Bill,

While I agree with your assessments of the behavior of the banks, the SEC, Treasury Sec. et al, I think you give the US public too much credit.

A. Most people don't follow, let alone understand what is being done to us. Their furor has no idea what to target and is easily manipulated. Most are easily diverted by a news flash of a Hollywood star or sports investigation.

B. Even those of us who have been outraged by our political parties and the lack of oversight and honesty by rating agencies, etc. are unable to do anything.

Over time the congress has become an elite organization in total control of their own pay and benefits. They can put on a public display of concern for the country and citizens, but maintain their ties to corporate power and money without fear of expulsion. Those few who are caught and publicly chastised, retire with benefits intact and a bright future in the lobbyist department.

You stated Paulson knew the bankers were out of control. Isn't it more likely he went to Treasury from his cushy $45 million GS job because he wanted to protect his own loot taken as a part of the whole scam?

I'm only guessing partly due to some of your prior Paulson comments, but...

He had a huge number of Goldman shares. He knew the stock would plunge.

When a person like Greenspan, Bernanke, Paulson and now Geithner leaves the private sector his investments (ostensibly to avoid conflicts of interest) are put into a blind trust.

I believe I read Greenspan was 100% in US Treasuries. Now, this sounds patriotic or at least benign, but... When they make the changeover they will not be taxed on the massive switch — therefore each of these guys got a huge tax forgiveness.

If so, Paulson would have sold his shares at 2 or 3 times the price they fell to, dodged the tax bite and then made out on the Treasuries with lowering rates (still dropping). Did Ben get a "Thank You" note?

Henry has no morals, nor do the others. To add to my disgust they publish books with multi-million dollar advances touting their wonderful service to our country.

http://tinyurl.com/6lz7vk
Seeking Alpha article: Bottom in, rally in stocks, likes HERO DRYS BAC. When the Fed starts tightening to ward off inflation, switch to TIPS and gold. BAC also a top pick on BNN last night along with TD and Cisco.

grym-

amen to your entire post. can't believe that they're hasn't been more discussion by the press about the deal these schmucks get when they leave the private sector and the tax avoidance scams.....

$Dollar has gone crazy up on the spot chart that I look at. Anyone else seeing this?

Most revealing article that describes highly suspicious activity at the NY COMEX...

But the WAR is fought in the NY COMEX market from 8:20 am to 1:30 pm EST each day, as that is where essentially ALL of gold and silver’s losses occur. Amazingly, throughout this nearly nine-year bull market, gold has declined far more than it has risen in New York, and last I read it had fallen in something like 93% of this year’s trading sessions despite being down just 2% this year. And, by the way, that 2% decline has outperformed essentially every asset on earth, not just this year but for seven straight years, soon to be eight!

But the COMEX’s days of setting global gold and silver prices appears to be nearing its end (in itself a ridiculous concept, given that such a tiny percentage of futures traders have anything to do with the business of gold and silver production). As I have been noting for some time now, COMEX open interest, or the number of outstanding contracts, has been plummeting for both metals all year. Consequently, open interest for both gold and silver are currently at multi-year lows amidst the greatest financial crisis in a century.

http://tinyurl.com/5q88ss

Anyone else experiencing problems with Scottrade Elite this morning?

Good morning.

There are NO Cara 100 Ratings Changes to report at this time.

Cyderman, yep. Scottrade is sucking, no data. Perfect timing....just in time for a big cash infusion here and a switch to IB and a chance to take advantage of CTAB's services.

They also suddenly realized that I day trade and designated me a pattern day trader. To say they're slow is an understatement.

Time for a new broker.

Will someone w/o Scottrade verify the premkt price on TCK? Are my eyes right?

craig,

i see tck at $5 USD on NYSE.

8,650 shares traded thus far

I see TCK bid/ask @ $5/5.25

Thank you NYUgrad! Cool. Up 25%.....

Don't forget that TCK.B traded in Canada yesterday and saw quite an advance.

I see Bid $6.25.....Ask $ 6.25 cdn

Good day yesterday for teck

Yes Cyderman, thanks for the info..Scottrade Elite not working now.

China dropped rates largest decrease since 1997. This may be taking the Yuan down and $Dollar up this morning. Could affect Gold price at some point if Chinese decide to go for Gold in even larger mass numbers, but we probably won't see it in this country (US).

are there any links to reports / commentary from several months ago?

[Bill Cara note:

We are testing the new blog platform and will soon make the switch. after that, you will find it easier to navigate, research, and so forth.

Also, here is an important note from the CTAB head quant, Pierre Brodeur (which I agree with):

Bill, Here is a quick comment on the status of the Canadian market:

In the past few days, many short and ultra short sectorial ETF have been “biting the dust” as their bullish support lines have been broken.

TSX Bear Mining and Bear Gold Comex are now in bull mode while the Bearish Canadian Energy sector is now standing on its bullish line ready to break.

Finally, the TSX Bullish % reversed into a column of X yesterday which is testimony that:

-1- More and more market participants “believe” that this upswing is different this time.

-2- Upswing is finally more broad based as the mid and small caps are starting to participate

Conclusion: Now is the time to modify the strategy from being defensive (capital preservation) to a capital appreciation strategy.]

those who trade options - how do u place your stop loss orders? Do you like conditional orders?

Bill - request for the new site, a way to search all history esp discussions. For example, search for GG and every result with GG is shown with a 2 line preview of where the comment occurs (pretty much like Google) - click on the comment and you're taken back into context. This would make all of the valuable knowledge in these comments mind-blowingly valuable for research.

Wow, interesting comments this morning, Bill. I saw Harvey Pitt's comment on this subject the other day [http://www.cnbc.com/id/15840232?video=935343729] and it left me to wonder - is the suggestion that settlement is the 'real problem' here, or just yet another factor in a perfect storm? And is there any relationship between this issue and the CDS/derivatives problem?

Not easy to trade confidently amidst this confluence of confusing events.

Bill
Thanks for the note by Pierre Brodeur (any relation to Martin?)interesting because I have been easing into the HOU recently (2X NYMEX Crude Bull)More so because the trading in the short space in Energy ets. seems crowded.

"In the past few days, many short and ultra short sectorial ETF have been “biting the dust” as their bullish support lines have been broken.

TSX Bear Mining and Bear Gold Comex are now in BULL mode while the Bearish Canadian Energy sector is now standing on its bullish line ready to break."

Bill, just wondering if im reading this right:
the TSX mining/comex gold bear vehicles (HGD/HBD) are in BULL mode? if this is correct how does that satisfy the conclusion to look towards capital appreciation?

thx!

I can also verify that ScottradeELITE is not working yet.

Bill, Thank you for your daily reort today. Looking at the C100 I am seeing impressive gains since BUY ALERTs triggered 3-4 days ago. Could this suggest a trend forming on share valuations of good companies?

Re: Bill's note above:
"In the past few days, many short and ultra short sectorial ETF have been “biting the dust” as their bullish support lines have been broken.

TSX Bear Mining and Bear Gold Comex are now in bull mode while the Bearish Canadian Energy sector is now standing on its bullish line ready to break."

I'm obviously a little dense. Is he saying that the HGD & HBU (the bearish ETF's) are in bull mode so the price of gold/miners is going to drop?
Thanks for any help.

Re: HTD.TO

Since a bear ETF in the long bond was mentioned a few weeks ago, the USB has rallied significantly to all time highs. I would say that this ETF might be worth a try should the long bond sell off. Easier said than done, because as part of the TOG, the expectation is that government bond markets collapse.

So far, yields on bonds and treasuries have declined after a brief rally in early fall.

HGD.to and HBD.to

Look at the charts:

HBD.to
http://tinyurl.com/5jmlgk
HGD.to
http://tinyurl.com/56qozo

M. Brodeur clearly means the gold sector - not the ETF's themselves - are in BULL mode.

Bill,

I agree that the DTCC and SEC are making naked shorting possible.

It seems to me that in this computer age, that all shorting should REQUIRE pre-borrowing as PART of the system. That would end the fraud, which is exactly what it is.

Scottrade: You can see your positions and gains/losses, but you have to have Scottrader running to do anything about it. No market data, yet they must have it to give you current position status. Their server is flaking out.

From the 'banks are their own worst enemy CDS file'
http://tinyurl.com/6lnk2v

dr.cosa - I have the same question. I adore his conclusion though, it gices me great confidence.

So naked shorts still aren't closing, making them illegal? Selective enforcement of rules stifles free market enterprise, and regulators continue their quest to hide the truth from the public to their own ends.

Obviously it's solely up to us to carry this message and educate the public. Remember when shorting was stopped because it was "abusive"? What a disappointment it was to learn that media misrepresented the purpose of shorting by slapping on negative connotations without attempting explanation of the underlying issues. Adding insult to injury, the illegal activity of non-closure continues and the public still hasn't been educated on the detail and purpose of shorting equities.

Globe and Mail’s CEO of the year
Extract from Globe and Mail article this morning
fallout from the financial meltdown, tightening credit markets and cratering stock values. Which made the task of choosing a CEO of the Year that much more challenging this time around. The criteria we use to rank our nominees are much the same as the ones that investors use in judging a company's performance: Has the CEO done a good job driving fundamentals like revenue and profit? We also look at harder-to-quantify characteristics such as leadership and vision.
By these measures, Prem Watsa, the head of Fairfax Financial, stood above the rest this year. As senior editor John Daly--who two years ago was the first reporter to land an in-depth interview with the inveterately media-shy CEO--e-mailed me as I was making my final selection: "Is there any other financial executive who warned that markets were long overdue for a crash, yet was also humble enough to admit he couldn't tell exactly when the plunge would come? Who positioned his companies' investments defensively to avoid the pain, by loading up on government bonds and cash? Who profited from the greed and short-sightedness of some of the most powerful men on Bay Street and Wall Street by trading in the very toxic financial instruments (credit default swaps) that brought about their downfall? Who, à la Warren Buffett, has taken some of those profits and plowed them into beat-up operating businesses (AbitibiBowater, among others) that other Canadian investors won't touch? Who is an energetic, entrepreneurial, self-made man who grew up about as far away from the Bay Street old boys' network as you could get?"
The answer was, in a word, no.”

Globe and Mail’s CEO of the year

http://tinyurl.com/5sa8b9

"Thanks for the note by Pierre Brodeur (any relation to Martin?)"

This is the single most often question that I get. The answer is no.

"Bill, just wondering if im reading this right:
the TSX mining/comex gold bear vehicles (HGD/HBD) are in BULL mode? if this is correct how does that satisfy the conclusion to look towards capital appreciation?"

What I am saying is that HBD.TO - Horizon Bear Comex Gold is now in a bear market because the bullish support line has been broken. HBU.TO - Horizon Bull Comex Gold is still in a bear market as well. But from a swing trading perspective, it reduces the risk of buying HBU.TO on its next double top breakout if you did not on the first breakout at $12.75.
I did not make any comment on $GOLD.

There is no relation between this observation on the Horizon Comex Gold ETF and concluding that the strategy should be oriented towards capital appreciation. That conclusion comes from observing a reversal into a column of "X" yesterday for the TSX Bullish percent index.

"Is he saying that the HGD & HBU (the bearish ETF's) are in bull mode so the price of gold/miners is going to drop?"

No, I am not saying that at all. I made no comments on the Horizon Gold stocks Bearish ETF which is in a bear market as well since early November. The Horizon Gold stocks Bullish ETF is still bearish as well but is exhibiting a clear bottoming formation as it is on its third buy signal since reaching a bottom of $4.00. The price of Gold miners may drop in the short term by I agree with Bill's bullish call for the intermediary term.

I do not want to "plug" my blog here but all is explained there.

Pierre Brodeur

[Bill Cara note:

Pierre's blog plus that of Vad Graiger, Pascal Willain, our Trading Team, and probably a few more will be set up on the CTAB server in December. There will be occasional links to the CaraCommunity.com blog.]

why can't mr. moral hazard tell us what happened to make him change his mind that buying troubled assets was the wrong way to go about this, after convincing congress it was the right way?

Bill
Long time reader. First time discourser....(love when people say that).

I believe you used to refer to Colin Twiggs work some in the past. Since then I have been following his newsletter. He seems to continue to follow a more bearish bent in his analysis of the charts. Any comments on the difference in opinion, thought process, interpretation of the data outside of the the comments you already make daily in the blog.

Thanks for all your teaching and a a great book. Enjoy some beach time.

donka1, I've noticed the same thing. I know Bill is under no obligation to do so, but I'd also appreciate a comment on Twiggs' continuing bearish outlook.

Scottrade Elite now up.

FAZ - $60 => $201 => $59, all in less than a month

donka1/n2s- fwiw, here's my (highly personal) take on the distinction between Twiggs and Cara:

Twiggs observes (slightly behind the curve), Cara anticipates (slightly ahead of the curve)...Twiggs is an astute observer of the market, and offers likely + less likely scenarios based on trends, support/resistance levels, and economic data...Cara is an astute trader, and starts shifting ahead of confirmational data...if this were the Indy 500, Twiggs would be in the observation booth, Cara would be driving...very general distinctions, of course, and JMO...

[Bill Cara note:

You may be right. Trading is different from blogging or analyzing or discussing information and education. Without commenting on any analyst, I did discuss with my pro traders in the 8:30am conference call the great difficulty that all but real-time traders are having today. In fact I said to them, "What I write at 9am could be 180 degrees wrong by noon." The volatility in the market today is caused by the broken credit ring, which I wrote about again this morning. That's nobody's fault except for the bankers. It will be the Treasury Secretary's fault if he doesn't attack the problem. We know what the problem is. Solve it. I wrote about it a couple days ago too when I gave a list of solutions. CDS trading needs to come out in the sunlight where all of us can see via an exchange, like Chicago. The govt needs to close every transaction that these bankers cannot make good on. Then the Treasury Dept needs to take control of those failing banks and reorganize them and put them back on the market for sale as good merchandise to strong financially banks. Congress needs to legislate the take-over of the DTCC and cut the strings of their shareholder bankers who have abused the system. This is not rocket science. People like Paulson, Dimon and pals are the ones who are throwing up roadblocks and smokescreens. They want the status quo because it's a system that has made them wealthy beyond all imagination or basis in ethics. They have managed to control the system because they control their peer network and the underlings in their banks. The system is broke. The solution is obvious, and these people will fight like terrorists to stay in control. Congress has to step in. Don't waste your time talking about stuff like Bill Cara this or Colin Twiggs that. We're unimportant players. Tim Geithner is either going to be on our side or their side. It won't take long to find out. If he's on their side, so long America as an economic and financial power. It won't be long before the rest of the Americas and Europe and Asia-Pacific countries set up a new power structure. I suspect the new Washington-New York axis could be Brussels-Dubai.]

mr. moral hazard has got to be the absolute worst, and most conflicted interests Treasury secretary ever in office, who the heck put him there and why are they keeping him there? Yank him out of the picture immediately, and put W's dog Barney in.

Americans are so exhausted from all the
BS lies we've been fed for way too many years. Good job Browney!

does CHK's volume today look a little high to anyone? and down 17%?

No wonder Greenspan will do and say anything to protect credit derivatives trade and keep it out of the public eye. Everything that was done since 2002 has a distinct bias towards promoting CDS in just about every market possible. Credit Derivative Swaps against interest rates are causing ever higher bond prices.

It all makes sense if you think of it this way.

strong bids into the close would be a good set-up for Rob's Black Friday rally next week...

RE: CHK

AP

"the company said it plans to sell common shares to fund drilling and exploration activities and to guard against the effect of lower natural-gas prices on cash flow.

The Oklahoma City company filed an acquisition shelf registration statement to issue up to 50 million common shares. It also filed a distribution agency agreement that allows the company to sell common shares with an aggregate offering price of up to $1 billion."

some humor for the day

http://tinyurl.com/5ans4y

I appreciate the bullish sentiment. However, I have heard numerous people say that the earnings for the S & P 500 for 2009 will be around $40 and that this would take the index down near 600.

Also, I forget the name of the chartologist (Elaine Mizler?) who appears on Fast Money a lot. Earlier this year she did predict the drop in the dow to well below 10,000. Recently, I believe that she made a prediction on the S % P to go down near 600 as well (or the dow to 6000, I forget which)

Anyway, any thoughts about the earnings estimates?

Re: Forbes

There's something about Steve Forbes that I don't like. He's not up front when he says something.

A while ago, he was remarking on the fact that mark to market had been defeated and literally gloating over the fact that mark to model had succeeded.

But its the same with Soros. In front of Congress, he was expounding the virtues of the derivatives market.

I think both of these men are vying for the failure of the derivatives trade, and that they are prepared to put their money in investments that count on the fact that they fail.

some more humor
http://news.yahoo.com/s/ap/20081128/ap_on_re_eu/eu_france_sarkozy_voodoo_doll

newbee - Absolutely! Earnings estimates remain overly optimistic. I think the good traders recognize this, and will take advantage. BTW, where did these yo-yo rear-view analysts come from, and who do they think they're kidding?

ok chickenpookie (probably not apropriate to shorten this up to chickenpoo)

What I am getting at is that there has been writing on this web-site by bill about being more bullish. I am trying to square this with these doomsday calls for dow 6000 and s&p 500 down to 600. So, I am trying to get a grip on how Bill, and everyone else, views the calls for drastically reduced 2009 earnings and how this will affect market sentiment.

Is it the view that the stimulous that is being poured into the economy will raise the earnings to higher levels?

Thanks

bought back shares of FAZ that i was stopped out of. Purchase price: $58.0.

new bull market??? it's now up 20% from the lows last friday.

F6 - I like your observation, there may be some truth to that... Any idea what are they doing to position themselves for such an event? This senseless CDS mania absolutely has to stop, regulators must step up to the plate.

Re: Credit Derivatives

Furthermore, I find both Soros and Forbes are adept at speaking to conventional wisdom, or even forming a conventional outlook for our benefit, which goes unchallenged.

It could be that Soros, Forbes are sensing that credit derivatives, which are unregulated and would be considered as outright fraud in any law books will pass into legimacy. Why wouldn't they? The entire apparatus of the government is at the beck and call of Wall St. banks who are making a killing, while claiming they are bankrupt.

That means there will be no restriction against selling securities and eventually having the people holding then, that debt liable for third party liens in credit derivative swaps will become legitimate. Its literally a form of taxation.

This would turn securities regulation on its head, and the clock back 100 years.

newbee - Sounds good! I'm expecting analysts will begin changing their forecasts about the time the Bull has pookied out.

The Word
Thanks Pierre.

I look at it this way - I've been waiting years to get prices like these, and IMO it's a rare opportunity that likely will pay off (I'm willing to take this risk). Sure prices might go lower in the short run, but I'm pretty sure I won't be buying at absolute bottom anyway... Heck, I'm patiently waiting for a 9k Dow to begin trading again.... Any major pullbacks represent buying opportunities, but I usually loose my nerve.

chickenpookie, so you are expecting analyists to revise their 09 estimates downward and then revise them back upwards in a short amount of time?

I understand that this is more of a trading site than a long term investing site. I wish that i had come here earlier, because it might have saved me some significant losses this year.

Are most of the people here extremely short term traders or is there a mix?

Re: Scottrade v. IB I recently discovered that to purchase 5,000 shares of something cheap is to pay $25 on IB. Also, it's an extra $10 a month for live feed of some etf's...skf, fas, faz. I'm moving some of those big lots over to scottrade so I can liquidate at $7. charlie

Good morning! I it seems like gold/silver have seen the worst already during the October panic, so I figured it might be good time to double my position in PNP.TO at a preposterously low price of $0.44 US (considering that I started buying it at $3.13 in February). Even if it doesn't double in a month, I'll still sell the shares I bought today 30 days later and write off my initial purpase for tax purposes.

cp - I'm basically with you. It does take nerve to buy in the face of those -400/-600 point swings, but those are the days you make money.

last week I was watching (and buying) DB on its way down to $23+; this week its back over $35. (and I started buying it at $30+, so it got tougher each time to push that BUY button, especially with a financial.)

we will rarely buy at the absolute low or sell at the absolute high - make some quick cash on the swings, that's about all anyone can ask for in this market.

RE SLW up 14% and closed near the day high. Good day for a half day.

http://tinyurl.com/5s4kkq

The volume is going to have to pick up or else this rally wont last. CMF needs a lot of work too. The weekly chart doesnt look as good as the daily charts. But i like the divergence of the accum/dist on the daily.

I will try to remain patient.

Make no mistake...

To give up the day-to day workaday world for the market full time is to foresake dry land, and to commit ones self to swim with the predatory fish, fighting with them for food and ultimately, for survival.

Newbee - I think the deeper question regarding earnings is, will lower earnings for 2009 reflect:
the beginning of a long-term trend of progressively lower corporate earnings

OR

Has the credit crisis been so severe that 2009 earnings will mark the lowest point for earnings and the beginning of a long-term trend upwards?

P/E is not a forward looking metric therefore properly valuing stocks in general requires forward analysis. After a stock market crash like we have seen this year, I am more concerned about the 5 year forward P/E of a company. The fact that 2009 earnings are going to be low is old news. How will earnings be in 2010 and beyond?

newbee - Definitely a mix all of the above. I don't consider myself anywhere near qualified as a day trader, just trying to collect some lower-priced longs.

Since when have analysts been proven correct(on average)? Perhaps it's worthwhile to listen to those who called a top when everyone else was screaming buy. Bill was sounding the alarm, and I had even heard the warning on my own before finding Bill's blog. I thought it would much worse though than Bill's blog portrayed, I discovered encouragement here, but more importantly, I discovered precious truth. We are all human, and posses an infinite range of tolerance for error and ability to recover from disappointment.

Anyway, I'm not impressed by analysts numbers which don't seem to reflect reality, so I don't believe they are worthy forward looking indicators. They almost seem more clueless than I.

billysundance, i agree with you, but how can one value forward earnings in this environment? It would seem that the visibility of forward earnings at this point is extremely limited. Also, it seems that valuation is relative, so that a company with excellent earnings growth and visibility is still getting knocked down because all of the other "houses in the neighborhood" are going down as well.

Which ones of yous got in on the fannie/freddie party? Not me, I had too much to do unfortunately and I missed out. I am very excited about next week, lots of stocks look to be setting up well for some moves.

Thanksgiving always struck me as being a curious piece of propaganda, a celebration of that final moment just before we "stabbed the natives in the back" (a euphemism for a more off-color comment).

newbee- these are just my opinions:

(a) 2009 earnings were priced in back in october, and maybe we're beginning to price in 2010 earnings...

(b) DJIA 6000 is not at all out of the picture...personally, i think we need to test the 11000-12000 range before that happens (if in fact it does)...even bill has commented on lower numbers on the indexes looking out to 2011...

HTD.TO was one of the top picks on BNN's market call today. The show was pretty good, with Jaime Carrasco, focused on resources.

http://watch.bnn.ca/market-call/november-2008/market-call-november-28-2008/#clip116803

Sees gold much higher, USD and bonds collapsing. An interesting strategy he uses: goes on margin in US$ accounts and invests in Canadian Income Trusts whose yields are much higher.

Re. Canada. Now there is a *chance* the minority Canadian gov. may fall on Monday. Lots of talk of a new election being triggered, coalition government, etc.

BNN also reporting that BCE will be taking on KPMG as they do not agree on the last minute "solvency report" that just came out this week out of nowhere.

Trader be nimble, trader be quick...a more creative mind can finish that. :D

Nail on head again Bill concerning the DTCC. If the trade is not settled, how can there be a trade? You can't sit at a table in Vegas without buying chips and IF the exchanges cannot conduct business in a like fashion, we need new mechanisms. Just a random thought, but what would happen if traders simply closed their accounts en mass? Withdrawal of all that capital might get someone's attention, yes?

If the market is to be free, then why sweat any organization like it for the wronged would be free to punish the thieves wouldn't they???

Observation:
It sure gets quiet on the Cdn exchange after the Americans go home. Anyone else see this?

Slipped out of OPC.to this AM at $2.46. Rebought at $2.17. My raised stop at $2.22 just hit and up she goes again. What a pain.

re: WA Post article about Clinton appointee to commodities wrangling with Greenspan's boys for transparency on derrivatives...can you repost link to article? I tried searching the post but didn't have the attorney's name...a top woman who's who. Thanks!

Bill, RE: your comments earlier today (in your reply to 2nd Ave) about The Problem, The Solution, and Paulson, Geithner, et. al...

I desperately hope that you will do whatever you can, with the help of those in your network, to communicate these critically important ideas and warnings to those who are in a position to act on them. Americans at large should be more concerned and angry about these events, but generally they're not because of the complexity and the fact that the media is feeding us mostly pablum.

You just referred to yourself as an unimportant player, and maybe that's true in the larger picture. But the respect you've earned, the people you know, and the eyes reading this board, all bring you closer to castle than most of us sitting in our living rooms trying to make sense of it all.

newbee

"how can one value forward earnings in this environment"

Valuing forward earnings is difficult exercise indeed. I think the first thing is to keep your analysis focused on companies/industries that you can fully understand. I.E If you aren't an expert on trends in B2B software providers, its probably not worth your time to perform an analysis on individual stocks. Stick to what you understand.

"Also, it seems that valuation is relative, so that a company with excellent earnings growth and visibility is still getting knocked down because all of the other "houses in the neighborhood" are going down as well."

Stock prices are always irrational in the short-term and rational in the long-term. Your earnings analysis will allow you to identify strong companies with long-term trends that are in there favor. But, at any instant, the quality of a company and its stock price are mutually exclusive. Finding the right company and finding the right entry on its stock are separate exercises.

I think today's discussions have been very interesting; especially regarding future earnings time frames.

I am curious about the way markets price in future earnings. How long in advance would/could/should an investor/trader expect a move in the market to reflect future expectations. I know Libor, treasury bills, fed funds play a big part.

Are their any who have opinions about this area and even better...past experiences regarding this pricing phenomenon? My guess is there is not a formula involved but what are some signs?

Guys:

I have some MFC and the pre and after market is odd today now up after hours $1.50 on some volume is not all day enough time? Any Ideas this morning at 9:30 was huge.

Thanks

No oversight of the TARP program:

"Yet for all this activity, no formal action has been taken to fill the independent oversight posts established by Congress when it approved the bailout to prevent corruption and government waste. Nor has the first monitoring report required by lawmakers been completed, though the initial deadline has passed."

"It's a mess," said Eric M. Thorson, the Treasury Department's inspector general, who has been working to oversee the bailout program until the newly created position of special inspector general is filled. "I don't think anyone understands right now how we're going to do proper oversight of this thing."

...

"The legislation also created a body called the Financial Stability Oversight Board, whose five members include Paulson and Federal Reserve Chairman Ben S. Bernanke. But it has no staff of its own, and few expect that policymakers can conduct oversight of themselves. "It's sort of a joke in terms of oversight," a congressional aide said."

http://tinyurl.com/6eeg3u

The TSX exploded to the upside in the final hour or so of trading. This is a tad suspicious, given that it is the end of the month and U.S. markets were closed. Still, hope springs eternal :-).

Newbie
As a one time engineer (two light years ago) I often believe that the market'(s) noise to signal ratio is far greater than 1, ie the noise far exceeds what's really happening. We have all gone through a phase of looking to others to make or confirm our decisions and if for example we rely on 3 commentators we can get terribly confused because 1) says go short, 2) says stay out, and 3) says be bullish. You have to develop your own model of how things work which will never be perfect but hopefully profitable (another story on probabilities). You have seen the diversity of input on this board to know there are short termers here and intermediates like myself all with either different ideas and conclusions. Its possible that some of us are on opposite sides of the same trade, ie my long term indicator says buy but the short termer signal sell sell. Hopefully they both work out winners for both, ie they traded by their rules.

In regard to predictions: How many analysts do you know or know of who have made fortunes from predicting the Dow goes to (enter any number you choose)? Personally I rely on a few indicators to tell me when to get bullish or bearish. With my mindset determined I can then go fishing for candidates hopefully world records! Its easy for an analyst to predict the S&P at 600, hey why wouldn't they to drum up business. I am sure there are other readers here with more history than I that could illustrate where analysts predictions did not eventuate during the 2001-2003 correction.

The charts are telling you where the markets at and while pointing south at present I'm begining to see lots of divergencies across many indices and stocks, a precursor to a north pointing run.

As a neophyte, if you haven't yet read Vad's book the Master Plan then I suggest you get it. It will help you sort out what makes sense for you and not the chorus of analysts who I think have a severely skewed to the left distribution chart on predictions.

Bon chance

TN blogger
"I am curious about the way markets price in future earnings. How long in advance would/could/should an investor/trader expect a move in the market to reflect future expectations. I know Libor, treasury bills, fed funds play a big part."

People write books on this subject which get stored away in the bookcase and never get seen again. FA is a wonderful science/art however you only need core data to be wrong and the whole model/answer is wrong. Many companies 'manage' their earnings to ensure they just exceed analysts forecasts so prices will get a boost just when they want them. It is a common maxim that one should under commit and over deliver in public companies.

The charts tell you what's going to happen to earnings well before the analysts predict any movement. Believe the chart... as long as some Whorl Street crook is not playing games.

Go to any large broker, say Citi and get any Dow constituent report off their web site. They do a pretty good job of justifying how they arrive at their earnings and price forecasts. Unless there is a strongly trending market I don't believe their numbers. I trade on what I think others will think of their numbers as that is what moves prices.

"I am curious about the way markets price in future earnings."

so am i. agree completely with seadog. ALL assumptions are just that, and frequently wrong. the simplest models i've seen use discounted cash flow analysis, but even with those every single cash flow number is a guess, and every interest rate(s) used to discount the cash flow(s) is a guess.

On my TSX Question - Thanks

Thanks for the heads up on last minute action up north. Looks like talks of a Canadian banks bail out is making the rounds today unsubstantiated. Something I read showed a date of 12-9 to watch, but look as I could I can't find it tonight to post. West Life was up 21%, Manulife Financial up 18 %, ING Canada up 16%, Bank of Nova Scotia up 12% and Royal Bank up 11%.

Another thing I found interesting was a chart showing how strong the US dollar has gotten in just a few weeks against Canada's dollar ( I am visual).

http://tinyurl.com/5vre7j

Re: Discounted Cash Flow Models and future earnings

DCFs are unreliable at best. Take fifty to 350 assumptions projected through at least one business cycle and, if one is off, conclusion will have a compounding error. Consider automakers' single erroneous assumption that they could sell expired two- to five-year lease vehicles using a four-year depreciation shedule that led to the first wave of multi-billion-dollar writedowns and the collapse of GMAC, Ford Credit, and Cerberus calling Daimler to the mat. I recall DCFs as the primary tool for the S&L crisis too. All it takes is junk in, junk out with a laptop and a stupid or dishonest exec.

Re: naked shorting

Isn't our government, Federal Reserve, and fractional reserve banking system also guilty of "naked shorting" when they monetize debt (i.e. create additional currency from nothing)? If one opines that naked shorting stocks should be illegal, wouldn't it follow that debt monetization should also be illegal?

Holy BazookaMan!! Take a look at what has happened this month to the 30yr Treasury. Sort of a reverse generational trade.
http://tinyurl.com/6z9jor

http://tinyurl.com/56fbcm

Charts with your Saturday Morning Coffee

Crude Oil, for whatever reason, is currently priced back down to end of 2006 (pre-oil-bubble?) levels. During the time that Crude prices were driven to a strangely high peak, some changes were made to Gov rules on Crude in the US. One of which, of course, was when Bush declared that his Office would not enforce any laws that restricted off-shore drilling. Another was Bush's opening public lands to cheap leasing for surface mining of oil shale. I guess the public will continue to feel happy.

In any case, I am looking at the current price of Crude and wondering if it will rise again if Obama threatens to reverse any of Bush's actions. Many stocks are either directly and indirectly governed by the price of Oil. I like the Oil/Gas Trusts for potential dividend plays, but their dividends go up and down along with their price in accord with either Crude or NatGas. I like the future earnings potential of the oil sands and oil share companies, but they might fold if the price of Crude and/or NatGas stays low.

I found this link with a good discussion of some of the factors that are involved in production of shale oil, and it is an easy read. Here are a couple of snips:
" ... It [extraction from shale] is more difficult than the famously difficult task of extracting oil from oil sands, because the oil in shale is truly part of the rock, not just floating around as a mix of oil, sand and water...
Some of the figures thrown around put costs at $37.75 to $65.21 a barrel for shale oil production. To put that in perspective, the Interior Department puts the actual production cost of conventional onshore crude at of $19.50/barrel. ..."

http://tinyurl.com/6ogyg8
------------------------------------------------------------------------------------

On a related issue, I notice that a few of the US Oil/Gas Trusts are administered by Bank of America which of course is in financial difficulties that are at least partly due to poor financial transactions. I am thinking that as Bill Cara has noted, sometimes Board Members can take some very questionable actions that are NOT in the best interest of the company or of you and me. I think I will NOT include BAC administered trusts on my list, but jmho.

Comment?

spot,

HTD.to (U.S 30 Year Bond Bear Plus).

"In Friday’s post-US Thanksgiving shortened session; volume was the lowest of the year, prices did side-track until 11:20, and there was an upward bias into the close, rising +120 points in the DJIA in the final 100 minutes."

Once again, Bill Cara was bang on!

Mackinaw - you said
HTD.to (U.S 30 Year Bond Bear Plus).

??? What was the rest of your thought? :)

CP,
"Yank him out of the picture immediately, and put W's dog Barney in."

So what you are really saying is replace a bad SOB with a nicer SOB ;-)

I'm posting this first in the Discourse to give regular readers the first shot, but we are going to try to transition to the new blog over the weekend. Go over to http://caracommunity.com , set up an account, and look around. I have closed most threads to comments, but I have a "test thread" that will stay at the top of the main page where people can post comments.

While I'll mostly be looking to fix bugs right now, both feature requests and style suggestions are still welcome. You can give suggestions in the comment thread, by clicking on the "contact author" link next to a comment of mine, or by emailing me at jeff at billcara dot com. Thanks!

newbee, BillySundance
re: Valuing forward earnings
In my forty years experience I would estimate forward earnings we hear from analysts are on the high side around 90% of the time even in good economic environment.
(Analysts, brokers, CEOs — nearly everyone giving such ideas — is a salesman with some benefit in painting a rosy picture)
I know I am not smart enough to figure then accurately from reading their published reports, annual, quarterly, etc.
I usually go with my own assessment of general trend (foreseeable down) and fit it to the particular segment of the market.
Give it your own best shot and protect with stops and/or options.

Grym - Barney doesn't sssstttttuuuddeerrr like PPPPPPPPaaaauullssssssson, isn't brain-dead and think everyone around him is more stupid than he. True, Barney's not a Harvard Alumni, (from where the CDO mentality originates, BTW) but small details yield huge advantages in certain instances. This obviously is one of those instances.

I know we are into metals and the miners, but.

In the last 5 days BHP has come up 62%, that iron has to move as always by sea. Following DRYS smart money says it may default on it's payment of such a large fleet of ships with the Baltic Dry Index so low. So I am asking myself who stands to profit if the fleet is broken and sold? Researching I came accost OceanFreight Inc. a small fleet of 10 ships 8 dry bulk and 2 wet. It jumped 100% on Friday with after hours added in. My stomach says your covering someone's profits on that kind of move, but others are putting down hard earned money that it moves up more. Anyone following the boats here that can add 3 cents this weekend. I am asking who might benefit with ocean freight to China next 6 months?

No position at this time.

As always - Thanks in advance

OCNF http://tinyurl.com/6kffmp

921 trades http://tinyurl.com/6b8k6k

Anyone care to predict whether the rally continues next week?

In the past week, Royal Bank of Scotland and Citi Bank get nationalized, Fed pledges $8 trillion in desperation to inflate the economy, and the stock market rises about 1000pts?
Something seems fudded up as Henry "Elmer Fudd" Paulson stutters while Rome burns.

On the retail front...

VALLEY STREAM (WABC) -- A Wal-Mart employee died and four others were hurt in the Black Friday rush to get into the Valley Stream store Friday morning.

The injuries occurred as the shoppers crammed into the Wal-Mart when the doors opened at 5 a.m. Some 2,000 shoppers were waiting to get inside the store for Black Friday sales.

Police said the shoppers knocked the man to the ground at 5:03 a.m., three minutes after the store opened.

Kimberly Cribbs, who witnessed the stampede, said shoppers were acting like "savages...When they were saying they had to leave, that an employee got killed, people were yelling 'I've been on line since yesterday morning.' They kept shopping."

Imagine the crowd behavior if there was a food shortage... and you are forced to go to Walmart for your monthly rations.
Not a pretty thought. Remember food is on a three day just in time delivery schedule.

CP,

Oh, that Barney. I thought maybe Obama's dog was named Barney.

Barney Frank may not stutter, but he does sort of sound like a percolator when he gets mad.

As Chairman of the oversight committee he let the head of Fannie Mae and the board alter their pay method to a percentage of loans written and to raise the loan limit to $400,000. A bit of a conflict of interest when you can make a ton of money just by OKing anything anyone may want whether he can afford it or not.

I can only think of a few in congress I think worthy — Bernie Sanders, James Webb, Byron Dorgan, Richard Shelby — come to mind, but given a day or two I may think of a couple others.

In Saturday's report Bill noted that until credit market issues were "resolved, the Trade of the Generation I called two weeks ago will not REALLY take off. There is still too much repatriation of USD, which happens when foreign securities are sold (selling the Foreign currency) and the proceeds are left in $USD. That move keeps the $USD from crashing, but it is on the precipice. Forex traders are waiting for the repatriation move to end, which will kill the US Dollar and the US Treasury bond market."

So I'm wondering what. exactly, will be the sell Bond signals? Will it be the Yen declining against the dollar? An intraday low in 10 year yields? Spikes in gold futures?

I have various calls on gold stocks and GLD. Am thinking sometime in the next time I might either do a straddle on TLT, or just do a coupla puts on the front month. Seems to me that one the bond exit begins it could be a stampede. Perhaps I'm being too impatient to think I'd like in on the trade the day it begins.

[Bill Cara note:

Having given the switch trade, I am short the bonds now. I am just saying that there are reasons why the bond trade did not REALLY happen (so far) like the gold/goldminer trade has. One further point is that, once the bell rings on debt monetization, which will hammer the bonds, there will almost certainly be no advance warning. You'll be long TLT one day at x and the next day TLT will be 0.8x. However, in the long-run, if you truly believe that a 10-year US bond yield will actually continue to return 2.957% to maturity, then don't make that trade. How recent was it that PIMCO's Bill Gross opined that 4.50% would be a reasonable yield on the ten-year. If I'm not forced to buy US Treasuries at these price levels, why would I possibly do it? So, I take the longer view, which I think is pragmatic and I am am responding only to the nay-sayers who have watched bond yields drop and prices rise for two-and-a-half days.]

4theFuture - Doug Kass seems to have the same view on TLT. I am also looking at June or Jan10 puts

http://www.thestreet.com/_yahoo/newsanalysis/investing/10449381.html?cm_ven=YAHOO&cm_cat=FREE&cm_ite=NA

Shiva, just read the Kass piece. Yes, he seems to view shorting the TLT as the way to go, and I gather he has already done so. I think long-dated, out of the money puts might be the way to go, but I'm still a bit leery about overpaying. Rick Santelli of CNBC thinks the safe haven flight is still going strong.

Did you notice the big open interest June and Jan 10 80 puts? Also, the 100 put for Dec 2008 looks like it's been a magnet for someobody's money.

I suppose the thing to do is watch the yen, gold, and the yield curve. . .

Hou.to is looking attractive,record daily volume on friday I beleive, oil has broken out of a downtrend and the heu.to has lead the way with better gains so far for the oil stocks,

70 looks like the next res area?

http://img408.imageshack.us/img408/5979/oillllfm9.png

4thefuture, jan, mar, jun & jan10 all seem to have put interest. December 08 - there is a lot of activity on the call side as well (probably strangle)

New ProShares Ultra and Ultrashort ETFs for Commodities, Oil, and Currencies
-> Gold and Silver in the next few weeks

http://tinyurl.com/6xd3tk
http://tinyurl.com/5zgdof

(For Fransix - YCL is the Ultra Yen)

Shorting TLT: looking at its 5-year price chart, the recent spike does seem unsustainable. However, all else being equal, I think it is better to start shorting bonds after several down days in the market rather than after the strongest 5-day rally since 1987 (which built on top of the strongest 4-day rally since 1933). So if the market keeps going up, I'll enjoy the gains in my portfolio. But if the rally reverses and the fear will be up in the air once again, then I'll probably buy some long-dated TLT puts.

Another thought: the fact that TLT rose for the past 3 days may be signalling that the low-volume rise in the stock market we saw during the holiday week is unsustainable, and the bond traders are bracing for a large leg down. So those who are enjoying strong gains in their portfolios over the past 5 days may want to buy some put options to make sure that some of the gains will be preserved if the market were to crash next week. Another strategy would be to wait until the 840-850 level on S&P 500 is broken on the downside before loading up on puts.

Interestingly, the last trade price for the January 2010 TLT call option at $105 was $8.27, while for the put option at $105 it was $16 -- does it mean that the majority of traders is already expecting TLT to be much lower by January 2010?

After looking at the TLT option prices, I am getting a feeling that the current volatility premium is WAY TOO HIGH. So the better strategy might be to just short TLT. If there were options on TBT, selling some TBT puts would also be appropriate now.

Bill: what implementation of the short-bond trade did you choose? Thanks!

Well i think i am done shopping. I can confirm from one shoppers point of view, i spent more this yr then last on black friday. however i wont be buying any more discretionary items. I took advantage of the sales to buy all the gifts, as well as things i needed.

The crowds were crazy in the central nj area at both the mall and the outlets. One bit of sad news was that a man in his 30's died at Walmart in Nassau county Long Island; he was trampled by rabid black friday shoppers. the worst part of it was he wasn't a full time employee, rather a temp from an agency walmart hired. Prob someone who was working extra hard on a holiday to provide for his family.

most disturbing of all were the shoppers.

Excerpt from ny times:
“When they were saying they had to leave, that an employee got killed, people were yelling, ‘I’ve been on line since yesterday morning,’ ” Ms. Cribbs told The Associated Press. “They kept shopping.”

How easy of a job must it be for hb&b to feed the mob what they want. Money and credit to keep buying things they can't afford.

NY Times
http://tinyurl.com/62k3w8

Bloomberg
U.S. ‘Black Friday’ Sales Rise 3%, ShopperTrak Says
http://tinyurl.com/5j6gh8

signs of a recession, not; at least, not here...

adding to anecdotal reports by other posters-

(a) i had lunch with two friends in downtown San Mateo, and all three of us were late, not anticipating it would be almost impossible to find a decent parking space...
(b) hit the Stanford Shopping Center later in the day with my family, and we had a hard time finding a space there also...

Interesting to hear about the recession from the eyes of a car dealership owner.

NYT
http://tinyurl.com/5fwaer

Bush pledges "full support" as India recovers from crisis
Washington(PTI): Pledging "full support" to India as it recovers from the deadly terror strikes on Mumbai, US President George W Bush on Saturday said the strength and resilience of the people of the country will enable them "withstand the trial".

Terrorists will not have the last word and the financial capital of India will continue to be the "centre of commerce and prosperity," Bush said at the South Lawn of the White House upon his return from Camp David here today.

"We pledge the full support of the United States as India investigates these attacks, brings the guilty to justice and sustains its democratic way of life," he said.

Asserting that terrorists will not have the last word, Bush said Indians can count on the support of the US as they recover from the crisis.

"The killers struck this week are brutal and violent, but terror will not have the final word. People of India are resilient, people of India are strong, they have built a vibrant, multi-ethnic democracy, they can withstand this trial. Their financial capital Mumbai would continue to be the centre of commerce and prosperity," he said.

"As the people of the world's largest democracy recover from these attacks, they can count on the world's oldest democracy to stand by their side," he added.

Bush, who had spoken to Indian Prime Minister Manmohan Singh on Thursday, said the leaders of India can know that the nations around the world support them "in the face of this assault on human dignity".

been hearing Canada might be cutting interest rates soon.

An area i am weak on is inter-relationships between interest rates, equities, commodities.
throw in multiple countries and it becomes foggy to me.

So i understand cutting rates boosts equities for the short term but long term it has never worked. Also realize lower rates = easier credit = more spending = more money supply = decreasing currency.

And decreasing value in currency also causes commodities to rise. Hope i am correct so far.

Then i also see comments that gold and silver are highly correlated to the Canadian currency or FXC as an example. So that is what is causing my current confusion.

I guess another way to ask is:
what has the stronger correlation for Canadian miners, gold rising on fall of dollar, or strong Canadian currency?

Can gold/silver rally if Canada's currency becomes weak?

David -

20+ Treasury ETF - TLT - Jan 2010 @105 strike.
PUT spread = $12.90/$16.70

A limit order in the midst of that range might trade - say 14 or so. The premium feels kind of high (to me), but then again, you are paying for 13 months of time. TLT has traded in a range of $88-105 over the past year. You'd need a drop to 90 or so to make this worth it, if held to next year. Of course, if 90 happened in a week or two, you'd be off to the races. On the other hand, if the broad (stock) market goes lower, TLT likely could go higher (against your puts).

Like everything else, its a short-term volatility risk and no one has a crystal ball.
Perhaps DXD calls would hedge this?

(And there's also two prongs to Bill's TOG, which assumes you hold GG already, right?)

ALOHA!!

ON FIAT CURRENCIES
Its been a long race to mediocrity and fraud! Certainly as paper debases to oblivion gold and silver will move higher. The key is counterparty liabilities, which most definitely speaks to the C WORD! Global governments and their versions of "globalization" cannot be trusted!

IMAGINE
I was just watching two Beatles songs on YOUTUBE. One was filmed on the roof tops in London and the other was actually a John Lennon song called IMAGINE. Then I started thinking, "Were people back in the late 60s unhappy and impoverished more than they are now?" I also thought about back then when I saved up $3000 to buy a 1968 VW bug. I thought what kid in his twenties today can save up to buy a car? What do they do save up $30,000 for ten years and then buy a car? No ... they go into DEBT or they hit the LOTTO or Daddy gives them the cash! When I first moved to Australia my friends saved up to buy a car and hardly anyone bought on CREDIT then, least of kids in their twenties! That is the BIG HUGE difference!!!! In order to proximate the same living standards of the 1960s people now have to go into unending DEBT for everything. In fact even a down payment on a house is just financed!

Back to John Lennon and IMAGINE ... I first heard that song while I was walking on my way to the Night Bazaar in Singapore. I passed by a stack of flats and people there had their washed clothes hanging on poles to dry off their balconies and I looked up and I saw a guy had speakers out on his balcony and he played IMAGINE! You cannot miss John Lennon's voice or his songs. I thought it was an amazing and poetic moment to hear a song like that in a place like Singapore. I always recall that day when I hear that song.

Then I listened to U2 ... ONE!! Too bad John Lennon died so soon. ONE is a song Lennon would have appreciated very much ...

My point ... People were very happy without DEBT!!

Eliminate the US FED ... Why do we need them? A trained monkey can FAIL, even one that teaches at Princeton!

QUESTION AUTHORITY ... If Lennon were alive now he would most definitely do that ... FBI file or no FBI file!

IMAGINE a World without the need for unending DEBT!

DEBT DOES NOT EQUAL WEALTH !!!!

IMAGINE ... THAT!!!!

ALOHA !!

This is another reason David Walker, the US Comptroller General of the GAO quit ... The US government continually fails to keep adequate and legal records for consolidated financial reporting(CFR). I have found this same claim by the GAO every year.

Right out of the GAO report to the US CONgress on the financial stability of the USA. Imagine if your CPA turned in such notes on your 1040 form stating that your records were so inadequate that the CPA could make no "opinion"!

UNREAL ... Who's flocking to US Treasuries for WHAT?

This common statement is found in all the GAO AUDITOR REPORTS ...

“A significant number of material weaknesses related to financial systems, fundamental recordkeeping and financial reporting, and incomplete documentation continued to

1. Hamper the federal government’s ability to reliably report a significant portion of its assets, liabilities, costs, and other related information;

2. Affect the federal government’s ability to reliably measure the full cost as well as the financial and non-financial performance of certain programs and activities;

3. Impair the federal government’s ability to adequately safeguard significant assets and properly record various transactions; and

4. Hinder the federal government from having reliable financial information to operate in an economical, efficient, and effective manner.

Because of the federal government’s inability to demonstrate the reliability of significant portions of the U.S. Government’s accompanying consolidated financial statements for fiscal years 2006 and 2005, principally resulting from certain material weaknesses, and other limitations on the scope of our work, described in this report, we are unable to, and we do not, express an opinion on such financial statements. As a result of these limitations, readers are cautioned that amounts reported in the consolidated financial statements and related notes may not be reliable … END

What a joke! B+ here we come! You will see in this report where the Treasury Secretary files a letter saying they have complied with the GAO to improve reporting but then in the end the GAO files yet another AUDITORS REPORT stating the Treasury Dept is "trying" but still has many problems! This is just gratuitous GAO crap with an agenda not to upset CONgress or the Treasury.

COME ON!!! How many chances to we keep giving these criminals?

Who will US VOTERS vote for when OBAMA'S "CHANGE and HOPE" fails? ROMNEY on the Rep ticket? We are getting what we vote for and those who keep voting these thugs into office cannot be complaining one bit. You got what you deserve!

Here is the link to read the AUDITORS REPORT which starts on page 159 of the FY 2007 FISCAL BUDGET REPORT compiled by the GAO.

Link: http://www.gao.gov/financial/fy2007/07frusg.pdf

GOVERNMENT IS ONLY AS HONEST AS ITS MONEY ...

CHL - No position
Chart: http://tinyurl.com/58zssg

base building action.
possible inverse head and shoulders?
down from $101 all time high about 1 yr ago.
down 50% in 4 months.
No volume conviction.
GICS 50, Cara 100

This might be worth a look soon for a watch list candidate. #1 mobile phone carrier in the most populated country in the world, with less than 50% market penetration for cell phones there.

http://tinyurl.com/64g238

Where else can you get charts, the NFL, Phil Vassar, and Herman Wouk in one column?

re: Shopping and recession signs

While the mobs may be shopping i believe it is a questionable sign regarding the economy's health.

Media report this AM gave optimistic view based on number of customers swarming at stores and said, "Black Friday has obviously put retail in the black as hoped."

Sales are not profits — margins are slim to negative. Stores unable to get adequate fuunding MUST sell at any price to raise cash for spring inventory purchases.

I remember when Bill Moyers' crew came here a few years back and were given a tour our our empty manufacturing district — hundreds of thousands square feet of empty factories. The local host, owner of a small machining company and supplier of auto and appliance parts, told him that he and his son had taken no salary for over two years in an effort to keep from laying off long time employees.

The interviewer said at least the Bush tax cuts would be a plus in times like this.

The owner practically had to draw him a picture in trying to make it clear...

When you have NO EARNINGS tax cuts are meaningless.

Likewise, when you sell at a loss — you do not go into the BLACK!

As long as a single credit card is accepted people will shop — paying for it is a whole other issue.

I took my 4-yr-old car in for service last week. (Mine is their lowest price model.) Interestingly, the top of the line is now on sale at "employee cost" — nearly $600 less than mine cost back then. (I did not swap.)

AS Kaimu stated, "Its been a long race to mediocrity and fraud!"

Among the affects of globalization in the U.S. we now have:

• Fewer employee benefits and lower job quality.
• Tainted food, including baby and pet food
• Anonymous tech support from people who have been told to use American sounding names (using non-American sounding voices) I found out the hard way some can sound very confident about a Mac while knowing zip.
• Port security a blind burglar could overcome
• Imported Ph.Ds working at jobs our BA & BS grads could be getting
• U.S. companies and even tollways and bridges with foreign owners
• The first generation who is economically worse off than the previous one.

When NAFTA was up for a vote I asked my representatives, "When you dilute blood with water, how low will it take to make it pure blood once again?"

Contrary to Thomas Friedman's view the flattening of the world is not all joy and celebration — AND I'd love to tell him where he can put his Lexus and Olive tree!

Kaimu,

My last post covered the economic dilution, but I have no idea how we can do anything about the fraud committed or condoned by our elected and (even worse) appointed officials.

It seems nearly universally accepted that a candidate cannot speak or show his true beliefs and feelings and have any chance to be elected. Both Obamas quickly learned to modify their comments early — "clinging to guns and Bibles" and "first time proud."

Congress has complete control of their own pay and benefits. Can avoid any issue forever through the committee system. Uses the media to divert attention to baseball steroids and hanky panky while tax reform, unfunded entitlements, immigration, port security, financial conflicts off interest and others are held in limbo.

The congressional approval process allows them to stack the Supreme court and control or delay indefinitely other presidential appointments.

By using appointed surrogates like the FED, Fannie and Freddie, and long time bureaucratic agents they award favors without appearing to do so.

They have become the equivalent of the old European aristocracy. If Tocqueville were to visit today it would be astounding how much we have devolved into that which he hoped to change to our model.

Those who do their best, like David Walker, are simply ignored until they give up in frustration.

Any practical ideas on what we can do about this?

plus I think Thomas Friedman's style of writing is boring...

Kaimu - is your recommendation that everyone (everyone that cares, anyway) be in PMs at this point?

The death knell for fiat currency - ok, hear you - but we all need cash to live and meet our day-to-day obligations (food, rent, whatever).

And I can't recall much of an uproar when the silver was removed from our coinage (beginning in 1965, in which I was seven, so I might have remembered it; gold would be another story, of course).

So even though I understand part of the problem, what, then, is going to be the solution or proposed solution?

Goldbug,

There were a few who saw the removal of silver as a time to start saving any coins which still had some silver content.

My father-in-law and I piled up a pretty good stash which I still have — a bunch of silver dollars we picked up at banks and then whatever we got in change. We resisted cashing it in the Hunt Bros. run-up.

It's just been sitting in the basement and survived a burglary in 1983. (They don't like to chance being trapped in a basement.)

Grym, yes, I remember the excitement of finding a pre-65 quarter when I was a teenager in the early-mid 70s, but I've not seen one in change in over 30 years now...

But does anyone believe the US (or anyone else) could possibly return to a bullion-backed currency at this point...

You would have done well (possibly, depending where you re-invested the proceeds) selling silver at the height of the Hunt brothers fiasco in 1980...

I still maintain a sockful of Morgan dollars, Walking Liberty halves, etc etc - they're cool to have and hold...these days I like 1 oz. Maple Leafs; sadly for the little guy (less than 500 oz), it's almost 40% juice over spot...

About TLT options:

Might not the rich premium and high open interest on puts be due to those long on treasury bonds looking to hedge their position? Is the TLT option activity a definition of a "crowded trade?"

Also, I wonder if TLT goes under 100 if that might not boost all the puts under 100, more so than previously reliable metrics of options pricing might predict. It seems like there is a big world of traders and market movers out there who regard this safe haven flight to treasury stuff as extremely instable. So it might not be a bad move to pick up some 80 puts, even though TLT might not get lower than, say, 90, because the stampede out of treasuries, when it begins might easily boost the premium paid for that strike price.

Otoh, isn't it quite likely that, just as bonds have broken records on the upside, then they might well break records when they go low, and that the TLT could breach 80?

One Man’s Military-Industrial-Media Complex from NY times

http://www.nytimes.com/2008/11/30/washington/30general.html?pagewanted=1&hp

re:TLT. Indeed, most of the open interest in the LEAPs are well below 100, in fact, below 80 (max-pain for Jan2010 is 95). When there is a flight to safety, however, yield pretty much goes out the window, as we are seeing in the current situation. My point is, in these crazy times, we have to ask: short-term, how low might the yield on 20+ T-bonds really go. No one knows the answer. I'd say they are overbought, ok, no argument. But that begs another question - where is all the money from the hedge fund liquidations ($40 billion for October alone, probably much more to follow) going to?

Re TLT and options, why not simply buy TBT?

Goldbug,

Yes, the search to quantify and time The Great Deleveraging--The Key to the TOG. . .

Here's some data I've seen proffered as proof that the hedgies are winding up their unwinding:

This link shows short interest on the NYSE fell 1.8 percent in mid-Nov:
http://www.reuters.com/article/marketsNews/idINN2530943420081125?rpc=44

Otoh, I'm mindful of Bill's directive that it's the fluctuating fortunes of JPM, C, and BAC that need to be watched, to gage the flow, or lack thereof, of the liquidity needed to get the markets moving, and thus end the Treasury fetal retreat.

Hey Westcoaser,

TBT has no options. I don't like to tie up more than 1 or 2k with any given trade, so a stock only position make no sense for moi.

Most of my savings is in physical gold and silver, bot when Au was 500 and Ag was 7. Still fuming that I didn't sell the stuff in March.

You're still ahead in AU and AG, and you may not be fuming come next March, or the following.

I've been watching the upward move in AUY the past few weeks, noting that PM issues have done well in Jan and Feb (bought 300 at 12.95 last Dec 27th, sold Feb 27th at 18.45).

The April 10 calls are fifty cents bid, .65 ask. Interesting (to me). No current position in AUY options; holding 300 shares of the stock, slightly underwater.

Also considering GFI, again, no current position.

Kaimu,

Your advocating that people avoid going into debt is irresponsible and wrong. If people take your advice and do not go into debt, they will not be a part of the ever-expanding debt-pyramid and therefore are rendered useless to all the rest of us debtors. In addition, the risk associated with taking on vast quantities of debt has been vastly overstated as we've seen recently, knowing as we now do that he who is in an ocean of debt will be the next to receive a taxpayer funded bailout with a big Christmas ribbon on it, compliments of Kaimu and the other responsible stewards of wealth:)

Debt is good...Debt is good....
(repeat in perpetuity)

Linear verses log scale?

Oil has broken out the linear downtrend but has not on the log scale chart.

Which one is the best to use?

Tbar "Oil has broken out the linear downtrend but has not on the log scale chart. Which one is the best to use?"

Both, depends on application. I use log to get an appreciation of the long term relative movement of prices. But day to day I use non-log. Are you using a log/semi-log trend line when using a log/semi-log scale? If you have a chart on semi-log/log scale and use a linear trend line it simply gives you a straight line of no relevance. A semi-log trend line actually curves as plotted between price points, which makes sense.

I think the new WIR that Bill put out is totally awesome...he rules

[Bill Cara note:

Thank you. I do what I can in the time I have available. Today I had to return a couple hours later and delete several paragraphs in the first section. I seldom re-read and edit my stuff -- I just let it flow, and then hit upload. Today I was rushing and never gave it a second thought. After my return from a BBQ, I was reminded by a follower here that I should not let idiots piss me off, and end up challenging the whole community. That was good advice, so I deleted the section.]

seadog at November 30, 2008

I am using logarithmic as per stockcharts:
http://tinyurl.com/6reuqw

and linear per stockcharts:

http://tinyurl.com/6moffl

Per the $hui we see the same thing so one of the charts is a precursor and one is not I would think?

On long term charts I like the dow linear fans as important key supports,seems every chart dances to a different tune to keep us on our toes?

http://tinyurl.com/3fq25z

More countries central banks going to ZIRP (Zero Interest Rate Policy). UK may want to join the EURO - ECB going to cut soon (one of many more to come, they need to catch up).

If the modernized world is at/going to ZIRP and the globe needs more credit introduced into the system to prevent monetary collapse...
Someone please explain to me two things..
-If over night rates are at ZERO, why wouldn't a ten year bond be below 3%?
-If the world needs more debt to prevent monetary collapse, who could issue the debt?

Here is the oil ihs I was watching friday, nearly shook me out as I had I bought hou.to prior to the dip. 62ish seems like the po?

http://img153.imageshack.us/img153/3277/oilihscp7.jpg
hopefully more than an active imagination but it is uncanny that the bounce was so strong and up through the neckline and on good volume.

Tbar,
To my aged eye the scales on both charts are not that different so you are only getting a subtle appearance between the two. Personally I prefer electric fans (sorry, my warped my sense of humour!).

I spent some time reading Michael Lewis "The End" from Conde Nast. It's been posted before, but in case you missed it, it's got everything that is troublesome about capital markets in it, written in Hunter S Thompson style.

http://tinyurl.com/64mm8l

Bill - "insider bankers liked the Geithner choice – he ran the New York Fed and is one of them – and they couldn’t hold their greed in check, so they issued their monster buy orders – illegal as hell I might add, but who’s really minding the store these days anyway."

My immediate concern at the time was why/how Wall Street seemed to have advance knowledge of the coming Geithner announcement. I recall the 3:00pm gun well, it actually began slightly before, if I recall, then outsiders quickly jumped aboard into the close. It seems perhaps nothing has changed? I think Obama has his back against the wall, we'll be extremely fortunate if he's smart/determined enough to maneuver the hurtles.

Grym - Barney is our lame-duck president's dog. Remember, he recently bit a reporter? He's the smartest "dog" on the block.

Great WIR, Bill.

For the last few days I've been trying to get my head around all these historic moves. Friday has, however, thrown me for a loop: continued US$ strength, EXTREME up-moves in treasuries, and continued rallying in equities, especially non-U.S. markets. What the hell is going on? Who is buying all this treasury crap? Is it just the Fed monetizing at any price? Or does this portend some imminent nastiness in the markets? Doesn't help that so many asset classes have rallied so hard recently that they have reached oversold conditions and key resistance points in their downtrend-lines. Very interesting to hear that you will be monitoring the "defensives" vs the "high betas" at the open on monday.

It looks to me like the stock indices tried to go down since Tuesday, but inexplicably were ending higher. On Monday, I think, we'll get a real down day. So I just placed a sell stop limit order (stop $3.35, limit $3.3) on the 2000 shares of SLW I purchased last week with an average cost basis of $2.77. If this order gets hit and then SLW keeps moving higher and higher in December, then I'll be very happy, as it will give me a chance to close my SLW $2.50 calls with decent profit as well. If this order gets hit and SLW drops down below $2.80, then I'll start buying shares again.

I meant "overbought conditions" not "oversold conditions" in my last post.

Tbar, re Log vs Linear chat scaling

I posted some ideas on this subject last month also. 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. (Note technically its semi-log but everyone refers to it just as Log)

I put together the following image which shows the comparison of linear vs log charts for both 5 & 10% growth per period. I also show how it would look if there was a change in growth, 10% 1st half the 5% for the 2nd half.

http://tinyurl.com/3emae6

Now here is the chart of the INDU from 1980 to present, linear and log scales. The advantage of the log chart for long time frames is that a 10% price change anywhere on the chart is represented by the same vertical "Y axis" distance.

Note I've also added the MACD to the bottom of the chart, for long term charts this is also a problem because its based the magnitude of price movements over time. Price movements today are very much larger than they were in the 80's, BUT we really need to look at the percentage changes to make a fair normalized comparison over time. Thus I use the PPO, which is exactly the MACD but calculated on a percentage basis and as you can see provides better long term information.

http://tinyurl.com/5yox7x

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

Quasi

Quasi - thanks for that VERY helpful post ont he basics of linear vrs. log scale and MACD vrs PPO.

It's too easy to give charts and indicators a life of their own, without keeping in mind how they work and what they are actually saying.

We want to judge reality, not to build sand castles in the air ... Thanx

when are we going to officially move to the other site?

Blue Bluff,

Migration to the new site will be soon, maybe a day or so.

Korvus will post a message that you'll see when you log in, or you may just be automatically redirected there when you try to login here.

kaimu,
Fortesque ASX:FMG up 21% today in AUD.
ASX Mining Index down 2.1% today.
So why a 24% differential?
Rumours negative: BHP wants to buy (doesn't make sense); short covering (no say key institutional stock lenders)
Rumours positive: FMG will do a large placement to a Chinese investor.
Your strategy on course!! Big bikkies, well done so far.

http://tinyurl.com/5p8q6y

You've got 'all kinds of time'.

Quasi at November 30,

Thanks for the great explanations.

Wow. What the *heck* happened to the POG?

I'm having trouble with the new site...Entered my old username with a new email address and I seem to have entered a black hole.

Shark

Haven't seen this before, you should receive your account and login info by email within a few minutes of entering, maybe within 30 minutes if things are busy.

I would also check to see if your email client program thought the email was spam, it might be in your junk or spam folder, ie because that sender is not in your address book, if you then add that email address to your list it will know it is not spam.

If that is not the case, Jeff will see this shortly and look into it.

shark- for me, the link was directed to the spam folder...

today's dicourse isnt updating comments.

gold getting smacked. just in time for people to claim its because of the treasury auction.

wonder where all the COMEX conspiratorialists are about default on the December contract. i guess they will just advance their theory to jan, then feb, then march...

http://tinyurl.com/6mpf3w

Bernanke's Gambit: Monetize the Debt. Frankly, he disgusts me.

http://tinyurl.com/66bjtw

Includes "The I told you so" video about the foolishness of the talking heads.

Ron,

I expect we will see Bernanke's picture on the new currency's $Trillion bill. (Replacing the old $1 bill.)

My first recollection of Bernanke's existence was an article he wrote for the WSJ a few years post NAFTA saying we were not actually experiencing job losses — we were replacing all those messy manufacturing, low brainer jobs with better paying service ones.

At the time, here in our city we were approaching the 10,000 job loss figure. If he had been speaking within arms reach I am confident he would never have lived to become FED Chairman.