Good morning.

Here are your Cara 100 Ratings Changes:

DNA - Upgraded to Buy @ Jefferies & Co.

NKE - Coverage Initiated @ Stifel Nicolaus with a Hold

Thoughts on NYCOMEX default...

Large investors and bullion dealers are now looking to take delivery of the December gold contract and there is likely to be a significant number of longs who stand for delivery leading to COMEX warehouses being depleted and the increasingly ridiculous COMEX price then surging in value.

The possible default of COMEX is even being considered by some astute observers. It is estimated that COMEX only have enough gold to deliver on some 10% of the outstanding contracts. October is not a delivery month so the December contract is being targeting. Some large money interests also realize the potential for sizeable profits from taking delivery of large gold and silver bars and melting them down into smaller bullion products for sale at far higher premiums. The COMEX December Gold option expiry is November 20 and there may be fireworks in the gold market soon after the election on November 4 th in anticipation of far higher prices due to the incredibly strong supply and demand fundamentals.

http://tinyurl.com/6am43x

Here are the symbols i am watching as of yest. Charts seem good relatively speaking. But i am still paralyzed from rubbernecking.

NDAQ, THOR, PLHI, AFAM, ISYS, ENSG.

All cash

A world gone mad-wasn't it just a few months ago everyone was buying commodities hand over fist. Over history breaks of this magnitude (over 50% lower in corn, wheat, soybeans, oil etc.) in such short order mark short term momentum lows and spawn meaningful sharp rallies. With the US dollar at the same time reaching a resistance level against the euro, I am beginning to watch for set-ups to go long crude, long ags, and long the euro. Bidding 128.5 and 128 for the FXE this morning and if this area looks to hold will begin to purchase USO in the 55-56 area. Good luck to all.

Didn't a similar delivery issue happen when the price of barley (or grain or something) crashed? I heard a story that someone found it was a better deal to take delivery and sell the empty burlap sacks, dumping the contents into the river.

Looking at the RSI <30 buy list, maybe it makes more sense to buy the ones that _don't_ have buy alerts.

Makes it easier to look at anyway.

A talking head on cnbc just said "look at yahoo at $12, they are cutting jobs and are up today, i mean how much lower can they go?"

Did this dude just show up to this party? thats pretty?

^that's pretty bold no?^

hehe

You should be on the payroll? I should be on the payroll.

I told you guys we'd need to get through earnings before this market would be ready to roll.

And thanks for your heartfelt concern for my mother. Very touching.

BA posts earnings
http://tinyurl.com/5jo8lx

"The company (Boeing) now has a record $349 billion backlog of planes."

Sharky:

Good to hear from ya"!!!

the moves in the USD index lately are almost comical

i had a disturbing dream sunday night of watching BNN and kevin oleary was cheering gold down at $660, saying its a buy, and i felt ill.

im not sure what made me feel worse: gold making new lows or kevin oleary.

either way, golds action isnt surprising in the face of recent USD strength. the question is:

if global financial weakness is causing a flight to US dollars, and w/ more weakness popping up in other nations every week (argentina/pension funds) what case can be made for the USD to begin a meaninful descent if the conditions which brougt it up so high havent abated?

Bill:

What's worse about that Euro person's rant, is they called you an "American."

[Bill Cara note:

nemo, I'd proudly be an American. And if I were, I'd be living in Ft. Lauderdale. Nothing wrong with being a Canadian living and working in Bahamas either!]

NEMO ^^^

that was funny!

dr cosa.

I havent had a single nightmare in weeks, can't sleep!

Here is a usd chart I favour , mistakingly the chart I showed last night was linear, prefer log for longer timeframes.

http://xs132.xs.to/xs132/08433/usd511.png

That fellow in Europe needs a perspective transplant. And as for the doomers on TV, I believe a trader friend of mine when he says, "When they're crying, you be buying. And when they're yelling, you be selling."
Good day, All.

we need a high volume move out of the 8400-9800 range to wash out the ST anxiety...they (we) need to take it down to 7000, or (preferably) above 10000...

"Bill, I see a few stocks worth a nimble."
"It’s why, when I sit to write, I could do it until I drop. What comes out of me is me."

nimble or nibble-> the subconscious makes itself known ;)

[Bill Cara note:

I was quoting my associate word-for-word. English is his second language. I didn't pick up on that. I guess I wasn't my usual nimble self."

thx for the chart tbar,

who would have guessed 84-85 on the USD so quickly,
is 90 out of the question if things dont improve?

RE: IBKR and DNA

Looking at these from a purely technical analysis standpoint, I'd like to see more upside volume on for IBKR. But given the timidity of the current market environment, it's possible that larger volume may not show up until it's clear that the market is ready for a rally.

There remains a fair amount of resistance for IBKR between $26-$29.

For DNA, the "V" bottom is not a pattern that I personally look for when establishing a position in a down market.

I'd be looking for another pullback in DNA in the weeks ahead.

Of the two, I'd say that IBKR is showing more constructive basing action.

Just one person's opinion. Do your own due diligence.

GG anyone?

Dr, what I would never believe is that the hui would fall below where I sold all of my gold stocks in Sept 2003 at 379 gold, today at 750 gold.

wow. someone just hit the Sell button hard on everything

Well, I should probably correct myself. As an American from Massachusetts and having lived overseas, I understand how this country can come across as boorish, arrogant, and obnoxious (traits I possess personally).

This country was founded on some pretty sound ideals (which are, unfortunately-idealistic-which I guess, paradoxically, makes them unsound), so I wonder if foreigners opinions are often grounded in dismay that a country originally built on such principles can conduct itself in such contradictory fashion.

What is often lost is that was a rare time in history where men of such character and the confluence of historic events gave birth to an historically unique entity. Unfortunately, what is also lost is man's ability to be noble and "virtuous" for lack of a better word, is bound up in a self-interested indiviual who has the counter-acting ability for capricious pettiness. At all times there is this internal struggle in individuals expressed in the various interest groups that create what is a natural expression of both the good and the bad.

XAU 78...it was >200 three months ago..

I am enjoying cnbc. they seem to be out of material.

Getting Ready for "The Turn" in the Dollar
BY FRANK BARBERA, CMT

http://tinyurl.com/63xh7c

"Either the [USD] market is in ‘kick off’ mode and is signaling a major intent to move seriously higher on a sustained basis, or the movement outside the upper band is a marker for an over-extended market that is about to reverse. In such cases, the reversal is usually compelling and usually comes within just a few days."

"For the badly depressed Euro which is now down nearly 20% from its July peak, a base should develop over the next two to three days followed by a sharp recovery rally back up -- in my view, toward the 140 to 142 area initially. Over the next two to three months, I would not be the least bit surprised to see this market snap back 50% of the entire decline which would come in the zone between 147 and 148."

Last week talked about time being as important as price as I scaled into gold stock positions. One third last week, will another one third add to NEM, AEM, ABX, and GG positions only on an opening range breakout later today. Filled in FXE at 128.5.

I was just about to ask about GG myself. At 18 it would seem attractive but if Bill's call for the USD reversal takes a few days as he suggested it may, perhaps there's more room on the downside. It bounced at 18 and I'd like to see what happens when/if it goes there to retest.

nemo

I'm not sure what you just said up there at 9:49 AM, but it sounded rather cerebral. :)

Hulbert: Anatomy of a Bottom

http://tinyurl.com/5dnhe5

".. my hunch is that we have yet to experience capitulation.
For example, interest in the market is now at an all-time high. Individuals who I never knew were even aware of the stock market, much less that I write a column on investment strategies, are stopping me in the street to ask what's going on."

"My guess is that, when that low does finally occur, we'll see be witnessing, and experiencing ourselves, a lot more of the psychological traits associated with capitulation: Exhaustion, disgust, lack of interest, even apathy."

nemo- ideals are necessary to illustrate what we strive for...the "sound" part comes from the (hopefully) intelligently crafted/common sensical policies and regulations that help us get there...one becomes corrupted when their own interests take the place of ideals, and of course, if he is in a position to influence policies and regulations, he is able to misguide the entire system...

It's looking as if the stage is set for cascading job losses. We all know this translates to prolonged recovery.

2nd Re; hulbert.
That observation is so true. I rember the heady days of dot com and the subsequent crah.
After the crash, no one wanted/ was interested in talking about the market.

Downies here in Melbourne, my favorite coin shop, won't have any bullion coins until January. Even then they won't be sure how much they will be allocated. Perth Mint, have huge backlogs and are working three shifts a day. The gentleman behind the counter had never seen anything like this before and "it's going to get worse". Hang tight with your gold.

Todd:

Well, I guess that means I've reached my pomposity quota for the day. Actually, I remember watching a program about the most recent Iraq invasion through the eyes of the Arab media. It took place in news rooms of various Arab media outlets. One of the Arab reporters was asked a question. I do not remember the whole answer, but he said, "I believe in the Constitution of the United States."

Even cynics such as myself have a little ray of idealistic sunshine. We'd like to believe human's would act in such ways. I think many outside the US-those who don't want to believe we're also Machiavellian by nature, are disappointed and frustrated with a country whose basic documents stand for so much, but conducts itself no differently-on the whole-as other countries have throughout history.

"Paulson pledges strong actions to deal with crisis" When will the recycling of prolific literature cease?

2nd:

Your preachin' to the choir...

re Hulbert's comments- if we take his reasoning at face value, then we should expect a severe drop in the number of posts at the bottom...but i don't think that's necessarily the case-> i know my own interest in the market did not wane during the 2000-03 recession..if anything, it picked up...people also do not stop having breakfast at the local diner to talk about the weather because times are bad...

Having said that, 2nd:

Ideals are outside the individual. They always move in the direction of self-interest. If the individual sees that a specific course of action which contributes to the "greater good" contributes to their self-interest, then they'll act accordingly. That's where we get back to the standard distribution of IQs under the bell curve. Oh, saw a great quote yesterday:

"Of all tyrannies, a tyranny exercised for the good of its victims may be the most oppressive. It may be better to live under robber barons than under omnipotent moral busybodies. The robber baron's cruelty may sometimes sleep, his cupidity may at some point be satiated; but those who torment us for our own good will torment us without end, for they do so with the approval of their own conscience."

~ C.S. Lewis

nemo- sorry, man...like Todd, i just wasn't sure what you were saying ;)

i love CS Lewis, btw...

these hang tight gold posts remind me of what they were saying about CMGI from 200

Thoughts on leaps? Just bought Jan '11 $2.5 call leaps on Yamana at $3.18. With an inherent price different of $2 ($4.5 stock - $2.5 strike). I get time of over 2 years for $1.18 ($3.18-$2). My first foray into leaps.

Im not an experience options player but I'd like to understand some perspectives on why these are so cheap (or at least seem to be).

Navid

CP- LOL, you're right..he needs to establish some credibility by telling us the economy is totally ----ed; then we can start paying attention..

speaking of exhaustion and disgust, the market is doing its job...

2nd:

That's o.k., sometimes I'm not sure what I'm saying

Won't a turn in the usd bring strength back into the markets as it gets revalued in cheaper dollars? It seems to be an inverse relationship lately and now that it has run up they have room to "save" the sm with a usd drop. Just a thought.

navid:
the Yamana $2.50 leaps...

seemed pretty cheap to me too; so I rushed to check...

I think they're Jan10; not jan11.

Still seems cheap.

tx for the headsup.

love that quote nemo.

thx

i sold 1150 shares of HGU yesterday @ $8.75 and was able to buy 1400 shares this morning @ $6.20

its only part of my whole position, but it let me watch the drop in gold miners w/ more objectivity and i at least got 250 extra shares out of it for my trouble. it keeps the volatility from driving me nuts if i can trade a small portion around it and build my share base.

Re: Hulbert and other technicians:

I have heard so many market veterans say "this market is not anything we have seen in our lifetime". I believe Bill said something similar to this too.

If this market is "different", why do we want to predict the outcome and how we get there based on history, aka "last crash(es)"?

Let's assume market goes to zero! Do you think no one would talk about stock market then? If the media is all over it, does that mean we really have not capitulated?

@Joey

Nope those are Jan'11 (VPAAZ on my brokerage).
So I spent $3180 on the contracts ($3.18 *10).
As long as Yamana is $5.68 ($2.5 + $3.18) or more on Jan'11 I break even.

I'll take that bet. Still would like to see what I'm missing...feels like dropping a net rather than spear-fishing...

Navid

So we have approved a $700B package, but has any of the money actually be invested/used yet?

Is the FED just playing a game of chicken with foreign central banks, forcing them to cave in and start distributing bailout funds (i.e. ING, etc)? Are they just forcing these foreign central banks to start their own printing presses to help alleviate foreign trade imbalances and support the global credit thaw....

Perhaps this would explain the weekly Paulson/Bernanke/Bush media appearance jawboning as a strategy to keep calm/order until the FED finally steps in to buy up assets/infuse capital into banks.......

I still just can't believe that Congress does not seem to care how conflicted Paulson is in this leadership role. Does no one in Washington realize they left Paulson in charge of the largest sovereign wealth fund ever or does EVERYONE know?

cosa,
I've kept sane by doing the same thing. Bought an extra 5k shares PLM at $1 during the last panic. Sold for $1.50. Will buy them back again soon while holding core position.
MCM

getting ready for a couple meetings. then off to pittsburgh to wine and dine a new client. good luck to all.

Tbar - That's precisely what I'm anticipating. I think we all are, which concerns me somewhat.... Perhaps the moment HB&B finally off-loads their bad paper onto the USD is the moment the USD tanks.

BillySundance - Maybe they're waiting for a synchronized signal prior to firing up the printing presses.

Pookster:

Or maybe their words and not having had to take action on the 700B have gotten the other central bankers to take action so they don't have to do as much damage to the US balance sheet. What a chess game...

nemo - The second move for HB&B will entail trading their newly minted USD's into the market just prior to the moonshot.

ALOHA !!

nemo-"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."

WRONG! I am betting the US FED in conjunction with their crime partner the US Treasury will eventually INFLATE OR DIE, which tends to cause stock markets to rise since the money spigot emanates from the financial and market sectors, then it does a trickle down from there. The DOW chart from the 1900s has mainly increased based on inflation because the DOW is denominated in US Pesos. I conclude that eventually a stock certificate will be seen as more valuable than a US Peso simply because a stock certificate has real tangible assets backing it. The US government's only asset is DEBT backed with the "faith and credit" of the US government. So ... yes I see a US "monetary crisis" as the be all end all! I would say by around 2012, which is the year the Bush FY 2008 Budget forecasts a "surplus"! HA!! Without an income can there be a surplus?

ON USDX DECOUPLING
Why have the DOW and the S&P moved decidedly down at the same time the USDX rallies upward? It is clearly a no confidence vote in the US economy and the companies that generate income for the US government. Like a forced sale of mutual funds due to redemptions there is forced buying of US Pesos due to oil and commodities and US DEBT(safe haven)denominated in US Pesos. The very reason that US DEBT is considered a "safe haven" is the very reason it is not! Essentially a US FRN is a stock certificate, a share of the US government and the US economy that supports that government. I find it perplexing that the general sentiment is that somehow US Debt will survive but the US economy will not. The US DEBT and the US economy are conjoined twins!! Obviously via margin calls and redemptions foreigners and Americans are voting with their feet on the US economy! There cannot be a US government if there is not a US economy, because government by itself produces no wealth or income like say a GE or IBM. Without a US economy the current state of the US government and its associated DEBT are dead in the water along with its Peso. Right now the World is voting that the US Peso will weather the economic global storms better than any other country, which I believe is a mistake. I have pointed out that the Y/Y withholding charts for US companies payroll have fallen off a cliff, down 75%+ from 2007. That's a double whammy in that the US government gets less tax revenues(assets) but takes on more liabilities through unemployment and welfare! So, employment is shutting down in the USA yet the US FED and US Treasury are keen to dump as much funding as possible onto US Banks, which without those funds would be with LEH right now! Shouldn't the US Treasury and our GANG OF 535(US CONgress) be sending that money to the US economy instead of US Banks? What income and tax revenues will US Banks generate and when? I believe the SMART MONEY is exiting the US Peso while it rallies and is instead buying up "real wealth". I have already seen Merrill Lynch(is this where their bailout money goes?)buying Australian juniors. I have seen the Dubai Group buying Australian juniors. I have been buying Australian juniors and miners. With a US Peso they are ON SALE! But that isn't the half ... With the flight to cash and the redemptions these share prices have plummeted in a panic mode, yet the fundamentals of the companies have not changed with respect to their deposits. If anything they have improved! Funding is a different story and if you buy the ones with cash or production then I think you will win in the end. So, with the lowest share price in years and with a US Peso another 35-40% discount ... I cannot pass that up!

What does a strong US Peso do for US based exports? Ask Japan what a strong YEN does? It means the US government has even less tax revenues! My flowers now cost a Canadian 20% more than they did a few months ago, so neeedless to say I have almost no orders from Canada any more. Luckily Canada is not my "bread and butter"!

Not only is the US FED Balance Sheet broken but so is the US Government Balance Sheet and as these numbers wash through the economy and become more evident the USDX rally will end and the US inflation via US DEBT will rise even if we have to buy our own debt! Cash flow via tax revenues has dried up and US TAXPAYERS are as broke as the US government is. In order to make up for the vast shortfalls in "revenues"("stealings" is more like it)the US government will have to INFLATE. The other option, which I have never seen them take, is to shrink the size of the US government and renege on their many decades of promises(entitlements). One way or another the US government will be forced to shrink and renege, but they will go kicking and screaming. When that day comes both parties will be out of business! Which ... is how it should be!

DEBT = WEALTH is a fallacy ... Who has more DEBT than any other country in the "history" of the World now and is growing that DEBT by at least $1tril annually? Not to mention the $99.2tril unfunded liabilities! At some point as people retire they will want that which is now "unfunded" to be "funded". They are "unfunded" for a reason! Why is it something is "unfunded"? DUH-H-H!!! HA!!!

ALL OUR BEST THINKING GOT US HERE ...

Palin and Pebble - NY Times article

She leans towards the mining industry; this mildly pro-salmon, anti-pebble article recounts her involvement in the (failed) referendum to kill the mine; she's said she'll consider the permit when the application is in:

http://tinyurl.com/5prxrp

(You'll need a free subscription to retrieve the article).

Kaimu:

Wrong about what? (Not that I haven't been wrong today) I asked, or have been pondering this dissonance between your positions. That's all.

Here's a scary thing that goes a bit off topic. Your guess about 2012 goes along with all that mystic and Mayan calendar stuff...anyway.

I can see it now, Kaimu the economic mystic sitting on the hill giving economic lectures among his floral progenitors...

What was I thinking nix progenitors, add progeny

Bought half my starting postion in DGP @ $13.64

I have been waiting for gold to go down to $700, but Bill thinks $740 has support. If the commodities start to rally next week, I think I will buy into the miners(SLW,GG,AUY,ABX).

There's no question current market conditions are extremely frustrating... and without a consistent pattern in a positive direction for the markets... the frustration has a way of floating to the top... and exposing it's ugly head! That said... by staying in the game through this historic period of market volatility consider the value of the education gained and what this experience will mean for each of us going forward versus those who chose to flee and bury their heads in fear!

nemo you are on a cerebral roll today!
"....for they do so with the approval of their own conscience." WoW
Because I am may not be a "real american" if I disagree with whatever plan proposed, whether its a bailout or a gold grab or a Freedom About Reduced Territory Strategy
And now a trading question... GG looked good in the 20's and I was wise (aint hindsight great) to scale in. Now at 18! Cowabunga. If I add 1/2 a position size for me I will be at 3/4 position with a basis of 20.
So have I just put a target on my back that says dumb and dumber?
Comments please

ALOHA !!

Lets recap the COMEX gold play ... Lease rates are on a tear today. Remember the average lease rate over a five year period is 0.12 and now I see the 3month at 2.75, almost a 2300% rise in a very short period, so leasing is being discouraged and central banks are hording gold. Of course the COMEX price does not reflect that, but the physical market does. If I was the COMEX and I was facing a huge delivery of DEC contracts I would want the gold price down to discourage deliveries by saying,"Hey, look what good is taking delivery of gold when it keeps going down.? If you instead take a US Peso you will be better off because the USDX is going up not down!" Every sale has a salesman ... Who sits on 71% of gold derivatives? JP MORGAN ... I am sure that has no bearing on why POG is down! If you were forced to return leased gold wouldn't you want to return it at a lower price?

CRIME SCENE ... Move along people ... Nothing to see here! Move along!!

Sell 100 Shares of UAUA
Details Filled at $16.00

Photogray:

I'm all gray, and that wasn't me, it was C.S. Lewis. If you believe Bill, you're probably just about right in your GG position.

kaimu, I'm buying canned goods and ammo.

When it hits the fan, I'll be able to trade a can of soup for an ounce of gold.

you cant eat gold.

Hey Kaimu:

What if they don't have the gold to return???

Interesting piece from UK hedge fund, Hayman Advisors L.P.
http://tinyurl.com/5khdjb

Procol:

Save the soup. Use the ammo.

Dr. Cosa
You seem to have a real good feel for the price movement of gold, but I believe you only play the long side. Have you ever tried playing both sides(long and short)gold?

What could possibly account for a 15% spike in UAUA and does that now make it a short target? I'm ticked I didn't pull the buy trigger this pre am

ALOHA !!

I don't have to buy food and I have no neighbors that need shooting!

@vinod

short, 100 CAL

Good news!

The most the HUI can go down from here is about 181.40!!!!

Holding AUY, SLW, DGP with a tight fist.

MCM

Kaimu:

Never know until the fecal matter hits the ventilator. Anyway...question for you: When the US reserve currency collapses and the US goes out of business, are we a counterparty too big to fail?

Photogray:

W/UAUA it's the drop in oil.

Kaimu,
So true you can eat deer or wild chicken depending the Island you are on...oh and don't forget the SPAM! :-)

procal - "I'm buying canned goods and ammo"

That is so Y2K!!! Although ammo is good and food is better, I hope you're buying more than just these...

NYU Grad,

I'm not saying BA is a bad investment, but...

Backlogs are about as reliable as analysts' estimates. You can't take them the bank.

dr. cosa,

IMO, flight to US dollar is an amazing example of reliance on habit rather than reason!

thx bobbyo, in reality i have a very poor feeling for gold's movements as ive made a series of catastrophically bad calls the past year w/ a few good ones in between.

my fear of shorting gold is due to the explosive nature of gold as of late. the $70 down days have been the majority to day but if you are a fan of Jim Sinclair you would agree that $70 up days may become a more regular occurance at some point, which would obliterate the shorts, coupled with ongoing COMEX issues id rather be holding hte physical or the miners in a bounce back of gold.

though i say this as gold is testing critical support at the moment, the miners are making new lows even though the broader market is not, and the USD is making new highs every day.
i dont know a Fu@#&ng thing these days.

Bill,

We in the US have a bad habit of trying to corner the market on the use of American. But, I guess Canadian is easier and more melodic than United Statesian or USian :-)

In defense of the European...
My wife and I have numerous European friends who I feel limit their expressions of anger with the current US international image.

BTW, I'm happy and comfortable with the few purchases I have made since your switch to 3 year bullish.

Should you care to join the ranks of the extreme paranoid regarding current world events go here.

http://tinyurl.com/66va3l

They even sell the canned rations you'll need for your bunker!

re:LEAPS
They are less volatile than the closer contracts; as with any option though, performance will depend on what the underlying stock does.

You may not even need to hold them as long as you think to make a profit.

I use LEAPs when I see a stock at a price I'd own it at, I sometimes buy the LEAPs for considerably less money (ex: XXX at $35, Jan 2010 w/30 strike at $8-9 lets you lock in lower price with less capital expended; if the stock goes up from there, you can simply unload the options).

Bill's idea of writing puts to pocket the premiums while not minding if the stock is put to you may be a better strategy to pick up shares lower...

Current volatility:

Last night on Fast Money Jeff Macke, in response to a comment on some recent positive market move, said what he wants is Bernanke and Paulson to shut up so we can see what the market is like without the spin injections.

To which I'll simply add — BINGO!

2nd - Pull up a comparison chart of DXO and QLD and let me know if you think we need to make an adjustment...

gbu.to is up 8% today, I dont own it but have noticed it often has a move like this at bottoms.No idea why?

Nemo,

I'm adding the C.S. Lewis quote to my collection.

Unfortunately, someone has decide to have us try life under robber barons AND those doing things for our own good.

I'm all for freedom to fail as a part of free market philosophy.

Bill,

Thanks for the link to the CPM report. If realised, the report states that global levels of economic activity ( measured Real Gross GDP ) will bottom next year to levels at or about 2001 and recover to levels about 2004. I suppose the question is whether we see linkage between market pricing and real gross GDP. I believe there is significant linkage but no direct correlation. The report confirms to me that my focus should be on pricing risk based on market prices of securities in the 2001-2004 period as the benchmark and adjusting for earnings retained from that point forward. I remain cautious about accumulation at present price levels even while many are arguably outstanding enterprises with promising futures. I'm not buying (yet) but I'm not selling either.

ALOHA !!

nemo ... Well, it appears Bush likes 2012 also!

My only difference between Bill is that I am selling the US Peso to buy heavily discounted Australian equities and I am not buying the US markets. If Bill had a CARA 100 ASX then I would be there! When the AUD rallies I win, when the commodities rally I win double! If I were buying the DOW I would certainly wait until earnings season and tax loss selling is over, maybe Q1 of 2009 is more realistic. Notice though both he and I are in the BUY mode, but cautious about timing and duration!

yvrapx ... Uh, you left out my favorite ... FISH! I don't need to buy food or water and I do not need air conditioning or heating and I don't even need clothes! HA!!

TerryC:

You hit my concern on the head. Given this is an economic downturn on top of a systemically screwed up market, I am wary until the indexes hit their 70's lows in regards to P/Es (8ish for the DOW)

dr.cosa - One thing about shorting gold (DZZ comes to mind) is you can keep a sell stop limit on your hedge to force a sale upon reversal. I haven't done this, but it's been a notion I've visited more since volatility of the trend has decreased recently.

Anybody want to bet the Saudis play ball next week and limit cuts to really send oil down?

nemo - Saudis - That's certainly food for thought!

nemo... seeing how oil is not getting traction even though cut is practically sealed, I have feeling it's preparing sharp drop in any case - maybe with short-lived spike first.

Kaimu.
Bring on the shoyu poke!!!!!

If the Saudi's play ball-it weakens Iran, Venezuela, and Russia. Whoa!!!

Now Vadym:

Conjecturing about oil..A wise man once said, "play what you see, not what you think." Oh...that was you!!:)

Grym - It's obvious Paulson.LLC wants the market to drop so the good ol' boys club (HB&B) can buy the bottom with their newly minted fortunes. They're delaying implementation and talking it down as part of their strategy to recover from their past poor decision making process. The problem is this has lead to even greater pain across the board. But why should they care, they are beholden to no one but themselves!!!

If wise is well-scarred, then yes, lol.

To me it's exactly the case of trading what I see vs. what I think. Meaning, conventionaal thiking would be an output cut should put a floor under oil price, which is not what we see.... This is price/information divergence, which is an underlying idea of that motto

Shadow interest rate cut today?
http://tinyurl.com/5g95cu

Vad:

That's where what wisdom I've seen comes from I've found. Vicarious learning is almost impossible. We only have a chance to learn from something if it hurts.

Raises another question.

Bill says OIL, BASE METALS GOLD

Well, if oil keeps going down, how do the others move higher??? Interest rate cuts and reflationary/inflationary pressure?

I decided to sell 2/3 of my TBT position and to buy dividend paying stocks with what what I consider good growth potential. I bought FRP, which pays 18% dividend and is a stodgy regional telecom services provider, and DAI with its 9% dividend and leading global brand. This way, if the market recovers, I earn capital gains, and if it doesn't, at least I have some income. I've become tired of waiting for the long bond side of the TOG to begin....

nemo - A Fair and Wise-guy says once you see it, it's too late because billions of other eyeballs saw it before you! Plan the trade and trade the plan.

US investors who wish to go long gold: consider HGU.to, a 2X ETF, now trading at $6.20, all time low. A falling knife at the moment, but if you believe gold (and the miners) will rise you can use your mighty powerful dollar today and get a good deal, and then watch the USD fall and get even better than 2X return. Please do your DD.

Also, IWM straddles continue to do just great. Thanks.

Pookster:

The best players see it before others do.

FRP

Total Cash (mrq): 11.15M
Total Cash Per Share (mrq): 0.125
Total Debt (mrq): 2.23B
Total Debt/Equity (mrq): 9.719

Must be a reason it's paying out 18%. Argentina bonds were paying out 24% yesterday...

DAI - you're smarter than Ichann I guess...
Total Cash (mrq): 5.98B
Total Cash Per Share (mrq): 6.187
Total Debt (mrq): 67.14B
Total Debt/Equity (mrq): 1.481
Current Ratio (mrq): 1.178

Not sure that companies with debt will do well in this environment.

SiO2,

Would your straddle play be buy CALL NOV08 @ 51 for 3.7 and sell PUT NOV08 @ 52 for 3.7 now that the stock is around 51.5?

correction: I meant BUY PUT...

Hi All - I am getting capitulated by the computers today with low volumes. Should be interesting tomorrow with another chimp run up the tree. Happy Trading

Chickenpookie at October 22, 2008 12:57

I think many eyes have been waiting for 730 in pog to get tested,their are 3 highs since 1980 at this level 2 in 1980 and one in 2006. The breakout was never tested but may be any minute. I nice wick off the level would be welcome

fazeli, I am using wide strangles because they are cheaper and we lots of time to expiration. Keep in mind that volatility is very high, so premiums are very high.

The more I think about it (dangerous, I know) the more I think the Saudi's play ball. They, Qatar and Kuwait can knock another $30 bucks a barrel off the price and still maintain their budgets, which allows them to avoid any civil unrest that might arise. It also puts pressure on Iran for whom the Arabs have no love loss, which aids the US. Dropping oil, per Bill, may help keep gold down, which also helps the US government.

Probably don't get a production cut announcement that materially affects the market, except, as Vadym stated, short term. Even if the majority of members vote on a larger cut, if the Saudi's announce they thought the amount excessive, the message will be they'll keep pumping, as will others.

Just got back from the liquor store. Add Kentucky bourbon to the list of essentials like ammo and canned goods. Elliot wave triangle calling for a plunge here, followed by a 2-4 month (big) rally. I'm getting nauseated watching the volatility...

MCM

Hi,

Spot gold in USD just printed a lower low.

Oscilators are bearish in daily charts, and stochastics are embedding.

The suggestion of a possible symmetrical triangle forming at the daily chart has been set aside.

Unbelievable.

Cheers!

SiO2:

How wide?

SLW heading for a 3 handle - ouch!

I pulled this up from Bill's Daily Report on July 17, 2008 (Comments & Outlook section):

"Yesterday, I pointed you to Suncor, saying that at the cycle bottom for the broad market that I feel will come in the next couple months, traders should be accumulating shares of Canadian oil sands companies, like SU. My reasoning is simple: The US needs oil independency, which can only be done with supplies that are close by and in a solidly pro-American country. Mega-billions are being spent on pipelines that will transport the oil to US refineries along the Gulf coast.

So, please keep on top of this situation. SU has dropped about -8.0% in the past two days, closing at 56.55, hitting a low of 54.06. Write some Dec-08 50 and 47.50 puts, now and over the next month or two. As I see it, the stock is not going back to 45, unless Crude Oil goes back to 80, and your put premiums protect you down to that level."

I realize that the downfall of the banking systems around the world, global recession, lowering demand for oil, and manipulation are all factors...

Bill, can you comment (more specifically) on why SU totally fell apart vs. what you thought would happen?

Even when Oil hit 80, SU was already down in the low 30s / high 20s. And now, well, 20.50 is the current price.

I'm not bringing this up to point fingers. I'm just trying to get educated. In early August, I placed bets on SU for Jan08 $40, and $37.5 puts after doing my own thinking. I too was mistaken with that play.

[Bill Cara note:

I am on a conference call with a regulator and will get back to you later on this. I haven't had much time to follow the blog today. Sorry.]

Fazeli:

1. Hedge Fund dissolution

2. Raised margins on oil futures contracts

3. Slowing oil demand

4. OPEC disarray

5. General commodity collapse

Another Nortel goes the way of the dodo.

http://tinyurl.com/5ppx2k

re: SU

the avg barrel of oil in the mid east costs $8 or so to refine to gasoline and jet fuel distillates. oil sands are much more messy and require several processes to refine them down. it used to cost around $30-40/barrel. thus, when oil was at $10 in the late 90s, no one cared about oil sands. with $100 oil, that story changes.

obviously with oil down to $67 or so, the whole game changes. and with people like our good friend roubini on cnbc this morning talking of sub $50 oil, SU's story changes...not too mention it has a big hedge fund ownership profile that is getting thrashed.

i got stopped out on my SU purchase this morning. lost around 7% on the trade.

Oh, and another thing about the Saudi's. As long as they maintain enough revenue to pay their budget ($30/barrel) they're living within their means...which will dampen alternative energy development. Sounds like a win...win for them.

Wavesmash,

Thank you for providing a balanced view to the allure of high dividends based on current market prices. We must look closer at the balance sheet and decide if the dividend is high for a reason. Is it being paid as a result of acquiring very high debt, and is the dividend sustainable? In Canada, the chatter is all about how wonderfully strong our chartered banks are and what a great dividend they are paying. Sorry to throw cold water on the sell-side but these banks are scrambling to keep liquid like elsewhere on the planet. As we speak, bank-owned brokers are calling in margin and the banks are steering the panicked herd of their client/depositors out of their mutual funds and back into deposits ( last month, most of the $4.4B in net redemptions in Canada came from bank-operated mutual funds ). They need the cash in deposits so they can apply the multiplyer to lending and relieve the credit strangulation that is happening for them. Will they continue to earn record profits doing business the new way, or will they be compelled to go back to something more akin to the basic banking model of the last century where profits can be expected to be smaller when earned the hard way? I suspect the latter, and lower valuations and dividend cuts are a high probability, particularly in a recessionary environment.

To reinforce Bill's position on the direction of the U.S. Dollar:

http://tinyurl.com/1w56

Many investors understandably rely on companies that pay dividends to augment their overall returns when investing in the stock market.

Many investors reasoned that the financial sector represented excellent value many months ago as they were still paying hefty dividends.

Be mindful of companies that will have to cut their dividends in light of reduced earnings and cash flow as economic activity slows.

Just a word of caution, and one person's opinion.

Hello all,

Even though this is not specifically a market oriented question, I'm hoping to get your perspective on the housing market in Vancouver over the next year. Does anyone living in or around Vancouver have an opinion on the housing price direction and the effect of the olympics?

If someone was to move there in the next year, would it be prudent to rent for a period of time?

Thanks in advance.

Re Vancouver, I think rent. The condo market is frozen, I don't think houses are moving too well either. As the wisdom on this site goes, let the prices come to you. A lot of construction workers will leave town when the olympics and all attendant infrastructure construction is complete.

am i crazy in seeing a rally before close?

i'll answer my own question: yes.

Steel and Heavy construction stocks are just getting brutalized today.........I guess this is just what happens when we see bubbles that get way overinflated?

MDR @ 15
MT @ 24
X @ 35

Maybe instead of banks the FED should be buying its own steel and construction companies to help us build nuke plants........

Look like sell off will continue untill we break previous low?

sign of the beast.
Rick's Cabaret looking good at $6.66. Book value $6.64...

When the credit squeeze fully reaches the consumer (it has already started in some regions), in the way of reduced or the complete elimination of home equity lines of credit and credit cards, then we'll see the true extent of weakness in the U.S. economy.

For those who rely on credit cards to buy the necessities (they're more in this situation than what is readily acknowledged); when that line of credit is gone, then what happens ?

Something to think about ...

Just one person's opinion, as always.

If we do get a rally I hope it starts in or after the 3.15->3.30 area. Most of the recent up moves I can remember that started before this time have got trampled.

ToddinFL,
I think that's where we're heading too. Just not sure how to play it. How about an arbitrage play with AMEX and VISA? May be simplistic, but it would seem that the consumer who uses American Express and as required pays his bill every month in full is the more solid consumer.
MCM

Watching the tsx, it looks like we may have hit the bottom for the day around 14:20 or so. The market seems to be having trouble going lower than about 9350. Perhaps people will realize this and we will get the usual flood of bottom seekers, causing a rally. Of course, as soon as hit post on this, the last hour dump will start and I will look rather foolish. Such is life.

day-trading aid - flip your chart upside down; see if you still like your position!

Day-trading is SO riveting, that you can get TOO involved to the "squiggle" you want to see evolving.

I was trading SDS (double inverse S&P500) and took a look at SSO (double POSITIVE S&P500).

This helped me "get loose" mentally and see that momentum had shifted in the other direction. I exited my position. Try it out. Most broad ETF's have inverse counter-parts.

something to keep in mind:
S&P closed at 899 on 10/10. It closed at 907.84 three days later. If it closes above the 907.84 prior low does this make it a series of higher lows?

MusicCityMan

Visa is a transaction company. They have no debt position vis a vis the card owners.

music city man

The way to play it, imo, is to be VERY careful and not commit cash prematurely.

This is a time to watch prices, and formulate lists of companies that you are comfortable owning.

In some cases, there are reasonable values now available in the market. But given my feeling that there may be more pain ahead than what many expect, I would probably err on the side of caution.

Rule #1 is and always should be, to limit losses when speculating in the markets. Attempt to place the odds in your favor as best possible.

Just my opinion.

Jock:

My charting software (Fidelity Active Trader) allows me to chart the target and a comparable. So I can watch SKF and UYG on the chart at the same time. I just can't watch the volume of both

Tbar - This is all the more reason for me to hold gold. I wish the miners well, as I too have some which I don't plan on letting go of at loss (GG@$20.19). I really wouldn't be surprised to see sub $50 oil, maybe even close to $40, considering all the economic damage that's been done by HB&B greed which puts us back how many years?

Ugh!

All this said, if 900 holds on the S&P, and it is able to rebound off today's low of 904, then that would increase the possibility of a short term rally.

For short term traders, it pays to watch these levels of support very closely.

Nemo - watching your ETF and its inverse simultaneously would be TOO much of a mind-bender for these here grey cells ...

Must be cool, though, for watching a stock vrs. its industry average. Can you do THAT realtime?

Jock:

Yes.

I think the market's saying that the government bailout dollars are disappearing down numerous banking black holes, never to see the light of day again as a mortgage, car note, student loan, or commercial line of credit.

rugger09,
We have friends who are moving to the Vancouver area. Their realtor told them that he expects panic selling within about 6 months. Prices are still sticky. They will be renting for at least a year.

Sold some GG 17.50 puts, which will put me into GG at close to $15 a share if I get them

Chickenpookie

when my wife sees te devastation form today on the little we have lefe she is going to want to sell it all. I reassured her this morning. I am close to a breakdown as it is.My only pos in one acct yri.to will likely die today leaving a small rsp left. I can't believe this is happening at725 gold. My minera is down another 14% today,60% down in the last 3 weeks... Another sleepless night

Oh the pain:

The next time we encounter such hard times, I'll be more wary of selling PUTS too early! These debt obligations totally destroy your cash reserves.

How long can this MASSIVE USD move last? Canadian dollar is down 3% today!

With the bailout, the war, the low interest rates (soon to be come lower), etc., you'd figure USD would have an upper limit.

S&P trying hard to retain the 900 level.

Tbar,
Hang in there, this will pass and many company's that were flushed as the leverage rushed out are still good co's. Fixation will ruin your marriage and health.

Wow, right on time: 3:30 PM!

Tbar
they all will come back and some may move higher than what you have paid.
Now I do not look at market constantly only few time a day and walk away.

POT - The good news is the p/e is at 10 - guess you all know the bad news. Be confident in Bill's guidance and happy trading.

how on earth is this possible?

http://xs132.xs.to/xs132/08433/ccc131.png

Little support below DOW 8500!

If this doesn't hold, chances are we'll see 7800 again (the intraday low of Oct 10).

Lowest close in five years comin' up...

Tbar- i like vinod's idea...i'm off from work today, and since i'm not day trading, spent most of the morning doing other things (including some thinking about business opportunities that may arise from a global recession)...

JMO, but i think it's too late to go to cash-> selling into a panic just doesn't carry the 'mark' of the smart trader...

Everything I sold today was a good decision. Everything I bought was a bad decision, so far.

Oh God!

Still plenty of $900 Gold on Ebay.

http://tinyurl.com/63otey

i got pretty much stopped out on most of my holdings. its so tempting to go back to basic materials and energy but the selling is ruthless and it looks like we're going back to at least 2 year lows.

im sitting on shitloads of cash at this point...ill step in if we get a freakout tomorrow morning. my sense is the govt pretty much has little ammunition left.

This is just the warm up folks. Elliot Wave Theory is showing the following:

"Tomorrow is one of those Fibonacci phi mate analysis is suggesting another turn is due this coming week, around October 23rd, 2008 +/-: This is the twelfth phi mate date we have scheduled for 2008. It will likely bea top, at the merging point of a converging triangle. We believe this could lead to yet another crash leg in stocks,
wave 4 pattern in process, it means
we will see a 2,000 point +/- (in the Industrials), 20 percent stock market crash, wave 5 down, likely to start by the end of this week, taking stocks to new lows for 2008, and for the Bear Market that started in October 2007."

[Disclosure: Went long on the Sept 19-21
bull call. I'm ----]

Tbar - Keep your composure best you can, it's not the end of our world. If you can hold on, I think you'll do well. It could take a long time, then again it might happen soon, there's just no telling. Anyway, judging by the action we've seen these past few months, the market makes 25% moves quickly... Up, then back down. Repeat. I'd put a tight floor under that margin next time it breaches break-even. Just hold on, we'll all make it through in one piece. Gold/miners will have their day in the sun once the USD farce is exposed, so I hope you've accumulated a good chunk by then which you can just let ride. Meanwhile pinch those pennys. It's tough on me too, I may have to call in some personal loan(s) if the tide doesn't reverse by Christmas.

tsx: currently moving up on a volume spike. Fingers crossed for a 13 minute rally into the close.

This isn't good action in the major market indices.

3:45 - 3:49, 120 point turn around! Can it hold?

Tbar, I am down huge. My wife expects me to be on top of this! Ha. All I can do is not sell losing positions just before a turn. I do that often. I close the comp, do chores and try not to project what I think should happen.
Thank my higher power for this community, for Bill and the many small things that I have been given that allow me to "invest" (another word for lose)
Have faith.
I have been reading Lao Tzu again. I won't write the whole poem but the last line.....
"To know enough's enough
is enough to know"
peace brother

Tbar- if it makes you feel any better, today's close means anyone who bought at the recent lows is also getting beaten up, and maybe taken out, which of course contributes to the downward spiral...

another positive is that we now get to retest the low...

try to keep your head above it all, and get a little sleep (get some Ambien or Xanax if you need it)...if you stay cool and don't jump/drown with the crowd, i think you'll be fine...

personally, not knowing where it bottoms, i simply plan to ride the DJIA down as far as it goes, and ride it back up again-> if you jump out now, when/where do you plan to get back in?

Thanks Vinod and 2nd ave. I need to grow my savings to pay off debt otherwise my savings will be gone in a few short months.I had to barter my shop equipment today just to get firewood to heat the house this winter. I dont think you may understand, and I certainly dont understand otherwise I wouldnt be in such a predicament.

I understand what you are both saying is spot on, wish I were in a pos to take advantage of it.

They just closed out my only position in my one account that I tried to save myself with yri.to
I have 1000$ left. How pathetic

if you sell today, and tomorrow it closes at 9500, how are you going to feel? hang in there...

Tbar,

Keep your cool.

This is volatility none of us has seen in our life time.

So far, the broad equity market has NOT put in a lower low, and there will be fight at these levels and at the lows.

I can relate to your pain, because I have been there too.

Here is something that might help: you are not defined as a person by the result of your trades. Love yourself above all as a wonderful creature of God. Your wife knows it, that is why She married you.

Best,

hey maro - does a lower low consist of intraday lows or closing lows?

what's the official close, 8527 or 8609?

Wow again... 3:30 CRASH, 3:45 RECOVERY (relative)... Close well above DOW 8500, and S&P smack on 900!

Rally tomorrow?

Teamfuego,

From a strictly technical standpoint, we should look at closing values, but in a market like this, I am also take into consideration the intraday lows.

As bsi87 says: "expect the unexpected" Who expects a recovery by week end?

geez,
slw and auy both closed at 3 and change. Never would have thought this could happen 6 months ago.
Refer to telestar's posts about what it takes to make your money back for a given percentage loss. I think I'm looking at triples here...
MCM

does anyone know what happened with the Lehman auction?

maro - closing is my feeling too. and i don't look at the DOW, rather I look at the S&P, which closed below the 10/10 lows...

so much for wishful thinking!

The more the markets swoon and lurch the more I am convinced of Bill's call on the market. I was initially sceptical but given the price movements and commitments from Governments worldwide to print money, we are definately at an inflection point.Quote from John Rothchild: The longer you wait, the less attractive folding becomes. At 40% down (and below, "the risk of missing a new bull market is greater than the reward from avoiding the tail end of the bear. Yet it's a common feature of many bear markets that the largest contingent of sellers exit at the point of maximum loss.'

Hey Photogray:

Which chapter?? 7?

Teamfuego,

I understand your point.

BTW
Thanks Bill, you are a like a lighthouse in a storm steering us from the rocks.

CP,
I don't! I raised as much cash as possible without selling some core holdings that I'm not willing to admit I made a mistake on (big mistake but too late too sell). I believe we will plunge before the rally. Haven't really seen extreme enough fear given the situation we are in. People are still more concerned about who is going to get kicked off the island than the fact that the market closed down another 500 pts. Of course, I am no expert, as evidenced by my enormous losses over the past year..ha ha.
MCM

bought some sub $4 SLW. Who knows, maybe it might be worth something someday.

Sad close, but they were giving everything away at the end, so maybe we are close to bottom.

For those in financial strife, it's possibly better tosell in order to reduce debt, no matter what you think can do to mitigate the debt, or what may happen in the economy going forward.

Debt is 'death' in this economic environment.

If you must sell assets to reduce debt, so be it; as incredibly disturbing as that may be.

Live to play another day = should be the rally call of some market participants.

This is no time to play hero. Be careful, folks.

There is remarkable value in the market, but it's being SOLD at any uptick. The buy-and-hold folks are getting KILLED. I went 80+% long before the $700B bailout and am at 95+% long last week (mostly oils, gold, and materials.. Oh MY!)

The only money made are the short term trades. I'm also thinking that when I cover my PUTS, I should buy a few while at it...

CP- well, i think we now have good odds for a gap up open/higher close tomorrow (reasoning being that many if not most recent buyers getting shaken out today), maybe even 10000 by week's end-> but since every one of my recent calls has been wrong, i may as well be Cramer...

personally, i think we successfully tested the low...

JMO. And since it's free, it ain't worth much.

I think we're seeing the funds/institutions getting sh-t off their books. ST traders are dumping what they bought at the last lows to protect what profit. It's not pleasant but it appears volume for major indices is lower.

Another thing to keep in mind is yr end bonuses. The WS low lifes will find any way possible to take the mkts up and earn a bonus.

I wouldn't trade/invest on those factors but it's probably more useful than "the markets are down".

PS Month end rally would start Wed/Thursday next week.

We'll know in the fullness of time.

Anyone looking at the volume... wow!

was it only 3 months ago we were getting daily reminders about peak oil?

re:SNDK

2 more days like today and it'll be zero, right?

LOL

From John Murphy of Stockcharts.com
[yesterday]
~~~~~~~~~~~~~~

MAJOR AVERAGES APPEAR TO BE FORMING SHORT-TERM TRIANGLES -- THAT REDUCES THE ODDS THAT A LOW HAS BEEN SEEN AND SUGGESTS ONE MORE MOVE INTO NEW LOWS MAY BE NEEDED CONVERGING TRENDLINES ...

One of our readers pointed out that the short-term pattern of the last eight trading days has a triangular look. A "triangle" is a trading pattern that is characterized by two converging trendlines. I've applied them to hourly bars in the following charts. The converging trendlines in Charts 1 (Dow Diamonds) and 2 (S&P 500 SPDRS) look like potential "symmetrical triangles" in the making. That's usually a contination pattern. In other words, it increases the potential for another dip into new lows (or at least a retest of the October lows). The pattern in Chart 3 has the look of a "descending triangle" for the Power Shares QQQ Trust. [A descending triangle has a flat lower line]. That's more likely to hit a new low. The Nasdaq 100 fell 5% today and was the market's weakest index (note the late selling). By contrast, the Dow and S&P 500 lost 2.5% and 3% respectively. Another sign of a triangular pattern is the dropoff in volume during the recent bounce. Keep in mind that these are "short-term" patterns and have no long-term significance. They do increase the odds, however, that the recent market bounce is more an interruption of the downtrend than an end to it. The good news is that triangles often precede a final downleg. In Elliott Wave terms, they're usually a fourth downleg in a five wave decline. That would suggest that the sharp decline that started in September needs one more move into new lows before it's complete. That would also put the Dow and the S&P 500 closer to major chart support at their 2002-2003 lows. Any breaking of the lower trendlines would increase the odds for another dip into new lows.

JWibbs- on the sidelines or buying?

I listened to the CEO of Intel last night talk about $3B in quarterly free cash, being able to finance capital investment without going to the bank. He talked about the new line of low cost processors that will NOT hurt margins or cannibalize other product lines. He talked about opportunities in cell phone technology and other growing markets.

How am I supposed to reconcile this CEO's assessment with the performance of his stock: trading at a 52 week low, yielding close to 4%, trading at prices below the bottom of the dot.com bust and not seen since 1997. Can people not see past the next couple of years? So much for discounting future cash flows :-(

FRE/FNM back to trading levels from Sept. Takers?

My BC limit order expired yesterday. whew.

Been long XIU/PCA/CNR since Sept 23. (Red 23 lol?)

Should have bet on black.

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

UAUA closed higher than SNDK or DELL, and one point intraday for 16 and change you could have bought either UAUA or GG...

http://tinyurl.com/5ku877

Total Credit Market Debt as a Percentage of GDP

The above chart may show a correlation of some kind.

And I do believe that the last 1.5 year's worth of data would increase, not decrease, the correlation.

The blip at close looked like stink-bid short-term interest. I'm anticipating an up day tomorrow based on this (not withstanding any useful revelations from our media friends). Rinse and repeat.

Either HB&B doesn't have their money yet, or they want to continue shaking ripe apples from the tree.

Where's my air sickness bag? -- GDX down 15%; S&P closed below its close of 10/10. Only tick-trading the SDS (double inverse S&P) kept me from losing my shirt today ... Prices were behaving like Mexican jumping beans ...

[Bill Cara note:

I missed much of the market action today due to business issues and phone calls, all or almost all of which turned out well, but I feel like you (get the airsickness bag!) even though the market didn't hurt me -- just kept me under pressure. In a day or two, I'll make an announcement of what's happening. I feel I need a couple days off before I do it though.]

INTEL - closed at 14.46. Its 2002 low was a touch below 13. Amazing.

Ha, UAUA is back at their 6mo high? WTFO!

Amazon down 13% after hours. If a report like this:

"Annual sales will be $18.46 billion to $19.46 billion, Seattle-based Amazon.com said today in a statement, compared with the company's July forecast of $19.35 billion to $20.10 billion. Operating income will be $716 million to $876 million, excluding about $300 million for stock-based compensation and other costs, compared with $745 million to $920 million." - Bloomberg

can send the stock down so much, then I guess the recession is not baked into the cake.

It's going to take a series of BIG events to instil any kind of confidence in markets in the weeks ahead. Right now I'm doubtful that we would see a mood change even if we tuned in CNN and saw GWB riding a chariot down Pennsylvania Ave dragging behind him the corpse of Osama Bin Laden. The fraudsters in the "Financial Services" community that brought us all to where we are today need to be prosecuted and justice must be seen to be being done. Giving billions from the Treasury to the same bad actors is a destructive strategy and doomed to fail.

Brown-Cal - Intel was touting cell-phone devices seven years ago in a diversification plan. Don't know what they did with the idea, nothing as far as I konw... Maybe too much competition, just a smoke screen?

Sorry fazeli I was away all afternoon. I have a 58-45.

2nd - Peak oil was 2005!!! Coal/oil/hydrocarbons are killing the planet. I'm still thinking nuclear is going to surge in the next 5 years, France is at 80% nuclear electric already.

Beats tearing up and mining half our environment to squeeze the last few drops of oil... or hunting the few remaining whales in our seas...

maromatics at October 22, 2008

thxs, I realize many have been through the same.
appreciate it.

Jim Cramer said today "If you are not in the market, you will probably miss most of the move when it turns".

I'm not a fan of Jimbo but what he is saying is probably true. He is in a way confirming what Bill was saying in his comments this morning. "The greatest concern should be missing the commodity price rally that, in my opinion, will start as soon as the $USD rally stops"

The thing that scares me: That 1/2 quadrillion derivative bomb.

The market seems to be the main source for liquidity at the moment. What if derivative losses exceed the total value value of the stock market. Could the market theoretically be sold to zero in a long mad panic to get cash to settle massively over leveraged derivative bets? How much capital is on the sidelines in relation to the total value of stocks and bonds vs possible derivative losses?

By the way, A US House Committeed investigating the credit crisis and collusion between credit rating companies and their clients, will take testimony tomorrow from Alan "Bubbles" Greenspan, John "Snowjob" Snow and Chris Cox. Today the committee revealed emails from rating agency companies...one said "We would rate it if it were created by cows"

I hope everyone is okay after today...

I'm gonna need a bandaid, but I'll live.

About all you can do to improve your lot on days like today is lower your basis were possible and trade the ultras. Held some SDS and UUP from yesterday so it wasn't all doom and gloom.

Tough going in the pm's today. Took a bit of a beating on GG/GFI/GSS....it can't last forever....all new 52 wk lows for miners. :>(

Been listening to Roubini a bit lately. I think he is probably a smart man, but I have to wonder if we have an "infinite monkeys" situation here, where the monkeys are economists (no offense intended to economists): for any given outcome, you could probably find one (or more) economists that predicted it.

Amazon has a trailing P/E of 36, that is why there is more meat on its bones. I should have just stayed short this one.

Question???

Does anyone know where I can get recent reports on fertilizer demand around the world or a website specializing in this area???

SV

Price of Gold:

The recent downtrend started with a bearish engulfing. Wake me when we see the first bullish engulfing. I'll start looking to go long then. I'm afraid the Dollar Strength, described on one of today's links above as the "tallest midget in the crowd" will surprise people and wipe out the years with of Anti-US Dollar trades out there.

So far, this market has found a way to take money from all but the most prescient and timely. Normally, at bottoms, price risk minimizes as information risk is maximized. I'm inclined to trade like price risk remains very high.

re: lower lows, etc...the intraday lows from 10/10, 10/16, and today are lowest, lower, low if one were to look a gift horse in the mouth

I survived the Nasdaq crash intact, and with all my profits banked.

I am also surviving this carnage in the same manner.

My secret?

I don't hallucinate that I know things I cannot possibly know.

Try it sometime.

heres something for us to chew on:

check out a 1 day chart of the USD index, notice the basing patten after the initial spike up to 86?

these typically occur right before large plunges or runs up. and a move up only takes us that much closer to the inevitable cascade down. imho.

SiO2- Do you have a formula to help you decide how far out of the money to buy your strangle strikes? Do you use the greeks at all? Thanks.

Well, I know what it feels like to be a buzzard perched on the side boards of a manure wagon.
Confession........ Bought AIG in spite of their extravagant arrogance of the working taxpayers, their children, and their unborn grandchildren.
Unelected Messiah Paulson and his banking thugs have invited AIG to bring in buckets full of sh*t and exchange it for buckets, and buckets, and more buckets full of taxpayers cash.
Trade the numbers, not the stinkin' company?

Some thoughts...

I'm 98% long - and considering using some marging while hedging that margin by selling some options. And most of my portfolio is a single stock.

Crazy right? Well, I've never felt calmer in the markets, oddly enough. One thing I've discovered is I feel much healthier holding a very small number of stocks I know very well rather than diversify away into 40 stocks I don't know that well.

Either way, I'm of the opinion that handling investments right now is more a matter of having a peaceful psychology rather than superior rational analysis. Buy sturday companies you are confident about and we will be fine. If this really is the Great Depression, then no amount of rational analysis will save anyone; imho gold will not act that reliably in a worst case scenario and for me it's safe haven status is illusory.

Right now I'd rather bet we will come out of this somehow, not necessarily unscathed but at least wiser - and frankly right now putting up my capital to work to buy stocks is the best way I can find to help things along. If it weren't for me and other buyers ready to commit I guess we would plunge endlessly to Dow 500. Lord knows how much it would damage the fabric of our society of that happened. About being long vs. shorting... I think I would rather live in a society where I am poorer amongst equals, yet working for the greater good, rather than live like a King watching things plunge without givign anyone a helping hand. Just a personal view.

It helps immensely I'm now much more detached from my money. Took me ten years to save this amount (and the last year's saving efforts were apparently wasted so far). I'm preparing myself psychologically for the possible case where it drops by, say, 50% from here. That would still hurt a lot, but, that's the risk I'm willing to take. I am planning option strategies to make that eventuality, which seems implausible now, even more implausible, as much as I can.
My income is much greater now than ten years ago, so I am fortunate I could probably rebuild a portion of it relatively quickly.

Being detached from the quotes and the account value helps tremendously. I'll be happy if things go up obviously, yet I'll be happy if I can buy some more shares cheaper. If it goes sideways I've got some option strategies put up to make me a bit happy as well :-).

Good luck to everyone! My chips are all placed, I'll only twiddle a few things here and there.

nemo, chapter 46.
Read the version by Ursula Le Guin of all people. It blew me away.
Chapter 56 makes me think of Bill and what he does here;
paraphrasing
Who knows doesn't talk
Who talks doesn't know...
then you cant be controlled by profit or loss
praise or humilation...
Then you have honor under Heaven

http://tinyurl.com/5s6wu8

Hump Day

Just another comment...

Keep in mind everything we hear about that is meant to cause fear, panic and confusion.

Quoted from Ron's link:

"No matter how you SLICE it, no matter how you defend your market ideology, the market's voice is FINAL. Yet another BRUTAL, EXHAUSTING day on Wall Street as BEARS BRUTALIZED the bulls."

If you think about it, isn't it funny how we assign such graphic language to what amounts to a number that's just changing throughout the day? Think about it. No wonder we all are so fearful.

Imagine you go the fruit market, and the oranges are on sale for 5% off that day. Do we talk about how the orange bears totally massacred the bulls that day into submission? Of course not. All that happened is a few sellers showed up, decided they waned to get rid of oranges for whatever personal reasons, so undercut other sellers by 5%. End of story. And nothing that dramatic to it. Buyers, sellers, doing their thing, and everybody with a head on their shoulder knows next year's orange prices won't be related at all to today's orange prices.

I'd be worried if that other orange seller had some advantage I don't. But he doesn't - he's selling those oranges below the price it cost him! - and the oranges, although a bit blemished right now, are quite edible, thank you.

2nd
“--- I may as well be Cramer...”
Cramer made money for other people as hedge fund manager.
And you have helped other people how not to lose big with your position size advice
I remember my first buy was 500 FXP and you told me to get out as soon as possible.

About market I have feeling that we may test low and go lower
What I do not understand is market in China and India is going down.
Relative just came from china. A business trip. And told me that they are not that much slowing down. They are not growing at 14% but still growing at 9%
Also India is not growing at 9% but growth will be 7% next year.
And stock IBN of India which I have 1000 is down over 80%
I talk to some people there and I am told mutual fund and other from west are selling and taking their dollar back. May be this is one of the reason dollar is strong while their currency is going down
Also have feeling that oil may go under 60. I am taking beating in SU/VLO/TSO
I also feel that BC used to have effect of oil price but now there is whole lot of different issue with this stock like GM/F. and may sell my 1000 BC taking 50% hair cut but money invested in other stock may have netter chance to recover. What is your opinion? Also taking bit on GG/TCK/RIO/ CCL

Craig
Special thanks to you for saving my head
Two week ago I posted that I was going to use margin but did not
And you posted that is good. For Your sanity
If I have used margin as planned I would have lost 10000 more as of today
As miner hitting low- GLW where my wife used to work was 300 and it went down to 100. My brother in-law open an account at fidelity and brought 10000 of glw at around 100 thinking it will go back to 300. Well, GLW went to $1
So, point is lower can go more lower

Muzie,

that's a very funny analogy. It has some inaccuracy (as all analogies do as they serve illutrative purposes, putting things in perspective) in that the oranges are being bought for personal consumption, not for re-sale, thus it's no-lose propsition for a buyer providing they are edible. Should have they been bought for re-sale, it would be possible to lose on the transaction.

That's, however, me being anal-retentive. I agree with the premise - really, I have hard tiome imagining DELL, for instance, still trading at these prices a year from now. And being a sucker for elegant writing, I love the way Ron put it.

Vinod, I agree....2nd .."you have helped other people (but more importantly, me parathen. mine) how not to lose big with your position size advice"
Since that sunk in to me I have taken 1/4 or 1/5 positions, hoping to go more. As nothing I have bought in the last 10 days has gone any up, I am afraid to average down. Man I thought I was a wiz getting HGU @ 6

It seems every report that Obama leads in the polls is followed by a market swoon. Imagine raising capital gains tax now. Not that Captain Smiles has any ideas either.

Vadym Graifer
My MBT is down 50% since I brought
amy information on this Russian company?

Photogray:

That chapter is in reference to social value structures. The value system of a given society measures the success or failure of individuals according to the system. From the Taoist point of view, these value systems are artificial.

To live within a system, but not to be psychologically weighed down by it's values is to find that honor under heaven.

The first two lines are a common one throughout the Tao Te Ching. Words are only words. It's the meaning and actions behind them that count.

Chickenpookie - you listen to Al Gore? Some are saying a global "cooling" is going on right now...I know I know...caused by global warming too...

nemo, cannot agree more. Just a few years ago, I had much more than I do now. But even though I literaly punch a clock I still give value and receive praise beyond my wages. Am I an american sucess? Prolly why I'm not the right kind of american.
All I was saying to Tbar was..yer elbows arent nocking wood
peace

speaking of Al, I recently rented a lodge just outside Mt.Rainier that Al stayed at. Had the plaque and everthing. What a great place and time we had. Weekend with old and new friends bunking out like the hippie days but in much better style. And we all brought our favorite beverage and the coffee was good. The front porch, looking west, the mountain behind. Also had an awesome stone fireplace and massuse/owner who could make tension gripped muscles bend to her will. The Wellspring in Ashford. Tell Sunny I sent ya.

The massive correction in silver brings back Indian buyers. According to a Reuters story, Indians also shift to silver as the high silver/gold ratio of 80:1 makes the white metal appear cheaper to its competitor gold. Imports have jumped to 250 tons every month since August after a dull first half 2008 when record prices repelled buyers.

Silver dramatically undershot my worst case scenario of a low at $14, trading briefly below $9 before it recovered to the current level around $10. The silver miners got knifed accordingly, playing out the bad side of beta with losses of up to 90% this year. But the Indian buying spree and losses in production because base metals mines are closing due to the price slump may be a solid base for the next upleg on fundamentals.

From Reuters

Danielle Park on BNN today: She's poised in cash waiting for the technicals to signal that the decline in US equities has stopped after which she plans to buy Technology and Financials which she believes will lead the next Bull cycle. I wish that lady was my financial advisor.

wow - charts are looking hopeless here - if these crucial levels don't hold it could get ugly...it's good to see the rally into the close but it seems a little desperate - As far as indices go:
INDU - trading at lower symmetrical triangle line, broke through lower symmetry line today but rallied back - did not break lower-low - positive short-term price action
SPX - same as INDU
NQ - more of a triple bottom (or descending triangle) type formation indicating the importance of the support levels

either way markets seem to be coiling to make or reach a decision - Wasn't at screen today but would have shorted on todays break-out of lower symmetry line - buyers stepped in - will wait for tomorrow (friday) to see.

any breakdown of these points on my charts will be hedged with shorts - will also add on break-out - looking to play break-out up/down aggressively - will also be weary of head-fakes which would be common at these points

interesting times to say the least - it's difficult being long right now but will let price decide actions...

I am very much looking fwd to the next bull to get on its way, but I believe it is too difficult to time an entry in these conditions. One of my hard learned lessons has been to never lose big (more than 10%) and i am sure this % threshold will go down as i age and become less risky.

But these wide and deep moves across all sectors would have already caused me to sell and take a loss. But i continue to be hopeful. This is def the bottoming process. Businesses are still open, airplanes still fly, gas stations still pump, banks still exist, people will find a way to get through it.

Its odd to me that the market is reacting so badly to earnings. Everyone knew there would be layoffs, reduced guidance, and poor results. everyone knew this. no one is expecting any company to have a record yr/qtr or give guidance that 2009 will be even better.

I hope the pain stops soon. Would like to end this note with a simple grid reminder of how hard it is to come back from big losses.

Start with $100
Value Loss Needed to break even
$90 -10% 11%
$80 -20% 25%
$70 -30% 43%
$60 -40% 67%
$50 -50% 100%
$40 -60% 150%
$30 -70% 233%
$20 -80% 400%
$10 -90% 900%
$0 -100% Game over

still all cash.

LAND MINES EVERYWHERE!

USA Today had an interesting cover story today on muni bonds based on natural gas derivatives where 73 municipalities secured an inexpensive, long-term natural-gas supply. (Supposedly!) The long-term savings would be huge.

The entity was called Main Street Natural Gas which is part of the Municipal Gas Authority of Georgia, a government agency established by the Georgia Legislature 20 years ago to buy natural gas for city-owned utilities that now serve 243,000 customers.

(Same cast of characters), the investment banks sold Main Street's tax-exempt bonds to investors, mostly mutual funds, insurance companies and wealthy individuals. The interest rate was attractive — as high as 6.6% annually through 2038 — and interest payments were exempt from federal income taxes. The investment banks kept the cash and promised to deliver natural gas at below-market prices.

This borrowing technique had been uncommon until a few years ago because of questions about its legality.

Then the Energy Policy Act of 2005, a 1,700-page energy bill supported by Congress and President Bush, confirmed that tax-exempt borrowing to obtain a long-term energy supply was legal. (Thank you President Bush!)

Lehman commodity traders had the job of betting the $700 million in a way that was profitable for the investment bank and delivering the natural gas to municipalities including Disney World and Tallahassee when it was due.

Main Street Natural Gas' deal was riskier than ordinary natural-gas derivatives because it placed the entire bet with one company: Lehman.

YOU KNOW WHAT HAPPENED NEXT.

http://tinyurl.com/6s86ef

I post this as FETV touts great muni rates (and yes, there are some out there).

The past few days I’ve seen great muni bond yields on municipal electricity revenue backed by numerous cities in a state. Sounds secure until you realize they may have gone to bed with someone like Lehman.

Be careful where you step. Caveat Emptor!

an article form Minyanville to lift the spirits of those holding gold miners:

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

Dear Fed: Why Not Buy Gold Miners?
Lance Lewis Oct 22, 2008 2:40 pm

A unique way to spend bailout money.

Have $40 million Bernanke bucks lying around?

Buy Nevsun Resources (NSU) - the entire company. It’ll cost you about $40 million at today’s price, and you can pocket $20 million of NSU’s $60 million cash balance, while at the same time selling its Bisha gold mining project (worth a $267 million NPV at $700 gold and $10 silver) to the Eritrean ENAMCO for the same $25 million that ENAMCO paid NSU earlier this year in order to purchase a 30% interest in the project.

So, if anyone has $40 million lying around for a tender offer, this seems like a pretty easy $20 million profit to bank.

NSU is not the only gold miner being priced for bankruptcy. New Gold (NGD) is currently trading at less than 1/3 of book value and has $350 mln in cash. Northgate Minerals (NXG) is trading at 1/3 of book, 1.32x cash flow, and 2x trailing EPS. I could go on: The entire industry is not only priced for $500 gold, it’s priced to “go away” and in many cases it’s priced worse than going away.

I guess giveaways like these are what happens when the XAU/Gold ratio makes all-time lows like it is now?

I don’t know where the selling stops in these gold miners, but in my opinion somebody is going to make a fortune buying them down here.

If someone told me tomorrow that “I’ve got $100 billion that I don’t know what to do with. What do you recommend?”, I’d tell them to just go buy the GDM Index’s entire 32 members, which have a $94.57 billion market cap as of yesterday (and is 10% cheaper today), and he’d still have $5 billion left over for a really great party with one heck of an open bar.

In fact, if Treasury Secretary Paulson asked me, I would suggest he spend $95 billion of his $700 billion and really make the US taxpayers some money after the Fed, in my opinion, eventually destroys the dollar with what it's doing.

I believe there are two choices for the US: Default or debase, and both lead to more inflation. Today, the US is a giant debtor nation that relies on the kindness of foreign creditors to finance its gargantuan current account deficit and its enormous debt load. It’s for that key reason that the current situation that the US faces is neither Japan of the 1990s, nor the US of the 1930s. Those looking at the bursting of these bubbles in the past and expecting history to repeat today in the U.S. (i.e. - “deflation”) are likely to be sorely disappointed with what lies ahead.

If anything, today’s situation for the US is more like the US of the 1970s, where the US simply defaulted on its obligation to exchange gold for dollars. Fast forward to today, and the US is going to default on its obligation to not inflate away the world’s fiat reserve currency (the US dollar). So, whether we call it “Weimar 2.0” or “stagflation squared,” I think this can end only one way: more inflation.

While it may be painful at the moment for gold bulls due to hedge funds continuing to delever and sell anything and everything they own in order to raise cash to meet redemptions (including gold and gold stocks), in my opinion those holding gold and gold stocks today will be sitting pretty a year from now. On the other hand, those holding US government bonds
and betting on “deflation” will more than likely be disappointed. As Warren Buffett said last week in The New York Times:

“Indeed, the policies that government will follow in its efforts to alleviate the current crisis will probably prove inflationary and therefore accelerate declines in the real value of cash accounts.”

NYUGrad:

In my view the market isn't racting to anything. If the fund dumping theories are true, then these dumps are just set to a fairly consistent schedule that bears no relationship to the actual market.

The pattern seems to be a big dump at the open whenever seems convenient, at which pump the market which reels around stunned for a while as it tries to absorb the newly dumped shares. After all this we're only down -0.5% from a week ago.

On "coming back from big losses": Personally I find this a bit misleading. Rallies coming off a newborn bullmarket would be more rapid (and safer) than typical rallies so making back losses may not be as streneous.

Seen another way, if a company was worth x a month ago and it is now worth x/2 while the fundamentals are unchanged, then it is more realistic for such a stock to come close to double than for a stock who has only gone down 5% in the downturn.

It may be unrealistic to expect beaten down stocks will go back to highs from a month ago, but a significant amount of retracement, if it ever happens, would be quick.

Well that was a whole lot of fun!! NOT. After accumulating a partial position in select gold stocks last week I looked to add to the position if there was an ORB this morning-thankfully the trades were not activated. I bring this up to highlight the importance of planning the trade and trading the plan. I cannot tell you how many times I had the mouse cued up ready to buy these stocks because I just knew these stocks were bargains at such "depressed" levels, but I forced myself to let the market tell me if sellers were exhausted and buyers ready to take control. By taking the emotion out of the trade I avoided making a bad day a truly disastrous day-some of those stocks dropped 15-20% after the first hour. Live to play tomorrow. Proper risk management is essential. Smaller size , cut losses quickly, and once the trade goes in your favor let it run-moves that used to take weeks are now taking hours. Let's use it to our advantage.

We can still buy these falling stocks on the way up, right?

Interesting idea, Blowout Preventer. In fact, if we simply starting bidding higher than market prices for these stocks we might start a short-squeeze and get this dumb market off it's a$$? hmmmm.

"Could the market theoretically be sold to zero in a long mad panic to get cash to settle massively over leveraged derivative bets?"

My limit order at $0.02 would not let that happen. Heck, I would have bought Lehman's Middle East assets for $2, though it probably would have been tough for me to make payroll.

There is so much cash on the sidelines and so many different ways to hedge that no matter where the market goes somebody is making money.

As Bill showed me in the past, the media = hype to get eyeballs. I think that there are problems with currency imbalances right now which are causing some of this topsy-turvy market.

Example: looking at $960/oz gold maple leafs on eBay = $1190.40. There's your $1000 gold. Gold in CAD is still $985.

Anyone from the US thinking their gold is dropping in value, just move to Canada! The weather is balmy!

BCE (NYSE) down $1.16. BCE (TSX) down $0.30. Hit $36 today.

They are already spinning this one as if a forfeiture of the deal would give BCE a $1B "special dividend" windfall that would be paid out to shareholders.

With regards to high-dividend paying stocks... watch for the yield signs as they cut dividends in this market climate.

Market Risk

List of companies paying dividends owned by Warren:

http://tinyurl.com/56cpp4

"Warren Buffet has owned shares of STI since before the second quarter of 2000 and seen the price per share fluctuate from $45.69"

Now around $40. Yields 7.4%

"Warren Buffet has owned over 3 million shares of GCI since before the second quarter of 2000 at a share price of $59.81"

Now around $9. Yields 14.5%. Yikes.

"Warren Buffet has owned BAC stock since before the second quarter of 2007 and has witnessed the stock decline in value from $48.89"

Now around $22. Yields 5.20%. (A bank yielding 5.20%?? What's their savings account yield?)

"Warren Buffet has owned 1.5 million shares of GSK since about the fourth quarter of 2007 and seen a price decline of 15.79 percent from $50.39"

Now around $36. Yields 5.20%

"Warren Buffet has owned shares of USB since before the second quarter of 2001 and seen the price per share rise from $22.79"

$28.11 - we have a winner. Still a profitable trade. Yields 5.50%

Hope Warren is hedging his bets. GE made it down to his buy in price of $18.50 today again.

Not sure what the dividend is but it doesn't really matter. Wealth preservation is key. Can the debtor pay all of its creditors (not just you and your dividend)?

Credit risk...

"Standard & Poor's expects that dividends for S&P 500 companies in the fourth quarter of 2008 will fall 10.5 per cent from the same period last year - the biggest dividend dive in any quarter for half a century."

http://tinyurl.com/5k49pe

Is it going to be any better next week?

Not if Country Risk can help it.

"The country risk (in Argentina) is growing, legal guarantees are decreasing, which is reflected by the selling (of shares) of companies exposed to this country, including blue chip Spanish shares," said Rafael Rico Ruiz, an analyst at Fortis bank.

The pension funds on Tuesday were suspended for a week from operating on the Buenos Aires stock market."

http://tinyurl.com/6qovj3

That gives us until next Tuesday.

"Your system is at risk!"

Ratings agencies 'put system at risk,' CEO says
Testimony shows watchdogs were 'Kool-Aid drinking' lapdogs
By Rex Nutting, MarketWatch
http://tinyurl.com/5adq4j

Oh yeah!

Seriously though, doesn't it make sense to avoid those "strong" blue chip companies?

In a section of his memo titled, "Conflicts of interest," McDaniel said the market "actually penalizes quality" because companies hire rating agencies based on which agency is willing to give a securities offering the highest rating, not on which one is the most honest.

The blame game continues.

"Waxman will ask SEC Chairman Chris Cox about his agency's oversight of the credit rating agencies at a hearing on Thursday. Former Federal Reserve Chairman Alan Greenspan and former Treasury Secretary John Snow are also scheduled to testify"

Fun times tomorrow?

From last September:

"Greenspan put the odds at less than half that the U.S. is headed for a recession. “We’re heading towards a slowdown. Whether that actually leads to a recession is dependent on things we can’t forecast at this moment. My own guess is the odds are less than 50-50 that we’re heading to a recession,”

The Cramer 50/50 Rule in effect...

Why does it look like that picture with Castro holding Greenspan's book was photoshopped in? Would he really leave the 30% off sticker on there?

http://tinyurl.com/66hkfd

vinod, re: MBT. Sorry, no slightest idea. Could be simply drowning with the market, you saw how badly Russian exchange got beaten...

vinod,

rebound tomorrow? Sounds like their largest shareholder's statement about trimming costs by 30% affected the company. (Choking growth?)

RBC, 21.10.2008, Moscow 18:14:07.Mobile TeleSystems (MTS) does not plan to cut capital investment in the fourth quarter of 2008, the Russian telecommunications company's acting Vice President for Finance and Investments Alexei Kornya told journalists today. While the terms of supply contracts may be revised, he noted, capital investment will remain unchanged. Kornya added that proceeds from the placement of an MTS bond issue, which was expected to begin on Thursday, would be used for general corporate purposes, specifically to refinance the company's $100m debt in Q4 2008 and another $100m debt in Q1 2009.

Earlier, Sistema Financial Corporation's President Leonid Melamed announced that several Sistema subsidiaries, including MTS, intended to reduce capital investment by up to 30 percent.

"Real estate developer Sistema-Hals has been forced to put up another 50 percent of its shares as collateral on a loan, a company source confirmed last week."

http://tinyurl.com/6qxkz7

Not sure if this is the same Sistema that owns 54% of the company? (maybe less after today.)

Some entrepreneur needs to create debit cards backed by gold or silver.

Futures look like we'll keel over tomorrow

Got Ameuro?

"Consolidation of the back office industry that underpins most stock and derivatives trading took a big step forward yesterday when Depository Trust & Clearing Corporation (DTCC) of the US and Europe's LCH.Clearnet signed a preliminary agreement to combine their businesses.

A deal, expected by early next year, promises to deliver cuts to the overall cost of trading many kinds of assets, ranging from shares to derivatives.

It would create the world's largest clearing house and the first transatlantic one."

http://tinyurl.com/5jggba

Remember the quadrillion number?

"Last year, DTCC settled more than $1.86 quadrillion in securities transactions. DTCC’s depository provides custody and asset servicing for more than 3.5 million securities issues from the United States and 110 other countries and territories, valued at $40 trillion. "'

Sounds like a big deal to me.

[Bill Cara note:

DTCC is owned by HB&B. That must stop. A key point in my plan to restructure the capital market, freeing it up from control by the credit system is to set up an independent DTCC.]

re:SNDK

If I were Samsung's Chairman, I'd launch a hostile takeover for 16 bucks/share, realizing I'd pay 18-20. Better than 26.

Perfect time for the FED to announce another rate cut?

I'm sure regretting not buying out of money puts on GLD on Monday...

http://tinyurl.com/3xr343

Asia is getting the second half of it

Rob G - No, I don't listen to Gore, but I do try to listen to the concerns and observations of those around me. Now the fear is, global warming is happening, backed by prominent scientists with warnings dating back to the late 1950's.

My personal observation is that weather has definitely changed from when I was young, normal cycle, I have no way of knowing.

Regardless, I prefer not to imagine the ecological damage which would be caused by tearing up large portions of Canada to extract oil from sand... or a continuing mining of coal, and the associated ecological disaster.

Have you ever seen a river on fire? Back when waste hydrocarbons were dumped directly into rivers (along with many other highly toxic heavy metals and chemicals, etc.), river fires were commonplace.

So what is it about nuclear power that adds to the gift of ecological destruction man has given to this planet?

It looks like a viable alternative to me...

VIX/VXN in low 60's.

One more punch above 70 and that'll be it...IMO

bsi87 - "One more punch"
Do you mean knockout punch? So often what you say could be taken either way...

"Could the market theoretically be sold to zero in a long mad panic to get cash to settle massively over leveraged derivative bets?"

come on...if they sold the Cara 100 down to 0.01 i would average in with each paycheck up to a few hundred thousand shares of each, and start planning for an early retirement...it's not going to happen...

Couple of interesting reads courtesy of Oversight site and The Big Picture Blog.

From an MSN between 2 S&P analysts...

Rahul Dilip Shah: btw: that deal is ridiculous

Shannon Mooney: I know right ... model def does not capture half of the risk

Rahul Dilip Shah: we should not be rating it

Shannon Mooney: we rate every deal

Shannon Mooney: it could be structured by cows and we would rate it

Mooo!

Got Risk?

"The super senior CDS valuations reviewed by corporate management licked Ibc ICCUJ'ICy and
Jl'uularity ~ssary to understand 'the impact of key valuation components on A10'IICcOUDtiDg aDd
fmancial reportins disclosures. Corporate management did not obtain suffiCieat iDformation to complcccly ISICIS the applicability of the nepth1c basis adjustment, a critical component of the valuation method. In view of this occurrence ad the observed similarity'in reporting by other key subsidiaries; we are co~d that risk metriCl and financial reporting provided to corporate management by AlGFP and other· key lubsidiaries may lack the independence, transparency, and granularity needed to provide effective risk manapllnent oversight ."

http://tinyurl.com/5c266e

PDF translation a bit rough but you get the gist of it?

More on the Basel bubble as it relates to current Argentina pension woes.

"First of all, the bin-approach to risk advocated by Basel risk-based capital requirements induce banks to invest in the highest risk security in each bin, sensibly altering the distribution of asset risk. For example, most non-OECD countries attach a zero percent risk weight to their own government paper. As a result, during the Argentina crisis, domestic banks loaded up on government bonds, in spite of the declaration of default,because they provided a regulation arbitrage: a very high yield and zero capital requirement" (Rojas-Suarez, 2008).

Testimony of
Luigi Zingales
on
"Causes and Effects of the Lehman Brothers Bankruptcy”
Before the
Committee on Oversight and Government Reform
United States House of Representatives
October 6, 2008

http://tinyurl.com/58yw4r

"this regulation failed to appreciate the enormous pressure it put on the shoulder of credit-rating agencies. As figure 2 shows, Moody’s revenues from structured finance ratings increased from a little more than $100 million in 1998 to more than $800 million in 2006, representing more than 80% of its total rating revenues."

Where's the gravy?

vinod- this market crash will make a great story for the younger kids/grand kids someday...i plan to immerse myself in the daily grind as much as possible without getting carried away; i'm also aiming for a little emotional detachment by avoiding the constant attention required when i was day trading...

have you noticed that our anxiety level has now diminished to the point where it's almost background noise? i think it's due to adaptation...if we go back (even further) to first principles, then i would say Darwin's 'survival [of the fittest]'- those who adapt most quickly to unfolding events in the market will survive (i do not, btw, necessarily believe in the extrapolation of Darwin's theory to explain creation, but i certainly think his direct observations are valid)...so now we have a market drop that has exceeded all of my expectations, and i'm trying to adapt as best i can- this doesn't mean i am able to see what lies ahead, or that i have proactively 'planned ahead' for anything- IMO, adaptation at this point simply means the ability (for those of us who are invested in it) to emotionally cope with the drop...once that clears the runway, then the strategy that 'works' for each of us individually becomes obvious; not quite there yet, but right now my flight plan is to (a) watch and wait, (b) deploy a few trades once we clear 10000 feet, and (c) starting to think of an eject plan in the event of a real crash...

More from "Causes and Effects of the Lehman Brothers Bankruptcy”
Before the
Committee on Oversight and Government Reform
United States House of Representatives
October 6, 2008

"First, as market liquidity dried out, more and more firms had to move
to mark-to-model."

Basically the auditing firms had control of this modeling... with disastrous results... and writeoffs to boot.

"Second, write-offs calculated in this way had major impact in the rating-firm decisions to downgrade financial institutions, which in turn had strong effect on their ability to survive."

Self-fulfilling prophecy. Modelled (level 3) assets are not "transparent" enough for the ratings agencies.

"Finally, as Morris and Shin (2002) have shown in a situation where there are multiple equilibria, increasing public information is not necessarily welfare enhancing, because it can lead to inefficient bank runs (Diamond
and Dybvig, 1983)."

Seems to be true.... so do you think this could get the 9:30am talking heads to stay off the TV?

$521m to stay locked in ING funds
http://tinyurl.com/6daoxo

Fubon Financial yesterday agreed to buy ING's Taiwan life assurance business for US$600m to create the island's fourth biggest life insurer by assets, Robin Kwong reports from Taipei.

http://tinyurl.com/69gtju

ING Canada's ratings affirmed, ING Groep's downgraded: Moody's

http://tinyurl.com/59eet6

vinod- the gist of our dilemma, IMO, is how far do we think it goes down? obviously, if we think it drops to 5000, then we should sell now, and buy back when it hits our target range...the fact that we haven't sold so far then probably reflects the belief that we've seen the lows, and/or we're afraid if we turn paper losses into real losses, we are unable to find a good re-entry point and end up getting left behind...

and of course, both of us telling our wives we were at all-time highs less than a month ago is getting old-> i keep telling my better half that relative to everyone we know, we're probably doing well, but you know how far that gets you)...
so basically, now i'm down to telling her i got in too early, i missed an opportunity on the way down to sell with most of our gains intact, and here we are...it's just 2FB...

Vinod: Glad to hear it saved you some money.

2nd
Base on what we read in book it takes more than life time to learn about the market
I was up 70% than 50% than 20% than even
I felt good that I am even and not losing anything
Now I am down 10%
So, it is always after the fact. It is not the loosing that is bothering me but there are so many very cheap stocks that I can not buy now (no capital) is bothering me
But, in the end we will be smiling about hanging in tight and not giving in to market (by Selling).

There are times I do get worried by the power of the internet and the possible power of "this" blog. It is important to have a reasoned approach to the comments we put forth. Just think for a moment of the power of it all. If 100,000 people follow this blog and each one has an investment portfolio in stocks of $50,000 US, then we are seeing a force behind this of $5,000,000. Yes, that is 5 BILLION dollars.

Now we know these markets have not been kind to buyers, and there are a lack of buyers out there and the market is going down. Now if the markets have gone down 20% (and with the stocks I see daily mentioned here, it is probably a lot more), we have seen a paper loss of 1 BILLION dollars.

Now glass half full, glass half empty. I hope that the $5,000,000 was in cash and not stocks considering the market volatility. We are not all trading here. In that case THE 1 BILLION dollar loss was avoided.

Alas, my Canadian dollars have wilted in the last six weeks vs the US Dollar and even gold. The falling Canadian Dollar has at least been a buffer in equities listed in Canada/(US) not falling as badly.

Peace from Canada. [064]

That last sentence is not correct. I should revise that to the opposite. "The falling Canadian dollar has only made the fall worse for inter-listed stocks in Canada." [065]

QT

Great posts on the Elliot Wave.

I have taken it to heart and it made one heck of a set up!

It seems we are blind in reading the effects of that. Even Cashin on Bubble vision mentioned it but didn't seem to have the conviction of the possibility of the set up.

I don't really believe in TA but with how bad the sky is falling and the FED/Tres/Central banks seem to be shooting slingshots at cars... (not pellet guns at trains) it would only make sences for things to do what they are doing.. COUNTRIES COULD START TO DEFAULT ON THEIR DEBT. The whole world go DRUNK in this money bubble. We had 140 oil? what the heck (especially now right? we were all dumb to see the money bubble). 140 oil? Tell how is a third world country like guatemala going to continue afford $4 gas? wait, they do it till they are broke and then the recession starts. More countries could run in to trouble, not only will banks fail but more stuff could. Stocks are over sold based on many news letters, heck i agree too. what value can we really use? Who cares about last quarter? the credit seize happened 5-6 weeks ago... car dealerships closing, mervins, who knows circuit city is next? what can we expect future earnings... are we oversold or are we pricing in lower earnings going forward. either way, emotion always overreacts.

we are not out of the woods in the this stock market but soon hopefully we will be.. again over sold till when? and when will the bottom hit?

Time will only tell, history is upon us my friends.
"like sands in the hourglass, these are the days of our lives" <-- some soap opera.

Hi Everyone,

Covered a few of my bond contracts this morning. My gold contracts and gold shares... well, we all know what is going on there - basically been decimated there recently. I have decided to deploy the balance of my cash into gold over the next week or two. As they say in poker, "I'm all in !"

I believe that we are in the early stages of the TOG - that being said, I'm very worried about putting this money to work, but isn't that when we're supposed to be buying ? Remember when Bill pointed out to us this fall would give us an opportunity that we would not want to miss ? Well, here we are !

Be brave, have heart, and know nothing is for free in this environment - you earn it the old fashioned way. How lucky are we to have this discourse ? What a fantastic opportunity in all this turmoil.

TED spread, short term LIBOR, primary corporate bond market .. these markets are making the steps in the right direction. Once this dollar rally fails we are off to the races - I hope we'll all be there to meet at the finish line.

Hang tough and know we're all on the same team. Maybe one day we'll all be sitting by a beach fire drinking some Kalik's talking about our war stories and individual gut checks during these crazy times.

http://watch.bnn.ca/#clip105024

Oil update on BNN with John Stephenson Worth the watch. Oil overshooting to the downside. Will settle out $75-80 near term $100 and beyond next year as many projects will be cancelled at this low price.

http://watch.bnn.ca/#clip105138
I like Peter Morici from U of Maryland. Feisty, outspoken, doesn't pull punches. Chinese won't play ball, re-peg their currency, manipulating their currency, exacerbating our financial crisis.

ALOHA !!

An interesting GLD development here ... The price of GLD hit a high around $90 in October and is now seeing lows of $66, intraday. While the share price has tanked the inventories have not. Nothing has been sold and inventories of gold are still above 750 tonnes moving towards 800 tonnes. Something is broken at GLD, unless tomorrow the inventories sell off down to 525 tonnes, same level back when GLD price was same a year ago! What's up with that?

My take is that JP MORGAN is in the mix here ... Its getting to the point where looking up the word "fraud" in the dictionary there is a photo of the JP MORGAN logo! So here is what I see. Suppose a lot of gold deliveries are taken on the DEC contracts, more than the COMEX can handle. Where does the COMEX go to get a quick gold supply so as no to default and go force majeure? GLD would seem like the perfect physical gold "backstop" in this scenario. Who would know? Are there any GLD holders out there that have actually been to the vaults in the UK and counted the GLD bars? Do you take JP MORGAN's word for it? That's a red flag, regarding "supply", which is what I have been saying all along! With lease rates sky high central banks are hording their gold, or whats left of it and many investors are buying physical gold not selling. It appears that GLD does not want to sell their inventory either. Do they know something the COMEX POG does not? When it comes to the reputation of JP MORGAN and all of WALL STREET we're all tin-hatters! I would not trust GLD as far as I could throw it!

This guy has the charts on this new GLD development and I have the inside angle!

Link: http://tinyurl.com/5jpknh

I want to study some correlations among stocks and among ETFs to decide better what to trade.
Can you suggest some sites that can make these calculations?
So far I found only the link to the SPDR ETFs but it shows only the correlation between a stock and the ETFs managed by SPDR.

I have found, for example, that SU has a very high correlation with XLE (not less than 0,95 in the last 6 and 12 months and 3 years!) so that it seems to me it does not make sense to trade SU with the high risk concentrated on just one stock, when trading XLE is just almost the same.

Re: Bullion Deflation

If the price of gold is going to move below its inflation adjusted price, then this is a major red flag for stock markets.

The last time the bullion price deflated rapidly as we are seeing now, we saw a major historic crash in the markets. The price moved from highs of ~$980 to $740, followed by historic declines in equities. The price has now moved from a high of ~$940 to ~$730 in a much shorter space of time.

I believe this has to do with the cartel getting in on its usual habit in the bullion markets, but with CDO's and CDS' commanding a disproportionate share of any market, this may be acting as if you have massively leveraged put options with no expiry held against any downward move. This draws every available dollar from any market, and requires the liquidation of futures contracts in bullion or the bullion itself with no hope of replenishing physical stocks.

The fly in the ointment is that when prices rise, the counterparty holding CDS' drawing capital when prices decline may reimburse for every price rise in bullion, but only in cash. That means holders of CDO's in gold had sold their bullion, or futures contracts with a obligation of physical delivery, to raise cash and now cannot get any bullion in return when prices actually favour bullion, and wind up with less and less physical stock.

Specie is very important in the gold sector, as cash is no substitute. Those comments on physical delivery causing a COMEX delivery fault are very cogent as the real possibility of a failure to deliver may catch up with swaps held against bullion.

That's the key to the winnowing effect that CDO's and CDS' written against just about every aspect of the market is having on the wider economy. The gold market is just a small example of what is awaiting every market and every sector.

That the vast majority of bets in CDS' invariably wind up short of the market in every sector and begin to siphon available cash from the market, causing massive sell offs, but do not return specie when the price moves the other way.

CP

did I say "knockout"?

Lows and highs are often retested.

re:VIX/VXN.

Many are watching these. I think they'll push above 70.

WHEN, repeat, WHEN they drop below 70, it'll represent a buying opportunity IMO.

That said, the most secure buys are when capitulation (RSI 7<10) occurs. Secure is relative.

And RSI 50/50 DEMA will act to cap gains.

Trader's market for now.

RE: VIX

Could be a H&S top forming if it gets back up to 75-76ish, and then rolls over like bsi87 said.

Muniman and all our Cara Commentary friends out there,

re: FEAR OF BUYING WHEN OTHERS ARE SELLING

President (General) Eisenhower had a plaque on his desk which said,

"All Generalities Are False...Including This One."

Yesterday I got a letter from my brokerage saying (as have so many on bubblevision) in effect, you bought, now hold. Actually the title of the page was, "Market Turmoil: The Value of Staying the Course."

Included is a 20-year chart (which appears periodically either to urge buying or comfort in downdrafts) — The Penalty for Missing the Market. The results show an 11.82% average annual gain for having been fully invested at the top and 5.26% if you missed the 30 best days.

Let's ignore that we don't know how this was computed (commissions? diversification? etc.)

Why do you suppose they sent this?
1. They want to keep their investors as clients.
2. Much of what the clients own may they may have recommended.
3. Many of the brokers have never seen a time when buying the dips and holding on did not work.

This year is not the first time I have sold most or all and gone to cash. In 1987 I was stopped out. I was back in the market in less than a month (mostly in a week). It worked great!

In January 2001 with a 30% drop (all in mutuals at that time) I cashed out. Within a year I gained back all plus a slight gain on the year by trading in one stock — Krispy Kreme Donuts.

In September 2001, I was just plain lucky. I had good gains on five RRs companies and sold on 9-10! I bought them all back 30% cheaper when the markets reopened.

Bill points out in his book and many times here, we are buying (renting?) price and time. Some have been critical since his switch to being bullish. Some have bought from the Cara 100 list and had a stock go down. Some (myself) have misunderstood what he meant (communication is a sometimes thing).

Buy when others sell is NOT time specific, it is time GENERAL — many other factors should be considered.

My circumstances are now such that I cannot, should not, do some things I once did without fear. I am no longer working and generating cash for daily living — I never buy on margin anymore. I am too old to be looking at a 20-year payback on anyone's chart. I have health care cost/longevity considerations for my wife and me.

My point is...most generalities are pointless.

Remember the General's Generalities plaque: Do nothing based on someone else's slogan. There is no shortcut for reason and judgment. The trading "hero" is the one who lives to fight another day.

bsi87 - Thanks for the clarification, my comprehension was improved tremendously.

Kaimu and F6,
Wonder if you both read the Seeking Alpha article on gold lease rates:
http://tinyurl.com/6ydhtb
and the more detailed comment here:
http://tinyurl.com/62aksb
and what your opinions are.
TIA

Grym. Well said!

Jobless claims up by 15000.

Lelik,

For ETFs I often go to:

http://tiny.cc/R2JGU

Hedgefund unwinding responsible for the carnage ?

http://tinyurl.com/6o37jz

ABB:
Trading at 11.45 on a downturn in orders.

Chicken - I agree nuclear is a viable option...

Allen "Ace" Greenberg interviewed with Charlie Rose last night, and wouldn't comment on whether or not he knew Bear Stearns was in trouble prior to the freeze-up. To me that meant he had a good idea what was coming given their leverage was fully wound and that "Rumors" killed BS. He also said that over the past two weeks he's been buying common stock shares of various holdings.

Not saying this is a green/red light, or that major downside isn't a possibility, but Greenberg didn't indicate more downside, he said when the recovery starts it's most probable to come very quickly.

Lelik,

I should add that I use the ETF connect in conjunction with Yahoo Finance:

http://tiny.cc/NbdsE

Grym - Good post; enjoyed reading it as I am on the same wavelength (timewise) as you.

It's often said here to disregard the advice of Brokers, but most still don't realize how much we all have been exposed to the false teachings of Brokers; eg "buy and hold", "upgrades/downgrades", target prices, "earnings were down but better than expected" crap, and so forth.

Why do so few ever comment: "I'm SOOO pleased - my $US dollar has increased in value by 21% over its last low!" That's "money in the bank", my friend, and depending on what you want to buy, that dollar will buy more than it did a year ago.

I am a chart reader. I see NO bullish charts except ultra shorts, UUP, and the $Dollar, and the last two recieve no acclaim here. Too bad for those who ignore it - except for retirees with money in good banks and Treasury backed money markets.

When the charts change, I will change.

Was the Gold Kool Aid grape or cherry?

procol - Have you checked your local coin shop lately? You might find obtaining physical PM's is becoming more difficult. "Falling" prices don't seem to be from falling demand, wonder why the supply/demand curve is looking severely distorted?

Im not too impressed by that. They are taking full advantage of the fear.