Good morning.

Here are your Cara 100 Ratings Changes:

FSLR - Price Target Lowered from $170 to $120 @ Friedman Billings

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

Today's Market Music:

http://tinyurl.com/6ypz6j

Excellent idea Bill, I've had the same sense about the coming capital reallocation. I think it's already been happening. I'm not sure that I can accurately predict where it'll go next, but there's a lot of smarter people than me here and I'll look forward to that discussion.

on the pirate topic from last night, it looks like India is taking the bull by the horns.

http://tinyurl.com/5gtxn2

This commentary on RM regarding yesterday's late day suppository...eh...I mean, steroidal, action:

Doug Kass
Memo to Jim 'El Capitan' Cramer
11/19/2008 7:42 AM EST
Upon the completion of the InBev acquisition of Anheuser-Busch (BUD), $50 billion of capital (Anheuser-Busch's market value) was distributed to shareholders.

About 11% of Anheuser-Busch's shares were indexed to the S&P 500.

A portion of that 11% (about $1 billion) went into the shares of Stericycle (SRCL), which replaced Budweiser in the S&P. The balance of about $4.5 billion was distributed to the other 499 stocks in the index, depending on the market cap of each company.

This created upside pressure on the market in the last 15 minutes, which I discussed in The Edge throughout the day yesterday.

Position: None

Jim Cramer
The rebalance at the close
11/19/2008 7:29 AM EST
If someone here can explain the rebalance at ther close i would be very grateful,. The S&P ripped huge but it was apparently artificially ramped by the rebalance

Great initiative Bill. The Big Three seem to be dead in the water. I'm sure that they will have money thrown at them in the short term, so that they can fudge and sweeten the numbers. But really do you see these three dinosaurs seeing out the current decade in there current guise. These firms are just as guilty as HB&B for the state that the world finds itself in.

Lithium-ion battery production seems to be the key. From Reuters recently:

Toyota Motor Corp, which dominates the global market for gasoline-electric hybrids with its Prius, plans to start producing lithium-ion batteries next year from a joint venture with Matsushita Electric Industrial Co.

Nissan Motor Co also has joint ventures with NEC Corp to mass-produce lithium-ion batteries next year.

Lithium-ion batteries -- lighter, smaller, longer-lasting and capable of holding more power than the nickel-metal batteries which power the current gasoline-electric hybrids -- are used for plug-ins such as GM's heavily-touted Chevrolet Volt, which will be powered entirely by an electric motor and can be charged through an ordinary power socket.

"The role of the local and state governments is going to be the incentives they can provide to companies who want to get into the business and establishing that infrastructure," said Wright, who previously headed hybrid development efforts at Ford Motor Co.

Mitt Romney has an excellent op-ed in NY Times today.

He makes a convincing argument for bankruptcy.

http://www.nytimes.com/2008/11/19/opinion/19romney.html?_r=1&th&emc=th&oref=slogin

Why the US has no immediate prospects for mass producing auto-size lithium-ion...
http://tinyurl.com/6gh3wy

HEV a strong Lithium-ion player.

what about the direct relationship car companies have to oil. how will that be broken? and where will the govt go to replace the tax revenue from oil?

i am hopeful Obama will push oil independence, but skeptical the govt and its puppet masters will say "we dont need oil tax revenue"

That was a good op-ed from Romney. All the more evidence/reason he should have been McCain's running mate.

Thanks for posting that wabrew.

Some good info (including how inefficient our system is) but that Lith-ion article is three years old. Not that it doesn't contain useful info but a lot changes in three years...esp the last three of rediculous inflation/fuel prices.

re: Long Term

Remembering the attempts at alternative energy in the 1970s, I am unwilling to commit anything to such today. Things are different this time I'll leave to others for now.

(1 to 2 years)
In case of the inability, of Bernanke and Paulson to reflate: bond funds: WHOSX, BIV, LQD and for PM/Ts combo PRPFX.

(3 to 5 years)
I'm watching the big, well diversified consumer companies like JNJ and MMM. XOM and APC in energy
I'm planning on putting in low bids soon. If a plan to create jobs through infrastructure reconstruction seems likely, I'll go for CAT, DE, and related companies in commodities.

I am retired with only Social Security as monthly income, but have usually been conservative. While I have traded actively for short periods, I mostly go with a stock for months or sometimes years — holding until something major changes my view of the prospects. Current market volatility, frequent rule changes and vague/indesicive financial policies only make me more so.

Until July I was nearly 100% in stocks, got hit by SEC tinkering and went to 85% cash. I've been at 50% cash for about two months.

The only thing surprising to me about our current malaise is how long it took for the house of cards to collapse. My fears of globalization, NAFTA and the "new information/service economy" matched those of Ross Perot and got about the same attention by my representatives.

I give credit (blame) mostly to CNBC hype and that of popular investment publications who have reinforced the buy and hold/buy the dips/ momentum financial theories. It certainly proved the power of mass communication and propaganda.

CNBC touting Dow 6400. Closing bell in Europe show.

"The Dow Jones Industrial Average is set to sink to 6,400 within the next few weeks, Nicole Elliott, technical analyst at Mizuho Corporate Bank told CNBC."

http://tinyurl.com/66xdjv

Me: I guess anything is possible. But everyone is bearish. Isnt that the time to buy?

I can't quite recall the deficit amount that was being spent on fuel at the height of gas prices. Was it 500 billion a year? I don't like doing business with countries that would just as soon see me dead. Electric, Natural Gas, nuclear power, whatever it takes, lets get self sufficient and head for a greener life NOW.

"We need to develop a thread in the Discourse that seeks to uncover the best potential long-term stock plays. Those traders who are not momentum players would appreciate this initiative."

Bill I'd personally appreciate such a thread, and would participate and help to the extent possible. I've modified my strategy recently - away from daily price movement watching to seeking out those long-term opportunities. I'm thinking that a "buy and hold for while" strategy will provide great returns in the coming years.

Dave

I'm not sure is the time to buy unless you're averaging in.

Volume has been relatively tepid. If there were more buyers at these prices, there would definitely be more sellers, but there aren't. I think teamonfuego said much of the institutional money he deals with is on the sideline, therefore with no bids to support the market, there is the possibility of a downward vacuum until what Obama is going to do is clear.

Then again, we could go up 10% this afternoon...

We need a rally today!

Positive thoughts.

USD just broke uptrend line --> Rally time --> SSO premkt.

DaveB said:

"I'm thinking that a "buy and hold for while" strategy will provide great returns in the coming years."

How many years are you thinking that one would have to hold to get the returns you speak of ?

Cara 100 Update:

RIMM - added to Goldman's conviction buy list based on valuation, a stronger dollar and attractive pipeline. Sees 44% upside to its 12-month target of $68, based on 19x P/E.

OT Piracy Issues

QE2 is headed for Dubai right now via Gulf of Aden.
Not to worry; this ship and a lot of other passenger ships have LRAD: this device generates a focused beam of sonic energgy at 146 dB. Has been successful in repelling pirates.
Cargo ship operators have not invested in this technology, but now they will.

go to resourceinvestor.com and look up the author Jack Lifton. He has written extensively about the metals and auto industry. His argument is that Li+ ion batteries cannot be mass produced to fill the gap or make the transition to hybrids. Amount of Lithium needed is not feasible, so NiMH will still be used...Cobalt is a major metal for this. They are long articles, but very good...

So the goal is to divert incentives for domestic oil exploration and production to alternative energies such as clean coal, diesel from coal, and solar/wind technologies?

Isn't a free market the best way to achieve these goals? I'm trying to keep this all in context in the effort of not having the wool pulled over my eyes.

BBY debt downgraded by Standard & Poors. Recent support @ $20. If (when) it's broken, it's bombs away to the downside.

http://tinyurl.com/6q2gn2

HD yesterday reported sales were down 8%.

The consumer is tapped out.

China considers increasing gold reserve...

China's central bank is considering raising its gold reserve by 4,000 metric tons from 600 tons to diversify risks brought by the country's huge foreign exchange reserves, the Guangzhou Daily reported, citing unnamed industry people in Hong Kong.

The Guangzhou-based newspaper didn't elaborate on the plan.

China's forex reserves, at US$1.9056 trillion at the end of September, is the world's largest. U.S. dollar-denominated assets, including U.S. treasury bonds and mortgage agency bonds, account for a big proportion of the forex reserves.

http://tinyurl.com/5jv4oo

nemo - "possibility of a downward vacuum until what Obama is going to do is clear."

My thoughts exactly. In terms of energy, be prepared for a nice disturbance response and then settling back to the norm. Everyone here has high hopes for alternative energies I know, and so do I, but in terms of my trading strategy, I'm going to assume a contrary position on that one.

there's no way to predict when a rally starts, or how far it goes, right? what we sometimes 'bet' on is the highly reliable observation that sentiment invariably reverses...if this were Vegas it would be analagous to knowing that the odds of red or black on any particular spin (leaving out the 0/00 for now) is always 50/50, but also that a series of consecutive reds will, over time, revert to a 50% incidence...

re:RIMM

RSI buy alert 11/17

Re: Depression Era

In reviewing which sectors performed well during the depression era, I was surprised to find that auto makers found great favour back then. This was after the crash in the subsequent bear market rally, just like the commodities rally from 2003 - 2008. The auto makers of present day bear no resemblance to historical companies of the day, since they all have massive quantities of public debt underwritten by notional derivatives script.

What they're really looking for in the bailout is some way to get out from under the pox of credit derivative swaps sapping their life blood out from under their public debt, while hoping to write a slough of credit derivative obligations once that's done to keep them going, just like the credit sector. Never mind about concentrating on building quality vehicles. Of course, if the bailout fails, then the whole house of cards comes down, because the entire economy the world over is yoked to a credit derivatives standard, and no political will besides to rectify notional value and systemic kleptomania.

So, in keeping with the idea for the moment that transportation will somehow survive the unwanted complete collapse of the financial system, which now seems inevitable due to the prominence of the off balance sheet derivatives trade, I began going to car shows.

The biggest surprise of these outings was not the luxury of some of the cars presented, but a toddling electric car made in the early phase of the automotive invention, which was the Baker 1911 electric car.

http://images.google.ca/images?gbv=2&hl=en&q=baker+electric&btnG=Search+Images

This car would be completely adequate with modern technology,(in the urban setting) but nobody would buy it. In fact, it was the upholstery which I found delightful. What a comfy car. Bigger than a Smart. What made the auto industry then was being able to provide something adequate for transportation needs. While people were toddling around in underpowered barely adequate internal combustion vehicles to get around, the rich had access to massively powerful large engine -displacement cars with gaudy designs and could easily honk, badger and overtake any earnest effort by John Q. Public to get from A to B.

Unless a new power source can be implemented, then vast majority will be toddling around in what they can afford, and the affluent will be brusquely driving by. Nope, the car industry will have to shrink to the point where they are providing only the most affluent with surpassing vehicles, and the rest with very basic transportation.

Either that, or networking will have improved to the point that cars drive themselves and we call up a driverless pod to get around:

http://news.bbc.co.uk/nolpda/ukfs_news/hi/newsid_7148000/7148731.stm

(Its just a question of how the keep the damn things clean)

re:consumer debt

While I don't have blind faith but dire predictions that the consumer is spent out usually doesn't happen. Drop in fuel prices, both automotive and home heating, could put enough funds in pockets to surprise.

We'll know in the fullness of time.

"divert incentives for domestic oil exploration and production to alternative energies such as clean coal, diesel from coal, and solar/wind technologies?'

If we are going to divert "incentives" then we aren't talking free markets to start with, right?

I note that Bill's idea is based on seeing a rather noticeable and large reallocation of these incentives for oil to alternatives.
I don't expect big oil to roll over, but i wonder if their past methods will hold sway.

good morning - it seems like things have settled down a bit the last couple of days....perhaps all the bad news is baked into the cake now?

XLF ain't joining the party... tried to get over 11.75 and couldn't. Can't get going without HB&B on board. Out of SSO for a quick 2%.

Looking to reenter, as the USD index has cracked.

"Isn't a free market the best way to achieve these goals?"

Why do so many still believe the myth that oil companies HAVEN'T been subsidized?

http://cleantech.com/news/node/554

bsi87 - agreed that lower fuel prices make the consumer story not as bleak as the herd seems to think it is...

Re: Bad News

All the bad news and then some

Google search on 'debt default'

http://news.google.ca/news?ned=ca&hl=en&ned=ca&nolr=1&q=debt+default&btnG=Search

WLC.V - Junior lithium play in north central Nevada with a significant reserve, but no production pending for now. A small company with little capital - buyer beware. Happy Trading

last summer pirates comandeered a sailfish one day when out here on long island sound and the cops came and asked me about it.

"Scoundrels I says.....But no, I hasn't seen any Pie-rats aroun' here, no I 'aint in at least a fortnight commander....."

DFS approaching its 52 week low set back on Oct. 8.

COF broke through it's previous lows yesterday.

Lower fuel prices at the pump and for home heating merely allow consumers to stay above water for awhile longer.

It has been argued by many that the reduction in energy prices will lead to increased consumer spending in other areas. I don't see it happening. I think the consumer will continue to pay down debt versus buying more stuff.

JMO

I just did a scan of charts of some which I follow...daily candlesticks...

AGU,CCJ,ECA,GG,KGC,POT,SLW

all doji's (or, very very squashed bodies)

fwiw

BBY broke the $20 barrier. Look out below.

Disclosure: No position

CPST - Someone likes this micro-turbine power plant manufacturer early today. Had some nice gains on this one back when but watched them evaporate instead of being the nimble trader.

SLW has buyers today.

BSI87:

Yes, the consumer has never failed before, and money is going into their pockets because gas is down, but how many have room left on their credit cards?

Pirates eat at RRRRRRRRRRRRRRR bys'

http://www.teslamotors.com

They are doing it now. Sedan version out soon.

CPST is a trading vehicle right now. Financially in really rough shape.

as i mentioned last night...

this explains the price movement in SRS:

http://www.reuters.com/article/marketsNews/idUSN1826572220081118

Anyone see the CMBX AAA spreads? wow. they're up like 400% since July

Guys - this spread differential has literally spiked in the last couple of weeks. This is NOT good.

oilexco...........Halted

With respect to electrically powered cars. The idea of 50% of North American cars powered by electric fuel cells certainly makes us feel good, but the concept raises questions. What would the costs be to develop sufficient electrical generating capacity to power these cars? What fuel would be used to generate this capacity - natural gas, coal, nuclear? Solar and wind are not yet at the point where they can be counted on to make up the extra power needed. Will they ever be without government subsidies? What would the costs be to develop/renew the required long distance power transmission infrastructure to support the fuel cells? How large would the carbon footprint for the manufacture of the fuel cells and the requried power generation be?
These are some of the questions being raised by people with knowledge of the concept and they do suggest there are large obstacles to be overcome.
As Bill points out, in the longer term, ingenuity and entreprenurial skill may very well find a way to solve these problems.

re:consumer

Predictions that this will be the worst Christmas retail season ever could be. BUT "What everyone knows isn't worth knowing" meaning stocks have been sold down in advance. And nuthin is ever as bad as it seems nor as good.

The American consumer will find cash to be self indulgent. ;)

meanwhile back at the ranch,

$CPC going vertical.

Isn't Sen. Jim Demint a politician with a government insurance/retirement plan?

This hypocrite is on FOX uttering the words, "auto workers golden contracts".

Apparently Mr. Demint thinks he is God's gift to humanity. WHAT does he PRODUCE? DEBT?

I think it's possible to save all of our industries with the money we send to these Aholes in Washington. They are under the dillusion they actually do something.

Alright...back to the markets. yikes.

Re: RIMM

Downtrend line when drawn from Sept.26 shows resistance just under $52.

Also, mini H&S pattern formed from Oct. 6 to Oct. 20 projects down to $32.

Not saying it gets there, just putting it out there for study/discussion.

the consumer taking fuel cost reductions and paying down debt or saving with this extra money is still a good thing, right? It occurs to me that in the long term this is even better than spending it.

TNA buy stop 32.06/32.15 limit

blue bluff

As Bill Cara has said for years on this site, paying down debt is ALWAYS a good thing long term.

That said, the U.S. consumer (along with the U.S. govt.) still has a LONG way to go before they've paid their debt down to reasonable levels.

One or two quarters of debt reduction won't get it done, imo.

I don't think a lot of people realize how important the American auto industry is to our country. IMO the government should give them money but with strings attached....thru oversight, work with them to create energy efficient, exceptionally well made autos and then Obama should encourage all of us to buy them. We can't keep sending all our money overseas...

$CPC - wow thats pretty high. Maybe indicating that its time to buy

number2_son,

"Why do so many still believe the myth that oil companies haven't been subsidized?"

The obscure terminology "oil depletion allowance" does not grate on the ear like "kick-back to my campaign contributor" would.

"A little bit of honey makes the medicine go down."

Not many people were concerned over all the non-offensive terms used to cover the whole mortgage fraud.

One should wonder how much of the recent drop in oil prices is just another targeting of consumer/investor gullibility.

Possible goals of fall in prices:
Oil rich countries, oil companies and legislator backed by the oil lobby not wanting any serious alternatives developed. So far one major ethanol producer has gone bankrupt. Wind and solar enthusiasm must be cooled down. Consumer spending needs to resume US economy support as we go into the big season.

By whatever means available the consumer must be encouraged to SPEND! Remember Bush right after 9/11 —"If we change our lifestyle, they win. Go shopping!"

Today's AP Report...
Consumer prices drop by largest amount in past 61 years as energy prices see record plunge

http://tiny.cc/B1Pdn

Fuel cells are a local technology, no power lines needed. They could power your home and your car. Wind is competitive with our current generation costs, kills nuclear when all costs are included. The biggest obstacle is not the technology but the capital and oil interests scheming for their future profit streams.

The best answer isn't the one that has a meter on the end of it, but that is what they will push.....because the meter is their income from our stupidity.

Todd - agreed, I worry for my 5 year old daughter....and her future family....they are probably going to be left holding the bag...

ToddinFL- I'm a little more cynical; I don't think the US consumer will be paying down debt any sooner than necessary...I've advocated that we Boomers, who have partied long and hard for thirty years, should consider making serious sacrifices (working 5-10 years longer, improving personal health, playing smarter [reading, writing, public service, spending time with the kids/grandkids, short road trips]) for the sake of the next generation...I just don't think they're going to do it...

Todd,
Rimm down gap @ end of Sept - any effect from it?
TIA

Electric cars --

Anyone know how many pounds of copper an engine would need? I seem to remember it was near 50, but can't find the link.

ToddinFL

How many years are you thinking that one would have to hold to get the returns you speak of ?

I wasn't stating that I'd hold for a period of years, rather I'm thinking that, in the future, a strategy of buying great long-term stocks and holding them "for a while" (perhaps months or years)during the coming years

"Why do so many still believe the myth that oil companies HAVEN'T been subsidized?"

I haven't heard or read anyone claiming oil companies haven't been subsidized, where did that come from? Perhaps in earlier days oil needed subsidy to get started, just as I feel alternative energy will need the same.

Then there are some who feel subsidization should never occur, that the free market should operate unfettered.

Why the interest in twisting words?

Just saw this headline:

SolarWorld offers $1.26B for Adam Opel's assets

http://tinyurl.com/5v5d5g

"Bonn-based SolarWorld said in a statement it was planning to offer GM euro250 million ($350 million) in cash and another euro750 million ($945 million) in credit lines in a bid for four German production facilities and Opel's Ruesselsheim development center and headquarters, to make it Europe's first true "green" auto company."

"SolarWorld said any deal would be dependent on GM completely exiting the company. The parent company is seeking government loans and says it is running out of cash.

GM Europe spokeswoman Karin Kirchner said that "Opel is not for sale" and declined further comment, saying GM "wouldn't comment on speculation." "

{Crude could hit $40 a barrel by April, Deutsche Bank says}

this borders on GS and others' forecast of $200 crude last summer.

DaveB- i think all investment strategies need to anticipate change, and that includes a change in time horizon as events unfold...you could see great returns in as little as one week, in which case i guarantee your perspective will change as well...

Mark Haines is the most honest of the talking heads. Let 'em fail.

Chicken, no offense intended. My point was that there is no free market. Particularly when it comes to energy.

On a side note, a key U.S. House committee chairmanship may change hands soon, with significant implications for our country's energy future. John Dingell (MI), chairman of the House Energy and Commerce Committee, is being challenged by Henry Waxman (CA).

Under Waxman's leadership expect more favorable action on alternative energy and less permissiveness to auto makers and oil companies.

the truth is there are enough pre owned cars to supply us with all the petrol cars we need or want to buy. Maybe its too extreme, but maybe by 2010, every new car sold in america has to be 35mpg+, by 2015 50 mpg+, by 2020, 65 mpg+.

and why cant they just stock test drive models in every trim/color/option variation at dealers for test drive, no inventory. just build to order. my friend bought a mini cooper and picked her options, and they built it in 6-8 weeks.

In the meantime ESLR (and no doubt many other small companies with light volume) are getting walked down to their cash value on 100 share sell orders.

TLT was mentioned Monday briefly and shared opinions were that there wasn't enough volume in TLT to trade. Maybe so, but I not that from the close on Monday until now, SPY has hardly moved, UUP (Dollar) is actually down, GLD is up about a $1.30, but (drum roll please) TLT is currently up about $2.20. Sometimes, traders have to go where the action is, n'est ce pas ca?

Not a recommendation!

2nd_ave

Consumers (at least those who wish to continue consuming) will be forced into paying down debt.

Those who have the means will consume as they've always done; this is the minority, btw.

It's possible that we're entering a period of increased attention on:

A) Lower consumption on the less essentials. Buy what you need not what you "want".

B) More on saving for the future (govt. can't be the backstop forever)

C) That we'll all have to work smarter and more years than what we originally planned

D) Green technology - save the environment. As the masses become increasingly aware that natural resources are finite, attention will be focused on allocating those resources responsibly and the focus will be on new sources of renewable energy.

This green tech. trend is already well underway, imo. I'm looking in this sector for the next market leaders.

Good discussion ...

Electric cars - Perhaps we should also be thinking about weight reduction, which would be applicable to any automotive technology. Carbon fiber technology is my first thought. Coincidentally, there's also a wind power play in carbon fiber.

still holding my RIMM $45 puts...underwater.

Re: Electric Cars

Come to think of it, I was very taken by the prim, fetching interior of the Baker 1911 Electric. Except, when I sauntered over to the Mercedes section of the car show and sat in the latest roadster, I couldn't imagine impressing the young ladies. The appeal of upscale cars is quite formidable, folks. There's no way around it.

with a nod toward something bad going on in commercial real estate land...that remaining tarp money may be needed sooner than we think???

teamonfuego

What expiry on those RIMM 45s ?

Skater

Re: RIMM down gap

What exactly are you wondering about that down gap ?

Big gaps on big volume (in either direction) often signal a big move in the direction of the gap, as it represents many market participants who either wish to enter or exit a stock.

Re: Electric Cars

"Better Place" started by an Israeli is a good starting point. Proposes a station network for battery exchange. Big backers and multi-national participation underway.

http://www.betterplace.com/

"This green tech. trend is already well underway, imo. I'm looking in this sector for the next market leaders."

I agree, Todd. I also expect you're biding your time before investing in this sector. The selling in the last two months, and again in the last two weeks, has been brutal.

The negative hype on this sector right could not be more extreme right now.

"We need to develop a thread in the Discourse that seeks to uncover the best potential long-term stock plays." said Bill.

Ok, but it might be helpful first to define "long-term" for this thread AND to require that all thread participants first declare an "I'n (Inflation)" bias, or a "D'n (Deflation) bias for that period of time.

I don't think it particularly helpful to discuss why the particular bias is held or to discuss how I'n or D'n is defined - just whether the item that is discussed is from a whichever pov.

just my centavos.

Todd- I hope they(we) all do...working longer will relieve the strain on Social Security...improving our personal health will relieve the strain on both the health-care system and the vastly underfunded Medicare insurance program...playing smarter will save our resources as well as buy time for improved science and technology, benefit our families and communities (both in terms of time spent together and in productive efforts), and set a great example for succeeding generations...

I suspect that women will be changing their idea of what indicates a good provider.....and a car with skyhigh payments for the foreseeable might not be the best choice.

Man we have a lot of work to overcome the head job big business has done on Americans.....and now the rest of the world looks up to auto ownership as a sign of prosperity. Suckers.

BTW, those watching JPM/BAC/C as Bill mentioned....they are getting a true a@@kicking today.

"working longer will relieve the strain on Social Security..."

....As it increases the under employment problem among younger workers, the future of this country.

These bailouts amoung to nothing less than an organized assault by the Baby Boomers to preserve their privilege at ANY COST to the future of this nation or it's citizens.

No offense, but what we need is for the Boomers to go broke, lose their jobs, homes and families and let the younger generation pick up the pieces of the broken American Dream. You boomers sure as hell screwed the Chiwawa haven't you?

'We need to develop a thread in the Discourse that seeks to uncover the best potential long-term stock plays. Those traders who are not momentum players would appreciate this initiative.'
Agreed Bill, I think any long-term positions need a decent position in energy and agriculture. Both are needed in spades going forward and both have large input costs requiring investment. My bias is natural gas on the energy side and fertilizer in agriculture. Less convinced on alt energy until the political grandstanding peters out.

shark_attack said:

"No offense, but what we need is for the Boomers to go broke, lose their jobs, homes and families and let the younger generation pick up the pieces of the broken American Dream."

No offense ? LOL

I'm no boomer, but that was pretty harsh. I did get a good chuckle, though.

It is, (and usually has been) survival of the fittest on this planet. Vested interests will always look out for themselves. Today is no different.

The specialist in ESLR is dribbling out shares. I just a few hundred, and they all crossed the tape at the bid in 100 share increments.

shark_attack

please go to your room, no supper for you young man!

1. Who was recommending DRYS as a great buy opportunity a few days ago at 10.00?

Well it is now 6.82

2. BAC, C and GS are crashing. Is it time to sell everything and get out of this "bull market" ?

Todd - I'm under the illusion that stock price gaps try to get filled due to being under/over sold and reverting back to the average. This doesn't always apply but look at rimm for mid February 08 or last week of July 08 on a daily chart.

This could also just be wishful thinking since I'm long rimm since yesterday morning.

Wikipedia on lithium:

There are widespread hopes of using lithium ion batteries in electric vehicles, but one study concluded that "realistically achievable lithium carbonate production will be sufficient for only a small fraction of future PHEV and EV global market requirements", that "demand from the portable electronics sector will absorb much of the planned production increases in the next decade", and that "mass production of lithium carbonate is not environmentally sound, it will cause irreparable ecological damage to ecosystems that should be protected and that LiIon propulsion is incompatible with the notion of the 'Green Car'".[17]

Todd,

Fascinating point you've made. I want to add it isn't survival of the "fittest", in a modern nation-state with laws, cops and armies. It's survival of the WEAKEST after a point. The laws, the private property hoarding-rights, the elaborate mechanisms of the state which keep the rich rich and the poor poor help ensure that the feeble, the old, and the physically weak maintain evolutionary primacy over the true heir and owner of the American legacy. To believe that the stuff of life should belong to those who are alive is no more radical than its more commonly accepted but no more sensible opposite.

Last time GE was this low was in octomber 1996

What to invest in for the long-term?

I am still sticking with auto parts retailers as having fundamentals for multi-year growth. The market for new vehicles is suffering not only from consumer credit evaporation but also a huge auto-technology gap that needs to be closed (and will likely take years) before people feel comfortable buying new vehicles.

In the mean-time, people will be busy keeping up their existing vehicles (and also being more likely to fix their own cars).

My favorite plays on auto parts retail are GPC (most conservative), AZO (moderately conservative), & ORLY (less conservative - growth oriented).

BTW:

On the subject of the broad averages, every indication is that the historic 840 support (s and p) is in the process of breaking down. It seems there are just too many questions right now for stocks to make a move in any direction but down.

I was long rimm.

Youch! - Is skf (or us) going to be comfortable being a $200 etf - hope not

shark- the problem with your attitude is it turns you into an honorary Boomer...right on, and pass that doobie ;)

vanillabean
Not sure who 'recommended' DRYS a few days back but any calls by those in this blog require DYODD.
I do recall the conversation centered around the Baltic Shipping Index (an extremely short term gauge of economic activity) and that those who were the 'shippers' were at a decent entry point. Most goods are shipped by sea and a call on the shipping industry is based on lower fuel costs, capital infusions in world economy's etc.
'BAC, C and GS are crashing', no mystery here baklance sheets are still hooped and again DYODD.

Todd - Nov $45's on RIMM...risky, i know, but the spike into close was a run of almost 30% from it's lows...i thought it would come off some for a trade. i'm down about 8%.

I've got one foot in each camp....

Man that's some good $#!T

To all who preach asset allocation
Which assess is up right now?

LiIon - Illini - Is GM attempting to provide us some kind of clue with their jawboning of LiIon? The battery business has always been inherently dirty, and will remain the weakest link for electric cars.

Sorry folks, I'm not prepared to buy the electric car strategy. We'll see ultra-light high-mileage gasoline cars long before. Carbon fiber is where it's at, talk about long term growth potential!

considering MGM puts for a trade.

shart_attack - "No offense, but what we need is for the Boomers to go broke, lose their jobs, homes and families and let the younger generation pick up the pieces of the broken American Dream. You boomers sure as hell screwed the Chiwawa haven't you?"

No offense taken but you ARE being needlessly offensive.

re:asset allocation

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

re: the Chicken Littles on Clown TV. While Dr. Faber and Jim Rogers are real bears, even Roubini, the mob of doomsayers was nowhere to be seen this spring and summer. Their advice has ZERO value. To call another 20 percent down after their clients took a fifty percent hit. Noooooo. You call that at 14k or 13k or 12k. Calling a market crash now. Yea right. They were calling for bs like: 1 decoupling 2 commodities bull 3 FED and Treasury rescues working.. etc etc. Bill is 100% right - they should stop the incognito appearances and wear clown suits and red noses when they go on clown TV.

price of oil

It has been going down. Why?
Debt unwind/de-leveraging/deflation/credit contraction.
IMO more downside ahead and that goes for more natural resouces.

We never let the 2002/2003 deflation cycle take hold so we could be on our way to unwind the growth of the past 5 years and also what should have unwound in 02/03.

No conspiracy about anything else. Green is upon us and they will look to find alternatives fuel/energy sources.

IMO - carbon credits, these will surge because of cap an trade. Hedge your carbon output and pollute more than your competitor if you can imply a savvy strategy.

Cell post- just an opinion.

TOF - re: RIMM Nov 45 puts

Not knowing what you paid for them, I wish you would have bot the December's, as u prob do as well.

That said, I would prob hold what you have, (unless it's a particularly large position).

With the general market indices on the verge of breaking down further, RIMM may provide further downside.

With nominal inflation taking a big drop today, it is possible we may see a 0% nominal rate fairly soon. 0% inflation cannot be good for gold no?

weird times....Citigroup at the money 7.5 covered write for December pays 20% and dividend yield is 7%

Todd - I'm still holding these. I don't have much in it so it's not a big deal. I believe there is real risk the market will break down to the 2002 levels quickly. If that happens, RIMM could spike back down to $41 or $42.

Still watching SRS...something bad is happening in the CRE arena.

calvino
Don't hold back, let us know what you really think!!!
Clown TV rocks!

blue bluff

There's no way that divvy on C is safe.

It will be reduced (or gone) very soon.

TOF

There's no guarantee that the market slide stops at 2002 levels. Much of what happened from the 1998 bull market on was a lot of huff and puff, imo.

Here is good news if you like
Just heard from people here that cash holding by mutual fund is highest ever.
That means when time come there is lots of fire power waiting to be unloaded.
So, we are going to see MOTHER of all the rally?

hi

[Extreme volatility on low volume continues to be the hallmark of the US equity market. Yesterday was a classic roller-coaster, driven mostly by programmed trading as human traders stood on the sidelines.]

basic question - I have heard that a significant amount of stock trading is done by programmed trading. But, it was never clear to me what that is.

Is this things like day traders putting in some kind of triggers and then having the computers do their own thing? In other words, is a lot of the trading just movement for movements sake?

I remember that Bill said something in the recent past that he thought that the markets were moving up from that point (becoming bullish).

Bill,

1 does that notion still hold?
2 is there anything in the near term that looks like it might drive the market higher?
3 are we in danger of breaking the near term support levels and dropping significantly lower.
4 my sense is that the senate will not do anything for the auto industry anytime soon. If this does not happen, are we in for a massive drop in the market/economy.

It seems that some kind of pre-packaged re-organization of the auto industry would make sense with the government acting to reassure people about the warranties for their cars. At this point it seems that most everyone is aware of the automakers predicament and this might be hurting their sales at this point. So, if the pre-packaged bankruptcy is announced to the public along with the fact that the feds are backstopping things, then this might actually improve sales.

Another problem is the life of existing cars. How many autos do we need? Improving the fleet standard (something that I have been for for decades)will take some time due to the existing auto fleet being driven for longer times. Also, as gasoline prices stay low, consumers will have less incentive to trade up into a more efficient auto.

It has been proven by past actions that the consumer as a whole has not placed a high premium on fuel efficiency. It has been proven by our government that they have not been willing to enforce fuel efficiency. This has been driven by the total free market theory. It seems that the total free market theory is killing us in the financial arena.

What is needed is leadership. As bad as it seems, raising taxes on gasoline (like in europe) would encourage: less driving, more efficient cars, and raise tax revenues which could be used to develop infrastructure - like good mass transit systems.

Also, I thought that GM made something like 18 natural gas powered vehicles overseas. Why can't they bring these to market immediately? Also, many homes and businesses have natural gas lines, so how hard would it be to put fueling stations at these sites that would take credit cards?

Anyway, I am very concerned about keeping any money in this market. I have waited way to long to arrive at this view. Does anyone see any upside anytime soon?

Also, not all baby boomers have been wasteful. I have lived a frugal life as has my 87 year old mother. Unfortunately, much of her savings has been wiped out in this mess (which was invested in stocks for her children and grandchildren). I have been a deficit hawk since Reagan came to office. It is sadly ironic that I have lost so much money in this market by being sucked into the long term view, global growth story, de-coupling etc. and all of this unbelievable leverage at the hedge fund and investment banking level.

Anyway, right now I am having a hard time finding anything to be optimistic about when it comes to the economy and the severity of this downturn.

Sorry to be so long-winded. Thanks for all of your answers to the questions that I asked yesterday.

so i guess all stocks are going to zero? will skf ever reach $300 in 2008? this is crazy. will the stock market exist in 2010?

IMO, the automakers do need a complete restructuring, and it will be very painful for everyone involved, and failure to restructure them will leave them forever losing money, because they can't afford the promises they made in the past.

The real question in my mind is with the $1 trillion of CDS's that will need to be paid off if GM alone goes under. Why is it we don't know who is on the hook for those? And how about the ones written against Ford and Chrysler, and the auto parts suppliers? Why is it we can't see in the financial filings who else is going to be bankrupted if/when the auto industry goes down the tubes.

So we know we have potential sytemic risk, but we have no idea who is at risk. I don't like that.

Todd - i agree. however, the 2002 lows are psychological lows in my opinion.

OIL.TO, saw a rumor post of a takeout offer at $6. If it were true, it would be cruel irony as I believe the stock was off 20% today in London before halt, and down from 220 to 120 over the last 5 days.
Risk Mgmet: Sold my g @ $26.2 and some CNQ @$47, reloaded at $45.65

As has been reported repeatedly, this is no time to play hero; and/or guess bottoms, unless you like playing with fire.

I like playing with fire - long DB at $26.86

newbee - I agree with most all of what you've said. As to removing money from the market, the best thing to do IMO, depends on your current financial position. It could take more than a few years for the market to fully recover, so your entry point is an important factor, as a 14K DOW isn't likely for a few years at least.

Ask yourself, if you were a buyer, would you be buying now, or waiting? Personally, I think I would be buying in anticipation of an automaker bailout, but I wouldn't be committing more than 30% of my port until signs of economic recovery were more clearly defined. This is all in retrospect, of course.

TOF

"Psychological" lows don't really matter, imo.

This is a time for 'batten down the hatches'.

No better example than the pirates taking over ships. Who would have thought that kind of story plausible in November 2008 ? Pirates ? For real ???

Extreme times bring extreme actions (by many participants), some known and some unknown.

thanks for the timely warning, Todd.

Pretty fascinating stuff right now with the Nas tagging 1430. There are probably quite a few stops under there, and there isn't exactly stiff buying to defend that low based on volume and price action so far.

It's making me wonder why the market isn't being pushed through here to take out some stops or bring on some panicky bailing.

I would love to see what Cara Advisors are trading right now.

Was talking to a friend on his Iphone this AM. He just downloaded speech recognition software add on. W/O programming, he can call up telephone #'s by enunciating the person's name or ask google the square root of 25, and it comes up with response.
Time to look at AAPL?

Yesterday afternoon, my friend/buddy/pal, Barron's Randall Forsyth, called to ask me what was the meaning behind the dividend yield of the S&P 500 (3.57%) having had eclipsed the yield on the 10-year U.S. Treasury note (3.54%) for the first time in 50 years.
Many who were interviewed by Randy suggested that the phenomenon signaled a stock market bottom. By contrast, I viewed the significance of the yield differential (or lack thereof) as more of an indication that the forces of economic contraction will be greater than the forces of economic expansion over the next several years.

"It's a general sign of profound risk aversion (and a flight to quality)," adds Douglas A. Kass, who heads Seabreeze Partners Management. "And in a broad sense, the absence of a differential [between the S&P 500 and Treasury 10-year yield] reflects a growing sense that corporate profit growth will be limited over the next couple of years," he says.
-- Barron's, Up and Down Wall Street: "Reversal

"So, we are going to see MOTHER of all the rally?"

Yep! Except no one knows where the bottom is, right?

Electric vehicles

Came back to visit family @ 1981 and there was Uncle John driving his electric car. It was a Fiat body with numerous lead batteries in the truck for power. No gasoline. Charging took awhile, perhaps 6 hours. The state actually produced a separate license plate noting it was an electric vehicle.

Went for a drive and surprised it actually reached about 35-40 mph. You know the slight delay after you push the shutter release on a digital camera? There was a similar half second delay when you hit the gas pedal. It was good for @ 25 miles if memory serves me.

Battery weight was the major challenge. And this was a time when gasoline was a lot cheaper and less volatile.

Uncle John was a member of an electric car club and subscribed to electric vehicle magazines. He’d love to see some of the new technologies of today and the future if he as still alive.

Some alternative fuels:

Natural gas. Boone Pickens, with a vested interest, promoting nat gas vehicles

Hydrogen. Some manufacturers have these vehicles but not many fueling stations available in the infrastructure. Bonus is virtually no pollution. (Occasionally there’s a drop of water exiting the tail pipe).

Cooking oil waste. Loyola University, Chicago, has a program where a campus vehicle runs entirely on the grease, cooking oil from local restaurants.

Solar car? Doesn't Nissan have such a hybrid produced for an overseas mkt?

And then there’s Brazil with their sugar cane ethanol that’s cheaper than corn ethanol, but it’s not politically popular to seek this cheaper alternative that also does not affect global food prices.

bsi87 said:

"thanks for the timely warning, Todd."

You're most welcome, bsi87.

. . . if he "was" still alive.

too bad you weren't posting in August, 2007

Chickenpookie
you don't think so?

Interesting, both $CPC and OTC:CPCF spike up

SLW is getting the beat down even though Silver Futures holding @ $9.55 oz

[Bill Cara note:

I believe this is forced selling. There was a very strong institutional interest in SLW, and it may be the case that the fund managers do not want to sell, but must sell in order to meet redemption demands.]

$cpc was above RSI 7 day of 70, now falling away slightly at 68, see how it trades late.

BSI,how do your indicators look for TCK right now?

YHOO looks like it's falling apart!!

I can't believe how low prices across the board are. It's definitely starting to remind me of 2002 out there.

I'm looking at some calls on DDM.

How about F at 1.26?? Crazy!!

It reminds me when AMR was at .75 cents back in 02. I though I was great riding it from 90 cents to two bucks and then it went to 16 in the next year.

Could F be one of those plays? F seems stronger than GM.

Making any move in this market requires serious fortitude.

Rob.

bsi87

No one cares who said what when. It is what it is.

The issue now is whether equity prices go lower or higher from here.

I warned to be cautious back on Sept 29 of this year and said that prices would go much lower than anyone expected. This was when many were anxiously buying into declining prices.

It matters little who was right and who was wrong. What matters is what should people do NOW, given current circumstances.

I'm not a short term to intermediate term (3-6 months) bull, for the average investor. Professional traders who trade short term can make large coin, but they're the exception.

The average, non-sophisticated investor will see his long term portfolio decline further in the next 2-4 months, imo.

I have zero desire to continue a discussion in a you vs. me competition. Take it fwiw, or just ignore my input.

Kass on Real Money saying S&P 500 yield exceeding 10 year Treasury yield.

Ok spot..Let me try to be more positive.

In addition to bailing the Boomer's rear ends out, let's also go back in time and bail out the buggy whip manufacturers, Tose who produced steam engines, the ocean liner business, floating derigibles and those who raised do-do birds for food. Then let's bail out any crack dealer, loan shark or extortionist who also is in need of additional operating funds. Finally let's bail out those industries which have not failed but are in potential danger of failure, such as most tech companies, many basic materials manufactureres etc.

By the time we're done the only one we will not have bailed out will be you and me, spot.

Regarding Alternative energy,

This doesn't have to do with cars but we used to burn 1000 gallons of heating oil per year and now we just switched to a Greenwood heating system.

It's a Hydronic system that is highly efficient compared to the Woodmaster or Central Boiler brands. We actually have it in our garage.

It's a great sense of freedom not having to rely on the Oil truck for our heating needs.

Rob.

vinod - I vote yes! Only after finding bottom. I was thinking bottom at DOW 10k, remember?

I have never agreed with any bailouts. But I think that foreigners not buying our bonds anymore is the only way to stop the runaway bailout train.

So, if the automakers get bailed out what happens to their stock prices?

Rob.

There IS always a bull market somewhere - Clown Cramer is RIGHT!

Only 1 of the 208 Morningstar sub-industry groups is UP since Sept 30th: education and training.

CPLA up 19%
APOL up 15%
STRA up 9%
DV up 8%

APOL, operator of Univ. of Phoenix, is the largest, and probably the safest to buy.

FYI, only. DYODD, CYSoI (cultivate your sense of irony!)

[Bill Cara note:

Be sure to watch the Cara 100 banks in India. Here is a report from Deepak Lalwani of Astaire Partners in London, which is a broker-dealer that specializes in the India market:
-----------------------------------------
While Citigroup announced job cuts this week of 52k globally, India’s 59% Government-owned State Bank of India (SBI) is to add 25k new jobs and 2k new branches in 2009, according to a report by Bloomberg. The bank, which started as the Bank of Calcutta in 1806, will have over 12k branches and over 200k employees by end 2009, according to Mr O.P. Bhatt, SBI’s Chairman. The bank has 16% of deposits and 16% of loans in the country and reported earnings growth of 40% in the quarter to September. Banks in India were nationalised in 1969 and private sector banks were allowed entry only in 1994. ICICI Bank (NYSE: IBN) has 1,308 branches while HDFC Bank NYSE: (HDB) has 1,412.]

Todd,

If you are a LT investor meaning weeks or months, then post it as a disclaimer. Like I will not go long until the SPX trades above the 200 day MA for 10 days or something.

To continually warn "Watch out" after the markets have been cut by 40-50% really serves no investing/trading purpose at this point.

If you think it's going lower, put up the trade.

Just because the cash in on the sidelines means we could see a big rally.

Money goes in the market, money leaves the market. Still a market. Emotion moves the market. As money gets tighter investors are careful.

IPOs bring new money to the market.

going long DIG

Japanese economists see "Obama Bonds" written in Yen instead of dollars. Not so easy to just print to repay that way...

http://www.atimes.com/atimes/Japan/JK19Dh01.html

I suspect we might need to borrow in Yuan and Euro as well...

[Bill Cara note:

If the debt is structured as retractable at the option of the US Treasury, I see no problem with doing that. Timing of the payment can be made when the $USD is at a cycle high.]

Anyone knowledgeable--there was an article in Barron's a few years ago about numerous ways the gov't could pull the rug out from under Roth IRA holders in future years using any number of tricks. I don't remember the details, but it made me suspicious. Any other paranoiacs that feel Roth's might be the target of gov't chicanery in future years or do they seem safe enough? Inquiring minds need to know. Thanks.

Roth IRAs generate current tax revenue, unlike traditional IRAs which defer the taxation - not sure why targeting a revenue-producer, in effect destroying more wealth, would benefit the government?

Denny - threats to ROTH IRA?

Untold millions of boomers and their kids depend upon their ROTH's to retire. Now, we all vote. Isn't the threat to social security and medicare (invisible cuts through inflation, for example) much more likely?

Re: the pirates. Apparently the Saudi's are engaged in ransom talks with them with a view to getting their oil back. If they can prolong the talks long enough, the price of oil should decline sufficiently to buy them off with a case of beer.

bsi87

I have mentioned OFTEN my trading intentions differences from a long term vs. short term bias. There are times when my comments are directed at short term trades (like today's comments re: RIMM Nov 45 puts).

You seem to be the type that likes to bottom fish and trade often, and that's perfectly fine. Buying extreme weakness can certainly yield bounces that lead to nice short term gains.

But for people who think buying RSI 7s below 30 usually yield short term winning trades, I'd point to SNDK on October 21. For those who didn't have a close stop in, they got creamed.

Buying stocks on weakness can be a risky proposition. One sometimes assumes that the weakness is temporary based on short term factors, or that the bad news has already been factored into the price, or that the reason for the weakness is simply unjustified.

For me, I don't like to argue with the markets. It has almost always cost me money.

My comments have largely been directed for those who have longer term time horizons (unless otherwise noted), not the professional short term trader.

For now, I'd not be long any credit card issuer = COF, DFS, C, or BAC. Whether one chooses to short them is they're own decision.

Also, I would avoid any operator in commercial real estate.

I see that the yesterday's rally off the tripple bottom did not continue today. This market action does not look inspiring -- something is pulling the market down. So I just sold at $2.93 the 2000 shares of SLW I bought yesterday at $2.86, so as to decrease my margin debt once again and brace for another 10-20% decline in the market.

This is NOT the time to be on margin in the equity markets.

jmo

David - look to the CRE market for your answer. It has cratered significantly. The banks that got bailed out with the TARP funds were be back at the begging trough to cover the losses in the CRE market. CMBS AAA bonds have spiked over 400% in a short amount of time. Look at SRS for your guide.

CARA 100 TCK

Bought at $5.38 100 shares 11-19-08

11-20-08 was showing divergence on RSI around 1315

Any thoughts on why it keeps going down?
Could coal be a factor?

sorry...should say "will be back at the..."

Obama's chief of staff said yesterday that they will push for big things quickly, including national healthcare, and wants business support for the move.

I figure this could be a boon to companies by removing the spiraling healthcare costs, especially for retirees, from their expenses. And chances are that current health insurers will be tapped to manage the paperwork involved, I would think, perhaps leading to a surge in revenue/profits for these companies.

My personal feeling is that if government can insure citizens and provide the social security program, it should be able to be laissez-faire in all other aspects. This would allow Americans to be more entrepreneurial as the cost of doing so would be significantly less. I can dream...

Jock, goldbug--yes, I swear there was an article in Barron's a few years ago by a professor, I think, that laid out a number of different ways the gov't could subvert Roth IRA holders if it needed more money. Unfortunately, my memory being what it is....

Todd,

If the market rallies 25% from here, what's your stance then?

bsi - why are you giving this guy such a hard time? i think he's been clear that he thinks the market is still going down. he said that when the market was at 10k so he's been right so far. it's just an opinion.

Team

The barn has already caught fire and the horse has left.

What's the point of yelling "Fire!" now?

the only green i see are inverse etf and SLW by a penny

bsi - maybe his point is there's a lot more downside to the market still. remember, the markets as a whole went down 90% during the Depression. people that got out at 40% down saved money for meals even after the barn caugh fire and they were yelling "Fire"

that's not to say i think it will go down 90%, but just keep that in mind.

Team,

I think it's very possible that the markets will trade lower...after rallies to resistance.

Most on this board don't need daily warnings.

I think there's nothing wrong with exercising caution at this point.

The market could go either way or just drift along. With volume this low any large money pool can wreak havoc.

I have been cautious since Oct 07 and see no reason to go "all in" right here.

I currently have 4 times more $ in a private bank than I have in the market and I can't see changing that strategy for quite a while.

I would rather have 90% in the private bank in this environment.

Rob.

i guess so. i haven't really paid too much attention so i don't know for sure.

on another note...i see a late day sell off to below last thursdays lows. i'm still holding my RIMM $45 puts that expire Friday. I'll sell them if RIMM gets over $46.20

warren buffet...be very greedy when others are afraid...

"I like playing with fire.."
Posted by: goldbug58 at November 19, 2008 12:20 PM

gb58- if playing with fire, animal torture (we all like watching dead cats bounce, squeezing bears, and skewering bulls, no?), and bed-wetting (no comment ;)) indicate a future serial killer, then i hope it means we'll all be making a killing in the future...

Posted by ToddinFL: "This is NOT the time to be on margin in the equity markets."

I know that being on margin is generally a bad idea (since ANY position can decline strongly and stay down longer than desired). On the other hand, right before a bull market or before a strong bear market rally, the ideal strategy is to borrow the most on margin and sell it into the rally. I am planning to sell many of my positions into the first strong rally I see. :) So now the question is: how far are we from the bottom in the PM stocks, into which I am heavily invested now? I have a feeling that one year from now all of these stocks will be significantly higher than they are now. So I am just trying to hold my ground now and not miss the turn around.

bsi87 said:

"If the market rallies 25% from here, what's your stance then?"

I keep an open mind. If the volume was strong on the upturn, an the market gave a legitimate follow through day, I would consider participating on the long side.

I would want to see action from the world governments and other entities that would push important industries in the right direction, and then see ENORMOUS volume in the markets that would confirm that price strength.

But as has been mentioned previously, 20% rallies in the course of a continuing bear market is not such an unexpected event, given the size of the decline.

The question remains, are we individually capable enough to participate in such a rally (buy at the bottom and sell into the top), or will the average investor get whipsawed once again ?

I maintain that for the average investor (knowledgeable, yet still relatively unprotected given the extremes of the times) that they will will ultimately get trampled trying to play the long side in any shorter term intermediate rally.

That is, they may buy at an OK price but hold on too long and ultimately lose money.

For the average long term investor, this is a time to save money and park it in cash. There WILL come a time for putting that cash into the equity markets, but it will come at drastically lower prices, imo.

jmo

re: CPI

Something to consider in today's report which won't be mentioned.

The housing portion of this report is measured in "Owner Equivalent Rent" rather than in actual house prices. Just as the soaring housing market reported in this manner subdued the inflation effect, it is now hiding the deflation effect of collapsing house prices.
--------------

2nd_ave,

Small consolation, but the government has heard your offer to work longer and is already accommodating he idea. In the early eighties they began raising the age before you will be eligible to receive Social Security.
---------------

NYUgrad,

Is it really stated as "every" car or will they simply continue to average MPH as they have been?

Even if so stated — a lot has happened recently and in past in times of "crisis" which was unexpected. It would only take a weekend meeting by a few appointed decision makers to over ride such a decree.
------------

Goldbug,

I'm puzzled by your comment the Roths generate current tax revenue.

When to commit cash per Don Coxe:

1. If the Ted Spread breaks 150 and stays below that level for at least a week.
2. Bank stock index continues to out perform S&P.
3. VIX retreats
4. Yen and US $ decline

When all four confirm then it is time to start buying, per Coxe.

Grym- yes, age 65 (which was always kind of an arbitrary line to begin with) no longer 'makes sense' from a life expectancy viewpoint...spending 20-30 years out of the workforce can be nice, but not at the (unnecessary and/or onerous) expense of wage earners...

re:TCK

RSI Triple Time frame is in accumulation mode. Not seeing divergence on hourly MACD chart.

No position

IMO tax loss selling is not done, volume has dried up and there is no real catalyst to move stocks higher sooooooooooo in the absence of buyers (recall it takes a pile of money to move a market up and zero to make it drop) the malaise tranlates into the red on the screen.

Hormel (HRL) is green today, people need to eat and Spam is making a comeback.
- The company has lowered guidance twice already because of product mix and higher costs.
- - The effective volume using Pascal Willian’s site indicate the large players are buying.
- They report on November 25.

I’m taking a chance that more people are eating at home and the bad news has already been priced into this stock. FWIW

Some of us will indeed make a killing in the future, 2nd - those that have some skin in the game.

Bill Cara recommended way back to be in cash. He also said "you will be able to buy shares of quality companies at prices not seen in years".

These are the times where we are seeing "prices not seen in years".

Now I would be the last person to recommend going "all in" at this point - but "accumulation" of beaten-down shares bought selectively and with due diligence seems prudent to me. Patience is a virtue.

Grym,

that was just my opinion. i didnt read anywhere. I just think they could develop cars with mpg in the 50+ range. I just think that big oil and the big three autos have been in bed for a long time.

And where will the govt replace the lost tax revenues from oil if we do become less dependent?

[NYUgrad,

Is it really stated as "every" car or will they simply continue to average MPH as they have been?

Even if so stated — a lot has happened recently and in past in times of "crisis" which was unexpected. It would only take a weekend meeting by a few appointed decision makers to over ride such a decree.]

Judging by DRYS today it looks like the pirates hijacked their whole fleet.

Chickenpookie
Yes, I know Dow 10K
In last two week I have been stop out few position costing me over 2K. And it has been frustrating and boring. now doing nothing
I pay less attention to market now. But it is addictive and cannot get away totally.
This is like a cancer, slowly moving down. I wish it goes down 1000 point and get it over with.

$TRAN getting drilled today to new lows.

This has been a market leading sector. Take it fwiw.

Can the general market fall another 20%-25% from here (SP 500 at 830)?

Yes, it can. Preservation OF capital should be utmost of concern.

"What's the point of yelling "Fire!" now?"
I need constantly that 2x4 to remind me. i was regaining lost principal, i bought back to 90% equities and am slowly selling on spikes -at a loss.
I read both bsi and toddinfl, and acknowledge you both are more right than i am
peace
and thanks to all who post

Can the market rally 25% from here?

Yes, position size and proper entry/exit are most important.

C'mon, how about we all yell MONKEY

The major thing is, in all timeframes, to wait until the right moment to strike. I feel like the stock market's going to take a big plunge based on the way price is reacting to news/events. The end of this economic downturn is nowhere in sight. It's PROBABLY, contrary to popular opinion, closer to the beginning than the end (referring here to general economic activity).

Coxe's indicators of a bottom: nowhere near there yet!

BKX has taken out its July &October lows, to hit its lowest reading since 1996!

VIX up 8% today, highest reading in November

TED spread is back above 2

YEN at 1.04 has NOT reached parity with US$

Therefore, Coxians hold your fire! Next stop S&P 770? - the 2002 low?

(C) Citibank is collapsing, for those keeping count.

This isn't good, folks. But it isn't necessarily unexpected.

Watch COF, DFS, BAC, etc. This will not end well.

jmo

photogray..spy breaks 83 we could plunge fast...ont he other hand..if it keeps forming hammers and gettign balied out like in the last 3 hours ...we could reverse and rip...breadth is 10:1 neggo though...failed rally if breadth does not improve...>1

43,000 shares at $2.80 on the bid for SLW.

^^^not me, just observing.

!!!YEKNOM

roseville, that was funny!

AMEX Select Sector SPDRs Close Change % Chg Date
XLB Materials 21.24 -0.76 -3.45% 2008-11-19, 14:19ET
XLV Health Care 24.61 -0.66 -2.61% 2008-11-19, 14:19ET
XLP Consumer Staples 23.05 -0.28 -1.20% 2008-11-19, 14:19ET
XLY Consumer Discretionary 17.71 -0.83 -4.48% 2008-11-19, 14:19ET
XLE Energy 46.52 -1.57 -3.26% 2008-11-19, 14:19ET
XLF Financial 10.94 -0.81 -6.89% 2008-11-19, 14:19ET
XLI Industrial 21.15 -0.82 -3.73% 2008-11-19, 14:19ET
XLK Technology 14.11 -0.48 -3.29% 2008-11-19, 14:19ET
XLU Utilities 28.17 -0.27 -0.95% 2008-11-19, 14:19ET

some of my long stops are being taken out, we're going lower,

but i dont think all the way...getting ready to close 1/2 my short positions...

Another round of rate cuts likely. I recall seeing these DOW numbers after the EU/BOE cuts came, and DOW did lift slightly on Fed cuts? I'm getting very tired of this, but it's addictive as vinod points out...

Vanillabean,

The same with IBM at 90 and DELL at 17. They are now at 76.85 and 10.20. Are they still good buys?

Thanks,

Calling the bottom in this environment is silliness.

We're in unprecedented times, and it calls for actions o0ver and above what has ever been implemented.

Don't listen to anyone who says "this is the bottom", etc. Stocks can always go higher than expected; and likewis, they can always go lower than expected.

I never thought I would see GS at 57.

Even Warren Buffett must be underwater on his GS

Rob.

Fed's cheery announcement at 3:13 p.m. included ....."With the economy forecast to lose traction, or even jolt into reverse, unemployment will move higher, the Fed predicted."

"Jolt into reverse?!" Seems the days of euphemisitc speech are behind us (unless that IS euphemistic speech!)

that about says it all.

dow hs bottom on the 30m?
http://img231.imageshack.us/img231/5540/dowme3.png

gold has held 735 well, perhaps the usd is soon to fall and save the markets?

What do most 401k's and LA have in common? They've both gone up in smoke!

VIX popping it's day high 73.61

C chart seems to be a gradual (?!?) decline rather than the bump in the night that occurred in Oct.

If you can call down 15.5% (no wait, 13.5% now) gradual. It's pretty steady selling anyway. Somebody big unloading in an orderly fashion? Or somebody else big buying in an orderly fashion?

Nobody can call a bottom here... (unless you're the head of the Fedge fund and decide to reverse course on GM. Hey, it happened once already.)

someone is buying everything being sold. greatest transfer of wealth happening before our eyes. eventually alot of these stocks are going back up. Would love to know who is doing most of the buying.

Another reason the auto makers need to go Chapter 11
http://tinyurl.com/65koos
they still don't get it........

How perceptive and enlightening, the Fed is always so far ahead of the curve it scares me!

ALOHA !!

seadog ... The employment sectors I quoted last night were direct from the US Federal Reserve St. Louis.(research.stlouisfed.org)

As I understand it the data includes people who work more than one job, which are counted more than once and includes all jobs specs like part-time and full-time and temp. I am sure there some illegals getting counted as I doubt even US employers bother to check. I put in 25 years in the construction industry and I never heard of one employer ever letting an employee go because they were undocumented. Heck, nobody ever checked because nobody in the "real World" cares. Most employers just want a hard working employee they can trust ... never mind his "status"!

More reasons to get rid of the US FED as the data they put out gets more and more opaque the worse off the economy gets! Does anyone actually use the BLS BIRTH/DEATH MODEL in the "real World"? Only academics hired by corrupt politicians with an AGENDA would come up with that!

YES ...

Any comments on thid US Gold press release?

http://www.marketwire.com/press-release/Us-Gold-Corporation-AMEX-UXG-922624.html

"someone is buying everything being sold. greatest transfer of wealth happening before our eyes. eventually alot of these stocks are going back up. Would love to know who is doing most of the buying."

A cursory look at the broad averages as well as micro sector analysis (yeah like I do a lot of that, right?) suggests that heretofore many buyers have lost money, suggesting they are basically suckers (You and me). Other buying has been done by the professional speculator, but I doubt that much of that buying has been more than transitory purchases and sales in narrow timeframes. In other words, there's no intelligent dark force accululating all of the world's stock at bargain basement prices (yet) IMO. That day will come, not today:)

I've been nibbling, now I want a MONKEY!

ALOHA !!

"... unemployment will move higher, the FED predicted."

HA!! Its laughable ... This is NEWS? WOW, what a prediction!!! Don;t they even bother looking at US payroll withholding data? From Q4 2007 to Q1 2008 the payroll taxes withheld fell off a cliff and they have moved further down all of 2008, so that they are nearly down 80% over a year ago!

Whats to predict?

Get rid of the US FED ... They have an agenda and it has nothing to do with social equity or a fair markets! It never has and I have documented that since 1974!

Dump the US FED and the US BANKS and let the US TREASURY take over the US BANKS. Just go over to Bank America and hang a sign BANK OF THE PEOPLE. Why do we need to pay 16% on credit cards or even 5% on mortgages when its our money they are lending and it is our money doing the BAILOUTS? Man, the MAFIA would love to get in on this scam! What's the difference between TONY SOPRANO and BEN BERNANKE? I don't see a whole lot? THEY BOTH LIE A LOT AND STEAL! Only Bernanke steals more! HA!!

GOVERNMENT IS ONLY AS HONEST AS ITS MONEY !!!

That's not too honest ...

C below 7, GS below 58

GS hasn't seen this price since a few weeks after listing in 1999 !

C hasn't seen this price since 1995!

In the most basic sense "was all" still subscribe to a bull market "it fell it will rise again" mentality that leaves one ill-prepared for the steady erosion of value we're having. Or should I say the AWARENESS of the erosion of value. Value actually eroded years before the stock market woke up to that fact.

It has been ALL ABOUT the short side for so long it's hard to remember.....

"We" also subscribe generally to a highly amateurish conception of the world in which we PURCHASE stock, not the much more esoteric idea that you can sell the stock NOW and buy it LATER, whcih, honestly, probably doesn't even quite compute in the mind of the average market shlub. I say this because even I have a long bias I'm trying to rid myself of daily...

Strange as it may sound I think we need a fresh burst (not a trickle) of terrible economic news to start a sustainable market rally. This holiday shopping season sales will probably do it.

westcoaster, the MONKEY arrives in the last 30 minutes, as we all know. :) Which way will the MONKEY jump today, though?

go shark_attack - to the dark side :)

i will say, id be very tentative loading up on some shorts right now...closed out PNC, WFC shorts today

im waiting for the next rally to attack again

Maybe i can put in some stink bids on goog at ipo prices?

sold my RIMM $45 puts at $1.35 for a small loss.

Vix @ 71.96

looks like the monkey jumped in front of a train.........

I imagine that the paralysis I've been experiencing for the past few months is common only among the inexperienced. I know everyone's saying that it's different this time, and the worst market they've seen in X years, but the best traders out there, Bill among them, seem to be enjoying the ride, if not the realities behind it. I put savings to work after the first big leg down, thinking it was The Opportunity. I've been paralyzed watching my red positions deepen ever since, terrified that I'll sell before a big multi-day rally. Meanwhile ,my head is telling me that there's no such catalyst in the real world, at least not yet.

I'm an emotional guy, maybe that's the first problem. I clearly have much more to learn.

Just one of those jolts into reverse?

Long AAPL $95 calls at $0.46...expire Friday. exposure is very small

Looks like the MONKEY is going down today. Just bought some December QQQQ puts with a strike of 27. I hope they expire worthless. :)

RIMM is acting quite strong still...

Foz,

I'm in the same boat. Getting closer to just selling it all and admitting I was stupid.

Gad.

We're out of the "Scare you out" phase, the 800 pt daily move. Now into the "Wear you out" phase.

JMO.

bsi87
Well put, a bit too accurate but well put.

DJIA 10 day ATR is now 453, seems like it was up nearly 600 early Nov.

SPX 10 day ATR is 49.

COMPQ (Naz) is 82.

someone please give me the blue pill. I want you to plug me back into the matrix. at least the lie felt good.

lets shoot for -400 shall we? all four root canals on the same visit please.

Those prop traders are making me woozy.

Support lines from Oct lows

DJIA 7981
SPX 816.96
NAZ 1414.03

Big boys are having fun today.

stopped out of AAPL calls at .41

NYUgrad,

Never fear. If the government can't collect taxes on oil they will tax water, air or grass. They will find a way :-)

Those of us on Social Security pay a bit more from our check each year. One way is by skewing the CPI calculation on which Social Security (and other things like TIPS) is figured.

Twenty-five years ago I used to do my dad's Medicare stuff for him. When I got there a few years ago I saw immediately how much less there is now.

It's the hidden taxes that slip in here and there.

What we should have done and could start now is develop an interstate transportation system to like all forms of passenger travel and eliminate the waste of individuals driving so many miles. I have to believe the auto and oil lobbyists are the reason we've never done it.

Miggs,

Hooray for SPAM! I always liked it as a kid (my doc. would never OK it now).

In US Army cook school one day we learned about twenty ways to make it more palatable. To begin with wash off the salt saturated congealed fat, then go with cloves or maple sugar, etc.

Saving auto jobs:

Job losses from autos are not to be tolerated. Barney Frank says we have a contract with the unions. The preamble to the Constitution implies a contract with all of us — to "... promote the general welfare..."

We've been losing millions of jobs every year since 1993 (NAFTA), but who was counting?

Most CEOs aren't worth the powder to blow them up. But thousands of GIs are being blown up literally working at foreign locations. They couldn't even get a job at home now, if they were discharged.

I can't watch anymore. yvrapx thanks for the link to the BIG THREE CEO's flying in private jets. Actually, with Nardelli in the three, I expect to see more gross exploits. Maybe that will be the spark for a tax payer revolt. Theres a lot of tinder out there with all those bailout bills just lying around on the floor

This market will go much lower now that support levels have been broken.

No time to play hero = no time to buy what you "think" is undervalued.

And never average down. That will cost you the most !

Well I'm catching more falling knives.

Just bought some DDM December calls.

If Santa doesn't come, we go to zero for the new year!!!

Rob.

Gad42,
And let someone ride your stocks back up while you kick your own butt for being intimidated out? That has happened to me too many times (once, actually, which was one time too many). I'm back in in a middling way... in Cara 100 companies... and I did my homework. I'm in the red too, but since I haven't bet the farm, I'll chance that I'll ride them back up myself. My mistake, of course, is in getting stuck long, against Bill's best advice, through simply not paying attention at the right time. But I have kids and they've taught me a lot about patience.

Anybody get the number off that truck?

Folks, these stocks aren't going back up soon for any extended time.

We're in a period of extended nonethingness = flatline. It could occur for months, or years.

It depends largely on the actions of our leaders. I'm not that confident on the outcome, but I always hold out hope !

My my.
Dow below 8000 !

why not -500. lets go for it.

the monkey is dead.

Bought JNK.

Note on gold involving Wachovia Securities...

Wachovia Securities this month alerted its brokers and clients that it no longer would purchase precious metals for brokerage accounts, only shares in precious metals exchange-traded funds. In an explanation given to its brokers, Wachovia said the precious metals markets "are illiquid with wide bid/ask spreads and minimal transparency."

This implies that real metal is awfully hard to get these days, and maybe that some brokerages would prefer that their clients not get it.

http://tinyurl.com/5t6aoy

ToddinFL
Almost certainly you are correct about it not happening soon. But my alternative is to give my money away. I only do that with my wife -- because I like her.

TCK is up a buck AH.

Todd

What's your downside target?

S&P 400? S&P 0?

I just don't think we're going straight from DOW 9600 on Nov 4th down to the bottom in one straight shot.

A 20% rally from here would bring us back to around DOW 9600.

Rob.

Todd - Better talk to Soros about averaging down.

Doesn't the "general welfare" clause pertain to laws that benefit all US citizens, not just those employed by auto and auto related industries?

we should find Market God
and pray to him

[Bill Cara note:

A few week's ago, many traders believed Warren Buffett was such an icon. I referred to him as Yesterday's Man. In the past 45 days, his Berkshire Hathaway has crashed from $140,000 to $84,000, which is a loss of -40%. These are Buy-and-Hold people. The S&P today dropped to near Oct-2002 lows (768.63), which approximated the lows of Jul-2002 (775.68) and Mar-2003 (788.90). Throughout the cycle bottom of the 2000-2002 Bear, there was extreme volatility. I see the same thing happening here. The upside is that there will soon be a bounce of +30% to +50%. What traders need to do is variously sell the volatility, and then switch to calls on the dips. This is not easy, but it's a time where the good traders are separated from the rest.]

Vinod,

We have found the Market God and he is us.

Apologies to Walt Kelly and Pogo Possum.

Rob..dont shoot the messenger....:) Dont be long, for long...or short for long....guess we are looking at 02 lows...

after that( $SPX 770)....look at the SPY on a weekly chart...Isnt that the mother of all double tops??

Too many looking for a rally maybe...then again...there is that $vix divergence...:)

vinod, I was thinking of a low placed kick.

EEmtrader,
I hear you. Nothing says we should go up from here and all the news is universally negative. I just have a feeling that everything is getting too negative.

Electricity is still flowing. The grocery stores are still stocked. My Citibank credit card still works.

I may be naive or have the "crowd mentality" but I just can't see everything sinking too far from here. But I could be wrong.

Rob.

Rob...bought some QLD, DIG and FXI at the close...trading the vix divergence...if not...give some money back from todays profits. price to pay for the life I choose..:)

gotta wonder when DRYS P/E is < 1 !!.

How long before you think those Ethanol fools go to capitol hill to go begging for handouts?

[Bill Cara note:

Every share sold today was bought by someone.]

Re Roth IRA's: I think this is the article I was looking for.

http://tinyurl.com/5clg3z

It does detail a number of ways Congress might renege on its Roth promises. Like you needed something more to worry about....

Warren Buffett had no choice but to voice support for stocks a few weeks ago, even though he knew that his ship had hit the 'berg and it was every man for himself. He will, when all is said and done be crucified on a cross of Fluffer-Nutter.

"This is not easy, but it's a time where the good traders are separated from the rest."

As a card-carrying member of The Rest, I'd like to thank you for reminding me, again, that the sun also rises. Seems that every time we fall through another line of support, I forget that. Again, inexperience.

I will sweep up my mess and fight back.

[Bill Cara note:

In order to achieve success, every trader must first be handed their head on a platter. I don't know one professional trader who has not gone through that. They have to experience the worst in order to learn how to be the best. Most traders, however, quit. That would be a shame. I'm glad Foz that you are going to hang in.]

Todd,

I agree with you as I feel that we haven't even started to form a bottom. 02 levels are not the bottom.

Now that being said, i would not discount the fact that we could see a 20-30% rally from here or some level close to "here".

IMO there is money to be made just don't listen to the pundits on bubble vision...

IMO
Euro might not survive in the next 12 months, China will have problems to where they will have to burn through their reserves...

EEMtrader,
So many stocks are trading at levels I'll bet none of us thought we'd see this fall.

That's the big problem with the auto bailout I guess is that if it passes then every industry will line up for some too.

They gave away the money so easily to the banks though so I would assume they'll keep bailing until their allowance gets cut off.

They're likely stalling to do a huge option expiration play. That's been done tons of times this year by the FED and Congress so why wouldn't they do it again?

Rob.

Seems like time on our hands today. A good time to read other opinions? Catherine Austin Fits speaks eloquently of how we must all 'come clean' and value our human equity in the process of rebuilding a new economy. A quote from her site: www.solari.com

"The only devils in the world are those running around in our own hearts—that is where the battle should be fought."
—Mahatma Gandhi

To the good fight!

"...devils in the world are those running around in our own hearts"
Nice sentiment. Would that my world was like that.
Ask any Home Depot grunt holding their Employee Stock Purchase benefit what they think about Nardelli

We need a rally tomorrow...

Feed the monkey, get it a great nap and tomorrow we go up!!!

Positive thoughts..

I thought I would add this video to the discussion of the Big Three bailout:

http://info.detnews.com/video/index.cfm?id=1189

It was posted on Mish's blog a few days ago. It describes Ford's new plant in Brazil. A plant like this in North America, building fuel efficient cars would do wonders.

Rob : No clue about Opex...long way from Max pain on the indices..

I take things in 2-3 hour segments...except when i see a divergence and take the trade..and go long..heck i could wake up to a 500 point gap down...

How odd...experiencing history with people I hardly know.

:)

Posted by ToddinFL: "Folks, these stocks aren't going back up soon for any extended time. We're in a period of extended nonethingness = flatline. It could occur for months, or years."

Here is what John Hussman had to say about such statements in his most recent article:

"... investors give up their remaining patience and decide, as they often do near the end of a bear market, that there's no way that the market or economy CAN recover, and that there is no catalyst that is capable of driving stocks higher."

Since such sentiment already seems to be present, we may not be too far from the bottom "in terms of distance." I am OK with waiting for 6 months for the new bull market to begin as long as I know that we don't go much lower from the current levels. So knowing that we are not too far from the bottom "in terms of distance" should be comforting.

"Averaging down" regularly causes controversy. While difference of opinions is always good, let's have a deeper look into it to make sure that opinions are informed and that we are talking about the same thing.

There is averaging down and averaging down. Not all of them are created equal. I'd break them down by two kinds.

1. A trader buys, position goes against him, he fails to cut his losses, sees them growing and getting out of hand. Eventually at some point he adds to his position following the logic "If I liked it at $20, it should be even better at $10" and/or "it can't get go any lower". Both are false: anything can and often will go lower (no lack of examples of that these days, eh?); and who is to say it was any good at $20 to begin with? And is $10 a better price or simply a proof that $20 was a mistake? This kind of averaging down is a "bad" one; it's done out of frustration, and it adds to a mistake. More often than not it increases eventual loss. In most cases what follows is: your position does recover some, by some magic stalling right under new breakeven level ($15 in our example). This gives you a chance to exit with a small loss but you don't take it - after all, recovery has started, you are looking at possibility of nice profits now. Sure enough, stock reverses and drops under $10 where you either exit with even bigger loss or put it in your long term portfolio, a.k.a. Grave of Short Term Trades Gone Bad. Another frequent scenario is, stock dives briefly under your second entry level, you sell your second position for a small loss, and that's where stock reverses and goes back to that 15... you curse your decision to cut losses on second part and don't sell first part - after all it's cutting the loss that killed your chance to get out even, right? Sure enough, it reverses down and you are looking at ever-increasing loss again.

Those rare instances when this strategy works only reinforce the idea of it being a viable approach, eventually provoking you to employ it again and again, until it leads you into a loss exceeding anything you saw in your worst nightmares.

2. Averaging down is a part of planned strategy. When a stock comes into your target zone but there is a lot of uncertainty in the markets, you don't feel confident enough to fully commit and don't want to stay on a sideline. You break your purchase in parts and plan a strategy for them. This strategy includes various scenarios of building up to full position in case of further drop, in case of reversal, in case of stall. It also includes an "uncle point" - event or scenario which proves that the whole idea of entry was an error, so whatever is accumulated up to that point is being dumped. There is nothing's wrong with this kind of averaging down - it's done by a design, to minimize exposure at the uncertain time and increase it as events develop in a favorable way.

SiO2

You said "O% inflation not good for gold ? "

Here's some positives for gold.

US Monetization and quantitative easing> future inflation - good for gold

Low interest rates- good for gold- reduced cost to hold

Potential for Dollar Crash good for gold

China contemplating raising gold holdings from 600 mton
to 4000 mton - good for gold

Competitive currency devaluations and money printing by most central banks - good for gold.

Fear is spreading- good for gold

Gold is pure wealth- everything else is someone's debt

I find it really hard to believe that even the tobacco spitting beer guzzling gun toting jacked up pickup truck driving rednecks (I grew up with) would cheer the rescue of the worst offenders on the planet in terms of wealth destruction predatory lending and perpetuation of the worst of certain testosterone laden animal insticts.

I mean, even Shark Attack helps his baby boomer mother cross the street---right?

Fishy AH on SLW

http://tinyurl.com/6573uo
Nasdaq site has $2.941 and shows a 99,900 share block.

TD Ameritrade shows same block at $2.72. Anyone know which is correct?

"Anyone see the CMBX AAA spreads? wow. they're up like 400% since July

Guys - this spread differential has literally spiked in the last couple of weeks. This is NOT good.
"

I am beginning to seriously question how predictive any of these spreads here. There's momentum trades everywhere, and spreads are no exception. Getting worked up over a spike in these to me is like getting worked up over oil at 150$ and being certain that oil had all dried up.

The cost to insure Berkshire debt has now risen to 560bp. From Bloomberg: "For the swaps to pay off, Berkshire would have to exhaust its $33.4 billion cash hoard, and Buffett's decades-long record as the world's most successful investor would have to come to a cataclysmic end."

I'm truly beginning to think ALL markets are now trending as far as they can, and short-term traders would will the S&P all the way to zero, as long as the trend is on their side.

I wouldn't necessarily completely discard the CBMX aas irrelevant but I'm not entirely sure it makes sense to be all worked up over it either.

The market's capability to price in information is long gone.

"re:consumer

Predictions that this will be the worst Christmas retail season ever could be. BUT "What everyone knows isn't worth knowing" meaning stocks have been sold down in advance. And nuthin is ever as bad as it seems nor as good.

The American consumer will find cash to be self indulgent. ;)
"

I am soooooo spending money on myself & my family this Christmas. I could have paid for 100 Christmases with all the money I lost in the stock market. Dunno what others will do, but I will be a record spender this Christmas - perhaps others will do the same.

Sometimes when you think you have people all figured out, they do exactly the opposite of what you think. People need to feel good this Christmas, and so far, most still have their jobs. Many will think "let's spend on ourselves one last time before the coming 'depression'".

Bill
Your comment during the day helps us keep our sanity.
I am your student and your students do not quite that easily.
This is an American problem started with housing which is rocking whole world.
I thing applying all the solution by government. They will go to root case of problem and
This problem will end with housing. This is my opinion

"where you either exit with even bigger loss or put it in your long term portfolio, a.k.a. Grave of Short Term Trades Gone Bad."

lol :) My portfolio is a complete Graveyard now. :) However, the new bull market will resurrect the dead! At least all those who don't go bankrupt in the meantime. :)

I don't understand how this bear market can be compared to 2000-2002 or the 70's. This is in an continuum between the depression and the 70's. Why do we not think the collapse in equity prices could approach the same range?

As Bill says, the market breathes. It's an entity unto its own. Through monetary policy, it's been shot full of steroids. Eventually the body weakens. Bottoming process....sure, but the top is just the other end of the bottoming process. How much farther? I realize the financial powers that be are more sophisticated than they were during the depression, but...the nature of the system can be distorted for only so long before reverting (in an Ecclesiastical sense) to it's core. This may still have a way to go.

David - Are you sure its a new bull market or its going to be a counter trend move in a bear market?

"Bill
Your comment during the day helps us keep our sanity.
I am your student and your students do not quite that easily.
This is an American problem started with housing which is rocking whole world."

Speak for yourself Vinod...I'm certifiable and I ain't coming back.

Anyway...this is not an American problem...We did teach the world how to F_itup, but they, being greedy humans also, were all too glad to go along for the ride.

Muzie - I only look to the credit markets because they have continuously prepared us for an upcoming explosion. spreads blew out in March, Bears Stearns went bankrupt. Spreads blew out in July, FNM/FRE were essentially nationalized. Spreads blew out in September, LEH & MER & AIG essentially went bankrupt. Spreads are once again blowing out...perhaps C/etc will go bankrupt?

Either way, I'm long in my long term trading account with the belief that we're close to at least a medium term bottom. I stand behind my belief that the lack of confidence people have in their leaders will change significantly when Obama is in office and we have a new leadership team. Until then we have to listen to stuttering Hank and stammering Bushy.

Note on Buffett: He is not a trader, I remember when he got flim flamed on Silver and he got killed on shorting the dollar. I laughed when he said to buy stock...

Vinod, respectfully, housing is just an expression of a form of 'feeding our greed' and perhaps an inner emptiness that has been refined to an art form in America. Having lived in the South Pacific where a good Kiwi can make anything out of number 10 wire, I was able to kick my high heels habit (almost). If you have ever seen an image of the 'hungry ghost' realm in the Tibetan Wheel of Life it visually depicts a realm where the inhabitants have very small mouths, long narrow throats and huge bellies that can never be satisfied. The problem will end when our obese society goes on a consumer diet by choice, not just lack. Housing is an expression of that greed. How we live in context to our world has gone astray.

"[Bill Cara note:

In order to achieve success, every trader must be handed their head on a platter."

Does having it forced into an orifice count?

[Bill Cara note:

Some people will say I've been there, done that too. The point is that if you learn from the really bad experiences, you'll try to avoid repeating them.]

"For now, I'd not be long any credit card issuer = COF, DFS, C, or BAC. Whether one chooses to short them is they're own decision.

Also, I would avoid any operator in commercial real estate.
"

Toddin: With all due respect, Toddin, the problem is you are not providing anyone with new information. You're merely a transport for a bunch of memes that anyone can read about on SeekingAlpha or CNBC. Everybody and their grandmother knows about commercial real estate, and you would have to be Martian not to know credit card companies will suffer large writedowns.

I think bsi's point is that you had brought up these points a year ago you would be in the informed minority, and thus the information given would have great value.

But a year later, it is widely known information, so you're just spreading old hat around. The questions becomes: even though most of us here who've never been even near a credit company's HQ, let alone work for one, suddenly expectly give advice on said problems of credit card companies, exactly how is it that insiders and full-time paid advisers, who can be and are actually connected to that industry wouldn't have noticed?

Credit cards and whatnot may go down (actually everything goes down, so predicting a subsector goes down doesn't really take much foresight). But you haven't produced any real logical reasons for it to do, besides the old "things are bad, and will get worse because I say so" argument I see everywhere.

"Bill Cara note:

In order to achieve success, every trader must be handed their head on a platter. I don't know one professional trader who has not gone through that. They have to experience the worst in order to learn how to be the best."

This is too true. It's been about 10-11 years since my amateurish actions all but destroyed my trading account - and it still pains to remember how it felt. Yet, however painful it was, it did serve its purpose - each of my three big losses taught me most I needed to know in order to form the philosophy that works and to shape up a different mindset.

Just how telling it is that even now, 10 years later, I can immediately recite the 3 symbols that taught me those lessons... ESOL, TTG, KTEL. When I hear "it dropped so much, it can't go any lower, it's the best discounted deal in whole market" - hello ESOL. When I hear "It's such a great story, it's a find of the century, you can't go wrong no matter what price you pay" - hi TTG. When I hear "It went up way too much, it's not supported by fundamentals, it will crash and burn any minute now" - nice to see you again KTEL.

"David - Are you sure its a new bull market or its going to be a counter trend move in a bear market?"

Well, if a bear market rally revives my dead stocks, I'll be even happier, because then I'll sell some of them with profit (which I intend to do as soon as I see some profit, without worrying what kind of a rally is taking place) and then buy them back when we fall to new lows.

Buffett is definitely not a trader. He is a highly successful investor.

[Bill Cara note:

We're agreed on that. He sets the standard. But the "investors" who invested in Buffett earlier this year have also lost a fortune, which in one way of looking at it only puts them back to 2005. I'm confident that by 2011, his stock will be riding high again.]

Kaimu

"When I first moved to Australia in 1971 they had solar on the roof of the house I lived in! The house was built in 1890 but it had been modernized with solar equipment and the solar was passive and worked beautifully! Solar is only new to Americans!"
------------------------------

I worked in solar in south florida in the late 70's and did a repair job on a thermosyphon system that was on
a house built in 1942.

I found out that during the war all new homes in dade county had to have solar hot water to save oil for the war effort. It was on a flat roof bungalow in coral gables.

The guy bought the house and didn't know he had a solar system as you couldn't see it from ground level. It was in the center of the flat roof and had a 100 gal tank on stilts next to
2 - 4ft x 10ft solar panels. It worked beautifully and silently all those years.

No elec pump, no sensors that can go bad. They used tin for the box in those days and it had rusted out so we installed his old copper in new anodized aluminum boxes and he was back
in action. Homes built with tile roofs had false chimneys to hide the tank.

In 1975 after the arab oil embargo there was a professor up in gainsville that built an elec car.

He bought a small 4 door sedan with no motor. Got a 30hp starter motor from a junked out DC-6 aircraft for a couple of bucks and connected it to the drive shaft. Then installed
a gas generator under the hood and connected the fuel line to the generator.

He put lead acid batteries in the front and in the trunk to balance the weight.

The car would go about 40 miles on a charge and if the trip was over 40 miles the gas generator would kick on and power the motor and charge the batteries. That's the exact design of the "NEW" Chevy Volt!

Share your ideas with the new administration:

http://www.change.gov/

Upside: Locking 5.75% 30 year fixed mortgages today. Confidence in bonds as a result of market jitters? The wellfed bear rarely shares-- prefering to hibernate-- but at least a few are are still in business out here. HINT: If boomers (over 62) have too much in the home basket go for a HUD insured Reverse Morgage.

re Vads 5:19 post: Vads number one scenario was actually an integral part of my trading strategy, at one time, and worked very well...for a while.

My scalp setup for AAPL was to buy on a new low and add on each subsequent drop until the ultimate bounce created a nice little payoff. Worked like a charm on 84 consecutive trades until one time when it didn't.

The price just continued to drop until I ran out of money and then dropped some more, slicing through every support level like warm butter, ultimately closing at it's lows where I had to bail. My lose on that one trade wiped out 84 consecutive profitable trades times 10 and 10% of my entire portofolio...Aye Carumbu!!

I don't trade that way any more. Pain is a wonderful teacher.

Chris

Wonder how "greedy" Buffet was today...

Buffett seems to have done a lot better 40 years ago than the past 10 years.

"Buffett seems to have done a lot better 40 years ago than the past 10 years."

That should be obvious considering he now has to invest billions at a time. It's actually remarkable that he actually managed to successfully transition from the small fry he was at first and manage to churn some amount of profit even while driving the Berkshire behemoth.

I'd be curious how much profit he's generated in nominal terms over the years. I'd bet he's generated more dollars over time.

Well I covered my shorts and all in cash except for the stocks Paulson bought for me. I'm sure they are doing swell, but he keeps it secret because I can't handle the truth. I wish I could have Bill manage my TARP tax.

I just talked to another friend of mine, who is a part of a small team that manages a few billion dollars of private money. They are mostly investing that money into hedge funds, so he has a good feel for the hedge fund situation. He said that some hedge funds require only a 30 day notice to process withdrawls. Those who require a 45 or a 90 day notice and already received such notices with a selling deadline of December 31 did not sell everything yet, as they were waiting for a good rally to sell into. Since we didn't get such a rally and instead broke through October lows today, the hedge fund selling can accelerate now. Also, he is seeing some hedge funds (more and more of them) starting to totally liquidate their positions, and they usually state that they will liquidate over a 12 month period.

On the other hand, my friend did confirm that many hedge funds (and other investors) are already sitting on A LOT of cash, and so it may happen that when that cash starts pouring into the market, it will overwhelm the forced hedge fund selling. In fact, when stocks will start rising, the hedge funds will stop selling so as to catch a rally.

This kind of a situation inevitably will lead to a huge rally at some point, because the more the stocks fall, the more incentive the value investors have to buy them for the long term, and if their buying will overwhelm the sellers at some point, the rally will become a self-propelling event REGARDLESS of the state of the economy at that point, since all hedge fund sellers will want to wait until the end of the rally to sell whatever they have to sell at the best prices.

So I guess the price and volume action will tell us when the rally begins, and when it does, it may still be OK to join it even if one misses the first 5% of it.

"So I guess the price and volume action will tell us when the rally begins, and when it does, it may still be OK to join it even if one misses the first 5% of it."

Hmmm, more like "first 20%" of it. We've had two or three unsustained rallies of 15-20% that faltered immediately afterwards.

We could have a 20 or 30% rally at any time. Or we could have a 20 or 30% pile drive low at anytime.

http://tinyurl.com/5asdc7

"Boeing says orders will shrink from here"

looks cheap here but "cheap" is hard to define these days.

"we should find Market God
and pray to him"
Posted by: vinod [TypeKey Profile Page] at November 19, 2008 4:12 PM

"[Bill Cara note: The upside is that there will soon be a bounce of +30% to +50%. What traders need to do is variously sell the volatility, and then switch to calls on the dips...]"

vinod- so the MG answered, if you're a trader (and i think you are)...all JMO...

Shark "No offense, but what we need is for the Boomers to go broke, lose their jobs, homes and families and let the younger generation pick up the pieces of the broken American Dream. You boomers sure as hell screwed the Chiwawa haven't you?"

Human nature trumps any generation. In every cohort of most demographies you choose there is a bell chart distribution of members from (let's call them) altruists to the selfish. To imply that the y's, x's and future generations will be any different to the boomers distribution is IMO fallacious. Any observation of the xy's today would indicate such a spread. I do not think the distribution curve is remarkably skewed for any of the generations. Human nature is human nature. Adam and his apple.

"Let he without sin be the first to cast the stone." Not a bad ethic to attempt to live by.

I did a quick look to see if this link has already been posted... didtn see anything, but I havent read the blog today.

Anyway, Fitts as follows:

http://tinyurl.com/6pxswg

bought some APWR in AH at 4.22.

"We could have a 20 or 30% rally at any time. Or we could have a 20 or 30% pile drive low at anytime."
Posted by: groosbank [TypeKey Profile Page] at November 19, 2008 7:03 PM

groosbank- i just finished transferring a little cash (not much, maybe 20k) into a trading account for deployment into calls should we get taken down to those levels...Bill occasionally offers a little enlightenment when responding spontaneously to posts, and i'm zeroing in on his response to vinod as one alternative to waiting out this bear...i know you have the means, so you may want to consider the same; sometimes a little trading can you through an otherwise frustrating waiting game...

re the give-and-take between the bull view and the bear view- i would let it continue, if not outright encourage the point/counterpoint...was it Miggs that brought up 'group think' last year? that's the last thing we want; it helps to hear the case for/against any POV at all times...personally, i would even be against editing any of the 'emotional content' of these posts, as they give us a better 'read' on interpretation...

"can GET you through"

2nd,
If we did have a drop of that magnitude or greater, my prayer is that I would not panic and sell at those levels, at the same time keeping my sanity over the loss of wealth. I don't know if I would have the gumption to buy more at that point.

groosbank- you need not (necessarily) buy more...you could liquidate one share of BRK-A for redeployment into selected calls...

Well, we'll sure be reducing consumption...

Wife got laid off after 2 yrs today. Shades of things to come for all, I think.

although fearful investors could drive it lower, BRKA is now selling below its net asset value, so
I am inclined to hold it through hell or high water, rightly or wrongly.

2nd I've missed the earlier posts. Coming in later in your day is a bummer as there are so many posts to read if you have the time. Now are you suggesting Long or Short Calls? The former @ cost and expecting a rally, the latter as income expecting either a lazy sideways market or a further drop.

seadog- i only just started posting less than an hour ago, so it shouldn't be too hard to wade through ;)...having a little cash to go long calls occurred to me after Bill's response to vinod resonated with me; not an idea that will resonate with everyone...

SAIC, Dongfeng to buy GM, Chrysler? not comfirmed

http://tinyurl.com/68hmtp

Interesting to look at cash levels vs. mkt cap:

SIGM: Cash - $7.00/share; price - $7.71
IMMR: Cash - $4.10/share; price - $3.13
YHOO: Cash - $4.50/share; price - $9.14
MSFT: Cash - $2.79/share; price - $18.29
DELL: Cash - $4.50/share; price - $10.35
AAPL: Cash - $28.0/share; price - $86.29
GOOG: Cash - $49.3/share; price - $280
CSCO: Cash - $3.95/share; price - $15.0
JNPR: Cash - $4.00/share; price - $14.04
HPQ: Cash - $8.25/share; price - $33.03
CRNT: Cash - $2.65/share; price - $5.15

the list goes on...point is there is a TON of cash and no debt in tech companies. a TON

A couple of good BNN clips: Jim Balsillie of RIM.
http://watch.bnn.ca/#clip114072 . Obama needs to engage with like pools of productive intellectual capital in the US to lift us out of this morass. That'd be change.

Maryland professor Peter Morici, weighed in before the Senate on Auto bailout yesterday. BNN interviews him today.
http://watch.bnn.ca/#clip114021

" Floor traders interviewed on Bloomberg on Friday weren't angry or panicked any more, the reporter said. They were just tired. "

I think that sums it up well.

Just now watching a selection of the daily BNN clips, westcoaster. Great clip with Balsillie, eh?

Just a question for Max-Pain types. Is Friday option expiry day? Quite a few issues are trading at well below max-pain levels. e.g. SPY closed at $81.50 and max-pain is $95.00. Certainly not a 1-bagger like bsi87 seeks, but I'd be interested to hear what such a 15% differential is thought of by the max-pain watchers.

coping strategies (for anyone looking for one)-

(a) have more than one iron in the fire...there's more to your life than the market, right? this could be a good time to stop focusing on every tick and tend to neglected family/friends/chores/hobbies...

(b) prolonged recession=opportunity...find one that fits you, and give it a shot...this is a great time to push ideas across the table, as (i) ideas (at least the good ones...the goofy ones only get play when money's flying around) tend to be few and far between when money dries up (ie, you will have minimal competition), and (ii) there will be friends/colleagues who will finally have enough time on their hands to listen to your ideas/help you out...

(c) start planning for the recovery...drive around to open houses on the weekends (realtors will be thrilled to see you); you can get to know neighborhoods, network with realtors/brokers/other house-hunters..you might even want to take the time to study/get your license...or take a few classes at the local community college that will position you to take advantage of new trends-> i wouldn't necessarily recommend Chinese, but why not?

(d) get the jump on your colleagues-> apply for a part-time job teaching (your profession/trade) at night...take (any) part-time job while they're still available...you can use the proceeds to fund a new stake for high-risk trading (whatever)...

everything under the sun that has ever happened is happening right now somewhere on the planet...and with every day you're alive you have the opportunity to be doing one or more of them...there's just no excuse to be sitting around worrying about your portfolio...

OIL.to issuing combo of up to $150m US 15% unsecured convertible debentures and $20m comm @ $2.25Cdn. Paying off $60m ($30m pounds)of maturing debt, the rest about $160m Cdn for ongoing development.
http://www.oilexco.com/

Is this expensive, or about par for the current climate? Will they raise it? I would think so at this price.

Information about Exxon Mobile Chemical and their automotive battery LiIon battery separator film:

http://tinyurl.com/6f3ttp

2nd. I like your drift. I personally year round participate in salsa dance classes/dances, and play tennis which relieve the stress, are fun, good exercise and not big capital outlay.

Mackinaw - re MaxPain

An item that you might not know is that the provider of option contracts might hedge against a costly outcome by buying/selling options on his own account (unreported?) before or on expiry day thus moving the MaxPain strike price up or down from what MaxPain in theory would be - this is called "Delta Hedging" or going for "Delta Neutral" overall. For a very little expense, he can make the MP price look a lot higher than it really is.
http://tinyurl.com/6qbfls

For example, take a look at the MaxPain table for SPY. The far out call strike price is $190 with $21,500,000,000 of contracts written on that strike. Someone correct me if I am wrong but that is not Mom and Pop but rather someone(s) is doing a pile of hedging because SPY closed today at $81.50.

2nd
I am going to start buying starting tomorrow
I cannot time the bottom. But felt like time to get in
I just calculated all position I sold in panic. I can buy same position back and still have plenty left

" Floor traders interviewed on Bloomberg on Friday weren't angry or panicked any more, the reporter said. They were just tired. "

Muzie- floor traders have every right to be tired...however, I hope neither they nor any other trader would consider taking any action on any account purely out of fatigue...

[Bill Cara note:

Why would they be tired? Volume is dead low, and most of the trading going on is from programmed trading systems. Most of the traders on the floor are low-paid staff to execute the few orders from clients. They're mostly tired because they're up all night worrying about the job cuts, thinking they're next to get the axe.]

westcoaster- and i like the fact that you are maintaining your health, both physical and mental; those are just as important to your financial health as anything else (both in the immediate sense, and in the ultimate sense)...

Hehe no I'm not taking any action. I've shot myself in the foot many times doing that earlier this year and I have no doubt in this volatile environment it would be even worse.

This really is a market for sissies though lol. Neither side is willing to commit, and any amount of courage is violently punished.

So we broke the lows on a closing basis and it appears the entire universe agrees we're headed lower as this was important support. Can it be that easy? I mean, really?

I can't help but think the remianing bulls are all going to switch to shorts and the shorts will dive to the bottom only to realize they've got nobody to cover the shorts to.

2nd - "(a) have more than one iron in the fire...there's more to your life than the market, right? this could be a good time to stop focusing on every tick and tend to neglected family/friends/chores/hobbies..."

first of all, excellent suggestions 2nd and I concur. I quote the above because I've been exhausted by the market for quite awhile and although I mentioned this sometime back, I pulled a significant amount of money (most of it) out of my trading account back in august (that I would have otherwise lost a good chunk of by now I imagine) and built myself a much needed horse barn for my horses. I love it and they love it and that's what I'm mostly focused on these days - family, horses, various other pets and friends and of course my job. I still have a few little irons in the market fire, all oil or Jr gold shares that are well under water now, but they were small potatoes compared to what I took out to build with anyway.

Thankfully I don't lose any sleep myself, but I don't like to think about how market conditions might be effecting the average hardworking Joe or fixed income senior these days.

But being that I like to trade a little, I've been saving some cash since then and reloading the account to pounce when things look good to me again. So I still come here and watch you guys and at least pay attention to the market too.

ALOHA !!

A couple "ratios" to throw out there ...

- The Gold/Silver ratio is way off historics at nearly 80.

- We have a new all time record for the NASDAQ not seen since 1987. The ratio of volume in stocks down compared to stocks up is 68:1. Now that is a lot of down!

vinod- from a purely common sense POV, all i can say is it's been too much of a unilateral move...but this is the market, which is comprised of the individual trading decisions of human beings- so it can be quite irrational (i like human beings in general, but i know better than to trust human emotions ;)...therefore, unlike table games in Vegas, where the odds are straightforward, and unilateral play in one direction can be reliably faded, unilateral price movement can go on and on...even so, at some point sentiment can be faded with good odds...you have to wink at Mr. Market once in awhile, knowing that he's obligated to frustrate you beyond all sense of fair play...

A first class interview of Jim Rodgers by John Authers of FT:

http://tinyurl.com/5who3q

Here's another gem I found that perfectly reflects this market:

"Due diligence is for losers."

Sad, really.

"The ratio of volume in stocks down compared to stocks up is 68:1. Now that is a lot of down!"

kaimu- for years i listened to Hendrix play 'Mary' thinking he was singing "you can hear happiness staggering on Down Street" (rather than "staggering on down the street")...i still think the former interpretation is better, but hey, i didn't write the song...in any case, "a lot of down" has always been my favorite time for making entries; 68:1 to me means time to buy, but of course 1068:1 would be even better...

"They're mostly tired because they're up all night worrying about the job cuts, thinking they're next to get the axe."

bill- i've always wondered why media photographs of floor traders on down days invariably show grim faces and grimaces (i mean, at least some of them must be holding short positions, right?)...now we know...

gdiman- i remember your posts about the barn from last summer...glad to hear it worked out so well...

Vadym's 5:19 post and actually his later one too add both wise experience and humor to an environment that needs both.

Remember Fred? Fred took a year off from whatever his job was to try trading for a living. Fred didn't make as much as he had hoped, or maybe even lost some and decided to pack it in. Not making as much as you'd hoped now seems like a pleasant and naive staement based on a set of assumptions that are long gone. When I think about what many of us have been going through, the pain, the losses, the lack of gains, I feel kind of perversely proud, of me and of you. We've been through markets they never wrote trading books about; a hideous and unrelenting bear that's got it's teeth into our overalls and is threatening areas more precious still.

There is no disputing that the selloff has not ended, new lows are being achieved and now the prospect of a huge wave of genuine panic selling seems POSSIBLE, if this 800 or so level does not hold all hell could break loose with everyone realizing that the old low may be resistance, not support.

I wish I had followed my macro-instinct, which was to learn how to short really well. Instead I have traded from the long (rhymes with wrong) side FOR THE MOST PART, but I am beginning to believe, perhaps wrongly that it could be different this time. That maybe all this won't snap back. That maybe lots of 401k money is going to wind up going down the housing rat-hole before all's said and done. Who knows. All I do know is, the price action that happened today was in no way indecisive in totality, and occurred at very sensitive levels in the markets. It time for the market to show us what's next.

gdiman- i remember your posts about the barn from last summer...glad to hear it worked out so well...

In addition, if this is the way the market is reacting to the bailout of all bailouts,then maybe there are laws of nature that cannot be violated. Maybe you can't retard the hands of progress, avoiding corrections while enjoying that booms that precede them. But if this is how the market likes the bailout, then maybe they should stop the whole bailout now and we can save the 10 trillion or whatever it's going to be.

We had already had a serious affordability problem in housing for DECADES prior to the subprime boom. That's why people had to go to banks and borrow MILLIONS of dollars to buy them, notes which they paid off for THRITY YEARS! It has always been the case that the availability of financing has caused the most benefit to accrue not to the borrower, but to he whose sale of assets at inflated values is facilitated by the presence of credit. When you can borrow 90 percent of the cost of something, it's a problem.

im sick of reading every commodity bull turn economist who got it so so wrong on gold and commodities in the current down turn and now are telling us about a US dollar correction they never saw coming 4 months ago.

Man, this is depressing reading tonight. I have been 95% out of the market since the first bail out did not sustain a rally. How long ago was that anyway? Well today I put 20 % of port to work at the close in Dividend paying blue chips. ( maybe red chips now). Then i read everyone's dire posts about support being broken and next stop is Dow 1899 ect. I guess I should of shorted the indexes because well support is broken and everyone knows down is the only direction right? The time to short is when the market is already down 40 % and the lows are taken out. Need to pile in to those shorts now. Man this stock trading is easy. Once lows are taken out all you have to do is short. Of coarse i could AVERAGE DOWN those blue chip dividend payers and just be a schmuck.

"long (rhymes with wrong)"

shark- LOL, tell that to the owner of the long gun and the long coat, the money on the long shot, the driver who takes the long way down, the man who starts a long vacation, and maybe Howie himself...what are the odds they come up short?

"Man, this is depressing reading tonight."

After all the jacks are in their boxes
And the clowns have all gone to bed
You can hear happiness staggering on down the street
Footsteps dressed in red

-Hendrix

Tomorrow tomorrow, I am hoping tomorrow will be a great reversal of a day and we get a rally.
We are due, from a TA aspect it could be either way. I still believe this beast of a bear isn't planning on going to into hiberation anytime soon. However we can be optimistic, tomorrow the Rally Monkey gets us going!
USD is showing some weakness but the forex markets move on a dime these days...

Todd - "Folks, these stocks aren't going back up soon for any extended time. We're in a period of extended nonethingness = flatline. It could occur for months, or years."

I concur. As nemo stated earlier we really don't know what we are facing today. Is it a combo of 70's 30's or 70's Japan 2.1 or 80's Japan or something we haven't seen ever.

As far as Hussman (smart person) discussing the bottom and bear markets, well every pundit has been screaming bottom for the past 12 months... All of them wrong, no one, no one will know the bottom is in, until it is in.

Here is my problem with our state of affairs. IMO we haven't seen this animal before... THE TEXT BOOKS don't COVER DEFLATION, realistically they go back about 40 years...

To think the FED and Central banks (master's of the universe) are going to fix this problem, bah hahah. How many new acronym facilities have they invented since December of 2007? To many and now we have a liquidity trap as they are the first/last/only lender of last resort. The credit markets are broken and the stockmarket is the TAIL - Credit markets are the Dog. Tail does not wag the dog, if it did then the world would be trading in Rembi or Yen.
We tend to look at the libor for the credit markets to unthaw, not a good indicator, look at Mortgage rates (fannie/freddie bonds) vs 10 year treasuries. The spread is WIDE. Look at AAA corporate bond yields vs treasuries WIDE. Today they just announced on bubble vision that CMBS (commercial mortgage back securities) are starting to drop. Did you pay attention to a big credit card issuer with defaults and delinquencies? going UP!
"they" say markets are forward looking up to 6 months... I am laughing at that... this market really had no idea (but a few) of what was coming and still discount what "could" come. The signs are ALL OVER! We just gloss over them (I HAVE MISSED THEM ALL YEAR LONG).

SiO2

You said "O% inflation not good for gold ? "

I agree and I would also add that, we are already at zero inflation in you fully including housing and full energy costs to the gobermint's CPI figures...

Inflation again - probably a chapter or two or three away. All central gobermints are printing money but they can't print fast enough to stop the force of credit contraction. Now REITS are going to fall, here we goooooo... credit cards next, producer nations next, LBO rollover debt next, hopefully it stops by then.

Gold and IMO (remember it is just my opinion and if you go back through my posts i have asked many questions on how to purchase gold).

As Gartman who has stated he won't touch it because he can't seem to gauge the market. The events that have taken place should of made gold go up HUGE! It has not whatsoever, and my guess it won't for a while We can assume the USD will crash but not anytime soon. It would be in no countries interest to allow that to happen because they are either pegged to the USD or there are so many US based corporations there and they have no choice but to buy USD. Also in case we have missed it but the FED has had swap agreements on USDs and those foreign banks can't keep them in stock. Fiat money is contraction but real money is expanding. People are hoarding USD cash... This won't flip on a switch either. Real damage is being done to all these economies.
Even-though we live (or not) here in the USA remember, many foreigners still call this the land of opportunity (some are pissed, I am pissed) we have the largest proportion of middle class (as a percentage) in the world. Until it isn't the USD is king. Crash in the USD is probably a couple chapters away.

China can buy all the gold that they want, china is also not going to experience a recession either (wait for it... wait for it...)
Gulf nations who converted massive amounts of USD to EUROs in the spring and summer are getting the clocks handed to them now in the mad scramble to dollars..

We shouldn't be talking about a crash in the USD, we should be discussing the crash in the EURO (give it 12 months, PIGS are dying)

Gold does have a store of value but in a fiat world those who are in control will do anything to keep the control. Don't get me wrong, at the right price i'll back up the truck for gold.

Also how many informercials or radio commercials have you heard to buy gold lately? When you hear things like that... you know that the time has passed for now. I remember hearing REAL ESTATE informercials all day long in 2006, 2007 and this year. Party is over for real estate.

we all have our own thoughts and opinions and we may or may not agree with them. It is good to discuss them.

I am pissed off about my losses earlier this year through out the summer... real mad...

disclosure - Position in nothing above.
if anyone knows a double short eft for the EURO or pound i would want to know that info!

"The time to short is when the market is already down 40 % and the lows are taken out. Need to pile in to those shorts now. Man this stock trading is easy. Once lows are taken out all you have to do is short. Of coarse i could AVERAGE DOWN those blue chip dividend payers and just be a schmuck.
"

Yes, I feel like it's 1999 all over again. Except now the only possible direction is down. Back then it would have been heresy to say the NASDAQ would lose 90% of its value in 3 years.

Today, likewise, it is heresy to even mention the market could recover 90% of its value in the same amount of time. Maybe that's a sign, who knows.

This year I learned to be a contrarian. I made a lot of trades early in the year that would have paid handsomely if I had been more of a contrarian and held on to my (short) trades longer.

Of course, now I learned it, I'm finding the contrarian skill isn't as useful now as it would have been back then it seems...

Long time no see? Long tall drink of water? Longbeach Mortgage?...oh right that's a dead sub prime bank absorbed by Washington Mutual in their long race to come up really really short.

Repost from Oct 9, 2008:

"I know this market has bottomed when I look around on various blogs and see that no one is nibbling at "undervalued" stocks or asking "is this capitulation?". There's that old saying, "If you have to ask..."
Most of the financially illiterate people I know are not yet cashing out their 401ks.

Step back and look at the big picture. Really. Do you think the world economy will be stronger in 6-12 months? Do you think consumers will suddenly break out the credit cards again soon?
Are local, state, and the federal governments in good financial health? Are tax revenues growing or shrinking? Do you think earnings (whose expectations are still wildly optimistic) will suprise to the upside? Do you think the largest credit bubble IN HISTORY will deflate better than it did in the 1930's? Do you think this is the "typical" bear market of 12-18 months?

If you are optimistic about all of the above, then jump right on in. Me? I'm holding onto my 95% cash / 5% short portfolio which has returned a one-trade gain of 7% YTD. The bottom, when we get there, will be established over months and there will be retests. There will be time to buy in. We're headed well below the 2002-03 lows. Where it ends, nobody knows... JMHO."

Posted by: eventhorizon at October 9, 2008 5:14 PM

I agree with Toddin FL. I think many traders/investors are not paying attention to the big picture here. Has anyone looked at the ABX, CMBX, CDX indices lately? If not, I suggest you check those spreads. Blowing OUT. I urge everyone to either get short or get the heck out of the way of this market. Don't gamble. We are witnessing history here. We are already in a deflationary spiral and are definitely headed for a Great Depression II. We'll come back and visit this post in time.

Muzie,
I have been a contrarian all my life. Guess what? I am eventually 100% correct on all my calls. Trouble is I am often early on my calls. Way toooo early and way to chicken to go against the irrational (To me) momentum to make too much money. I am trying to go with the trend, but it is against my nature to go against logic and to deviate too far from the mean. Any suggestion on a new trading method?

"I am hoping tomorrow will be a great reversal of a day.."

norm- we all know that hope is not a (trading) strategy...yet hope is the driving force behind all bull markets...what constitutes a 'true' contrarian perspective at this point, anyway- it's getting hard to tease out the underlying sentiment...(can't help but be reminded of the countless number of times i've watched players impulsively move chips from Banker to Player, prior to a run of wins for Banker, of course)...why is it that the odds are stacked against the player both on Wall Street and in Vegas? the similarities (including the need to learn money management techniques) are amazing..

2nd - cheer up... sun rises and it sets everyday.

tomorrow we rally, if not so what if i got egg on my face.

we rally! nothing but postive thoughts.

Little Bob Marley for everyone's pleasure...
Three little birds.

"Dont worry about a thing,
cause every little thing gonna be all right.
Singin: dont worry about a thing,
cause every little thing gonna be all right!

Rise up this mornin,
Smiled with the risin sun,
Three little birds
Pitch by my doorstep
Singin sweet songs
Of melodies pure and true,
Sayin, (this is my message to you-ou-ou:)

Singin: dont worry bout a thing,
cause every little thing gonna be all right.
Singin: dont worry (dont worry) bout a thing,
cause every little thing gonna be all right!

Rise up this mornin,
Smiled with the risin sun,
Three little birds
Pitch by my doorstep
Singin sweet songs
Of melodies pure and true,
Sayin, this is my message to you-ou-ou:

Singin: dont worry about a thing, worry about a thing, oh!
Every little thing gonna be all right. dont worry!
Singin: dont worry about a thing - I wont worry!
cause every little thing gonna be all right.

Singin: dont worry about a thing,
cause every little thing gonna be all right - I wont worry!
Singin: dont worry about a thing,
cause every little thing gonna be all right.
Singin: dont worry about a thing, oh no!
cause every little thing gonna be all right!"

To put this in context:

"We've surpassed 1929 in terms of first year corrections. CHEERS!..."

* applause *

I'll give a downside target:
DJI 4500-5000, touching the trendline from 1932. Won't get there all at once, obviously, but we're headed there, IMHO.

well i guess when all hope is lost we still our will.

Our will is our will.

You are correct underlying sediment is what will drive this up. It will take some buying. Need that mojo. I'll take a one day solid win of down up 4-6%. That would make my week much better...

Dow futures are up/flat, the dollar is neutral (as of now).

If not, trend is your friend... listen to many above, small inverse positions might be the trade.

whats the best way to short USD? anything other than UDN?

That Jim Rogers interview on forced selling & short term rally is spot on...

"I agree with Toddin FL. I think many traders/investors are not paying attention to the big picture here. Has anyone looked at the ABX, CMBX, CDX indices lately? If not, I suggest you check those spreads. Blowing OUT. I urge everyone to either get short or get the heck out of the way of this market. Don't gamble. We are witnessing history here. We are already in a deflationary spiral and are definitely headed for a Great Depression II. We'll come back and visit this post in time."

EventHorizon: Fine. Now can you explain to me in reasonable detail what these different ABX, CMBX and CDX indices are exactly, with some amount of detail? Can you explain to me who trades these spreads, who is on the other side of the trades, and what are the motivations behind the sellers and buyers? Can you, or anyone, explain the mechanisms behind these markets and what valuation methods investors (or is it traders? If so, do I want to trust my entire outlook on the economy based on whatever intraday TA or whichever these traders are using?) use in these markets?

With all due respect, I have found 99% of those who invoke the credit spreads, CDses, TED spread have absolutely no understanding of what they are and what they do, apart from the basic fact that "high spike must mean bad" (and that includes me). Now everyone is an expert on high finance it seems.

I'll grant you that ABX spike looks ominous. What is going on? I wish I knew. Except I have no information except that big spike which I don't understand fully (yes, it means traders bet on higher defaults on debt - so I should throw away my entire portfolio due to what some unknown traders I know nothing about think?).

My choiceis this: I can use reason or emotion. I have plenty of emotional reasons to sell. A fearful spike. But I don't fully understand it, so I have no real logical excuse to be selling.

Something to be said about the guy who shouted "Spike!" in the crowded theater...

One thing I notice is that while oil (and energy stocks) continue to be pounded based on the "demand destruction" storyline, gold hasn't moved very much at all in the past week. And it also seems like the gold/euro link has broken down as well - the euro moves around, but gold remains in a small trading range. Any clue what that means? Perhaps we've found a strong support level for gold?

Shiva,

In mutual funds one can use DXDDX, a 2.5X inverse to USD. In stocks there are all sorts of ways: FXE, FXS, FXA, almost any gold stocks, even DBB - metals commodities. But UDN is probably the one with the most predictable relationship.

I do not pretend to be infomed on most matters of these strange times. I, however, am amazed at some views expressed here(you could be kidding of course) i.e., Kill the FED, the BANKS and the CROOKS. Who among us is without greed, ignorance or anger in some dose? The root poisions of all the ages will bring us down if we do not find the antidotes. Generosity, Wisdom, Kindness. Apply liberally. Thanks for sharing.

Eventhoizon,

Regarding your Repost. I remember the reading it the first time and agreed with the sentiment, Yet we trade to make money. If you have so much conviction to the downside of the market why is only 5% of your capital short. Look at all those chips you left on the table since then. As I have pointed out to sharkie. It is one thing to make a call it is quite another to have the conviction to put capital at risk. If your call is right That is roughly a 37% gainer starting at this point (8000 to 5000). Use a 2X pro share and your talking serious money. I am not saying to do this. Just wondering how much conviction you have in this call and at what point would you call it "chasing".

Muzie,

Until i research it, i can't explain it..

Let me bring up another example. Help me understand how a "AAA" rated company can't even get commercial paper unless they go to the FED facility?

my reason on these credit spreads are MESSED up is because there is ZERO transparency. They are not trading so they widen. No one can gauge risk, no one knows who will be in business down the road. Everything was collateralized and shipped around the globe, chop and chopped and no one knows how or where or what these products are specifically tied too.

the system needs to be flushed, plain and simple. Until it does no one can trust anyone. The central banks will do the trading amongst each other and banks.

The whole globe was built on a house of cards, assumption that all asset prices will always go up. That worked until it didn't. That worked with EASY money, the whole system has to MUCH MONEY. The whole system (globe) would probably (i say probably, me) would require the world to have a middle class percentage of population of the USA or something like that. What i am saying is the whole system can't support the money in the world and we know money is debt.

The whole system can create money but it is very difficult to sustain it if there is to much of it. that is my best GUESS to why we have our "conundrum"

norm- IMO, most (not some) of the most memorable novels, films and music I've read/watched/listened to were conceived in pain...no worries- the day i need to be cheered up will be one sad day indeed, my man..;)

loan

what is funny is that had the same feeling about "FED and CROOKS"

eventually the truth will set you free...

we are all greedy and we are all ignorant because we are human. That is us.

are you in mortgages?

2nd

ya always cheer me up and I appreciate the response too!

Whoa ....

I truly respect everyone's opinion on this site. When I take a step back and let today's posts sink in I can't help but think we're near a short term or intermediate bottom. I'm not thinking day trading or a time horizon in days or weeks. But come on - look at the devastation. It is very unfortunate for many. I have many friends who are really worried about their mortgage, college bills, family bills, etc.. for next year. Reading all the posts tonight makes me feel like most have thrown in the towel and going short is SO obvious. The entire country is bearish right now. Whether they are traders or not.

No, I don't think anyone who is involved in trading stocks thinks that the U.S. economy is going to turn around anytime soon. I also don't see people getting out their wallets and spending (cash or credit) over the next few months. It's really bad right now - people are really starting to freak out. I'm sorry to state it that way, but it's the truth.

So... my point is take a look around. No one is bullish (or it seems that way to me). We're supposed to be trading prices. Emotions are heavy right now. Even if the Dow and S&P rally 20-30% I still think the economy will be sucking wind during that time frame. But we're supposed to take advantage of times like these. We have to have a time horizon of months (not hours, days, or a couple weeks).

Also.. TOG ! Remember .. a generational trade isn't a short term trade in my book - it's something that will unfold over years.. I sold a couple March bonds today and bought another gold and silver mini contract along with some HL and SLW. Yes, it's gut check time again.

Just my two cents .. maybe next week I won't have any cents left... Remember, here in the U.S., we have a holiday next week that hopefully will help put a few things into perspective.

"Just my two cents .. maybe next week I won't have any cents left.."

muniman- if it's a choice between cents and sense, obviously (well, for some, not so obvious), you have plenty of the latter, which is all you need to accumulate the former...thanks for weighing in..

[Bill Cara note:

Some people will say I've been there, done that too. The point is that if you learn from the really bad experiences, you'll try to avoid repeating them.]

Bill, problem is, eventually,as you pile up 'experience' almost everything looks too risky to trade ;-)

This market is kicking serious butt, of all but the most circumspect.

loannetter- i should have gone through the 2nd door by the bird feeders and bought that house in WA last summer...would have undoubtedly held up better than the broad market..

Norm
Yes, I fund mortgages. To walk among the greedy and the needy is very sobering these days. Being grateful for 50% of my business of which 50% actually funds is 'what is'. I am grateful for my teachers in all their forms.

2nd, We still have your house at 95% LTV (lower price) if you haven't wrecked your prospects to pay back the loan!

Loannetter

that is good and that is difficult in this day and age...

2nd,

"most memorable novels, films and music I've read/watched/listened to were conceived in pain..."

You forgot the greatest creation - children, are "delivered" in pain :)

Norm, Hardly difficult! I am truly grateful and so I continue to feed the birds..."the least of these" I belive was the Biblical phrase. When I was a child of six my mother went without a coat so I could take ballet and piano lessons (all forgotten now). It is payback time apparently!

USD & Bailout - spreading the pain...

Interesting perspective from India -

"CEOs of these financial institutions have been pocketing huge incentive bonuses and other perks, besides being labelled as mega performers. The burden of such omissions by the CEOs and the US regulators eventually culminated with the multi-billion dollar bailout package by the US government, utilising taxpayers’ money.

Shouldn’t there be a mechanism to impose penalty on the management of these bankers and shouldn’t such bail-outs be funded by the CEOs and their managements themselves? This raises another question: Who is funding such billion-dollar financial packages by the US government, is it the US citizen or, in the light of the rapid appreciation of the dollar, is it the non-US citizen? ... "

http://tinyurl.com/6rse6q

[Bill Cara note:

Every share sold today was bought by someone.]

Me: "someone is buying everything being sold. greatest transfer of wealth happening before our eyes. eventually alot of these stocks are going back up. Would love to know who is doing most of the buying." 2:46 PM

for someone who makes fun of myself here, its good to know i had 1 common thought with the Wizard.

Norm: Let me put this in context.

There used to be a time when there were no such thing as credit markets - at least not like these. Back then, it was each institution's responsibility to evaluate each claimant individually, evaluate risks through "traditional" methods, and then propose a bid for the claimant based on their own internal analysis.

Now we have these so-called credit markets.

As soon as you create these public markets, I'd venture you create all sorts of potential to profit from non-information and imagined hopes or fears. There is little need for in-depth analysis now, basic TA/trend following can probably be used in these credit markets and profit made from it. Why spend all this time trying to profit by guesstimating the "correct" value of the CDS through analysis when you can profit just as much by buying at the start of a trend and selling later.

Take oil for example and its markets. Millions of people are relying on the oil markets to price in the most essential commodity of our civilization - yet when from 150$ to 50$ in four months. Was that "supply and demand" from consumers? Hell, no way. I was a doubter of the speculation theory but I just can't explain why a commodity would drop down to a third of its price based just on so-called demand destruction. The demand curve couldn't be THAT elastic.

So I wonder, if one of the world's most important commodities couldn't be correctly priced in the markets, what makes credit spread markets so infailible?

So far, they have been, but you have to understand (and I think many people are not seeing this), that these credit markets become self-fulfilling prophecies. When the credit spreads on, say, Lehman Brothers, widen to a huge amount, it scares everybody away from ever lending any money to that instutition, and pretty much this develops its own momentum. It's a feedback loop, and margin calls eventually crop up based precisely on these widening spreads. Eventually the spreads widen to the point the institution is suffocated without capital.

Of course, LEH was insolvent. It's quite possible all major banks are insolvent - frankly the whole concept of fractional lending makes the concept of "insolvency" a bit hazy, doesn't it? Insolvency can be "solved" if a bank can make it through a difficult period, until fear subsides and it can finally shed assets at something else than a complete panic price.

Trust is all banks have - and when credit spreads widen, it becomes a self-fulfilling prophecy, no matter the assets of the bank.

Now the TARP is not going to buy this paper, so it's reasonable to assume the spread should be higher. But it's circular reasoning since it seems implausible the Treasury would willingly withdraw the TARP if it didn't have more confidence on the outlook of the banks.

I can see a reasonable point for shorting, say, Citi based on the widening spreads. But shorting the entire market based on it is just preying on fear.

Nyu GRAD,

Don't you and The wizard also shout MONKEY at 3:00 pm everyday?

2nd_ave said:

"everything under the sun that has ever happened is happening right now somewhere on the planet...and with every day you're alive you have the opportunity to be doing one or more of them...there's just no excuse to be sitting around worrying about your portfolio..."

I like your positive thoughts.

"[Bill Cara note:

Every share sold today was bought by someone.]

Me: "someone is buying everything being sold. greatest transfer of wealth happening before our eyes. eventually alot of these stocks are going back up. Would love to know who is doing most of the buying." 2:46 PM
"

Doesn't it make a world of difference whether the share was sold to a market maker vs. a regular market participant?

The market maker is FORCED to buy. And God knows how many tricks he has to hedge his risk so that his purchase is, in fact, completely hedged.

Some cool NEWS!

Mini USA has opened application process for the new Mini E (fully eletric mini) has a range of 156 Miles. only 1 yr trial lease for steep $850 per month.

I would never be a 1st adopter but i thought i would share the info here.

http://www.miniusa.com/minie-usa/

kudos to bmw for pushing the envelope. my contribution is to vow that my 2007 vw gti is the last petrol car i ever buy until a non gasoline alternative becomes affordable and reliable (barring any unforseen accident or theft).

Muzie,

you make great points...

Everything is based on credit. The credit market is how many times bigger than the equities market?

If the start of the system can't issue or get credit, wouldn't that trickle down to the rest of society?

Since the originators of credit are in trouble, those who need credit/money have limited access to it as it is expensive/wide spreads.

confidence game... nothing more than that right now.

to put this in perspective before tonight's retirement.

if you were a company and needed credit and it is currently expensive why not get it? If we could assume that a chapter or three from now we could have heavy inflation and higher borrower base costs that might be a good deal by then.
then again, if no one is buying your stuff, why finance more stuff????
We don't need any more nail salons, home depots, hummers...

Bobbyo,
I have since increased to 10% short, which for me is more than enough considering the amount of money I am managing. I'm trying to profit from my view, but I've traded/invested long enough to know one must manage risk. I'm not trying to knock it out of the park.

@5:19 PM today, Vadym said:

"It also includes an "uncle point" - event or scenario which proves that the whole idea of entry was an error ..."

Vadym, I read with much interest your views on this topic of averaging down as an investment strategy. With all due respect, I still think there are inherent problems with the notion of putting good money after bad.

It's akin to what we see the govt. doing by bailing out the financial sector. We all can see that they have behaved badly (making poor decisions) so why should we feed them more of our money ?

The same basic premise goes into stock investing. If one of my investment ideas is wrong (the stock declines 8%-10%), I'd be better served to sell it quickly and be rid of it than to invest more money and be further involved.

Simply put, we probably should not reward bad behavior - both on a corporate/governmental level, or in your investment portfolio.

Cut the dead wood out and let the new sprouts burst forth.

making my rounds and in google finance i read cramer pumped SLW on his lightning round.

SLW Rating:
"Buy. Cramer calls it a nice speculative stock at its current dirt-cheap level."

might sell some if people bite on this news thur.

Norm: You're right credit is the start of it all.

I'm just wondering how reliable the signals are. Hopefully the credit market guys are "supposed" to be more reliable than, say, commodity traders.

But in another way I wouldn't be completely surprised if the spreads completely cratered at some point just on some momentum, and the "unsustainable credit spreads" story were to vanish just as the "we're running out of oil" story has now completely vanished from the collective psyche. It seems unlikely, I know.

The thing is, we (all of us) constantly focus on whatever's spiking at the moment.

Three months ago, everybody was certain the stock market was correlated to the oil price. It was on everybody's mind - whenever oil went higher, stocks would go down. That worked for a while until it didn't.

Then the TED spread became the hottest topic ever - TED spread up = crisis! But now the TED spread is down and is in fact close to levels from a year ago (apparently banks are lending to each other more). So we've moved on. We need a new crisis indicator!

Looks like this credit spread is the next hot thing.

Seriously, things really could be worse. Can you imagine if the TED spread was still at 4 or 5, Oil was at 150-200$? And the dollar picking up is actually a good thing for the consumer, or so it would seem. Actually it's pretty uncanny how all these things have come down, and they're all in the consumer's favor. Hmmm...

Either way, we were at risk from high oil prices, we were at risk from banks not lending to each other, and we were at risk from the entire banking system collapsing onto itself.

I guess a deep recession kinda sounds like a walk in the park to me compared to that.

Of course now that "financial system collapse" is no longer the key headline (it was three months ago), "Great Depression II" is the best thing we got. We're always scared of something, and the "something" changes every couple months.

I really look forward to they day when we run out of "somethings". At least we're not at war, yet.

What was it that made me decide today to get off the fence I have been sitting on for almost 2 years and get back to active investing? Was it the capitulation being expressed by several regular contributors? Was it some weird kind of guilt that comes from having my net worth only decline by about 10% since the summer while many around me have been nearly wiped out? I'm not a market timer but I just feel that we are bottoming out here in the near term and a big bounce is in order. Putting 20K to work today ( a large daily outlay for me ) has actually been very cathartic and I look forward to seeing how things work out. I bought some BBD.B, some RY and added to a Dividend Fund in my retirement account.

Norm, The originators of credit are in trouble because the secondary market is not quite so happy to buy their mystery boxes of chocloates. So tighter FNMAE and FRMC guidelines are attempting to sniff out chocolate covered turds wrapped in cellophane. News flash: banks still need to lend. If they didn't loan the money they would go broke. Yes, their margins are tighter when a percentage default. Subprime is not the huge hairy culprit. Only a small percentage of subprime loans have actually defaulted. They had other problems, guys. Betting on AIG odds, selling fake paper, bundling the really stinky ones (crooks at work) and insurance swapping parties for example. FED handouts create a bunch of sated bears, taking care of their own stomachs. Handouts actually dull their appetites to lend. Or so I am told....

TerryC....u may be a better time than you think..

Norm: Heres an article on the TED spread and its importance:

http://www.portfolio.com/views/blogs/market-movers/2008/09/26/does-the-ted-spread-really-matter?tid=true

"The TED Spread, he explained, is 300+ basis points, and unless that changes, the whole system will shut down in a matter of days (the TED Spread measures the difference between 3-Month Treasuries and 3-Month LIBOR and represents how much many banks have to pay to borrow short-term money from each other. Banks either have to borrow or sell assets, the analyst said, and banks aren't going to borrow much at a 300bp TED when that's often bigger than their entire net interest margin.)

"

The TED spread is 180-200 now. So we averted the "the whole system will shut down in a matter of days". That still sounded more serious than some credit spreads to me.

Hate to say it but "MONKEY" doesn't work. Tried it while losing a few bills at the blackjack table in Vegas this past weekend. But what I can tell you is that is was a small fraction of what I've been losing on a daily basis, it was fun, and I got lot's of free drinks. Should do it more often...
MCM

thats timer....lots of nice bulish divergences shaping up....just waiting for that sharp intraday reversal....or a gap up and run..dang..havent seen those in ages in this market...

Eventhorizon,

Good luck, I believe you are doing better than 97% of the professional money managers this year. Let us know when your sentiment changes. I would join you on the short side, but the one trading rule I follow is to never chase. At this point I believe to short would be chasing. I might leave chips on the table, but that is how I manage risk.

ToddinFl:
I disagree about averaging down. I think it could
be effectively used on the right stock. With momentum and high multiple stocks averaging down is foolish, but with low beta stocks at low multiples averaging down could be an effective way to put in a large position.

good luck TerryC :)

Terry c.
Glad I was not the only one buying today.
Bob

Any comments on the daily USD? Looks to me like a consolidation for an upside breakout over 88.

RE: averaging down

I think Vadym clearly broke it into 2 groups
a) Averaging down as an impulse reaction to a lower price, in hopes of recovering; "oh man BAC was recommended at 25 by Cramer and I bought...but now it is 15! I'll buy to cut my cost base in half" This is just a hail-mary type of play.

b) Averaging down as part of a strategy of uncertainty about price.
"Ok I fundamentally believe WFC has level 3 assets out the wazoo, and when prime mortgages start defaulting next year they will be taken out to the woodshed. I am comfortable shorting 200 @ $31...and then it goes to $34 and you short 200 more (to up your base), and then it goes to $35 (you review your insights, all SAP reports, and realize that it is 20x forward earnings in this price zone...and so you lurk even longer)...and then it hits $38 and you short 500 more shares to "average down" even more. That is a strategy of uncertainty, not about your direction but about the the prices you can pick things up at. This is a big fleamarket and everybody knows prices oscillate.

On a sort of tangential note: Seems like fear is clouding things for people...There is danger out there...but we're trying to be professionals here and risk management and due diligence and hedging your portfolio is essential. I contend from many posts I am reading that fear is making it hard for people to work...and even sometimes see obvious things. Perhaps then it is better to stop, and when you start again make yourself hedge every long with an equal an opposite short - find good company and bad company...just some ideas to get people motivated and constructive.

What condition is our condition in...according to the writings of George Soros whose book Open Society -reforming global capitalism- which i am currently reading we are in a state of "dynamic disequilibrium"...a time when the familiar ways and means may no longer meet our expectations and new kinds of thinking and behaviour are needed in order to adapt and survive. This lead me to think about another man who devoted much time and study to the problems of business and manufacturing in particular. His name was Dr. W. Edwards Deming. I am reminded of him because of the perilous state that the Big 3 U.S. auto makers are in.the wikipedia page for him is here:

http://tinyurl.com/2k7j3y

Although he was an American his concepts methods and ideas were most greatly embraced by the Japanese manufacturers such as Toyota. For some reason American Management didn't take advantage of his ideas and I wonder if any of the three CEO's that went to Washington to plead for money have any knowledge of Deming.Watching them I was reminded of a Quote from Deming:

"Learning is not compulsory... neither is survival."

ToddinFL,

nowhere in my overview of averaging down did I advocate putting good money after bad. Planned position building in parts during "fuzzy" stage of the movement with pre-defined criteria of actions triggering or defying adding to a first part described in part 2 has nothing to do with "good money after bad" described in part 1.

i know this goes hand in hand with increased volatility, but it's interesting to note the larger bounces off the bottoms since January of this year. From the January lows, the market bounced 7-8%. From the March lows, the market bounced 14%. From the October lows, the market bounced 20%. From the November lows....who knows??? I'm assuming it will be about 25-28%. Depends on where the lows are, though. I thought they would be around the July 2002 lows, but it's looking like it will probably be lower.

DISCLOSURE:
Long in my long term account since the close last Friday (870 S&P).

Chapman article mentions Dubai launching an ETF for Silver

http://tinyurl.com/5bepvl

Remember, January 3 2008 DOW was at 13000

From NY times
After Losses, Pensions Ask For a Change
By MARY WILLIAMS WALSH
Some of the nation’s biggest companies want Congress to roll back rules requiring them to put more money into pension funds.

That means we are sucker who is putting money in 401k/IRA?

http://tinyurl.com/6qzwk5

Over half of James Cramer's Stay Mad portfolio is down more than 50 percent YTD...almost a third is down at least 70 percent.

CNBC...the source you can trust?

ALOHA !!

Perhaps in April the price to stay in Nassau will be much lower.

This is from an article entitled "Crisis In Paradise"(AP Press) about the big resort in the Dominican Republic called CAP CANA, backed by Deutsche Bank and Trump and Ritz Carlton financed by LEH that is on the rocks ...

Is "THE DONALD" going to turn into a commercial bank and get a BAILOUT too? Too bad THE APPRENTICE tv show did not have a task where the two competing teams went to the NY US Federal Reserve building in NYC and bang on the door to see which team could get the most "bailout" money! Oh, IVANA work your magic on BEN!!!

Essentially the CAP CANA is toast but it seems the "crisis" has spread to the Bahamas and beyond. Tourism in Hawaii is down some 18% over last year.

I have to ask, how many workers does the ATLANTIS have if they laid off 800? Man, that must be one big resort!

Below there is mention of union workers protesting and asking for the Bahama Government to give them aid. With GM and F on the ropes and their BAILOUT hopes fading for now, adding to hard times, I wonder if US unions will be in the streets protesting for government aid? Without unemployment benefits and food stamps and welfare we would already have millions of Americans in the streets protesting. The US government has built its expansion on promises ... future promises to 300 million people ... promises to pay. This si the same kind of promises that now back a US Peso, the promise in the "faith and credit" of the US government and its ability to tax US TAXPAYERS. If the US government fails to uphold those promises then the two party system is dead and they know that. The real question is ... What lengths will those who hold power go to in order to retain that power? In 1933 the two party system outright confiscated US citizens personal property in order to save the USA from default, but who keeps creating these defaults? We had another one in 1971, except this time the entire World paid for it and we are still paying!

I have already posted many times about government and taxes in desperate times. I see the GOVERNATOR wants to increase sales tax to 11% "temporarily" and expand what products and services can be taxed. Okay ... are we US TAXPAYERS that stupid that we are going to buy into another TEMPORARY promise? The entire US income tax was suppose to be "temporary" to fund the costs from WW1. How did that work out? When I worked for the IRS, back in 1980s, I was highly amused by management when it came to explaining the term "voluntary tax system". Can someone please explain the "voluntary" part? If it so "voluntary" then why does the IRS have a division called the CID, which is really nothing more than Nazi stormtroopers wearing suits and ties?

If you trust government then you trust "voluntary" and "temporary" and a 95 year track record of corruption.

This is just part of the article that focuses on the Bahamas.

READ ON:
CRISIS IN PARADISE
Nov 19, 2008

This month, the sprawling Atlantis resort in the Bahamas laid off about 800 workers, citing low occupancy rates. Baha Mar Resorts Ltd. laid off about 40 employees at its Sheraton Resort in the Bahamas and 40 more at the Wyndham Nassau Resort. The Bahamas Hotel Catering and Allied Workers Union has called a demonstration Thursday to demand government aid.

"I've been in the business 38 years. I have seen the impact of the Gulf War. I have seen the recession of the '80s. Certainly Sept. 11," said Robert Sands, senior vice president of external affairs at Baha Mar. "But nothing has been of a global nature, which makes the current financial situation we're in much more worrisome."

In Puerto Rico, the Caribe Hilton laid off more than 50 people this month because of rising costs and sluggish occupancy rates. The last time the hotel had to lay off workers was after the Sept. 11 attacks, General Manager Jose Campo said.

"What worries me is that this will last longer," he said. "We are mounting an aggressive campaign, but the situation is what it is."

Even the normally busy holiday season is expected to be relatively quiet.

"There is space available for the holiday season and beyond," said Alec Sanguinetti, CEO of the Caribbean Hotel & Tourism Association. "This is often a time when hotels are sold out and vacationers are looking for any place that has availability."

Workers are spending their days off looking for jobs outside the tourism industry. Others have already been sent home. (more)

[Bill Cara note:

The Kerzner Atlantis resort staff normally totals 9200, but has fallen to 7800, and with these cuts down to 7000. This is a 3164-room resort (except the 423 room Beach Towers was shut down for renovations). I will be running the Cara Bahamas 2009 Conference April 3 through 13 at Atlantis, mostly at the Coral Towers (Booking number to soon follow, and yes there will be substantial discounts and amenities). Kerzner also owns the close-by One & Only Ocean Club, which has a posh 106 rooms. All told, Kerner's resort would be about the 12th largest in North America, but the setting is certainly one of the finest.]

ALOHA !!

vinod posted ... "That means we are sucker who is putting money in 401k/IRA?"

Exactly!

ALOHA !!

Someone earlier posted saying " ... at least we aren't in a war, yet!"

COME ON!!!!

What is IRAQ and AFGHANISTAN? There has been so much focus on the "credit crisis" and the "real estate crisis" and the "derivatives crisis" and the "bank crisis" that we have totally forgot about our WAR CRISIS! We are in the BIGGEST WAR since the VIETNAM WAR, financially speaking. If you go by "body count" then we are nowhere close to the VIETNAM WAR where nearly 60,000 US soldiers died. BODY COUNT ... of course that term does not console the wives and mothers and father and brothers and the families of those 5,000 soldiers already killed in the WAR ON TERROR. Nothing can ever replace that loss ...

THE COST is what makes the WAR ON TERROR so "terrifying"! It now exceeds the cost of the VIETNAM WAR, which caused the USA to default on the gold standard. The COST of WW1 caused the US income tax to be created which led to FDR's default on gold. Remember the gold standard was the global monetary system back before 1971. We don't have that any more. We have "free floating" currencies trying to mimic the gold standard discipline. I believe we need to change that word "floating" to "sinking", because since 1971 the purchasing power of global currencies have done nothing but SINK! FIAT MONEY is a boat anchor around all our necks!

We have yet to face the FINAL BILL for the WAR ON TERROR, but so far we have been paying "off balance sheet" DEBT via supplemental and emergency funding bills. Remember when BUSH said the IRAQ WAR would only cost $1.78bil USD???? Then when the US TREASURY SEC O'Neil disputed that he was fired ... remember that? What does HANK PAULSON say about the costs of the WAR ON TERROR? He says absolutely nothing, which fully indicates to me that when he came into office the US government and the Bush administration knew that a financial tsunami was heading our way. They knew that back in 2006. Why? Because Hank Paulson is a WALL STREETER, he specializes in markets not money! It was like when Jeffrey Skilling quit ENRON. Shortly thereafter ENRON blew up! It is very important to pay attention to the comings and goings of high placed monetary officials and CEOs. Those are clues and RED FLAGS! Who will OBAMA appoint? So far it looks like cronies from the CLINTON years! I have ZERO faith in OBAMA'S monetary abilities. I am not dissing OBAMA only, there are others worthy of dissing on both sides of the isle, but unless a US President addresses the US monetary system it is more band-aids and more US TAXPAYER abuses and more attacks on the US CONSTITUTION.

I would not underestimate the financial impact the WAR ON TERROR will have in the future. Those in power have done a good job of sweeping that under the rug, which is what they specialize in! Believe me, those WAR COSTS will reassert themselves very soon. The US MILITARY is on FULL TIME BAILOUT!

ALL OUR BEST VOTING GOT US HERE!

ALOHA !!

While we US TAXPAYERS stagger and get irrate about a $700bil BANK BAILOUT we say virtually nothing about a $603bil cost of funding the IRAQ WAR.

I dare anyone here to go to this link and tell me this is not going to be a problem soon! You will be amazed at the George Bush quote from 2001!

Link: http://zfacts.com/p/447.html

Look at that clock go!!! YEHAWWWWWW !!! Check it out Dr. Strangelove!!! HA!!! As US TAXPAYERS we are all Will Pickens riding the bomb and we didn;t even get a chance to vote for any of this! That is why I call this TAXATION WITHOUT REPRESENTATION ... When's the Boston Tea Party?

Bill:

You can't post to the latest community chat...

For those of you who remember my post about the news stand in Harvard Square over which I saw the moniker..."Dewey, Cheatem & Howe," sad news:

http://www.boston.com/news/local/massachusetts/articles/2008/11/20/plan_to_shutter_newsstand_pierces_heart_of_harvard_sq/

Norm,

Once again you and I are in sync. Deflation is appearing to be the next big problem. (CPI just doesn't show it all)

Since I am mainly interested in the longer term, I have put in bids beneath the recent lows on several producers of consumer required items — XOM, JNJ, MMM — yesterday. While the markets and the economy are not synonymous, they are linked.

Here in the midwest things have been disintegrating for more than a decade. Still they continue to worsen, especially for those not actively protecting their retirement money — many who I know are approaching a 50% loss.

Over time, as we lost manufacturing jobs, it had become difficult to sell a house to move to a new job location. Then, as things got tighter, it got to be too expensive for many to even travel for an interview. Now with the total collapse of the housing market even the part time jobs are getting hard to find due to the tendency to hire younger people or those with more education for the same money a struggling retiree was doing.

Several years ago, before everything began to fail, we had an exodus from the deteriorating public school system. Yesterday I heard of a Lutheran High School in the Chicago area where delinquent tuition payments led to a failure to pay a $70k heating bill and kids were doing field trips daily to avoid the cold.

Here in my city a great number of parochial were added in the past 25 years. If they migrate back into the public system we'rre in big trouble since they are already running an annually increasing budget deficit due to the state's failure to pay. (Also in deficits big time.)

Autos are the poster boy right now, but nearly any category I can think of could be added to the bailout queue.

This looks to me like a long time, trial and error condition.

BTW, T-bonds and bond funds have not done too badly and are looking even better as they keep cutting rates. I have been trading, but now I'm holding. (I'm also keeping a lot of cash for bargains as they appear.)

Speaking of wars, biggest Brazilian newspaper today has an article on Chinese gov. officials saying unemployment has reached "critical levels", and some provinces imposing limits on the number of layoffs each company can have (?). Article also mentions China is trying to avoid mass layoff to contain social instability as several protests have been held. 2nd, are you aware of these?

If people go hungry, nasty things happen, governments fall. The biggest concern with such serious and long term economic crisis is the way countries have historically found to get out of it. More so given the precarious situation the US seems to be in.

We are way too gloomy today. Maybe it's rally time.

If I had money on the sidelines and deflation is occuring, isn't my money buying more? Housing...gas...CPI down...PPI down.

If I had money on the sidelines and a very foggy picture of when things might stabilize (at least until we know what Obama and govt's are going to do) should I risk that capital, or just watch it's buying power grow due to deflation?

Good morning.

Here are your Cara 100 Ratings Changes:

SNDK - Downgraded to Sell @ Matrix Research

There was some discussion in the recent past few days on just what energy source could be the solution to replacing oil, coal and fission based energy sources with high cost inputs and environmentally damaging or radioactive outputs.

This is not a new technology, but an outcome of discoveries made in the last 20 years in the chemistry field which actually overlaps nuclear physics.

Watch the short documentary video on this website, and if you have some chemistry and physics background, you will find that the manipulation of the ionization potential in hydrogen. lithium and their tendency to form and reform molecules will generate substantial energy returns in the form of heat discharge:

http://www.blacklightpower.com/

My only criticism here is that these good scientific works, though unassailable scientifically, do not have representation in the public vein, where a speaker can show in plain english how the system works, without jumping around in complex subatomic theory or engineering terminology.

The system requires readily available materials, and a little tinkering and cajoling of properties inherent in the structure of matter to get going, perhaps this is the biggest disappointment. It was there all along, and only required a drill down on the properties of matter which were simply overlooked and did not require massive budgets to realize. But the technology is complex and requires the top knowledge in the field and cannot be boiled down into simple elements.

Like electric car advocates before them, they will simply have to install a working prototype in a car and drive around for years depending on it without refilling their gas tank with fuel or relying on batteries.

Producing motive energy out of this unit will be the obvious challenge.

Nemo:

"If I had money on the sidelines and deflation is occuring, isn't my money buying more?"

Yes, nemo, until they devalue it, and IMO that's what comes when they can't stand the pain of the deflation...

Does anyone but me think that DB is being unfairly punished, and I mean overdone. They have earnings of 10.8 billion, and the stock has a PE of 1.35.

Down pre-market by another 6%, to $24.25

If it makes me irrational to keep buying it, I guess I am incurably irrational.