The financial panic that began in early September has been a body blow to global business confidence and the global economy which, according to the Survey of Business Confidence of the World, is now in recession. I have just compiled a number of topical (and fairly original) charts in order to cast some light on the economic outlook.

The link is: http://tinyurl.com/65pp6a

Bill,

Hope you're right on SLW & CAD strengthening (USD weakening).

The 5-year chart for CAD doesn't even show today's price & with the velocity of this downtrend I see a lower CAD in short term.

Looks like the selling in SLW was in the USD-listed ticker, or is this just currency fluctuations?

http://tinyurl.com/5no8yw

Regarding MFC's drop, the story is the market drop has forced them to liquidate some holdings ... Some speculation that this was behind Toronto's spectacular drop yesterday.

http://tinyurl.com/58kfrz

re:SLW

I'm not qualified to offer any fundamental opinion on SLW. I will note the max pain opts expiration for Nov (now 5 bucks) was substantially below SLW's daily price for many days.

Before buying or selling anything, I would recommend one looks at max pain.

I did buy some SLW pre open at 2.91 (the 3PM price)

[Bill Cara note:

I believe you will have a triple within six months, maybe three. Just my belief.

Another one is that Noront (NOT) is ready to soar now that my friend Dick Nemis has stepped down and a new and well balanced Board of Directors has moved in. The backers who demanded these changes are Pierre Lassonde, Rob McEwen, Eric Sprott, and Sheldon Inwentash. These are the major players in Canada's junior mining industry. I will march in that army. NOT at less than $1 is a screaming BUY now. With the new Board, Noront will attract hundreds of millions of dollars in drilling and exploration funds. This play will become the next Sudbury. Still, it is suitable only for high-risk takers and younger people who will put away the investment for several years, and not get caught up in the day to day trading. You can start by catching the webcast of the Noront meeting this morning.

Today I will be too busy setting up accounts at Interactive Brokers and monitoring markets to stay closely involved with the blog. I just want you to know that I will be buying the market. One of the tells will be the $USD and another is US Steel (X), down from $106 to $32 in six weeks, but reporting an excellent quarter. Watching to see if risk-takers hop back on the X-train will tell me a lot.]

Bsi - how do you determine max pain? the price where open interest is biggest?

Noront

Sorry, having some computer issues and cant post the link but on the companies web site it is stating with yesterdays date that Rosseau Asset Man. and Noront have agreed to resolve their proxy contest and are agreeing to a jointly determined single slate of directors, perhaps someone can have a look and post the link.

[Bill Cara note:

http://www.globeinvestor.com/servlet/story/GAM.20081028.RNORONT28/GIStory/ ]

I bought 300 more shares of SLW today. Bill, I hope you are right this time. I am a small ma and pa (not expert like you).

80% bullish. still waiting for my wave.

testing the waters with slw at $2.85 pre market

FOMC meets today and Wednesday. A surprisingly large rate/wording change might bring the $Dollar down and reverse trend. Interesting times.

dec max pain slw is 10

Good morning! Beautiful starlit morning here on the west coast. Market opens in T-10.

Bill, Thank you for your guidance this a.m.

SLW: Still holding with $4.33 basis.
I recommend reading CT's report for today on gold and currencies.

I will be *trading* PM related equities on any spikes. I take profits in this sector when they present themselves as we have all experienced how it can move against us and CT's warning that gold could fall to $550 is worth noting.

By trading I mean selling partial positions on spikes and buying partial positions on pullbacks.
I will always be holding a core position of SLW because I think we are heading for an inflationary environment and the price targets are realistic.

I am in slw for the trade. not traveling today so i can watch this sucker. Nothing in the market has told me yet that i can comfortably hold a position overnight.

i have trouble believing the the flight of capital to the percieved safety of the US dollar will be materially impaired by a 1/2 point cut.

a full point is a different story but i just dont see them cutting that much.

gold is having these sudden spikes higher but then dumping before the market opens, this has typically be a bad sign short term. if we can crest $740 today and stay there we may be on the next leg up to $850.

the USD has to get back below 80 and gold has to start appreciating against most currencies before I entertain the inflationary environment concept again. deflation abounds...

Re: CAD

I was astonished to hear on the news channel yesterday that RBC economists recommend buying the $US and selling the loonie. If anything should be bought, its the loonie from the simple fact that a rally is in order.

So I began looking around at various currencies, as to which currency pair may make the best trade under the circumstances.

My guess is that the loonie will make surprise gains against the Euro as the rates can still come off quite sharply there, but is unlikely to make great gains against the dollar since US rates match the 2yr. yield closely. Canadian rates can come off by 25 basis points, but there's been a strong rally in rates on the short term treasuries.

Either the Yen or the Buck are overbought vs. the Loonie, so a relief rally should occur soon.

No major currency is without its problems, particularly because the massive derivatives trades held against these currencies are all falling apart. The decline in the Euro, the sharp rise in the Dollar and the Yen are all part of a collapsing currency trade.

For instance, the Yen crossing 90 would be a disaster in the making due to power reverse currency notes, the Euro collapsing if feeling its effects in emerging markets as well as oil producing nations, A rise in the dollar or dollar demand is having an effect just about every other trade which is held against the dollar.

Cara 100 Update:

CSCO - Target Price Lowered from $30 to $22 @ Merrill Lynch

I hope I don't get in trouble for asking this. Bill - you said "I am buying the market today". Does this mean that you haven't been buying at higher levels for the last few weeks after you issued several buy alerts including one where you listed 95 stocks at 3:40 PM on a given Friday. I'm not trying to be confrontational - just want to understand how you feel when you issue buy alerts for the future. TIA

[Bill Cara note:

Fair question. My statement just means what I said. I am buying the market today. I say that in a general context that, amongst too many disbelievers, I am buying.

When my system generates an Accumulation Zone message or a Buy Alert, all that means is it's time to focus. It's time to do your dd. When I issued a list of stocks, I was arguing that those specific stocks were mostly low debt companies and it is an environment that will favor them, and so that is where the least risk is. I did that to help people focus and to see that I have a bullish, not bearish, mind-set.

I have been advised by several professionals on my team that I ought not to comment on specific stocks any more, and I will consider that. There are too many time pressures on me to follow up properly, and to be specific when that is required. I do what I can do, and no more. It was recommended that I set up in the blog a single stock of the day or the week that I did buy, adding the reasons, expectations, average price (I always scale in), etc, and follow up for the same info on the sale. I'll have to give some more thought to that.]

Adam,

I dont think Bill is going to be on too much as he mentioned he was tied up with CTAB today. but when he posted that he was switching from bear to bull and listed those companies, even with the cara 36, i read it to mean as his mindset has changed from glass half emtpy to glass half full.

I personally do not think he intended to tell you or us to buy all of those stocks at that time. just a starting point for all of us to do our own research and decide for ourselves. everyone has diff situations and time horizons. that was my interpretation anyway. best of luck.

Adam,
good question and I have to admit that I was was very confused (to put it mildly) by all the strong buying alerts since September 08.

Anyone have any thoughts on WGI/WGW? Under $.60 for a junior with positive cash flow?

AdamG- there are two things all great traders are good at: (a) changing their minds, and (b) trading across all time horizons...

I think Bill tries to 'speak' for his wider audience, but we already know that he (a) (for that reason) is unable to give specific advice to any individual, and (b) he writes as he thinks, with little to no editing...

It's entirely possible he bought (and/or sold) the market 9/29, 10/1, last week, yesterday, and today, given short(er) time horizons for portions of his portfolio...

The only general advice he's given out is buying this month, given a time horizon of 1-3 years...

hi,

I hope everyone dance today :^)

anyone heard anything on about C and GS?
GS is falling now...

mnvnni,

Re max-pain (for a particular trading instrument)

It's the option strike price of the closest expiration date where the option sellers make the most (therefore the option buyers lose the most) money.

The (valid, IMO) idea is that large interests (option market makers or large funds writing covered calls/puts) have an 'aggregate interest' in manipulating the underlying stock's price to where they make the most (which is the strike where the options they sold has minimum value).

There is a free online calculator at http://www.optionpain.com/MaxPain/Max-Pain.php

From my observations, it is a very useful indicator, especially for confirming trade direction based on other criteria - but in the recent expiration it ended up way off for most underlyings. More proof that this is an extreme episode we're going through.

...when i say good at changing their minds, i'm referring to the ability to react quickly to events as they unfold...NOT to going from bear to bull to bear in the space of a few weeks...i think the bull call was good-> the ability to dance around that bull call given unprecedented events in the financial sector was also good...trading the markets is not a stationary activity that takes place in a sterile environment-> you need to be able to react to unforeseen events on your way to a destination...no?

[Bill Cara note:

It's a dance. The music often changes. The dance partners often change. I'm not the DJ.

Re NOT,

http://www.globeinvestor.com/servlet/story/CNW.20081027.C9864/GIStory/

The meeting will be webcast, starting at 10:30 a.m. (Toronto Time), on the Company's website www.norontresources.com and also via the following link:

http://w.on24.com/r.htm?e=124197&s=1&k=3D541C26D9519DBBD9BDFE66CDC687B2

To listen to the audio only portion only of this webcast please dial:

Local: 416 644 3417

Toll Free: 800 731 5774 ]

re: max pain

It's the price where the most puts AND calls expire worthless.

[Bill Cara note:

Most professional traders are option sellers. Their job is to transfer risk to others. Independent traders should learn from that.]

for some reason, I'm reminded (again) of Mary Decker...if she had been able to react to being tripped by simply getting up and using that adrenaline to run even faster than her normal best, she could have nailed down her place in Olympian history...instead, she nailed her own coffin (as far as what she will be remembered for)...whatever happens, whatever setbacks you encounter, conduct yourselves with dignity, and you will have no regrets...

re: SLW - is anyone that invested in that concerned at all about the high levels of debt and low levels of cash on their balance sheet?

again just observing the action in gold and the gold stocks its very weak.

a big crest at the open followed by weakness here.

i just dont see a current bullish set up at the moment. i envision a bullish turn around to hit us all on the head with strong openings and good volume pushing us up through the session w/ spot gold having a reasonable move up.

instead we are getting the usual morning pop and at least the last while the afternoon drift before the last hour slide. until this changes and we get more than a few sessions to crack this pattern we are still on watch. imho. i hope the miners prove me wrong her and begin to climb out.

we're free to go up when investors on the "slope" give up and we start climbing the "wall"

Wouldn't want to be an American paying taxes to help banks buy each other. Totally agree w/Bill get rid of the players who got us here and start a new system based on transparency and quit the gaming of the system.
From Joe Nocera NYT
http://tinyurl.com/5hxpxe

re:max pain

Since I don't have unlimited funds like most on the board ;), I have to sort thru the best potential trades. Following were quick back of envelope calcs based on yesterday's closing price.

SU Max pain/current price 25/18
ECA 50/39.5
IMO 45/28

I put the IMO trade on.

Thanks Bill for all you have done here. Into NOT today and also hold via underwater PNP position. Averaged down on STO yesterday. Happy Trading All

Big tech companies are filling the void left by banks and specialty lenders that are retrenching and making financing more difficult for smaller tech firms, the Wall Street Journal said.
Companies such as International Business Machines Corp (NYSE:IBM - News), Oracle Corp (NasdaqGS:ORCL - News) and Cisco Systems Inc (NasdaqGS:CSCO - News) are lending more of their own money to customers and taking on new risks, according to the paper.

Defaults on tech financings, loans that allow companies to purchase computers, software and other products, have spiked this year, the paper said.

I wouldn't be at all surprised if we see something similar in other sectors, as larger companies form a kind of merchant banking syndicate for smaller players in the same sector.

Bill:

That single stock idea is probably a pretty good one:

1. It allows the "great unwashed" to follow your analytical model evaluating a security, which may provide the best opportunity for us to learn.

2. It may cut down on questions or comments you find frustrating.

After a few of those lessons, and perhaps the stocks on which you focus follow a rotation/progression (your oil, basic metal, gold mantra-for instance) that help to not only build for us a model for security analysis, but market as an organism analysis.

As you build those, then those general lists of stocks will make more sense, or readers will know better how to deal with them.

Also, in an effort to reduce your frustration, perhaps it would be good in the new website to have a foundation link. My line of thinking is The School of Lacon, where you couldn't speak for your first two or three years. So, if people ask dumb questions you can point them there. Or, we can.

Having said that, here's a dumb question. If the FED cuts tomorrow and Trichet has already hinted at further cuts there, won't they negate each other and leave the $ relatively strong. I realize this may still propel gold, but will that not negatively affect US exports and thus the economy?

Bill,

Thank you very much for clarifying the confusion regarding SLW’s insolvency.

Oh, to be complete, that Foundation link would have your "educational" material from the website such as the WIRs and perhaps other material/links you find pertinent.

Look at that 3 month chart for AA...death by a thousand cuts...look at the 3 year cart....I know technically it's still broken,but I can't help myself....I have to buy some at this level.

Why not a sector and a few CARA 100's within that sector. Then turn the blog loose on those few demonstrating to all how to perform the fundamental and technical analysis and news related to those securites like happened last night with SLW.

The blog members generate plenty of good calls on various single co's, but collectively we could be a much more effective team of analysts than even most professionals if we focussed on say a sector a week. Bill picks the sector in the WIR. This could be based on research he gets or where he thinks markets are heading, long or short, options or straight trades.
This way he isn't giving direct picks or equities, but instead pointing to entire sectors and then WE would narrow it from there, thus accepting responsibility AND adding extreme value.

Case, that is a lovely web site, thanks.
bsi87, looking at IMO, I see the same max pain number you do. How did you interpret that relative to the current price, and what trade did you make?

Thanks -

Max price>current price and Triple RSI buy alert.

Buy stop limit above 3PM price.

then one cancels other

sell limit 45/sell stop 26.02 (HOD - 10 day ATR)

GG getting hammered. Time to buy more.

What a head fake today is turning into...so far

still trying to get comfort with the balance sheet of SLW. i'm seeing cash and LT investments on hand in the amount of $116 Million and ST Debt of $29 Million and LT Debt of $464 Million.

They were cash flow positive in the amount of $36 Million for the 6 months ended 6/30/08, which is about 10% less than the same period in 2007. The question is: will they have enough $$ to pay off the interest on the debt and the principal in an environment where silver prices rapidly decreased? Since the last quarterly filing, silver prices have dropped from roughly $18/oz to $9/oz. That means cash flow could be halved and possibly only be enough to service the interest payments on debt. I don't know that for a fact, though, as I haven't had a chance to look at the debt repayment schedule...

SLW @ 2.64

teamonfuego:
See last nights discourse. Much info there on SLW you are missing.

GS getting rolled like a cowboy cigarette.

I'm watching the ultra long ETFs. Virtually every time frame is pointing down with no bottom in sight. And so much for that opening gap up ... the sellers used that as an opportunity for a fresh pile on.

I tried to find a bottom today with a small trade on SSO. Got stopped out in less than two minutes.

I'm using very small trades and tight stops until I can find a rhythm again. Otherwise, I'll just watch and wait.

The solars are getting hammered yet again today on a "timely" UBS sector downgrade. First Solar (the leader in this sector) reports earnings tomorrow.

In this market, discretion is truly the better part of valor.

IBKR (Cara 100) at all-time low.

CRDN - absolutely brutalized.

Status: Bear - Today we have only covered yesterday's loss and the USD/JYN are in a strangle hold. A lack of strategic planning delays implementation while opportunity costs and economic damage accumulate (is this a goal?). We need to witness implementation and signs of progress as opposed to the jawboning we've been subject to thus far. In the future, I hope to see more dynamic approache to disturbance response as opposed to a fits and starts "strategy". Obvious lack of planning... or is it intentional?

Stochastics turning up on SLW. depending on what the broad market does i might just try to break even including my commission today.

im really starting to put thought into totally changing my investment thesis which has been long gold/miners for so long.

i and many others have been so wrong for so long,
all the arguments that said gold would do well during periods like this, or that the stocks would hold up during a panic turned out to be so wrong,
i cant help but wonder how using the same constructs will make us winners this time around.

everyone seems to agree that the levels of liquidity being injected are inflationary but at what point? this has been a key feature of discussion here and elsewhere for some time.

if things are truly broken as we have witness the past month, and if more pain is on the way, why would the things that have gone down so sharply along w/ the market suddenly reverse course?

rate cuts, injections and capitulation signals abound but stocks continue to fall or drift, they are not trending higher in that sense. at least not yet. and as i posted earlier the aciton in gold is indicative of a drift pattern, not a spike up. the only spike that happened was following a huge spike down below $700.

i have watched people discuss SLW for some time,
i remember when i first started buying gold/siler and SLW was a great way to play silver. every time it goes down people seem to ask the same set of questions and continue to buy believing that the course will change soon.

i hope so, if not for me but for all of those who are invested. how much longer can this go on when week after week we continue to drop. even a multi week rally hasnt materialized in any way from observing the metrics.

and now people have pinned their hopes on a rate cut? the only rallies we see are the opening prices before the afternoon slide.

im playing that at the moment and its working so far.

good luck gang. hoping for a turn around!

Canaccord Capital in Canada today released it's 10 stocks to trade/own, many of you will recognize Bill's picks of which 5 are in this group:
Barrick Gold Corp*
Bank of Nova Scotia
Goldcorp Inc*
Manulife Financial Corp
Nexen Inc
Potash Corp*
SNC-Lavalin Group Inc
Suncor Energy Inc*
Teck Cominco Ltd B*
Thomson Reuters Corp

[Bill Cara note:

I also have Manulife Financial (MFC and MFC.TO) on the Cara 100 list. So, there are six. The other four are fine companies as well. This is a good list.]

BTW in the prior post 'Canaccord Capital in Canada today released it's 10 stocks to trade/own' disregard the *

Considering Mr. Hoye's comments that the gold/silver ratio sometimes achieves 100 in a credit contraction, I would wait for that number to be registered before jumping on SLW, or silver-related stocks. (not in a day trading sense)

That being said, there's more pain in the markets than people are willing to acknowledge. Its astonishing to see the clinging to the oil trade when its a certain disaster.

Just the same the senior gold analysts have all, each and every one, done a major disservice to gold sector investors with a disabused inflationary model. (not the least advocates for silver) The only one which has had some traction is an outlook based on the demise of credit.

There has been an epic fail of these types to acknowledge the extent to which derivatives pervade the markets the world over, especially in the currencies. This might advantage gold, but the fallout from the collapse has taken out value and replaced it with extreme losses.

The thing that confuses me is that the banking sector prefers its fraudulent script and wants government backing for it, at a time when politics will turn against private banking. You have to wonder at the leadership within these establishments, whether they are not plainly ideologists clinging to the notion of political control when they could be better off operating on their own account by weighing in on bullion for their own benefit.

Lots of analogies are being drawn with the depression, but not one analyst has pointed out the massive decline in Barron's gold index in 1938:

http://www.kitco.com/ind/sobolev/oct272008.html

dr cosa
I retrospect, 99.9% investors assumed lower dollar and inflationary pressures this spring. This is why that trade backfired badly. The really big question is whether PM/commodities bull is over for good or still intact. BC seams bullish, I want to be bullish, but who knows? Maybe a couple of more years of deflation (as per the 1929 scenario or even the recent 1997-2001 dollar action)?

SLV @ $8.48 new 52 wk low $8.45

Hi everyone. It's been a while since I last posted on this blog, but I'm a regular reader.

I'm working on a website where I'm trying to give a broad coverage of the Chilean stock market. I have a company profile for the 40 most important companies (the ones comprising the IPSA-index).

I also put out relevant news from the Chilean media. Everything in English off course.

I'm still working on the layout and trying out new ideas, so I was hoping some of you guys could have a look and perhaps give some feedback.

Actually the market in Chile has performed quite well so far, down only around 20 percent this year, which isn't too bad relatively speaking.

You can check out my site here: www.incainvest.com

[Bill Cara note:

We intend to support your efforts. Of course, we are well fortified by Concha Y Toro. :-) ]

SLV has made a complete u-turn. hoping this bodes well for slw short term

"im really starting to put thought into totally changing my investment thesis which has been long gold/miners for so long."

Me too. The actions I had imagined and read about aren't developing, but I'll wait for the USD to fall before executing any 180 turns.

Good article on silver and gold. The SLV chart showing the amount of physical metal being added as the price collapses in head scratching.

http://tinyurl.com/5dsdpp

What I don't understand is why the silver mining companies allow this to happen. Why aren't they shutting production and buying COMEX metal to fulfill delivery responsibility? They are their own worst enemy.

SLW - I agree the stochastics are turning up but when there is a strong downtrend ( 8 to below 3 in 20 trading days) stochastics need something else to confirm the reading. I use a long term ADX di+ di- (50). I like to see life in the body before betting it can run! Still short KR basis $26.40.
GILD ($43.27)may be a good short too. I may miss a bit of the move waiting for signs of life but I feel more confident in my decisions.

Thanks Bill! I am a good friend of Concha y Toro myself:) Also, I could recommend Cono Sur, they have a Pinot Noir (lots of anti oxidants), which is great value for money.

[Bill Cara note:

The Cono Sur is inexpensive, I think. One of my house wines is the inexpensive Concha Y Toro Casillero del Diablo. I tasted their Don Melchor 1996 from Maipo Valley this weekend, but at $70.50, that is for a special occasion w/filet mignon.]

For those long term investors who have cash on hand, and have yet to deploy those funds in to the equity markets on the long side, I continue to suggest caution (as I've been saying numerous times earlier this year).

Short term, the markets could certainly rally - and do so in a big way. However, any rally that occurs will quite possibly ultimately be met with further selling as investors look to recoup past losses.

There will be plenty of opportunity in the future to buy solid companies for the next bull phase.

I continue to believe that for long term investors, that this is not the time to rush in and buy equities en masse as has been suggested since mid September, when the market really began to fall in earnest.

Selectively, there are some equities that can be purchased now for the long term, but they're the exception.

This is largely a time to watch prices and prepare lists of potential buy candidates, once the market settles down and stabilizes.

Just one person's opinion, as always.

Bill

Im glad that you are "considering" the advice of the professionals on your team as far as not commenting on individual stocks anymore, but im sure that for every one that does not get what you mean there are 20 others who do, and more often than not many posters will try to clarify what you mean when those type of comments come up. anxiously looking forward to the day when Interactive Brokers get the Canadian situation cleared up, im sure that i read that there would also be some sort of premium blog, could you please clarify this, thank you.

[Bill Cara note:

Interactive Brokers has the best system in the world for active traders who are able to use sophisticated trading platforms. For a trading-based Financial Advisor like me, it's essential. In time I hope to add other platforms, but that will be a long way off I believe. For Canada, the authorities there recognized the need of IB Canada to flow orders to the IB Global platform, but they retained the right to have IB Canada (regulated in Canada) be the gateway. So Canadians can and do set up accounts at IB, but I cannot advise them because of another Canadian industry rule. So I need relief, which I will apply for. Canadians who maintain a residence outside Canada or who place their funds in a registered bank or broker outside Canada are accounts I can work with. But there are rules and regs over that aspect too, so I cannot discuss it here... In terms of a premium blog/advisory/newsletter, that's third in line, after I help Vad Graifer set up a trading school type of service later in November. The new website will contain info on that.]

solar stocks getting hammered. fslr down under $100

ToddinFL

"Just one person's opinion, as always.

Posted at October 28, 2008 11:44 AM"

A VERY good one at !

at that! [ooops]

WGI/WGW

Looks like a very large block of stock traded earlier today with very little price movement as a result .... does this mean anything special?

Stv

Broken Securities Industry Still Has $20 Billion to Pay Bonuses
http://www.bloomberg.com/apps/news?pid=20601084&sid=aVann0.cv9Tw&refer=stocks

I can't wait for the poster screen.

Great...New York (the entire state) is asking for Federal aid.

Who was it worried about income re-distribution?

I'll show you income re-distribution, and it isn't the direction we all imagined.

So let's see who's on the Fed welfare dole:
Banks
Insurance Co's
Auto Manufactureres
Publically traded key corps.
States
Municipalities

Who's next? Who will rescue the rescuers?

To carry on the gold discussion from yesterday ...

Unlike 1933, a far higher percentage of bullion is now in private and public hands in Asia. I'd venture to say that the Asian will defend his/her right to own gold as much as Americans profess to defend their right to bear arms.

I have been at my home in Phuket, Thailand for the past 2 months and yesterday (Monday) decided to see if I could replace some gold Sovereigns that I had sold earlier in the year. I went to my favourite Goldsmith's store and the owner showed me the collection of gold coins and swiss bullion he had inherited from his father but said I had to go to Bangkok for that kind of purchase. I contented myself with buying a weighty Thai 22 carat gold necklace instead.

But here are my observations : the only retail customers I saw were buying gold, no one selling. In Bangkok on Monday, there was a buying frenzy, particularly after the government agreed it was too risky for local gold stores to be selling on Saturdays while the gold markets "sleep".

I see the current suppression of the price of gold as an unintended gift to Asia. The locals are certainly seeing it that way, exchanging their overvalued fiat currency for the real "stuff". The Japanese must be gleeful, selling depreciating assets and buying ever cheaper (in Yen) Gold, the eternal metal. That is their Trade of a Generation.

Thanks to the poster ChicagoMark relaying the information as to who is controlling the silver market. But I have a feeling those 2 U.S. banks are acting as proxies. Now why is it so difficult to know who are the players shorting gold? Does a guy like Soros know?

And belated congratulations to Bill for the launch of CTA(B).

[Bill Cara note:

Ahh, Phuket. Beautiful place. I was close by, but never made it down to Phuket.]

A close in the green is in my mind today, but yesterdays losses will not be completely erased.

On alt energy crash - it is an aborted bubble as opposed to fulfilled internet/dotcom bubble. They did not achieve meaningful market penetration yet. This is the case of investors being too early rather than too late. But this also means it is not a hopeless investment.

Dundee Securities downgraded all the Canadian banks and slapped Cara 100's Royal Bank (TSX:RY) and Scotiabank (TSX:BNS) with a "sell" recommendation. http://tinyurl.com/66fdz3

RY and BNS hardly moved on the news. Could this be a sign of a bottom? Is his analysis already baked-in?

I called MFC Investor relations about a week before they imploded.

I asked why they were not selling off when US insurers were.

I got a lecture on how Canada had stricter rules.

Well, that may be , but I guess depending on the performance of stocks for your financial health is not proscribed.

As a former shareholder, I still have a curiosity in CRDN. Perhaps others in here are also interested in this dynamic and innovative company.

CRDN stock is down over 30% today on an earnings fall and sharply lowered '09 forecast.

I just finished listening to the 3rd quarter earnings call. Here are my DENSA style notes:

+ Declining body armor sales were the main culprit for the earnings burp and lowered forecast.

+ 4th quarter body armor shipments are expected to be even worse than 3rd quarter.

+ 1st quarter of '09 expected to be the weakest quarter of '09.

+ management expects a lower but good business base with the U.S. Army over the next five years.

+ competitive bids have lowered margins.

+ non-defense sales are up.

+ CRDN has investments in auction rate securities

+ company looking for acquisitions in the solar industry.

I'll continue to watch the fortunes of this company. Right now, I'm more intrigued in FLIR and ESLT as possible investments in the defense sector.

Disclosure: No positions in any of the above mentioned securities.

Alternative energy was a way of playing the oil price mania until the oil price turned around and crashed. We still haven't seen a major capitulation in oil prices just yet even at these low levels.

Dr. Cosa,

I remember that Maromatics suggested a while back using the 20/50 week moving averages and buy or sell at crossovers + or - 1%, I believe. I wish I had heeded those signals myself before the big collapse. However, I'm heeding them now, and I don't intend to buy until the two crossovers turn positive. I could miss a big sudden move, alas. I noticed that the AROON (25) oscillator seems to be a good tool for anticipating these crossovers. My question would be, how far should the oscillater move across the zero line to consider it a reliable signal.

As for the general collapse in Gold and Silver, and their not acting as anticipated for the market we see before us, I can't help but think that these two are anticipating deflation. Plus I recall Bill saying that Gold is the last to leave the dance floor, and indeed gold held up nicely throughout most of the collapse of the stock market. Based on some of the reading I've done, I don't see why it is necessarily the case that deflation can't overwhelm the inflationary effects of printing money. The deflation seems to come first and the printing comes second as a panic reaction. JMveryHO.

From BCA Research a Yen intervention may be in the cards:

"The G7 statement over the weekend gives Japan's Ministry of Finance the latitude to intervene and slow the yen's appreciation."

http://www.bcaresearch.com/public/story.asp?pre=PRE-20081028.GIF

Yesterday the Canadian banks took a 7% hit down and this morning first thing Dundee downgrades Canadian banks to sell. What a coincidence,do you think?

Regards

Apparently I started some sort of panic re: SLW yesterday. That was not my goal and believe me, I am not an "expert." I was just expressing shock as I looked at buying SLW at 7, then 5, then 3, and then in the 2s yesterday and today.

All of the miners have sold off because metal prices haven fallen and the miners are more leveraged to the price of the metal versus owning the metal itself. That leverage doesn't necessarily come from being heavily indebted, it comes from having a cost of production of $x / per oz and a sales price of $x /oz and their profits and cash flows deriving from that spread.

Regarding SLW, was looking for some outside the box explanation of what might be accounting for the large share price slide. Obviously, 90% is the fall in price of silver from $20 to $10 as has been pointed out on the site ad infinitum. I think the other 10%, however, probably has to do with the way that their business is financed, in that on top of being leveraged to the silver price (market price - $4 cost), they also have a decent amount of long term debt financing which is provided by banks. We know the banking / financial sector is in trouble as a whole, so I don't think it is too big a stretch to be concerned about SLW's financing.

Things that I don't know about SLW's financing:

1) Which banks have extended the financing?
2) What are the terms that would place the agreement in default? (i.e. is non-payment the only potential default, or could a default be tied to a fall in the price of the metal, or some other unknown contingency)

I don't think these are unreasonable questions / comments.

[Bill Cara note:

Well said. Traders need to look at all angles. My point is that if those arguments were made a week earlier there would not have been the panic. Also, these are arguments I would like to see come from the industry analysts. CPM, which is an expert in silver, published a report recently which I linked here that said the biggest concern at this point should be in missing the rally if, as and when it comes. I agree with CPM and the Wall Street analysts on this. The economists are leading the deflation charge down Main St and have a panic. But we all know that you ask 10 economists a question and you'll get at least a dozen answers.]

aucorant:

I've been thinking about the deflationary effects of wealth disappearance (well, paper wealth)and the inflationary effects of printing and how they might counterbalance each other.

nemo - in that regard, it's easy to see that the deflation in value of assets has significantly overwhelmed the inflationary aspects of the bailouts.

Nemo,

I would love to hear your thoughts. I'm just expressing my disbelief that somehow deflation will not be "allowed", as if we had some kind of control over it. The reason it is alleged that it will not be allowed is that Bernanke said he will print as much money as it takes to head it off. However, the money he has printed so far has not prevented commodities, housing, equities, and gold and silver from collapsing. Nor has it prevented the dollar from rising. One would imagine that the dollar would collapse in an inflationary environment, but perversely, it keeps rising. Why aren't markets looking ahead to inflation? I've been taught to believe that we will have hyperinflation a la Weimar with all this money printing. Perhaps it is deleveraging which is the motor behind the collapse in prices. Since it was leveraging that enabled/caused prices to mount, it stands to reason that deleveraging (unraveling) would be deflationary. Again JMHO.

Yes, that is what I've been thinking also, but at what point do they become inflationary. In many ways even though the paper has been issued, it hasn't made it's way into circulation. Is that when? Or, is it inflationary when the economy begins to pick up? That is when the velocity of paper in circulation increases.

F6 - I could be dead wrong but based on everything I read about current oil availability and discovery pace vs demand destruction suggests that it is unlikely we go much under 50bb and if we do it will likely be a short lived undershoot.
And the world will not survive next bull market without alternative to oil be it natgas, nuclear or solar / wind or whatever.

On deflation issue - the world switched from near hyperinflation to a full blown deflationary collapse in a matter of few weeks. Once the world governments realize catastrophic fall in their tax revenues they will have *no other choice* but to print until the deflation is done in.

Since they have neither knowledge nor tools to temper the inflation/deflation transitions the opposite switch to inflation will be at least as violent and fast as the previous switch from inflation to deflation and those betting on infinite deflation will be wiped out like the inflationists.

No doubt the popping bubbles have been deflationary. So has the general fear that has pulled money out of equities and, perhaps, created a bubble in government bonds. Perhaps that's where some of it has gone. Weimar might still be a possibility, but, and I'm no student of the history of that situation, the central bank coordination today may be much more sophisticated.

Actually, I had posited that the value of a currency is directly linked to the productivity of the nation issuing it. I think GDP figures are inaccurate, but the relative values of currencies, in the long-run, are better arbiters than fungible GDP. Look at how the value of the Chinese currency has risen vis a vis the US. I realize it was pegged, but it has continually risen.

I think, after this short-squeeze on the $ abates, and the currencies begin to reflect productive economic value, as Bill says, $ down, interest rates up, inflation returns simply because our deficits will need to be financed and investment will be crowded out reducing the US's ability to grow GDP. So, natural resource countries and the Asian/Latin Tigers with those US companies with strong international arms

Isn't that funny...I see it the way Bill sees it. Maybe he's got a point :-)

Soulek1
SLW uses BNS, BMO, Westlb AG, EDC, HSBC, RBC, and JP Morgan. All were onside as the CR facility was expanded from $100 Million to $400 Million. I believe BNS and BMO are the big players here as they did the original $300 Million credit line backed by Goldcorp in 2007 for Luisman production etc. (also Glencore and Lundin)
The Co also owns stock in Bear Creek, Revett Minerals Inc. and Sabina which are materially down for the company's initial investment.

nemo - agreed

VLO posted a nice quarter - $1.86 vs 1.39 anticipated. I'm holding this for a while; slightly underwater in it, my cost basis is around $17.50.

But even as we are in the green today I think that the first sustained rally will happen later this year right around the peak of negativity about busted retail season. It may actually happen slightly ahead of that peak.

Brother Occam:

Well, I think we might have to get through Hedge Fund dissolution, and Ma and Pa collapsing the Mutual Fund industry first. Whenever that is. Then again could be tomorrow.

?? the yuan had a crawling peg. it's continual rise was by design, wasn't it? beijing's US 30-yr bond binge & "greenspan's conundrum," was / is the testament to chinese productivity, as that was needed for continual currency management.

with my next-to-nothing experience, i wouldn't call this a short squeeze on the dollar. this was a flight to the "safety" of USD & JPY. The short USD trade has been over for a while...

the nasdaq & IWM are below the early lows of the month. XLF is clinging above it, the DJ / SPX are hanging in there... still in no-man's land until this tug of war gets resolved, IMO.

If you don't want to call it a short squeeze, that's o.k. Many debts/transactions (CDS settlements, oil, commodities, futures) need to be paid in $s. So, you have to get dollars to pay them. Even if it's worth-less, you have to pay up, which is a squeeze. I wouldn't call it necessarily a flight to safety. It was a flight to what they needed.

This would be funny if it weren't so sad.

"An impatient White House served notice Tuesday on banks and other financial companies receiving billions of dollars in federal help to quit hoarding the money and start making more loans.

"We're trying to do is get banks to do what they are supposed to do, which is support the system that we have in America. And banks exist to lend money," White House press secretary Dana Perino said. "The way that banks make money is by lending money. And so, they have every incentive to move forward and start using this money," Perino said."

http://tinyurl.com/66m39f

Obviously this Dana Perino must have been in a cave for the last few years where loaning money was the tiny part of how banks made money.

Also, this reluctance to lend must be directly related to how banks still don't trust anyone because of the suspension of mark-to-market accounting rules.

Rob.

another late day fade? i'm still holding off on SLW. i'm afraid there is further downside pressure given the terribly deflationary period we're going through...

SLW:

Just read through yesterday's discourse.

I would class SLW with all the other small/tiny-caps (e.g. tanker stocks), where imho you buy the management, not the books.

My small position is a hedge against my major put positions.

The chart of SLW is completely bearish at this point.
I see no reason to build an investment size position.

Debt is currently lethal, the best management in the world cannot overcome that if things don't stabilize.

Just a thought!!!!

We the people are against big government looking over our shoulder and rightfully so...

But can you imagine how global financial markets would be today without governments around the world intervening...

Pretty scary thought..

SV

Bill, I know that your Cara 100 list has several miner related stocks on it and I too like all of them. What are your thoughts on using the GDX ETF as a play now based on it's price versus buying the individual miners.

Won't hold you to your opinion ... just interested in your investment thoughts and advice.

Thanks ...

[Bill Cara note:

I can only speak for myself and say that I am more interested in going forward with individual selections like TCK and GG. To protect myself in what I see happening today, the best program is to buy an out of the money call and write an out of the money put in these stocks. If there is a break-out in either direction, I can sell the disadvantaged option and let the profits run a bit, and then put on another collar later. However, this is not a market for people trying to hit home runs. The complexion of the market can change by the hour.]

F-L - That is exactly what I expect banks to do with the bailout money, it is naive to assume they will serve anyone but themselves. The money already given to banks are dead period. That is why the bailout money should bypass the banks and go towards the projects that will do good long term and stimulate business activity and employment short term like an infrastructure development etc.

sv - If the banks *knew* that they will not be supported by intervention this crisis would have resolved much sooner and would be much smaller in scale. Any intervention is a double edged sword.

the more i hear and see bernie sanders, the more i agree with him. here is a great video from last year of him in regards to social inequality:

http://www.youtube.com/watch?v=sl404KNfENg&feature=related

makes you wonder how much the average person is being brainwashed into believing that the proposals obama is making about redistributing just a portion of wealth is a bad thing. i wonder how many of these average people are actually looking at their wealth over the past 8 years and how much it has gone down.

the situation is pretty abysmal and change is definitely needed. i wonder if it will come in 7 days...

cmon markets. give us a close we all can cheer about!

does anyone else think that the pms and miners are getting hit hard to enable the big money to get in cheap before the anticipated re-flation trade goes back on??

[Bill Cara note:

I think it's more a case that some impressive people have lined up on the side of the deflation scenario.]

SLW is down 70% in a month compared to 30% for SLV. Seems as silver falls it approaches some price that accelerates the decline of the SLW stock.

"MONKEY!"

canadian pacific up $4.40 cdn

SV

CNBC was just giving me some background noise and i heard some comments on USX, 17 of their 29 blast furnaces world wide are down, or was it 19 out of 27 ? just got up from a nap my self as i was on nights last night :), did any one else hear this by any chance ?

There is also the caveat that in Canada, there is no such thing as illegal naked short selling, and any equity can be dragged down by almost infinite supplies of IOUs.

Not unlike the silver market in the COMEX, with hundreds of millions of ounces short and no hope of delivery, naked shorting is conducted as a matter of routine in Canadian markets.

This situation won't change any time soon, since the banks are also the brokerages and have a lock on legislation.

"What we're trying to do is get banks to do what they are supposed to do, which is support the system that we have in America. And banks exist to lend money," White House press secretary Dana Perino said.

curious what the Dillon dude thinks about that..

Were there a couple big buys in slw around 2:30pm?

Going back to the old TOG play........

from Denninger's Blog:

http://tinyurl.com/6owxl

(Condensed)
Has anyone here considered what would occur if the shorting the long bond half of the play would be negated by a "capping" of LT Yields by the FED(unlimited purchases)?

I hold some shares of BCE INC current price is $34 cdn

The buyout price is $42.75 (I believe) and is expected to close sometime in december.

Anybody else holding onto BCE for the buyout price???

SV

"MONKEY!!!"

Close up damit!

Bill,

could you provide a brief explanation to your most recent comment on, "people lining up on the deflation side"......thanks dbear

robbie fields - Thank you for your field report, Please feel free to keep us apprised of your observations, I wish you and yours in Phuket all my best!

NYUgrad - please keep encouraging the market. It seems to be listening to you!

MONKEY!! Hold Dow 400+!

you can do it.

Rumor said to be floating around [on CNBC] has Japan cutting rates tomorrow. A .25pt cut would them at .25 and could rekindle the carry trade. Food for thought.

vmw smoking right now. i got on the wrong train this am. should have went with my gut. but i think vmw is a long term winner.

Still in my SLW. 2.80 seems to be the line in the sand.

C'mon markets! we are all tired of the bear.

its like fifo right? first in first out of this mess?

ok, you guys convinced me. i read through the posts last night and the quarterly filings and dipped my toes into SLW at 2.81.

MONKEY 600+

Come on baby. hold the gains.

Zeto - sounds like an awesome rumor - the currency markets seem to agree with the possibility of a USD + YEN rate cut combo for now.......looks like $USD is going to end the day with a thud

Huge reversal in steel sector ETF SLX as well which was one of Bill's tells he mentioned this morning (US steel)....

Bill,

I recall that a couple of years ago you were first calling for a bear market and how there was a concerted effort by the pension industry to downplay the serious unfunded liability that existed in defined benefit plans in Canada. You provided a list showing some of the largest corportations had enormous deficits in this regard. I cannot fail to believe that the current situation, kept from the inquiriing eyes of the media, is simply devestating in light of current market valuations of plan equity positions. This could be another big negative for the markets: annual pension statements having attaching letters outlining the severity of the situation and stating the possibility of curtailment of benefits. Workers and pensioners alike are going to realise that they are affected by what is going on around them even if they do not directly hold market investments. Why has the media chosen to ignore this crisis?

all i know is if we close down from here in the last 30 minutes, it is not time to go long yet. unless your time horizon is half a day.

Volume in general is still light.

i don't think anyone is 'buying' (ie, buying into) this rally, which (IMO) is a positive...we need maximum skepticism to drive a rally, and of course, once you get maximum buy-in, then you get the 70+ RSI numbers...

BH

Have followed both FLIR and ESLT among others in the defense/homeland security field. Have always made it a point to have at least something in this security arena.

ESLT, an interesting Israeli company with a niche. Like it, but no present position.

Currently have a small (1/2) position in RTN.

sv, I also hold BCE, both shares and Dec 35 calls. Already did this trip once this summer. We shall see.

could you provide a brief explanation to your most recent comment on, "people lining up on the deflation side"......thanks dbear

Precious metals are considered stores of value generally in inflationary environments. If you think deflation is the call, money moves away from hard assets.

$43 billion flowed out of hedge funds in Sept

I don't want buy any company with debt. Is there any gold company in the world without debt ? Remember GG when McEwen was there ? The company had no debt and this was his philosophy no debt.

Got GOLD ? ? ? ?

~~~~~~~~~~~~~~~~~~~~~~~~~

In 2009 the US Will Be Forced to Selectively Default and Devalue Its Debt

We have seen estimates that next year the US will have to finance a $2 Trillion annual deficit. They may be able to push it forward into the next Administration by the forbearance of the world, but not by much.

It should be obvious to anyone that we are approaching the apogee of the Treasury bubble, with the credit bubble having broken already.

When the Treasury says they are facing unprecedented challenges in financing the US public debt next year that is an understatement.

Once the deleveraging of the markets subsides, the dollar and Treasuries will drop, perhaps with some momentum, as the rest of the world realizes that the US has no choice but to default. This can be resolved in several ways, including continued subsidies from foreign sources in the form of virtual debt forgiveness, devaluation of the dollar, raising of taxes, and higher interest rates on debt.

The problem now is that the US has breached the point where it can service its debt out of real cash flows, and turning this around will require a severe devaluation of the US dollar.

Devaluation and selective default are the only foreseeable systemic alternatives. There are other exogenous paths of a more political nature such as consolidation and war that may color the default a slightly different color, but a selective default it remains.

This is the fundamental situation. Everything else is speculation and commentary.

Jesse's Café Américain

Grabbed small position of SLW at 2.82 to average down. My Average is now 4.86! I may try to bring it closer to 4.00 or 4.50 and then basically treat it like a LEAP call option play as was suggested yesterday.

Nasdaq isn't following through as well as S&P and DOW. Furthermore, Russell 2000 is far below the other indexes.

What's volume like? IB doesn't show me the volume on the indicies.

A short term rally into the U.S. elections appears to be at hand.

1050-1100 on the S&P is certainly possible. Even after the huge rally today where the S&P is currently at 918, that would be a huge gain percentage-wise for the general market.

But the larger question remains, how will the market react to significantly reduced consumer spending, and a serious reduction in business investment in 2009 ?

Enjoy the gains while they last, but consider the longer term economic trend, as well.

Just one person's opinion.

VIX/VXN dropping below 70...again.

Jeff Mackie of Fast Money fame, advises not to buy today but sell off those longs you been wanting to get out of.

You have to buy 'em when u can.

Just one man's opinion.

feels like buyers are getting crowded in a line to get back in the market this last 20 min.

might be short lived but i will take it. 1st time in a while i actually hold a position overnight.

a rally tomorrow might make me a seller. we'll see how asia and eu do tonight.

MONKEY! 700+

Each time the market moves my online broker bogs down to the point that trading in realtime becomes impossible. Impossible to even get quotes during this afternoon's huge 700-point snap rally.

Can anyone comment on the performance of serious online services like IB in times of intense market activity ?

I don't like the fact that SLW has not participated in the movement from DOW 400+

It's sat between 2.79 and 2.86 for a couple of hours.

Meanwhile: that VOW movement was CRAZY!!! 85% on the world's largest company by capitalization's stock?

added some more DAYYF.

short IYR at close if it goes parabolic.

The ascent better slow down a bit, otherwise the rally will die of decompression bends.

MONKEY!!!! 800+

EOM trade, fellas.

Looks like we're powering into the close here. A few columnists on real money dot com are offering positive reasons for a turn, such as the Fed funding that started on Monday beginning to force LIBOR down, a big reversal in the Euro/Yen that began today, and evidence of exhaustion in hedge fund selling. Plus RevShark is discussing the possible double-bottom in the SP-500.

Amazing what a difference a few hours can make, eh! Personally I'm playing it cautiously and waiting for a follow-through day in the indexes on high volume before I commit further capital. After my recent mistakes I simply can't afford to play it any other way.

I sure needed a better day than anticipated.

Now this is a GREAT close...

Hope many in the Cara Community made money today.

I did...

SV

that close was almost too perfect.

but i'll take it for now. might sell tomorrow.

It sets the tone for a nice week, a fresh start. :)

smoke 'em if u got 'em.

yeah i'm lightin one a my havana montes...

2nd, I remember you saying a while back that you were looking forward to the day when we saw a rally like this. If I remember your words, you weren't looking for a "measly 500 points". Congrats.

There's a thing called the "Digg effect" -whenever a site gets popular on www.digg.com it goes down.

The Cara effect?

"Shares of some top silver companies are mixed at noon:
Hecla Mining fell $.09 or 3.8 percent, to $2.17.
Pan American Silver fell $.28 or 2.9 percent, to $9.32.
Silver Standard fell $.35 or 5.7 percent, to $5.84.
Silver Wheaton rose $.22 or 8.5 percent, to $2.81."

SLW still at 8.5%.

French_Canuck

I use IB...Trader Workstaion...worked just great today. Have had some problems in the past with skipped data on certain charts, but they seem to have fixed it.

I have borrowed some money from a credit card, and now I am back in business of catching falling knifes! :) I'll be very careful now, though, and take very small positions, since I may need all my available cash to meet margin calls if my portfolio keeps dropping. So I was thinking of buying the $2.50 March call options on SLW today if I saw SLW falling below $2.50, but now it seems to be up. So during breakfast today I instead bought 4000 shares of WGW at 0.51. If there is a stock that has all the qualities of a call option, this is it. :) Remember: they have more than 1/3 of their production for 2008 hedged at $800/oz. I'll try to call an investor relations representative from WGW today or tomorrow to make sure that the recent credit crunch did not really affect them.

Nice to see the bears on their heels for a change. They'll have to wait for their 10/10 retest... and wonder.

wow- that's a record gain in the DJIA, right?

That was refreshing, but I'm going to need a double!

David

Borrowing money from a credit card to put into the stock market, when you're already on margin ?

I hope you posted this as a joke, as it's almost incomprehensible to come up with a more indefensible position given the current market environment.

Must've been vinod's move to 25% cash yesterday that did it.

I am not the best person to dish out any advice but in best intent, i would also highly vote against borrowing from a credit card to buy stock. especially in this wild environment where 500 point swings are common.

But best of luck to you. i hope the trade works out for you David.

Wal Mart up $5.45...:)

It's one of my core holdings

I'm telling you...you sleep well when Wal Marts on your side...

Thank God for this Beautiful Monster

SV

I'm no professional, and I don't have a license for providing financial advice, but I'm going to backup ToddinFL and NYUgrad here by saying that I think it's very unwise to borrow from a CC to buy stock in this market!

Or any market.

well, bears got their bearish patterns blown away (what else?), but charts haven't broken above the last couple of weeks' tops yet, so bulls can't feel home free yet either, so what do we see, objectively speaking . . .

a trading range! . . . how exciting . . . not.

think I posted a week or two ago that I guessed we'ld be in a range for a while, too many bears & bulls all hot & lathered tuggin at each other.

if i am in gold i will prob go into the stock with the most sponsorship = gg. my 1 peso for what its worth

BOJ rate cut?

http://tinyurl.com/5k5s6t

aucorant, nemo, occam,

On the deflation side: (I'm definitely NOT one of the impressive people Bill mentioned :-) I am deeply concerned this may be happening. If so, we in the US are in a much different position than in the Great Depression.

We were largely agrarian back then — those on farms and with their own gardens were self sustaining in that aspect. Today we have "progressed" through the manufacturing age and are producing little the world needs.

People recently have made comparisons between the official unemployment rate of a bit over 6% (highly questionable IMO) to the 24% of the 1930s depression. But it didn't suddenly go to 24%. As Bill has pointed out there were several rallies in the markets.

I have no real idea of how accurate the data were in the first biggie, but for years I have distrusted the government figures — skewing to the numbers to look better is in the interest of everyone involved in their gathering and announcement.

I hope Nouriel Roubini is wrong, but his reports and record are difficult to simply dismiss.

http://tiny.cc/gSsyH

I am familiar with the Bernanke plan to avoid deflation at all cost, but he is an academic (remember LTCM?) and inclined to be a believer in theories.

"In theory, theory and practice are the same. In practice they are different." Albert Einstein

---------

On another topic — banks hoarding cash —

Could it simply be that they truly aren't sure just how much toxic stuff they are holding? This may not be a credit crunch, but a genuine fear of insolvency on their part.

So what about the short ETF's today??? Anybody holding one of those?

closed my SLW position that i bought at 2.81 at 2.92 AH...yes, i'm skittish.

net.fishing,

I watch about 37 of them. all are down 5%-40% but all are also trading above their 50 day moving avg, except EEV, which broke it and is at its 50 dma.

Kind of sense consensus appears to be a rise tomorrow going into the Fed announcement, then a sell-off. 50 basis points cut baked in. Don't think they dare cut only 25 basis points, but what if they cut 75?

*******************

tgifbipo—good luck with the knees. FWIW, my mother-in-law had both of hers replaced and she’s out and about everywhere, including golfing most of the year!

Someone commented about hip and knee replacements recently. Let me add they do shoulders too!

David - if you are serious about CC/margin I'd recommend you take advantage of this rally and reduce the leverage immediately, like today AH !

Afterhours activity on Korean country ETF EWY. Number of sizable trades, incl. two separate 100,000 share transactions one at 25.30 @ 16:31, one at 25.395 @ 16:20

The JGB is very close to falling into a liquidity trap if they cut rates further, but maybe they're willing to risk it.

Any currency held against the Yen it its runup is probably in for a good trade as they all have several gap-ups to fill, at least five.

Its obvious that the speculative trade, which had gotten on the bandwagon since the last couple of weeks, are opting out for other venues.

¥/CAD, ¥/€, ¥/AUS seem like good candidates for a reversal. The ¥/AUS certainly looks like it will sell off this week. The Eurozone can still cut their rates quite a bit, as well as the ACB, but the Canadian central bank's rates are low as it is.

That being said, it may be well to just bet the CAD long for the next while. It seems that there is little need to hedge in the fashion of an arbitrage.

Overall, the currency trade is so out of alignment that its effect on bullion seems to be very short term. Bullion has been behaving much like a currency in a rout held as a currency pair against a rise in the dollar or Yen.

I'm really glad I bought those UYG calls yesterday. This really could be the beginning of a little rally to around DOW 11K. I have the June 09 $10 calls.

I like Bill's idea of collars and Sio2's strangles as well. When this rally starts running out of steam I'll cash out of the UYG calls and put a strangle or collar on UYG and QQQQ.

You all notice the dollar falling hard right now too right? That was probably the impetus for the rally.

Good luck to everyone.

Rob.

What's to stop Bernacke from just giving Goldman Sachs's France office or Jp Morgan's London office or Morgan Stanley's Berlin office money to buy the treasury debt no one wants to make it appear that there is still worldwide demand for treasuries?

If he's running this type of shell game, he could inflate as far as he wants as there would never be no one to buy treasuries.

And, if it's true that Europe is on the hook for most of the emerging market debt, they'll be toast and we'll be printing more to lend to them and save them.

I'll have my finger on the button to sell if we really nosedive after the announcement tomorrow but I'm starting to think the financials could lead the rally here.

Don't worry though, I'm not betting with any money I can't afford to lose. I hope no one else is either.

Rob.

Grym said:

"Could it simply be that they truly aren't sure just how much toxic stuff they are holding? This may not be a credit crunch, but a genuine fear of insolvency on their part."

I agree that seems possible, but from a functional point of view (i.e. if you're trying to figure out how/what to trade), what's the difference?

Here goes another $150M?

"On May 23, 2008, the Company's wholly owned subsidiary, Britannia Bulk Plc, as borrower (the "Borrower"), entered into a US $170.0 million term loan facility with Lloyds TSB Bank Plc and Nordea Bank Denmark A/S (the "Facility"), which Facility is secured by twenty two vessels in the Company's owned fleet. Approximately US $158.0 million is currently outstanding under the Facility"

http://tinyurl.com/6qew69

Britannia Bulk to post loss, considers bankruptcy
http://tinyurl.com/6ly8z7

DRYS spiked after hours though they were deep underwater this morning.

Lots of prior support at this level but with velocity of downturn will probably see them lower...

"Baltic Dry Index Drops Below 1,000 for First Time in Six Years "

http://tinyurl.com/55dx42

"October. This is one of the peculiarly dangerous months to speculate in stocks in. The others are July, January, September, April, November, May, March, June, December, August and February."*

Mark Twain, Pudd'nhead Wilson

Hi,
I have been reading up the blogs in this site for a few months now and enjoy the honest discussion thats going on plus of course Bill's take on the market.

I trade mostly options and have been doing it for over 5 years. I know the basics of options and execute simple strategies & want to develop on that. To the options traders here - Do you guys have any suggested readings plus tools that you use?

On a side note, my 401K which i did not manage actively is down 44% YTD but my trading account(mainly options) is up about 60%, though the size of the 401K is much larger. I guess I learnt my lesson, I need to pay attention to my 401K more closely.

BTW, CDNS tip someone gave on this site is really interesting, being a top EDA player, it should bounce back up once their earnings story is sorted out.

I'm gonna guess tommorrow's rate cut won't matter. If the FED cuts it will be spun as increased spreads helping financials. If the the FED holds it will be spun as a show of strengh against a myriad of collapsing currencies. I believe this is an attempt at pandering to the electorate, don't want to send the voter to the polls in a sour mood, fake bottom with some recovery. This will likely collapse sometime after the election when the exitement and uncertainty can give way to an attempt a risk pricing from a fundamental approach. Not that transparancy has resumed enough for this to even have remotely become possible.

Shiva,

re options studies, the thinkorswim.com site has a lot of freely available reading material.

they also have a lot of really snitzy advanced tools in their trading platform - none of which I use, though I do like to look at it occasionally, being a math-geek type by nature.

Imho you simply can't as a private individual compete successfully against the market makers' trading systems in more complicated strategies.

The simple stuff works fine however, if you have diagnosed the trend (or lack thereof) correctly, and stay reasonable.

Pappdjavul,

Thx for ur suggestion. I will look into that...

I also came to the same conclusion years back about sticking to simple stuff but vertical spreads could be useful in reducing risk on the premium (capping the upside ofcourse). I am also interested in strategies related to +/- in implied volatility (more like buying puts on VIX few days back). Have to try out those trades slowly...

I agree that market trend & stock trend (or lack thereof) should be the leading factor.

Ashraf Laidi weighs in on yen intervention:

http://www.ibtimes.com/articles/20081027/yen-intervention-will-not-work.htm

Certainly seems to have all of the theory down, but the charts say at least a month or more of correction on the way in the Yen vs. other currencies, since the power reverse dual currency trade has collapsed.

"October. This is one of the peculiarly dangerous months to speculate in stocks in. The others are July, January, September, April, November, May, March, June, December, August and February."

obviously listed neither in chronological nor alphabetical order...thus likely in descending order, and looking forward to december and february..;)

re:october...july, january...
attribution: mark twain?

Should the Fed decide to reduce rates tomorrow, it will do little to help ease the problem for U.S. consumers and businesses in the next 12-15 months.

They would be better off leaving rates alone.

Just one person's opinion, as always.

gb58- just responding to alexx's 539pm post...

Thank all of you for buying today, especially vinod and Bill!

2nd
Now I feel comfortable and less tension. Raised cash to 50% and cut down YTD loss to 4% because of oex November 470 call I brought yesterday.
Will try to stay at 50% cash going forward, I might lose future gin in stock but tension is not worth it.
Also got rid of all individual stock and kept only ETF like YUG/SSO/USD/QLD/DDM and MOO. Too much risk in individual stock. May buy them for day trade with tight stop
Which I never use before.
I do believe in Bill point of view that if stock purchase today will give excellent return 2 to 3 year down.

THE TW was talking about X as a tell today:

AP) - United States Steel Corp.'s (X:$35.20,00$4.38,0014.21%) quarterly profit more than tripled as higher prices led to record gains in its tubular and flat-rolled steel businesses, but the company warned Tuesday softening demand in North America and Europe will cut results for the rest of the year.
U.S. Steel Chief Executive John P. Surma said the Pittsburgh-based company turned in the most profitable quarter in its history, but warned that fourth-quarter results will decline due to "the volatile global economic climate."
He cited "softening demand and prices for flat-rolled products in North America and Europe." He also said it is hard to gauge near-term prospects because of a low number of backorders.
Flat-rolled steel is a sheet-like item used to make auto exteriors as well as appliances.
The company's production was reduced late in the third quarter to match declining order rates for its flat-rolled and European segments.
U.S. Steel reported net income of $919 million, or $7.79 per share, in the third quarter, compared with $269 million, or $2.27 per share, a year earlier. Profit was lowered by 67 cents per share because of charges for employee signing bonuses under a union labor agreement and environmental remediation.
Excluding one-time charges, a spokesman said, U.S. Steel earned $8.79 per share and quarterly sales soared 68 percent to $7.31 billion, easily beating Wall Street forecasts.
Analysts polled by Thomson Reuters, on average, predicted earnings per share of $7.09 on revenue of $7.2 billion. Those estimates generally exclude one-time items.
In the third quarter, income from flat-rolled products soared to $835 million from $170 million a year earlier, boosted by higher prices.
The company said it averaged $227 per ton in the quarter, up from $78 per ton in last year's third-quarter.
Goldman Sachs (GS:$93.57,00$0.69,000.74%) analyst Sal Tharani said the domestic flat-rolled division "provided the biggest positive surprise, which he had expected to be about $658 million.
Income from tubular goods, used to drill for crude oil or natural gas, climbed to $420 million from $74 million on higher prices, partially offset by increased costs for semi-finished steel. Tharani expected $330 million.
European operating results fell, primarily on higher raw materials costs, lower shipments "due to market conditions" and increased maintenance costs, all of which offset higher prices.
Tharani said results from Europe fell 29 percent beneath his expectations.
"These results reflect US Steel's high sensitivity to steel prices which were up significantly in 3Q. However, we expect a sharp deterioration in US Steel's earnings in the next few quarters due to falling prices and demand, a significant deterioration in Europe, and its relatively fixed cost structure."
Shares of the company rose 6 cents to $30.87 in afternoon trading. In the last 52 weeks the stock has ranged from $30.48 to $196. Year-to-date, United States Steel (X:$35.20,00$4.38,0014.21%) shares have fallen 74.5 percent

Chickenpookie

I am only 10 month old in this market. I kept shifting my view and position
And trying to understand the market. Some of you guy/girl has many years of experience to deal with volatility and sharp downward movement.

I do have great faith and am believer in Bill’s take on market.

Great mind at wall street with enormous resources and inside information and connection are losing big at this point some are force to sell stock of the company they are running and understand the company better than anyone else. In this environment it is hard to stay focus

SLW
Whilst there has been some good analysis on this company the chart currently (IMHO) says "don't touch me unless you are a excellent bottom picker" and how many of them do you know? Granted there is not much more room to fall but you can still maybe lose 50% or more at this point. I use the GMMA (Guppy multiple moving average)indicator on Metastock. When the short term set of MA's begin to converge then you have a warning to get set. At present these MA's are expanding, not converging which means most players remain negative on the stock (not necessarily the company). I already own GG so do not have any interest in SLW at this stage... I'm already suffering enough! Reward favours the patient, these will come back... hopefully before I pass into the big white cloud.

Jay,

Well, I'm basically a longer term investor — sometimes a few months, but I once held Walgreens for ninee years. (Until they began spending so much on new buildings there was not much left.)

A few years ago I read A.Gary Shilling's book, "How to survive and thrive the coming wave of deflation," in which he spells out some general ideas. Reduce financial leverage, Wait for lower prices, pretty ordinary common sense stuff, but his main investing advice is to own Treasuries.

I am currently in treasury only bond funds and ready to jump to the inverse if/when rates are raised. I think Bill's 100 list has so many companies which are getting cheap that I will gradually add to the couple I now own.

Regardless of inflation or deflation there will always be companies for a latter date profit.

XOM, GG are all I have right now. I'm waiting to buy JNJ and MMM and possibly some RRs.

vinod - My thinking is simple. I thought market went up today because you and Bill among some others here, were buying equities. Maybe it's only Bill's buying...

Historical time and sales data information. What site shows this information for stocks? tia

80% bullish, caught a great wave today but looking to get back to the beach to rest. not sure if those clouds are ones that just left or are heading for me.

Watching Asia indices, EU indices, FXY, FXE overnight.

David, as we all know, is a sharp guy; all things being equal, my money would be on him.

Other activities I would not normally advocate include: betting all your winnings on red, chasing down someone who just cut you off, asking for a 25% raise when you have the company by the balls, or betting big against TASR shorts...but I have (and everyone else here has their own stories...has no one here ever quit a boring job/walked out on the boss/hit the road), and when you win/'win', it adds another dimension to your life difficult to achieve any other way..

David is still starting out as a trader, and apparently willing to lose it all (and then some) at this stage...if he wants to shift into overdrive and try to beat this market, I'M not not going to stop him...give the guy a chance...

did i say not not going to? it's not a freudian slip-> based on what i know about him, i'm all for it..

401kmatters,

Thanks for the confirmation of IB's trading platform. It's where I need to be.

French_Canuck

Excellent analysis of the inflation / deflation debate here:

http://www.safehaven.com/article-11688.htm

Here is an excerpt: "... the Fed plans to inject money directly into the economy (it is going to bypass the banks). This will be done via the Commercial Paper Funding Facility (CPFF), which was announced a couple of weeks ago and will go into operation this Monday Oct 27th, and the Money Market Investor Funding Facility (MMIFF) that was announced last week. These facilities will allow the Fed to inject hundreds of billions of dollars, or trillions of dollars if need be, directly into the economy."

If you happen to believe the FED is orchestrating market moves, then yesterday's CPFF tactic would coincide very well with tomorrow's expected rate cut, coming right after having scared Ma & Pa into selling at the bottom just in time for a rally.

Very good Bloomberg interview with Fred Mishkin, recently retired from Fed Reserve, regarding Bernanke's focus on explicit "inflation targeting" also working on the downside to increase confidence in the market that deflation will not be "allowed" or accepted -- unlike what happened in Japan.

Here's the link:

http://tinyurl.com/5ae4gc

As we know David is a pretty good trader while sleeping. I wouldn't do what he is doing (starting at least 3-5% down for the CC$) but I wouldn't bet against him either.

Yes, that was a good interview. Interesting that he was saying Bernanke's fed inflation target would be maintained in inflationary *and* deflationary times alike.

Inflation, Deflation & the USDollar

Richard Russell has said over a year ago that all the dollar denominated debt acted as a synthetic short on the dollar.

From his comment today DowTheoryLetters.com
(Subscription only.)

" What we're experiencing is a reversal of decades of leveraging and borrowing, a situation that's been in progress ever since World War II. In the US, everything is leveraged, backed by trillions of dollars in debt. This bear market is about the years of credit and leveraging coming apart. Cars are owned on credit, washing machines are owned on credit, houses are mortgaged, skyscrapers in Manhattan are owned along with debt, the whole nation is built on credit and borrowing. The immense size of the bond market is testament to the fact that the US is floating on credit and debt.

All this debt must be financed by dollars, and suddenly there's a short squeeze on the dollar. You want to carry your property, then you need dollars, and today dollars are scarce, nobody wants to part with their dollars. This has sent the dollar to new highs."

"Nothing's easy in a bear market, when all the easy credit schemes are coming apart. The international bear market sends economies down to a bare-bone state of deleveraging, down to a state where everybody is again living on cash without borrowing. Shades of the Great Depression."

"The big question on my mind -- will fiat "money" survive the journey toward deleveraging and truth. For fiat money is the biggest lie of all. Fiat money is basically creating "wealth" from zero. What's zero times zero? It's just zero."

His mantra is that the government must "inflate or Die"

The unwind of the carry trade has also created the need for dollars from dollar based investments to convert back into yen. The Yen went up in value 10% in one week. The size of the Yen carry trade is estimated at $6 trillion. As the stock and commodity markets are currently the main source for liquidity or cash... those assets get sold and the dollar gets squeezed higher. This to shall pass on the way to higher inflation which usually takes 6-12 months to appear.

Bernake said in recent comments that the Fed creation of money would be sterilized at a later date thus not monetized... Bullsh*t
I doubt he is telling the truth. The Fed is out of ammo as a long line forms at its window of redemption.

David - Foolish to borrow money in this market to speculate. he market is crazier than ever. When you lose big-time, you'll feel very BAD. Smarter to learn risk management, and start slowly before you try to shoot the moon.

Craig: I think you hit it right on -- Bernanke's going to explicitly maintain the "inflation target" because prolonged deflation like in Japan in the 1990s (unlike thecurrent short-term deflationary pressures from asset deleveraging)is unacceptable to the Fed/government given the implications for stagnation/no growth a la Japan. Better to maintain some "inflation" for price "stability" versus prolonged price deflation.

As Mishkin states, this can be a justification to lower rates even further in the short-term. I think this is helpful to increase market/public confidence in a proactive Fed committed to preventing painful "deflation". However, when the business cycle picks up again in the US and the rest of the world, I don't believe the Fed's "inflation targeting" is going to be able to stop the "explosive" inflationary pressuresthat will be generated.

Japan's Nikkei 225-stock average is up more than 7% in early trading.

http://tinyurl.com/3xr343

Boeing makes a deal
http://tinyurl.com/6ldpn5

So far it seems good news for tomorrow for U.S market

A car for everyone...

"GMAC LLC, the money-losing auto finance and home-loan lender, said it was granted access to the U.S. Federal Reserve's new program to help unlock short-term commercial credit markets. "

So the bailout has spread to cars and hedge funds...

http://tinyurl.com/6yfqxd

Sort of feels like seeing a crack in the Hoover Dam.

fourier123- was it a 9-to-1 day? maybe hulbert will weigh in tomorrow...

Isaiah Thomas? i lost track of him after watching the Pistons win in '89 and '90, and moving to the Bay Area...

http://tinyurl.com/6z457l

sometimes winning it all early in life leaves one nothing left to do...

Companies participating in the plan.

UBS seemed to have the best return today. Others did well, some up 10% or more, giving up gains after hours.

http://tinyurl.com/5rzcfg

"The Fed purchasing power was evident in the commercial paper market that has seen sharp tightening conditions of credit. According to the latest data available on the Fed Web site, 1,511 issues from corporations were completed and raised $67.1 billion. The Fed is assumed to be the buyer of most of these debts. Only a week ago, 340 companies raised $6.7 billion and for the week ending on October 10, 101 companies raised $2.4 billion. "

http://tinyurl.com/6lmpro

Volume stats
http://tinyurl.com/6o4usy

How to apply (FAQ from the Fed)
http://tinyurl.com/5jyfne

For those with an investment horizon of longer than a year, the oil drillers as well as the big oil co that are trading at fire sale prices are an UNBELIEVABLE steal at these prices.

Excerpt from Bloomberg about the upcoming IEA World Energy Outlook report on actual production drops faced by current oil fields:

"Global oil output is falling faster than expected, leaving producers struggling to meet demand without extra investment, the Financial Times said, citing a draft of an IEA report.

Annual production is set to drop by 9.1 percent in the absence of additional investment, according to the draft of the agency's World Energy Outlook obtained by the newspaper, the FT reported. Even with investment, output will slide by 6.4 percent a year, it said.

The shortfall will become more acute as prices fall and investment decisions are delayed, the newspaper said. The IEA forecasts that the rising consumption of China, India and other developing nations requires investments of $360 billion a year until 2030, it said."

Bill's call seems so absolutely right on PBR/SU/ECA. Could we see a drop into the teens again? Who knows?! But in 2-3 years, all three will be MUCH MUCH higher...and I'm not gonna notice whether I got in the 20s or the teens...

Watch for Mexico bounce Nov 1?

"Mexico puts up $4 bln to guarantee commercial paper"

http://tinyurl.com/5hg6a7

Question for Bill/board:

Would appreciate thoughts/perspective on emerging market funds, specifically FXI (China), IMp (India)?

Also, more developed Asian countries such as EWY (Korea) and possibly Singapore?

Too early to start positions? Better potential in the US/Canadian markets for now?

Vinod,
I have considered trading ETFs (exclusively) myself. I finally figured out that I tend to "fall in love" with a company when I buy the stock and it clouds my decision making. I don't seem to have the same problem with indexes and ETFs which I view as vehicles for trading...
MCM

There's been a bit of talk about capitulation on the blog...is it capitulation?...is it not capitulation?...or, as an ode to Vadym, Kaputimutilation!!

Well, would hedgefunds(also, Ma and Pa pullin' money out of Mutual Funds) going out of business be considered capitulation? I realize we're used to the big, seismic, downward whooosshhhh, but, if I remember correctly, sir William had thought the market would drop to 10k or so. Well, I'd say we had a bit of a capitulation(?) below that number. Considering how many hedgefunds had to go out of business, or still have to go out of business, perhaps it's not surprising this has gotten a bit strung out.

Not that I would say for sure, but it might be worth consideration.

I-Card,

I have 19 diversified long positions. Best performing one today, by a big margin, was EMM - ishares emerging markets etf - up + 25.6% (beating out QLD's +20.92%). In my scramble to get a portfolio together for this rally a couple of weeks ago, I couldn't decide on weightings for China, India, etc, seperately, so I decided to bag them all together (like I did with the techs and QLD). EMM's superior performance today doesn't suprise me at all, as I posted about a few days ago.

Nevertheless, my head is still under water as I was way too early and may yet regret it all yet.

Hey CP: I found a dandy! Take a peek at CTSH and lemme know what you think. As to your WAB suggestion yesterday, I love it - it's been on my Watch list for months. Unfortunately my watch list now has over 200 entries now :(

O.K., back to Ringworld Engineers...market behaves better when I don't watch it .

Today is another confirmation of trade what u see, not what u believe.

re:LAMR. Long.

Selectively bullish, waiting for follow thru day while looking at selected issues.

Kangaroo tail reversal (candlestick) a la Elder.

http://www.incrediblecharts.com/technical/candlesticks.php

Just one man's opinion.

365 Hammers in North American Markets today, bsi87.

This satirical-yet-starkly-realistic article by 'The Mogambo Guru' illustrates the disparity between PM futures vs physical. Confirms what I read here and elsewhere.

http://www.safehaven.com/article-11693.htm

Mackinaw - EEM - Great pick! Quite a run today, wow! Do you think there's more of that to come? Looks like maybe yes... CTSH - You'll easily double your money on that one too...

Good ideas, thanks for the heads-up!

I card

A big part of the value of a board like this is to teach yourself. And get feedback on your methodology/trades...if u want it.

Bill and Korvus have put the tools out there. Just google "RSI Korvus" and have at it.

Ah, Mac,

the key is to be selective...RSI 7 day breaking above 30 and Max pain above to exert upward pull.

re:Anchoring

seeing some of this on the board.

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

FC - Yep, maybe that's what Bill's getting at when he says interventionists will eventually loose control.

Has anyone else (especially the chart watchers) started to get the feeling that we are in for a period - perhaps long - of mostly sideways action in the markets with dramatic swings up and down in a sideways channel? Almost all of the charts I'm viewing are shaping up this way.

bsi87 - You move at light speed while I think at the speed of molasses in January.

Chickie,

U get quicker to avoid beatings.

Mackinaw - I think you're correct, we won't see 14k on the big board for a few years but might see 11k in a few months... What's your assessment?

Mac,

I've stated several times that the 50/200 DEMA will act as ceilings.

bsi87 - sage advice! Then again I was always slower than most on my best day. I'm one of those who often suffers from peripheral vision.

David,

I was in a similar position once, where I was out of dry powder and really, really felt a particular stock was dramatically undervalued, much like today, but what I did was borrowed on margin, and then sold my S54 powered M Roadster at a bargain price to sell it quick. Having other sars anyway, it was no big loss, and the stock I bought went from mid $2's to $4 in the next few months.

Anyway, I'd say "no guts, no glory", but if it were me I'd take steps to reduce debt exposure, perhaps by selling little used assets, thus avoiding needing to unload shares at silly-cheap prices.

Looking at some more charts this morning, this rally could easily take the S&P back up to 1150 or more in a very short period of time.

Even for the skeptics, it's certainly a tradeable rally for this inclined to trade that way. Those holding bearish ETFs and shorts should look to get out of those positions promptly, if they haven't already.

I'm not ready to proclaim this as "the" bottom just yet, because I'm of the opinion that the economy will be worse than what the markets reflect.

That said, it never pays to fight the tape.

Just my opinion, as always.

bsi: Thanks for the link.

Trying to do my own DD but time-restricted from my "day-job" :-)

With regard to emerging markets, my hypothesis is that the eventual worldwide recovery is more likely to be "outside-in" and be led by the emerging market/Asian nations than the US this time. Multiple factors for this including low savings and likely continued drag from consumer retrnechment. If this is true, emerging market funds would seem to represent better value than US markets at some point. The question is, is there more to go with fallout in the EMs in the near term from the cedit crunch... Just not knowledgeable about the fundamentals of this argument and was wondering about perspectives from those more informed.

FWIW, both EEM and EWY both triggered RSI buy alerts, although there seems to be a bunch of those on the CARA 100 yesterday :-)

Mackinaw: Thanks for the heads up on EEM. Actually bought a bit 2 weeks ago at north of 25 and still underwater but regretting not buying more the last couple of days...

On one hand this, on the other hand that.

Just one man's opinion.

bsi87

Who are you directing that to ?

If the shoe fits...

My watch list this. RSI 7 day below 10 or nearby

KNDL,CGX,CVD,LAMR,MEOH

CP asks: "EEM ... Quite a run today, wow! Do you think there's more of that to come?"

It wouldn't suprise me in the least if it gave back all the +25% over the next little while - perhaps even in one day. Fundamentally, though, I would imagine its current price will, eventually, prove to have some value.

congrats to the bulls on a good day. if there's follow though today and tomorrow, I may join in the festivities but so far, IMNO, (N stands for naive and iNexperienced) the trend is still down, incl SLW. Good luck!

Mackinaw - your 12:12am - trading range?

I see what you are saying about the possibility of a trading range pattern developing over the next several days, but when I look at the weekly patterns, using SPX as an example, I see decending highs with a near horizontal bottom pattern, a descending triangle, which is a bearish trend continuation pattern - which works until it doesn't. I would not be surprised to see stops run out the top of the triangle, but beyond that is the question. Obviously, with an election coming up, we might hit that 50/200 dema ceiling mentioned in another post.
+++++++++++++++++++++++++++++++
OT -- Whatever happened to "It's the economy, Stupid!" as a campaign slogan? Candidates must be afraid that the general public now knows more about the economy than they do. jmho.

Mackinaw - Here is a link for you on that triangle I mentioned:

http://tinyurl.com/66ensg

bsi87

The unwillingness to change one's views (sometimes very quickly) when operating in the markets, can lead to serious financial loss.

While I don't think we're out of the woods by any stretch, yesterday's market action was very significant, at least for the interim period.

I'm not sure why you have an axe to grind with me personally, but so be it. I'm certainly not here to make enemies; but rather to glean the valuable nuggets of information that are dispensed daily, and hopefully add something of value in return.

CP,

That's a pretty bright and dazzling green you saw coming!

Good morning.

Here are your Cara 100 Ratings Changes:

JNJ - Downgraded to Neutral at JP Morgan

Anchoring? I have both hands over the sell button.

no one saw that rally coming. but 800 pts is 800 pts

RIMM -

Good morning. Did anyone see the premarket action on RIMM earlier at a range of 57-59? Is this option related?

ToddinFL- as another Todd (Harrison) would say- "...always honest." appreciate your views, and i agree that one mark of a good trader is the ability to adapt to sentiment changes, which sometimes means switching sides on a dime...

speaking of 'marks,' i don't which way the market is headed right now, but IF it's headed up, the 'mark' of a true rally will be to leave the majority of those on the sidelines remaining on the sidelines...if this rally hits 1150, the bulk of the move will most likely come near the end, fueled by the same...

GFI gets the Buy @ UBS

SLW is up premarket to $3.30. will watch and be ready to sell if it goes 2.95

"the 'mark' of a true rally will be to leave the majority of those on the sidelines remaining on the sidelines"

Matches exactly our early description of the most probable scenario, doesn't it? Part of it was big gaps and quick violent upward moves - all dikrected at moving up with as few on board as possible.

Todd

I will focus on what I see. The Triple RSI screens I use on ETF's including bull and bear ETF's, have shown the bull etf's in accumulation and/or buy mode. The bear ETF's have been in distribution or buy mode. VIX/VXN have gone above 70 several times then dropped. The number of Naz/SPX stocks trading below their 50 day MA's have been below 5%. The DJIA tested the Oct 10 low (kangaroo tail) around 8100. The national news magazines and evening news shows have lead with the stock market as their lead story (what everyone knows isn't worth knowing). Our host has turned bullish.

Whether the bell was ringing at the bottom and whether it is THE bottom, it is difficult to say. However, it is a tradeable bottom IMO. To continually urge caution after the DJIA has dropped 6000 points over months is shutting the barn door...after the horse is gone AND the barn burned down.

Post your picks, long or short. Post your methods. Post what will change your mind. We know about the markets.

Many of the commodoties seem to be up premarket so far.

You guys have different time horizons and trading styles from what I have observed, so there is little point in antagonism, right?

You both add a lot of value to this blog and I thank you.

I'm glad no one noticed my post from 10:53 a.m. yesterday. Yes, that was me executing a losing trade just ahead of the turn in what would prove to be one of the biggest market rallies in memory.

Granted, it was a small loss as I have reduced my size significantly and tightened stops as I struggle to regain my footing. But the opportunity lost was significant.

It's been that kind of trading for me lately. But I've dusted myself off, reviewed my trade and found my errors, and now I look forward to doing better the next time.

I have no other choice.