Bob Hoye's Signs of the Times

http://www.safehaven.com/article-11571.htm

Our Monday's ChartWorks outlined what is needed to complete this phase of forced liquidation. If this is a down week for the Dow, or S&P, a Downside Capitulation would register on our proprietary model. On the weekly reading this is rare and, obviously, important. However, it's worth noting that if it comes in it is registering a condition that can end this decline.

In past examples it can take a week or so to begin the rebound, which will likely be a tradable rally in a cyclical bear market. Typically at major lows there will be thousands of individual stocks registering Capitulations and this is not happening yet.

In May we concluded that the seasonal turn to widening credit spreads would lead to "severe conditions" by September-October, and this has been the case. The same has happened to commodities, which should bury Wall Street's claim that commodities was an asset class that moved contrary to the main trends in equities. Another part of modern portfolio theory based upon a short attention span of those dreaming up the theories.

As the saying in physics goes: "If you keep your data base short enough it will fit your theory." For hundreds of years, prices of stocks, doubtful debt and commodities have gone up and down together.

Once this liquidity crisis exhausts - stocks, corporate bonds and commodity prices should rally together.

Our work a few months ago suggested that the decline could climax by late October. Monday's ChartWorks suggests that if the "Capitulation" is registered on Friday then the bottom could be accomplished in the latter part of October.

In January we looked to the patterns in the 1973 and 1937 bears. As the year developed, the common items to both called that upon the hard break in May the decline from the October top would be around 25%, which was the case. The overall decline could amount to 49%, but need not be limited to that.

Cara 100 Update:

DNA - Upgraded to Outperform @ Cowen & Co.

closed my rimm position from yest. re-entering later/lower.

The following interview with Warren Buffett, taken from the November 1, 1974 issue of Forbes magazine, still makes for interesting and useful reading today.

How do you contemplate the current stock market, we asked Warren Buffett, the sage of Omaha, Neb.

"Like an oversexed guy in a whorehouse," he shot back. "This is the time to start investing."

Hello from Omaha,

The CoinGuy

http://tinyurl.com/4b94vq

The First post lost my url.

Best,

TCG

Bad News. AJ Cohen on CNBC tomorrow.

http://makethemaccountable.com/podvin/street/020224_LeadingLambs.htm

Next victim of turmoil: Americans' salaries

Income for the median U.S. household — the one in the dead middle of the income distribution — will probably be lower in 2010 than it was, amazingly enough, a full decade earlier. That hasn't happened since the 1930s. Already, median pay today is slightly lower than it was in 2000, and by 2010, could end up more than 5 percent lower than its old peak.

"The biggest hit will be in 2009," Nariman Behravesh, the chief economist of Global Insight, a research and forecasting firm, told me, "and it probably won't be until 2011 until we see any kind of pay gains."

http://tinyurl.com/3sce3p

What says you 2nd_ave?

2nd
Sold few stock that were green and raised 5k
And will raise cash up to 50%. Do not want to be long 100%. It was a mistake to be in 100% equity. Also stop reading and wasting time on article and opinion about market.
I have a feeling that we will not hit 10000 for DOW for a while
So, to day trade and swing trade need cash and now I am trying to raise it. Thought of using margin but gave up that idea.
I look at gold related stock last night and conclude that
If there is deflation gold will not go high?
Also there will not be big consumer demand of gold because of week economy.
And since gold and gold related fund are not down people may sell them to raise cash instead of selling other big loser.
Also there is lots of quality company stock that are down a lot which may give return
Than gold related investment which is not down a lot and may not give big return relative to other sector
This is my personal opinion and I may be wrong more than right

vinod- i have about 12% of the portfolio in gold/miners...

shark- i like the continuing negativity in the headlines, and looking for a follow-through day...we may retest the low of 7882, but i don't think it happens for a few months...keep in mind that the market also (re)tests upside targets..

out of QID, 69.54. In at 59.64

" keep in mind that the market also (re)tests upside targets.."

and the election in about 3 weeks

Wow....They didn't even make a play for the egg money tody, they just sold em off.

out of FXP 101.50, cost 90.

Bill,

Glass half empty? Maybe not, but I just added 3 more names to my list of people who I know that have lost a job. (My total since 1995 is now 59.) I know I have a tendency to be looking at the wrong glass which colors my investing.

I must keep reminding myself the market is NOT the economy.

The saddest thing is these friends and relatives have already lost at least one job earlier in this long-running, downward spiral.

There are still people who can invest, people who must invest, people who will invest. I just know to many who cannot anymore (stuck with the advice of the buy and holders), are already spending their retirement (even with the 10% penalty) or have had their monthly retirement check reduced or stopped. Fortunately some are old enough to have a pension which is still solvent.

Election note:
All of the above are totally disgusted with the lack of specifics from all candidates regarding the fraud, cover-up and "solutions."

I've been buying a little here—Thanks to your specifics.

Looky them airlines go

Long JNY. Capitulation. Do ur own homework.

shark_attack
Airlines is up
USO is at 52week low

jk484,
re: falling median U.S. household

I suggest this has been going on in real terms since the 1970s. Most number never tell if inflation adjusted, do not consider tax increases and other individual expenses added—self retirement responsibility, health care, growing Social Security taxes.

What is different is it can no longer be hidden.

GG is starting to ascend. If I had half an idea why, I might be tempted to hop on.

BA.

Contries like India are going through growing pains. Their airline sector is not doing too well. jet airways is laying off its workforce. The era of low cost airlines is stalling at least temporarily.

I suspect other airlines will start holding back.

In that environment, I think BA might take an additional hit. Thats my opinion.

I told yous guys with oild down here the airlines would be back in business. Now how about GM and F?

Good morning – The 10 year U.S. Treasuries bond price is off today to raise the yield to 4.10% - up from 4.0% yesterday morning despite the lower stock market open that would usually move the price up and the yield lower to help mortgage rates. The yield on the 10-year note had risen about .44% since 10/8/08 as traders fled government debt on concern the Fed will issue more securities to pay for the rescue of the financial system, driving prices lower and the yield higher to worsen mortgage rates. Regards Luggie

Yee Gads 2nd,

Airlines are achieving altitude even as the market does a flight 800.

base metals still weak, i am starting to believe that the PM miners wont really begin their advance until weakness in base metals abates which wont happen until the USD begins its descent.

the charts are looking toppy for the USD, but the technicals havent turned strongly negative yet, the next few days action will be critical.

Sandy,

BA has a backlog of about 3600 aircraft. That's enough to keep them busy for years.

Regards

Adding to YRCW at 4.50. do ur own homework.

long WAG

shark - Are people more or less apt to fly? airfares are falling. Are people buying cars yet? This the second largest purchase, so folks are going to want nearly the sames discount on a new car that they see their home decline?

This whole thing swings on home prices. Consumer spending was pinned on increasing home prices and now that trend has reversed. Look around for signs of consumer spending... I see contraction.

Reference BA

FWIW, Keep in mind that BA is the second largest defense contractor. (source HS Today).

They are the prime contractor for the Secure Border Initiative Network .

dr.cosa - I'll go along with that. Keeping and eye on PM miners...

2nd, Vinod: I think we see a near test of the low, say 8000 in October.

I wouldn't let that train leave without being on it.....

double position in BC. MACD diverging.

Do ur own homework.

This bottoming feels like a process, as opposed to a single momentary event.

im seeing a few things right now w/ respect to the miners on the TSX:

S&P and TSX not faring too well at this point, and the miners are just a bit positive (HGU/XGD)

gold had a little plunge down in the morning then a spike up today, it seems to be settling down towards $844 but hte USD is not doing much at the moment.

i suspect that many people, especially value players are watching the miners to see if they decouple from the market and follow gold higher at some point, initiating a strong rush to them. but at this point i see very little until gold/USD does something.

if the broader market plunges they will likley go down too regardless of gold, we've seen it too many times.

Re BA

will backlog necessarily translate into a firm order. Can airlines not cancel orders ?
As refards defence, can the defence spending expected to go down in the coming years ?

one cancels other on DE

37 limit/trailing 1.3 buy stop

On Monday a buddy down the hall told me to never trust gap-ups in a Bear Market. Looks like I'm buying lunch today.

underwater on MDR

BC - CHICAGO (AP) -- An analyst said Monday boatmakers Brunswick Corp. and boat-seller MarineMax Inc. are in danger of violating debt covenants as sales in the industry sink amid the global economic slowdown.

BA is also a key name in CDO/CDS market.

http://tinyurl.com/3s424c

Anyone know what spread is on Boeing or way to track CDS spreads?

Hey bsi87,

when you're looking for MACD divergence, what time frame are you generally using?

thanks--

BA: Airline fleets aging, replacements needed for safety and fuel efficiency in addition to adding basic routes in the still developing world.

We (in the U.S.) are the ones that will be flying the old MD80's.....

Defense, as Kaimu has pointed out numerous times, will not be a victim of budget cuts until we are totally bankrupt.

BA is far more diversified than most people know.

For the very short term trader playing this bounce, keep in mind the excessive degree of overhead resistance that has been created.

This will keep the bounce for many stocks off the Friday bottom rather constrained. Short term oriented traders should take those profits when they have them.

Sandy,

About 40% of BA's backlog is from customers with a below investment grade rating.

If half those orders get canceled, which IMHO is unlikely, that leaves 2880 aircraft in the backlog.

This still translates into years of production (if they ever get back to work). ;^)

Regards

re BA

an article I read some time ago stated that some 25-35 thousands aging airplane needs to be replaced in the next 10-20 years

forgot to mention " world wide"

BP:

I look at both the daily and hourly.

Gold could hit $1,500, say Merrill analysts

By Moming Zhou

NEW YORK (MarketWatch) -- Gold prices could hit $1,500 as global plans to rescue the financial industry are set to increase inflation pressures, according to analysts led by Francisco Blanch at Merrill Lynch. "The unintended consequence of the ongoing financial bailout will be a return of inflationary pressures to the commodity markets," wrote the analysts in a note released Monday. The analysts didn't say when gold would hit the price target. They also predicted oil prices will rise to $150 a barrel

dr. cosa,

I think a lot of people will be watching the bond markets.

Short term yields are very low right now, which is very gold positive and lends support to a market which is seeing little participation. (COMEX) The fact that other currencies are prone to decline vs. the Yen also feeds back into the $US price, which is preventing a sell off.

Jesse's Cafe Americain which pointed out the possibility of a bond market rout.(than-you to whomever posted it a few days ago.) U.S. government backed securities may face a sell off because their investment grade may be lost.

If you look at the very long term chart of bonds vs. dollar, you will see a chronically firm bond market vs. a weakening dollar over the years with various routs right before peak of the blowout of the Nasdaq, Dollar, Housing and Oil. But since the oil price came off, the bond markets rallied. Each time there was a rout in the bond markets, there was a rally and a re-flation.

http://jessescrossroadscafe.blogspot.com/2008/09/coming-collapse-of-us-treasuries-and.html

look like one of those 700 point day for DOW

Falling knives everywhere. We witnessed the first bounce, now, is this a stairway? If so, how many steps to the bottom?

Fed fiddles while Rome burns and dominos begin to tumble.

hmmm. ibm, rimm, ba holding up well vs their index/market. i tried to get in lower but its being stubborn.

good signs for all three charts too
http://tinyurl.com/2jyzb9
http://tinyurl.com/yqskgu
http://tinyurl.com/7ygy2

BA seems to be the slowest cruise ship to make a u turn.

Mission accomplished.

LONDON, Oct 15 (Reuters) - Gold erased its earlier 1 percent gains to trade little changed on Wednesday from the previous session as a further decline in equities sparked selling of commodities and the dollar firmed a touch against the euro.

Silver fell 5 percent, platinum nearly 5 percent and rhodium more than 10 percent as fears over the outlook for the global economy added to the perception demand will fall for industrial precious metals that also have an industrial use.

http://tinyurl.com/3uq5j2

A bit of research material.
Some info on CDS spreads related to auto makers and others from Bondwatch Oct 10.

http://tinyurl.com/53o4tk

Info on level 3 asset exposure & fair value accounting.

http://tinyurl.com/4y9wx7

Based on the chart on page 9 I would be sticking to Energy and Other sectors.

Other sectors seem to include Boeing, GM, and Ford though...

pulled DE order. Switched to AG. More upside.

trailing buy stop on CENX

Disinflation is a decrease in the rate of inflation. Reflation is the act of stimulating the economy by increasing the money supply or by reducing taxes. It is the opposite of disinflation.

[Bill Cara note:

Thank you Chicken. My dad's nickname was Chick btw. You see, the Italian Ciccarelli (my birth name, which I changed to Cara -- middle four letters with Italian "a" on the end -- not an English "e") is pronounced chick are elli.

Commodities are hammered this morning again because of the banks putting the squeeze on their speculative accounts. After those senior bankers were finished meeting with the Treasury Dept yesterday, they were read the riot act, I am sure. Reflation is going to zoom commodities and kill the $USD -- this sell-off is an attempt to smash the will of those who will be loading up the precious metals truck -- before they reach for their keys to get the ball rolling. But that can only go on for so long. In time, these interventions will be met with a flat-out stoppage in oil and precious metals production -- or threats from OPEC and the goldminers. Then where will the Treasury Dept be? No, this selling wave will soon be replaced by a buying wave. The bigger the selling at this point; the bigger will be the buying when independent traders kick into action. My fear is another period in time when the US authorities impose controls over currency/gold. The last one didn't work, and neither would another. The only thing that works is a free capital market.]

long CENX at 11.78. Do ur own homework.

Unless there is a miracle rally in this bull by Friday then the "Max Pain" numbers will take on a whole new meaning.

Nevermind about CDS... Watson came through.

Apparently different data is available depending if you're on the "sell side" or "buy side".

Forums on Wilmott about modelling risk instill me with confidence. :)

http://tinyurl.com/3qtphh
http://tinyurl.com/3ztbea

CENX: Very high debt equity ratio.
bsi8, what was your rationale behind buying ?

re:FXP/QID

per usual, sold them too soon.

re:CENX

It's cheap and people are puking it up.

Sandy,

Write this down and put it on your screen.

"What everyone knows isn't worth knowing"

It'll make u a lotta money.

bsi87,
Point noted!

So did Lehman sellers lose $365 billion last week or $6 billion?

http://tinyurl.com/4z7d83

As always, the media comes through with the staggeringly high target.

So does that mean all information in the media is slanted 98% in favour of their objective?

That means instead of 25-35k airplanes being replaced in the next 10-20 years, would that read better as 5-7k airplanes?

So instead of "$50 trillion" in exposure to derivatives, are we really only looking at $1 trillion?

And would a $700 billion bailout end up really sending only $14 billion to the ones that need it?

After the IPO and startup costs of the Fedge fund, anyone know what will be left?

Interesting times...

re:CENX - it might be cheap for a reason (mainly no current earnings)...
but as always respecting your opinions, bsi, would like to know when you think DB has capitulated (or has it already).

re:DB

RSI 7 day has not traded below 10. 41-40 might be an interesting entry.

No position.

Kaimu...

Yesterday you said:

"I will be in the ASX today buying up beaten down commodity stocks I have been following since 12/07 and averaging down on companies I already own who keep putting out improved reserves and production and profit! To each his own ... Besides how I can ignore the ASX discount on the USD?"

I too believe this is a great course of action for the next few years. How are you purchasing the ASX stocks? Are you using a US broker for the orders are did you open an account with an Australian broker and transfer funds there? If so would you recommend that broker?

Any insight into the stocks you prefer?

Also,

It looks to me like basic materials, minerals, and oil companies are contributing to the majority of the decline today.

BHP, MT, RTP, BTU, X as well as big oil co's like CVX, XOM, etc all getting jackhammered.

Is this just the natural over reaction to the downside as players exit en masse or is this foretelling many years of weak commodity prices and weak global construction growth?

If the Chinese were desperate for a piece of RTP or BHP 6 months ago, what are they thinking today?

On the flipside it seems that tech companies with manageable debt/no debt like IBM, ORCL, MSFT, HP are weathering the storm much more effectively........

I'm sorry I'm so short/brisk in my answers but I had a bunch of trades to put on.

One of the things I learned thru Elder is that buying and selling correctly and proper position size can overcome a lotta problems including the mkts/stock selection.

Buys
JNY 9.75
CENX 11.78
BC 7.05
WAG 22.84
YRCW 4.50

Now these are perfect buys but they're not bad.

One should be HAPPY when the markets gap down at the open because people want to sell their stocks. And gives u a chance to sell off your short positions. I bought FXP and QID when the markets gapped UP yesterday. 2-3 days and moves generally exhaust themselves ST.

Focus on fear (fear of losing and fear of not getting enough (greed) and one will do better.

Write this one down too.

The hardest trade to put on is usually the best one.

Sandy,

Did you ever make any headway on compiling a list of companies with a good deal of cash on the books? I would be interested to take a look.....

I think some small/midcap tech companies with nice cash positions will benefit from a good environment for takeovers by larger rivals and also from ability to institute stock buyback programs.

Thx

correction.

"Now there AREN'T perfect buys but they're not bad."

``The Black Swan Protection Protocol is designed to break even 90 to 95 percent of the time,'' Spitznagel said. ``We happen to be in that other 5 to 10 percent environment.''

http://tinyurl.com/4y87yw

Maybe black swans from days of Exxon Valdez are having revenge on oil companies...

Bill - I chose this name because it reflects on the BS we're fed everyday by government, big business, and media. This BS gets recycled and compounded until reality becomes blown out of all proportion and good people make costly mistakes. Additionally, chickens are curious creatures (to me). They are direct descendants of dinosaurs. A chicken hen doesn't take any BS from any of the other barnyard animals, they are damn tough birds in their element and can live twenty-plus years. But I'm sure you already knew the purpose of my choice.

long TIN at 9.87

So, invest in chickens?

More on the BSPP (Black Swan Protection Protocol)

Taleb's strategy is based on buying out-of-the-money options -- puts and calls whose strike price is either lower or higher than the market price of the underlying security. A put option gives the buyer the right, though not the obligation, to sell a specific quantity of a particular security by a set date. A call option gives the right to buy a security.

The Black Swan Protection Protocol bought puts and calls on a portfolio of stocks and S&P 500 Index futures, along with some European shares. The Black Swan Protocol doesn't rely on commodities, currencies or insurance on bonds known as credit default swaps, Taleb said.

``We refused to touch credit default swaps,'' Taleb said. ``It would be like buying insurance on the Titanic from someone on the Titanic.''

If I was to implement this approach with a couple of stocks or ETFs, could someone give me the tickers of the call/put options they would suggest?

Contrary to their trading namesake, chickens aren't particularly bright.

Did anyone see the CEO of Tyson on the tube the other day?

Big investment in "proteins" in Brazil, China.
And he was market savvy, knew he wanted to be buying here.....

Is this a black hole or black swan?

"Reported estimates of the size of the credit default swap market have so far been based on surveys. These surveys tend to overstate the size of the market due to each party to a trade separately reporting its own side. Thus, when two parties to a single $10 million dollar trade each report their “side” of the trade, the amount reported is $20 million, which overstates the actual size by a factor of two since both reports relate to a single $10 million contract. When examining the outstanding amount of actual contracts registered in the Warehouse (not separately reported “sides”) as of October 9, 2008, credit default swap contracts registered in the Warehouse totaled approximately $34.8 trillion (in US Dollar equivalents). This is down significantly from the approximately $44 trillion that were registered in the Warehouse at the end of April this year."

The DTCC holds all the world's paper in its name. :)

http://tinyurl.com/4ogeya

But it doesn't want you to.

http://tinyurl.com/4hv8dc

This can't be good for paper companies.

http://finance.yahoo.com/q?s=ABH

If ABH was a steal at $40 then what is it at $1.90?

Craig - Actually, in my experience I'd have to say chickens are fairly bright. They are able to reason cause and effect surprisingly fast. Roosters are another story, it appears they have only one purpose in life.

The Irony of the market taking a swan dive in the middle of Bernanke's speech about restoring normal market function is remarkable.

Stopped out of CHK at 17 on 300. $1350 profit in three days on $3750 - not counting commissions, I'll take it.

Maybe it's just me, but Bernanke with his voice trembling and up and down tones, almost always seems like he's on the verge of breaking into tears when he speaks publicly.

But then, who can blame the guy. He's got huge shoes to fill.

There's nothing normal about the Bernanke.LLC intervention we've been witnessing, what they say and do are in total opposition. They claim to be rescuing the market in public, while in the background they're working harder than ever to take it down.

TSO Q3 earnings estimate 1.70-1.90 per share.
(.03 cents a chare in Q2).

CEO sells 251,000 shares due to margin call. (?)

long AG 31.54

long CHK 17.29.

Thx goldie, I thought there'd be a retracement and give me a chance to get long.

Alright, CP, I have no idea what your experience is.....LOL!
I know they're bright enough to teach to play the piano.....and they're tasty. That's good enough, right?

"But then, who can blame the guy. He's got huge shoes to fill."

LOL!!!!!!

Yeah, big ol' Greenspan clown shoes.

You're welcome bsiiii....keep feeding me those capitulation ideas tho...I like em.

bsi87 said:

"Write this one down too.

The hardest trade to put on is usually the best one."

It could be argued that the hardest thing for long term investors to do right now is to sell equity holdings that have already decreased in price by 50%-75%, with the logic being that the decline has already discounted bad news, and thus they can't possibly fall any further.

We still haven't seen fully the effects, nor dealt with, the commercial real estate market and the whole unsecuritized debt market (credit cards, HELOCS, etc.)

"Bargain" is a relative term when you're chasing a moving target.

Selling at 50-75% loss is hard when you're talking 1 stock out of your portfolio - been there, done that.

If they're all down by that amount, I'd say its pretty much an impossible decision...but I do see your logic...

Todd,

That ship sailed at Dow 14,000.

The hard trade now is to hold and buy more now, not throw the towel in.

Just curious, are u net short, net long, or flat?

Sold as planned the same no. of Dec. puts today before (US) lunchtime as I had bought Jan. puts yesterday. This turned out much better than expected, sometimes one gets lucky.

Bought also as planned the DMLP 22.5 Nov. puts in the open, paid through the nose as DMLP was up while almost everything else energy-related was down. so didn't dare wait. It is also now down somewhat.

Often these high dividend stocks finally sell off into the close on the pre-ex day. If it doesn't break below 20, I'll exercise the 20 calls at the close.

Watching IYR as a general market tell, it is weakest & down at the "last chance" level for a bullish outcome of the automatic rally. XLY is actually somewhat stronger, odd considering the poor retail showing.

It seems like it must have been ages ago when the DOW had broken 11,000 and I had posted here that my charts make me bearish and that I believed that there would be another leg down. I am not pointing this out to pat myself on the back, but rather to state that DOW 7800 was not and is not the full leg down on my charts.

SLW broke up out of it's intraday downtrend channel yesterday, but then didn't go anywhere.

Today it is gliding down the upper downtrend channel line.

Very hard to call this one.
Intraday volume is still negative, but not too far from a potential intraday bottom.
If it breaks down into the channel again it will go down to Friday's low again - minimum.
But as long as it holds & drifts down along the upper channel line it could break upwards.

you know things are bad when stockcharts is down!!!

bsi87

Essentially flat, but have equity exposure in retirement accounts.

The hardest thing for me to do right now is to be bearish even after these incredible declines in the market averages.

The current environment is a professional short term trader's dream with all the volatility. I don't think the average investor who doesn't have the proper tools or training should be trading these markets.

But for Mom & Pop long term investor, it's not out of the realm of reasonable possibility that the markets may see even further downside.

At best, we move sideways in a trading range for the next few years, which would be quite constructive long term. At worst, I really don't want to go into that here ...

worse yet the $hui is down 14pts to levels seen when gold was upper 300$ and on a 9-14$ up day in gold at 850$ gold?

incredibly frustrating, I thought today would be a good day for the shares as the gap in silver got filled this morning?

To demonstrate the disconnect between todays price of oil and energy stocks, I looked at the prices of ECA, SU, and XOM for September 07, when oil was same price range as today. Last September, SU traded at 44 - 50 range (now 22), ECA 58 - 74 (now 40), and XOM 85 - 94 (now 68).

We all know the chicken is a mighty animal, and mighty good tasting too, particularly the wings, fried up dark with some Frank's Red Hot and Tabasco.

The market is not convinced.

What I am GUESSING we are doing is descending to, hopefully, not quite as low as the previous low, thereby putting in a good "higher low" which is, once even a whiff of bullishness manifests, an excellent time to go long.

Craig - Nor do I know of your experience and attempt not to pretend. All I can say is the chickens and ducks living in my backyard certainly have me catering to their needs. They've done remarkably well at training me....?

It's like the slick New Yorker who travels to a small coastal fishing village to sell investment ideas to the locals, telling them he will finance a large fleet of fishing vessels, eventually enabling them to retire wealthy and live simply in a small coastal fishing village.

SU down 16%.

I'm really glad I didn't get caught in the fade yesterday... still holding the index, PCA (soon to be swapped with SU?) and some CNR.

Oh, and my limited-time, special-offer, act now and we'll throw in GE Capital GE @ $19.95 stock (actually $19.58).

Another one to note.

When it comes to investing, you are your own worst enemy.

CAD dropped again? Didn't they like the fact that we have a minority government?

Don't they like our six-point plan?

http://tinyurl.com/3smyfg

TSX is down 4.44% today.

http://www.tsx.com/

WWF Canada opened the market with a chair to the head.

http://tinyurl.com/4c2lug

I saw a bunch of live chickens and roosters at a fair we went to last week. Right outside the barn door they were selling chicken fingers and fries.

Black Swan or plum sauce?

everyone buying this dip?

NYU-I am thinking about buying some XOM.

sharkie

What you detailed regarding the general market averages would provide a nice "w" bottom and provide a reasonable entry for those who didn't buy on Friday or early Monday.

That said, I don't see upside beyond 1075-1100 on the S&P on that move. This remains a professional short term trader's market.

Just one person's opinion, as always.

Here are your highly volatile symbols from TSX that were frozen for a period yesterday.

BNE.UN, BPF.UN, BPO.PR.J, BPO.PR.K, COW, COW.A, NWI, OPC, ECG.WT, EFX.UN, CU, CWF, BVX, CBD, CBQ, CCL.B, CFS, CMW, CJT.UN, CLU, SPF.DB.C, SRQ.UN, SRX, TCW, GLV.B, WJX.UN, WZL, XCG, HTE.UN, IGM, IGT, GZ, HAD, PGF.UN, HEU, HF, HFD, HMD, HED, EXN, FBS.B, FFN, FTU.PR.A, LBS, NDM, LNR, NKO, CRQ, MUH.A, QBR.B, RBS, TO.A, TTH, UFX, VNX, RPQ.PR.A, PIF.UN, PKI.UN, XDV, XEN, HQU, RCI.A, DRX, DTF.UN, BEI.UN, AGB.WT, ALC, CNQ, ERF.UN, TCK.A, ATG, MCH, MEQ, DVT, EBR, CXA.B, BSD.UN, TDS.B, TIH, WIX, IAG, HTE.DB.E, HJD, FM, FSY, GDI.DB, CRP, BQE, ML.WT, RBT, TRZ.A, TXT.UN, RPB.PR.A, XFN, XIC, XIN, HQD, DML.WT.A, AZC, ARX, AVN.DB.D

http://tinyurl.com/4q8trn

Could make some good swing trades.

Isn't XIC an index ETF?

shark_attack,

I see a year end rally starting late Nov. early Dec. from a lower level. But I may be wrong and you may be right.

i think its clear at this point:

use me as your contrarian indicator but im out of gold stocks.

done.

nothing is making them go up. a few quick jumps before they crater, harder than most sectors. the XGD/HGU are getting killed today. i see none of the rationale provided working in terms of lower energy prices helping them, higher gold prices (we need over $1000 just to get a hello from these things?) or a flight to safety.

gold was up at $900 and the XGD was aobut where it was right now. gold is looking a bit toppy as well and may sink toward $800 on some new found US dollar strength.

i see nothing at this stage that suggest gold stocks are going higher unless the entire market move up, and gold moves up, otherwise they will miss the boat, which they have for too long.

ill follow the situation closely to see when i may jump back in. who knows, gold may jump $100 over night, but if recent history is any guide, the shares will move just an inch.

good luck gang.

long POT 78.8

Doesn't chicken make good shark bait?

It is odd that the Central Fund is down so much today with gold up slightly. It has a huge premium so perhaps that is it, but I think the people that were running into gold over the last month are dumping now.

I've been watching Goldcorp. It seems to me that it is under accumulation. The rallies are on significantly more volume than the selloffs the last few days even though the price has gone nowhere in aggregate.

long SU 21.41

whole lotta longs today bsi...

Yep, they backed the train to the station.

should I sell yri.to ? jees I thought today would be a good day, will the gold shares bounce back by end of day?

I can hardly believe it. Gold up 9$ still and the hgu.to(bearish gold equities etf) is up 10% ?

starting to nibble

SU looks tempting. Bought some ECA. Bought some FCX.

Thoughts on DVN?

Will wait for bigger buys if we drop closer to 8000 later today or tomorrow (won't be unhappy if it doesn't get there though).

I feel like puking.

bsi - you and most of the rest of us. Pretty brutal out there.

Chicken in peanut sauce. Works well for catching crab, probably lobster as well.

I think all above are correct, the train doesn't budge from central station until all HB&B positions are satisfied. Snowballing ensues and damage accomplished in the face of implementation delay.

The day the Earth stood still?

Speaking of trains... Looking at adding to CNR position....

Still a long way to go to get to last Friday afternoon lows.

10 day ATR for DJIA is 593.

Its another worldwide collapse in the forex for just about every currency. Looks like a currency crisis is brooding in Brazil.

Talk about dumb, I can't believe I rode my bag down this far... Now I refuse to sell and I refuse to buy.

man. i dont know. just looking at charts, not tv, and everything points to lower equities. maybe a strategy can be to buy high quality companies on dips like today, sell on moves up, then rotate into invest etf's, then repeat.

and not jump all the way into the bullish pool until i see some nice bases forming with appropriate break outs.

I think we may finish well off the lows today with buying in the last hour. Hope there is an appetite from the "big money"

Normally down 7% on the S&P would qualify as a mini-crash; now its just the normal daily range!

Well, we're very close to Friday's close. Only a couple of hundred points away on the DOW!

Other than picking up a bit of BA and KO these past couple of days, and selling a couple of PUTS on MSFT for Apr 09, I've sat out.

As mentioned earlier by bsi87 (I think), the hardest thing to do is hold and buy more at this point. I'm 55-60% in stocks now, but underwater. I'm tempted to keep at it, in the sectors we've all noted, but days like today show me a few things:

1. We have plenty of sellers left.
2. The markets have not found a firm footing to launch upwards.
3. Even "bargains" can look turn into lead balloons when fear and uncertainty are so high, regardless of the logic behind great valuation.

You can never time a bottom, and I've failed doing so thus far, but I wonder if it would be prudent to press the buy button today.

Latest on the "phi mate turn date"

"...it is possible to count the recent rally as a corrective wave 4 up within an ongoing, and incomplete stock market crash. If a wave 4 up finished Tuesday, it means the bottom of wave a-down will come around our next phi mate turn date, October 23rd, meaning this coming phi mate turn will be a major bottom, but key point here, it means a huge plunge to new lows is imminent, possibly a 2,000 point +/- plunge, starting in a day or so, from wherever wave 4 tops. If wave 4-up needs another week to complete either a zig-zag or a triangle, then the coming phi mate turn will be a top, and we could see a 2,000 point plunge starting next week, from wherever wave 4 tops, lasting into mid-November.

Anther possibility is that wave a-down bottomed Friday, that the rally since is a first leg up
within a large degree wave b-up, meaning the October 23rd phi mate turn could be a top, that leads to a several hundred point decline correcting this past three-day rally, but one that does not lead to new lows.

Any way we cut it, we should see one more sharp decline, either several hundred points, or several thousand, starting between now and late next week. Buy signals are conspicuously absent in most key indicators tonight. Once a major bottom is in, we should see most of our key indicators generate new buy signals."

~~~~~~~~~~~

Caveat emptor

[wish I was 100% cash]

the 10 day euro chart looks like an ihs, maybe the gold shares will start to react? It seems to be the pattern, smacking the gold shares down and then running back up into the close.

Todays selloff, despite being pretty massive, seems pretty controlled across the board.

I'm not observing as much parity and dislocation, which leads me to believe that a lot of the movement is being created by the option market makers on broad indices (rather than fierce disclocations caused by margin selling).

Big oil and industrials/minerals seem to be the big losers today but beside that it looks like they are just running the broad index herd back and forth and shaking the options tree.

We'll see what happens but the volume on DIA is instructive IMO.

Friday it traded 73 million shares.

Monday "rally" it traded 44 million, not good.

Tuesday it traded 58 million, increase volume on a down day.

Today so far, it's down a sh-tload (trading term) but on volume of 24 million.

So IMO, it appears the sellers are wearing out.

We'll know in the fullness of time.

Not sure I understand all the doom and gloom. So far, what we have is a typical gap fill, pullback after a string run-up. Even if that fails, we still have double bottom ahead of us as a next reversal formation. Now if THAT fails too, then yes, more lows are likely. But to fall in such desperation now would only mean you expected the market to have no red days at all.

Not addressing anyone particularly, rather general mood

[Bill Cara note:

I agree that all day long Bloomberg has been spewing doom and gloom from economists and it started yesterday afternoon with Roubini. Let's hear instead from the traders who have real capital on the line. For every share that is being sold, one is bought. Who's buying? That's the issue -- not what some academian thinks of the capital market.]

B.S.

Yeah, you don't get a panicked sense in the sell-off. Or...maybe we're just slow cooked frogs not panicking because we've seen this before.

bsi... I agree with your volume estimation, with one addition: low volume Monday was probably a reflection of some markets closed on Columbus day.

My last remaining idea is on the refiners, only because they've been beaten down so far, the hope is that they post good numbers and that lifts em' all.

I definitely do not like what I see in tech at this point. My gut says they remain weak for a while.

Yo Beard!

We'll have to start calling you, "Mr. Sunshine"

Sharks, with a reputation as indiscriminate eaters, are actually quite selective in choosing the morsels in which we partake. No license plates and flotation rings for this shark. I prefer filet bernaise with creamed spinach and new potatoes, or perhaps some veal scallopine in a white wine sauce with plenty of butter and mushrooms, capers and fresh parsley. Or we could just fry up some chicken:)

BTW I stayed the HECK out of this market all day and while that doesn't reveal me to be an adept shortist (which I'm not), I didn't lose any money either.

The "smart money" indicator so far.

DJIA down 214 pts first 30 min
NAZ down 50
Russell 2000 down 15.6

10 day ATR
DJIA 595
Naz 117
Russell 38

most indices have already hit their ave daily move.

Vadym,

I agree that it's not time to look at coffins. As bsi and BillySundance said, volume looks low, selling seems rather moderate!

Still, many technical indicators are unclear. If we are setup to test the "double bottom", for people who are not 80-100% cash, it seems to make sense to wait a couple of days and see where we'll go.

Having said that, you can always just buy quality stocks in small increments all the way down if you're not day trading.

On another note: UTX seems to be in the pack with MSFT, IBM, etc. in terms of relative strength here.

Also, anyone else notice that IB's 52-week lows are incorrect across the board?

nemo... sunshine am not. Just not letting emotions could the reality. neither elation nor desperation have their place when evaluating the market stand. So far what we have is just that: retreat with gap fill, more likely to reverse back up from here than continue down. If conrinues down, next test will be double bottom at 10/10 lows. Simple set of IF-THEN scenarios where IF describes market action, THEN defines a trader's reaction. Whatever happens, a trader has pre-defined set of reactions. No ego involved, no emotional attachment to positions or opinions, acknowledgment of the market as uncertain environment that works in odds... that's all.

...emotions CLOUD the reality...

Teck made a slightly lower low today. Looks like a possible broadening bottom formation.

Vadym: I agree completely, poor attempt at humor. My apologies.

shark... I am not sure I get it. You are a DAY trader, aren't you? We are having unprecedented daily ranges, what more could day trader ask for? If not participate now, when are you going to? There was enough of money to make on a LONG side today, btw, if shorting for some reason is not your thing.

It's just that you regularly post calls that prove to be correct (I haven't tracked them to say honestly but you did give a summary), so why not utilize your own read?

Sorry, but I need to rant.

Added 20 shares of lead .308 caliber @ .50 a share. Actually, I just got back from Home Depot. The 230 Sq Ft of special order slate tile I bought turned out to be a major headache. The display was so very pretty. The slate was all smooth and at a reasonable price. After my 23 cases arrived I inspected and took 3 cases back. After cleaning them off I took another 4 cases back. Over 25% defective. The 3 cases I ordered to replace the first 3 were also defective. This stuff was more like compressed cardboard than stone. Thankfully Home Depot credited my card and did not require that I repurchase product from their store. I'm amazed at what some of the manufacturers are trying to peddle and the methods they will use to do so.
On another note, I've had to travel to the San Francisco area 2 times in the past 2 weeks. It just so happens that on one trip, the museum we were visiting was next to the Blue Angles display. Needless to say we couldn't find a parking place within 2 miles of the museum. My wife dropped us off while my daughter and I toured the facility. She came in about an hour later. Each time I've traveled to the Bay Area, I have seen no indication that really hard times are upon us. The freeways and streets are jammed and the restaurants likewise. If this is a recession, what the heck is the next boom cycle going to look like?

all this negativity is good; it sweeps weak hands and sellers off the street...

instead of slow process I wish DOW go down 2000 point and get over with it?

Bob P mentions SU and it pops up.

LOL

Right on cue....buying started right at 3:00.

DJIA down 214 in first half hour, up 100 since 3PM price

FOSL, on Bill's list of 90 stocks i believe, appears to be capitulating today, down 9% second day in a row, RSI daily of 9. $17/share down from high of $46.

No position. Clearly a consumer discretionary company, but might be worth playing for a bounce i suppose...

We'll see about this hour. THe pattern has been smart money buying. Patterns are made to be broken...huh, Vadym???

I would suggest one should calculate the 10 day ATR for any index/stock/ETF to understand what is probable.

stock market Off Topic:

RosevilleBill

I hope you made sure you got the same dye lot on all that replacement tile. Otherwise, colors may vary.

nemo... just to put real time example to theory - ADBE, sharp selloff into 27.50 with sharp vollume increase, and immediate jump over 50 cents... from a day tgrader's standpoint, how to ignore such easy money, entry on 27.50 crossback with merely 10 cents stop (bottomed out at 27.44 so stop is under latest low), and 1:5 risk/reward in minutes... This is kind of patterns I follow.

On NQ, gap fill level was about 1280, it bounced from this level so far, give or take 5 points. Another pattern...

Fossil may benefit from "retail slumming"

Fossil offers low cost alternatives in clothes and watches....so instead of buying that Tag or Rolex. Maybe you get a Fossil for xmas this year.

Anyone have any highs/lows data for NYSE or NASDAQ today (or links to a good source for this info)?

Despite major averages being down about 7% at one point, I don't see many new lows on my watch lists......

so much for that "great" ER from INTC.

'spose we'll see some upgrades in the AM?

Vad,

Can't always do the right thing for yourself is my answer. To see everything falling below the opening range and going short, which was basically the trade today is not for everybody, not every day at least. I've concluded that, for me, being VERY selective about choosing trades is going to put me in the winners circle. I wasn't in tune with the bearishness today, so I couldn't really capitalize on it.

I've been meaning to ask you...Have you determined the optimum position size for a trade such as the ADBE one you describe above?

LOS ANGELES - Nancy Reagan suffered a broken pelvis in a fall at her home and will be hospitalized for several days, her spokeswoman said Wednesday. The 87-year-old former first lady fell last week, spokeswoman Joanne Drake said. She did not seek immediate medical care but decided Monday to get checked out because of persistent pain, Drake said.

I hate when I do that.

Sold a couple of Mar 09 PUTS on EWZ, strike $25 for $3.40 premium. This ETF gets crushed with oil fluctuations and all the pessimism out there, but also rallies hard.

I figure if we see a pop, I can cover for a few hundred profit. If not, I see Brazil as being an aggressive play in the BRIC, developing, and Latin American nations. Getting put at $25 = $21.60 buy-in. 52 week low thus far was in the low $30s (IB's numbers are wrong, and I don't remember exactly).

shark,

depends on a stop size and volatility that could lead to a slippage. With 10 cents stops, I'd do 2-3K shares on a normal stock in normal times, but ADBE can be very volatile, so I mostly do 1K, sometimes 2K.

No buying interest at all....each uptick gets sold off.

Cool. I still look forward to heading out to BC and looking you up and buying you and your wife the best dinner you ever had.

BTW this market isn't closing too well. More tomorrow?

I'll make sure to have a list of the most expensive restaurants around :)

The way things go lately, the most probable scenario would be gap down, selloff at the open, then huge rally - isn't that how market stuns us lately, lol?

the strong dump towards the close seems to confirm more weakness for the short term to either re-test the bottom or make new lows. the volume is the canary in the mine here.

gold is basing, and if the broader market moves to new lows and the mining shares hold up above last weeks low that will be a very good sign IMHO
on any future uptrend.

Guys,

I don't want to hear any B.S. on this point...This selloff today IS significant and deserves to be taken notice of. It's meaningful.

[Bill Cara note:

It was also profitable for short-sellers. The problem for the public is that they (me included) don't know what's going down in NY and how serious it is. If we discover after the end of the month that HB&B had a great month on the trading desk, then you can figure a little birdie whispered in their ears. Given that these banks are in dire straits, nothing would surprise me at this point. Still, I hold my belief that there are super values in the market for long-term oriented traders. Aren't the real losers the Goldman Sachs of the world who assessed the oil market at 147 on its way to 200. How much did that cost the hedge funds that were clients? I put that in the past tense because I wonder how many of those hedge funds are still trading today.]

Wow, this is truly dreadful price action. Monday is fully erased on the Nasdaq now, below Friday's close.

dr.cosa

"the strong dump towards the close seems to confirm more weakness for the short term to either re-test the bottom or make new lows"

With that said do you there is any validity to my 2:21PM post?

Buy 300 Shares of GG
Details Filled at $23.09

Okay, so Monday never happened. Huge upwards movement, shorts reloaded?

A very strong dump started at 3:30PM!

We've seen this in the past 2 weeks a couple of times, where there is an exponential increase in selling starting around 3:45PM!

Looks like my EWZ put short timing was tad early!

The 61.8% retraces are in sight. Perhaps gap down to those levels tomorrow followed by a rally?

-10% is the biggest daily selloff yet in this bear, no?

They're going to have to do better than that if they want me off this train. When/if they can get the big board down to 6k I'll definitely be buying.

what a nasty close. cash still feels mighty good.

Shark:
This selloff today is significant.

To me it looks like another call in on margins
which would mean its another hammer blow to shake confidence.

Or perhaps.. the system is a bit more broken than we all believe. perhaps it was pushed a little too far...

Doesn't matter... Tomorrow will come, rain will still tumble, sun will still shine

and we will live our lives as best we can.

One step at a time

peace

those phi charts are intersting but somewhat confusing.

basically the SPY seemed to want to fill the gap from last fridays close with that sudden crunch down.

South African Miners are up, since their currency has collapsed 15%(no typo)

Gold miners getting squashed again, some downgrades come out today:

http://www.kitco.com/stocks/companyname_asc.html

I understand they took Cheney in for irregular heartbeat.

Apparently they found him in the woods all rusted solid saying something about "oil can".

Cost averaged down on TCK today. Now about 12.90 USD (15.50 CAD), with a P/E of 4.1.

Same old big hedge stuff only on a shorter time frame and for relatively minor gains to spruce up a bad year 1/2 way through the 4th qtr. Great day-trading stuff once you see where the programs are going, but hope to see them bite the big one on something unexpected.

Into CNR.to @ $45.10 at close.

I just hope this sell off isn't related to the retail sales numbers and the "news flash" that we are in a recession. I would think these would have been priced in a long time ago.

As mentioned above it may be a signal that far worse is yet to come. Ma & Pa have to be getting tired of 7-10% changes in account values every day. That used to take months or maybe even years.

I'm with Vinod. Added to GG at the close. Also a partial XOM.

It's like Vadym and Shark are going for the best chicken dinner in BC and they drive up to the restaurant and chicken is on sale half price!
It use to be $14,400 (Canadian)and now it's $8000! Such a deal!

Do you suppose they rant about how ugly the 'close' is or do you think they buy the best chicken dinner in BC for half price?

Sandy,

Airlines can and do cancel orders (as does military). I once worked for a company whose biggest civilian customer was Boeing. For years after leaving their employ they were one of my biggest clients. When my invoices went unpaid I knew they were slowing and sold my BA stock (and visa versa).

For about 10 years I thought investing was a snap — then came the 1970s and there went my signal.

So US Steel down 18% today.

90% institutional ownership.

Steel must be harder to burn in your fireplace than wood.

http://tinyurl.com/3kjvjp

Abitibi anyone? Down 20% today. 18% shares short.

Bought...GOLDCORP...ENCANA..CANADIAN PACFIC..CANADIAN OIL SANDS...SUNCOR..GE

SV

TSX.....DOWN....640 POINTS

SV

I think Mr. Market is only now starting to factor in the earnings contraction from the severe recession which has descended upon us. The past few weeks has been all about the credit crisis -- now that there are some positive developments in that area, attention has turned to the expected fallout to the "real" economy.

I fear we're in for at least a few more rough weeks before we can bottom and then start to climb the wall of worry upward.

wavesmash

US steel hamilton canada operations will be idled for 6 to 8 weeks begining around Oct. 26, blast furnace will be idled, from what i understand other blast furnaces in their chain are also idled, lack of orders, Arcelor Mittal s Hamilton Canada plant (the old Dofasco) is only operating at 50% capacity, layoffs have occured there.

I'm puzzled as to why anyone is surprised at the selloff?

The big up move was due to fear of missing the big up move. Nothing has actually changed yet with all the funding and talk of even more.

Bernanke said something today about needing to restore trust. When they start to hang a few of the people responsible instead of asking them what to do, I may begin to think of trust.

Naaa.

October 13, 2008: LOSS… Compliments of Richard Russell of Dow Theory Letters

“Now I'm going to write about some stuff that you won't hear from most other
advisors -- loss. Is there any advantage in living as long as I have, 84 years? Well, yes,
you've gained a lot of experience. Everybody suffers losses in a big bear market such
as this one. If you haven't lost in the value of your home, you've lost some in your
investments or you may have lost your job.
Loss is always painful. I know of two great and brilliant stock market operators who
committed suicide after suffering huge losses. One was the famous trader, Jesse
Livermore, who was a friend of my parents. Jesse had made millions in the stock
market (he was a brilliant short seller), and in the end he was almost wiped out. Jesse
shot himself after taking a horrendous loss. George Schaefer, my mentor, jumped out
of the window and killed himself in 1974. George had made millions through his
writing and in the market. George suffered the second wipe-out of his fortune in '74,
and it was too much for him. Death seemed the sure way out of his misery.
More personally -- My family has had its confrontations with stock market loss. My
grandfather owned the biggest jewelry store in Washington D.C. Grandpa shot
himself in 1907 after the Panic of 1907 wiped him out. My uncle Irving jumped out of
the window of a New York hotel in 1929 when he lost most of his inheritance. Uncle
Irving left me a little money in his will, and ironically that money piqued my interest
and got me started in the stock market.
Losing a lot of money can be terribly painful. For some people, it can feel like losing
both legs, for others it can feel like death itself. What's the plus side of losing a
fortune? For one thing, it makes you think. But there's a positive side of loss. The
positive side of the tragedy of loss can be appreciation.
I look back over my own life, and I marvel at how or why I've lived to the age of 84. I
grew up during the Great Depression. I've been held up at knife-point twice, once in
Harlem, NY, and once in San Francisco on Market Street. I had a severe mastoid
infection when I was 8 years old, and almost died during the operation -- this was
before antibiotics, when surgeons literally had to cut out the infection. I lived through
World War II, and I had a painful double hernia operation. I suffered two heart attacks
and a quintuple by-pass operation. I recently suffered a stroke. I lived through a big
motorcycle crash and a number of narrow motorcycle close-calls (I rode cycles for 45
years). To put it succinctly, I appreciate and am amazed by the fact that against all
odds, I'm still here and still alive.
It's funny, I well remember one incident during WW II as if it was yesterday. I was
huddled in the nose of my B-25 bomber, and I had just released our bomb-load. I
could see black puffs of flak exploding all around us. Some of the fragments were
bouncing off our plane, and they sounded liked stones hitting sheets of metal. I was
scared out of my mind, and although an agnostic I suddenly said to myself, "Please
God, get me out of his one alive, and I'll never ask for anything again."
Today if I suffer a loss I think back and appreciate the fact that I'm still alive. Against
great odds, I'm still here. And today I'm not hurting. If I were to lose everything I own
I would still be here. I know I'm a lot better off now than I was when I was having a
heart attack, and I'm a lot better off than when I was flying missions during WW II.
Appreciation, it's the antidote to the sorrow and pain of losses that you might have
taken in the stock market or somewhere else. Remember that word -- appreciation. It's
the way out of depression and pain.”

IWM straddles: 54/55 position from 2 days ago up 22% (this one went up, I did not sell, and then down), sold. Bought a 52/53 at 3PM today, up 56% now. Still holding 52 puts, 45 puts and a number of leftover penny calls (to catch any rebound). Greatly benefited from increased volatility today. October plays are very risky now.

SiO2- Do you usually wait until near expiration to play the straddles or do you play them equally during the month? TIA

i have to admit, jesse's cafe american blog has been on fire lately, and the 2 latest updates are well worth the read and provide complementary rationale to what bill has been saying.

http://jessescrossroadscafe.blogspot.com/

CNBC currently discussing the debate tonight, saying McCain may propose elimination of capital gains tax for some period of time.

Ma and Pop just had their capital gains wiped out... I doubt that will go over well tonight. My guess is that the masses are ready to punish and tax the rich for the recent chaos that has wiped out their savings.

Inntrade/Dublin betting odds for the Presidential election today:

Obama 82% McCain 17%

hulgar, with such high volatility short term plays are good. Last week (one week before expiration week) was absolutely great. This week has had hairy moments. The last two positions bought this week were underwater until this PM (because they moved and I did not sell, then they came back). With such violent moves tomorrow might be good too, if you are fast on selling.

I have been doing a detailed study on IWM this month and will publish next week.

In a low volatility environment (like when VIX was 12), going 6 months ahead is good (got this from optionoracle). Thanks.

SiO2- I'll look forward to your study. Because of your posts I entered a Nov SPY straddle 2 days ago and added to it this AM. It's currently up about 15%. Many thanks. We aren't going to have to worry about IV suck with days like this.

Bill,

Thank you for your exemplary perspective on GS past recommendations to hedge funds i.e them saying the price of oil was going to the moon. When we start to price risk based on where the shares might be trading given TODAY's and FUTURE underlying prices of such factors as commodities, cost-of-money, state-of-economy, etc., rather than looking at the recent past and saying that today's prices are a comparative value - then we have the basis for long term accumulation strategies. I like BA and I sense that most here see value. It reinforces my recent decision to hold and accumulate more BBD.B for many of the same reasons. Although I am presently underwater with BBD.B, I feel BA under $40 and BBD.A under $4 look attractive for the long term and buying at these prices will put me in the black in short order. If the price of oil stays below $80 this will almost ensure the integrity of their order-books during the economic downturn, IMO. I'm also holding my PM and uranium stocks until the USD is priced where it should be.

looks like the 80/20 rule applys to politics too.

To purchase a straddle, do you enter market or limit orders on each option?

AlaBill,
OptionsExpress have a facility in Australia from which I can trade US and ASX stocks. You might like to contact the US entity and see if you can open a US account then a subaccount for the ASX which is what I have done but in reverse, ie from Australia.

wavesmash- I'm not a straddle expert, but I use OPXS, which lets you enter one limit order on both legs at the same time with a reduced commission.

Casey,

Agree.

The sun will rise again.

Best,

Noront Shareholders (NOT)

I got a call from a firm (PR or something) urging shareholders to review the information recently sent out regarding the upcoming annual shareholders meeting and to remember to send in your proxy vote for management's board of directors candidates - explained it very briefly as a response to a potential hedge fund takeover of the board???

Anyone else hear anything? I was just on my way out the door (cdn long weekend) and could not speak at length.

Stv

So, have we filled that fu$%ing gap from monday morning yet? Ugh, today was the worst blow ever for me.

Not too many big earnings reports today, but a few notables tomorrow:

Morning: C, MER

Afternoon: GOOG, IBM

Could play well into Vad's mention of a possible morning gap down and late day rally, but who knows at this point.........

How can this happen at 850-1033 gold? How can the miner performance be this bad when the other commods are falling reducing their costs and the gold they mine for profit has gone up.

I am destroyed by the action on this chart having been in miners for the past yr and always thinking they would go up. I am at a loss to understand and near losing everything I have not being a nimble trader.

http://tinyurl.com/3soqu6

hulgar,

thanks... that's what I figured.. Waterhouse is a bit clunkier for things like options.

Will probably look at putting a bit of money in IBKR or some other true trading platform...

IBKR closed above the last 2 lows. Maybe it's worth buying some IBKR...

Fine Craig,

But I prefer to think of it as Caesar salad, 3-4 pound lobsters, bouisabaisse, some nice Beluga and a couple of bottles of 2000 Cristal for 50 bucks at some sort of Twilight-Zone early bird special:)

Now as I expected the media attention is switching to retail sector. Until the expectation of dismal results in discretionary / retail sectors comes to fruition the market is more likely to drop further. Probably during this holiday season the bulk of the worst news will be in and most likely start the first sustainable rally. I may be wrong but the bottom will happen somewhere between now and the peak flood of retailer desperation during holiday season.

That said I was clearly too early and now heavily underwater. I trimmed my long position from 80% to about 70% during the short lived rally. I am seriously considering taking a loss and further trimming my long position if we break the lows.

I am not a perma-bear, I think that the situation now is somewhat different than it was in 29-32, after all the entire world now is in fiat mode and I am not sure if it is any safer to keep savings in US IOUs vs. say INTC stock. History repeats itself but with significant variations or the life would be too simple.

Lurker here. Great site without the usual pumping and bashing seen on most sites. Have been following for a while but never posted.

With Oil and Coal prices down shouldn't the cost side of production improve the profit picture for the miners? Anyone know how much of a cost factor energy is for an average mine?

Thanks again to Bill and all Posters for a great site.

Vad,

In addition I lack the skill to scalp or really daytrade on an every-hour or many times a day basis. I need a big move happening in order to profit 'cause when it comes to trading the stocks I am real dumb. I dunno nothin'. I buy 'em when they're going up and I read magazines when they're not:)

ALOHA !!

YAHOO FINANCE HEADLINE:
Stocks plunge anew as data points to recession- AP

What? We're in a RECESSION today? HA!! When did that happen?

Amazing whoever writes these headlines seems like they just woke up. Yeah ... If you thought the R WORD was bad wait until the C WORD kicks in!

I posted the data on US Corporate withholding tax revenues and from Q4 2007 to Q1 2008 they dropped off a cliff, now down 75% Y/Y! What sort of an economy and earnings can you have when employees evaporate?

Here it is right out of Bernanke's own mouth today!

``Our strategy will continue to evolve and be refined as we adapt to new developments and the inevitable setbacks,'' Bernanke said. ``We will not stand down until we have achieved our goals of repairing and reforming our financial system.''

EVOLVE? Is that anything like CHANGE?

WE WILL NOT STAND DOWN ...

Unreal that Americans actually buy this crap! Not only do they BUY IT they eat with a spoon! What ever happened to our NATIONAL backbone? Our elected leaders should be GRILLING Bernanke on his every word ... They should be cramming all his and Greenie's past failures down his throat until he gags and passes out! They should be at least hinting that he and the US FED are on their way out! But .. they aren't! Instead they fawn over this idiot like he was the new Jesus Christ our Savior!

My solution would be to get rid of the US FED! That would make a GREAT stride towards "free markets" and more importantly a monetary system not based on corruption and fraud! You can in no way have free markets without a currency that holds a "store of value"! That is the key ingredient missing from anything financial now. There is no value because our money has no value ... We need a complete overhaul of our monetary system first then the financial system.

I'm over in the ASX ... I want to load up while my US Peso is still perceived as a "safe haven"! I am buying "real wealth" ...

[Bill Cara note:

We hear you, brother]

On straddles, an exit strategy is a must. For example, you can sell when you reach your target profit, be it 5%, 15% or 50%. 10%/day is not bad! You can also wait for one side of the position to go over 100%, sell that side and keep the other (catching a potential rebound, riskier, but it has happened repeatedly). There are many other strategies, but you must act or decay will eat your profits. Keep in mind also that premiums are very high now due to volatility.

ALOHA !!

Yep Bill ... Bernanke has given us all his ultimatum today!!

WE WILL NOT STAND DOWN!!!

And that friends, is our problem succinctly spoken in five little words!! I would BET 100 gold ounces that Bernanke said that so as to inspire CONFIDENCE in his actions!

C-O-N-F-I-D-E-N-C-E ...

He just did the opposite to the SMART MONEY!

Glad I didn't buy before I left at 3:15

Vadym:

Geez, I hope I didn't offend you. I thought I was echoing your words in that once the masses catch on to a pattern, it loses it's effectiveness.

I added gold miners today, but am as exposed to stocks as I'd want to be. If I'm wrong or early, I'm turning off the screen and riding it out. Got enough cash left to live on for at least 10 or 12 years.

Got plenty of food and ammo, too, just in case, LOL.

I think what happened today was the banks and brokers were short the market and they in turn put out a margin call to force selling and they make millions in the market. Talk about a rigged market.

Knowing when to sell in this market is the hardest. Tuesday morning, I'm +25% on my equity longs and +40% on my short puts. I took 1/3 profits when I should have taken 100%, because this morning was nothing more than triage, trying to exit my PXP, ESV, CHK, etc. with some kind of profit and trying to avoid any loss. "It ain't what you make, it's what you keep." Gotta keep more when it's there right now.

GE didn't hit it's last low today and floor (last low) on XIU appears to be today's close of $14.

Tomorrow is the 50/50 Cramer rule.

Maybe everyone has decided swing trading ("Black Swan trading?) is the way to go.

I wish that Fed and other talking heads would only speak on Friday nights if at all, and go back to talking in cryptic fedspeak...

"In 1987, the relatively inexperienced Greenspan did not know how to properly communicate his message and he rattled markets. He presented his views in the wrong forum by giving an interview to a Sunday television news show...; the next day stock markets sharply wobbled. He learned his lesson..., never gave again a TV interview for the following 20 years"

This whole transparency thing isn't all it's cracked up to be.

Hi Kaimu

Been following your posts recently and live in Sydney. Completely agree..Are you in Australia now?

IH

CP

Regarding your question yesterday about banks creating money out of thin air, the link below is to Rothbard, The Mystery of Banking. An excellent primer on banking, with a libertarian slant. Free and downloadable.

http://mises.org/Books/mysteryofbanking.pdf

When you get through that, take a stab at Friedman & Schwartz, A Monetary History of the United States, and you will then know a whole lot about the money supply. A good read, actually, if you’re into it.

http://tinyurl.com/47jn3t

nemo,

gosh, of course not. I just answered in a good faith, quickly commenting on patterns that were working at the moment. Just want to add tat it's not like I inventing patterns on the go - there is a bouquet of them, some work at this point in time, some work at that... matter of observation.

It takes a LOT to offend me. Like, a stock triggering my setup, immediately diving into my stop and thensoaring to my target AFTER shaking me out - THAT offends me. A call from telemarketer just when my guests took places around the table and shishkebab is acorching hot and vodka is icy cold - THAT offends me. Ben threatening to repair and reform our financial system - well, this both offends and scares the living daylight out of me.

Ok a philosophical Rant on how to shift looking at the current set of economic problems we are seeing.

Any economic system isn't about money, money is just one of many mediums of exchange in the system.

Rather all economic systems are a statement of power.

As a statement of power: all economic systems are a reflection of us, our society and how people interchange between each other. Because all such systems literally reflect our nature, we can directly model them, predict them and make best guesses on how to interact with it.

Several important points from these initial statements.

Right now might be a good time to switch some of the older models to examine what is happening as compared to other human models of behavior.

One based on abusive relationships:
If the current system is a reflection of us, it sadly seems to be a reflection of an abusive relationship right now. Where we the people are being beaten on purpose for control purposes.

The only way safe way to deal with an abusive relationship is either throw the abuser into jail (which isn't happening), to leave or to stand firm turn the tables around and take personal control.

Two based on how people fight:
In being about power, it is pretty clear larger people are now fighting economically in this mess. I think in effect we are seeing economic war occurring.

It isn't safe to live in any war zone. It can be profitable if you know what you are doing. But personally, I have no desire to be in the open as they begin to consider throwing economic nukes about.

Three based upon your own life:
If you based your lives values on this current system... and as it tanks, as it is manipulated by behind the scenes forces watch how it is rigged against the average person.

How will you recover your personal self worth, when basing your life upon a system designed to beat you?

OK My point is never to tell anyone what to do. In fact I am doing something different. I am encouraging people to look at the current system differently. To base your assumptions and what you see now on other models of human behavior. See how it applies to your life and adjust accordingly to improve your life.

I see things vastly differently, but when I look at any system which deals within human values. The very first question I ask myself what I can learn about myself, how can I help others and how do I need to shift in order to improve myself.

My real point here is this: As everything changes: How should you base your new world view? Upon what talking heads in the television tell you it is like... Or what you see in your own life and then correcting accordingly to improve your life. See the difference you either are led by the system... or take your own lead.

Bill talks about social equity. He lays out some guidelines what has to happen at the larger level. However, it takes a little more than that. It involves each of us also. We each must understand: social equity is ultimately based upon how everyone views the economic system and the choices made upon that system. If it is to change, we also must change, otherwise we just re-enforce the older patterns: which are the problem.

When desiring to make it better, we each have to act accordingly and personally for it to become socially applicable and equal for the average person and yourself.

Otherwise, by playing to the old rules or how the talking heads spin it, a person simply loses their shirt and at the current rate a bit more than bargained for.

Just me rambling and thinking out loud. Today made me think about this a little more again.

Over the next few months and next year I am pulling all the way out for this reason. While not much. Its what in my heart makes a difference so I will follow it rather than the talking heads.

Good luck in your own choices

[Bill Cara note:

Thank you Casey for your Wizdom. I will speak for this Community in saying that you have made a valuable contribution here.]

shark... great, don't day trade then - you had a LONGER term outlook that worked to the letter, utilize that for a sizeable move...

Sorry, I'll get off your case :) Didn't mean to put you on a spot, rather to encourage you to rely on your own chart read, gut instincts etc. You are not one of those analysts that somehow are always right but never made a penny in the market, nor do you want to be one I am sure.

I am still feeling my way but I think I have pretty good feel.

Lots of volatility the last week, so what to make of it all? The scenario we laid out in our last posts of a big down move first and then big up move came to be. After a 24% rally in the S&P 500 from its lows, the index fell over 9% today. This follow-on decline is not unprecedented and most closely resembles the price action that followed the October 1987 Crash.

What is interesting is that the number of very weak stocks has declined dramatically (-88%) compared to last week when we were at the same market levels during a decline. So while the market averages grab everyone's attention, the broad market is actually much less weak technically than it was a week ago. This is ultimately bullish even if the market averages sell off again over the short-term. If the averages do trade off again in the next few days, we will be buyers of stocks just a percent or two above the lows from last Friday. Because the number of very weak stocks has diminished by such a large amount, we believe the odds are small that the market averages break to new lows.

We will have more to mention on the next 3-4 months of price action we expect. Stay tuned, the next trading day or two should prove very interesting.

JWibbs
http://www.2globalmarkets.com

I might have posted this but it is worth posting again.

October 10, 2008
Structured Credit
Credit Derivatives
Insights
The Future of the CDS
Market

http://tinyurl.com/43tcbq

Page 7 is probably the most interesting.

It is a good thing 2008 is 3/4 done as there isn't much room left in the timeline for more events.

"Alan Greenspan praises CDS for spreading credit risk throughout financial system"

Thanks Al.

the charts aren't looking too great - it could get ugly tomorrow if we gap down - some prices would be under the Friday low (or close to) causing stop's to get hit which will magnify the selling - GOOG, NOK, IBM, AMD report earnings tomorrow - NOK in the AM and the others after hours - maybe Tech will be the tell tomorrow - these moves are extreme - and oil just won't give up...protect yourself if necessary.

More 2+ hour meetings at the BBC and less champagne.

BBC bans champers

Director-general Mark Thompson is clamping down on bubbly and lavish Christmas parties in a bid to vanquish the culture of excess. By Mark Hughes

http://tinyurl.com/4oxweb

What happened to spending your way out of a recession?

Casey, great comment btw.

Just to add.

The reason I made my earlier post was for this reason:

much of the material on the discourse helps us manage our money effectively. My point is since money is in effect a reflection of our self value... we also be careful on how we manage how we view our personal values in order to be healthy.

Sharkie

Significant is in the eye of the beholder.

VIX is approaching its high but the MACD is diverging.

Ditto VXN.

No one can call an exact top or bottom so I feel buying today was not imprudent. Looks to me that those who went long at Friday's open decided to save what profits they had and/or some severe liquidation of positions by who knows.

All I know is when I feel like puking, it's time to be buying.

GL

on the 10/10 buy list [AMEDISYS INC} NYSE:AMED looks good - take a look at a long-term chart - uptrend still intact - will add to portfolio

TIme to watch beavus and butthead debate

re Loss(es)

I appreciate dr.cosa's 441pm posting of Richard Russell's comments on the subject.

Unless it's referencing a stop loss, or when/how to take a loss, you won't find the term listed in the index of the average trading text...

For the most part, my colleagues at work are pretty sharp individuals. They don't spend a lot of time managing their portfolios, but they understand the concepts of dollar-cost averaging, diversification, compounding, and most believe that higher returns are possible with equities. There were conversations in the hallways and conference rooms following the 777 point drop, but most of them were able to shrug it off and joke about it. A few of them (unexpectedly) swallowed hard or looked away when the subject came up. Then I left for a conference/(vacation destination for the kids) last Wednesday, and of course the market dropped further into week end. This week the reactions I've seen are all subdued- it's clear that most portfolios are down 30-40% YTD, and that's just on the basis of the September 30 statements.

Obviously, telling someone what they should have done is like telling them they should have created a defensible space around the house after its burnt down (even worse if you point out that's why your house is still standing)...

It was late in the game (so I thought) when I went long. I more or less dollar-cost averaged in between September 26 and October 1. However, after years of using small position sizes as a backstop, I ended up 100% long (in a few positions- QLD/USD/UYG, the equivalent of 200% long). So I have (deservedly) taken a massive hit.

I'll try to be as honest as I can about handling it. I can't see getting too upset about it-> after over 50 years of experience with loss and grief, I know that (for me, at least) the anger-denial-bargaining phases are a waste of time and can be skipped over. I also know that (a) selling into a panic is almost always a mistake, (b) markets recover, (c) markets do not recover in a predictable manner that guarantees an entry, (d) any position at all (including no position) carries a risk (not the least of which is underperformance), and (e) having faith in human nature (or psychology, call it what you will) rarely lets me down. For now, I'm relatively comfortable being down (and I admit to an additional layer of confidence arising from the fact that, relatively speaking, the entire global portfolio is down). I don't foresee making any sales below DJIA 10000, maybe even 11000, depending on the strength of bids and the degree of positive sentiment.

If you're depressed, I like Russell's comments about appreciation being the antidote to depression- not only does the strategy of (re)focusing your attention on what's going/gone right in your life work (and it works when faced with a loss of any kind), it's also the truth. We all know gloom turns to exuberance, and exuberance to gloom. If I don't catch the bottom or the top, it's just a reminder I never have.

I sincerely hope (going back to Russell's comments) no one thinks about jumping out the window should the markets continue down, but with 100,000+ readers, it's not that unlikely. Should that occur, and you're unwilling to talk about it with family/friends, I would encourage you to at least talk about it 'anonymously' here. I'm confident the collective experience of posters here can offer helpful and timely advice.

GL to all.

USD$ up, C$ down, and I have to admit that I am not good enough to watch tons of stocks anymore. I have to simplify and refocus. I'm looking at the Canadian oil, natural gas, and gold Horizon Beta Pro ETFs (both Bull and Bear).

I figure the extra juice in converting my USD$ into C$ will overcome my lack of expertise in entries, slippage, and EXITS.

Guys,

First off, I want to extend a hand of friendship and support to 2nd_ave. Your above post is heartfelt and honest and I sympathize with your position.

Secondly, I seriously doubt anyone is thinking of jumping out of any windows and I don't even think the suggestion of the concept is warranted. We're talking risk capital here. We're all retarded enough so that we all do stupid things occasionally as well as plenty of smart.

Finally I do sense both a tightness of sorts in many of us, an edginess. I also must stand up and mention that contrary to all the experts, and IN MY OPINION today's price action betrayed a lingering bearishness that could come out of the woods and bite your ass while you're watering a tree if you don't watch your back.

What's important is not that a global cadre of committed interventionists are printing overtime to try to plug the holes in this enormous rat ship; What's important is what the market thinks about the above circumnstance. Today it said something unprintable.

I never really believed in that buying while puking theory. It may work well for some, for me it's a little too subjective:) I've always felt that the best, quickest largest trades are accompanied with the feeling that you're getting away with murder.

2nd
I look at my 4 position I paid 80K for it and it is worth 25K
And first time I am losing my original capital
And market may go down more tomorrow.
What I learn is to do my own research and do not
Pay attention to any pundit and market expert who makes call of buy or sell.
I am down 45K today
Yes, my mind does go through many thought and I write them down. When time to make decision my heart tells me to hold everything I have and do not look at market for a while
Return will be very good.
I think now is the good time to buy stock

2nd,
Thank you for that post.... no surprise that you have licked your own wounds and are out there trying to talk your friends in off the ledge.
I, for one, must acknowledge that if it weren't for your input on the way up, I wouldn't have had as large a position to piss away over the past couple of weeks. :}
May the size of your portfolio soon match the esteem in which you are held in this community.

Does anyone have any favourite sites for the following "indicators du jour" ?

Ted spread
Libor
Libor-OIS spread

shark/Jaketh- LOL, with all due respect, you two are the last people that post was directed at...

shark- look, there are people out there who are getting wiped out, and by dismissing that possibility, you do a disservice to those to whom the post WAS directed..

Jaketh- your last comment can be interpreted two ways, my man ;)

"I never really believed in that buying while puking theory. It may work well for some, for me it's a little too subjective:) I've always felt that the best, quickest largest trades are accompanied with the feeling that you're getting away with murder."

as i've said from the start, you need to find a job on wall street...

Calculated Risk does most of the work for you for Ted spreads et al...

http://calculatedrisk.blogspot.com/

Nassim thinks quants & VaR propagators will get sued.

http://tinyurl.com/546s82

FWIW, today's volume on the major indexes was lower than the previous up day. Looking strictly at the price and volume action, that's a positive for the pullback.

At the moment, I still don't see upside beyond 1075-1100 on the S&P short term, but that's certainly subject to change depending on how the market acts.

Jaketh- "no surprise that you have licked your own wounds and are out there trying to talk your friends in off the ledge.
I, for one, must acknowledge that if it weren't for your input on the way up, I wouldn't have had as large a position to piss away over the past couple of weeks. :}"

Maybe you mean well and I shouldn't take offense, but to set the record straight- (a) I said I've taken a massive (IMO) hit, but I mentioned nothing about being wounded or treating one in any way, (b) a position gets 'pissed away' only in the mind of the beholder- I think over the proper time horizon you will have a much different perspective...

I try to be honest when commenting, and I have to correct (possible) misinterpretations when I see them...

vinod- i'm impressed with the fact that you put your numbers out there, up or down...

LVS Las Vegas Sands from 150 to 11 in less than a year

Ashes to Ashes, Sand to Sand

Put it all on Red Baby!!!!!!!

"shark/Jaketh- LOL, with all due respect, you two are the last people that post was directed at..."

actually, i've seen some very experienced traders get wiped out, so i should amend the statement to read "people in your current position(s) are the last people that post was directed at"...the point is, i believe the average investor on our planet is down almost half (i can only imagine the plight of the average investor in shanghai), and i am fairly sure there are at least a few readers of this blog for whom Russell's comments are more than a casual read...

procol- betting red + a straddle play on 0/00 at least gives you known odds...have to wonder what the odds on slots have been tweaked to in order to boost the bottom line...

2nd,
Was just trying to commiserate. Sorry if it was a clumsy effort. I wish you well.

2nd_ave:

As someone who has almost never posted here but reads religiously, especially these last months, I thank you. I usually have limited time to read during the day. When I visit this blog I read Bill's comments and then I usually press ctrl-F to search for "2nd_ave" and to see what you are thinking, "scaling into" and sharing with Vinod, and others. You are always a great read. A socialized "gain" that comes at the expense of your temporary loss is that you give perspective to those in the same boat. Much appreciated.

2nd: Your 9:25 PM post is beautiful and right on spot on how to help turn around lose to gain.

Perhaps you should join in teaching at my retreats occasionally ;)

To everyone: no one here is at a lose when being part of a community such as this: a community that actively supports you. Be open to share if needed, for it's in sharing we all become more.

2nd's offer to share the lose to turn it around is heartfelt and true. It can make all the difference in the world when feeling on edge and not sure what is next. It's together we pull back the night and enjoy the sun again on the morrow.

Peace my friends

Jaketh- thought so, thanks...

A couple of ideas for the future. I try to apply this in a daytrading timeframe but I betcha it works wekk for position trading too.

1) Don't try to pick turns. It's a natural human tendency to try to pick turns, because to do so is accompanied by a nearly overwhelming sense of emotional gratification. But it's wrong. It's wrong because people can get really chewed up around the turns as we've been seeing. It's wrong because until the new trend gets a little traction the turn is a dangerous, ambiguous spot. They aren't stocks they're steamrollers, right?

2) Don't invest all at once. Buy 100 shares here, and plan to add when the price/volume characteristics conform to a continued bullish world view. Maybe buy 100 shares each time a stock rises fifty cents or dollar or whatever. You won't make 11 million dollars that way, but Rome wasn't built in a day.

3) Most of all don't listen to advice, tips, suggestions, gurus, except sometimes as a contrary indicator. Now I know what you're thinking. And no, this comment has nothing to do with Bill. Although the same basic principle applies to him as it would to anyone. Don't listen to anyone but the market. It will tell you what's up if only you're not too thick to listen. Today spoke volumes in my estimation.

Think about this...

Like many of you, My investment accounts have been decimated. And I'm disgusted by the state of affairs in my country.

But this week I honestly feel lucky, after meeting a 23 year old young man with metastatic melanoma (who will never live to be my age), and taking care of a middle-aged woman who was struck and crushed by a pick-up truck while helping a stranded motorist try to push a disabled car off of the road.

I believe in wealth, as a means of achieving financial independence and the happiness that comes with it, but there ARE things that are more important.

Seeing this sort of thing on a daily basis is one of the only things helping me to keep it all in perspective. Good luck to all.

And now for a lighter moment: Refersher on Terms:

CEO --Chief Embezzlement Officer.

CFO-- Corporate Fraud Officer.

BULL MARKET -- A random market movement causing an investor to mistake himself for a financial genius.

BEAR MARKET -- A 6 to 18 month period when the kids get no allowance, the wife gets no jewelry, and the husband gets no sex.

VALUE INVESTING -- The art of buying low and selling lower.

P/E RATIO -- The percentage of investors wetting their pants as the market keeps crashing.

BROKER -- What my broker has made me.

STANDARD & POOR -- Your life in a nutshell.

STOCK ANALYST -- Idiot who just downgraded your stock.

STOCK SPLIT -- When your ex-wife and her lawyer split your assets equally between themselves.

FINANCIAL PLANNER -- A guy whose phone has been disconnected.

MARKET CORRECTION -- The day after you buy stocks.

MARGIN -- A mistress who wants more as things get worse

CASHTRATION: The temporary impotence caused by meeting your margin call

CASH FLOW-- The circular movement of money as it disappears down the toilet.

YAHOO -- What you yell after selling it to some poor sucker for $240 per share.

WINDOWS -- What you jump out of when you're the sucker who bought Yahoo @ $240 per share.

INSTITUTIONAL INVESTOR -- Past year investor who's now locked up in a nuthouse.

PROFIT -- An archaic word no longer in current use.

LOSS -- When you give up that which wasn't yours in the first place but it still hurts.

ALOHA !!

inflationaryholocaust ... HOLY COW MATE!!! That's quite a handle there! What are you implying?

No, I am not in OZ I am here on the Big Island of Hawaii. This is where I have lived for the past 10 years, almost! I was just in SYDNEY in JAN 2008! I used to live in Perth, WA ...

I will talk more about the ASX tomorrow ... I see it is as I had thought DOWN! YEH ... that works for me!

TA!!

http://tinyurl.com/4k4fcu

Jesse posts a great correlation between MZM and Gold, and what it means for gold, oil, the dollar, bonds, etc.

Essentially, TOG + Oil.

Jaketh- i don't know why i take umbrage so easily when blogging- maybe with expression confined to the written word, clarity is lacking...when conversing face-to-face, i actually prefer a grimace, a squint, or a laugh to the use of words, as non-verbal communication can be far more exact than words...i apologize...

masstrader- thank you

2nd,
Very true. Makes you appreciate the great writers who can achieve that clarity with (seeming) ease. No worries here!

Stops. The final thing. If you've planning on making thirty percent on a trade, and if, like many traders, you're wrong at a rate that can approach and sometimes exceed half the time, how much can you afford to lose on any each trade such that you will still conform, in the long run, to a behavior that COULD result in you making a profit? (hint...it's not an exact figure, it changes continually based on all the variables...but the concept must be born in mind)

kaimu- LOL...

shark- as long as we're on to lighter moments, let me respond to your post with my version:

"1) Don't try to pick turns. It's a natural human tendency to try to pick turns, because to do so is accompanied by a nearly overwhelming sense of emotional gratification. But it's wrong. It's wrong because people can get really chewed up around the turns as we've been seeing. It's wrong because until the new trend gets a little traction the turn is a dangerous, ambiguous spot. They aren't stocks they're steamrollers, right?"

1) Don't try to pick your nose. It's a natural human tendency to try to pick your nose, because to do so is accompanied by a nearly overwhelming sense of emotional gratification. But it's wrong. It's wrong because people can get really chewed up around the nose as we've been seeing. It's wrong because until your pinky gets a little traction the nose is a dangerous, ambiguous spot. They aren't apples they're boogers, right?

well, at least it made my six-year-old laugh...;)

2nd... you owe me a keyboard. Mine got ruined with all the coffee coming through the nose.

(I forgot to mention, my sense of humor is right there with your 6-years old)

My own personal "puke point"...

I've found that if I buy something I really believe is already overly beaten down (like MS last week at $7.80's), and then it drops another 5 or 10%, and I get deathly scared, and absolutely furious, to the point of screaming at the screen, and then as it drops I go to enter the order to sell it, and it keeps dropping so fast I can't enter it except as a market order...

That is the point to watch the screen, and change the checkbox from "sell" to "buy", and then walk away. I've been able to bring myself to do it a few times. I wish I had better control to not buy until I saw that in the first place.

Vad- LOL...

Every morning I check the POG, and usually notice the "take down" around 0500-0800 or so. It's like clockwork, Seems consistent enough to take advantage of. Any ideas on how to play this?

Credit crisis... IMO

It would appear that the mortgage part of the credit crisis is here for sure.... (i know, where have i been right?)

Whitney analyst for oppenhiemer on bloomberg
http://tinyurl.com/4b3dtp

my guesstimate would be that phase two of the crisis will hit HELOCs - tied to homes.... followed by credit cards/mixed in with payoption arms..

Trying to wrap my mind around how big this whole credit mess actually is...

good news as I discussed with a friend that the US peso isnt' the only currency that is devaluing itself... by printing...

still trying to understand where the money is coming from, who is going to buy the bonds, who has the capital to do that...

The next six months will be very exciting and there should be plenty of opportunity to capitalize on the events...

don't get greedy but we all should prosper...

Thanks 2nd. It is a heartfelt thought and one that I had not even considered. there are people who feel completely without hope. And the market does not care. I have been bummed big time that I am not the Jesse Livermore or wiz bang trader I can dream up but I am doing better than my paid sell side advisor who I took control from. I am into my capital and at a YTD low. I am at that low because I have learned here that panic selling guarantees a loss.
And today I bought 20 shares of ADBE. Position sizing I have learned. If my port goes lower I will sell at a loss portions of the the riskier positions first. I am long good companies. SLW, GG, CTSH, RIO, GFI,ESLR LYM ZNN.v. I am almost out of bullets. I have come again to the conclusion that not only is Bill a good guy, hes also right. I need to learn to use options as a tool in addition to being long

vinod. Keep your spirits up. What we make is not who we are

Thanks to all who post here

ALOHA !!

ON LOSSES
Who hasn't suffered losses? If you claim you haven't then I would have to say you are lying!

I recall back in 1990 I was so broke I drove around in a beat up old BMW with a broken gas gauge. I ran out of gas in the CALDECOTT TUNNEL on my way to Orinda,CA(East Bay of San Francisco))about 100 yards away from the end of the tunnel! DAMN ... MISSED IT BY THAT MUCH!!! HA!!! YIKES !!!! If you want to know how it feels to be HATED by the masses then try that! Almost every driver that went by me was honking and yelling some nasty words and displaying one of their fingers! Inside a tunnel the honking and yelling is amplified and is deafening! HA!! There was no way I could push that heavy old BMW out by myself so I walked back to the lady who was stuck behind me sitting in her car wasting her blinker, and told her that if she didn't use her car to push me out we'd both be spending the night here. She reluctantly agreed and once I got to the top of the hill I just coasted to the gas station at the bottom of the hill, which is where I was headed prior to my miscalculation! I knew the gas gauge was broken but I decided to risk it anyway! Well, I took a risk and I lost! That may seem simplistic to some but I have never run out of gas since then and that incident is always in the back of my head when I am planning travel logistics. Really I was unprepared and had no PLAN B and I always get burned without a PLAN B! That and procrastination have cost me plenty! The key though is to learn from your mistakes and move on. You don't lie down and die ... You get up and get going! You kick yourself in the ass and go!

When I met my wife I was at my lowest ebb financially! I had just finished a BIG School project as a sub but my final payment was being rip sawed and delayed by the General Contractor and it ended up going to court, which took even longer. So for a period of about three years I drove a crappy BMW that had no heater. Rented a room with an old lady at her tiny house. I owed about $30k in credit cards bills and another $30k to attorneys! One of the first dates I took my wife on was to ride the ferry from San Fran Port Authority(QUESTION AUTHORITY) to Sausalito. When we returned I was driving us back in the BMW and it was raining and the windows were fogging. I knew my defroster was broken so I had to roll my window down and drive with my head out the window in the pouring rain! HA!!! What a great first impression!!! Luckily she did not know I had about $60k in debt! HA!! In the end I won my court case and got out of debt and then some! In my 20s I was homeless for a few months, living in a 1968 VW bug! Up until age 30 I could carry all my possessions in my backpack and I shunned anything remotely mainstream. I could lose everything right now and I would not care because I know being homeless is not the end of the World. Why? Because I was homeless so I know what that is like ... I actually had a great time! No, I was not on drugs. I was and still am very ANTI DRUGS!! I was having a great time surfing and camping at beaches between Doheny and Mazatlan, Mexico!!! If I needed cash I stopped in at a construction project and got work for a few days.

I have to credit my Father for teaching me to "adapt"!! We lived in Third World countries and traveled a lot during my youth and we always had to adapt to new environments, even ones where we did not speak the language! His idea of teaching me how to swim was throw me in the deep end of the pool at age three! SINK OR SWIM?? He did not like to spend a whole lot of time "teaching"! But in his own way he taught me to SURVIVE... HA!! He never candy-coated anything and was always warning me of the sins of being unproductive! I still hold letters from him that he sent in my vagabond surfing career, which he, in no uncertain terms, did not approve of and took every opportunity to make it clearly known! Not just to me, but to practically anyone who would listen ... Yet he completely overlooked what I was learning from surfing. If you want to learn survival then that is surfing! If you want to be up against all mighty odds and feel powerlessness in absolute oneness with Nature then that is surfing. Seeking out unique places and unique perspectives then that is surfing as well. Being alone yet being content in that then that is surfing. Depending solely on yourself in life and death situations then that is also surfing. Surfing teaches you to adapt to the World and to trust your abilities, yet to also know your limitations. It may sound cliche but there is a lot to surfing than meets the eye ...

People who jump out of windows in order to solve their problems never really learned who they were and did not trust they had the skills to survive another day of life. Learning those survival skills starts very early in life and then never ends!

Right now the markets are suffering and so are many who had placed their hopes and dreams there. I learned a long time ago not to do that!

HEY BUDDHA ... LIFE IS SUFFERING ...

RE Poor close today

Yes it was a poor close and that volume in the last 5 mins made me wonder whats going on, Daily volume did not seem unusual.

I pulled up a list of the INDU, industrial average 30 stocks and ran a few scans on it.

Volume Wed greater than volume Tuesday
3/30, AA, CAT, HPQ, INTC

Volume Wed greater than SMA volume Monday & Tuesday
6/30, AA, CAT, HEK HPQ, INTC, KO

Volume Wed greater than SMA volume Friday & Monday & Tuesday
6/30, AA, CAT, HEK HPQ, INTC, KO

Volume Wed greater than volume Friday
0/30

I then looked at each stock on a 5 min chart, basically every one had the same large spike in the last 5 mins. Almost every stock had a significant spike in the last 5 mins, 5 times the volume in any of the pervious period back to the opening spikes which are much smaller.

I then looked at all the charts back for 3 weeks, same large spikes at the close on a pretty regular basis and pretty well the same for all 30 stocks.

So the volume at the close is not unusual, what is unusual is that it is now affecting the price quite dramatically. In the past this huge spike would not affect the price, market balance of buyers and sellers absorbing the volume with little price movement. However now when one attempts to move that volume at the close it does affect the price.

The other thing I noticed is that its not just one stock the volume appears on all 30 in tandem, at about the same relative levels, thus probably big players moving in or out of the index's.

Just some other thoughts on the subject, interesting times we are living thru.

Quasi

Correction, cut and paste not working well after midnight.

Volume Wed greater than volume Tuesday
4/30, AA, CAT, HPQ, INTC

Volume Wed greater than SMA volume Monday & Tuesday
6/30, AA, CAT, HD HPQ, INTC, KO

Volume Wed greater than SMA volume Friday & Monday & Tuesday
1/30, INTC

Volume Wed greater than volume Friday
0/30

Imagine a world were we had no intervention. The way i see it if there was no intervention taken the indexes could not be down much further than they are now. Trading is timing and intervention is probably timing too. Maybe we needed a big washout to begin with alla 87 and then the intervention.

It seems strange to me, even with the high volatility, but the market still feels orderly(rigged). I know the range is historic, but it is a range. Is this because of all the programmed trading? Maybe we need more human input into stock prices. Even overseas same thing. When is the real panic going to set in and a market some where implode or explode upward. Are we so inter connected now that the markets are going to spontaneously combust together? No Asian crisis, No Sars, No russian devaluation. Just world wide monetary collapse all together. Or maybe except for the Black Swan guys. The total collapse is not programmed.

2nd, My Fellow Caraistas:

Remember about August 2005 ( I think it was right about there) that Bill called the top of the market (esp RE) and after taking on Hanks Folly the market took forever to show it because it was being held up while the Fed, Treasury and Banks tried to tell us all was well, there was a soft landing and goldilocks was fine, and they jammed the market to 14,400 in order to start stepping down from a higher elevation.....then they stepped it down slowly...step by step almost to collapse?

I think the bottom will be much like the top. It will take time to step by step bolster this whole mess, but once all that liquidity starts sloshing around it should pick up speed pretty quickly.
That and it takes time to build short positions to squeeze.

Thank you 2nd, I was about 2/3rds back from the dead on the bounce, traded my greens in for some nice gains, reloaded afew and added to my reds on severe pain today and await the future with 1/3rd cash.

It's been interesting.

Kaimu,

You seem to have a penchant for german vehicles. Funny, cause I pictured you driving something more like this around your orchid farm :)

http://tinyurl.com/5x6xmk

thanks for the entertaining story, feel like i know you better. If I'm ever in Hawaii again, you'll have to let me buy you a beer...

In times like this, it's important to remember a quoted loss is different than a realized loss.

http://www.ft.com/cms/s/0/b25d1fbe-9a11-11dd-960e-000077b07658.html?nclick_check=1

This here says mutual funds got 65B$ pulled out of them last week. Counting hedge funds and other, we could say 100-150B$ of money got pulled out of the market in actual money.

The index is down 8% or so on the week... So that 100B$ coming out actually caused a roughly 1T$ "loss" on the total market cap. I think that's something to ponder. The panic of 1 of the few induces pain to the 9 others.

Just because the guy next door is panicking and willing to sell at any price doesn't mean we have to. Let's keep that in mind.

Mythiot - Good going! The conclusion I draw is the money which has disappeared will reappear sometime in the future in the form of a weaker fiat. This is my definition of inflation.

kaimu - I ran out of gas only once and learned my lesson, like you. Then when I moved to Texas later in life, I was forced to recalibrate... Because gas stations are further apart in many areas of Texas. Twice in the first year, my vehicle's engine run out of fuel and stopped while surfing up to the fuel pumps! I knew my luck wouldn't continue, even though my gauges were all functioning properly!!!

Muzie - IMO Selling at a loss in this market practically guarantees loss. Buying opportunity increases as the market continues downward. I bought too early at DOW 10,800 but will buy again at around half that value (my personal adaptation of the law of halves).

Europe is crashing pretty good.....Another good day to sleep late:)

Casey Kochmer at October 15, 2008 8:01
thankyou for the great post,I resemble that very much.

2nd ave, also appreciate your views.

PPT Question:

Since the Fed can seemingly do anything it wants these days, can it trade in market futures to prop up the Dow, etc.?

I watched Asia plunge hard. Europe followed with the Dow futures down about 140. Then, out'a nowhere, DOW futures are up near 100 and Europe markets turn around.

Is this something that can be seen on the trade books? Maybe I'm too close to the tin hat, but that sudden futures reversal seemed awfully fishy.

Eurpean bourses fell hard, then recovered well, though still minus.

This to me signals that in the US there should be a nasty gap down, that is bought and then (after a lot of fakeouts) gradually turned into a "magical" rally into opex Friday -this would be SOP.

Does SOP still work? we shall soon see . . .

SEK (and NOK) sold off hard against the EUR, SEK to a new ATL. The experts say this is mostly "technical" and also SOP in extreme risk reduction times - all capital is concentrated in the major currencies (USD, JPY, CHF & EUR in that order), and all peripheral currencies are dumped.

For those who enjoy catching falling forex knives, a spread of long SEK + NOK / short EUR might eventually prove very rewarding.

imho Sweden & Norway have generally much better fundamental prospects (and much less legacy banking problems) going forward than the euro-zone taken as a whole. As to timing, probably way to early as of yet.

Today & tomorrow should be very interesting.
If the equity markets are going to really crash, I would guess at a mega-gap down Monday after a failed world-wide bailout of some sort.
This could happen.

Going into the weekend, aside from the long energy trusts / short XLE spread, I will probably be only in carefully chosen option straddles / strangles.

good luck to all.

Economyths
by Bob Hoye

http://www.safehaven.com/article-11576.htm

Another coup by "Mr. Moral Hazard" from Roubini's blog:

First, Treasury is announcing a voluntary capital purchase program. A broad array of financial institutions is eligible to participate in this program by selling preferred shares to the U.S. government on attractive terms that protect the taxpayer. Second, after receiving a recommendation from the boards of the FDIC and the Federal Reserve, and consulting with the President, Secretary Paulson signed the systemic risk exception to the FDIC Act, enabling the FDIC to temporarily guarantee the senior debt of all FDIC-insured institutions and their holding companies, as well as deposits in non-interest bearing deposit transaction accounts. Regulators will implement an enhanced supervisory framework to assure appropriate use of this new guarantee.

Translation: Whoa! Hold on there! This is an enormous rule change enforced with little discussion and even less reporting. I am quite surprised to have had to dig this information up off of a relatively obscure portion of the Treasury website. Okay, maybe not that surprised.

What does it mean that the FDIC is now guaranteeing "the senior debt of all FDIC-insured institutions"?

We can be certain this is a fairly large expansion of the FDIC program, but I do not yet know how large the potential exposure might be. We might guess that this new authority was granted to stem the flow of debt financing away from troubled institutions. Now that the government is guaranteeing the senior debt of all FDIC-insured institutions it means that holding that debt is as "safe as treasuries" only with better yields.

This is another gross marketplace distortion of the highest order. It means that sharp investors will now scramble for the highest yielding junk debt of the most troubled institutions so as to grab all that extra free yield. Suffice it to say that moral hazard has just been kicked up a notch. Instead of poorly performing banks being shunned, as they should be, they are now advanced to the front of the pack by virtue of offering a higher "risk free" yield than their more cautious competitors.

But the real kicker was that tag line, "and their holding companies". *Gulp* Unless there's some hidden details saying otherwise, this means that the senior debt of any holding company of an insured bank is now covered by the FDIC. Look for crappy banks to suddenly be highly desirable acquisition targets of non-related companies seeking a government subsidy for their own senior debt offerings.

By Guest on 2008-10-14 17:16:29

http://tinyurl.com/3vnjpg

You can also get a nasty staph infection.

Nokia Third-Quarter Profit Falls on Lower Prices, Market Share
By Juho Erkheikki

Oct. 16 (Bloomberg) -- Nokia Oyj, the world's biggest maker of mobile phones, reported a 30 percent slide in third-quarter profit as prices fell and it lost market share in high-end devices.

Net income slid to 1.09 billion euros ($1.46 billion), or 29 cents share, from 1.56 billion euros, or 40 cents, a year earlier, the company said today in a statement. Sales fell 5.1 percent to 12.2 billion euros. Analysts anticipated profit of 1.12 billion euros and sales of 12.7 billion euros.

up in pre-market...

Joe The Anchor (I Hate This Part)...the morning numbahs, with accompanying clip from The Pussycat Dolls.

http://tinyurl.com/47qwhv

RSI scans

Bill's Oct list/no debt companies - FOSL capitulation

SP500 50% list (companies that comprise 50% sp500 mkt cap) - no capitulation

Top 10 QQQQ components - 3 buys GOOG,AAPL,RIMM, 1 accum CSCO

DJIA - 15 buys/5 accum

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

Here are your Cara 100 Ratings Changes:

New Coverage:

NTES - Buy @ Roth Capital
PG - Above Average @ Caris & Co.

dr.cosa,

Thank you for the Richard Russell article on appreciation of life.

Kaimu,
12:41 post gets my vote for your best ever. I copied and forwarded to one of my boys so he could hear the lesson from a third party. Thanks.
Best Regards,

Sounds like my youth and relationship Kaimu.

Got layed off in the 70's from my cushy job in so. Cal., loaded the girlfriend's 66 VW with all our worldly possessions and headed for a friend's house in No. Cal.

No work in No. Cal., friend in Washington says "come work for me".

No $, a 66' VW with a 6 volt starter (that means push or crawl under to jump starter) and we found a cabin to rent for $75 a month. No running water, an outhouse and propane refrigerator and lights. We loved that place, in the middle of the woods with Roosevelt Elk and coyotes. Power out, world crisis? We never knew about it. No radio, no TV, no cares.
Ahhhh, the 70's.....

BTW, if you are ever blessed with a 6 volt VW that won't start, just run a jumper wire from the starter lug up to the voltage regulator where there is a nice big wire from the battery....just put a wire nut on it and when the key won't work, you use the jumper wire.
Saves a lot of pushing.

I never ran out of gas, it was a VW for crying out loud!

Bring on the "hard times", we are prepared and looking forward to more good times, except this time we have a few conveniences.

Bills 10/16 posts has been available for over 1/2 hour.

kaimu,

Yesterday Carl Icahn was on Fast Money. The gist of his message: "We need to get rid of incompetent managers, not reward them. The same goes for boards of directors. They say these guys had a contract which we must fulfill — What about the goddamn contract we had with the shareholders, the contract with the bondholders?"

In his view the CEO's "contract" should be lumped in with the decision of the bankruptcy court's distribution of assets remaining
.
He went on to indict the SEC, Fed, regulatory agencies, the congress and everyone who ignored, permitted or participated in this fraud. (Yes, he called it what it is.)

I was alone in the room, but stood to applaud.

Later I watched/listened to the next president and the runner up...

Can a person really be disappointed when he hears exactly what he expected?

In last night's debate, Obama and McCain were to address domestic problems and present their solutions.

What we got was wallpaper pasted over the cracks.

Obama's description of the pattern, colors and design was delivered in his usual smooth and entrancing style. He made wallpaper seem like the thing to do and will even give it away free to those who can't afford to buy their own.

McCain's wallpaper was less intriguing — "I know how to wallpaper. I've wallpapered a lot. We can retrain people to do wallpapering, so they can get a job."

What we needed is a bold plan laid out in a broad sweeping way. What we got is a complete bypassing of the critical, emergency nature of the U.S. economic and financial systemicl failure. The dangerous problem is in the very foundation of the structure.

The media continued the charade with the examination and valuation of the trivial and threw in the physical appearance of the candidates — body language, voice quality, blah, blah, blah.

---------------------------
"Make no small plans for they have no power to stir men’s blood.."
Daniel Burnham, architect

Watch MDR. Might be a good buy.
News on a defence contact

Position: Long MDR. but down.

Soryy about the news. It may not be for MDR.Please ignore the statement

But MDR is up 1 dollar.

NUE on a tear. Any news ?

Nibbled RIO

Can someone explain how I would to a straddle in RIMM

What should be the expiry month for the 55 put and 60 call ? How would I determine that ?

Dec 55 Put selling at 8.65
Dec 60 Call at 8.60

Is that not too expensice for a total cost of 17.25 ? How can I determine whether the option premiums are reasonable in the current market ?

man, this market is testing my patience.
Heads I lose. Tails the market wins :)

down 20 % in MDR!

sold RIO at a loss. But even out with QID hedge..