Wednesday, July 18, 2007

Late in the Day

Just and advance warning that you should prepare better yourself for more of this. You are going to be reading and learning plenty more than you bargained for about the concept of 'reversal of unrealized gains'. Lending firms like Downey (DSL), Countrywide(CFC), and Wachovia (WB- even more so with their takeover of cancer causing Golden West financial) the like have been booking neg-am ARM's payments at full fare for years under the assumption the homeleasor, (debtor is too harsh a word for most and homeowner is an oxymoron, so homeleasor it is) will be good for it. We may find out they turned the practice into an art form. I really don't care if its GAAP or not its wrong and you don't need much formal education to come to that conclusion.

Stocks with good earnings don't act this way. Merrill had blow out numbers yesterday and the opening trade $83 was 23 cents from the high turned down and didn't look back. This action can be put in the memory folder called how a stock should not act. Today's action on MER, gap down on the open only confirms yesterdays action. I just caught some hack sorry analyst, (on pom pom TV a.k.a CNBC) touting Merrills book value, blah blah, int'al biz, blah blah. He should come out and say the truth, " with all this liquidity, buy the dips. I have no clue as to what and how much of what they're doing but we got some heavy institutional clients that are up to their collective necks in the stock and my butt will be in a sling if we can't get them out." At least we could then appreciate his significantly compromised position to be impartial and ignore his assessment. To be fair the other cat with Punk Ziegle made some candid remarks so as Bill Fleckenstein would say he might not be a "dead fish"

Don't look now but Sears (SHLD) broke..... fasten seat belts, put trays and seats in upright position .......$135 here we come

We now get word on the 2 Bear Stearns toxic funds. Nice. You just gotta love 'professionally managed money'. Good luck and good trading to you.

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