Good morning

These are the quick market stats for the past week: the MSCI World Index up by 0.3%, the S&P 500 Index up by 0.3%, the Reuters/Jeffries CRB Index down by 0.1%, the US Dollar Index down by 1.6% and the ten-year US Treasury Note yield up by 4 basis points.

An uneventful week? Not if you consider the monumental swings that characterized trading from hour to hour and resulted in the most turbulent week in financial markets since 1987.

Next week is likely to be pivotal to stock markets’ recovery, but I am still of the opinion that markets are bottoming out. I would not be surprised if a year-end rally has in fact already commenced.

Read all about this in my weekly review, highlighting some thought-provoking news items and quotes from market commentators during the past week.

The link to “Words from the Wise” is: http://tinyurl.com/3nfnb6

That’s the way it looks from Cape Town.

[Bill Cara note:

Henry To has written some interesting stuff. Either he or the poster here thinks it's important in any case. However, I deleted it. Sorry, but I am not going to pay the downloads of anybody else's website and even support their promotions. In the interests of fairness, I ask my fellow bloggers to do your own stuff. People here are getting overwhelmed with it, and I am getting letters. I have no time to manage these things, so in future just understand that I will delete stuff that isn't part of this community's discourse.

Also, with 1000 letters a day, how can anybody expect me to answer specific, often detailed, queries? If I gave every one a single minute, we're looking at 17 hours a day, and you know I can't do that. On many days I don't even have the time to scan them for the contacts who are important to me.

Anyway, you know I will do what I can.]

Bill, I would greatly appreciate your thoughts on John Hussman's commentary, especially in regard to the bond holders/tax payers issue.

[Bill Cara notes:

More management on my part. The link that was here was not working. Besides, why would I be asked to go to another website and comment on somebody else's work? Let's be reasonable here. If you have a view, why not just say, "Hussman says this and I say that. Now what do others here think?" That works.]

Hey Prieur, can you keep your Blog driving traffic spam to another site? You are tying up useable bandwidth w/your recycled spittle.

[Bill Cara note:

After I get the new blog platform running properly, I intend to move these comments from other blogs and newsletters to a separate page. I find many of them helpful, but time is at a premium here, so we need to focus the Discourse on our own commentary and discussion. Getting 625 comments over the weekend is too much reading for most people. I know I can't cope, and it's my blog. But I also think there are people here who care a lot about the full access so I'll give it.

Also, there will be no Typekey under the new blog system. You will just have to register a legitimate e-mail address and name. There are too many of you who think the blockage of your blog entries is cased by me. Believe me; I have zero say in the matter. MT Blog Software and the Typekey system is not mine. ]

Here's an example of what the short-selling ban is doing to the options market:

ALL OCT 37.5 puts has no bids (open int: 7,200)
KEY OCT 7.50 puts bid .15, ask .70 open int: 900)

You cannot sell them. Those that have bids have spreads totally out of whack.

Berkshire Hathaway just got halted.

Those long cut-and-paste posts are a pain. I would just put in the link and maybe a first paragraph.

vinod- scaling back into USD at 34.70...

Hey, where's that lower oil price?

2nd

Are you shorting the USD? If so what ETF may I ask ar you using. I have Power Shares "UDN" on my screen but it looks lightly traded.

QT- actually, USD is the symbol for an ultralong semiconductor ETF...(JMHO, but if bill's opening comments are correct, you may want to exit QID here and get off the tracks)..

2nd

I did. Thanks!

Went long C, BA, BBY, and QLD.

UYg/SKF even more broken this morning.

Pappdjavul - thanks for the info on Bensimon - if you find that stuff would be great to see it.

Here is an audio interview with him from Sept. 17th - just a few days ago where discusses in detail his gold and silver targets:

third one down:

http://www.kitco.com/ind/kitcoradio/index.html

Denny,

The full article by Mr Henry To is available only to paid subscribers...

Just wanting to share another opinion on this critical market cross-roads - be long for the long-term or still stay short...

CP- yes, i see BOTH UYG and SKF are down 2.6%?

In msft 26.00 at 10.00

hitting the 'wall of worry' right at the start, which (IMO) makes it a good start...

2nd
In USD @ 34.40
also brought INTC 200 @ 19.30

What's up with GRMN, -1.77?

yvrapx, disagree with your post about prieur's site. He's been posting here a long time and it's most definitely not "recycled spittle."

For whoever is interested, I am sharing a couple more stock tracking and charting pages based on Bill's comments. Prices are 15-20 minutes delayed.

http://nexalogic.com/5miners.html The 5 miners Bill says to watch for a recovery

http://nexalogic.com/brazil.html Brazilian ADRS

and of course the cara100 list:

http://nexalogic.com/cara100.html

trailing buy stop on FXP executed at 84.36

Bill: how big of a power grab is Paulson's "Section 8" vs. the original establishment of the Federal Reserve in 1913?

"Sec. 8. Review:
Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency."

[Bill Cara note:

Equity prices were set to pop this morning when it became apparent to King Henry Paulson that the Dems were going to force him to kiss the Pope's ring in the form of judicial review. so King Henry responded pretty much in the fashion he ran Goldman Sachs, like a bully. He and his Wall Street friends torpedoed the market, and they will keep doing it to show their power. I said this Bull would roar after the deal is done in Washington; the devil's in the details and Congress doesn't like the details you pointed out here. If Congress approves that aspect of the bill, then these cowards ought to be voted out in November -- every single person who voted in support of putting King Henry above the Judiciary. In fact they should be vting for his impeachment this week.

This is serious stuff. A revolution of sorts is going on. The market will tell us how it's going to go.

I hold to my views that if enough pressure is put to bear on Henry he will either have to accept a compromise (has he ever in his life?) or resign, and then there will be a deal, followed by a monster rally that will be the first up-leg in the 2008-2011 Bull market.

The President and the Republicans will not put up with a market crash here. The Dems have voting control, and a heck of an opponent in Paulson's gang. This will be an interesting couple days. Btw, it's a time to review the recent non-Financial Cara 100 Buy Alerts. In the Financials, I do like Canada's Royal Bank plus Options Express and Interactive Brokers.]

pulled BA/ABV buy limit orders. Needed an early sell off early.

I see Dodd and other Dems are questioning that section of the act according to Bloomberg headlines.

They BETTER question it.

This is exactly the same situation as the Iraq proposal. If your Congressman or Senator signs his authority over to Treasury, you MUST vote him/her out.

Just ask Hillary how that went.

prieur is ok in my book and he IS insightful and always polite. Many here probably would skip my posts if my name was at the top of the post as I am a densa master
peace

yvrapx - Prieur is not some upstart. Once a week, he makes a short, respectful post to the blog. There are several regulars would refer us to his post anyway. He provides a macro commentary which intelligently synthesizes insights from a range of analysts. Prieur is not attempting to push a particular stock or market segment. Unless Bill says otherwise, his action is not out of place.

DTO - Bid @$37.95, still afraid to sell Au.

Bought some freddie on the previous drop.

Anyone else noticed that almost 1 million shares of GIX.V have traded this morning?

Perhaps someone is taking a loss in one account and buying in another?

Craig, is that the only section they are questioning? Why are they not questioning the whole scheme?

Are they analyzing Hussman's proposal (thanks Grym and L-E), which may fix the crisis and has little taxpayer cost instead, without offering a bail-out.

BillySundance - wash rule prevents one from doing that - wait period is 30 days I believe.

ST07 - does wash rule apply to Canadian securities?

Anyone shorting the USD using an ETF other than Power Shares UDN ?

Or perhaps I should say: Does the wash rule apply to income accounting in countries besides the U.S.?

SiO2, thanks for those charts. That is a great favor.

yvrabx, re: Prieur - I still appreciate the sentiment. The comment was just presented a bit harshly and overlooks the fact that a regular would post the link anyway.

re: GRMN

Merrill Lynch Initiates Coverage on Garmin (GRMN) with an Underperform
StreetInside

SiO2: I have no idea, I'm glad they have read it and are asking questions. That's a start.

Any idiot can see it's a trap.
A BIG tax payer trap.

everyman - Thanks!

FRE/FNM are bullets. And to think I was going to triple down at $0.35...

CP- i guess the question going forward would be: are you willing to triple down right here?

You'd think if Paulson really wanted to scare Congress he'd let Au rally to $1030.

If you wish to bet on the USD going down, consider the HDD.TO. It's a 2X short and it trades in CAD.

For comparison, while the UDN is up today 0.8%, HDD is up 2.21%.

On top of it, if you buy this paying with USD and hold, you may earn even more if the USD keeps dropping. Do your DD please.

2nd - I think FRE/FNM would be a safe bet because I don't think congress is going to let them die. What else can they do but keep them alive?

FRE/FNM - I don't believe in chasing, that's my primary reason for not jumping in here for a few days.

SiO2

Thanks...that's a good idea. Only thing is I don't have access to the .TO markets with Scottrade.

On that USD exchange note, I mentioned last week BCE and NT. I just sold the BCE 35 calls for 88% profit. The reason is that if the USD keeps dropping I will start to lose money as the buyout deal is for CAD 42.50. Those $42.50 may become $35/36.

Senate Democrats draft calls for Treasury to get “contingent shares” in companies selling assets; calls for establishing of emergency oversight board to monitor bailout plan 11:00am EDT-Reuters

Thanks for all the input on my earlier comment on prieur's post. I concur with northvan, my comment was on the harsh side and for that I apologize. My intention was to simply keep the discourse flowing in a manner that was less commercial and a link would be more than satisfactory.

GoldBugs

Any thoughts or opinions on Seabridge Gold [SA]?

Bought GG as a long term investment this AM.

Also, DGP as a trade.

Otherwise am out of mkts except for 3 month T note and PRPFX

This kind of gov. "help" is bad for my blood pressure.

Wake me in time for the revolution ;-(

Note: Grym när inflammerad = Vicious when riled.

SiO2

So if I bought BCE DEC 36 in CAD I'm ok then?

Anyone see why BRKB got halted?

I humbly submit that the US Supreme Court is not an independent organization and is politicized and open to abuse by organized special interest groups. Just as HB&B have pulled a fast one over most people pretending not to be conflicted, the US Supreme Court and judiciary over centuries have advanced the deception that it is apolitical and independent. It is not. However, it will continue to deceive the public, because the source of its power and legitimacy is its supposed independence.

One method to test whether my idea is correct is by examining situations when the high law of the Supreme Court met the high politics of the President/country. Every time high politics prevailed. Most prominent examples include Bush v. Gore (5/4 along party lines under the cover of nonsense equal protection) and the 1937 National Labor Relations Board v. Jones & Laughlin Steel Corporation (after FDR's threat of packing the court and overwhelming electoral victories in 1936, justices reversed their attacks on New Deal legislation and capitulated to FDR's will).

[Bill Cara note:

Of course the Supreme Court is a politicized organization, but it is the best system America has for working with laws that Congress writes, including all the grey areas the court must interpret. If Congress wrote better quality bills, there will be less abuse at the Supreme Court level. The same situation would exist with the SEC run like the Supreme Court -- but legislators could tighten up the laws to prevent much of the nonsense. Today, securities law is in fact a cesspool of grey. There are few blacks and whites, and that's because HB&B power-brokers have made it that way. They deliberately built a system of endless loopholes, self-regulated at that, so they could stay in control. Only their stupid credit market dealings in the past several years has cost them. Now is the opportunity for the People to strike back, but if their elected reps are only listening to the special interests who pay them off, then the People will continue to lose.]

SiO2 - Isn't USD supposed to rally in parallel with Au? Oil should be fall to ~$80. If I were confident Au would come back to $850, Id sell around $900 and make my first serious chunk of change.

Chickenpookie

From this morning's report I take the game plan has changed because of Paulson's massive bailout.
[note last 2 lines]

"traders in Asia-Pacific markets, as well as in commodities and forex, were getting it right: higher equity prices, higher commodity prices and a weaker USD. But as the day begins the US interventionists are trying to put a damper on things until their legislation is approved. Then watch this Bull roar"

in looking at the buy alerts, i'm thinking of building a portfolio with the following:

IBKR
NOK
GS
TOT
TTM

I'm wondering if the short selling ban will have negative impacts on IBKR. Any thoughts?

WMT:
The chart is telling me this might be a nice time to go long. The Nov 57.50 puts just sold for 2.25. It's 59.25. Should the shares get put to you, that gives a cost basis of 55.25.

The 59-60 area was strong repeated resistance. If it holds as support, we may be seeing a new channel form above the 59 range. If so, that means it is at the bottom of that new range today. Of course, there is a chance the range does not hold, in which case it's back to 56. Which makes selling the puts and getting a cost basis BELOW the previous strong channel makes this trade even more attractive.

Chartists: I'd like to know what you see and how absolutely wrong I may be reading this.

Fundamentals: Dunno a thing. But this seems a good time to be Wal-mart.

WMT discussion anyone?

Bill (no hurry answering this right away, nor in this post),

Are you expecting an equity rally based on "King Henry" getting what he wants?

I.e, you are taking for granted that he will win out, can't be stopped?

What if he loses, what would you guess they might do in revenge? Crash the equity market seems somehow to obvious and to simple, but . . .

jus' pondering

[Bill Cara note:

This is the proposition I put forth in my Week In Review and then in my CC Addendum at 11:15am ET: (i) I assume he'll win and we'll rally after that, (ii) he's having problems getting his King over Pope ruling, and that has him pissed, so the HB&B friends are taking down the Financials now.

Look at it this way, nothing but good happened this morning with (i) Japan's largest bank buying 20% of Morgan Stanley, and (ii) three large companies, including Microsoft, agreeing to huge share buy-backs, which would put capital back into the shareholders hands. As soon as Europe heard this, their market turned on a dime to go higher. Also, Asia-Pacific wasn't rattled by the events of the weekend, before this good news of the day. Their markets were much higher. So, tell me, does Europe and Asia not have as many intelligent people -- or are the smart people just in the US?

It was only after Chris Dodd of the Dems said he didn't like this King over Pope stuff that Henry went nuts, and the Financials started tanking. I say one thing to Henry: it's time for change; get out. The US has no need for Kings. America was created by the Forefathers who left the Kingdom for just that reason. The Founding Fathers then wrote a Declaration of Independence that somehow King Henry doesn't like and thinks he can override.]

CEG, just let it go on the ramp. out 28.07.

May repurchase later.

30 minute rule suspended

On September 19, 2008, the SEC suspended the timing and volume restrictions of Rule 10b-18. Rule 10b-18 is the rule that says that repurchases by a company will not be viewed as manipulative if they are effected in accordance with the conditions of the rule. The SEC emergency order:

http://tinyurl.com/30minuteruleSEC

A lot of stock repurchase plans announced today.

ALOHA !!

Can you guys quit being shocked about the ASX decision to ban all shorting? The privileges were being abused and its that simple!

Last Feb/March I was posting here numerous cut n paste articles about how the largest Australian pension funds were discontinuing the "share lending" scheme. Equip Super was one of the first to start this ... If nobody wants to lend shares then you cannot have LEGAL shorting can you? So its turned ILLEGAL ...

I for one have nothing against the LEGAL shorting but I do have a LOT against how it is administered, especially here in the USA. If I buy something, even in a margin account, and the margin account has ZERO calls then I want my shares lent only on my permission to do so and then I want a CUT for what the brokerages are getting paid for that transaction, in order to offset the RISK I am taking in the event my shares are not returned because the counterparties are broke.

There's your RISK and why this is happening. If banks won't loan to each other because they do not trust their loans will be repaid then why is it okay to loan out client shares for the purpose of shorting, even LEGAL shorting?

EXAMPLE
Broker A loans my shares out to Broker B. Broker B fails and is in BK. Now Broker A has to buy my shares back on the open market only Broker A is also in trouble financially and either cannot afford to buy back shares or has to delay buying them back for an extended amount of time, which would then freeze up my ability to sell my own shares because Broker A has no shares of mine to transact. In effect Broker A has defaulted on my portfolio account ... I know its only paper, but that paper took me years of hard labor and saving to obtain. Broker A and Broker B never worked or saved for any thing!

IT ALL WORKS UNTIL IT DOESN'T !!!

Makes me wonder what happened to all the shares LEHMAN lent out?

Legal shorting works rather well when banks are solvent but I don't think all banks are solvent. It is now obvious none of them can stand on their own BALANCE SHEETS any more ... I almost said "STAND ON THEIR OWN "TWO" BALANCE SHEETS ANY MORE"! HA!!! A Paulsonian slip!

With so many lies flying at the moment how can these bankers keep them all straight? And NO there is NOT honor among BANKERS!!!

QT - So this cancels parallel USD/AU rally?

I'd rather catch monthly trends, nowhere nimble enough for instantaneous decision making based upon disturbance response of multiple crises multiplied by the psychotic behavior of an unstable lying cheating thief and a bewildered political base...

Chickenpookie

USD: "Is toast" [see yesterday's WIR] To me that means downhill

Gold: Up Up and away especially if King Henry gets his way.

[Bill Cara note:

I truly believe that the financial aspects of the package presented by Henry Paulson is necessary. When you have a storm, you close the window. But when you see that these storms are getting bigger all the time, you bring in hurricane shutters, and that's what the US Congress -- not the Treasury Secretary -- has to do in the future. For now, the $USD falling further is necessary because the relief package is costly.]

From jessescrossroadscafe.blogspot.com:

Black Monday: Unintended Consequence from the Short Selling Ban?

We had this in an email from a trading friend George Slezak regarding unintended consequences of the ban on shortselling that the SEC enacted unexpectedly on the markets last Thursday evening.

Our reaction was more optimistic because we suspected that the markets would adjust fairly quickly since it is temporary, affects only 800 stocks, and can be arbed out in the case of the broader indexes most affected. We respect George's experience and have a watchful eye out however.

It would be ironic indeed if the crony capitalists managed to crash the economy and kill off free markets as we have known them, after capitalism won the Cold War. But as we have pointed out here in the past, their defense and attachment to economic freedom is only a thinly masked rationale for privilege, patronage, and pilfering.

As a trader on the trading floors of both the CBOE trading stock options and the CME trading S&P futures for more than 15 years, I want to explain that the short sale ban will have a dramatic impact on the liquidity of the stock market futures and options. When there are more sellers than buyers in the option and futures pits, the prices of the futures and options drop to a level where index arbitrage provides liquidity by shorting a basket of stocks and then buying the futures or option.

In a competitive market, the arbitrage of the futures versus the underlying basket of stocks is done for fractions of a point versus fair value. Losing the ability to short stocks to transfer the selling in the futures and options to the underlying equity market will, in my opinion, result in the futures and options trading at severe discounts to the fair value.

This overhang will drive buyers away from the markets. For example, imagine the S&P futures trading 36 points (3%) under fair value. Will you step up and buy stocks when you see the futures forecasting that the entire index is being sold in the futures market 3% lower than the current market?

Liquidity for ETFs is provided in a similar manner to the Index futures and options. Normally when ETFs trade at a small discount to fair value, arbs would short stocks and buy the ETFs locking in generally a fractional spread. Now, the short side arbitrage cannot be done and if we see index ETFs trade at substantial discounts to fair value, I think those EFTs, by their own rules, begin liquidation of the underlying basket of stocks they hold.

On Friday evening the December S&P futures settled 9 points lower than the S&P 500 index. Fair value is several points higher than the index close. If this discount to fair value persists DURING in the trading day on Monday, I expect we will see the market to start to go into a spiral decline....

Picked up DTO, ready for oil to fall back to ~$80...

Holy smokes!

I just checked. Large call volume on WMT.

I'm not the only one thinking about that name, I guess.

TICK is bad but TRIN signals accumulation. $VIX is unchanged even with the selloff.

USD- adding at 33 and change...

(QT- damn, man...sorry to have talked you out early)..

Bill, Thank you for your reply. What Hussman says is that in the recent bailouts the tack taken is that the capital of the bondholders must be preserved for them 100%, so in situations where the stockholder’s equity section of the balance sheet no longer covers the assets that need to be written off, the public money steps in. I was surprised as I thought bondholders can expect to be at lower risk of losing money than stockholders but not to be immune to that risk. However, I only know about insolvency as presented in elementary accounting. I wonder how reasonable it is for the government to take over risk that I would have thought was that of the bondholders, and how much risk it would present to the financial system if the bondholders were not bailed out, esp. the non-Freddie/Fannie ones (since with their quasi-government-backed status the credibility of the government might have been an issue).

CP - throwing two chips onto FRE @ 0.75xx...it may be the same casino, but it's a different game...

QT - Okay, thanks! Bill also is still expecting lower oil in his WIR. Keeping Au, won't sell my insurance policy... maybe never.

Bill Fleckenstein's latest:

" Hopefully, my readers have been prepared for some of these events and are in a position to avoid being hurt, so that someday they can capitalize on a return to normalcy -- which I expect will be brought about by a vicious bear market and recession.

As I have said, the folks who've been trained by the risk-suppression policies of the Greenspan era don't have any real knowledge of how markets work and what can really happen. Hence their disregard for risk, as we have seen across so many fronts. That will change, and as it does, risk will get priced into "risk" assets like stocks and bonds.

True investors will have a great chance to buy real businesses, at fair (if not low) prices somewhere down the road in the next couple of years."

http://tinyurl.com/3kf8hz

I couldn't believe it when I saw that Obama was quotes as saying that there may be a place in his administration for Paulson.
I mean seriously where is the accountability?
digusting golden parachutes for the bums that got their firms into trouble in the first place.
just unbelievable.

2nd

No problem, I was the one who had to "right click" the sell button. Wonder if Bull Hunter held. Hope so....

2nd,

You'd have had me and QT winging our way to the Bahamas if we'd had listened to you last week re: QID.

Regards

I also opened a position in USD (Ultra Semis) at $33.70. I believe semis will be a very nice hedge against a weakening $USD that I expect to see over the next couple months.

opened position in IBKR (Interactive Brokers) at $21.55

SLW:

has gapped up and is running, all systems go, should not close todays gap.

Next fib target 11.35, then 13.30, then 16.12.

If this is a real "new bull", then it should gap past the 11.35 (I would not take profits there) and run straight on up to the 13.30.
time there to take another look.

pappdjavul

Thanks for the SLW targets. I'm holding a large position.

As to financials, anyone have an opinion on PNSN Penson Worldwide?

This is the young innovative (and profitable)fiduciary behind thinkorswim (SWIM).

No position, except they have my assets.

Oh, and now Obama likes Paulson? Tell me all these politicos aren't clueless morons!!! And which ones did you say you were considering voting for? Yeah, right!!! Good luck.

QT,

The only thing I wasn't liking about SLW was the daily volume accumulation pattern, weekly & intrady were ok. Weekly says it could do a big run.

added to SKF position at 98.06

dfinvest,

I also viewed, with disgust, Obama paying homage to King Henry.

Makes pulling the lever for Bob Barr that much easier.

Regards

pappdjavul

I remember reading here many of times that silver proceeds gold in the rise up. So that makes sense. Next week SLW will be on fire if congress passes King Henery's decree. Which sickens me BTW.

L-E - why bondholder bailouts?

Perhaps (like F&F) there are lots of foreign bond holders, and there is fear they will sell dollar holdings.

Bushies wouldn't want to talk about the degree to which our foreign creditors may be becoming overlords.

Geologix Explorations up today 13.54% on almost 12x normal trading volume. Somebody bought a big chunk (789,000 shares) at $.96

Stock is still well under my ACB, but nice to see the juniors showing signs of life lately.

Billysundance@wash-sales - I'm not positive, but I would think so.

QT,

Silver is problematic to understand from a fundamental point of view, many think it is a partially monetary industrial metal.

Well, Sweden once tried to monetize copper, have you ever seen those Swedish plate coins from the 1700's, 10 - 15 kg heavy?

Then I like Bill's characterization of the silver bulls as "silver crazies", that's cute, and there's probably some truth to it ;-).

As to making jewelry, I find silver is far more interesting than gold

MikeNYC,

Re WMT - Max pain as of today suggests WMT stays flat or goes down from here in the forthcoming months, targets are 60 for Octiber, 55 for January.

As for the options, I would offer that it's the writers that make the money as an aggregate - not the buyers. So call volume could be an indication of the exact opposite of what you're expecting and the chart suggests.

I'm ok with the technical picture as you describe it, but that's my $0.02 - also, I would take into account that as of 2000 WMT appears to peak at market bottoms, or close to them.

I've heard this rumor from several different sources now: foreigners, perhaps Chinese, have been aggressively shorting the financials so they can buy them up cheap. Perhaps there is a national security issue. But if naked short selling were not allowed how would they be able to do this without getting killed?

RE: Silver

Silver may not be precious metal for the western world, but it has been currency in Asia till 1940s.

Interestingly, Copper, Silver, Gold coexisted as currency. I think it's something like 1000 copper coins = 50g silver = 5g gold, or something like that.

dfinvest,

I just sent the Obama campaign a "love note", telling them what I think of having King Henry in an Obama Administration.

Regards

BH- LOL...at least we won't be swimming to Cambodia in the aftermath of Apocalpyse Now...

..at least, not yet..

Bull Hunter

QID broke 50.... hope you are holding... I sold waaaaaaaaaaaaay too ealry....

TDAmeritrade has frozen all Reserve Fund holdings including the Reserve Treasury Money Market Fund:

From Ameritrade:

19. What happens to my Reserve Fund assets?
•
Your Reserve Fund assets will remain in your account as a mutual fund holding.
•
These assets cannot be used to purchase stocks and are not currently available for withdrawal.

Probably too late to buy, but this company has made billions playing the credit crisis right and should be saluted.
TORONTO, ONTARIO, Sep 22, 2008 (MARKET WIRE via COMTEX) -- (Note: All dollar amounts in this press release are expressed in U.S. dollars.)
Fairfax Financial Holdings Limited (CA:FFH: news, chart, profile) (FFH:
Fairfax Financial Holdings Limited
News, chart, profile, more
Last: 308.23+48.23+18.55%
1:09pm 09/22/2008

FFH 308.23, +48.23, +18.6%) announces that it has realized cash proceeds of $574.5 million during the third quarter as of Friday, September 19, 2008 through the sale of $3.22 billion notional amount of credit default swaps.
"Beginning in 2003, we took significant steps, including the purchase of credit default swaps, in an attempt to protect our balance sheet from investment risks," said Prem Watsa, Chairman and Chief Executive Officer. "Given the unprecedented events of the past week, we felt it was prudent to update shareholders on the progress of our credit default swap sales prior to the date that we would customarily report our third quarter results, particularly since we have an active share buy-back program."

UAUA diving to a buy range...

It seems it would be good to figure out how quickly the house and senate are going to agree to a plan that Paulson tells Bush to sign.

The markets likely will crash until then and then spring up hard.

How much the taxpayer is perceived to be on the hook will determine the direction the USD and commodities will move.

I'm leaning towards selling my SLW calls as I can see people initially thinking it will be dollar positive which will push the dollar up to the 80 resistance one more time before it starts crashing again, giving us one more lower entry point to commodities.

I sold my DIA calls Friday. Good thing I did too!!

I hope everyone is doing great!!

Rob.

QT,

Still holding QID

Regards

Thanks, Jock. That explanation makes sense.

On top of the reliance on foreign creditors for funding the soaring U.S. debts, I noticed an increase in foreign ownership of U.S. companies with the news this morning that Morgan Stanley announced plans to sell a 10-20% stake to Mitsubushi Financial Group of Japan.

Bull Hunter

You are the Wizzard Jr.

On SLW - I did buy some last week. Looking for more though. It is tough psychologically buying here after this run.

Thanks for posting your SLW targets pappdjavul.

Anyone else have thoughts on entry point on SLW after this run here? Chasing is not fun.

QT,

Bill is the Wizard. 2nd is the investment counselor. I'm the President of DENSA.

Regards

Jeff Saut in his weekly comment says that a premier investment bank was telling weathly clients on Wednesday that we were on the edge of the precipice and to sell everything!

His weekly view is similar to Bill's: we are bottoming:

http://tinyurl.com/4q3kxs

Bill.

Ok, I see where you are at. I agree, everything is pointing to the market "wanting" to bottom out here, albeit probably with one (or more, as in 2002) serious retests.

What has me worried is that things are, not truly different this time, but truly much more extreme. We all know what will happen if this bottoming process fails & the bottom is taken out.

re:SKF.

Buy stop order 101.80/102 limit

BH- no, i'm the guy in the casino who ducks out to catch the house band doing 70s covers between bets...

On SLW: I was thinking the same thing-that a solution woul be seen as $ positive an might bring a dip in metals, but...

last week metals went up as the crisis grew an then tread water as the short ban and Paulson rescue came across the wire.

Now, going back to Bill's original scenario where USD and Gold/Silver go up together-Gold and Silver goes up. In previous $ debasements $ goes down-Gold and silver go up. So where is the downside?

I think the likelihood of profit taking is great because they are basically 50% moves since the 10th, but IMO (DENSA certified) it will only be profit taking.

According to MarketWatch...

Crude futures reached the daily price move limit of $10 per barrel. Rules state that if any contract is traded, bid or offered at the limit for five minutes, trading is halted for five minutes. When trade resumes, the limit is expanded by $10 per barrel. October crude was up $10.90, or 10.4%, at $115.45 per barrel on Globex after a high of $115.93, according to FactSet.

CP- speaking of the 70s, bill withers just came on the radio, getting ready to double-neg his way thru ain't no sunshine...

WASHINGTON - Senate Democrats are proposing to add government help for homeowners and limits on executive compensation to legislation providing a $700 billion financial system bailout.

Rep. Barney Frank, chairman of the House Financial Services panel, said that Paulson "is being entirely unreasonable" to expect that Congress will pass a bill right away without examining the proposal thoroughly and adding provisions Democrats want, such as the curbs on executive pay.

http://tinyurl.com/48bp6r

ST07 -

SLW "should" eventually make a new ATH, run well past 20 that is. Tomorrow or the day after I would expect it to gap up over 11.35 and not look back, that would be typical if this is really a major bull run starting like it seems to be.

Having said that, intraday it looks likes it's a little tuckered out and is going back down to test the gap and the low of the day.

If it is extremely bullish it should not even get down there, though stocks very often fill such gaps partially, and that could still be quite bullish. That would be around 9.80.

You could try scaling in some at intervals during the afternoon today, if it does retrace as it looks like it might do.

But look at the EUR, up 2% today. The USD is getting creamed. So it's really hard to predict what might happen.

At several hundreds or even thousands of percent volume compared to nearby strikes and an implied volatility in the 30s, WMT calls are being bought, not sold.

Given the runup in the oils, would it not be prudent to take profits?

Why was everyone so bullish on stocks this morning? I just thought I'd ask.

I would think when the bailout plan is approved by congress there will have to be an attack on gold.

BSI - Are you still holding DZZ or did you get stopped out?

re: WMT.

Triple RSI sell signal given on 9/12 at 62.41. Strong reversal on Friday in an up mkt doesn't look good to me.

Max pain for Oct is 60.

Maybe some upside but not like when Bill recommended it in the low 40's.

no position.

Crude -

CNBC has been reporting in the last half hour that the eise in Crude today is due to Oct. Contract short covering...

still long DZZ. just too early...HA

Rocksfall

From this morning's daily report.

"The bottom line is as I relayed in the WIR: equity prices up, commodity prices up, bond prices down, $USD down, gold up"

Did you get a chance to read Mr Cara's WIR yesterday?

c3 - Thanks, that helps a lot.

For some reason ARU is soaring on low volume (as to be expected) up 14%

???

Paulson blinks:

CNN reported that Paulson has conceded allowing for taxpayer warrants on the finacial companys, so prepare for share dilution.

2nd
Looking at DUG again

October crude up 21% today!

Huge volume on MAG.TO today - over 5 million shares traded (3 month average is 177K/day). Looks like a volume spike of 4 million shares at once.

Does anyone recall a discussion a long time ago on the blog about how huge block transactions can signify that someone is a taking a tax loss in one account and re-opening the position in another account? Whether this is technically legal or not, I believe that it is fairly common................can anyone provide insight? I think it might be happening to a lot of small miners right now and could provide a good "tell"

Trading halt on oil @116 trading reopened and then shot to $130. Now 119

DHIL hereby nominated for "Big Stones of the Year" award.

As probabably one of the only people on the planet who, while living in a rent-stabilized apartment, voted to strike down all rent controls in the Commonwealth of MA, I like the attitude these guys are showing and see a possible kindred spirit.

"NASDAQ issuer Diamond Hill Investment Group, Inc. (DHIL) has voluntarily opted-out of NASDAQ's list of Covered Securities under the SEC's Emergency Order, effective today, September 22, 2008. Diamond Hill Investment Group, Inc. will not be subject to the restrictions of the Emergency Order."

(BTW, that was Brookline MA and I shared a massive, stupidly cheap 4 BR with one other person, right on Beacon St., 1 block north of Harvard St. in Coolidge Corner, over what is now a paper store next to Rani, if anyone cares. And yes, I voted directly against my privilege in a state referendum ending rent controls in MA.)

2nd - Withers - dble-neg done with style that's hard to match by any stretch of the imagination! Right up there with Trailer for Sale or Rent and Patches.

Do I see a double top in GLD on volume?

Might go long @ DJIA 11K if it falls back around there, but for some reason I'm not holding my breath...

crude- wow...it's one thing after another in this market...NGas, as usual, isn't budging...

vinod- i don't know about DUG...to be honest, i'd be looking more at DIG...

Wow, GLD just lost a percent real fast...

XLE is the only ETF up today that I am watching, +1.13%.

Oil up / stocks down = oil stocks flat, more or less.

Note - the $US is down more than 2%, which means XLE turns out a loser anyway.

However, the trusts are up around 5%, most of them. They are what you want to hold on a day like today.

RE MAG and others: Would need to consult a tax authority, but it could go from personal to corporate or to RSP and probably escape detection by CRA

SteveC & Bill,

re: Supreme Court

I don't think the Supreme Court is necessarily split along party lines. The appointment of justices is, of course, done by presidents who seek to choose those which favor either conservative or more liberal interpretation. Even there it can be unpredictable. (G.H.W. Bush gave us one of the more liberal ones still serving — but then, he was not a true Republican.)

Being a life appointment they have no elections to consider, but as with all humans, person predilections are difficult to set aside.

Of the three branches, I would generally give them the highest marks for integrity. As Bill pointed out the legislature's law's have built-in limits which the court must deal with.

"My daddy's voice helped me through the years
Sayin, "Patches, I'm depending on you son
To pull the family through My son, it's all left up to you
I could still hear papa when he'd say
Patches, I'm depending on you son
I tried to do my best It's up to you to do the rest".

Clarence Carter

Anyone know anything about the Pan American Silver Corp [PAAS]? It is up right now 13.33% [$3.08]

Dunno about PAAS but SIL is going nuts. +62%

I have some SLW and bought some SVM as well thinking that if SLW hits new highs then SVM is a better bet if it follows since SLW is 11.21 and needs to hit 19.30 for a 52 week high but SVM at 4.40 would reach 10.65 for a better percentage gain. No, I don't know anything about the fundamentals of either. Great investing style here LOL

PAAS is the biggest pure silver miner; Fleckenstein was on the board (and may still be). Their mines are in W. Hemisphere.

MikeNYC:

I use an Herb Shop up on Harvard St., between Brookline and Beacon

QT,CP & Bill,
To mix a couple metaphors — We're closing the window after the horses are out.
[Bill Cara note:
I truly believe that the financial aspects of the package presented by Henry Paulson is necessary. When you have a storm, you close the window. But when you see that these storms are getting bigger all the time, you bring in hurricane shutters, and that's what the US Congress -- not the Treasury Secretary -- has to do in the future. For now, the $USD falling further is necessary because the relief package is costly.]

Bill, I suspect you saw the downside of the derivatives (before I began visiting your site) just as Hussman, Buffett, Gross, the late Sir john Templeton and many others who spoke against them.
That's when congress should have done something, not now. This is like the Captain of the Titanic telling his passengers, "We need to watch out for icebergs in the future."
He went down with his ship and so should a long list of irresponsible (possibly crooked) individuals on the right coast.

Westcoaster.....I'm not so much interested in doing the tax avoidance thing myself.

I'm just interested in using it as an indicator as to when to jump in on some of these smaller and more illiquid miners. Essentially I think that some of that block activity is a sign that some big players believe a bottom has been put in.......

still with freddie, shark? all that supply does not seem to be impairing its move up...

SVM has huge producing mines in China. Widely held in precious metals funds at least here in Canada

TTM- going long at 9.10...

Not liking the action in GLD. Exited DGP and SLV in my 401K. Still holding some TBT, which appears to be weakening as I type... some bad news happen?

FNM just taken out at $0.89, in at $0.8285

Nah 2nd not with freddie anymore, sold into the strength. Also caught a nice ride on PAL N.A. Palladium, looking to re-enter.

Re: Sec 8 of the Bail Out Bill

Yesterday I took the time to send my Senators and Rep a letter regarding the above. Told them the citizenry was gathering tar,feathers and pitchforks if they allow Hank to be above the law.I also mentioned my opposition section 10 which hikes the debt ceiling to over 11 trillion.

We shall see how corrupt they are. I urge all Caraistas to take 5 minutes and send them an appropriate message.

I find myself curious what would have happened if Elliot Spitzer was still around. They CHEERED on the exchange floor the day he went down in flames. Market uncharacteristically soared that day. Regular folk hoohawed and ridiculed. But Bill called it a "tragedy," and left it at that.

Personal shortcomings be what they may, he was put into office to bang heads together, not teach Sunday School. Probably no change in the big picture were he still around, but some of those Gyrm refers to might have been held accountable.

Reminder from Bill's WIR - "Oil Review

$WTIC (US Light Sweet Crude called West Texas Intermediate) gained +$1.50/bbl (+1.48%) to 102.50. On Friday, the contracts soared +5.34%.

Yes, ultimately I do feel that Crude Oil will drop to the 80-85/bbl level, which is still a rather large pull-back if it happens; but I’m certainly not negative on the shares of the high quality Oil & Gas industry companies, which I believe will lead the commodity price turn-around – as they usually do.

For $WTIC, the 50d MA is now 116.80, and the 200d MA is 111.82."

nemo:
A friend used to buy Chinese herbs near there. Maybe the same shop? Man, she made some foul smelling infusions. I moved from that spot on Beacon around the corner to Pleasant St., where I lived for many years in the row houses between Browne and Freeman streets.

Quarter mile from the Paradise Rock Club one way, quarter mile from the Coolidge Corner Theater the other, quick ride on the B train to Kenmore Square (Fenway Park and the Rat) subways, river, parks, all of it steps away. Boy, I really loved living there.

FRE and FNM....does the govt have any intentions of making anything on these shares? Maybe the PPT is running them up today

....signed conspiracy nut

"I find myself curious what would have happened if Elliot Spitzer was still around"

Was that the guy that Ted Butler and the rest of us silver bugs were begging to investigate the COMEX shorting?

Good morning! Given the present market volatility, my strategy or placing limit orders and "trading in my sleep" keeps working. The sell limit was hit for WGW at $1.50 for the shares I purchased on Friday at $1.26. The sell limit for SLV was hit at $12.91 for the shares I purchased a few weeks ago at $11.90. Another limit was hit for SLW at $10.50 for the shares I purchased at $9 -- if one does catch a falling knife successfully, then a lot of profit is generated.

I was very glad to see that Bill changed his mind in the latest WIR about the USD bull market -- I get much more comfort holding a portfolio full of PM miners if USD is going down instead of going up. Now the case for a PM bull market (at least in the medium term until USD hits the previous lows) is much more clear, and an aggressive trading (buying every little pullback and selling once the price returns to the previous level) should generate a lot of profit. As I said, I am planning to do this with WGW until it hits $2.

Finally, I decided to close today my ABK October $7.50 puts, which have quadruppled in value. At this point my only short play on the market is the XHB puts, which lost a lot of value on Thursday and Friday but gained a lot today and are back exactly to the price I paid for them.

"I couldn't believe it when I saw that Obama was quotes as saying that there may be a place in his administration for Paulson.
I mean seriously where is the accountability?
digusting golden parachutes for the bums that got their firms into trouble in the first place.
just unbelievable
-----------
Anyone hoping for Obama's "change" promise — be careful what you wish for. This guy got my vote once — never again. The only difference between Barack and Slick Willie is Barack seems to have kept his pants on.

Pookie - Thanks for info. I am long STO calls and they are doing real well.

2nd - did ya take them FRE gains yet?

This bullish equity call throws me for a loop. Do you guys honestly believe the bear market is over? Why now? The timing is a bit precarious.

What is going on?

Bear-Bull-Bear-?

Hey all,

I asked a couple of days ago if anyone knows of a well regarded technology ETF listed on the TSX. I imagine the question got buried in the frenzy that was last week.

I'll take another stab at ask here... :)

wrt PM & miners, I for one am not a high-frequency trader, so I had a tough time moving into the market over the span of 3 trading days to take advantage of the very low PM miner prices that have now shot up ~30-50%. It only makes sense for physical value stores (and the companies that dig them up) to shoot up in price as the faith in fiat currency disappears as we hear about $700B bailout packages. Still, I'm a bit hesitant to chase here. Looking to see a day or two of pull backs to then jump on board the PM train.

Is that unrealistic at this point?

QT, if you want to play on $US going down, why not just buy gold? Bill was saying that even if $US were to be in a bull market mode, gold would still go up after the short-term rebalancing with the Euro (which seems to be finished now). If $US were to go down, then gold will have TWO engines under it -- one would be the inflation fears and the other would be a direct appreciation due to a falling $US. And if you agree with gold going up, then instead of buying gold you can make even better investments, such as WGW. :)

This market is whacko. TICK/TRIN doesn't match the price action IMO. Lack of buyers rather than deluge of sellers?

Wouldnt giving 3M americans $230,000 each to pay down mortgage and debt, have same effect on inflation, govt deficit and also fix savingless Americans, plummeting housing market, and the garbage on the balance sheets of these crooked managed companies?

NGD back down now.

Fazeli...not at all unrealistic. I am long pm's and plan on doing the same. Although, my performance should not encourage emulation. I am best if I follow Bills plan of RSI entry

OK, decided to follow the crowd and opened a starting position in USD at $32.85. Also, increased my short bond position -- bought TBT at $64.70 in addition to the TLT short I have already opened at $97.17. If TBT is up during such a sell off, imagine how much it will jump during a positive stock day (say tomorrow)!

The SKF boys didn't get the bang the UYG boys are gettin' right now, UYG lookin' good for a pop in the next couple days? (Oh, I'm staying away)

Big fat-butt double top in TRLG.

Bought USD at $33.22

Sold PCA.to bought UAUA. Thanks 2nd for the alert

XLF - Dead skunk bounce!

Wow, I wish I hadn't logged on today LOL. I was too sure of the short trade and I guess I was right. Didn't take advantage of it though...sigh

Thanks for the comments on SLW.

Word of caution on BOEING - BA. Word on the street is that 787 will be delayed yet again.

Semis being week the last few day is not a good sign.

NYU grad - No, this money is for banks to pay CEO benefits, courtesy Congress and all the other moronic politicos in DC.

Now seeing TICK and TRIN confirm price action.

Thanks for heads up on BA news ST07.

Hi!

Am I nuts, or has oil closed at 120?

Cheers!

2nd
brought USD/QLD/UYG/TTM/IBN
still holfing TBT/AIG/ESLR
and brought some OEX call

Fazeli - go check Yahoo finance ETF lookup, I can't cause Yahoo's ticker crashes my dinosaur. Hopefully an upgrade to XP will fix that, or maybe a laptop so I can trade from a sunny beach somewhere.... I'll bet the sand reeks havoc on a keyboard...

My reasons for my buying USD, incidentally, were as follows:
1. It is down 66% from it high in July 2007 and it was down 8% for the day when I was buying it.
2. Bill is calling the end of the bear market in non-financials (and a beginning of a range-bound market)
3. $US going down should help technology exports, as someone has already noted today.
4. My whole portfolio was invested in PM miners as of last week, and now that I closed profitably some PM positions, it would be good to diversify my portfolio.
5. And finally, 2nd_ave's intuition said today that it was time to buy. :)

told you guys. same old tactics, just a diff version. you realize the avg american sees paulson and co as saviors. 99% of the population took the blue pill from the movie the Matrix, and rather avoid pain than learn the truth. Most people on this planet operate away from pain rather than towards pleasure.

It really would take every working american, to strike, before fixing it "correctly" is even considered by the high and might. So i wait and read blogs like this so i can get back in to try to make a buck.

From the movie:
Morpheus: You take the blue pill and the story ends. You wake in your bed and believe whatever you want to believe. (a red pill is shown in his other hand) You take the red pill and you stay in Wonderland and I show you how deep the rabbit-hole goes.

I am soooooo sick that I didn't keep my shorts [QID & TWM].

Guess Bill was vindicated today on the home builders call as XHB was down about 10% today. Sold the puts I bought on Thursday for around a 30% gain. This market just seems to nuts to hold on to anything for too long!

I see the list of banned shorts had another 96 companies added. What a joke. If you're gonna do something that stoopid, at least do all or none, none of this selective business...

David

I do have a gold play going. I was going to use an ETF to short the $$$ for a trade of a few days.

i dont like bailouts in general and want free markets, but i would prefer if the govt gave 3M americans $200k each to pay off mortgages,vs this type of bailout. cost would have been almost the same 600-700B, but the spark would have been much much bigger.

Fazeli - Get set to jump on the PM train if there's a pullback, I wouldn't buy in here myself...although many folks will...and might get their donkeys handed to them.

QT,
It pays to have conviction in your trades. I had SRS but dumped at 73, only to watch it go up from there.

clarification on Boeing - I didn't mean delayed b/c of strike, but rather ongoing engineering issues.

Got rid of all my SRS @ 80

Scaling into TTM, USD, and SSO

DJ hit 11K much to my surprise, and showed some signs of life. So I picked up a small piece of DDM @ 56.22 before the market close.

Mostly cash, and waiting. Also wondering what happened to TBT, that wasn't a pretty finish to the day. But if it falls below 63.5, then I'll get out.

I think I understand the in(re?)flationary bull call, as Bill calls for. But I'm wondering if reduced future earnings can be ignored, as I don't see how they'll be inflated much with a tapped out consumer, despite gov't pumping.

Was the VIX behaving oddly, inter-day? Perhaps as Bill states, the XLF today has been an act. That would be interesting...

Gold being over $900 is holding me back from shorting at the moment. And that fake breakout on meager volume today in GLD distracted me this afternoon, I might've picked some up before the close if I'd caught GLD coming back down from its highs.

Too many charts, too little time.

Maybe it's just me but I just can't see a sustained rally from here. I just can't. For the bulls, is there a ST target you're eyeing for the DOW/S&P?

I'd love to hear opinions on this. This is a great topic for further discussion.

[Bill Cara note:

After reaching a point earlier today, I sent the following e-mail to Rocksfall who is aka cooldwg.

Rocksfall,

You started commenting three weeks ago, and were quiet for the first three entries. But the next four, all yesterday and today, are personally offensive. Nobody needs that stuff here. If you want to be constructive, then do it. Otherwise, you'll be banned. Are you cool?

/Bill

Unfortunately, he/she did not reply to my mail, but subsequently has changed the tone. I take the lack of requested direct communication with me as a heads-up.]

Hussman's open letter is here:

http://hussmanfunds.com/wmc/wmc080922.htm

Key suggestion:

"These institutions are not failing because 95% of the assets have gone bad. They are failing because 5% of the assets have gone bad and they over-stretched their capital. At the heart of the problem is “gross leverage” [...]. The sequence of failures we've observed in recent months [...] has followed almost exactly in order of their gross leverage multiples. After Bear Stearns, Fannie Mae, and Freddie Mac went into crisis, Lehman and Merrill Lynch followed. Morgan Stanley, and Hank Paulson's former employer, Goldman Sachs, remain the most leveraged companies on Wall Street, with gross leverage multiples above 20.

[...]The appropriate solution is not for the government to replace the bad assets with public money, but rather for the government to execute a receivership of the failed institution and immediately conduct a “whole bank” sale – selling the bank's assets and liabilities as a package, but ex the debt to bondholders, which preserves the ongoing business without loss to customers and counterparties, wipes out shareholder equity, and gives bondholders partial (perhaps even nearly complete) recovery with the proceeds.

Is there anything wrong with the above? Seems like a better solution that saving GS/MS/et al and preserving the status quo. Why doesn't congress do this instead?

Rocksfall,

I can't see a sustained rally either, but I bought today, trying to trade what is showing up in the charts and not trading what is in my head re: the economy, etc. Hence, make me a small brick in "the wall of worry." But, we'll have to see.

I do see that the downside risk buying here is a lot less, but that the "information risk" is really high. Usually a good time to buy.

added to SKF position at 101.82.

bsi, XLF went down 8.2%, SKF went up... 2%, UYG -9.7%.

SKF and UYG seem like broken instruments.

I wonder if SDS and TWM will follow suit, particularly SDS as it contains lots of financials of the S&P500.

The options market is broken too.

$GOLD:$SILVER ratio has declined the last 3 days, but still is way above normal. Plug that into stockcharts.com and see for yourself. Maybe silver will rise faster than gold ...

CP- just don't see the point in bailing on the FRE position right now...i'm going to forget about the position for awhile...remind me when it's in the teens or twenties, alright? ;)

QT- guess you could just turn around and buy QLD, but i'm not going to jinx that trade for you..

Anyone else see the Chesapeake announcement after the close?

http://tinyurl.com/4zlnjs

I really like a lot of what I see in this announcement. CHK curtailing some planned production/expansion should help stabilize the market as a whole. Also they have an amazing gain on their hedge portfolio.

Excuse me, I should have said that CHK had a nice gain on their hedge portfolio as the market corrected over the last couple months..........still overall the hedge portfolio has a loss:

"Natural Gas and Oil Hedging Update

As of June 30, 2008, Chesapeake’s natural gas and oil hedging positions had a negative mark-to-market value of approximately $6.5 billion. Subsequent to June 30, the prices of natural gas and oil have significantly declined and Chesapeake’s hedging positions had a negative mark-to-market value of approximately $500 million (including settlements for the 2008 third quarter) as of September 18, 2008, or a favorable change of approximately $6.0 billion.

For the second half of 2008 and for the full years 2009 and 2010, Chesapeake has hedged through swaps and collars approximately 83%, 72% and 46% of its expected natural gas and oil production at average prices of $9.30, $9.63 and $9.89 per thousand cubic feet of natural gas equivalent (mcfe), respectively. In addition, Chesapeake has collected approximately $400 million in premiums for written calls with strike prices above current market prices for its natural gas and oil production in the second half of 2008 and for the full years 2009 and 2010."

Nonetheless I still like what I hear....

Should have listened to others advice and bought FXP.

With my pick of NVDA they would have cancelled each other out. :)

I got this in my email for any holders of this stock.

High River Gold Comments on Share Price Decline
TORONTO, ONTARIO--(Marketwire - Sept. 22, 2008) - High River Gold Mines Ltd. ("High River" or the "Company") (TSX:HRG) would like to comment on the large share transaction volume and consequent share price decline resulting from trading late on Friday September 19, 2008. The Company believes that the share price decline was related to High River's deletion from several S&P/TSX indices, and the resulting selling by index funds.

On September 12, 2008, Standard & Poor's Canadian Index Operations issued a press release announcing its quarterly index changes. In this press release it was announced that High River, among others, was to be deleted from the S&P/TSX Composite, Global Gold, Global Mining, and SmallCap Indices, effective as of market open on September 22, 2008. To adjust for these index changes, index funds likely sold all of their remaining High River shareholdings late last Friday. Several brokerage analysts specializing in stock index trading estimated that these funds were required to sell approximately 15 million High River shares to re-align their holdings with the announced changes. Over 9 million High River shares, or nearly 4 times the average daily trading volume, traded during the last hour of trading on Friday, causing the share price to drop by more than 40%.

The Company is not aware of any other corporate developments to explain this share price decline on September 19, 2008.

High River believes that its current share price significantly undervalues the Company, and is currently examining various initiatives to remedy this situation.

And saw this one on GM.

The Associated Press

NEW YORK – Fitch Ratings says General Motors Corp.'s credit rating is moving deeper into junk status because of the automaker's diminishing liquidity and lack of access to capital.

The credit ratings agency said Monday that it cut GM's issuer default rating one notch to "CCC" from "B-." Both ratings are non-investment, or junk, grade.

re:SKF.

I don't know what the deal is. I do know the 10 day ATR (average trading range) for SKF is 16.91 so there's a pretty good probability it'll move that way. I did like the fact that it closed above the open and the preceding close. I didn't like the volume being 1/2. Guess it'll take a bit longer for some panic to set.

DJIA 10 day atr is 344. thought it might reverse today.

sundance - CHK

My take-away from CHK PR: you'd better know a thing or 3 about the biz before buying CHK.

Are they building reserves, while moderating production growth? Is this good for their cashflow and profits, and therefore making the stock more attractive?

TIA

SKF is broken because they won't issue new shares to keep the NAV close to the price. Now there is a premium built in, as if it were closed end rather than an ETF.

Saving their own skin.

“Transparency makes markets go round. But some banks want the government to suspend the use of market prices to value some assets.

That would leave investors even more in the dark than they are now about bank balance sheets, potentially worsening the credit crisis.”

http://tinyurl.com/4opzph
(WSJ--subscription may be required)

Today in mining: Only the PM stocks were grinning -

silver stocks up 12%
gold stocks up 6%
non-metallic minerals 2%
industrial metals, minerals 0%
Aluminum -1%
steel&iron -2%
copper -3%

industrial minerals have yet to light up!

(media-general/Morningstar sq.root of cap. indices)

Jock - CHK is definitely a complicated pup, no doubt. As one of the largest producers around though, I am encouraged that they are curtailing some production and slowing some expenditures. This usually leads smaller players to follow suit.

I am also of the opinion that natural gas has a nice stable floor below it as long as coal prices remain high. The current conditions of high coal prices relative to natgas prices encourage more power generation from nat gas fired power plants over coal-fired plants - especially in the eastern US where high-priced appalachian coal is the standard.

Lots of moving parts to watch but I do see good value. Its on the watchlist for me.

PS - I gave PNRA another shot the other day and it wasnt as bad as I'd recalled. Sierra Turkey was yummy. I guess I still just had a bit of a tiff from all the changes they've made since the early days of Breadco ........still wouldnt touch the stock :-)

[Bill Cara note:

I too like NatGas, better than oil or coal.]

Can anybody explain why the October Contract for Crude is $120 and all the rest remain $108-110.
http://finance.yahoo.com/q/fc?s=CLX08.NYM

westcoaster

Short squeeze on the October contracts.

Tomorrow it should trade back to the 108-110 level for Nov. that you mentioned.

Media alert! Kaimu has company!

Jim Cramer dons a tin-foil hat this evening, drinking the yellow koolaid by totally endorsing gold instead of "toxic equities" and envokes visions of Weimar Germany and people pushing money around in wheelbarrows.

[Bill Cara note:

This Washington farce has been elevated to the level of tragicomedy. Who better than Cramer to do the acting.]

I'm just wondering if the volume is going to dry up and the volatility settle down quite a bit (when compared to last week) as market professionals wait out the resolution of Paulson's moves.

The inability to short for professionals may just cause some market participants to do very little but watch and wait, imo.

By the way I want to officially take credit for having predicted for at least the past year the demise of Lehman Bros.

[Bill Cara note:

Yes, sharkie, you are the acknowledged LEH expert. I recall you on their case from the beginning. Did you call for their demise before I removed Lehman from the Cara 100? If so, I should have listened.]

Damn! The Cramer Effect will screw up the pull back in gold and silver!!!

I bet he touted AUY it's up after hours

Re: POO

I guess all of those plays counter to oil will have to wait a bit. Very surprised, but I figure that oil prices are desired higher, not lower, and that much of the collapse in the Wall Street banks are caused by collapses in the oil futures. Maybe there is some kind of hail mary psychology involved here. I do believe the same happened in the dollar when Euro reserves were sold as some sort of hail mary approach to resuscitating the dollar. Why don't these people just speculate in gold and get it over with?

Re; GS

I was watching Bubble Vision on GS being turned into a holding company. They do this in the airline industry to avoid an imminent bankruptcy. So why are the markets so bullish when there is a bearish dip in bond yields?

http://finance.yahoo.com/bonds

Nobody noticed, as usual.

Thank you Bill, just make a seperate daily comments section for Saturday and Sunday, since banking hours obviously extend into the weekend now.

HRG and WGI

Same thing (big sale and big share price drop) happened on Friday end of day to WGI. Correctly identified as an index delisting by bobj. Thanks bobj.

WGI came right back up today to where it was before the sale.

Stv

VAL gold

Not sure if anybody linked to this interview with Steve Wilkinson - I looked and could not find one - at the Cambridge show on June 26/08

http://tinyurl.com/3g5vwq

Sounded so good I added more at .04 to my underwater position. Up to .065 today. The right direction at least.

Stv

nemo: Cramer specifically touted aem & abx or gld as an etf play-i was watching the ticker in awe as abx climbed a buck within minutes after-hours on his rant, which lasted 15 minutes (his rant). Basically, he said it is a can't lose play b/c if the bailout plan fails, it is a flight to safety play; if the plan passes, it is an inflation play. He was really pounding the table.

[Bill Cara note:

Excepting the histrionics, I go along with Cramer on this point.]

Bill,

I'm not sure if your call for a bull market is for a secular or cyclical one and I'm sure as a trading expert you are much more aware and alert to signals than I. Since I know I will not sit at my computer all day, I am thinking mostly of longer term buys when the numbers look too good to pass up.

Even when I have bought with a protective stop lately the extreme volatility has dumped me at a loss. This is not a time that I feel comfortable speculating short term. (Although I bought a little DGP.)

I bought GG today with an eye to holding it for the longer haul.

One of my biggest problems is understanding how we can possibly avoid runaway inflation (other than in discretionary categories like housing and autos) when the US bonds need to find buyers to support the huge spending with the Fed and Treasury bailouts.

Does your call for a rerun of 1974-1982 include the double digit borrowing rates and eventual high Treasury rates of possibly 18% again?

I'm about 80% money market and could try to wait for a bond deal like that.

[Bill Cara note:

Very high interest rates are a possibility, but not before the US economy is in very good shape. That could take a few years. Investing in MMF for the long term is destroying one's wealth because inflation is higher. There are very good companies with well priced equities for writing puts for income if that's your need. There are some solid dividend payers that will pay a greater return than MMF if you are prepared to take a minum of risk.]

"we are bottoming:"

Really?

Now that the sharks and their flying fish friends are all gone what's left will be only:
http://tinyurl.com/3mwvn2
and on the bottom is where they stay until someone eats them

[Bill Cara note:

Is this an attempt at humor or just taking a shot at me? If you want to question me, then quote me in context, state your beliefs, back it up with analysis and expect me to respond. If I have time, and I think it will add value, then I will. Otherwise I have no time for this stuff, so please stop it.]

"I'm about 80% money market and could try to wait for a bond deal like that."

In order to get to a bond deal like that, the bonds will have to drop in price by a fantastic amount. Bill is anticipating that there will be higher bond interest rates (not sure if he has something as high as 18% in mind, but surely something higher than the current 4.8% or whatever it is).

To capitalize on the rise in interest rates, he has suggested that we look at shorting the long term bonds (in the futures market, short US or ZB, I believe the ETF play would be to go long TBT). This will allow you to make money on the anticipated rise in interst rates.

Then, if/when the market does achieve a high enough interest rate to strike your fancy, you can simply go long the bonds directly instead of shorting.

Combined with a long position in gold, Bill and others here have been referring to this as the "Trade of a Generation" (TOG).

Was the drop in financials today blamed on bear raids? Those nasty naked shorts!

Randallbard: They fish for the halibut(hellofit).

Re: Derivatives

So. We are seeing bailouts for the on balance sheet assets(loans) in order to save the derivatives from imploding. No mention of derivatives anywheres except:

http://watch.bnn.ca/clip94796#clip94796

Canada, the money-laundering and naked shorting capital of the world.

Saloot! My fellow communists!

>: [

david- appreciate the nod, but if this was gaming i'd be putting 3-5x odds on anything you roll ;)

david/vinod/QT: i decided to 'up the ante' on my cash holdings as well, using OAKBX as a bench for the duration of (any) bull market in place of money market funds...if i'm lucky, between now and december, the bench might even outplay the starters...

scaled back into a 40% position in USD (which, as david pointed out, has taken a 66% haircut and will undoubtedly be back to shoulder length by the time the 1974TOG gets underway)...will be looking for re-entry points into QLD/CAF/TBT/and yes, even UYG...(sticking with freddy play this time until it burns out or fades away)....

GL, always fun trading with you guys...

'the' freddy play...

Hi!

Am I nuts, or has oil closed at 120?

Cheers!

Posted by: maromatics at September 22, 2008 3:47 PM

Maro,

I am only seeing $110. Are you taking your medications? Stay focused on gold, man. :)

re the skepticism about a turn in the market: if you stand back and distance yourself from any emotional attachment to where things are, it becomes obvious that the discourse is a tell...the disbelief and difficulty getting into the bull groove is exactly what we all are quick to point out when describing historical bottoms, right...yet now that we're experiencing those exact sentiments, we can't seem to use that to our advantage...JMHO, and i may in fact be way off here..

[Bill Cara note:

2nd, you are absolutely right. As soon as people's beliefs or understandings are challenged, they tend to get upset, and get vocal. None of that bothers me -- I expect it -- but there are also skeptics who would waste our time with drivel. (Is that something like a mean drunk?) My role here is to challenge this community to think and learn, and to add value with their own info, experience, analysis, etc. This is not a tout sheet, and I am not a stock-picking.] newsletter.

I have made lots of money taking bill's advice fom WIR and Daily Report
After reading this week WIT
I bought most of stock mention in BUY alert and
and have done very good buying these stock in past
In the end I am responsible for my decision

I'm horribly mistiming things as usual. Two weekends ago (Sept 13-14) I felt that the poop was going to hit the fan and also felt that it was getting close to buying time. That all seemed to play-out last week, as I thought. Nevertheless, I spent the whole week chasing prices around (summer holiday is over, so no day-trading) with limit orders amidst that insane volatility. When the dust settled I found myself the proud owner of 3 fairly defensive stocks (BCR, APOL, HUBG) that ALL now look totally inappropriate (see Bill's comment re:staples in WIR). This trading game is hhhhhaaaarrrrrdddddd. :(

vinod/david- for clarification, what i mean by 'bench' is that anytime i park money in 'cash,' it will be parked in OAKBX (rather than MMFs)...and i plan to leave it in that parking lot only when i believe the outlook (ST or LT) is 'bullish,'...it seems bullish at the moment, but of course, that could change at any time...

U.S. Regulator : Long oil restriction?!!!
http://tinyurl.com/4uxzdg

"Unfortunately, he/she did not reply to my mail, but subsequently has changed the tone. I take the lack of requested direct communication with me as a heads-up.]"

Bill,
I truly apologize if you took anything I said as offensive. I just read the email you sent a couple of minutes ago (only check the email about once a day unfortunately).

I don't comment here often as you said. I check the blog every day to get a sense for how people are trading. I made the first comment because some of the ideas some of the regular bloggers had was a bit counter to my opinions about the market at that point, and I simply wanted to get other people's opinions.

I guess I must have shown my frustration with some of my trades today but this in no way was directed at you. I was even surprised you took the time to respond because you emphasize MT to LT trends and I trade short-term. I am always responsible for my trades.

I have benefited a great deal from this forum and I apologize if I offended you or anyone here.

Group...

The treasury plan... thoughts? concerns... what are they?

It seems that something has to be done in regards to the state of current affairs.
What is the exact state?
Why are we here? (please no blame on a political party or another, they are all to blame; even us). Back to why were are here... When we look back onto history what will be the outcome? Or how will it be written in the history books?

I myself have several thoughts...
#1 - 700 billion plus in the bail out... the treasury will buy the distressed assets... As mentioned in this blog, something has to be done. Or the likes of many institutions will become insolvent and no longer be able to do business and the trickle down will lead all the way to the bakery on the corner of the street. That would be horrible.
A question and thought, how is this inflationary?
Sure the treasury is going to issue t-bills in exchange for US dollars... where are the dollars coming from???
Investors can move cash to pick up the bills, sell other assets and pick up the bills.... convert other currencies in to us dollars and buy the bills... Besides increasing the GDP payments towards debt eventually, HOW is this inflationary? What is the definition of inflation? Isn't increased money supply?

So once the treasury gets their USD from investors, they will have institutions offer their crappy worthless assets and sold to the treasury for bid. Maybe they get .25 on the dollar, maybe it is .60 on the dollar. We won't know until we know (it would be a shame, if they were scooped at an unfair price, like .95 on the dollar).
Now we will have financial institutions who sell they bad assets to the treasury in exchange for USD.
***Inflation could then occur if they invest the USD in assets and LEVER those all over again (i.e. create more money or something out of nothing AGAIN.. LEARN YOUR LESSON WALL STREET!
(am I way off base here?)

I wish in this bailout they should require all those who exchange the toxic assets for cash, be required to maintain the inverse difference of those assets in liquid cash capital within those institutions. To prevent an extreme inflation, don't let them re-leverage after they essentially was given a GET OUT OF BK free card on the monopoly board game at the risk of the US treasury.
Those assets are worthless currently and all the financial institutions probably know it. No one wants to touch each other...

#2 Europe? are they really in a better.... situation? Will their recession will be more severe than ours? those banks are levered 30-40 versus ours are from 12-30 (leh, bsc, mer, gs, ms - were all allowed to maintain a leverage ratio of 25-30, where as other instututions were capped around 12). That being said, their could be more of a financial crisis there if those banks were to implode. How truly stable is the euro? What nation has the most leverage in taxing it's citizens? What nation has a lower unemployment rate?
I find it hard to believe that the euro will continue to appreciate vs the usd.... It seems that fundamentally (even with the press working overtime) the USD could rally back...

Where are other alternatives?

6 months from now, 2 years from now, 5 years from now, 10 years from now.... what will it all look like?

How can we be prepared for the challenges to come?
Identify opportunities.... Let's step back and think..

Group...

The treasury plan... thoughts? concerns... what are they?

It seems that something has to be done in regards to the state of current affairs.
What is the exact state?
Why are we here? (please no blame on a political party or another, they are all to blame; even us). Back to why were are here... When we look back onto history what will be the outcome? Or how will it be written in the history books?

I myself have several thoughts...
#1 - 700 billion plus in the bail out... the treasury will buy the distressed assets... As mentioned in this blog, something has to be done. Or the likes of many institutions will become insolvent and no longer be able to do business and the trickle down will lead all the way to the bakery on the corner of the street. That would be horrible.
A question and thought, how is this inflationary?
Sure the treasury is going to issue t-bills in exchange for US dollars... where are the dollars coming from???
Investors can move cash to pick up the bills, sell other assets and pick up the bills.... convert other currencies in to us dollars and buy the bills... Besides increasing the GDP payments towards debt eventually, HOW is this inflationary? What is the definition of inflation? Isn't increased money supply?

So once the treasury gets their USD from investors, they will have institutions offer their crappy worthless assets and sold to the treasury for bid. Maybe they get .25 on the dollar, maybe it is .60 on the dollar. We won't know until we know (it would be a shame, if they were scooped at an unfair price, like .95 on the dollar).
Now we will have financial institutions who sell they bad assets to the treasury in exchange for USD.
***Inflation could then occur if they invest the USD in assets and LEVER those all over again (i.e. create more money or something out of nothing AGAIN.. LEARN YOUR LESSON WALL STREET!
(am I way off base here?)

I wish in this bailout they should require all those who exchange the toxic assets for cash, be required to maintain the inverse difference of those assets in liquid cash capital within those institutions. To prevent an extreme inflation, don't let them re-leverage after they essentially was given a GET OUT OF BK free card on the monopoly board game at the risk of the US treasury.
Those assets are worthless currently and all the financial institutions probably know it. No one wants to touch each other...

#2 Europe? are they really in a better.... situation? Will their recession will be more severe than ours? those banks are levered 30-40 versus ours are from 12-30 (leh, bsc, mer, gs, ms - were all allowed to maintain a leverage ratio of 25-30, where as other instututions were capped around 12). That being said, their could be more of a financial crisis there if those banks were to implode. How truly stable is the euro? What nation has the most leverage in taxing it's citizens? What nation has a lower unemployment rate?
I find it hard to believe that the euro will continue to appreciate vs the usd.... It seems that fundamentally (even with the press working overtime) the USD could rally back...

Where are other alternatives?

6 months from now, 2 years from now, 5 years from now, 10 years from now.... what will it all look like?

How can we be prepared for the challenges to come?
Identify opportunities.... Let's step back and think..

Mackinaw, it is hard, and I think it's basically because of what BIll says: we are played. I've been repeating as a mantra now--don't be played. And that basically means not chasing, but trying to lead. I see a major opportunity coming up for being played in the precious metals. Who now isn't regretful that they didn't go all in at the bottom? Who now isn't also waiting for "the pullback?" I don't know how it will all play out, but I'll bet a lot of people will lose money in pm's or not gain what they should.

Hey, Beard! You o.k? No posts...:(

2nd

Hey...you didn't jinx that trade. I already did. If you knew the entire story of my TWM/QID trade and what took place, and what ALMOST took place, your jaw would drop. It almost turned out to be the "Trade Of A Lifetime" for me.

By chance did you see this NY Post story over the weekekned? Just 500 trades and the bottom was about to drop.

Also that SOB---------> Paulson before the opening bell tipped them off. [see end of story]

" Bank of New York Mellon and State Street in Boston informing them that federal money was in the market and they should tell their clients the Feds would be back with a plan to stem the constriction in the credit market."

http://tinyurl.com/53bxo6

Rio Tinto moves into spot market

By Elizabeth Fry in Sydney
Published: September 22 2008 23:25

Rio Tinto has signalled its intention to move away from traditional long-term contracts, with annual price negotiations, and instead increase the amount of sales both into the spot market and through so-called hybrid contracts with regular price updates.

Sam Walsh, chief executive of Rio’s iron ore division, on Monday told the Australian Institute of Company Directors that long-term contracts did not represent market value and that he expected annual price negotiations would get harder.

“We’re not planning to base more business on the traditional long-term contracts basis,” he said. “The gap between long-term contract prices and the spot price is unfair for iron ore producers.”

Mr Walsh’s warning comes ahead of the start of the 2009 iron ore price negotiations, due to begin in late October or early November.

Resource analysts estimate that Rio has sold upwards of 15m tonnes of iron ore on to the spot market this year and expect that figure to increase next year.

Copyright The Financial Times Limited 2008
http://tinyurl.com/4ffjq2

Well said, Denny. My bent is for large, stable companies, or at least stocks showing consistently good performance. I can't tell you how many times over the last year that I have kicked myself for not entering , for e.g., ABX, only to turn that opinion around over the course of a week and thank my lucky stars that I didn't bite (or worse I did bite). Along the lines of your mantra, I've been telling myself - profits don't stay on the table long here, which should suggest: "don't chase performance", but it's hard when the alternative is stocks that have been pummeled but show a slight upturn. Problem is these have inevitably been bull-traps over the last while.

Re: NuVista Energy (NVA.to)

Recall that this jr oil and
gas company is/was one of Joanne Hruska's top picks.

news here that Ontario Teacher's Pension Plan Board, a deep pocketed institutional investor in Canada, has increased its holdings...

http://tinyurl.com/3ztydh

"re the skepticism about a turn in the market:"

Agree. The bottoming process can't be all that easy and obvious. I bet the smart money is buying here while everyone jumps. Learned a thing or two from Vad's book.

Fransix, thank you very much for the link to Statyajit Das appearance on BNN, author of "Traders, Guns & Money.

Going back to October 2007:

Posted by: SiO2 [TypeKey Profile Page] at October 15, 2007 10:18 AM: "Bill, Re. "... If the dollar figure is pegged by HB&B at $100 billion as needed to plug the holes in the already burst credit market, could the real number be $1 trillion or more?"

$100B may be peanuts indeed. According to Satyajit Das, supposedly an expert in credit derivatives and risk management, up to 53% of the global $2.2. trillion commercial paper is now asset-backed, with about 50% of that in mortgages. Earlier this year, the total value of the creative derivatives that were made of these was about $485 trillion (with a "T").

In the meantime, oil hits $85 and change, and some experts still say they cannot understand why oil is so high. Oil, priced in USD, is cheap."

Here we are today with a band-aid solution of $0.7T which may not make a dent. Please take the time to watch the clip.

(And oil was at $85 and the experts said it was expensive.)

Rather than giving this money to HB&B to save their collective bottoms, why doesn't the Fed lend it to business who will actually *create* something.

Mackinaw, I know people have said it many times and I have ample evidence in my own trades bearing it out but we humans don't seem to be wired in a way that is advantageous to winning at this game. I frankly find the psychological game way more disturbing and perplexing than the mechanics of the market. That's probably why many people, including myself, have started turning to Bill's "simple little system."

joey - I checked Scottrade and MSN money. Both show NUVISTA - NUSF, but there are no charts or history that I can see.

NUVISTA Symbol correction: NUVSF

JohnE
http://bigcharts.marketwatch.com/interchart/interchart.asp?symb=CA:NVA&sid=1494782&time=

JohnE

Try

www.Stockcharts.com

and type

NVA.TO

ST07's post on Rio Tinto is HUGE.

This shows what many have been saying: the futures market is diverging from spot in a way that cash market arbs are not being effective in filling.

Asd much as it seems to bother some readers here, this proves Jason Hommels point regarding the futures market being disconnected (to the short side) from the physical.

I also find Hommel's latest effort, making a market in Canadian silver maples, or trying to, very intereresting.

Many people have valuable points to make, despite the fact that other things they do and say may discredit them. If you look beyond the religous aspect, and some of his crazy price points, Hommel has valuable and important points to make. I lump Cramer in that category, also. Doesn't excuse their weaknesses. But it doesn't excuse those who dismiss them out of hand, either.

yvrapx and Qt - Thank you.

MS is up in after hours trading. I took a flyer and bought a few calls on it today, only to watch them and MS head into the abyss. Perhaps tomorrow really is another day.

For kicks, here is my bailout plan:
1. The program is voluntary.
2. The "bad assets" holder will sell the "bad assets" to Treasury at face value. They can choose however much they want to sell.
3. The "bad assets" will be classified in several grades, like "bad", "worse", "worst".
4. The Treasury will hold the "bad assets", and charge an annual interest depending on which grade they are in, i.e., LIBOR +4%, +6%, +8%.
5. Upon receiving the "bad assets", the Treasury will receive warrants that allow Treasury to convert the whole face value of "bad assets" to Senior Preferred Stock or Common Stock at prevailing market price.
5. The Treasury's claim on interest payment is above all other debt/equity "bad assets" holder takes.
6. The "bad assets" holder should pay interest quarterly, with a grace period up to 1 year.
7. In case "bad assets" holder default, Treasury shall exercise the warrants.
8. Treasury is only the holder of the “bad assets”, it will not do anything about it.
9. The "bad assets" held by Treasury is redeemable at any amount and any time, with no penalty at the time of redemption. Alternatively, participants can choose to let Treasury hold some "bad assets" forever.
10. The proceeds from selling “bad assets” should be booked as special-class equity for participants until “bad assets” are redeemed.

Bill in recent days has made some really important points:

1) “I am trying to say that in my experience it is unwise to bet against the central bankers of the world when they intend to build economies via reflation. Money buys bids and bids buy Bull markets. Traders go with the flow.”

In other words Marty Zweig’s do not fight the FED mantra.

2) Being flexible! In woolybear’s word’s “Bill adapts to the new realities of the market with ease and speed.”

In the last week I have been thinking that all this liquidity has to be positive for the markets, Bill reinforces this. I’m still nervous about getting through October and November as the funds close out their year and average investors sell to take losses.

The best approach may be to put X dollar’s per day, week, or month and just average in till your comfortable with your allocation.

Hey Chickenpookie, you there? Have you looked at the daily chart of XRAY lately? Still a stock I am looking to enter but MAN - it looks like a heart patient undergoing a massive coronary - these markets are whacked!

MikeNYC - I think I'd like Cramer if I didn't think he represented that which I dislike most; conflict of interest. It is the one thing which puts him in a bad light which out glares all other value.

2nd - FRE - I'll meet you at $1.20 and we'll ride the donkey into the teens and beyond (still holding).

"Consider: Less than one-quarter of workers age 55 and older -- just 23% -- have savings and investments totaling $250,000 or more, according to a study published in April by the Employee Benefit Research Institute in Washington. About 60% have less than $100,000."
http://tinyurl.com/4vptny

What? There's that much money left in the middle class? If the modern day Genghis Khan, Hank P., catches wind of this he'll increase his "tribute payment" from the current paltry $700 Billion.

I'm looking at XRAY. SHEESH, It'a a great pick. There's good stuff to buy all over the place and now's the time IMO based upon what we know. So what if it drops a little more...what's the diff +37% vs 38% gain? Can't be beat my friend! Sure wish I could buy them all...

Mackinaw - And, if this market keeps chopping sideways you can trade that baby twice a month...

Telestar3D - If Bill thinks this is the bottom, that's good enough for me! To me it feels like the bottom, sounds, tastes and smells like the bottom.... Congress is finally sitting at attention and it looks like they're convinced a new dike needs construction. Heck, what else will they have to do for the next 4 years when the entire budget gets doubled just prior to election? Their hands are tied, let's hope they make the right decisions otherwise I hope you've got gold!

hey nemo,

thanks for asking! Just managed to drown myself in work. Mr. Paulson is not the only one working over weekends, you see. I don't expect the praise from president though, after all I am not saving the planet... solar system... universe... parallel universe... what else did that gang save lately?

Vadym:
I think vodka might be a good investment right now. A lot of people are going to have to drown their sorrows. I think I'll invest in vaseline also. :)

"The bottoming process can't be all that easy and obvious. I bet the smart money is buying here while everyone jumps. Learned a thing or two from Vad's book."
Posted by: c3 [TypeKey Profile Page] at September 22, 2008 8:48 PM

c3- and similarly the smart money was selling last fall into abby joseph cohen's call for DJIA 15,000-> do you remember that? sometimes it feels like people are PAID to goose the market up or down at the extremes...

every book i've/(you've) ever read about trading includes an obligatory paragraph along the lines of "at the bottom NO one wants to buy stocks" (maybe even Vad's book has one ;)...well hey, last thursday was all about cashing out-> wasn't there a headline about the Putnam Money Market Fund closing last thursday due to excessive redemptions? how much worse does it get than that? so as we approached bottom thursday afternoon, who was buying? if you re-read the discourse on this blog (where we have relatively sophisticated investors who have all read that obligatory paragraph somewhere), it was pretty dismal even here...

Some funny stuff at Boing Boing.

http://www.boingboing.net/

I like my long lost Uncle Hank's Nigerian letter scam the best. Reminds me of the daily emails I get from my relatives and their lawyers in Nigeria.

"This is a matter of great urgency. We need a blank check. We need the funds as quickly as possible. We cannot directly transfer these funds in the names of our close friends because we are constantly under surveillance. My family lawyer advised me that I should look for a reliable and trustworthy person who will act as a next of kin so the funds can be transferred. "

For Vodka, I've had my eye on Central European Distribution (CEDC). Stock has, possibly, been sufficiently butchered over the last 2 months to warrant a look-see.

QT- you don't need to elaborate...i can remember the two of us talking about FXP when it dropped below 60 last May...definitely on my mind when it hit 145 last wednesday! it would take more faith than i had to see that coming. going long is a little different...i AM able to foresee, let's say, USD 145/QLD 200 within the next 2 years...

Cramer pumping gold tonight on financial entertainment TV...time to take some profits (or just be glad you were buying when he was negative just a few weeks ago...) what a clown...

Pookie said “If Bill thinks this is the bottom, that's good enough for me!”

I like having Bill on my side, but I will still think for myself and not blindly follow anyone. Even if a bottom is in does not mean its going to be easy. Very few daily, weekly, or monthly charts have what I would consider strong bottoms, mostly V spike ups. The one exception is the Russell 2000has what I would consider a base in all three time frames.

Bill also made four important points to that teacher’s students which are;

“learn that with (i) a basic understanding of capital markets, (ii) the application of independent and objective thinking, (iii) the focus on risk management above all, (iv) the search for value, and (v) the study of price trends and cycles, they ought to do a good job at managing their portfolios.”

All are very important, but without #3 risk management most will fail.

If at any time someone does not like their results, it is simple to know who to blame, just look at the reflection in the mirror.

shark- right on; my vote for quote of the year:

"Lehman's going the way of Bear."
Posted by: shark_attack [TypeKey Profile Page] at June 3, 2008 1:55 PM [link]

Bank of America: "Paulson Plan Benefits Mostly Goldman, Morgan"
http://tinyurl.com/3o5wuj

is there any way we can actually stop this paulson plan?

After listening to Hillary Clinton's responses to a Bloomberg interview today, I believe Paulson's plan is a done deal. Her response was she approved as long as there were some checks and balances. What she meant is if there were some checks with her name on it that would increase her balances then it was OK.
I've purchased about 25 different stocks (mostly Cara 100) over the past 2 weeks. I feel very comfortable with whats in my wallet at the moment. Thanks everyone for your input.

http://www.reuters.com/article/ousiv/idUSPEK4365020080917?sp=true

Valueline's Aug. 1 one-pager adobe re: Dow30 AIG replacement Kraft KFT is posted.

http://www.valueline.com/dow30/f15242.pdf

JesseSLC,

Maromatics has it right - October oil index closed at USD 120.92 on Sept.22.

That's what my IB console says anyway.

Plus (with all due respect) I personally found the medication joke a little too stretched to the uncomfortable side...

Music City Man, no, in this case Cramer provides part of the critical mass required for Americans to ditch their dollars, as they should have been doing for years but they are mostly slow learners, and flock to gold. Gold is still trashed by most people due to constant media bashing which is sad because gold (and silver) are their only hope. So of course he is a 'clown' but he is part of the Financial MSM and has a huge following. If he can bring in J6P to the fold, the supply of gold will dwindle and the price will soar to new heights. The best outcome of this new awareness on the part of MSM is that possibly the public can eventually empty West Points vaults if they aren't already empty.

Bravo Cramer the Clown

[Bill Cara note:

Did you mean Fort Knox?]

[][][]

Bill....NO, I wasn't taking a shot at you or anyone else. Others here post that if you feel that this is a bottom ..then they feel it is too, some don't. They are going on feelings just as I am and I feel that a weaker USD and weaker market is necessary to put the greed that consumes the USA to rest once and for all and change this immoral way of life. The demise of Wall Street is to be welcomed imo.

Anyway I don't believe this stuff about if the majority is saying one thing then we should use it as a contrary indicator. Why? The housing market, real estate prices were the talk at parties across the nation, in cafe's, in almost everyone's conversation and YET this bubble got bigger and bigger and lasted for 8 years. Gold is still dismissed as something only a weirdo believes in or owns. A bear market is born in total euphoria and gold and silver are nowhere near that condition. Even if gold gets on the cover of Newsweek as it was in the '80s, this time it won't signal the end by a long shot...that's my feeling.

Anyway I sure didn't mean to offend. I'll try to be more careful

Ever see this?

http://usera.imagecave.com/camarojoe/0808cyclechart.gif

[Bill Cara note:

A facsimile of this graphic has been popular since well before most of us were born. As for the rest of your response, understanding "feelings" is a large part of one's analysis of markets. Psychology plays an important role as the graphic reflects. But the point I wish to make is that most any statement anyone here makes will be opposite the views of others. That doesn't make either side right or wrong. If you want to engage in a discourse, and have respect from others, however, when you make an entry that is not factual, you must offer up an opinion and back it up with argument. Otherwise, your remark is taken by the others as gratuitous and your presence here unwanted. Since nobody knows you, it's only your words that earn you credibility and respect. I hope you understand what I am saying here because, regardless of whatever opinions you hold, this Discourse will be credible and respectful or the participant will be banned. If you truly believe you have something to contribute here, then my banning you would be your loss, not ours.]

Looking over Monday, I notice that XLP was "only" down 0.5%.
This weekend I had picked it as the best short sector.
Well, it still is I think - it is the only sector I see that has already closed below last weeks weekly low.
But it is not volatile, so you have to just sit on it for a while.
Buying short-dated OTM puts for example would just be feeding the sharks.

Only other surprise was that IYT transports was down so much, not looking so good there.

XLY consumer discretionary also down much more than expected, looks like it is finally cracking.
Together with IYR realestate should be a good short.

My hopefully now balanced spread XLE puts / energy trusts & dito calls did well.
It has not always done well - some of those trusts have weird price action.
But they are illiquid.
Now looking at Hruska's Daylight trust for the next pullback.

good deal was hedging the whole shebang with FXE calls, would have preferred FXS (SEK) calls, but no market maker came to meet me on those - almost no OI.

"We shall see, said the blind man, who picked up his hammer & saw . . ."

Isn't that rather like trading?
You hit something, then you wait to se what happens?

Gold Stock predictor.

In October of 1999 issue of Hussman Econometrics, John P. Hussman published "Four simple indicators for monitoring the condition of the precious mentals Markets".

Quoting from an abstract: "In the rare instances when 1)The rate on inflation has been higher thant 6 months earlier, 2) Treasury bond yields have been lower than 6 months earlier, 3)the NAPM Purchasing Managers Index has been below 50, and 4) the Gold/Xau ratio has been above 4.0, the XAU has soared at an astounding rate of 123.63% annualized. In contrast, when none of these have been true, the XAU has plunged at -53.21% annualized.

I think we are there. The gld/xau ratio hit .675 this last week. It was as high as .575 in 2000. TLT went over 100 last week-higher than 6 months earlier. The inflation rate in August was 5.3719% vs 4.0266% in February of this year according to the rateinflation web site. I am not a subscriber of the ISM site but I will bet that the NAPM Purchasing Managers Index is below 50. If anyone have access to the ISM site could you check the current index. Thanks.

some observations.

RSI scan of oil drillers show them in mid range, not a buy or a sell.

Number of DJIA stocks showing RSI buys but charts not showing a good entry point yet. Ditto SP 500 stocks screen.

Ditto emerging markets ETF screen.

Flip side test. Bear ETF screen showing a number of sells.

I subscribe to the old saying that the market will do what will hurt the most people in the worst way. To me, that appears to be a further sell off below last Thursday's lows. That would kill the bulls who went long then and get some bears chasing to short (whatever is left to short LOL).

Now to throw in some more monkey wrenches, the funds are gonna to be throwing their losers under the bus to clear their books for month end/year end so I'm guessing a significant low by Friday. Just be aware of the month end situation.

The markets are the lead story on all the news shows so a rally would be the unexpected event.

JMO. Do ur own homework.

bsi87,

I'm seeing the same thing. Rally last week didn't catch up to losses. More losses to come.

Sea of red in Asia, except for the unwinding of carry trade in Japan.

FXI hit 39.06 last high. Didn't break 39.64 high. Broke 37.43. Now at 36.62.

Very little short-term support before it hits 30.88. March - May 2007 look like last areas of support.

On the other hand, RSI looks weak too fast and there are huge volume spikes which are skewing results, so could be some bounces.

Someone on BNN said yesterday this is the toughest market to analyze in 25 years.

XRAY P&F chart looks dangerous if it breaks through certain levels. There is a huge spike upwards that looks like one of those Utah rock formations.

Think of all the LEH employees without dental plans...

Good morning.

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

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

Good luck to all who play in the shark pool today.

WS,

also didn't see $naa50r trade at 20 or lower. 25 but not the area where sustainable rallies usually start.

sticking in a buy limit order for BA at 56.95 pre market.

CEG - Be careful with CEG, there is "probably" one-of-many lawsuits filed and a Electricite de France SA has offered $35 a share but Mayo Shattuck, Constellation Energy's chairman, president and chief executive, told analysts Monday the company has accepted what it considers the best offer.

Any share price above the current $26.50 "accepted" offer is risky!

Gotta throw my 2 cents in the discussion of "bottom-no bottom".

I believe the market is working the process of bottoming these days. Bottom, however, is a process rather than event, right? In last week's explosion market kind of showed its hand - made it too obvious that rescue plan is what it wants to put the bottom in and reverse. Things can't be that obvious and easy - market is always trying to go with as few people on board as possible. When I ask myself "if I were a market, what would I do to fool those who decided they figured me out?", my scenario comes out as following:

1. While the rescue plan is being discussed, retreat and plant as much doubt as possible
2. When the plan is adopted, spike briefly luring "reflexive players" in
3. Drop sharply, possible making new low, shake out hopefuls as violently and rudely as possible
4. Rally from there as fast as posssible, leaving new believers minimal chance for entry and make them chase.
5. Now that credit crisis ceased to be THE worry, start looking for new worries or recycling old ones (USD, oil etc), but do it in a context of new bull market.

If it sounds a bit wierd to talk about market as an entity with its plans and thoughts... well, it is, but if you look at it the market as a conglomerate of participants' thoughts and emotions, it helps decipher its messages.

All above is my working assumption - kind of framework that I, as a short term trader, try to assign to Bill's bottom call

CEG, excellent point JohnE. Mayo Shattuck kept referring to the Mid American offer as the "superior offer."

There was some tension on the call when some analysts wanted to why they did not accept the higher offer. CEG management avoided answering by saying superior offer.

putting sell limit orders on FXP/SKF close + 10 day ATR. If not executed by 10-10:30AM, cancel. Not sure if I'll trail a sell stop or just put a sell limit order on at that point.

Correction:

There was some tension on the call when some analysts wanted to know why they did not accept the higher offer. CEG management avoided answering by saying superior offer.

Vad,

Totally agree. The market will do what will hurt the most in the worst way esp at turns.

And although I don't subscribe to the IBD's Grape Koolaid approach to "investing", there's something to be said for the "follow-thru" day if it occurs 4-10 days after the initial jump with volume 50% higher than preceding day and 1.5% + gain. Not sure whether yesterday negates Thursday/Friday's action.

Bill, Jay, QT & too many to list,

I want to thank all who have given me specific info and links. This site is GREAT!

There is so much rumor, misinformation and outright lying on the internet, general media and government that I have gone from skeptic to cynic. (The election shows little promise.)

QT, when I read that Section 8 abomination I simply couldn't believe this was happening in the US. Thanks for the NYT tip.

Bill & Jay: I cannot do some of the techniques due to most of my retirement money being held in a brokerage account, but I can certainly use TBT and ind. stks, etc. Thanks.

I had a 15% overall net worth gain YTD from SKF (far too many eggs) when the SEC rule change trashed it to an 8% YTD loss. Just when nearly even they did it again! If we were at a sporting event of any kind the fans would kill the ump or whoever did any such thing, but OUR outrage is spent punching a pillow.

I will find a better place the MM funds, I'm sure, but can't afford to take chances — I didn't mention I have been buying gold coins on any dips.

My wife and I may outlive our resources like a couple of our friends whose mutual funds were hit in 2000 and never recovered. I will NEVER go to a nursing home regardless of what that may require!

The inflation/deflation puzzle and noise is a worry.

Bill, you are doing a fine thing here. Thanks again.

bsi,

to me, yesterday confirms Thu-Fri... :)

Vad,

Thursday/Friday looked like opts expiration, short covering, and Fed goosing all rolled into one. Yesterday was unwinding. JMO.

See what happens today.

fnm fre are bidding up pre-market, and seem to want to rise. Of course, 2 members of the trilogy of morons are speaking today, usually a bearish indicator.

These Wall Streeters have effected a bloodless coupe, have taken over Washington and the nation, and are administering U.S. domestic policy. They are attempting to ruin the country for good by forcing US to pay for THEIR mistakes. They SAY that theyre doing this for everybody, don't believe it. This bailout is for the golden parachute crowd, and they'll stop at nothing to preserve their privilege over us.

Vadym:

Thu and Fri confirm what?

Regarding FNM an FRE

Since they're penny stocks now that volume this morning could just be someone setting a trap

Amen, sharkie.

I haven't been this upset with the U.S. Government since Kent State.

Grym

Sec 8 ... AMAZING...isn't it...

re:bailout/rescue (whatever they call it)

Was listening to NPR. Some guy said when Congress set up the RTC, there was a real push to get it done. Took 6 months. This situation is much more complicated without physical assets to sell off.

Norm,

re: Why are we here?

IMO we are in this mess due to a carefully orchestrated plan and actions of at least two decades.

Globalization, the end off the cold war, the internet, lobbyists, a media compliance, a self-centered congress — all worked together to transfer huge amounts of power and wealth into a new elite class.

This was passed off as — inevitable (globalization) beneficial (to the consumer) and the "new service economy"/information age where mere manufactured goods were beneath our intelligence level.

In my own experience it led to the evaporation of my graphic design and illustration business as my clients ignored selling based on presenting the pluses of their goods and services and (low) price became the only relevant factor.

It has trickled down to my barber and dentist, whose customers go much longer between visits. My younger son is earning less than half what he did 15 years ago. My older son whose job is threatened with export to India. (His company is hiring Ph.Ds at BA prices now.) McCain's offer to retrain (to what?) has a hollow ring and the cost of a college is choking our younger friends' budgets.

This plan is nothing other than a cover-up of history's biggest fraud. a guy who sells a TIMEX in a Rolex case goes to jail. The same should fit a AAA rated investment label slapped on a JINJA loan.

I have a difficult time believing we can't simply let these idiots who bought a grab bag of doggy-do, sell off what assets are good to pay for their folly. If they go belly up, let them take it out on the managers.

The same goes for the foreigners who bought this crap. Hey, China, this is what the 'free market" is all about.

Remember all the hand wringing over the Y2(K) crisis? Here we go again.