Good morning from Cape Town

Whew – what a wild week! World stock markets and commodities tumbled, whereas government bonds and the US dollar surged amid mounting fears that the ongoing turmoil in financial markets was foreshadowing a hard landing for the US and Europe.

Now that the bailout deed has been done, attention is shifting to whether the plan will work and break the logjam in the credit markets. What do you think?

Read the views of a variety of commentators in my weekly “Words from the Wise” review: http://tinyurl.com/3lsla6

Be careful out there and remember the old adage telling us to hope for the best while preparing for the worst.

Kosmo is telling everyone to sell...now. Now? Where was he six months ago?

Canadians

Are RRSP's scrambling for gold?
Is that why CEF.A is bid up over $1 pre-market?

Reminiscent of what happens when there's only one chair left in musical chairs

Good morning from Pennsylvania, home of the National League Eastern Division Champion Philadelphia Phillies.

Here are your Cara 100 Ratings Changes in play this morning:

ADBE - Downgraded to Market Perform @ Friedman Billings

KO - Downgraded to Hold @ Deutsche Securities

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

Have a great day.

I am considering POT and then writing a Jan call. any thoughts.

ugly, schifosa...let's see how traders play it today...

Timing, it is said, is everything in life.
In our game it's even that much more crucial.

as always, im curious how the gold miners will hold up w/ bullion rising but the overall markets lower.

miners/gold ratio set to make new lows or are people going to begin to recognize the value in the beaten up mining shares over the metal?

good luck to everyone, things seem to be changing on a dime

Will sell the one that are green like PFE/GG/SLW and
Also TBT which is closed to even and use this money to buy more
QLD/SSO/UYG/CAF
There will be more return in to this ETF than TBT.

I can't shake the feeling that stocks have been in an enormous bubble similar to the real estate one, and given liquidity/credit issues, Johnny 401-K's diminished place in the global scheme, etc, that those excesses have yet to be fully wrung out of the system, but it's just a feeling, nothing more.

Scotia Capital Edge Report/Oct 06/08
Maintain Sector Outperform

Yukon Silver Rush Michael Parkin, MBA, P.Eng. -
Event
■ Silver Wheaton announced a silver stream deal with Alexco Resource Corp. (Alexco) on
their Keno Hill Project.
What It Means
■ Silver Wheaton has purchased 25% of the LOM silver production from Alexco's Keno Hill
Project, located in the Yukon Territory. Keno Hill has very high grades, which rank it
among the top 3% in the world.
■ The deal calls for an upfront cash payment of US$15 million for underground development
and the remaining US$35 million to be used for mill construction. All funds will be drawn
from the existing line of credit. In addition, Silver Wheaton will pay the lesser of $3.90 per
ounce delivered or the spot silver price.
■ The project should add approximately 800,000 ounces a year to Silver Wheaton's silver sales
and, in our view, there is significant upside potential to both extend the mine life and
increase production.
■ We maintain our 1-SO rating and our one-year target price of $20.00 per share. At this early
stage of the Keno Hill project we show it as neutral to NAV. Silver Wheaton is extremely
attractive in our view for such low-risk production, trading at only 0.80x NAV

Long 25% of position

vinod- OK...can't do a thing myself, it's like being on the ropes with the other guy jabbing at will...(and it's hard to see them making Rocky XV with Stallone in a wheelchair rallying his fellow residents down the ramp)...

By the way this dude I know through a friend of a friend who was "fund manager of the year" several years ago (by loading the boat with risky housing and mortgate stuff during the end of the runup) is now trailing the indexes by about 20 percent, So it's starting to seem to me that he is reverting to the mean in more than one sense of the expression.

So many of the "professionals" never knew squat about managing money, and times like this are the proof.

POT - showing off ~7.50 in pre-market

2nd
nothing wrong with GG/PFE/SLW/TBT. but going with one that will give me more return.
still has 35% cash and will use them all if we go under 9500

woof, 8% hit in a week for my account. still positive for the year by several percent. but ouch!

from a little weekend research (regrettably left the work at home) over the last 50 years, the worst for the S&P is about -28% from the 200dma. as of friday we were somewhere around -17%, and it only got pounded that much on a few occasions. when that did happen, the mid to high -20% area soon followed, always within a couple days. i think only once in that time period did it get this far below the 200dma and that percentage begin to recover.

today seems to be following through on that statistic: the recent pounding below the 200dma getting worse, probably going to be in the low -20% area.

the S&P value ultimately did recover from the lower prices at these "% of 200dma" extremes, it just took a few months. several months in the cases of 1964 & 2001, if i remember correctly from my excel sheet. very quickly in the cases of 2002 and 1987.

anyway - it's a quick, fun exercise in excel if anybody wishes to play around.

also, i *think* the put call ratio was over 1.3 for two days in a row, which was also a signal that occured at major turning points over the last 16 months or so. again, fun to play with in excel, and plot out occurrences vs. the indices.

need some fun in this market...

holding QLD and underwater. waiting for SPX -25 to -28% of the 200dma before i go all in with some SSO. i should probably repeat the above exercises for the nasdaq... no time!

best of luck everybody.

Woof indeed.

vinod- well, then i picture you more like hugh jackman taking hits while finishing his cigarette, before unveiling his claws...

Alright, I'm preparing to time this thing today. So far GS is down 6% for the day on the open. and SLW is bouncing between 7.07-7.2.

Should be fun.

Going to be crazy to see a 9 handle on the Dow.

2nd
look at SMN/DUG I sold them under 30 month ago?

GOOG down 19% straight out of the gate. A Cara 36, btw. When to buy?

Pay attention to the Great White Shark, it'll save you fromk getting a RIMM job or from buying any rotten AAPLes.

anyone know why the HGU (beta pro gold miners x2) is frozen at this time? the other beta pro's are moving????

vinod- i see that...try looking at QLD/USD/SSO when the fog clears...

shark- we're going to remember that in boston...;)

you'll be invited, btw...

You'll have to hand it to Bill if he's right and we're near a low. I think he's the only bull out there!

BRKB down $220/share.

Have something to do with GE being down another $1?

Will be looking at marine stocks like BC since this market is way underwater.

If BC was a good deal at $14 it must be a great one at $9?

Shark_attack,

Thank you for the "get out now" talk from last week. Saved me thousands in SU and CCJ--I'm 100% cash and waiting for the knives to bounce off of the floor, not trying to catch them in the fall.

MOO!! (not the symbol, the bull sound!!)

I'm following Bill! fingers in ready position

Hi!

Gold put in a higher low, and appears to be headed to a higher high.

Bullish on all timeframes.

Time to let the proffit run, imo.

Please DYODD

Enjoy your day.

Cheers!

Cara 100 Update:

GRMN - Downgraded to Underperform @ RBC

Re: ¥

Japanese Yen running hard against all currencies, except the Yuan and the Dollar.

ok im pissed, just got off the phone /w my bank and they have no idea why the HGU is currently not trading.

this is $#*#$*#*#

VIX at 49.30 and the DOW is 80-some points from the 9,000s.

i'm showing HGU.to trading on the Fidelity platform, currently up 7.63%...

yup just started now. thx 2nd,

though im disappointed its at $11.50 while gold is at $870

i supposed the broad market is still pulling down the shares

2nd, I see you and I are playing rope a dope....
Just tighten the ol' abs....

9800 is the projection that technicians are watching from the recent H&S pattern in the DJIA.

For the S&P 500, the projection was 1087 from its recent H&S pattern. The S&P is currently at 1069, so that level has been broken.

As I stated back on September 29, I felt that the September 18 lows in the major indexes would be broken to the downside. My views have not changed.

The need to raise cash and get liquid is urgent for many companies and individuals as credit continues to dry up. I think the U.S. market will continue lower until valuation levels are more compelling, which will in turn bring cash from the sidelines back into equities.

As the market flushes down the toilet, keep your eyes open for stocks FAILING TO MAKE NEW LOW's ... that'll be a great tip-off of strength in the next bull, I think.

what when it breaks 10000
expect it to bounce up hard?

We're going to have one heck of a party in Boston...Better yet let's wait 'till next summer and meet up at Vinod's place in Wellfleet:) Bring your suntan lotion!

I love hearing about people saving money by the way.

craig- i prefer the 12oz curls, but it's too early in the day for that...

Boy.
So difficult to see this market making lows every day. Will the market ever recover with so many contries having similar issues?

Especially, when the confidence of investors is shaken to the core.

I am finding it difficult to see how the markets will even enter a bull phase so early. But then I am a lesser mortal than Bill. And I do not have experience that qualifies me to make that kind of statement.

I hope for all of us that Billis right.

Currently 100 % cash.

shark_attack
It is a deal
and I will pay all expense except airfair

goodbye 10000, nice to know ya...

just broke 10000

vinod- you don't know our drinking habits yet..

No you wont! 2nd is paying for the booze and the lobsters and clams and you can show me where to do the clambake!

RIMM is screaming buy me...

Sandy

100% cash is a good place to be at this point.

There will be more downside, more than many think possible or reasonable, IMO. But that's how markets work in periods of crisis.

There really is no need to try and guess the bottom as there will be time to watch the market hit bottom, settle down (from a volatility standpoint), bounce around for a bit, and then pick through the best, most financially sound equities.

Buying into a plunging market can sometimes work and make you money, but it just as often results in losses as the market falls further than expected.

Just one person's opinion, as always.

Get ready to pounce on GS... 12% down but still free fallin'

I think I'm at hurl point with my PUT shorts! SU, RIMM, and QLD specifically!

[Bill Cara note:

If you were hedged in gold, you wouldn't be so upset. The DJIA is down -3.6% but Gold futures up +5.0%. Besides the lower prices go, they become even more attractive.]

Wavesmash....Dont listen!

I shouldn't say that. This may be an awesome buy oppty, but I won't be following you in ok?

There's nothing about today that has me feeling that anything good will be happening anytime soon. Vad what do you think my man? 2nd? How do you read this thing?

My thoughts are one needs to see RSI 7 day <10 and the MACD hourly diverging. That'd be capitulation. AND max pain for Nov at least 20% higher than current prices.

For instance CNW capitulated last week (long at 33.85). YRCW appears to be doing the same. No position in YRCW

JMO, do your own DD.

puke point approaching,
miners down hard w/ the market,
i dont see how a bounce happens here w/ everything being sold indiscriminantly.

but lets see where the days takes us. im trusting in Bill's call here.

see the way the gold stocks are falling? Theyre always stocks first and gold third, which is the problem with using them for a gold play in the face of calamity.

agreed shark,

i never believed they would act this poorly in the face of strong gold prices.

though wouldnt it stand to reason they will perform very strongly if the market overall begins to rebound?

GS just bounced off $115 after falling over 12%. Wonder if this is the moment Bill was referring to.

shark- i'm trying to put myself in a buy-and-hold frame of mind to gauge capitulation...if you're down 30-40% in your retirement accounts and you wake up to this, that might do it...i still think it goes up (but then, i'm also still in positive territory right now)...

Lucky. I was also watching GS and it did seem to turn sharply. Of course this note is extremely temporary given today's volatility.

Nokia NOK P&F.

http://tinyurl.com/47up5z

OOOOOAO!

Sitting on my hands watching PetroCanada hit a reef.

Another 700-800 down day on TSX?

Though it hasn't been mentioned the airlines are quite unrelated to oil prices now

GE back above infomercial pricing.

So far, DELL at 14.8 and failing to make a new low (which would be 14.5 or lower).

Say hello to Black Monday.

"Goldman Sachs (GS) Top Executives Agree Not Sell More Than 10% Of Their Shares For Three Years" (http://tinyurl.com/4nzf5o).

Well, it looks like they decided to go all the way today...

10 day ATR for DJIA is 384. Just an average day today so far albeit unpleasant.

SLW in lows 6s now. I don't know if i have the cajones to pull the trigger. It is harder than I thought.

Curiously, GS bounced @ $115, which is exactly the price that Buffet agreed with GS on the warrant to purchase 43,478,260 shares of common stock for an aggregate purchase price of $5.0 billion in cash...

There is some absolutely bizarre action going on in currency markets:

Aussie Dollar -8%
Brazilian real -6%+
Mexican Peso -5%
South African rand -5%

Japanese Yen +4%

Yep, nothing like having FREE markets. Bill sure can call them.

tsx dowm 950 points...... WOW

SV

What I don't like about Goldman is a big daily downgap (although the size pf the gap shouldn't matter) it's a bearish continuation pattern in this case and augers for down, but you didn't need me to tell you that right?

And yamana's 6 bucks. Does it go to 2?

Really hard to buy when the sky is falling
but some really good deals out there

sv

Like a spring. if you press too hard it will bounce back too hard

Somebody please stop the freefall in SU!

I've only got my 401k to play with and I've been buying on the dips. But this drop doesn't want to appear to stop.

97 handle...

Dow down nearly 500. NASD about 125.
Its been very long since I saw these numbers.

Wow!! down is down 585.NASD 135

If this helps I capitulated like a little baby! Probably time to buy. Because I am Billy six Pack.

Guys, it's called TOTAL SYSTEMATIC BANKING FAILURE WORLDWIDE (sorry didn't mean to shout)

I was telling everyone I knew that last weeks "news" (the bailout) wasn't the news at all. The news was total systematic banking failure.

now we're getting closer to panic.

SU/PCA/ECA etc.

Is business model on oil sands still valid with Oil under $80/barrel?

According to PCA it takes >$50/barrel to break even. That was with 2007 input costs, interest rates, and credit environment.

Gold
I am seeing a possible bearish divergence in RSI7 in the 60 minute chart in today's price action

And the only reason Goldman isn't at 80 right now is the guys on their prop desk are buying the bejabbers our of GS.

but...no capitulation shown on the major averages.

GS bouncing off Buffett's $115 again. Hmm...

Shares sell:buy 230:1

This is not black monday

This is bloody monday

sv

I'd suggest placing stink bids for the stuff you like, the broker systems may freeze if we have a true crash and you miss nice entry point. Good luck to everyone.

CDNX approaching 11.60. it's getting close to capitulation.

anyone see a green close?

Well, its black monday on the TSX, that's for sure.

Yep the wild west is alive and well as the TSX plunges 1000+ points. NO circuit breaker unless the DOW drops 1100 points, nice.

Do you think Boeing employees on strike might settle after today's action?

Looking hard @ DIG. IMHO, this one's an easy triple in 1-3 years.

23% of DIG's holdings in Cara 100 XOM

I bought SQM, FSLR, UPL, and CLF for my retirement account this morning. I lost my connection to Schwab, and haven't been able to get reconnected, but the trades were already completed. I am off work this week and my trading is not for immediate income, so I am just watching the carnage with some amusement, even though my IRA has taken a huge whack this am. This is what panic looks like, which is the time to buy, not sell. If I were trading for immediate profits, I would hate this market, but for the long term I love the action here. Capitulation is what we need to generate some real upside.

Aussie dollar -11% ?!?!?

Worst birthday ever! Anyone else born on sv's "bloody Monday"?

ABC just interrupted regular programming with a special alert on the stock market. Calling it capitulation and frightening.

Covering 2/3 of the RTH/XLY shorts. Starting daily knife catching practice. Wish me luck.

Oh My God

Looks like Walmart bought the Toronto Exchange and put on one of those "smiley faces' sales.

Added to SLW.to

Anybody buying HBU>to (no position...yet)

BH- would definitely be selling puts on SU...

Tim Knight just turned bullish. Also says China capitulation complete.

http://slopeofhope.com/

2nd, Europe is off 7-9 mpercent across the board. If we close green I will pay for the clams!

Tsx down 1160 points

Canada getting whacked

sv

[Bill Cara note:

I was interviewed on Saturday by Derek Morris for iStockAnalyst. You can catch it here:
http://www.istockanalyst.com/radio/podcast100608.html ]

Is it just me, or are there no PUTS options available below $25 for SU? Is this a result of it having simply dropped so far so fast?

MOS - starting to slowly peel off NOV 30 puts. The VIX is backing off slightly

DE capitulation. RSI 7 <10, Max pain Nov 50.

One cancels other order buy limit 35.52 or buy stop limit 36.40 stop/36.50 limit.

long YRCW at 7.16

Holding on to my bleeding miners. Hoping for a global coordinated rate cut here...
Just blew the top off the 10 yr $VXO chart...

Russell 2000 rsi 7 day at 21.

TSX only down 1.12% according to their web site.

http://www.tsx.com/

Guess this is like $1.00/litre gas... just couldn't happen.

Bill

love reading your comments

you must be next to your computer
targeting your next company to buy these are interesting times....

sv

Congrats to any of you buyers of CCJ @ 16.xx and SU buyers at 26.xx

I lucked out.

My broker decided to move to another firm (I started with his father in 1969.) and I am following, so my accounts are all in limbo with 85% cash, 10% 3 month Ts and the rest in bullion.

Good time for my to sit back and read Bill's book in prep for picking up the goodies. I am still basically an investor at my core, but plan to set aside a percent for trading when I get at least some kind of foundation of understanding the faster moves.

I'm still just guessing based on observing for decades, but when the "good" stuff keeps getting sold (gold stocks) isn't it likely someone (hedge funds?) just needs all the cash they can grab to cover the pile of crap?

An aside: Funny thing about perceptions. In 1987 I got stopped out on everything and jumped back in less than a week. (Should have waited a couple...) I was working and my business was good, so I was pretty much unconcerned.

That was far worse (%) than lately, but now I'm retired as are most of my friends and much more bothered. I that in addition to no other income the speed and amount of news is making this into more of a "crisis" than it needs to be.

The TOG — tailor made for the HB&B Bill talks about.

If you want reasonably up to date index quotes for the tsx, goto http://www.ctv.ca/business or http://www.globeinvestor.com. You can go back to tsx.com as soon as it is back :-).

Obligatory conflict of interest declaration: I am just trying to be helpful here, but I have a conflict because I work for the Globe and Mail (which is a sister company of CTV). Therefore, feel free to delete this message if it violates rules or guidelines.

TSX web site fixed again. :)

Tailor made and the COMEX gold neatly roped off for the big money by white gloves.

"[Bill Cara note:

If you were hedged in gold, you wouldn't be so upset. The DJIA is down -3.6% but Gold futures up +5.0%. Besides the lower prices go, they become even more attractive.]"

I did buy some XGD in my RRSP account at the end of last week, but that's obviously not as good as GOLD. Still, I was not expecting such RADICAL drops in RIMM and SU!

PGH was at $10.38, pays over 2.60 div.
Good grief! Was forced to add...LOL!

Markets are now fighting the daily VWAP (on QQQQ and SPY).

Listening to Bill's interview on iStockAnalyst. This is the first time I've heard Bill's voice. Somewhat strange to hear his voice after 3 years of reading his thoughts!

Bought bce 33,10

buyout if it happens is $42.75

sv

Dividend players: October white sale!
CHSCP Not at the low but it doesn't move much. See really long chart.
PGH Canroy, killer deal. Hit 52 wk low today...down $3 or so from previous low.
CNSL Regional phone co, nice div, new 52 wk low.

For the Cramer Contrarians among us, he says it's time to get out of stocks:

http://www.msnbc.msn.com/id/27045699/

Hopefully for us longs, we have witnessed the "turn" Bill called for this morning.

Imagine this: a royal plunge below DJ 10K, quick snapback so the train leaves with as few people as possible... Green close, green close...

Somebody's program trades kicked in at 10:45am.

http://tinyurl.com/3tuhax

RIMM is almost back up to where it was screaming buy to me.

Here is a link to the roll call voting record of the H.R. 1424, Emergency Economic Stabilization Act of 2008.

http://tinyurl.com/bailoutyesvotes

I hope we will see the American people punish the "YEAS" in the upcoming elections.

I see Cramer like the Coyote.
Hit's the ground and his ACME parachute poofs up afterward over his smashed body.

Bought some Fortis Inc (FTS on TSX) today. This one is a buy and hold for me!

Newfoundland!

Re: Gold Lease Rates

Gold Lease Rates are climbing since the beginning of the month, meaning there must be a heck of a lot of bullion leases circulating the markets.

"2nd, Europe is off 7-9 mpercent across the board. If we close green I will pay for the clams!"
Posted by: shark_attack at October 6, 2008 10:59 AM

shark- since you took the liberty of volunteering my wallet earlier, just put it on my tab, man...

Anyone noticing how well XOM is holding?
Oils sold like mad....XOM down 1.22%, PGH *was* down 23%, similar to SU/ECA, etc.

29 years ago today the last decent Fed boss we had stepped up to the plate. A man with stones who took tough, arguably brutal, action to decisively do what had to be done.

Things sure are different now.

Nice Podcast Bill. Not only do you read like a considered gentleman, you sound like one. Good one Mate!

Stephen

FTS for me too!

Looking at ERF.un (16.74% yield !

Re: Cramer

One of the problem children of the post inflationary boom.

Tsx was down 1168 points

now Tsx down 628 points

WOW...Bill the turn has begun

sv

FWIW.......I have been keeping track of major indices as they approached the 0.618 Fib level from the highs made back in Oct ' 07

This mornings lows brought the indexes to the following retracement levels:

Cycle High Todays Low Retracement
NAZ 2861.51 1810.63 0.632753337
SP500 1,576.09 1,027.18 0.651726741
DJIA 14,279.96 9,738.30 0.681955692
R2K 852.06 579.65 0.680292468

We're more in need of gentle laxatives than shock therapy, Mike.

"The movements in the FX market are incredible. One friend just read me something which he has received from an fx trader which said that the only things that anyone desires to own are the US dollar,the Japanese Yen, gold, bottled water and bullets!!!"

From http://acrossthecurve.com/

The blog that provides one of the best views inside the bond markets, in my opinion. If you recall Noodle's great input here, this guy's blog is like that times ten.

Example - most recent post:

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

IG 11
October 6th, 2008 11:05 am
The corporate bond market is more illiquid than usual. There is virtually no trading. Everyone wants to buy protection but there are no sellers. One salesman noted that the only sellers of protection are less than credible counterparties.

The IG 11 was 180/183 last.

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

That doesn't sound too good.

Anyone get GG at the low? I missed it....
Heck and dang!

Ok, point taken. Don't put the shock therapy on the head.

Oilexco (OIL), the darling of many analysts, down 37%. No position.

SDA @$7.50. People still have to eat no matter what. You can't eat a Blackberry or an Ipod.

Bill: great interview!

Talisman Energy

TLM.to.Picked off starting position @11.83.Walmart 1/2 price sale.High risk!.....high return?).

F6: You are probably correct. It also seems we've added layer upon layer to our house of cards in those 29 years, and so a similar shock might be a bigger risk.

But what do you do when you are full up with the laxative and you aren't producing desired results?

What's the financial equivalent of a big fat burrito from Boca Grande in Cambridge, MA? One of those babies always got things flowing for me...

(TMI?)

IBKR...in the green for now.

TSX now up 6% from this morning's low. US Markets up a couple of percent.

Did someone say how much money is waiting on the sidelines....to be invested

sv

I fully expect that Metamucil is about to become very popular.

beano is working for gas prices.

gradually buying since last week in my 401k act. Sucor is $28 now. Unbelievable!

Very interesting article from the Guardian: Iceland's economy on the brink of collapse. A supermarket chain says it doesn't have the means to pay for food in foreign currency and this has caused a panic:

http://tinyurl.com/3ryk6x

"see the way the gold stocks are falling? Theyre always stocks first and gold third, which is the problem with using them for a gold play in the face of calamity. "

at the moment thats the right thought I guess, but it has not always been that way.

S&p fell from 1500-800 while the hui went from 35 to 157

That was an envious relative performance

Frankly I am really crushed by this action of gold stocks and I dont undersatnd it when some could be bought for large % less than the cash they have in the bank.

ALOHA!!

So, Hank and Ben and the entire US CONgress go on national TV and pledge that this $700bil bank bailout will "save" everyone, but yet the carnage in the markets continue on and banks still consider other banks more risky than US DEBT(US Treasuries)! HEY BANKS ... HERE'S A NEWS FLASH ... ITS ALL BAD DEBT! NOT EVEN THE USA WILL REPAY IT! Klues-R-Us has a blue light special going!

I am seeing my "C WORD" mentioned much more, even in the mainstream media(internet as I have no TV). What happens when the US Peso/bond lemmings realize that America and its MOUSE MONEY is no bastion of safety at all but instead the MOST exposed country to the death spiral of derivatives and DEBT than any other country in the World? What happens to banks when they have no more big banks to consume and they then are forced to stand on the merits of their MERGERS financials? I already see Bank America's CountryWide purchase being ridiculed as the "liability side" of that merger exerts itself. Then there is the US FED's own balance sheet where now they are being forced to lend to more and more companies and even States like California and lets not forget the US FED now has to cover higher FDIC coverage($100k to $250k). Announcing California is insolvent does not look good for CA bond holders and if we had a competent credit rating system in the USA then California may even get a downgrade. What about a downgrade on the US sovereign credit rating? HA!!

Whats the US FED do next? Lower rates looks highly tempting. What the heck, the rest of the World's central banks are doing it! Only look what country has very little room left to lower! Couldn't that be looked at as a measure of future viability in terms of exposure to toxic derivatives and debt fundamentals?

Its all boiling down to "liabilities exposure" and who has the least of them. If 90% of the toxic derivatives and sub-prime originated in the USA with US Banks, then what does that tell you? Sooner or later people and banks, especially central banks, will revisit their logic on the "barbarous relic", which is not looking so barbarous now! What good is interest and dividends when monetary debasement owns you? The integrity of FIAT is at the forefront and that is where the FIAT KINGS least prefer to be ... in the spotlight!

Here it is ... the US TAXPAYERS reps in the CONgress have given the greenlight to the FIAT KINGS to perform and they aren't, so where does that leave their credibility? Today the US CONgress looks like the biggest fools on the Planet! Its a title they richly deserve ... MORE FAILURE PLEASE-E-E!!!

GARBAGE IN ... GARBAGE OUT!

Anybody who knows anything about tweaking video signals knows that is the LAW! It most assuredly looks like that is the LAW for FIAT as well and all that FIAT embeds which is mainly ... CONFIDENCE! How safe is "FAITH AND CREDIT" anyway? How long will that be accepted as the REDEMPTIONS keep flowing!

REDEMPTIONS ...

I have been speaking to "monetary insurance" for years here and at other cyber pubs! One of my points was that we take out insurance for health and cars but not one Joe Average in America considers insurance for their money! That's why gold is not a commodity, but those in control of the futures markets want you to think otherwise. See commodities main claim to fame is that they get "consumed", but gold does not. Even if you have gold on your teeth you can still cash it in, so even when its "semi-consumed" its not consumed! Explain why gold is listed as a commodity then? The FIAT KINGS do all they can to make you believe gold is not money, but its not a commodity either! If gold is so worthless then why is still around and more to the point why is it still increasing in value and decreasing in supply?

I still see the "supply issue" as the SLV(silver) bullet for the global gold ETFs like GLD! As soon as you detect consistent rising gold prices but no corresponding rises in GLD inventories it is time to sell! When central banks start buying, GLD will be toast because GLD will be competing for the same limited supply only GLD has no printing press. That can happen like so many things in these FIAT markets ... ON A DIME!

With all this "panic" I find it odd that the fundamentals of why this panic is here have yet to be "cured". Is it really just "frozen credit"? If the banks suddenly started lending to each other again what does that mean? Is the debt gone? Is the HUGE government spending gone? Are entitlements and welfare fixed? Are people done eating and drinking? Is China going back to a rural economy? Is Russia de-arming? Is the US leaving Iraq? Is the US FED gone? Is unemployment back down to 3%? Is California solvent? Is Africa prosperous? Is Osama in jail? Is Pakistan de-nuked? Are Israel and Iran best pals? Will anything have changed other than banks are lending to each other? The systemic risk both domestic and geopolitical still lives on! So far its all about BAND AIDS!

Our global FIAT monetary system is broken ... What a shock all the global currencies are in a "race to debase"! So long as that is never addressed then "instability" will rule!

THE ENTIRE WORLD IS ONLY AS HONEST AS ITS MONEY ...

re gold stocks:

my feeling is that if the market can settle and begin a slow grind upwards, the gold stocks specifically will be poised to outperform, hopefully w/ the metal back up the rise.

the question being will people see the value in a gold stock down so far w/ gold up and poised to go higher or will they instinctively stick w/ the metal?

I think they lean to the metal due to difficulty with financing for operations and the metal being the pure hedge. Some I'm sure are positioned, but others will be looking for credit to mine money. Disclosure: long GG/GFI/GSS.

WB halted......... on pending news announcement

Oilexco is the cost of a Big Mac combo. $5.00

Thoughts?

Anyone know if they have a financing situation that is serious?

90% cash (jumped in 10%, 2 days to earlier it looks)

I guess today will be a good one as any to put some stocks in my portfolio.

Pres Bush is speaking in a few minutes....

kaimu - no government is going to allow its citizenry to replace fiat currency or even barter with gold unless that government also controls the gold. But the governments do not want to use a currency that has a physical supply limitation because that will make it impossible to deficit spend and that is no fun at all.

In 1933, Franklin Roosevelt, outlawed the hoarding of gold by presidential order - no vote was taken by the Congress. I doubt they were even informed the order was coming.

So, why do so many people seem to think that gold is some kind of savior because when you really need it it will be illegal to do so?

Just another relatively orderly sell-off on moderate volume. If this is the bottom it is giving lots of chances to get in here. Not likely in my opinion.

Re: Gold Spot

Its really academic whether gold will advance in the coming weeks, since investor demand has caused a run on bullion and coins with the street price trading far above the spot price.

I'm not sure if PG(Metamucil) is trading at bargain levels, but its for darn certain that the junior gold sector is down and out.

I wonder if Greg McCoach picked up his favourite bottle of distilleries when he went back to Denver after the Cambridge House Resource Investment Conference this weekend. I'm sure he'll have a hard time explaining delivery waits to anxious customers demanding immediate delivery.

In what Curry called a “dramatic statement,” Cramer emphatically urged any investor who has money they may need in the next five years tied to stocks to pull their dough out.

“I thought about this all weekend,” Cramer told Curry. “I do not want to say these things on TV.
“Whatever money you may need for the next five years, please take it out of the stock market right now, this week. I do not believe that you should risk those assets in the stock market right now.”

Is it just me or does the dow drop 100 pts everytime bush speaks.

Thanks for that piece of info QT. This could be another good contrarian indicator to back up what Bill has been telling us.

Hello out there:
Where do I buy bullion? i was going to wait for a show in Houston, but I don't want to wait. or should I?

Thanks Cramer, now that the market is off more than 4-5000 points.

Reminiscent of Maria's "list of stocks to short"

IMO, Cramer's been fomenting panic, on purpose, for a week or so now, ever since his call for everyone to get out because the market was going to go down another 1,000 points or more. I can't remember where the market was then, but probably at least 1000 points higher (have been out of touch, due to hurricane repairs). Anyway, figured he was talking his book, knew the overall playbook, and was helping out his friends who were overall short. Whatever else his comments may have been, they were, and are, certainly as irresponsible as shouting fire in a crowded theater. And, worse, he knows that.

I took a screen shot from Kitco.com when the currency rout vs. the Yen and the Dollar was at its deepest. This is a solid factual demonstration of why gold is a performer, that its price feeds back from other currency declines into reference currency, unlike other commodities:

http://www.flickr.com/photos/11747277@N07/2918149449/sizes/o/

reviewing my DE buy. It has capitulated IMO. However I thought the MACD hourly had diverged. I believe now it may make another price low below the LOD and provide a better entry for others.

Do ur own research.

HEADS UP FOLKS !

Bill has posted an ADDENDUM 12.35pm ET

Lehman's Fuld in the hot seat right now on CNBC house oversight committee. Almost half a billion in compensation since early 2000's.... amazing.

[Bill Cara note:

Fuld's counterpart at the bigger and stronger Goldman Sachs was, from the late 1990's until June 2006, Treasury Sec Paulson. He didn't make less than Fuld. Whether he reported it, or was able to hide it more effectively is a different matter. When somebody listed Paulson's compensation in 2004 and 2005 as just a couple million, I stated flat-out I would bet a dollar to a penny that was not true, and if it was accurately published, then the IRS/FBI should be paying him a visit right now. These guys are all the same, from Countrywide's Mozilo to Lehman's Fuld to Goldman's Paulson. They earned their nicknames Bully and Gorilla for good reason. I think the public now recognizes how HB&B is run, and by the type of person. I'm glad to have retired from all that in 2000.

btw, if you are watching the Fuld testimony, look at the lips of the three people sitting behind him. Those are faces of emotionally beaten people.]

I am watching this too music man... hard to believe some of his answers

This is a very slow descent back to the intraday lows... Looking rather scary because we just hit 1 PM.

The really nauseating thing is how the politicians (who obviously know very little about the financial system and derivatives market) keep asking Fuld for advice about how to improve the stability of financial institutions.

Kind of like asking the fox with blood and feathers in his mouth how to build a better henhouse!

Racing heartbeat and pulled the trigger on some SLW at 5.85 this morning. Looking really close at GFI now. XOM, KO and HBC as Bill has recommended are a little to rich for Wachovia based wallet (ouch, I hope I'm not in too much trouble in not bailing out my checking/savings from WB).

A great deal of gratitude to Bill and everyone else here (especially Kaimu for his over-the-top insights).. I'm long in all things and I know nothing about puts, calls, options and stink bids, but even so I've learned more in the last month since discovering this blog then in my entire life.
It's appreciated. We live in interesting times indeed.
bill (in washington, dc)

Re: Fuld's half bil in pay:

The MikeNYC Industry Overpayment Rule:

If the members of any given industry, besides rock stars, are getting (p)(l)aid like rock stars, a thorough investigation is mandatory.

Both the (p) and the (l) were true here in NYC for the past five years. That just ain't right.

Fatty Arbuckle,
"For the Cramer Contrarians among us, he says it's time to get out of stocks:"
Does Cramer get paid for this, or does he just get his jollies being on camera?

This noon Fuld is testifying before the House Oversight Committee (Hindsight Committee?)
His opening line was, "No one could have foreseen the effects of the mortgage policies on the credit markets...blah, blah..."
Hey, that's what they paid you big bucks for — and I don't for a minute you were clueless.
Like Sec. of State Rice right after 9/11, "No one could have expected an airplane to be used as a weapon."
Whoa! Read a bit of WW2 history or watch the History Channel. (Think Kamikaze.)

This noon Fuld is testifying before the House Oversight Committee (Hindsight Committee?)
His opening line was, "No one could have foreseen the effects of the mortgage policies on the credit markets...blah, blah..."
Hey, that's what they paid you big bucks for — and I don't for a minute you were clueless.
Like Sec. of State Rice right after 9/11, "No one could have expected an airplane to be used as a weapon."
Whoa! Read a bit of WW2 history or watch the History Channel. (Think Kamikaze.)

Re: Fuld
Where is Dexter when you need him

Well, its not mortages per se, its the sum total of oil derivatives speculation, unlimited credit, AND mortgages.

FranSix,

The Yen carry trade was the quiet backstop to the oil derivitives, unlimited credit, and mortgages you mention. .8% financing is a drug stronger than meth.

As the Yen strengthens and "Taps" is played for the Yen carry trade, I think more selling will continue, and the market will suffer withdrawals from the carry trade drug of easy, almost-free, money.

Music city man and Bill,

Fuld began his testimony before the House Hinsight Committee with, "No one could have foreseen the mortgages affecting the credit markets..."

Remember Sec. Rice saying, "No one could have expected a plane to be used as a weapon."

Hey, folks, that's what you got paid the big bucks to foresee and prevent (along with the committee). Check the history of fraud and look up Kamikaze.

Sorry for the repeat on Fuld — kept getting message the post didn't go.

re: Currency question
FranSix or SiO2 (or other Canadian investors),

The $US is looking quite strong right now. Is it prudent to buy American stocks right now if one is a Canadian investor? With the $700 billion + bailout, do you expect the $US/$CDN ratio to decrease after the immediate crisis is over?

The reason I am asking is that I was invested in some US-listed ETFs when the Canadian dollar was strengthening. What appeared to be decent gains were illusory.

Mikey,

Damn few are the rock stars who made
Fult-type money.

That was great hearing Bill's voice on the interview. For a little excitement I decided to update the BIOS on my computer. It worked. Intel makes good stuff. My paints almost dry, so back to work I go.

Good morning! I see that my latest gamble of buying stocks on Friday did not work out and I will get a margin call today. I decided to act early and sold my 400 shares of TBT (with an average cost basis of $63.5) at $56.50, which is the smallest percentage loss out of all my positions. Remembering the lesson of 2nd_ave to find positive aspects in any market moves, I am very happy about my recent TBT position, as it kept a good chunk of my money in a "safe" location away from the more volatile miners, etc. Also, using 2nd_ave's terminology, I decided to make a "lateral move" into SLW and bought $500 shares at $6.41, after seing that SLV was up but SLW was down 10%. If things turn around here, then I'll make more money on the 500 SLW shares (absolute investment of $3200) than on 400 TBT shares (absolute investment of $22500). I think this would be good "lateral move" to do at this point even if I didn't have to protect myself from a margin call.

Re: Currency Risk

I would say currency risk is easier to evaluate domestically. But you'll have to find a growth story.

I also want to add that I am proud to live during such unique times! I finally feel like I am one with the rest of the world, as opposed to being an outcast gambling on commodity stocks. Losing some money is the "least expensive" way to get such an experience -- being together with the other Holocaust victims was much more painful, to say the least. So all those who are despairing today should instead thank God that all the problems now are on some abstract monetary level as opposed to the real physical level as was during WWII.

CDNUSD=X
Sell into strength. Buy into weakness.

im speechless at whats happening to the gold miners right now. new lows for the day.

are they really just stocks as far as the market is concerned when selling happens?

do we need a new bull before they can rise, or is there a decoupling puke point when they just go too low relative to the underlying asset?

Buying a few things:

RBY @ $1.18
NVDA @ $7.65
DE @ $35.22

On Bill Cara's take: SLW @ $6.27
(plus calls MAR 12.50@ $.60)

At this point, I don't really know where market is heading. There is selloff, but volume is not covincing. In fact, in the last week the volume was not convincing that the market paniced in any day. But these volumes added up quite a bit.

I am not experienced enough to tell if the market still need a 10% (or more) down day with huge volume that will mark the turning point. What is everyone's take on this?

Should be CADUSD=X.

Same thing happened with holding GLD and then converting back to CAD. The 20% gain was actually flat in CAD terms.

Unless you have some good models for currency arbitrage it would be easier and less risky just to focus on Canadian stocks. (If I'd have listened to this advice I would not be holding GE like a 1 ton anchor)

There's lots to pick from now that markets outside of US are being avoided like the plague.

Why not some PCA.TO? OIL.TO? XIU.TO?

TSX Advancing - 98, Declining - 1458

Almost 40% made new lows today. Is the bottom in when they all make new lows?

I'm not expert, but I don't recall a slow bleed such as this one in my life. My feeling is that this has hurt alot more than the 1 to 3 day blowoffs. Its like a 1 day crash in slow motion.

Babybear,

I'm no technician but this doesn't feel like capitulation to me, either.

Regards

Re: the low volume. This move down is in some way similar to the low volume climb we had in the spring, with a continued move up occurring there without big money ever seemingly participating.

I wonder if anyone agrees with the view that we're seeing a retail investor based capitulation and big money is biding its time.

Old timers I play golf with tell me that they sat through bear markets (such as '74) where it was like watching paint dry. Every day a little more value would dribble away.

It seems to me that Wall Street "pro's" who manage money need to wake up to the fact that this is not a buying opportunity, before it will become one. Today feels like the BEGINNING of that process.

Dave Hyde - My thoughts exactly. Big guys sold at the bigging to day and have been watching the action since.

Re: $CDN currency risk

I've been concerned too with the potential for a strengthening loonie eating into my $USD equity holdings. A few ideas.

There's a double inverse USD ETF listed on Toronto--HDD.TO, but the volumes are anemic. I believe there's also a double inverse ETF on the NYSE, UDN. Without looking at the details, if this is a double inverse fund, then presumably the percentage change over time would be greater than the counter-effect of the Cdn/US exchange rate. UDN has good volumes.

Alternatively, I think if you have some of the oils/metals purchased in $CDN on the TSX, then these should jump nicely on a currency rate reversal.

In the meantime, I'm thankful for the rapid 7% move lower in the loonie over the last week or so, which has cushioned the blow of some of my $USD holdings.

Still 70% cash, but way too early on partial positions so far.

both retail and institutions, especially hedge funds, have gotten destroyed but there is a mammoth supply of fresh, just printed dollars on the sidelines.

Looking forward to bsi87's last hour indicator.

Get ready for a nasty sloppy close.

(hey guys...it's a buying opportunity....NOT!)

Forgot to mention that there's also a S&P 500 ETF hedged to Canadian dollars that trades on Toronto--XSP.TO--and it's fairly liquid.

I have come to the conclusion that I have been trading far too actively on the long side, sometimes make 15 different trades in a day and sometimes re-buying the same stock higher, as opposed to adding.

I am planning to think of myself as an observer of the market willing to make an occasional trade when it seems really good risk/reward wise.

It's too easy to get blown out of this game in times like these.

Looks like the "old" one day drop record of 777 may be coming down.

added gg/sso/usd/qld/intc

There's no rule that says capitulation is required. Everyone would like to see it, but it may not come all in one day.

It's also telling (but not surprising) that "everyone" was looking long when clearly that's not the correct direction (yet).

Art Cashin- UBS floor trader just said on CNBC look for close on low, big down open tomorrow and maybe capitulation and reversal on high volume. He has been right a lot of times lately.

Taking bets on the final close. I say down 900 Dow. What says you?

We're certainly due for a mammoth reflex rally given all the oversold indicators flashing.

But the question remains, is the full decline over ? Will that reflex rally be the start of a larger move up ?

The govt's actions to this point (as has been previously mentioned) have been essentially "bandaids". There is more pain ahead for the markets after the rally that is virtually inevitable in the next few days.

I would change my view if I see meaningful, substantive action taken by govts on a global basis.

So can we taxpayers ask congress to reverse the $700B since after it was approved market still tanked? someone is basically stealing this money with no cause or reason. i wish i could do that

GG down 20%. This is another margin call.

Murder, she wrote...

Looks worse by the hour.

Added to Deere at $35+ and Valero Energy at $22+. Added a little AUY. Moved $10K out of Treasurys and into position for trading. Cocking the trigger but not pulling it just yet.

apollo7,

I see GG down 13.5%

Tuesday is often the day for turnarounds: "turnaround Tuesday". I too was thinking that there needs to be a big down open that is bought to signal a bottom. I've been hearing talk of the high 900's as support - I need to look at the charts again. The fact that 1080 wasn't support at all is not good as that was a line that went back to 2004.

Stocks are certainly on sale, but how long does the clearance last and how deep the markdown?

re GG:

i have to admit, as bad as the price action looks,
from a technical standpoint it seems like textbook bullish divergence on the RSI and the W%R.

its the 3rd down leg w/ lower lows, but at some point it needs to reverse to the upside to confirm this.

how long can these miners remain decoupled from a rising POG?

2nd
Hit my goal of around 9500
90% in stock now
kept 10% to play OEX option
hope for the best

Dr.

They're stocks first, toilet paper second, and gold third.

sold GG to capture the tax loss and rolling it into SLW and AUY....

Please find below the Top 20 Largest Consolidated Short Position Report Highlights. The report is produced twice monthly, effective the 15th and the end of each month. The report below covers the 2-week period ending September 30, 2008.

TSX Datalinx collects this information on behalf of Market Regulation Services Inc. Participating Organizations are required to file this information pursuant to Universal Market Integrity Rule 10.10.

http://tinyurl.com/4w3d32

I think I might buy some Nortel shares today, to sock in my reminder portfolio.

Those are pretty good questions, Moab.
I don't think anyone knows the answers, though.

vinod- congrats...unless it's a foul ball, you just batted a home run...

shark- still 90 minutes to go, and it could end green...

shark_a

are you partial to the metal itself,
or are you waiting until the miners start moving again as an anit-toilet paper move?

Fazeli, I saw it in ameritrade. It was down $4+, roughly 17%.

2nd - i hope you are entirely right but that sounds to me like a firm nod for being 90% long right now ?

Weather European Monthly Cumula
HLU08.CME
Up 33,250% today.

Wish I picked up 1 share.

I am fairly partial to the physical gold, yes, but probably not today and not at this price. I figure gold is threatened at this point by the overall contraction and looking at Bill's charts in his WIR I perceived that the strong possibility exists that gold may fall further, perhaps significantly so. I like gold when the market begins to improve and we can then not worry about deflation but instead concentrate our attention on the new inflation. The nice thing about gold is, it's gold, so even if you paid a few sheckels too much, you've still got gold.

2nd, if it close green I will send you vad's book now. If it closes better than down 400, you send me Vad's book now. Deal? (don't take this deal...or you will be buying a book asap).

VIX at almost 58

Here is your DOW 777 again!

gb58- you can't trust a firm nod from someone who's 100% long, my friend; but it's a firm nod...this sell-off 'feels' right in the sense that it feels like payback for the houses/cars/parties/toys we really couldn't afford...i've said all along i have no problem with unwinding the excesses of the last 10-20 years, just a little disappointed i misjudged the force of the whacking we would get...

I meant anything worse than negative 400 DOw, you send ME the book (still don't take this deal friend)

Was hoping these weren't going to come into play, but here are the 0.618 retrace levels for major indices:

0.618
NAZ 1768.41318
SP500 974.02362
DJIA 8825.01528
R2K 526.57308

Nasdaq is pretty darn close right now at 1779, looks like it will hit today. SP500 pretty close as well.

Nasdaq just went below the 61.8% Fibo retracement for those who follow that sort of thing. S&P 500 did so earlier today. The good news is that this kind of thing usually means a turn is imminent. The bad news is that you drop off a cliff if you don't get the turn

Does anyone know if there is such a thing as market circuit breakers anymore?

shark- to make it a fair deal, you would have to bet it closes 1000 points down...

We're all Austrians now.

2nd and vinod - i wish you all the best forgive me for saying so but my little round things are not quite that brassy...

i had a really great summer but those gains are quickly disappearing over the past 2 weeks...

no complaints, no worries. just wish i could believe in a real entry point here...

I don't see a thousand today. Maybe tomorrow though:)

I will buy a case of champagne and you me and Vin will pop some corks next summer, how's that, no bet. I actually don't really like betting, per say, prefer sure things:)

[Bill Cara note:

We could see -1000 on the DJIA because people are panicking. I look at things differently. At the top of the cycle, I could not force myself to buy. Now at the bottom, people are throwing stocks of great companies away. Today though will lead to those infamous news magazine covers, something like Time Magazine shouting: Confirmed Bear! Then later, people will sit around and laugh at how stupid Time Magazine editors were. But all they are doing is reflecting the mood and opinions of the public. Also, I look at the prices here when the DJIA is down almost -800, after already falling almost -4000 points from cycle high through yesterday. Most shares being bought today in really good quality companies are at a lower price than any shares purchased for the past three years. The losers today are the sellers.]

Is there still a cliff to drop off of for Nasdaq? I almost don't want to know the answer! peak was near 2800 right? We're at 1780, which is a 36% drop!

[We're all Austrians now.

Posted by: MikeNYC ]

You got that right, my man.

GSS: adding at $1.15
GG 22.90

Shall we have a contest for who's underwater the most in $usd?

This would be the first time I would be in the running.....

From your mouth to God's ear 2nd.

Bill

Just listened to your interview...good one

Maybe time to see you in action on TV... BNN,MSNBC OR CNBC !!!!

I believe your community would love to see you on tv...educating the masses

sv

[Bill Cara note:

I may set up my own podcasts in the next six months, but I'm afraid I'm too private a person to go on those network shows. Now if they want to come to The Bahamas like Regis and Kelly and Martha Stewart, I may change my mind. :-) ]

All,

I sold ten MAR $7.50 puts on SLW. Since I've never sold puts before this, can anyone school me on when they're likely to get put to me? (SLW is currently at $6.07)

Is there any sort of rule of thumb/percentage below strike/etc for when it might happen?

Thanks

There's been violent changes on the Euro area bond markets. They must be literally dumping mass quantities of short term bills on the market in a bid to keep interest rates solid:

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

To clarify, I sold them awhile ago, back when SLW was in the $9's :)

Here's the NYSE page on circuit breakers.

They don't kick in until -1100 DJIA points:

http://www.nyse.com/press/circuit_breakers.html

craig- i don't mean to trivialize anyone's pain, and right now, 95% of investors are in real pain...but honestly, turning the DJIA back a few years seems about right...what was unreal was running it up to 14000...

SLW looks like it's in a falling wedge, but if it breaks down it could go to 3. I'll wait.

everything I watch down except gold.
Everything except XLU has left an unfilled gap above.
Bulls will say it's an exhaustion gap.
Bears will say it's a midgap.

Canroys down 20%? (PWE, PGH)
that's factoring in they might go bust.
well, they might - they have big debt.

sold a few of the remaining Nov. puts in the AM, bought a little DMLP (which is hedged by the XLE puts).
not buying anything, not adding any more puts here - VIX rediculous, will just ride what I have down as far as it wants to go.
Now wait & watch.

no time to read the blog, electricity was out for 2 hrs. also.

everythinmg that keeps going down - respect that. it could just keep going down.

mojo- they could be put to you anytime...it's probably better to sell out-of-the-money puts (eg, 5 strike)...

S&P RSI(14) monthly < 30 (26.6). The only time that has happened in the last 15 years was shortly before the bottom in 2002.

as I said before, I don't think one can buy unless the RSI 7 day <10 and the max pain shows some sort of upside pull into Nov expiration.

mojo- OK, just read your clarification...almost typed clairvoyication...

Thanks 2nd

Mojo,

I was thinking about selling the MAR puts also, but today. They will be worth more to sell then excerise them. So, they won't be put to you until around March of next year. And that is only if the stock is below that $7.50 price still. I am looking at the 5/7.5 puts.

Bought more DE/SLW
Bought F

Jim Cramer is calling for Dow 8300.

Others are saying if we sell off tomorrow, around 11am EST, there will be a BIG rally.

I am long, and 25% cash (from 90% cash)

Good Luck everyone, Be Smart!

[Bill Cara note:

Ask yourself why Citi and Wells Fargo are fighting tooth and nail to buy Wachovia for mega-billions when the world is throwing stocks away?]

They don't call it BRIC for nothing.

http://tinyurl.com/3vpsao

Seems like large weighting in Oil stocks & Telecom is what is causing the fallout in BRIC economies? (in addition to flight to quality risk)

Russia down 21%.
http://finance.yahoo.com/q?s=rsx

FXI down 12%. (9% realtime)

Are we starting to see a bounce?

I'm no expert chartist, but the monthly $SPX (S&P500) looks like the break of a trendline going all the way back to when I entered basic training (1993).

-oebkb 3 @ 20.00

Please. Just STOP TALKING.

This article scares me. Geithner, by the way, is the unsung hero for moral hazards. When Fed heads, politicians and Wall Street dream up bailouts, he's the hands on man doing the implementations. All three need to have their mouths taped and their hands nailed to the chair.

Geithner is, BTW, viewed as a likely Fed chairman. Of course.

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

Paulson Talking to Bernanke, Working on TARP Program (Update1)
By Rebecca Christie and John Brinsley

Oct. 6 (Bloomberg) -- Treasury Secretary Henry Paulson consulted with Federal Reserve Chairman Ben S. Bernanke as stocks slid worldwide and met with his team to set up the $700 billion program to shore up the financial system.

Paulson also spoke with New York Fed President Timothy Geithner and reached out to Wall Street executives, Treasury spokeswoman Brookly McLaughlin said in response to a question.

http://www.bloomberg.com/apps/news?pid=20601087&sid=ahyFC8aVVvWo

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

I don't think we close below 777. If there's a PPT and they do anything, I have to believe a new record drop the day after a bailout plan passes is not what 'they' want.

European E-Bay price of silver per oz. is currently $21.00 US. Fictitious NY COMEX silver per oz. is $11.00. Real world vs. fantasyland!!!

http://tinyurl.com/3jwys6

mojo- keep an eye on the premium. Right now its $1.34. It would cost someone that much extra to put the stock to you. They could do it anytime, but why would they?

Very good Bill. I asked myself the same question. There is value out there or lawyers would be scarcer than offers. We have both.

I'm also noticing they are rotating amongst the big caps to run it down. GE, then BA, and so on.
It appears broad, but it isn't.
XOM still holding, I'm waiting....I want it to come to me again at $71 or so....

[Bill Cara note

Yes, agreed. Go to the Sat Report and see the table for Cara 100 winners. Traders should be shocked to see so many winners on a day that the DJIA dropped -400 points in the closing 3 hours on Friday. What's going on today is that the sheep are being fleeced; the people are being played. I just listened to an economist say that this recession could be very, very deep, and yet the same guy a month or two ago refused to acknowledge a recession. Ask yourself who pays these people and you'll see that they are puppets on a string.]

I feel like I'm watching two Titans battling it out over which direction DOW goes from here to the close. We dropped from -790 to -500 in 20 min, and then -500 to -600 in 3 min, and now -600 to -550 in 30 seconds.

DBA looks interesting. Capitulation.

Ok, sacrificed some GE @ $20.90.

Now that I have sold at the bottom, it will surely go up?

If we see Warren's $18 price tomorrow I will be ticked.

[Bill Cara note:

Were you watching the XLF. It bottomed at 2:30pm ET at 17.23 and has been rebounding, hitting just over 17.70. If it pulls back at the close, then more selling to come, but if it powers through the close in 30 minutes, I expect a rally tomorrow.... Now 17.96. Watch this move.]

Did UUP just top out or take a short breather?

long DBA. 25.70.

Just came back from doing some shopping and I see that the crisis has intensified. Well, as 2nd_ave said, in every crisis there is an opportunity. Right now I think the opportunity is to buy call options for those who believe that the market will be higher one month from now. So I sold 100 shares of GS now for $120.86 (taking a $700 loss that wipes out the $700 gain I had when I bought GS last Monday at $120 and sold it on Tuesday at $127). With the money that was freed up, I placed a buy limit order on October RSX call options with a strike price of 20 -- unimaginable out of the money strike price! Also bought 2000 shares of WGW at $1.28 -- with gold being up, WGW will rocket as soon as the panic ends.

b0ss,

Correct me if I'm mistaken, but as I understand it, the purchaser of the puts that I sold have the option to put the shares to me at or below the strike price of $7.50 ANYTIME between when I sold it and expiry in MAR '09. Is this not correct?

hulgar,

I sold the puts for for $0.90

What if his shares have a cost basis of $5? In the scenario of a current street price of $6, my counter-party is dumping them on me for $7.50, a gain of $2.50 for him and an immediate loss of $0.40 for me (factoring in premium I received), yes?

Am I misunderstanding the way puts work?

note CNW. It capitulated last week.

I wouldn't buy it now but it followed the RSI 7 day capitulation model.

[Bill Cara note:

Industrials are now doing better than Consumer Staples! A tell?]

What I wouldn't give to see a bunch of charts of all of these currencies vs. the Yen rather than vs. the Dollar which is more than just a scribble.

[Bill Cara note:

Were you watching the XLF. It bottomed at 2:30pm ET at 17.23 and has been rebounding, hitting just over 17.70. If it pulls back at the close, then more selling to come, but if it powers through the close in 30 minutes, I expect a rally tomorrow.... Now 17.96. Watch this move.]

Think they hit RSI 80 too fast.

Fed says it will take at least 4 weeks to setup a new PPT team. Have to hire some fund managers to get the hedge fund up and going.

There has to be some sort of rally tomorrow with the crazy downdraft today... but is it a low-volume dead cat bounce or something with confidence?

Don't see us getting a TSX 1000+ rally tomorrow. Maybe TSX 600?

Casino only has to scrape a little bit at a time.

Bought 500 shares of ESLR at $4.40. I am considering it a part of the "lateral move" from my large TBT and GS positions into cheaper and more volatile stocks that should rebound strongly once the market turns up.

Posted by: shark_attack at October 6

I think I answered that pretty well,(and I'll post it again if you missed it but I don't think you did) if you have a counter argument to the contrary of what I said to you, I would appreciate hearing it. (last sentence deleted)

GE choking below my $20.90 sell.

LOL! Bill, I've been watching XOM since you noted the buy signal a while back. I've made some $ trading it on swings but I gave that back today on my long positions. Such is life.
If I'm patient it will come to me, if not, there are other trades in the oils, although it looks like today's oil trades are done.

[Bill Cara note:

There are margin calls going on here. Your stops should have taken you out. You have to be watching XLF price and volume before going back in. At 2:30pm ET, XLF started to bolt and is higher now than when the DJIA was over 10000 at 10:15am ET. The DJIA has been in a rally since 2:30. I don't know why traders would sell here unless they have to meet margin calls.]

ran a quick screen on the top 10 in XLI.

CAT, GD, UTX are closer to capitulation than the others BUT they're still above RSI 7 day 10 level.

POT potentially.

Long DE,UTX

Volume on XLF exploded in the last hour as it went up.

Sell into strength... which would mean buy into industrials in this case.

http://tinyurl.com/4pm9p4

$77 to $95 in less than a week? Something's gotta give.

If HB&B wanted to do a shakeout after passing the bailout bill, then today was a pretty big shakeout, I should say. :) So we should be all clear now for starting a medium-term rally tomorrow. On the other hand, HB&B might be just trying to save its own chops and is selling today to avoid the larger losses in the next days/weeks as the credit crisis intensifies...

[Bill Cara note:

What we need to hear is for the Bank of England, Japan, ECB etc, and the governments there stepping up to the plate like the US. The problems are just as bad there. HB&B will actually fare relatively well in the market today. The DJIA could close above 10000. That's quite a move from 9525 in just 90 minutes!]

CNW bullish engulfing pattern. wow.

long.

looks like the big boys are buying into the close.

DJIA down 300 in first 30 minutes.

David- you went grocery shopping in the middle of this sell-off? you could apply for a job at Casey's retreat...;)

up 200 in last hour so far

[Bill Cara note:

Buy on close. The DJIA is now above 10000. That's almost +500 points in 90 minutes.]

DE position goes green. whew.

TBAR,

What the "HECK" are you talking about? I didn't ask you a question.

And If I provide a disservice, then what the "HECK" are you providin?

MOJO re SLW puts..

I always forget about cost base, you have to think of it like you got what you got. Is it going up or down, if you think there is more downside and wanted to liquidate your position would you use those puts to get $7.50, or would you sell the stock at $6.40 right now and also sell the puts to someone else for $2.45 right now. Position liquidated for 6.40 + 2.45 = 8.85 much better than the $7.50 just exercising the puts.

Thus at this moment they will not be put to you, but things can change quickly.

Quasi

mojo- You got 0.90 for the right to sell SLW at 7.50. Your basis is 6.60.

Hm... A reversal seems to have taken place. Cancelled my buy limit order on RSX call options (they have a huge spread now and a low liquidity) and instead bought 500 shares of RSX as a market order at $19.05. As the panic ends, the emerging markets should bounce stronger than the US markets. In the longer term, RSX is also a kind of a bet on the rising oil prices, and with oil at $90, I think it is time to start betting on it rising again.

[Bill Cara note:

Yes, why would US Road & Rail be very strong today if we were headed into Great Depression II?]

Bill I agree that stocks are getting cheap and I will be a buyer, tomorrow, if things are positive.

Meanwhile, try to figure out what that TBAR thing is and consider striking his nonsensical comment.

[Bill Cara note:

I deleted TBAR's last sentence, which I agree was offensive and not acceptable here. But, the rest is up to you. TBAR has passed the ball to you.]

10 day ATR for DJIA is now 422.

gotta be nimble

Dow above 10K

Rally tomorrow?

I thought I would get little sleep tonight after buying when the market was down 777.

Looks like a big day for me. I am glad I left work early today to buy some stock. Now, when do I need to sale to lock in the profits?

[Bill Cara note:

Right before the close, the DJIA hit 10030. The last minute sell-off of -75 points was just the market reloading the gun I think.]

Would have been a nice 1 day gain on $54 RIMM stink bid sharkie! :)

http://tinyurl.com/4uq6up

Wouldn't have the guts to hold it until tomorrow though.

bsi87 - thanks for the heads up last week on cnw

thanks to ALL for the help today - many heads are better than the one given me...

Quasi,

Thanks for the insight. The picture is always bigger than one would think.......

hulgar,

Indeed, my math was off. My stated basis was off. It'll be 6.60 if put to me.

"David- you went grocery shopping in the middle of this sell-off? you could apply for a job at Casey's retreat...;)"

2nd_ave, if you see my earlier posts today, I figured that I should be happy that it is just a market sell-off as opposed to a Holocaust. So there was no reason to be nervous and glued to a computer screen.

For you Candlestickers, lot's of "hammers" out there today

Thanks Bill for the confidence in pushing the buy button on such a difficult day. I received emails from friends to dump everything but did not do it. Instead, I took my PM stocks off the main board so I wouldn't feel so bad. Besides, when I bought them last month, Bill said to hold for 2- 3 years.

Today, I bought RY, ABB and QLD. Thinking about going to the bank to get more cash for tomorrow. Can't believe the bargains!

I am long for 5 - 10 years

Thanks for your regular updates today Bill - as always, you go above and beyond for your readers.

Hussman's Sunday commentary seems to concur with Bill's outlook of a market reaching buying range. Hussman has also been bearish for a while.

http://tinyurl.com/3oytp7

He has interesting thoughts on talk of depression, precious metals, and the dollar:

=====
Frankly, I thought the drama and fear-mongering about another Great Depression was ridiculous in the first place. The same financial news anchors and Wall Street analysts that constantly gurgled about the market's resilience and strong fundamentals at the top, and all the way down, suddenly shifted to warning about Depression, economic meltdown, and bread lines - bread lines! - when they saw a big bucket of money that would only become available if the public was scared out of its gourd.... This Depression talk is just outrageous - especially from people who didn't have the slightest sense that any of this was coming....

The total return prospects for utilities, foreign currencies, and precious metals have significantly improved... the Gold/XAU ratio shot to 7.44 by the end of last week - about double its historical norm. Another way to think about this is that the price of gold itself could drop by half and still leave most precious metals shares reasonably valued at current prices....

As a final note, the frantic attempt to acquire dollars during this panic has had an interesting impact on the U.S. dollar. In recent weeks, U.S. Libor (the interest rate paid on deposits of U.S. dollars at foreign banks) has soared above the Treasury bill rate, pushing the spread between T-bills and Eurodollars (the "TED spread") to unusually wide levels. My impression is that as that bid to acquire dollars at any price subsides, we're likely to see some very abrupt weakness in the value of the U.S. dollar. So part of the evidence of stabilization in the banking system will be an associated plunge in the U.S. dollar and fairly sudden strength in oil and commodity prices. That strength might only persist for a period of several weeks, until further evidence of ongoing recession develops. But over the short-term, greater financial stability will likely have the apparently strange side effect of dollar weakness.
====

I, too, had to step out for awhile today. Dental appointment.

I was a little worried he was going to go for the gold in my teeth.

Made a small purchase of FXI at the close for 30.04!

Hoping to see a relief rally in England, China (and the rest of the world) tomorrow based on the price action into the close in the US today.

Hey Bill...WOW

Your blog was just featured on BNN along with some of your picks.... royal, Rimm, barrick and that you believe we are in a bull market..

Good one Bill...Next step.. guest spot on BNN

Maybe

The investment community is listening...

SV

[Bill Cara note:

I will have to thank BNN. Like a lot of things to do with money and business, I have a high regard for things Canadian, and BNN really stepped up to the plate to provide a high-quality service when they started up just a few years ago. Many of their Talking Head guests are actually Talking Experts, and they have a basic Canadian honesty as well. I continue to recommend BNN's streaming video of certain of these guests. The majority of their anchors are outstanding too. While it does have some weak spots, I believe BNN is head-and-shoulders the best Financial TV in the world... If you don't know, CNN's leading financial journalist, Ali Velshi, made his name at BNN. An Indian-Canadian, Ali got his academic degree at Queen's U in Kingston.]

tom sheepngoats-

"Got a feeling I've been here before
Watching as you cross the killing floor
You know you'll have to pay it all
You'll pay today or pay tomorrow
You fasten up your beaded gown
Then you try to tie me down
Do you work it out one by one
Or played in combination
You throw out your gold teeth
Do you see how they roll
I have seen your iron and your brass
Can't you see it shine behind the glass
Your fortune is your roving eye
Your mouth and legs
Your gift for the runaround
Torture is the main attraction
I don't need that kind of action
You don't have to dance for me
I've seen your dance before
Do you throw out your gold teeth
Do you see how they roll..."

-Steely Dan

Mojo

yeah.....that's right.

And (hope this is not premature)...

Bill, you are THE MAN!

[Bill Cara note:

At least I'm still vertical.]

I miss the low for Slw.to at 6.45 today, and spent all day trying to get in at 6.52. It never hit it.

Now I feel exausted, and wondering if I should just get in at 7$ plus.

Do any of you fear you've missed the bottom???

Or is it possible it will revisit these lows one more time?

Thanks

Sandra

I feel bad for those Moms and Pas who listened to their "advisors" and sold today. The close was such a ripoff.

To follow up on my previous question (1:51pm), does anyone feel today is the final shakeout day, or the real thing is yet to come?

Vad's projection almost two weeks ago: when bailout is announced, market will fall for a final shakeout, potentially to new lows to shake investor out, then rally as fast as it can, to leave mom and pa to dust.

Obvisouly Vad's mind could have changed, but it seems this projection could still be valid. Especially in light of Bill's restatement of his bullish sentiment throughout these dasys.

Sold DGP, bought RBY, GORO, GBRRF, and GG

Could be a bottom. Depends if the CB's want to see more panic tomorrow or not, IMO. Dumping money from choppers onto banks doesn't do anything for worldwide stock markets.

Bill,

I read tbar's earlier post and fail to see how it is that he "passed the ball to me" because I neither queried him as he stated in his post nor did I respond to his prior post but I am attributing this exchange to "just something I don't understand" and let's leave it at that.

The market made a fairly impressive comeback today. Let's see what tonight and tomorrow brings.

BB,

details change, general idea stands. For instance, dragged out discusasion of bailout changed sentiment somewhat, so initial reaction got a little distorted... but these are nuances visible and significant on a micro-level only; on a grand scheme of things this kind of changes is a merely blip on a radar.

Today's developments IMO confirm everything Bill said over last couple weeks. Remember old saying "Amateurs open the market, pros close it'? I have zero doubt that it was Smart Money that bought second half of the day today. Even if we haven't seen ultimate bottom yet, it doesn't really matter for anyone whose time horizon is longer than a few days.

Babybear:

I got into gg, slw and google today. I think this was a hammer blow on purpose to shake the market. as Vad predicted also.

I am not sure why I think this other than US elections are coming up and if the market keeps falling it would push support to Obama and I have a hunch the current bankers want Palin as president...

If we have downward trends its only for a week at the most for that reason.

I might add if you watch Obama in action right now, its is as if he is doing everything he can to throw the election to Palin...

Thanks for the reply Vad.

Bill wrote: "I believe BNN is head-and-shoulders the best Financial TV in the world."

Aware we can access replays via the web, however wish we could receive BNN live in the U.S. For some reason, we can obtain via satellite/cable the BBC, Russian, Polish, Philipino, Chinese, Middle East, etc. news and other shows but the satellite/cable companies just don't provide access to Canadian broadcasts. I inquired about a year to a year and a half ago, but no luck FWIW.

Don't know why. Maybe FETV keeps them out?

[Bill Cara note:

It used to be that for about $7/month, you could subscribe to live streaming of BNN and get it anywhere in the world. I'll check. Now, if I could just do that for Leaf games, which (i) for the most part I can't get anyway, and (ii) for most of the games I can get (not many), it cost your right arm here in Nassau. I'll just have to watch CBC from Montreal (shown here 24x7) to watch the Canadiens win the Cup this year. Because of circumstances I want the Habs to sign Sundin. He's my favorite player since he came to Toronto. shortly after that -- many years ago -- he came to Nassau for deep sea fishing and golf, and via fluke circumstances he came to a club I used to frequent and we spent many hours having drinks. He was I guess about 26-27 at the time and I figured he had the most impressive personal values of any professional athlete I had ever met. He became my favorite hockey player right then and there. In my life, I only look at a person for their values, and Mats Sundin is one of the most impressive people I have met in that regard... ah, maybe you can tell, I've had two G&T's since the market closed. Got to decompress. The guests at Sandals are now waving to me as I sit on my perch about 30 feet from the beach. What a life... tomorrow I think the equity market could lift. But, I'll be off in the morning to meet Sol Kerzner's lawyer. Kerner is the owner of Atlantis and One & Only. I understand his new resort in Dubai is even bigger than his resorts here on Paradise Island. The man's a genius, for sure.]

(BAC) down After Hours 7.5% after earnings, raising 10bil in capital, and cut dividend in half

Thanks for the comment Casey. On election topic, I think I understand why Obama Campaign focus so much on Palin ... Election nowadays is pretty much popularity contest, and this is specially the case with Obama and Palin.

I'd like to see how much more power HB&B will wield on the market. I wonder what is their ultimate goal. Do anyone think it is possbile that Fed will assume the role of clearing banks for interbank loans if this downward trend continues?

French Government is seeking an emergency G8 meeting on crisis. (4:58pm on Marketwatch)

Hey MikeNYC,

Does MRB (Metallica Resources--AMEX) appear to be setting up for a Bollinger / Keltner breakout?

http://tinyurl.com/3tsehu

bot a QLD call, a SU call and some SSO today thinking there will be rate cuts announced globally this week.

Bit of a treat:

Bob Hoye BNN

http://watch.bnn.ca/clip100136#clip100121

He's trying desperately to look serious and avoid cracking jokes. Usually found here in Audio:

http://www.howestreet.com

Another couple of usual suspects:

http://watch.bnn.ca/clip99518#clip99518

So Bob is saying more to the downside towards the end of October. What this means he's looking for downside capitulation or price exhaustion usually dependent on comparisons between other similar moves in years past, and the technical indicators such as CCI(8) and RSI(14) on the Nasdaq as their example crossing above the -100 and the 40 on the weekly, and possibly the monthly chart as well.

Moreover, Bob noted in his research that Gold prices had a recent isolated low, but provided no forecast into Q1. It should be noted that pi-cycle dates as well as Kondratieff considerations make up part of Bob's technical toolbox as well as drinking beer in his underwear in front of the computer. Central Banks are his favourite punching bag.

A wild forecast can be had in a similar vein although much more technical measurements based on pi-cycle arguments is available here:

http://AstroCycle.net/Gold.php

More downside risk in the markets and more firmness in the gold and dollar markets.

F6

In what could either be considered a "dark day" or "day of enlightenment", I purchased Petro-Canada stock today. The signifigance of this is that to this day I won't fill up with gas at a Petro-Can station. As an Albertan, I still have the bad taste of the Liberals starting Petro-Can and then implementing the National Energy Program in the 70's and early 80's. Even though the company was privitized in the 90's, it still brings back bad memories and I still refuse to use their gas.

So for Americans upset with their government's actions over the past week who will refuse to use some of the HB&B players that got the benefits, maybe get used to it. It's obvious I held a grudge for 35 years!

I also agree that we have to be aware (as a Canadian), of investing in U.S. stocks for the long term. IF the loonie starts gaining against the USD again (as kiron pointed out), paper gains suddenly disappear when converted back into CAD.

Seamus - re: BNN - you can subscribe to a live BNN video stream for $6.95/mo.

Made some other buys today like RIMM, couple juniors in oil & gas, ACGY (builds platforms and underwater pipelines), and averaged down on OIL.to.

Without Bill and this community, hitting the buy button today would have been impossible for me to do. There may have been panic elsewhere, but not on this blog. Thank you everyone!

Vadym,

I love you man, but come on. Amateurs sold the market down 800 points this morning? Because why?....Were ma and pa getting massive fund redemptions? It might have been dumb professionals though......

Amateurs don't sell the market down 800 points. Not today. I agree pro traders drove the market up toward the close... pros like you who then handed the merchandise off to amateurs:) (he says with all warmness and candor)

Time will tell.

2nd_ave: Ha! I just saw your comment about my Retreats.

Half the retreats I teach are Taoist the other half are crisis resolution. One thing about a crisis based economy it creates crisis in leaps and bounds.

On a more serious note just to share: in case anyone is having jitters.

Letting go of fear is the hardest part of resolving crisis and working through markets like this I think.

But the biggest mistake people make is: they think they have to solve the larger problems outside of themselves in order to resolve their own crisis.

NOT THE CASE.

That is part of the trap of the current system, You are tricked into thinking you have to be politically and economically active to fix the system. And to do so neutralizes you since the system is designed to keep you down and not effective.

So Nope, It's the reverse actually.

To let go of a crisis based system is to live to your own kindness, heart and transformation. That's the step outside of the system.

And the funny thing about the current social system and fear mongering: it is actually helping people to get out of their fear now since people are reaching saturation and are just naturally beginning to turn it off.

This is part of the reason I agree with Bill's assessment. There is a limit to how much fear you can use to control a system. The bankers have to let up soon, or they will break their own crisis system. So I seriously have faith in Bill's statement the next two years should be good, and then watch out... Because they will hammer us, hard to get what is next on the agenda... which I think is the amero! Everything done to now has weakened the dollar long term hugely, so it won't be hard to destroy the dollar and create the need for an amero soon.

Peace!

Question for Bill:

With BAC recent announcement to raise capital, do you think there will be others to follow? Citi?

Thanks!

Rob

[Bill Cara note:

Yes, all the strongest HB&B firms will have to raise capital, but at least with a few hits to their share prices because of dilution (and dilution at lower than market prices), they can do the capital raise-ups. They then become predator. The prey are those banks that cannot raise new capital. The latter are the ones that get screwed in the take-overs.]

With the SEC short-selling ban to end Thursday, will that not put more pressure on the financials and other included stocks such as GE and IBM. Looking to nibble on a few Canadian banks but thinking I should wait a bit more.

[Bill Cara note:

Actually I think it's a good thing, and could play into the strong hands of the market. Bulls climb on a wall of worry. Short sellers pave the way. They get squeezed, and have to buy back in at higher prices... The time to sell short -- if that is a strategy you can live with -- was the summer of 2007, not now.]

Thanks Bill! That is what I thought...

Can price alone serve as the catalyst for a significant leg upward? Seems to me that all of the (negative) catalysts continue to be eminating from the credit market, reminding equity investors that they ain't goin' nowhere until the credit markets stabilize.

There is also talk of the Fed Gov't stepping into the commerical paper market directly (unbelievable, it seems like the bailout did not address the most pressing problems) http://online.wsj.com/article/SB122332670032508997.html

The Central Banks of Europe are in complete disarray.

Don't these things need to be worked out before a move up can begin in earnest?

Carter Worth was on Fast Money tonight and said that we are in capitulation that will mark an inter-mediate low, as with Jan. & March low.

Cramer just came on the air said that he didn't tell the viewers to sell "everything" ...

So I guess, the Joe Sixpack would be buying tomorrow if they watched these shows.

CME is up 9% for the day as they lobby for an exchange for CDS. It's testing an important resistance @ 400. ICE is up 4.5%.

Seamus,

BNN's video stream is available in the U.S. I receive it here in Tennessee for less than $7.00 per month.

You can sign up on the BNN web site: http://tinyurl.com/5y3acq

They referred to the financial collapse around us and the bailout comparing it to putting a band aid on a decapitation at the Resources Investment Conference in Toronto this weekend.

Very well attended, but I could only find out minimal information on my ailing gold junior, though it was well worth the effort to discover how naive I had been heading into the markets even as late as last year.

FranSix, you wrote: " ...though it was well worth the effort to discover how naive I had been heading into the markets even as late as last year." Naive about ... markets, in general? Miners? Your junior? Would you elaborate on this? Thanks.

True perspective Bill,

Other than some daytrading, the era of going short Lehman and Countrywide at 70 and letting 'em fall to zero are way behind us.

Two questions for either Bill or the community - 1) I am curious for learning purposes why there was a buy call issued on XOM when the MWD RSI's are not in the 30 range. Can someone give any clues? and 2) Since the buy call on GG three or so weeks ago, does that call stand, or would Bill re-state the buy call now that the stock is similar in price to when that call was issued down here in the ~25 range. Thanks all.

F6, I ask because you seem like the least naive among us.

What started out to be a Bloody Monday ended out being not so bloody but yes painfull to watch

we kept calm and used our heads and bought while others ran for the door

Buying good quality companies in these very CRAZY TIMES when others are running for the door is hard to do but we all know and believe this will pay off one day

Yes there was calm on the blog today...wonderfull to see...

Thanks Bill and cara community

SV

"With the SEC short-selling ban to end Thursday, will that not put more pressure on the financials and other included stocks such as GE and IBM."

DaveM: If I wanted to trick the most people, I would have a rally Tuesday or Wednesday, another rally on Thursday, then some profit-taking on Friday to suck in some shorts, and then another rally on Monday to shake out the shorts.

On Sept. 17th Bill Cara noted:

"But if there is a purge of emotion and act of surrender by Wall Street, then I believe the equity markets, at least, will have reached a bottom. Today had the look of Friday October 16, 1987, with enough selling at the close to frighten enough traders to fold their cards tomorrow, as they did on that Black Monday Oct 19. Over two or three days, many blue chip stocks had fallen 25%."

Bill - when you spoke of a "purge of emotion and act of surrender" you're saying "capitulation" in other words. Would you please elaborate on how you quantify this event. What are the markers of capitulation to look for? If it's blood in the streets we're looking for, how do we measure the platelets?

For those who missed Fuld's testimony today like me, go to http://www.c-span.org. on the home page for now

The Gold Spread Widens

Its hard to miss the disconnect between 'spot gold' prices, which are based off the gold futures front month adjusted for time, and the market prices for physical gold in any reasonable quantity and form.

What does this imply?

First, there must be forced selling of paper gold probably in hedge funds being attacked by bear raids from the other large hedge funds and bank trading desks as we noted in story about Goldman Sachs last week.

Secondly, the central banks are known to be selling and leasing gold into rallies, by the data and by their own admission on numerous occasion, to hold down the price of gold. Why? Because in their own words it is a signal of fear, and so the theory goes, by turning off the signals of fear you prevent the fear from becoming unmanageable.

But that is primarily a rationale, an excuse that ordinarily reasonable and lawful men use to justify unreasonable and unlawful actions to themselves and to a court of review in some imaginary future they play out in their minds.

So as such the spread between the price of paper and physical gold is a measure of the level of public confidence, or a lack thereof, in the ability of the world's central bankers to make a silk purse out of a sow's ear, and to keep the world marvelling at its craftsmanship and desirability of their rainments, as they prance naked through the streets.

"We looked into the abyss if the gold price rose further. A further rise would have taken down one or several trading houses, which might have taken down all the rest in their wake. Therefore, at any price, at any cost, the central banks had to quell the gold price, manage it. It was very difficult to get the gold price under control but we have now succeeded. The U.S. Fed was very active in getting the gold price down. So was the U.K."
Eddie George, Bank of England, September 1999
Or as the great stock market bear Daniel Drew once said in another context:

He who sells what isn't his'n
Must buy it back, or go to prison.
Hope to see you and your friends at some future financial Nuremburg, Sir Alan and Herr Doktor Bernanke.

Jesse's Café Américain

vinod- you bought 3 -oebkb calls at 20? that could put you in the hall of fame...

Bill-Habs fan here....they disappointed in the playoffs last year, but have a very young and good goalie in Carey. I hope Sundin signs there also. They had a very talented team for the first time in many years last year.
Bill-do you think a coordinated global rate cut is a) needed, and b) the Fed's next bullet to stop the selling?

tks

Ray

ptf- IMO, if buying and selling were as simple as watching RSI numbers, you could program them into a black box and have your Blackberry beeped...for all practical purposes, whether you bought GG three weeks ago or today won't matter when it hits the DZ...mechanical systems also do not/cannot predict (as far as I know) buying opportunities created by panicked sellers...

is there some website that keeps track of Cramer's calls? it it can validate that in spite of being wrong, let's say, 66% of the time, following his calls would still put you ahead, then he's vindicated...but to tell listeners to sell it all today if you need the money within the next 5 years- where is he coming from? he's talking to real people with real money who will experience real pain if he's wrong...

IF it can validate...

2nd
Buy to Open Call 3 Contracts of -OEBKB
Order Number:J06DNFWJ Details Filled at $20.00

Fascinating action in currencies this month, and especially today:
Yen +3.65% http://tinyurl.com/3gatuy
Aus$ -7.08% http://tinyurl.com/4x7wdy
MexPeso -5.79% http://tinyurl.com/3fw34w
These are really unprecedented daily movements. Why is the carry-trade unwinding so rapidly just now? This is pretty conservative money - borrowed at low rates in Japan and invested at favorable Gov't. rates in places like Mexico and Australia. What's the prime driver of these moves? Expectations of dramatic interest rate moves (down in Mexico+Australia; up in Japan)? Expectations of currency collapses(Mexico, esp.)? Need for liquidity (redemptions)? Overwhelming alternative opportunities for investment (being ????)?
Or is this just another in the interminable sequence of bull-gorings that has hit every single trade that has been working in the recent past (e.g. Gold, Oil, Emerging Markets, Nat. Gas, Materials, Fertilizer, Canada(!), etc.)? Is it really necessary that HB&B pulverise all profitable trades first before normalcy can return to these markets?

Sorry for the ramblings...

-

2nd
when I brought OEX bid was 18.00
did not filled. I raised to 19.00 no action
raised to 19.50 nothing raised to 20.00
asked was 21.00

vinod- my bet is your bid was hit by someone selling to close...they probably bought the calls in the forties, watched the bid drop to 18, then gave in when you put a 2 handle on it...;)

Why do I always seem to buy too early? Thought the mornings lows would be THE lows but wrong again. However, I'm heartened by the close today.

One nagging concern -- not sure if a world-wide coordinated interest rate cut is coming as quickly as some hope. Maybe Bernanke trying to save his last few remaining bullets? Hoping I'm wrong.

Bill Gross is pushing for rates to go to 1%...and what Bill wants lately, he has received.....time will tell. Quite possible they wait on the rate cuts till the end of the month.

[Bill Cara note:

Of course, the Bond King or Queen would want that. As rates fall, his bonds will rally in price! But would he be just as likely to tell us when he is selling? Look, please ignore that crapola. If Bill Gross is not just as likely to tell us when to sell as when to buy he is totally useless. Ignore him! Ignore every Talking Head like him. When are people going to understand that successful trading requires a total blockage of people like this? Soon, I hope!]

going back to buy points, if GG was a 'buy' at 31 and is now 25, then QLD/SSO/USD/any of the Cara 100s in the AZ were buys in the past two weeks...when GG hits a 5 handle, or any of the above hits the DZ, your memory will get a little hazy-> when, for example, QLD is sporting three digits, you'll need to minimize the Travelocity screen in order to dig through order history to recall if you bought it with a 3, 4, 5, or 6 handle...maybe you purchases with all those handles, but when you're selling it with a 1 handle, you won't care...

and now the Nikkei is sporting a 9 handle...

Stopped out on 4 stocks today that I had patiently acquired over the last month. Picked up 3 others though:

PFF - ishares S&P preffered stock index fund (now yielding around 9%)
AGM - Farmer Mac. On a roll - 'nuff said
CSH - Cash America. I feel a bit guilty buying into a company that charges up to 800% for short-term loans but, wth, these are tough times.

at 9989, no one will know whether you're talking about the DJIA or the N225...

damn GDX at 26? I will have to buy tomorrow.

lots of Demark buy signals for tomorrow also.

rayg: good point about Bill Gross -- the sooner the better though.

On another topic, anyone with strong opinions/thoughts on Mortgage REITs -- specifically NLY (Annaly Capital)?

Couldn't resist buying a boatload today. Trading near book value with > 16% dividend. Invests in GSE paper which is now guaranteed by the government.

Principal negative is that they are leveraged 7 or 8:1 and concerns about how the credit crunch is affecting their borrowing requirements and the interest they've got to pay affecting performance. Still, seems like a steal at these prices. Am I missing something really big?

Hi,Bill and Others,
As I read last night, "if a huge deficit were accompanied by an expansionary fiscal policy and tight monetary policy,the country's currency would actually rise". It is George Soros' theory. But I do not quite understand that. I'd like to hear what you think about this statement, and if it is what is happening to USD?
I am long gold miner, feel a little bitter to see gold is up but miners down big. However, the price of gold lately did confirm what Bill said earlier, that gold and USD could be strong in the same time.
Thanks.

"Amateurs sold the market down 800 points this morning? Because why?....Were ma and pa getting massive fund redemptions? It might have been dumb professionals though......
Amateurs don't sell the market down 800 points. Not today."

OK, first let's agree about definitions. Amateurs are not necessary ma and pa only; any trader, who sells into the lows of capitulatory move or buys into the highs of euphoria move is amatauer, whether he trades his own or OP money. Funds that chased tech stocks in the spring of 2000 were no less the Crowd than ma and pa who did the same. Any traders that sold/shorted back then were the Smart Money - whether they traded their $25K account or multimillion fund.

Second, it doesn't take much to spook amateurs into selling when emotions run as high as they do now. Pull bids, flash huge offers, sell some to start the process, and they will do the rest. Skillful manipulation doesn't require doing it all by yourself, it's done by provoking certain reactions. Think of it in terms well known phenomenon in retail sales: it's enough to have mewrely 3-5% less supplies than normal to start widespread panic, hoarding and full-blown deficit.

...in terms OF well known...

US investing for Canadians, profits vs exchange rates.
RE Kiron at 1:34 and Bobj at 5:40

Don't know whether this will help or not, but its how I look at it. You have to make sure you start and end with an apples to apples comparison, so often people forget that point. Example follows.

Lets say I give two friends $1000 Can, one in Canada and one in the US, they are both going to buy Suncor, (SU and SU.TO). Now I will pick the time frame from Feb 1 2007 to Nov 1 2007 as the exchange trend was pretty steady then, $US down $Can up.

US, takes the $1000 Can converts to US @ 0.85 = $850 US, and buys 11.4 shares of SU at $74.67. He sells it at $106.15 for a total of $1208.35 which nets him a profit of 42% in USD.

Can, takes the $1000 Can and buys 11.4 shares of SU.TO at $87.83. He sells it at $101.01 for a total of $1150.06 which nets him 15% profit in Can.

Wow 42% vs 15%, but if we convert the US gain back into $Can at the Nov 1 exchange of 1.05 the gains become equal.

So the only real gain for the US guy is if he spends his profits quickly on something which hasn't yet been restocked on the shelves at a higher price in the US. From the standpoint of buying power, as soon as the lower USD value filters thru the system it all equals out.

As a Canadian, if the stock is dual listed I will go with the higher trading volumes, usually US and the options are usually much more liquid also.

Just some other ideas to think of.

Quasi

Vadym,

Capitulatory moves trigger not only "amateur" selling but disciplined-trader's stops. Over the last month I have raised my stops from 2X to 3X to 4X ATR (down), in conjunction with techinical support/resistance levels. Nevertheless, I have been forced to sell some. IMHO, the only way to have remained in most of your trades would have been to abandon stops altogether and trust your fundamental analyses, or to have been exclusively shorting the markets or been on the sidelines.

2nd,

Looks like the site with Cramer & Leonard the wonder monkey was taken down.

Find it on the Internet Archive

http://tinyurl.com/3qoa2o

Since November 1, 2005, Jim and Leonard's overall records are:

Jim Cramer - 138 wins, 138 losses, 48 ties
Leonard the Wonder Monkey - 138 wins, 138 losses, 48 ties

Ongoing Stats:
Jim Cramer is right 49.27% of the time.
Jim Cramer's picks average a 0.24% ROI after 30 days.

Leonard the Wonder Monkey is right 49.95% of the time.
Leonard's picks average a 0.43% ROI after 30 days.

So there's a 50/50 chance Jim's right about selling all stocks and give up hope all ye who enter here? Something tells me no... Cramer is a member of the Buffett family now and should adopt a buy and hold approach. :)

Red overseas.

http://money.cnn.com/data/world_markets/

"Super-rich investors are pouring their money into art and antiques to protect it from the global banking meltdown."

http://tinyurl.com/4zbynx

The next bubble?

"Art Fund Added To Harbour’s Hedge Fund Platform"

"The fund will invest in a broad range of artworks, with an emphasis on Old Masters, Impressionism, Post-Impressionism and Modern Art, avoiding those areas the fund believes will underperform the market. Investments in individual works of art are expected to be in the £500,000 (US$885,860) to £3 (US$5.3 million) million range."

http://www.finalternatives.com/node/5667

$4 trillion in sidelines needs to go someplace... why not art?

"I think when ordinary working people come home, turn on the TV and see... a bunch of people at a rich gala... all subsidized by the taxpayers--claiming their subsidies aren't high enough when they know those subsidies have gone up--I'm not sure that's something that resonates with ordinary people."

There we go, spouting off about Joe Six-pack again...

One million Canadians can't be wrong.

http://www.scotiabanknuitblanche.ca/home.shtml

Agreed.

In the face of a falling price, in an environment like this one many traders subscribe to the policy of selling first and asking questions later.

To sell at the open and buy your position back 500 Dow points lower or the next day or week when conditions improve is not, in my opinion, amateurish.

And if the Dow futures are down 100 points tonight and the market closes down 400 tomorrow, I am guessing you will reverse your opinion and agree it was the "professionals" who sold the open today and the "Amateurs" who bought the close, correct:) ?

Best explanation of what CDS are and aren't:

http://www.investorplaceblogs.com/users/toma47/2008/02/lets_parse_a_few_sentences_fro.php

Sample quote from comments:
"..Leaving aside my opinions on the possible solutions, I am suggesting that research into the scope of trading in Credit Default Swaps, particularly those that are not supported by an insurable interest as described above, will provide useful information on the causes of the current market turmoil..."

Sorry if this has been explained before.

http://tinyurl.com/4xqrt3

Many may disagree, but I think this is a A GREAT CHART from Jessie. There may be a tremendous bounce. I'll wait and try to play the re-test . . . no retest, then no worries on my part.

Yes, I was incredibly naive about miners, but realized how many people are following in the same path only to have bought in at the highs, having been to the Cambridge House in Toronto.

There isn't a single miner in the gold sector which is a winner in this market, so the advice to sell your losers and buy the winners was just hubris on the part of the speakers, because its quite certain they also had lost incredible amounts of money playing the resource sector.

Right on, Blowout Prevender: 800 seems like the natural target.

... then they will term these as the lost Bush years.

wavesmash- 49% with a 0.24% ROI after 30 days? IMO, that's pathetic...i could put it all into Treasuries and beat that system...it makes you wonder how many hedge fund managers made their reputations in the 1982-2000 bull market simply b/c it was a bull market-> overweight the high beta stocks and odds are you'll outperform the benchmark...

Mackinaw... I would simply never had stop as wide as to have sold at the bottom of such a sharp downward move... I don't view a stop placement as a sole function of how much I am willing to lose. That's just one factor; without reasonable technical support for a stop placement it will not be in the right place.

shark... are we talking about same thing at all? Review my original post to which you replied and you will see that I was not talking about day traders at all. I was talking about those who liquidated their long term positions today into panicky selloff of the first half of the day. It has nothing to do with those who "sold the open and bought 500 points lower".

Also, notice that I was talking about selling into the lows of capitulatory selling - again, has nothing to do with "selling the open".

Not only did many make their bones in the bull market because it was a bull market, but further confusing the matter is the issue of, and I am forgetting the technical name for this phenomenon, but in any endeavour with a large number of players (the law of large numbers?) a few actors' behaviors will defy the odds of the standard distribution and they will "excel" despite themselves, if you will. On Wall Street this phenomenon was responsible for a fair number of success stories, some of whom I know personally:)

Typically it is agressive behavior that succeeds in this business at least in a bull market.

And actually I don't think many of us have enough experience with other kinds of markets to even know how to or if we can succeed in them, which may be one of the issues that's bothering me today.

As I said, Vadym : "In conjunction with techincal support/resistance levels". You keep harping on these points, and we have heard and heeded you. Nevertheless, deep supports have been obliterated over the last week. I suspect that you have not been in the game this last week - cudos to you; that's the real trader's edge.

whereas vinod had a 70% return (as of 6 trading days ago)...i know he attributes his results to a variety of sources, but i wouldn't underestimate his own contribution; he reads/hears things, but in the end it's how he pieces the various inputs together and arrives at a decision using his judgment and common sense that determines the results...heck, we've all read books on trading, and we all see the same daily news feeds; how many traders, however, are able to apply their experience/knowledge/intuition/(as well as emotional control and self-knowledge) to the information coming in and make the proper entries and exits on a consistent basis?

Vadym you're right, I have a lot on my mind today I get what your talking about and actually agree with you. The only thing I didn't agree with, and I don't even know if you said this, but I disagree with even the suggestion that amateurs were...what's the word...somehow pivotal in this morning's drop.

I-card. On NLY: They had to do an equity offering last Spring. If financing doesn't loosen up they may have to do another one, but I don't have any specific information on that.

shark- IMO, the term 'professional' is not necessarily synonymous with 'smart,' nor does the term 'amateur' necessarily connote 'not smart'...

in the final analysis, the smart player buys low and sells high...the 'smart' player thus sells his positions in the DZ, and buys in the AZ...on an intraday basis, shorting today's open, buying back 500 points lower, and exiting at the close would have been a 'smart' trade, but IMO it would more correctly be called a successful bet...a 'smart' play would have been to sell/short when the majority of the Cara 100 were in the DZ, and to be buying them now...

Vad,

I've been confused about volume. For each transaction, there is a seller and a buyer. While there are desperated poeple on the sale side during the morning slide, "who else, besides me being early, is buying" would be my question. Amature traders?

majority WAS...

Asian Markets overnight mirroring today's North American action. For e.g. Australia,

http://tinyurl.com/4tvm3w

CLICK ON "1d" to see tonight's action.

sustain_ability: re CDS

That was the point I made last week. It's like taking life insurance out on your neighbor. No insurable interest, so you can't do it. It breaks one of the basic tenets of insurance.

On Cramer and the Monkey:

I'm curious if, considering I've heard him say wait a week before buying any of his recommendations (because they get bid up immediately), one were to actually not include the recommended date, and instead wait one week and then check the next 30 days, if the results would be better.

"I suspect that you have not been in the game this last week "

Quite contrary :) Haven't missed a single day, including today. I post the log of each trading day for anyone to see...

re:remote tv viewing

Bill,

get a slingbox.

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

re being 'early'- that's a pretty relative term...the last major turn in the market was last october, and i know many here heeded bill's call to sell into strength...how many of you are upset that you sold at 14000 instead of 14128? 13850? 13000? do you really care? what about being upset at buying QID at 43 instead of 37?

so you bought QLD at 61? 58? 45? today's low of 36.67?-> what if you bought at 37, but then exit at 58, happy with 58% gain-> you'll be upset when you see it at 75, no? what if you averaged in with a basis of 55 and hold it until 120?

point is, no one catches the low, and no one catches the high (except maybe craig and vinod)...i would in fact wager that the lower your basis, the more likely you exit early; if your basis is higher, you'll probably exit higher as well, almost as if you have a built-in percentage gain detector that regulates when you sell...(if you don't believe that, may wish to review the entries/exits on FXP, SKF, DUG, SMN from earlier this year)...

no need to freak out over being early-> you'll make plenty of money sticking with buying on weakness/selling on strength...you jumped on the right train, right? you can trade your way into right 'car,' if it's that important to you...i think of all the small stuff i've wasted time worrying about in my life-> when i look back, it's only having made the correct GENERAL moves that mattered...

re:Smart Money Indicator explanation.

http://www.wallstreetcourier.com/affiliates/smart-money.htm

c3,

this is actually a very good question. There are, come to think of it, two questions in what you asked.

First: since each trade takes a buyer and seller, what do we mean when we say buying pressure or selling pressure? There is a need to distinguish active buying from passing buying (same for selling, let's just focus on one and another will be self-explanatory). Active buying lifts the offers, chases them, bids higher. Passive buying bids only, often reluctantly, retreats and lowers bids willingly. Thus, it's more about potential buyers and their willingness than it is about each actual print. Active buyers and passive sellers - buying pressure; passive buyers and active sellers - selling pressure. This may seem something understood by default but if I had a dime for each time I heard question "what do you mean when you call this print a buy and that print a sell if it takes both buyer and seller to make a print"...

In light of the above, second question (one you actually asked) is easier to answer. We have market makers who have obligation to do what their name implies: make market. They have to bid and offer; they play the spread; they fulfill multiple orders by their clients; they start and liquidate positions for themselves, for clients, for funds, for insiders etc etc. All this endless flow of orders creates market; depending on what clients want and what market makers think, those bids and offers move, react of what others are doing, react on news, on this, on that... throw to the mix day traders, swing traders, some know what they are doing, some don't... what we have as a result of this huge comnglomerate is Market. There is no way to tell who and for what reason did each given print. Good thing is, there is no need :)

Hope it helps

re:$NAA50R - % of Naz stocks trading above 50 DMA

now 9.43%.

$spxa50r - % of SP500 stocks trading above 50 DMA

now 5.8%.

2nd_ave,

Your 11:07 post is like talking to me. Thanks for that insight!

Quasi
I agree with your analysis, but I believe it proves the point I was trying to make. For sake of argument assume SU is only listed in the U.S. {I've deleted the Cdn purchase & made couple changes}
{Canadian} takes the $1000 Can converts to US @ 0.85 = $850 US, and buys 11.4 shares of SU at $74.67. He sells it at $106.15 for a total of $1208.35 which nets him a profit of 42% in USD.
Wow 42%, but if we convert the US gain back into $Can at the Nov 1 exchange of 1.05 the gains become equal.{15%}
The problem is that I'm looking at my trading platform and am giddy with excitement seeing that I'm up 42%, until I sell it and find I'm only up 15%. Or worse, be up 13% on a different stock (which isn't bad for a 9 month time period), only to find out I actually lost 2% when converted back into CAD.

If I'm not correct in the above, please correct me.

With 27/36 stocks on Bill's list being U.S. listed, plus buying gold denominated in USD, I believe non-American investors have to pay attention to the exchange differences. Or, you plan on leaving it in your account in USD and only pulling it out in USD to go visit kaimu in Hawaii.

how low can this go?

http://tinyurl.com/5nxymn

RE:NYSE % bullish

lower than SoGen crisis and Bear Stearns.

Nice setup for a fierce snapback rally.

We'll see

bsi87
Bill still needs a Canadian feed for the Slingbox.

re:Slingbox

He sets it up at his house in Toronto or at one of his buddys'.

RE Bobj 11:14, US vs Canadian stocks and exchange.

I think of it like world value. If both guys took their 42% US and 15% Can profit and went to say the UK and tried to buy gold, they would both end up with 1.52 oz of gold at the price on Nov 1, in this example. So is the gold bought with US$ worth more than that bought with the Can$, No they both have 1.5s oz of generic gold, same value, same world purchasing power ( the 42% US profit taken out of context is misleading).

Yes I agree if you left the 42% in the US and then spent it there, in the short term you may realize some of that gain. But over time as the US pays higher costs for all input materials, (due to USD$ being worth less), then the output costs in US$ increase accordingly, particularly significant for anything that’s imported and there's not much that’s not imported these days in the US.

Agree its something we have to keep track of you need to watch both the stock price movement and also the exchange rate to see the true P/L change in real world value (purchasing power). One way is to use a portfolio tracker where you can track your US trades in Canadian dollars, Yahoo will do that. I also use Stockcharts where you can plot the value of US stocks in Canadian dollars. (symbol SU:$CDW). Note the $CDW Canadian dollar index is not exactly the US - Can exchange rate but pretty close.

Quasi

no one has ever really explained this process of leveraging, specifically, if i have a pool of say 100 subprime mortgages paying say 10%, i break even if 90% pay without default. if i charge 20%, i break even if 80% pay without default. even though the subprime default rate is close to 10%, ive never understood this leveraging process which makes my pool of 100 mortgages worthless, how can it be worthless if 90% dont default.
you people seem intelligent and made some interesting remarks on this stressful day so i thought i would throw this out there.

"point is, no one catches the low, and no one catches the high (except maybe craig and vinod)..."

Man, I wish! Sometimes I'm lucky on a stock I watch closely, but since I scale in I tend to miss buying all at the lowest price and to not catch tops but just after it rolls over, most of the time.
Right now the pain is scaling in and having underwater positions. Buying dips has a new meaning on down 800+ days! Still approx. 33% cash at this point.

Anyone buy CDS on banks in Iceland? Is this a credit event?

http://tinyurl.com/4jatsv

ICELAND'S Government seized control of the country's biggest banks overnight in an attempt to fend off wholesale economic collapse.

http://tinyurl.com/3q34e7

RE Bsi87, Slingbox

Yes I agree it would work but I disagree with using the internet for this type of broadcasting. Internet traffic is increasing exponentially and a lot of providers are now looking at charging for bandwidth usage. A lot of this bandwidth problem is related to the amount of streaming video which has taken off on the internet. Netflix, Slingbox, Porn and live feeds from most news sites etc etc..

This type of stuff is best viewed over the air waves or cable or satellite. One channel is transmitted and all viewers tune into the same channel. The internet delivery systems like Slingbox creates an individual channel for each user. It only takes a few hundred users to create a bandwidth usage greater than all the channels of a typical satellite company.

I promote keeping the internet interactive for research and discussion, broadcasts are better kept on other delivery systems.

Now at some point the internet backbone and local delivery will be able to handle such things, just not right now. It would also require many more local servers to act as local mirror (distribution) sites, thus eliminating the need for everyone in the world to have a dedicated channel to the source.

Just one of my pet peeves.

Quasi

abba1,

I'll take a crack at it. Others here please correct me if I'm wrong.

The problem lies in the fact that all of those mortgages in your pool sit on your books in the 'asset' column. Then, through the magic of fractional reserves, you allowed to make even more loans based on those in the first batch at a leverage ratio of 12to1, 20to1, even 30to1 or more. Once those loans are made, they too enter the 'asset' column on the ledger, and the process starts again. They remain in the 'asset' column as long as they're 'performing' (joe 6pack paying his mortgage). When joe 6pack defaults, the loan becomes 'non-performing' and can't really be used as an asset anymore. So it, and all of the loans that it spawned are now no longer adequately backed by 'assets' reserves.

Now, in the world of truth, those loans should be written OFF as a loss, because they are, at least until such time as they can be sold. Instead, they are written DOWN, moved to some vapor area of the balance sheet. Because to actually have written them OFF would result in the whole house of cards falling down. In a word, insolvency. You know, the inverted pyramid thing - remove the bottom block and it's look out below. So what you're seeing here, and what HB&B has been doing, is more like a gigantic game of "jenga"

http://tinyurl.com/42jmkm

And since nobody hold onto these loans anymore, no one know which ones are which, because they've been sliced and diced and packaged and sold so many times. That's why HB&B doesn't trust anybody to lend to themselves. Kind of like a Mexican Standoff - Who's got blanks? Who's gun is going to backfire?

And the big factor here has been the use of Credit Default Swaps to 'insure' against losses. That's a whole other topic. Too tired right now to attempt that one.

So yes, only 10% of the original 100% of loans has defaulted. It's what's been done with that 10% that is the problem. Leverage.

Pakistan's Rating Cut by S&P on Debt Payment Concern (2 notches. 2 million to insure 10 million debt)

http://tinyurl.com/4fa4xo

Ban on unnecessary imported goods suggested
http://tinyurl.com/3roo29

"Similarly he criticized the huge import bill of over $ 1.0 billion in respect of cellular phones and allied equipments, coupled with unnecessary electrical home appliances like refrigerators, Air Conditioners, Ovens, accounting for over $1.5 billion in addition to import of cars, motorcycles and other Completely built Units of over $ 500 million, which not only add trade deficit but have increased the import bill of oil.

If the Government puts ban of import of vehicles and such other equipments, import bill of oil can be reduced to the tune of $ 2 billion. "

Fed is looking at taking over regulation of $45 trillion (or whatever it is now) CDS market.

http://tinyurl.com/4z7ahy

Rate cut tomorrow?
http://tinyurl.com/3suftg

"The difference between what banks and the Treasury pay to borrow money for three months, the so-called TED spread, widened yesterday to 393 basis points, the most since Bloomberg began compiling the data in 1984"

Austrilia central bank just cut rate by 1%.

shark_attack at October 6,

My apologies. The gold stocks are almost literally killing me and I need clarity now if possible.Your statement stung me because it isnt nessessarily true all the time and this has been a nightmare owning gold stocks. I believe if someone makes a statement they should be ready to offer the facts they have to support their view to the best of their ability.

You said;
"see the way the gold stocks are falling? Theyre always stocks first and gold third, which is the problem with using them for a gold play in the face of calamity. "
----------

I replied with;
"at the moment thats the right thought I guess, but it has not always been that way.

S&p fell from 1500-800 while the hui went from 35 to 157

That was an envious relative performance...."
-------

Then later you said the same thing again adding that they are toilet paper:

"Dr.
They're stocks first, toilet paper second, and gold third."
----------

Here is a chart of that period,I dont think it is fair to call them toilet paper in a blanket statement.This yr I think it is more than fair to call them tp. The nasdaq also fell from 3k to 800 during this period, that was calamity right?
http://tinyurl.com/489seq

Here they are for the past 3 yrs looking terrible during a period that gold is up 100's of dollars

http://tinyurl.com/4evck8

When one index has the ability to go up nearly 400% while another goes down by nearly 50% or more it is misleading to call them toilet paper and certainly they have in fact been stellar performers while calamity has reigned in the past.
So it's a much more complicated issue than just calling them name imho

I owned eld.to,ng.to,k.to and a few others back then and they were hated very much by all at the time,prior to running, similar to today?

The xau:gold was at .1576 then and it is at .1313(30 yr lows)now so perhaps a similar set up is presented?

I think it requires further study not nessessarily negative comments about their performance.Maybe I am wrong I certainly have been and I remain confused and stressed beyond reasonable or healthy levels by their lack of performance to pog. I still cannot understand why they have done so very poorly.

cheers

thanks mojo, but i still dont get it. you have to have money to make a loan, dont you, if i nake a 10% subprime mortgage to someone i have to have enough cash to pay off the old mortgage, isnt that true? i do settlements so i know, the existing mortgage has to be paid off, in cash, wired to the mortgage company's account. i don't get how you can leverage this if all the old mortgages have to be paid off. and since you brought up credit default swaps, i understand them even less. you know, this is a horrible problem apparently as it has cost me a lot of money but i do not understand the underlying process.

extreme statistics.

Conover is actually very good, a lot of interesting stuff on his site.
Not for the mathematically faint of heart.
Does not run a blog or advisory service.

"A short addition to Quantitative Analysis of Non-Linear High Entropy
Economic Systems VII, on the current economic crisis. It analyzes how
bad things could get. The crisis is a year old, on October 9'th, and
projects to be about twice as bad as the 2000 dot-com crash, and half as
bad as the Great Depression, with a 50/50 chance of bottoming before
February, 2010, and a little more than a 25% chance of lasting 12.5 years.

John"

http://tinyurl.com/3o4l8t

Sweden.

More margin calls yesterday than all of last week together. (How much of those are done in real time these days?)

Riksbank apparently joining in thje world wide money printing - I was hoping they would not. Not sure how to quantify this.

"Iceland has new law allowing banl takeovers - whole country make become bankrupt"

Iceland may be first & an extreme case, but -
that is what will happen in much bigger countries if all the banks must be saved at any price.

Looking over yesterdays action, I do not see anything bullish except gold.

ALOHA !!

Tensions are running high ... These sorts of things will only increase as things get worse for the AMERICAN DREAM of retiring on the backs of Asian workers and savers. What is it that the slave nations pay the Emperor? Tribute ... is it? That only lasts so long as anyone who has been in a partnership with someone who is perceived as never pulling their own weight! I have certainly been there ... At some point you HAVE TO go your own way just for the sake of sanity and balance and jettison the dead weight.

So I read that Barclays paid $1.35bil for LEH assets and $960mil was the LEH NYC building. That means after 158 years of "paper shuffling" LEH business was only worth $390mil. Way less than SLW market cap! Way less than OPRAH'S net worth and OPRAH has a "real" job! So much for what banks are made of ...

Back to Faud ... Here is a guy who sees Faud on the treadmill at the LEH gym and he walks over and punches his lights out! Faud by his own arrogance and fraud is now a marked man along with all the others of his ilk. Imagine being these guys like Faud and Mozillo and the likes having to walk through a mall and wondering which shopper will just out of the blue put a Glock 40 in your face? When I used to do CDC(California Dept Of Corrections)prison projects I would ask the prison guards, "Aren't you worried about your safety?" They would say ... "Yes, but I would be more worried if I was a cop on the beat. Here at the prison I know where the criminals and psychopaths are!" TRUE indeed ... That's why I hate it when CONgress goes on vacation! HA!! While they are in session at least I know where all the criminals and psychopaths are! HA!!

So what causes this in people to break down and attack another person violently? A flood of human emotions ... ANGER, FEAR, SHAME, GUILT ... its all there. High tech, globalization and modernization doesn't mean a thing to the human condition. We are still no more evolved emotionally than we were when we lived in caves! Any of us are capable, under the right circumstances, to commit violent acts against others. Indirectly my taxes went to killing and injuring hundreds of thousands of Iraqis civilians I never even met when SHOCK AND AWE took place back in 2003.

COMMON LAW is based on two important principles ...
1- Do all that you have agreed to do.
2- Do not encroach on other persons or their property.

Directly in my youth I had most definitely encroached on others, but I like to think "they" started it! HA!! I try to live my life now based on those two laws. Its called, "Keeping my side of the street clean ..."

Obviously the US government has long ago thrown the principles of COMMON LAW that date back to the 1700s right out the window!!! In fact they hand out awards and medals to each other now for whoever can break COMMON LAW the most! I refer to Alan Greenspan's Medal Of Honor and the latest $700bil reward for Hank and Ben's lawlessness!

I have come to believe that this guy who knocked out Faud's lights at the gym did it because he lost HOPE! The AMERICA DREAM represents HOPE for a better life and many of us now see HOPE fading away. There is now a REDEMPTION of HOPE afflicting citizens of America.

Anyone here recall Bernie Goetz who shot the five black kids on the NY subway trying to rob him back in the 1980s? If someone shot FAUD or MOZILLO would a jury ever convict the shooter? In essence didn't FAUD rob the shooter(investor) just like the black kids robbed Goetz on the subway? What was that called back then ...VIGILANTE JUSTICE?

DO UNTO OTHERS ...

Interesting note ... FAUD is one "R" away from FRAUD!

READ ON:
Knock Out: CNBC Confirms Lehman CEO Punched at Gym

Network verifies reports Richard Fuld was attacked for financial institution's bankruptcy.

By Jeff Poor
Business & Media Institute
10/6/2008 3:59:29 PM

It seems anxiety from the financial crisis is reaching new highs, but the tipping point for one individual came at the Lehman Brothers gym in the midst of the company’s collapse.

While former Lehman CEO Richard Fuld was testifying before the House Oversight Committee Oct. 6, CNBC reported he had been punched in the face at the Lehman Brothers gym after it was announced the firm was going bankrupt. CNBC and Vanity Fair contributor Vicki Ward said Fuld was attacked at the gym on a Sunday following the bankruptcy.

“Frankly, I sat there and listened and I’m with the guy who apparently, the day before Barclays announced they were coming in and Lehman had already filed for bankruptcy, went over to him in the gym and punched him because that’s how I feel when I, you know, when I watched that,” Ward said on the Oct. 6 “Power Lunch.” “I didn’t think he was contrite at all, I thought he was arrogant.”

Ward confirmed previous reports about the incident that reportedly occurred Sept. 21 and said the information came from “two very senior sources.”

“From two very senior sources – one incredibly senior source – that he went to the gym after … Lehman was announced as going under. He was on a treadmill with a heart monitor on. Someone was in the corner, pumping iron and he walked over and he knocked him out cold. And frankly after having watched this, I’d have done the same too.”

Ward determined Fuld deserved the beating based on his testimony before the committee.

“I thought he was shameless,” Ward said. “I thought it was appalling. He blamed everyone. He blamed, as you say, ‘naked short sellers’ over and over in case we didn’t get the point, when in fact hedge funds like Harbinger had money locked up in Lehman and was shorting it to try and make the most of the money that they already had. He blamed everybody but himself.”

Lehman Brothers filed for bankruptcy in September 2008 and its assets were later snatched up by the British bank Barclays for $1.35 billion, which included Lehman’s Midtown Manhattan office tower with a $960 million price tag.END

Posted by: abba1 at October 7, 2008 1:55 AM

["thanks mojo, but i still don't get it. you have to have money to make a loan, don't you?"]

Actually, you don't. And that's the whole trick. Money is created out of thin air the instant the loan papers are signed.

In this previous post there are a few links that may shed some light on what confuses you. Check it out:

http://tinyurl.com/472xok

Quasi

GL with that.

DBA capitulated yesterday. JJC/JJG close.

Ouch! Mauritius Stock Index down 75% today (according to Bloomberg). That's gotta hurt.

bsi87,

You bought DBA at 25.7

What is your target sell-price?

I'm asking as I bought it at 26.6 last year... Should have sold at the mid $30s level but kept holding on... Sigh...

Steve Saville has an excellent article on Inflation and Money Supply.

http://www.safehaven.com/article-11485.htm

Trend Change Signaled

In our 3rd October email alert we wrote: "The Fed expanded its balance sheet by $254B during the one-week period ending 1st October, which follows a $204B expansion during the preceding week. As a result, the Fed's balance sheet has grown by almost 50% within the space of just two weeks. This, we believe, is unprecedented."

Last week's money creation by the Fed won't appear in broader money-supply data until the end of this week, but the week-before-last's expansion of the Fed's balance sheet has given the True Money Supply (TMS), our preferred monetary aggregate, a substantial boost. In fact, it has pushed the year-over-year (YOY) TMS growth rate from 3.75% to 7.0%, thus signaling a new major upward trend.

We can never know for certain, in advance, which items and which markets will be the eventual main beneficiaries of an upward trend in money-supply growth, but we can make educated guesses. In general, inflation will exert the most upward pressure on the prices of items/investments that are relatively scarce and relatively under-valued.

Value is always a matter of opinion and there are many smart people in the world who disagree with our assessment of relative value, but from our vantage point the broad stock market's high P/E ratio and low dividend yield disqualify it as a likely big winner from the coming inflation. The bond market also looks over-valued, as does the property market. Commodities are likely winners because in most cases their prices remain low in real terms and because the large nominal price gains of the past several years have not yet brought about large increases in supply, but industrial commodities such as oil and the base metals could languish for quite a while in response to the global growth slowdown. Gold, however, often benefits from illiquid financial markets and economic weakness due to its historical role as money. Furthermore, we think gold is cheap relative to most other commodities and most other investments.

It could be 1-2 years before the new upward trend in money-supply growth begins to have a meaningful effect on commodities in general and 3-4 years before it begins to boost the prices of everyday items, but gold's reaction is likely to occur much sooner due to the anticipatory gold-buying of large speculators (some large speculators will appreciate the inevitable/eventual effects of the monetary inflation and take positions in gold in anticipation of these effects).

Fed did nothing useful that I see.

That was a monumental goof, IMO.

Dollar and Gold Rise Simultaneously? Bring On the Flying Pigs --- Tim Iacono is amazed at something Bill had predicted weeks back. http://tinyurl.com/4ttwsv

re:DBA

Nov max pain is 34. 50/200/20 day BB are between 33-35 so there's resistance in that area.

Like to use the Triple RSI sell but I don't know if it can do that in a market like this.

since reaching my target on ESZ8 of 1000 I've accumulated over 25 Cara 100 stocks. My portfolio is very green. Thanks for all the encouragement Bill. It really helped me be brave enough to go in when things looked like hell. I've also bought my "insurance" in gold, but my % is a little higher than yours at this point. good luck to everyone with their trading.

[Bill Cara notes:

I'm off now for meetings downtown. Will return after lunch. I saw a lot of volatility in BA at the open. Should be catchable at 50-51. /B

Bill,

Thanks for all your insights in this market for the past few years.
While I maybe wrong, but I see Australian Shares the possible "trade" or "market" of the generation, given the sharp drop of the AUD of around 40% in past 2 months.
Where do you see the Australian dollars in a few years (or less)? On par with the USD? Higher than the USD?
Do you suggest convertin USD to AUD now, or wait for the dust to settle?
Given that Australia, is rich in commodities, and the boom of commodities will continue for years, could the Australia market be the best place for capital appreciation and currency appreciation?
Your feedback and the community feedback will be greatly appreciated.