Smart money points
Naz first 30 min/last hour 28/29
SP500 23/17
Russell 2000 9.87/10.4

draw your own conclusions.

Good morning.

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

High Yield Bonds Funds Canada. Barry Allan one of the best in this space. Closed end fund HYM.UN.to yields 11%, delivers income as combo cap gain and return of capital
Spreads unprecedented 14%. Expected default rate about 8.5%. He has only ever had one bond default in his portfolios. No position

http://tinyurl.com/67wcc8 Bloomberg article mentions Exelon (C100) is able to scoop companies who are unable to refinance their debt on as favorable terms.

[Bill Cara note:

Bloomberg is reporting this morning that Money Market Funds offered by mutual funds are having difficulty meeting redemption requests, which has caused weakness in the equity market this morning. The Fed has stepped in with a new Emergency Funding Facility. Since when has the Fed lent money to mutual funds? Never -- until now. With the US Treasury backstopping the Fed, it's a new ball game now. Badly managed mutual funds get to stay alive.]

FOSL buy limit 16.75
WSM buy limit 11.7
LVS buy limit 11

all on a one cancels the other order (one executes, the others are cancelled).

October 21, 2008

Trying to Get Something for Nothing
by Steve Saville

http://www.safehaven.com/article-11627.htm

As if Paul Krugman winning the Nobel Prize in economics isn't reason enough for us to be less-than-sanguine about the future, everywhere we look we see well-respected analysts advocating increased government regulation and spending -- effectively the same policies that transformed a financial crisis into a drawn-out depression during the 1930s -- while completely ignoring the root of today's problems.

The current predicament was not caused by insufficient government regulation and the risk of future disruptions will not be mitigated by increased government regulation. The mortgage market was already heavily regulated prior to the crisis, but had it been even more regulated and had the regulations severely crimped, rather than boosted, the abilities and desires of financial corporations to expand the supply of mortgage-related instruments, then the focal point of the boom would have shifted; however, bubbles would still have formed somewhere and these bubbles would subsequently have burst, leaving financial wreckage and major economic dislocations in their wake (the bust is always and everywhere a consequence of the preceding boom). The reason is that the boom was caused by the central bank fixing the price of short-term credit at an artificially low level for a prolonged period, thus encouraging trillions of dollars of investments and new business ventures that should never have seen the light of day. In effect, the central bank created an environment in which prudent lending practices were punished and reckless lending practices were rewarded.

With the central bank making it very cheap and easy for financial corporations to expand the supply of money and credit, investing/lending bubbles became inevitable. The only real question was: where will the bubbles form? That one of the biggest bubbles formed in the housing market set the scene for a more disastrous outcome because so few people ever view rising property prices as evidence of an inflation PROBLEM. Instead, a powerful upward trend in property prices is invariably viewed by the masses and by the monetary authorities as a sign of increasing real wealth. As a result, policy-makers will tend to let investment booms in the property market get further out of hand than, say, investment booms in the commodity market. This, in turn, is one of many reasons why the price of credit should not be set by a central planning agency.

Now that the investment boom has gone bust and the necessary adjustment process has begun, we are being told incessantly that the solution to the problems caused by massive increases in the supplies of money and credit is additional massive increases in the supplies of money and credit. And given that the private banking industry is no longer capable of driving the monetary expansion, we are being told that the central bank and the government must become even more involved.

The latest in a long line of policy moves designed to curtail the necessary adjustment process is the government's plan to provide capital directly to the banks. It seems that almost everyone is in favour of this idea, which suggests, to us, that few people appreciate the basic economic truth that the government has no capital. Any capital provided by the government to the banks will first have to be extracted from other parts of the economy via taxation or inflation or borrowing. In other words, the government's provision of additional capital to sick businesses can only happen at the expense of the more healthy parts of the economy.

Whether the advocates of increased government spending and the various other re-inflation policies realise it or not, at the root of their proposed 'solutions' to the crisis is the idea that it is possible to get something for nothing. It is axiomatic that an increase in production must precede a sustained increase in consumption; that saving is the basis of long-term economic growth; that no individual can become rich by spending more than he earns; and that no country can become wealthy, or recover from a recession, by consuming more than it produces. And yet, most commentators have deluded themselves into believing that you can get around the problem of inadequate real savings by simply increasing the supply of the medium of exchange, and that you can bypass the need for increased consumption to be funded by increased production by simply getting the government to spend like a drunken sailor.

anyone taking a stab on FCX after earnings this morning? down 10% premarket on weakening commodity prices.

its tempting but they dont seem particularly bullish on the next few quarters from what ive ascertained.

is it mainly the copper that's pulling them down?

New Member

Greetings everyone! I'm a new member having just found this website a few weeks ago. I'm quite a novice at the market but I've been reading the blog on a daily basis. I just bought Bill's book via Amazon last week, still awaiting delivery and I'm looking forward to the online trading classes he mentioned in this blog from today.

Cheers,
WI

[Bill Cara note:

Welcome. You are joining a community of people from 140 countries. We share and learn here. A couple days ago, I received a lengthy commentary from Ota Nigeria on my comments regarding economists. The writer was a professor at Covenant University. He wrote me again today so I checked out the Covenant U website. I was impressed with the school's focus on entrepreneurship and wealth creation. In fact they have a Centre for Wealth Creation (CWC), which could serve as a model for schools in any country:
http://www.covenantuniversity.com/unique_programmes/cwc.html ]

Great call last Friday, as usual those who followed Bill's advice enjoyed some nice gains.

Unfortunately we are still far from October 2nd's Dow level of 10,800 when this blog switched from bearish to bullish, but over time that level will likely be reached and surpassed.

[Bill Cara note:

To state the matter correctly lest anybody take your message incorrectly. "This blog" is not a tout service. A couple weeks ago I changed my mind-set from bearish, where it's been for a couple years, to bullish. That means, when looking at the glass of water, I no longer see it half empty, but half full. Now I'm looking for values, and I am seeing them all over. Please, enough said about calling markets for free. It's not what I do.]

sorry for my lousy thought about a usd high at 83.25ish fwiw the two highs in early 2002 run into this area as a trendline?

It's snowing in Ontario!

[Bill Cara note:

Whitecaps are falling here too -- over the offshore reefs.]

I keep getting lengthy commentaries from Nigeria, but with a different bent....:>)

[Bill Cara note:

There are con artists in your town too, plus some pretty fine people and organizations. My eye doctor is from Nigeria. She taught me a lot about color blindness -- in more ways that one.]

Cara 100 Update:

WFMI - Downgraded to Underperform @ Jefferies & Co.

ohhhhh

we are down around 40% in DOW
we may go down to 50%
but we are not going to go down 60 or 70% in DOW
so, let the storm pass

FYI on Bill's warning to watch the three little pigs....

JPM/BAC/C

C was downgraded to sell by Goldman.
Down approx. 5% today.

[Bill Cara note:

JPM bought $600 billion in Money Market Funds paper today. Amazing what can happen when you have a Treasury-backed Fed helping you. Still, it sounds like a good deal for the market. The losses this morning turned right around on the news.]

re:TXN

waiting till 10 AM, will buy or put a trailing buy stop order on.

Cancelled the LVS/WSM/FOSL order. They won't get that low in the first 30 min.

Tbar - snow in the province already? I suppose you're up in cottage country or places north of there. In Waterloo we're hanging on to plus 5 degrees today, so it won't be long.

I'll have to bring my pineapple plant inside.

Only in Uxbridge Dave,40min north of toronto,no accumulation.

Oh no worries Bill, I'm totally colorblind in some ways (ala Colbert) and perfectly color sighted in others!
I'm not immune to cracking a joke or two about the silly e-mail fraud letters emanating from various locales though....we all get them.

No doubt there are frauds in *my* town, city, state, nation....I'm particularly keen sighted in that area. I've received several phishing/e-mail fraud letters from within the U.S. too.
There is something to be said positively though, as the quality of the Nigerian letters exceeds those I've received from within the States.

[Bill Cara note:

I thought that CWC link page from Nigeria's Covenant University was well written too:
http://www.covenantuniversity.com/unique_programmes/cwc.html ]

TBar. Re other stocks to follow, I am naturally drawn to Canadian energy and Ag stocks. POT.to for example has traded between 80 and 125 in the past week

SU CNQ ECA all offer trading opportunities in this environment, plus the smaller ones discussed by Hruska and others on BNN. WAV, VRO go.a TOG etc. I'd like to see us watching for entry and exit points for these stocks.

Let gold go for a while and focus here, to maybe scalp a few dollars.

Peak Oil, declining production from 2005 forward favors this asset class.

Craig
It is not fraud? It is marketing to make money.
We should be proud that they still likes US dollar.
And are not asking physical gold from Kaimu’s drawer?

re: TXN

buy limit 16.17

gotta scoot

MICC--

Millicom came out with earnings, increased subscriber growth, they delayed early redemption of $460 million in 10% 2013 Notes. Getting crushed right now, down 16% or so, but, in the hourly chart, notice the possibility of a divergence in MACD ... as MICC makes a new low, I'll be watching MACD closely to see if it maintains a "higher low" . . .

I like to buy these MACD divergences when they appear; let's watch MICC.

Nice earnings (loss!) response for UAUA today - anyone still holding this rollercoaster?

jpp10780, I think FCX is generally an excellent buy a these levels, but the short term timing has been very rough. That thing has been killing me, painfully re-enforcing the lesson of using trailing stops.

LOL! Vinod...marketing is selling *something* for renumeration.

What are they selling? Are we counting these letters as fine creative literature? They're good, but they aren't that good!

It has been my experience that *everyone* likes my $USD. LOL!

[Bill Cara note:

What was Kirk Kerkorian buying when he paid like +35% over (falling) market prices for Ford? He borrowed $600 million for that purchase? How much did he lose in the market and to the bankers? A billion? I smell a rat here. Sounds to me like the SEC ought to be examining those earlier purchases and then the subsequent losses. Was this a tax dodge via offshore account wash trading -- or was Kerkorian just struck with a momentary loss of brainpower? A legit question is, why did Kerkorian go to the market for that stock when he could have bought all he wanted at a discount direct from Ford? I am suspicious that he didn't want the added regulatory oversight that would come with a Ford private placement.]

Oil.to already reached average daily volume. Adding

bought SU at the lows this morning as well as some AXP once it went negative.

[Bill Cara note:

The high-cost Western Canadian oil sands producers like Suncor have margins squeezed when oil prices fall; but in the bigger picture, America is now dedicated to eliminating the political pressures of relying on oil from Venezuela. So SU will ultimately be a terrific holding. As you know, I like it. Right now, however, its also a daytrader's play because of the extreme volatility.]

westcoaster
I sold all my gold stock in sept 2003 and bought oil stocks,then lost patience over the next 2 months as the xoi did nothing with oil rising. I sold oils just before the xoi nearly quadrupled, so I will try to be patient for now and make trades to build things up. I think gold stocks turn at a run is getting close?

http://xs132.xs.to/xs132/08432/oil916.png

TED Spread's looking much better these days at 2.57, I'm thinking the market will close up again today.

Bill...of note is that these banks all were forced recently to take funds from the treasury, needed or not.....they STILL feel the need for the MM funds as well? Is this how they avoid a stigma?

NOT taking my eyes off JPM/BAC/C....can't trust em' any further than you can throw them.

"Oil, then base metals, then gold... rarely is the sequence contorted." Bill Cara

[Bill Cara note:

Yes, that's the sequence -- whether the time horizon is long-term, intermediate-term or short-term. Right now the $USD strength is pushing commodity prices down. The Cdn Dollar, however, will be affected by this morning's Bank of Canada rate drop (-25bp) and I suspect next week the same will happen with the $USD. As central banks in the world accommodate the their govt rescue programs and stimulus packages by keeping rates down and buying bank paper, there is a coiled spring getting stronger under commodity prices. The only thing that can stop that spring from exploding is a massive economic recession. However, price deflation will only impact consumables. Gold is, like cash, an unallocated asset. When traders think that rates will continue to get cut -- to nothing even -- then there is no reason not to hold gold because there is no opportunity cost. And traders will flock to gold as they did in the Great Depression of the 1930's where gold was the top performing asset class. Gold and cash will only be bad holdings in your portfolio during periods of noted wealth creation and disinflation. That's when you should be 100% long equities -- the economically sensitive sectors like the Healthcare, Consumer Discretionary, Industrials, Technology, especially. If interest rates remain in a narrow range at that point, then adding the Utilities and Financials is also desirable.]

Got off a little slv on that little push....sensing further weakness.

Sell into strength.

Nice touch from Sprott yesterday, they handed out one ounce Sprott silver coins. Can be used when :1the paper blows up.

Rob Cohen at Dynamic for all you silver crazies: The gold silver 13:1 ratio derives from Greeks or Romans equating gold with sun and silver with moon. Moon goes thru 13 cycles in one solar rotation. There's the basis for your ratio. In hard times, ratio goes much higher 50:1 (?)

Bill,

I did some research on the Chinese companies listed in Best Asian 200 companies from Fortune. To my dismay I could only find annual reports and historical summary financial info in Chinese.

I hope someone has better resources.

Bill that's a very useful looking macro trading strategy picture you just gave us. It's all about watching this unfold in slow mo. It's a slow dance held on the slowly derailing train!

At the time I felt Kirkorian was simply senile, but Bill brings up an interesting thesis.

Even is there was some kind of 'wash' involved, paying 35% more would certainly limit the benefit of that move.

Bill,

with regards to this line:

"Gold is, like cash, an unallocated asset. When traders think that rates will continue to get cut -- to nothing even -- then there is no reason not to hold gold because there is no opportunity cost.

And traders will flock to gold as they did in the Great Depression of the 1930's where gold was the top performing asset class."

just wanted to get clarification just in case i am mistaken, are you referring to only the physical gold or gold miners as well in this scenario?

as well, if there is large scale recession/depression hurting business activity everywhere, would the miners basically be lumped together with the rest of the faltering market the way we have seen happen the past month?

thanks,

[Bill Cara note:

Sorry, I thought my saying gold clearly meant gold and not stocks.

Analyzing goldminers is not nearly as simple. But, as a rule, when inflation is under control, meaning the mining companies have manageable labor, energy, shipping and capital equipment purchasing costs, then the goldminers should do well when gold does. But if interest rates are rising and the miner or explorer has a lot of debt, and insufficient cash to meet the monthly nut, their shares will suffer. Then there is country risk, legal disputes, and a plethora of other issues to deal with. Mining is not easy. Ask any mining manager who has been at the job for 10 or 15 years! Anyway, when I talk about unallocated assets, I'm referring to cash and gold, which is money. I'm not referring to equities or debt securities of a company.]

RIMM downgraded by First Global

Research in Motion (RIMM: Nasdaq) By First Global ($59.01, Oct. 20, 2008)

IN VIEW OF THE IMPACT OF INTENSIFYING competition and increased spending on the company's growth and profitability, delayed product launches, macroeconomic pressures, unfavorable foreign currency impact, and management's disappointing guidance, we now downgrade Research in Motion (ticker: RIMM) to MarketPerform with Underperform bias.

Mmmmhhhh....

Paranoid conspiracy???

http://www.americanthinker.com/2008/10/hedge_funds_politics_and_the_m.html

Quick question for the group with regards to a margin account...

I use Schwab for trading...was hoping someone could help me understand why they are charging me interest on margin.

If I have a 1M dollar account balance

Go Long 1.25M
Go Short .45M

Why am I being charged interest for the .25M I am long??? I have cash from the .45M I am short in my account...why does this not cover the amount I am long and keep me from paying margin interest...

BB:

If you have a 1m balance, and you have positions of 1.7 million, that leaves .7 million outstanding, yes? Sounds like you're borrowing 700k. Short positions are a liability.

bigboyz,

the way I understand shorting, you don't really have the "cash" in your account, it's a financial interest, and it will be added or subtracted after closing out your shorts based on the success or failure of your trade. So, in essence, it's not cash money, it's just a scorecard...

any community members please correct me if I'm wrong.

Thanks Bill! "Gold and cash will only be bad holdings in your portfolio during periods of noted wealth creation and disinflation."

It looks as though the cash side has done well lately, but I'm not sure if gold has had it's day in the sun, or if that day is yet to come. I'm sticking with the latter.

Anyway, my goal is to some day operate on the intricacies as opposed to my less-productive panoramic view.

[Bill Cara note:

gold is same as cash. It earns no income. As interest rates drop (ie, money gets cheaper), gold gets more attractive. Now that there are bank bail-outs and economic stimuli being tossed about in the trillions, yet central banks are dropping rates, common sense dictates that gold will rally, which means that today it's being held back by Interventionists who need the public to allocate their money to equities and debt of companies and govts. In time, the market will overwhelm the Interventionists. Remember George Soros and his billion dollar bet against the Bank of England. By himself George couldn't pull it off, but with some organizing on his part he certainly did. In time markets will go the way that common sense dictates.]

I am currently 100% cash, no positions at all, in my IB trading account, yet I am watching it's value fluctuate everytime I check it today. Anyone have an idea what that's about?

[Bill Cara note:

A phone call would have it explained to you. If you have a margin account and no debt, then the broker is using your money and paying you for the right to do so.]

Miners starting to put production on hold. News today of PAL placing their mine on care and maintenance. Recently some zinc mines as well seen in the report below.

Mon Oct 20, 2008 5:14pm EDT
(Corrects in paragraph 12 to show analyst is from RBC Capital Markets, not UBS) (In U.S. dollars unless noted)

By Cameron French

TORONTO, Oct 20 (Reuters) - A worldwide wave of mine closures has finally hit Canada, with a pair of small producers saying they will suspend two operations in the country, and another mid-tier producer saying it will soon address the "challenging" economics of one of its nickel mines.

While several mines in other countries, including operations run by Canadian-based miners, have been put on hold, mine operations within Canada had so far been untouched by plunging base metal prices.

On Sunday, however, First Nickel (FNI.TO: Quote, Profile, Research, Stock Buzz) said it had suspended production at its Lockerby Mine in nickel-rich Sudbury, Ontario, due to low nickel prices.

That followed Blue Note Mining's (BN.TO: Quote, Profile, Research, Stock Buzz) announcement on Friday that it will put its Caribou zinc and lead operation in New Brunswick on care and maintenance, as current prices have made it unprofitable.

"The fact is, the current (zinc) price of 50-53 cents a pound is too low for the industry," said Hendrik Visagie, an analyst at Octagon Capital. He predicted the wave of global mine closures will continue, but said some Canadian operations will be protected by the falling Canadian dollar.

Blowout,

I have a hard time understanding their account screen as well. Do you have any holdings in e.g. canadian dollars? I have some canadian junior holdings in canadian dollars which essentially makes me short the USD (ouch). If you closed out positions, but not the currency trade that might be one explanation.

Regards, MCM

How does the Gold ETF change the rules for the metal itself?

Doesn't this lend it to further exposure to bubbles and manipulation, leading it to an unsustainably high price (over and above just inflationary protection) and then a collapse?

I think commodity & PM ETFs such as USO/GLD/SLV have allowed for easier speculation and market manipulation, which affects the underlying asset with dramatic, volatile results.

We saw it with energy and Enron? Why is it different with these products? Grain? Cotton? Cocoa? Tin?

Baltic Dry Index another manipulation?
http://tinyurl.com/5fwrzc

What about SWFs (Sovereign Wealth Funds) and the hedge funds/pension funds that are really SWFs?

"Some SWFs owe their existence — and most owe their size — to the explosive growth that has recently occurred in official sector assets. Commodities — oil, in particular — are one key to this growth.
Petrodollar assets grew at a compound annual rate of 19 percent in the period from 2000 to 2006 as the price of oil tripled and crude oil exports rose.10 Fourteen of the 20 largest SWFs have commodities as their main source of income."

http://tinyurl.com/5gudwd

I wonder if the Fedge Fund (the new SWF of the US?) is investing in commodities or financials?

Have to move where the big guys are going.

Another question, is the US recycling liquidity or getting new injections of capital?

Spain wants sovereign wealth funds to help cover its debt Published: October 20, 2008

"You can only increase liquidity in the system if we attract liquidity from abroad," he said. "We are offering these sovereign funds the chance to buy Spanish bonds."

http://tinyurl.com/6mskr6

Nemo -

Appreciate the response...but they are not charging interest on the short position.

I put in a call to them...it appears they are doing the following...

Long 1.25M - charging me margin interest on 250k

Short .45M - taking this cash and giving me a very low return 1%

I am trying to clarify this with them now...just wondering why they dont use my short cash to pay for my long margin...

Amazing that after 10 years+ I have never seen this occur before but I just realized I have never been this long as I have been in the last week...I do plan on continuing to scale back and have been selling calls on my longs that have done well these last few days...I dont plan to have these positions on that long...just wanted to confirm with the community this was normal.

Blowout / bigboyz

RE: Shorting & Cash in the Account

A couple of years ago, I shorted a stock when I let some puts expire (and be exercised). It added about $200K to may account. So, the money was really there; but I was required to maintain 130% margin on the shorted stock.

ETFS Short ZInc (SZIC:LSE) set a new 52-week high during today's trading session when it reached 89.27. Over this period, the share price is up 84.10%.

http://tinyurl.com/6m7afh

Since ZINC:LSE's inception (Sept 2006) you can really easily see the bubble-pop, bubble-pop, pop, pop, pop on the chart. Some dramatic short interest in mid-September.

http://tinyurl.com/6m7afh

Do ETFs track the index or make the index? Is there a way to tell?

BB,
You also might be paying some interest on the shorted shares.

long TXN 16.50

do your own homework.

SandraT at October 20, 2008 3:56

Your trade looks pretty good today congrats!

I tried to sell my yri.to at a little higher than the days high yesterday thinking it would do what your slw.to did, that seems to be an often repeated pattern lately. It didnt and now I am back in dangerous margin territory.

So the greed lesson has been taught to me again,yet I was so close....

Hi Tbar: Yes, it did. This morning I was thinking, god, I left .31cents per share on the table, but it actually opened lower that my sell at 6.01.

This day trading stuff is so difficult. I will most probably take Bill's trading class.

I day trade a bit by the seat of my pants... No real experience, but I'm learning. The most difficult part for me is to wait for the lower price and to wait for the higher price

Tbar: No margin for me... never have, and never will.

Forbes magazine has published a list of the best U.S. cities to ride out the recession. I was pleased to see my area make the top ten:

1) Austin 2) Oklahoma City 3) Honolulu 4) Portland, Oregon 5) Tulsa 6) Virginia Beach 7) Seattle 8) Baltimore 9) Boston 10) Lancaster, PA

(Worst: Riverside, CA)

Source: Lancaster New Era

Regards

sandraT
I have never used it in 7yrs of investing until becoming so distressed and depressed at the financial destruction I have become that I used it recently in a last ditch effort to save my household.

Two important technical indicators are giving off clues right now, 1) net institutional buying/selling histogram shows a pattern of higher lows, a positive and 2) the McClellan summation index is turning up, a positive.

If the market can survive this week by testing last weeks lows (SP 839) and holding there is a good probability that a short term bottom is in. If we break the lows the market good get a panic sell-off of say a 100-200 SP points. Critical point IMO.

BSI, I take responsibility for my own trades, but I enjoy riding your coattails occasionally. I have no training in technicals and am too busy to learn right now.

Keep digging around for those setups and thanks for sharing.

Correction:

NYSE McClellan summation index

the market could get a panic sell-off of say a 100-200 SP points.

Drcosa asked "just wanted to get clarification just in case i am mistaken, are you referring to only the physical gold or gold miners as well in this scenario?"

In the 1930's both bullion and gold stocks did well. With respect to gold stocks today, the critical distinction one must make is that in the 1930's labor costs were going down. Today labor costs have not gone down and most cost inputs have risen.

re: WC

welcome.

re:AG

acting much better than DE/CNH. Long, been carrying position for awhile. Do ur own DD.

A follow-up on Bill's most recent article in Seeking Alpha:
http://tinyurl.com/6qoxxl

Isn't tomorrow closing day for the LEH Credit Default Swaps? Today must be pre-CDS jitters day.

re: AG

probably doing better because S&P downgraded it. LOL

bullhunter,

as much as i love baltimore, god only knows how frightening that city will be with even less jobs and money coming into the area.

that said, just sold AXP for a 10% profit.

I'm looking for the mkts to chop around but set up for a month end rally to start late next week. Funds dumping losers for fiscal yr end/month end.

BUT rallies up to the 50/200 DEMA are opportunities to sell and potentially short.

LT downtrends are still in place IMO.

Nemo -

Confident that I do not pay interest on my short positions...

I was under the impression the short position cash i received would offset the long though...

Basically schwab is saying lets take your cash and put it in this vehicle earning 1% and then you take our cash and pay us 6%...its of no consequence...I do not intend on having this open much longer...just curious on what is typical.

BC capitulates.

bought too soon.

Hank Paulson just walked the floor of the NYSE.

Where is that guy who pie-in-the-faced Bill Gates when you really need him? ;^)

Hey all, margin has been on my "to learn" list. How do you not use margin? If I have a 10K acct do I have to keep 30% in cash?
thanks in advance

Photo
You have $10k in account, the'll let you buy $20k of stock or $30 depending on what the policy is.
Penny stocks less marginable.

XOM:
Buy alert (trig. 6 days ago [on 2008-10-13 at $73.08, +2.61% chg], after a 2 day AZ)

Looks like it's below last buy alert.

Looking for a position in BC around $3.25, lots of support there. Catching a falling RV.... yikes.

Yesterday I wrote that USO had hit the top of it's (short term) downtrend channel and was knocked down, while XLE was up 11%.

Thus either crude would have to break out or XLE would also be knocked back down.

Today crude is down 6% and XLE down 5% so far.

This does not bode well going ahead.

Equity markets still indecisive with a weak/bearish bias, mostly floating around major fib levels. This could continue for a while.

At the 2 PM watershed now, maybe a trend will develope . . . or not.

Photogray - My trading account is non-margin.

I think the model for option pricing is a little broken - but broken in a good way for the put writer. After a huge decline, they are quite expensive. But presumably after such a decline, that's when the risk of another large decline is lowest - the stock has already been pounded, so most likely the next move is up.

When I wrote all these puts, I got some really big premiums. And now, even with the stocks that haven't rebounded all that dramatically, I see the puts getting much cheaper. Each day these puts get less valuable. In some cases, the underlying stock even declines a little bit, and the puts still go down.

Does the same thing hold true for big up moves and covered calls?

I guess the trick is picking the bottom. But still - you don't need to be 100% accurate. I wasn't. But the options pricing model seems to give you a fair amount of slop. And the further out you write them, the more slop you get.

Bill, how far out do you write your puts? Do you spread them out in time, or just write them for the front month?

ALOHA !!

This guy, who is a pal of Art Linkletter's, has totally missed every time he buys into either F or GM ... By the way, for the younger readers, Art Linkletter was a BIG TV personality in the 1960s. He bought 1mil acres of land in Western Australia near Esperance for $1 per acre! He also had a few deals with Kerkorian along the way! I used to sit around the Balboa Bay Club pool with Art Linkletter as a kid! Another frequent visitor was Chuck Connors of The Rifleman fame! I also recall Louie Nye and Mickey Rooney and Red Skelton there ... There was always some Hollywood celeb!

At 91, hummmmmm ... maybe he should rethink his strategy, at least with US automakers!

I hear from my Vegas pals that the casinos are not doing so great either, especially the casinos that cater to the locals! I wonder if online gambling has cut into their profits? Are there any public online gambling companies outside the USA? Whats MPEL doing now?

READ ON:
Kerkorian Cuts Ford Stake, May Exit as Bet Collapses (Update2)

By Bill Koenig

Oct. 21 (Bloomberg) -- Billionaire Kirk Kerkorian is unwinding his Ford Motor Co. stake after the auto industry recession cut the value of his $995 million holding by two- thirds and put his firm's gambling investments at risk.

Kerkorian's Tracinda Corp. sold 7.3 million Ford shares yesterday for an average of $2.43 each and said it contacted an investment bank about unloading the rest. Tracinda's remaining 133.5 million shares were valued at $311.1 million yesterday.

Kerkorian, 91, reversed course less than six months after expressing confidence in Chief Executive Officer Alan Mulally's turnaround efforts at Ford. Last week, Ford's collapsing stock price forced Kerkorian to pledge another 50 million shares of his MGM Mirage casino company to back the $600 million credit line used to buy into the second-largest U.S. automaker.

``It was an investment that made no sense,'' said Maryann Keller, an independent auto analyst and consultant in Greenwich, Connecticut. ``He's pulling in his horns and concentrating on areas he knows best.'' (more)

re:XOM

JMO. No position.

The 50 DEMA is at 75.81.
RSI today 49.75, seems I recall someone said RSI 50 is often a barrier in a bea

r mkt.

Nov max pain 70.

Looks like an ascending right triangle on 10 day hourly chart with base at 76 and ascending support line at 65. Height measures about 20 pts.

We'll see what happens next.

Chickenpookie -

Just curious if your trading account is non-margin...can you short?

Rob

Hey Kaimu,
Just came back from a week on Oahu and is there ever a lot of places for sale. Have been to the Islands many times over the years and never seen so many on the block.

BSI, what are the numbers on the index for the first half hour open? What do you think the close is shaping up to look like today?

re:close

looks like a push right now.

Pennies from Heaven letters:

I got one last week offering a $76,000 unsecured loan, no questions, no payment schedule.

The only qualification... Not available to anyone currently "in open bankruptcy court."

I kind of like offers which don't take a lot of my time to decide :-)

As Arnie on Laugh-in would say while peeking through the palms, "Well written , but stchupid!"

davefairtex:
the option pricing model is broken*, but not for reasons you suspect.

the pricing phenomena you observe are due to the role volatility plays in the option pricing model. read up on that a little and the 'odd' changes you see will be clear.

note that serious option players trade the volatility component of an option more often than price. reflect on that, in terms of what you have observed about option prices changing while the underlying has changed very little. this idea, as seen in practice, was also pointed out by vinod in a post a couple months ago.

*(the options pricing model is broken to the extent that it relies on a normal distribution as the basis of the Black-Scholes model. these distributions "in the wild" are often (always?) not distributed on a perfectly normal curve. therefore the prices generated by Black-Scholes will almost never be accurate, (as a modeled expression of risk, not in terms of the market price discovery mechanism.) The real tough part is determining the real distribution curve for a given option strike, and then taking advantage of any mispricing. Without a half dozen actual rocket scientists on staff and a buttload of computational power, and without lots of capital to lever up on the narrow price differentials over thousands of small trades, good luck!)

NOTE: The role volatility plays in option pricing is something anyone who wants to use options should understand. This goes even for those who simply want to use the buy/write tactic espoused by Bill. Everyone from a punter picking up a single contract that is 10 bucks OTM, to a hedge fund writing 1 thousand contracts at a time, absolutely MUST understand the role of volatility in option pricing. It is simply not an accident that Warren Buffet recently sold millions of dollars in puts at a time of huge vol.

ALOHA !!

yvrapx ... There is stuff for sale, but even the median Waikiki condo is still $600k, so I wouldn't jump in now! When I was looking(1996) for my place here I also looked at some condos over in the north side of Waikiki, over by the Otani Kaumana hotel. I found a two bed for $169,900USD. It was tempting but I didn't want to pay management fees and dues plus I wanted a place that had a business or some sort of income. So ... here I am! I'm just not the CONDO type!

bsi87 said:

"BUT rallies up to the 50/200 DEMA are opportunities to sell and potentially short."

In a severe down market like we've had, often times stocks hit selling resistance before ever getting up to their moving averages as under water investors and scalpers look for liquidity or quick gains.

In this type of market environment, there are the quick, (who don't hold on for the last dollar), and then those left holding the bag.

That said, I agree with your premise of this move being a rally in an overall down trend, until I see more constructive action.

Just one person's opinion ...

Kaimu,
As an aside the locals I spoke to in Oahu were all concerned with the drop in tourism, retail etc. That said Costco was packed all the time as was Walmart/Kmart. Dropped by Oakland, CA and Walnut Creek, CA on the way back and they were really hurting. Not a pretty sight seeing the once wealthy rummaging through the sale bins.

Sandra - problem with day-trading

What "edge" do you have - vrs. the professional proprietary traders of HB&B and others? That determines how you win when you win.

I know one HB&B trained trader who gets instant acccess to figures periodically emitted certain early mornings by the Energy dept. He has an ultra-fast connection to get the info quicker, and have time to sort through it before the open.

He then trades oil futures minute by minute, having learned how to interpret these data.

That's the kind of thing we're up against in day-trading.

with circuit city essentially going bust, wouldn't BBY be a big beneficiary? They have gotten crushed, as expected, but they could be a nice value right here.

I've read that they introduced a sub $300 laptop for the holiday season as part of their strategy to move toward cheaper stuff during the downturn.

bigboyz - The only shorting I've done thus far is through ETF's. I'm reasonably certain I cannot short individual equities, considering non-margin accounts don't allow share lending. Tit for Tat?

Jock... maybe with oil futs... but with stocks it's not that bleak :)

davefairtex:

It is well known that the Black-Scholes model for options have at least two major deficiencies:

1. The model assumes that the random process is Markov, which has no memory. In other words, it assumes that all available information is encoded in the price of the underlying. We know that assumption is not true, right?

2. The model cannot predict the volatility smile; in other words, it predicts that all options with different strikes and expiration have the _same_ implied volatility, which is not true.

Btw, the model assumes that the _percentage_ fluctuations (NOT fluctuations in dollars) in the underlying are normally distributed.

Jock: I only trade stocks, mainly the oil sands. However, I'm not trying to beat HB&B, I'm just trying to make some profits, hence why I always sell too early. I use about 20k/50k.

I'm not trading every day right now, cause I'm a bit fearful and not enough experience yet.

Jock - "That's the kind of thing we're up against in day-trading."

I think you're describing another aspect of our "free" markets.

Refiners were having a good day, backing off a little in past half-hour.

Still long - VLO, TSO, FTO

HOC looked like it has turned the corner a little as well. No position.

Re. competing with HB&B trading, currently one third of U.S. equity trades are done with algorithmic trading, a figure is expected to soar to more than 50 percent by 2010.

http://www.ddj.com/architect/210604499

Also interesting comment on the technical trading system at Binckbank in the above article.

Grym - It wasn't too long ago (7 years?) a friend of mine was refused a car loan, we thought at the time because he was 72 years young. He wanted a new pickup truck.

bsi - r u still waiting for an entry on DE? What about CAT?

re:bear market rallies

On the other hand, they can be fierce 1-2 rallies jumping 20-30%.

Trade small

re:DE/CAT

have AG and TEX. That's enough for now.

re:oil sands

GL daytrading 'em.

Might be better off swing trading those and finding something else to daytrade.

By day trade, I assume u close ur positions every night and go home flat.

re:CETV

in at 34.67, out at 32.13.

1-2 "day" rallies - bear market rallies

Jock at October 21, 2008 3:04
I am trying to sort out some rules and strategy that can give an edge,help eliminate risk.My buying so far has been ok but my selling has been terrible.
Using a 30min chart seems like a good timeframe.
Only buy when;
-histograms are below o
-rsi 14 is below or at 30
-price is at or below the lower 200.2 bb
-all of the above should be in proximity to a downtrend break

Moreless the opposite for selling

critique is welcome

re:SNDK

closed above the open and previous close on volume 80% higher than 10 day ave.

disclosure:long

Amazing how we just kissed DOW 9250 twice today just to fall back to 9000 both times....

HUI made a new low today,
GDX close to lows but on weak volume.

technical action on Gold not looking good but
considering the run up in the USD the past few days its actually impressive its held up.

my main concerns are at this point:

1. will gold move up w/ prolonged USD strenght?
2. will gold move up on any weakness in the USD
enough to ignite the miners
3. the venture exchange did not make a new low
which is somewhat encouraging.
4. will the miners beable to move up in a rising
gold environment while the rest of the market
faces ongoing pressue?

Weird day with only GE, NAK, KRY & UNI-V up in one of the accounts - not sure I see the correlation here. Average volumes seem to be tailing down as well. Happy Trading

Here is the chart I am using to trade Yri.to

http://xs132.xs.to/xs132/08432/yri405.png

I missed most of today as i was meeting clients. Good day to miss the markets or did i miss a good buying opportunity?

AAPL earnings are out - stock is halted for some reason. Earnings beat consensus but revenue missed consensus.

QQQQ trading down a bit AH if that is a worthy indicator. I'm not sure why AAPL was halted or when it will resume trading.

I guess we'll see what Mr. Market has to say soon enough....

Today FED said they will buy from mutual fund
Today credit-default swaps of Lehman has to be settle and AIG was one of the biggest holders of Lehman CDSs, and is now in Federal hands, I guess that it was the taxpayers, once again, that ultimately paid off the counter-parties...
Also
Thursday the Washington Mutual swaps will settle
I think something is going on and we do not know. Other wise FED and Republic president will not be talking about simulation plan
Look like sell off will continue through Friday

RE: World-wide bailout

Counting the Treasury and all other central banks, where are we now in bail-out commitments? $5 Trillion? $6 Trillion?

Pretty soon, they may start throwing some real money at the problem.

Goldman say sell (Citicorp) C
Tomorrow city will say sell GS/JPM/BAC
It is paying time for kids at kindergarten

"Correction:

NYSE McClellan summation index

the market could get a panic sell-off of say a 100-200 SP points.
"

Funny - that seems like cheap change to me now.

This market in 2008 will probably mark a whole generation (well, assuming we're relatively close to the end of this debacle).

I would think those that stayed in, if they are ultimately rewarded somewhat, will have developed insane risk tolerance in the process. I know today I view large swings as nothing more than that, swings.

Those that bailed out of the market at the bottom however will probably be scarred for life.

Of course if we have another 40% drop from here... well, geez, I think the stock market would just die for a while. People will just give up on the whole idea of relying on stocks for wealth increase and retirement.

AAPL has over 20B in cash, no debt, and a market cap of appx. $80B.

Stock just opened modestly down, I think we may see some whiplash reversal here as the spike down might be a shakeout....

AAPL is trading now. wonder who got assisted out the burning house 1st?

"When I wrote all these puts, I got some really big premiums. And now, even with the stocks that haven't rebounded all that dramatically, I see the puts getting much cheaper. Each day these puts get less valuable. In some cases, the underlying stock even declines a little bit, and the puts still go down.

Does the same thing hold true for big up moves and covered calls?
"

I've sold some covered calls and I've found, as well, that the calls I sold are deflating in value much more than the stock going down would indicate. Calls also tend to be more expensive than puts overall.

That was classic market maker action on AAPL.

Opened it down a couple bucks to scare the daylights out of holders and wham! movin' on up, to the east side.....

sorry for my burning building comment. havent even read the report yet. for everyone's sake i hope apple spurs a huge rally tomorrow.

Muzie
change in valuse of premium is due to VIX
yesterday market was up 200 OEX was up over 10 and OEX
460 pemium did not move reason was VIX went down 20%

"Kerkorian, 91, reversed course less than six months after expressing confidence in Chief Executive Officer Alan Mulally's turnaround efforts at Ford. Last week, Ford's collapsing stock price forced Kerkorian to pledge another 50 million shares of his MGM Mirage casino company to back the $600 million credit line used to buy into the second-largest U.S. automaker."

Talk about an investment built on a house of cards! However, this might be just the price a big player with deep pockets pays to have a seat at the table. Isn't that W. Buffett did recently when he ponied up a few $billion?

we can learn from Kerkorian action in ford stock is there is a time to let the stock go no matter
what was paid for it and move on

Does anyone know what time McDonald's reports earnings tomorrow. I bought some just before the bell. AAPL amazing!

aapl sold quite a few iPhones this quarter...this could bode well for Best Buy (BBY).

Re MCD, never mind I found it. Before Market open tomorrow.

earnings - briefing.com

Kind of confused with Kerkorian. Does this mean the end of Ford? someone who invests $1B in ailing Ford must know more info than the avg joe, yes?

Or is he as apt to get sucked in and buy high & sell low?

I am trying to understand how someone with so much money can make what seems to be a avg investor mistake?

APPL, RIMM, GOOG, QID -

BillySD - " That was classic market maker action on AAPL."

Well it did scare a hugh "volume" priced from $87 - $94). But price moved north of $98 with very thin volume.

Like to hear your opinion on these. I think AAPL's growth may be slowed but not out. They may very well take market shares from other companies, e.g. MOT. (They could buy RIMM to fill the enterprise space :)

APPL, RIMM, GOOG all traded higher after Steve Job spoke in the conference call, even BIDU. QID traded down to afternoon low. NOK & MOT little changed. Tech got hammered with APPL earlier today.

(long aapl, rimm)

hubris

NYUGrad - one thing that i can think of is this: Kerkorian is 91 years old. that means he was born in 1917. He grew up during the beginning of the automobile revolution. Ford was the leader for the 1st half of the 20th century and owning a Ford was the equivalent of owning gold. The impression this left on people of his generation can not be underestimated. Think of a brand like Google, but multiply it by 100.

So, in my mind, owning a piece of Ford to Kerkorian may have been akin to owning a piece of the NY Yankees or some other once heralded brand (not to say the Yanks are once-heralded (!)).

im not happy about saying this but i have noticed when gold has a big down day and consolidates into the close and the overnight markets it has tended to crash down hard the next day before the market open.

i hope im wrong w/ what i see happening right now but i have this nagging feeling gold wants to bounce off the summer lows w/ all this USD strength before its run to $1000. lets hope the miners can keep it together.

but Kerkorian must have hedged himself in some fashion, no?

RE: Kerkorian

Kerkorian isn't the only billionaire making big mistakes.

Aubrey Mclendon CEO of CHK had to liquidate a gigantic stake in his own company at fire sale prices losing billions in (albeit paper) gains. He disclosed he had bought much of the stake on margin (it should definetly be illegal for a CEO to own company stock on margin, right?)

Apparently 31 companies in total have reported similar management liquidations due to forced selling.

http://tinyurl.com/62dvqv

Pickens recently disclosed at least $1B losses in his hedge funds by missing the commodities turn.

Icahn has got to be getting burnt pretty bad on numerous botched takeovers like MOT and YHOO disasters last couple years (speculation)

With that said, I know eventually we'll be hearing about some great fund managers that hit the ball out of the park by buying into the panic......

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

c3

As far as AAPL, I dont follow them closely - was more interested to watch earnings on a technical basis for broad market implication for tomorrow.

Their growth will definetly take a breather but they do have great products and a fat pile of cash. Good management. Earnings should moderate for a few Qs.

GOOG and IBM shot up after earnings then moderated over the next few days so might be the case w/ AAPL as well. I'm cautiously optimistic that tech may have bottomed but I;m wary of another late month swoon. Seeing the $USD top would perhaps confirm a bottom for tech......

Earnings for MSFT are on 10/23....should tell us more of the story

APPL up $13 on heavy after hours trading so far tonight.

Terry C,

I don't think Buffett ever really gambles. From what I remember of his $5B outlay, he's pretty well assured he will make out on the deal. High interest, stock and a big penalty for a default.

Deep pockets give a person a huge advantage most of us will never see.

Blllionaires are allowed to make dumb moves as we all are. As a young Mexican kid once told me, "That's OK Mr. Nobody does everything right, sometimes." :-)

Rusoro Mining, RML.V or RMLFF:
What is going on with this company? A new low again today with a 25% drop in one day? 21 cents a share. I don't get it. Even KRY and GRZ are higher and RML is suppose to be in Hugo's back pocket. Grz is now lower in price than KRY. Something must be up; some kind of government investigation against RML.

Re: Billionaires Losing & Philanthropy

I worry about philanthropy for deserving institutions as things go forward.

In a somewhat bastardized example, Boone Pickens donated $165 Million to his alma mater Oklahoma State, but then *required that the $165 Million be invested back into his hedge fund BP Capital*.

Pickens' margin calls this summer (he was massively long oil and oil stocks at $148 per barrel) virtually wiped out the school's $165 Million. My point is not that this is an example of the right way to be philanthropic, but to say that a lot of successful people may not be able to support philanthropy the way they have been able to . . .

Re: Stocks One Hates to See Bullish

EBS--Anthrax Vaccine company.

Up over 10% today and has TRIPLED this year. I hope the market is not pricing in some mass casualty event to come.

BillySundance - Great post at 7:23pm, thank you.

BillySD -

On 10/16 when GOOG reported earnings, many tech shares rallied along after hours, dropped before market the next day and rallied after market opens. NDX rallied the next day. This is a second green day for the market and the rest is southward bound. BRCM & VMW both up after earning report. Given relative light volume today on the downside, perhaps this'll be a cause for a turn tomorrow?.

Blowout Preventer,
Another stock one hates to see doing well:
LPHI--buys life insurance policies at deep discounts from cash-strapped holders experiencing financial/medical distress and holds them until...well you get the picture.

c3 - I'll be looking for follow through from AAPL and other tech tomorrow....... lots more earnings from big cap tech to come next 2 weeks so I'm looking at the bigger picture.

I think in the long run strong tech co's may take advantage of the situation to do stock repurchases that end up smoothing earnings over time. MSFT, ORCL, HP are buying back stock and I expect to see others do the same and swallow up smaller tech companies as well.

The way I see it, there are a lot of industrial/commodity companies that would love to repurchase stock right now but don't have cash on hand and aren't able to borrow to buy back stock right now due to crazy credit market.

Its true what they say, its hard to measure the value of liquidity until you don't have it.

Just noticed an hs top in the usd that I had not seen before, an old one

http://xs132.xs.to/xs132/08432/hhhhh160.png

but it may be resistence here
http://xs132.xs.to/xs132/08432/h2225.png

BillySD -

Thank you for replying. Well said. The market seems to be reacting that way too. The Jury is still out until the big guys (CSCO, MSFT, HPQ, etc) weigh in. Interesting enough, ORCL, ACN, VMW, IBM all did quite well on earning. And, they are in the enterprise space.

Samsung Electronics Scraps Plans to Acquire SanDisk

http://tinyurl.com/59o8yu

Today the S&P500, DJIA, R2K put in 3rd consecutive higher lows. This was the first time since 7/31 for S&P and 8/7 for DJIA and 8/29 for R2K.

Nasdaq did NOT make the third higher low by barely clipping yesterdays low of 1698.01 in the final minutes hitting 1695.12 before the strong AAPL earnings in AH reversed tech.....makes me think that down spike at the close today may have triggered alot of technical selling

Will be watching tomorrow to see if a 4th consecutive lower low is put in for S&P,DJIA,R2K.....once a pattern of accumulation is broadly identified it could signal a level of safety for sidelined money to return en masse.

I also think at some point after enough stock accumulation has occured we will get a very sharp reversal of the $USD that will send money running back into the market......just hard to figure out what exactly the catalyst will be....completion of WAMU of CDS settles, sharp narrowing of TED spread to pre-9/15 values would make sense. Other big CDS settles coming?

Would be interested to hear other pattern changes or potential catalysts/signals are being identifed....

BillySundance
Thanks for good observation
will pay attention to it

The SNDK buyout is history. Not surprising in this climate. We should be hearing similar news any time now about the BCE $52 Billion leveraged buyout.

Let's look at the players here: Ontario Teachers Pension Plan + Providence E. Partners + Madison Dearborn Partners + Merril Lynch Global Private Equity together working to pay the moon with financing from Citigroup, Deutsche Bank and Royal Bank of Scotland. Are you impressed yet? The private equity players are having enormous problems raising money and hanging on the ropes while the banks are all but down and out and turning to governments for capital to stay alive. Because of a failing business model BCE was,IMO, no better than a $30(CDN) stock at the time of the announced deal. Today it is probably worth much less. Then again BCE stands to pick up a walk-away fee of over $1 Billion - but good luck in ever collecting it. Any ideas on how to play this one going down?

BillySD -

Not sure if you're still up. Just found out that the Bollinger squeeze is evident on the hourly charts of ALL three indexes: NDX, SPX, DJI. BB is inside the Keltner Channel and about to exit.

Gold, breaking out, breaking down.

Are the charts misleading, all depends on which currency you view it in. TA is being overshadowed by currency exchange.

Chart of Gold in US$ and CAD$ similar but quite different, do gold bars actually have different directional momentum depending on where you buy them?
http://tinyurl.com/6oap84

I see TA in the current world situation challenging. The biggest problem is we have all been brought up to read charts, X time constant (units: days,weeks etc), variable Y value in dollars (units: US$, CDN$ Eur$ etc).

So X is constant time, a day is a day anywhere on the chart.

The big problem is value in the units of dollars, we assume it to be linear and constant anywhere on the chart, but it is not and can greatly mask what is really going on.

I think of a simple example, say tomorrow we value the US$ at 1/2 of todays value, the price of gold would double in US$, the chart would show a huge breakout, vertical. However if the US$ was a stock and we did a 2:1 split, the value and the chart data would be back adjusted, yielding a chart with no anomaly.

Essentially this is what is happening when we look at most of the charts today. We are changing the value of the dollar units daily but we are not back adjusting the data. I know my 2:1 example is an exaggeration, you would notice that. But really what is happening is a 98:100 split for several days in a row and then the other way around for several days or weeks or months.

It adds up over time, in the last couple of years the US$ has experienced the split equivalent of 7:10, problem is you were never credited with those extra three shares, the FED just kept them.

Its a difficult thing to get your head around, if anyone has a better way please explain.

thanks
Quasi

Look at the dollar go parabolic tonight... 85.67 so far. How is a strong dollar in the best interests of the US at this point? Is this what "they" want?

now 85.91...wow.

stu,

strong dollar good for us? depends on what part of the spectrum you are on. It will help/hurt many industries.

I believe they need to prop it up as much as possible before the wheels fall off the wagon and it goes down. That will be good for many asset classes.

what i don't understand, that is isn't just the usa printing, it is the whole world. deflation may or maynot be here but I can't seem to get my thoughts wrapped around the consequences of global printing and they are also able to swap for usd(s).

very curious to see what happens..

"Argentina Default Looms as Pension Funds Seizure Roils Markets "
Bloomberg

Are we out of the woods yet?

ALOHA !!

Quit kidding ourselves ... If America is capitalism and free markets then where is it? I see nothing but a socialist monopoly. I would almost say Communism, but we still have some Rights ... As far as money goes we are a DICTATORSHIP!

Only one politician ever speaks the truth. Ron Paul on the US financial system!

READ ON:
Too Big to Fail?

“In the midst of highly unpopular bailouts of Wall Street, many justifications have been given about why Washington feels the need to act. Some claim that capitalism and the free market are to blame, but we have not had capitalism. If you compare our financial capital to our aggregate debt, this would be obvious. In the same way, we have not had a truly free market. The monetary manipulations of the Federal Reserve, a complex tax code, the many “oversight” agencies and their mountains of regulations show that we are far removed from a free market economy…”

The corruption is absolutely rampant in Washington DC!

When will panic buying of USD stop? Anyone have any insights?

ALOHA !!

LESS GOVERNMENT NOT MORE!!!

What a radical idea???????

ALOHA !!

ON USDX
I am not panic buying ... I am SMART MONEY. I am cashing in even more of my US Pesos right now while I am being gifted a chance to "get while the gettin's good"! I am doing the opposite of the masses! I am selling the USDX ... I only hope it goes up more so I can sell more!

kaimu.is the usd going up so a big one can get out before it falls? something is rotten

When a foreigner buys a us tbill or bond, it has the same monetary effect as if they had bought a tractor, or some corn. Since the us is borrowing, the lenders have to convert to dollars. Thereby increasing the value. Becomes a self fulfilling prophecy for the futures/foreign exchange. The dollar is popular.

kaimu:

don't forget to hang on to a few of those dollars

they might be good collector items one day ;)

http://tinyurl.com/5hrbtk

Volatility expansion setup. The NR7s (narrowest range of 7 days) cover the board.

Yeah, like confederate cash...LOL!
Collectible but worthless.

On USD -

John Maudlin had a very good Ouside the Box note from Brad Setser (http://blogs.cfr.org/setser/)

In essence, there is a dollar squeeze going on, especially in emerging markets. Excerpts:

"Some emerging market central banks have noticed that they - unlike the Bank of Japan, Bank of England, Swiss National Bank and the European Central Bank - don't have access to unlimited dollar credit through reciprocal swap lines with the Federal Reserve...

Think of Korea. There is “a shortage of dollars in the Korean banking system” - and Korean banks (and the Korean government) are scrambling to obtain them. That is likely adding to the pressure on the Won.

For all the talk about how the G-7 has lost relevance, in a lot of ways the recent crisis has reinforced the G-7's importance. Banks in G-7 countries that borrowed in dollars have access to unlimited dollar financing from their central banks - dollar financing that comes from the fact that the main G-7 central banks have access to large swap lines with the Fed.

Banks in emerging market countries have no such luck."

My conclusion is that the dollar's rise may be much more structural with a longer duration than market forces would normally support.

Putting a trailing stop on UUP, will buy/add gold/silver/miners when uup starts down.

Ron, what is an NR7?

We're back to $0.80 CAD this morning.

I may sell more GE stock later this week. With the exchange I could be out of the woods!

One thing that gets me when buying physical metals in Canada is that it requires purchasing USD (and showing proof of purchase from a bank most times) and then giving it to the bank. If you do the transaction at a bank you're giving them the spread on the currency, the premium on the purchase, and the spot difference they manage to get out of the transaction.

Selling the metal requires buying USD too, only this time you may just keep it... leaving the CAD a little bit weaker.

The guys creating risk scenarios must be having a field day with this year.

Six Argentina opportunities... for you to short.

http://tinyurl.com/66buuq

Got Amero?

Craig, I'll take a shot... NR7 is the day (or bar if you use other time frame than daily) with the narrowest range out of last 7. It's a signal of volatility contraction usually followed by big expansion. In other terms, be ready for explosive move. If we are in trend (in terms of the time frame you use for your NR7), the move is more often in trend's direction. At the end of a very extended move it's more often a sign of a snapback; however if narrow bars continue for a while at the end of such move, it's a consolidation that signals high odds of even further move extension.

Being more of a volatility indicator, NR7 by itself is not a directional indicator and should be verified by general thoughts like those sited above and other indicators.

Forgot to add: active traders like NR7 for entries because it allows very clear entry signal (break of the range) and tight enough stop (break of the opposite end of the range)

Vad is correct re: NR7.

Short term traders look for them largely from the standpoint of producing very tight stops, thus significantly reducing risk.

Mmmmmmhhhh...

I posted a few days ago a series of questions regarding what I see as a dissonance between Kaimu and Bill's position. The main point seems that Kaimu thinks everything is coming to the end for the $ and Bill (bet on the jockey (Paulson) not the horse) believes central banks will win the day. I wondered why this difference between the two positions.

I wondered if it would be too much power for central banks to cede to move back to a fixed standard (gold)and also, that the US(or should we say FED) would fight losing the reserve standard for the $. Now, I see WPeyton's post above, regarding the phenomenal rise of the $ because of emerging market countries lack of $ denominate debt. I don't understand the nuances, but this seems to be evidence of the battle for reserve currency supremacy/central bank supremacy.

Rothschild's words echo through the years...

Kaimu:

Thanks for your posts.

SNDK getting drilled in pre-market. One more example of why it's not a good idea to catch falling knives.

I think they are in sync....

Bill suggests the Treasury and Fed win, meaning flushing the system with liquidity and reloading the banks, which brings on Kaimu's (and Bill's) resultant counter move in PM's, miners, etc. due to extreme monetary expansion needed for the Fed/Treasury to "win".

Their winning of course is our loss in the long run but our gain in equities depending on the value of our $.

re:SNDK

It's early. Thanks for the insight.

Thank you Vadym and Todd.

Everyone should take a look at Ron's blog today then.....It looks like it could be one of those LT buying days.

Craig:

Except Kaimu sees a Weimar $. I'm not sure the Central Banks can afford to let that happen. Counter party risks to the other fiat currencies would be too great.

Craig:

Ron who?

That SNDK deal got dropped last night AH.
Was it Samsung that was supposed to be interested? Whoever, not now, so SNDK will maybe find a new low.

Nemo: See this AM 6:37 post.

If we keep reflating/inflating and expanding money supply to try to smooth market fluctuations instead of paying our debts then sooner or later Kaimu will be right.

Art Cashin just parroted Bill's trading plan on CNBC.

Venezuela - is there REALLY country risk? Depends who you are, and whether you asked me yesterday or today! LOL

If you're Canadian, BIG country risk. Ask KRY or GRZ. But if you're RUSSIAN, no problem!

Still, I used to think a small VZ country risk for Rusoro was the CIA toppling Chavez!

But, with the US electing a "socialist" President, I think Rusoro's country risk in VZ just went way down.

LOL