The Mess On Wall Street: Four Trillion Dollars Down The Drain

The New York Times has an interactive graphic up on its site that pretty much says it all. It shows that $4 trillion has been wiped off the total market capitalization of the U.S. stock market since last October. Of that, nearly $1 trillion is from the decline in the financial sector alone.

http://tinyurl.com/687gnl

Oil market collapse waiting to happen

An estimated US$260 billion was recently invested in oil markets, superimposed as an inverted pyramid of risk on a relatively tiny base, worth about $4 billion, of physical crude oil. The risk of market failure is considerable, and there is little that regulators can do.

http://tinyurl.com/49u6ma

The liquidation trap

A cocktail of forces fostered the exuberance that led the US financial system to its present impasse - a liquidation trap in which falling asset prices compel asset sales and hence further declines. Politicians and commentators on both left and right urge that the "sins" of key actors require punishment. Both views risk unnecessary economic suffering.

http://tinyurl.com/5x4jab

Cara 100 Update:

WFMI - Coverage Initiated @ Friedman Billings with an Underperform

WMT - Target Price Raised from $60 to $63 @ Credit Suisse

i've started watching ttes and mpwr. still cash. cdnx bookmarked.

Trying to put order in for Breaker Energy WAV.TO....does not recoginize symbol. Any idea on how I can trade this?

It really is a calming influence to have discovered this board, Bill primarily of course and so many wise traders. At times like yesterday, when the proverbial hits the fan, this was one of the few places I frequent where people were leaning the right way, observing and posting calmly, and making money.

Bill's accuracy with his calls has been astounding, particularly on short-lived bounces that should be sold and calling a GG bottom (which so far looks like it was to the very day!).

Good luck everyone - for many here luck doesn't come into it I know: my aim is to be aligned with the way most of you trade as I learn more over time.

Bull Hunter

Where do you stand on QID?
Sell and lighten up or hold for the high 50's or maybe the low 60's {???} ?

"when you say the "types of company I have identified as
targets" - do you mean the Cara 100 companies?"

i see (in the Daily Report) 7 more Cara 100 companies in the AZ today compared to the day before...that has to be some kind of indicator...

personally, i usually think of adding specific companies in terms of tweaking gains on the portfolio...but to catch broad moves in the market, ETFs that trade intraday in real time now make that play much simpler...

Quesstion on price to cash flow....I've seen Bill mention this several times and Hruska mentioned it on BNN many times. Is there a good source that has this calculated already? If not, what figure for cash flow is used? Operating cash flow (ttm)...Levered free cash flow (ttm)???

re: Mackinaw Mackinaw at September 17, 2008 10:19 PM
[BernardF, Please do tell us: What bank in Canada is paying 3.75% for deposits????]

The offer is from President's Choice Financial.

This is not a recommendation. The accounts are provided by Loblaws (Weston Group) from CIBC.
I get rewards of 1% on my bank account and whenever I use my MasterCard. I hope that they are not in trouble and using the funds for their own use.

More info here:

http://www.pcfinancial.ca

=================== Two interesting recent emails from them re my points:

Bernard, you currently have 143,593* PC points that you can redeem for $1,430 in free stuff.

Redeem for...

If your PC points don't cover the full amount of bigger rewards, just top-up with cash!

So come and get your stuff, any time you want. Just tell the cashier you’ll be using your PC points. Enjoy!

===================

PC points CORRECTION NOTICE!

Hi Bernard,

You recently received an email showing the incorrect redemption value for your PC® points balance. Please disregard that email. Your correct information is shown below:

You currently have a PC points balance of 143,593,* which can be redeemed for $140 in free rewards.

We apologize for any confusion and hope you'll enjoy redeeming your PC points at participating supermarkets where President's Choice® products are sold.

===================

I guess I did not move fast enough to redeem them. Just like the stock markets. If you are not quick these days you miss the move. [050]

QT,

I'm holding on. I don't buy into this gazillion dollar band-aid gambit by the FED and the UCB.

IMHO, the tech stocks are still over-priced but then again, I've stayed at the party too long in the past.

Regards

i was hoping to see a gap down open that would get bought...but i'll take the modest gap up-> which may attract a little profit-taking to set up a rally...

one phrase from bill i caught on the fly last night was "IBM will still be making computers..." to really make money, i think it's necessary to buy during weeks like this...it's not as if life as we know it is coming to an end, right...there are still people playing "Chelsea Morning" right now and looking forward to classes at the art school or coffee with a boy/girlfriend...it's a nice day here in SF, and out of a couple thousand employees i'm probably the only one with enough interest in the market to be blogging about it...

BH- came damn close to 55...you've done quite well and i have no business giving unsolicited advice...so i'll shut up...;)

im devising an exit strategy on all my funds should any Canadian Banks up here face problems w/ regards to their money market funds, brokerage or savings accounts.

im thinking once i move everything to cash id like to hold it under deposit limits for insurance and splip the totals between cash and gold/silver certificates.

though im concerned about the validity of such certificates even if issued by a major canadian bank held in trust by the old Scotia Bank Gold Vaults.

does anyone have any specific thoughts about holding the share certificates on the Canadian Central Fund as a safe option, or straight to delivery of the metal for safe storage? too extreme for the canadians?

any thoughts are appreciated

looks like the high-stakes poker game was in the FXP room...

Well, Capstone had to do an equity offering. Crash and Burn.

I just wanted to say "thanks" to Bill. I read this blog like a junkie who needs a fix and I know many others do. With all the turmoil in markets today, I for one believe that Bill's free blog accomplishes more in the way of levelling the playing field than any regulation that the US Congress is likely to pass in the coming months in reaction to all that's happened - largely because Bill is honest and unrestrained.

Mark Twain has a great quote: "Keep away from those who would belittle your ambition - the truly great will make you believe that you too can become great." I think that quote fits Bill to a T.

God bless you, Bill. Be well.

2nd,

I always respect and appreciate your advice on my investments.

I think we differ on the "life as we know it" aspect. IMHO, this is going to turn out uglier than anyone imagines. Hope I'm wrong.

Regards

Through thick and thin have learned the following

During tough conditions, times are not a bad as they seem.

During euphoria, things are not quite as good as they seem.

Keep a level head out there.

Bull Hunter

Thanks for you take....

CEG bought out for $26.50/sh

Riding DXO today.

Old Goat,

Thanks for your past reference to Vantage Wire. I finally opened an account. How nice to have access to real time TSX quotes.

Regards

Maybe stockcharts datafeed is broken but the TICK is negative even though the market is up so much.

Looks like a pump and dump to me.

Remember SNL... Hans and Franz......We want to pump you up!!

BH- LOL, OK...i just picked Chelsea Morning at random thinking of a young art student in NYC totally unconcerned with Wall Street...

but i just as well have picked Tom Thumb's Blues for Wall Streeters-

When you're lost in the rain in Juarez
And it's Eastertime too
And your gravity fails
And negativity don't pull you through
Don't put on any airs
When you're down on Rue Morgue Avenue
They got some hungry women there
And they really make a mess outa you

nemo - Capstone (-21% today) - Wow, you were right! Proof that when a CEO is seen and heard from the truth is not likely positive. I think I avoided this one partially from your voice of reason and my recent observations of CEO jawboning. Good call, thank you!

moab- they're messing with our minds...zoom out to the long view and finish your coffee...

i COULD just as well have picked...

"KRAFT FOODS TO REPLACE AIG IN DOW JONES INDUSTRIAL AVERAGE"

LOL- well, i guess they picked a nice, safe one...

trailing buy stop on DZZ

wish they would replace AIG with Kraft Foods in UYG also...

Made a nice profit on the JAG.TO that I bought yesterday - up a nice 15% on the open this morning. I'm going to watch for it to fade the gap and consider another ride.

Toronto up 3.2%

CAF and FXI seem to be saying things get better in asia tonight...

Pookster:

Frankly, it was two things: His one-line where they might need to invest to produce the new product, and two-they aren't cash-flow positive yet. Put the two together in this market and...

2nd_ave,

aren't you worried that UGY hasn't crossed it's July low..even with this getting worst! Weird!

I notice that with SKF too. Hasn't come close to the $200+ mark.. and I think this is worst then July! IMO

keep bill's tell in mind- CDNX up 1.87% at the moment...

>>Through thick and thin have learned the following

During tough conditions, times are not a bad as they seem.

During euphoria, things are not quite as good as they seem.>>

Seamus,

I've found that you're absolutely right -- and your words apply to Life In General, not just the markets.

sorry UYG not UGY!

Guess it is not a pump and dump. Options expiration looms.

Grantmi- of course i'm worried, but the time to listen to your worries was last October, when it was time to sell (and i think most of us here did)...now i'm worried, but not REALLY worried, right...i'm more worried about missing the return train, which is why i bought early...

Rumor Du Jour:

Kraft Foods to merge with Martin Guitar.

New company to be known as Cheeses of Nazareth.

:^) Sorry, couldn't resist.

Re: Bond Yields

Short-term bond yields effectively at zero:

http://finance.yahoo.com/bonds

FWIW, ref: CEG buyout at 26.50

CEG makes up @ 7.7% of nuclear ETF NLR. Nowhere near the liquidity of CEG trading on panic yesterday, but ETF up today.

Keep in mind some good companies dumped in a plunge are also holdings in etfs. When the company rebounds, could be opportunity in relevant etfs. Sometimes there is a time delay before ETF moves.

No position in NLR.

They won't let me put a stop under my DXO... not allowed for otc...

Howdy all,

GS was very good to me so far...I jumped in with both feet premarket and just sold half. I don't believe i've ever made so much money in 30 mins.

It's a nice bright spot in the middle of waiting to return home post-IKE. Good luck to all today.

Gemmastar

"your words apply to Life In General"

That's where I learned it! ;)

Now is when Bill's admonition to keep an even emotional keel should pay off. Personally, I've been mostly in cash for some time, but I've now loaded a comfortable amount with which I will test what I think I've learned here. And I've warned my adrenals to stay the heck out of it.

Thanks Bill and everyone here for the education and the stimulating discourse. Good luck, All.

IB data on TICK...-23 to +286 in 2 sec

Craig,

Checked out the price of OTT lately?

Hillary writes to Chris Cox - Letter attached:

http://investigatethesec.com/drupal-5.5/node/398

I should have read Bill's comments before the open.

nemo - I really like (love?) the technology. - Another reason not to enter, got to deny emotion....

USD flat

Yeah: I've found relationships for love rarely turn out well.

http://www.bloomberg.com/apps/cbuilder?ticker1=.TEDSP:IND

Know that we know the President is on top of the Market situation, I guess I'll turn bullish.

;^)

Was just going to pick up some SLW, though hesitated, now SLW dropping quickly here - any insight?

Got out of GS in the middle of W's speech. Whew.

Patchie - I'd say based upon that memo, the author "doesn't get it". When will these folks ever stop listening and start reading?

Anyone into SWC, thoughts?

I still think energy is headed up from here.

SLV trading below the open and approaching previous close, indicating support is fading. JMO. Do ur own DD. Sold SLV position near open. Look to reload at later date/time

DavidV has been trading SWC..but you'll have to wait until 1130PST for his take..

Just profit taking in silver and gold. Would anyone want to let anything run in this market with opex this week?

Man, Google finance stinks... What are you guys using as your window to the world?

BH: OTT. No, I've been waiting for CNSL to come back to me. Better div, and a 21 PE compared to 91 for OTT, and OTT is in the middle of it's 52 wk price range. If I'm going to be in a telco they have to be near the low and pay me to stick around and worry/bother with them.

Trying to set myself up with some big div payers into the future.

BH - You go ahead, I'm not thirsty for the red KOOL_AID! ha,ha!

GLD breaks below open and previous close.

Chickenpookie - I generally use Yahoo but I think it is mostly a matter of familiarity. I look to Google when I want to see news items overlayed on the chart.

ST07 -

SLW has a majot fib level which I put @ c.a 9.38, looking at the action it's probably 9.28.

IF you think it is in a new bull market, buy it under that. It may fiddle around that level for a while longer, daytraders do quickies long/short around these levels.

northvan - Thanks, I normally use Yahoo too, when they don't have the ticker that crashes my browser. Guess I need a windows upgrade from '98.

CARA 100 stocks up pretty impressive today compared to the Dow or SPX (http://nexalogic.com/cara100.html). Definitely pretty impressive selection of stocks.

Maxpain: FWIW, MP and current prices converged last month for DIA and SPY (they both moved towards each other). We are currently well below MP values. http://nexalogic.com/maxpain.html (charts at the bottom)

On Nortel... Nortel yesterday announced a reduced sales forecast as well as the intended sale of a key Metro Ethernet division (a "premium asset"). The market responded by dropping its stock price by more than 50%. The day Nortel chose certainly helped push the stock off a cliff.

The company's valuation at the end of the day yesterday was USD$1.3B. With sales of $10B ($8.5B excluding Metro Ethernet), this means the company trades at 12%/13% of annual sales. The Metro Ethernet division alone, could fetch $500M to $1.5B. Nortel also has a wireless division (particularly for LTE, Long Term Evolution) which is riskier but is worth something as well.

The company's cumulative tax losses are roughly $6B, worth approximately $1B in cash savings for an acquirer.

The company has $3.1B in cash, and $4.5B in debt. The company is selling its premium division because it is in trouble, its financial position is not strong, customers are buying less, competition is tough, and it does not enjoy the economies of scale of other players such as Cisco and Ericsson.

The company could be well undervalued at the current prices, at least by a factor of 2 or more. The key is what kind of valuation is given to percentage of annual sales. 12% is too low.

High risk, high reward. Went long some 2.50 and 5 call options earlier today. Please do your DD.

P.S. The company's 20-year chart is quite something, you see that type of chart when viewing RF (radio frequencies) spectrum in oscilloscopes.

[Bill Cara note:

The Financials, including Goldman Sachs, are pulling this market down, which I have been writing would be the case, possibly to 10000/2000 on the DJIA/NASDAQ -- but others are doing ok, and I expect many of them to work through a cycle bottom with minimal downside risk here plus major upside potential. That recommendation was, as I stated, for traders who have a time horizon of 1 year or more. Short-term (swing) traders and day-traders may have different trading plans in place. GS, btw, remains in the Cara 100 because the firm still has the biggest bazookas on Wall Street. They have persistently denied have credit market problems like their peers. If they were lieing, then they'll hear about in court, I am sure.

Re the coordinated action of central banks this morning; if more than $180 billion is needed, they'll come up with it. If they do it roughly in balance with the $USD weightings, then there will not be a currency crisis. However, gold will continue to move higher in price because all important fiat money currencies are being devalued together against a storehouse of value like gold.]

CP,

Windows '98? My nephew's Fisher-Price Computer has a better operating system. :^)

Regards

thanks pappdjavul, 'ppreciate it.

BH - This was an VGA color upgrade from my Apple IIe...

Interesting,
Ex-SEC Official Blames Agency for Blow-Up of Broker-Dealers

http://www.nysun.com/business/ex-sec-official-blames-agency-for-blow-up/86130/

Back in April, Bill mentioned: "common sense tells me that higher inflation and slowing economies, ... the classic stagflation scenario, is now being recognized in Europe, UK and Japan."

I am still trying to reconcile the prospect of stagflation (and even hyper-inflation) with the prospect of deflation. Mish has long argued that credit is being destroyed on a far larger scale than money is being created.

It seems very relevant to the Treasury side of the Trade of the Generation (TOG).

OT: Humor

Why did the chicken cross the road?

BARACK OBAMA: The chicken crossed the road
because it was time for change! The chicken wanted
change!

JOHN MC CAIN: My friends, that chicken crossed
the road because he recognised the need to engage
in cooperation and dialogue with all the chickens on the other side of the road.

HILLARY CLINTON: When I was First Lady, I
personally helped that little chicken to cross the road. This experience makes me uniquely qualified to ensure right from Day One! that every chicken in this country gets the chance it deserves to cross the road.
But then, this really isn't about me.

GEORGE W. BUSH: We don't really care why the
chicken crossed the road. We just want to know if the chicken is on our side of the road, or not. The chicken is either for us or against us. There is no middle road here.

DICK CHENEY: Where's my gun?

SARAH PALIN: Where's MY gun? That chicken's
got no choice!

COLIN POWELL: Now to the left of the screen, you
can clearly see the satellite image of the chicken
crossing the road.

BILL CLINTON: I did not cross the road with that
chicken. What is your definition of chicken? AL
GORE: I invented the chicken.

JOHN KERRY: Although I voted to let the chicken
cross the road, I am now against it! It was the wrong road to cross, and I was misled about the chicken's intentions. I am not for it now, and will remain against it.

AL SHARPTON: Why are all the chickens white?
We need some black chickens.

DR. PHIL: The problem we have here is that this
chicken won't realize that he must first deal with the problem on this side of the road before it goes after the problem on the other side of the road. What we need to do is help him realize how stupid he's acting by not taking on his current problems before adding new problems.

OPRAH: Well, I understand that the chicken is
having problems, which is why he wants to cross this road so bad. So instead of having the chicken learn from his mistakes and tak e falls, which is a part of life, I'm going to give this chicken a car so that he can just drive across the road and not live his life like the
rest of the chickens.

ANDERSON COOPER, CNN: We have reason to
believe there is a chicken, but we have not yet been allowed to have access to the other side of the road.

NANCY GRACE: That chicken crossed the road
because he's guilty ! You can see it in his eyes and the way he walks.

PAT BUCHANAN: To steal the job of a decent,
hardworking American.

MARTHA STEWART: No one called me to warn
me which way that chicken was going. I had a
standing order at the Farmer's Market to sell my eggs when the price dropped to a certain level. No little bird gave me any insider information.

DR SEUSS: Did the chicken cross the road? Did he
cross it with a toad? Yes, the chicken crossed the
road, but why it crossed I've not been told.

ERNEST HEMINGWAY: To die in the rain, alone.

JERRY FALWELL: Because the chicken was gay!
Can't you people see the plain truth? That's why they call it the 'other side.' Yes, my friends, that chicken is gay. And if you eat that chicken, you will become gay, too. I say we boycott all chickens until we sort out this abomination that the liberal media whitewashes with seemingly
harmless phrases like 'the other side.'
That chicken should not be crossing
the road. It's as plain and as simple
as that.

EVERYONE'S GRANDPA: In my
day we didn't ask why the chicken
crossed the road. Somebody told us
the chicken crossed the road, and
that was good enough.

BARBARA WALTERS: Isn't that interesting? In a
few moments, we will be listening to the chicken tell, for the first time, the heartwarming story of how it experienced a serious case of molting, and went on to accomplish its lifelong dream of crossing the road.

ARISTOTLE: It is the nature of chickens to cross
the road.

JOHN LENNON: Imagine all the chickens in the
world crossing roads together, in peace.

BILL GATES: I have just released eChicken2008,
which will not only cross roads, but will lay eggs, file your important documents, and balance your checkbook. Internet Explorer is an integral part of eChicken2008. This new platform is much more stable and will never reboot.

ALBERT EINSTEIN: Did the chicken really cross
the road, or did the road move beneath the chicken?

COLONEL SANDERS: Did I miss one???

QID now green.

We're not done yet, QT

Regards

Hey folks.

Made money on a short run up in CDE (Cour De elaine or something) then sold before the crash. My mistake? Buying it again too soon after the crash. This stock has always been a slippery snake.

Then I bought GSS after the crash, a great buy. Problem was, I set a dollar trailing stop at a nickle, went downstairs to get coffee and that f-er had cropped another dime momentarily, stopping me out, I rebought but that cost some money too. The good thing was loading up on size in GSS at that point and riding it up a quick dime. So all in all, on the day I'm ahead only enough to buy Bill a very nice lunch.

northvan - You're on the money man. Soon the tables will turn on deflation, clearing the way for TOG. When there's no return on bonds and folks are loaning their money to USG, paying them for the privilege. This will reverse and selling bonds at hight of bond price is the target.

I'm wondering how much longer the TBT will be here since LEH crashed...

Buffett buys CEG at 26.5

I'm guessing Bush finished his speech.

To paraphrase Sen. Jim Bunning on Bubble Vision this morning:

Henry Paulson should know better. Ben Bernanke shouldn't know better, he's not even qualified to head up the FED.

Maybe I was right about the pump and dump after all. We'll see if it breaks the lows. VIX is now up.

shark - You're a card!

I don't know what is going on with KeyCorp but they are collapsing, down 17% in an hour.

reloaded once again some XLU puts on this likely last push above the 33.50 fib, thank you, next target the 29.90 fib.

I do not agree with Bill that the utilities are a good buy for income. They have simply everything against them in the current environment - cash strapped consumers, municipalities & states, and borrowing becomes more difficult & more expensive by the minute.

Just totally disregarded my ego and re-bought GSS higher and even more of it and dumped it again for a nice ride. love this game boys, much better than blackjack.

Goldman is still owned 48% by its partners. Another 22% by non partner employees.

Why aren't these well heeled folks dipping into their very deep pockets to re-capitalize the firm?

And am I wrong in thinking that Goldman's partners managed to convert capital into income? How could that be tax advantageous?

What am I missing?

Do not use margin in anything gold, be it shares or bullion. You kill everything you touch with margin, including yourself. You facilitate the legal short because on margin your shares may be lent to the short . The volatility you have just seen has only just begun.

Chickenpookie, yahoo crashes Vista too. Wish I still had 98'. For real time I use the trading platform IB
Dollar down as per kitco live spot price page
http://www.kitco.com/market/

out of ROS at 40.33.

long MBT 55.30

Bull Hunter

Just got back... looks like QID has been holding its ground.

BH...have you looked at the charts for a sell point. To me it looks like 57.xx+ could be the ceiling. What's your take?

clarifications.

MBT is a Triple RSI screen, RSI 7 day broke above 30 this morning. Sell stop at 53/52.75 limit

Failure to File a Notice of Change

Posted by: hawnkoa on September 18, 2008 03:07AM

Since the Offer came out on July 28, 2008 a representative of the Government of Ecuador has come out and said that the "dreaded" Windfall Profits Tax will not apply to mining. In my estimation this should require a Notice of Change from the BOD of Aurelian.

Below is an excerpt from the OCS Takeover rules on page 25...

"Notice of change
2.16 (1) If, before the expiry of a take-over bid or after the expiry of the bid but before the expiry of all rights to withdraw the
securities that have been deposited under the bid, a change has occurred in the information contained in a directors’ circular or
in any notice of change to a directors’ circular that would reasonably be expected to affect the decision of the security holders to
accept or reject the bid, the board of directors of the offeree issuer must promptly issue and file a news release relating to the
change and send a notice of the change to every person to whom the circular was required to be sent disclosing the nature and
substance of the change.
(2) A notice of change in relation to it must be in the required form.
Filing directors’ notice of change

2.17 The board of directors of the offeree issuer must concurrently file the directors’ circular or a notice of change in relation to it
and deliver it to the principal office of the offeror no later than the date on which it is sent to the security holders of the offeree
issuer, or as soon as practicable after that."
http://agoracom.com/ir/Aurelian/messages/943949#message

shorting -

if the up-tick rule is reinstated before shorting, shouldm't there also be a down-tick rule before buying?

re: ROS

RSI 7 day capitulated 2 days ago. Then MACD hourly diverged. Went long at 29.79.

Does the uptick rule make any sense with penny increments in stock prices?

QT,

My best guess is that we break $60 before this is over.

I'll be glued to Bill's market calls though and won't hesitate to sell before we get there, should Bill give the all clear signal.

You might want to take partial profits. Maybe sell half at $55 - $57? Remember Bill's admonition, "Always Sell Too Soon".

Good luck and best regards.

STT bank down 20% any news?

Scheleppy-

RE: Price to Cash Flow

It's a ratio of comparing a company's market value to its OPERATING cash flow without the effect of depreciation and other non-cash factors.

Bill Hunter

Thanks...

Re: Bond Yields

Bond yields held effectively at zero, gold should rally.

Surprising that the London market still manages to see a gold price decline overnight. There is still some dumping going on there.

Gold basis still very tight throughout the correction and pops into backwardation with the rallies.

PG - I sometimes use UUP as a quick way to check USD. Thanks for the confirm re:Vista, that's why I stuck with '98, because it sounded like folks were getting it stuck to them on Vista and I'm waiting for AMD to work their issues through.

Out of MBT. that was quick.

Dont know whether to buy, sell or run after the chicken. Quad witches should be ...hmmmmmm interesting. Am up small gain (due to emotional entry I am sure) on pms, OSK, MFN and RBY. boy I should have named a child ruby I like that one so much.
Is this a time to add to TBT? Or wait for a dip on it? My timing skills are too slow to try to time anything, eg the door does occasionally catch me in the *** on the way out.
And lastly, does anyone know how to put the TSE symbol into IB so I can watch the CDNX index along with TICK and TRIN.
Thank you..all. Thank you Bill. Although I am down YTD, I have the tools displayed here, Otis Redding on CBC and a beautiful foggy northwest fall day.
peace

QT,

Let me just add that if you're going to push the envelope on this trade, when you sell your first group of shares, consider placing a tight stop on the remaining shares.

For now, tech stocks are in a downtrend and I'm not going to fight the trend.

As always, your mileage may vary.

Regards

Re: Bubble Vision

The one thing that always catches my attention at CNBC are always the cogent comments from the senior trader they always refer to at market turns.

He stated that it was the second mouse that always gets the cheese. Well, there you have it. A trapped market.

I wouldn't be surprised to see a .50 pt rate cut tomorrow morning before the market opens. Didn't Ben do this on an options expiration day not too long ago?

Bull Hunter

I'm fighting greed here...major greed. I'm shooting for 6 figures on this trade. Close but not there yet. Guess I'll continue ride the bull down untill it is close to death.

"As always, your mileage may vary"
[LOL good one!]

U S Gold Corp. Rob McEwan was on Bnn this morning

Link : http://watch.bnn.ca/#clip93640

hope it works.

I am way long UXG

tony,

Thanks for the link. Looking forward to what "RM" has to say.
I been long UXG waaaaaaaay to looooooooong myself. Hope it takes off soon.

QT/BH- LOL...you can also jack up the 'torque' on your returns by rocking your 'vehicles' back and forth...

VIX at 52-week high.

Telestar3d- great humor, especially Hemingway's take..

long GS at 88.49

Some of the regional banks like KEY are getting demolished and Goldman just melted 8 points. This is a recipe for panic.

"This is a recipe for panic."

They BETTER NOT stop trading today!

re: GS. Capitulation play. The big boys gunned stops at yesterday's low. MACD divergence on the hourly charts

CEG, I like it now that one of the best balance sheets around wants to buy it.

Also, look at this quote:

“"I am definitely shocked by the price level," said Angie Storozynski, an analyst with Macquarie Research Equities in New York. "To get such amazing power plants at a fraction of the replacement cost is just incredible," she said, adding Macquarie's fair value target for Constellation shares is $102.”

CEG also has very good yield (7.7 or 13.81, quoted from two different sources, maybe the second reflects recent price drop). Also, look at CEP, the B shares for yield.

Long CEG for my yield portfolio.

long MS at 15. Another capitulation play.

On tickerforum, Genesis said that MS and GS are shorts to zero the day LEH went bankrupt because hedge funds will figure out that all they have to do is short the stock to oblivion. Their debt will be downgraded, firm collapses and they pocket 100%. This seems to be happening.

This is gonna get ugly. TICK can't get above -500.

Re: RMX.TO

Recent bonanza grade intervals probably means that people will begin to speculate in the stock because Goldcorp bought neighbouring Gold Eagle.

Gold Eagle traded as high as $12.40 at the time the offer was made.

Stockwatch.com

http://tinyurl.com/3j9upr

http://tinyurl.com/3hdult
Republican presidential candidate Sen. John McCain on Thursday called for the firing of Securities and Exchange Commission Chairman Christopher Cox. McCain said Cox "serves at the appointment of the President and, in my view, has betrayed the public's trust. If I were President today, I would fire him."

[Bill Cara note:

Fine; blame it on the Regulator. I can take a share at poking it to Chris Cox because I think he is too much influenced by the White House, but that man is not the problem. Treasury Secretary Paulson and Fed Chairman Bernanke are the two who ought to be fired. Paulson ought to be investigated, and possibly prosecuted.

Here's more garbage on the airwaves today: http://tinyurl.com/4nc4gm

Can you believe Donaldson --ex-Wall St honcho like Paulson and ex-NYSE CEO like Thain-- has got a single word to say that we should listen too?

And how about Barney Frank's "We need more regulation" mantra!

This stuff is getting too bizarre.

HB&B caused the problems in the late-1920's and early 30's and pushed Congress to legislate a Securities Act and Regs in 1933-34 that put credit mongers into control of the capital markets. Now the same HB&B has totally screwed the financial system, and they say they need more power? They need to be prosecuted. We need a new Securities Act that calls for an independent regulator, and the elimination of all conflicts of interest in financial services firms. Enough already with this broker and dealer and agent and principal and insurer and lender and self-regulator. I have said it for years, including in formal session of all the Canadian Securities Administrators -- stop this nonsense before it starts global wars and causes economic depressions. That's where the world is headed today, and the G-20 national leaders and Finance Ministers (and certainly not the central bankers) are urgently required to put their collective foot down now.

Yes, we need a new International Securities Act, and when we do it, please leave HB&B and central bankers out of the room and out of the deal. Legislation is supposed to be for the benefit of the people. Let HB&B file their briefs like every other vested interest. Put it on the table, and let's see the facts discussed and negotiated. Let's see who votes in the interest of the people and who have been bought-and-paid-for by HB&B. If this is not done, governments will never get it right.]

A run on a money market fund managed by Putnam Investments, a subsidiary of Great West Lifeco Inc. (GWLI.F:great west lifeco inc com
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GWLI.F 30.25, +0.77, +2.6%) has forced the company to liquidate the institutional fund. Putnam said that "significant redemption pressure" on Wednesday forced it to close the $15 billion Putnam Prime Money Market Fund (PPMXX:PPMXX
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PPMXX, , ) . "Constraints on liquidity in money market instruments created the risk that in order to process redemptions, the fund would realize losses in selling its portfolio securities," said Putnam in a statement. "The Trustees determined to close the fund to ensure equitable treatment of all fund shareholders." The statement did not say when shareholders will receive their money, nor did it say whether the payouts would maintain the fund's $1 a share net asset value.

Have you seen STT get hammered? Down 51% this session........

re: GS&MS.

game of chicken.

Good morning! I am glad to see that POG stayed at yesterday's heights -- maybe yesterday's move was real, and now the medium-turn uptrend has begun?

Well, my limit order at $1.70 was hit this morning for the WGW shares I "reloaded" yesterday at $1.56. I have just "reloaded" those shares again at $1.48, as I am determined to trade all fluctuations in WGW below $2. I did post a calculation a few weeks ago that if gold stays at $800, then WGW will have such earnings (their production volume and costs per oz are known) that at P/E of 10, their shares should be worth $4, which they were worth in March. So any purchase of WGW under $2 is a risk-free purchase, IMO. I am holding a long-term core position with the basis of $1.54, and I'll be trading around that core position aggressively before $2, and once WGW rises above $2, I'll be buying pullbacks greater than 10%.

Also, my ESLR limit was hit at $5.54 for 1/2 of the shares I purchased at $4.50. The other 1/2 I want to sell at $6.50. I am also placing a buy limit order at $4.50 to "reload" the shares I sold today, in case ESLR takes a quick dive down at some point.

Also, my VLO stop limit was hit this morning at $31. Placing a sell limit order at $32.90 for these shares.

Besides that, getting ready to close my ABK $7.50 puts (which I purchased when they were out of the money), which have almost tripled by now. I bought them at $1 and placed a sell limit order at $3 -- hopefully it gets hit today.

Re: Gold prices in backwardation

We are now seeing gold prices some $23+ in backwardation.

Gold is launching, up $50. I think something is up with the financials as many of them are collapsing.

woah here we go again...get on the gold train...

gotta hand it to u Kaimu.

Re: Gold Rally

Gold rally in effect possibly due to negative yields on treasuries. The page at Yahoo only records down to 0.01%

http://finance.yahoo.com/bonds

2-yr yield is off over 100 basis points over last month.

long USD.

long gss baby

Good start McCain.......
http://www.marketwatch.com/news/story/mccain-calls-firing-sec-chairman/story.aspx?guid={26ADDC18-65F8-434D-AF70-A8AB662B93BF}

"During the day today and tomorrow, I anticipate massive swings in prices."
Bill Cara

That is putting it mildly !

KEY Sep 10 puts up 850%.

Anyone knows why is still green?

BCE 36 DEC CA call options didn't work too well... :)

Thinking of getting some Cameco ones... may as well ride this one..

! now that felt like a little fear...

long QLD

U.K. REGULATOR PLACES TEMPORARY BAN ON SHORT SELLING

that is a panic move by the brits. it won't stem the tide, just slow it

Telestar3d,

Didn't you see one of the news articles? Warren Buffet just purchased Constellation Energy Group(CEG) for 26.50 per share. If I'm not mistaken, Buffet just bought the whole thing.

expect the unexpected

If GS breaks above the open, it'll be a screamer to the upside.

ST07:
I noted your list of BNN notables the other day...Hruska, Cohen, Tardif, and I wholeheartedly agree.
I hadn't come across Brent Cook, tho'.
Fyi,he was just interviewed during the Commodity Report segment at 11:30. Very worthwhile...lots of commentary about 'money for junior miners' predicament.

Also Rob McEwen and the Ceo of Rubicon were on at about 11:15...same theme...

Recommended segments for anyone interested in the sector.

DavidV- careful, man...you're going to get a reputation as a Sith guide..

McCain on Cox

http://investigatethesec.com/drupal-5.5/node/399

Thanks mebea

I found that Reuters has this calculated for you under their detailed quote, then ratios.

Is there an ultrashort for short term treasuries or just the TBT for long maturity?

Quentusrex, Yes I know.

Paula R. George
Sr. Administrative Assistant
BGE
Meter Reading
4211 Blakely Avenue, Suite 202
Baltimore, Maryland 21236
410-470-1701
410-529-2571 (FAX)
Paula.R.George@Constellation.com (EMAIL)
SAFE TODAY -- ALIVE TOMORROW!!

From: The Desk of Mayo Shattuck
Sent: Thursday, September 18, 2008 10:27 AM
Subject: Message to All Employees

Dear Colleagues,

For the past 72 hours, our management team, in consultation with our Board of Directors and our outside advisors, has been engaged in a nearly around-the-clock search to identify the best approaches for guiding our company through the unprecedented and treacherous turmoil on Wall Street and in the financial credit markets. This morning, I can announce that we’re pursuing a path that I strongly believe holds great long-term promise for our employees, our customers and all of the many stakeholders we serve.

Our Board of Directors this morning approved the tentative sale of Constellation Energy to MidAmerican Energy Holdings Company, a subsidiary of Berkshire Hathaway, one of the most respected companies in America . Under terms of the agreement, MidAmerican would acquire 100 percent of Constellation Energy’s shares for $26.50 per share. The purchase price is far below what we could have expected in a stable market environment. But the past two months have been anything but stable, and we had to move quickly and definitively to preserve shareholder value in this new and unpredictable market reality. We believe that operating under MidAmerican in the Berkshire Hathaway family of companies holds considerable long-term growth potential.

The name may be new to many of you but MidAmerican is an exceptional company, experienced and knowledgeable in global energy markets. Let me provide a brief overview. Based in Des Moines , Iowa , MidAmerican operates seven energy subsidiaries across the United States and United Kingdom . Like Constellation Energy, MidAmerican is an experienced utility operator, with its MidAmerican Energy Company subsidiary serving customers in Iowa , Illinois , Nebraska and South Dakota ; Pacific Power serving customers in Oregon , Washington and California , and Rocky Mountain Power serving customers in Wyoming , Utah and Idaho . Overall, the company owns a diverse generation asset base, including nuclear, wind, coal and natural gas, and serves 6.9 million gas and electric customers. It has approximately 17,200 employees; annual operating revenues are approximately $12.4 billion.

Like all of the many companies in the Berkshire Hathaway family, MidAmerican has a unique and highly successful management philosophy and culture. They invest in quality companies with quality assets and quality employee talent. Their commitment to the companies they acquire is that they will put them in a position to grow and thrive over the long-term. When I shared with Greg Abel, MidAmerican’s president and CEO, that our company has a 200-year history, he responded by saying, “And they’ll have another 200 years.”

The tentative agreement was reached last night and it’s our expectation that due diligence will be completed in the next two days. The goal is to sign the final agreement by close of business, Sept. 19. The acquisition is contingent upon a number of regulatory approvals, including FERC, NRC and Maryland regulators. We’ll be working toward a close in approximately nine months. MidAmerican is familiar with the Maryland marketplace and shares our commitment to working with Maryland authorities to invest in infrastructure in the state and ensure service reliability. We believe our state leaders will be very impressed with MidAmerican’s history and track record and its commitment to renewable energy solutions.

I recognize and fully appreciate that events have unfolded very rapidly this week, and that the news I’m sharing today may be both surprising and unsettling for many of you. At this stage, there are many unanswered questions and we will be working to bring clarity to these over the coming weeks. I can only emphasize that MidAmerican is investing in Constellation Energy for the long run. It is a privately held company, and is not entering this arrangement with a promise to shareholders to reduce employees or slash costs. It has established a track record of allowing successful enterprises to operate autonomously. Like our company, it focuses on results and rewards those who achieve their business plans. They want to keep our company in the MidAmerican family and they want it to excel. It’s a good fit from a business perspective, and I believe it will be a good fit from a people perspective.

In the next few days, we’ll be focused on finalizing the terms of the transaction. Our goal is to have more detailed discussions with all stakeholders, including investors and employees, next week. I very much look forward to introducing Greg and his leadership team to the Constellation Energy team.

I’ll close by saying that the events which led to this transaction were breathtaking. When the financial markets began to show real distress this summer with the demise of financial giants such as Bear Stearns and Lehman Brothers, and more recently, Fannie Mae, Freddie Mac and AIG, the state of the credit markets challenged all participants. Venerable institutions have collapsed within days. Although we are an energy company, which participates in commodity markets, the contagion was inescapable. We were forced, almost overnight, to reorient our priorities and strategic objectives. This decision meets our goal of preserving shareholder value and has the potential to secure a strong future for our company and our people. Berkshire Hathaway and MidAmerican have great reputations … I believe we’re landing in a good place.

Thanks for your continued support, understanding and, as always, exceptional work and results. I promise to keep you as informed as I possibly can.

Mayo

CEG: Article today at the Street.com

"MidAmerican Energy Holdings will pay $26.50 in cash for each outstanding shares of Constellation Energy. A definitive deal is expected to be signed by the close of business Friday, at which time Constellation will issue $1 billion of preferred equity with an 8% yield to MidAmerican. "

from: http://www.thestreet.com/_yahoo/newsanalysis/energy/10438186.html?cm_ven=YAHOO&cm_cat=FREE&cm_ite=NA

Bill
Thanks a million for educating me on the ways of the market - I sold my builders shorts this morning at a nice profit and also my short on the S&P.
How do I access archives for the past year; archives only shows prior to sept 2007 and your recent archives is only for the past 2 weeks?

[Bill Cara note:

This blog platform is being changed. You will be able to get all archives, and I hope be able to access keywords right to the source paragraph as opposed to the whole article. You'll be able to quickly link to my intra-day comments, and also key on your favorite community members, stocks, etc. I was hoping to have it ready by about this time, but these things are out of my control. Soon though.]

I turned on the tube for a few this morning. Lo and behold there was Charlie Ghasparino. I swear the man never took a breath of air as he babbled on. After about 2 minutes I switched it off. Do these TV people breath through another orifice while they're talking?
Telestar - nice chicken post

From Across The Curve acrossthecurve.com/:

Money Market Stress

September 18th, 2008 12:36 pm
The money market is in a severe state of disruption in spite of the massive liquidity injection by the central banks of the world. Three month Libor for tomorrow is 3.40 percent bid and as of a few minutes ago there was no offer. Investors are allocating funds to the overnight market and that has prompted a bit of a scramble in the longer maturities such as the three month sector.

There was other troubling news, too. The Federal Reserve in a standard weekly announcement revealed that CP outstanding had declined by$52 billion in the week which ended at the close of business yesterday.

Additionally, the Colorado Diversified Trust with assets of about $200 million was not diversified enough and its exposure to Lehman caused it to break the buck. The fund ministers to local schools and governments in Colorado.

This was another source of tension and intensified the reexamination of portfolio holding by investors.

Finally, in a real world example of the extreme difficulty of funding at a reasonable rate, a AA rated bank paid 4.00 percent for $50 million of two week money. That demonstrates the significant pressure that even the most stellar names are facing.

Thanks Telestar.

I've never owned a stock share when the company was purchased, so I'm not familiar with the process.

As a frequent commentator who has been bearish, I want to let the readers know, that I think that an ST/Intermediate bottom has been put in.

Did I miss a piece of news? the DOW just jumped nearly 300 points in about 5-10 minutes... Or is this part of the "massive swings in prices."?

McCain is the one who said about Alan Greenspan years ago that not only would he reappoint him but if he were dead he would prop him up at his desk. More recently, poor John has been quoted as saying "I don't know much about the economy".

U.S. to Sell $100 Billion in Bills to Fund Fed Moves (Update2)

By Rebecca Christie

Sept. 18 (Bloomberg) -- The U.S. Treasury said it will sell an additional $100 billion in short-term debt to aid the Federal Reserve's balance sheet, amid the biggest extension of central- bank credit to financial companies since the Great Depression.

The Treasury today announced plans to sell $30 billion in 59-day bills at 11:30 a.m. tomorrow, $30 billion in 45-day bills at 1 p.m. tomorrow and $40 billion in seven-day bills on at 11:30 a.m. on Sept. 24.

Yesterday the Treasury started a special program to help finance the Fed's portfolio with an initial $100 billion in bill auctions. The proceeds will give the central bank cash to boost liquidity in credit markets struggling from $519 billion in writedowns and losses since the start of last year.

The new bill sales ``are intended to give the Fed the ability to liquefy the financial markets,'' said Ward McCarthy of Stone and McCarthy Research Associates in Skillman, New Jersey.

At about 8 a.m. London time, the Fed announced a $180 billion swap line in collaboration with other central banks, the latest addition to a series of Fed-backed emergency credit facilities. This new facility ``will take up all of the extra balance sheet space created by the first wave of the Treasury's cash infusion announced yesterday,'' said Wrightson ICAP chief economist Lou Crandall in a note to clients today.

The expansion of the Treasury's bill program may increase calls for other ways to expand the Fed's portfolio. One proposal put forth by Fed Chairman Ben S. Bernanke would allow the Fed to pay interest on reserves deposited by commercial banks, enabling the central bank to expand its balance sheet without affecting monetary policy.

Congress' Role

The payments would help officials push money into the banking system without influencing the main policy rate, by giving lenders an incentive to leave funds with the Fed. Congress already passed a law giving the central bank the authority, starting in October 2011, and Bernanke has called for it to be effective immediately.

``Congress better authorize the payment of interest on reserves quickly, because the Fed's balance sheet management challenges keep growing,'' Crandall said.

For now, the Treasury is using special bill auctions to help the Fed add to its portfolio. An initial auction of $40 billion in 35-day bills was held yesterday; today the Treasury is selling $30 billion in 20-day bills and $30 billion in 76-day bills in a pair of auctions.

All of the supplementary bill auctions announced so far settle on the day after the sale.

Separately, as part of its regular borrowing calendar, the Treasury today announced plans to auction $27 billion in three- month bills and $27 billion in six-month bills at its next weekly sale Sept. 22. The department also said it will auction $20 billion in 52-week bills on Sept. 23.

Treasury spokeswoman Jennifer Zuccarelli declined to comment about the auctions for the Fed.

To contact the reporter on this story: Rebecca Christie in Washington at rchristie4@bloomberg.netJohn Brinsley in Washington at jbrinsley@bloomberg.net
Last Updated: September 18, 2008 12:17 EDT

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

This quote interested me the most: "``Congress better authorize the payment of interest on reserves quickly, because the Fed's balance sheet management challenges keep growing,'' Crandall said."

That really worries me...

seeing crossed orders on GS.

Bye Bye Au with a 7-handle!

RosevilleBill - totally agree with you. The answer of course is that he's breathing through his mouth/nose as usual, but where he's speaking from is questionable :)

Hmm... If the FTSE can't short sell financials, can any of the other stock exchanges still short sell the financials? With this globalized market where you can trade on many exchanges, won't this action just move the short selling to a different exchange?

Illini,

More recently, poor John has been quoted as saying "I don't know much about the economy".

AT last, an honest politician.

Anybody ride UYG today...this is nuts!!!

just made a shi*load buying and selling Goldman

and I owe it to bsi37 for bringing it to my attention

you guys could have made THOUSANDS, or tens of, if you'd checked out what bs what saying, which, if I might say, was no B.S.

wow somebody just paid 117 bucks for some goldman....wish I'd sold it to him.

ALOHA !!

If I told you to drive from Los Angeles, CA to San Diego, CA blindfolded you would say I was crazy and that it would be a completely impossible task and very dangerous as well! Then if I asked you to predict the success rate of driving from Los Angeles,CA to San Diego, CA blindfolded you would say it has a success rate of 0%! I would say about 99.99% of Americans would agree that it would be a most unsuccessful venture.

In the past I have mentioned that we need to eliminate the US Federal Reserve Bank(US FED). The above example is a analogy for what Alan Greenspan and now Ben Bernanke have been doing with the US central bank and the US dollar and what every other US FED Chairman has done. THEY ARE DRIVING BLINDFOLDED!!! I use the term "MOUSE MONEY". This term has nothing to do with the strength or quality of money but it does have a LOT to do with monetary velocity of modern times. The velocity of money has changed drastically since 1929. The money supply has grown drastically as well. Monetary velocity is like an engine in a car. You press the gas pedal and the car goes and the harder you press the gas pedal more fuel is burned the faster the car goes. The engine of monetary velocity in 1929 was a Model T. With the advent of computers and the internet the engine of modern monetary velocity is a rocket ship! It isn't even in the realm of a car engine! One mouse click can move $1trillion MOUSE dollars in 5 seconds or less to any bank anywhere in the World. While in 1929 it would be impossible to hide such a transaction because printing presses would have to first create the funds in actual paper and then some vast convoy would have to move all that paper. Compare that to today and there are only two people who need to know about that $1trillion transfer. The guy that sent it and the guy that received it! I think you see where this is going ...

Monetary velocity and transparency are but just two barriers to successful monetary policy. The real barrier is the "blindfold"! Modern central banking is doomed because like driving from Los Angels, CA to San Diego, CA blindfolded central bankers are driving our economy blindfolded. This is why I say Economics 101 as taught here in America is highly flawed and essentially just "guessing"! In fact it can never be considered a science so why pretend? I would term Economics as used to forge monetary policy in the USA a science of "rear-view mirrors"! There is no true predictable results as in a true science like Physics or Chemistry.

If in fact you accept this premise that I have stated then most investors/traders are as doomed as central banks to preserve their wealth because we are all basing our futures on data that has no basis in the reality of the human condition. This is why we are at odds so many times with what is trading data emitted without question into Wall Street by the likes of the BLS and US FED and OMB when our five senses tell us this is not right! We are not crazy the data is!

You cannot compare 1929 to today in order to predict a bottom or anything! The only real prediction will be the failure of the US FED to succeed! Is that an asset to America? I believe it is a major liability ...

Only two modern American politicians ever ran for President on the platform to abolish the US FED. One is RON PAUL. The other was ROSS PEROT. The other "GANG OF 545"(our US CONgress) have been "blindfolded"!

From "Nightmares Of A Central banker" by Anthony Mueller

READ ON:
"Statistical aggregates per se do not cause anything in the economy. What is being measured by the aggregates and averages are the effects of human action, not the causes. There is no way to know ex ante whether a specific monetary policy measure affects primarily the so-called price level of final goods — whether the main effect goes into the asset market, or leads to more investment at home, or more imports from abroad. Central bankers do not know whether changes of the money supply and the interest rate will cause a change of credit demand for business investment or a change of credit demand for private and public consumption.

Central bankers sometimes describe their activity as "more art than science," which is implicit recognition of their ignorance. The "art of central banking" is the art of pretending to know what one does not know. Not only is it not a science; it is not even an art. At best it is alchemy; at worst it is a gigantic cheat.

When economic systems grow in complexity and diversity, central planning and interventionism become exponentially inefficient, and the need arises for more decentralized coordination mechanisms. Modern economies, and in particular modern financial markets, have become too complex for active central banking. Monetary policy cannot be improved by more research and better central bankers. What is needed is something quite different: a monetary system that can do without an active central bank."END

Antony P. Mueller is a professor of economics at the graduate business school of the University of Caxias-do-Sul (UCS) in Brazil.

What's an Austrian doing in Brazil? HA!!

thanks Shark. I don't think the MS and GS long plays are over.

206 PM GS spike to 117

u r welcome i owe you dinner

nemo- i've been 'riding' that train since yesterday, and it's like a Disney ride so far...hoping it levels out soon...

seeing divergences in the DJIA on the hourly. Thinking a wicked counter rally to 11400. Kills the bears, gets the bulls chasing. Nice setup to go short again. JMO. Long DDM

10 ATR for DJIA is 300 pts

ALOHA !!

REDEMPTIONS ... are killing the financials. This is the modern MOUSE MONEY equivalent to the 1929 "run on banks"! This time the crowds beating down the bank doors are not visible, except in cyberspace! This keeps the majority of "savers" anesthetized.

IT ALL WORKS UNTIL IT DOESN'T ...

re: ROS.

Russian mkts open tomorrow. ROS hourly BB shows 15.

Wish I wasn't working today. Congrats BS and Sharki

kaimu- to be fair, they're not blindfolded...driving in thick fog, maybe...greenspan was actually doing quite well at first, then got too comfortable and veered off taking us on the road to hell...i'm not ready to say bernanke is doing a good job or a bad job given the fact they changed drivers in a pretty remote spot..

I can't remember who, but someone was mentioning MAG Silver the other day. After doing some research, I ended up buying some yesterday and making a nice profit on the huge mid-day jump and have since watched it retrace a bit and jumped back in at $5.05 CAD.

This company is worth looking into as it has a gigantic land package (assembled over many years) in Mexico w/ defined resources and extensive drilling programs. It also has over $60m dollars (certified to be safe) on its books.

Looking at the charts it looks like someone was desperate to sell off shares a few days ago when the bottom was put in. It looks very technical in nature.

I would also note that this stock is much more liquidly traded on TSX than AMEX so probably best to trade the MAG.TO than MVG.

Billy, MAG was mentioned on BNN as pick, thus the pop.

ALOHA !!

In the past years I have mentioned about retirement funds in relation to taxes. I believe pensions and retirement will come under assault as future US government desperation increases and INCREASE it will! Why not tax retirees pension funds at a higher rate for the good of "WE THE PEOPLE"? This is the first semi-mainstream writer that has brought up my concerns and he points out that the CLINTONS tried to grab 10% of US pension funds for political reasons under the Clinton's credo "Putting People First" back in 1995!. In the State of Arkansas back when Bill was the GOV he did succeed in grabbing funds out of the Arkansas Teachers Pensions Fund.

In desperate times desperate politicians will do desperate things! That was the basis for me to stop contributing to my retirement fund back in 1999 and pay off debt and buy gold and silver instead. You tell me what was the better move based on the financial chaos of today? If you persist on being a political target then at some point you will achieve your goals!

The current US government will never let you off the hook for free! Is anyone here still buying taxes will be less by time you retire? Some here are already retired ... HOWS THE TAXES?

BEWARE ...

From: Chris Laird the Prudent Squirrel

READ ON:
I am linking an article from 1995 that discussed the Clinton administration's attempt to tap private pensions

As we stated recently, I believe that, as the US and other western governments start to run ever bigger deficits dealing with an emerging world economic contraction, at some point it would seem they will look at the huge pile of money in tax deferred retirements - something to think about...and increase taxes on them, whilst we saved in those thinking the taxes would be deferred and at a lower rate when we retired.

I am not suggesting anyone do anything like selling them out, but, one should consider the possiblity that these tax deferred retirement accounts will be a big temptation for budget busted economies in coming years.

"As a result of the landmark 1994 Congressional election, the taxpayer revolt, and the realization that the federal government must balance its budget, the usual Democratic solution of raising taxes and increased social spending is no longer an option. The Clinton Administration has launched a behind the scenes, incremental strategy to fund its social agenda by tapping into the $3.5 trillion private pension system. .."

Link: http://tinyurl.com/4wa6tw

Re: Currency Crosses

Looking at the forex, we are seeing various currency crosses failing against the ¥, but the ¥ not necessarily appreciating strongly against the dollar. I think the ¥ will eventually head up strongly against the dollar as well, but for the immediate future, the €/¥ cross is deteriorating rapidly, as well as the Swissy/¥ cross.

Consider if you will the extremely wide basis differential between the € and the ¥. We have already seen the rout of this particular currency cross on financials(amongst others), but we haven't seen any change in interest rates in Europe. A 50 basis point change would upend the interest rate differential between the € and the ¥.

The dollar US has been coming down for so long and so precipitously that American markets are probably more affected by derivatives than they are the carry trade. But the European markets are more indebted to the carry trade than any other, simply because of the differentials. There are greater differentials in other currencies, but they are minor, and with the moderation of inflation, their interest rates will come down against the ¥. The € is already dropping, perhaps as a pricing in of rate cuts, but there is also heavy divestment of the € as well.

There must be simply astonishing complacency in Europe, considering the unchanged yield curve:

http://www.ecb.int/stats/money/yc/html/index.en.html

Good for gold!

2-3PM margin call time I believe

Should have posted a chart:

XEU:XJY

http://tinyurl.com/448yxx

Note that gold prices are reacting to the drop in treasury yields.

ALOHA !!

Here's some REDEMPTION! Instant evaporation with no screaming crowds knocking down the doors! Some $15bil of MOUSE MONEY in action ...

READ ON:
Putnam Fund closes after investors pull cash
Thursday September 18, 2:11 pm ET
By Mark Jewell, AP Business Writer

Putnam money-market fund suddenly closes after institutional investors pull cash

BOSTON (AP) -- Putnam Investments on Thursday suddenly closed a $15 billion money-market fund and announced plans to return investors' money after institutional clients pulled out cash despite the fund's lack of exposure to troubled financial firms such as Lehman Brothers Holdings Inc.

The move, believed to be unprecedented in the $3.5 trillion money-market fund industry, came a day after asset managers sought to reassure investors in the wake of a massive pullout from large retail fund Reserve Primary Fund. The run on that fund caused its assets to plunge in value by nearly two-thirds and fall below $1 for each dollar invested.(more)

ALOHA !!

"Note that gold prices are reacting to the drop in treasury yields."

HEY WAIT ... I thought that was why gold was such a "barbarous relic" because it paid NO INTEREST! Over the past few years all the global central banks have been selling their gold because it paid NO INTEREST!

Hummmmm????

More brilliant central bank strategy that so many here are enamored with!

UK Bars Short Sales

"British financial regulator cites "extreme" conditions in banning short positions in financials till January, at which point a review is planned."

"Republican presidential candidate Sen. John McCain on Thursday called for the firing of Securities and Exchange Commission Chairman Christopher Cox, saying he has 'betrayed the public's trust.'"

"Money market funds saw nearly $90 billion of net investor cash pulled out on Wednesday, among the largest single-day drops in history."

ALOHA !!

For those who are running to US Treasuries for safety ...

GARBAGE IN ... GARBAGE OUT

thanks for the heads up, Joey. He's one of the smartest geologists around in my opinion and he is conservative and knows how to pick 'em. He likes SGR.V (San Gold Corp.) as much as I do as well, which always helps :-)

Si02 - thanks for the info. I was not aware of the MAG Silver mention as I do not have BNN.

I guess I got lucky with timing for today, but I still think this one is worth keeping an eye on for awhile as liquidity returns to the market. I also like AQI.TO as far well financed silver explorers go.

bsi87 - shark - Congrats on the LEH! I don't have the hootspa...

with those kinds of stories playing across the ticker, it has to be close to a bottom...(if not THE bottom)...

What's the deal with COF up 7 points?

Bank of New York Mellon has just announced that a $22 billion institutional money fund which it manages has broken the buck because of exposure to Lehman Brothers.

Right at the exact moment that CNBS reported the new Paulson thing Scottrade froze and I couldn't go long GS again, costing me much money.

Did anyone else have this experience?

From tickerforum:
NY AG Launches Wide Ranging Probe Into Short Selling
Particularly in financial stocks. Will use Martin Act to prosecute short sellers who spread false rumors and engage in other improper conduct. Calls upon SEC to suspend all short selling for 30 days. Says federal regulatory structure has failed this country.

It is the blame it on the shorts show; rerun of the depression.

Money market - Poor saps pulling their money out... Hope they're not buying treasuries at the advice of their brokers...

Market sitting on CEG,again.

TOT a CARA buy here is lifting off the mat.

Long CEG, most likely TOT soon.

I have to say that the news of the regulatory ban on short selling is horrible manipulation in my view. If it's legal when things are going well, but illegal when things aren't that is a horrible double standard.

But while all the shorts are getting squeezed we're getting a significant bounce on the indexes.

[Bill Cara note:

http://biz.yahoo.com/ap/080918/eu_britain_short_selling.html

This ban on short selling financials is a removal of your rights as a trader. Just brutal. The Banks and Broker-Dealers are soaring in price, but we know that the shares are not worth any more in terms of value. So there will be a romp in the market, carrying most share prices higher, and then traders will simply sell the Financials because their prices will be inflated beyond their value. I find this situation mind boggling. Next step I think could be the removal of your rights to buy foreign bonds or to move your precious metal to safekeeping outside the country. Yesterday, I wrote that flags should be at half mast. Boy, did I get that right.

Can we short them from Canada and the UK/Europe and Japan? Or, do the American regulators and legislators now speak for the world? If the rest of us (non-Americans can still short sell HB&B in other countries, then this is another problem for Americans. These authorities have started down a slippery slope.

oh, oh. The Brits have done the same! http://www.marketwatch.com/?dist=ctmw

I think the world has gone crazy.]

moab:

I wish the government will ban stock buying during the peak of the stock bubble mania in 1999 :)

Teich

exiting the tunnel and accelerating up the grade...

moab - I think they got the last sentence nearly right...

"Says federal regulatory structure has failed this country."

This is totally insane.

shifting into overdrive...

Resolution Trust Corporation-type solution

market is up on that to 350pts

flipped the switch to the auxiliary tank holding jet fuel...it's a drag race now...

Gold NYMEX backwardation continuing!

trade what u see, not what u believe.

Did I miss something?
I dropped over 8pts on TWM in less than 10 min

ALOHA !!

Here's one the US Bank that is behind GLD ... So you trust these guys?

The real question is what happens when JP MORGAN seriously falters? JP MORGAN holds your GLD ... GOLD!

SUPPLY is still a factor ...

READ ON:
State Street shares plunge -- off 42% at 1 p.m.
Boston Business Journal - by Tim McLaughlin

* AIG could cost Fidelity, Wellington, MFS billions

Shares of State Street Corp. plunged Thursday morning on renewed worries about unrealized losses that potentially could turn into a massive write-down within its $70 billion-plus securities portfolio.

State Street (NYSE: STT) shares were down 42 percent to $37.25 in early afternoon trading on the New York Stock Exchange.

Analysts renewed their worries about State Street’s securities holdings.

In its second-quarter filing with the SEC, State Street reported $3.31 billion in unrealized securities losses, up from $3.16 billion in the previous quarter.

State Street noted that those unrealized losses could become impaired, triggering a write-down.

Its securities portfolio averaged about $72 billion in the second quarter, mostly in triple-A rated investments.

The asset-backed part of the portfolio consists of student loans, home-equity loans and credit card loans.

An August report by analysts at Lehman Brothers said 43 securities with a total fair value of $1.2 billion had been placed on credit watch and 632 securities with a fair value of $2.5 billion had been downgraded, of which 603, or $1.7 billion, were based on downgrades of the underlying monoline insurers. That was as of June 30. Also, no securities had defaulted as of the second quarter.

State Street executives have said the company has the ability and intent to hold the securities until recovery in market value. Still, the company has said its securities portfolio may incur other-than-temporary impairment in future periods, the Lehman report said.END

out of MS. 50% gain is enuff for me for one day

QT- it't time to take the shirt off and join the skins...

I hope your out of gold

Looks like TOG!

picked up FXI @ $31.90
PCA @ 33.50

Thinking of getting out before the close... any thoughts?

This market is just plain wacky.

Bull Hunter

There goes QID hitting 60 going out the window... :-)

DELL up 11%...

I have just returned from doing morning errands and I see DOW has swung wildly from -100 to +350! What a day!

Since the time I had breakfast, SWC hit the limit price of $7.20 for the shares I purchased at $6.20. The next limit I have is at $7.80 for the shares I purchased at $7.20 a while ago. SWC gave a presentation at the Denver Gold Forum in early September and said that their share price closely tracks the price of palladium, since they mine a higher fraction of palladium (relative to platinum) than the other similar miners. The palladium market is much smaller than the silver market, which is much smaller than the gold market, which is much smaller than the forex market. So price swings in palladium can be huge. If precious metals have indeed turned around, then it is just a matter of time before palladium picks up, and when it does, it will double or triple and so will the share price of SWC.

FXI @ 31.90? hell, no!

Relax, AIG just took profits with their $85B...

You know what is interesting about all this hoopla about removing Cox and who is responsible for the financial chaos and short selling issues we have:

In 2004 I was contacted by a lobbyist in Washington (Jack Wynn) who had identified that Bush wanted a white paper on naked shorting because he was "concerned". Since then both Republicans and Democrats have held Congress and neither wanted to address this issue despite being informed of it because those that most benefitted from the abuses bought these crooks off. Suddenly Hillary, McCain, Schumer, etc...are coming out of the woodwork in outrage but I can tell you each was personally contacted and briefed on this and each walked away.

Questrade, in typical fashion, is down.

Looks like HB&B wins again......

sarcasm 2nd or horror?

Bought 200 shares of DXD @ $65.50

The Dow was up 400+ pts at the time. I don't know about this RTC plan that the government is thinking about right now.

I'll look to buy back into MS around 17 in the first hour tomorrow.

reloaded the SSRI just now at 17.91 that I had sold off yesterday at $19

Bill says trading is like a dance.

Today I felt like either:

1) The guy in the old Western movie that the bad guy points a gun at and says: "Dance, boy, Dance" and then starts shooting at one's feet; or

2) Like I was in a mosh pit.

The market moved so fast that I lost more money than I usually make in a day, but still managed to book WAY more profit than any other day this year--by far. Craziness.

one buys fear and sells euphoria. one does not fight the tape (or the Fed).

Started scaling into the TLT short at $97.18. Bill seems to think that we might have a week or more of markets rallying after the recent massive intervention, and hence TLT should decline as traders will not need the safety of bonds.

2nd

LOL

out of DDM for 6%

ALOHA !!

Keep an eye on the solvency of these banks running these ETFs, both here in the USA and internationally. What will happen to the ETFs if the bank goes the way of LEH? Will the US FED hand JP Morgan enough to bailout your ETF positions? What about the foreign equivalents to GLD and SLV? Will the ECB bailout ETF positions?

At the rate the US FEDs balance sheet is being destroyed will there be any ammo left for saving ETFs and their derivatives?

Then what of REDEMPTIONS in ETFs? MOUSE MONEY is awful fast and a lot of your wealth could be sucked out via foreign markets as you sleep!

IT'S TEN PM ... DO YOU KNOW WHERE YOUR MONEY IS?

A good night's sleep is becoming a luxury for even CEOs ... especially BANK CEOs ... Maybe they'll have to ask for a raise ...

Got murdered on a MS short today. Thanks interventionists, made my day you a-holes. (Stops are good, always stops, always always!)

I think I just made a mistake of a lifetime.

I have a couple of OEX calls. I just happened to look at my quottracker screen and saw the price up around $800. Each. Then as I wtched it went up and up over a 1000. I priced in a sell order for the two calls and scottrade told me revenue for the 2 calls would be over 200K.

I waffled, sort of amazed, on hitting the sell button real quick. It changed back real quick before I put in the order.

Would that trade have actually gone through and been binding? Did the MM fatfinger something?

Did I just screw up big time?

The ask is now back to .90 or whatever, which makes more sense.

If I just missed out on 200K of MM mistake money I'm heading to the roof and jumping off.

Didn't have the guts to sell gold, need to understand what happened there prior to making any snap judgment.

[Bill Cara note:

What happened to Gold at exactly 2:56pm ET was an organized naked short-selling Bear raid by central bankers and HB&B. That was timed with the publishing of the announcement that the Brits too were going to ban legal short-selling on Financials. If anybody thinks this is a fair game and a level playing field after seeing this action today, then I can say you suffer credulity syndrome.

Btw, in this morning's report, I wrote: "Gold prices soared in the biggest one-day gain ever, yesterday, with $GOLD lifting +$70.00/oz to 850.50. Crude Oil ($WTIC) gained +5.94/bbl to 96.96... In the futures market (today), prices are moving so fast, it would be silly for me to quote them. Suffice to say that Crude Oil is on its way to 100, Gold may hit 900. If you didn't believe me, you should know that Gold was over 920 and Oil over 100. Then the Interventionists stepped in and smashed the market. The Financials are on a moon-shot, which does not hide the fact that most are still bankrupt. The problem for the Interventionists is that now that we the People see how crooked this market is, we will not buy shares in the Financials. They need our capital, but we can withhold it from them, and then what kind of business model do they have? The thing is that if you know how the game is crooked, you can deal with it.]

out of GS, 25% gain

Who issued the Get Out of Jail Free card to the market?

out of USD, 11% gain

BINGO!

AP
Stocks surge on report of entity for bad debt
Thursday September 18, 3:34 pm ET
By Tim Paradis, AP Business Writer
Wall Street soars on report that federal govenment will create entity to hold banks' debt

NEW YORK (AP) -- Wall Street surged higher Thursday, with the Dow Jones industrials up more than 400 points after a report that the federal government is considering creation of a repository for banks' bad debt.

CNBC said Treasury Secretary Henry Paulson is considering creation of an entity like the Resolution Trust Corp. that was formed after the failure of savings and loan banks in the 1980s.

Investors were cheered by the notion of a huge federal intervention like the establishment of RTC to acquire the real estate debt that has hobbled financial institutions and led to the intense volatility in the markets this week.

If there's an RTC-like entity, "it's going to take a lot of the bad debt off the balance sheets of these companies," said Scott Fullman, director of derivatives investment strategy for WJB Capital Group in New York. That would alleviate many of the pressures causing the credit crisis, he said, and open up the credit markets again.

However, Fullman added, "the devil's in the details."

In late afternoon trading, the Dow soared 406.29, or 3.83 percent, to 11,015.95.

Broader stock indicators also jumped. The Standard & Poor's 500 index rose 41.54, or 3.59 percent, to 1,197.93, and the Nasdaq composite index advanced 76.52, or 3.65 percent, to 2,175.37.

out of QLD, 6% gain

ALOHA !!

I have done quite well over the past seven years fighting against the FED!

"Their tiger-style kung fu is strong, but our dragon-style kung fu will defeat it!"

Hummmm???

"I think I just made a mistake of a lifetime"

"Did I just screw up big time?"

DITTO.............

I was up huge today.... really HUGE...now I am border line red [also borderline a**h*le]

Oooooo the humanity!

Sold the DXO

They floated a bunch of manipulations today to break the downtrend before it got ugly, or at least until options expiration.

MikeNYC - the only way that trade would have actually executed is if YOU had made the fat-finger mistake........

Dave

Kaimu:

How's your lip-synching?

ALOHA !!

On IB the symbol for LEH just changed to LEHMQ. Well Bill, they must have your complaining that LEH still trades on the NYSE! OHHH ... thats their BANKRUPTCY symbol!! I see ...

Hummm ... now their share price is about the same as CNU!!!

Who here a year ago would have believed it if I told you ECU would be worth more than LEH?

nice day...grin

So if the ask is 1000 on a $1 option and I sell, I don't get to keep the dough?

The bid is 1000, I mean.

To add to my disgust over my last post about taking the bad debt off balance sheets...

I am currently under a notice from the IRS that I under paid my tax a couple years ago. With any normal entity I could call and explain in about two sentences. This is going on forever.

I over contributed to both my wife's and my ROTHs and as soon as I realized it (about a month) with drew the contribution. They say I owe tax on the amount. It was, of course tax paid dolllars, and even if not, tax exempt money, but...

Somebody has to be too SMALL to fail!

MikeNYC - if that happened then I have to believe that a MM would have cut into the trade, and you would have received a market fill, unless you'd specified a sell limit of $1,000 - in which case the trade would most likely never go through
JMO
Dave

Ameritrade just kicked me out for the 3rd time this week... very frustrating.

I kinda thought we might get a surprise, but I thought the surprise would include oil. Maybe it still will...

I don't attribute my success today to my own skill. I was thinking hard before the market opened about what Bill said about the "massive swings in prices" and I was also thinking that if I was an elected official in a position of power and saw what just happened over the last 4 days that I'd have to do something(to avoid having my arm broken that is being twisted behind my back by those that funded my campaign). So I had puts on the DOW until about the 10550 area, then moved to calls. Now I'm all cash.

Honestly I feel whipped-sawed(in a negative way) from what happened today... And I have no clue about what to do with the new cash that is in my account. Debts are paid off. My wife and I have a months worth of expenses in cash in hand, and the same amount in Gold at the $775 level. We're renting our current location, so there's no mortgage to worry about. ...

What to do now??? On the macro scale?

unf---ingbeliev...i mean unforgettable! our biggest one day payoff ever, man...just wondering whether to take it off or play out the hand...

[Bill Cara note:

My NYSE screen just went blank. Right before the close. How much did that cost somebody to make happen?]

half off...whatever...

Grym - Good luck with the IRS, they're not pleasant to deal with. I don't know if you've already sent them a letter of explanation, but that might work if you can enclose some kind of proof.

bsi87 - The DZZ move was brilliant!

I got auto signed-off from TDAmeritrade three times today. It has never done that to me before. It was running the slowest I have ever seen it after the market hit Dow +250 up. I was going to move my 403B account from bonds back to the S&P500, but I think I will wait another week as the trade goes thru at the end of day.

After hours market is eating my breakfast.

I have a sell order in for WGW at 1.71 and the asked is showing 1.88. How does that work?

[Bill Cara note:

My NYSE screen just went blank. Right before the close. How much did that cost somebody to make happen?]

And I thought it was just me... the last 10 mins I saw nothing. ZIP ... "O"...

JohnE

WGW price:

Ask $1.07 -you can sell at
Bid $1.88 -you can buy at

Does anybody know how big the Greenlick Nat Gas is for Dominion? Is it a significant field?

IS there a nat gas etf?

Opps! I said just the opposite on above post:

Bid $1.07 -you can sell at
Ask $1.88 -you can buy at

SRS
Coulda', shoulda', woulda'. Thought about propping a $95 stop-loss under this one when it went over $97 today, but after coming back to the computer from doing my real job, I find it's dropped back into the low 80s. Man, I wish I was clever enough to day-trade something like this!

WJA-T
I'm getting interested in this well-run, little Canadian airline as it appears to be forming a double-bottom. I'll be looking for the current strength in oil and the overall market weakness to do a final downward push, then probably start buying. (Just thought I'd throw it out there for folks to chew on and maybe exchange thoughts on if they were interested in beaten-up Canadian stocks.)

Opinion on short selling worth reading
http://agoracom.com/ir/Aurelian/messages/944957#message

[Bill Cara note:

On that short-selling matter, I have exactly the opposite opinion. Legal short selling where you pay to borrow an asset to use as you wish and replace it later is something we do in other aspects of our lives. Whoever wrote this piece doesn't understand trading.

Moreover, it came from Agora and I have already asked you to stop promoting them here. You published something earlier, "To Our Extended Family..." from another newsletter writer, and I cut off the crapola. I will ask once more; if you want to join the discourse (as I know you are capable), please do, but please stop promoting other newsletters here. If I see it again; I'll cut it off. Sorry, but people here want to know what you think and what you know. If they want to go to those other places, please be assured they will.]

Can anyone that follows IamGold explain why IAG traded inversely to the POG today? Crazy hedges? Haven't had time to do my research yet.

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

What a crazy close. I am thinking there will be some whiplash tomorrow for those who had to cover or chase the indices this afternoon.........I am thinking we see gold open around $865 and indices open down 1% or so.......there's only so much intervention to go around.......

IWM outperforming again is nice to see.

Thank you Bill Cara.

I owe you a debt of gratitude. This is going to sound like a sad story but it isn't.

Since 2002 until sometime last year, I lost a LOT of money in the stock market. In retrospect I think it was a gambling-type of obsession. I was trading on whims and hunches. After starting out rather successful, I got into a pattern of consistently losing money. I would get stopped out of trades often for significant losses, since I was using margin, and began to get caught in the loop of thinking I had to make bigger and bigger bets to make back the money I'd lost.

Since stumbling upon your site, I've at least been able to (apologies for the bad metaphor) add a rudder to my little boat, and learn how to use the sail. Now I feel like I've really regained control of my financial future.

Through your comments, and the incredible discourse, I've been able to make well-timed trades and have been intermittently, and patiently, riding the market down via ultrashort ETFs. Just yesterday, after finding myself up A LOT, and discussing it with my girlfriend, we agreed that I should take some profits! And reading your discourse this morning cemented that. I got rid of all short positions today.

I made my first real long-term investments in years, too. I've been watching the Cara 100, and selected several stocks with buy alerts - GOL, MBT, VIP, TTM, TOT, and a few others (XOM, ATVI - family connection, GG, SLW) to name a few, and made relatively small investments in each. And after today's performance all I can say is WOW. I am up 63% from a year ago!!!

Thank you Bill and the Cara community for helping me to be in control and to make informed, intelligent decisions. I am sure I speak for many people when I say that you, Bill Cara, are an empowering force. I am eternally grateful for the work you do here.

Cheers!

[Bill Cara note:

Thank you for this letter and to all the others who write me every single day with comments like this. I deeply appreciate it. I appreciate that you all understand that one person can do only so much. We need 100,000 sets of eyes and ears, plus mutual respect and trust. Then we can manage ourselves to financial independence. That, and not debt, is what the Founding Fathers had in mind for America -- to be able to show the world how to do the right thing. The world has gone so far off course that it's up to us to get together to fight back. You know, a few months after I started blogging, Barron's wrote something like "Bill Cara's stuff is great, but we can't understand why he does it free". Being able to say thank you to the wonderful people who write me every day -- thousands of letters like yours -- that is the reason I do it. I know how empowering financial independence can be. If we work hard and live a good life, it should be ours.]

b0ss - The bid is $1.07 the ask is $1.88. I am offering to sell WGW at $1.71. So I am asking $1.71. Why should an asking price of $1.88 be ahead of mine? This is on the Vanguard trade screen.

boss - It just changed to bid $1.07 asked $1.59. So now I am asking more and in line. Anyway the mkt's closed.
Thanks for your reply. It is always appreciated.

Regarding MAG.TO / MVG pop mentioned above by others - there was also news released due so pop could have also been related to that. It's a great play in my opinion.

JohnE,

I am on TDAmeritrade. I just put in an order for $1.10, and it showed up within 1 second.

I am now seeing bids of $1.10/$1.59

Is your order for after hours?

manx928,

Eerie similarity with my day. Happy to see SRS up, thought about a stop, but keep getting stopped out on these short ETF's, so figured I'd hold. Come back from soccer over lunch, poof, 17% gone... But I'm still a believer, so i put in order for some more for 79...

And, I looked at westjet today as well and even placed order. Still gotta check if any of my orders filled...

weird.

the odd thought.

Now that the VIX is up & the options have become expensive enough that it hampers my style (buying deeply ITM stuff with as little premium as possible), the gold move for the market makers short term might be to let the markets go into a trading range while keeping the VIX.

What would kill that would be if the banks or insurance companies or money market funds keep dropping like flies, or the institutional money keeps unloading going into October.

GS, MS, BIDU -

Be it the news or regulations, I think the option expiration has people running for cover. I think that is why GS @117, or BIDU @ 301 from 280 is not a bad deal, looking from where they at on Monday.

Congrats to all who got in on GS/MS at 88 & 15. I was a bit too late. Need more exercise. Good luck tomorrow!

re SRS, which I don;t follow separately from IYR:

IYR just did a round trip between two major fib levels this past 2 weeks or so- working down from 65:ish to 58:ish and then - all in one swell foop today - back up to 65:ish.

That was pure technical trading today in connection with opex, easy for the market makers to start it up as all the traders can see the target and will keep it going for them once it has taken off, and has nothing to do with any "funnymentals" for the realestate stocks.

Mike,

What you didn't do could not, by definition be the "mistake of a lifetime".

If you know how to trade/learn, then you can profit wildly going forward. If you can't then you would be destined to lose your new gains/not make more. No one wants to win that way, because of somebody's mistake. Figure out how to WIN, and you can win a lot of times.

Keep your eye on our friend bsi87...he knows what's up.

VIX was at an historic high (~42) just before report of RTC-like "solution", which may suggest a near-term bottom. Previous occasions appear to have been good for rally.

Shark + BSI87 Thanks for the heads up on GS got a few scalps at the top of the trading range.
Bob

I'm guessing the MM would want to win that way if the mistake were on my side. If the guy on the other side of the trade would take the mistake and run, I shouldn't really have a problem with it, either.

You really think Uncle Vito at NITE or whoever is making the market would return my cash on a mistake? Hah!

It's gone now, but that dough would have been life-changing. You know my situation, or part of it. Of course it's not the way I walk around living my life or a goal, so don't think it's my orientation, based on one event. It just is what it is. Or was.

Somebody stepped into the gladiator ring to do battle and tripped. That's when you get the sword.

What about that airline stock that sold for pennies on the false news. Would you have returned the shares, had you bought them? Everyone seemed to wish they had gotten the deal. Isn't it the same? Or at least very similar?

Well, it's gone now. But this and a few recent market mistakes have me wondering if putting crazy GTC super high asks on everything I own is just plain smart.

Washington Mutual auction fails to attract formal offers, according to a source; shares fall 11 percent in extended trade 4:48pm EDT

MAG.to Analyst on BNN says co. has $60M in cash, its NAV is over $1B, sees stock price at $20. Kaimu, this is a silver play, would you know anything about it?

Analyst says not to touch any exploration company that is not producing - nothing that can require funding, because simply there is no money and there won't be any for quite some time. Nil.

So GS is on the verge of collapsing and look at all the strings that were pulled around the world.

Did anyone see the last hour of trading in Goldcorp? From 31 to 28 back to 31 in the last five minutes.

[Bill Cara note:

If you were watching your goldshares monitor closely, you saw ABX and GG getting hammered before the others. That's when I figured the Interventionists had come to play. They are usually not too subtle, and weren't today either.]

What I am saying my dear friend is, you have it. You have what it takes. Many don't and you do, and you will succeed wildly the moment you commit yourself 100 percent. You'd be amazed the sacrifices people make to trade. !00% is what it takes because that's how much others are devoting. That's what it takes. But you have it. And I look forward to watching the evolution of you. You seem to understand those option-thingies wheras I could but don't bother. Be good.

Today reminds me of the rancher(1) having a breeding stock sale. He makes a deal with another rancher(2) to come and pay big bucks for his prize bull. This price helps the other bulls on the sale bring higher dollars from the other buyers. The rancher(1) then goes to the sale of rancher(2) and returns the favor later. How much of today was mouse money?

By the way, it's funny this rabbit Paulson pulled out of his er..... hat, people are really standing up and saluting it.

This canard is getting a lot of respect.

Thanks, shark. Those are kind words. I think you are correct. I'm close.

Stepping it up and putting out a higher level of intensity, concentration and work is all that's standing between me and ... whatever I want. That should be easy, right? ;-)

It's just that an easy 200K would have freed me from one difficult trap I'm in and left me with a reasonable trading stake, too, instead of the tiny amounts that I have that I try to nurse into something useful.

Well, it's gone, so I'll drop it.

Lesson: Next time your shares are priced 1000x what they were a minute ago, enter a market order as fast as you can and stop sitting there with your jaw hanging open repricing and messing with the sell order!

MikeNYC, I would advise against that very strongly. Keep in mind you only saw the data that was sent to you. Something like that situation could only truely occur on a VERY thinly traded stock. Because every limit order would get priority to your market order. Plus the chance that it was an all or none for a large amount(meaning that two brokers are getting 'creative' with a trade). Or the more likely reason that your computer was sent bad information. You'd be surprised at what can happen when any of the binary 1's and 0's get flipped to the wrong one.

RE: MAG Silver

A quick search on NASDAQ.com showed me that Acuity Investments owns (owned) a very large stake in MAG Silver. They added almost 1 million shares in Q2 when MAG Silver was trading between $10-13 USD for a total ownership of 9.6M shares (almost 20%) of the company.

http://tinyurl.com/3sewzz

I wouldn't be surprised if mutual fund redemptions and investment losses in natural reources/metal funds were forcing Acuity to drive MAG's stock down at all costs and the smaller players to follow suit.

I looked at a few PM co's w/ similar market caps and 20% ownership by one investment house seems to be enormous. Perhaps this is more evidence/reason for the massive capitulation recently...........

BIDU, CTRP -

Wow! China on fire?
BIDU up 15.54%
CTRP 38.86%
FXI 12.69%

At least 60-70% of BIDU & CTRP options price higher than the level their close today. "Might" be a play for Friday as a day-trade.

I hear gold margins are being raised, but I cannot find any sources to confirm.

Unusual SPY options activity. Yesterday, the total $volume for SPY calls was $82M (the average daily is around $650-$70M). Today the volume was $792M!

The average call premium paid was $6.27! The daily average is around $2.50.

If you look at the options table on yahoo http://finance.yahoo.com/q/op?s=spy that you will see that the orders were spread out on all the deep in the money calls, all the way from the 60 strike. This volume was not there yesterday or in any other day.

Picking one at random, SPY 71 Calls, 2,676 contracts traded, all at $49.50.

Somebody knows something? Sure looks like it.

Can anyone tell at what time these calls were bought? Someone may be pocketing billions here.

I have been tracking these every single day and have it all in a spreadsheet.

I had no doubts that gold would take off today, as I had read in Bill's post, but I should've realized the interventionists would knock it back down. Next time I'll be selling into the rhino horn.

SiO2,

i have no idea what any of that means exactly,
could i get a dummies version?

thx

Headline in Brazilian papers: "US Treasury studies fund to assume rotten debt" "... similar to Resolution Trust Corporation, which assumed US$ 500B in the 80s."

No more bad debt then, all clean now?

nemo - UNG is an nat. gas ETF, maybe this is what you were looking for?

Bloomberg: New AIG CEO wants to pay off the $85billion early. Hands up, who believes that statement has any possibility of coming true?
http://tinyurl.com/477tyy

[Bill Cara note:

Actually he has a good shot. Make ten or 15 percent on the $85 billion and take out a new $85 billion line from the other banks that want his business. Of course, he'll have to wait until this banking crisis is over and the banks have funds to lend him. What the Fed did (with Treasury's "full support") for AIG was incredible. I wonder if there is a retraction feature on the share issuance. Anybody know the terms of that deal?]

From Wikipedia,

Naked short selling, or naked shorting, is the practice of selling a stock short without first borrowing the shares or ensuring that the shares can be borrowed as is done in a conventional short sale. When the seller does not then obtain the requisite shares, the result is known as a "fail to deliver."

I believe authorities have led the public to believe that short selling and naked short selling are the same thing, and therefore should be banned. The public is unaware of the differences and because it almost sounds sensible (remember, they are not traders), are going along with the program.

Sometimes you have to walk a mile in someone else's shoes. I wouldn't expect a professional trader to perform an appendectomy just as I wouldn't expect someone who has never traded the market to know the difference between a short sale and a naked short sale.

In fact, it seems as though most politicians don't know the difference, or possibly, they do, and wish not to execute according to oath. I'm under the assumption that a majority do not know the difference.

wavesmash-

[picked up FXI @ $31.90
PCA @ 33.50

Thinking of getting out before the close... any thoughts?

This market is just plain wacky.

Posted by: wavesmash [TypeKey Profile Page] at September 18, 2008 3:23 PM]

[FXI @ 31.90? hell, no!

Posted by: 2nd_ave [TypeKey Profile Page] at September 18, 2008 3:24 PM]

[sarcasm 2nd or horror?

Posted by: wavesmash [TypeKey Profile Page] at September 18, 2008 3:28 PM]

make sense now?

This was a massive rumor/news induced short covering rally. The crappiest companies were up the most. The market was really coming apart there for right before the turnaround.

I think next week will tell the tale, if this is a bottom or not. Could be just another one off rally like we saw into July 15th.

moab:

I think it will depend on whether this RTC-Like thing is just a Potemkin Village or ends up being something with substance.

Don't you think so борода?

Sorry Bill

I didn't see your first reply asking me not to link to Agoracom. Got it this time.

Now can I comment on something you said?

"Legal short selling where you pay to borrow an asset to use as you wish and replace it later is something we do in other aspects of our lives"

We do? In my mind short selling should be banned period. If I don't understand trading then fine, but if a parking lot attendant that has my car in his lot goes and lends it to a friend of his without my permission and then goes and smashes it up thus creating a loss for me I will never take my car back to that lot. I would ask the police to press theft charges against the parking lot company.

To me this is exactly the same principle. Unfortunately people are so used to the concept of stealing things from others in our society that it is no wonder that this practice is considered normal. Now that the banks are being shorted, and they are the very ones that endorsed this concept in the first place, governments are crying foul. So? why should short selling be allowed again? Protractors argue that it creates a balance but its still theft. Brokers do this all the time, everyone knows this. I don't care if they must pay me the dividends or whatever...I don't recall a broker ever phoning me asking if they can lend my shares so some crook can take them and use them against me. Know what I would say?

[Bill Cara note:

Michael, your reply has proven an excellent case study to the class. Basically, it shows the difference between philosophy and law. Securities are traded under law plus rules and regulations intended for easier interpretation of the law. Any philosophy involved, such as yours, may have been discussed by the legislature back in 1933 when the US Securities Act was passed in Congress. Under law, when you sign an account with a financial services company that is registered to hold client assets, you are signing a legal agreement. You are provided a copy of that agreement. It states the rights and obligations of both parties. If you are approved for a margin account, you sign the rights to use your stock as the broker sees fits their interest, including lending it for a fee to other clients who would borrow it for purposes of short selling. There is nothing illegal; in fact your signature on the margin account made it completely legal and the business of securities lending by the broker is a large part of their business model. Getting back to philosophy, if the practice of securities lending is objectionable to you, you do not have to sign a margin agreement. You could sign a cash agreement, in which case, you put up the cash in front and the broker doesn't have to lend you assets of other clients in the form of cash. It's your cash; you spend it how you want, and the broker will happily execute your order.

There is nothing wrong with holding opinions such as yours. Many clients of brokers do this all the time. They will not sign margin accounts. If they believe they need margin, they go to their bank and borrow, by putting up other forms of collateral. They then take that money and deposit it into a brokerage cash account.

You might think I take issue with your philosophy, but the fact is I don't. Knowing the law, I take issue with your statement. But your philosophy is the same as mine. I have stated from the beginning of this blog that the credit (liability-based) systems should be separated from the debit (asset-based) systems. I believe that banks should be banks, dealers be dealers and brokers be brokers. I believe the public needs an independent depository for their securities, one that is not owned by the broker-dealers. That way, the broker-dealer cannot use your stocks and if your broker (agent) is not your dealer (principal who sells you products), nobody can trade against your positions. If you have collateral and good financial standing, you will find a bank to lend you money. The way the financial services system has been built today is full of conflicts of interest because your bank can also be your dealer, your broker, your advisor, your depository, your insurer, and a principal that trades against you. Moreover they are self-regulated. Philosophically, Michael, how does that sit with you? As for me -- someone who built the Eastern Canada operations of the biggest independent broker-dealer in Canada on the penthouse of the Toronto Stock Exchange tower, I can tell you that I hate it, but it's the law. Michael, I can assure you the market place needs it. For every short sale there must be a future buy. What the law ought to do when a public company files for bankruptcy is to require all shorts to cover. The trustee in bankruptcy ought to account for the obligations of short sellers as an asset. That law would stop a lot of shorts, particularly the illegal shorts that, I agree, drive some companies into bankruptcy.

The more we talk about these things, the closer we'll get to answers. I appreciate the fact you decided to express your views. There is no need for hostility in any of what goes on here -- frustration should be the limit.]

Michael Randallbard,

What do you think the banks do with the cash you put in there? They use it how they want to!

MR-if you have a margin account you'd better read the fine print. ronK

Michael Randallbard,

That's close but not quiet it. It's more like you buy a car to use in New York City. You park it in a garage. You leave on business for a month or so. The attendant asks if he can rent your car out and pay you a fee for the rental.

That's closer to what Short Selling is.

USSA - put the sickle on the US flag now. And fly it upside down.

b0ss - No I'm not yet sophisticated enough to trade off hours. As you can see I can barely manage on-hours. Without Bill, this site, you and all the other traders I would be hosed.

I bought 3K wgw@1.40 with a sell for $1.71. Also have some sto, vlo, auy, gg, ceg, 25 mitsy (argg),

SPY options, all those deep in the money calls were traded at or near 4PM. http://nexalogic.com/spy2.jpg Can anyone explain this?

Bad debt agency: am I the only one who thinks that if this is true, and gold margins are being raised, we, you, and your children for generations to come have all been screwed? (pardon the word, but even our PM uses it).

FINRA might be a good place to go for information on short selling
http://tinyurl.com/3wpbes

SiO2 - Just looked at the SPY calls, it's really bizarre!

GLD is back up to $84 in after hours trading. I took a mini bath today, but at least didn't got out with only 3K damage.

Why would those deep in the money calls go down today? Volatility decline?

"USSA - put the sickle on the US flag now. And fly it upside down."

Just relax. A couple of those stars will be hammer-and-sickles from now on, but you'll still have a bunch left.

:)

Oop, I mean

:0

No smiling, fellow communists!

moab- those prices were from the last trades, sometimes they don't trade everyday!

Michael Randerbard - You're getting the hang of it, and if you keep digging and thinking, you'll discover that legal short selling is actually beneficial to the function of equities markets.

It is illegal short selling which is destructive. Illegal short selling occurs when shares are sold but not borrowed, and so, not returned, a "fail to deliver"

A case can be made perhaps that abusive short selling occurs through an "organized bear raid", but my belief is the successful organized bear raid actually terminates in failure to deliver (illegal naked shorting).

There's a huge difference which is not apparent to non-traders, and I suspect, a majority of politicians.

SiO2-

can't think of too many reasons to buy high-priced calls, so the trades were probably driven by call writers...just throwing out a few possibilities-

(a) someone taking advantage of the high premiums near the close to make a few bucks- ie, betting on a steep drop in value tomorrow..

(b) someone selling deep-in-the-money and buying out-of-the money?

(c) someone padding the bank account before declaring bankruptcy tomorrow (LOL)...

nemo,

I am not sure about this RTC thingy as a decisive factor in a matter of rally-not rally. Feels to me more like any excuse was good for a spike simply because market was ready for it. Air was soaked with fear, we talked about it yesterday... and boy, when Bill predicted wide swings today, was that a call or was that a call. As for what's next... I really think Bill pretty much exhausted this in his day by day mapping, with precision of neurosurgeon.

SEC intends to temporarily ban short selling, but it's not clear if the commission has approved the move. Cox is briefing congressional leaders. Separately, the government is seeking congressional authority to buy distressed assets.

On top of all that, they want a FDIC-type guarantee on money market accounts.

Dow futures up 120pts...

Citi: Risk Aversion Marks the Bottom; S&P 1475 Year-End

In a think-piece this morning offering the reassuring observation that “September always has been the worst month of the year for stocks on average,” Citigroup’s (C) U.S. Equity Strategist Tobias Levkovich suggests the panic he’s observed first hand among fund managers over the last few days is indicative of a market bottom. He’s sticking to his prediction of 1475 for the S&P 500 by year’s end — it’s at 1143 currently, so that would be a gain of almost 30%. Levkovich has a couple nice charts showing that the banking and the financials part of the S&P 500 are actually above their July lows, proving, he writes, that “The perception of collapsed banks and related stock prices is simply not the actuality.” The gloom among investors, insists Levkovich, means it’s probably up and up from here. “This week’s pounding in equity markets certainly feels like capitulation with almost no investor we meet or talk to willing to take any risk,” notes Levkovich. “Such environments typically mark bottoms and are not indicative of further weakness.

Michael,

others pointed out misperfections in your analogy. let me add couple thoughts, leaving theory and ideology out and going off pure practical angle.

1. Short seller provides you, buyer, with liquidity on the way up. When you buy, some one sells shares to you, and leaving only sellers of existing long positions on a sell side will decrease liquidity to a degree where you, buyer, are going to face increased spreads, thus paying more.
2. That same short seller provides you with liquidity on the eway down when he covers his short. If you thought he was a "brake" on the way up, consider his role now as a padding on the way down. Shoukd you decide to sell, he will play the same role of liquidity adding spreade-eater. Should you decide to sit the drop out, he will provide support, softening the drop.
3. Pure empirical observation: there are markets where short selling is not allowed. Think they perform better? More in tune with fundamentals? Look at China, 70% off the high... no shorting allowed.

There is nothing new in blaming short sellers when stocks drop. Livermore was widely blamed in crash of 1929, to the point of getting death threats. Anyone really believes he caused the crash? Or he simply exploited it?

CP,

My broker is preparing a statement for my accountant to attach to his letter of explanation. Both have handled things for me for decades (second generation with broker).

Once, in more than 55 years of filing, I did not need to. The IRS sent a letter asking me to state why I did not file — multiple choice on the back included: I did not earn enough to exceed the limit including my Social Security income. (I had carefully balanced my gainers and losers in my trading.)

The result I had to actually file the entire 1040 in order to prove that I did not need to file the 1040.

Three years in a row they lost my 5500EZ showing my retirement plan contributions and balances. I had to refile.

The problem now is only because I was honest enough to withdraw my over contribution to the ROTHs. If I had left the money in they would never have known and I would be earning several thousand more totally tax exempt. As it turns out I will actually be able to show a net loss and could probably file an amended return to get about a $30 refund.

The last thing today the gov. announces they are taking the bad stuff off the balance sheets for those bastards who are costing the next couple generations a fortune and they do nothing to reclaim $billions from them. Is it any wonder people flaunt so many laws?

The government is inept, impossible to reason with and totally unfair — unfortunately the only game in town, they know that, so they have no need to improve.

Don Graifer:

I agree, but two or three pieces of positive news, some substantive-UK US short-sell prohibition, and the other a headline: the RTC-thingy, as you so aptly put it. That was enough to scratch the itch

WSJ journal is reporting that the SEC intends to temporarily ban short selling here. They are unsure whether the rule has been approved or not.

moab

"SEC intends to temporarily ban short selling"

How will that affect utra shorts like QID SKF TWM etc?

+slope of hope" could quickly turn into a "wall of worry"...JMO based on the skepticism i see about this rally...

as for banning shorts, i guess that leaves current shorts in a bind...if/when the squeeze comes, they're stuck with going long with no way to put the short back on...wonder where that leaves the ultra-shorts- down to puts and more complicated swaps?

"The U.S. Securities and Exchange Commission intends to temporarily ban short-selling, The Wall Street Journal reported Thursday night. It's unclear if the commission has approved the move, the Journal reported. SEC Chairman Christopher Cox, Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson were briefing congressional leaders Thursday night. The U.S. move would follow a similar action by U.K. regulators on Thursday."

like the timing on this announcement? how much notice were existing shorts given to get out?

2nd

This has been some crazy year hasn't it? Remember in the 1st qtr of this year when the market rallied from -175 to 250+ in a matter of few minutes at 2:10 in the afternoon and now this. If there was another game in town I would pack up my toys and go there.

So what happens to those of us who holds utra shorts, it goes to zero?

not sure if anyone has seen this yet, since I haven't very active here of late

Morgan Stanley in Talks with China's CITIC
http://tinyurl.com/4wdhql

but as FranSix says earlier

No smiling, fellow communists!

QT- i hear you...do your best to take advantage of their games...current volatility is to your advantage; in fact, this week is your best opportunity yet to either day trade, or simply place large consecutive bets on Banker with heightened odds of winning...aside from betting, you could also go all-in on the long side with a 6-month to one-year horizon, and sleep well...you don't see many opportunities like the one you have this week...seriously

TBT How many of us had our sights on this one? An LEH product (friend of bonds?).

QT- i wouldn't worry about that; ultra-shorts are still expected to perform as advertised...i was just wondering (a) how many of them depend on being able to sell short as a means of achieving stated goals (and may need to find another strategy), (b) how big a handicap it poses to downside momentum, and (c) how it psychologically affects existing shorts...

Paulson wants illiquid assets off balance sheets?
The garbage paper is going to be dumped on the American taxpayer's doorstep and Wall Street will walk away from it's "mortage-related indescretions"?

The SEC is going to ban short selling?

Have I gone through the looking glass, or is this the latest greatest example of the total failure of the Laissez faire so-called "free market" to do anything other than self-destruct?

Doesn't it illustrate principle that welfare's fine, as long as it isn't for black single mothers on crack? Because if welfare is for rich men and corporations, then it's JUUUUSSSSSSTT fine.............

If they disallow short selling they will, and don't think they can't do this, they WILL probably kill the stock market in the name of what? Republican/communist bailouts? When did these guys stop believing in Adam Smith? What the HELL is going on in this country?

SEC Didn't Disclose Expiration Date for New Short Selling Rules
Posted September 18, 2008 4:52PM PST

The Securities and Exchange Commission's announcement yesterday of new rules against abusive short selling practices did not include the fact that they have an expiration date.

The action the SEC announced was actually an emergency order that expires Oct. 1. Before then, the commission plans to make permanent rules.

But that's not what the SEC said. Its press statements referred to "new rules" to protect investors against naked short selling abuses. Only late in the evening did the SEC release the actual details of the emergency order.

The SEC's first statements about the emergency orders referred to them as "actions, which are the result of rulemaking under the Administrative Procedure Act" saying that they "go beyond its previously issued emergency order."

Longer-term rules should be in effect by the time the emergency order expires, SEC spokesman John Nester said, though the emergency order can be extended for up to 30 days if necessary.

When asked why the SEC hadn't disclosed in its press release that the commission's action announced yesterday was an emergency order, Nester responded that the commission was "just trying to communicate what the actual effect would be."

The emergency actions require short sellers and their broker-dealers to deliver securities within three days after the transaction date, and impose penalties for failure to do so. In addition, the SEC eliminated the options market-maker exemption to the delivery requirement. Finally, the SEC adopted a provision making it illegal for sellers to lie about their ability or intention to deliver securities.

http://pipes.dealflowmedia.com/wires/top_wires.cfm#1

Editorial: I first learned of this earlier this afternoon and was beside myself with disbelief. The SEC deceived the public and did so intentionally. The language in their press release and the language in their interviews presented this as a new rule when in fact it was a rule with a fixed termination date.

This is an egregious breach of public trust. This is not about the contents any more but about the quality and integrity of materials disseminated by the SEC. What else has the SEC lied to us about?

For the past 3 years investors and economists alike have debunked the SEC Office of Economic Analysis reports citing that Regulation SHO was working. The analysis was flawed and the SEC refused to provide the raw data used in concluding what they have. Similarly, there is an OIG investigation into a staff attorney in the Denver Office who is accused of committing perjury to an administrative judge relative to testimony in the USXP case.

Chairman Cox may disagree with Senator McCain about whether or not he should be fired for his handling of the financial disaster we are in. There is no question however, that under this same Chairman’s watch the integrity of this Commission and the ethics for which they operate have been severely compromised. The releases yesterday are proof positive of that.

[Bill Cara note:

I too sense that the Chairman has been under severe duress from the White House, and the Treasury Secretary in particular. Do you recall that I said during Congressional hearings that Chris Cox should never be seated at the same table and face an inquiry along with the Treasury Secretary and Fed people. Whomever forced him to do that should be outted, and Cox himself should have resigned at the time. The SEC must be made into an independent agency of government, with a Permanent Secretary, who is responsible to Congress. What has happened to the SEC in recent years in particular is to politicize it beyond effectiveness as a regulatory body. In fact, if Treasury Secretary Paulson had his way, the Fed as the head regulator would take control. It is actions like that from Paulson that I believe should call for his impeachment. Cox should be called before Congress to explain under oath the political pressure he has been put under.]

2nd

Thanks for your imput.

Patchie:

I don't know why anyone would be surprised when they're political leaders and appointees deceive them. Ask Vadym-life in the USSR including what you said, always was reading between the lines.

Interesting movie I saw the other night. I think it was The Candidate. Jeff Bridges plays the president of the US. He quotes Napolean as to why there are no great leaders anymore. Because, to reach the pinnacle of politics where greatness can be displayed they first must be extremely petty. The two don't often exist within the same person. Leaders always paint a picture they think we will accept, not the truth, and they're the most cutthroat SOBs in the country. That's why they play in the big leagues.

Darth Graifer:

Whaddya' think about tomorrow?

"Have I gone through the looking glass.."

shark- like you, i thought (still think) the best path would be to for the country to take the economic hit it needs, and unwind the life-is-good mentality we all knew deep down didn't seem right...but it's possible that paulson and bernanke know a few things we don't, among them the possibility that without intervention we could lose it all...like it or not, much of what we depend on resides in financial institutions (insurance, credit, cash, stocks, bonds), and if they go, then we're screwed...so maybe the kind of stabilization we're seeing right now, as bad as it seems, may in fact be saving our a---- from total loss...

a smart guy on leisa's blog once asked (rhetorically) if we're all getting along just fine without any of the off-balance stuff right now, why not just leave them off-balance?

GLNG took off to the moon today +25%, then sank: -10% AH... What up????

kinda regret taking half off at the close right now, but hey, maybe the regret will disappear by tomorrow's open...

CP- what was the size of the AH trade? when a stock goes up 25% in one day, likely to be one or two nervous holders who get taken out in the AH playground...

2nd - Is the answer to that question evident from the illiquid credit crunch that's killing the housing market? I don't know for sure but I suspect the banking sector has to be dealt with first before housing can have any hope of recovery..

Supposedly, these banks are leveraged 30x, so maybe mergers are the only way to execute unwind?

shark- could also ask F6 for what's left of yesterday's doobie and let Gracie explain the looking glass to you...

CP- true..can't buy a house without a loan, can't get a loan without a bank, and can't have a bank without deposits...

2nd -GLNG- Dunno, Just Google Fin, can't tell. Looking elsewhere...

relief rallies underway in asia...

Had places to go so I didn't have a lotta time during the day and early evening to explain what I saw in the last day or so.

NBC Nightly News had the Financial Network talking clowns on last night. When u see the markets as the lead story in the general newspapers and news shows like Today and the evening news, it's likely the markets are near tradeable bottoms. Anyhow, the clowns were talking about gold. I think gold will eventually go much higher like Bill but in the meantime, "What everyone knows isn't worth knowing" Looked to me like a gold buying panic on Wednesday. Pretty good set up for a fade. DZZ made a lower price low this AM but the hourly MACD diverged, hence the buy.

The Triple RSI screener helps but I'm seeing more capitulation where the RSI 7 day trades below 10. I'm looking out to Oct options max pain to see 1) if there's any upward pull and 2) if there's enough upside to put the trade on. I also want to see a sell off in the AM - more likely to see reversal to the upside in the afternoon like today.

Keep position sizes small with this much volatility and/or close the trades when u hit a profit objective or ur sell stop is hit.

GL

http://tinyurl.com/4vhgrz

Listing of high volume "picks" run through some kinda filter...

sorry, it might be outdated.

Or we could just fire up some o g kush and trade stories about the looking glass and going through it.

"[Bill Cara note:

What happened to Gold at exactly 2:56pm ET was an organized naked short-selling Bear raid by central bankers and HB&B. That was timed with the publishing of the announcement that the Brits too were going to ban legal short-selling on Financials. If anybody thinks this is a fair game and a level playing field after seeing this action today, then I can say you suffer credulity syndrome."

....and as I stood there watching the unraveling, I kept hitting my "Buy" button on Schwab as each lower level was reached. Didn't have any GG, or SLW at the start of the day, but ended with a nice starting position and at much better prices than an early am panic buy. Thank You BC.

Schwab also locked up a few times today, but I can't discern if it was Schwab or my cable supplier Cox which has had continuing issues with the Schwab feed and refuses to correct it. Does anyone here use Hughes Satellite?

bsi87 - Thanks, good idea. I'll try to sell Au if we see another rally tomorrow, I guess the rate of rise had me spellbound and under the belief it wasn't coming back so soon. I've not seen such a fade like that...

I see, an old list so you can follow his picks and benchmark performance...

Patchie,

I also noted the misuse of those Press Releases today.

Having worked on wallstreet during the .dot com days, I know the impact the press releases have on the public and I also know how tough the SEC is on those who abuse this system for their own financial benefit. I even know someone who went to jail for that after being suued by the SEC. But when it is the SEC, it obviously doesn't apply .. they can do it in the name of Homeland Security / Patriot act / or " Financial Terrorism" lol

I am just waiting to see Sarah Palin sworn in as the first dictator of the USSA a few years down the road.

Editorial: I first learned of this earlier this afternoon and was beside myself with disbelief. The SEC deceived the public and did so intentionally. The language in their press release and the language in their interviews presented this as a new rule when in fact it was a rule with a fixed termination date.

Hughes Satellite - I wish! Don't know how well it works, but am considering it. A string and tin can set would work better than my dial-up!

Sounds like it will be soon a done deal. All these people from both parties are grateful that they are solving this crisis!

http://bloomberg.com/apps/news?pid=20601087&sid=aBSQuhba4nTc&refer=home

"It will be like New Year's Eve for the market tomorrow morning. "

"Paulson, Bernanke and Securities and Exchange Commission Chairman Christopher Cox ``asked us would we agree to do legislation that would create the authority within the federal government somewhere to buy up these illiquid assets,'' said Representative Barney Frank, chairman of the House Financial Services Committee ``We said `yes,' we think that's important to do because the consequences of not doing it are so bad.''

And what are the consequences of these actions?

Did you folks in the US vote for these people? And you will let this happen? Act now!

SiO2 - The lobbyists put them in office. Who cares if the US goes down the tubes as long as the rich get richer? The entire last years has been like this, one screwup after another and the public just sits back in their easy chairs and watches.

This is what kaimu's been talking about, he see it happening too.

last 8 years.

market move up and down but counting from Monday 9/8/2008 to today
Market is down only 200 point

2nd
"you could also go all-in on the long side with a 6-month to one-year horizon, and sleep well...you don't see many opportunities like the one you have this week...seriously"
that is what I did investd 60% of my capital
will do day trading with ony 20% of my capital for fun

testing

2nd...
yes, now I can get my wife this for her b-day.

http://tinyurl.com/5tmgm8

and maybe have some left over too.

Wish I'd picked up more but that was just a freak stink bid that went through.

This should help it a bit tomorrow.

"China decided on Thursday to scrap the stamp tax on stock purchase, effective on Friday, in a move to boost the equities market after domestic stocks fell for third consecutive day since Tuesday.

With the authorization of the State Council, China's Cabinet, the Ministry of Finance and the State Administration of Taxation said they decided to cancel the share trading stamp tax on stock purchase while the stamp tax on share selling remained unchanged at 0.1 percent.
"

http://tinyurl.com/5soot3

"China stocks surged the most in five months after the government said it will buy shares in three of the largest state-owned banks and scrapped the tax on share purchases. "

http://tinyurl.com/52bvvy

I owe you some hawaiian flowers or something...

anyone else having trouble posting?

This last year that I have come to follow the markets and, especially, to discover this great community has been one wild, eye-opening ride. As I think it was Vadym who said, if you can learn to survive in this current market, you'll have all the tools you need for a lifetime (or words to that effect). As such, I'd like to thank everyone here - especially Bill - for this great gift.

On a more specific topic, Bill has recently been saying that the Financials are likely to lag in the next Bull phase. But I thought I recalled him saying earlier that this bull phase can't really get underway until the financials show some healing. Is anyone else getting the feeling that the financials-healing is well underway? I offer up two examples that I have been following (I have no positions in these because my trading-execution is still pathetic):

Look at these charts in the MAX timeframe to gauge their rate of recovery.

Old National Bankcorp: http://tinyurl.com/58863j

Zions Bank: http://tinyurl.com/6pd4ej

For the last eight months I have been thinking of devoting some $ to Financials on the rather obvious discount opportunity (as a long term play) but it has puzzled me that this is so darn obvious it'll never work. I'm starting to think I was right. Could it be that these financials are going to zip out of this trough so fast that the opportunity will pass the majority of traders by?

From the little that I have read, the RTC didn't buy bad loans. The loans were given to it as part of the decommissioning process for defunct S&Ls. It then arranged for the sale of assets, at lower prices and much more quickly than some banks would have liked. Those were they days before securitization took off.

I haven't heard of any details yet about what they are planning. The easy "bad loans" to deal with would be the ones on the banks' books. The majority of the loans were sold as MBSs, all of which have contracts which specify the degree to which modifications can be made to the pool. It might be more complex than Congress understands at this point.

Also, what would be included? Residential loans only? Commercial real estate loans? CDOs? Alphabet soup? Municipal bonds gone bad? They will need trillions! Think about it. Will they bail out only American banks, or will they extend it to pension funds and other institutional investors.

The only way it could work for the taxpayer is if the bad assets were purchased for pennies on the dollar. That would force write-offs rather than merely large write-downs. The banks might not like the deal very much when they get to see the details.

If the SEC bans short selling, will commodities see the run up again?

doesn't look like there's gonna be much edge tomorrow in going long or short. I was hoping for another selloff in the first hour to try to get some STT, GS, MS, et al but futures at this point are very strong. People want to believe Helicopter Ben and the Goldie Wiz SecTre can make the pain go away.

Unfortunately the bear ETF's haven't dropped enough to reload those.

And with triple opts expiration, mkts could chop around.

see what happens

re:MBT.

Had that stop set too tight. Up 13.75% today.

Asian Markets exploding to the upside at the open tonight - China, for e.g., up 9%. Gov. taking measures to try and turn the market:

http://tinyurl.com/4tfshk

The Economist http://www.economist.com/
Time http://www.time.com/time/magazine

There is no way the government can print enough money to fund the RTC without foreign treasury buyers bailing.

But maybe he's already thought of that and will start buying our own treasuries in a crazy feedback loop. It almost seems inevitable that the only way the financial system will get resolved is by us becoming a true Wiemar Republic.

This week has truly been crazy. My SLW calls are great and thanks to helicopter Ben my DIA calls are looking good again.

I hope everyone is doing well through this rollercoaster ride.

Rob.

nemo,

when emotions run that high and market is so sensitive to news (of which we are experience no lack, aren't we), I don't do any forecasting. My routine these days is to read Bill's morning write-up as a map for the day, soakin morning news, gaps, sectors and stocks, then start hunting for setups, one at a time. Also looking for patterns, old ones to be confirmed and new ones to emerge. For instance today's observation and their utilization:
1. USO/UAUA is back to certain degree, with new twist: UAUA started reacting on NQ as well, and NQ these days is mostly driven by what happens with finaancials (even though none of them are on NASDAQ), not by oil. So, in a few instances when oil told UAUA to go up and NQ - down, UAUA sat hesitating for a few, then went with NQ. Thatdelay was good for entry, so after observing it couple times I did a few plays on thhis.
2. Interesting new pattern appeared and worked for at least couple hours: every time new headline would put more chances on MS buyout by China bank, WB went down; every headline doubting that would sent WB up. Since MS juggled between China and merger with WB all day, logic is self-explanatory here. Was good for couple plays. Then WB just went up like crazy and, sadly, I misssd big part of that.
3. In second half of the day GS clearly worked as leading indicator for SKF (inverted relation of course). Considering SKF's natural volatility it was not an easy hunt but fairly profitable nonetheless.

So, as you can see... taking it play by play.

BillySundance - Re: MAG.TO/MVG 's decline. Yes you are correct, I believe. In fact Brent Cook sent out an alert the other day on MAG saying the same thing - fund liquidation caused it to drop sharply and he thought it was just too low. Actually, as a side note when I viewed the recommended BNN video of Cook today, I was a little surprised at his enthusiasm for MVG because he is usually so reserved/conservative, but obviously he thinks its a steal here.

In other news, strong words from Dr. Marc Faber on this rally being 'fantasy' for a new bull market. Recall Faber has called this commodities bull market from the beginning in '99/'00. I've read every word he has published for 3 years and he is one smart man - his book 'Tomorrow's Gold: Asia's Age of Discovery' is a must read for anyone. The economic history and how it relates is absolutely fantastic. Too few people pay attention, in my opinion, to that fact that very little of what we see today is 'new'. Most has occurred in exactly similar fashion throughout history if one cares to look back far enough.

Anyways interesting to hear Faber's view on bloomberg tv there today. I did a whole lot of buying across the board today for the long term. We'll see.

Thanks Vadym,

Fishy fin wave from Nemo

Shark,
I couldn't agree more about how much bull____ all this intervention is. I don't agree that the system will fail without these banks and brokerages.

I do believe that Congress won't get their grease if they let their good old boys go down hard and a new crop of bankers rise up.

And the machine needs it's grease.

Of course, the responsible thing is to let these people fail and save our money to support the sound banks and brokerages that rise up and become the new BofA and GS and Citigroup.

How funny would it be if the short-selling ban backfires and they end up with stocks that have no bids and no one trying to cover their short to help hold it up?

Rob.

Vadym,

Well, it seemed all the financials did the big turnaround just about at 1 pm. That was when I first heard the no shorting story out of the UK. I think they started a bit before that because I'm sure the news was out.

I know many Canadians would be against this, but I for one would love it. What do all Canadian on this board think????

Canada-EU trade proposal rivals scope of NAFTA
Plan to lift barriers for goods and labour to be discussed at summit after election

DOUG SAUNDERS

From Thursday's Globe and Mail

E-mail Doug Saunders | Read Bio | Latest Columns
September 18, 2008 at 2:00 AM EDT

LONDON — Canadian and European officials say they plan to begin negotiating a massive agreement to integrate Canada's economy with the 27 nations of the European Union, with preliminary talks to be launched at an Oct. 17 summit in Montreal three days after the federal election.

Trade Minister Michael Fortier and his staff have been engaged for the past two months with EU Trade Commissioner Peter Mandelson and the representatives of European governments in an effort to begin what a senior EU official involved in the talks described in an interview yesterday as “deep economic integration negotiations.”

If successful, Canada would be the first developed nation to have open trade relations with the EU, which has completely open borders between its members but imposes steep trade and investment barriers on outsiders.

The proposed pact would far exceed the scope of older agreements such as NAFTA by encompassing not only unrestricted trade in goods, services and investment and the removal of tariffs, but also the free movement of skilled people and an open market in government services and procurement – which would require that Canadian governments allow European companies to bid as equals on government contracts for both goods and services and end the favouring of local or national providers of public-sector services...

http://www.theglobeandmail.com/servlet/story/RTGAM.20080918.wtrade18/BNStory/International/home

I've been wanting to move to Europe - France or Switzerland and be able to work there, if this comes true, then I will be happy and I'll be gone

" but also the free movement of skilled people "

From Doug Kass on the RTC:

I have to disagree with all the pundits -- and many of the more bullish cabal today -- who view the RTC solution as a cure-all.

The issue is more complex today as compared to when the RTC emerged in the early 1990s.

At that time, the government inherited its vast real estate portfolio of commercial and residential properties through the acquisition of bankrupt thrifts.

Today the issue is far more complicated, as the government apparently intends to buy the bonds that are backed by the delinquent and foreclosed properties.

So unless the Treasury pays more than the real estate backed bonds are worth from the banking and thirft industry, this is not a recapitalization that immediately benefits the financial intermediaries that have been crippled by delinquencies and foreclosures.

While a Treasury intervention will stabilize the impaired real estate markets, it is not, as I previously wrote, a cure all.

Moreover, how does the federal government plan to pay for such a large-scale endeavor?

Even with such a solution, the only real cure is time, and some more pain for the banks that hold the assets. It is for these reasons, and others, that the equity market, in my judgment, has overreacted to the "news."

Doug Kass is founder and president of Seabreeze Partners Management, Inc., and the general partner and investment manager of Seabreeze Partners Short LP and Seabreeze Partners Short Offshore Fund, Ltd.

I love Canada with all my heart, but I'm really not nationilistic (if that's a word (I'm french). It doesn't matter to me whether we merge with the US or Europe... I guess I'm International and love free borders and be able to work in any Country I like and trade freely. I know this is not Popular with many people. Maybe I just don't understand the consequences.

Fingerlakes,
I agree 100 percent. After the short squeeze where will the smart money go? Into toxic banks? They are playing with fire.

Rob - exactly - they are taking away the only people buying - 'short sellers'.

It's a joke. Socialism being masqueraded as staunch capitalism. The world will get it wrong and think this is a failure of capitalism. It is not. It is a failure of socialism. Constantly intervening in the markets to set short term interest rates to thwart the business cycle - that is not a free market. That exacerbates and increases in magnitude bubbles which would occur anyways. This deflationary credit bust is what we have predicted for several years. My fear is that with 1.14 quadrillion in derivatives (arguably real risk $60 trillion), no one can quantify the real risk out and we could all be proven wrong on our view.

Friedman said 'the problem with capitalism is capitalists, the problem with socialism is socialism' Banks behaving badly and no action was forthcoming. Outrageous leverage due to low interest rates. Short termism in politics resulting in escalating debt. This was a failure to regulate capitalists through prudent enforcement of already existing rules and perhaps instituting some new ones and a failure in repealing some good ones (Glass-Steagal). A failure of government and citizens to see long term.

All you can do is protect yourself. We recently found out that my wife and I are bringing twins into the world. I wonder what kind of country this will be for our kids. A return to Canada beckons more and more. We'll see.

Good luck to anyone trying to leave the U.S.>

The "Heroes Earnings Assistance and Tax Relief Act" (H.R.6081) into law on June 17, 2008.

The below section was inserted by Congressman Charles Rangel, tax deadbeat...

Expatriate Taxation
The act imposes mark-to-market taxation on the property of U.S. citizens who relinquish their citizenship and long-term residents who terminate their U.S. residency — for example, foreign workers returning to their home countries after leaving U.S. employment — to the extent the property gain exceeds $600,000. The legislation requires 30 percent withholding rather than direct taxation on the following:

Amounts in qualified retirement plans, 403(a) and 403(b) plans, 457(b) plans, SIMPLE plans and simplified employee pension plans
Interest in a foreign pension plan or similar retirement program
Deferred compensation
Any property or right to which the individual is entitled in connection with performing services to the extent the property was not previously included in income under tax code section 83

Amounts held in so-called specified tax-deferred accounts — health savings accounts, Archer medical savings accounts, IRAs, section 529 accounts and Coverdell ESAs — will be treated as if they had been distributed the day before the expatriation date (although they will not be subject to early distribution penalties).

The provisions generally apply to expatriations on or after June 17 and override existing tax treaties.

http://tinyurl.com/HeroesAct

Vadym,
I was wondering where do you get your news. Do you pay for a service,Bloomberg terminal, Ect?

Tigermaple, I will be watching and jumping into toxic banks if tomorrow goes as I think it will for a real short term trade. C anyone? The non toxic banks are already near a 52 week high? WFC, USB. How are they going to grow earnings. I thought no one was lending.I guess they are going to increase market share? How are these finacials going to replace their lost income?

SandraT, I'm with you free borders. One world. need one of those 60 song lyrics 2nd_ave.

Marc Faber's interview can be heard here http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aVcjMIO_jAyw

He made no mention of commodities this time...

http://tinyurl.com/4fn8al

See above, I like energy stocks here: both in nominal and real terms.

Could short-covering be killing money market funds?

http://tinyurl.com/3vzuhe

ST07

I am considering to move back Canada too. Maybe I should think about another country.

To All:
I am in Vietnam now on my business trip. What a nice country except the hot weather. A plenty of food/fruits, fresh & cheap. People are more genuine. When I talked to local people, they start to tell me that they feel U.S. is going down. I think that is a very critical sign. As most know, Vietnamese love America. They think that is heaven, freedom, high quality life. Ironically, they start to change their mind when they see the fallen financial institutions. The sea is changing.

On the plane to HongKong, one gentleman sit besides me. I guess he is an investment banker in MER. He is on his personal trip. First class has been sold out. So he stuck with me in economy class. I think he has some connections with United. Flight attendants visited him every two hours and asked him whether he needed anything. They even offered free wine to him. I never asked his name and which office he worked at. We discussed gernerally. I asked his investment advice. He told me to invest in high quality bonds, high quality equities. For being polite, I did not say anything. But I told myself what you told me is everyone can say. What makes you a high rank investment banker? If he is my financial advisor, I will fire him. There is no added value.

Later I ask him about US$. He said he is okay with it. I guess that is the reason he recommended high quality bonds. I am very curious what is his definition of high quality bonds? US treasuries or AIG bonds. But I was being polite. I did not challenge him

Then I ask him what about gold. He did not express any interest about gold.

After the whole trip, I am very comfortable about gold positions now. As a high rank MER investment banker, he has not advised his clients to go to gold, which means gold will go much higher when they change their minds. He passed some research reports to me. (To MER lawyers, what he was doing is completely legal. Those reports are offered to the public. Please save your time and salary, provide some added value to your clients.)

What funny thing is he recommended GE. Right after the trip, his so called high quality stock fell like a stone.

Vinod - On Citi's year-end SPX outlook @ 1480(?), Briefing.com issued SPX year-end @ 1500 since beginning of the year and has maintained that position since then.

Bill - On schwab tradining, my system was locked up several times. I couldn't change or cancel my orders. I used wired internet connection. So, I think the problem is with Schwab's trading system being over-whelmed, not the satellite.

this is pretty scary stuff.

my advice to Bush is to just print money and pay off every American's mortgage at no cost (me 1st). give the title to the American citizen, then move that credit from your U.S balance sheet onto the "financial instrument" that is being proposed, before launching it on the next rocket toward the Sun.

my plan might sound stupid but it would prob work faster and better than what paulson & co are about to do.

September 18, 2008
America, not the financial markets, in trouble

Hello Bill,

I was quite surprised when I read this letter.

a Well.. 9/11 was indeed a financial terrorist attack on America and everything in the letter pertaining to 9/11 is correct but.. I find it hard to believe we are having a repeat 7 years later (just because they say it).

Don't you think that the Cia would have caught this terror organization already? Geez it has been 7 years and they have THE PROMIS software!

The question is: are they using the terror card on us or are they so incompetent that our financial system is at stake.

Either way, we are in big trouble.

VB

Vadym and all,

On Short Selling -

Execuse my naiveness. On short selling (your post on 7:51pm), from my limited knowledge, it seems to me that shorts are analogous to "derivatives" of equity in the simplest form. A derivative has no real value of its own unless it is backed up with some sort of collateral or capital. If anyone can short the stocks, without any real capital deposit or strictly trading on a margin account (borrowed money), wouldn't shorting be just as dangerous in a financial system that isn't bullet proof?

"America, not the financial markets, in trouble"

If there is some truth to this, it is not just America, it's everyone on this planet earth is in trouble.

There were quite a bit of discussion on why FED should've cut the interest rate on Tuesday. Someone in Minyanville pointed out that FED alone is not a fix. Rather, it is the "coordinated effort" of all central banks that can put the death sprial to stop. I think we got that today, and more.

bobbyo,

I use Tradethenews. http://tinyurl.com/4fpxkh

Vadym,
Thank you. One more question is this short selling ban for real in the U.S.I AM CONFUSED.
Bob

c3,

look at it this way. You see a price of cows jumping so high that you start thinking it has to go down from here. If you had a cow for sale, you would sell right now. But you don't. And I do. So you come to me and ask "Can I borrow your cow for three days?" Being a good sport that I am and holding you in good standing, i give you my cow. You go right ahead and sell it. price of the cows drops, in three days you buy the cow back at the lower price, pocket the dirfference, bring the cow back to me and throw in some symbolic payment (interest).

That's essentially, the mechanics of short selling the stock. And yes, I do love a good steak. Rare.

vinod- glad you held onto your positions, you sounded a little discouraged yesterday...of course you realize i'm just following bill's blueprint as far as buying (and of course i jumped the gun, nothing new there)...so for purposes of clarification, good odds of oversize gains on CAF/QLD/USD over a 6-12 month period (although i think we both enjoy trading around our positions); TBT is a trade; UYG/IBN very short-term, but looking to build LT positions in WFC/IBN/DB/HBC...sold the GDX too early (within an hour of buying it wednesday..again, nothing new), but looking for another entry...SU/ECA/XOM/DIG/UYM-> guess i'm waiting for oil to complete its move down...

bobbyo,

here are last I headlines see on this:

21:28 MORE SOURCES REPORTING THAT THE U.S. SEC IS CONSIDERING A TEMPORARY BAN ON SHORT SALES OF SOME, OR ALL, STOCKS
- Reports suggest that the SEC is coordinating with the U.K.'s FSA to crack down on abusive short selling

21:04 SEC'S COX DECLINES TO COMMENT ON PRESS REPORTS THAT SEC WILL TEMPORARILY BAN SHORT SELLING; SAYS THAT ANY ANNOUNCEMENT WILL BE MADE AHEAD OF THE OPEN ON FRIDAY

shanghai up 9.5%...

...keep in mind shanghai has limits of 10% up or down...

This short selling BS is unf---ing believable. If the shorts were falsely knocking down a stock someone would of bought them. How many people looked at AIG an LEH books? Was there any offers? If there was any value, don't you think they would of got a bid. For heaven sakes LEH books were so bad the feds wouldn't even buy them. Short sellers put bad companies out of their misery. Would it be better if LEH hung around for 2 years before they went bankrupt?

2nd_Ave Kudos on your China position. personally I thought you were way too early. Bet it must feel nice to catch a bottom.
Congratulations,
Bob

so Vad, what happens if c3 borrows your cow, sells it for 500, 3 days later mad cow hits the States, your cow is now 2000, and c3 can't afford to buy it back?

rare is exactly how a steak should be eaten, with salt and pepper, no additional seasoning...lobster tail on the side, salt and butter, no additional seasoning...bread or rice...corn or spinach...

bobbyo- thank you...

one world/no borders? not in our lifetime...if for no other reason than it's been almost impossible to reconcile the different religions in the world- so here are your dylan lyrics (from 1979):

Precious angel, under the sun,
How was I to know you'd be the one
To show me I was blinded, to show me I was gone
How weak was the foundation I was standing upon?

Now there's spiritual warfare and flesh and blood breaking down.
Ya either got faith or ya got unbelief and there ain't no neutral ground.
The enemy is subtle, how be it we are so deceived
When the truth's in our hearts and we still don't believe?

Shine your light, shine your light on me
Shine your light, shine your light on me
Shine your light, shine your light on me
Ya know I just couldn't make it by myself.
I'm a little too blind to see.

My so-called friends have fallen under a spell.
They look me squarely in the eye and they say, "All is well."
Can they imagine the darkness that will fall from on high
When men will beg God to kill them and they won't be able to die?

Sister, lemme tell you about a vision I saw.
You were drawing water for your husband, you were suffering under the law.
You were telling him about Buddha, you were telling him about Mohammed
in the same breath.
You never mentioned one time the Man who came and died a criminal's death.

Shine your light, shine your light on me
Shine your light, shine your light on me
Shine your light, shine your light on me
Ya know I just couldn't make it by myself.
I'm a little too blind to see.

Precious angel, you believe me when I say
What God has given to us no man can take away.
We are covered in blood, girl, you know our forefathers were slaves.
Let us hope they've found mercy in their bone-filled graves.

You're the queen of my flesh, girl, you're my woman, you're my delight,
You're the lamp of my soul, girl, and you torch up the night.
But there's violence in the eyes, girl, so let us not be enticed
On the way out of Egypt, through Ethiopia, to the judgment hall of Christ.

Shine your light, shine your light on me
Shine your light, shine your light on me
Shine your light, shine your light on me
Ya know I just couldn't make it by myself.
I'm a little too blind to see.

it's a beautiful recording, btw...here's a link:

http://tinyurl.com/4hozb7

they're gonna carry this guy (actually he won't be invited back to the next round). He's shorting at support levels.

http://articles.moneycentral.msn.com/Investing/StrategyLab/Rnd18/P2/TheAmateurJournal20080919.aspx

they're gonna carry this guy out (actually he won't be invited back to the next round). He's shorting at support levels.

http://articles.moneycentral.msn.com/Investing/StrategyLab/Rnd18/P2/TheAmateurJournal20080919.aspx

apollo7 - Thanks for the story, quite interesting. Glad you didn't buy GE, they are 1/2 financial, right? Okay, I might consider it if they took Cramer off the air!

2nd_AVE
I don]t need a link. Infidels is one of my favorite albums all time. Dylan and Marc Knopfler. Wore out an album,a cassette and a CD on that one.

"so Vad, what happens if c3 borrows your cow, sells it for 500, 3 days later mad cow hits the States, your cow is now 2000, and c3 can't afford to buy it back?"

His broker will buy it back for him, then stick him with a margin call - just like broker does when long position bought on margin drops below certain level. Easy. And painful.

Thank you Patchie and Vad for posting clear concise descriptions of naked versus legal shorting. I believe that is why Bill runs this blog.

I apologize for anyone offended by my attempts to do exactly the same thing. I was letting my frustration at the obvious posting of blatantly incorrect information show.

Yes, I am outraged at the levels of intervention. Only from using the basics I have learned here, being fast on the trigger and being VERY, VERY lucky is my portfolio substantial (for me that is) up this year.

No matter what happens in the short term I refuse to go long any of the HB&B at this point. I can make money long other ways. I will wait, hopefully patiently, to have a chance to honestly and legally short HB&B again for profit. I have been using SKF, sold Tuesday for a 15% gain on less than a week and was waiting for the trade to settle and find a new entry. I was lucky, reading this blog helped.

To the naked shorters here (2nd avenue I believe has posted he does), do you at least put a butt towel on your chair?

ALOHA !!

ON PAST MISFORTUNES
The hyperinflationary flare up is beginning to materialize and not just in the USA. Look at how many news releases there have been over the past 48 hours about foreign central banks and governments, even China, pumping money into the financial systems. It is a race to see who can devalue their currencies the fastest. The liabilities are numerous and extreme. I have NEVER seen such large sums of money burned so fast. We are running at the rate of a VIETNAM WAR every week!

Look here at what the US FED(Bernanke) and the US TREASURY(Paulson) are formulating now. Its a $1.2tril BAND AID!

READ ON:
BLOOMBERG NEWS
Options under consideration include establishing an $800 billion fund to purchase so-called failed assets and a separate $400 billion pool at the Federal Deposit Insurance Corp. to insure investors in money-market funds, said two people briefed by congressional staff who spoke on condition of anonymity because the plans may change. END

Later in the article some financial analyst calls this a toxic dumpster funded by America's future generations. Well he really only mentioned the dumpster part, but who will fund these soon to be quadrillion liabilities? The derivatives markets according to the BIS have reached $1.1quadrillion! Who's the counterparty to that exposure? The counterparty is the FUTURE GENERATIONS! My generation can't even afford to pay back the $92.4trillion unfunded liabilities of Social Security and Medicare ...

Now look here ... The "experts" are meeting all the time and look who is in the thick of it all ... "THE PRESIDENT'S WORKING GROUP ON FINANCIAL MARKETS" ... These are the WIZARDS of OZ pulling the strings and firing off rocket ships of new money. Its a GROUP of SUPER INFLATIONISTS. It would appear that their goal is to double GLOBAL total money supply by the end of 2008!

READ ON:
White House cancels Bush statement after market mtg

WASHINGTON, Sept 16 (Reuters) - U.S. President George W. Bush will no longer make a statement to reporters on Tuesday after meeting with his Working Group on Financial Markets as previously scheduled, the White House said.

"We decided it would be best to limit public comment about markets today, and so there will not be press coverage of the president's Working Group meeting this afternoon," White House spokesman Tony Fratto said amid seesawing stock indicies. "The president looks forward to the briefing by the Working Group."

The meeting was to include Federal Reserve Chairman Ben Bernanke, Treasury Secretary Hank Paulson and Securities and Exchange Commission Christopher Cox. END

Okay, I saw an article today pegging bailouts of US Banks so far at $900bilUSD. If you add in this $1.2tril now up for grabs we are at $2.1trilUSD expanded money supply growth all within the past month. MAN, THAT'S A TON OF MOUSE MONEY!!!

Recall last year I was posting about positioning yourself at the MONEY SPIGOT? Anyone, recall what that was all about and where I got that term? It came from what happened in Germany in 1923, called the WEIMAR REPUBLIC. During that period those who survived in the PAPER WORLD held stock certificates with companies that actually had PP&E(plant, property and equipment). They were trading and conniving day and night to enhance their "false wealth". The MONEY SPIGOT was the stock market in 1922 Germany. It is the same now in the USA. Look where 99% of the money being created is headed. TO WALL STREET! Do you see any US FED employees on your street knocking on doors handing you and your neighbors money? Its TRICKLE DOWN, only don't be on the bottom of the TRICKLE because the river of money will be dry as a bone by then! We, the US TAXPAYERS, are FIRST in line to PAY for all these bank bailouts but we are LAST in line for these touted financial rewards at the end of the rainbow now being promised by Bernanke and Paulson.

Some very similar historical monetary precedence as seen through the eyes of Germans in 1922 ...
From Adam Fergusson's book When Money Dies:

"Most of them clung to the mark, the currency they knew and believed in, long after the eleventh hour had come round for the umpteenth time. Most had no choice; but all were encouraged or bemused by the Reichsbank's creed of "Mark gleich Mark" -- paper or gold, a mark is a mark is a mark. If prices went up, people demanded not a stable purchasing power for the marks they had, but more marks to buy what they needed. More marks were printed, and more, and more."END

Here is more from the book, When Money Dies ...

"Speculation on the stock exchange has spread to all ranks of the population and shares rise like air balloons to limitless heights. My banker congratulates me on every new rise, but he does not dispel the secret uneasiness which my growing wealth arouses in me...it already amounts to millions."END

More on Germany in 1922 and the corruption from the same book:

"No people could be expected to remain unconcerned while huge profits and riotous luxury were ostentatiously being enjoyed by the few. Corruption bred corruption, and the Civil Service caught the infection even in the war years.

As the old virtues of thrift, honesty and hard work lost their appeal, everybody was out to get rich quickly, especially as speculation in currency or shares could palpably yield far greater rewards than labour. While the anonymous, mindless Republic in the shape of the Reichsbank was prepared to be the dupe of the borrowers, no industrialist, businessman or merchant would have wished to let the opportunities for enrichment slip by while others were making hay. For the less astute, it was incentive enough, and arguably morally defensible, to play the markets and take every advantage of the unworkable fiscal system merely to maintain one's financial and social position.

As that position slid away, patriotism, social obligations and morals slid away with it. The ethic cracked. Willingness to break the rules reflected the common attitude. Not to be able to hold on to what one had, or what one had saved, little as it worried those who had nothing, was a very real basis of the human despair from which jealousy, fear and outrage were not far removed. The air of corruption in business, politics, and the public service, then, was general."END

Then there is this from an article in the New York Times in 1922:

"The Times on April 18, 1922, printed a bitter report from 'a man of business' recently in the country:
The greatest fraudulent conspiracy in the history of the world is now being enacted in Germany with the full concurrence and active support of its 60 or 70 millions of people. Germany is teeming with wealth. She is humming like a beehive. The comfort and prosperity of her people absolutely astound me. Poverty is practically non-existent. And yet this is the country that is determined she will not pay her debts...They are a nation of actors...If it wasn't for the fact that the German is guiltless of humor, one might imagine the whole nation was bent on perpetrating an elaborately laborious practical joke."END

Who now refuses to pay their DEBT? Who now throws trillions onto the bank fires burning incessantly? Who? This is not the typical "business cycle" of the past ... This is a MONETARY CRISIS yet unseen. Remember I posted earlier today about the "rear-view mirror" science of US Economics as taught at Princeton. Do you think BUSH will announce a MONETARY CRISIS? How about Bernanke? Greenspan? Paulson? Obama? McCain? Anyone you elected?

GOVERNMENT IS ONLY AS HONEST AS ITS MONEY ...

http://tinyurl.com/5ycroc

The SEC is pulling out all stops to save financials. So much for free markets.

Link is from the SEC website.

Once again I refuse to go long with any of the companies on this list.

Just for spite.

Re shortselling, puts, ultrashort ETFs, ETNs, single stock futures, etc.

All of these instruments I named above can be used to establish a short position, from the retail traders' point of view they may seem interchangeable.

The only one where the counterparty's position behind the short is easily visible is the direct short sell. There you have yourself borrowed the stock from someone else, & it's your problem getting it back to them when the time comes.

In all the other variants there are one or more counterparties who are not directly visible. Obviously they will hedge their positions is some fashion.

For example, the Proshares ultrashort ETFs purchase "swaps" on the underlying, but from whom? And how does the counterparty to these swaps hedge them?

I am not the man to know all of these answers, which may well not be easily obtainable.

Could a ban on "all short selling" reverbrate through all of these various instruments, causing them all - worst case - to be simply shut down?

inquiring minds want to know . . .

2nd
I brought CAF/CHA/USD/SSO/TBT/IBN/BA/UYG for long term (3-6 month)
I had 500 CHA at 36.10 and should be for long but sold today at 42.32. This is driving me crazy-should have kept them for few month.
Mistake like this upset me
Also had 2000 SLW which I got out at 9.80 and made good return. And still holding 5000 ESLR and I am in plus on this my average cost is under 5.00
What killed me yesterday was I had 30 OEX call I brought on Wednesday at closed and I was under water today (Thursday) finally as soon as I broke even I sold it.
I am kicking my self for not holding until end. If I had kept until end I would have made 40k this is killing me.
Presently I do not have any OEX contract but if market goes up intent to load up PUT
Also when I show my wife who I am doing in market, she wants to go and shake Bill’s hand; I might have to do this.

2nd
also I got call to buy STT around 30. from friend who works there. I posted about it in the Blog, did not see any comment from anyone
and I did not buy it.
reason is I brought 300 AIG at around 11.00 and still have them.it is hard to trust financil
but I should know better about STT, so many friend works there should have made few call
well! that the way it is?

Driving to boston for work, going there early so I can get out early.

I'm thinking that his short-selling debacle, together with the USD printing presses going into Weimar-style hyperdrive to nationalize all this formerly private bad debt, might just produce the final "hook" before the market really collapses.

Question is, does the equity market collapse, the USD collapse, or some mixture thereof?

______________________________________

To my simple conniving mind, does the following mean that opening "new" put positons may become more difficult=expensive, thus driving up the premiums of existing puts, as fewer market makers become able or willing to sell new puts?

"In addition, the SEC eliminated the options market-maker exemption to the delivery requirement."

Just who is Christopher Cox protecting?

Who bought those thousands of OTM short dated puts on Bear? Who was the counter party?

OK, let's say they ring fence the MBS mess. What about the CDO's exploding, car loans ... this feels like the bottom of the second inning.

And witness how much more quickly the UK debt market is becoming unhinged compared to the U.S.A. They're less than a year into this!

Who thinks the USA will save UK this time?
Or will Britain finally get over hating Kaiser Billy and embrace the Germans as their
saviour(s)?

no-bid

Fingerlakes wrote: "How funny would it be if the short-selling ban backfires and they end up with stocks that have no bids and no one trying to cover their short to help hold it up?"

Many will assume that a no-bid situation cannot occur in equities, only in OTC stuff.

I personally experienced a "no-bid" situation in a major stock once.

It was some 8 - 10 years ago, don't recall exactly, but the general market at least was not in bear mode. At the open (on the Swedish exchange) I was watching Autoliv, looking for a potential short entry. At the open there was no bid - at all, the ask was a normal something like let's say 170. This continued for about 10 minutes, with no trades, so to find out what was going on I put in a stink bid of 1 for 100 shares. For a few minutes my bid was the only one there, then some other joker put in a bid of 1.5. After another few minutes the exchange probably woke up some market maker & a normal bid-ask spread appeared. But Autoliv went into a steep decline that lasted about 2 weeks, and I made some nice money.

^^^

The scenario in this post is destined to become the new normal if the SEC gets away with this.

DO NOT BID ON THE LIST OF 799.

Social equity requires fortitude.

A remark re the bank liabilities of various central banks:

The CHF may not be what it once was, UBS is Swiss - not a eurozone bank, the Swiss CB has pumped some serious money to save it

HBOS, Northern Rock, are Brittish banks, also not eurozone banks. The UK CB is apparently going to bail out everyone twice - GBP should really go down the drain.

What bank liabilities does the EU CB then actually have? Spanish & Irish banks primarily so far I would guess, but the UK and even some US banks have been sneaking in the back door there to borrow, and now that back door seems to have been getting wider, so some EUR worry is warranted

Finally, Sweden may be rather unique in not having pumped in in any money nor saved any banks at all - yet. Sweden as Norway took the hard line towards the banks back in the 90's bank crash, and will so again when Swedbank & Sebanken crash and burn eventually (because of their exposure to mortgages in the Baltics, etc)

Is the lowly little recognised SEK one of the few remaining hard(er) currencies?

http://tinyurl.com/5y4lku

It's the end of the world as we know it.

JVS3- you're confusing me with shark...and i don't think they allow(ed) butt towels at the westport library...

vinod- i can't tell you the number of times waiting a little longer would have made my day...but also the number of times closing a position early saved my a--...it all works out in the end...don't let it kill you; there must be tens of thousands of people a day in Vegas thinking 'if only i'd bet Red/Banker/Don't Pass/whatever', right? it's a casino and you got your money back...;)

radio Armenia had it down cold back in the good ole USSR:

Radio Armenia answers listeners' questions:

Q: What is chaos?
A: We do not comment on national economics.

Q: Is there a difference between capitalism and communism?
A: In principle, yes. In capitalism, man exploits man. In communism, it's the reverse.

Or in a somewhat more subtle version:

Q: What is champagne?
A: Radio Armenia is pleased to inform you that champagne is a wonderfully delicious alcoholic beverage which is consumed by the working people through their elected representatives.

Good morning, comrades.

Two Cara 100 Upgrades to report:

GG - To Neutral @ HSBC
ORCL - To Buy @ Piper Jaffray

Waiting for the buying panic to burn itself out. Looks like TWM and SKF have the most potential after/if the mkts drop again.

GS 130 premarket? wow. guess I hit the eject button too soon.

The swings between euphoria & dispair seem to be coming more often & more violently.

Who can trust a manic depressive market?

Aside from going entirely to the sidelines, I think even smaller positions with more empasis on working into straddles/strangles.

The SEC has put in this order to begin Sept. 19
at 11:59 PM nad end Oct 2 at 11:59 PM. Does that mean we rally for the next two weeks?

Yagshamesh!

How is max pain handling all this going into options expiry day?

Call options you should have bought on Sept 17.

http://tinyurl.com/4xmbrh

Mr Cara

Do I understand you correctly...

"These are the sectors that will most likely sustain the new Bull; the Financials and to a lesser extent the Consumer Discretionary sectors will have to re-test the lows"

That yesterday would of been the bottom for all sectors except Financials and Consumer Discretionary? So for small caps and tech stocks the new bull has begun?

[Bill Cara note:

I was prepared for the reversal. It's kind of hard to buy now after a 1400 points lift in the DJIA since Wednesday afternoon. The risk here is that the Financials and Consumer Discretionary sectors will fall back to re-test their lows. Ultimately stocks trade on fundamentals, not on government relief measures. The Energy, Basic Materials, Industrials, Tech and Utilities are presently undervalued and should be bought (on pull-backs) and held. The Financials and Consumer Discretionaries need to have stops in place that are raised if the market continues higher. The junior Western Cdn Oils and the gold and gold miner stocks should now be bought because this intervention by central bankers does create weaker fiat money against storehouses of value.]