Cara's Commentary & Community Chat, Fri., Apr. 3, 2009

[7:15am ET] Yesterday I remarked that


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London
London
April 6, 2009 3:29 pm

EBS from late last week idea, took out 12 and now at 12.80.

Grym
Grym
April 5, 2009 11:13 am
vinod
vinod
April 5, 2009 2:12 am

I came home from a party and heard there from a person who works at ESLR. It is merging with someone. They going to announce soon

2nd_ave
2nd_ave
Reply to  vinod
April 5, 2009 2:21 am

vinod- The first useful post all day. Just kidding, of course. Thanks. (I knew I’d find a way to weasel out of my bet with shark 😉

jock
jock
April 4, 2009 5:02 pm

Remember in the 30’s, the price of gold was legally fixed by and backed up by the US gov’t. So, in the deflation of the 30’s, gold was likely the ONLY asset whose price was guaranteed not to fall. That is no longer the case. I believe that gold will once again go up, should we enter prolonged deflation, but it’s not a no-brainer. Only the chart will tell. Unlike gold-bugs, I don’t believe gold is forever – only until you can once again trust banks and their paper “fiat” money. So, maybe the new era of gold lasts only… Read more »

jock
jock
April 4, 2009 4:54 pm

The british mining analyst & blogger who uses the name “inca kola news” today explains his namesake: a Peruvian soft drink which outsells Coca Cola in Peru. Quite interesting:

http://incakolanews.blogspot.com/2009/04/where-can

He covers Latin politics (with mucha opinion) as well as Latin American juniors.

Shiva
Shiva
Reply to  jock
April 4, 2009 6:49 pm

and thats owned 60% by Coke :), so is Thumbs up

jock
jock
Reply to  Shiva
April 4, 2009 7:00 pm

Shiva –

I didn’t know that. I guess only China can say NO to Coca Cola ! – 🙁

Chickenpookie
Chickenpookie
April 4, 2009 2:17 pm

Bill Black knows it is and he’s here to explain…

“The FBI correctly identified the epidemic of mortgage control fraud at such an early point that the financial crisis could have been averted had the Bush administration acted with even minimal competence. To understand the crisis we have to focus on how the mortgage fraud epidemic produced widespread accounting fraud.”

http://www.pbs.org/moyers/journal/04032009/watch.html

Dave M
Dave M
April 4, 2009 4:14 am

I know he doesn’t have many fans here, but I still think he provides an interesting counterpoint. He is also bearish on gold, feeling we are in for a deflationary period rather than inflationary.

http://tinyurl.com/d93ref

Bill Cara
Bill Cara
Reply to  Dave M
April 4, 2009 10:44 am

Gold is an excellent asset class to hold during periods of deflation. That was proven during the 1930’s. Re “Roubini… doesn’t have many fans here…” The people in this community understand, I think, that our job is trading and Roubini is not a trader. It is very difficult to make money following the advice of an economist. At the recent cycle lows, Roubini stated that the DJIA index would fall a further -30% and instead it has rebounded about +15%. Maybe in the next year, the DJIA drops back to its recent low or even possibly lower. Maybe in time… Read more »

Grym
Grym
Reply to  Bill Cara
April 4, 2009 1:45 pm
Bill Cara
Bill Cara
Reply to  Grym
April 5, 2009 11:28 pm

Grym, I agree with your comments about those two gentlemen. However, they do make explicit statements, and many people are affected. My point is that I don’t see how anybody — myself included — could make money listening to them.

loannetter
loannetter
April 4, 2009 4:03 am

In tribute to my mentors here: http://activerain.com/blogsview/1017762/Seven-Secr

I’m sure there are more…these stood out for me!

jock
jock
April 4, 2009 3:59 am

Both QQQQ held above its breakout level today. I had emailed Alex Elder about it, since Alex doesn’t believe in breakouts. (Maybe it comes from his Russian sense of irony? from not believing in happy endings?) Alex was not impressed, and repeated his mantra: “sell new highs, buy new lows”. Certainly, he’s right MOST of the time. Most breakouts are false breakouts, unless it’s a William O’neill, IBD bull market. BUT, today 170 of Morningstar’s 208 sub-industry groups were positive. Gold and silver were the worst performers of all (-5.37% and -5.64% respectively). 66 of the NAZ 100 (=QQQQ)components were… Read more »

proudPapa
proudPapa
Reply to  jock
April 4, 2009 4:42 am

I looked at the dow chart from 1929 to 1932 to get a sense of breakouts, support levels, etc, and I feel like I must agree with Alex. There look to have been many false breakouts in that time period. Left my chart markups at work, maybe I’ll look at it again over the weekend…

kaimu
kaimu
April 4, 2009 3:17 am

ALOHA !! Here is a crystal ball courtesy of Harvard! Well … what can we expect from past banking crisis? Here are some examples from a study done late last year called THE AFTERMATH OF FINANCIAL CRISIS. This study was compiled by the University Of Maryland and Harvard. I would not take it as gospel, but rather a minimal guide. At any rate even under this study we are a long way off from recovery contrary to what MAD MONEY says! Link: http://tinyurl.com/da9s6f For instance just on housing the historical average is a loss of 35.5% in prices over an… Read more »

Johnny
Johnny
April 4, 2009 3:12 am

This evening I watched the Saturday 4/3/2009 Bill Moyer’s Journal http://tinyurl.com/d7ay6c and was shocked to find a mainline media show, telling the truth about the financial fraud. Bill Black http://tinyurl.com/cgo8e7 was the main presenter of “Sharing the Blame for the Economic Crisis?”. It was the type of information I knew, read about and discussed on blogs and even wrote my politicians about, to no apparent effect. Later journalists Amy Goodman and Glenn Greenwald explained how it is that the mainline media have such a narrow focus and fails to report on the broad spectrum of public opinion. It was some… Read more »

Grym
Grym
Reply to  Johnny
April 4, 2009 2:02 pm
Chickenpookie
Chickenpookie
Reply to  Grym
April 4, 2009 2:34 pm

True, the congress and the banking industry are like an infant; a voracious appetite at one end and absolutely no control or sense of responsibility at the other.

“There are no guarantees!”

In consideration of the magnitude of this crisis, this statement alone makes me puke.

More Bill Black:
http://www.huffingtonpost.com/william-k-black/the-

loannetter
loannetter
April 4, 2009 2:56 am

Prabha?

Shiva
Shiva
Reply to  loannetter
April 4, 2009 3:18 am

not me, that must be somebody else 🙂

2nd_ave
2nd_ave
April 4, 2009 12:51 am
Grym
Grym
Reply to  2nd_ave
April 4, 2009 1:52 pm
Finger Lakes
Finger Lakes
Reply to  2nd_ave
April 4, 2009 1:35 am

I guess it’s a baby step but I’d like to see him take a more hard line with them. This executive pay and bonus issue is nothing compared to most of what’s going on. If they’re so set to pay back TARP why have we promised them 12.8 Trillion? How about we see their balance sheets including off balance sheet stuff? Oh that’s right they don’t have to show us or tell us anything. Where are the strings and conditions on the money Geithner and company promised were coming? Why is Obama practicing “trickle-down” Economics? Isn’t that what the other… Read more »

proudPapa
proudPapa
Reply to  2nd_ave
April 4, 2009 1:32 am
proudPapa
proudPapa
Reply to  2nd_ave
April 4, 2009 1:29 am

“And he (Dimon) said his industry needs to explain more directly to the American people that the economic recovery plans are already working.”

Hmm, foreclosures have stopped increasing? Employment is rising? Consumer spending is on the mend? Bank failures are a thing of the past? Govt pensions are now fully funded? The FDIC doesn’t need the extra hundreds of billions any more? The deficit won’t be 2 trillion? Exports are picking up? Commercial vacancies stopped rising? What metric exactly is this guy looking at?

Finger Lakes
Finger Lakes
Reply to  proudPapa
April 4, 2009 1:40 am

Maybe the metric he’s looking at is that him and his buddies are ready to gobble up all the regional bank and community bank failures coming, dumping the bad assets on the FDIC and keeping the good assets. What better way to long lasting health than stripping your competitors of their lifeblood and discarding the carcass? I wonder if Garlic works against Super Bankers?

Rob.

proudPapa
proudPapa
Reply to  2nd_ave
April 4, 2009 1:24 am
2nd_ave
2nd_ave
April 4, 2009 12:45 am

For those of you in professions that are related to one (or more) of Obama’s pet projects, might want to look into applying for money that will be spent pretty much at the discretion of local and state officials. A group I put together last year (at first, in response to the opportunities that may arise during an economic crisis, and then more specifically in response to Obama’s initiatives) is trying to find a niche within the changes that are obviously coming down. Strategy is to be (a) first, and (b) ready to move immediately.

kaimu
kaimu
April 3, 2009 10:47 pm

ALOHA !! Warren Buffett was asked if he believed what his father Congressman Howard Buffett believed, which was this: “So far as I can discover, paper money systems have always wound up with collapse and economic chaos.” “Sounds like my dad, yeah,” Buffett replied, “I heard that every night at the dinner table for a long time.” The Congressman’s son may have heard his father at the dinner table, but he wasn’t listening. The entire article link: http://mises.org/story/3408 Dr. Cosa … what is money to you or for that matter any American? We are so out of touch with what… Read more »

kaimu
kaimu
April 3, 2009 10:52 pm

ALOHA !! Once again CHIMP ECONOMICS wins out! Eat a banana, arms flailing with loud cackles, twirl in a chair and throw the dart! AHH-H-H!!! The probabilities of actually hitting the “dart board of decisions” are slim and therefore CHIMP ECONOMICS has a greater success rate than Keynesian Economics! What did Churchill say of Lord Keynes? “If you put two economists in a room, you get two opinions, unless one of them is Lord Keynes, in which case you get three opinions.” With a CHIMP you get none! Just how scientific are “opinions” Sir Winston? I vote for the CHIMP!… Read more »

David
David
April 3, 2009 8:26 pm

I decided to free up some cash today and bought to cover 5 contracts of April FAS $5 puts at $0.25 which I sold a few weeks ago at $1.70. I figured that since I have already extracted most of the absolute profit from this trade, it is more important now to free up the collateral cash so as to be able to sell some puts again on a pull back if it comes next week. In the summer of 2007 I figured that since the economy is going down, the stock market is likely to follow it down, and… Read more »

2nd_ave
2nd_ave
Reply to  David
April 3, 2009 9:53 pm

David- No. I switched the buy-and-hold half into cash last Thursday (3/26) on market strength, then back into FIDSX/FSPTX/FSENX on 4/1 (when unexpected buying strength caused me to switch back to a bullish stance). So I was two days late on the re-entry, but was able to lock in about a 4.5% ‘gain’ based on ST timing. I also declined to get back into FSAGX on the re-entry, as I just don’t have a good take on the gold sector right now.

papadynamite
papadynamite
April 3, 2009 8:07 pm

Doc, I hear what you are saying. But the fact remains that we are now in a B wave of a bear market whereby we can retrace the S & P between 1000 and 1100 which would be approximately a 38%-to 50% retracement expected to last 3-6 months. Not straight up but in waves. In this rally, people are willing to take risk and want a return on investment. Gold does not give them a return but safety. Safety is forsaken for risk! Therefore, there is no interest to acquire gold. BUT, as I mentioned, the C wave will cause… Read more »

teamonfuego
teamonfuego
April 3, 2009 7:51 pm

closed out my small position. Short MOS via puts ($40 April puts) going into earnings.

teamonfuego
teamonfuego
April 3, 2009 7:14 pm

anyone follow this company? Looks like it could be a volatile one…

papadynamite
papadynamite
April 3, 2009 7:11 pm

Earlier today I posted about the gold technicals. Now I hear, from some of your posts that gold will not reach 1000 this year! That is totally hogwash!! Bill is not wrong! Gold will probably break 1000 within the next 6 months. Let me explain. The currently outlook, of which I previously wrote, referred to a short term analysis. Six months to 12 months is an intermediate term, perhaps 3 months to 9 months, could also be an intermediate term. This downturn will not last until the intermediate term. The period between September until at least November should be a… Read more »

dr.cosa
dr.cosa
Reply to  papadynamite
April 3, 2009 7:37 pm

papady, that was my personal opinion, im not here to call out Bill or anyone else, just giving my own thoughts. to be honest, i see nothing in the charts from a TA standpoint that suggests gold moving to the $2000 within the next 9 months. further to this your analysis reveals no objective justification as to why gold will jump considering we saw the SPX get creamed last year along with gold and gold stocks. gold ended the year on a better note but only thansk to a december run up, at the peak of the carnage the HGU… Read more »

tbar
tbar
Reply to  dr.cosa
April 4, 2009 11:56 am

“considering we saw the SPX get creamed last year along with gold “

Sorry but that is just not true one bit.

Spx fell 35% for the year and gold was positive for the year.

What did gold get creamed going up? lol The miners on the other hand got creamed maybe even worse than creamed.

Watch for a test of the 1980 high to hold,875 per stockcharts.com

dr.cosa
dr.cosa
Reply to  tbar
April 4, 2009 1:32 pm

Tbar, the second part of my sentence puts the quote in its proper context: “we saw the SPX get creamed last year along with gold and gold stocks. gold ended the year on a better note but only thanks to a december run up, at the peak” i was dealing specifically w/ gold’s behaviour during the crash, a period which people insisted would be one which gold held up as a safe-haven. mid july gold peaked at $980, it would hit $680 3 months later before moving higher. regardless of where we ended the year as a single price point,… Read more »

Dr. Strangelove
Dr. Strangelove
Reply to  dr.cosa
April 3, 2009 8:22 pm

dr cosa – Remember when oil ran up to $150/barrel last year? Commodities are bound to run up after all the tinkering ends – this week’s mark-to-make-believe, Euro central rate easing, and G20 grandstanding gave us an irrational rally and took PM down. It’s a rally ignoring Kaimu’s highlight of gov’t payroll tax free fall, Congress’ multi TRILLION dollar budget approval (hello?!), runaway unemployment report, Ben’s monetization of treasuries, and G20 hinting toward alternative currencies all THIS WEEK and last. Be patient and play some Billy ball like our fearless leader. I made strong money on SLW and GG over… Read more »

davefairtex
davefairtex
Reply to  dr.cosa
April 3, 2009 8:19 pm

Seriously dr.cosa you are right, short of a major event, the intervention in the gold market will keep it from rising. From my observation, intervention moves the price down $5 here, $5 there, day after day as soon as each big move up is finished. I am beginning to think that the smart trade is to go short following big moves, once buying pressure subsides. If we’re in this to make money, that is. Still, I do think the chickens will come home to roost eventually. We really are printing money, and our massive debt is unlikely to be funded… Read more »

jmorris1950
jmorris1950
Reply to  dr.cosa
April 3, 2009 7:51 pm

Right on, Dr. Cosa. A little too much magical and overly emotional thinking going on about gold. At the end of the day, it’s just a trade you win or lose.

Chickenpookie
Chickenpookie
Reply to  papadynamite
April 3, 2009 7:36 pm

“the S & P to the 500 level!”

Bill said this?

We’ve already seen a 50% drop in the market that didn’t really move gold very much. I’m not saying I know what’s going on here…

2nd_ave
2nd_ave
April 3, 2009 7:09 pm

Holding longer-term positions in C/BAC/MBI/SLW, in cash o/w. Going to pick up the 7-year-old for the start of spring break.

jdb633
jdb633
April 3, 2009 6:38 pm

let’s see if this move up

Dave

2nd_ave
2nd_ave
April 3, 2009 6:37 pm

Chickenpookie
Chickenpookie
April 3, 2009 6:35 pm

If I had kept my TNA which I sold March 20 @ $16.96, my gain would have been 26% to date. Instead, I bought BC that same day which is now up 35.74%. 🙂

AA to ZZ indicator is now 3.73

Finger Lakes
Finger Lakes
Reply to  Chickenpookie
April 3, 2009 7:38 pm

Great move. I have noticed that BC has been moving steadily up no matter what crude does. I remember when it used to follow crude pretty closely.

Rob.

2nd_ave
2nd_ave
Reply to  Chickenpookie
April 3, 2009 6:40 pm

CP- I must have been asleep at the wheel the day you explained the AA to ZZ indicator. Can you direct me to the relevant post?

Chickenpookie
Chickenpookie
Reply to  2nd_ave
April 3, 2009 6:56 pm

“I must have been asleep at the wheel the day you explained the AA to ZZ indicator.”

Simple, it’s the ratio of the difference in the gain across the NYSE to the mean total gain. Or that’s the goal of the calculation. I’m still working on this just for fun… Not meant for trading advice, the indicator has not been back tested and remains a work in progress. 🙂

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