good morning

futures don't look good for the day.

many are saying that the s & p estimates are still too high for 2009 and that the s & p will end up around 600. anyone agree with this?

unfortunately, i hold a bunch of long stock positions bought around the October lows. are you saying that it is not good to be long stocks and better to be using options?

I'm still waiting for Time (or was it Newsweek) magazine cover titled "The Death of Equities"....I think we're getting close...

TCK

I have just read that as a filing date of 18 Nov 2008
The Caisse De Depot has aquired 58,600 shares of TCK at $CDN 6.63

Regards

May 2008 - I was trading puts on financials, mostly MS and making lunch money every week or so. The trades that put me over the top for the year were still to come in July, when I was buying puts on USO and MRO, and calls on CAL. My best trade of the year, interestingly enough, was BAC calls on 15 July when it hit its bottom (18+ at that time) and then rallied back to 30.

Til 20 Sept my trading account was up about 30% on the year.

Since 20 Sept, I am now dead even on the year, which is still OK considering the markets, but indicates that I was clearly wrong on general market direction and individual issues that I chose in late September.

Still and all - I'm not uncomfortable with what I currently hold, and I'm optimistic for the future, tho' like most, at times I get impatient.

I will wait out the market and see what the future brings.

Re: Motley Fool,

Every time I've followed one of their recommendations, I've regretted it. When they plug a stock, it must be for 10 yrs down the line.

Right now I'm having an Elmer Fudd moment: "Be very, very afraid." Undoubtedly should be getting back in with what little remains in my account. Thank you Bill for your wise words yesterday in which you said that every successful trader has had his head handed to him before he learns to trade. Now is not the time to call it quits. However, I plan to use position sizing to limit my losses.

WASHINGTON (Reuters) – The number of U.S. workers filing new claims for jobless benefits rose by a larger than expected 27,000 last week to their highest level in 16 years, Labor Department data showed on Thursday, as a harsh economic environment forces employers to cut back on hiring.

Initial claims for state unemployment insurance benefits were a seasonally adjusted 542,000 in the week ended November 15 from a revised 515,000 the previous week.

A Labor Department official said there were no special factors influencing the report.

KEY EVENTS TO WATCH FOR:

Thursday, November 20, 2008

8:30 AM ET. Nov 15 Jobless Claims

Weekly Jobless Claims (expected 505K; previous 516K)

Weekly Jobless Claims Net Change (expected -11K; previous +32K)

Continuing Jobless Claims (previous 3897000)

Continuing Jobless Claims Net Change (previous +65K)

A complimentary service from INO.com ( http://www.ino.com/ )

fslr $95 pre market.

i appreciate the head on a platter comment, but i have had about everything else handed to me as well. I am tempted to cash out to day because i am concerned that things have broken through support levels and may drop hard.

there just doesn't seem to be much in the way of buying.

accourant, same here. It's kept me from completely wiping out. Does the market go lower? I think so, but the risk/reward on the short side is too high while fighting the downtrend eats away at long trades.

I'm gonna wait until I see signs of this forced selling coming to a conclusion.

unemployment numbers worse than expected

An article titled Reflation Challenge & Gold by Jim Willie, a goldbug.

http://news.goldseek.com/GoldenJackass/1227131103.php

I definitely think the economy is in deflation now, and I don't have much confidence those who are pulling the strings will do anything to reflate before the downward spiral accelerates. Why they gave a ton of money to banks to sit on it I really don't understand, given that they said they were going to sterilize it. That means they took the cash out of the open markets and lent it to the banks, who promptly sat on it or used it to buy other banks instead of lending it out, the effect of which would be to reduce the money supply rather than increase it, I'd think.

STP reported this am. down 20%+. Its really unjust. I think the street is bombing all solars to wipe out individuals for big clients, and they will all run up in 2009.

What do you think happens when our president replaces every other word from "nukoolar" and "evil doers" in exchange for phrases like "Alternative energy" "solar" "wind" and "oil independence" "new energy economy"?

csiq reports tomorrow.

NYUgrad, yep. Holding solars through these times feels like King Lear raging against the storm.

Has anyone ever been in a market where the market cap for a company is less than the cash on its balance sheet?

That's what's happening now.

If you wake up and don't want to smile,
If it takes just a little while,
Open your eyes and look at the day,
You'll see things in a different way.

Don't stop, thinking about tomorrow,
Don't stop, it'll soon be here,
It'll be better than before,
Yesterday's gone, yesterday's gone.

Why not think about times to come,
And not about the things that you've done,
If your life was bad to you,
Just think what tomorrow will do.

Don't stop, thinking about tomorrow,
Don't stop, it'll soon be here,
It'll be better than before,
Yesterday's gone, yesterday's gone.

-C McVie

music to go with the coffee...

We've seen devastation in equities. The question lately has been, and IMO going forward is a basic question of supply and demand. Right now the former outstrips the latter. Will Johnny 401-k play a role in the new bull market? Probably not much. When it comes, if it comes it will be largely an institutional and foreign affair. Johnny K. is sitting on the sidelines with his knee in a bucket of ice. Employment gains, when and if they come will of course favor low-wage nations. Destruction of the American auto and related industries will continue even in the face of an equities recovery.

For stocks, improvement may be around the corner somewhere. MAY BE. For the average American shlub, don't bother pulling out the trumpets and bugles. His place in the new global economy is way too insecure for that.

(did I spell shlub right?)

TCK lots of news this am. dividend suspended, selling assets, etc

Monthly stochastics on the long term SPX charts hit all time low: http://nexalogic.com/spx-sto.jpg, suggesting deeply oversold. Daily and weekly on shorter term charts not at records though.

Also, take a look at the SPX since 1925, shows the magnitude of the drops then, and now (in log scale):

http://nexalogic.com/spx-all.jpg

taking a screenshot of today's marketwatch front page, and saving it for comparison purposes...

any estimate of how much lower it will open today?

TCK
Caisse de depot et Placement du Quebec currently own approximately 7,151,133 shares of TCK assuming they weren't part of the exodus out.

2nd
I don't know-what to think
will closed window to market untill Monday and will not watch or do anything untill monday

First chart link had an extra comma somehow, here's the correct link:

http://nexalogic.com/spx-sto.jpg

Biggest double top I have ever seen SiO2. I think somebody mentioned this a couple days ago. Anyone else care to comment on that LT chart? Does Moore's law apply to stock market crashes?

http://en.wikipedia.org/wiki/Moore's_law

$0.7950 US or a bit more will get you $1 CAD today. Buyers went out to lunch at 12:30 yesterday and didn't come back.

Around 26% of stocks trading at 52-week lows on Nasdaq. What sort of levels would this be at in the lows of a bear market?

Vinod,

I doubt you'll be missing anything worthwhile.

Little Erin missed her calling, she should have been a stock salesman.

vinod- even if you plan to stay out, i think you should remain fully engaged in the market action...how else can you track sentiment accurately?

Repost

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. Add: You would have to review the business presentation as well as the technical representation on the website to understand the possibilities.

NEW YORK (MarketWatch) - Crude-oil futures fell for a fifth session Thursday, slumping below $50 a barrel for the first time in more than three years as global stocks tumbled and economic worries deepened.
Crude for December delivery dropped $3.71, or 6.9%, to $49.91 a barrel in early electronic trading. Front-month contracts haven't moved below the $50 level since May 2005. The December futures expire Thursday, adding more volatility to the contract.
Crude has lost 14% in five consecutive sessions.

Crude 50.64 (kitco)
UGA (21.73 -.87) USO (41.64 -1.60) dollars
Buy or Sigh?

Cara 100 Update:

DIS - Price Target Lowered from $30 to $28 @ RBC

vinod- remember your target last summer of $10 for all the large-cap financials? C has exceeded, and BAC is close..

Today COULD, now that we've violated all the previous lows, become an enourmous down day.

doom aside, let's get some skin in the game

what are people looking at buying at what prices, or what are people looking at shorting at what prices...

Si02

Looking at that chart of the S&P 500 you posted, draw horizontal lines across the tops set back in 2000 and 2007, and then another line across the bottom in 2002. The S&P is right at/near those 2002 bottom levels.

Now, since your chart is log scale, take the distance between those 2 lines and draw a 3rd line equidistant lower on the chart. It takes you back to the lows set back in 1994, roughly 435 on the $SPX.

I'm not saying the market necessarily gets there, it's just an interesting chart to consider.

The 10 year U.S. Treasury bond price jumped during the day yesterday and again this morning to lower the yield to 3.18% from 3.47% yesterday morning, bringing to total decline since Monday to ~.55% - a record decline in such a short period in my experience. While there remains a disconnect between the declining 10 year yield and mortgage rates – the rates have certainly improved today. Of course with global stock markets declining massive amounts of new funds are moving to the relative safe haven of Treasuries in the face of a deepening recession and lowered inflation concerns which impair the longer term Treasuries. Happy Trading

Bluebluff,

Death of Equities cover: Could be, but I don't expect a three day resurrection — possibly a dead-cat bounce though.
------------

Skater,

re: jobs report
Seems like typically stupid government report — "larger than expected" losses? "no special factors"?
I wonder what the cost per taxpayer is for this kind of stupid data.
------------

Thriftybob,

They gave it to their buddies and to cover their own involvement in creating this fraud.

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

2nd - Hendrix's "... bloody footprints ..." lyric last night took the prize. Today? Hendrix or Marley? I think I'll choose Marley and a bloody mary for the day. :)

grim outlook from Bay Area employers:

http://tinyurl.com/5jpsxu

" Four out of 10 Bay Area employers contacted in a survey anticipate cutting jobs within six months, according to a dismal report on the region's business pulse being issued today."

All in all the market has held up under extreme negativity. I predict a green day for everything except commodities. Shorts may get restless.

Chrysler Jeep dealership on South Van Ness closes with no warning:

http://tinyurl.com/5c5spx

spot- thanks for catching my error (footPRINTS is correct)...

2nd,

My mistake on our ESLR bet was not including a low price at which, should it have been hit (3 dollars say) the bet would be won and the book immediately forthcoming.

News on local tv, this morning, said that Asia and European markets fell strongly overnight due to Congress not moving ahead on the US auto bailout ('scuse me - I meeant "relief") bill.

Are you kidding me! Who writes this stuff? Lobbyists must be sending in news copy spin with a nice check. Why not, it works in Congress?

SKF up 120% in 12 trading days.

Wow !

2nd - "footprints" or "hoofmarks", I don't care. You still get the prize, imo.

Enjoy the Sun, today.

"How would anybody expect to make money in the 5-year Treasury yielding 2.09%?"

Because the USD will be deflating @ X %, and so real yield would be X + 2.09

until the US defaults, that is...

RE: Blacklight Power

See Wikipedia - http://tinyurl.com/5zshhm

FWIW, the "Controversy" section, and a brief review of the available literature, indicate caution would be prudent here.

Gold seems to be holding well considering how high the dollar is anymore. When the dollar covering finally ends I expect gold will take off.

They can't add trillions and trillions to the debt and not expect it to eventually have an effect on the value of the dollar, IMO.

SKF seems comfortable in the mid 200's - if it gets to 3's or 400's should we wonder about bank accounts?

Blizzard Outside - I'm going for an indoor skate (Exercise does reduce strezz) - markets should bounce up nicely in my absence...

Bill just called the TOG. Anyone listening?

Does anyone feel that there is no worse to come?
And all expected bad news is price in?
Also is our government intentionally keeping dollar high so we can finance our need
Are we sucking liquidity internationally to finance our need but which indirectly export slowly down around world without even solving our problem?

bought some Nov $2.50 puts on SLW.

maybe we reach 7000 dow today?

this is crazy. where are our leaders? maybe the U.S will be sold to china in 1 big transaction?

where are our leaders? they are out squandering trillions of our tax dollars. I can see no reason why this market shouldn't go lower.

where are our leaders? i guess no one is piloting this plane anymore.

Last night, someone posted that Dollars increase in purchasing value in Deflation until those Dollars are devalued. Actually, it is Inflation that devalues the purchasing value of a Dollar, but DEvaluing can occur in a rather perverse way.

A member of my mother's family did some teaching during the Depression years. She was a state employee, and considered essential, but there was no Dollars in the state treasury; so, she was paid in script (a State IOU for Dollars at a later time) which she then had to trade at a discounted value to locals who had the Dollars.

State scripts might come back in vogue - don't throw those Dollars away yet.

NYUgrad
Not the whole enchilada
But small pieces at a time
Alaska to Russian
Texas to Mexico and we will have to ask Bill if Canadian are interested on anything?

Thanks Todd, roughly like this? http://nexalogic.com/spx-a.jpg

Is now a good time go long SLW with an investment-length timeline (6-month to a year+) to capitalize on the value that Bill's SLW writeup spoke of?

Or has the SIL/SLW story become too uncertain even with a lengthy timeline?

vinod- personally, i think there is worse to come..but i think it occurs a few years out from here, maybe in 3 years or so...

^^^ Rather, SLV not SIL.

What just happened to TCK? Down $1.50 on the TSX.

ESLR now under $2. The decline is inexorable and extreme.

2nd, did you see the article in the Chron today about the local survey that says 4 of 10 Bay Area employers anticipate job cuts within the next six months?

The one bright spot was, you guessed it, companies involved in green technology.

Shark - This schlub has his entire derriere in that bucket of ice. I'm in as deep as my conscience will allow until I see a steady-state 9k DOW.

I love BNN having analysts like the S&P clown who is 'cautioning that the markets may go lower' and 'remain defensive'. Remember this is the same debt rating group that gave you the AAA ratings on Alt-A and Subprime paper. If this isn't the bottom........

[Bill Cara note:

Your comment illustrates why financial services companies must stop wearing multiple hats. S&P have research analysts and they have a debt ratings group. The perception (and perhaps the reality) of conflict of interest is definitely an issue. It's not any different than an auditor doing management consulting, or an agent broker also being a dealer, and on and on.]

ABK flirts with, but does not yet make an "A-up"

ABK definitely wants to rise but is having trouble in this market.

We do not have leaders, we have dictators.
A leader would tell us where they want to take us then we can choose to follow.

When you tell me what's for dinner pookie I never want to hear

"Chicken wings"

See I knew I was misspelling "Schlub":) Rhymes with Shrub.

shark- well, you can't expect to anticipate all contingencies when making a bet (maybe next time you should run it by a lawyer first)...in any case, i'm taking my own advice and starting an LLC next month-> moving ahead on a project that will explore new technology in my profession...at some point i may be flying East; if that happens, i will present you with the book personally; i'll even ask a stranger to commemorate the event with a photo in front of the now infamous westport library...ONLY in the event you win the bet, of course..

Si02

Re: S&P 500 chart

You got it.

Essentially it's one 45% decline, with another on top of it. Yikes !

Bill - Thanks for the TOG reference, I was thinking of rotating out of PM's for a day or two...

I am showing the 2002 low on S&P 500 @ 768.63. I also am seeing the next lowest value taking us all the way back to 4/28/97. Prior to '97, it becomes pretty difficult to evaluate theoretical (or psychological) support levels.

I am seeing stock being sold indiscriminately this morning and S&P has not yet broken that 2002 level.

There is a very real possibility 768 breaks later today, however, if in the face of indiscriminate selling, the 768.63 level does hold, it could be a purely technical reason for a reversal to occur.

abk showing moxy

DRYS at 3.98

Re: Blacklight Power

I would not give any credence to a wikipedia article which opens with a bias against a proven process. Either the thing works, or it doesn't. Why bother with the cultural biases inherent in any system even if the people doing the scoffing are tenured ivory tower types with no patented technology of their own?

The trick I suppose would be to convince the patent office that refuses you, in order to protect the propriety of the methods, which are easily reproducible if you have the technological background.

adding to longs QLD FXI SSO

Looks like BC is making a run again. I would be on board, but I just put my last chips in TBT even though it crashed through a triple bottom. Go TOG....

Corporate executive flying in private corporate jet to D.C. asking for helps from people whose
Election was finance by them using lobbyist. What a show ?.
And scaring us all about union losing 3 million jobs if we do not give them money.
Pirate of the cost of Africa are not only one asking ransom

looking forward to meeting you 2nd.

Vinod your comment about pirates rings true.

America Held Hostage should be the headline.

wollybear1 or anyone,

"Bill just called the TOG. Anyone listening?"

What does that mean?

Si02

If you can, post a log scale chart of the DJIA starting from about 1930 up to the current point.

Draw trend lines across the bottom from 1933 to 1942 to 1982. (1932 was even a bit lower - but it goes below the parallel lines)

Next, draw a parallel line across the tops at the end of 1936, to 1959 to 1965 and on through today.

You'll see that there are very instances where the chart deviated from that perfectly parallel channel.

It also shows that starting at the tail end of 1995, the DJIA broke up through that upward channel and actually used the top trend line as support during 2002.

Now, with the DJIA having broke down into the original long term channel, does that signal a longer term "reversion to the mean", for lack of a better term ?

Is it too late to long DOG?

so some gg, slw and fslr for 2009?

Re: TOG

read today's Daily Report at the homepage about TOG.

Thrifty,

"Comments & Outlook

I think we can finally say that this week represented the Trade of the Generation, which is to Sell bonds and Buy Gold/Goldminers. Today for bonds -- before the close -- could be a major sell.

If there is a trader in the universe who has bought US treasuries for reasons of income rather than panic/safe haven, then there won’t be a second. How would anybody expect to make money in the 5-year Treasury yielding 2.09%? The 10-year yielding 3.39% and the 30-year yielding 3.97% reflect only the ridiculous prices as traders have panicked from other assets.

The $XAU goldminers index hit a high of 209 in March-08. Eight months later, the index was often in the 64 to 72 range. GG yesterday closed at 18.62. In late September it was double that. Within a year, this stock will likely be at least +100% higher than the close yesterday."

SKF up 120% in 5 days - damn, i was having SKF & FXP last week but closed out thinking downside risk is too high.... I bet this is going to be another torture day, closing slightly positive with no firm resolution

I think I will capitulate today with multi $$$$$ losses. Lets see, so far, Bill was 2 months early with his bull market call.

Please, some of the older members here, remind me if he was early with his bear call before the July 2007 top. If he was early, was it 2 months or 2 years? If 2 years, then, I need to sell all that is left and turn short.

Wow. Green. This market is so not-susceptible to being analyzed. All you can do is trade the patterns and prices that are right in front of your eyes, and if you don't like the market, wait a half hour.

gold did not go down, while oil is getting the flush. hmmmm. the other team may be coming back on the field to give the PPT a good second half? the takeout of oil can not be sitting well with the good souled PM Putin.. nor our allies in the Persian Gulf. Maybe they will decide to punt gold back at the dollar? Just a thought.

NYUgrad.. you have no idea what you are talking about. It is spelled 'nukular'.

nibbling on clmt, tbt, and atp.un// a utility yielding 20%??? you have got to be kidding.

US$ index - from 72 to 88 in 4 months

No wonder GLD is down 24% in 4 months ....

ToddinFL - I could only go back 20 years in stockcharts. Where does that reversion in mean point to - 6000? Can you post a chart?

SKF - Distribution zone per Triple RSI time frame.

NYU .. only kidding.. nulkular. And I had you thinking nukular. haha.

Goodbye John Dingell, hello Henry Waxman!!!~ Welcome to the House Energy Chair!!! Just came through on the news.

Opened a position with GG at 17.40, considering Call leap 2010 Jan 35......any thoughts

Shiva

Use Yahoo finance, click on the Dow, choose "basic chart", click on "max" for duration and then use the large chart version.

The file size is too big for me to post it here.

I don't even want to say what the low end of the channel is; I'd probably get banned from the site. lol

dbear

I have the GG Jan 2010 $25 call, bought at $4.2, if you can get it at $4.5-4.7 I think you'll do well...we're going to see a lot between now and then.

Corporate exec. steps off fancy jet dressed in Armani suit and carrying tin cup, arrives to worship specticle of the great and all-knowing Giant Bazooka. Offers 3 million blue-collar jobs in sacrifice and utters the following:

http://gmfactsandfiction.com/

Request Denied!

[Bill Cara note:

I uploaded an ADDENDUM above, which references GM.]

ToddinFL - I will be watching the next high from the current lows, if it makes a lower high, then we can pretty much say a new bear market started in 2001

ToddinFL

In order to draw these long term trend lines, don't you need a chart that shows all DJIA values on an equal scale? Yahoo chart changes scale above DOW 5000. Doesn't that skew your trend line analysis?

Todd- don't worry- you'll only get banned if we get there, and by then, it won't matter...;)

shark_attack
If we closed green, we should have official ceremony to bury this bear in CP’s backyard.

When the move comes, it'll probably be a swoosh up and our resident bears will say I knew that. LOL

"Goodbye John Dingell, hello Henry Waxman!!!~ Welcome to the House Energy Chair!!! Just came through on the news."

Solars rallying meekly on news.

brought some TNA/FAS/BGU/UYG/SSO

I'm running a series of RSI screens. The Bull 2X ETF's are showing accumulation mode. The Bear ETF's are showing distribution. FWIW.

NYUgrad said: "where are our leaders? i guess no one is piloting this plane anymore."

Actually, our "leaders" personally jet-packed away some time ago to their own private jets, and hummed a few bars of "Where ya goin' to go when the volcano blows" as they flew off to their ranches in SA. Ah yes, whocudanoed?

Looks like a total high volume washout on PAY (Verifone). I am taking a chip shot @ 2.80.

Todd, Si02

RE Long term Dow and trends lines. Yes Todd I see what you're talking about. Its a very long term chart, conditions are certainly different over this period. It works till it doesn't, or things could be different this time, how does that saying go.

Anyway here's a chart I thru together, think its what you're talking about.

http://frontenacdesign.com/BC/Charts/LT%20Dow.png

Quasi

Shiva... it points at 6000.. however, it overshot the channel once, in 1982.. if it overshoots like in 1982, look for 4500. This will be happening in about 12 months, if it does.

Will Europe close green? My bet is yes.

Quasi, same question as I posed to Todd.

Doesn't the fact that the ^DJIA values on that chart change scale above the 5000 level skew that trend line?

This is not bash or criticism but an honest question.

Don't you need a chart with an equal scale for all ^DJIA values 0-15,000 to draw a long term trend line?

i'm taking a look at the 3 x ETFs right now. ERX looks interesting. Still trying to figure out how they calc NAV.

also looking to buy UYM for my long term trading account.

SU in Triple RSI accumulation zone, no position. Do your own homework.

bsi87, what's your time frame on the acc/dist charts?

A few questions if anyone has time,..

I sold some puts a month ago that are now in the money and, I imagine, will be assigned tomorrow. Is there anything I need to do, or will the stock be automatically sold to me at the strike price?

If I had sold a covered call (that's now in the money), would the broker just grab the stock?

Lastly, if I had bought the calls or puts will the broker execute those purchases/sales automatically too?

Thanks in advance, Gad.

taeamonfuego - i was thinking about the 3X funds as well. Should they do better than individual stocks if we move up 30% from here?

quasi, todd -
great chart. Look at the volume increases over the last decade. If she goes there could be a lot of force or take a while.

Go find the chimp we rally today.

Nevermind, you just answered, as I was asking.

Glum glum glum....

Yesterday the Starbucks berista in So. Cal. said that business is actually pretty good. Was very slow two weeks ago but is back.

Costco was packed the other day and I was there right at the 5-5:30 after work rush, and it was a doozy. I've shopped COST since 1989 so i have an idea how it is...

My escrow agent said he was busy in October and had a big increase in business.

Stopped at In N Out Burger last night for a bite of the evil stuff. The drive through was backed into the main blvd and the place was packed.

Chicken Little reported sky is falling.

Bright light in Eastern sky scares minority groups in sector R. (for you Firesign Theatre fans).

Shiva, here is the link to the chart.. the log of the market averages going back to Colonial times..

http://www.marketoracle.co.uk/Article7116.html

Todd, this is the analysis that you have been riding. Please give credit to Paul Lamont, where it is due.

Calvino - whats different this time is the drop so far has been almost vertical..... I dont think we will see the bottom of the market in a straight shot, it will pull back up to some level and fall again in the next 12 to 18 months.

thanks... daily report wasn't out when i started reading here

TA question:
Some changes were made recently to the Dow and the S&P500. Does it matter when doing the TA? What impact does that have when looking at long time frames?

Sorry, Barista. Saw a Barista action figure at my local coffee shop the other day. They are super heroes to some....

from Mike Kahn's blog.

When measuring downside targets, especially for large patterns, I switch to log scaled charts and project physical distance, not price, down from the break point.

This is still apocalyptic but at least it has a chance to be valid. A drop like this one would erase 21 years of gains and bring spoos to their August 1987 peak.

Craig

discounters like WMT and COST are doing comparatively well in recession, just like fast foods like MCD. On the other hand, try to go to a big ticket store (any furniture store) or Home Depot / Lowes and see how things are over there. No mas.

Billy Sundance

Log charts are typically used over arithmetic charts because they reflect percentage moves as opposed to point moves.

5,000 to 10,000 = 100% move (5000 points)

10,000 to 15,000 = 50% move (5000 points)

Triple RSI time frames 7 days, weeks, months.

Cara 100 Update (Final):

UTX - target cut at Credit Suisse to $51 from $63. Expects business and general aviation market to decline 8%-12% in FY 2009. Maintained Outperform rating

Todd - thanks for the reply. I appreciate your posts.

Calvino said:

"Todd, this is the analysis that you have been riding. Please give credit to Paul Lamont, where it is due."

I've never heard of that guy or that blog. I simply look at various charts over different time frames and found the one on the DJIA to give an interesting long term view.

And I'm certainly not "riding", as you put it, one simple chart of the DJIA as the way to project potential target areas.

It is but one of many things I look at and consider.

Id have to think that FCX and CHK are getting close to accumulate, tho' they're not Cara 100 listed. On second thought, I have enough commodities-related stocks. No position in either - just watching em.

re: Buffett

from Optionmonster.com
"Warren Buffett may still be the Oracle of Omaha, but he may be losing his title of richest man in the world now that his company's stock is down 50 percent in just two months.

Berkshire Hathaway's shares, which have famously never been split, hit a low of $74,100 today after trading as high as $147,000 as recently as mid-September. The drop may have something to do with Buffett's put sales on the world indexes.

Goldman Sachs has also hit a new low, getting down as low as $49 today after being climbing as high as $180 in August. Buffet made a $5 billion investment in Goldman at a critical juncture for the company in what was widely considered an exceptionally sweet deal.

We know that Buffett won't have any real gains or losses on his put sales until at least 2015. But he sold them when volatility was very low and the S&P 500 was up above 1200, so the paper losses have got to be enormous.

Now we are hearing through the grapevine that Buffett did the trade with Goldman Sachs, and wasn't obligated to put up any collateral. As this position creates greater paper losses, and Berkshire is facing a cut on its high credit rating, the company and Goldman may have to put up that collateral on the trade. This might apply pressure on both stocks, and it may be a downward spiral that will be difficult to curtail."

Gad, each broker may act differently, best to ask them. Best to buy back those puts, commissions are usually smaller this way. They can really charge high commissions otherwise, adding insult to injury.

Craig,

As part of the economy suffers, other parts can be expected to benefit (costco a good example).

As for demand at in n out burger, perhaps a few of your neighbors were struck by a sudden and abiding attack of the munchies:)

Thanks for posting that chart Quasi. That's the one I have been looking at, only I use the larger version of the chart.

Christmas in Houston, On-The-Ground, report: It took me 3 days to get my dad's computer over to the Apple store because traffic was so high at the mall I had to circle and circle and circle, looking for parking. The first two days, I gave up, the third, I just parked in the next county, and carried it over! There is no slowdown here, from what I can tell. Gasoline is at 1.55 at the pump, and dropping.

My 401 K is screaming for me to look at CVX and JNJ yielding 4%.....what will be their yield at these prices in 10 years??

Vinod,

I'm looking forward to having some champagne and oysters up in Wellfleet. Maybe when 2nd comes to visit with my book we can blast up there in the party cruiser and you get the fire going.

PAY - out @ 3.40

writersblock -
I second the Houston area situation. Went to Baybrook Mall Saturday and the parking lot was overflowing. Filled up the CR-V for under $20 and started looking around wondering where and when I was.
Definitely no slow down in Houston, and I'm not sure anyone's thinking about one yet either.

Long-term charts: I look at this also (use S&P 500 generally). Difficulties with these long-term views - no inclusion of dividends - no compensating for inflation / deflation - no compensating for bond yields (the primary alternative to equity risk).

I need to figure out how to create a view that allows me to see a more thorough picture of the investment landscape over time....

Dave

SOUNDS REAL GLUM BOTH HERE ON THIS BLOG AND ON THE TALKING HEADS.......CAN THIS THING CAPITULATE BETWEEN NOW AND FEB, 2009?

GS at the bottom of its short term (3 weeks)trend channel, and also at the bottom of its intermediate channel (11 weeks) that goes back to early September of this year.

BTW, that's not a recommendation for GS by me.

Just an observation ...

Joanne Hruska on BNN right now.

Gold is approaching the $750 level for the second time today; silver is down but silver miners are flat.

Tempted to buy some TCK here down 20% on the day. 1X earnings at the moment, but even if earnings came in at 2004 levels, this thing is only at 3X earnings including a plan to pay back the debt and hopefully reinstate the dividend at some point a year from now. With a two to three year time frame, this seems like a no-brainer. What am I missing?

dbear - I capitulated ...
- am now 100% long the market (S&P & NDX100)
- just bought a condo this morning (my best estimate 50 cents on the dollar of real market value)

I've been waiting for a moment like this to put money to work. Here it is! I consider this moment in time a gift to those who have been responsible and are willing to grab the brass ring.

Dave

ptf - what would the debt load be if their earnings go negative? do they have any loan covenants that would be breached? when is their debt due? those are the questions i would be asking before stepping in.

DaveB- congrats on the condo!

Regarding the long term chart, I've been wondering about that too. Does Yahoo or some other free charting service provide chart with ticker division? I know stockcharts.com does, but it only goes to 3 years back.

I'd like to do something like $SPX:$CRB (index normalized by commodity index) for 20 year time span or more.

Paul

I will take into account your reports of good activity in Houston. I'd like to know foot traffic versus sales figures, but they're not telling.

This kind of info flow is one of the awesome things about the net. It's why governments get control of it, it such a potentially potent weapon in the war for democracy.

thanks 2nd - it's a foreclosed property. In a GREAT location and in great condition - appears that the previous buyer lost his employement and was foreclosed in June 08 - I made a lowball offer that was accepted - wrote a check this am.

This is my way of recouping my share (as a US taxpayer) of the gov't TARP.

Dave

Corner Stone, I was at Memorial City Mall. Traffic on the freeways is still, er, robust, to say the least. Also, on side streets, and in the local strip malls, though not as robust as the mall. Sharkie, from the number of people carrying shopping bags in the mall, I would say sales are good, too. Will let you know when I have to get exasperated, waiting in line to make a purchase. That will truly be the signal to go long-er! Apple store was full, even though I was in there on a week day, before school was out for the day.

Does anybody follow KWK (Quicksilver Resources) - an energy company. Stock in mid 4s right now - I am thinking anything between 4 and 5 is solid buy and hold for 12 months. Any thoughts?

ABK was only up like 25-30 percent or so when I called it this morning. Now it's up 90 percent.

Is anyone thinking of picking up some POT at these levels(57.71). I like typing that.

Re: Edumacation On Gold

What's so great about gold? Edumacate me.

Ok, I will, but just this once.

""So is gold money ?

The idea sacred to the maddest gold bugs that gold should be the world’s only universal money is wrong, simply because of the sums which prove that either at the small (coinage) end or at the large (bank payments) end there has to be an alternative form of money based on something else. History also shows them to be wrong - although not everywhere and not all the time.

The historical records show that gold is doomed only to repeat its temporary and peripheral role. But it is, nonetheless, a vital role. When it comes back, it makes its owners the richest people around. We need a grasp of the history of money to see how this works."

http://www.galmarley.com/index.htm

These comments were committed to the web during the run-up in Gold bullion prices in the 2002 - 2003 time frame. A review on the history of gold will provide some insights. Especially how credit derivatives and swaps seems awfully like hickory sticks split in half used in the 16th century, or that the banking sector appears to some degree like John Law's banking system.

Natural gas may have had it last inventory injection this week. Price went down a bit after the numbers were released, to too much. Time for the TOS (Trade of the Season) may be close, assuming markets keep operating more or less normally. Do your DD...

BillySundance, Norm

Log vs linear chart scaling, same as what Todd said, I'll just expand a little.

I posted some ideas on this subject last month, link below. Basically long term I like to look at the rate of change on the price action. On a long term linear chart, the price action is exponential (parabolic) when the rate of change is constant, ie; say 10% every year. On a long term log chart, the price action is a linear (straight line) when the rate of change is constant. It's just much easier to see changes in the trend, hard to tell when an exponential curve changes, but easy to see if a straight line changes.

Oct post link. with sample charts linear vs log and long term Dow chart which was being discussed at the time.

http://tinyurl.com/5tymd5

Norm,

Agree the volume is interesting on long term charts, but I look at it this way, things are different now. Prior to say about 1980 it was buy and hold, Buffet style. If you wanted to buy or sell, you called your broker and made an appointment in a day or two to go in, discuss it and then sign the forms, the trade took place within a few days. With Tech bubble and the internet things started to change late 90's, to the point we are at now with hedge funds day trading billions in stocks and ETF's, often stocks turn over the entire float in a day, things are different now.

Of course all of the above is just me opinion and subject to change without notice.

Quasi

The last time I went to Wal-Mart on a weekend (2 weeks ago), I was reminded why I normally go during the week. Monday I went during daylight hours and was reminded why going late night is best. I have seen no reduction in price for any of my favorite foods.

DELL now trading below $10 for the first time since June 1997.

Log vs Linear charts

looks like that last Tiny URL to the old post was truncated, try this one.

http://tinyurl.com/5loafw

Quasi

put a flyer out on C...$7.50 Nov calls

FatrtyArbuckle,

You got it on the Ts! You don't need to buy & hold them —trade.
--------------

NYUgrad,

Pilots? Bernanke replaced Greenspan, but trained in the same flight school. Paulson, one of the subprime architects is now at the controls and doing loops and rolls to distract from other tricks being used to cover all those asses in D.C. and N.Y.

This afternoon's op-ex unwind should be a historic event.......

Maturity Yield Yesterday Last Week Last Month
3 Month 0.01 0.03 0.15 1.02
6 Month 0.42 0.61 0.89 1.54
2 Year 0.97 1.06 1.23 1.60
3 Year 1.18 1.32 1.61 1.25
5 Year 1.95 2.02 2.42 2.64
10 Year 3.19 3.32 3.86 3.73
30 Year 3.78 3.91 4.36 4.21

10 year treasury in ONE WEEK from 3.86 to 3.19 - this is a rare opportunity - Bill's TOG ready to go IMO

Dave

4 out of 5 expiration friday
market goes up

Bill,

re: ADDENDUM

My problem is I have been worried since 1993 (NAFTA) although I first began to see the effects here of globalization of U.S. jobs in mid 1980s.

The current unemployment here is at 10.5%. As of several years ago we had lost over 10,000 jobs in a city of 150,000 — don't know if it is higher, but must be since several other mfg facilities are completely gone now.

I guess our claim to fame is this whole area was early into this briar patch.

About two nights ago I had a dream where I was at the local Home Depot and the place was almost completely empty. All the wood was all gone, the shelves were bare, and some of the shelves were actually gone.

At the checkout, I asked the clerk how long they would be open. She told me that within 3 days they would have sold everything possible and close the doors.

Why do I dream this stuff ? Only God knows ...

DIS showing some strength!

Todd,

I'd be more inclined to respect and trade on your dream than I would the opposite.

Many of my stock dreams have come true usually that day.

Bill just called the TOG. Anyone listening?

Posted by: woolybear1 at November 20, 2008 10:05 A

I don't see it. When did he post it?

"4 out of 5 expiration friday
market goes up"
Posted by: vinod at November 20, 2008 12:31 PM

vinod- remember the relationship between market direction the thursday before the week of opex and market direction the day of opex? i can't even remember how the market closed last thursday...(and where do they come up with these things?)...

someone asked a few days ago about a decent place to park cash-> based on SiO2's call above, HNU.to might be a good bet...

auto loan agreement reached

Rumor is out that GM is getting bailed out; stock reversed and is up 15% now

There seems to be rising interest in gold, I don't expect this to last too long though.

Todd- did you catch my earlier link to the SF Chronicle- that 'dream' came all too true for the employees of the Jeep dealership on Mission and Van Ness..

shark_attack

About 4-6 months ago (I think, it's been awhile), I actually had a dream about the dollar. In my dream, I could see a chart of the dollar and it was going straight down (and I got to see the exact price too !).

I read somewhere, maybe in one of Jack Schwager's books about traders having dreams about the markets and how it helped them trade.

Todd maybe you were just dreaming about next summers Hurricane season.

Yeah, I saw that link 2nd_ave.

One of my friends in the construction industry called me this morning and told me he got laid off, that he's been looking in the local paper for jobs but they're aren't any to be had.

can someone send a link to the auto bailout?

if so i will closeout my shorts and get ready to reset (WFC, PNC). may go long RIG, GG on the turn...

if you guys need a solid laugh, check this video out:

http://www.youtube.com/watch?v=c5j4McFzies

bobbyo

Maybe you're correct. Maybe my seasons are off.

Speaking of hurricane season, one of the major employers in my area is a manufacturer of windows and doors (PGTI), and specializes in impact glass which meets the strict hurricane housing codes for Florida.

The company came public back in 2006 at $14, got as high as $18 and change, and now sits just above $1.

They've already had several rounds of layoffs, restructured some of their long term debt, but it looks like they'll have to cut even more employees to survive.

is C going to 0? my gosh, some of these numbers are getting silly....and the option premiums seem to be at once in a lifetime levels...

Auto deal
http://tinyurl.com/5w75wq

Where is my bailout?

ToddinFL re: PGTI

They make a product called EZE-Breeze - a wonderful system for creating a "nine-month" room out of a patio area.

I've been planning to buy their product for two covered decks at one of our lake homes. The thing holding me back was the price of $4200 for the materials from PGT. I'm gonna re-contact the distributor in my area and see if they're interested in reducing pricing yet.

I'll keep an eye on PGT in the future.

Dave

How low can silver go before they stop production? $6?

[Bill Cara note:

Silver is invariably a metal that is not mined separately so the accounting for it could be handled as a by-product.]

DaveB

PGT serves what I would refer to as the "middle of the market" in their sector. That EZE Breeze line is indeed pretty nifty, as their are a lot of upscale homes in FL that are tailored to varying conditions of the weather.

Looking at windows, Marvin Windows makes a top notch product for the impact glass market.

they're* are a lot ...

Man I hate not being able to edit my typos.

[Bill Cara note:

Well, the more I edit, the sloppier people get, which would lead to the more I need to edit... Maybe there is a solution with the new system that we are testing for release later in the month.]

Grym - Perhaps Hillary will tend to foreign affairs while Bill concentrates on his domestic affairs.

auto deal ran into snags between senate and house - talking about re-convening in december

Mini E debut in Los Angeles

http://vimeo.com/2297054

Looks like congress identified an important knob. Let's see if they can get maximum bang for our bucks...

Cp, LOL!

Well, maybe she'll meet some nice foreign guy and she can dump "whatever is,IS" Billy boy.

Cara 100 stock DOW chemical is starting to make me greedy. It is on sell at 1994 levels and has a 9% yeild. The question is with the end of the world happening. Will anyone buy chemicals again?

I read market wizards too. I had 2 dreams about stocks which turned out to be right on, and one which didn't pan out. I'm a big believer in dreams.

Paulson's about to talk about the economy. What can the man POSSIBLY say that the market will like?

"We were wrong, things are better than we thought"?

I do have to say we're seeing some strange stuff. Both F and GM made a-downs before they made b-ups, if you know what I'm talking about. Does today go solidly green?

Dow Chemical CEO Andrew Liveris is on record in a CNBC interview not too long ago stating that the dividend would not be cut under his tenure.

That's pretty interesting to me.

CNBC says Buffett lost tens of billions. Even we haven't done that right gang?

Actually, that Liveris interview was back on October 23 of this year, That's what caused the gap up in the stock at that time.

Buffett was buying USG back in the $40-$45 range. The stock is now under $6.

[Bill Cara note:

Do you think he was buying to close his shorts? Either that or he's feeling like a cement head.]

shark, percentage wise i am prob beating Mr. Buffett.

ALOHA !!

Jock ... Lets look at that in reverse!

USDX up 22.2%(from 72 to 88)

OIL down 66%(from $147 to $50)

GOLD down 28%(from $1030 to $736)

SILVER down 58%(from 21 to 9)

The amount OIL has fallen in relation to the USDX stands out like a sore thumb and you have to wonder why the US CONgress doesn't have the HEDGE FUNDS and OIL execs in front of them grilling them as to why the OIL prices have dropped so low and so fast? What happens when the USDX crashes again? It will ...

The USDX is trade weighted not against our biggest creditor CHINA, but against Europe and mainly GERMANY. The EURO is a GERMAN MARK. What would the USDX look like if it was weighted 70% against CHINA instead of EUROPE? In reality this is another game of shuffle the deck by the corrupt monetary authorities using this "sinking currency"(I refuse to use "floating" any more)modus operandi! When corrupt money is the basis of the entire World's economic system you get what we have today. What businessman can make any long term plans when there is no store of value anywhere?

Last night I posted about the CAP CANA resort in the Dominican Republic that has been abandoned. My brother flies all over the World as an architect consultant for retail developments. This week he is in Qatar on a job. He says the same thing about companies like Neiman Marcus and Macys whose store plans require years of planning and construction to even do a remodel. Now there is no way they can plan for future growth because there is no stability in the World financial and economic markets. This is a monetary issue as I have been saying all along.

FLOATING CURRENCIES ... WHAT A JOKE!

ITS THE MONEY STUPID!!!

I guarantee you the "deaf, dumb and blind kid" OBAMA will not even touch the money issue! Heck, if OPRAH won't then why would OBAMA?

OBAMA ... if you are reading this ...

ITS THE MONEY STUPID!!!

NYUgrad, no harm intended, just an observation on my part.

Relative performance when managing money always makes me cringe.

If I'm outperforming the S&P, but I'm still down 35%, what good is that ? I'm still losing money, period, end of story.

When I read about a certain money manager who has "outperformed the correlate benchmark index", I know that I'm being set up for a spin story.

jmo

I had an epiphany last night. So the big hedge funds right now bear the burden of their leverage, and in addition, they are forced to sell because of investors who want their money back. So even though the managers at the funds may think a stock with a PE of 4, and contracts locking in those earnings for at least the next two years is a good deal, they are forced to dump the stock at the worst possible time - a time when they know they should be buying more.

We don't have that burden. We are not forced to do anything. We can sit and admire all the red, and if we aren't leveraged, there's no reason (other than the blow to our ego that we "bought too soon") to sell something that's just down "temporarily". Philosophically, it is now "our time" to prosper. If we are margin free and not faced with investors forcing us to sell, we can do better than the hedge funds, but only if you ignore the voice telling you that you screwed up.

I mean, I wouldn't be buying any heavily indebted retailers or automakers right now, but buying no-debt companies who aren't forced to take precipitous action to stay alive? Seems like its more likely than not those trades will make money, once tax loss season is over, the hedge fund liquidations have run their course, and the annual 401k money is dumped into mutual funds in January.

Just a thought.

A solid stock idea:
http://www.forbes.com/2008/11/14/scuix-pssi-geo-fan_jl_1114adviserqa_inl.html?partner=yahootix

Jenny Jones (a top flight fund manager) mentions RGA - her largest holding, in the above interview. Very nice, yet brief, analysis of why she likes this company.

RGA is also my largest holding (I work for RGA!!!), and agree fully whith Jones' analysis. This is a stellar company with exceptional management, very solid fundamentals and wonderful growth opportunities.

Bill - you might want to look at RGA for inclusion into your CARA list.

Dave

With crude oil futures trading down to 50 today, the it's becoming easier and easier for low volume traders to be forced out of solar positions. STP is currently trading at 6.30 but a month ago it was trading at $23 and a month before that $43. STP looks like a sound play in every time horizon including the short term and should be considered I think.

Dave B,

Regarding long this market. What few companies are the best companies at these best prices?

General Question:

Bill Cara asked the other day if the community had ideas on solar/alternative energy ideas anticipating Obama's grand favor that way.

Are there companies that simply make the components that go into solar products and also, have a good balance sheet?

ALOHA !!

Outperforming the S&P or BUFFET is relative. Where were you guys when he was buying up CVX and KO for $2 a share back in the 1970s?

I agree BUFFET has made some mistakes, but I am not privy to his "mistake insurance", which I guarantee you he has some! You don't own GENERAL RE and not have insurance ... Then again I am not privy to what sorts of government pressure BUFFET has working against him. Someone of his stature has the US government in his pockets in more ways than one and I have some very suspicious deals come through over the past ten years.

Traders do not create any "real wealth", they live off the glory and despair of others, essentially they live off OPW(Other Peoples Work)! I am glad to see traders finally breaking a sweat these days! Hand 'em a shovel!!!

todd,

I meant i am beating Buffett on the downside. as in the bigger loser.

DOW chem revisited. If the dividend is safe how could this not be attractive to fixed income people. Which goes back to Bill's Daily report about the low yields on govt bonds.People will need some kind of income. Just thinking out loud no position yet.

[Bill Cara note:

There is always competition in the market between fixed income and dividend yields. If you are looking at dividends then you have to be prepared to hold the stock for a few years (at least until the next Bull market sends the price higher than your cost basis). You need to have a lot of confidence that the earnings/cash flow are fairly stable. And you ought to look for a low dividend pay-out ratio (from earnings), a healthy working capital position, and a track record of consistent dividend payments. There are many companies that have never missed a dividend payment, so maybe you want to start looking there.]

davefairtex

A reasonable approach and hypothesis.

That said, those unencumbered with debt, and who have cash, will undoubtedly require the right price before they plunge in.

I recall an interview with the often disliked hedge fund manager, and short seller, Jim Chanos on CNBC who argued that the credit markets were illiquid because the spread between the bid (roughly 15 cents on the dollar) to the ask (roughly 80 cents on the dollar) was too disparate to make a market.

He argued that if the ask was dropped to $0.25, then the bid might be $0.20, and some of those "illiquid" assets would find a market.

Of course, if the firms who were in trouble had to sell at $0.25, they would fail. Thus, they ran to Hank Paulson and cried for help. And we can see how the markets have acted since that occurred.

You don't reward bad judgment and bad behavior by bailing them out. If you do, you undermine the very premise of free markets.

jmo

ToddinFL
Re: Manager Performance is akin to the tallest dwarf scenario, you're still short.

bobbyo

DOW is an interesting company.

Will Liveris make true on his promise - will the board allow that to occur ? Will the weakness in the economy dictate a cut in the divvy in the future ?

All fair questions. I just put it out there for thought and discourse.

kaimu

You're on a roll today! This will go down as the quote of the year for the "Cara Community". How true this is...
~~~~~~~~~~~~~~~~~~~~~~~~~~

Traders do not create any "real wealth", they live off the glory and despair of others, essentially they live off OPW(Other Peoples Work)! I am glad to see traders finally breaking a sweat these days! Hand 'em a shovel!!!

NYU.. I would ask at what price do Oil Sands get shut in. Answer - now. Shell on hold, SU on hold, etc. If crude stays below fifty, they are going to be making announcements.

Kaimu.. the takeout of oil was an election tactic like 06. It worked too well. This is why Lehman was sunk. imho.

Potential short candidate: SPG

Tons of resistance up @ $70; also @ $50.

With the 50 DMA sitting @ $52.40, any rally back to $50 could represent a decent short entry, although it may not even get that high (so don't be greedy).

This is not a recommendation. Do your own homework and due diligence.

For comparison, SPX chart since the 20s in linear scale: http://nexalogic.com/spx-al.jpg

(and log scale: http://nexalogic.com/spx-all.jpg ). Clearly, linear scale is of little use for long term charts.

I made a great call this morning on a positive close and the govt has to approve another bailout that drives stocks down. Can the govt please stop helping. The stock market cannot take it any more.
Bob

Right. If excessive risk isn't punished then next time this will happen all over again.

ToddinFL:

Nice to see you putting it out there :)
I agree on SPG, I shorted down to $49.

Here is one stock I'm trying to get my head around, Agrium (could substitue for Mosaic, I want to see who has the lower debt).

In last 3 weeks
Agrium Tgt Raised To C$162.50 From C$127.75 By Salman >AGU Dow Jones Newswires 11:35am ET
Agrium Tgt Cut To $85 From $105 By TD >AGU Dow Jones Newswires 7:56am ET
Wednesday November 5, 2008 11:01am ET
Agrium Tgt Cut To $65 From $125 By BMO >AGU

I have no idea what it is worth $162 or $65. However, look at a 5year chart this thing has gone up parabolic and now down parabolic, we're back to 2006 levels! Trading around $25.

The need for this stuff is not going anywhere. Soil erosion is going to continue around the world.

I'm looking into 2011 AGU $25 Calls which are around $12.

Thanks for that Si02.

People can copy and paste that second chart (log) to paintbrush, and then draw those trend lines.

OUT OF GG EARLIER AT 20.17....COULD NOT RELINGQUISH 9.5% IN THREE HOURS....

FELT LIKE LUCK

bought more SLW $2.50 puts. expire tomorrow.

[Bill Cara note: When I was a new recruit to the securities industry, I saw that one of my associates in the firm was buying out-of-the money calls for a penny or two on the day before expiration. The thrill of a quick hit was what made him roll the dice for $500 to $1000 a pop. I told him I didn't think he'd last long in the business.]

navid

I'd steer clear of AGU for now. It looks like it could easily hit the lows set back in July, August, Sept of '06.

navid

BTW, I pay very little attention to analyst recommendations. Watch the charts and ask questions of those who know the industry.

So according to October reports, TARP invested $25B in Citigroup preferred stock and warrants.

As of right now the market cap of Citigroup is just below $28B, down about 66% of its value on October 17th when the purchase was announced.

So am I correct that TARP Citigroup investment has already created a MtM loss of approximately $17B for the US taxpayer in less than a month?

thats CRAZY

[Bill Cara note:

Think about those Sovereign Wealth Funds that invested in the major banks, some of which soon afterward went bankrupt. It's not just the US taxpayer who is getting screwed.]

HERE WE GO, LAST HOUR....ANY GUESS'S?

FSLR down to 87, down 13, with Dec 75 puts are trading at 10. This for a company that appears to have contracts going out years and a very nice fwd PE ratio.

Memo to George Bush, Henry Paulson:

Market hours are 9:30 to 4 pm. Please refrain from making any public statements during this time. A good time to make statements is 4:30 pm.

Your cooperation in this is greatly appreciated. It may even have a better effect than TARP.

[Bill Cara note:

Total agreement on this. Have frequently made the statement myself. These photo ops are materially moving the markets, and that's not right. The problem is that insiders have advance access to the speech copy and can and will game the market.]

Navid,

In addition to what Todd said. I am wary of anything that was just part of a bubble. The whole agriculture story is interesting, but it was miss priced on the upside and is likley to be mispriced on the downside.

RE: commercial real estate

All I can tell you folks is what I see north and south (2-3 mile radius) of the road from where I reside.

There are two brand new commercial projects that have been completed in the past 6-12 months.

One of them is probably 20% occupied. The other is 100% empty. Yeah, nobody there. No one to pay the monthly nut. That isn't good, folks.

And this story isn't going to get better before it gets worse. The commercial RE market is obviously the next big drag on the markets. But we all know that, as does the equity market ...

Question is, how much worse does it get ?

I'm not willing to take the bet on the long side across the board for the long term scenario just yet.

But I'm just one person in SW FL, so I reserve the right to be wrong.

jmo

SLW just above it's $2.56 low. if it cracks, well you know. DRYS cracked it's $8.50 low and it's now down over 50%. I know because i bought at 10.40 only to sell at 9.00 (luckily).

DISCLOSURE:
$2.50 puts in SLW.

ToddinFL, bobbyo

Agree don't blindly listen to the headline conclusions of analysts. However, are you reading their models? You have to build some assumptions about value and market...otherwise you are operating on fear. Anyway, i'm quite happy we're at 2006 levels, and these companies are getting nears 3x earnings with products the entire world's need. Major downside imo is the cancellation of ethanol mandate.
Would love to hear your valuation thoughts.

teamonfuego,

that was hilarious. y'll forgive me for posting one more off topic funny, but I think many of us could use it. Check this out...

http://www.youtube.com/watch?v=lj3iNxZ8Dww

LOL...

MCM

MCM - i was just talking to my friend about how the surfer dude might rival the South Carolina beauty pageant chick. funny to see you post that too. I can't decide which is funnier...i'm thinking it might actually be the surfer dude.

on to investing...

I'm transferring $10-12k into my trading account tomorrow and plan on buying up UYM for a bounce to the $14/$15 range (previous resistance lows)

Ouch! I think I hurt my stockmarket!

Right there with you. I tried to knife-catch TCK in the mid-5 range and will just plan to hold it. (That's one of the reasons I needed the laugh). Taking funds out of 3 mo T bills and plan to write puts in quality oil and gas companies- looking at PBR, COP, XOM. Will also keep some powder to try the 3x ETFs for some day trades. Also going to sell entire bond component of asset-allocation work retirement fund and deploy into stocks. Counting on a decent retracement bounce here and prepared to be fully long...

MCM

uchhhhhhhhh
what a crummy market
just a bunch of electronic numbers, tied to NOTHING, truly, what is a "stock" but an arbitrary number... that moves up/down, but now mostly down, and wreak havoc on people's savings..and many people's lives..

At this point, I just have to say What The Heck...? Selling right through 2002 on the S&P? Is this short selling? I was feeling good starting an SLW position today - just stopped at a small loss. I'm gonna have to watch from the sidelines because week after week the market is telling me "You have no game. Muahahaha..." Back to ye olde drawing board for now...

NOw the machines have joined the selling.

this sucker's dropping like a rock!

DJIA down >400, man..

C plunging under $5 on huge volume over 620 million.

GE under $13 on volume of nearly 200 million.

These are major market companies plunging on heavy volume. Take it as a sign fwiw.

look like any stock going for more than dollar is overprice?

navid,
I like AGU, I like the story. And man it looks cheap here, but in this anti-equity enviornment it could get much cheaper. As a long term investment it looks fine here Looks under valued, Hell it is below book! I'm going to watch this. Thanks for bringing it to my attention. It is just the Ag space is way out of favor.

2nd
thanks god i just by 50 each this morning

C looks like it's going out of business huh?

I was just reading Fransix's earlier post and some additional posts concerning the future of energy technologies.

The problem,IMO, is not that the technology to revolutionize our world does not exist, or hasnt been tested, or produced... there is ample evidence to suggest that it indeed has... Including functional and cheap water splitting technologies. The problem is that these technologies have not been permitted to be released or developed by those in authoritative position to repress them.

Take for instance, the alternatively powered car scenario.... something that would displace the internal combustion engine as a relic of the past. Do you honestly think any of the big three would allow such a thing to have occurred. They will have been scrambling over one another to eliminate these technologies. These companies are anachronistic behemouths whose primary agenda was a slovenly self-perpetuating path of least resistance... which is why they are essentially worthless and bankrupt today. Predictably they would have colluded to abolish any challenge to the supremacy of their products in the marketplace.

If the automakers hadnt offed the messenger with such revolutionary news, the oil barrons would have. The world has been operating on an oil standard as much as a dollar standard. You could say, and others have, that the dollar has been backed by a commodity...oil, instead of gold. Would these oil-based power brokers ever allow anything to undermine the source of their power... not bloody likely. Any such threat would be terminated at its source regardless of its potential value to the peoples of the world.

And can you imagine the apoplectic response from elitist controlling agents should anyone ever discover unfettered and un-meterable source of renewable free energy.... That would permit those third world, energy-deficient nations to remove the boot of oppression from their collective necks. That would mean these countries couldnt be pillaged for their resources.... and this third world populace, having attained the where-with-all for independence, would surely educate and regulate themselves. Democracy of the masses...Goodness knows, that would be a deal-breaker.

No, the problem is not one of lacking technology. There is more than ample evidence that revolutionary technologies have been developed under the public radar. The thing that has kept the world strapped to the oil drum is essentially a social construct.

The sooner this construct fails, the better.... again, JMHO.

I like to ask Bill
Have you seen anything like this in your life time?

[Bill Cara note:

The S&P 500 has broken the Sep-2002 lows of 768.63 (or thereabouts). I never thought we'd see that. The October 1987 plunge on Black Monday was worse, but the shock was quickly over, and while equity markets didn't immediately rally, they stabilized. The banking fiasco has sucked the liquidity out of the ocean and now we are on land watching water sink to a new water table. In Paulson's speech today he didn't once refer to the source of the problems being he and his Wall Street colleagues who agreed to build the previous Bull on the back of a ponzi scheme called credit default swaps. At the point he departed Wall Street to join the Treasury Dept, he had to have known that there was no way for his industry to unwind those positions and that as soon as the Bears and Lehmans failed, which broke the credit ring, the game was over. He did all he could to try to help the Republicans last through the Bush Administration before this debacle crashed the market. I even think that back in the Spring, when the Republicans knew the game was over, they pulled Wall Streeter Mitt Romney, the best candidate, out of the race, and put an aging loser at the time (McCain) up on the pedestal, allowing him to pick a no-name running mate, to keep everybody else's hands clean for 2012. I think the GOP was thinking Hilary would get in and they would enjoy another four years of taking merciless shots at the Clintons. After it became clear that Obama would be the candidate, they helped Paulson in any way they could to try to get through this mess until year-end. But few outsiders realized the problem was as big as it is. Books will be written about this issue, and you know, Paulson will go down in flames holding onto the gift of a $200 million capital gains tax exemption the taxpayers provided him. There is seemingly no justice. Not only have I never seen anything like this, I couldn't have imagined it. I knew there were issues, and I wrote about them for a couple years, but, still, when I listen to Paulson attempting to re-write history while he's still on the job and people are listening, I shake my head in disbelief. That man will never admit to the truth, but the truth will come out.]

Cheap can always get cheaper. Get (embrace) that concept.

Chasing moving targets is a dangerous gig.

Carry on ...

Vinod,

No one has seen anything anything close to this bro.

Don't buy this madness.

It goes lower in week/months ahead.

Clear enough ?

is this the panic? or are we goin to 7000?

i refuse to add to this selling. i should have some dry powder soon. this is madness.

2nd
SLW I got few days ago at 2.98 is down big
FAS/BGU/TNA/UYG/SSO I got today is down big
Not faith in market anymore. I feel agree/mad/frustrated but not down
May be I will have to postpone trip to china

get me a bucket...

S&P 500 back to April '97

GM and C look as good as toast and NASA is still trying to identify the black hole known as GE.

I just realized how out of synch I am that I convinced myself it was Friday all morning. Wish I had been correct.

um so i guess this is the time to go buy a gun/ammo, a closet full of spam, and rations of water. its the end of the world per the stock market sentiment.

Bang for your bucks!

So now will the USD tank? Almost feels like capitulation, except folks still refuse to stop buying?

[Bill Cara note:

The $USD will tank when the cash on the sidelines starts to buy the equity market, I think.]

a whole lot of head shaking going on....

10 yr Treasury yields closed at 3.08-ish. I put money to work on a short T-bill fund at eod. Moved much from long equity position into this position.

Dave

NYUGrad

I don't think this is panic, sadly it is reality truly setting in.

In my business we have a saying,

first you let go
then you let go of letting go

capitulation is the same.

wow...that felt like a marathon. dont like when i'm watching each tick but it was exciting haha

closed out shorts: MET, NAV, MAC, WFC, HCN shorts
picked up longs: ECA.TO, SU, TLM, and AGU ('11 calls)

January 3 2008 Naz was at 2600
I try to find when did Naz droped 50% in 11 month
last time. can not find history like this

note to self: from now on, sell in may...

I would be making a list of buys BUT I would be only looking at those that have a) Triple RSI buys AND b) show capitulation, that is, RSI 7 day < 10.

Then I would watch for hourly divergences on the MACD before taking any long position.

And I would have a sell stop in place.

Problem with a situation like this is one is NEVER short enough or FLAT enough.

dow 6800ish at the fan line below? no idea here really but it looks like the next support off the lows in the early nineties if 7437fib doesn't hold?

http://img136.imageshack.us/img136/1493/dowmv9.png

[Bill Cara note: When I was a new recruit to the securities industry, I saw that one of my associates in the firm was buying out-of-the money calls for a penny or two on the day before expiration. The thrill of a quick hit was what made him roll the dice for $500 to $1000 a pop. I told him I didn't think he'd last long in the business.]

Up 255% ytd, pretty much done trading this year. Just can't help buying strangles during options expiration week (just last 2 months). Did it again today, Nov S&P 750 puts and 860 Calls - this volatility is awesome. Sold the 750s in last 5 minutes of trading.

I might mention - these are pure speculation in that I normally trade as a net seller of options, but in this environment, 50-60 point moves become normal.

401K been in bond fund since May 06 (looked silly to a bunch of buds when we hit 1565). Won't convert to equities until 50 day crosses 200 day to upside (S&P 500). Don't have the time for stocks, but every person I know that does stocks, I send them here!

Thanks Bill - and even though I don't participate in individual stocks, I read your site daily!

[Bill Cara note:

My associate from almost 30 years ago was buying calls in a low volatile market. He had a gambling problem. And, my friend, you are trading. At the end of today's commentary, I stated that strangles and straddles were essential to successful trading in this volatile market environment...

Btw, it's only fitting that with all the puking going on that yesterday was World Toilet Day. Did you know the average person spends three years of his life on the john? I guess one of those years is 2008.]

The kinds of corruption we are seeing in the markets and politics since 9/11 would make the Romans pale.

And to think it was all about something as frivolous as credit derivatives, which are no different in character to split hickory sticks used in the 16th century.

Just the same, a strident call for draconian regulation will undoubtedly create a banking monopoly like we've never seen before.

Wrote a put on FSLR Jan09 70 for $13.30 in the last few seconds today.

2007 support is at $75. FSLR down to $86 today. We're still far from that even though with all these talk of armageddon in the solars.

[Bill Cara note:

When you prepare for a trade like this, you want to look at the charts of the peer group, look at their support levels as well. Then you need some other set up to help you make a decision. Maybe the Stochastics have bounced off zero for a couple of the peer group? Maybe the RSI-7 is well down for them all for the 10-minute, 60-minute and 1 day chart? Something, other than guessing, has to be the primary factor. Unhedged, I don't know I would have picked the January's though because the market is still crashing, and I don't see enough of a set up to cause me to put on that trade. I like the trade because you are selling volatility and the time decay will eat up those put buyers, but unhedged I probably would have extended the time frame a bit unless it was my plan to have the stock put to me as part of an acquisition strategy based on the company fundamentals and quants.]

To Panic or NOT to Panic?

Our industry continues to catch the flack for this mess while our clients are more often than not, investors who are frozen in fear. Bill Sparkman, a mortgage coach who has seen 30+ years of these cycles put it well:

"A man walks slowly down a flight of stairs, sometimes pausing or retracing his steps until he reaches a floor. After trudging along for while, he notices another staircase and begins ascending, occasionally pausing or taking a step back before methodically proceeding upward.

A second man hurtles down a terrifically high flight of stairs. Ignoring the safety railings, he runs recklessly downward, dodging obstacles in his path as he goes. He suddenly cries out as he loses his footing, sails through the air, tumbles down several flights of stairs in a spectacular crash. The badly injured man is bandaged from head to toe and attached to a variety of beeping, flashing medical devices that monitor his vital signs. Experts debate his condition but agree that the situation is dire and prospects for recovery are uncertain.

...and that’s why more headlines say “Home values off the cliff in Phoenix, Miami and Las Vegas” than “Things aren’t bad in Seattle, Portland and Charlotte.” Most readers just find sensational headlines more interesting. And while they may help sell newspapers, they also scare buyers and sellers to the sidelines, though the news may be very positive for home buyers in particular."

And I say:Check out the better areas! We will prosper by coming together as a country to solve our problems with our best minds, energy and our vision intact. A person cannot act appropriately out of fear...fear saps your very being along with your power.

Thanks for your knowledge, Bill.

With the 10 year Treasury yield down to 3.0% this afternoon we should be locking 5% to 5.25% -30 year fixed conforming loans (no points), but best I could pull today on a big one ($417,000) was 5.75%. Fannie doesn't want to help too much -just trying to get the stuff they get delivered back out the door promptly into new mortgage backed securities that hopefully someone will be buying. Happy Trading

Yep - you are right, still trading. I guess I just meant "small trades" I don't care about losing. The normal trades are selling strangle credit spreads deep out of the money.

Missed toilet day - will have to mark it on the calendar for next year.

Also - I still think we will be printing 6 handle on S&P - didn't think it would happen until next year - but it should happen one and the same. Earnings forecast on S&P too high, around 85, and with a low multiple of 10 and lower estimate of 60, gives a pretty compelling reason for 600. That may prove to be overly optimistic.

[Bill Cara note:

The list of the top 25 winners on the NYSE today (see Wall St. Journal Market Data Center) was chock full of inverse 2x and 3x ETF's. Some of the gains over the past couple months have been extraordinary. I'm wondering how much of an impact the inverse ETF's are having on the market volatility.]

Re: Beating Buffet

Funny how Buffet adulation turns to Buffet bashing in a difficult period.

Hey, I hate seeing his face everywhere all the time just as much as anyone, but give the guy a break. First off, those stupid puts expire between between 2019 and 2027. That's ELEVEN TO NINETEEN YEARS FROM NOW - and they are non-exercisable until expiration. Worrying about those is like worrying that we might have a thunderstorm twenty years from now when it's pissing down rain right now. Even if they somehow end up the in the money, Berkshire has twenty freakin' years to prepare and build up a cash hoard to pay it off if it needs to.

I guarantee you twenty years from now these puts will expire and no one will notice - and not one single journalist will waste a single drop of ink on them.

loannetter:

I think about the holiday season coming up and how we watch it spiral in this negative spiral...

What I think about this:

All that fear pushed upon the people is coming out to fuel this to become worse also. All the fear mongering over terrorism, peak oil, take you pick of a hundred disaster themes people have been sold...

That perhaps fear itself is the profit our society reaps in equities when fear is use as the primary tool of social control?

Fear is a negative emotion, a false projection only powered by each person to be true at the cost of their own life/energy. And I can't help think at the terrible cost to individual lives.

This market won't stop coming down until the elite few buy back in at bargain rates at the cost of those souls others tossed away in their own fear. That is just wrong and goes against social equity 100%

Just talking out loud as I watch and work at some paper work...:) The sun is shining and helping people one person at a time to make life better. Strangely this is something you can never truly mass market as a cure to this problem either. Since it has to come from within and not from the outside to matter.

A friend of mine just said this to me:

I'm an optimist by nature and refuse to participate in a recession.

Sums it up.

buying into this market is of fear, or living to your life and building it up to be what you know it can be.

a personal choice for us all.

Gad: "I sold some puts a month ago that are now in the money and, I imagine, will be assigned tomorrow. Is there anything I need to do, or will the stock be automatically sold to me at the strike price?"

At Interactive Brokers, the puts will simply be exchanged for the stock automatically.

Unlike SIO2 I don't recommend buying them unecessarily. OpEx day is always volatile and you can screw yourself over trying to outguess where the market makers will push the stock tomorrow (I'm assuming you don't have a crystal ball here, which unfortunately a lot of the short term traders here believe they do; if that's your case then feel free to trade the options). Not only will you pay commissions but more importantly depending on the volume on the options you may be paying a large spread.

I would act on what I know and stop trying to guess what I don't know. To me that means holding till OpEx. Presumably you were happy with the price you have been assigned as that was the point, so why try to fool around with squeezing a few cents more on a price you agreed on at the time?

Bank stock colaapse is because of TARP
we would be better of without TARP

Navid: "otherwise you are operating on fear."

You nailed it.

Can any bear in the room who is not solely operating on fear raise his hands please? Can any bear do a forensic analysis of a specific company and show some kind of deductive logic that shows that the intrinsic value of said company is higher than the current stock price? There has to be some. I'm just not seeing a lot of really informed bears here.

100% of the bears I know use either:
- Technical analysis, either short term or extremely long-term (thus all the calls for S&P 400)
- A very simplistic form of macro economics analysis (aka "America is in debt and thus we are doomed!")

I would truly welcome some real form of analysis with cold, hard numbers. We could argue about TA targets all day. Saying "earnings should be at 60$" or whatever seems rather weak when you're trying to lump 500 companies under one earnings number in one fell swoop with no data to back it up.

"Company selling below cash" doesn't mean the stock will go up, but at least I can see a certain logic there that, frankly, is hard to ignore completely, wouldn't you think, and it's more solid than "the trendline I see goes lower".

I just called an SWC representative and found out why their stock is down so much in the recent days. At the current price for palladium and platinum, they are just breaking even. However, there is also a big caveat. They have a contract with Ford and GM to sell 100% of their palladium to them at the floor price of $368/oz. The current price of palladium is $180/oz. If Ford or GM or both go down, SWC will have to start selling their palladium at the market price. If that happens, then the combined sales price of platinum and palladium that they mine will be 30% below their current production cost, resulting in the cashflow of -$75 million/year at the current prices. They have about $190 million on hand now and their recycling business is bringing them about $20 million per year at the current prices. So if Ford and GM will go down now, nothing horrible will immediately happen to SWC, but it will put them into a negative cashflow situation. THAT'S why the SWC stock price is so correlated recently with the news about Ford and GM.

[Bill Cara note:

Great stuff!]

"Don't buy this madness.

It goes lower in week/months ahead.

Clear enough ?
"

Toddin: Personally I don't think comments like these add any value to the discourse. Please state arguments and reasons rather than restating your position every single day.

I don't think anybody needs any go ahead from you to confirm that the market headed lower today, and comments like these are what I would expect to see on a Yahoo Finance board, not here.

That's a good point on Gad's question Muzie. The thing is we don't know what Gad's intentions's were. My assumption is that the trade had gone bad, as the markets have dropped so much, so he was looking for away out (my assumption may be completely wrong). So my suggestion was for the safest way out, and lowest cost at the time. In fact right now, just a few hours later, he would likely be down even more. My experience with the broker assigning shares to me, once when I had some calls in the money and did not realize it, was not a good one. Ended up losing money due to the very high assignment commissions. They bought the shares for me then sold them right away. Double hit. Live and learn.

SiO2: I was assuming he was using Bill's recommended strategy, which is to buy quality stocks at "low-ball" prices by selling deep out-the-money puts. So I'm assuming he's supposed to be happy about his purchase lol :-).

You're right though, it depends on each broker, and on Gad's strategy. I'm not aware of such high commissions when I was assigned.

Is this right? SLW down to 2.20 afterhours?
http://tinyurl.com/5oh2l6

I don't think it's catching falling knives anymore...you're trying to catch light sabres

Disregard my post. wrong ticker

Thing I hate about this market and that I try to learn from everything the market teaches me but I have the feeling but there's just nothing to learn here at this point. What's the lesson here at this point "markets can go down in a straight uninterrupted line after all" and "oversold can become more oversold, so by all means go ahead and short stocks of high quality companies that are already down 50% to make big bucks"?

The environment is so unique that I have high doubts any strategies that work wonderfully now will ever work again in the future. I could be wrong. But obviously the market can't go lower than zero, and we're going there so fast that pretty soon a rally will become a question of numerical necessity rather than sentiment :-P.

"I don't think it's catching falling knives anymore...you're trying to catch light sabres"

At the speed things are going catching bullets is properly a more proper analogy.

I cut and paste from here and send it to my Congressman B.D. Barney Frank-if anybody doesn't want me to do so, let me know.

NYU:

I have a buy on SLW at 5:47 for 2.68

How low can oil go? It looks like my Nov XLE 42 puts will be assigned to me....fortunately the Dec 42 calls I will write are ridiculously high (as of now), which will lower my basis even more...I'm not panicking which I'm proud of but I wonder if I'm just a moron...I planned for $50 oil but not a continuous free fall

bb, I heard someone on BNN talking about $30 oil. I doubt it, but nothing would be a surprise in this market.

best of luck tomorrow to all. i will be in client meetings all day in boston. driving up tonight. hopefully i dont wreck refreshing my blackberry browser for stock quotes on my way back.

I'm hearing talk about 35$/barrel.

If/when we reach it I'm certain I'll hear talk of 20$/barrel.

Then 10$ or 5$.

This is ridiculous. Nobody has any clue and just projects every trend indefinitely in the future.

Right now, I don't believe markets have the ability to assess any prices whatsoever, if they ever did. I guess I've awakened now.

Si02 - at this rate why not $10 oil.....not to mention GE as a penny stock and actually getting paid for acquiring and storing those leperous Citigroup stock certificates....the Dylan CD "World Gone Mad" comes to mind

"I don't think it's catching falling knives anymore...you're trying to catch light sabres"

Falling grand piano?

I'm quoting Cramer here, and this makes sense. Maybe Blackrock is a good idea:

The collapse of all assets, except U.S. Treasuries, which soared today, is in itself a terrible sign. And the decline is happening with a speed that takes your breath away.

How can it go on endlessly? Because of the nature of the asset class. This is the only asset class where you can actually raise money.

The market might be seem way down to you, but if you are running a giant portfolio of assets -- commodities, real estate, commercial real estate, residential and commercial real estate bonds, locked-up hedge funds and equities -- the only one with a real bid, the only one that can be sold and instantly raise money, is stocks. Equities. They are being sold because they can be sold. They are being sold because they have to be sold. They are not being sold because they represent no value. They are being sold because they can give you money to meet obligations, and as long as they can be sold, as long as there is a bid, at SPX 773 or SPX 673, they will be sold.

That's the way it is.

Now, what happens ultimately? OK, here goes. Companies that used to be $2 billion to $3 billion will be reduced to companies that are $200 million to $300 million. I kid you not. At those prices the companies will at last be able to find financing, because the financing will not even need leverage; it will be done at twice EBITDA or less.

Let's go over that again. Companies that used to be midsized will become small-cap and trade through cash, and the companies will then, at last, attract some of the $350 billion in private equity.

Large-cap companies? If they have decent dividends, they get put away by institutions.

But, and this is a big but, many of these companies have corporate debt that is so much cheaper than equities that it makes no sense to buy the equity, including the financials, although those have all become totally toxic. Why buy JPMorgan Chase (JPM - commentary - Cramer's Take) common when its long-term notes yield 11%?

what are all those 401k stock holders going to do come Friday morning after looking at what happened today?

one good setup to exit if you are long intraday....

3 point touch of trendline and failure..breadth greater declining issues than advancing issues...

ride the 2x inverse ETFs...

make money no matter what the market does...

http://screencast.com/t/r9N6vbgC

Nemo:

That's interesting. However, it seems to suggest that supply will remain high & constant while buying will remain close to zero. It also implies that there's a lot of companies out there whose business model consists of selling parts of themselves to meet their obligations - is that such a major part of the economy?

Another issue I have with this is, if everything gets on that bandwagon, then it'll be the smart thing to do for these companies to hedge so they're not forced to wait for the low SPX 500 to get the best price, aka short the stock. Even though stocks are the only liquid assets (supposedly), nobody has an interest in selling them down the drain, and if I hold an asset I know is depreciating, I would hedge. Of course, I guess maybe only good 'ole Cramer has figured this, and nobody's going to hedge all to the bottom thinking this is the bottom.

It's an interesting theory, but like most of Cramer's stuff, it seems awfully simplistic.

"what are all those 401k stock holders going to do come Friday morning after looking at what happened today? "

The same thing they do everyday...

Maybe if we push this down fast enough we can actually get this whole darn bear market done by the end of the year, you know, with a good 70%-80% down YTD. Painful but quick.

we have already dropped close to 50% (from peak) in less than an year. Are we going back to some kind of a barter system & getting rid of currencies, financial markets etc or what?

Shiva at November 20, 2008 6:42

Yamana dropped I think 78% from high to low? reported a 401% increase in profit the last quarter recently and promptly dropped 26+% again,gold up 60$ off the previous low and it still has such a hard time putting 2 days of gains in in a row? I just dont get it. All of the gold stocks are having the same sort of problem it seems. Temex announced great drills the other day and dropped 17%. No idea here.

Muzie,

The argument about bears not being informed is well, misinformed. After about 5 years of studying markets - I think I have a pretty good handle. Doesn't mean I or any other bear can accurately predict exactly where the market will go, but I can tell you that earnings expectations are too high for 2009. If 85 is too high, what is reasonable? I have downloaded S&P's tables, I have researched p/e multiples in periods post 1950, and yes, sitting at today's 19.19 trailing twelve month is too high @ 800.

So - yeah - guessing that earnings come in around 60 and a "cheap" valuation of 10 would infer 600. Might go to 55 and 9, could be 65 and 11 - whatever. But 85 and 19 is overpriced.

It is what I do with the information that is important. I am the manager for a group of us in an LLC. I sell credit spreads, which means I don't really care about where the market goes, just as long as it doesn't go through my strikes. Personally, I won't invest any 401K money back into equities via S&P 500 until the 50 day moves above the 200 day. I will stick with bonds.

This has occurred around 30 times since 1950 and would equate to a CAGR of 8.74% vs the S&P on a buy and hold strategy of 6.4 (@ 750). Doesn't sound like much, but over 59 years, a $1,000 investment would be $45,000 vs $148,000.

Also - even though I am "bearish" today, I will be bullish when the 50 day cross occurs - on a personal basis.

Hope this helps to alleviate the thought that bears do not have research or numbers to back up their beliefs.

Cheers

[Bill Cara note:

Good stuff. Thank you again.]

kc135guy,
Logical, tempered, well written and believable. Will print this one off as a reminder. I use a guy in Sydney who does the same sort of thing as you. He's the only advisor/broker I'm happy to talk to these days, he's the hedge to my intermediate now turned long term trades! I'm sure the board would welcome some more detail on your method and what to look for in a professional advisor who would follow such a method. Thanks.

Was it Keynes who said the market can remain irrational far longer than you can remain solvent? We are certainly learning that lesson now.....

kc, that looks like a reasonable approach. Also re. the strangles. Today I bought IWM 41-41 (for tomorrow), they were profitable after 3 hours or so. Ideally we keep going down in the AM, then I'll liquidate the puts.

I have a question for you: where do you get the S&P500 earnings? Mauldin stated that the "E" was 50 a couple of months ago when SPX was 1200 (September!), so the PE was 22 at the time, so it was clear this thing was coming way down. I could never figure out where to get the current "E".

If the E were still 50 today (which it cannot be), the PE would be 15, so you are absolutely right. Also, another point he made was that we have been operating at very high PEs for quite some time, so in order to revert to the mean, we need to drop the ratio for a period of time too. If this were to happen, we'd be looking at a long period of lows PEs, which suggests very bad things to happen. However, Bill has stated (or my understanding of it) that with all the cash infusions and all the cash sitting on sidelines lately that fundamentals are not that important. Bottom line is that straddles and strangles are a pretty good approach.

Casey: Fear and joy...positive thought and negative thought, it's all the same in that it is all illusion, with illusion being defined as 'that which is not real' and real being defined as 'that which is constant'.

The place between positive and negative is where we find truth and it is only in this silence that we can find real peace...which, by the way, is our place of optimum performance, in trading, investing, or any other area of life.

Chris

kc135guy

I concur with Muzie that I'd like to see more analysis - even back of the envelope analysis - here. I think we're going to learn best if we put our ideas specific ideas out there for scrutiny - which would for me translate into - a stock, a target, and a 2 line thesis...even that is enough to have a discussion.

Just want a bit more than the usual warnings like "oh baby watch out it's gonna fall..head for the hills quick!" :)

If Bill had said, back in early October when Cara Traders became official, "I think this thing is going down from here, even below the 10,000 I earlier forecast, and here's my list of plays (srs, skf, sds, swm, etc) ...answer honestly, how many of you would have gone along with those recommendations?

Muzie:

"It also implies that there's a lot of companies out there whose business model consists of selling parts of themselves to meet their obligations - is that such a major part of the economy?"

I thought it said that people who own portfolios and must raise cash are using the most liquid assets. Might they be replacing them with options to buy back in the future...maybe. If you need cash, you sell what you can sell. Oh, and didn't Teck Cominco just announce they're selling assets to pay down debt. Simple as Occam's Razor.

tbar

I am willing to stay with Yamana. I bought the 2011 $2.5 calls, even though the stock is cheap to lower my upfront costs. In 2011, their cost per ounce will be lowest in the field $120/oz versus Goldcorp $175/oz. TD revised its forecasts and has it as an Action List Buy at $16.00 (down from $20). They have no debt, and will generate $1B in cash flow in next 3 years.
Their Net Asset Value is $8.15. Gold may come down, however, this stock in 1-2 year time frame has little downside and a minimum 25-200% upside.

ROB RINGER LAKES...

that double top on $SPX (has to break to become one or we could bounce...) that I was mentioning yesterday....from Louise Yamada...

http://www.cnbc.com/id/15840232?video=935035648&play=1

so IF we penetrate the neckline..and IF it doesnt....portfolio adjustment...target if we penetrate ...400-600

kc135guy:

Yes, I admit I was been too wide with my statement. Roubini certainly wasn't dumb and he has established a strong case throughout the year.

"but I can tell you that earnings expectations are too high for 2009. If 85 is too high, what is reasonable? I have downloaded S&P's tables, I have researched p/e multiples in periods post 1950, and yes, sitting at today's 19.19 trailing twelve month is too high @ 800."

On P/E:
This here (http://www2.standardandpoors.com/spf/xls/index/iee500_gics.xls) indicates the P/E 16.37, not 19.19 as stated, so your estimate is 15% (well the market moves 5% everyday, so that's understandable).

This here (http://www.comstockfunds.com/files/NLPP00000%5C026.pdf) indicates an average P/E for the last 50 years of 17.71.

If the requirement is that the P/Es need to undershoot by some margin, then fine, though on a P/E basis I don't think we can affirm that the P/Es are "too high".

Yes on a forward earning basis they could be too high - but as I explained trying to guess 500 forward estimates in one sweeping guess is not what I call investment analysis that is readily provable. It's your gut check, and you have a right to it, it just wouldn't stand up to any kind of scientific method in my book. Besides, who says we all need to buy the index? Nobody is forcing anyone to buy into the weaker companies.

I have studied the markets for five years. My lesson has been one of humility, and that "margins of safety" are often illusory. I don't see anything magical about the SMA50 crossing the SMA200, and as I said mentioned, like most bears, I see you invoking a TA thesis to invoke a margin of safety. It could cross at S&P 1,000 or at S&P 400, two completely different valuations.

The crossover has worked before. My thoughts were buying a market that is 50% down has worked everytime (at least in the intermediate term) as well, though it remains to be seen if I was right.

In any case, your case is better explained than many bear arguments I see here, and I appreciate that.

The 1 day ^SPX chart on eTrade shows a huge volume spike (up volume=green bar) at EOD when the index recovered about 5 points just before the close. Smart money buying?

Nasty day today, however, today's decline means we are only down about 52% from the Oct 07 highs. It is a rapid and steep decline, however, we have seen other +/- 50% declines throughout history.

Yes, we broke through 2002 support levels today, however, major tops and bottoms are often put in by breaking slightly above or below significant support or resistance levels.

I bought some and sold some puts at the close today and hope to do some more shopping tomorrow, keeping enough cash to buy more if/when we go down 60% from the Oct 07 highs. That would be another 8% down from the top but 16% down from here. If we go down more than that, I will borrow on margin to invest.

buying straddles & strangles - are you guys expecting that ^VIX will stay at this high level for months to come, if not, are you not overlooking a 50% loss on both sides just with reduced volatility.

Going through my evening ritual of researches at various sources on the web, now. One thing that jumped out at me was the quality of the parade of talking heads today at BNN. Not the usual analyst-types (which are of a generally high quality, anyway), today we're hearing from the big-dogs and big swinging-d's: VPs and CEOs almost exclusively. It's crunch-time, methinks.

Something was said here a few weeks ago about selling everything if C, BAC, and JPM dropped in earnest. It seems like we are there?

"That perhaps fear itself is the profit our society reaps in equities when fear is use as the primary tool of social control?" Casey

If we consider that our stock in trade in any given market must be appraised before it can be priced, then we must first value the exchange.

I value this exchange. Not as a trader, but an observer of the human psyche and trader's skill while girding my loins to join the fray one day.

If fear has a value --it is the power to disempower.

"We have nothing to fear but fear itself" Churchill

Posted by: navid at November 20, 2008 7:31

Agree,it's just frustrating watching such a great deal get offered after having not sold such a great gain long ago. Bitter I suppose.lesson 47 3rd take......

Seadog,

Thanks - concerning professional advisors, gave up on them (with the exception of Bill Cara). Seems when I posed the question to several about where earnings would come from post securitization and credit (debt) frenzy - most looked with blank stares.

Regarding strategy - not sure if you mean the credit spreads or personal account.

SIO2,
Get earnings straight from S&P website. June 30th trailing 12 months was 24.92 p/e, with the 30th closing at 1280 that equates to $53.00. I read Mauldin and emailed back and forth concerning the same issue.

Yes, reversion to the mean would imply moving below historical norm of 15 trailing multiple to (insert here best guess). I guessed 10 - but if we went to 7 (happened several times before), then if earnings stayed at 50 - we hit 350. Since I do not have the time to actually research 500 companies, I am comfortable in estimates.

The beauty of Bill's site here is that it gives us the freedom to challenge the thoughts expressed on financial TV. I can't count the number of times I have heard "buy because the market is cheap." Thank goodness I did not listen because I have found what they meant to say was "buy because I need someone to sell to."

I can honestly say - I have gleaned more knowledge from this site (lurking and rarely posting) than I could ever contribute.

jragusa - i'm moving towards the long side for a quick bounce too, what stocks will you look at if we go another 16%+ down from here

denny - Cramer said if no auto bailout, sell everything till ~6000 (perhaps that is unrelated)

muzie - any key stocks on your radar day-to-day? if you're like me you're willing to trade on sure-fire long term bets (not the opaque banks)

"Was it Keynes who said the market can remain irrational far longer than you can remain solvent? We are certainly learning that lesson now....."

Another point of note is that Keynes managed an annual 15% yearly return throughout the Great Depression after being nearly wiped out in the initial crash.

And he wasn't short.

What happens to Canadian energy trusts if the price of oil goes so low that it isn't economical to dig out the oil sands?

Muzie:

Averages for P/E's really don't count in this situation, imo. Averages compare apples, pinapples and oranges. Look at similar situations. At best 1974 or so, at worst: 1932 or so. That's likely where the market is headed

Hey KC135:

Value? We could cut you up and sell you for scrap...less now than a few months ago, granted. :)

I am new to the site, but do try to read when able. I enjoy learning from you guys.

re: kc135guy-I like your reasoning...keeping it simple...I think Cara advocates this. I also like your providing more than just "it is going down! I would like to see some reasoning on things like RSI and others...a great tradition to start.

I was listening to Cramer this evening and agree that Cox, not Coxe has single handedly dismantled our markets. /

Nemo:

I would take an average over 50 or 100 samples over a gleaning over 2 samples any day of the week, frankly. I can accept that going lower is certainly a possibility (who am I kidding, it's happening everyday).

But with 2 samples you lose any kind of statistical evidence. The world was completely different in each of these two times.

In 1974 inflation was a huge problem. Few would argue that with gas now at ten-year lows, this is no longer the case. By that reckoning, I've seen arguments that higher P/Es are justified because there are no high returns from other asset classes.

And 1932... well, 1932 is such a different beast I still don't get how people can make an argument that things would be the same. That was eighty years ago - no electronic tickers, no federal reserve, tax increases, mutual and hedge fund involvement not the same, bucket shops, no SEC, 25% unemployment, no global economy. I mean, so many variables are different I can't see why people could make a correlation.

It seems some bears have this notion that P/Es will just go perfectly to the lows of the entire history, at which point they can buy and P/Es will go down just a point or two before rocketing back up.

I will eat my shorts if it's that easy.

Thanks Muzie,

From S&P website under earnings - average since 1936 (not 1950) is 15.79. Use whatever you desire. Concerning forward earnings - yeah, that is a joke and I don't use.

For weekly P/E, I use WSJ site, it states 19.19. But use math backwards - with S&P at 900, that means earnings are .... 47. To get to your 17, that is a 10% decline. To get to my 15 that is a 21% decline. Again, reversion to the mean and you can see how if earnings are at 47 and multiple becomes 10 - voila...

Your comments "I don't see anything magical about the SMA50 crossing the SMA200, and as I said mentioned, like most bears, I see you invoking a TA thesis to invoke a margin of safety. It could cross at S&P 1,000 or at S&P 400, two completely different valuations." I just simply did the research and proved it. I was just looking for a strategy to get long the market via what I can in my 401K. Now I have it.

Thanks for giving some of us (current) bears the benefit of doubt. Good discourse.

Shiva,
With VIX this high, it only makes sense to sell options. I only bought because it was a very cheap play today.

loannetter: nice!

right on the mark

If fear has a value --it is the power to disempower.

It's not the time of investment,it's how we perform the action and follow through that measures the results.

power means to define oneself to one's own terms. To be a successful trader is to define the trade in your own terms so it is acceptable.

The whole point here and for everyone here to empower themselves and keep their personal definition and trades and not give in to that fear.

Thanks Great response

Chris: likewise thanks

Don't define by the terms fear.. joy...market forces or any definition for that matter. Instead let it come out of what is centered upon just being ourselves.

At least here we can help each other navigate the spread, but I still sadly think about the average person who re-acts to the fear and have that project out in their investment and conversely their life in return. I think much in this market plays out to that situation now especially as retirement funds get decimated. I know too many already being hit by this truth.

the long term effect on this market on the retirement population is going to have massive ripple effects.

"muzie - any key stocks on your radar day-to-day? if you're like me you're willing to trade on sure-fire long term bets (not the opaque banks)"

If you're going long-term, I think it's more important to pick a stock you know you can hold whatever happens than a "sure-fire" stock. By that I mean it should be sure-fire in your mind first and foremost, and it's unlikely I could imprint on you the kind of conviction that I have (and is required) for the stocks I hold.

I do like ATVI. It's a videogame producer and was part of the "survivor's" list that Cara sent out sometime ago.

Market cap is 10B$, about 3B$ in cash, no debt. A 1B$ stock buyback was announced on the last earnings call. The company beat earnings on the last quarter. Now down about 40%+ from its peak (I bought lower). Major products came out in the last few weeks and will come in for earnings in Q4. Other major products are in the pipeline throughout 2009 and 2010. Company recently merged a year ago with another (Blizzard) at a merger price of 13.50, which gives some semblance of what the corporation was giving fair value at back then. A tender offer was made at that price six months ago and nobody took out (stock was much higher).

The videogame group was reported in late October to be 15% up in sales year-to-year despite all the recession talk.

Yesterday the company announced it broke the all-time record for sales in a single day in its industry on its latest product which just came out (World of Warcraft expansion), cashing out almost 120M$ on that one day. I don't follow the stock price everyday, but I have no illusions that the market paid no attention and the stock must have crashed anyway due to the market jitters.

On the bad side, the P/E for it is high (17-19). But perhaps you can obtain it at a better price.

Again, that's a stock for me so doesn't mean it's for you :-). I needed a stock that I knew I was, in my view, taking little company risk and was shouldering the market risk only. So far I'm down quite a lot... but that changes every week. One day I'm breakeven, another I'm down 10%. I'll need some kind of sustainable rally or stabilization in the market before the stock (or any stock) can stand on its own.

Very interesting:
A Photo Album of Bear Markets
http://www.dshort.com/

Hey Nemo,

Funny. How about wait a couple years when steel is a little more... then cut up and sell...

re: TOG

It seems that the bond market is as wild a place as the stock market today. I don't claim to understand the bond market, but I found that the following link sheds some light on what is happening.
http://tiny.cc/xRbo4

Yesterday Jesse had a plot that showed how extreme the situation is:
http://tiny.cc/1rcIB

It is like watching the water recede before a tsunami hits.

Shiva, re. straddles and strangles and VIX, I did study that.

http://shockedinvestor.blogspot.com/2008/11/effects-of-volatility-on-performance-of.html

Profits are higher in declining markets, for sure, but you still get them when market goes up in the current environment, at least as long as VIX remains elevated, and by elevated I mean probably over 20!

When the VIX, which is not volatility, but a measure of how much markets go down in practice, when it's low, say around 10, then you can buy long term straddles (6 months out), as stated here by optionoracle.

Nothing is guaranteed.

Casey: I guess the approach I try to follow is to detach from fear and courage or any other consequence of 'thought' and rather seek my peace in 'silence'. From this spot you can still be 'in the world' but not 'of the world'. Peace man, it's the only way to go.

Let's face it, this market is a mess. It's not even a market any more. It's a slaughterhouse of broken dreams. It's slicing through support zones, and trendlines. It pays no respect to RSI, historical averages, P/E multiples, Oracles of Omaha, Max Pain, TICK, VIX, or any other metric devised from historical normal market behaviors because there is nothing normal about this market, this time. And it's not done yet.

It appears to me we are witnessing a global implosion brought on by years of unregulated exponential debt accumulation and in my opinion, the best thing to do is exit the slaughter house, go out to the parking lot and spark up a cigarette, or crack a beer, breathe in some fresh air and enjoy the sunset, until the screaming stops and the clatter subsides.

Then tentatively tip toe back in and begin the long process of rebirth. JMHO.

Chris

ATVI
Thanks for the tip, I looked into it. I like what they make and see it is as a solid market go forward. The PE on my screen is 25.5x here, maybe you mean FPE 17-19. Their new product world of warcraft is a cash cow. Definitely a stock I'm adding and will buy on dips.

Chris: Very eloquent, I like it.

I guess the only difference is I actually threw all my cash in this slaughterhouse, walked away, watching the sunset, and I'll start taking prices as anything remotely meaningful once I hear the screaming stop.

I've found separating your own sense of self-worth from your money you've placed in this market is the only way to survive this market (for those that are not on the sidelines).

Navid: Yes, I've found the sources can be bad at showing wildly different P/Es for this stock. One even had a P/E of 80 for some reason. I was using P/E as reported by Yahoo.

Most of the stock's earnings will be concentrated in the 4th quarter so perhaps the yearly earnings will has greatly readjusted at that point.

Another point I forgot to mention is earnings from recurring online subscriptions to World of Warcraft have no been included in any earnings release yet. That's for next quarter. There may be mispricing if investors are underestimating the income from the 11 million subscribers.

Of course, "mispricing" doesn't mean much in this market. Market has to pay attention to these types of things for the stock to go anywhere :-P.

Although I would be timid to say we're going to get any kind of bull market anytime soon, I'm still of the opinion we're sitting on a keg of gunpowder to the upside for the market in the intermediate term.

I mean, we've already had 1000 up days two or three times already. And there wasn't even any good news - and ultimately that's probably why these rallies went nowhere. Technicals produce oscillations, not genuine trend changes imho.

But if we can get some actual piece of genuine "hey this is better than expected" news, that could be enough. I know, I wouldn't trade based on that hope. Just a thought.

Personally, I would have thought the fact that the financial system is no longer as close to the verge of total collapse (as it was when LEH went bankrupt) is good news plenty - but the market wants more.

http://seekingalpha.com/article/107182-consumer-shopping-backlash-could-reverse-8216-misery-effect-8217

"Shoppers are tired of bad news and will open their wallets this holiday season: Consumers say holiday rituals are more important this year as they take comfort with friends and family, according to research by IRI, reports Retailer Daily.

Moreover, consumers say they plan to make better use of merchandising and promotions to maintain appearances.

Among the main findings of IRI’s survey, “Rethinking Retail: Holiday Shopper Insights and Recommendations”:

94% state spending time with family is more important this year than last.
80% plan a greater emphasis on holiday meals and entertaining than last year.
74% state they plan to give the same number or more gifts.
65% will focus more on religious celebrations.
63% plan to buy as many or more expensive gifts.
“We expect a consumer backlash this holiday season and a reverse of the misery effect consumers have felt this year,” said IRI Consulting and Innovation President Thom Blischok. “Shoppers have affirmed…they will continue their holiday rituals, but will temper their spending through increased use of merchandising and promotions.”

"

An interesting take.

Nice call this AM shark!

You wrote: "As for demand at in n out burger, perhaps a few of your neighbors were struck by a sudden and abiding attack of the munchies:)"

No no munchies here. I'm in So. Cal. still (until Saturday), I don't get In N' Out Burger in my neighborhood so when I visit I take the opportunity to get fat.
This In N'Out is on the edge of the barrio, so I have my choice of hunderds of good mexican restaurants, but it becomes such a staple here that a good burger is a needed break. I don't know if you are familiar with In N' Out, but all of the drive throughs are lined up onto the local blvds. They are very popular...but
privately owned. Bummer.

They are also having gas wars here. Some gas stations selling gas for $1.85. If this continues the people they interviewed on TV will be happy consumers soon.

Flights are cheaper too. Some west coast destinations are under $200 RT.

Got a laugh out of the editing posts post, ie: spelling and grammar. I goof up once in a while and it makes me a bit nutty. I'm not alone. The biggest problems seem to be: to, too, there, their, they're, and maybe. Maybe isn't hard, it's two words put together. If you get 'may' right the rest is easy.
My 10th grade english teacher would be after all of us. She was very disappointed she didn't have any Shakespeare fans in her class. :>)

Down 2100 from November 5
I do not think economy went that bad in just two week
Lots of people have been taken out under margin call and people have shorted financial a lot lately.
When squeeze is on and market moves it is going to move a lot and fast

kc

can you give an 'example' of a credit spread sell?

I am curious of the range, the idea that seems interesting.

RE: The rule (or whatever) that states that mutual funds need to sell stocks if they fall under $5: Seems to me to be a good time to lift that. We must have more "name" stocks trading under $5 than ever before. Being forced to sell based on a rule ostensibly designed to protect long-term holders seems, in this environment, to be too blunt a risk avoidance tool. And of course, it'll only further the plunder.

vinod- who's selling?

i deliberately stayed away from media 'explanations' tonight in an attempt to understand the sellers' point of view-

from discussions with colleagues, i know that none of them have sold anything in the past three months, which leads me to doubt the recent stories about mass redemptions...

more likely is an absence of buyers...one scenario that comes to mind is the same mental picture i had last fall-> how many blackjack dealers do you see working up a sweat? none...they're just dealing. how many brokers are working up a sweat? none...they're just dealing. the same dealers who calmly sold into last fall's run-up are now calmly standing aside to allow the market to drop...when they're ready, they'll start buying...maybe it's off-the-wall, but for now this 'explanation' works for me as well as any other, and i have no problem 'understanding' the motives behind it...

"This In N'Out is on the edge of the barrio, so I have my choice of hundreds of good mexican restaurants, but it becomes such a staple here that a good burger is a needed break."

craig- i envy your access to Mexican cuisine right now...one of my favorites, and i know the difference a 400-mile drive south can make if you're after 'the real thing.' IMO, restaurants require a 'critical mass' of customers who want the real thing in order to offer it on the menu...i have to disagree with your opinion of the i/o burger-> the only burger that works for me is the one i make at home- medium rare, 1/2 to 3/4 pounds, and served within 30 seconds of leaving the grill...

I am quit disappointed I didn't get too reed much Shakespeare in school.

Actually, not really - I'm not that into olde englishe. I dropped an Advanced English class in high school on the first day. The teacher told us my favourite writer at the time would not be considered a true author and couldn't be written about in her class.

Stephen King has sold over 350 million books and I got a scholarship in general English. :)

I would recommend Bill Bryson's biography on Shakespeare which proves he is not just a funny travel writer. Oddly enough, I picked it up to learn more about tragedies and how they relate to the current stock market.

"The amount of Shakespearean ink, grossly measured, is almost ludicrous. In the British Library catalog, enter "Shakespeare" as author and you get 13,858 options (as opposed to 455 for "Marlowe," for instance), and as subject you get 16,092 more. The Library of Congress in Washington, D.C., contains about seven thousand works on Shakespeare - twenty years worth of reading if read at the rate of one a day - and, as this volume slimly attests, the number keeps growing. Shakespeare Quarterly, the most ehaustive of bibliographers, logs about four thousand serious new works - books, monographs, other studies - every year."

I would imagine Buffett would have similar publishing statistics in financial articles, though many less books are written about him.

"Berkshire Hathaway fell the most in at least 23 years yesterday, dropping for the eighth straight day since reporting a 77 percent decline in third-quarter profit. "

http://tinyurl.com/6agd5p

I don't think 20-25 year puts really mean anything to a 78-year old guy, and a doubling of CDS spreads causing a huge drop in Berkshire stock doesn't sound right to me. More likely is the fact that Berkshire is just a bank / mutual fund in disguise. As its holdings get devaluated, so does its "intrinsic value" as Warren would like to say.

I think it's way oversold, though I would probably take a 300,000% gain off the table if I had one.

http://tinyurl.com/658yad

I think his biggest mistake was being even remotely associated with the current market and some of the key players of the Fedge Fund.

For all we know he lost a game of bridge and is paying off a bet.

94,100 results for Buffett from Google News.
630,000 results for Shakespeare.

1,550,000 results for tragedy.
6,300,000 results for stock market
67,400 results for stock market tragedy, with only 4% falling between 2005 - 2008.

25,000 for stock market shakespeare, which is just wierd.

"Let's face it, this market is a mess. It's not even a market any more. It's a slaughterhouse of broken dreams. It's slicing through support zones, and trendlines. It pays no respect to RSI, historical averages, P/E multiples, Oracles of Omaha, Max Pain, TICK, VIX, or any other metric devised from historical normal market behaviors because there is nothing normal about this market, this time. And it's not done yet."

Chris, you should write horror screenplays for a living. That quote would make an awesome tagline for a horror movie.

Mexican Horror Movie Generator.

http://tinyurl.com/63uvzj

Ford was up 10% today (down 4% after hours). Did not buy it. I'm waiting for the ending. Precedent says they get a bail out. Anyone notice GMAC is going for bank holding company status?

"Lawmakers failed to reach agreement today on a proposal to provide $25 billion in emergency aid to the ailing auto industry, but they left open the possibility that they could come back after Thanksgiving and try again. "

http://tinyurl.com/57k9zg

Seems to coincide with the Canadian bailout notice.

"The Canadian government has pledged support for the auto sector, but has not detailed any specific action.

Canadian Industry Minister Tony Clement and Ontario's Economic Development Minister, Michael Bryant, said they spent time on Capitol Hill gathering information needed to propose help for the Canadian auto industry.

"The only option we've kicked off the table is a no strings attached bailout," Bryant told reporters.

"I don't think anything horrible is going to happen between now and Dec. 8 when Congress returns."

http://tinyurl.com/6drk9w

Guess he doesn't watch CNBC or checked on his portfolio lately...

[Bill Cara note:

The list of the top 25 winners on the NYSE today (see Wall St. Journal Market Data Center) was chock full of inverse 2x and 3x ETF's. Some of the gains over the past couple months have been extraordinary. I'm wondering how much of an impact the inverse ETF's are having on the market volatility.]

I have a friend who is a trader for a Canadian Bank. He tells me that he and his yahoo colleagues swing 100% in and out of HOU.to and HOD.to (and other Horizon Betapro products) in their personal accounts according to which way the wind is blowing on the floor.

Should read "25,000 for stock market shakespeare, which is just weird."

Handing back the scholership and looking for an editing system in typepad for less relience on Bill and more independance. :)

Foz

I believe its institutional investors and pension funds that cant hold stocks under $5, looks like citigroup may be the next one to unload, would this take another three months or just to the end of the quarter.

I just had a great epiphany that will help the markets. Instead of bringing back the uptick rule for short selling that we hear so much about how about eliminate selling altogether. Maybe in a market where selling is eliminated altogether a PE of 15 would be considered reasonable.

Norm,

No problem - all trades December expiration (25 days left) E Mini S&P as of close today.

Buy 1000 Call @ 2.25
Sell 960 Call @ 5.50
Index @ 754
Sell 500 Put @ 6.00
Buy 450 Put @ 3.30

That is a 460 point range (960 to 500). Call spread - you keep difference of sold and bought for 2.25; put spread - you keep difference of positions for 2.70 for a total of 5.95 (ES multiple is $50 - so that would equate to $300 for each call and put spread).

Market has to stay between 960 and 500 until expiration to collect all $$. That would be a 26% rise and 33% fall.

Just an example and I do not endorse this trade. If I made any trade, it would only be puts because the recent range is 748 to 1008. I never sell both sides until middle of recent range. I have lots of other "rules" before I trade, but that is the basic premise.

Hope this helps.

Ouch !

David - re SWC and sales to Ford

I second Bill's emotion: GREAT GET! I appreciate your posting the info about the connection between Ford's fate and SWC's.

Makes me think that with a bailout, SWC may zoom upwards! Thanx again.

Somehow I managed to get a Mexican Horror Movie Generator to relate to Shakespeare to relate to Wall Street.

"Meekmok.com went online in December 1991 with the goal of printing out every page on the World Wide Web (WWW). We started Meekmok.com because we believe that the WWW is a great repository of information, however it is by its very nature a volatile repository. Disk drives crash, web authors change their pages, and information is lost. Such loss is tragic, and we at Meekmok.com wanted to do something about it.

Armed with a trusty battery of four 24-pin dot matrix printers, we quickly achieved our goal of 100% coverage in under three weeks. Since then, however, our coverage has shrunk, not because our archives haven't grown in size, but because the web has grown so huge. And the recent fad in generating web pages dynamically has only made our task that much more difficult. But we are up to the challenge. We have grown from our initial 50 sq. ft. facility to seven 50,000 sq. ft. facilities. Our latest, in Vishakhpatnam, India, will open in March. When all facilities have once again reached 90% capacity, we will build an ninth."

http://tinyurl.com/68e465

Shakespeare in the Park calls ours a "Sisyphan task" and refers to our employees as "poor bastards", which we take as good-natured hyperbole. Although printing the Internet is a daunting - and even onerous - task, we take pride in our scrappy uphill struggle to preserve history one acid-free page at a time. Our employees around the world, far from being miserable unfortunates, know that they are part of a grand and vital undertaking. They are well compensated and fairly treated."

http://tinyurl.com/5ume5v

"Click here for WSJ article on Blogging
In the same spirit"

"Blog, Blague, Blog
Bloggers: May they live and be well, but not too close to me. by JOSEPH EPSTEIN
Saturday, December 4, 2004 12:01 A.M. EST

No big surprise, I suppose, in Merriam-Webster's recent announcement that "blog" was the word most looked up on its Internet sites during the past year. Bloggers were much in the news; in fact, they often turned the direction of the news, and made a fair amount of news on their own. Bloggers caught up with many campaign lies during the past presidential election; by catching him out in shoddy journalistic practice, they cost Dan Rather an honorable departure from a long career.

Bloggers have become something of an auxiliary media, often doing the grubby journalistic work of picking up the essential threads left hanging by the major, or mainstream, media.

At their best, they resemble that small stockholder who ruins what was supposed to be a smooth stockholders meeting by pointing out that the company's top executives seem to have been making ungodly profits by putting asbestos in the products of corporation's baby-food company in Latin America. Politicians, journalists, public figures generally, have been served proper notice: Beware--Little Blogger is watching you."

Sounds like a Mexican Horror Movie to Me.

Beware-- Little Blogger is watching you. :)

AbitibiBowater is down 97% this year. I wonder if they stopped printing out the internet?

http://tinyurl.com/5ao36r

David - Another note on Paladium

While SWC has touched its 2003 all-time low, PAL (North American Paladium) has far exceeded its all-time-low.

I imagine PAL (as well as the platinum price) will bounce back strongly with a (post-inauguration?) bailout~!

can someone please recommend a good book on PRACTICAL options trading strategies? Not the basics, but strategies one would use in real market. Something along the line of Bill's recent post on GG options analysis would be perfect. Thank you!

And thanks Bill for the feedback on my FSLR trade. I didn't expect that. I decided to cover tomorrow after some more analysis which points to more downside risk.

Muzzie:

Not my point. Averages include many data points true, but, and of course, this comment is subject to the criticism whenever you say "this time is unlike any other;" however, it is not shaping up to be your garden variety recession. Statistics also have outliers-which this may well be. The market isn't valueing anything right now:

"In 1974 inflation was a huge problem. Few would argue that with gas now at ten-year lows, this is no longer the case. By that reckoning, I've seen arguments that higher P/Es are justified because there are no high returns from other asset classes."

Occam's Razor: why isn't the market valueing at higher P/Es then? Inflation was a problem in 74 and was here until a few months ago. Now that we're in arguably a deflationary/contractionary environment what effect should that have on P/Es? Deflate them maybe?

Actually, if we are currently in a deflationary environment, isn't the $ you hold in your hand worth more? Why lose it at the Nasdaq casino?

"And 1932... well, 1932 is such a different beast I still don't get how people can make an argument that things would be the same. That was eighty years ago - no electronic tickers, no federal reserve, tax increases, mutual and hedge fund involvement not the same, bucket shops, no SEC, 25% unemployment, no global economy. I mean, so many variables are different I can't see why people could make a correlation."

Well, with credit frozen, how much of a global economy do you have? Businesses can't get letters of credit. Volvo cancelled the majority of their truck orders last month.

No Federal Reserve in 1932? Huh?

Hedge funds-seems I remember commentary from Mr. Kennedy about having to regulate "dark pools" of capital-those were your hedge funds. One could argue the SEC hasn't done a bang up job-Bill might like to chime in on that one.

Unemployment isn't their yet, but statistics are misleading. Two part-time jobs held by one person still count as two jobs. Nevermind how the government calculates statistics differently over time. So, whereas unemployment may be X officially, it may actually be Y under a previous standard.

There is one thing you can be sure of in this world. History will repeat itself. Now, I'm not saying we'll have a depression, but the similarity of this situation is closer to one of those periods than the garden variety recession. To then use those garden variety data points is to act erroneously. Just because variables are different doesn't mean they won't add up to the same thing. Different variables just give you the opportunity to go fubar in a different way.

"It seems some bears have this notion that P/Es will just go perfectly to the lows of the entire history, at which point they can buy and P/Es will go down just a point or two before rocketing back up.

I will eat my shorts if it's that easy"

Nope. Never implied that. It could be better, it could be worse. It does seem, as Bill has said, and a couple of bloggers have confirmed, there's a bunch of money on the sidelines waiting to go to work. The question is when, and what else happens before then?

Frankly, I made my point to an "investment advisory" service that handles a relative's money 3000 points ago. Their newsletter cited the "average" P/E and it was a good time to buy or stay invested. I made the same argument. Where has it ended up? 3000 points lower.

I think most would agree

rally tomorrow...IMO

VIX - closed at 80.86 - highest close since end Sept!

Only 6 days EVER (in October 1987) have seen higher VIX closes than today!

oops...bad editing strike "I think most would agree" also, had a homonymistic spelling error.

US indices closed near their lows. Asian indices now down 1 to 4%. I won't bet on a rally tomorrow.

My small position in TBT ( 2x short TLT) is dismal. May buy more though. Cant see treasuries holding at such low rates for long. Can you?

Jock- fair enough...i think it does...;)

repost from yesterday:

SIGM: Cash - $7.00/share; price - $7.29
IMMR: Cash - $4.10/share; price - $3.16
YHOO: Cash - $4.50/share; price - $8.95
MSFT: Cash - $2.79/share; price - $17.53
DELL: Cash - $4.50/share; price - $9.81
AAPL: Cash - $28.0/share; price - $80.49
GOOG: Cash - $49.3/share; price - $259.56
CSCO: Cash - $3.95/share; price - $14.47
JNPR: Cash - $4.00/share; price - $13.84
HPQ: Cash - $8.25/share; price - $31.83
CRNT: Cash - $2.65/share; price - $4.79

keep in mind that this is net any LT debt these companies have. most of them have no LT debt. can you believe that you can buy SIGM for $0.29/share net of cash? they are projecting $42M in sales next quarter. the last time they did $42M in sales in a quarter was the qtr ending 8/4/07. Net income in that quarter was 0.32/share. So even if you extrapolate that out you get $1.28/share in earnings for a year. Add that to the cash and you get $8.28/share or roughly 15% ABOVE its current market price. I'm going to take a shot and buy some of this tomorrow.

INTEL - today's closing price hasn't been seen since October, 1996 !!!

I'm calling a steep decline on the open, with a sharp rally upward so the week doesn't look as bad.

If they haven't run out of lipstick to put on the pig.

"There was no playbook for responding to a once or twice in a hundred year event," Paulson argued, saying he needed to shift strategy to respond to worsening financial and economic conditions.

http://tinyurl.com/5g4xwz

Hopefully that hundred year event peaked today.

I thought Value at Risk was supposed to avoid these situations...

At the "Online Ethics Center"

"These problems were originally developed as part of an NSF-funded project to create numerical problems that raise ethical issues for use in engineering and other course assignments. The problems presented here have been edited slightly for clarity."

http://tinyurl.com/57zlxo

"Assuming that the floods may be modeled as a Poisson process, prepare a plot of the probability of one or more 100-year flood occurring in any time interval from 1 year to 150 years.
Prepare an oral presentation, not to exceed 20 minutes, to explain the results of part (a) to a general audience. Assume an average general education level of 12th grade, but only 5th grade competence in mathematics. Consider in turn, each of the mutually exclusive scenarios below in (b1), (b2), and (b3).
Suppose you make the presentation out of public service considerations only, i.e. you have no financial interest in the project and will not be affected directly by the decision to build or not to build the plant.
Suppose you make the presentation as a paid consulting engineer for the local entities seeking to attract Acme to build the plant.
Suppose you make the presentation as a paid consulting engineer for "Save Our River," a citizen's group seeking to block construction of the Acme plant.
Comment on any differences in the presentations in (bl), (b2), and (b3). "

Wonder if he took the same course?

"So, for the time being, the clearest path to making money in the public markets is to know in advance what the government plans to do next with which companies, and when -- and then trade on it. Let there be no doubt: Plenty of people with access to such inside information are enriching themselves this way now. My guess is none of them is named Mark Cuban, and that the Securities and Exchange Commission will never sue any of them. "

http://tinyurl.com/6zxfhj

I came across a chart tonight that “shows the bear market (20% plus) declines since WWII, all 18 of them. It traces the percentage drops and the bear market duration for each fall. “ As a visual learner I thought it was something I could bring to the community. The author also present information
regarding Lehman's auctions and the CDS markets and what he believes may be some unreported facts. That is “As Is” I just wanted to show you the chart it is an eye opener.

http://tinyurl.com/5b48kr

Fear.. fear attracts the fearful...the strong...the weak.. the corrupt...the innocent
fear is my ally Star Wars

2nd, Can't disagree with a homemade burger which is my favorite, but I'm far from home and Alaska Airlines frowns on carry-on grills and to check it exceeds my burger budget. All life is suffering.

XDroid:

Fear is the mindkiller.
- Dune

Bill Gross was the one who I first heard state long term treasuries were overvalued. That was May. Now I see more articles saying such. Gross was grossly premature.

TARP holdings, courtesy of Calculated Risk.

http://tinyurl.com/5n4hz8

Merry Christmas

"Fannie Mae to Suspend Foreclosures Until January "

http://tinyurl.com/6sxebg

Happy shopping.

Secret Meaning of 'Black Friday' Revealed
From One Power Plumber to Another, Jelmar Salutes Plumbers Who Spend the Day After Thanksgiving Doing the Dirtiest of Deeds

http://tinyurl.com/6lylm4

"Woolworths is likely to get just £1 for its loss-making 800-store chain."

http://tinyurl.com/5jtgu8

That's equivalent to 1/10 of a donation to

http://www.the10poundhorrorfilm.com/

Muzie wrote ... "But if we can get some actual piece of genuine "hey this is better than expected" news, that could be enough. I know, I wouldn't trade based on that hope. Just a thought."

While it doesn't have the shock value to make headlines, LIBOR has edged steadily lower to today's 2.15 from 52-week high of 5.15. Now whether banks are actually lending is another matter, but to see LIBOR slowly declining must meen that trust is slowly re-emerging.

Hmmm, Asian markets in the green, although Australia may be drifting back towards unchanged as it nears the close. Still, a positive sign. Time to go to bed.

"LOCAL stocks were heading for their first positive close this week after staging a stunning turnaround after being down 4 per cent.

The S&P/ASX 200 was up 30.9 points, or 0.92 per cent, at 3383.8 with half an hour left to trade after falling to 3217.5 earlier in the session, its lowest level since December 2003. "

2nd calls it? No more monkey. Kangaroo.

Bonds over 2 days: Corp AGG flat vs TLT up 7% with strong up in last hour today. Is corporate America ex auto going going bankrupt? I dont think so but then again the auto industry is very big.

With the stock market plunging and the credit market entering a new freeze, cries are being heard for a new government intervention to prop up major financial institutions before President-elect Barack Obama takes office.

“We can’t get from here to Feb. 1 if the current ‘who’s in charge?’ situation continues,” said Robert Barbera, the chief economist of ITG, an investment firm, arguing that Congress should adopt a stimulus package, including temporary tax cuts, as rapidly as possible. Instead, he said, Washington seems paralyzed.

People who are talking about gold failing because it has not moved in some or the other direction, a VIX-like thermometer of some imaginary "fear index," are revealing themselves to be pretty ignorant of what is happening and may happen, and the role of gold therein.

In my humble opinion, that is, and with all due respect, yadda, yadda...

Re-read your Austrians (and weep.) It's behaving exactly as it should.

i saw a clip of john browne on the show after kudlow and i was taken aback by what he said. i follow this guy quite a bit and agree with a lot of what he says. he said that the only way we can avoid a depression is by spending unheard amounts of money. on the order of $10 Trillion. he said he thinks they're starting to get that fiscal spending is completely non-inflationary when you're dealing with wholesale deflation. i think i agree with him. not sure of the figure, but can you imagine if we just took the $2 Trillion we've dumped down the drain and put it into infrastructure projects? that would create long lasting jobs and a production based economy. instead we have more failing banks and huge job losses.

SPX 39% under 200MA. A record - never happened in history.

Not thinking a bull market is coming... but can't help thinking one day we might get a 2000 point one day rally out of this (which would be faded the next day, of course).

Markets are supposed to be like a rubber band that stretches and snaps back... Hmmm, maybe the rubber band broke this time, ha.

Perhaps the financial system $700B bailout should require submitting a business plan as does the $25B automobile industry bailout.

$25B would buy 1M cars at a price of $25k each. Where do I sign up for my new 75mpg diesel car?

At the Volkswagen dealer Pookster. The car you want is a diesel Golf. Maybe Detroit can license the engine from the Germans. Or else Cat gets GM, Navistar gets Ford and Detroit Diesel Corporation gets Chrysler. Then will see who can build the best engine. Cat people - save it! I know that you are the best and everyone else is second rate, whatever.

Food for thought gold bugs.

FCX Market cap 6.65Bil, Gold reserves 41 million oz

GG Market cap 13.87Bil, Gold reserves 43 Million oz

No position in either.

2nd: I am just skipping tomorrow and going to the beach , I rather rally in the waves :)

When I was trading the crude mini-contract in 2004, I'd be saying "no way it goes over $50" and then short it only to get a margin call two days later. So from Spring 2004 in the 30s to $147 by summer 2008 - was quite a run. The run from $147 down to current levels is even more spectacular given that the drop has occurred in 4 months versus 4 years.

Oh yeah, forgot to mention that the "tuition" I paid for "learning" commodities was much more expensive than for stocks. That account's been closed since 2005.

kc135guy

Could you help me understand from your perspective what is driving the purchase of long duration US treasuries at these very low rates? As a novice to bonds, I read the following as a deep pool of short covering, if so, what is the consequence..........

from
http://acrossthecurve.com/

Your interpretation would be appreciated!!
..........snip..........
"There have been stunning and dramatic moves in the market since wrote my earlier piece. The Long Bond is trading at a yield of 3.43 percent and the dollar price has exploded 9 points today. I have done this for nearly 30 years. I have never witnessed this before. Even more incredible is the 30 year swap spread and swap rate. The 30 year swap rate is 2.84. It has dropped about 80 basis points on the day and is about 60 basis points rich to the 30 year Treasury.I just spoke with an options trader about this historic move. He said that there structured product trades buried in trading books all over the world which are melting. There is a massive short in the 30 year sector (in Treasury paper and in the swap market) which resulted from sales of cheap volatility. Some of these positions have been on the books of various entities for years and it is only recently that the chickens have come home to roost. Each time the spread turns more negative, that movement forces some one to receive in swaps to hedge there position. There are short the long end trades in every permutation and combination along the curve. The receiving creates a self fulfilling prophecy which compels someone else to receive. He had no opinion on when this would end."

http://tinyurl.com/566hoh

The best growth business on the planet? At least they don't need the TARP.

Good morning.

Here are your Cara 100 Ratings Changes:

Downgrades:

DELL - to Market Perform @ Friedman Billings
ORCL - to Perform @ Oppenheimer

New Coverage:

CSCO - Market Perform @ William Blair
GOOG - Sell @ Merriman Curhan Ford

BRC,

Capital preservation vs capital loss.

People are putting money in something that will not go down in value. First the 1 mos went to zero, then the 3 mos, the 6 mos is at .50, the curve steepened due to those believing this crisis would be over relatively quickly. Now the long end is falling rapidly due to those seeking any yield at all.

The 10 year will bust 3 next. The 30 year is headed well below 4. I think it is now just a race to see who can keep the money in their account vs beating any index.

Just my take and I am not a bond expert.

dbear,

If you are thinking in terms of trading in and out — fine, but...

My personal opinion and some experience to boot —

In the 1970s alternative energy was sunk along with oil (as people adjusted to the new "low" prices). The lobbies were and are too powerful for reason to overcome.

As for Obama (I once voted for him here in Illinois) he is a smooth talker. He knows what to say and how to say it, but does nothing which may ever be a reason to vote against him in the future. (140 votes of "Present" in one year to avoid controversial decisions in print.)

Once in office he will go with the flow. He has financial advisors who were Fannie & Freddie beneficiaries — Buffett and Volker are window dressing, IMO, and will not make policy.

-----------
FranSix,

re: corruption

To that I would add spin.

Heard on CNBC last night — "If we let the autos fail, I fear that we will move this recession into a full depression!" (I wish I could remember the congressman's name.)

Something for Paulson & Co. to use as a scape goat and erase all the real reasons from public memory.

We are one sick nation.

-----------

re: fear

"We have nothing to fear, but fear itself." FDR

Then came Pearl Harbor. (175,000 man army, the fleet and air fields destroyed — followed shortly be Hitler's declaration of war on the US)

In Roosevelt's first term we bailed out the banks, insurance companies and the railroads — in that order. Sound familiar? I fear, since we are already well on the path of the early 1930s, we will proceed to the same economic solution.

We are tired off war and Obama is far from a defense bull. Watch for military spending cuts to feed the economic bailouts and stimulus packages. Then a full force crisis rebuild if another US attack is pulled off.

Sometimes fear and defense is the most rational state of mind whether of physical or economic threat.

Just realized my quote was mislaid. Apologies to FDR and his followers.

2nd, regarding the employment situation in the Bay Area. Just before the credit crisis broke, I was in the middle of interviewing for two open engineering jobs where I work. Then I was abruptly told that we had a hiring freeze.

This was followed a week or two later with the news that no one would be getting a raise next year. Followed by no company-sponsored Holiday Party. Followed by a moratorium on non-essential business travel.

Today I was told we will start our hiring search again.

I know the recession is ugly. But maybe, just maybe, the panic is beginning to subside. We'll see. After a week like this, a little hope is better than none at all.