Interesting charts, Bill.

The first one especially (1975). Eeerie how the recent gyrations aline almost perfectly, albeit with today's swings having more volatility. Also, the first one suggests we might have a wee bit further to drop if history is going to repeat itself, doesn't it?

I sure hope you're right Bill...one would think that all the bad news and fear would be baked into the prices already...

anyone have any thoughts on how low oil can go? Below 50 will blow my mind...

The avg price of oil for the last 8 years has been right at $50. I think it could drop below that level for a little tiny bit. I will being buying DXO if it does.

Good morning.

Here are your Cara 100 Ratings Changes:

TOT - Downgraded to Hold @ Citigroup

INTC - Price Target Lowered from $19 to $17 @ Friedman Billings

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

Today's Market Music:

http://tinyurl.com/5nmyam

I think we see a ST tradeable bottom here.
Most traders will be covering their shorts and selling ultras into any strength at these levels which should provide some upside for a bit.
I posted selling SDS yesterday afternoon but I was apparently tired or something as it was QID I sold for $85, overshooting 5% afterhours.

Everything I was nibbling yesterday is looking good this AM, BA/BAC/CAT/GG/GLD/GE

Watching UYG today.

Good luck to all today.

One often finds such good correlations when one allows curve fitting e.g. via chosing the best start date of the individual series. In March/April 2007 there were many such premature correlation plots for the chinese markets in comparison to the Nasdaq bubble in 2000. But the evil chinese stock market ignored these correlation analyses ;-) , continued climbing and gained further 50% before the collapse started.

CARA 100

Classic Patterns Screener

ABV AmBev Continuation Wedge (Bearish) $43.10 $29.00 - $32.00 Short-Term Bearish

AET NEW YORK Aetna Inc Descending Continuation Triangle $21.81
$7.00 - $10.00 Intermediate-Term Bearish

CVX NEW YORK Chevron Corp Symmetrical Continuation Triangle (Bearish) $67.28
$47.00 - $52.00 Intermediate-Term Bearish

DIS NEW YORK Walt Disney Co Descending Continuation Triangle $20.16
$14.00 - $15.50 Intermediate-Term Bearish

GGB NEW YORK Gerdau SA Continuation Diamond (Bearish) $5.93
$1.80 - $2.60 Intermediate-Term Bearish

NUE NEW YORK Nucor Corp Continuation Diamond (Bearish) $30.63
$17.00 - $20.00 Intermediate-Term Bearish

SU NEW YORK Suncor Energy Inc Continuation Diamond (Bearish) $19.02
$9.00 - $11.00
Intermediate-Term Bearish

XOM NEW YORK Exxon Mobil Corp Symmetrical Continuation Triangle (Bearish) $68.93
$51.00 - $55.00 Intermediate-Term Bearish

ATVI NASDAQ Activision Inc Flag (Bearish) $11.18 $8.60 - $9.10 Short-Term Bearish

LLTC NASDAQ Linear Technology Corp Flag (Bullish) $21.27
$26.00 - $27.00 Short-Term Bullish

Long;su

imo - oil

i am thinking it could go to prices similar of that from 2001-2003.

another $20 give or take $5. So $35? give or take...

Gartman was on Bloomberg saying he thought oil had overshot on the downside already. Not that I put any creedence in talking heads.

Bill

Another Ry Cooter song is also appropos: "How can a poor man stand such times and live."

[Bill Cara note:

Anybody in this world who has good health and no debt is not poor. If they jobless but have prospects of employment, they are looking ahead at the wealth that can be made, and singing, "Let the good times roll!" Not being in debt and having my health, I'm in a position to be able to see that the glass is half full and soon to be filled to the brim. I feel badly for those who are not in the same boat, watching the tide come in.]

Anyone watching Steven Colbert last night (doing reasearch) would have seen T. Boone Pickens calling for $100 oil in the not too distant future.

Duh? On Jon Stewart's show....

sticking in a bid for SU at 18.83 pre market, do your own homework. Looking at 10/28 action.

Jeez, Boone talking his book...again?!!!

He won't have any money left to buy some players for Okie State. LOL

Actually it was a really good interview and I didn't get the feeling he is talking his book so much....as he says, he's 80 and will make it to the end without any more money.

To be honest he kinda confirmed what I was watching you do yesterday bsi....scaling into the upside. I don't use those direxion etf's but I was checking out your posts.

Craig,

My guess could be way wrong but my gut says so. Oil may retrace up some but by this time next year, i would think my guestimated target could be hit.

Are those the same pundits that called for oil $175-200-300 that have a vested interest in the price increase?

All those figure heads don't realize how helpless the world (central banks) is to the "great unwind".

UK saying they will go to ZIRP (zero interest rate), that we could add them to the list of Japan, USA and who knows maybe the EU will join the party. How many % of GDP producing nations will be at ZIRP? USA, EU and Japan have to at least be over 75%.

With a fiat global regime, Deflation/De-leveraging/Debt Unwind is upon us.... The bankers can't do anything about it.

This will be very helpful to those who are not in debt. Everything will be on sale. Price paid in the past 5 years are way to inflated and high, time for them to go down.

We need a job plan, YESTERDAY. Helllllllllooooooo Someone in washington, JOBS JOBS JOBS.

re:Boone

He was on 60 Minutes couple weeks ago. He admitted that his energy fund was down big time. He's been on CNBC predicting oil prices higher than current market, never that they'd go down.

He can say all he wants about not needing the money BUT he had the Okie Stadium named after him. He's a product of the Depression and from close observation of people from that era, he is in it to WIN. Don't fall for that "I'm a poor country boy, just trying to make my way in the world." jazz.

Cara 100 Update:

Beat up on Intel Day.

Price Target Lowered:

INTC - from $27 to $20 @ Stifel Nicolaus
INTC - from $24 to $16 @ Wedbush Morgan

take the $350 billion left from tarp and make some friggin jobs!

claims 516k... hopefully we still go up today.

CP,

Whenever I started a design project, an ad, a brochure, and annual report — I would try to simplify things as much as possible.

What is the result desired from the audience?
What can we offer the reader?

In other words what's in it for him and what's the cost for us?
What does it take to create a win/win situation?

Selling our bonds:

We want foreign countries to buy our debt — we offer IOUs (Treasury Certificates) in return.
These certificates are redeemable for more paper IOUs (US dollars).

We are doing our best to dilute the value of the certificates which they already have bought.
The dollar is held in the lowest esteem ever. There has been nothing tangible behind the dollar since Nixon removed silver from the equation and we have been relying on "In God We Trust " to deliver trust in us.

With the US reputation at around congressional and presidential levels, we need to offer something besides more paper promises.

How about a billion toasters?

Holders of US debt are already redeeming some dollars for US tangible assets — US companies. Now many of those companies are falling in value. Perhaps China will want a deal on coal, or grain... but Treasuries?

Grym,

Our debt should be bought for a few more years. Just on Obama's good will alone. (i did not vote for him, wrote in my vote).

as a nation we were bankrupt 3 years ago.

If china does not buy our debt, they will have a access of liquid capital in their country and have super inflation, now if they have nothing to export to us because we can't afford crap toys. They wouldn't have much incentive to buy our debt.

It shouldn't be a problem, besides ROW will have little choice but to get the engine of the world running. If USA, EU don't pull out soon, nothing else will rise.

enjoy your day!

How many of these cycles do we have to go through before we realize we're not making anymore oil? Everytime we get to their induced breaking point they pull some magic demand destruction or they destroy the economy with $150 oil and bash us back down to a level that get's us to take our eye off the ball.

This is a great place to get long oil and hunker down if you have some time. Like you say, it has a $50 average..... but look at any long chart of oil or any of the biggies like Exxon.
There is NO DOWN on a long chart.
I hold out hope everyday that XOM comes to me just one more time in the upper 50's....I have every HD vehicle I own ready to load up.

tango6- appreciate the encouragement...

I was just looking at an interseting pattern in the $hui this morning, perhaps a pipe dream but it certainly happened before.

http://img148.imageshack.us/img148/929/fractalaa5.png

bsi87, I judge herding trials...I've already heard every poor southern boy and his story, several times, WITH his dog, IN Oklahoma. I'm not saying the guy isn't acting in his own best interests, he's a human being, right?

Cara 100 Update:

Downgrades:

DELL - Downgraded at Goldman Sachs to Sell from Neutral based on expected deterioration in margins and earnings. Company remains highly dependent on hardware sales and pricing, both of which will suffer as demand continues to erode. Price target cut to $9 from $14.

JCP - Downgraded to Equal-weight from Overweight at Morgan Stanley due to dramatically weaker sales and margin outlook and higher pension headwinds. Morgan Stanley now forecasts $180 million in pension expense in FY09. Factoring in double-digit comp store sales declines through 1H09 and the pension expense, revised fiscal 2009 EPS estimate reduced to $1.40, 38% below consensus of $2.27

Numbers Cut:

COST - estimates reduced at Morgan Stanley due to a lower comp expectation and forex headwinds. Morgan Stanley is $0.14 below consensus and believes management will have to lower full-year guidance when they report on Dec. 11. 1Q09 estimate is $0.64 vs. consensus of $0.62. Maintain Equal-weight rating.

INTC - estimates reduced at Morgan Stanley but Equal-weight rating maintained. Morgan Stanley forecasts revenue decline of 11% in 2009 and gross margin decline by 1,100 bps by 2Q09. Intel estimates and price target reduced at BofA to $18 from $24. Revised CY09 EPS estimate is $0.80, down from $1.42 previously. BofA maintains Buy rating due to the belief that the current stock price represents tremendous value.

Oh, the humanity!

hey, DowN futures are up..;)

Bill and others: Who would you like to see taking over the Fed/Treasury/SEC under Obama? I fear that he's getting advice from foxes who want to continue their dominion over the hen house. I hope there are enough people around him suspicious of Paulson and his cronies.

[Bill Cara note:

I'd like to see the Pres-elect make a statement that he is bringing in the team of Volcker as Chairman (and chief strategist) and Summers as CEO (master tactician) of the Office of the Treasury. If I see Corzine, Rubin, Bair, or any of the Fed people in there, I'll puke. BTW, Bob Rubin did a marvelous job under Clinton in the early years, so I ought not slam him, but the old crowd we don't need. Summers knows the job and is young and clearly brilliant. He would be best. Yes, even a Harvard economist! But back him up with Volcker to make sure he doesn't get too much pressure on him in the crucial early quarters.]

is this a bull trap?

re:CEO/investors on TV

When they have time to be on TV, it's time to worry. Certainly I'm much happier to go long oil and oil related stocks now compared to 150.

[Bill Cara note:

Agreed. A CEO does need to be a leader, and to do that needs a public profile. But when you see them constantly making the rounds you know they are leading an IR entourage. The big issue that I see is that no CEO should discuss the newly released financial reports. That's a job for the CFO. The CEO is a salesperson, and gets into conflict of interest by putting lipstick on a pig. If it's a pig, then the shareholders and other traders need to know it's a pig.]

"Seems to me that when all the world is in the red, China's up, and when we had that last rally, day after day, China was, each day, in the red. Is this what happens when your government conspires to restrict your information exposure to the rest of the world?"

Mackinaw,

Maybe it's because red is a good colour in China.

http://everything2.com/e2node/Chinese%2520colors

Red
The usual word for the color red is 紅 hóng. It is the color of success (開門紅 kāiménhóng "off to a flying start", 生意紅火 shēngyì hónghuǒ "business is booming") and of communism (紅心 hóngxīn "loyalty to the communist cause", 紅軍 hóngjūn "The Red Army") and honor (紅榜 hóngbǎng "honor roll").

FXI seemed to go down just as well as anything else yesterday...

RSI commodity screen

JJM, USO, FTY, FIO, OIL, COW, DBC, GSG, DJP

all in accumulation mode.

Long GSP

Craig

Been watching oil also. It overshoots on the updside and overshoots on the downside. Cause? Probably the hedge funds on the way up and hedge funds liquidating, meeting redemptions, margin calls on the way down. IMO.

Sold some XOM Jan 70 puts back in Aug and am ready to have shares put to me @ 66 handle cost. If not, will pocket.

Also watching OXY here and may nibble.

FWIW, Yesterday saw one of those Jefferson County, AL muni bonds I mentioned. Yielding more than 9%, duration @ 2 1/2 years. Buyer beware as alluded to in the past. It was gone later in the day. Just my 2 cents.

Bull Hunter - Just for you http://tinyurl.com/5ezxdy

wavesmash

If you check the Shanghai market, red numbers are positive. Green means negative.

teamonfuego- i don't know if there are any bulls left to trap...

Anyone know why yri.to is performing so poorly?

TCK
As an example of how brutal Research is from the Banks and Independants look no further than the changes after the close last night:

DJ 7:57 *DJ Teck Cominco Tgt Cut To C$17 From C$23 By Natl Bk >TCK
DJ 7:48 *DJ Teck Cominco Tgt Cut To C$11 From C$25 By TD >TCK
DJ 7:39 *DJ Teck Cominco Tgt Cut To C$9 From C$27 By Canaccord >TCK

Once again there has been zero change in the near term for the Co. but since the stock has cratered on shorting and fear, Analysts jump on the downgrade 2 weeks after the fact. If there ever a better reason than now to buy TCK let me know.

Thanks, JohnE.

Used to perform that one years ago. Great tune.

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

Hershey Foods to debut new product, Unemploy Mints.

j/k ;^)

and of course, offering red envelopes to the right people at the right time will ensure a seat at the right table...

2nd - i've heard plenty of them on BSNBC.

putting a bid in on NM for 1.65, for ABK at 1.25, for TRLG at 11.50, for UYM at 13.50

Carryover from yesterday:

Yes, tight stops can necessitate re-purchase, often at as high or a higher price. I calculate the matter in the following manner...A round turn is 14 bucks. A 30 cent loss on a thousand shares is 314 dollars. For the price of a 30 cent loss (5 % on a 6 dollar stock) You can get stopped out at a 6 cent loss 4 times and still be ahead of the game, re-buying when the scenario becomes more favorable.

I guess today's the day we break S and P support.

Adios dinero huevos!

IEA cuts oil demand forecast http://tinyurl.com/633f3l

Cara 100 Update:

The carnage continues:

DELL - Downgraded to Market Perform @ BMO

Price Targets Lowered:

AMAT - from $16 to $9 @ RBC
INTC - from $18 to $12.50 @ AmTech Research
INTC - from $16 to $9 @ RBC
NOK - from $24 to $16 @ RBC

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

"Somebody stop me !" - Jim Carrey

Saudi's take large gold delivery...

There has been an unprecedented surge in Saudi gold purchases in the past two weeks with over $3.5 billion being spent on the yellow metal, reported Gulf News citing local industry sources.

Gold market expert Sami Al Mohna told the leading regional newspaper that this buying had substantially increased the gold reserves of the country: ‘Many Saudi investors see this as the right time for making investments in gold as the price is the most reasonable one at present’.

He said gold was seen as a traditional safe haven at a time of global financial turmoil. Gulf regional stock markets have fallen very sharply since early October, leading to an exodus of cash which needs to find a safe haven.

News about the Saudi gold rush is bound to fuel speculation about the alleged large physical gold transactions that have been taking place at prices will above the spot price set in the futures market. It is very unlikely that such a large hoard of physical gold could have been bought for the depressed current price.

http://tinyurl.com/6gln89

long SU at 18.82

sold FXI Nov puts at $3.1 that were purchased at $2.80.

Filled ABK at 1.25.

Every day is the same now. The only trade that works is selling the open.

I tried DDM again, thinking we might move higher before reaching 8000 on the Dow. Wrong. I was stopped out in less than a few minutes.

I'm living the definition of insanity.

bsi87 on SU...where is your stop? Support @ $80?

God my lisdexia is kicking in today...at $18?

Oh my - RIMM just cracked 40.

[Bill Cara note:

It's on its way to being a core holding in your portfolio! This is the 800-pound gorilla in personal communications, and last time I looked, I saw that people still have an essential need to be connected.]

long SPWRA at 24.30. Hourly divergence on MACD

Do your own homework.

Merger news! Pet Rock and Chia-Pet - The economy is in rough shape this year folks, so this Christmas' most favored gift is rumored to be the new Chia-Rock!

[Bill Cara note:

Can anybody [biz schools speak up!] think of a better business model than Chia-Rock? Simple concept, inexpensive, makes all customers happy, good margins, solid brand... wow! Compare that to Wall Street and their engineered products, fraud, customer wealth destruction, financial losses, and now worthless brand... wow!]

I see many opinions posited on the price of oil. Not one mention of the DOE's report today. That may have something to do with prices? Ya think?

NOrm... Yesterday Art Cashin said he was an oil bull at 55. No offense Norm, but I don't even know your last name, although your first one is all over the blog today.

While your call on 20 oil is daring, this is not 1996. Russia is not collapsing and OPEC, as well as the rest of BRIC are using an additional 10, 15, 20 million barrels a day? You tell me. btw OPEC has called an emergency meeting for the 28th and the IEA is calling for a trillion a year investment to maintain supply. The part where the depletion is mentioned at eight percent has been suppressed, after it was leaked.

SU low on 10/28 was 17.83. Something just below that. I took a larger than average position since my stop will be tighter.

Just bought a ticket on the whipsaw express for UWM.

iffa woulda coulda trade. CBG. On my list but I was out after 3PM.

Come on kids...let's cover those shorts and drive north!

[Bill Cara note:

I get the point, but there is snow in the Great White North. Today in Bahamas, it's 86 degrees and sunny. From my house, I can see... looking north... the ocean beach just 100 feet away. I'm waiting for T-Bills/Bonds/$USD to fall and equity volumes to lift before I want to "drive" anywhere. Today, I'll just be nimble, thanks.]

Market has reversed and this time it looks real.

I hope there's someone in Washington keeping an eye on Henry Paulson. If he goes near a microphone, tackle him.

[Bill Cara note:

Watch the bond/bill yields and the $USD. Watch the volume! Also, the big miners, oilers and gold/oil are also tells. These are important factors if you have an intermediate term time horizon, ie, up to 1 year.]

UUP heading down...hand in there Dr. Cosa!

Throw a TARP over him!

bought Nov $10 Calls on DRYS avg $1.19.

sprint made my day.

something fishy about the crude futures, up up up since market open. who got the inside scoop on the DOE report?

[Bill Cara note:

The US equity market shot up at precisely 10am ET. The DOE report is not out until 11am, right?

XOM Exxon and CVX Chevron, plus the Big Pharma Merck, Pfizer and Johnson & Johnson are very strong.]

IMHO -- Trying to figure out a bottom price for oil is not a rational exercise because the price has risen and fallen so rapidly due to market forces which are exaggerating the macro-economic forces.

I remember just over a year ago blogs saying it could go to $100 if we bomb Iran and then the Iranians close the Straits of Hormuz. It seemed a crazy hypothesis at the time, but it didn't even take that for the price to go much higher! So now, who is to say that it isn't going down to $20, due to the same crazy market forces?

However, even with deflation, oil is going to be in demand, there simply isn't any energy source that can compete with it until it goes well north of $60.

The conspiracy theorist in me says that somehow the OPEC nations traded heavily in oil markets to drive the prices up to $146 to their own benefit. Perhaps they even had to unwind those positions much more rapidly than they anticipated -- and that at least would be some measure of justice!

So to me, an interesting discussion is what are the market forces that are causing this? Is it hedge funds, sovereign wealth funds, the advent of new trading exchanges? And how much longer will those forces going to continue to widely exaggerate the price swings of oil?

ok, i'll admit. i was very bearish the past week and a half since the election. but i'm becoming more bullish after seeing this price action. maybe i'm stepping into a bull trap...

Norm,

I don't think people are going to give Obama that long a honeymoon. Too many are in dangerous situations, no job or threat of loss, upside down on houses, cars, and smothering the credit card debt.

Obama is already modifying his economic promises and I expect him to modify his defense views now that he sees the daily briefing. I gave Bush a lot of slack due to this daily downer and will also for Obama.

IMO what we have been trying as a remedy is too short sighted. Granted, emergency measures are needed — unemployment extensions, perhaps. But unless a longer term jobs creation is started soon I see only increased downside for the economy.

Trying to get consumers to reignite their credit binge is folly. A massive, coast to coast infrastructure rebuilding might do it.

I understand Eastern European countries are in worse shape than we are. The fall of the Wall added a huge retirement and health care load to the EU.

long USG at 9

Has anybody noticed that MSFT is hitting a 10 year low today? Does anybody care?

Illini - While I think MSFT could bounce here I think the long term competitive advantage for them is waning. A lot of their products are going online and will eventually be offered for free, opening up the possibility that computers may not have the Office Suite installed on their computers in the future. Just look at Microsoft Outlook. Gmail and several other online programs offer essentially the same thing. One of its saving graces is that it comes with the rest of the office suite.

Yes, scaling into MSFT.
Also small spot of INTC. Decent div...

Also, just to let everyone know, my dreams have taken a serious hit lately.....

Kendra has a new boyfriend and Holly is moving out of the mansion.

AMAT also at 10 yr low and INTC is pretty darn close. I own both.

loaded up on more DRYS calls. this (to me) has one of the best potential return/risk ratios out there...

yvrapx at 9:38am Re TCK

Agree when the downgrades come flooding in from all directions, I think the institutions are looking to accumulate but need to scare out some more shares.

I sold some Feb 09 $5 puts yesterday for $1.55, looks like I could get a better price today. They started $5 strikes for Nov and Dec yesterday and today I see $2.50 strike for May 09.

Interesting thing is, looking out longer I see some action on the Jan 2010 calls this morning, 100 contracts traded just after 10AM for both the 30 and 35 strikes, at a price of $40.50 and $35.50.

?? Somebody paying $405K to buy 10,000 shares at $30, their breakeven price is $70.50 per share. Now maybe its the same guy setting up some kind of spread, but thats alot of money at a high future price.

AM I MISSING SOMETHING, comments please.

thanks Quasi

MS is also a lender, financing the purchase of software and hardware...

Took off my $19.95 stink bid yesterday after hitting UAUA.

How about buying something "no money down and no interest for 3 years?"

http://tinyurl.com/6p986t

Like the cell phone manufacturers, customer retention is key.

There is a cell-phone driving law coming into effect up here which could have impacts on mobile devices... not to mention the fact you can get an iPhone or smartphone that one-ups the Blackberry with the "wow-factor".

GE seems to be turning from infomercial price to k-mart blue light special.

UAUA recovering... still stinkier than my stink bid yesterday.

RSX anyone?

2nd Ave///GE is a good place to double down on here..half the price you paid for in April...purfect for your 6 year old....so is fxi by the way...gotta catch up to that post olympic meltdown....

long FMCN at 6.90

Sigh ... ok, what now? Just got a minor cliff dive on the ultra bulls.

crude storage flat, rbob up 2 million, distillates up half a million. futures reverse down 2.5%

BRKB - easy money or are their fortunes tied to GE. The wave that bowled this one over Oct 6 was huge.

Why Warren took the initiative at $18.50 I guess we'll find out next year.

Holding my 1 share hoping they hold the next annual meeting someplace warm and sunny down south.

DOW [YM] looks like break of overnight range and test of 8000 on deck...Another symmetrical triangle break on the daily and weekly from yesterday.

"A lot of their products are going online and will eventually be offered for free, opening up the possibility that computers may not have the Office Suite installed on their computers in the future. Just look at Microsoft Outlook."

Gmail only replaces Outlook's e-mail - and e-mail is intrinsically an internet service, so having offline never made that much sense anyway.

But there's no way I'm going to log on to some "free" service with ads popping everywhere if I'm going to write word processing documents or spreadsheets. The lag and delay from all the processing just makes the user experience horrible. Do you imagine refreshing a web page each time you need to do a spell check?

Until we get internet 2.0 with an order of magnitude more bandwidth, offline software is here to stay.

CAE INC (cae)(cgt)...Flight simulation and pilot training company
cae inc holders...some good news out there

- Thursday, CAE Inc. (CGT: News ,CAE.TO: News ), a provider of simulation equipment and services to the aviation industry, reported an increase in its earnings for the second quarter, driven by increased revenue across all its business segments.

The Montreal, Canada-based company reported second quarter net earnings of C$48.7 million or C$0.19 per share, higher than C$38.9 million or C$0.15 per share a year ago.

Earnings from continuing operations for the quarter increased 25% to C$48.9 million or C$0.19 per share from C$39.0 million or C$0.15 per share in the prior-year quarter.

Revenue for the quarter increased 15% to C$406.7 million from C$353.9 million in the same quarter of last year.

Revenue for Training & Services/Civil segment increased 20% year-over-year to C$108.2 million, primarily due to the contribution of additional Revenue Simulator Equivalent Units, or RSEUs into its network coupled with the integration of results of its two acquired companies, Sabena Flight Academy and Flightscape.

Simulation Products/Civil segment generated revenues of C$114.3 million, a 2% increase over last year, owing to higher number of orders. Revenues for Simulation Products/Military segment rose 30% year-over-year while Training & Services/Military revenues increased 7% from prior-year.

Further, the company declared a dividend of C$0.03 per share, payable on December 31, 2008, to shareholders of record on December 12, 2008.

In addition, the company appointed Marc Parent as executive vice president and chief operating officer, and as a member of the company's Board of Directors, effective immediately.

Looking ahead, the company believes that combined with the benefits of geographic diversification, the split between civil and military markets and the balance between products and services, it remains well positioned for the future. CAE continues to see opportunities for growth in most of its core markets and adjacent markets.

CGT closed Wednesday's trading at US$5.10, down $0.25 or 4.67%, on the NYSE. CAE.TO closed Wednesday's regular trading at C$6.47, down C$0.09 or 1.37%, on TSX.

by RTT Staff Writer

Shares of Intel Corp. (INTC), already down 16% in November, hit a 12-year low Thursday before rebounding into positive territory as Wall Street digested the semiconductor maker's dramatically reduced fourth-quarter revenue forecast and talk of "significantly weaker-than-expected demand."

from DJ News at 10:34 ET

PBR - In at 21.55 and averaging down STO again. Happy Trading

GE was @ 14.66. Did they announce the end of the world?

SV

CAE results were good and even better than I expected. But this is a bear market so I dont expect any gain.

Regards

Muzie - Cloud computing? Sure, gotta keep the target moving ya know...

Chia-Rock has a lifetime guarantee, will not rust, bust, chip, peel, or hurt the baby in any way! (extruded version has no inside, rendering it completely harmless)

Those TCK LEAPs are not for 1 contract of 100 shares, they're for 24 contracts (2400 shares underlying). Works out to about $1.70 an option for the $35 strike (weirdly enough).

Quasi
Re:TCK
Not an options dude but your math is spot on. What I think a lot of 'investors' are missing is two-fold
1)Met coal is the steel makers choice (Elk Valley is the absolute best of the best) and will enjoy a premium to whatever price is agreed on going fwd, the key is agreed as met coal(any coal for that matter)is traded like U308, off market, 2) TCK has been an early stage investor in FDG as they parachuted their CFO in when they bought in after the CP breakup they know this company and this market.
The more I see the immense stupidity of the herd and the opportunist shorts I see TCK as being a stock I want my 6 month old to own in his RESP.

this from Vitaliy N. Katsenelson, CFA

He does good research, thought some might like to look into:

AmEx as a Bank Holding Company

AmEx becoming a bank holding company (BHC) is not just net positive for the company it is simply positive. When a highly leveraged investment bank like Goldman Sachs turns into a BHC, its future profitability suffers as its leverage drops to commensurate level of the bank. Lower leverage leads to lower profitability.
AmEx on another hand, though not regulated by the Fed, maintained a capital structure very similar to a bank - it securitized its credit card portfolios and market participants demanded bank-like leverage ratios. AmEx’s profitability will not be altered by becoming a BHC – so no negative here.

But here is a very significant positive - it will be able to borrow from the Fed, paying a puny 1-1.5% to fund its credit card portfolio. AmEx becoming a BHC removed a liquidity risk – a risk that AmEx will not be able to fund float and provide credit in its credit portfolio.

Fed funds and discount rates will not stay at these levels forever but an increase in the rate will coincide with an improved economy and stabilized credit markets and thus AmEx will not need the Fed anymore.

I did a fairly in-depth analysis of AmEx in March 2008, though many things have changed since the thesis has not changed that much.

Muzie:

Re: Microsoft

Bill Gates has been selling off his stock of late. Also, you can download open office-it does basically everything office does without pop-ups.

EEM- good memory...if only i could;; he's already loaded up on a mix of stocks/ETFs...

by the way, if this is indeed a bottoming process then it seems to me that the one thing we're learning is that the bottoming process of a credit crunch induced bear market happens much faster than other bottoms. the unraveling occurs quicker and the bottoms don't take as long. look at the 98 unraveling. it happened so fast and was over in a month. same with the 90/91 lows...

i hope this is the case (albeit on a much grander scale). my fear is we're in a (re)pression style bear market where lower lows will ultimately be made another 6 months or a year down the road.

By the way, did anybody see where Czar Putin is getting the constitution changed so he can take over as president again...

sold Jan $10 Dell puts for $1.60 with stock trading at $9.63...

bloody hands from knife catching TCK but hope it will look like a steal in 1-2 yrs...

MCM

MCM - good luck with your Dell puts...that's a ballsy move

hello 840 s and p

Caraistas,

I see that HTE confirmed their C$0.30/share monthly dividend payments through Feb. 09, which they have been paying for the past year. At a share price of $10, isn't this a pretty safe 36% return with appreciation opportunity as oil rises next year? Yesterday's press release below:

Harvest Energy Announces Third Quarter 2008 Results and Continues C$0.30 Monthly Distribution
9:15p ET November 12, 2008 (Market Wire)
Harvest Energy ("Harvest") (TSX: HTE.UN) (NYSE: HTE) today announces the release of its third quarter 2008 financial and operating results. The unaudited financial statements, notes and MD&A pertaining to the period ended September 30, 2008 are filed on SEDAR at www.sedar.com and are available on Harvest's website at www.harvestenergy.ca. All figures reported herein are Canadian dollars unless otherwise stated.

Corporate Highlights:

- Cash from Operating Activities before changes in non-cash working capital and asset retirement obligations was $208.9 million ($1.36 per Trust Unit), and $133.5 million ($0.87 per Trust Unit) after these items. This resulted in distributions declared as a percentage of Cash from Operating Activities of 66% and 104%, respectively;

- Subsequent to the end of the quarter, declared the C$0.30 per unit monthly distribution for each of November and December 2008 and January and February 2009;

- Approved the 2009 budget for the organization which features a $260 mm capital investment in the upstream and a $62 mm capital investment in the downstream reflecting very attractive projects with short-term deliverables. We also expect to continue developing our very attractive longer-term growth opportunities in the upstream and downstream.

Disclosure: HTE long

My $0.25 on forecasting oil prices-it's a mug's game. I'm old enough to remember the early 80's when Canadian governments nearly taxed the industry out of business on expectations of $100 oil, based on the same arguments I hear for $200 today. IMO it's safer to trade the trend which is hinting that $50 is the line in the sand.

re GE: it can't be good that the Fed is having to back their debt, can it?...also, even though they have some great energy and infrastructure things happening in China and India aren't they 40% a finance company?

wow...that is a sick yield on HTE

Goldbug58, Yvrapx

Posted by: goldbug58 at November 13, 2008 11:41 AM

"Those TCK LEAPs are not for 1 contract of 100 shares, they're for 24 contracts (2400 shares underlying). Works out to about $1.70 an option for the $35 strike (weirdly enough)"

OK you lost me with the above, everything I can find says Leap contract size is the same as for standard options, ie 1 contract = 100 shares underlying. If I punch in a buy order on my broker platform for one of these leap contracts the cost is 100 times.

Got a link somewhere that explains this 100 volume actually equals 24 contracts, seems really weird.

-----------

Yvrapx, I totally agree with your take on TCK and the future of Met coal, it’s a commodity which will be in demand shortly.

thanks Quasi

as per my ongoing nightmare of many weeks ago,

it is looking more and more as though it is coming to fruition.

when kevin o'leary is chanting "660 gold! 660 gold!" on BNN in canada, claiming low gold means risk is reduced and a new bull market in equities will begin, ill know the upswing is ready to begin, that will take gold farther than many believe it can go.

until then, its moving down to new lows, in spite of the USD not making new highs.

TCK was obliterated. analysing earings seems pointless imho. if there was a line in the sand for oil, it was probally $60-$70. many nations are suffering w/ lower oil prices, so $50 and even $40 will cripple them. it wont cripple the US, so if anything this current oil dump benefits them twice: by easing consumer costs for gas and hurting several nations to whom they consider enemies.

there is no line in the sand for any price.
stories about saudi's buying gold are worthless imho as much as stories about comex default.
what hat will the gold experts hang themselves on when we cross below $700 and every story that is supposedly bullish on gold only see's the price fall farther?

mabey $590 will be the price that will truly make most gold fans bearish, before the price explosion does begin.

my guess is oil below $45 for any sustained period of time will cause a breakout of war in russia.

good luck gang.

Apple's Iphone... maybe in trouble????

RESEARCH IN MOTION

BlackBerry Storm Rolls In With $200 Price Tag
Back to Online Version
E-Mail Article
Reprints
By Sinead Carew
Reuters
11/13/08 9:19 AM PT

The BlackBerry Storm, Research In Motion's first touchscreen handset, will become available on Nov. 21 at a price point competitive with Apple's iPhone -- about $200 after a $50 rebate. That deal is open to Verizon Wireless customers who agree to a new two-year contract.

Sponsored by AT&T
Change critical apps at the office to powerful tools at your fingertips. Change your game with mobility solutions from AT&T. Learn more.

Verizon Wireless said on Thursday that it would sell the touchscreen BlackBerry Storm for US$199.99 after a rebate -- in line with pricing for its popular rival, Apple's (Nasdaq: AAPL) iPhone.

The wireless venture of Verizon Communications and Vodafone Group (NYSE: VOD) said the first touchscreen phone from Research In Motion (Nasdaq: RIMM) would cost $199.99 after a $50 rebate for customers who sign a new two-year service contract.

Subsidies vs. Profits
Pricing for the highly anticipated device, which goes on sale online and in Verizon stores on Nov. 21, has been the source of much speculation after Vodafone said Oct. 31 that it would give the Storm free to UK customers who sign a contract.

U.S. carriers, in particular, often shoulder a big part of the price of cell phones in exchange for getting customers to commit to a two-year service contract -- but analysts have worried about the effect a hefty subsidy on the Storm would have on Verizon Wireless's profit margins.

AT&T (NYSE: T) , the exclusive U.S. provider for iPhone, has already shown that its subsidy for the latest iPhone has hurt its profits in the recent quarter.

Responsive Touchscreen
Verizon Wireless and Vodafone have exclusive agreements to offer Storm with Research In Motion, whose BlackBerry devices are a big hit with business users who e-mail on the go.

The popularity of the iPhone, first launched in mid-2007, has also inspired rivals -- including Nokia (NYSE: NOK) , the world's biggest cellphone maker, Taiwan's HTC and South Korea's LG Electronics and Samsung -- to develop their own touchscreen phones.

Unlike other touchscreen devices, the Storm's screen indents slightly when it is pressed, a feature designed to attract users who have been hesitant to move away from phones with physical keypads for fear they'll have difficulty typing.

© 2008 Thomson Reuters. All rights reserved.

uble????

Monty:

Don't forget that the dist. is Canadian. Need to take off about 25% for the exchange at the present time. Plus the 15% dividend withholding tax which you won't get back if you hold the shares in a retirement account. Still a great net yield though.

SPY target for today around 81.
A measured move, also right in the middle between a fib projection @ 80.50 and downsloping channel line & a pitchfork line currently around 81.50.
Should bounce from that general area late today, but -
if it blows past that, watch out below.

XLY, IYR & of course XLF all well below their 2002 lows & working down.

added some Jan. & Mar. XLU & XLP puts, these should break down last.

PBT broke down over the last few days, one of the oil bulls' favorite trusts. Watching it to add some, perhaps around 15 again. Have some puts also.

SLV, GLD not looking good.

SP500 has just broken below the 10/10 intraday low. We shall now know the previously unknowable.

[Bill Cara note:

Agreed. The commodities are leading the market south. GG, along with the rest of the goldminers, has been plunging, and has broken below the $18.90 stop in my report. Nonetheless, we are refocused on the next bullish entry for GG, which represents our core trading position in goldminers.]

Adios 840 s and p...we hardly knew ya....

Now LOOKOUT BELOWWWWWWW

Live feed of Committee Holds Hearing on Hedge Funds and the Financial Market. Good stuff.

http://oversight.house.gov/story.asp?ID=2274

POG with a 6 handle a moment ago!

[Bill Cara note:

Please read my comment about GG a few minutes ago.

BTW, I think the Pres-elect is taking the right stand on GM and the US automakers.]

you gotta love some skf.

brought little BGU/TNA/FAS

OK, if you can mention a Chia Rock on this blog then...

To reduce the backlog of foreclosed and unsold properties: Why not have a national lottery and sell tickets to win a home. I'll bet they would take in a lot more money than the homes sell for and it would reduce the million REO properties. The government could calculate the selling price of the homes and divide it into the ticket sale receipts to determine how many homes could be won each month.

There could be tickets classes. So tickets for $1,000,000 homes would cost much more than those for $50,000 homes. Damaged homes would have their own ticket class. I think it would be a great idea.

The winners could appear on TV and it would make great news and show happy faces. We could all use more of those.

Now King Paulson won't use TARP money to prop Detroit car companies. Forecast: Drama

I just puked so hard my shoes came out of my mouth!

looks like test of 2002 lows. i see a dip down below 800 on the S&P 500 really quickly and then bounce up very hard. could see a 30% rally after S&P 500 dips below 800. i think this next rally could hold for a while...obama is coming in soon and i think people will be relieved to get bushy out

TCK - Yesterdays news http://tinyurl.com/5ed766

[Bill Cara note:

I discussed this situation in my morning squawk box call with the traders. I said at the time that if Brookfield Asset Management and Teck (TCK) Board Director Derek Pannell are behind this ugly piece of deceit, then I'm going to start a new Stelco-type ripping of those people and I will 'off' the Teck Corp as a Cara 100 without hesitation. I won't waste my time following the continuing manipulations of these accountants who moved from South Africa to Toronto many years ago. They have shredded the Canadian natural resources industry from Quebec, through Sudbury and Hamilton, and into western Canada. They led to the rip off off the taxpayer paid Skydome for less than 10% of its value. There isn't an investigative reporter in Canada worthy of standing up to what's happened in that country for years. When I saw the recognizable M.O. yesterday or the day before, I looked into the company, and sure enough there was Brookfield (the Brascan Boys) front and center. Let's be on guard as this plays out. Teck is a major mining company with phenomenal assets. The shareholders don't deserve to have their gold holdings sold off at the very bottom of the cycle to certain parties. It sucks. Where are the regulators?]

Emerging markets holding up very well.

stopped out of SOL at cost

auy, slw on a slide.

[Bill Cara note:

Please see the ADDENDUM to the blog on the Goldcorp (GG) report posted yesterday.]

SPX struggling to come back, but I wonder how much of the drop was due to leakage of Fed's Balance sheet news (to be reported to us unpriveledge) at 4:30pm.

Tomorrow, of course, bad news will become good news but maybe then another bank will close. And they say that "a bull market climbs a wall of worry" -- I guess a bear market wallows in a pond of despond.

cnq.to filled $46, out $47.1 with Sharklike speed.

watching 185.46 on SKF, old mid point on 10/28

Stopped out of NVLS at $12, 10% loss. Sold FTO with 25% profit off october low. Most of my holds are now approaching their oct lows.

Adding to: DB, MOS, TRA.
Watching: SU, DE.

Question for the more knowledgable.

I've noticed a correlation that's occurred a number of times over the past several weeks that I don't understand.

First, gold plunges quickly with what appears to be large selling, "in concert" with a sizeable DOW drop. Second, the gold selling stops and recovers, volume comes into the market, and the DOW drop is reversed.

While it almost seems like a position being unwound in the Gold market and cash transferred to equities, that's obviously too simple.

I've looked to the USD to find a correlation, but it's spotty at best (see early today w/ USD zooming and equities holding up).

Is there some additional obvious correlation that I should be looking to which explains the tightly coupled moves?

Bill I'd like to hear more about what you alluded to in your recent comment on TCK. I gather that the company is being artificially induced to selloff gold assets behind the smokescreen of credit panic, when they could pay for the coal acquisition out of cash flow. BAM boys lining up to lighten them of this asset? New guidance for TCK? I'm holding a few underwater shares at this level. I know a few folks from Trail who are loading up at this level too. They need to be told.

[Bill Cara note:

Take a look at the "treatment" BAM put on Fraser Papers (FPS.TO). This is the same M.O. Also, in your neck of the "woods", a union leader contacted me to say that the same thing was happening in their company. I have been warned by former senior execs (the good guys) who departed that company to be careful about my saying anything because there is nothing that stops them. I'm not here to make enemies; I'd just like to see the whole thing exposed by Cdn investigators. I retired to the beach, so I have no dog in that fight. I just get pissed that no Cdn media has the guts to speak up. Nobody. But you talk privately to long-time brokers and advisors on Bay St and they will say they wouldn't touch BAM with a ten-foot pole. Others will say, hey, I love the returns and I don't care how they get them. That's what makes a market. We'll just have to hold the torch under Don Lindsay, who I do think is a superb manager -- if allowed to do his job. Don was formerly head of CIBC World Markets investment and corporate bank. He is one of the best senior execs in Canada.]

Fear and greed really on display today (in that order).

here we go..

TCK...MORE INFO PLEASE...ADDED TO MY POSITION IN RECENT DAYS...WHAT'S GOING ON......

The markets are falling from Dow up 70 to down 30 now...

Let me guess, pres Bush must be speaking again on TV???

Why does it seem like every time the market starts to go a wee bit north, Bush or Paulson or Bernanke show up to speak, like clockwork, and the market tanks?

Will someone please give Hoover the hook?

We must have been watching for Hank and missed dumbleyou.

"I've looked to the USD to find a correlation, but it's spotty at best (see early today w/ USD zooming and equities holding up)."

Look at EURUSD instead. The $USD is comprised of many currencies, but the two largest components are Yen and Euro. Yen serves as a funding currency, so people borrow yen to buy other stuff (stocks, commodities, bonds). Therefore, the Yen and Euro moves often tend to cancel each other out, making the composite USD not reflect underlying trends as strongly. If you look at EURUSD instead, I think you'll see stronger correlation to moves in DIJA, Oil, Gold, grains, etc.

CF, MOS, TRA and POT all had a nice bounce off the 1PM lows.

Goldbug58, Yvrapx

Posted by: goldbug58 at November 13, 2008 11:41 AM

"Those TCK LEAPs are not for 1 contract of 100 shares, they're for 24 contracts (2400 shares underlying). Works out to about $1.70 an option for the $35 strike (weirdly enough)"

OK I get it now, Your right, here is the CBOE doc on the option impact of TCK buyout of Fording coal. This has to be the the strangest option contract adjustment I've seen, should have looked there first when things looked to out of wack.

http://tinyurl.com/55a5n3

thanks Quasi

Last I heard/read, Pres-Elect wanted capital for GM. This was days ago, and since, Obama site has removed economic outline, no longer posted...?

DRYS sure looks like it's ready to take off.

Pres-Elect got what he needed to get from promising money to GM...elected...now its time to face reality.

this sport is not for the faint of heart.

Out of FXP call and FXI put with small profits. Closed out most of my puts and bought some BGU, TNA

I will be buying TRLG, NM, ABK shortly. Already hold DRYS Nov $10 calls at $1.24 average.

Chickenpookie -
Dems developing bill to fund Big 3 to appease Senate GOP with onerous stipulations: In a nutshell its UAW owned Democrats vs. GOP in a Mexican stand-off. Pres-Elect can't act in time. By Jan 20, GM will be in default and unable to make payroll.

Song "Panic in Detroit" comes to mind.

2nd
1500 point one you have mention few time is on the way?

Man, what a call to pound the table on GG in the addendum...!

Wow - heck of a reversal going on here. Been busy with meetings today but checked the market before I went out to lunch and didn't help my appetite a bit. Feeling better now.

I'm just glad I stopped using margin awhile back as todays action looks like a giant margin call. Also haven't watched CNBC for about 6 months which I think has been a healthy move....I think my heart rate has steadily reduced since then.

500 GG shares filled at $18.75. Thanks Bill.

[Bill Cara note:

From 1:00pm at 17.75 to almost 21 at 2:30pm. That's not a bad return for 90 minutes. I posted it as an ADDENDUM to the GG report and here. Stick with me Dr. Strangelove or How We Can Learn to Stop Worrying and Love the Volatility." :-) But, day-trading is not for everybody. Option strategies will help manage the risk, but there are no guarantees. Traders today cannot afford to spend five minutes in the washroom, unfortunately. Don't you just love the proof of concept?]

we ever see +1500 in a day I will send brother 2nd a 2004 Clos Fourtet + a box of havanas.

bear mkt rally? wouldn't be surprised.

Will the responsible party please throw in a (insert primate here)?

[Bill Cara note:

Speaking of names, it was about 20 years ago when the regulators didn't really understand what a Bancorp was so I snuck in a new incorporation by the name of William Cara Investment Bancorp Inc, and got approved as a Limited Market Dealer licensed by the Ontario Securities Commission. I'm proud of that and list it clearly in the "About Us" and various regulatory filings. Long after the industry came to understand that a Bancorp was really a bank, people would ask me if it was true I was a bank. I would reply that I should be so lucky. Even my wife and closest friends have always said I'm 15 years early. But I found it pays to be early. FIFO works you know.]

Portfolio turning green, what a relief. What's with the rocket launch reversal?

[Bill Cara note:

I threw in some Fording Coal. :-)]

The market turnaround coincided with the end of the long bond auction at 1pm ET, which by the way went very poorly.

obligatory day trader / trading desk / short covering rally after "another retest", or for whatever excuse, got started a little high & a little early, but good 'enuff for guvm'nt work.

But they may not be able to run it straight up into the close, for that they should have waited an hour or so.

To turn bullish they have to take out Tues. highs, at least.

Otherwise it's back down again, though likely not until after opex next week, of course (what else?)

Note how GLD & SLV got run up together with equities . . . of course?

For now they're all bear market rallies, right?
We will only be able to determine if they were bull market rallies in retrospect.

One thing to watch, we created an overhead gap at S&P500 898 from Tuesday when the market gapped down on yesterdays open - will be important to see how the current rally acts at about that S&P500 900 level........

lcs

Do you have any more info on the long bond auction you referenced?

Seems all of these new lows coincide with big cash settlement events. I.E. 10/10 Lehman CDS settle, 10/27 WAMU CDS settle.

Any more detail on what exactly todays auction entailed or how to stay on top of future bond auction events would be appreciated by those of us that are less in the loop on the bond/debt markets.

Warning to BEAR country.........good piece from Hays Advisory
Thursday, November 13, 2008
Consumer Bearishness off the Charts
Stock market lost more than 10 times the value of TARP
By Mark Dodson, CFA
Summary
•What is the stock market discounting?
•Average Consumer is a ROARING Bear
•What does the new chart on the website mean?
•Catching our breath
What exactly is the market discounting?
The stock market has now lost about $6.9 trillion dollars since the peak. This is almost 10 times the size of the $700 billion TARP program. This is seven times the value of all subprime mortgages that were in existence in the US (around $900 billion), six times the amount at the peak of the housing boom. All the mortgage debt in the US amounts to around 11 trillion. In our words, the stock market has now lost enough value to discount that 60% of the homeowners in the US with mortgages are going to default on their mortgage. Can you say overdone?
Average Consumer is a Roaring Bear
As part of their consumer confidence survey, the Conference Board asks respondents about their expectations for stock prices. We took the decreasing expectations (bears) and divided it by the sum of the decreasing (bears) and increasing (bulls) expectations. This has busted out well beyond any previous high since they first started asking the question in 1987. Consumers are more bearish on the stock market than they were after the 1987 crash, the 1990 bear market, and the 2000-2002 bear market. Spikes in bearish expectations like this have always come at or near bear market lows.

What does the new chart on the website mean?
It means the market is more attractive than any other time since 1974 and 1982 when adjusted for the current level of inflation. It means that we expect the market to return an average REAL annual return of over 19% per year over the next five years, blowing past the previous highs in our portfolios that we are all using as the anchor for our despondency. And, you shouldn’t wait for the fog to clear. A nice chunk – near a third of the overall gains - will likely come in the first year, as the stock market has returned 47% off the lows since 1900 on average. Bear markets usually end with a bang, giving back a lump of what they took from you.

Conclusion
Just a few short years ago, angels were singing as almost the entire world had embraced capitalism and the new flat world. Today, we await the formal announcement that capitalism has passed away. Ten years ago, we all sat anxiously awaiting the bullish prognostications of Abby Joseph Cohen. Now, we sit on the edge of our seats waiting to hear the latest dire revelation of Dr. Doom.
We aren’t trying to dismiss the seriousness of what has played out over the last couple of years and the need for transparency or reform, but losing $6.9 trillion in US stock market wealth is more than a bit excessive. Warren Buffett recently said that “confidence in an economy is like oxygen; you don’t know how important it is until you run out of it.” The paradox is that as an investor, the best time to invest in the stock market are those very times that the stock market makes feel like you cannot breathe.
Thanks for reading.

Are the Treasury auctions going to be prime movers for the equity markets going ahead?

new SOP?:
Equities sold down going into auction, short covering rally after?

acrossthecurve gives the gory details:

Thirty Year Bond Auction: Not a Good Result for Hank Paulson
http://tinyurl.com/6sxc5w

"The Treasury auctioned $10 billion Long Bonds and the result was a genuine debacle for the taxpayers.
. . . "

$index has had a big drop to $87.1 after it's pathetic relative strength pop this morning to $88.5

the markets right now are not a pricing mechanism. it is a roulette table!

down 300pts to up 400!!!

Pick a number any number, play inside, outside colors, or 00. place your bets....

no more bets.

Today sure felt like a bottom to me.

S&P up 9.5% from the lows (of today!)

400 Dow MONKEY!

GG +9.2% @3:38pm

I like the action in TBT today. What does it mean for the likes of GG, AGU, TCK and CNQ? TOG on? Panic buying?

NY,

The market was slightly oversold going into this AM. Certainly it wasn't time to short it; there have been any number of times to do that. Plus going into opts expiration week. Hit near the 10/10 intraday low.

Set up for a rally.

Check out the volume when the market turned. Tsunami like.

I feel bad for all the short ETF holder
will unload TNA/BGU/FAS at end of the day

short IYR if it goes parabolic into the close.

looks like the bulls may be a little tuckered out already, may not be much more upside left after today.

But, if it backs off towards the close - don't short it, it will probably workl a little higher tomorrow.

Putting some Orville Redenbachers in the microwave.......should be an exciting close

DRYS up 20% from lows of today.

S&P up 10% from lows of today.

Gosh, had a limit order 5 cents below where my stock stopped going down before rocketing up 19%. Man.

This market is so full of opportunities but they only last a nanosecond.

Unless you're actually staring at the screen all day, I can't see how anyone gets away with using stops in this environment. Exactly what kind of stops wouldn't have been hit in the whipsaw today?

So how many retests of bottoms with rockets coming off of it do we need before this actually is the bottom? :-P

[Bill Cara note:

Panic buying in GG at the close.]

Muzie, you put your finger on it exactly. You blink and you miss your entry on a trade.

Wow, what a close.

took some FMCN off at 8.10

Since this market has turned into a casino should we perhaps not just make sidebets amongst ourselves as to what happens tomorrow (monopoly money of course) and if you see Charlie Gasparino as you go by the jail ask him if he wants Maria to join him in the lockup, that should be pain enough for him, listening to her all day.

Kind of like when the gamblers at the table know the dealer is about to say "no more bets" and hot money wants in on this hand or roll or spin.

yeh that was todays close.

yeh, where'd all those MONKEYs come from? NY?

took some FAS off at 42.85

nice day

for historians here, was that intraday swing one of the largest in history? if now top 5? points wise, not percentage.

I guess no one wants to miss the bottom. i hope this doesnt just sell off tomorrow.

[Bill Cara note:

I feel like a jockey whose just won a four-way stretch run at the Belmont stakes. Elated but dead tired.

You may have caught this addendum to the Goldcorp report:

ADDENDUM: 1:00pm ET Thursday Nov 13

GG hit $17.75 at 12:59pm ET, which was subsequent to our stop at $18.90. We went long, and took an additional risk position in GG. We believe we are close to an inflection point with respect to the broad market sell-off. Investor psychology and sentiment are near extremes, markets very oversold with some important stocks nearing support levels. Our traders just need some confirmation from price action before we will extend our risk profile to additional stocks.

With put writes, our cost basis for GG is significantly lower than $17. Should the market turn against us, our options strategies will protect us, and we shall use the opportunity to subsequently take on more risk.

http://tinyurl.com/6cy2n7

ADDENDUM: 4:08pm ET Thursday Nov 13

GG closed at $22.65. With a long call position, our three hour performance was greater than the +27.6% in the underlying stock this afternoon. Float like a butterfly; sting like a bee. Boy, I love this business!]

"the markets right now are not a pricing mechanism. it is a roulette table!"

The market seems to put 90% of its in bearish mode, but when it switches to bull mode the impact is ten times stronger.

I would take this as a hint there's plenty of buyers who would be willing to buy at this week's prices, they're just keeping their cards hidden trying to see if they can get the best absolute price.

The pricing mechanism works - everybody knows the good companies are worth more than that they are at now, as soon as we rteurn to a semblance of normality. It's just a bit of a poker game.

That's why there was such a strong upsurge - buyers let the sellers see their cards a bit too close, and sellers figured they could pump the ask on the prices - or decide to hold out instead. How many traders will just decide to keep on some of their trades for the long haul if they get lucky and pick up some stocks near the bottom?

And of course short covering always makes things... entertaining.

These parabolic mega-short covering days are becoming too obvious, one day soon one is going to fail suddenly right in the middle I have a feeling.

IYR up over 11%, nearly as much as XLE?
rediculous . . .

"i hope this doesn't just sell off tomorrow."

I hope so too. Either way, some kind of resolution would be nice. This is OBVIOUSLY not a market chock full of panicky sellers willing to sell no matter what.

Enough of this "I'll get you out of your stocks for a miserable price to ease your pain" taunting.

Let's see. DIA up 5.75%, volume 2x.

Looks like a follow thru day.

Just one man's opinion.

BSI-90% follow thru day on volume, but not on adv-decline....still good day

How about reinstating the uptick rule. I know it won't solve all of our problems, but at least it might prevent some of this absurd volatility.

"I hope this doesn't just sell off tomorrow."

It will because I covered my XIU short at $13.01 (today's low was $13.00). I can only rejoice at such luck until 9:30AM tomorrow.

Happy trading to all.

Does anyone have a feel as to when this bull dollar will reverse and go bearish?

Thanks ....

Howdy All.

I've been gone a while . . . picked up the family and moved to the East Coast, but we're settled in. Did I miss anything in the market over the last couple of weeks? ;-)

"Did I miss anything in the market over the last couple of weeks?"

Nope ... like watchin' paint dry. <8)

anyone have a technical read on DRYS? we all know the fundamentals on this...very undervalued, best buying opp of a lifetime, yada yada yada...

i'm trying to determine how long to hold on to these Nov $10 calls. they're up like 70% already.

team-set stops.....nice trade

Here was the thing. When I saw the way the broken support "sprang" back bullishly and vaccilated, I knew the potential for a strong upmove existed, However, I had to meet a home health aid at 2:00 to interview her for mom AT THE HOSPITAL. I saw the bullishness setting up, and I just left anyway and missed a mondo rally. I HATE DOING THAT! Want to make the market rally? Leave the house. The lesson?

Stay at the helm of your ship or risk rocks and icebergs.

Which ones of yous guys was winners today?

re:DRYS

Max pain opts shows 17.5

full disclosure: long DRYS

Shark,
Same happened to me a couple of days ago, spending time with my aged father, and other assorted relatives. We all made out like bandits today, but tomorrow's another day, and I'm sure you'll catch up.

bsi - how do you figure that out?

Sharkie,
I also had to leave for a meeting but sold my FXP & a few other puts before that & bought IWM, BGU, TNA. Mostly on the long side now, still hv a few jan puts.

Now Bill, About Teck, there's obviously a story here. Can you tell us more about what you think is not right and fair to shareholders here?

[Bill Cara note:

Do you recall at the height of the Bull market, when corporate America started these humungous share buy-backs? Do you recall what I said when Lehman announced an $8 billion buy-back? I said, why would a professional trader buy billions of dollars worth of stock at the cycle peak? It was a sham, and now you see what happened. That was a take-out at the highest prices. These bankers were using shareholder capital to take out their friends, family and best clients at the top. Okay, why would Don Lindsay who was CEO of the CIBC investment bank and a guy who wouldn't get sucked into paying a then thought-to-be-ridiculous price for world class nickle assets in Sudbury, and turn around today with a brain that's gone to mush and agree to see gold assets at the cycle bottom? Don's neither stupid (in fact he's brilliant), and he not a crook (in fact he's a fine person). So, where's the link? Aha, Brookfield hired the former CEO of the Sudbury company and parachuted him onto Don's Board. Next I see that the company, needing credit to close the Fording Coal deal, decides to sell $2 billion debt they held in Hudson Resources, a penny stock with diamond interests in Greenland -- high quality company but a penny stock nonetheless -- converting it to common stock to take over 15% of Hudson. That doesn't make any sense at all. This is not the way banker Don does business. Neither does he do a news release to announce he's looking for a buyer of the company's gold assets when he knows the thing to do is to work the street privately. That's his skill and experience -- he's one of the top investment bankers in the world. Putting out that news release was like throwing a match on the fire at Teck. People are asking, why the massive selling volume? Is this company going bankrupt? Isn't that what you thought? Whenever something makes no sense at all, I say use your common sense and look further into the matter. With Watergate, the Washington Post reporters were told, "Follow the money". I tell you, follow Brascan or Brookfield or whatever they call themselves these days (as if I care). Same M.O. in all their deals: "Death by Loan Covenant." Look into Fraser Papers. Look into Stelco. Do you want a long list? Anyway, this is not my fight. I happen to like Teck a lot. I have personally been to Trail -- twice -- to go through the smelter. Incredibly hard working people -- like Steelworkers Local 1005 in Hamilton who got the Brascan shaft. Let's watch and hope this works out for the Teck employees and shareholders, bondholders and vendors. It didn't, unfortunately, at Stelco. But, I'm not going to get dragged into this. If the regulators are not watching, then it's every man and woman for themself, as usual.]

ADDENDUM: Actually, if you want to follow this up -- if there is story here -- then send your evidence and complaint to:
Ermanno Pascutto
Executive Director
Canadian Foundation for the Advancement of Investor Rights
51st fl, Commerce Court West
199 Bay St, Toronto
Tel: (416) 869-6891
ermanno.pascutto@faircanada.ca ]

Ermanno is my friend and I told you about this Investor Rights initiative a couple years ago, which is now a reality. Google Ermanno Pascutto and you'll see he is clearly one man in Canada you can turn to for social equity within capital markets. In my eyes, the man is a giant. He's also a reference on my book jacket for Lessons From the Trader Wizard!]

http://www.optionpain.com/MaxPain/Max-Pain.php

bsi, you've been holding out on us! What a beauty, thanks!

Since cash is king right now this is a good read about stocks trading for less than the cash they're holding

http://tinyurl.com/62ktus

Thanks for that Bill. I think I get it. Correction $2m loan to HUD, not $2B. But the news release...hmmm. As shareholders, we could get viral and email Lindsay: "We're watching you. Don't sell us out!"

re:Max pain

Naw, I think I've mentioned it before. Works best around this time but I like to look at it. If the max pain figure is at or below current price, why mess with the stock? Plus I'm looking for 1 baggers (100% gain) to take on a long position.

If cash is king, just for today, stocks were the Emperor.

bsi,

please give me a quick tutorial here. in case of vmw, max pain for Jan 2009 = $40. ($22.77 today's close)

This is basically saying at $40, options writers lose the least for Jan expiry? and will do whatever possible to get it close to $40 as possibe?

And when using this tool, if you can find quality companies trading lower than their future max pain, it signals less resistance up to that max pain price, barring any unforseen news?

And lastly, who is the owner operator of that web site? how do they make money? and how do we know the source of all the options data is all legit.

thanks in advance.

Bonds - Thanks for the explanation, this makes perfect sense.

re:VMW

I would look at the closest months first. Nov 22.5, Dec 20, Jan 40. VMW closed at 22.77 today.

The max pain point is where the maximum number/$ of puts and calls expire worthless. I don't know that the Jan figure is that accurate esp when Dec is showing 20.

I use RSI screens to identify potential buys/sells. If the max pain is not above my entry point, I just skip that stock. And with the markets as tough as they are, I've been looking for those issues with max pain at least 2X the current price. May not get there but more "gravitational pull".

I don't know who runs the site.

Suggest you google Max Pain options, there's a lot to read.

Play of the Day goes to Craig!

Come on kids...let's cover those shorts and drive north!

[Bill Cara note:

I get the point, but there is snow in the Great White North. Today in Bahamas, it's 86 degrees and sunny. From my house, I can see... looking north... the ocean beach just 100 feet away. I'm waiting for T-Bills/Bonds/$USD to fall and equity volumes to lift before I want to "drive" anywhere. Today, I'll just be nimble, thanks.]

Posted by: Craig [TypeKey Profile Page] at November 13, 2008 10:19 AM [link]

bsi87,
Taking that VMW example, Nov could be pretty close. But Dec & Jan , there are still lots of options to be sold, so how do u decide? If you are buying Jan VMW calls, what price point would you take as the max option pain....

The market turnaround coincided with the end of the long bond auction at 1pm ET, which by the way went very poorly.
so billions of shares of all types of stocks (REIT's, mining, basic materials, energy, etc etc.) were bought starting simultaneously
with the end of the auction
can the person on the blog that did this please fess up...
oh and next time give us advance warning ;^)

But WHY did the market turn at that point?

Budget deficit for the MONTH came in at $232 Billion, BTW, which also came out early afternoon.

LOL! Bill, I'm no oracle, but I thought yesterday's AH action in the index ultrashort ETF's was the clue and I said we would see a ST tradeable bottom in my first post of the day at 8:17. I thought if we were going to test the previous low we were set for it and we would see short covering that would drive prices north (just being a figure of speech, we all know north isn't up). I would gladly take higher prices *and* a lower latitude, but at the moment that will have to wait until I have a lot more days like today, I turn a hunk over to CTAB and turn you loose, or you put me up in your closet.:>)

BTW, It's a fricking awesome day here in Western Washington. Clear, sunny, no snow or precipitation of any kind. Don't tell anyone....the locals like everyone thinking the weather is horrible here.

BTW, I couldn't have done it without your help over the years, this blog, and trading high quality Cara 100 companies, some of which I've already been quite nimble with....several times!
Thank You.

calvino and others who read my post earlier today.

First off my last name is irrelevant. Second by no means am I a "guru" as the discourse here has excellent traders such as si02, 2nd, CP, bi97, craig, nemo and many, many others. I am dumber than 98% of the population and proud of that.

Art Cashin is a great trader and very respected. He is correct, i would of been a buyer of oil at 55 because it was technically oversold. Technicals are great for your short/intermediate term trading. Fundamentally the WORLD is slowing.
Those third world countries that have been buyers of more oil will stop because what is their roll? Support the g7 nations that are obvisously about to embark into a deep recession. So explain to me how nations with little consumers going to grow? if they roll is to export and produce for g7 nations? They won't once their savings accounts are gone, they will be in trouble. Also, if you believe that many in our nation over spent, it is only worst in those nations. Factories are closing in China left and right, housing is down 50% and the largest migration in the history of the world from rual China to metro China is starting to unwind. They were building over 5 manhattens a year for 5 years straight. consumer spending is 37% of their economy and that is going to wane and die soon. Give it time... DEMAND is dying.

We are missing my point, my prediction of $35 give or take $5 is assumed over the next 12 months. "by this time next year".

Let me bring up a theory. In 2004 the investment banks lobbied the SEC to allow 40 - 1 leverage ratio. meaning they could expand their assets to 40 times of the balance sheets owners Equity. So lets imagine this... If my theory here is wrong please correct me.

It is sort of ironic as EASY money policy cause and help fuel a commodity run. We had HBB from the USA to the EU going leverage crazy (40/50 - 1) and inflating balance sheets.
Here is web site with the historical price of oil

http://tinyurl.com/655hoq

my assuption of oil prices is assuming that the debt unwinds which will destroy money because assets on HBB balance sheets are debts owed to them (for the most part, as they go so smart they outsmarted themselves). . Which is money/debt.
In 2003 crude average price was $32.34 and 2004 was $42.80 adjusted for 2007 inflation.

We are now entering a time of deflation, debt will unwind and many got suckered into the bad bets. HBB got real smart and packaged instruments that even our treasury secretary doesn't even understand what they are... These instruments are all over the world and now the world is suffering, there is little transparency and until housing stabilizes the spiral will continue. Lets not forget that the housing price run was based not on economic growth but loosened underwring guidelines.
As grym mentioned yesterday rent own ratio has to go down. The overall problem with our economy is that we are in worst shape than we were in 2k2/3 leaving the recession. All assets increased since 2003.

Russia is in trouble!!
- also they have been out of US dollars since Tuesday as their has been a run on their banks to exchange RUBLES for Dollars.

They are on a verge of very, very bad news... not good
http://tinyurl.com/6allcd

Also - yeah PUTIN is only a genius because of a commodity bull market, just like every investor in the suckers bull run from 2k3 - 2k7. Every looks good then because of Peak Credit. Guess what? It has to unwind, and that will be painful.

They need oil to be over $70 a barrel to run at a profitable level.

OPEC - and cuts... hah, that is a joke to me (my opinion). Lets look at the big picture here... Sure they announce cuts SO WHAT, cut all you want. For one the world can't afford oil more than $60 a barrel (lack of credit, ZIRP). #2 - IF they do cut and prices go up, you'll cheat to capture more revenue and send more oil to the market. Once the market figures out there is more than needed supply the price will drop once again. They provide less than 45% of the world's oil and ever barrel out of the ground is money to those nations so who will cheat? First to the bottom wins. Nuf said.

craig,

great call today, in the early morning!

Sector that let to rally unto November 4 are same sector that rally today.
They are REIT, Mining, Basic materials, Energy,
And than we went down starting November 5
Will we repeat that history?
Do bull market start with these sectors?

Hi Bill and Caristas family.

Found Seth Glickenhaus interview from today (i think). Running time 32 minutes. Not sure what time it was posted on the web.

Link to launch interview:
http://tinyurl.com/5zymbq

Link to website that had it:
http://tinyurl.com/6dq8n7

Updated at 4:49pm on 13 November 2008

The oldest stock broker on Wall Street says key problems in the United States must be addressed in order to lift the nation out of the current financial crisis.

Seth Glickenhaus, who is 94, began his first job on Wall Street in 1929 and has lived through the stock market crashes of 1929, 1987 and the latest economic downturn.

And his advice? It never pays to panic.

In an interview with Radio New Zealand on Thursday, Mr Glickenhaus said the world is seeing one of the sharpest declines in history, and US President-elect Barack Obama will have to deal with some major issues to improve the country's economy.

He told Nine to Noon that issues such as public health, alternative energies and replacement of oil must also be addressed.

re:VMW/Shiva

I really couldn't tell u what options to buy. I'm not an options trader.

I know the max pain indication helped when posters were buying SLW at much higher prices. Max pain was much lower so I didn't have much interest. Then it got below Max pain about the time Bill and others started conversing about SLW. I think I bought it below 3 and sold it around 4.50. Now showing 5 and it could have been bought below 3 today. RSI 7 day shows 33 althought it was probably lower intraday.

GL

Speaking of oil: Urals blend oil now below $50.

The Moscow Times » Issue 4031
Oil Plunges Below $50 14 November 2008

Rosneft, the country's biggest oil producer, led the decline as crude for December delivery traded near a 21-month low in New York. Urals blend crude traded at $48.80 to $48.90 a barrel, its lowest since January 2007.

The government says its budget can be sustained on $50 oil next year, as it can resort to the use of gold and forex reserves.

The Central Bank reported on Thursday a $9.2 billion drop in reserves, which are now down about $120 billion since their August peak, mainly on the back of heavy interventions to support the ruble.

http://tinyurl.com/6zacv6

norm - "UK saying they will go to ZIRP (zero interest rate), that we could add them to the list of Japan, USA and who knows maybe the EU will join the party. How many % of GDP producing nations will be at ZIRP? USA, EU and Japan have to at least be over 75%."

Because I can't resist the subject, I'd like to ask a follow-up question:

If interest rates are put to zero, then wouldn't that, by definition, indicate very low rates for corporate and consumer driven borrowing? Who wouldn't take advantage of such low rates, and wouldn't this negatively impact default rates, and cause perhaps overspending? There would be little incentive to save, as returns would not exist, right?

Still trying to get my arms around the subject, as I think it's of paramount importance going forward...

Attended a luncheon today hosted by Morgan Stanley "Asset Allocation and investment Strategy for 2009 and Beyond", speaker was David Darst, author of several books( most recent is "The Little Book That Saved Your Assets") and frequent speaker on financial channels. Their outlook is 70/10/10/10. 70% chance of a recession similar to 19th century recessions, which were caused by lack of credit (different from 20th century recessions). 19th century recessions were long, no quick turnaround or fix, takes a while to get credit flowing again. 10% chance of something worse, a depression. 10% chance of a protracted Japanese style deflation. 10% chance that the flowers will bloom in the spring, birds will sing, and we will recover quickly. They feel that if we break 776 on the S&P, then those probabilities will change, much higher risk of a depression. They believe we will be in a trading range for a while.

Norm,
I do not wish to challenge your predictions (personally my own are hopeless) but am curious about the source of your information on China. Certainly there is a global slow down which will affect Chinese export oriented industries however it is my understanding that their government will redirect more funds into infrastructure over the next few years, ie more GDP (GNP) on internal development. This would continue to benefit diverse commodity suppliers like BHP, RIO and Vale.

Given your scenario what do you plan to do to profit from it? Whilst I am sincerely curious here, if I am being too forward please disregard the question.
Cheers

Anyone know the rationale behind a principal-protected structured note? In theory, the investor can't lose any of his principal. I'm not buying it, but I wondered what the rationale may be.

To follow up, at 1 p.m. immediately at the end of the long bond auction, $TYX (the CBOE option) spiked up from 421 basis points to 431 as traders became aware of the poor auction results (very low demand.) My guess is a lot of money swiftly moved out of Treasurys and into equities, meaning today's move was triggered by panic.

Only my opinion, but the bond market is the tail that wags the equity dog.

Thanks Linda, I'll bet the birds and flowers will bloom this spring, but wouldn't bet on a 14k Dow one iota. We'd be very lucky to see an 11k Dow... Interesting to know what MS believes though, I respect their opinion to a high degree.

lcs - I think the bond/equity relationship is very well known. I'm sure the quarterly auction process (if this is the period) will be closely monitored here from this day forward.

Seadog,

I have no idea how to profit on this. I am still trying to understand it all. Here is my/the deal.
I started following this site 5 years ago. Didn't know anything then (thought I knew a something, still know nothing) and now I have tried to understand the other side of the coin, or the round edge. In fact, I really didn't learn anything until I started to really read kaimu's posts and question where he was coming from... Wow kaimu you are right in so many ways.. Bill's WIR have been extremely helpful too.

As Bill always mentions, HBB has their agenda. That agenda doesn't mesh with ours. We must protect our capital.

To profit from this, no idea I would like to inform people my point which is extremely cautious. Y'all take your own risk and investments. Listen to all on this board and you should be ok. I don't recommend any stocks, I can't.
Stay hedged like Craig, which is really smart.

IMO we haven't hit the bottom, but that is an impossible call and the pundits EVERYDAY will say we hit bottom... until we did. Who knows when that is... the text books go back 40 years, no 80 years. I would argue we need to mesh both 40 years ago and 80 years ago.

Rio Tino, BHP, VALE - call investor relations or get on google, i have no idea. If the Baltic Dry index is virtually free to ship dry goods like their product, that might tell you where demand is currently at. 12000 - 800 (give or take) is a big drop in that index.

CHINA here are the articles. lots of reading so bare with me....

Chinese job losses prompt exodus
http://tinyurl.com/6p9lfn

Half of China's toy exporters out of business
http://tinyurl.com/5g2cb5

Thousands of toy makers laid off
http://tinyurl.com/5rfydm

50% of toy firms 'gone in 2 years'
http://tinyurl.com/5egqxw

Sub-contract factories fall victim to US crisis
http://tinyurl.com/57fj7o

Economy rocks China factories
http://tinyurl.com/6oowbc

That should paint the picture... The 37% consumption from cosumers came from Mauldin's letter.

Re: interest rates

My broker shows the overnight right at 0.27%. Does it matter if it's 0 or 0.25% really?

Such low rates are appealing though. Margin interest charged is a ridiculously 1.27% yearly - it doesn't even factor in as a cost at that point.

So although deleveraging occurs due to margin calls, the effective cost of leveraging is as low as it's ever been.

Even I am looking at timidly putting on small margin on selected issues.

Dollar did a "bearish engulfing" candle in overbought condition at similar level to Oct. top today. That is a reversal signal, IMO.

"They feel that if we break 776 on the S&P, then those probabilities will change, much higher risk of a depression. "

Can someone explain to me how whether a ticker price moves below some arbitrary threshold level somehow on a US index reliably indicates that the entire world economy is going down a depression?

Markets might be a discounting mechanism but to assert that a mere 70 points from the low (with 100 swings intraday) immediately translates "Oh, we're really eat it NOW for sure!", that seems plain silly.

It's scary if people believe in that bull. Because that means it takes only a little "wink wink" push from concerted forces at pushing the index down to make perception become reality.

Ara Hovnanian recommends 3% mortgage rate.

Not sure if he is intending for at-risk home owners only and the 3% is only until 2009? I have a better proposal...

With some adjustments to his idea and making it permanent for 30 yrs out, i like it.

When can i refinance my 30 yr fixed?
http://tinyurl.com/64nm2q

Muzie - These are the guys who are well paid for their analysis, we all know that here.

We'll need less than 3% 40yr if they're serious about fixing the problem quickly. New purchases will need a gov assist down if their income is solid. Need to soak up the inventory immediately.

3% fixed for 30 years?

to quote Colin Twiggs: "Today we have a Fed confidently patrolling the financial markets with a huge can of gasoline, ready to douse any new flare-ups. And promising to use as much gas as it takes to restore stability."

CP,

Let's discuss... as i am still trying to grasp this all because our theories about hyperinflation isn't here at the present, maybe it is a chapter or two away, i'll guess two. How long is a chapter? Who knows and the rules could change with currency changes, amero, one world currency? who knows all speculation at this point as we could debate our hyperinflation theory is now. I am in delfation camp and we have deflated for almost a year by now. Delfation is not my idea, just been convinced by reading a bunch.

Review...

"If interest rates are put to zero, then wouldn't that, by definition, indicate very low rates for corporate and consumer driven borrowing?"
Japan - ZIRP for how long? Just because rates are low, doesn't mean all will borrow (if you didn't borrow in the last 4 years, do you need to borrow today?, maybe maybe not, besides we need to have a job to pay back debt). Especially if anyone who bought a home after 2005 is probably underwater on their home. We/EU got over extended and the liquidity trap is in play. How do we get out? force banks to write down and come clean.
Also credit spreads are high right now, TED is easying until it doesn't, LIBOR is going down, till it doesn't. The only reason they are coming down is by Central bank intervention. Not healthy.

"Who wouldn't take advantage of such low rates, and wouldn't this negatively impact default rates, and cause perhaps overspending?"
If you don't have debt now, will you need it tomorrow (if the status quo does not change) probably not. FED funds rate at 4% is historically low! We have seen cut after cut, this time, it hasn't had an effect but acknowledge that there is a BIG problem. How can we hit 1% FED Funds target twice in a decade? Thanks politicians... thanks a lot.

"There would be little incentive to save, as returns would not exist, right?"
My guess is that there is all the incentive to save because your money is worth more tomorrow (current time). Deflation.
Been to Costco lately? 4.99 lb ribeye, year ago 8.99.
Current interest rates (1%) are above actual inflation rates (falling prices like that store's slogan)... remember the fed has faux CPI numbers. They gauged on the low side of inflation and now those numbers that they handicapped are crashing back to reality which they are still over priced (housing, energy).

"Still trying to get my arms around the subject, as I think it's of paramount importance going forward..."
We can learn together as I am student as well but I do have absolute conviction in my thoughts....

Countrywide foreclosures. - Blue light special on homes... they will only get cheaper..
http://tinyurl.com/2lttqd

...not that i wouldn't immediately refinance my own home, and buy as many others as possible ahead of the next wave of speculators...

IMO the main problem that needs to be fixed is falling home prices and not necessarily the terms of the loans already out there. People are walking away from their real estate because they're upside down. Better terms are nice but they're still upside down and prices are still sinking. I think if there is going to be a bailout they should open the credit windows to home buyers and investors (yes, investors) who want to buy real estate. If they have good credit and they can pay give them a low down payment, low % fixed mortgage. If folks could get loans, real estate prices would stabilize and even appreciate. Just my .02

norm- did you type that correctly? Costco rib-eye @ 4.99/lb?

Ara H. needs to the lower the price on his houses.

3% mortgages are a subsidy in disguise.

This was my most active day trading in awhile because I knew this turn was about to happen.

I got stopped out of three trades early using tight stops, and then missed the big turn because I work a real job. In the last hour I caught another entry when I came back to check the markets and observed the surge in volume. Not as early to the party as I would have liked, but I expect a good follow through tomorrow.

bsi97,

How about a Max Pain 1 bagger in one day?

AMAG closed yesterday at $18.37 (RSI 7 @ 19). Max pain was $35. How'd it do today? Simply up +103%, bouncing off a resistance level of $35 - 3 times - during the day, finally breaking it late and closing at $37.32.

Yah, yah - lots of good news for this one in the last 24 hours but... why not jump to $30? or $40? Interesting new level of complexity that "max pain" adds to this already complicated game :(

"Ara Hovnanian recommends 3% mortgage rate."

I'm not quire sure low interest rates are the solution, though it should help quite a bit.

From what I read, homeowners move homes every five years or so. Having a home that is underwater deprives you of that mobility and that can be very damaging career or life-wise. So even with 1% interest if the home is worth less than you paid it is still a burden around your neck.

Not everyone needs that kind of mobility I suppose, so still a net positive.

blue bluff,

What if home prices are still too high for those earning average/median incomes to afford them with traditional lending methods? What if there are too many homes? Realize that the low lending standards, exotic lending programs and low interest rates allowed people who otherwise would not be able to afford a home to buy one (either to live in or to speculate with). This fueled price increases. Returning to traditional lending will cause the pool of buyers to shrink, which is partly what is putting downward pressure on home prices. Another problem is that the securitization process is broken so there is less to lend. It is very difficult to just fix the home price problem.

norm- sorry, man...i just confirmed it...thanks for the heads up...

$4.99 Rib Eyes - maybe that's good 'ol Western Canadian Beef that just got a whole lot cheaper for Americans with the recent 21% decline in the Can$ vs US$. And who says Canada isn't doing their part to restimulate the US consumer? :P

I've read several traders who like number2son believe there will be a follow through tomorrow...I'm not so sure...I'm curious as to why some think tomorrow will go up as well....thanks

Brokers need more complex stop and buy limit orders. I wish I had a sell-at-limit-and-with-downward-momentum type of order. I could probably program such a thing in IB TradeStation, though I lack the time.

kiron- a 3% 30-year fixed will make most homes affordable to the average wage earner...it's not the listing price, but the monthly payment that determines affordability, right? however, taking LONG-TERM rates down that low just takes us back to the source of our current problems- easy credit, and little incentive to save...

kiron - I understand what you are saying. IMO the pendulum has swung too far in the opposite direction of the easy lending days. In my prior post I stated that loans should be given to those with good credit that have the ability to pay. The problem now is that non-first time home buyer and investor loans are a minimum of 20% down and spec house building loans are virtually non-existent even for those with great track records. Also, credit score requirements and debt/equity ratios are very high. A happy medium would fuel buying which would create a bottom.

norm - conviction is good if all details fit. Maybe a truly modern age society. So,ribeye 1/2 off? yum! ;P I gave up and bought a beef side months ago, eat chicken too, chicken price still high though. Will check beef price again....

If people think their money is worth more in future, they will spend because what's left will buy more later? If no jobs, no money to spend. If no job, food is not bought, no one to grow food? Soup line?

How can one buy a home/property with no money / no job? Maybe it's not bought, but given or assigned?

This is all totally reverse from anything in my experience ever, hard to comprehend but will keep trying. Similar to Grym's idea, need your patience.

2nd,

very, very beautiful. On saturday I picked up rib-eyes for $4.99 lb. I got home and pulled the last steak from the purchase just over 2 months ago and it said 8.99. Grilled two of those beautiful steaks on Sunday. Amazing!

Blue bluff - you make good points but the fact that we have a hard time understanding as Grym mentioned last night is that Housing is still expensive on rent/own ratios.

Housing should of never went up over the last couple years, the job growth/wages didn't support the market. Easy underwriting standards and loose money did.

If investors and owner occupiers were to buy today, they wouldn't experience appreciate because housing is still to expense. No appreciate going forward. Realistically IMO is housing must go down to real wage level and where the economy can support the prices.

blue bluff,

Remember when Bill called Bull a way back he outlined one possible scenario of how it might unfold to leave the maximum number of people behind? A gap up and strong finish tommorow would do it. I think I remember him saying something like "don't get cute just use market orders or you'll get left behind."

That might explain the thoughts of some that tommorow will follow through. On the other hand, don't other strategists, like IBD, e.g., suggest that follow-through is ideally something like around 3 days after a day like today? Poor IBD, they just switched their "market under pressure" call to "market in correction", today. Now they are going to have to print "attempting rally" in tommorow's issue. I like IBD's information, but some of their readers must be getting shaken-out permanently with frustration at all this volatility.

"I've read several traders who like number2son believe there will be a follow through tomorrow...I'm not so sure...I'm curious as to why some think tomorrow will go up as well....thanks"

My interpretation:

Volume was strong today. And obviously the surge was huge.

We've tested the low successfully three times now.

The first test produced a 13% one-day gain from that low, and ultimately a 26% gain.

The second test hesitated a bit for a few days - but it eventually did a one-day 11% gain again. That second test produced a 19% gain.

Now we have the third test, with a one-day wonder of 11% again.

Somebody luck enough to get the 1st low, and then just repeating the same pattern twice would have made 40% on the one-day gains ALONE - never mind the gains from each complete mini-rally. And I can't imagine what your gains would be if you held a high-beta stock instead of good 'ole S&P.

At some point sellers and shorts need to take a hint, and if you like money, people realize if you're stubborn enough to try to short at the support three times and you got burned massively each time, then if you try it at 4th time... well you're not very smart. Not only is the short covering painful, but you miss out on a lot of seemingly easy gains.

Bulls were clearly drawing a line in the sand at that level and telling shorts/sellers "BACK OFF! I'm buying here" in my view.

So if we approach that support again, frankly it's going to take some extremely stubborn people to try to sell & short this again and get burned a 4th time.

We may go lower later but it seems to me the test just seems too retest for shorts/sellers to try to push it there right away.

Of course, if some new big piece of bad news happens that could change things. We had plenty of those and bears really didn't do much of anything impressive in the end.

Of course, some might say HB&B will do exactly the opposite everyone to confuse everybody.

It may be, but the contrarian of contrarian of contrarian thinking seems long in the tooth imho. Sometimes simplicity is best.

CP

the people I talk to everyday DENY that nasty word or that this is a possibility. (uhmm... oil, housing are two examples)

Sometimes we see a "black swan" and can't believe it... maybe the confluence of events has brought several "black swans" to us....

Lobster is on SALE too... Chicken will get cheaper...

Last Friday I was surprised at the rally right into the close! Man, there was a lot of dinero left on the table...

2nd,
I agree that the monthly payment is what makes a home affordable.

I am not convinced that they can bring the 30 year rate to 3%. The reason is that the Fed controls only the short end of the curve. There were problems with the bond auction today, and I expect that as they try to auction off another trillion or so that rates will rise. Banks and investors will also demand additional risk premiums to enter the mortgage market again.

norm - It's good to think in the inverse, builds mental capacity. Will search up some black swan stuff, never saw one, sounds extremely rare.

"Sometimes we see a "black swan" and can't believe it... maybe the confluence of events has brought several "black swans" to us...."

We're so pre-occupied by black swans right now we perhaps forget that "white" swans (aka. bubbles or unforeseen beneficial dislocations) happen even more often than black ones...

blue bluff- i don't necessarily agree with a follow-through day tomorrow, and i can't come up with any fundamental reasons for one, but i can think of a few psychological reasons for one:

(a) the sentiment at today's low was pretty negative, even on this blog...no way would the average guy on the sidelines have been enticed to buy...and thus a further spike up tomorrow would pretty much close the door on any (reasonable) entries by sidelined investors, which is classic market action, no?...

(b) there may be some downward pressure at the open, as weak holders among those who bought today take the bait...i wouldn't expect any sell-off to last long, however; the majority of positions at this point would almost have to be LT, so supply should be limited...

(c) there's been much talk of testing support...i think we're overdue for a test of resistance...

(d) i would like to cash in on "a 2004 Clos Fourtet + a box of havanas."

on the other hand, if the trend is [our] friend, then i've been wrong calling for DJIA 10000, and perhaps it's smarter to bet against (a) through (d)...

"Banks and investors will also demand additional risk premiums to enter the mortgage market again"

Shouldn't we be demanding that the banks lend the money on favorable terms since they're getting free taxpayer bailout money? This non-disclosure, amorphous, no strings attached bailout by King Henry is really disturbing.

Sigh. Canada's Finance Minister mulling over the sale of various gov't assets, including the CN Tower.

http://tinyurl.com/5ttb72

Would someone please sign that guy up for Vadym's market-timing tutorials?

But seriously, he understands timing all too well. Would some Canadian Taxpayer Advocacy group please stand up for us and stamp out this blatant crony-capitalism?

"Shouldn't we be demanding that the banks lend the money on favorable terms since they're getting free taxpayer bailout money?"

No. People with assets = pay lion's share of taxes = don't need loans as much. People with no assets = get all the benefits of "favorable" terms.

We need to stop this cycle of savers passing money on to non-savers at "favorable" terms, right now. It's what caused this bubble in the first place.

The banks will get the same stupid spread no matter how favorable or unfavorable the terms here. Only the ones lending the money get shafted.

kiron- agreed...it would basically take (complete) nationalization of all mortgage lending to get to 3% fixed for 30 years...

Norm, re rib eyes

I could be wrong but have your looked at the price of bread lately, its almost double what it was 6 months ago.

My take is lots of farmers are selling cattle as they can't afford to feed them, creating a glut and lower prices. I'm putting those rib eyes in the freezer as my take is they will be much more expensive 6 months from now.

The economy may be going into recession / depression but the population growth is not going to change on a dime, we might all use or buy a little less but we all gotta eat whatever the cost.

long food, agri, energy and metals

Quasi

Muzie - I appreciate your comments. In the course of my business I see plenty of people with assets and a good track record unable to secure good loans. I'm talking about real estate investors (not speculators). It seems like every day banks are tightening credit standards. Able buyers and sellers want to come together to do deals but can't secure financing or the down payments necessary are way too large when everyone's liquid assets have taken a hit. I go back to my previous statement that the pendulum has swung too far the other way.

blue bluff,
Many people are demanding that the banks begin to lend because they have been given the money. If it was simply a case of liquidity, then that would be the case. I believe that the banks receiving the money were insolvent or close to it and need the money for their capital base. They can't lend it out. In fact, I recall that Paulson has insisted that further capital infusions by the taxpayer will have to be matched by private investors - meaning that he expects that even more capital will be needed.

I think it was Colin Twiggs who pointed out that "needs recapitalizing" is code for "insolvent" and that in that case it cannot be used for lending. I think that is also why the CEOs are being cagey about what the money will be used for - a rainy day fund or buying a weaker bank (read deposit base, possibly with FDIC help).

"Shouldn't we be demanding that the banks lend the money on favorable terms. . ."

That's what got us into this mess in the first place: lending the money on favorable terms. Break the cycle and make the loans to prople that have good credit and are likely to make the payments.

I guess what I'm not conveying adequately is that people with good credit aren't getting loans for a whole variety of ever changing reasons and that people with good credit can't come up with the ever increasing and onerous down payment requirements. That's a big problem IMO.

blue bluff,
I am curious about what you would consider an onerous down payment. When we were borrowing to buy a house about 14 years ago (in Canada) 25% was considered quite normal. People here were used to saving for a down payment. Even now "no money down" is quite unusual.

China to diversify foreign exchange reserves into physical gold...

The mainland is seriously considering a plan to diversify more of its massive foreign-exchange reserves into gold, a person familiar with the situation told The Standard.

Beijing is considering changing its asset allocations during the financial tsunami in order to build up gold reserves "in a big way," the source said.

China's fears about the long-term viability of parking most of its reserves in US government bonds were triggered by Treasury Secretary Henry Paulson's US$700 billion (HK$5.46 trillion) bailout plan, which may make the US budget deficit balloon to well over US$1 trillion this fiscal year.

The US government will fund the bailout by printing new money or issuing huge amounts of new debt, either of which will put severe pressure on the value of the greenback and on government bond yields.

http://tinyurl.com/5hwvuw

Paulson on Bloomberg:

Bloomberg: "Is the TARP shift in focus an acknowledgement that the original plan was flawed?'

Paulson(heavily paraphrased): "No, it was and still is a good plan. Problem is, the size of the problem is WAY bigger than I thought so we don't have enough bazooka to help there. So, instead we're going to try using some good 'ol leverage ideas in another direction and cross our fingers and hope it helps."

Yikes.

http://tinyurl.com/5fe3sz

i would concur. if a buyer can make a 25% down payment, that is fair and they should be incentivized by low 30 yr fixed programs and possibly tax abatements for 10 yrs.

i hate bailouts. i dont want the person who shouldnt have bought next to me sinking my house too. but i prefer to get foreclosure risk people into low fixed mortgage to stop the bleeding. they are going to end up paying interest the 1st half of the life of loan anyway. but they stay and basically pay rent to the bank.

but they should also allow dilegent and solvent homeowners to participate in a low fixed 30 yr too. they then can either decide to continue to pay more to pay quicker or use the extra cash for their family or spending or just save it.

also make sure it becomes harder for home equity loans to protect homeowners from converting homes to atm's.

just thinking outloud.

So we had our rendezvous with destiny and lotsa people are smiling. I hope that the successful retest sets up some decent short term action.

My biggest hope, however, is that the markets become less volatile and that in time people become less scared of their financial future.

I've read in many places that the stock market crash in 29 was not the cause of the depression but the result of it. With so many people invested in the market today the situation is the complete opposite.

People have become frozen with fear and that is creating a serious negative feedback loop between the economy and the stock market. Lets hope that this is the beginning of a break in that loop.

A less spectacular, even boring, market would do wonders for the economy IMO.

NYUgrad
Homes to ATM's, agree that was alot of the current problem. People living beyond their means, just min monthly payment.

When I grew up my parents taught me, if you can't afford to pay for it in cash, you can't afford it, save first buy later. (Basically for everything but a house) Now a days people only think of min monthly for TV, dishwasher, clothes, etc.

I remember when car adds in the paper used to tell you what the price was, now they just advertise the min monthly, which is totally bogus as you can make that just about anything, based on money down and length of term.

Hey if TARP is handing out money to write down principals for people who made bad decisions I might qualify, I have some stock I paid way too much for.

Quasi- good point...if they're willing to write down the principal on our neighbors' homes, they should be willing to write down the basis of our portfolios by the same percentage...

principal amounts...

scratch that...

make that revise the value of our portfolios upwards by the same percentage...

"I guess what I'm not conveying adequately is that people with good credit aren't getting loans for a whole variety of ever changing reasons and that people with good credit can't come up with the ever increasing and onerous down payment requirements. That's a big problem IMO."

Blue, that 25% downpayment is only onerous because housing prices are too jacked up in the first place. A 20% drop in house prices, means a 25% down is now a 20% downpayment.

I'm 32 and have never owned a home. Surely others can do the same and some money away.

I could hesistantly accept that we rework loans for those who already bought high priced homes - but we must not force existing renters to buy in a perpetual bubble by forcing them at the current, still inflated prices.

"People have become frozen with fear and that is creating a serious negative feedback loop between the economy and the stock market. Lets hope that this is the beginning of a break in that loop.

A less spectacular, even boring, market would do wonders for the economy IMO.
"

I absolutely agree here. Constant bombardment with possibilities of great depression becomes a self-fulfilling prophecy.

I firmly believe if we could have a time machine and we could actually go back in time to live what it was like in the great depression, people would feel silly for even suggesting how we live today is even remotely comparable.

2nd_ave

I went thru the same thing in the 80's in Canada and it ticked me off. I had my bought my first house, took over a 5 year mortgage at 10%. I could afford it, live well, pay bills, and had safety left over for new furnace, car repairs, roof, all the unexpected things, lived well within my means.

Then mortgage rates went to 18%, alot of people were in trouble, they got help and special treatment, nothing for guys like me.

When my mortgage came up it was back to 12% so I was OK. In the end I lived thru it by my own due diligence, just ticked me off some others also lived thru it and also profited from the bailouts for bad diligence. (ultimately at the taxpayers, my, expense).

last post.

written by robert folsom.

"Psssttt! Hey, buddy -- listen...

Wanna get in on the hottest bull market? You ain't gonna believe what I'm about to tell you!!

Yeah...wait, c'mon, man, no. Don't walk away. Just wait a second. Just lemme tell yah what I got to say. This market... man, this market is SO hot -- that's right. It ain't stocks, it ain't real estate, it ain't crude oil. It ain't any of that stuff.

There ain't no fees in this bull market, either. You don't have to do nuthin'. Ain't no risk at all. None of them "transaction costs." What? Yeah, I'm bein' serious... Real serious.

Now just come closer and I'll tell yah. Closer so I can whisper it. You ready? I'll whisper it. Ready?

It's...

...It's C-A-S-H. Cash. Yeah, that's right. It's cash, man. Cash.
So it is. There are very few places where you can get the straight truth about cash, dear reader. If you do find one, it won't be a source that recommended going to cash well before the financial crisis began.

The math is simple:

"Cash is soaring in value, as creditors demand dollars and debtors sell everything they can to come up with them. Cash now buys 1.7 times as much stock and real estate, twice as much silver, and 2.5 as much oil as it did a short time ago."

Says who? Well, that quote is from the just-published November issue of Bob Prechter's Elliott Wave Theorist. He also says, "This trend is far from over. The longer you hold onto your money, the more it will be worth, until the deflation ends.""

Unfortunately because the US Govt, Canadian Govt etc. are doling out handouts, everyone sustaining any type of loss feels entitled. Anyone w/self discipline is punished and drives home a problem of when the profilgate boomers spend it all and still want the State to finance their retirements.

we have been hearing about china diversifying into gold for years now.

it has never happened on the scale suggested to move the price of gold.

these types of stories lack merit if read closely. the sources they cite eihter work for funds called "china gold fund" or are simply domestic analysts no different than when peter schiff gets on about america.

until we see signs of china buying mass amounts of gold i can only assume they have no intention of making any drastic moves. especially when they have enough problems of their own right now at home.

today's action was telling in gold, big dump and a strong surge up, but it must hold and continue its move or we will move briskly back below $700.

USD is looking shaky here with some big plunges down, so the roll-over may be starting and gold will hopefully respond in kind. if it does happen i suspect it will happen quickly and violently. the shares will likely follow to some degree in a similar manner. the HGU (canadian gold miner ETF) had one of the biggest swings ive ever seen from low to high today on massive volume.

asian markets are up solidly, lets see for follow-through tomorow.

good luck.

Muzie, re credit

I agree its getting crazy. Years ago I wouldn't even go to the bank to pre-arrange credit if I wanted to by a property. I new I had the money here or there, I would just have to sell something or move something around to get a downpayment and shop for the best deal.

I could make an unconditional offer and then after acceptance shop for the best bridge loan and long term financing.

However not now, people are having problems even with 100% secured collateral in the bank, doesn't mean what it used to, every one is running scared, deals are hard to put together.

Quasi- hypothetically, let's assume the SEC were able to rule tomorrow that all sales and purchases of stock transacted after November 1, 2007 are null and void, where would that leave us? would that not basically rewind the "transfer of wealth," and restore the majority of retirement accounts to their highs at the expense of those who profited from their ignorance? that, to me, would be an equitable re-redistribution of wealth...

follow through tomorrow:
just my thoughts from a technical standpoint:
the equities surge today sure seems to be a bond phenomenon that LCS recognized, volume in futures in 2's& 10's was high.
if S& P breaks and holds 900 next couple of days the pattern of the past months may have changed . Pattern was a clean 5-wave move during the August high to the October low. Now it has become volatile as Muzie clearly points out. So maybe sideways like the last 5 weeks is the new pattern.
Nice for "week-traders"; trading ranges are a license to print money

News on BC: Plant closure:
http://tinyurl.com/6z7qz8

Todays market action TNA and ERX up close to 30 % !!

2nd_ave

Interesting concept, I've seen them unwind trades for a few hours, but a whole year. Now that would make some people very happy and pi$$ off some others, not gonna happen.

If I had managed to somehow profit from this decline like I thought I would have, it would tick me off. But thats my problem gotta stop getting emotional and get back to investing like a machine. Probably why the computer programs are doing better than we are, no emotions, just formulas.

I did well a month ago, had 80% of the port hedged with S&P puts, but sold them up 100% when things looked iffy and never got back in, there now up 500%. But I try to look at what I've got today and just go forward, basically mark to market everyday, you got what you got, is my motto, forget what you paid for it (thats history).

If I would start a new investment today then I should keep it, if the answer is no way in hell I would buy this, then why am I holding it, go to cash and look for a better horse.

read IBD at the library today. Too cheap to buy it.

Thursday's paper said Wednesday's action negated the "rally" that had been in place, I'm guessing off the 10/27-28 low.

If that's the case, today is the first day of a new rally. Per IBD, they look for followthru on day 4-10.

Cost of FED's bail-out activities thus far...

Fighting the financial crisis has put the U.S. on the hook for some $5 trillion a report says. So far.

For all the fury over Treasury Secretary Henry Paulson's $700 billion emergency economic relief fund, it seems downright puny when compared to the running total of the government's response to the credit crisis.

According to CreditSights, a research firm in New York and London, the U.S. government has put itself on the hook for some $5 trillion, so far, in an attempt to arrest a collapse of the financial system.

http://tinyurl.com/55xzup

Re: G20 Summit

Folks, I wonder how you would all take the following article in the context of any investment, should it occur. Just a parcel of ideas to ponder before the G20 summit:

http://www.howestreet.com/articles/index.php?article_id=7938

http://news.google.ca/news?hl=en&ned=ca&q=g20&btnG=Search+News

Personally, I think they should fix the per oz. price of gold of above-ground monetary bullion as a function of the sum total of hard currency in circulation(or money supply) around the world.

Small wonder then, that the Saudis have bought $3b. in bullion, and the Chinese are making noises about diversifying their foreign exchange reserves.(not that they can just up an buy some, like you would copper or potash.) Have you noticed the ads for U.S. Mint gold coins on FETV?

All the talk on max pain tires me since I don't do options. Also too much on PoG and Cana miners today. I think I will play a game or two of Easy Chess on Google and retire. At least I can win at that by taking back an occasional move.

S&P down below 900 after hours. 11:44 PM ET

"Cash is soaring in value, as creditors demand dollars and debtors sell everything they can to come up with them. Cash now buys 1.7 times as much stock and real estate, twice as much silver, and 2.5 as much oil as it did a short time ago."

Norm, I must completely disagree with the naivete of that quote.

Why are we in the stock market? For 98% of us, some form of retirement.

Does cash buy me 1.7 times more retirement right now? No, didn't think so. Especially since nobody knows 10, 20 or 30 years from now if dislocations in the currency pairs will not make it such such that basic necessities will require way more than 1.7 times cash.

I can tell you right now nobody's going to be anywhere near prosperous in a deflation just sitting in a pile of dollars. Those that will be prosperous, or even grow wealthy, will not be cashholders.

If someone absolutely, deeply believes that deflation is coming and it is inevitable, then the solution is simple: short everything and anything, it won't matter what.

Blue Bluff - I've stated this several times in the past but it's worth mentioning again...

"the median national home price right now is still 4 times the median household income. the historical average is roughly 3 times. that's a full 25% lower than current prices. and during the great repression (a depression/recession hybrid???) that we're going through household income will fall, making the current median home prices even more than 25% overvalued."

the only thing the government should have done with all of this money, now well over $1 Trillion, was to create jobs through government infrastructure programs.

Think about this for a second...

$1 Trillion

divided by

$50,000/year x 2 years

=10,000,000

The trillion is what the government will be paying to these banks to shore up their balance sheets so they can be drowned in another 6 months. If this trillion was put into jobs paying $50,000 per year for 2 years to build bridges/roads and pay for solar and wind energy initiatives, it could employ 10,000,000 people. That is all of the people that are currently unemployed. EVERY SINGLE ONE OF THEM!~

Wow.

http://media.rgemonitor.com/images/blogs/bolsa.jpg

some comedy before Friday

re: MGM

Hi All - I'm wondering if you might be able to help me out. I'm trying to determine if MGM might default on their debt due to not meeting their loan covenants. Per their latest quarterly filing:

"The Company’s long-term debt obligations contain customary covenants, including requiring the Company to maintain certain financial ratios. In September 2008, the Company amended its senior credit facility to increase the maximum total leverage ratio (debt to EBITDA, as defined) to 7.5:1.0 beginning with the fiscal quarter ending December 31, 2008, which will remain in effect through December 31, 2009, with step downs thereafter. As of September 30, 2008, the Company was required to maintain a maximum total leverage ratio of 6.5:1.0 and a minimum coverage ratio (EBITDA to interest charges, as defined) of 2.0:1.0. At September 30, 2008, the Company’s leverage and interest coverage ratios were 5.8:1.0 and 3.0:1.0, respectively."

When I calculate their EBITDA from their latest quarterly filing and extrapolate it over the next 4 quarters, I get:

Earnings: $61,278
+ Interest: $144,751
+ Taxes: $34,011
+Depr/Amort: $200,102
=EBITDA: $378,864

These are the numbers for the quarter ended 9/30/08. If we multiply this by 4 (I know the math is simple, but we can all agree that the economy will get worse and therefore earnings will get worse...so I wanted to err on the side of conservatism) we get EBITDA of $1,515,456. Note this is in thousands.

LT debt as of 9/30/08 was $13,288,306. So the ratio if you extrapolate EBITDA out is 8.76, which would put them in default.

Am I missing something here?

Thanks.

http://tinyurl.com/6bwjon

Purple Mountains Majesty and the Mountains of Debt...buying the rumor?

teamonfuego - I like it. That's brilliant. You've changed my mind.

RE: IBD rally

What bsi87 posted at 11:20 PM is correct. Yesterday's lows undercut the previous lows, so according to O'Neil's methodology, that resets the count.

Yesterday's rally was day 1 of the rally, and it was very significant because all the major U.S. indices rallied in unison, and because the volume confirmed the price action.

Now we need to see a confirmation day where at least one of the major indices rallies strong (4-5%, and does so on huge volume (similar to today, or hopefully even heavier).

@ 9:28 PM, 2nd_ave said:

" ...and thus a further spike up tomorrow would pretty much close the door on any (reasonable) entries by sidelined investors, which is classic market action ..."

A spike up on Friday would be too soon for a confirmed rally. O'Neil's methodology states that the confirmation day "usually" needs to occur between the 4th and 10th day. The exception is if the 1st and 2nd days of the new rally are unusually strong, then a confirmation can come as soon as the 3rd day (which would be Monday).

If it happens, the rally should be overwhelming to the upside, and include many sectors.

Also, given the extreme weakness we've witnessed, I think it's premature to say that those who didn't buy yesterday or today or Monday have missed out on the big move, or on the opportunity to buy at 'reasonable' levels as you termed it.

If the trend has truly changed, and the market is going to move higher, then there will be plenty of opportunities to participate on the long side in the weeks ahead.

It takes time to repair the damage that has been done to so many sectors and individual stocks.

The transports rallied strong, and they've been a leading sector for awhile. The financials did rally, and the volume was heavier than the day before, but it wasn't overwhelmingly strong.

Typically, the market doesn't enter a new bull without the financials leading. But as has been mentioned prior, the financials are in such a bad state of affairs fundamentally that they may sit this rally out, at least on a relative performance basis.

Triple RSI buy signals on XLF, XLY, XLB.

Looking to buy some issues with limit orders based on 3PM prices.

Do ur own homework.

Big boys backing the train into the station...again.

Good morning.

Here are your Cara 100 Ratings Changes:

GSK - Downgraded to Neutral @ UBS

New Coverage:

GRMN - Market Perform @ Morgan Keegan
NOK - Market Perform @ Morgan Keegan

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

Some Get-Away Day Music:

http://tinyurl.com/6fbzan

CP,

"If people think their money is worth more in future, they will spend because what's left will buy more later?"
If you think your money will buy more tomorrow, would you buy today or wait?

"If no jobs, no money to spend. If no job, food is not bought, no one to grow food? Soup line?"

Crime is on the increase here (10.5% unemployment). This week local news reported burglaries, armed robberies are up substantially.

About 20-25 years ago on PBS TV there was a program about China. I think it was called Eye of the Dragon (something with dragon in it), anyway, I remember a scene with many women seated at a long table, sorting various types and sizes of screws. The question was asked, "Why are they doing this by hand? Don't you know there are machines which can do this much faster and need no one to even watch?"

The reply was a redirect of the thinking as to the purpose.

The westerner thought how inefficient and backward. The Chinese view was — to prevent unrest and trouble we need to keep people busy and give them a sense of purpose and accomplishment.

During the Great Depression we had to resort to the same thinking. One of the bigger employers was the CCC program. The Civilian Conservation Corps which was under the direction of the U.S. Army and sounds a lot like my basic training experience. The workers got room & board and a small amount of money to send home.

Massive public works and infrastructure rebuilding — the kind of thing we could do now to our great advantage, but takes time to set up properly. So far, the "fixers" have been unable to organize much of anything except protecting their own interests.

Families moved in with each other to share expenses in the 1930s. There was no Social Security/Medicare or unemployment comp. People can adapt to almost anything if they must.

Quasi,

Putting those rib eyes in the freezer gives real meaning to the term "frozen assets." :-)

Sorry, couldn't resist.

I agree on food, ag and (at some price) energy. I'm holding DBA for the long haul and have been trading a bit of XOM.

Kiron,

Agree on the "usual" saving for a down payment. My dad loaned me a part of the down payment on our first house and I did the same for my son. The balance our our down payment was called "sweat equity" — my wife and I did a good share of the finishing of the house, painting staining, finishing the floors and all the landscaping and lawn.

We had a small house built because of the cost savings of our added labor which we couldn't get on an existing house. The total cost of a 5-room house and lot = $11,800. (I was earning only $75/week gross.) After 6 years of building equity, we were able to build a nicer one using the same addition of our labor (still in it).

What ever happened to patience?

I started as a IBD/O'Neill trader (read the books/subscribed to IBD/puked at the editorials) which was a good technical start but I hasten to add that it is predominantly a momentum system for normal markets. One could easily debate if their signal or timing is valid in this bottoming stage where we have extremes in sentiment, volatility, and low volume days and then spurious spikes.

I still think this is a traders market until it tells me otherwise.

That said, I took profits AH on some of my non-dividend payers from yesterday (almost everything I held was up a minimum 7%) and I'm holding big cap div payers bought at the lows.

I sold GG at 22.80 and reloaded it this AM.
Sold BAC. I trust my profits, not banks.
Sold BA and then they announced the delay this AM. Luck.
MSFT. Trade.
INTC. Trade. I think we get these lower again.

I don't have a good feel for today after 500+ up, so I'm holding my LT buys at market lows and blowing off profitable trades that were ST in nature to start with.

Late news: Bloomberg: Birinyi studied action after big spike up days in October and the average was down 1.5% the next day.

Good luck everyone.