What a wild day on stock markets yesterday! At one stage the Dow Jones Industrial Average plunged to below 8,000 to a five-year intraday low, but staged a spectacular rally late in the session to close 6.6% up on the day. With the likelihood of further short-term gains a possibility, it remains too early to tell whether a secular low has been recorded.

How do you see this?

[Bill Cara note:

With all due respect Prieur, I am only interested if you post your ideas here so we can discuss them. By posting the link, which I removed, and asking people to join your blog to find out what you have to say is a bloody insult. There are many people in this community who have every bit the expertise and experience and knowledge you have, and we get by ok, thanks.]

In light of Bill's recent GG report. I found this article interesting this morning. Who am I to question the CEO. But weird.

********

Goldcorp Will Benefit if Gold Falls to $500

14.11.2008 13:36
Canada's Goldcorp will be well placed if the gold price falls to $500 per ounce, Chief Executive Kevin McArthur said on Thursday.

The firm has $450 million in cash, no debt and a $1.5 billion revolving facility that is untapped, McArthur told the RBC gold conference in London.

"We all have to be rational. I went through this in 1998 when the gold price fell below $300 per ounce and today $500 may be the new $300," he said.

"Nobody wants to go there again, but we are willing and ready to take that on if that happens."

The gold price has tumbled from a record peak above $1,000 per ounce and was trading at $713 on Thursday afternoon.

Goldcorp is taking a hard look at its capital expenditure plans and discretionary spending and the board will review options in mid-December, McArthur said.

"We are very bullish on metals prices going forward, but we're ready if we have to sustain the company for a period of time waiting for the metals prices to return."

The company has said it expect to produce 2.3 million to 2.4 million ounces this year while cash costs per ounce should be just under $300.

NOKIA [NYSE:NOK] drops a bomb on mobile industry.

Nokia warns mobile industry sales will falll in 2009
By Steve Goldstein
Last update: 8:08 a.m. EST Nov. 14, 2008
LONDON (MarketWatch) -- Nokia warned that industry volumes for the fourth quarter will be lower than previously expected and said next year's sales will be down. "In the last few weeks, the global economic slowdown, combined with unprecedented currency volatility, has resulted in a sharp pull back in global consumer spending. The weaker consumer spending has impacted many industries, including the global mobile device market. The mobile device market has also been negatively impacted by the more limited availability of credit, which has limited the purchasing ability of some of our trade customers," Nokia said. Nokia still expects its market share to be at the same level or up from the third quarter.

bravo on the update to the Cara 100!!!!!!

$220 a share at 35 - 1!

that is a lot of unwinding to do... should take a while, less anything you mentioned today. bumpy road ahead.

Futures dropped on an historically bad retail U.S. sales report for October.

http://www.bloomberg.com/apps/news?pid=20601087&sid=ahIqvQzPb3wk&refer=home

This Bloomburg article also notes that futures expire today. Volatility lives on.

sticking some bids in at 3PM prices.

Bill...perhaps it's time on Prieur

Sharky...isn't interesting...you had to be out taking care of your mother when there was all that money to be made...I bet you don't miss a dime...

Some excellent commentary here last night. One item that I did not see addressed was a comparison of the 15min charts for the spx, bonds, gold, and $US. The easiest way to see this is to use: SPY, TLT, GLD, and UUP (dollar up etf).

What I find to be interesting is both the suddeness and the coordiation of moves. At about 1:00pm, the Dollar dropped like a rock, Bonds dropped like a rock, and Stocks/Gold shot up like rockets.

Ok, one explanation might be that the Bond auction did not go well due to too much supply and that led to a questioning of the safety of the Dollar thus possibly causing the start of at least a mini-TOG move from Bonds to Equities.

Another, explanation might be just a bear trap move, or a MaxPain move, but that doesn't explain the coordination of Dollar and Bonds.

Another is that G20 jawboning might have caused the Dollar to drop, and thus the Bond, and then the rest, but I have yet to see any of this in the news (yet).

Interesting times. Personally, I am still using a slightly longer term trend change than one day for my signal to buy, but that's jmho.

spot, I'm looking at the hourly charts on the ultra longs, most of which broke through their downtrend lines in the last furious hour of trading. It looks like this morning we'll see those trend lines tested as support levels. That's where I'll look to buy.

A place that coincides roughly with the 3 p.m. prices bsi is shooting for.

spot,

re timing coordination of moves in different instruments -

This is not too surprising. Most buying and selling is done via automated platforms which adjust on the fly. If you spend some time following the daily action on a 1-minute chart across different instruments, it is apparent by the synchronicity of the ticks between practically all stocks, their indexes and the major drivers that you mention (Forex, bonds, metals).

This is true both on both very very boring and very very active days.

> Amen Bill! In the late '90's and early '2000's I recruited professionals for manufacturing positions after retiring from a 35 year career in manufacturing and product development. I watched the elimination of over 3 million jobs as we sent our manufacturing and our technology off-shore. Personally I believe the damage is irreversible and I hope, as you do, that BC will continue strongly, also HOG and others .

Amen Bill re: prieur post. The enitire post is just a cut and paste of his opening paragraph on his own website (which is full of advertisements- unlike your premium quality blog.) You've been quite patient and polite, and if there was an "ignore" option, I would flush that right back to cape town... Buh bye!

Have a great day and happy trading to the caraistas!

MCM

"The pendulum is about to swing." This was my first thought this morning upon awakening: "The pendulum is about to swing, it's only a matter of time".

I've got high hopes for our new president.

Grym, you could short the market. BGZ and TZA are 3x Bear, but I'm not recommending this...

Bill:

A couple days/weeks ago (I'm losing track of time in this market!!) you said keep your eye on C,BAC and JPM. I'm not seeing anything that gives me confidence. any comments?

gold and metal will rally, oil may drop further.
dollar will go lower from here,
I am not expert on any of this, but what i heard her i have posted

kar, new industries are being born in the U.S. today. The most promising in my view is alternative energy. Currently, however, investing in these companies is dangerous to your financial health.

FWIW, I work as a software developer. And outsourcing is a fact of life in my profession, and has been for over a decade.

chicken, don't the spreads and low volume on those 3x scare you?

Bill, I want to thank you for letting us look over your shoulder...GG, Quant,Tech,Fundies,Macro-Economic.

Which ingredients are most important to you? How do you limit/filter the immense amount of information that can be assessed?

I am trying to relate today's discussion topic to the macro-intermediate you referenced.

Thanks for any guidance you can give!

Cara 100 Update:

Price Target Lowered:

KSS - from $44 to $35 @ Credit Suisse
KSS - from $50 to $40 @ Stifel Nicolaus

Re: prieur. I'm not going to annoy anyone by prolonging a discussion on today's action.

But I'm really glad I'm not one of prieur's guys who has to sit on this site hitting refresh until Bill posts something new, just to be the first post of the day!

Jim Lehrer absolutely roasted Paulson on the PBS Newshour last night, I was jumping for joy! Nothing new really, but it's the first example I've actually seem or heard on public airwaves.

The most interesting point hammered home was about financing the housing market and how the expectation of the rescue package was to help stabilize the housing market. Pauson denied this was ever the intent, saying his goal was to stabilize the financial industry.

http://tinyurl.com/5h6s2p

long SHLD at 43

Bought some DRYS at $10.40. Holding on to my Nov $10 Calls I purchased yesterday...

Cara 100 Update:

BMY - initiated as Neutral at BofA. Believes company has three $1 billion-potential franchises that are estimated to collectively contribute almost $3.6B in annual revenue by 2013 and two cost-savings initiatives should lead to meaningful EPS growth ahead of the patent cliff. However, Bristol faces the largest potential patent hit in the group, with about 30% exposure to sales in 2011. Price target of $21 on 10.5 times 2009 EPS, a premium to the S&P of 9%, in line with the historical average.

number2son - I've got a position on the 3x Bull side with BGU, which eventually outperformed QLD yesterday. I'm reasonably confident volume will increase as new customers come on board. We'll see... What could go wrong?

bought some DRYS at 10.20

i think if DRYS can close green (say $11.50ish) it will set up a huge run. i'm thinking similar to the casino run a few weeks ago. we could see it go to $25 in a week.

bsi - we're on the same wavelength

Bill,
Great report on GG, thankyou

Dave Hyde,
I don't think Prieur has a guy hitting refresh, I bet its just an auto program that keeps checking for the new daily Comm Chat page, when it gets a hit, it mechanically posts his message. Probably not very hard to do as Bills URL's are sequential day to day.

Grym,
LOL, "frozen assets", rib eyes in the freezer

Now lets see if we can consolidate yesterday and move on.

[Bill Cara note:

I posted the DR at 9:45am ET because I got caught up in numerous other matters. Maybe, being too busy for words, I decided to come down too hard on Prieur. Do you think?]

Bill
'I have to make the ultimate decision to keep either in the Cara 100 based on the one factor: is the company broken? These companies are Goldman Sachs (GS) in the financial sector and Brunswick Corp (BC) in the consumer discretionary sector.'
Concur fully with the BC/GS call, there will indeed be a reckoning and GS being one of the remaining players will bear the brunt of the credit debacle, heads will roll so to speak. Am ultimately very curious about bear raids on TCK as Canada is still home to the naked short. Am sure the bridge debt deal TCK signed w/bankers came w/caveats around orderly maintenance of the co's share price. AM thinking there are a number of people privy to this and are driving TCK down to extract an asset or two at fire-sale prices from the Co. DO you think it is possible/probable?
BTW re:prieur, I to find it quite offensive for him to use your blog as a springboard. If anyone is interested in his outlook he is easy to find online.

[Bill Cara note: SUBSEQUENTLY EDITED

Vancouver-based Teck (TCK) and Silver Wheaton (SLW) both have fine assets, a quality management team in place, and quite acceptable financial strength. There is no legitimate reason for prices to be so low other than the possible case of forced selling by a major fund. If that is the case, the public is getting the shaft because there are some people who know what's going on and can/are going to trade against the public's lack of knowledge. This is not fair. I hope some of you convey this concern about market transparency and possible naked shorting issues as well to the media. The Report On Business (John Stackhouse is responsible for editorial, and he is a straight arrow) is the person you need to impress. If you convince him, he will take this matter to the attention of the Ontario Securities Commission and the govts of Ontario and Canada. I had given you the name of Ermanno Pascutto yesterday, and said earlier that I missed my calling him at the office yesterday before he left. I spoke to him at length now and he says the new FairCanada.ca website will be ready in a couple weeks, which will show that his new organization is one that will comment on regulatory policy. He is not an investigator, but where he thinks there are important matters to discuss with media on the policy front, he too will apply the full-court press on media. By and large, he (and I) thinks the Canadian business media has many dedicated journalists who will follow up complaints from the public. Some media is business-biased, but others, like Globe & Mail ROB is quite fair. He also does not see a naked shorting issue in Canada whatsoever. One final comment he made that I think is important is that as a private investor he believes that as soon as any company, like a Teck or a Silver Wheaton as examples, is seen to be facing any credit issues, the stocks are taken down hard, and probably much more so than should be the case.]

No Bill, you did not come down hard on Prieur. If he wants to advertise on your site, which is all he does, charge him. Since you don't allow advertising, tell him to not let the door hit him on the way out.

number2son, I agree with you, new industries will always be developed and I welcome alternative energies in particular as well as other new ones. If/when our govt "leaders" show some serious support for alt energy I will invest. My point was we are now buying products from off-shore in excess, sending our dollars offshore, and often receiving inferior if not sometimes dangerous products in return. I'm happy you're gainfully employed and able to outsource your services,hopefully off-shore.

re:DRYS

Nov max pain 17.5/Dec 20. Anything in that area I'll be letting her go.

Prieur's hit and run - didn't heed prior(hehe) request (Obviously didn't get message). Not too hard, put him in penalty box for a week, then give another opportunity to contribute....?

Thanks Bill
Canada has a history of allowing an intolerable amount of market thuggery including: insider trading/tipping, stealing company assets/not allowing competing bids by corrupt boards and my favorite, naked shorting. Our neighbors in the US may think they have a corner on market corruption, I disagree, Canada has a long history of corruption of it's own.

vinod

You're a prophet! Thanks for the 9:16AM info.

watch IYR, it is weakest, already down - 5% after first 1/2 hr.

JPY & $USD up, TLT up - not good for stocks.

note USO down but GLD & SLV up, seem to have decoupled from stocks & oil.

the times they are a'changin' . . . .

Is this a good selling point for GG? Max-pain @$22.5!

Bill
I never was to Prieur web site. But can see why he wants to post link here.
People go where they thing crowed is. If you let him and other post their link here it say a lot bout your blog. People do not have to go to any blog but Bill’s blog and they will find everything they want to know about market.
This is only my opinion

My musical answer to yesterday's comments and today's action.

http://www.youtube.com/watch?v=TuVO4R_3Awk

Speaking of Cara 100...

"July 24, 2008

Today I removed Yahoo (YHOO) and added Potash Corp of Saskatchewan (POT), one of the world's most successful fertilizer companies."

Since that day POT has lost 63% of value. XIU.TO has lost 29%. Index beat POT & cash beat the index.

Let the prices come to us I guess... I am still kicking myself for not buying it at $73 pre-split prices back in the $580 gold days.

Not knowing anything about Potash, I figured it wasn't a big deal at the time that they were close to a China contract.

The bubble on that particular industry should be reinflating soon I think.

Spreading some fertilizer on politics...

"Bolante earlier explained that the P728-million fund was part of the budget of the Department of Agriculture.

He denied claims that the fertilizer fund was intended to boost the President’s campaign kitty in 2004."

http://tinyurl.com/6fzdvx

Agree with Bill's take on BC vs. GS... take a look at BC competition though... they're all in the pink sheets.

GS competition includes JPM, MER, MS.

I guess that means BC has less of a ways to fall... and more upside potential? Some debt comes due July 2009...

Transcript of last call is worth a read.

http://tinyurl.com/6fuah5

I was considering buying BC @ $30, then @ $20, then @ $10, then @ $5.

It's $2.65 today... not much lower than GM.

Can you imagine GM or GS trading in the pink sheets?

Attention Law Firms: Lehman Brothers Is Open for Business -- Again

http://tinyurl.com/5px4kt

re prieur- what it comes down to is whether any "discourse" is taking place...a detached posting of a (cut-and-pasted) paragraph at the opening of the discourse each morning comes close to posting the day's lunch menu in the window...prieur has valuable insights to offer, but the one-way communication leaves much to be desired- i asked a question or two of him sometime in the past, and learned to expect no response...

2nd, Pookie:

On Prieur..."take the Canoli"

Bill,
I forwarded the string of our discussion and mainly your comments to Emmanuel yesterday, so he should be ready to engage in this issue, if there is one.

"Well if you're feelin' down and out....come on baby drive south..."

bought some SIL at .72. Couldn't help myself.

"........i asked a question or two of him sometime in the past, and learned to expect no response..."

By 2nd
If this is the case than I change my mind about
prieur

Bill
good call bout GS and BC

[Bill Cara note:

Sergio put up a list of the new Dow Jones International 150. I'd appreciate this community surveying that list and discussing the non-US based companies that you think would be highly rated by me. I have lists of possible candidates, but I'd like to here from you. The shares must be traded on the NYSE, AMEX, NASDAQ National Market in the US, however, because otherwise too many of you would not be able to get sufficient data to monitor easily and routinely. So, I look fwd to your ideas. I know you have favorites, so check them off against the DJ 150, and send them to me or post them here. TIA.]

I like sil @.72, thru down 2 chips myself...

Bill, re Prieur:

You are not being hard on him. You've asked him in the past -- politely and respectfully, I might add -- to contribute rather than advertise. Personally, I get a bit tired of regularly seeing his posting saying, in effect, "Click here to find out how smart I am."

added to ERX position at 46.38, 3pm price

Any guess
Another 500 point wild ride today?

vinod - that's my guess, depends on +EU = ++US

re: Prieur
Forgive me for beating a dead horse, but my take on what makes this blog special is that the community shares ideas and cares about one another's successes and failures. Self-promoting posts for the purpose of increasing the number of "hits" on a self-serving website and increasing advertising revenue are a waste of time to those of us who read this blog to share and learn. Like Bill said, "There are many people in this community who have every bit the expertise and experience and knowledge you have, and we get by ok" Last post on this matter...
MCM

[Bill Cara note:

Thank you MCM, and others. I'd like to move on because to do otherwise would not be fair to Prieur.]

bought some TNA, VT

Prieur has his own website, he has no business abusing Bill's hospitality.

[Bill Cara note:

I'd like this to be your website, which is why I changed the name to Cara Community and set up a url at CaraCommunity.com. Let me be the Chief Compliance Officer in terms of setting standards and inviting meaningful discussion. I am opinionated here, as in other matters, but I invite strong alternative views and constructive criticism. What I am doing here is to push others with strong views to back them up with analysis and argument that let's others make better decisions. It's rather easy to say, "I think this or that!" But, it's the thought process the rest of us are interested in. Sometimes, just commenting that somebody's argument on this or that did resonate with you is helpful to the process because that will bring in further discussion. At the end of the day, all I am ever interested in is value-add. Financial advisors have for far too long built their businesses on the basis they knew the patter. That's no longer acceptable. Today's financial services model has to be built around value-add, and if possible around positive performance with respect to risk management and wealth creation. Those who only add the patter (and the marketing) are going to be dismissed more quickly in the future.]

This one does not look like a stable, mature, market of a rich and powerful country but a stock market of Zimbabwe

Vinod:

Ahhhh Rhodesia....the good old days...

Waves of regulatory disturbance and indecisiveness.

SPY opened and fell from its 30min range (not good) but bounced on its 1st Fib (good) but it still has to move up and out of its opening range (and hold its move). MasPain might have some influence, although I don't know how to discount the delta.

bsi87 - A max-pain of 22.5 for gg is a sell indicator as price is now higher, no? TIA

Great comment by Paul Tudor Jones in the Gartman Letter this AM:
I see the younger generation [of hedge fund
managers] hampered by the need to understand
and rationalize why something should go up or
down. Usually, by the time that becomes
self-evident, the move is already over. When I got
into the business, there was so little information
on fundamentals, and what little information one
could get was largely imperfect. We learned just
to go with the chart. Why work when Mr. Market
can do it for you? These days, there are many
more deep intellectuals in the business, and that,
coupled with the explosion of information on the
Internet, creates the illusion that there is an
explanation for everything.. There are young men
and women graduating from college who have a
tremendous work ethic, but they get lost trying to
understand the logic behind a whole variety of
market moves. [At the end of a bull market or
bear market] there's typically no logic to it;
irrationality reigns supreme, and no class can
teach you what to do during that brief, volatile,
reign.

I think this fits well with what Bill teaches us.

Chickenpookie
Now Max-pain for GG should be over 30
Last few days I been buying 2000 GG and SLW
and been stop out 3 time losing 600
But yesterday's Bill call on GG made me not to put stop. so working out very good with GG/SLW
will hold them for a while.

Chickie,

I can only tell u what I see. U have to make the trade.

Hourly chart 20 hour BB top is 23 and change.

Nov max pain is 22.50, Dec is 15.

No position.

Bill...

Where is the Dow Jones International 150 list?

Long ANDE at 18.01 RSI accumulation mode. Nice kangaroo tail reversal yesterday.

re:SIL

wow whee. didn't get that one too cheap.

bsi87 - not asking u to make trade, trying to understand cool new tool.

SIL
it is lowest since 1998. it never went below $9 since 1998 to May 2008. is it worth a gamble to buy it?

vinod - cool tool

http://tinyurl.com/2925tk

RE: Prieur

I have to admit that the weekly cut&paste is looking increasingly out of place. I was disappointed that Prieur did not respond to Bill's request to become more involved in the discussions.

Although I have not been to Prieur's site for months, I recall it as being a quick (or perhaps not so quick) snapshot of what other analysts are thinking. The downside of the site is that it can simply amplify the market noise.

I believe the posting of the weekly link was appropriate if it had Bill's tacit suport. However, it is clear that Prieur did not have Bill's approval and is making surprisingly little effort to get it.

As long as we're looking at $0.60 PM co's you might also look at GSS. Similar chart...

sil - is selling assets, in trouble maybe is all I know maybe strong co but just a gamble while watching grass grow in early winter.

Craig, I'd rather you hummed a few bars of "North to Alaska".
Not so sunny here in the beautiful north Puget Sound as it was yesterday.
Bill, thank you for your efforts and your most valuable time. This site is many things rolled into one. While your effort may at times seem onerous, the proof of concept is the unique quality that is the Bill Cara blog. And as only GG, SLW and KRI are showing green on my too long list of longs, I think many others come here for insider info.
peace

RE: Prieur

I missed the earlier responses from Bill.

Moving on...

Apex Silver Mines (SIL) announces it has entered into a non-binding letter of intent with Sumitomo Corporation providing for the sale of Apex Silver's interest in the San Cristabal mine to Sumitomo for a cash purchase price of $22.5 mln. Apex Silver would continue to manage the mine following the sale.

GS bounced off 66 and still rising.

Bill regarding TCK I've stopped buying teck since all this talk about the "Brascan Boys" around Teck.How is the average joe to know about these guys. Thanks Bill.. you did wake us up to what may be happening on the inside of this company. Bill YOU MAY BE RIGHT or YOU MAY BE WRONG the decision in not buying tck is mine.

Bill just a suggestion when you write your daily commentary you should add a new section to it titled WARNING TODAY ON THIS CARA 100...or RED FLAG THIS STOCK and then explain why(remember bill you may be right you may be wrong. We would still love to hear what you are thinking on any particular company.....in the end the decision to buy or sell a stock lies with us.

ALOHA !!

"The engine which drives Enterprise is not Thrift, but Profit." - John Maynard Keynes

This from the man who practically invented FIAT money and "deficit batin'"!! Only if you saw the movie "Idiocracy" would you understand that term!

The fact that global currencies have NO STORE OF VALUE means we as the owners of capital and wealth must play against the rigged casino(is there any other type of casino?) in order to secure our retirement. For the US CONgress to force SAVING onto a country whose currency has been devalued by 96% since 1913 is utterly a "fools game"!

As Americans we run a constant gauntlet of US government intervention that goes hand in hand with the US FED and Wall Street's long term agenda of separating a "fool" and his money! The people now in charge of the VALUE of our money have never produced one single dollar of their own in their entire professional lives! Can anyone say Ben Bernanke or Jamie Dimon have ever produced any "real wealth" as opposed to say Bill Gates or the present and past CEOs of Rio Tinto?

Read this link from an insider Michael Lewis, entitled THE END ...
Link: http://tinyurl.com/64mm8l

From 2000 to 2002 the real budget deficit including off budget items was much less and even in positive territory briefly as income rolled into US government coffers via the TECH BUBBLE and real estate and during that time period the USDX rose to its zenith of 120. The current USDX rally today is a false rally since the real budget deficit and off balance sheet items is now running at all time highs of $50trilUSD loss while the USDX rallies to the 86 levels. Think of it as if the US Dollars in your wallet are stock certificates in USA INC. Would a stock rally if it was pushing the largest budget deficit levels in its entire history? If GE had $50tril of deficits would you want to buy more GE? Those running for safety in the USDX are doing so out of blind loyalty and reflex. The US fiscal fundamentals do not warrant any such "safe harbor" label. That label is only a short squeeze based on the US Peso's World Reserve Currency status where countries are forced to pay tribute to the US EMPIRE by pricing all their goods and services exported in USDX terms. The USDX is trade weighted against Europe and mainly Germany. Today Germany announced they are officially in a recession. Where is such an announcement from the USA? Its not coming out because of the manipulated GDP inflation deflector data, so once again the World trades on fraudulent data put out by a US government and a US FED with an agenda that does not include "honesty". Why should honesty be included ... "honesty" is not in our money?

I have pulled out of some of my Swiss Francs and converted to Australian Dollars(AUD). The Swiss bankers are just not what they used to be. I am referring ONLY to companies like UBS(leveraged 60:!) and Credite Suisse(40:1). I am NOT referring to private Swiss banks. I do not trust where UBS is leading to! I went to AUD due to the Perth Mint and Australian mining companies. I will get 28% more Australian dollars for each Swiss Franc.

I am like a rat on a treadmill, currency wise, we all are, since global currencies have done nothing but devalue since their inception. Some at faster rates than others, but DEVALUE is the theme of every global currency.

ITS THE MONEY STUPID!!

Whats missing in the financial world is a STORE OF VALUE with no liabilities to global banks or global governments! Why would you hitch your wagon to the same wagon being driven by proven financial and monetary con artists? Their collective ineptitude is legendary and getting more legendary each day ...

ALL OUR BEST THINKING GOT US HERE !!!

Re: Zero Rates

We're only ten points away from zero rates again. I am wondering where the panic rout is that would cause downward pressure on treasuries. Not seeing anything out of the ordinary but orderly selling its been a puzzle for the last couple of weeks:

http://finance.yahoo.com/bonds

Gray...the Elvis version, right? Love it. I guess that's what happened with Caribou Barbie. It's a bit cloudy here with sun breaks every once in a while, maybe a bit better there in the rain shadow?

Believe me, I'm working on Changes in Attitudes, Changes in Latitudes.

Bill:
Tx for the commentary on GS. I checked out the Stockcharts link provided - notably, the PnF chart, which is emphatically bearish:

http://tinyurl.com/6eq3fj

The price objective is $6...pretty good risk/reward for a short or a LEAP put, eh?

re:GSS

RSI 7 day 32.28

SIL RSI 7 day 24 and change.

SIL in accumulation mode already.

Doesn't make SIL better, just why I went with SIL.

I have a miners' RSI scan. HL looks interesting for next month.

Re: The Scoffing Has Started

Gold at $53k/oz.?

http://ftalphaville.ft.com/blog/2008/11/14/18260/gold-at-53000-an-ounce/

Started with housing, than financial, than auto, than retail,now tech.
Crisis is spreading.

yvrapx,

great quote. Market logic is a logic of human reactions. Point often missed by the scholars of straightforward logic... misunderstanding maintained by media types constantly publishing explanations for the past moves. "Market today rallied on positive data from XYZ" or "Market dropped on earnings miss by ABCD" - in most cases is just a false after-the-fact explanation. If you pay close attention, you'll see just as often comments like "Market dropped despite positive data from XYZ as investors worried about (insert whatever)". Speaks volumes about how accurate those explanations are, doesn't it. Yet this kind of comments creates this false impression that there is a direct immediate link between the reason and outcome that can be acted upon. Anyone who tried to trade on this kind of logic knows just how false it is

Chickenpookie, your 11:09 post. Thanks for that link, finally i can now understand what max pain is re: option stuff. Useful indeed.

I had been thinking max pain was the declining number that keeps appearing when i log onto online broker page.

Just sent Mr Pascutto a short note re: Teck, in hopes he will chase off some rats.

Exactly Vadym. This part struck me: "There are young men and women graduating from college who have a tremendous work ethic, but they get lost trying to understand the logic behind a whole variety of market moves. [At the end of a bull market or bear market] there's typically no logic to it; irrationality reigns supreme, and no class can teach you what to do during that brief, volatile, reign."

When push comes to shove we're back to buying fear and selling exuberance. Yesterday and today are good examples.

CP,

Max pain is a tool just like Bill's Triple RSI scan. Used incorrectly or indiscriminately, any tool will do damage.

I don't want to be responsible for pushing anyone into a buy or sell esp since we don't know risk profiles, current positions, portfolio size, etc. (Started on my CFC).

r.saunders - If I'm ever successful at tipping the odds, I'll be singing like a canary.

excluding autos and gasoline, retail sales were down less than .5%. something to keep in mind as people trade this market down 300+ points.

Vad,
I find as I get older a lot of my senior compadres have a bounty of knowledge and insight. The Seth Glickenhaus's, Paul Tudor Jones, Don Coxes etc.
(Bill Cara of course)It is a great relief having the knowledge of others as I am able to gauge situations a lot better.

Support on those ultra bull ETFs is breached. Same pattern as always - a slow drip down on little volume. Question is, do we get buyers in the afternoon or does everyone want to go home flat for the weekend?

Max pain discussion started back months ago.

As I recall, it may have been Terry C, it was opined Thursday a week and a day before option expiration, was labeled "misdirection" day.

Recall the following Tuesday, before option exp., there would be a reversal more towards the max pain numbers if something else (news) wasn't affecting market.

Of course, this market isn't what one would call normal, if there is such a thing.

bsi87 - Anything beats guessing, and calculators are responsible to no one. We all know, understand, and realize these things, and discuss them here daily. Believe me, you should never feel responsible IMO, we are all much more grateful and wise to consider otherwise. You are our friend, as we are yours, period.

Kosmo saying sell the rally. I feel better about my long positions. ;)

If we do get a large rally into the close, I'm gonna start peeling off some long positions.

Vad, craig, yvrapx:

Funny isn't. The game is fairly simple. Execution is the hard part. Reminds me of what Twain said, when at 18 he was amazed at his father's ignorance, and at 21 he was further amazed at how much his father had learned.

Plu cest change, plu cest le meme chose.

yvrapx,

great quote. Market logic is a logic of human reactions. Point often missed by the scholars of straightforward logic... misunderstanding maintained by media types constantly publishing explanations for the past moves. "Market today rallied on positive data from XYZ" or "Market dropped on earnings miss by ABCD" - in most cases is just a false after-the-fact explanation. If you pay close attention, you'll see just as often comments like "Market dropped despite positive data from XYZ as investors worried about (insert whatever)". Speaks volumes about how accurate those explanations are, doesn't it. Yet this kind of comments creates this false impression that there is a direct immediate link between the reason and outcome that can be acted upon. Anyone who tried to trade on this kind of logic knows just how false it is

I must say I learned that in school myself...that causality can easily be misunderstood. I think the commentators and others at CNBC should stop perpetuating false reasoning if our investor class is to start looking for real investments and sound advice, IMO.

Bill,

Pendulum about to swing? I am not sure that this is an appropriate allegory. In this market I keep getting visions of Poe's pendulum in the pit with the poor investor tied to the backboard at the bottom of the pit.

Nemo... unfortunately simple and easy are not necessary same thing :)

Looks like volume is tailing off as the mkts sell off.

Sign of the times

HEARD ON THE STREET, by Martin Peers
from The Wall Street Journal.

"Software giant Microsoft unveiled interest-free loans for "qualifying" customers buying certain kinds of business software."

CP,

I hope that your hopes are realized.
(I've watched this guy for too long to see anything other than a very savvy politician.)

Thanks for the shorts, but I don't plan to stay at my computer enough to stay on top of them. My outlook is more toward the longer trend and don't want to bet too much for or against this market on a short term basis.

Rule changes and indecision (maybe too many decisions) in high places make it a crap shoot.

I have a list of 8 or 10 which I plan to ease into on the long side when a clear direction is established. At my age, I don't expect to get rich, I just want to get by until checkout time.

Funny thing i saw on market update on yahoo.

"Gold prices are in rally mode, climbing 5.2% to $741.40 per barrel."

I could use a barrel of gold now.

CP,

This year quickly went from my best year to the worst of my two down years in forty + years in the market. 1993 was the other when I was down 8.9%. As of last Friday I'm still down 11.4% YTD, so I may still beat the old downer, but maybe....

Just goes to show the psychology of the market that desires oil become the store of value. If you consider the amount of leverage including derivatives applied against the oil market, and the fact that oil contracts are mostly hedged against currencies, then you can assume that oil is parried against currencies, making it a volatile form of currency. No wonder there's such a rolling disaster going on.

Bill-

Please excuse my late reply but I wanted to thank you for your GG post and subsequent pdf. The word Zazen come to mind after reading it. Again, much thanks.

Seamus: Keep an eye out, the past is coming back in vogue.

No interest loans for most large capital purchases like autos will have to continue.
Lease options for home purchases. I've seen these back already.
I hate to say it, but there will be lower home rates for a while but monetary pressure will bring back double digits. Wages will have to rise.....and you know the rest. Gold is good.

Bill - Thank you for all your posts and information regarding TCK. You are the only source.

[Bill Cara note:

Re TCK, RBC Research issued a note that can summarized as follows:

Even assuming flat US$100/tonne coal beginning in JFY 2009

and a $750 million equity issue, (note: RBC's worst case scenario) we estimate Teck's NAV to be $12.71 per share.

However, the market is focused on the liquidity risks, and rightly so, in our view.

The shares are in essence now trading like options.

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

I have a copy, but I am rushing out the door to go to meetings today. I will try to make it available over the weekend.]

Kar,

I would suggest our that if government would have stopped supporting oil and trying to diddling with the price, alternatives would have been developed before now.

Same with the auto industry. For years the big three carried the pension debt without reporting it as a liability. In fact I think I recall some creative bookkeeping which allowed it to show as a positive. (Not sure.)

SC Governor Sandford made a good argument on CNBC for letting the autos fold. He cited the success of Nucor Steel after letting others bite the dust.

SIL - Morning info, don't recall seeing it here http://tinyurl.com/5tluge

I'm with you on that one Craig. After we bottom on this deflationary spiral, look out. Not only gold, but the T-O-G.

Nov. 14 (Bloomberg) -- Capital Growth Management LP's Kenneth Heebner, who in 2007 dumped his entire stake in banks to load up on energy shares, reversed course by selling his top energy holdings and starting new positions in Citigroup Inc., Wells Fargo & Co. and Bank of America Corp.

Capital Growth, based in Boston, bought 15.4 million shares of Wells Fargo, 27 million shares of Citigroup and 15.6 million shares of Bank of America in the three months ended Sept. 30, according to a regulatory filing today.

The firm sold all its shares of Schlumberger Ltd., along with those of Freeport-McMoran Copper & Gold Inc., Peabody Energy Corp., and Consol Energy Inc. The four companies were four of the money manager's top five holdings as of June 30, Bloomberg data show.

Heebner, 68, known for his rapid movements in and out of stocks, exited banks in the second quarter of 2007 after saying that the credit crisis would hobble earnings. He put more than three-fourths of the fund into natural resources and energy, helping his CGM Focus Fund to an 80 percent gain in 2007, the best performance by a U.S. stock fund.

Seamus, 12:06pm

"Software giant Microsoft unveiled interest-free loans for "qualifying" customers buying certain kinds of business software."

Well this is starting to sound a bit like when I worked for Nortel and the Tech / Telecom bubble, do you remember "VENDOR FINANCING". If sales are down just give it to the customers and loan them the money to pay for it, no money down, no interest and no payments for X years. This can easily turn into a house of cards.

Dell up 7% on big volume after being down during yesterday's big rally. Go figure.

How long ago were they arguing that commercial capital investment would buoy the economic impact of slowing personal consumption and we would have a "soft' landing?
Clowns.

Where is the Dow Jones International 150 list?

Panic

Before the afternoon, pre-weekend action heats up, thought I’d share the following excerpted from the book (recommended) “The Unthinkable” by Amanda Ripley:

“Panic is one of those words that change shape depending on the moment. Like heroism, it is defined in retrospect, often in ways that reflect more about the rest of us than about the facts on the ground.”

“The word comes from mythology, which is appropriate. The Greek god Pan had a human torso and the legs, horns, and beard of goat. During the day, he roamed the forests and meadows, tending to flocks and playing songs on his flute. At night, he devoted much of his energy to the conquest of various nymphs.”

“But from time to time, he amused himself by playing tricks on human travelers. As people passed through the lonely mountain slopes between the Greek city-states, Pan made those strange, creeping noises that slither from the darkness, never to be fully explained. He rustled the underbrush, and people quickened their pace; he did it again, and people ran for their lives. Fear at such harmless noises came to be known as “panic.”

Grym, I heard Sandford speak and couldn't agree more with him. The big three have never learned to manage - unions, costs, quality, compensation at all levels, etc .... Foreign auto makers operating in the US and providing jobs and great product haven't asked for a dime from our gov. God bless 'em!

HB&B has never "rustled the underbrush" have they?

golfer
The Dow Jones International 150 list was posted a few days ago by someone in the chat. I don't remember which day.

Grym - You've done much better than many. I think of it as an optional challenge. True, if equities go to zero it would hurt, but won't wipe me out... everyone around me would be wrecked, that's where the problem lies as I see it. It's all too much panic and drama.

The market has properties similar to a third-order ststem with a very high gain factor and negative feedback loop (oscillator).

Joey, 11:24am

""..Tx for the commentary on GS. I checked out the Stockcharts link provided - notably, the PnF chart, which is emphatically bearish:

http://tinyurl.com/6eq3fj

The price objective is $6...pretty good risk/reward for a short or a LEAP put, eh?...""

I would be little careful with those price objective targets, auto generated for the PnF charts, read the notes and understand how they are calculated. As an example I pulled up your chart above and made a few minor changes to the settings, notice the huge change in price objective targets, $6 can easily change to $55. (Price objectives below are at the time I pulled up the charts, will change with the passage of time)

Price field changed from "hi/low" to "close" PO = $42
http://tinyurl.com/5mfb5p

Scaling method from "Traditional" to " Ave True Range" PO=$44.72
http://tinyurl.com/5gs7tu

Scaling method from "Traditional" to " Ave True Range" and Price field from from "hi/low" to "close" PO = $67.08
http://tinyurl.com/5olc9c

I tend to use the close along with ATR, then look for taking out previous resistance/support and trend lines.

Just thought I would throw out a different way to look at it.

From TD Economics 'Can Equities Recover'
http://tinyurl.com/65xfaf
interesting

More insider buying at Teck – Insiders

Teck Cominco Ltd. vice president of exploration Fred Daley bought 17,000 class B subordinate voting shares at $8.69 each on Nov 11, 2008, bringing these holdings to 54,250 shares.
Teck director Warren Seyffert bought 20,000 class B subordinate voting shares at prices ranging from $7.01 to $7.06 each on Nov 12, 2008, bringing these holdings to 101,902 shares.

Global Dow 150

For those that are asking, I did a little search.

Link to post by sergio Nov 12.
http://tinyurl.com/6buayp

Direct link to Global Dow website
http://www.djindexes.com/globaldow/

From Minyanville
Market in a Coma. Describes today well no?

I think today good to buy some gold bullion. What's best for Cdn?

Lance Lewis

No one can buy physical gold. Only paper trading.
"This tells us not only that gold is about to erupt to the upside, but also that the market smells the endgame for the dollar fast approaching too.

There's no way around the fact that the dollar will collapse. Either it falls because the Fed begins to monetize and rapidly inflate (which has always been my assumption), or because the asset-price deflation continues and the US government is forced into default.

Think about it: In what world does the biggest debtor nation on the planet become the epicenter of a financial and economic collapse - and also see its currency remain strong? These people looking for “deflation” into dollars are simply nuts: The only reason the dollar has rallied so sharply thus far is because the dollar is the world’s reserve currency, and therefore everyone’s liabilities are in dollars. And when people began to deleverage in a panic, they had to buy dollars to offset those liabilities.

The US is no longer the creditor nation that it was in the 1930s, or as Japan was in the 1990s. It’s a giant debtor with a world-record current-account deficit, totally at the mercy of its creditors (i.e. the rest of the world).

At the current rate of collapse and spending, the US government won't be able to service its debts. Eventually, the rest of the world will simply say “no” to continuing to fund more debt, just as the private markets did to the US consumer over a year ago when the mortgage market collapsed.

My bet: The first indications of that “no” are coming this weekend at the G20.

Interesting how GG, ABX, et. al. are holding up so much better than the indexes. Hope we rally again into the close. I'm tired of red weekends.

like watching yourself age.

Interesting Seamus. This begs the psychological question: Do you picture yourself as the hunted, afraid of the rustling Pan, or do you see yourself as the hunter, the rustling a sign of prey?
Is our *money* to be taken as prey, or is it rather ammunition to take our prey?

Most of the battle is figuring out what we're doing. We're hunters.

bobj,

Thanks for the info on the Dow 150. I will trace back to find it.

golfer

Holding Bullion Horizons Betapro. If bullion were to break out, would this paper gold fund rise with it, I've seen a lot of discussion about COMEX here in past re fail to deliver etc.

INVESTMENT OBJECTIVE

The HBP COMEX® Gold Bullion Bull Plus ETF seeks daily investment results, before fees, expenses, distributions, brokerage commissions and other transaction costs, that endeavour to correspond to two times (200%) the daily performance of the COMEX® Gold Bullion Index.
PRINCIPAL INVESTMENT STRATEGY

The HBP COMEX® Gold Bullion Bull+ ETF and the HBP COMEX® Gold Bullion Bear+ ETF take positions in financial instruments and/or equity securities to seek daily investment results, before fees and expenses, that correspond to twice the daily performance or inverse performance of the COMEX® Gold Bullion Index®. H

"The market has properties similar to a third-order ststem with a very high gain factor and negative feedback loop (oscillator) [with a wire attached to a kite in a lightning storm].

Chickenpookie wisdom with my foolishness attached. 8<) .

Westcoaster: Just search this site with two words, Kaimu, GLD.

feeling better and better about this market for the next few months. people are very pessimistic about all government reports, but retail sales to me is a good indication that people are overreacting. the latest report comes in what may be the worst month we will have during this downturn. sales were down 2.8%. but that takes into account very poor auto sales, which we can probably assume won't come back, and weaker gas sales (b/c gas prices fell so much). back those out and we're talking about a .4% drop in sales.

A 0.4% drop. does that warrant talk of a depression?

in addition to this, there is truly a leadership vacuum in both the markets and the government. in 2 months we will officially be saying good bye to the worst president in ages and saying hello to what i believe is one of the most influential and inspiring leaders we have had since MLK and JFK. in the time between then and now we will see a new treasury sec named, as well as additional posts to be named. this will significantly impact everyone's psychology. And i think we can all agree that the market is a barometer for everyone's psychology.

my take is that we should be buying these dips. we can sell them later at higher prices.

i still think that we will be hurting longer term and will see the 2002 lows some time in 2009. but that doesn't mean we can trade the BHO (barack hussein obama) rally.

doesn't mean we **can't** trade this rally, that is...

Information on the Global Dow 150 was Posted by:

sergio at November 12, 2008 8:53 PM

Some of his post follows;

NEW YORK (MarketWatch) -- The Global Dow launched on Tuesday -- the first addition to the Dow Jones Averages family of indexes in 75 years.

http://tinyurl.com/globaldow

The Global Dow is a 150-stock index of the most innovative, vibrant and influential corporations from around the world. Only leading blue-chip stocks are included in the index. Its components, like those of The Dow, are selected by editors of Dow Jones. For more information please contact us at djindexsupport@dowjones.com

http://www.djindexes.com/globaldow/

(The post provides the list which you can get from the Dow site.)

I wonder when the "government gold" commercials will stop running every ten minutes on CNBC.

Paulson talking in a few minutes. I wonder if the markets rise after he is done?

I wouldn't be surprised if he go down 100 more from down Dow -180 right now...

(The Standard)Friday, November 14, 2008
The mainland (China) is 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. The United States holds 8,133.5 tonnes of gold reserves valued at US$188.23 billion. China holds gold reserves of just 600 tonnes, worth only US$13.89 billion. Beijing's reserves could easily go up to 3,000 to 4,000 tonnes, Tanrich Futures senior vice president Colleen Chow Yin-shan said. Until now, the United States has had little choice but to issue massive amounts of debt to fund its deficits, and China has had little choice but to purchase it, as there are not many markets deep enough to absorb the mainland's US$30 billion to US$40 billion in monthly capital inflows. Government officials involved in the management of China's reserves are beginning to see gold as an attractive place to park some of these funds. They see it as a real, tangible asset that will not lose its value over time - in stark contrast to the greenback, which is becoming more disconnected from economic realities as more bills are printed. "It's the right time to increase the gold reserves, as the price is about US$710 to US$720 per ounce," said Wan Guoli, vice secretary general of the China Gold Association.
The International Monetary Fund has made reducing global payment imbalances one of its priorities in the aftermath of the financial tsunami. "I think China probably will expand its strategic reserves into commodities during this downturn," said a Hong Kong-based strategist.

"China will continue to buy treasuries ... otherwise the system would get distorted," he said.

"But I think China will diversify its reserves

Genworth

I mentioned Genworth two days ago as it collapsed to $1.00
and ramped to $1.50 yesterday....current $1.45
Nobody seemed interested as there were no comments.

no position

Does anyone know any good software or instructional website for constructing and tracking your own stock index?

TIA

Westcoaster,

You've just outline my greatest concern — the lack of credit at a national (US) level.

What, in your opinion, is the best defense if this indeed happens?

--------
Inspiration!
If the G20 and the rest are not fed up with accepting our debt and IOUs, what say we sell them a couple of auto companies, pension debt and all?

here we go? rising fast on increasing volumne by the looks of it...

Grym
No idea really, but as Kaimu buys AUS dollars, you might try some $cdn. I just reloaded Goldcorp here, with 2m oz of hard currency production every year.

Oil tankers being queried for possible temporary storage:

http://tinyurl.com/5edgdm

teamonfuego,
"...in 2 months we will officially be saying good bye to the worst president in ages and saying hello to what i believe is one of the most influential and inspiring leaders we have had since MLK and JFK. in the time between then and now we will see a new treasury sec named, as well as additional posts to be named."

I'm just curious, what leadership qualities do you see in Obama which give you such optimism?

(If possible try to avoid Bush's performance as a benchmark.)

Will you still feel the same if Obama's Sec. of Treasury is a re-cycled Clinton person?

Inflation will erode the national debt unless King Paulson repudates it. Soon a Hershey bar will be the size of a mint chocolate and cost $1,000. Stock up on chocolate before it's too late.

'UK pensions strategy needs complete rethink to be safe' from FT
The first sentence:
Working for the government looks like the best way for UK employees to secure a decent pension.....
http://tinyurl.com/5g8qvt
We have the same dichotomy in Canada, Civil Servants are 'Pension Aristocrats' on the taxpayers dime while everyone else is forced to weather the financial vagaries of the markets.

Grym - good question. I think it's really remarkable that he was able to be elected president, being that he is a black man. That is very inspiring not only to people in this country but to people around the world. You have to admit there is a great deal of racism in this country, so he was against a lot of odds. And the reaction by people throughout the world was one of inspiration and joy.

Obama is one of the best and most eloquent speakers we've ever seen. He has been honest about his past and has been able to answer critics about issues of his past pretty clearly. And he ran a really smooth campaign against a tough foe.

It's pretty clear that he is an intelligent, well spoken, well thought out person. That's a big difference from the prior administration.

Has anyone listend to Donald Cox and his commodity take today.

Regards

And as for the Treas Sec...I think a Clinton admin. has-been will be a neutral to slightly positive factor for the market. Again, we have a leadership vacuum. Anyone that can articulate his thoughts better than Paulson/Bush will automatically be positive for the markets.

westcoaster said: "My bet: The first indications of that “no” are coming this weekend at the G20. "

Thanks for throwing in your insight, it helps tremendously. This also fits with yesterday's bond auction which "didn't go well".

I noticed last night Kitco was showing inventory improvement with coins and bars previously unlisted.

Bob

Don Coxe is in India, so like he said last week might not be a call this week, or at a different time.

Chicken and others
Full disclosure: I was quoting Lance Lewis resident gold guru from Minyanville in myt 1:17 Post, but it resonated with me as an issue, and caused me to reload gold. I can't help but think that commodities like oil, gold, metals and fertilizer are a fairly solid place to be just now. JMO.

"I'm just curious, what leadership qualities do you see in Obama which give you such optimism?"

Voted Editor of the Harvard Law Review, a law Prof. says he is the most intelligent student he has had. He must have made a impression on a lot of people at Harvard.

I know sometimes in this environment intelligence is mistaken for something negative, but let us be reassured after our latest experience, it is very important to our success.

Just knowing the Constitution would be helpful.

agreed on oil, gold, metals and fertilizer.....also agree with teamonfuego re: Obama

wow, quite a reversal, are we going to see a positive close?

"I'm just curious, what leadership qualities do you see in Obama which give you such optimism?"

Grym- Your question was not directed to me, of course, but thought I would join the discussion. My optimism is based less on proven accomplishments and more on promise. How many Presidents in the past century have risen to that post with a background like his? I know what it's like to have grown up more or less in his generation. I know what it's like to grow up a minority in the US. He's faced challenges those in the "privileged" class (ie, those we normally elect to that position) are not only able to skirt, but probably aren't even aware of. He got to Harvard on his on merits. He seems pretty candid about his past, with little to hide (by admitting he used alcohol, marijuana and cocaine in high school, he's shown he's able to deftly sweep aside bull---- questions). He's been out in the open about his transition period, and he's been actively soliciting opinions from seemingly all corners. So far, he strikes me as someone just like us. So I'm optimistic.

Obama was Constitutional Law professor at U of Chicago so I think he understands the Constitution pretty well...

..just read teamonfuego's response..so i would say we're on the same page...

OK do we carry positions into the weekend?

Leadership: Focusing on the needs of the largest part of the populace- leading the most people to a reasonable standard of living over focusing on the powerful, wealthy, influential, but few; is a sign of leadership.

Obama,
Requesting that the law be upheld would be a good start.

My impression is that sentiment is almost universally bearish. B. Ritholtz had a post two days ago about bottom tests and the comments were largely in disbelief that this could be the bottom. My gut thinks that a lot of people will be left behind next week.

http://www.ritholtz.com/blog/2008/11/retest-of-the-october-lows/

Bought SLW and ABB today. Thinking about adding CCJ.

westcoaster - i think now is the time to be holding through the gyrations and only looking to sell at 1100 on the S&P 500.

I don't eat near as much as I used to, since I became a daytrading follow the market junkie. Getting rid of that roll around the middle. (Lunch is for wimps!)

my thinking on 1100 is that the 200 day moving average by the time we get there will be around 1,100. I'm doubtful we can get much more than a few percent above the 200 dma.

"looking to sell at 1100 on the S&P 500"

If that's the way everyone is thinking (and I'd be inclined do to the same), then that confirms why many think we will trade sideways for the next decade...

I like the idea of being able to keep my stocks overnight with me. Over the weekend would be a real pleasure. Equal anxiety either way.

Speaking of S&P 1100, here are revised fib retrace levels on major indices, updated for new lows on NAZ composite, S&P 500, and R2K yesterday:

______________38.20%________61.80%
NAZ comp______1975.93_______2314.11
SP500_________1108.90_______1287.31
DJIA__________10259.09______11794.57
R2K___________594.98________694.84

muzie - i think most people are thinking to sell at 1000, so i think another 10% upmove beyond that is quite possible.

"My impression is that sentiment is almost universally bearish."

I agree. The whole internet is bearish. Even the most bullish go for a "rally to 1100 before the huge plunge".

I've always heard the market does the least expected move. If we crash I sure am going to be surprised considered how everybody & their grandmother thinks we're going to crash.

Oh, and everybody thinks they're the only true bears as well, for some reason. In fact most of the forums I read have bears bickering each other about the fact they're not bearish enough.

Giving $50 billion to the automakers and the union without concessions sure looks like Obama is focusing on the most powerful, wealthy and influential of the blue collar class.

Telling them all to go pound salt would show me true leadership.

ADM -taking 50 % profit in 40 days, I am taking the money home for the week end, bought this with RSI buy alert.

spot - "with a wire attached to a kite in a lightning storm"

Thanks for completing my thought.

"without concessions"

Very dramatic but not realistic. Also not going to happen.

Instead of subjectively guessing at bearish/bullishness, why not use some hard measurements?

use stockcharts.com and plot $indu:ief, $indu:$vix, $spx:$vix, $spx:ief, $compq:$vxn, $compq:ief, changing RSI to 7 day.

IEF against the indices shows a measurement of valuation vs a risk free alternate (we can debate whether a 10 yr Treasury bond is risk free but that's another post). VIX/VXN measure fear. When the markets have rallied up to where indice:VIX is at or above 70, the risk of taking on a long position is very high. Obviously when they approach RSI 7 day of 30, it is a lower risk situation.

They're neutral today, about 46, both compared to VIX/VXN and IEF.

To save

bsi - Thanks for that one...saved.

Looks like a Fugly close.

goodbye uptrend.

i always try to remember that the market plays us, and not the other way around...

Nice jag south on the Dow..........

Fugly isn't the word. How can anyone truly believe sentiment isn't awful given how afraid traders are to go home over the weekend owning equities?

This is ugly, ugly.

What the heck was that?

number2son
Because they ARE traders, investing often times meaning holding investments longer than 1 session.

Market is to hot to hold, people get burn with it.
so, holding is out.

well although it wasn't fun, DIA dropped on lower volume, 41 million, vs 64 million yesterday.

I am impressed. Was that rise and drop in the last half hour a well-tooled trap?

Found one more bull expecting a secular bull market - Kevin Haggerty, former head trader at Fidelity: http://tinyurl.com/6bxr6y

Bottoms are made over time with prices. It's not an easy, clean process.

drop at the close-

based on what Bill has said a few times in the past, it may simply reflect raising ammo for a run-up on Monday...in any case, I'm not going to worry about it...

Clarification: Bottoms are made with a combination of time and price.

The closing half hour. Nervousness.

They heard "rustling in the underbush" and started to quicken their pace, then scampered away.

Make that "underbrush"

vinod
Well if the positions you own aren't able to be held longer than a session it qualifies as gambling not investing and Vegas has plenty of empty rooms right now. IMO there is the low volume and high volatility commensurate because short-termism has taken over.

CNN: Stocks tumble at the close, with Dow ending down 339 points, due to heightened recession fears.

Oh, it was due to heightened recession fears that blew in at 3pm then. You have to laugh at some of the "commentary" at times.

Jim Cramer thinks some kind of bad news must be on the way after the close or this weekend. That remains to be seen, after his 2:52 call: "If the redemption selling is over, you'll want to get ahead of the rush to buy"

agree, 2nd, if they dropped thru yesterday's low on heavier than average volume, I'd be slightly upset. Probably throw up and crap my pants.

The longer we consolidate in this area the better support it will form. Anyway its a Friday, didn't expect much and its still a higher low for the past three days.

Have a good weekend.

meant to add that this to shall pass........

re:Kosmo

The man rushes to get in front of the parade.

Just for good measure I picked up a little TCK.B at $6.5 at the close

bsi87

I like your approach to trading and appreciate your posts. This market has forced me to reevaluate my methods and consider other alternatives. Thanks

"The first indications of that “no” are coming this weekend at the G20. " This to watch over the weekend. Have a good one all.

Pay $10m, get $3.4bn of funding?
http://tinyurl.com/6cktyf

XLF & the major indices held the day's lows, but IWM broke support right before the close. Bought some gold in the 401K yesterday when the USD couldn't crack 88, but trading acct still in cash for now.

USD is continuing its rally AH...

re: Obama Treasury Secretary

Speaking of a Clinton era retread for this job - Larry Summers is really getting panned by women's groups, who would also like to see a female candidate. One person suggested is Brooksley Born. I looked her up, and from the couple of references I found she looks like a good choice. She was advocating regulating the derivatives that are now so toxic back in 1997.

I figure part of the downward momentum into the close took out the 401K holders who put in sell-at-close orders today after seeing yesterdays market rise.

The plummet was accompanied by a huge spike in the $USD.

I've got to admit, the extreme $USD strength over the last few months has really thrown me for a loop................

Bill,

You are absolutely correct to ask Prieur to participate. Im sure he has some interesting things to share but seems to act like a "SQUATTER" as his site uses ads and therefore wants to see more "clicks" to boost revenues. Kudos to you for taking a stand!

This isn't exactly a big epiphany or anything, but simply scaling back position size has made this market much more sane. I am basically 30 percent invested and 70 percent cash, and my account is back to fluctuating about the way I like to see it fluctuate in a day.

At least we didn't give back all the gains from yesterday. Maybe a small victory?

I think I saw here a day or so ago that today was the last day of selling for some Hedge Fund withdrawals, if so,this could account for the dive into the close?

The week before options expiration favors higher prices, but Max Pain can figure in for individual stocks.

re: Hedge fund withdrawals.

I think the hedge fund redemption story is bull*. It's gotten to the point where we ascribe every down to a single cause, namely the hedge funds. The markets would be more nuanced than that.

The whole point of "hedge" funds is to not be 100% long and to profit regardless of market direction. Of course, when market dislocations (not change of direction necessarily) happen, well then it doesn't work. But overall I would expect most hedge funds to use a mix of longs, shorts, options, etc. so to say every down is a redemption is suspicious.

I did read an article saying hedge funds were only 20% long now. If that's true there is no basis for saying they are constantly moving the markets.

Hedge fund redemptions is just one of those urban legends that we all use to try to explain away the random noise behind crowd behavior.

If the hedge fund rumor could be clarified.

Is it the last day for the funds to sell or is it the last day that investors in the funds must make a request to redeem.

The outcome will be different based on which scenario is correct.

"Because they ARE traders, investing often times meaning holding investments longer than 1 session."

True, but there is a difference between day traders and swing traders.

I think the swing trade is still on. Then again, it wouldn't be the first (or last) time I've been wrong. ;(

Hedge fund redemptions is just one of those urban legends that we all use to try to explain away the random noise behind crowd behavior.

Posted by: Muzie

Can I assume that "mutual fund redemptions" and "runs on Banks" are similar "urban legends?"

re: redemptions

No obviously when everyone in the public panic all funds do redumptions and stocks get sold.

My point is everyone is acribing a far bigger share of the whole thing to hedge funds than reality would support. And the fact we're trying to guess some kind of "schedule" by which these redemptions happen (and then end) reeks of wishful thinking.

Muni, I think there is definitely forced selling taking place by those with leveraged bets. Anyone that has utilized leverage knows what it feels like to be on the wrong end of a leveraged trade(s). I don't think it's as easy as blaming the market woes on this phenomenon though. The constant explanations of the "cause" of each move in prices does everyone who listens an injustice.

By the way the next story will probably be that everytime the markets sell of it's because of "harvesting losses" and "tax selling". I'm sure we'll get inundated with that, even more so if we get a big drop.

It may be, but I will stick to the far simpler explanation that "people are selling because they're scared shitless".

More Sign of the Times

Detroit News Friday, November 14, 2008
Source: Ford plans employee pricing offer
Tom Krisher / Associated Press

DETROIT -- Ford Motor Co. is preparing to offer car buyers employee pricing, plus cash rebates, on most 2008 and 2009 models as part of a year-end clearance sale starting next week.

(Not posting link as there is an irritating ad)

wow, what a crazy close. i stepped out for lunch and came back to some ugliness. however, i think it's being played with.

Recent comments attributed to Charlie Munger.

paraphrased

" We are forming a base in the stock market for a 10 to 15 yr. bull run. The performance of the stock market over the last ten years has never been worse, while corporate profit growth has never been better. "

" The market will not rally until longterm bond yields come down. "

" The government will make money from TARP program. Toilet quality Mortgage Backed Securites are being bought by smart vulture investors for 50 to 60 cents on the dollar, far above the price many people contemplate buying them for. He and Buffett are buying them at that price also. "

" He and Buffett are buying equities for their personal accounts. "

Charlie Munger, continued

" The longest recession ever was 16 months long, putting us about halfway through this downturn, which will be short, but painful. "

fox1,

u're welcome.

Where are the Charlie Munger quotes coming from? And thanks for posting them.

I find it hard to believe that poor quality MBS will make money in the long run - unless we see a very large inflation that lifts asset prices again in nominal terms. Many of the loans are the worst ever made.

I first heard the comments read on CNBC two or three weeks ago by the anchorwoman while she was interviewing Bill Gross, evidently seeking his opinion on the stock market.

I then punched up " Charlie Munger bull run " on yahoo and found the source of the comments, which seem to be reliable and also coincides with Buffet's recent editorial in the NY Times.

Regarding the Mortgage backed securities comment, I may have misinterpreted that, Let me restate more closely what I ready.

" The historical yields on toilet quality mortgage backed packages are far above the prices people are contemplating buying them for. Really smart vulture guys are buying them for 50% - 60%. We are buying them at that price also. "

comments appreciated....

I , am not sure if the the yield is 50 to 60%, or the price of the bonds are 50 to 60 cents on the dollar. Most of these MBS are made up of a certain mixture of good and subprime mortgages I believe.

Another couple of comments as I remember

" We will have a healthy deflation for a couple of years. The price of oil will fall to $ 50 per barrell. "

" The US Dollar has turned the corner and will continue to strenghthen against the Euro. "

For all I know, he may be all wrong, but the man is opinionated.

also, Munger stated something about the velocity of money and that the Fed may be able to withdraw liquidity as the recovery begins so that inflation should not too much of a problem.

look the comments up yourself and interpet them as you will.

RE: Applying for Obama Administration

Applicants need to fill out an impressive 7-page questionnaire detailing affiliations, legal record, email and Internet handles, controversial emails, Facebook pages, etc. The same goes for spouses.

They must also any declare gifts over $50.

New York Times:
http://tinyurl.com/56jor2

"There are no time limits for some information, including liens, tax audits, lawsuits, legal charges, bankruptcies or arrests. Applicants must report all businesses with which they and their spouses have been affiliated or in which they have had a financial stake of more than 5 percent. All gifts over $50 that they and their spouses have received from anyone other than close friends or relatives must be identified."

RE: Hedge Fund Redemptions and Urban Myth

Don Coxe has explained the crash in commodity stocks as forced selling by the hedge funds. I would like to believe that one...

US Dollar

Every thing seems to folow what the US Dollar is doing. Yesterday the dollar plummets at the end of the day and bingo, markets take off. Today the dollar takes off at the end of the day and guess what, the markets sell off.
I've been watching all the little dollar moves too, and the S&P 500 reacts predictably almost instantly.

Now what is driving the US Dollar?

re: Ford plans Family Pricing

Where I live I've been having to endure highly annoying employee pricing ads on the radio since about August, so this is nothing new.

What would be really interesting to know is what % of Ford employees actually drive a Ford themselves... You'd think with 'employee pricing' the incentive would be huge to buy Ford, so not driving a Ford would be doubly telling... And of course same goes for GM, Chrysler...

Buffett buys oil stocks

Source Reuters Australia.

* November 15, 2008 - 9:35AM

Billionaire Warren Buffett's Berkshire Hathaway revealed on Friday that it has nearly quintupled its stake in oil company ConocoPhillips, and disclosed a new stake in hydraulics manufacturer Eaton.

Berkshire disclosed its investments in a US Securities and Exchange Commission filing, in which it reported stock holdings on US exchanges as of September 30.

The company said it owned 83,955,800 shares in Houston-based Conoco, worth $US6.15 billion, as of the end of September. That is up from 59.69 million shares as of June 30, and 17.51 million three months earlier.

http://business.smh.com.au/business/buffett-buys-oil-stocks-20081115-67gy.html

I bought a Dodge pickup in 2006 that inluded employee pricing as just one of the incentives so they've been doing it for quite a while.

I have a friend that works at Chrysler headquarters and they are also giving preferred parking if they drive a Chrysler/Dodge/Jeep product. Most of them take advantage I believe.

re: COP - selling short term put options look juicy...

Tck. I've got to learn more.

http://tinyurl.com/5suzdl

Yesterday's 11% range in the S&P was the entire range for the index in the whole year in 2005.

This market is wearing me out frankly. There is no analysis possible, nothing but the loud cheering or booing of the crowd, day after day, on nothing but the most flimsy evidence either way.

It's gotten to the point where If I would have chosen to sell, if I did at 3PM I would be 30,000$ richer than if I did so at 4PM. The smallest window of time creates huge ramifications.

Funnily enough six months ago I was semi-annoyed when my account would fluctuate by 4,000$ in one day. Sheesh.

Feels like I'm in the Twilight Zone.

Muzie,
It's wearing me out too. I can actually see the gray hair increasing. I used to be such a young at 50 sort of guy. Now I feel like an old man in the space of six weeks time. Helpful comments from people on this board have helped me cope. It is one day at a time I guess. Hopefully, their will be a better day tomorrow. It could go either way however. I realize that.

should'a sold at 3:)

To be honest, this is the only long-term bullish blog I've found anywhere. I'm still cautious as I wouldn't just buy & hold, but I'm fully long. There's a bunch of "let's play the rally" people elsewhere, but no genuine bulls.

It certainly feels like I and the few others here are a very small minority of active investors actually having any kind of bullish stance on things (passive investors not really following any of this I would assume).

The remaining 99% being shorts, robots and traders roaming along on a deserted landscape.

Muzie,
Twighlight Zone .... now thats going back to bygone days. Our current world reminds me of that movie "Groundhog Day". I keep waking up each morning but its the same story every day.

teamonfuego,

I did vote for him once (I'm in Illinois) and I hope your expectations bear fruit. I agree he is well spoken, but I'll need to see more as President than I saw in our legislature or as a US Senator.

I realize race is a problem still, but since I was in Alabama in 1963 we have made genuine gains. I don't think it was as big an issue in the campaign as the media would like us to believe. But, since I'm not black, I can't speak with any real authority.

I can never figure how a person can be of one white parent and one black and be considered black. As an illustrator I know when you mix black and white equally you get gray — our first "gray president" doesn't have much of a ring to it though :-)

I'll settle for calling him the 44th President of the United States.

Bush is not exactly a tough act to follow and sound better, but the problems facing our country are staggering. I wish him well — and all of us.

Thanks for your opinion.

"should'a sold at 3:)"

Shoulda, coulda. Never mind the fact I'm not that skilled at figuring out what's going intraday in this noisy market, but I have a day job so I can't just watch it all the time.

It's been whipsawing the whole week, and it's 50/50 whether a gap up will not cause the 30k$ to reappear anyway (or another 30K to disappear, of course).

Maybe this wil be death of index investing. Perhaps nimble managers like Bill will be all the rage again. Better to have 50/50 winners and losers than a system where everybody loses.

2nd_ave,

I already replied to teamonfuego and have expressed my reservations in several prior posts, so I'll just wait and see how he does. It will be an interesting time for us all to say the least.

Thanks.

northvan,

Obama applicants are also said to be required to tell if anyone in their family owns a gun. Apparently "klingers" need not apply :-(

My monthly chart of the Dow shows RSI 14 (Months) is now at 23 the exact same level as at September 1974. These are the two lowest points in 40 years. The closest were in 1978 and 2002 both with 31. 1987 came in at 45! So for those of us who are down on ourselves for sitting with good quality stocks in our L/T portfolios we should take it easy. They will come back!

One thing I've noticed is many investment blogs (like, say, SeekingAlpha) nowadays have become rather useless. There used to be a time when you went to these places to get investment ideas.

Now obviously it's always about "preserving wealth". Of course that's not that hard - you sell everything, go in cash, and wait. And try to time in an entry using whatever sign.

So we've got hundreds of articles in depressions, bad retail data, etc. Alright, very useful to keep everyone scared everyday, but much of investment advice. You get the drift after the first "stay in cash!" article.

Plus of course 99% of the commenters are obviously not even in the market at this point and are all content to smugly point out how bad things will be since they all got out way back in '07 at the peak.

Very few people actually telling anything new.

Politics - fageddabotit! Get a nice glass of wine. Go to this link and listen to some really great music. I especially like Gene Krupa's Sing, Sing, Sing; although, it is the short version. It came out in 1937, but even 20 years later, I can remember the radio would play it and everyone would get out of their cars at the burger joints and cause happy riots with their dancing. Great memories!

http://jessescrossroadscafe.blogspot.com/

Interesting that a number of US indices had an outside day (high higher than prior high and low lower than prior low) on Thursday, an often reliable indicator of short term trend reversal. But time will tell.....

Many wise men are giving hints recently that we are forming a bottom, or at least stocks are undervalued, e.g., and that it doesn't pay to panic.

Warren Buffett
Charlie Munger
Don Coxe
Seth Glickenhaus
John Hussman
Bill Cara
Irving Kahn

to name a few. Then again, some people like Harry Dent, Nouriel Roubini, Feliz Zulauf, say we could drop another 20-40%. I really don't know who is right. I guess it is unknowable, but the bears have been right for so long.

Will they proved to be wrong?

northvan
Coxe has indicated numerous times it has been primarily hedge fund forced sales that crashed commodity stocks but he also said Institutional selling had been brisk as well. The trigger was the weekend attack which hammered many hedge funds because they had little time to unwind over the weekend, remember hedge=leverage in a majority of cases.

groosbank: RE: you post at 8:17pm

They may all prove to be right, or all wrong....in different timeframes...now how does that serve you?

if you dont have a methodology to handle the market volatility in the timeframe that allows you to sleep...and instead rely on what you read..from people who have different resources than you...whats wrong with cash...till the waters clear up?

Muzie
About your 7.53 PM post
When people with many years of experience and with good intention put their opinion out about market. Market is making them look fool or out of touch. Market will not wait to prove them wrong. It is that type of market right now
Last eight has been touch, and I do not think it is going to last next eight week.

"whats wrong with cash...till the waters clear up?"

Please hand me that crystal ball that indicates where "waters clear up".

Perfect scenario for a all-in-cash person would be reduced volatility, flattening indexes for a while, then a slow run-up. Wouldn't that be perfect?

Personally, I think it's far more likely volatility will stay the same or increase if that's possible, giving violent kicks up or down - until of the kicks up actually sticks.

I fully expect the "bottom" will look like any of the days we have now - it'll just so happen one the upside reversals will finally not be followed by a semi-crash the next day.

EEMTRADER
You mention “They may all prove to be right or all wrong....in different timeframes...now how does that serve you?”

I think basic methodology is also to study and understand experience of successful trader, how they handle the market volatility. Study of market history in different timeframe will serve well to present day trader

EEMTRADER
You mention “They may all prove to be right or all wrong....in different timeframes...now how does that serve you?”

I think basic methodology is also to study and understand experience of successful trader, how they handle the market volatility. Study of market history in different timeframe will serve well to present day trader

Muzie: Glad you have an opinion..now make money from it..

if you dont have a crystal ball for yourself....lets see whether your portfoio sticks around.....

Vinod...you are right..gotta create your own system...tough time to be a new trader..or any trader actually....

Then they are those who have more..um...thought.but can they trade...knowledge does not equal to results

lot of psychology involved from my personal experience., the beliefs of efective traders are without a doubt worth studying.

now read the posts carefully from today..who do you think is in despair..grasping...searching, apathy..lost..versus who deals in reality....

slow and easy ..till the waters clear up..:). have fun on your trip to china

I put out a ten-year chart of the S&P and I'm amazed how weird the action in October (and Novermber) looks. Teh candlestick chart doesn't even look like thick line - it's just a big fat block that's as wide as it's high for the last 8 weeks.

The index went from 1070 to 840 in one week - a week! How can that not be capitulation? I'm absolutely amazed how people are still saying they are "waiting for the capitulation". Are they blind? This may not be the bottom, but if it isn't we have to stop babbling this nonsense about using "capitulations" to spot when the market turns. If a 22% weekly drop doesn't fit the bill then nothing will.

from one of the email i got today
When prices are below 200 day average, it tells us that anyone who bought stocks over the past nine months is holding them at a loss. Typically, they will look to sell their shares if they can break even; collectively, that break-even point is the 200-day average itself. That creates resistance above and a potential trap for investors buying too soon.

Muzie says "Personally, I think it's far more likely volatility will stay the same or increase if that's possible, giving violent kicks up or down - until of the kicks up actually sticks.

I fully expect the "bottom" will look like any of the days we have now - it'll just so happen one the upside reversals will finally not be followed by a semi-crash the next day."

As a serious daily market watcher/victim only for 18 months now, I can't help but wonder if it is the black boxes that are predominately controlling (or at least benefiting most from) this market. After all, how many of us are striving for consistency through some set of rigid trading rules (e.g. RSI signals).

In retrospect, a lot of the pivot signals are and were quantified. I cringe at the thought of how well some of the better programmed, emotionless, "expert" systems must be doing switching from short to long and back in the blink of an eye in huge dollar volumes.

...and by "black boxes", I mean to include the big trading shops of traders that follow set strategies, like e.g. CIBC's pairs-trade shop, here in Canada.

MAckinaw...there are plenty of trade setups in this market....dont know whether you have the tie to trade during the day....

one that bill described the ROB..opening range breakout or breakdown has been around for years....no need for black boxes...

drop below OR low and a reversal, or drop eblow OR and stays below a 13 move ave..hints of trend down day..and if breadth is negative...stay short...or reverse ir for longs...trading above OR high

today had a rsi bear divergence at noon and a double top against strong resistance..nice short setup..1000 shares of SDS ...and 30 mins later walk away..

how many setups does a trader need?....not many..how much patience and detachment...? a lot...how much consistency...infinite....

with a $vix this high.....what setups do you look for?

todays market retraced to 50-61% of yesterdays range...a pullback after a 7% move is likely no?

to stab in and out of trades with scalps..is a fools errand....

ROB=ORB

to sit there and hold while watching a 300+ point drop....is a psychological issue..a failure of a trading system or no trading system..and most important ..a wanton disrespect for stops and volatility....draw your own conclusions

Mackinaw- you bring up a couple of interesting points, which i'll try to approach from other angles:

(a) everything makes sense "in retrospect," but what matters is playing future odds intelligently...and one can only play intelligently when in the proper frame of mind...anxiety and sleep deprivation obviously will not help in that regard...i agree with EEM's advice to move to cash if one's risk tolerance has been exceeded, and/or one lacks "a methodology to handle the market volatility."

(b) i have my doubts about how well "black boxes" or "expert systems" work...first of all, they are (of course) designed/programmed by people, and when it comes to emotions (which the trading game is based on), people seem to get it wrong more often than they get it right...furthermore, aren't there competing black boxes? which means if they're all betting on market direction, about half of them will be wrong...LTCM- you know, the "smartest" minds in the business: let's call a spade a spade-> as traders, they were infinitely WORSE than any poster here! not only did they bet the house on being right, they bet Grandma's house on it as well, and she would have ended up on the street if not for Uncle Alan...(speaking of the smartest guys in the room, let's not forget the traders at Enron)...

(c) going back to looking at things in retrospect: how do you know you aren't currently handling your positions exactly the way you will one day decide (in looking back) you should have? a few weeks into an extended market rally, and suddenly you'll look pretty good...a few more weeks of going down, and...but the point is, you've made choices every day for the past 18 months, and it remains to be seen whether you played it correctly...

groosbank- i think you described yourself as a "non-trader"...if watching the daily moves is wearing you out, have you considered handing over the 2m to CTAB and letting them watch the daily moves for you?

With all due respect 2nd_ave,

Handing off control of the entire nest egg in one fell swoop, while it might be the right move, would be a pretty tough one for me.

Wow, just read this washington post snippet on Mish's blog. It's from a few days ago, and maybe someone already posted it and I missed it, but I'll post it again anyhow. It's just that mind boggling...

"The Bush administration has defended the use of the rescue money [$700 billion bailout] to pay dividends to shareholders. The Washington Post reported that banks may pay shareholders more than half the amount they receive from the government over the next three years, basically passing on money that might otherwise support new lending. White House officials say that giving money to shareholders also is important for the economy."

Why not just mandate that everyone step out on their front lawn, take a $20 bill out of their wallet, and hand it to their neighbor to the left?

Oh wait, silly me, people who pay more taxes would have to take a bigger bill out. But then I guess danger is the masses might actually see some benefit...

These recent beatings remind me of the good old days working for Intel. We never made it through a week without a good flogging.

At some point do you think there just won't be any longs left willing to sell, and enough of the 401k crowd will be in cash, and the values so compelling as to bring the daring back?

I'm now at the point of buying things at forward PE's like 3, or P/B of .25. It amazes me how desperate people must be to sell.

Re: eBay Precious Metals Exchange

The web page depicting the eBay precious metals exchange of gold over spot has been pulled:

http://ebaypmx.com/ebaypmx_large.png

Now and futures.com recently noted that, on their financial crisis predictor page, the numbers we are seeing on the financial crisis predictor page co-incide with the LTCM financial crisis. Part of the LTCM crisis was brought on by a challenge to the 400 ton naked short in gold, which was unsustainable.

Now, precisely the same market-trap software methodology used in LTCM is being used to provide a certain amount of liquidity in the derivatives markets. Except this time around, derivatives in the form of secondary lien type financings cover almost the entire financial market globally.

The gold naked shorting through swaps actually forms the foundation of the entire edifice, as it is unlikely to be upturned, unless unforseen events overwhelm the gold market. There is no record of just how much gold is naked shorted through this method, except that you can go by rule of thumb that its probably 10X the LTCM at the minimum, and probably far exceeds the known supply of gold above ground.

A challenge to this naked short and collapse of the CDO/CDS structure would be the nail in the coffin of the entire financial system, and its held by one company, JP Morgan if you believe GATA:

http://www.gata.org/node/6871

Added to this is the fact that JP Morgan and Co. now corner the market in gold through derivatives (and in some sense through supply since they are one of the largest private holders of gold) and are attempting to control the futures market and spot price through daily intervention.

The Fed has been the backstop for this unworkable scheme, though we are seeing almost precisely the same outcome in the markets as the LTCM collapse, only absolutely everyone on the planet is facing poverty as a result of the confiscation of their wealth through derivatives.

IBD clips/Big Picture

-Volume slid 25% on the Nasdaq and 24% on the NYSE compared with Thursday's totals, easing the losses' impact.-

-But the market sold off hard in the final hour of trading, leaving another round of hefty losses. A Saturday deadline for hedge-fund clients to request year-end redemptions may have triggered the late sell-off, reports said.-

re: Thursday.-The prevailing evidence pointed to that big up day being the product of technical triggers going off, rather than any great underlying fundamentals in the market.-

S&P TA guy.

http://www.businessweek.com/investor/content/nov2008/pi20081110_855396.htm

Decisionpoint sentiment indicators

http://decisionpoint.com/ChartSpotliteFiles/081114_rr.html

Well if the positions you own aren't able to be held longer than a session it qualifies as gambling not investing and Vegas has plenty of empty rooms right now. IMO there is the low volume and high volatility commensurate because short-termism has taken over.

Posted by: yvrapx at November 14, 2008 4:09

It isn't a short-term market if you assumed in Aug/Sept that a bear market was underway and began shorting stocks. If you believed in the bear you'd be covering on the dips and shorting again on the highs and sitting pretty. I didn't do that, btw, and hind sight is perfect. I'm just saying...

but, to add to that, it's my belief that we are still riding the bear (big surprise, huh?) and I will believe in a bottom only when I see it. As long as a lot of folks think "it just can't go down any further," I believe it will.

shark - Glad to hear your mom's doing well, a comforting feeling for me. I'm sorry you've had to go through this, rest assured I'm continuing to think of her. Give her another hug on my behalf...

Will Russia purchase Iceland's military base? Will there be ICBM's installed in Cuba?

I'm not expecting an immediate or long-term market impact from these topics, anyone else?

Thanks Chicken,

Got home early enough on Friday to do a couple of stupid things in the stock market, so don't worry, I didn't miss out on the fun!

One of these days we should all contribute to a set of "trading rules", meant to be stuck to most of the time and broken sometimes.....But I am convinced of one important thing.....

To find good trades is not terribly difficult, they happen all the time.

To eliminate from consideration those which do not measure up, thereby being more selective seems to be the final frontier of market wisdom and profit...

You need rules to keep your stoned stupid drunken self from going wild at the helm and losing lots of money impetuously.

I know about (and sometimes use) the ACD method, and I'm wondering if anyone else out the has LOTS of experience implementing it so we could chat about it. It seems that there are other trades that also work out well such as buying at the bottom of the opening range on a convincing turnaround on a good looking stock during favorable conditions with the idea that it will probably retrace at least a good bit of the O-R.

Then, if a "real" ACD sets up, you're already in at much more favorable levels.

Does anyone else among you try to anticipate, perhaps to too great a degree, the ACD happenings?

Of course, buying into climactic drops at the open, and the reverse, also can work well, certainly not "textbook" ACD right?

Let me know the degree to which you've found implementing ACD is desirable, in your experience.

ALOHA !!

Anyone see anything unusual with this long term chart of FTTM? What is FTTM? Short for FED & TREASURY TOTAL MONEY ... Does anyone here really believe all this money the US FED is handing out will be paid back? What do you call a 170% increase?

Link: http://tinyurl.com/3wkb9u

Now look at this chart of the USDX rally and tell me the fundamentals are the same as the USDX rally in 1999? This shows trade and budget deficits minus TIC(Treasury International Capital). I have already evidenced that US payroll tax revenues to the US government have dropped off a cliff, down now by 79% from 2007. And no your eyes do not deceive you there are nothing but firings in the media so that does equate to less payroll taxes paid and less corporate profits made! DUH!!! Then you must figure that lost payroll tax revenues means more US government liabilities from increased unemployment benefits and food stamps and welfare. Combine that with the poor showing for the last Treasury auction and it is clear to me the US Balance Sheet is broken, since liabilities abound as this chart clearly shows. In other words the US government fundamentals will catch up with this USDX rally. What is the US Balance Sheet based on? DEBT and the ability to attract buyers of that DEBT. If it is based on tax revenues then the US Peso is toast and that is exactly the only factor holding up a US Sovereign Credit Rating of AAA(S&P) and Aaa(Moody's). I believe this very issue will be on the table for the G20 meeting this weekend. In one word "confidence"! The USA has to be accountable to its creditors and that will be the theme of the G20 meeting.

Link: http://tinyurl.com/69uc9h

Essentially US DEBT is backstopped by US TAXPAYERS. That all works for our creditors so long as there are US TAXPAYERS, but given the unemployment and the complete lack of payroll taxes where is the "backstop"? I might add that "backstop" has been abused and over taxed, without any representation, for decades now whereby the combined overall tax burden on all US TAXPAYERS averages 54.2%(adding all taxes paid not just 1040). The US TAXPAYER is the COUNTERPARTY to the US DEBT after all is said and done and the first chart I posted above showing FTTM is disturbing to US DEBT holders who would like to see a solvent COUNTERPARTY to back their risk. That's the focus of the G20 meeting and I might add a very strong blow off to the USDX rally probably just happened if the G20 gets their way! If you thought deleveraging credit was a bitch wait until you see deleveraging the World's Reserve Fiat Currency in action!!!

IT ALL WORKS UNTIL IT DOESN'T ...

Unless somebody speaks up and points out that the entire financial system is yoked to a derivatives standard, much like the failed gold standard of the past, then there's not much hope of arriving at a consensus as to how to clear off the overwhelming weight that derivatives have over the market. We are essentially all trapped in it. Its a trapped market.

http://tinyurl.com/5wt6wb

"Make the bad man stop."

Spot,

My fav kind of music and one of my all time fav songs — both short and long. Also like the version by Artie Shaw.

I came along a little late and was only able to actually hear a few big band greats in person — Count Basie, Ella, Teddy Wilson.

Teddy Wilson was in town only a few months before he died and we had seats in a small theater less than 15 feet from him. The last two fingers on his right hand were unusable (possibly trigger finger— a problem which I now have) but he was as good as ever and better than most with all fingers.

Thanks for the link.

Don't really understand "store of value." When you argue that paper or fiat currency is kaput because government has debased it basically by issuing too much of it, or more of it than can be equated to, or accounted for, by industrial/financial capacity, resources, productivity etc., etc, you are really just talking about a belief system or a quantum of confidence, no? Money is worth exactly what we - people - believe it's worth: no more, no less. At any given time, that belief, or confidence, is its store of value. What we think it's worth changes constantly, less and less as time goes by, like effect of time decay on an option. I get all that. Sort of.

But to say that gold, or platinum or seashells have an "intrinsic store of value" is also meaningless. An ounce of gold is worth exactly what we collectively think it's worth. You can say that it is protected against government debasement because government can't increase or decrease its production and availability, (It can actually, but that's something else).

So you have a dollar that's worth what you think it's worth in products and services, and you have an ounce of gold that's worth what you think it is

What's the diff? Educate me!

kaimu - It seems leveraging credit has been a bitch in terms of world economies, pushing multiple markets to unimagined lows, along with the standard sequence of far reaching repercussions.

What should we anticipate in observance of a deleveraging of the world's reserve fiat currency?

http://www.youtube.com/watch?v=COtE1J5NMbo&feature=bz301

Shark,

"Trading Rules": That would be an interesting discussion to follow. I guess, though, that "day trader's" rules might be a unapplicable to traders that use wider timeframes?

Firstly, anyone who compares gold with shells is uneducable.

Gold is a store of value because of one its qualities. It does not rust. It remains a liquid item. It can be used as an asset or leased. Gold is also increasing in value against all commodities. Why are all these things happening if its just a shell?

Take oil markets as your example. Oil was thought to be THE safe haven commodity. The oil price rallied into a mania and is now gone bust. The oil mania has broken a very long term trend line just this month, yet the consensus is that oil prices are going to the moon. Assets, such as mortgage derivatives were used to leverage up and send oil prices far beyond their supply and demand equation turning the world banking system into a global Enron.

Much of the oil market was hedged against major currencies, some which rose, some which fell. Along with a backdrop of a collapsing housing market, we are seeing a major collapse of currencies, not the least of which can lead to a government bond market collapse. All attributable to the use of derivatives.

Saying that gold is barbarous relic has no comparison to the barbarism in a wild mania in oil prices and feeling justified in killing a million innocent Iraqis in order that your oil market bets face no risk. Moreover, bribing your citizens with unreal levels of unsecured credit, throwing them inevitably to the dogs and destroying their pensions money underlines how barbaric derivatives and the policies that protect them are.

World politicians are all posturing with one another about who can pull the wool over the eyes of their citizenry, when they are fully aware that their vast bailouts are part of the problem. Of course, their careers are at stake.

I'll stick with my gold investments, because sooner or later the derivatives held against gold will fail. OR policy makers will see the light and call for the fixing of the price of gold with the sum total of hard currency.

re: Volatility

Art Cashin was asked by Dylan Ratigan yesterday if he thought the wild volatility was due to computer program trading.

Cashin used this analogy — We used to have of a bus stop at every eighth block on the street and you knew where the crowds would be. Now they stop a hundred times per block and we don't have a clue were to expect the crowd.

re: gone cash and when to buy in

I went to cash (85%) too late to protect good gains, but soon enough to avoid a huge drop.

I've been trading a bit using DOG and a few trades with GG and XOM, but nothing big — picked up a couple percent this week and now at - 9.2% YTD. Still 50% cash.

I am seeing some really interesting potential long term buys — XOM, JNJ, AA, IBM. I think I will soon be able to go back to my methods of 30 to 40 years ago. Buy low priced, solid companies, set an acceptable stop and gradually move it up, hold for a 15 to 20% gain, sell and switch to whatever looks better.

I will, however, be able to watch more closely now that I am running my business anymore and likely switch more often.

One of the most important things I got from Bill's book — never invest if it causes personal discomfort. Warren Buffett's version was during the tech boom, "I don't buy what I don't understand."

I had the best year in the market EVER going for me until July of this year. I should have been less sanguine. I confidently thought I had hit on a sure thing — the inverse financials. Then the SEC slipped a Black Swan into my portfolio right after I boosted my bet big time. Had been dropping a dollar a minute and I had trouble getting current info. (Still on dial up — DSL unavailable — will go to cable.)

If only I had read Bill's book a couple of months sooner... maybe...

I'm old enough to have known better — no one else to blame. Greed gone sour is a great teacher!

re shells and gold.

6er

I've been called many things worse than uneducable. Obviously, my observations have angered you. Sorry! But you did not address the thrust of my point. And you will find that many peoples have used certain seashells (they don't rust either) as a "store of value" and a medium of exchange, going back to antiquity.

Mackinaw... re: trading rules. If we are talking about certain set of general rules, they are mostly timeframe-independent. They form one's trading philosophy; big part of the course CTAB is about to roll out will be devoted to exactly that, helping a trader to design his personal approach, matching his personality and objectives, and only then taking him deeper into design of his trading system.

If, however, we are talking about trading rules in a sense of particular system - where to buy, where to place a stop, where to sell etc - that will be timeframe-dependent to a bigger degree. That, however, is less interesting topic to discuss for me, since this is not where the key to success is. Really, just about any more or less sensible system will work for you - IF you have discipline to keep its rules, flexibility to recognize when market conditions are not favorable to this particular system or part of it, discipline, self control, a bit more discipline, and most of all - discipline. Now, I haven't forgotten to mention discipline?, have I? To make a point about "any system will work" - I have a trader in my room who takes lukewarmly those of my setups that trigger... but what really fires him up is those that get invalidated. In other words, he effectively trades AGAINST my system, under certain conditions, and by his words, my conditions for entry are formulated so precisely that invalidation of the setup by itself creates a perfect setup for him. Now, add traders that take aggressive entries within the same setup, regular entries, conservative entries, exit with scalp at 1:1 risk/reward, partial out and trail stop - and you will get almost endless variety of possible ways to construct trades WITHIN THE SAME TRADING SYSTEM.

So, to get back to general trading rules... I have this saved copy/paste from somewhere, without reference. My apologies to the author of this set of rules. I will post them as a great starting point; not all of them will be relevant to all of traders although most will. Not all of them are in my trading philosophy although most are. Nonetheless, as I said - great starting point.

1. Never, Ever, Ever, Under Any Circumstance, Add to a Losing Position... not ever, not never! Adding to losing positions is trading's carcinogen; it is trading's driving while intoxicated. It will lead to ruin. Count on it!

2. Trade Like a Wizened Mercenary Soldier: We must fight on the winning side, not on the side we may believe to be correct economically.

3. Mental Capital Trumps Real Capital: Capital comes in two types, mental and real, and the former is far more valuable than the latter. Holding losing positions costs measurable real capital, but it costs immeasurable mental capital.

4. This Is Not a Business of Buying Low and Selling High; it is, however, a business of buying high and selling higher. Strength tends to beget strength, and weakness, weakness.

5. In Bull Markets One Can Only Be Long or Neutral, and in bear markets, one can only be short or neutral. This may seem self-evident; few understand it however, and fewer still embrace it.

6. "Markets Can Remain Illogical Far Longer Than You or I Can Remain Solvent." These are Keynes' words, and illogic does often reign, despite what the academics would have us believe.

7. Buy Markets That Show the Greatest Strength; Sell Markets That Show the Greatest Weakness: Metaphorically, when bearish we need to throw rocks into the wettest paper sacks, for they break most easily. When bullish we need to sail the strongest winds, for they carry the farthest.

8. Think Like a Fundamentalist; Trade Like a Simple Technician: The fundamentals may drive a market and we need to understand them, but if the chart is not bullish, why be bullish? Be bullish when the technicals and fundamentals, as you understand them, run in tandem.

9. Trading Runs in Cycles, Some Good, Most Bad: Trade large and aggressively when trading well; trade small and ever smaller when trading poorly. In "good times," even errors turn to profits; in "bad times," the most well-researched trade will go awry. This is the nature of trading; accept it and move on.

10. Keep Your Technical Systems Simple: Complicated systems breed confusion; simplicity breeds elegance. The great traders we've known have the simplest methods of trading. There is a correlation here!

11. In Trading/Investing, An Understanding of Mass Psychology Is Often More Important Than an Understanding of Economics: Simply put, "When they are cryin', you should be buyin'! And when they are yellin', you should be sellin'!"

12. Bear Market Corrections Are More Violent and Far Swifter Than Bull Market Corrections: Why they are is still a mystery to us, but they are; we accept it as fact and we move on.

13. There Is Never Just One Cockroach: The lesson of bad news on most stocks is that more shall follow... usually hard upon and always with detrimental effect upon price, until such time as panic prevails and the weakest hands finally exit their positions.

14. Be Patient with Winning Trades; Be Enormously Impatient with Losing Trades: The older we get, the more small losses we take each year... and our profits grow accordingly.

15. Do More of That Which Is Working and Less of That Which Is Not: This works in life as well as trading. Do the things that have been proven of merit. Add to winning trades; cut back or eliminate losing ones. If there is a "secret" to trading (and of life), this is it.

16. All Rules Are Meant To Be Broken.... but only very, very infrequently. Genius comes in knowing how truly infrequently one can do so and still prosper.

As I have said before, uneducable. Derivatives are like shells, an object of passing fancy.

Re: Short Term Bond Yields

.07

http://finance.yahoo.com/bonds

This was probably at the heart of friday's impulse rise in bullion.

Grym - I have great respect for your display of caution. At this point I see no need for a reversal of cautionary policy.

Okay, now for a bit of free-thinking out loud:

There are likely to be some huge breakthroughs in the Middle East in coming months, with perhaps a few temporary glitches (on which some may capitalize, others won't). I'm not sure how this couples with a receding world economy, but it's quite possible oil prices may stay low unless economic activity reverses direction by some unforeseen event, or the USD tanks (rising prices across the board in reference to devalued USD, in a race with oil consumption be it rising or falling). My thought is this is a reason to migrate away from bonds/USD at some point, but not necessarily a reason to be in energy?

AIG = Alliance In Greed

VG

Have printed the 16 and pinned to my wall. Real gold. Multithnx.

Some great commentary last night and this morning!

re: Trading systems. A few years aga, a great trader (Richard Dennis??) had a theory that even the simplest of trading systems (if well thoght out and tested in advance) would be profitable if traded with discipline in all aspects of signals, size, and risk. He took completely inexperienced (so the story goes) people and made successful traders out of them. They were called "Turtle Traders". The secret of course is a well-thought out system that covers timing, trade size, and trade risk of loss PLUS the wil to follow the discipline. I'm not recommending the Turtle system, although it has worked for many traders, except in concepts, buy one can Google it and probably find a copy.

re: Handling losses. Most wise traders suggest that a personal system be thought out, then back tested over random times with "paper trades" to see how well one can follow his planned system, how often trades occur, and how big are the losses that will always occur even in profitalbe systems. If no profits, or losses are too large to be comfortable, then review the system including where stops are placed and trade size to see if more comfort can be obtained. Make a journal entry for all trades - analyze results to see where the system broke down and make corrections before going on.

re: Type trader. Most people never decide whether they want to be a "momentum trader" and buy breakouts (or highs going higher), OR to be a "buy the dips" trader who waits for a reversal when there are no further sellers. Either way works but combining the two adds complexity.

re: Trend. You HAVE to follow the trend in your personal time frame - the trend IS your friend. If the RSI(7) daily chart is above 70_ and the weekly trend is DOWN, then you will get better SELL signals (profit wise) than Buys which will often be shorter term retracements. Check it out.

One last comment. You gotta spend some money and time on tools - too many people set out to build a house with just a screw driver in the tool box.

I'm not saying anything new. All good traders already know the above (put the emphsis on "good").

Good luck!

Starbucks - Customers are beginning to search for lower cost alternatives, such as cocaine, for instance.

Another irritant of this interday volatility is how it corrupts so many of the classical (amateur?) Technical Analyst's signals. For example, how many of us, perhaps unconsciously, interpret a "down day" on huge volume as an indicator of strong "selling" action by market makers, perhaps signalling future downward price-action? How many technical indicators use such assumptions as the foundation of their formulas? On the contrary, an examination of such a day's interday chart might reveal a sharp, low volume drop at the open, steady prices all day at low volumes and then a massive infusion of buying near the close that, nevertheless, failed to exceed the previous day's closing price. I've found that a bit of research on "Japanese Candlestick Charting Patterns" has been helpful, at the very least alerting me to look at interday charts on some curious days. For daytraders or professional traders, none of what I wrote will be of any interest, but for amateur sleuths, I just thought I'd share my struggles.

Great list, Vadym, thanks! Spot, The Way of the Turtle (Curtis?) was a good read - it was my Christmas Holiday read last year. This year it will be Bill's book.

tango6
I think of gold in traditional, historical terms, as a necessary addition to barter. If I have goats, and you have wheat, and I need wheat and you need meat, we can balance our needs and make an exchange. But if I need a coat, but the tailor is a vegetarian, I have to involve you in my coat purchase. Take that one or two levels more, and its impossibly complex, so we need "money".
What is it? It has two basic functions - its easily portable, and has intrinsic value that is readily identifiable, and so accepted universally.
In the case of gold, the intrinsic value comes from the difficulty of getting it out of the ground and the fact that once you've done that, it stays pure (until debased by a thief, whatever form that thief may take).
The intrinsic value is, in effect, a measuring standard. If I am to get a bushel of wheat from you, we must both agree as to what a bushel actually is - i.e. we both have the same size box. If next year you produce a smaller box and say this is a bushel, I get less wheat. Paper money is a box whose size is adjustable by one party (guess which).
Interesting side note though. Gold is not perfect - there was massive inflation in Europe when the conquistadors returned with plundered gold from the new world, because it basically inflated the money supply without increasing the supply of goods.

What a cataclysmic period Oct.1-Oct.14 was. So many charts like this:

http://stockcharts.com/charts/gallery.html?SPH

If we had to wrap it up in a nutshell, what really happened there? Was it simply AIG (and others) dumping assets to raise cash to settle-up their Lehman default swaps?

I ask you, where else but here is truth expressed in such a sincere and matter-of-fact way?

Thanks Bill, my hope is the word is spread far and wide. I always try to keep in mind which pasture HB&B would want the sheeple in today, and cringe as their boarder collies circle and coax the heard toward the sheering yard.

tango6,

Although I don't really "get" gold myself, I do understand an important difference. Our government, in clear daylight, would have no problem manipulating the value of the money you and I hold. One example is the proverbial 'helicopter drop' http://en.wikipedia.org/wiki/Helicopter_drop.

While I'm sure that the price of gold is subject to manipulations, they are done behind closed doors ;)

Cyd

Agreed. Thanks. The "value" of something depends essentially upon 1st demand and 2nd availability, in that order. (although other attributes come into play, as you say: ie "quality," "beauty," "velocity" etc). I hold a proportion of my small stash in precious metal, btw. I am just woolgathering on an idle Saturday.

ALOHA !!

F6-The FED FUNDS RATE follows the 3month TBill and has for over fifty years!

Also RON PAUL grilled Greenspan every time they met on the DERIVATIVES market, so you cannot say nobody in America is standing up against HB&B and their derivatives. The US Voters just don't want to elect anyone who would go against HB&B's agenda. I'd say 98% of Americans are clueless on any monetary issues, other wise RON PAUL would have won!

T6-Are you and F6 related? You both have 6s !!!

How old are you? If you are older than ten years old then you obviously have not been paying attention and you obviously have not read any of my past posts on the purchasing power of a US Peso. Show me a new home in the USA that I can buy for $1800? That's what a US Peso could buy in 1908 prior to the creation of the US FED in 1913. My Father-In-law bought his first new home in Ann Arbor, MI for $10,500USD back in 1955. What kind of home can he buy there for $10,500 now? While you cling to a paper debt instrument(IOU) known as an FRN(Federal Reserve Note)your purchasing power plummets because the US government you elect every year spends more than it steals and the money created to afford the US government unlimited spending power, via the US FED, creates monetary inflation which shows up in the prices of goods and services increasing in cost. Would you not agree that what a US Dollar purchases has changed over the past years? I recall minimum wage was $3 now its $8. Look at a postage stamp! Look at car prices. A decent car now costs(even with all this deflation)as much as a new home cost in 1970! A new Cadillac used to be $8000USD back in the 1960s now GM is offering $8000 rebates! They hand out $1mil USD on game shows now! Any of this make sense yet?

CP-When WALMART prices look like NEIMAN-MARCUS! A USD default would render all those who are now in 85% USD cash totally broke on the very same minute they announce the default and right before they announce the default your first clue will be a stock market and bank holiday probably announced on a Sunday! Just a wild guess ... maybe Saturday night??? Ask someone in Iceland?

I am a bit older than 10. I read all your posts and agree with most of your positions. On inflation, you are preaching to the choir. My question to hardheaded investors here was philosophical: How to we assign value?

As for governments and authority - I have read Thoreau, too, and agree with him, and you, for the most part, esp. that governments should always be deathly afraid of the people, not the other way round as it is today in the u$a.

My favorite bailout applicant.

After purchasing a 51% stake in GMAC Auto Financing in 2006 and 80.1% of Chrysler in 2007, mega private equity firm Cerberus Capital Management along with undisclosed co-investors need our help. After all, the powerful and influential should not suffer poor investment decisions.

Immediately following the purchase of the ailing auto maker, former Secretary of the Treasury and Cerberus Capital Management chairman John Snow addressed the acquisition and Cerberus’ plans for Chrysler in an interview with Newsweek. One of Snow’s comments from the interview: “We never buy a company with a disposition or sale in mind. We buy a company to hold it and fix it and improve it and stick with it.”

Now, just eighteen months later, Cerberus would like to sell the company to the American taxpayer. The deal may exclude Chrysler Financial Services and GMAC Auto Financing, which would benefit Cerberus.

Abelson on sentiment, market bottoms and gold...from Barrons

http://tinyurl.com/63kttk

kaimu - I'll extrapolate, because my question really wasn't very specific (sorry). I would anticipate the price (in terms of the failed denomination) of everything would rocket, meaning a giant stock market rally in addition to the items you pointed out. No?

Re:D-Day - My take: I'd be surprised if US markets were closed, or even if US regulators would make announcement, as the US gov has proven themselves completely belligerent and inept in terms of revealing truth on any facet. No, I would expect them to pretend as if nothing were wrong and just keep shoveling enough worthless crap out the door to placate the crowd. When was the last time we were told anything remotely similar to truth, or they actually stopped to provide more than cursory explanation? Hurry up and wait on that $700B!

Bill,

It'd be great if you'd put a Commentary and Community Chat for Saturday and Sunday. You don't have to post anything, just reduces the number of posts on the Friday Chat to wade thru.

TIA

fox1 - "After all, the powerful and influential should not suffer poor investment decisions."

It appears the powerful and influential have bought insurance policies in the form of CDS's. What's not apparent to me is why the USG feels it's necessary to back these unsecured policies with taxpayer monies.

Various posts have following reason for decline in market on Friday
1. A Saturday deadline for hedge-fund clients to request year-end redemption
2. decline created margin call which push market down even more
3. Decline trigger stop. And has taken out many position which help market to go down further
So, during this entire decline some one has to buy these stocks. Will be nice to know who is collecting these future stars

[Bill Cara note:

Sounds reasonable.

Btw, if you are trying to catch video of Pres. Bush reporting from the G-20 summit, you ought to be amused like me that hell hath no fury like the truth scorned, and the severe weather overhead has knocked out the video transmission. Too funny for words. The President was saying that accounting standards need reforming. I thought they ran out of rope on that line after blaming the auditors for Enron! Then, when he said that the G-20 is expecting less conflict of interest in the ratings agencies, before I could laugh, the satellite shut down. Look, Mr. President, the people understand what's going on here, so give it a break. The moment you have Central Bankers on the same level as Finance Ministers, you are starting from a basic conflict of interest, and that my friends is all you need to know why the system is broke. Then the President referred to the financial markets... excuse me, but that too is b.s. There happens to be a financial system, which is based on credit, and a capital market, which is based on equity. The two are different, Mr. President. The fact that Bankers are running both the financial system and the capital market is what is wrong with the market, but not only does the President deny the truth, he continues to spin the Banker's story by referring to a financial market. A Harvard MBA (1975) ought to know better. But, we shall overcome.]

Has anyone discovered (beyond conjecture) why there is so much more volatility in the market now than a few months ago. Or is it simply something that is unknowable by the facts?

I picture the volatility like this: an apple tree full of fruit is being shaken way beyond its natural tolerance. What happens? Fruit that would normally stay on the tree and ripen (long term investors, leveraged hedge funds etc) are dropping off one-by-one (selling in a panic) and while this is definitely good for the soil (future bull market) it is leaving the tree pretty naked (DJIA down 5500 points).

My point is that had we dropped to the low 8000's in October and stayed there it would be a lot less damaging to the avg investor's psyche then re-experiencing the drop over and over again.

vinod,

I bought a few shares yesterday, both at the mid day low and then at the end of they day (about 10 minutes too soon). Let me just say that finding a decent entry point was very hard for me as I am no technician. It took me all day to place 2 buy orders (and they are already down 1% which I know is the new zero).

2 quality companies (JNJ and INTC) which I intend to build a position in. I set the stops just below the recent intraday lows and I fully expect to not own these stock after Monday morning but you never know...

So I can't say I'm "collecting these future stars" but I'm trying to be in the right place when the dust settles and people realize that 92% of Americans are going to remain employed and they will come out of their bunkers at some point.

Brown-Cal What/who is shaking the tree and when will it stop? How long will they continue shaking?

[Bill Cara note:

One of the movers and shakers are the 12 million Americans underwater on their mortgages (as reported on Network News a few minutes ago), many of whom are lined up at the Treasury/Fed/FDIC Help Desk. But has anybody reported on how many of these people are still millionaires? Just because somebody is illiquid does not mean they are impecunious. I wonder what the farm workers and the clerks at Fannie and Freddie and the line workers in Detroit -- the ones who rent or who have managed their finances prudently -- think about these bail-outs. As for the bail-out money, I'll address in tomorrow's WIR just where it makes most sense to be spent. The problem is that Bankers have taken control of the US Treasury and very little of the right things will be done. It's a shame really.]

I think there are a lot of forces acting on the market. Yesterday there was news of growing individual brokerage activity as people try to learn the "new game" - playing both sides of the market and doing it with all kinds of sophisticated trading tools and low trading fees. When I watch Brian Shannon go about his business using 2x ETFs (http://alphatrends.blogspot.com/2008/11/some-trade-videos.html) and I multiply that out 1000's of times and I see an very powerful force.

I picture the older generation (of which I'm not quite yet a part) opening up the 401k statements and being left with a decision that nobody in any prior generation had to make. They have to take their lumps now knowing that they can't risk their futures against something as flakey as the stock market. They sign onto their account and press a button and just like that they are 100% cash - no taxable event, no broker to talk them out of it.

Hedge funds, program trading, proprietary trading desks I don't know all of the vehicles but I think their all in a state of disarray trying to adapt to the new game. And by adapting to the new game, they are adding to it.

How long will it go on? To me it looks like a lot of the downward price movements are on low volume and the upward movements on higher volume (with the exception of the closing hours where all bets are off). Not sure if that means anything.

Vadym:

I would like to add 17 to your List

17: Don't forget to turn it all off and live once in a while. Since after all, it's about earning money to live life. Don't forget the reason behind the trading in the first place! Otherwise you just live to trade rather than trade to live...

amazing how people forget that.

which is easy to do, Our life is about movement, about experiencing the currents of our life...

Money is currency, a paper representation of power and how we project out life... so it is easy to lose your self in the currency rather than the currents of one's life.

:)

me

In addition to Saudi Arabia recently, it appears that Iran has just made a major purchase of physical gold as well...

Iran has converted financial reserves into gold to avoid future problems, an adviser to President Mahmoud Ahmadinejad said in comments published on Saturday, after the price of oil fell more than 60 percent from a peak in July.

Iran, the world's fourth-largest oil producer, is under U.N. and U.S. sanctions over its disputed nuclear programme and is now also facing declining revenue from its oil exports after crude prices tumbled.

"With the plans of the presidency...the country's money reserves were changed into gold so that we wouldn't be faced with many problems in the future," presidential adviser Mojtaba Samareh-Hashemi was quoted as saying by business daily Poul.

http://tinyurl.com/6x833n

CP,

Why do you believe there are likely to be "huge breakthroughs" in the Middle East? I long ago gave up on the "Peace Process" as no more than a favorite media alliteration and reliable news topic when all else is quiet. The Middle East has been a hotbed of violent conflict since way before the 1948 "creation" of modern Israel. People in the region are perfectly content to kill their own relatives if they can't find anyone else close at hand, or even their own daughters if they get too friendly with an unacceptable guy.

If oil prices are low it will possibly last until the most recent ventures into alternative energy are squelched. All of life is a re-run for me.

Re: Fed Funds Rate

The fed funds rate has actually followed the yields on the 2-yr note, as central banks have adjusted their to the 2-yr. note in their currency as well. Only lately are we seeing declines in advance of the 2-yr. yield, but in the most part 2-yr yields seems to be the target.

Brown-Cal,

This morning's paper showed a mass of worried (mostly older) people who were unable to get in to a meeting at a pre-Great Depression mortgage company which they thought was "safe." They had zero subprime derivative involvement, but construction loans made to what were "safe" borrowers have gone sour.

Two of my neighbors stand to lose considerable sums of capital and reduced monthly income. I am old enough to remember talk at family gatherings about how stupid it is for anyone to gamble on the stock market. It's my guess that many of those pictured were of that mindset and now even this old time, local stalwart is in bankruptcy.

Grym,

It is amazing how quickly the mindset of 'nothing is safe' has taken hold. I went into a local bank this week that was offering 4.5% on a 13 month CD. I checked their rating here http://www.bauerfinancial.com/btc_ratings.asp and yet I still was wondering why are they giving me this rate... is it safe.

Even with the FDIC insurance I was wondering about hyper-inflation and if I was committing for too long a term. These are things I would never have thought of 6 months ago. So I'm hoping that in 6 months we won't be stuck where we are right now.

The volatility in the markets may be a reflection of uncertainty about the future. Spending has fallen off a cliff and until the landing is somewhere in sight (not the landing itself) I don't see how one can position himself for the future.

I have always held my stock purchases for intermediate/long periods. But here I am setting stop orders on high quality debt-free companies. My stops are maybe 5% below the PP and yet I expect to be taken out at the open on Monday. How can the market go up under these conditions?

Casey,

I very much agree with your 17... except we both exchange about it on a beautiful Sat afternoon, LOL. Fantastic warm fall sunny day outside, I am off for an ocean shore walk, in accordance with your 17!

Must... leave... computer..now... must... have... life...

2nd,
Yes, I have thought about turning over money to money manager. I thought it would be less hassle and they would probably be better at it than me. My friend turned over large sum to Davis Selected Advisors, and is down about 50%, so I guess I will manage my own account as I have in the past.

Grym, Here's an interesting explanation offered for middle-eastern activity tying in many of the questions we've been pondering. True or not, it sure sounds more convincing than anything else I've read lately...

Israel therefore has no threats or serious dependencies, save two. The first is the acquisition of nuclear weapons by a power that cannot be deterred — in other words, a nation prepared to commit suicide to destroy Israel. Given Iranian rhetoric, Iran would appear at times to be such a nation. But given that the Iranians are far from having a deliverable weapon, and that in the Middle East no one’s rhetoric should be taken all that seriously, the Iranian threat is not one the Israelis are compelled to deal with right now.

Israel’s fundamental fear is not Iran. It is a rearmed, motivated and hostile Egypt backed by a great power.

The Russians are not after Israel, which is a sideshow for them. But in the course of finding ways to threaten American interests in the Middle East — seeking to force the Americans out of their desired sphere of influence in the former Soviet region — the Russians could undermine what at the moment is a quite secure position in the Middle East for the United States.

http://tinyurl.com/6okgfg

groosbank

Many professional advisors are down BIG, even more than the general market averages.

As Vadym posted in his 16 rules above at 11:48 AM, and has been discussed at length in prior discourse, 2 simple rules that can save you from financial destruction are:

1. Never average down on a losing position. (Losers average losers)

2. Always cut your losses quickly; whatever percent you choose. Day traders sometimes have much tighter stops (2%-3%) than intermediate and longer term investors.

In any case, it's probably best to never let a stock go beyond a 20% decline. If you buy stock in what you feel is a legitimate and financially sound company, and it falls 21% from your purchase price, you may be better served to sell and re-consider both the company and its prospects, and/or the timing of the purchase.

The point being, never argue with the market. People sometimes go broke doing that.

Just one person's opinion.

Excellent list of rules. May I add one more?

Shark's rule:.......Don't be such a dumb ass, idiot! (this rule should be taken to heart).

Anyone trading TCK or other TSX stocks may want to monitor the block trades going on.

http://tinyurl.com/56ycqp

Vad- if I may recommend a weekend video rental: Transsiberian...opens in Vladivostok, takes place during a train ride from Beijing to Moscow, includes a great performance by Ben Kingsley, quite riveting and will not disappoint...I would rate it two starts above Quantum of Solace, which I also watched this weekend...

i meant two staRS, of course...

Russia will not get Iceland's air strip.

It is all a game and they want help from the EU or USA. Sooner or later (sooner) they will get EU help.

It is all a game. . . .

bought NY strips at costco for $5.19 lb at COSTCO.

5 steaks for 18 and change!!!

Love that cash bull market!

norm- i made a similar purchase for about the same price...they're cooking right now ;)

Its a slow thread today so I will speak to the Middle East peace prospects as CP & Grym have. I do recall when Sharon came to power and started to kick ass and the stock market began its descent (2000-01). Maybe coincidence but I believe it had an effect (by the way the guy is still being kept alive on extreme life support). Then 9-11, followed by preemptive war in Iraq. The latter jump-started a bull market which, in the long run, was as unsustainable as the war.

I have hopes for the Obama administration but his first appointment (Rahm) does not bode well for change in the Middle East. Neither would a S of S job for Hillary. Bill Clinton pretended to come close to something in 99-00 but it was just a show by a weakened President.

If Obama does positive things it could very well help a depressed market. Then again, remember that this economy is dependent on a large defense budget.

wavemash ...

Please forgive my ignorance; could you elaborate on the significance of block trades? I know this is institutional buying but what should we be looking for?

T-bone steak index and discussion...

The T-bone Steak Index
http://tinyurl.com/6htk4v

Gold: The T-Bone Steak Indicator
http://tinyurl.com/5p8el2

Contrarian view - sell your freezer... your $8 steak just lost half its value. (and then went to $0 in your stomach) :)

Americans Stop Buying Appliances... Except For Freezers
http://tinyurl.com/5dtchy

TSN seems to be at some serious lows. If my math is right the "meat index" dropped 18% last week. If TSN can bully its competition into submission (or receivership) it may do well going forward? Does the highest P/E in the industry and some of the lowest margins suggest it may be in for further corrections?

Watch for $3.99/lb steak in the next few weeks...

http://tinyurl.com/5nr8ft

Shark... I am sorry man, but Jesse Livermore beat you to it with his famous rule #1: Don't be a sucker! Full quote:

"He knows all the don'ts that ever fell from the oracular lips of the old stagers-excepting the principal one, which is: Don't be a sucker!"

2nd, I looked it up. Sounds like one I'll enjoy, thank you for recommendation!

This article on the decline of the Baltic Dry Index is very interesting and possibly important. He suggests that the decline in the index may be due to the inability of shippers to get letters of credit and the consequences down the road.

http://tiny.cc/VLDaz

Taking a look at TCK-B block trades...

I just find it interesting to note the volume & times of the block trades to explain sharp movements in stock and to see whether it's institutional selling that's moving a stock or something else.

Does anyone know if margin calls are done with block trades or just dumped on the market?

From the Big Picture:

"not the raw fall off in block trades that is revealing, but rather, the divergence versus the market direction that is significant.

Why? Block trades may reveal what is driving the market in a given rally. Is it Institutional Buying, which tends to be measured and longer lasting as buyers scale in over time. Or, is it retail investors?

Institutional buyers tend to be part of longer lasting trends . . ."

There were 4.4 million block shares traded Friday. 30% of volume in Canada.

http://tinyurl.com/54uozq

Would be curious to see how the "dark pools" are doing in this environment...

http://tinyurl.com/5r2q78

Illini - Sharon's health is irrelevant to the Middle-East situation at this point, in terms of Israel. Persia has been placated by reduced tensions with Iraq's former regime, Hezbollah is no longer recipient of goading from Iran. Basically, regional threat against Israel has steeped. With low oil prices, Russia and Venezuela have run into a new set of problems. With the election of Pres.-Elect Obama, relations with Tehran appear to be warming. Subtract from this, random politically-oriented jawboning, Middle-East stability is looking better now than ever in my memory...

Vadym:

:) myself I was swimming under three waterfalls for the morning, then at the beach in the afternoon. No worries here on my side about following rule 17, except in my world it is rule #2 after rule #1 of being kind.

Cargo Shipping rates updated:

http://tinyurl.com/58ed9q

ALOHA !!

Why bother rescuing US car manufacturers who run the risk of not being able to buy car parts for production. What is GM without cars? GMAC!

READ ON:
Insurers pull cover from GM and Ford suppliers
Search
2008-11-15 — ft.com

Troubled US carmakers General Motors and Ford Motor have been given a potentially devastating vote of no confidence by three big European credit insurers, which have removed cover from their suppliers.

The withdrawal of credit insurance - which covers suppliers against the risk of the car companies' failing - has previously hastened the demise of a string of European companies, with suppliers to retailers and construction companies finding cover increasingly hard to come by.

Euler Hermes, Atradius and Coface, which control more than 80 per cent of the world's credit insurance market, are refusing to write policies for suppliers trading with GM or Ford on credit.

GM and Ford are two of the biggest groups ever to be blacklisted. The cut-off of cover will primarily affect big operations in Europe, where the insurers do the bulk of business. US suppliers largely operate without insurance.

The move leaves three possible scenarios: GM and Ford can start paying upfront for goods; they can hope their suppliers will trade uninsured; or they couldbe unable to buy the parts they need for car production.

What is the Story of Stuff?

From its extraction through sale, use and disposal, all the stuff in our lives affects communities at home and abroad, yet most of this is hidden from view. The Story of Stuff is a 20-minute, fast-paced, fact-filled look at the underside of our production and consumption patterns. The Story of Stuff exposes the connections between a huge number of environmental and social issues, and calls us together to create a more sustainable and just world. It'll teach you something, it'll make you laugh, and it just may change the way you look at all the stuff in your life forever.

http://www.storyofstuff.com/

ALOHA !!

Someone here was mentioning that at least foreign companies are not asking to be bailed out. Here is an article where Nissan Motors is asking for help!

I want a bailout too! HA!!

READ ON:
Textron, AEP Ask for Access to Commercial-Paper Fund (Update1)
By Robert Schmidt and Bryan Keogh

Nov. 14 (Bloomberg) — A group of companies including Textron Inc., Nissan Motor Co. and American Electric Power Co. is pressing the Federal Reserve to expand purchases of commercial paper to include them.

The coalition wants the Fed to go beyond top-rated paper and buy debt with the second-highest grade, two people said on condition of anonymity. American Electric Chief Financial Officer Holly Koeppel said the group is seeking to add more companies and preparing a letter to outline its case.

While accepting lower-grade debt could reduce borrowing costs for a broader group of companies, it would also expose the taxpayer to greater risk. The request is one of a number of attempts to get a share of federal rescues, with industries from automakers to heating-oil retailers seeking funds.

“We are really creating a mindset where no one fails,” said Adolfo Laurenti, a senior economist at Mesirow Financial Inc. in Chicago.

Second-tier issuers of commercial paper, debt that matures in nine months or less and is a form of IOU for day-to-day expenses such as payrolls and rent, argue they’re disadvantaged by the Fed’s new Commercial Paper Funding Facility.

ALOHA !!

sergio ... Thanks for the STORY OF STUFF.

Two things I thought it should include that was left out.

1-MONEY. Without a FIAT MONETARY SYSTEM that provides for unlimited DEBT we could never have gotten to a CONSUMER based economy. You cannot pay off DEBT with more DEBT. That is the basis for the monetary system we now have. The video mentions that 50% of taxes goes to military related expenditures but it did mention that nearly $600bil of the annual US Budget is to pay just the interest on our DEBT. For all you credit card users that's just paying the "minimum payment", the principle is never paid. A FIAT monetary system is designed to increase DEBT and make government grow. Somehow the AMERICAN DREAM we were sold is not mentioned in this video. The AMERICAN DREAM is totally founded on DEBT! You finance a McMansion for 30 years and how do you pay for it? You go into DEBT! The video points out how much people work but does not really say anything about the lost purchasing power of a US Peso, inflation.

2-This video says that government is there to support and nurture you. To take care of you ... What a load of crap! Its precisely because of BIG GOVERNMENT that we are where we are today! Expanding government every year has not solved anything ... it's made things worse. I cannot think of a BIGGER failure than BIG GOVERNMENT!

I can place a link between World population expansion and FIAT MONEY. Can you? Think about it!

Now "redo" the video!

ALL OUR BEST THINKING GOT US HERE!

CP & Illini,

I think it is understandable the Arabs are still angry with the imposition of the Israeli state in their midst (on their land). But it is also understandable that Israelis, knowing they are minutes away from destruction 24/7, may easily justify preemptive strikes on slim evidence. In the words of the old west, "I'd rather be tried by 12 than carried by 6."

Actually our defense budget has been quite low by historical norms, but war and threat of war are classical economic prescriptions. Whether by design or coincidence (never to be resolved) WW2 was the real catalyst to ending the depression.

The problem is most governmental prescriptions turn out to be worse than the aliment — Viet Nam and Iraq have been sucking us dry. Our military being short on people and over stressing the "volunteers" plus the need to replace equipment may be seen as a call to build up again. There probably is a need, but determining how to allocate the cost will, as usual, be done for political gain and far from effective or efficient.

The collapse of the Soviet Union was the beginning of far less stability in the west — economic dislocation, over confidence in a lasting peace, with only the US as the target for blame of all of the world's ills.

While I think a reinstitution of the draft would be political suicide right now, another major attack would probably allow it. I have always believed universal military training or alternative service to be a good idea. At one time I considered staying in the military, but decided my personality is not compatible with it over a long, peace time period — too quick to speak my mind and little patience with anyone in a position beyond his abilities.

I think a draft is far better than the use of private soldiers like we now have in Iraq. Their pay denigrates the service of our military, they are not truly under our Commander in Chief and may cause extremely serious international complications for us. Under whose laws do they operate? Certainly NOT the Geneva Convention. NOT the Universal Code of Military Conduct. This is an abomination we need to stop.

Funny, but I am more comfortable with Hillary dealing with foreign affairs than with Obama.

Obama (if he stays true to his past performance) will spend his first term assuring his second. This means more direct stimulus packages, bailouts of the "too big" and big business dominance. McCain would have done virtually the same IMO.

Kaimu,

Interesting article in Dec. Money Magazine — interview with former U.S. Comptroller General, David Walker. He points out our real indebtedness.

"But the real problem is the nearly $41 trillion in unfunded promises and off-balance sheet obligations"

Makes the autos look positively frugal.

TCK looks like an incredible bargain to me... One of the best out there at this point.

the underwater problem

groosbank- i thought long and hard last night about the situation we find ourselves in, along with your "wise men" post, the comments about trading rules, and the advice about going to cash...

I'll start with the bottom line (or actually bottom lines, as each relates to a different aspect of the problem), and follow with as much of the reasoning behind each one as I am able to explain at this point (all of my decisions were made awhile ago; i'm just trying to coax out the [largely] subconscious reasons behind them):

(a) I have no plans to move to cash until I see a real turn-around in the market. I'm convinced I would lose more sleep (or actually, begin to lose sleep; I'm fine right now) were I to cash out: by doing so, I would have to be watching the market(s) on a constant basis (like you, I have a day job), and there's no way to guarantee I will catch the upward spikes when they come (what if I'm in a meeting, dealing with an emergency, or o/w unable to monitor market pulse). Why am I not losing sleep?-> I was comfortable being short at DJIA 14000, and I'm comfortable being long at DJIA 8500; it's really that simple...at 10800 (more or less my basis) I will be under serious pressure to cash out, and I realize that. That's a separate issue.

(b) I will always respect commentary by those I deem to be "wise men," as they're always worth listening to, but I have to believe my "wisest" counsel is my own. Who else knows me better than I do? I have my own agendas, a unique trading/risk/life profile, and I'm the one who has to live with the consequences of my decisions. Your 11/14/08 817pm lists market commentators/traders I would listen to- but I also have to try parsing their agendas (past biases, current holdings, reason(s) for commenting), as well as their track records. To pick an extreme example (IMO), how can Jim Sinclair allow himself the flexibility to change his mind about gold with his April "bet" on a 4-digit price by january 2011? he can't. My own experience tells me this market will turn around, it will turn around when least expected, and if I'm not holding then I won't be around to catch it.

(c) Trading rules. We all know them, we all practice them most of the time, but once in awhile (usually at the worst time), we break them. Personally, I don't want to hear about the trading rules right now, because that's of no help to me; I want to know how to handle being underwater after breaking the rules! [obviously, this comment is NOT directed at Vad or anyone else posting comments about trading rules, which benefit the majority of readers...simply sharing a real-time jab with groosbank from our minority perspective (LOL)]. The October market drop was a good time to stick to the rules, of course, but what if you didn't? What if you and your girlfriend always use protection, but got carried away last night and didn't? what if you knew better than to take that turn at 60, and now you're careening towards a steep drop? people are neither perfect nor robots; that's what makes life interesting...so what we need is a chapter on how to get ourselves out of jams...I think we're all writing that chapter right now, in real time...and personally, I'm sticking with (a) and (b) for now...

2nd - If your port has been smoked but not completely, I say re-adjust for maximum smoke.

CP- you could say i'm trying to turn an impaled pig into smoked ham...

G20 meeting considered a complete failure...

The G20 financial summit did not yield much of significance if it was meant to help staunch the bleeding brought on by the worldwide economic crisis.

Among the modest and and ill-defined suggestions from the meeting, members "urged governments to implement "appropriate" fiscal and monetary policies to shore up sagging economic, according to The Wall Street Journal.

The meeting lasted less than six hours.

The G20 plans another meeting for April 2009. The world ought to be in the grips of the worst recession in seven decades by then, and it will be too late for goverments to do much about it.

http://tinyurl.com/6djhkw

Somehow smoke has escaped from my port too. I'm working on locating more smoke and putting that smoke back in the bottle.

2nd - If your impaled ham is not smoked ham yet, then turn up the heat a little.

2nd,

how were they??? mine AWESOME. Delicious... In fact i made an extra for lunch today.. Football and steaks...

baltic dry index - Yeah Letters of credit haven't been honored for almost two months. the daily rates have went from $12,000 to just above $800. There are companies that might not be able to continue operations because of LACK of CASH, hence insolvent. Those are the consequences when you get drunk on debt in times of "strongest world economy" (or whatever our treas sec said about ump'teen times).

If nothing is really moving around the globe, how will this bode well for companies that produce those products that will be shipped around the globe by the dry bulk shippers????
In my fear, the news on those companies will get worst. (I have no idea, which companies those are by the way, just thinking from the nosebleed section of the stadium. no desire to get on the field of play).

ECONOMIST - I give the article a B minus, IMO still underestimating the forces as the EU does not get it.

"Debt and deflation
Depressing times
Are rich economies heading merely for a bout of falling prices, or for a 1930s-style deflationary spiral?"
http://tinyurl.com/5mfak3

All trading rules will works until they do not work.
And they do not work until they start to work.

I did worse in averaging down and sold below last average down purchase.
Like stock of BC/RCK/SU
I did well on averaging down on GG/UAUA/LVS and sold all with big gain and now UAUA is available for 40% less than I sold and LVS is at 66%

RIMM my average cost for 200 shares was 76. I thought it will take time to get there again so sold them at 45. Use these money and brought triple long ETF BGU/FSA and
Got most of money I was losing in RIMM back. If I kept holding RIMM I would not have got it back.
Lesson I learn is nothing is wreitten in ston. One has to try different method, different system. System that works this hour/today/this week may not work tomorrow.
Traying to adjust to correct market environment is only tru rule that will work in my opinion

norm- agree...

vinod- agree with you also...

I'm going to need a breadline ticket... or a recipe for biscuit soup.

Here is another list of rules re stock manipulation

http://www.stockmarketcats.com/f34/art-stock-manipulation-226.html

CP,

this will be a once in a lifetime of an event where wealth can actually transfer. keep the powder dry, those who are liquid will flourish soon. "No soup for you" or bread lines for that matter. It won't get that bad (i could eat my words though!)

IMO..

2nd,

I take it that you feel that 8500 is relatively safe. Is there a number that will shake you loose (below 8500). And why would 10500 shake you loose from above? Is the market overvalued there or more likely to go back down to 8500? If you think its likely to drop and everyone else thinks the same thing, then what is going to get it to >10k, a huge sucker rally?

I have a feeling there are a lot of people who would lighten up above 10k (of course that would change if we got there) and so I'm wondering if that means we won't be getting there anytime soon.

Yesterday I opined that the free fall in spending has frozen many buyers out of the market. What catalyst do you see moving the market up (some think that mutual fund or institutional buying was reponsible for Thurs. push off the lows)?

So far, even a powerful push like Thursday's was not enough to get people feeling that they are being left behind. That's because there has not been a back-to-back rally since 10/10.

I'm having a very hard time seeing what 'fuse' is going to ignite the market to get it > 10k. Perhaps that is good reason enough :)

norm - sage advice! he,he - I was just kidding, but you knew that. I'll continue working my up-front powder, constantly tweaking it for optimum hole-shot... There's a spare keg in the back room in case of actual emergency.

norm
"..lifetime of an event where wealth can actually transfer"
yes, it should transfer to me not CP.
he does not need it?

See Kaimu post of Nov. 15 at 1:14 PM.

Question: Are are the credit and equity market manipulations designed to drive all entities to a maximum cash position? Kaimu observes that everyone with large cash positions will be instantly broke the second the government defaults. What would the rational be to do this and how might someone protect against this happening? There does not seem to be a safe haven.

Dan

how soon will the government default? (mathematically we are already broke, bankrupt.)

remember if it were to get closer to happen.... tax rates go to 90%.
That was exaggerated but tax rates were almost 90% before around ww2 time period...

IMO - the USD will get stronger over the next few months... the unwinding of positions requires USD cash to be raised. also this is a result of the last 5-7 years of USD investment going abroad and fueling the "strongest global economy" (treas sec). Now those investments are being called back as the unwinding begins.

With the USD in high demand would this not have been the perfect time for Bernanke to print more? Could it be that he has already managed this slight of hand somewhere in the bowels of his bookkeeping?

Danf - The safe haven would be alternative currencies. Choose one that will perform satisfactory to your expectation. Disclosure: I have a "largish" position in gold.

vinod - I'd much prefer transferring my wealth to someone I know and admire, such as you, you'll have to work for it though.

Las Vegas = Lost Wages!

ok, this guy is scaring me, I thought I had more time....

http://www.infowars.com/?p=5938&cp=26%20%09%09%09%09%09%09Inbox%09%09X

Wow Shiva. We have seen the reason posted right here on this blog:

"There will be a revolution in this country,” he said. “It’s not going to come yet, but it’s going to come down the line and we’re going to see a third party and this was the catalyst for it: the takeover of Washington, D. C., in broad daylight by Wall Street in this bloodless coup. And it will happen as conditions continue to worsen."

Do you know Mr. Celente?

"I have my own agendas, a unique trading/risk/life profile, and I'm the one who has to live with the consequences of my decisions."

That's an excellent point, 2nd_ave. I have figured it a while ago as well and stopped worrying about my trading strategy deviating from the famous trading advices. That's because my risk profile is very different from most as well -- I can tolerate ANY fluctuations in my portfolio as long as I am not FORCED to sell low (because I cannot meet a margin call) and as long as *at some point* my portoflio will rise strongly allowing me to cash out some gains. That's why I am holding the most volatile and risky positions now.

SiO2,
Somebody sent me that link. I googled up his name and he seems to be widely quoted.

If we witness another black swan event, maybe what he is saying will come to roost so soon. But if not, its still hard for me to believe that the entire world is ready to back to cave man days in a few years .....

My take is they will come up with more band aids that will buy us all some more time.

There is still something unique about US vis a vis rest of the world. US can still trump up ideas (read Intellectual properties) and sell it all over the world. We still see companies like google, apple decimating their competition from around. When that innovative factor dies, aura for US is gone

Starting at 1hr and 14 minutes seems so relevant to today. Previous stuff is interesting too.

http://video.google.com/videoplay?docid=-594683847743189197

RE: Kaimu Country

When I was about 12 years old my parents took me to our 50th state and I went to one of those tourist-Luau's with the roast pork and the poi and I sat next to and spent the next 3 days with a woman at least 18, so if you're asking me "is Hawaii beautiful?", well what? Are you kidding me?

Re: rules

2nd......I'm not talking about the widely distributed and fairly stuff that everyone already knows, such as, obviously not adding to losers. This one is so obvious as to be dumb. I'm talking about proven methodologies by which to enter and exit stocks.

Vad....Do you (or anyone else) personally have any experience implementing (and maybe adapting) Mark Fisher's A-C-D system?

This seems to be a discrimination game. Having a filter to adjust the ratio of wins/losses. My specific question is about acd...With acd there are far fewer opportunities to trade. Are those opportunities also truly better opportunities, or has time and the dispersion of this information destroyed that edge?

yeah i know i was a victim...yeah right.

Brown-Cal-

"Is there a number that will shake you loose (below 8500)[?]" I don't know. For the DJIA to hit, let's say 4000, the world would be a different place, and my thinking would be in a different place. I'm not going to make decisions based on that scenario right now- can you think of any reason to?

"And why would 10500 shake you loose from above?" That would be 10800, at which point I would be back to my previous YTD high, and I'm just acknowledging the (psychological) probablility that I would be tempted to cash out and return to ST trading.

I think we deal in probabilities, and it makes sense to make decisions based on them. What are the odds that the market collapses in the next 12 months? That your wife leaves you in the next 3 years? That you're diagnosed with a terminal illness in the next 5 years? That you live to be 101? That the DJIA hits 14000 in the next 6 months? That California declares bankruptcy? That it ends up with a surplus? That a terrorist attack destroys the lives of those you love? That the Niners win the 2009 Super Bowl?

I don't want to waste too much time thinking about the extremes...

http://tinyurl.com/5utwkn

Obama radio/video address Nov 15, 2008.

Not much commentary here on G-20 summit...was there not much to discuss?

Tbar,

that film is so scary i almost cant watch.

shark_attack said:

"I'm not talking about the widely distributed and fairly stuff that everyone already knows, such as, obviously not adding to losers. This one is so obvious as to be dumb."

There are some here at this blog who use this method as a way to accumulate stock. I personally do not think it's a productive strategy for the average investor. Many professional investors use the method as a way to build a position.

For me, I like to see a stock move in my direction before adding to it. You can buy is believed to be a solid company with great fundamentals, and still lose a lot of money if your timing is wrong.

Also, fundamentals and industry conditions can change quickly. That's why it's better to watch price and volume action rather than rely on what we "think" should happen.

Cutting losses while they're small sounds so simple. In reality, it's much more difficult to implement on a consistent basis.

Meeting with Northgate Minerals' CEO

This year, I've been lucky to meet with a string of CEO's of juniors. I'm struck by how different they are, reflecting their companies' differing policies.

Ken Stowe of Northgate didn't even refer to the (inevitable) power point presentation, just launched into conversation. Of several juniors' CEOs, he was by far the most oriented towards internally funding growth of profitable producion - clearly in tune with today's difficult capital markets.

He has no interest in greenfields exploration, little interest to spend for drilling to build 43-101 compliant ounces, and no interest in growing production unless it's profitable.

Northgate has bought (cheaply) 2 previously producing mines in Canada and 2 in Australia.NXG quickly fixes their problems and builds to profitable production. NXG hasn't gone to the markets for financing since 2002, and has no intention to do so.

4 of 10 analysts recommend "buy". 118 institutions hold 40% of the stock. The largest is James Simons' Renaissance Technologies (the most successful quant hedge fund) which is said usually to buy large caps on traditional metrics.

Until these hard times, Northgate was considered relatively unexciting. There was more focus upon star explorers (McEwan) and acquirers (like Seabridge) who drilled and drilled to report growing 43-101 ounces, and hoped to sell out.

But pure explorers, and "deposit-builders" are no longer being funded. Even "project generators" who JV early with multiple seniors are not raising money successfully. Northgate's strategy focusing on internally funded production growth suddenly looks most attractive.

Last year, NXG had net income of $39M on revenues of $338M. This year, NXG projects 365K oz. at an average cash cost of $395/oz. Next year, costs are predicted to fall with rising grades.

Ken Stowe talks more like a manufacturing exective than a "dream weaver" or deal-maker. Northgate's apt slogan is "bringing value to the surface".

Northgate's formula seems well suited to surviving tough times. So, why is NXG stock since 5/21 down 80%, while McEwan's UXG is only down 66% and SA only down 60%?

There's no sense in today's market. Maybe tomorrow's will be different.

disclosure: no position. For information only, DYODD

What killed NXG for me was the inability at the time to get permitted for more area on their main project apparently because of some water polluting problems they'd had. The mine was generating good profit at the time, but only had a few years of life left in it. I sold when I read about the pollution issues, and the stock is down dramatically since then. After I sold they bought some other properties, which may or may not be in production by now. Its also possible that they made have found more ore in the main mine area that was already permitted. I guess that shows how critical it is for miners to avoid any pollution complaints at all, lest it label them.

No position now, older information from when I followed it/owned it. Lucky to have escaped with a profit.

Austin listeners certainly have unique advantages over many markets in terms of Alex Jones.

Is everything with Bill Cara ok? Just wondering as no WIR as of yet.

[Bill Cara note:

I needed to take off for several hours for the Hash, sorry. I'm 80% finished. WIR #46 should be uploaded about 8pm, I'd guess.]

Looking at my google calendar i see a big week coming for Solar companies earnings:

Tue - ReneSola
Wed - Trina Solar, LDK Solar
Thu - Suntech Power
Fri - Canadian Solar

Couldn't resist posting this asn there is truth in it.

Please, this is not a slight againt American Indians in any form.

An Indian walks into a cafe with a shotgun
> In one hand pulling a male buffalo with the other.
> He says to the waiter:
>
> 'Want coffee.'
>
>
> The waiter says, 'Sure, Chief. Coming right up.'
>
> He gets the Indian a tall mug of coffee..
> The Indian drinks the coffee down in one gulp,
> Turns and blasts the buffalo with the shotgun,
> Causing parts of the animal to splatter everywhere
> And then just walks out.
>
> The next morning the Indian returns.
> He has his shotgun in one hand, pulling
> Another male buffalo with the other.
> He walks up to the counter and says to
> The waiter
>
> 'Want coffee.'
>
> The waiter says 'Whoa, Tonto!
> We're still cleaning up your mess from yesterday.
>
> What was all that about, anyway?'
>
> The Indian smiles and proudly says ...
>
> 'Training for position in United States Congress:
> Come in, drink coffee, shoot the bull,
> Leave mess for others to clean up,
> Disappear for rest of day.

Courtesy of miadhach, Danielle Park on BNN, about 6 minutes length. She is great. http://watch.bnn.ca/#clip112214

She sees a possibility of another 30% drop, and says $400B have been put in hedge fund redemption requests, which since they leveraged, means ~$600B out of the market by Dec 31.

Do you know Danielle's work and would you see any flaws on what she is saying?

Thriftybob - re NXG, Kemess is the mine in question, which also had other problems this last quarter. Work was needed to shore up the west wall of the pit. Mine life extended to Q3/'11, with the Young-Davidson project in Ontario scheduled to start production in 2011. The two Australian mines (Stawell and Fosterville) have started production. A junior with market cap $161M with 3 producing mines!

Here's the presentation with more detail:
http://tinyurl.com/6nxhef

Of course, it's a good thing you sold when you did. ALL juniors are down. Question is when and where to re-enter.

Chicken, are you a Jones fan?

When the lowlife on Wall St were making 100's of millions for doing nothing useful, the people should have dragged them out of their offices and left a red spot on the ground.

I've said it before , the people are an ass. More proof coming daily.

Want proof? Read the latest from Business Week about how the sluts in the mortgage packaging business got well.

1000's knew of the scams and yet they were not shut down promptly. Who can you blame? Everyone.

http://www.businessweek.com/magazine/content/08_47/b4109070638235.htm?chan=top+news_top+news+index+-+temp_top+story

procol, someone here posted the link to Michael Lewis' The End article which explains the whole mortgage fiasco and what happened with Wall Street quite well. Brilliant piece. http://nexalogic.com/theend2.pdf

Lewis did not even know about that you just posted.

Re: G20

The whole emphasis on the G20 was aimed at propping up the derivatives trade, which few countries have any desire of seeing revived. I'm pretty disappointed, because that means no action will be taken unless its a panic move in the face of disaster. In the meantime, you have oil producing nations like Saudi Arabia and Iran diversifying their foreign exchange into bullion in quantity.

Probably all of the Arab states had some relationship with the Pound and the Euro, but now that the oil price has broken a very long term trend line, the oil market mania and collapse is over. These countries are rotating out of their primary export.

One big move in the markets that hasn't seen much airtime is the decline of the Pound and Euro against the $US. These currencies declined against the Yen without essentially changing their relationship with the Dollar, but now we are seeing a currency rout. This is not a healthy thing to have occur, especially when the yield curve has steepened dramatically.

Hopes for a reflation should be reduced as more reality sets in by next week. Another thing that got little mention was how currencies were tied to the oil price or held short against the oil price, which is leading to a huge unwind in the currency markets.

shark - I used to watch Jones on television, never personally was able to confirm or dispute his particular observations but made a few of my own. I'll just say, when Jones describes the Austin police force I'm more inclined to believe him than not.

Austin's an interesting place to live, Bubbaville to Bohemian, they've got it all. Maybe it doesn't compete with NYC, but what can I say? Check out Leslie Cochran (aka Banana Jane)...

http://www.youtube.com/watch?v=5zorsLs1pdA

SiO2: Do you think Danielle Park meant that $400B in hedge fund redemption requests were not processed yet? Maybe her info was as of last Friday, and so a large part of them could have been processed already, in particular during the last trading hour on Friday?

David, my understanding is that requests needed to be placed by the end of October, and they are processed before the end of the year. I would not know since I have never invested in a hedge fund, not even close :-)

SiO2, I read that Lewis piece a few days ago.

As low an opinion as I hold of the gangsters that caused this, I am STILL somewhat shocked to read of the gory details.

Our law enforcement agencies are impotent at best. Nothing new there either I guess.

Jock,

re: NXG, that all sounds rational. Its not unusual for mine lives to be extended as they find more ore in a pit area. It was in the low $3's when I bought it, and sold for a small profit at the time. That was back when being a profitable gold mine still had any value.

Currently long RBY, WGW, and GG. RBY and WGW are my lotto tickets, as dramatically undervalued as any out there.

Who here has a good web based site to track international indices in real time or almost real time? I have been using Bloomberg mostly and just looking to see if there are better alternatives? i use this on both pc and blackberry.

http://tinyurl.com/6msabu

NYUgrad- try this one for starters:

http://tinyurl.com/28kdov

guys - i do tax work for huge hedge funds and i can tell you that the majority of them were selling their assets off in anticipation of redemptions starting about a month ago. the majority of the selling is done in my opinion and quite frankly, they have had fewer redemptions than expected. i think people are making more out of an unknown than should be made. people are freaking out about an unknown because the media is making it out to be a big deal.

[Bill Cara note:

Thank you for this, but I hope you are not disclosing professional confidences. There is nothing more important than your personal reputation.]

NYUgrad - Try this:

http://finance.yahoo.com/intlindices?e=asia

Bill - I'm not about to and would never disclose anything other than just a general idea that it's overblown.

[Bill Cara note:

I hope so -- in both cases. Thanks again for writing it because I think it helps settle people down, which they need to be right now.]

also, i can't possibly tell how much selling might ultimately be done, but i wanted to give the general sense that a lot of this has been factored into and absorbed by the market.

teamonfuego

Thanks for the general info, most instructive.

Chicken,

I had that yahoo link. its def in my rotation. thx for the effort. Sometime yahoo has been crashing my firefox browser so i switched to bloomberg mobile version.

at any rate asia is up so far but i will be fast asleep when it closes.

I am just hoping next week has several up days in contrast to last week.

NYUgrad - Tell me about it, another brutal week! Sleep well.

I am not exactly sure what the racism comments at the end of the WIR were supposed to mean. Blacks and other minorities are not racist in the US because racism is prejudice + power, and whites have the power here. The power is the key because that gives people the ability to enforce their prejudices on other people. Everyone has prejudices, only whites can be racist in American society because they are the people in positions of power usually.

My wife has several minority friends; it is a completely different society for these people than it is for whites like my wife. My wife walks out of a store with an open soda that she bought elsewhere and there is no problem. If her friend did that they would accuse her of stealing. My wife's Filipino friend, born in this country, had a doctor's visit where the doctor asked the nurse if she spoke english. And this was in New York City. This same friend tried to return a defective backpack at TNF with a receipt and they refused to take it back. My wife tried a day later and they happily exchanged it without even asking for a receipt. These incidents may not seem like much but when you add them up, day after day, they become a huge weight making you feel that you are inferior. My wife, as a educator, has met many minority students who are extremely gifted - with the SAT scores to match - that were told by their guidance counselors in high school that they were not good enough to apply to a tier one college. Unfortunately they did not know any better at the time. My wife has helped a few transfer to Columbia University.

Whites often feel they are unfairly accused of being racist and that there is a double standard but they rarely see how privileged they are in this society. Unfortunately the whole media conversation of race has devolved into unintelligible pablum that doesn't touch any real issues, only words.

Hopefully Obama can effect serious change in this society through the power of his personality and the leadership he demonstrates but it will take many generations to undo.

David- this was movie weekend for me...for some reason, your trades came to mind in the midst of watching "Ripple Effect." There is a scene with Forest Whitaker, who plays a paraplegic, attempting to enlighten the man who hit him 15 years earlier: he tells him a story, which paraphrased, went something like this:

A man owns a horse, who does everything for him, and one day the horse runs away. His neighbors lament his loss, and call it a tragedy. He replies, "Maybe, maybe not." The next day, the horse returns with twenty mares. His neighbors rejoice, for he is now the richest man in the village. He replies, "Maybe, maybe not." The following day, his son falls off riding one of the mares, and becomes paralyzed. Neighbors come by to console him for this new tragedy. He replies, "Maybe, maybe not." On the fourth day, the military decides to conscript all young men in the village. Again, he is ambivalent whether this is a good thing or a bad thing.

Does karma enter into trading? I don't know. But attitude can certainly affect one's frame of mind in handling the volatility. (I'm not a follower of Buddhism or Hinduism, but I certainly believe that one can positively or negatively impact outcomes based on one's perspective.)

Bill,
from your weekly report

"People today ask me how I can have such a feel for the market. Oh, you cannot imagine the sacrifices."

You are a very kind person to be doing all the hard work but still devote some time to share your views with this forum/participate in it. I wish I see more of such people in my day to day life. It doesn't matter to me if I made or lost money following your directions (that responsibility solely belongs to me as i made the decision to buy or sell) but your honesty is a rarity and I wish to let you know that it is well appreciated. Thanks a ton

2nd,

just to make clear, my post about rules was not at all related to situation you discuss with goosbank, I merely answered a suggestion to discuss trading rules. I know you know that, just want to make it clear for anyone who hasn't followed the whole flow in multi-hundred posts thread :)

shark.. if I am not mistaken (and please disregard the following if I am), ACD you refer to is one of variation of opening range break setup. This is well known and quite fair setup, I play my version of it for years. Actually, it's so straightforward that I am not even sure there is much room for different versions.

"I am not exactly sure what the racism comments at the end of the WIR were supposed to mean. Blacks and other minorities are not racist in the US because racism is prejudice + power, and whites have the power here. The power is the key because that gives people the ability to enforce their prejudices on other people. Everyone has prejudices, only whites can be racist in American society because they are the people in positions of power usually."

Nahhh, that's how it's sold. That's how you create the victimization industry. So, Jesse Jackson's "Hymietown" comment wasn't racist? Are there issues, sure, but don't forget, it was a huge issue that JFK was...oh my god...Catholic. Racism...prejudice...whatever semantic you want to apply. Prejudice is endemic to the human existence. It follows cliques, clans, "races" social/economic strata. Whites having the "power" is noise to obfuscate the issue in favor of those who are not white, which makes it racist.

[Bill Cara note:

Discrimination of any kind is what purposefully separates and divides society to the benefit of groups who seek control without earning the privilege. I believe that the next four years under President Obama will be the time in all our lives when discrimination, or social equity if you will, became the most important topic for discussion and resolution of the issues. As usual, I decided to get an early start, and, as you know, I am not afraid to speak my mind. Ultimately, my interest in this subject matter is capital markets related. I detest intervention and control; I am a free market patriot.]

Nov. 16, 2008 @ 3:26 PM, 2nd_ave said:

"I think we deal in probabilities, and it makes sense to make decisions based on them. What are the odds that the market collapses in the next 12 months?

I don't want to waste too much time thinking about the extremes..."

What if the $SPX which closed at 873 on Friday falls down below 700 ? That may fall into the "extreme scenario", but let's just say it happens for discussion's sake.

For those already down big this year, they have to ask themselves if they would have the strength and fortitude to buy equities (assuming they have any money left to invest at that point) at those lower prices.

If one is fully invested in the market right now, then selling some stocks to raise cash for purchase of stocks at what could be even lower prices in the weeks and months ahead, may make some sense.

Prices tend to go to extremes that are hardly imaginable (both up and down) during major market events/moves.