Cara's Commentary & Community Chat, Mon., Jan. 12, 2009

[7:15am ET] A better TARP? A CNNMoney article asks an important question, but the public is skeptical.

Treasury Secretary nominee Timothy Geithner is working on plans to revamp TARP to include programs to prevent foreclosures and help cash-strapped municipalities, small businesses and consumers, two transition aides told CNN.

Lawmakers on both sides of the aisle have expressed unhappiness with the way Treasury used the first $350 billion to capitalize banks. They object to how Treasury made investments with few strings attached and no process for tracking how the banks are using the money.

They also are unhappy that none of the $350 billion allocated so far has been used to prevent foreclosures. And while problems facing credit markets have eased since the passage of TARP, the program has hardly been a panacea.

Consequently, leading Democratic lawmakers told Treasury officials that Congress would only release the remaining $350 billion if Treasury guaranteed that some of the money would go toward helping those at risk of foreclosure and consumers in search of loans for cars and homes, among other things.

On Friday, House Financial Services Chairman Barney Frank, D-Mass., introduced a bill that would place several restrictions on how Treasury may use the remaining TARP funds.

Frank said in a statement that his legislation “will strengthen accountability, close loopholes, increase transparency and require Treasury to take significant steps on foreclosure mitigation.”

For starters, Geithner played a leading role in the decision to recapitalize banks, and which banks would be recipients of the taxpayers


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Chickenpookie
Chickenpookie
January 13, 2009 2:21 pm
Chickenpookie
Chickenpookie
January 13, 2009 2:16 pm

“Down considerably”

Chickenpookie
Chickenpookie
January 13, 2009 1:45 pm
jack black
jack black
January 13, 2009 1:00 pm
Chickenpookie
Chickenpookie
Reply to  jack black
January 13, 2009 1:23 pm

Here’s what John Hussman has to say about durations:

http://tinyurl.com/8px92s

vinod
vinod
January 13, 2009 12:53 pm

put order to buy UCO at 11.00 and GG at 23

Ron Sen
Ron Sen
January 13, 2009 11:33 am

http://tinyurl.com/8z6kg4

A look at TD Range Projections ™

Ron Sen
Ron Sen
January 13, 2009 11:32 am

http://tinyurl.com/8z6kg4

A look at TD Range Projections ™

mrking
mrking
January 13, 2009 4:51 am

I retired at 55yo 3 years ago and have spent a lot of time studying the technicals and have not felt comfortable with it until lately. I am a very simple guy, no puts/calls…just wanting a way to get in and get out, make some money with minimum exposure. I have settled on a simple, but so far effective strategy using MACDh and RSI, adjusting values to fit my comfort level. I have had about 95% positive trade results so far and avoided many false trade traps. My latest was DXD (500 shares) bought last Monday at $50.74 and sold… Read more »

Chickenpookie
Chickenpookie
Reply to  mrking
January 13, 2009 1:32 pm

mrking – keep posting, sounds like you’re system is working and that’s hard to beat!!!

jack black
jack black
Reply to  mrking
January 13, 2009 12:54 pm

Congrats on your system. I also started swing trades in ETFs several weeks ago after realizing that buy and hold is dead now. I was lucky to have mostly wining trades too, but sometimes after willing to seat on underwater positions when my entries were early (quite typical of my trades). Another difficulty is an exit strategy as I tend to leave a lot of money on the table exiting early. Any advice on exit strategy?

alberio
alberio
Reply to  mrking
January 13, 2009 5:48 am

Mrking, nice trade. I was wondering how you were able to find it?
stockcharts doesn’t provide hourly scans or do you some other type of program?

ovidet
ovidet
Reply to  mrking
January 13, 2009 4:58 am

nice picture:)

Chickenpookie
Chickenpookie
January 13, 2009 3:54 am

If we were to draw a 30yr trend line on the S&P, it looks like it would intersect the 750 level, which is where we were back in Oct.

greg
greg
January 13, 2009 2:12 am

Thanks for the headsup on your comments on BAC this weekend. Your comment caused me to sell my shares in the pre-market before going to work. I broke even on the sale but now I can see myself buying much lower soon. I assume after the quarterly report. I sold at 12.95.

Chickenpookie
Chickenpookie
Reply to  greg
January 13, 2009 4:11 am

greg – BAC – I was just thinking out loud, but I’m glad you’re happy about your decision. I didn’t sell by the way but probably should have… the position was initial, so if it bottoms and BAC doesn’t cut their divy I might add to it…

Or, better yet I should’ve taken profits a few sessions ago. We never bat 1000 on this field!

Mackinaw
Mackinaw
January 13, 2009 2:05 am

I’m finding this a difficult (challenging?) juncture in the markets. Ironically, it may be due to what I perceive as a short term period in which most market participants have a very clear understanding of the risks involved in most assets. For e.g., if that were true, prices (and market direction) would be very efficient and, hence, offer up few opportunities for excess reward. To be specific, overhanging equities is “earnings angst” – the possibility (understanding?) that earnings are going to be pretty dismal, certainly in this Q1, and the potential impact that is going to have on revaluations in… Read more »

2nd_ave
2nd_ave
Reply to  Mackinaw
January 13, 2009 2:53 am

Mac- “At this time I am having a much easier time making portfolio decisions which will come to fruition in the longer term (2-5 years) than the for periods <2 years.” vinod- “..unless I take the risk I am not going to make money in market. So, I am going with my hunch and feeling about market based on reading of general news about market.” I feel the same way. Not being someone who uses technical analysis, I can only hazard a guess that TA has not worked well recently, as almost every post on the subject has lacked the… Read more »

Chickenpookie
Chickenpookie
Reply to  2nd_ave
January 13, 2009 3:43 am

“Maybe that’s all it is, trying to ski the black diamond trail I somehow ended up on without the necessary skills.” First I pay for my lift ticket in advance then head for that black diamond trail first thing after putting on my skis; just to look down and see what all the fuss is about. Yea, I’m a risk taker and I’ve got a few scars but never any broken bones… You have to choose the slope that best suits your needs, starting first with careful consideration of your responsibilities and moving on down the line in order to… Read more »

Chickenpookie
Chickenpookie
January 13, 2009 1:21 am

BAC really got a major spanking today, Citibank is in doubt of their dividend and thinks they’re going to be forced to raise capital.

This all seems like a terribly bad dream, a nightmare. Just think of how much money the market has sucked out of all the 401K retirement accounts… All because of the greed and ineptness of a bi-partisan Congress who were too interested in themselves and their own well-being to make and implement sound and common sense fiscal judgment!!!

Truly disgusting!

tango6
tango6
January 13, 2009 1:12 am

As members of this blog probably know, Mark Faber (Mr GloomBoomDoom) has already declared that WWIII has begun in Afghanistan. Forget Iraq, he says, which is rather unimportant in geopolitical terms, whatever its reserves of oil.

But Afghanistan has borders on both China and Russia, as well as Pakistan – nuclear powers all – none of which relish the idea of the longtime presence of US troops in that woebegotten country.

I find this idea interesting to contemplate … in Jeffersonian terms.

David
David
January 13, 2009 12:00 am

There are 3 basic strategies for betting on stocks rising: – selling at-the-money puts, – buying shares, – buying call options which I have ordered from the most conservative to the most aggressive. John Hussman mentioned several times that one’s exposure to the stock market should vary in proportion to the expected long-term returns. As prices fall, one’s exposure should be increased. I sold at-the-money ERX puts on Friday (a conservative strategy), since I suspected that ERX might have a further downside. I bought some UYG, WGW and USO today, since expected returns from the current price levels have noticeably… Read more »

2nd_ave
2nd_ave
Reply to  David
January 13, 2009 12:48 am

David- I like the way you’re applying your reading of Cara/Mauldin/Hussman/Graifer strategies to ‘live’ trading (and naturally putting your money on the line)…reminds me of the difference between reading about organic chemical extractions in a textbook, versus the satisfaction of watching yellow crystals form when one successfully isolates nicotine from tobacco leaves in the lab (no particular reason for coming up with that example)…no better way to learn or solidify your understanding of the principles in play…

dr.cosa
dr.cosa
January 12, 2009 11:49 pm

gone short gold today EOD i dont like shorting gold but my convictions say that the downward pattern of gold has been fairly consistant the past 2 years, when we have these huge plunges down theres a period of consolidation followed by some sort of brief spike overnight then a hard fall the next session. gold shares moved down hard along side gold. nothing has changed since the fall of everything that wasnt a T-bill in 08. imho, but again, i see absolutely nothing to suggest that there will be any sort of decoupling here in commodities or gold if… Read more »

tango6
tango6
Reply to  dr.cosa
January 13, 2009 1:03 am

Thanks for sharing your thinking, Dr Cosa. Always enjoy your posts. As for your observation that …

“china is the only one [currency]… for now… ” etc…

I add the perhaps spurious comment that China holds mega US dollars in it’s foreign reserves. China (among other countries) would be loath to see those dollars debased. Therefore, perhaps China might do whatever it can, which is considerable, to support the greenback, at least for the nonce.

David
David
Reply to  dr.cosa
January 13, 2009 12:15 am

dr.cosa, what is your exit strategy from your gold short? Are you going to take a quick profit if gold falls tomorrow? Or will you hold your short until you see some technical strength in the gold price? If you do the latter, then you may be covering your shorts at local tops… John Mauldin titled his 2009 forecast “Recession and deflation.” He has been warning about deflation since mid-2008. He doesn’t think $USD will fall in the near future, since there is no other currency right now that has a better short-term potential than $USD. Still, he is expecting… Read more »

dr.cosa
dr.cosa
Reply to  David
January 13, 2009 12:57 am

my plan? if gold moves back above $860 im stopped out if gold move below $810 i take partial profit, and again at $785, then i look at the TA from there. the moves back above are key to watch during these downtrends, note how gold will probally move back up quickly to the $840-850 zone, stop, touch it again then plunge down hard to new lows. basing patterns after plunges generally turn out to be staging areas for further plunges. as well ive been into gaps lately and i see a considerable gap on the GLD, GDX and ABX… Read more »

David
David
Reply to  dr.cosa
January 13, 2009 1:23 am

Thanks for your explanation, dr.cosa. Going short gold with a tight stop and nearby profit targets might indeed be a good trade.

David
David
January 12, 2009 11:44 pm

Placing a buy limit order at $4.1 so as to increase the number of UYG shares I own by about 1/3. The prices are beginning to look more and more interesting. 🙂 If that order gets executed, then I’ll double down on my UYG shares at the Nov. 20 low of $3.75. I started scaling into UYG in very small share lots, so if both of the above limit orders get executed, then I’ll still have less than 8% of my portfolio in UYG, which is just enough so as not to regret missing the quadrupling of UYG (from $3.75… Read more »

jack black
jack black
January 12, 2009 11:21 pm

I’m looking for a higher day to sell TNA (cost 28.8 today), reload TZA and DZZ, and short F and GM. IMHO, gold spot is in a topping mode, hopefully, short term only.

tgifbipo
tgifbipo
January 12, 2009 11:08 pm

http://www.youtube.com/watch?v=MXznKV7rw7k&feature

One womans take on the bailout, enjoy your evening.

Dr. Strangelove
Dr. Strangelove
January 12, 2009 11:09 pm

Citi exec gives a preview:

http://tinyurl.com/7nherg

NYUGrad
NYUGrad
January 12, 2009 9:54 pm

Buy at $100-110 range, sell when rsi/stoch rolls over, buy at $100-110 range and repeat over and over.

http://tinyurl.com/7drrjb

pretty systematic.

goldbug58
goldbug58
January 12, 2009 9:20 pm

Loss of $1.49 a share or just over a billion in Q4 – !!!

Eagleone
Eagleone
January 12, 2009 9:02 pm

I found what looks like an interesting post on controling gold prices. Any comments.

http://www.investorvillage.com/smbd.asp?mb=144&mn=

QT
QT
Reply to  Eagleone
January 12, 2009 9:55 pm

Eagleone…. thanks for the post. Very interesting!

TJ was right 207yrs ago.

Thomas Jefferson said in 1802:

“I believe that banking institutions are more dangerous to our liberties than standing armies. If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around the banks will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered.”

2nd_ave
2nd_ave
Reply to  QT
January 13, 2009 12:53 am

QT- I’ve always thought that most of us, without the 20th/21st century distractions of [telephones, radios, televisions, computers, automobiles, cramped quarters, dense neighborhoods, commutes, compressed educations/schedules/careers, unending worries, and noise in general], would be able to take a thought or an idea, reflect on all of its ramifications, sketch them out on paper, write/rewrite our way to a complete grasp, and follow it through to some kind of gratifying end/ending…I don’t know about you, but I just don’t have the time…Jefferson, sitting in his study or strolling the grounds of Monticello, had that kind of time…

Chickenpookie
Chickenpookie
Reply to  2nd_ave
January 13, 2009 1:03 am

2nd – “Jefferson, sitting in his study or strolling the grounds of Monticello, had that kind of time…”

Jefferson was an incredible man who accomplished amazing feats numerous times. He was a very deep thinker and perhaps didn’t have all the meaningless distractions we face, but I can’t agree he simply sat in his study or strolled the grounds of Monticello… he was master of many, truly a unique man. 😉

2nd_ave
2nd_ave
Reply to  Chickenpookie
January 13, 2009 1:16 am

CP- not taking away from Jefferson’s accomplishments at all…maybe a better comparison would be isolation in a prison cell, or self-imposed isolation in a lighthouse/firewatch tower, all situations which have spawned writers…back in my college days, writing a paper was all but impossible in a dorm room/(shared) apartment-> i had to ‘lock’ myself in a deserted classroom or alcove with no distractions whatsoever…

Chickenpookie
Chickenpookie
Reply to  2nd_ave
January 13, 2009 1:28 am

2nd – I realize you weren’t taking away from TJ, at least not on purpose… I’m pretty sure he could have blown both you and I away with both hands tied behind his back… on any subject of his day. I’m contemplating what he could’ve accomplished with all of our modern “distractions” at his disposal…. I have to assume he’d still blow us away….

jack black
jack black
Reply to  QT
January 12, 2009 11:11 pm

The quotation is false as the terms of inflation and deflation were not used in his time. But it sounds good, especially now.
http://quotationsbook.com/quote/44512/

NYUGrad
NYUGrad
January 12, 2009 8:57 pm

hope it holds 5.50.

Johnny
Johnny
Reply to  NYUGrad
January 12, 2009 8:59 pm

Good Luck NYU. I’m out a hea

NYUGrad
NYUGrad
Reply to  Johnny
January 12, 2009 9:44 pm

thx. the only reason i got back in was after watching the last hour, mostly last 15 min. i saw some defending. then i looked at gg, gld, slv. all down 5% ish. i just cant see gold, silver dropping 10% in 2 consecutive days. I also sold myself that i would be picking up 300 free shares from my position this morning, for doing zero work.

But me = novice.

yvrapx
yvrapx
January 12, 2009 8:47 pm
BillySundance
BillySundance
January 12, 2009 8:47 pm

FWIW…..the 38.2% retrace of the move from 741.02 – 943.85 is 866.35.

50% and 61.8% retraces are at 842.44 and 818.50, respectively.

What a shellacking for commodities today. Beaten with the ugly stick…..