

rknick,

happy to hear that. One of my readers put it best I believe saying that this book gave him clarity and structure.

The book outlining a structure of one's trading hardly can go too deep into each of aspects, otherwiise it's bound to turn into shelf-breaking volume. That's why we combine it with Bill's Lessons in a form of online course - this format will allow certain interactivity so a reader will be able to pick parts relevant to his today's task.

Don't let it stop you from reading Lessons though. There is a lot of colorful "meat" on a skeleton of book's logic.

vinod- shanghai's been off the radar since the olympics...with the SSEC at 2000 and change, no way to short, and no reason to sell now, i imagine the average investor has pretty much given up (maybe veteranwang can confirm that from beijing)...CAF gapped down this morning and almost hit 27...close to a low-risk entry?

Oh, earlier I posted "Patron Graifer"

It's the spanish word for "Don" It's pronounced with a long "o" I like Don Graifer. We could make him a monk and call him Brother Graifer. I kinda' don't want to call him Father Graifer after what happened with the church, especially here in the Boston area-not good.

Posted by 2nd_ave: "David- what if it doesn't hit the 600s? is 740 good enough? and when it starts bouncing around the 1400-1600 range, will 1500 be sufficient?"

I would be thinking like that if Bill would not have said that he is sure about the upcoming downgrades for the mining companies and oil going down to $85. Do you, personally, believe that gold will stay above $700 if oil goes down to $85?

"David...for the sake of argument, let's say we could buy and hold the gold sector today for a 100-200% return in 3 years...or we could trade the gold sector for the next 3 years for a 200-400% return...which path would you take?"

If I knew that I could walk the second path for twice the return of "buy and hold", I would do it! In reality, however, I am not sure about it, and so I will take a combination of the two paths: keeping a core position long-term and then, in addition, buying dips and selling the rallies.

Result of financial so far
MBI/ABK/-DOG
Bear Sterns - Done
FNM - Done
FRE - Done
LEH - In Action
WAMU - Pending
WM-Pending

USA Inc - Pending

2nd
China will come back and I am monitoring FXI/CAF
To enter
Also I do talk to people who understand India's market and India is not slowing down and market will be higher for next six month.
National election that comes every five year is due with in next six month and ruling party will do everything to win it

This should knock the USD down a few pegs...

China, which holds a fifth of its currency reserves in Fannie Mae and Freddie Mac debt, may cut the portion held in US dollars, according to China International Capital Corp (CICC), one of the nation's biggest investment banks.

China holds up to $400 billion in the two firms' debt, CICC Chief Economist Ha Jiming said in a report Thursday. "The crisis has made Chinese officials realize it's a bad idea to put all their eggs in one basket," wrote Hong Kong-based Ha. "This will likely lead to greater diversification of foreign exchange reserve investments."

China held $447.5 billion of US agency bonds as of June 2008, according to the CICC calculations using disclosures by the US Treasury. It is likely to reduce the portion of reserves in dollar assets from the current 60 percent by purchasing more non-dollar assets with new reserves, he said.

http://tinyurl.com/3z5s56

Bought some WM today and rode it up some. Bought some GSS just cause the chart's starting to look good.

2nd, I think it's time for you to do the right thing, buy Vad's books and ship one of em over here. I'll study it and send it back to you.

Vadym
The problem I am trying to solve is being able to look at a chart and understand what everyone is talking about. Breakout, breakdowns, stochastics are some of the things I am trying to get a handle on. Most of my training is on the fundy side, accounting and econ. What are your thoughts now? Thanks!

shark_attack/2nd
I am also interested to buy Vad's book
May be there is sell going on buy one get one free?

What can I say nemo... I've been called worse )

Sometimes subtle nuances that can be underestood only in a context float to the top of memory... Let me share couple.

- when pressed to become a member of Communist Party (which was a requirement for carreer advancement), I've been called by the head of local cell Comrade Graifer. That was quite common form of addressing people in a formal conversation. Left bad taste forever; feels very loaded, probably because it was originated in first years after Revolution of 1917 to underline the switch from class-based society to "classlees".

- when interrogated during my student years by KGB guy assigned to the university for pessession of forbidden song records and books, I was addressed simply as comrade. No name. Intonation was a bit mocking, as if hinting "comrade... for now". I was young; it was scary.

- when interrogated during my business years by KGB guy heading "commercial department" of that esteemed organization, I was addressed as mister Graifer. Very uncharacteristic form, was used by him to make a point: "We, non-businessmen, are comrades; you are not anymore. You are foreign element.".

Oh, and local mafiosi called me Beard. Self-explanatory. LOL.

Just some memories... :)

RHARAZ, thanks for posting the Bastiat site information. My sister teaches economics to high school students and consider THE LAW to be absolutely foundational. She says she re-reads it every time she teaches the course.

NEMO - Kaimu said he thought there was a CHANCE of a bank failure this weekend. That says to me that he isn't predicting it, only suggesting what may be "out there".

BSI87 - thank you for your clear exposition on RSI guidelines. I'm a newbie and have begun to notice the that it's best to wait for a clear sign from the RSI. Your "rules" have sharpened my thinking/understanding. Gracias.

DAVID - thanks for describing your put-buying strategy. Very useful.

GRYM - I know what you mean about art!! BELIEVE ME, I know!

KAIMU - Thanks for your constant comments that keep us focused on what really matters. "You get what you vote for" etc., etc.

VADYM - I always love your comments. I'll be buying your book.

FINALLY....

BILL! - Thank you for creating this blog. Not only do I enjoy reading your morning commentaries but I love it when you chime in with your "Bill Cara notes". Your book arrived; I've started reading it; little by little, I'll know more and more. Double thank you! We are all very grateful to you.

Learner,

well, on that level it will be sufficient. You will find out that what ytou just outlined will take a very small part of the book; however, you'll get a lot more in other aspects, so it may not be a complete waste, lol.

However (there goes fair warning again): if that's all you are looking for, there are a lot of free resources on internet. Just go to http://stockcharts.com/school/doku.php?id=chart_school, you'll find all that stuff to your heart content.

Vadym,
I am off to amazon. I learn best when I can take it with me and read it, read parts again, mark on it etc, where I am not disturbed. Thanks 2nd for putting me on the trail and Vadym for you honest feedback!
L2

Learner,

I am confident you won't be disappointed. Here is one piece I'd like you to read: http://www.realitytrader.com/masterplan/ ,
scroll down to Message which addresses to whom
this book is and is not adressed.

Vadym,
Book is on its way. I am always open to learn about the market and look forward to reading yours right after I finish up with Bill's. Thanks again.
L2

Grym,
"I started buying when the 30 year was around 7%, then as rates began dropping, I began selling. When the 30 year was dropped there was a big drop in rates (for some reason unknown to me) and that is when I sold what I had only bought 3 months earlier.

In general, I feel bonds should be traded, not held (not always true in all cases).

It sounds like you bought the bonds low and sold them high(er). As bond price increases, the interest rate decreases. Money flow was into bonds, driving down returns and driving price up.

I would bet this was because money was leaving the market and going to bonds.

Actually, Bill has a great section explaining bonds in his book, he covers rate curves and how their shape relates to the markets during various phases. He also covers in excellent detail the differences between long term and short term bonds, what to consider when buying, etc., etc. I found it very informative (even touches on possibilities of using them as tax shelters!).

Although his approach is somewhat different than mine, it comes down to the chicken and egg thing.

(Yes, the chicken did come before the egg, how do you think the egg was laid?)

I notice bond prices were down a bit with todays market gain.

If you think about it and consider if HB&B are bankrupt, then who needs them anyway? We seem to be doing just fine without them...

Mackinaw - Congrats on the XRAY, I'm keeping an eye on you...

Today's notes.
The path predicted for Ike puts the heart of the Gulf's oil production and refining very close to the east side of the eye. If Putin were trying to destroy our Petrochemical capacity, he couldn't plot a better path to do it.

Wash Mutual's Preferred Stock is trading in a range that the credit markets say that it is dead. They can't raise money with offering stock, and credit market prices are uneconomical.

Is the FDIC going to close Downey Financial and Bank United tomorrow night?

If the Chairman Hank and his comrades at the FDIC/FED/Treasury do a Bear Stearns on Lehman will the markets rally first and then crap upon realization that the banks are in deep trouble and that the bottom is not near and the light at the end of the tunnel is an oncoming train?

I am beginning to believe that the Fed is going to cut interest rates again next week. They have to help the banking system raise money, and with commodities giving them cover, who knows.

I think retail sales will cough up a hairball tomorrow. Not only did California sales tax revenue collections decline year over year for August (July sales), but now their personal income tax revenues declined YoY for August. Time to get a bigger container.

I bought some more SKF at 112-114 at then end of today because the banks, brokers, and insurance companies are going to a gunfight armed with only knives.

Lerner - Technical Analysis books

There are books which say, "this is THE indicator, or the chart pattern to look for" others that review a range of such indicators and patterns, and there are those which spell out one overall approach of many possible ones.

I think the best single read is Alex Elder's latest, Sell and Sell Short. I think this because one coherent approach to trading is presented, including money management (risk control) and the importance of good record-keeping.

I'm told Van Thorpe has a similarly comprehensive approach, but don't know Thorpe's books. Alex is a clear writer, and covers the trading style he has developed.

What do others think?

ALOHA !!

Lets analyze some GLD metrics here as we look back to when the POG was moving up some $200 from Jan 2008 to March 2008 when it peaked at $1,030USD ... Obviously the POG was going up as fast as it is coming down now.

From Jan 1, 2008 to March 28, 2008 POG moved up $200USD plus and GLD added a net 6.49 tons of gold to inventory per their own website data.

Okay ... fair enough, now lets see a $200USD decrease of the POG and see what happened to GLD inventory in that time span. I am referring to July 1, 2008 to NOW, Sept. 11, 2008. The POG peaked in that period at around $960USD and went down to $750, so that is a little over $200 down, yet look how much gold inventory GLD sold off. During that time period by their own data they sold off a net 44.34 tons of gold.

If you were running GLD and were on the side of your investors wouldn't you be buying down at this low POG instead of selling huge amounts(44.34 tons) of gold? Most people who seek to own physical are buying at these prices not selling. GLD is SELLING! Not just selling a tiny bit but a CRAP LOAD! Even Caraistas here are talking about loading up the truck ... GLD is doing the complete opposite! They probably even sold the truck to boot!

Here you have a case where GLD participates more in the downside and actually contributes to a major gold selloff(which aids a USDX rally)more than it does a gold rally! This is what you get when you buy GLD. You get the Wall Street guys who have been defrauding the markets and getting bailouts and they also run GLD. Here you have JP MORGAN as the administrator and custodial bank for GLD. It is also no coincidence that JP MORGAN is one of the major bullion banks involved in fraud in the gold market in partnership with Barrick and the US FED.

I have been saying that when you buy GLD and SLV you essentially own nothing but paper and in fact contribute to your own demise in that paper vehicle. GLD sells more gold than it buys and the selling coincides with the other bullion banks in their mission to bring the gold price down.

Now what happens to GLD and SLV when supply cannot meet demand ... when they can no longer add gold bullion? Their business model becomes fraud because they will instead enter the paper gold market where you will be getting paper for your paper GLD and SLV. Paper on paper ...

By the way for those Jason Hommel fans and critics of the PERTH MINT, if you go to the "bar list" for GLD you will see many pages of bars listing AGRMATTHEY(662 pages), which is part owned by Gold Corp Australia which owns the PERTH MINT. So even GLD depends on the PERTH MINT for gold supply indirectly via their subsidiary refiner. Who's bankrupt again?

As far as GLD and SLV goes ... BUYER BEWARE!

IT ALL WORKS UNTIL IT DOESN'T!

ALOHA !!

Let me just add that if you want to give GLD the benefit of the doubt then don't waste your time because they sold off a majority of that 44.34 tons of gold during the last thirty days. From August 12 to NOW, Sept. 11, 2008 they sold off a whopping 37.02 tons of their gold supply. The POG moved down from around $820 to $740 during that time. Why the BIG capitulation in the last few weeks? How did that benefit anyone but the Goldmans and JP MORGANS and the USDX rally? Is it any wonder that during that time frame we saw FNM and FRE collapse?

Think twice about your strategy to use GLD and SLV as vehicle towards free markets and social equity. You're not making the average guy rich, but you sure are helping the insiders at the US FED! Is it a coincidence that Goldman and JP MORGAN are major US FED insiders?

BUYER BEWARE ...

FWIW Kaimu, I know I have been tempted lately to buy GLD and instead have bought individual miners.
thanks

For the guys with the fancy trade platforms and the itchy trigger fingers:

PNRA closed right up against 55 (54.95 - day's high 55.00)

Draw a 3 month chart. It's been bumping up against 55 for a month solid now. That's a lot of energy building up.

Now draw a 3 year chart, with a trendline at 55.

There is a history of very heavy resistance and support at this line. In addition, and more importantly, all sorts of violent moves happen around this line (big breakouts, gaps up and down, etc.)

I'm not saying go long now, as it may fail to break 55 and pull back sharply before breaking through, as it did earlier this summer at 52.50. 55 may even be the local top tick. Who knows right now?

BUT, guys who can set the appropriate price/volume breakout alerts and who are looking for a trade may want to keep an eye on this. I suspect either move will be strong, but a breakthrough 55 especially so.

Conversely, the long term 3 yr trend is down (and STILL 30 times earnings.) A position taken here on a breakdown from 55 may be a solid entry for a longer term trade.

I also think long refiners is the pre-storm position to take. Refiners with capacity outside Texas, that is.

1. If the storm is bad and takes out refiners, bullish for distillates.

2. If the storm takes out no refiners, it means it wasn't that bad, which is bearish for oil. Bullish for refiners.

I say take positions in refiners pre-storm, especially if oil gets bid up and refiners pull back. Sell when oil resumes it's drop, post-storm.

Thoughts? Too simplistic? All priced in?

[Bill Cara note:

What about the impact of the Strategic Petroleum Reserve purchases, lack of purchases or sales? You know; those interventionists who keep telling us we have a fair market!]

2nd_ave at September 11, 2008 10:14

lol I think you got it. Maybe xau:gold is the spanked kid sent to his room because of bre-ex?

About to come out to play?

2nd_ave, as a practice for holding my position through 100% gains, I am moving my sell limit order on SLW up to $9.80 for the shares I purchased at $7.75 and $8.30. Given the magnitude of the recent USD move, the retracement should be sizable as well (even in a bull market for USD), and such a retracement should take SLW up to $10, as my gut tells me.

ALOHA !!

MikeNYC ... I used to have two houses in Galveston, TX and I had a third house where I lived and worked out of in the HEIGHTS area of Houston, TX. I would go down to Galveston to enjoy the beaches on the weekends and on that drive from Houston to Galveston(about 45 minutes)I would pass practically half the entire US refining capacity on that one HWY 45. Such huge refineries in places like Texas City and of course the big canal for shipping is there as well. In my mind there is only one place worse than New Orleans for a major hurricane to hit and that is where IKE is headed right now. A direct hit on those refineries would virtually halt the US gasoline supplies to at least one quarter of the country! It would take years to get that production back. Just the hazmat clean-up would be a year since Galveston and the Texas City area is virtually at sea level. New Orleans was below sea level, but any major storm surge and it will not matter.

I rode out hurricane Alicia back in the 1980s when it hit Galveston and the storm surge alone put big yachts on the freeways at least 10 miles inland. For months I would do that drive from Houston to Galveston and pass 30-40ft sized sailboats sitting on the side of the freeway! If I recall Alicia was a CAT 3 when it hit. Not sure what IKE will be!

Your strategy would be sound so long as you didn't take any positions in refiners that ended up getting wiped out in the Texas hurricane.

Look out for the SPIN ... Remember Katrina spin was saying that the damage the hurricane caused created jobs and boosted the economy, so a DOW rally was in order. Hummmm ... with that logic we should just go and nuke all our cities so we can boost the economy with all the new jobs!

Your #2 - If the storm takes out no refiners, it means it wasn't that bad, which is bearish for oil. Bullish for refiners.

I see refiners getting their profit margins squeezed by lower oil prices and inflationary prices to produce. It is very similar to what is happening to the miners as the POG and base metal spot prices fall the cost to produce an ounce of gold hasn't fallen and in many cases has gone up. Companies like MSFT don't have that concern because their prices for their products are not set in rigged futures markets! Yet MSFT does have to do battle against inflation though. Still imagine having to fight inflation of producing and not having any pricing control over your finished product. Instead "paper shufflers" dictate your price levels! Look what's happening to Russia! They're getting punished by cash outflows and futures prices they have no control over. Russia is a major exporter of oil and gold ... a double whammy for them, under these USDX rally days! Putin should spend his time on the financial aspects of survival instead of following our lead with military adventurism! He nor the Chinese have any worries on the global military front. Our military adventures will cost us dearly in a few years from a financial aspect. AN ARMY TRAVELS ON ITS MONEY! The US Pentagon has a monumental task in front of it just to modernize and replenish military equipment and they will go broke in their attempt to remain the #1 SUPERPOWER. Historically that's how it always is with EMPIRE ...

At the beginning of the week I mentioned LMT. They would be a benefactor of these rebuilding costs for the US Pentagon. Nothing like another COLD WAR to get those share prices of defense contractors rising!

Kaimu, Re. GLD. You say "If you were running GLD and were on the side of your investors wouldn't you be buying down at this low POG instead of selling huge amounts(44.34 tons) of gold?"

Actually I believe GLD by mandate has to own the appropriate amount of gold equivalent to the number of GLD shares bought. So, GLD cannot "invest" in gold per se (as if it were to make a profit out of it, other than management fees), it is not an investment. It merely reflects the gold possessions. GLD would not be buying physical gold because gold drops.

Similarly, you say "Let me just add that if you want to give GLD the benefit of the doubt then don't waste your time because they sold off a majority of that 44.34 tons of gold during the last thirty days."

The price of gold was falling, therefore holders of GLD started selling (correctly so). If stocks fall 15% many investors sell them, or it hits their stops. Again, to reflect this GLD has to sell the physical gold. That is what it is supposed to do.

JMO.

Gemma:

That was only a stab at humor (obviously with a very dull knife) towards Kaimu. He's been reporting (seems like years now)that a bank has been going down every weekend. So, when he makes the prediction it will happen this weekend, being the wise-ass I am, I sardonically stated that was really going out on a limb predicting another one would go down this weekend. Only funnin'. Kaimu is one of the sharper tools in the drawer around here

IKE's clouds cover nearly all of the gulf:

http://www.wunderground.com/tropical/tracking/at200809_sat.html

BTW, I have been tracking the computer models for several days, and how these models change every day. A few days ago the models showed IKE heading for Mexican/Texas border, and everyone was quiet. However, this assumed a change of course somehow, because the path was headed straight for New Orleans/Texas border originally.

SiO2, I was about to post the same thing. GLD is supposed to buy / sell gold according to demand of its investors.

I don't disagree w/Kaimu's comments about GLD working until it doesn't. But I'm beginning to think that as crisis severity increases, less and less market mechanisms would work. Can you really protect yourself from everything? Can you go buy lots of food with your gold & silver pieces, after a supposed USD crash?

I think Kaimu is also making the point that the fox is in the henhouse on GLD. If you're HB&B, you have to exert as much influence at as many points as possible within the system. Gold is a natural threat to fiat money. So, even if the effects are somewhat limited, they can have an effect. Considering the owners of GLD are part of the darkside it stands to reason one should, at least, be aware of these relationships.

I'm posting this from Cramer this morning:

"Okie dokie, the dollar's a rocket, just ramping every day. Oil's in free fall. It would have been well through $90 if it weren't for Ike. The Baltic Freight Index is through the floor. Gold hasn't been down this much in eight years. Job losses are accelerating.

And we are supposed to raise rates? That's the official stance of the Fed minions, the ones who talked about growth getting stronger and inflationary pressure in the system.

I have to tell you that if someone worked for me and said that stuff, you know what I would do? I would fire him before he even finished talking to me. That's just shoddy work.

Yet that's the work the people on the Federal Reserve Board have been giving us.

It confounds me that no one else ever says, "Boy, these guys are so wrong, it is frightening." It mystifies me that the Fed could be doing so little homework and is so off the mark. The Fed should be putting out the word that because of the extraordinary decline in commodity prices and the amazing rally in the dollar, it stands to make any liquidity available. The Fed should cut 50 basis points next week and at last give the banks a chance to rebuild reserves through net interest margins.

Now maybe, just maybe, the Fed believes the tooth fairy. Or Washington Mutual (WM - commentary - Cramer's Take), which just released a much-smaller-than-expected charge for bum mortgages. If you believe WM, then the foreclosure wave has peaked already and housing prices will be stabilizing before year-end. That's what their moves imply.

I just am fed up with the lack of scrutiny the Fed is receiving for its refusal to acknowledge the facts since July. The great commodity boom is over. The deleveraging is massively deflationary. The unemployment figures are only going to go higher and higher, with high-profile failures in the financial business.

Yet so-called informed people are saying it is time to raise rates.

Good grief.

When will they look at the facts? And when will the Fed be called on the carpet for being just plain WRONG?! "

Interesting...what does Bill see that Cramer doesn't...I wonder...is it perhaps as Kaimu has said about M3, that future inflation is baked in and that's why the FED talks about raising rates? Is it the commodity bust is only temporary because of currency debasement and the FED understands this?

As Bill says, that's what makes markets...

We know what happened last time JC cried like that.

Good grief indeed, what a guy.

Bill sees the banks have all severed a major artery and are bleeding liquidity while trying like hell to build capital....so any transfusion from the Fed and Treasury just bleeds out and M3 expands like mad.

The Fed talks about raising rates because sooner or later they will have to call Frankenstein back to the laboratory.

THAT and remember how it is when they make a move, they telegraph and lip service it for months before they make a move. So they may hint at raising or cutting in order to manipulate the market the direction they want, well before they actually do anything.

Oohhh...ESLR popped to 6.15 in pre market. Mmmmmh...I wonder if the lamb are getting set up???

Oil is popping, so ESLR will follow....

CP,

I wasn't paying much attention to the stock market and am not clear on the exact year. (My business was good—I was working long hours.) Greenspam was still Fed Chr. and running rates up, then down making it a good time for bond trades. I think the longest I've ever held a 10 or 30 year is about a year and a half.

I find it interesting that the highest the Fed has been able to push the 10 year since cutting, is to the high end of 4%.

Been reading, "Hard Times," (1970) by Studs Terkel. A series of recollections of the 1929 Crash. Last night a broker related how "speculation was the cause, but it can never happen again because of regulations."

"Never, say never" —James Bond

NEW YORK (MarketWatch) -- Sens. Max Baucus and Chuck Grassley on Thursday unveiled bipartisan measures to reduce tax breaks for large oil and gas companies and extend credits for wind and solar power, amid a flurry of attention around offshore drilling and energy.

Good morning.

Here are your Cara 100 Ratings Changes:

Upgrades:

GOL - To Overweight @ JP Morgan
SYT - To Neutral @ UBS

Target Price Lowered:

INTC - from $27 to $26 @ Friedman Billings

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

Have a great day and a better weekend.

(Political Animal) PALIN'S BOOK-BANNING EFFORTS, REDUX.... Here's what we know about Sarah Palin's interest in banning books. Time reported last week that Palin asked the Wasilla librarian, Mary Ellen Baker, about the process for banning library books. Baker was reportedly "aghast" at the question. Soon after taking office, Palin, according to a New York Times report, fired Baker, and news reports from the time indicate that Palin thought Baker hadn't done enough to give her "full support" to the mayor.

Palin reversed course on Baker's dismissal after a local outcry, and later said the discussions about banning books were "rhetorical."

Yesterday, ABC News' Brian Ross moved the ball forward a bit, with an interesting report.

Ross emphasized an angle I previously hadn't heard much about. Palin was elected mayor thanks in large part to the strong backing of her church, the Wasilla Assembly of God, which, right around the time Palin took office, "began to focus on certain books available in local stores and in the town library, including one called 'Go Ask Alice,' and another one written by a local pastor, Howard Bess, called 'Pastor, I am Gay.'"

Palin became mayor, her church was interested in censorship, and soon after, Palin asked a "rhetorical" question about how books might be excluded from the public library. When the librarian resisted, she was, at least initially, fired.

The line from the McCain campaign has been that Palin never had any interest whatsoever in banning library books. That seems increasingly difficult to believe.

Ask me about my heartbreaking time in WM yesterday...I kept getting stopped out and was suffering from sever finger (and wallet) fatigue by the time the muther took off. I SHOULD HAVE made almost a thousand bucks. Really frustrating.

No worries Shark, it will soon be obvious to all that the emporer wears no lipstick.

They actually let her sit down in front of Charlie Gibson for questions.....

Governor Palin couldn't answer when asked if she 1. supported the Bush Doctrine, and because she so obviously stumbled, 2. Could she explain what the Bush Doctrine was.

She did try a lame effort to BS her way out of it, but she was clearly outclassed. This was the first question I've seen posed to her by a major media journalist. There are gonna be a slew more....

Joe Biden might talk a lot, but he won't have to say much of anything to illustrate his overwhelming advantage over Palin, who clearly isn't qualified to be VP or President.

All these stories coming out about her style makes her look exactly like Cheney. Sure a lot of smoke around abuse of power.

If those boys at the FED kick in US Taxpayer money to assist the LEH sale, I'm gonna sell some equities and put the cash to better use...

UYG coming back to me, hope to get a chance to jump back in and sell into the next rally.

PDGI long at 10.17. Capitulation. see if it works out.

ALOHA !!

Si02 ... You miss the theme of my GLD/SLV essays which is that in a $200 price increase in the POG there is little buying happening compared to massive selling on a $200 price decrease. Why is that? Compare 6 tons to 44 tons ... isn't that lopsided? I say it is! It only helps those who are short gold and that is most all of HB&B! Connect the dots!

re: resistance to Bill's bullish market view

Here's why we NEED always to consider opposite views (per Jeff White in a Q&A on thekirkreport.com)

"A successful trader walks that very fine line between conviction in a trade and always observing whether or not conditions are shifting. The successful trader is willing and able to change their opinion in the heat of battle if the environment changes, at times even reversing a trade once they recognize they’re on the complete wrong side of it."