Cara's Commentary & Community Chat, Fri., Jan. 16, 2009

[7:15am ET] The Obama Inauguration Rally starts this morning. Carnival American-style. Banks and Retailers, Energy and Basic Materials, Technology


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Grym
Grym
January 19, 2009 4:21 pm

I think this whole line of discussion is degrading to cannibals.

Luggie
Luggie
January 19, 2009 11:42 am
seadog
seadog
January 19, 2009 9:37 am
NYUGrad
NYUGrad
January 19, 2009 5:03 am

If i had more time to spare for leisure, i would start my own “America’s Most wanted Advisers” page. http://tinyurl.com/7hz68g “IDAHO FALLS – An article released Saturday by the Wall Street Journal says investigators have begun looking into a Ponzi scheme discovered in Idaho Falls. A Ponzi scheme is where money is raised from new investors to pay off earlier investors. The article says its costing investors as much as $100,000,000 dollars. According to the article in the Wall Street Journal, Daren Palmer, an Idaho Falls business man, is being investigated after the department of finance met with around 30… Read more »

goatmtn
goatmtn
January 19, 2009 4:16 am

Attached file is from Justin Mamis’s “Nature of Risk”

My take on it is that we are at the beginning of the “Discouragement” phase.

cheers,

doug

2nd_ave
2nd_ave
January 19, 2009 2:59 am

David/Vinod- Love, pride, and the illusions/(self-)delusions we engage in chasing either one…set in the Bangladeshi community of London’s East End…based on the novel…Salaam

Bill Cara
Bill Cara
January 19, 2009 2:31 am

Today in the WIR, I commented that crude oil could not stay at the 40 level (or lower) for long because the costs worldwide of extracting and delivering that oil have skyrocketed in recent years. I checked with a blog from a week ago by CP who was quoting data from a couple sources (unchecked) that shows costs as follows: oil and countries new Submitted by EDC on Mon, 12/15/2008 – 15:53. #3041 From Gartman/Mauldin Cost-year-’00-’07-’08-’09 Venezuela-$34-$91-$94-$97 Nigeria—$32-$63-$68-$71 Iran——$18-$49-$55-$58 Saudi-Arb-$23-$49-$55-$62 Kuwait—-$11-$45-$45-$51 UAE——-$05-$34-$42-$51 Algeria—$22-$26-$31-$35 Could someone in the know (or otherwise) please check this data? I think it’s quite important, and… Read more »

Dr. Strangelove
Dr. Strangelove
Reply to  Bill Cara
January 19, 2009 4:45 am

WSJ on Mon, 10/21/2008 with links to articles quoting gov’t sources – if “budget” = break even point http://blogs.wsj.com/environmentalcapital/2008/10/21/ Cost-year-’00-’07-’08-’09 Venezuela-$34-$91-$94-$97 EDC’s source Venezuela———-$35-$60 WSJ Nigeria—$32-$63-$68-$71 EDC Nigeria————$62-$45 WSJ Iran——$18-$49-$55-$58 EDC Iran——————-$55 to $60 (09 only) WSJ Angola—————–$65 WSJ Russia————-$70-$95 WSJ Iraq——————-$80 WSJ $60 (Iraq gov’t Plan B) $111 (IMF’s est for Iraq) Saudi-Arb-$23-$49-$55-$62 EDC Kuwait—-$11-$45-$45-$51 EDC UAE——-$05-$34-$42-$51 EDC Algeria—$22-$26-$31-$35 EDC Oil was trading around $75 when the WSJ article was published and below $50 a few months later when EDC’s data was published. Those are big changes in production costs coming from Chavez but he may have chased away… Read more »

2nd_ave
2nd_ave
Reply to  Bill Cara
January 19, 2009 3:34 am

A simple Google search led to the following, which quotes break even prices provided by the Bank of Kuwait. The link is dated 1/5/08, so the numbers are a year old. However, the numbers are so far off from the ’08 figures posted earlier I thought they would be worth posting. http://tinyurl.com/88odb8 “$100 per barrel: the line was finally crossed on January 2nd 2008. What does this imply for profits of oil producing nations? In order to run some numbers we have to consider a key measure called the break-even price which is the amount of money it takes to… Read more »

David
David
Reply to  2nd_ave
January 19, 2009 4:17 am

2nd_ave, the Bank of Kuwait cites the break even price of Canada’s oil sands to be $33. I spent a little time reading about this subject, and what I found on the web (mostly from Wikipedia) was that the initial estimates of the cost of oil extraction from Canadian oil sands were greatly optimistic. Once such projects got underway, all sorts of difficulties arose. One of which, as I remember, was the fact that there was not enough water to keep washing the oil from these sands at the sufficient rate. Another one was the labor costs pretty much doubling… Read more »

2nd_ave
2nd_ave
Reply to  David
January 19, 2009 4:45 am

David- I was a little surprised at the oil sands break even price also. Can’t think of any particular reason for the Bank of Kuwait to publish ‘optimistic’ figures, but you never know. Also wonder if the numbers refer to a particular type of crude, or some composite; right now Brent is priced about $10/bbl higher than light sweet.

Mark Barry
Mark Barry
Reply to  2nd_ave
January 19, 2009 5:11 am

Had lunch today with the ex chairman and ceo of one of the largest oil companies in the world. We talked about the oils sands in Canada and he pegged the recovery price @ $48.00/barrel. Also an interesting comment that the US is doing the same stupid thing and ignoring the opportunity to shift away from crude.
He pegs oil to bounce back and forth between $40 & $50 and break through to end the year at $70.
If this type of comment is not helpful to the community I will stop posting them.

seadog
seadog
Reply to  Mark Barry
January 19, 2009 9:58 am

Mark,
Comments are eagerly accepted. It’s up to each of us to evaluate according to our beliefs as Van Tharp would say. Keep ’em coming. The 40/50 cycling sounds logical, makes sense but logic flies with the fairies past the Cuckoo’s Nest these days.

swissrobinson
swissrobinson
Reply to  Mark Barry
January 19, 2009 8:20 am

Thanks Mark, I’m a newbie here but excited by this discussion into oil futures. It sounds increasingly profitable.

jack black
jack black
Reply to  David
January 19, 2009 4:32 am

I agree, the bank of Kuwait numbers seem like a gross underestimation, especially for Canada, but Bill’s numbers sound too high.

But, there is a huge difference between the cost of running old fields (Saudi’s boast about $5/barrel in their best fields) and the new projects just coming online. Thus, one can quote radically different numbers and still be correct.

Johnny
Johnny
January 18, 2009 9:46 pm

http://vimeo.com/1778399 or sort of like a day in this market.

Chickenpookie
Chickenpookie
January 18, 2009 8:28 pm

” CHENEY’S ONE REGRET: I SHOULD HAVE TRIED CANNIBALISM

‘I would have to choose more conservatively, and maybe look for someone with a little less gristle, perhaps Sarah Palin.'”

http://www.legitgov.org/shulman_cheney_regret_1701

swissrobinson
swissrobinson
Reply to  Chickenpookie
January 18, 2009 9:06 pm

” CHENEY’S ONE REGRET: I SHOULD HAVE TRIED CANNIBALISM”

I dunno Chickenpookie, are you agreeing to the sentiments uttered by the Vice-President?

That’d put you within a toehold of getting barred.

I for one am offended by Cannibalism 🙂

Somehow, I just don’t think the next administration is going to provide as many possibilities for lampooning as the present. I’ve enjoyed McClatchy’s political cartoons for years. Pity, but all good things must come to an end…

LE.s

Chickenpookie
Chickenpookie
Reply to  swissrobinson
January 19, 2009 12:45 am

swissr – Both are “ralf on your shoes” offensive IMO. I’ve pointed out many times here how beltway insiders believe in themselves even to the last detrimental moment and expense of the country, this time even to the world… They cannot grasp the concept of having done harm in their quest to service their own interests, it isn’t within their means.

score22
score22
January 18, 2009 8:26 pm

macd, rsi, & ma’s work sometimes but not all the time. when i guess on direction, i theortically have a 50% chance to be wrong. but in practice results are greater than 50% wrong. macd, rsi, & ma’s show what has already happened. they may have just a 50% chance to predict what comes next.

Bill Cara
Bill Cara
Reply to  score22
January 18, 2009 9:37 pm

Re: “…in practice results are greater than 50% wrong,” I strongly disagree. You have given no time frame, and you have shown no understanding of the nuances of technical indicators to make your statement, other than of course, they don’t work for you. It sounds like you believe in the so-called randomness of prices. I think there are next to no professional traders who accept that academic nonsense. But, having said that, maybe you have discovered a better way to trade. We are all ears. That’s why I blog. I’m here to learn.

swissrobinson
swissrobinson
Reply to  Bill Cara
January 19, 2009 7:58 am

>Re: “…in practice results are greater than 50% wrong,” I strongly disagree. You have given no time frame, and you have shown no understanding of the nuances of technical indicators to make your statement, other than of course, they don’t work for you. Having said this, and with the understanding that most of us will never invest as much time as a professional like Bill, are there any websites out there with a good introductory overview of technical indicators? This RSI indicator I’m picking up here is neat, I’ve learned to read the moving averages chart, what is another useful… Read more »

NYUGrad
NYUGrad
Reply to  Bill Cara
January 19, 2009 2:03 am

Not sure if score22 was bashing indicators. my read of his post was, even with indicators the price may move against the trader. more of a cautionary tale i guess. I am still learning but the indicators worked almost to perfection the past two weeks for me. I have the gains and extra shares-earned to prove it. http://tinyurl.com/8scw8g Just hope the quality of my logic is increasing as i continue to learn from the group here. one thing i am learning from comparing my results of the past 2 weeks on actively trading SLW vs Aug 07-Mar 08 rally (which… Read more »

Bill Cara
Bill Cara
Reply to  NYUGrad
January 19, 2009 2:44 am

Either you believe that prices (i) are random, or (ii) are based strictly on fundamentals, quantitative or economic factors, or you believe (iii) have trends and cycles that exist in the price series data that can be analyzed by simple mathematics we refer to as algorithms or technical indicators.
http://en.wikipedia.org/wiki/Algorithm

I dispute the first; disagree with the second (although I believe that all are factors); and I wholeheartedly endorse the latter. However, I acknowledge that trading involves as much or more art (ie, subjective interpretation) as science (ie, mathematics).

nemo
nemo
Reply to  Bill Cara
January 19, 2009 5:37 am

Had to put my .02 in on SLW and the claim the fellow missed the technicals on SLW. I’ll start in Jan for S&Gs. I think that’s where the gentleman lost the rise in the $10 handle on SLW. Starting on about 5 March 2007 to 17 March there was a fall in the price from approx 9.50- approx 9. Higher lows in RSI-9 and Stochastics occuring on approx 17 March which were divergent from the fall of the stock, and presaged, as such divergences often do, an increase in price. Within approximately 3 days a positive stochastic cross occurred,… Read more »

NYUGrad
NYUGrad
Reply to  Bill Cara
January 19, 2009 3:07 am

I now subscribe to (iii).

I remember an actual class at Stern Finance at NYU when a professor tried to teach us (i), and money cannot be made in stocks short term on any reliability. And i recall thinking to myself “why the hell am i here?”

Craig
Craig
January 18, 2009 7:58 pm

Korvus: Thank You, I think you may have explained it, outside of it not recognzing me the second time. I used the Remember Me option the second time and here I am! So far so good. 2nd: The port is doing better than last year although still down. I’ve been working my way back and my set-up so far has been catching the turns and trends pretty well. Nobody wins them all but I am ruthless these days if a trade turns against me even a little bit and I ride the winners as long as I can and sometimes… Read more »

TradingMyChips
TradingMyChips
January 18, 2009 5:30 pm

A good trader has a reason for entering a
trade. A great trader waits until the signal triggers and then acts on that signal(Quote from John Person).

Scaled into AGU.TO @ 40.00 (Tuesday )and 41.64 (Friday).Will try to post signal triggers later.

Thanks gents …for all the great posts

TMC

2nd_ave
2nd_ave
January 18, 2009 5:16 pm

http://tinyurl.com/777w5e sometimes i wonder how i would deal with living in, let’s say, the home my grandfather built, but adjacent to a neighbor (maybe two or three) i just can’t get along with…i could ask them over for dinner, and look for common interests…send the kids to the same school(s), have them try out for the same teams, or maybe just back away from passing down the same hostilities…if the adults are able to keep to themselves, but the kids insist on confrontations, i could build a wall around my home to minimize the disruptions…if even the adults can’t avoid… Read more »

swissrobinson
swissrobinson
Reply to  2nd_ave
January 18, 2009 8:57 pm

>so in a way, resolving the conflict is beyond human capability…but here we have two cultures with strong religious influences, and both religions believe in the existence of/need for a higher power… Not my preferred subject for public discussion 2nd, but the history of this region is fascinating. Allow me to throw off a few titles touching on Israel/Palestine for those interested in further reading. Karen Armstrong is a former nun come atheist (does believe in a higher order, but not the christian doctrine or idea of god, something I subscribe to). Focus on religious fundamentalism (Christian, Islamic and Jewish)… Read more »

2nd_ave
2nd_ave
Reply to  swissrobinson
January 19, 2009 3:14 am

“..the history of this region is fascinating.

Allow me to throw off a few titles touching on Israel/Palestine for those interested in further reading.”

swissrobinson- i know next to nothing about the region, and was thinking about a trip to the library earlier today…appreciate the references…

score22
score22
January 18, 2009 5:07 pm

http://watch.bnn.ca/#clip124283

RICHARD Croft outlined two similar short straddles on Dec 24…..

interesting video…….

Quasi
Quasi
January 18, 2009 4:58 pm

Reminder for options traders, the OCC issued a new memo this week explaining the new option adjustment rules for dividends and distributions. The old 10% rule for special distributions is being modified, some new interpretations as to what is special or extraordinary and the introduction of a new threshold limit for adjustments of $12.50 per contract. http://www.theocc.com/market/infomemos/2009/jan/25… Just thought some might be interested, also per the discussion earlier on this thread here is an excellent tutorial from OCC on the subject of option contract adjustments. Most sections are pretty straight forward for stock splits and distributions, but have a look… Read more »

Johnny
Johnny
Reply to  Quasi
January 18, 2009 5:09 pm

Quasi, Thank you for the post.

Grym
Grym
January 18, 2009 4:37 pm
yvrapx
yvrapx
Reply to  Grym
January 18, 2009 5:03 pm

Grym I have both, Mac PowerBook and PC. Ran Safari when it first came out because it was infinitely better than IE. Once Firefox arrived both Mac and PC went to Firefox. Here is the prob, the new version of FF is brutally slow so I began using Chrome for the PC and love it. Will definitely use Chrome for the Mac when it is released. Chrome is the way to go IMHO

Grym
Grym
January 18, 2009 4:27 pm
Johnny
Johnny
Reply to  Grym
January 18, 2009 5:06 pm
Craig
Craig
January 18, 2009 4:16 pm

Used my usual favorites link to the Cara Community, like I have since 2004, and it didn’t recognize me so I had to sign in. Ah…all is well, I see 2nd is up….. Jumped to Ron Sen’s excellent and *scary* weekend missive, jumped back to Cara Community and the site doesn’t recognize me again and I have to sign in again. Hmmm? I don’t know if anyone else is experiencing this or of it’s my ISP. Maybe just a glitch.

korvus
korvus
Reply to  Craig
January 18, 2009 6:12 pm

Craig, Have you tried clicking the “Remember Me” box when you log in? The reason I ask is because I was having problems with some users getting logged out eventually (logins were set to expire in something like a month), and it was causing some odd behavior. So a week or two ago I set logins to expire whenever you closed your browser UNLESS you clicked on “Remember Me”…in which case it would keep you logged in pretty much forever on that computer. I think you still have to log in to access your user page, but that’s to prevent… Read more »

2nd_ave
2nd_ave
Reply to  Craig
January 18, 2009 5:35 pm

craig- the market’s been goofy, no doubt about that…how is the port doing…my trading half vastly outperformed the better half (buy-and-hope, LOL) this week…at one point i was 21% in SLW, now back to 7% + March calls…scaling into crude oil, and getting ready to jump on board any rally with OEX calls…buying calls/selling puts on the breakout in PALM on Thursday would have been the play of the week (and i think Vad’s group played it)…

Craig
Craig
January 18, 2009 3:16 pm

BAC cut the common div to 1 penny, did the preferred div get cut?

If not then exchanging common stock for preferred might be a good idea….if it comes to you.

Craig
Craig
January 18, 2009 3:16 pm

BAC cut the common div to 1 penny, did the preferred div get cut?

If not then exchanging common stock for preferred might be a good idea….if it comes to you.

yvrapx
yvrapx
Reply to  Craig
January 18, 2009 4:47 pm

No, there is no impetus to delare any commom div, however, if common is paid one Prefs are in line first to get theirs. Would imagine the Prefs are non-redeemable and cumulative.

greg
greg
January 18, 2009 2:32 pm

Since BAC took the 20B from the TARP on Friday, does that mean that the common shareholders were diluted by the preferred shares that the treasury recieved for the 20B loan? Is that why the stock dropped and what is a good stock price for entry into this company? I was reading on Pimco’s site that Bill Gross thinks that all of the banks will be nationalized at some point in time. Maybe that is a good thing from the standpoint that the government would hold the US homeowners mortgage loans. The government could have a monthly payment moritorium in… Read more »

Johnny
Johnny
Reply to  greg
January 18, 2009 3:19 pm

1/16/09 BAC article http://tinyurl.com/7a9gjb “BAC will sell an additional $20 billion of preferred stock to the U.S. Treasury, at a fixed coupon of 8%. Also BAC and the Treasury will enter into a loss sharing agreement on a pool of troubled U.S. based assets, the majority of which are legacy MER holdings with the remainder being similar holdings from legacy BAC. Under this loss-sharing arrangement, BAC will absorb the first $10 billion of losses, with any losses above this level to be absorbed 90% by Treasury and 10% by BAC.” Additional interest payments reduces the money available to pay dividends… Read more »

Johnny
Johnny
Reply to  greg
January 18, 2009 2:54 pm

Greg, 1st – I’m no expert, but… Holders of preferred shares are ahead of common share holders in the long line of BAC creditors. So an increase in preferred share holders means there are more shares in line ahead of common share holders incase of bad news e.g. default, bankruptsy, company breakup etc. So this is not good news for common share holders and others back down the line. I suppose there may even be a formula for determining the adverse impact. The 20B in TARP funds makes BAC look more likely to survive for awhile, while underlining their dire… Read more »

Chickenpookie
Chickenpookie
Reply to  Johnny
January 18, 2009 3:20 pm

So the market cap was chopped in half… ~$30B and they received ~$20B in trade. Looks like BAC is hunkering down for some lean and mean times, fleeing from shareholders to govn’t monies – no surprise there, huh? Elimination of the dividend places BAC shares off-limits for any portfolio geared toward fixed-income, distilling BAC into a pure speculative play IMO, herding the masses back toward the Treasury corral. BAC shares are safer now probably, and their TA improved Friday, so there’s likely an short-term undershoot recovery coming. I expect long term they’re stuck in the mud until loan repayment. So… Read more »

Johnny
Johnny
January 18, 2009 2:30 pm

http://tinyurl.com/5vpus9 favorable mention of slvr, lot’s of charts and comment

FranSix
FranSix
January 18, 2009 11:33 am
QT
QT
Reply to  FranSix
January 19, 2009 1:20 am

FranSix

Amazing set of pictures……..

NYUGrad
NYUGrad
January 18, 2009 6:08 am

…on the run. I searched this site and saw no results for his name, so i am assuming this is the 1st time anyone mentioned it here.

http://tinyurl.com/9fy6ho
MIAMI (Reuters) — The former head of UBS AG’s wealth management business, Raoul Weil, was formally declared a fugitive Tuesday after failing to surrender to U.S. authorities on charges of conspiring to help wealthy Americans hide assets from U.S. tax authorities.

Johnny
Johnny
Reply to  NYUGrad
January 18, 2009 1:39 pm

NYU, when we read that Kramer and the other tout’s are being reigned-in, read about numerous indictments for market manipulation, insider trading and other shady wall street specialties, then we will know the SEC and FED have decided not to keep looking the other way and perhaps even put in a full days effort. They have a long way to go, given their cozy track record with Indymac, the Bernie Madoff types and many, many others.

Chickenpookie
Chickenpookie
Reply to  Johnny
January 18, 2009 2:23 pm

“They have a long way to go, given their cozy track record with Indymac, the Bernie Madoff types and many, many others.” That’s right, and let’s not forget that out of control corruption, greed and fraud are what created this mess in the first place while governmental regulators were supposedly unaware. The witch hunt is just another scene in the dog and pony show, once this particular scene is complete, reversion to mean always follows when regulators, lawmakers and corporations return to their old tricks. They got their hands caught in the cookie jar and so now have to put… Read more »

NYUGrad
NYUGrad
January 18, 2009 4:03 am

http://tinyurl.com/7n858l

if this is not a suicide, add another to the fugitive “advisor” list.

it’s starting to become a trend.

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