Wednesday, December 31, 2008

McDonalds Chart

Yes dear readers McDonald's. The above chart shows a monthly view of this popular household name. Many fund managing zombies have no idea as to what to buy and this is a name they can show on their books with confidence. They know McDonald's is just as vulnerable to a bad economy as any other but they have to own something to justify their existence. Cash is not an option for these boyz.

I am getting short 1 unit here of McDonald's ticker MCD at $61.85 with a stop $64.22. I am also looking to add to that position on a move below $59.75

Housekeeping notes;

I am bumping my stops up on my 3 untrashort positions to break even less a pt. just to be defensive.

SRS stop now at $53.10
SKF stop now at $102.20
SDS stop now at $69.40

Good speculating to you all and never forget that "an investor is a speculator who made a mistake and will not admit it".

Open Positions:

Long 1 unit Ultrashort Real Estate ticker SRS @ $54.10 stop @ $53.10
Long 1 unit Ultrashort Financials ticker SKF @ $103.20 stop @ $102.20
Long 1 unit Ultrashort S&P500 ticker SDS @ $70.40 stop @ $69.40
Short 1 unit Darden ticker DRI @ $27.70 stop @ $30.12
Short 1 unit Amazon ticker AMZN @ $49.10 stop @ $52.31
Short 1 unit of McDonald's ticker MCD @ $61.75 stop @ $64.22


Tuesday, December 30, 2008

Amazon, Darden and Nat Gas Charts

I like what is happening here with Amazon. I am getting short 1 unit here this morning at $49.20 with a stop at $52.31

Right or wrong I am getting short 1 unit here of Darden at $27.80 with a stop just above the recent highs, lets call it $30.12 and be done with it.





Good speculating to you all and never forget that "an investor is a speculator who made a mistake and will not admit it".

Open Positions:

Long 1 unit Ultrashort Real Estate ticker SRS @ $54.10 stop @ $51.10
Long 1 unit Ultrashort Financials ticker SKF @ $103.20 stop @ $98.90
Long 1 unit Ultrashort S&P500 ticker SDS @ $70.40 stop @ $68.12
Short 1 unit Darden ticker DRI @ $27.70 stop @ $30.12
Short 1 unit Amazon ticker AMZN @ $49.10 stop @ $52.31

Monday, December 29, 2008

Careful with Gold



I want to bring your attention to gold (ticker GLD top chart). Long time readers know my affinity for the precious metal. It is no ones obligation, nor can it be duplicated or altered via financial or physical alchemy. Readers also know I own the physical as a form of insurance against our politicians gone made with bailout fever.

That said, the chart above is to be ignored at very serious risk to a long gold portfolio. We seem to have formed a double top on the chart of some substance. The chart of the gold miners index or the GDX(2nd chart from top) confirms this as it paints a very similar picture with volume waning on the second leg of it's double top. The perma-gold bulls seem to not recognize or willfully ignore the deflation gripping our system via a massive and I truly mean MASSIVE amount of credit and derivative based destruction.

The Fed can create and create money all it wants but until it is re-lent under our fractional reserve system all it is doing is plugging holes and even that may be a stretch. The people who qualify don't want the money and the people who need it can't qualify. The politicians can wail and scream that the banks must lend but isn't that what got us into this pickle in the first place, lending to unworthy (putting it mildly) borrowers.

I keep hearing claims of hyperinflation from all this printed money and while I recognize this as a potential problem later on, right now this printing and creating of money is like sandbagging a levy or dyke that has been breached. It is futile. The other issue here is that the de-leveraging game is still going full bore and many are selling what they can sell. You must remember many financials cannot sell or will not sell these various mortgage backed securities because they think prices are too low. I have a news flash for them, their first loss would have been their best loss, as that 70 cent bid they had 14 months ago they thought preposterous on the downside now is a pipe dream. Ask tech bubble stock holders how hanging on employing the hope and pray method worked out for them.

I have brought the gold chart up because many are watching and believing gold is heading to the moon and while I agree that yes gold can and should go to $2200 plus, many are ill prepared for it to go to $600 first. Like the analyst who claims a $20 stock is headed for $40 but never mentions it may get there via $10.

As my notes indicate I will leave shorting gold to those with a much stronger constitution than mine but the many longs out there should tighten up their stops and be on high alert.


And like dominoes, the Dow/Kuwaiti government joint venture deal falls apart which has now sunk the Rohm and Haas deal. Such pain, such shortsightedness, all in an attempt to be part of Merger Monday with Maria. You remember that don't you? Deals to do deals as only an investment banker could love. Sherman McCoy would love all the crumbs.

I want all you housing turnaround bulls to take a peek over at Mr. Mortgages piece, Low Mortgage Rates to Spur New Wave of Defaults. It is well worth your time and should serve as a note of caution to those inclined to believe Jim Cramer's rantings that housing is bottoming.


Housekeeping notes;

Much thanks to reader Tom who brought to my attention the discrepancy in my long 1 unit position in the SDS. The position should read 1 unit at $70.40 with the stop at $68.12. Besides not being very bright, I also suffer from bouts of temporary dyslexia.

Good speculating to you all and never forget that "an investor is a speculator who made a mistake and will not admit it".

Open Positions:

Long 1 unit Ultrashort Real Estate ticker SRS @ $54.10 stop @ $51.10
Long 1 unit Ultrashort Financials ticker SKF @ $103.20 stop @ $98.90
Long 1 unit Ultrashort S&P500 ticker SDS @ $70.40 stop @ $68.12

Monday, December 22, 2008

Little Crumbs?

President-Elect Obama has now upped his stimulus plan to be 3 million jobs, to which I would respond, why stop there? What about shock and awe? Why not have 5 million jobs. Why bother with cumbersome details like how, or how much lets just talk big. How disappointing. More big bold stimulus he says. I like, Rick Santelli, continue to look for the hammer and sickle to appear shortly on our flag.

There is still lots of talk and chatter surrounding the infamous Bernie Madoff. Karl Denniger over at Market Ticker had an excellent piece over the weekend entitled, "We're All Madoff" which you absolutely must read. I caution you the piece is not for the 'it's somebody elses' fault crowd' and could turn your stomach, as it most probably will serve as a mirror for many who continue to wallow in self deception.

Regarding Madoff, the focus has now seemed to turn to the feeder funds or fund of funds as they are called on the street. For the uninitiated a fund of funds basically takes your money for a fee and places it with another manager who actually manages the funds and then takes another fee in addition to a performance fee. Got that!

Please note they do not manage it rather they they hand it over to a manager, like Madoff, who then charges you another fee and most probably another performance fee on top. Kinda like paying your maid 1.5-3% of the value of your cheque for taking it over to the bank for transaction but I digress.

Now these fund of funds will tell you how hard they work, how vital their function as they expend much painstaking time and research in this effort, scouring the globe ferreting out the good from the bad funds in justification of the fees. Skilled labor to be sure.

At this point you might be asking what the heck does a fund of funds, so-called skilled labor do that a room temp IQ teenager cannot?

Good question!

The answer is.... ZERO, NADA, ZILCH.

But don't take my word for it. Judy McCoy (played by the fabulous Kim Cattrall) the lovely bride of Sherman McCoy in Tom Wolfe's The Bonfire of the Vanities so aptly explained to her daughter Campbell what exactly her father, Sherman, the bond salesman, does:

"Daddy doesn't build roads or hospitals, and he doesn't help build them, but he does handle the bonds for the people who raise the money."

"Bonds?"

"Yes. Just imagine that a bond is a slice of cake, and you didn't bake the cake, but every time you hand somebody a slice of the cake a tiny little bit comes off, like a little crumb, and you can keep that."

Judy was smiling, and so was Campbell who seemed to realize that this was a joke, a kind of fairy tale based on what her daddy did.

"Little crumbs?" she said encouragingly.

"Yes," said Judy. "Or you have to imagine little crumbs, but a lot of little crumbs. If you pass around enough slices of cake, then pretty soon you have enough crumbs to make a gigantic cake."

So the pension funds, endowments, and institutions relied on Sherman McCoy for their bond due diligence, just like Orange County and Bob Citron relied on Merrill Lynch and Michael Stamenson for theirs, just like Calpers relied on Goldman Sachs, Lehman et al in place of their own due diligence regarding their real estate portfolio.

You need to understand, you can do your own due diligence or you can let Wall St. do it for you. Just remember Gordon Gekko's admonition if you choose the second route, that "a fool and his money are soon parted, now that's assuming they were lucky enough to get together in the first place."


I am going to start my Christmas holidays tomorrow so I will be away from my post but will be monitoring events and will post on any items or charts I find of relevance. I want to take this opportunity to wish all of my readers and their loved ones a safe and very Merry Christmas.


Good speculating to you all and never forget that "an investor is a speculator who made a mistake and will not admit it".

Open Positions:

Long 1 unit Ultrashort Real Estate ticker SRS @ $54.10 stop @ $51.10
Long 1 unit Ultrashort Financials ticker SKF @ $103.20 stop @ $98.90
Long 1 unit Ultrashort S&P500 ticker SDS @ $80.40 stop @ $78.12

Thursday, December 18, 2008

Overdue Rant

I heard that the Keystone Cops, errr excuse me, the SEC arrested an individual in an insider trading scandal. Yes you heard that right, Eunich Central has made an arrest. Comical truly comical as you have thugs like Angelo Mozilo, Franklin Raines, Dick Fuld and countless others too numerous to name running around free, enjoying their ill gotten gains, while the SEC goes after these pikers.

Just watch as the Fed's go after early investors who participated in Madoff's ponzi scheme and withdrew their money with ease yet cannot claw back any of the fortunes Mozilo or Raines or others like them looted from their companies. Is it me or is this stupefying beyond comprehension?

Dylan Ratigan was asking some guests what can be done to get confidence back in the markets. First off trust when lost rarely comes back and it takes a very long time but you wouldn't know that by the shills on pompom TV telling us all will be well in a couple of quarters.

As to your question Dylan the answer is simple, you need a hard ass to come in and gore every ones ox. I am not kidding in this regard. I am talking the guillotine, the rack, the stocks, you name it. The phrase medieval punishment comes to mind. There is absolutely nothing to lose at this point as the capital markets of this country have become, not only the laughing stock globally and there is a mighty expensive price to pay for this, but a cesspool of fraud, deceit, connivance, and thievery !

This loss of integrity and confidence Mr. Ratigan, is reason alone to be short this market. Now couple this with severely deteriorating fundamentals economically and you have an extremely bearish scenario. Your bosses at GE and CNBC provide a daily dose of purported pros and pundits who continue to recommend and keep buying cheap stocks based on valuation. They can keep doing this all the way down to zero for all I care.

I had a reader ask me reader as to why am I so negative? Why so sour? Why do I rail on these people and entities, constantly putting them down.

The answer J.S (thx for writing) quite simply is that they deserve it. They are shameless. They, men like Greenspan, Bernanke, Paulson, Cox, Dodd, et al along with the numerous Wall St. and financial CEO's mentioned earlier have literally destroyed what were the finest capital markets on the face of the earth. The purported investigative journalists sit on their collective asses while Rome has been ablaze and only now are waking up to what has transpired.

These thugs have robbed us blind not only with the original fraud, and yes it was all a fraud, and once yet again with their purported remedy of bailouts. To add insult to injury the Fed and Treasury will not even tell us who got the bail out money and what was accepted in exchange. How this passes without civil unrest tells me unequivocally about the state of the average Joe on the street. Suffice to say it is not flattering as we sit here and just take it, too busy focusing on American Idol, and Survivor. The government's remedial actions most assuredly guarantee that we face depression. I wish this were not so but it is. I rant because I am angry that this has happened, I am furious that it continues to happen and that many are brain dead to what is going on right before their eyes.

You want solutions instead?

I have plenty of solutions the first of which is do no harm. Do nothing. Let the weak fail, yes painful but our survival depends on it. You open a new bank with pristine private capital and I am all for it and right there at the head of the line. But not if at the same time the government is propping up its weaker, inferior competitors with taxpayer money. This is not rocket science rather it is common sense.

But why bother with solutions when these will be ignored. I did not attend an Ivy League school. I do not possess an MBA from an "in" school. I do not have a resume stuffer like working for Kissinger's consulting firm like Geitner did so I am not "connected" with the requisite power base. I do not have a father who did the same so I cannot coat tail.

I have no idea how to run the SEC for example but I can assure you I know right from wrong and were I the head of it, Many of the thugs previously mentioned would start losing copious amounts of sleep. I could assure the masses that a new cat was in town and that the lawlessness that has become our markets was over and as for the the criminals running rampant and free, well, I assure you that their worst nightmare would be coming to life in my appointment at the SEC. I say this as a patriot and not as some sort of grandiose self promotional advertisement.

I started this blog as my own personal trading journal and it has slowly evolved into a place of ideas as to how to navigate this cesspool with one's net worth intact and hopefully much larger. I did not nor do I want our current circumstance to happen but this is the hand we have been dealt and it must be played accordingly. To focus on solutions is nice but in my opinion is a waste of valuable mental capital that would be much better spent on finding ideas to profit and increase our wealth which should help protect ourselves and our families going forward.

This capital is just a tool that should provide us with the means to have options and believe me we will need those in the future. So yes J.S. I would rather be long. I would rather see things as rosey and wonderful as trading and living on the long side is much easier than the short side to be sure. Unforturnately none of the facts available support such a stance.


Good speculating to you all and never forget that "an investor is a speculator who made a mistake and will not admit it".

Open Positions:

Long 1 unit Ultrashort Real Estate ticker SRS @ $54.10 stop @ $51.10
Long 1 unit Ultrashort Financials ticker SKF @ $103.20 stop @ $98.90
Long 1 unit Ultrashort S&P500 ticker SDS @ $80.40 stop @ $78.12

Wednesday, December 17, 2008

Have You Lost Your Mind?

The question is Have you lost your marbles? Why are you getting short yet again given all the calls for a year end so-called Santa Clause rally? Simple. The facts, and there are plenty, continue to point for much, much more downside to the indices. Besides when everyone gets on one side of the boat it tends to tip over. I am very comfortable that many long time bears are throwing in the towel and getting neutral or even bullish under the shallow guise of valuations. We shall see what happens to stocks when the E of P/E vanishes.

I cannot give any credence or credibility to any of these purported pundits who never saw any of this coming yet feel fully justified is trying to tell me it is over. Sorry but the likes of Bob Doll, Paul McCulley et al could tell me the Earth is round and I would fully double check and verify that it is NOT flat but indeed round. For to simply take these babbling shills at their word, and make no mistake, they are most certainly are shills with their last concern being your financial well being, well then, let's just say I would fully deserve the severe monetary punishment I would most certainly receive.

I continue to look at;

1. The yen. This is the carry trade vehicle of choice and as it rises it spells more and more de-leveraging.

2. The long bond and for those that do not or cannot follow it the TLT's. It like the yen continues to make new highs as people will pay for safety.

3. The earnings picture along with the employment is getting worse by the week. This is going to lead to a continual worsening of the housing and foreclosure situation. I realise the pundits are calling for things to get better in this area but it is not based on facts but rather hopes and prayers, just like this current rally.

4. The Fed has pulled it's proverbial pants down in a desperate attempt to repair the unrepairable. When a hurricane is coming you simply cannot change that fact you can only get out of the way and head for safe ground. I only wish the Fed, the Treasury, the Congress, the Senate, the administration, would get this through their thick skulls.

I am truly more afraid of not being on board as this train continues downward. You must remember the market wants as few participants aboard as possible, in either direction I might add bull or bear. That said, crashes tend to occur from extremely oversold conditions just as many start to believe because it hasn't happened it won't. This bear market demands your utmost attention and those who scoff at its intensity and strength will pay dearly.


Good speculating to you all and never forget that "an investor is a speculator who made a mistake and will not admit it".

Open Positions:

Long 1 unit Ultrashort Real Estate ticker SRS @ $54.10 stop @ $51.10
Long 1 unit Ultrashort Financials ticker SKF @ $103.20 stop @ $98.90
Long 1 unit Ultrashort S&P500 ticker SDS @ $80.40 stop @ $78.12

Crazy is as Crazy Does.

Crazy times demand one to be a little bit crazy as well or at least that is what I am currently of the opinion. That said I am very comfortable given the insanity that is our markets, our Fed, our treasury being insane as well. Especially so being unceremoniously shaken out of positions of late.

I am getting long 1 unit of SRS here at $54.00
I am getting long 1 unit of SKF here at $103.10
I am getting long 1 unit of SDS here at $80.30

I am using the respective intraday lows of each today as my stop less 1 pt.


Good speculating to you all and never forget that "an investor is a speculator who made a mistake and will not admit it".

Open Positions:

Long 1 unit Ultrashort Real Estate ticker SRS @ $54.10 stop @ $51.10
Long 1 unit Ultrashort Financials ticker SKF @ $103.20 stop @ $98.90
Long 1 unit Ultrashort S&P500 ticker SDS @ $80.40 stop @ $78.12

The Morning After.

I do not know what to say about current events but I am sure the history books will do a wonderful job. I happened to catch the the "financial summit" on CNBC this morning with the same old faces pumping the same old ideas. Are there no other voices to be held in this environment.

Has pompom TV become the promotional arm of PIMCO? Letting them pump their views and promote their positions day in and day out? The shameless, grovelling Paul McCulley nominating Bernanke for Man of the Year today. Should we be shocked that he that worships at the alter of the Fed be so reverential?

Bob Doll claims we are still in a bottoming process, he has and will continue to claim this for the foreseeable future I would duly expect. Reversing course would admit error and that is a no no in the world of public persona. Look no further than what they did to Hank Paulson when he reversed course. Whether required or not reversing course is unacceptable.

Poor, Mr. McCulley and the gang at PIMCO. Poor Bob Doll and the boyz at Blackrock. They all are arrogant enough to think they are smarter than the game. They assume they will have a chair when the music stops. Anyone that's been in the markets longer than 3 quarters knows this is an impossibility.

Just as the titans of the 20's, men like Durant, Stillman, and Whitney were not immune to the ravages of the bear market, similarly today's titans like Buffett, Redstone, Kerkorian, and Adelson will realise you cannot outsmart the bear. This is the reason for my admonition that in a bear market one can have only 1 of 3 positions, short, very short, or neutral.

The Fed cannot repair what is broken beyond repair. Greenspan attempted this back in 2000 with his cut in rates from 6% to 1%, all that was successful was delaying the inevitable day of reckoning. The delusion must stop. To think that we can succeed in policy where Japan failed ZIRP- zero interest rate policy) is hubris of the highest order.

We have had the mother of all credit bubbles. This is the hangover and we do not have a choice of accepting it or not. Depression comes from the government intervention. We must absolutely let the unfit products of the free money orgy go bankrupt. To save the weak at the expense of the strong is the recipe for a horror show.


I caught Jim O'Shaunessy this morning on pompom TV talking about how we are now at the same point, valuation wise as 1982. Rather than ridicule this statement as it full well should be, I will leave it to my readers pass judgement. I will counsel that these investment managers know of nothing else than to buy stocks. They truly are one dimensional. Their faith in the Fed and the powers that be is nothing short of mind boggling. We were flabbergasted to see sheep follow someone like James Jones to their collective deaths yet we sit mesmerized by the Wall St. gurus as they flap their gums using comparisons to something completely different.

Worse still and I trust you have noticed that these pundits of finance have, as the markets have progressively made further lows, exaggerated their comparisons to previous long term bottoms such as 1982. Did we not just see this same bottom calling and claims of buys of a lifetimes just occur post tech bubble top? The masses have oh so short a memory in these matters that one is left questioning sanity.

Time will tell, but I can assure you, the PUBLIC has not yet capitulated and sold out in a panic. These baby boomer stock holders are all on the cusp of retirement and are up to their eyeballs in real estate and stock mutual funds via their 401k's. The race for the exits will not be pretty, no matter how much Steve Grasso tells you there is money on the sidelines.

Regarding my above mention of sanity, lets move on to the Fed and their 3/4 of a pt rate cut along with their promise to buy anything and everything. I don't which is more shocking, their move to do this or the adulteration of their actions by the financial luminaries. I have repeated adnausem the necessity of the Fed to ring fence this cancer that is spreading rapidly. You do not bail out a losing division with a solvent one. You do not cure the disease with the same cocktail that created said disease in the first place.

More credit, more free money, more unsound lending to entities and people who cannot pay it back, will ABSOLUTELY NOT fix the problem. People who cannot pay must be foreclosed upon and liquidated. This is just the way it works. You cannot reward imprudence via prudence. The existing banks whom are insolvent, and believe me, they are insolvent msut be allowed to fail new ones created in their stead. The same could be said of the auto industry among others. Free money created this mess and it sure as hell will not fix it. You can delude yourself into thinking otherwise but you will end of paying a dear dear price.

Housekeeping notes;

I was stopped out of my 2 unit position in SRS at $68.45 for a loss of just over $13pts on 2 units.

Good speculating to you all and never forget that "an investor is a speculator who made a mistake and will not admit it".

Open Positions:

None

Monday, December 15, 2008

Getting Longer SRS

As my previous post indicated, I have added a 2nd unit to my SRS position at $83.50 as it has moved upward thru my trigger level of $83.40.

I am now long 2 units of SRS at $81.65


Good speculating to you all and never forget that "an investor is a speculator who made a mistake and will not admit it".

Open Positions:
Long 2 units Ultrashort Real Estate ticker SRS @ $81.65 stop at $68.55

SRS Update

I am prepared to add to my SRS position on a move up thru $83.40


Good speculating to you all and never forget that "an investor is a speculator who made a mistake and will not admit it".

Open Positions:
Long 1 unit Ultrashort Real Estate ticker SRS @ $79.65 stop at $68.55

Getting Long SRS


I am getting short real estate once again via the proshares ultrashort real estate ticker SRS at $79.55 with a stop at $68.55



Good speculating to you all and never forget that "an investor is a speculator who made a mistake and will not admit it".

Open Positions:
Long 1 unit Ultrashort Real Estate ticker SRS @ $79.65 stop at $68.55

Sunday, December 14, 2008

Back At My Post

I am back from the land of beauty that is Colorado. The majesty of it's peaks is breathtaking and truly gives one perspective. The skiing conditions were fabulous and a wonderful time was had by all. I cannot recommend a visit highly enough.

I never was the brightest bulb in the room but negative yields on T-bills spells deflation pure and simple. I have no idea how one can argue otherwise but such is how markets are made. Note the bid to cover ratio was north of 4 which means the feds could have sold 4X as much as they did. If I were advising them, I would sell as much as possible while they can, kinda how Ford mortgaged everything when they could, before the window closed on all of them.

Congratulations to Gary Shilling who continues to pound the table on treasuries and the deflation theme. I want to be short treasuries via the TBT's as this debt issuance and curve manipulation by the Fed will end in tears but will bankrupt many who fight it as it runs its course.

The United States Government, the ultimate sub-prime borrower.

The Fed wants to issue it's own paper, backed by.... you guessed it, hot air. I wish the marks who line up for that all the luck in the world as they will most assuredly need it.


I notice that some, even in government if you can believe it, are starting to get a clue as to what Goldman is. This Bloomberg article details how Goldman is advising clients to bet against Muni bonds it has underwritten or as one politician put it....

It’s “disturbing” to advise investors to bet against the financial health of a state whose bonds Goldman helps sell, Assemblyman Gary S. Shaer a Democrat who chairs the Financial Institutions and Insurance Committee, said last week in a letter to Chief Executive Officer Lloyd Blankfein.

To which I would say to assemblyman Shaer, Hello... McFly !!

For the record, I wouldn't touch muni bonds with a ten-foot pole but I'm sure many are and will, via advice from their friendly broker, with their preferential tax treatment and generous looking income. But like the famous quote says, I am more concerned with the return of my capital than
on it. Govern yourself accordingly.

The auto bailout dead but the administration set to step in. Yup par for the course, Pandit and the rest of the viper bankers don't have to leave their office or break a sweat with a business plan yet get hundreds of billions thrown at them while the big 3 auto chiefs grovel on both knees for chump change in comparison. Mark my words, this tye of action is sowing the seeds of civil unrest, guaranteed.

This article outlines, that according to the Office of the Comptroller of the Currency, 36% of borrowers who had their loans modified in the first half of 2008 RE-DEFAULTED after just 3 months. After 6 months that number jumped to 56%. This should be a blaring bull horn telling you something about the situation? Hint, it's not good. It also has nothing to do with being resilient, apologies to Hank Paulson.

Hedge fund valet boyz freezing client redemptions and not just run of the mill valet boyz but the upperclassmen of the lot. Nothing but cannibals, the lot of them. They would eat their young for a 10 figure bonus.


Speaking of hedge funds , what can one say about the Bernard Madoff fiasco. Oh yeah I know what is perfect for this occasion courtesy of former President of the United States Andrew Jackson addressing the bankers and financiers of his day....

"Gentleman, I have had men watching you for a long time, and I am convinced that you have used the funds of the bank to speculate in thebreadstuffs of the country. When you won, you divided the profits amongst you, and when you lost, you charged it to the bank. You tell me that if I take the deposits from the bank and annul its charter, I shall ruin ten thousand families. That may be true, gentlemen, but that is your sin! Should I let you go on, you will ruin fifty thousand families and that will be my sin! You are a den of vipers and thieves. I intend to rout you out, and by the eternal God, I will rout you out. "

I will say this though, all of his clients are ACCREDITED investors which translated means they should have known better as in when its too good to be true it more often than not is. Which reminds me of the famous Gordon Gekko line of "a fool and his money are soon parted, that's assuming they were lucky enough to get together in the first place."

Okay now couple this news with word the Fed has refused a request by Bloomberg to disclose the recipients of the $2 trillion in largesse and in particular what assets the Fed has received as collateral. You just cannot make this stuff up.

Housekeeping notes;

I was stopped out of my CRM short position on Monday this week passed at $32.65 for a gain of just over $23 points on 1 unit.

I was also stopped out of my AAPL short on Monday as well at $100.60 for a gain of just over $10 points on 1 unit.


Good speculating to you all and never forget that "an investor is a speculator who made a mistake and will not admit it".

Open Positions:

None


Thursday, December 4, 2008

Some Vacation

Home builders rallying today as the equity boyz are enamored that the Fed and Treasury may be buying treasuries in an attempt to drive down yields. Ya gotta give these guys credit, they're like the monster in a B horror movie that just won't die. I am at a loss for words as to how the masses have not put a stop to this.

The problem is they are bankrupting the nation in the futile attempt to prop up something that cannot be propped up. The ignorance in this regard is colossal. You would expect these remedies from a juvenile who has no understanding of economics and free markets. The Fed and Treasury, the administration, the business community are like that petulant child you see at Toys R Us screaming and throwing a tantrum until he gets what he wants.

Unfortunately for us, mother nature does not work that way. We are going to sorely miss all this borrowed money the Fed and Treasury is throwing away into oblivion as we will most certainly need this for the future unemployed masses who will TRULY need it for necessities like heat and food. You think Dupont and Merck are cutting payrolls just for the heck of it?

I want to let my readers know that I will be on vacation commencing tomorrow and all next week. A long awaited ski trip to Vail Colorado, to enjoy the slopes with family and friends. I will be monitoring markets as I can but my primary concern will be enjoying the slopes. I will post weather condition updates at Vail along with anything of market interest as conditions warrant.

Vail's current temperature is 28-32 degrees Fahrenheit or -2 to 0 Celsius. To give you an idea, one week ago today Vail had a year to date snowfall of 18 inches. As of today they have a year to date snowfall of 65 inches. Needless to say I am very excited as the forecast calls for another 8-12 inches more over the next few days.

Housekeeping notes;

I was stopped out of my SKF position at $129 for a loss of about $19 pts and was also stopped out of my SRS position at $104 for a loss of about 9 pts. Not much else to say as you get stopped out almost to the lows of the move. Trading will test your mental capital much more than your physical capital, always remember that !



Good speculating to you all and never forget that "an investor is a speculator who made a mistake and will not admit it".

Open Positions:
Short 1 unit Apple ticker AAPL @ $110.90 stop @ $100.53
Short 1 unit Salesforce.com ticker CRM @ $56.05 stop @ $32.56

Getting Short Real Estate

I am getting short real estate and am doing this via the Proshares Ultrashort Real Estate ticker SRS. I am now long 1 unit of the ultrashort real estate ticker SRS here at $113.10 with a stop at IYR $33.16


Good speculating to you all and never forget that "an investor is a speculator who made a mistake and will not admit it".

Open Positions:
Long 1 unit Ultrshort Real Estate ticker SRS @ $113.20 stop @ IYR $33.16
Long 1 unit Ultrashort Financials ticker SKF @ $148.10 stop @ XLF $12.31
Short 1 unit Apple ticker AAPL @ $110.90 stop @ $100.53
Short 1 unit Salesforce.com ticker CRM @ $56.05 stop @ $32.56

Wednesday, December 3, 2008

Den of Vipers and Thieves

I was reading Charles Hugh Smith's blog Of Two Minds, which is a daily read for me and which most certainly should be of yours as well. In his post today, Starvation and a Quiet Revolution, Charles wrote the following;

"How about we re-write the playbook and make the debt-serfs players instead of passive observers. How about we have the debt-serfs slowly strangling the political power of bankers by refusing to play debt-serf any longer.

How do you refuse to be a debt-serf? By refusing to borrow money. It's really that simple.

What happens when people stop increasing their credit card debt, stop getting auto loans and stop signing mortgages? The income of banks plummets, and thus so does their ability to purchase political power."



Here ! here ! Charles. Well put. As Charles usually does, he got me to thinking about our current predicament given all that has, is and will continue to transpire with the banks, insurers, bank holding companies, and about to be newly coined banks. I remembered reading a quote that I thought quite fitting given his comments. So after some digging I finally located it. It comes from the 7th President of the United States, Andrew Jackson speaking about the bankers of the day, the 1830's I believe;

"Gentleman, I have had men watching you for a long time, and I am convinced that you have used the funds of the bank to speculate in thebreadstuffs of the country. When you won, you divided the profits amongst you, and when you lost, you charged it to the bank. You tell me that if I take the deposits from the bank and annul its charter, I shall ruin ten thousand families. That may be true, gentlemen, but that is your sin! Should I let you go on, you will ruin fifty thousand families andtha will be my sin! You are a den of vipers and thieves. I intend to rout you out, and by the eternal God, I will rout you out. "

From the sounds of this quote, things haven't changed much in the world of finance since the early 1800's. One could post this in the NY Times or Washington Post think it was in reference toPaulson, Lewis, Raines, Blankfein, Mack, O'Neal, Thain et al.

Continuing on in this vein, an old colleague (thx Jeremy) sent me an email with a link to a recent article in Conde Naste by Michael Lewis, the author of the popular book Liar's Poker. The article entitled The End, is definitely worth the read, especially for this those still wondering if the market has discounted all the bad news and also whether or not former President Jackson was right in that they are all a den of vipers and thieves.

Good speculating to you all and never forget that "an investor is a speculator who made a mistake and will not admit it".

Open Positions:
Long 1 unit Ultrashort Financials ticker SKF @ $148.10 stop @ XLF $12.31
Short 1 unit Apple ticker AAPL @ $110.90 stop @ $100.53
Short 1 unit Salesforce.com ticker CRM @ $56.05 stop @ $32.56

Random Thoughts on a Bottom

I have been getting quite a few questions via email and while I cannot answer every one of them many overlap. I also think it advisable to answer some publicly via the blog so all might benefit or ridicule my responses.

Reader D.M. writes....

I know this may sound stupid but when will we know its a bottom? What should I be looking for?

This is a serious question that many non-professionals constantly have in the back of their mind. I believe this is fostered by the the financial media in turn by their advertisers as they constantly debate daily whether or not the market has reached a bottom. Kind or ironic they never had this type of debate or discussion a year ago as the market made it's top but I digress.
They want, no check that, they need YOU to stay and play the game!

The absolute last thing the likes of CNBC, Fidelity, Nuveen, Schwab et al want is for you to pack up our bat and ball and head home. They will do all in their power to keep you interest piqued. Hence million dollar stock picking contests, tight dresses, etc.. you getting the picture now?

That said, I believe that in looking for a bottom to be formed we must first consider that we are looking for this in the aftermath of the mother of all credit/leverage and debt bubbles civilization has ever seen. This leads this simpleton to suspect that the pendulum will swing, just of its own momentum, not just to the mean, but much further to the downside. That said. here are some of the things I am looking for on the DISTANT horizon as possible clues.

  1. You ask people at parties, that is if you still get invited and if people are still having them, if they own stocks and they respond with a resounding NO ! Not just a few people but the overwhelming majority of people you talk to have abject disdain for stocks.
  2. Brokerage firms will start discontinuing coverage on various stocks/sectors of the market.
  3. All day financial media, re: CNBC, Bloomberg, Fox Business will cease operations or curtail them significantly.
  4. The longtime pollyannas like Larry Kudlow, Vince Farrell, will slowly and reluctantly throw in the towel and give up on stocks.
  5. The acknowledged gurus of the day will be thoroughly and utterly discredited. By this I mean gurus of all types, momentum, value, Garp, etc. who are predominantly long only investors. No one will be immune. Bill Miller, Warren Buffett, Marty Whitman, all of them for the bear is like the terminator it has no feelings, it knows no remorse and will not stop till it accomplishes it's goal.
  6. This leads into the next step of this process which is a very important one. The initial genius' who called the top got short and prospered grandly in the initial decline will get back into the market thinking the bottom is in, that stocks are screaming values and besides they can't all go to zero, only to get wiped out. I fear that this mother of all bear markets, remember this a logical to assume given the mother of all bubbles has burst, will do ALL in it's power to take everything from everyone.


Know this, all the above is conjecture as we first and foremost MUST respect the tale of the tape. So no matter how much bulls may want the tape to go up or bears to want it to go down we must let the tape tells us. In this regard, and all the hype, conjecture, volatility and noise I think it best to focus on the monthly and for me in particular weekly charts


Good speculating to you all and never forget that "an investor is a speculator who made a mistake and will not admit it".


Open Positions:
Short 1 unit Apple ticker AAPL @ $110.90 stop @ $100.53
Short 1 unit Salesforce.com ticker CRM @ $56.05 stop @ $32.56

XLF Short


The above chart is a daily view of the financial Spiders ticker XLF. Friday was a abbreviated trading session as the XLF reached the 50% retracement of the leg down from early November. I am using toady's strength to get short the financials as they are hopelessly mired in such a quagmire beyond comprehension.

The facts are indisputable. The losses which by the way, the banks refuse to take continue to mount. The bulls can deny this up and down all the day long but this is fact. It matters not where they hide them, off balance sheet or on, level 1, 2, 3, it matters not a whit. The gig is up. Even the short bus riding equity boyz are starting to get a clue that the losses are staggering and this is just in the CMBS and residential mortgage arena. The commercial mortgage anvil has yet to fall. Credit card receivables, auto paper et al, will rear their ugly head as the economy and more importantly job losses mount. Slowly this is sinking in to even the densest market participants.

The shills can cheer and cajole and prod all they want it cannot change the facts. The banks and bank holding companies are insolvent, but for a minute lets pretend they are not. How are they gonna make money Mr. Larry Kudlow, Mr. Vince Farrell ?

Lending ? You're kidding right?

People and entities who need money aren't being lent to if hell froze over and the people one would want to lend to don't need it and further are smart enough to not want it!

Leverage ? Again a joke right?

Gone for good as they pull in their horns to stay afloat. Think of it like the guy who sells the family silver to keep the heat on and food on the table.

Wealth Mgmt and Advisory services? Another joke huh?

You call what the likes of B of A, Wachovia, Merrill were doing wealth management. I will cut you some slack on this one because even after the Henry Blodgett, Mary Meeker Frank Quattrone, Jack Grubman fiasco clients stayed on. Go figure but better left to shrink rather than me. In the face of this, who needs advisory services to stay in cash or buy T-bills.

Proprietary Trading ?

Without a Hank Paulson to lobby for increased limits back to the glory days of 60/70/80:1 a la Fannie and AIG keep dreaming.

This all adds up to a logical choice to test the water getting short the financials once again.


Good speculating to you all and never forget that "an investor is a speculator who made a mistake and will not admit it".

Open Positions:
Long 1 unit Ultrashort Financials ticker SKF @ $148.10 stop @ XLF $12.31
Short 1 unit Apple ticker AAPL @ $110.90 stop @ $100.53
Short 1 unit Salesforce.com ticker CRM @ $56.05 stop @ $32.56

Getting Short Financials

I am using todays strength int the financials to get long 1 unit of the ultrashort financials ticker SKF here at $148 with a stop at XLF $12.31

I will be posting some charts ASAP.

Good speculating to you all and never forget that "an investor is a speculator who made a mistake and will not admit it".

Open Positions:
Long 1 unit Ultrashort Financials ticker SKF @ $148.10 stop @ XLF $12.31
Short 1 unit Apple ticker AAPL @ $110.90 stop @ $100.53
Short 1 unit Salesforce.com ticker CRM @ $56.05 stop @ $32.56

Monday, December 1, 2008

Stupidest Statement on Earth

I have taken the likes of Hank Paulson to task many times in this blog. He and others like him Greenspan, Rubin, Raines, O'Neal, et al are a major reason we find ourselves in the mess we are in. That said, sometimes others, once groupies worshipping at the altar of all he does, step over the line and bite that proverbial hand that had fed them. A Mr. Ken Rosen who is a real estate hedge fund manager and professor of real estate economics at Cal-Berkeley does just this in a article, New Crisis in Commercial Real Estate Looms, brought to my attention by Mike Panzner over at Financial Armageddon.


"The system has never been tested for a deep recession".

"He's (Paulson) created havoc in the marketplace by changing the rules. It was the stupidest statement on earth" Rosen said.

The first quote stands on it's own for idiocy of the highest order but the second quote takes the cake.

Stupidest statement on earth, huh professor Rosen?

Let me tell you dear professor what is stupid. Stupid is sending your kids to college, paying through-the-nose tuition for courses like yours, so an ignoramus like yourself can blather about how real estate always goes up.

You want more stupid dear professor? More stupid is Cal-Berkeley employing shills like yourself who actually believed recessions were banned from existence and the likes of Greenspan/Rubin, Bernanke/Paulson would always be there to bail out imbecilic decision making hedge funds like yours.

You want even more stupid dear professor? Even more stupid is the fools with a capital F that gave money to a boob like you to manage. Now that is stupid so cut Mr. Paulson some slack as your quotes have provided ample evidence he has ample competition for title of stupidest statement on earth.

This episode depicts what is happeing in abudance. That many loyal Greenspan and Bernanke soldiers,(Wall St. types, hedge funds and various apologists) are breaking ranks and deserting. I have mentioned before that it is standard operating procedure for Wall St. and its brethren to circle the wagons and stick together. For a while, in the beginning they did, but now it is every man/woman for themselves and is not pretty. I have remarked before that it would be interesting watch the cannibals turn on one another.

Some may find my taking to task of Professor Rosen harsh and over the top. I do not know the good professor and fully expect him to be an upright citizen in good standing in his community. I cannot seem to find any quotes from him, when real estate portfolios were flourishing along with their attendant bonus's, handing any of the credit to men like Paulson or Greenspan.

There is an absolute dearth quotes from any managers that said 'my performance is due to an extremely easy and accomodative Fed and Treasury that always had my back'. I am aware of only 1 man that has admitted such and that man is Peter Lynch of Fidelity Magellan fame, who did this in his book One Up On Wall Street. That being the humility to admit he had the good fortune to manage money in a wonderful bull market.


That said, facts are facts and the village idiots need to be exposed for the village idiots they truly are. Never ever forget that the only thing worse than someone who knows nothing, is someone who thinks they know something. That is truly horrifying, most especially so when your financial survival is at stake.

Good speculating to you all and never forget that "an investor is a speculator who made a mistake and will not admit it".

Open Positions:
Short 1 unit Apple ticker AAPL @ $110.90 stop @ $100.53
Short 1 unit Salesforce.com ticker CRM @ $56.05 stop @ $32.56

Thursday, November 27, 2008

Thanksgiving

You may have noticed I have not been posted as I have started my Thanksgiving holiday a tad early this year. It is my absolute favourite holiday and besides there is plenty to be thankful for. I want to wish all my readers a safe and enjoyable Thanksgiving.

Please take a moment to look around at all you have to be thankful for. We truly are blessed.

That said, lots of little tidbits of items abound as the bulls enjoy the holiday activity. They deserve it. Maybe this is the start of the "rip your face off rally" that Steve Grasso off the floor of the NYSE keeps waxing so eloquently about. No mention about the rip your %#$% off drop we have experienced to the tune of a 45% drop in the market.

Just to put Mr. Grasso's perspective on the markets into some kind of context. Lets go back to Oct 11 2007, the day the Dow peaked at 14,198. 3 days later we were at 13,912. Did Mr. Grasso call the market top? Did he mention the market was over bought and at any time prior mention the potential for a "rip your face off decline"? Of course he didn't. Because like Sherman McCoy in the Bonfire of the Vanities, he is living off the crumbs of others. Vested interest in being positive if for no other reason than to be positive. Analytical, NO WAY ! Insightful, what a joke! Duplicitous shill, you bet !

I am not trying to pick on Mr. Grasso as I do not know him and hope he has a wonderful Thanksgiving but it seems to me he mentioned something about mutual funds buying with both fists about a month ago. Enough already CNBC, enough already!

Okay Toyota has its credit rating downgraded to AA from AAA by Moodys. Besides the fact that this is Moodys talking here, this is Toyota we are talking about. One of the most well run companies on the planet. Which leads me to my next point the domestic auto manufacturers.

I have purposely refrained from commenting on the auto bailout, specifically due to the fact that having grown up in an auto town in Canada having basically been immersed in the auto economy for the majority of my life. I held off to make sure any comments I might make would not be emotional and instead be thoroughly thought out. You know like the TARP plan from the treasury, thoroughly thought out, but I digress. I apologise now for any meandering I may do in writing this post.

Up front you should know that I am a constitutional libertarian at heart.

I believe that the strong should survive and the weak should fail. I opposed the Wall street bailout because at the heart of it I believe it was inherently wrong and upsets the natural order of things. I NEVER believed Paulson and Bernanke's lies that there was systemic risk. I believe the decision to bail out Wall St. was based on personal friendships and personal self interest. I believe in time this will become clearer and that men like Hank Paulson, Alan Greenspan, Bob Rubin, Ben Bernanke among others will be exposed for the scoundrels they truly are. Imagine an old auto exec at the helm of Treasury and you get the picture. For the record I oppose the auto bailout just as vehemently as I did the Wall St. one. It is wrong fiscally and morally.

That said, now that Pandora's Box has been opened with the bailout of the financials, quasi financials, and anyone who wants to be a financial, I am inclined to believe there is no going back. You bail out one, you bail them out all. Moral hazard in action. This seems to not be getting through to the simpletons on CNBC like their leader in chief Dennis Kneale, who could play the role of dumb and dumber for an Oscar, as no one can be that stupid, can they?

The auto industry is a major employer. You think we have a housing problem now, wait till these unemployed auto workers, tier 1, 2, and 3 parts supplier workers, and attendant service workers stop making house payments and enter the ranks of delinquent mortgage holders. I say this because Hank Paulson ensconced the bailout for Wall St. as posing systemic risk to the system. Well this definitely is systemic risk to the employment picture of the U.S.

Don't bail out the autos and the perception of inequality becomes more than evident to even the most elementary of layperson. When you bail out Wall St. and don't bail out Detroit and effectively the midwest, the seeds of unrest are sown because the perception grows you are bailing out white collar jobs and turning your back on blue collar ones is obvious. Forget the fact that many congressman and senators from southern states oppose the bailout yet bend over the table for the likes of Toyota and Honda.

Remember now absolutely NO ONE should be bailed out but this is the hand our politicians have dealt us with the law of unintended consequences is in full effect.

I am in no way defending the Big 3. Regular readers know how I feel about the missile engineers over at Cerberus who now are in charge of Chrysler. The parade of clowns who have mismanaged Ford and GM, men like Ron Zarella, simply speak for themselves and will live in infamy in the management hall of shame. The domestic automakers did not do enough when times were good to weather a downturn in the most cyclical of cyclical industries. Shortsighted does not describe if aptly.

Lets turn to executive compensation. First off it is completely off its rocker. Just like professional sports athletes being paid tens of millions of dollars Rick Wagoner has earned over $40 million since 2000 at the helm of GM. I agree his compensation should be the decision of the stockholders and the board, but given the composition of the board at GM and their collective IQ, we get many of our questions answered.

Do you really believe our country became what it is because of WalMart or McDonalds or because of Ford, Chevrolet, Dodge, U.S. Steel, et al. In this simpletons views it seems that you need to make something instead of what one CNBC guest recently commented " we run around selling insurance to one another".

We have a man who earned in excess of $40 million since 2000 presiding over a company who has seen its stock decline from $70 to $3. Is it me or am I missing something here? Is the board at GM privy to something I am not aware of? Brain dead or in cahoots, you decide.

This is a bear market rally, nothing more. Commercial real estate is a mushroom cloud. I am watching the IYR very closely and expect to get re-acquainted with the SRS very soon.

Again, may you all have a wonderful Thanksgiving with friends and family. And yes, even at 0-11 I am still rooting for my beloved Detroit Lions today.

Housekeeping notes;

I was stopped out of my short DIA position Monday at $83.75 for a loss of about 4pts on 2 units.


Good speculating to you all and never forget that "an investor is a speculator who made a mistake and will not admit it".

Open Positions:
Short 1 unit Apple ticker AAPL @ $110.90 stop @ $100.53
Short 1 unit Salesforce.com ticker CRM @ $56.05 stop @ $32.56

Thursday, November 20, 2008

Dow Short

I shorted a 2nd unit of the Diamonds ticker DIA at $79.45 as it broke $79.50


I will sit tight for now and leave my stop alone at $83.71


Good speculating to you all and never forget that "an investor is a speculator who made a mistake and will not admit it".

Open Positions:
Short 2 units Diamonds ticker DIA @ $79.80 stop $83.71
Short 1 unit Apple ticker AAPL @ $110.90 stop @ $100.53
Short 1 unit Salesforce.com ticker CRM @ $56.05 stop @ $32.56

Ready to Get Shorter the Dow

I am getting ready to short a 2nd unit of the Diamonds ticker DIA on a break of $79.50.


Good speculating to you all and never forget that "an investor is a speculator who made a mistake and will not admit it".

Open Positions:
Short 1 unit Diamonds, ticker DIA @ $80.30 stop $83.71
Short 1 unit Apple ticker AAPL @ $110.90 stop @ $100.53
Short 1 unit Salesforce.com ticker CRM @ $56.05 stop @ $32.56

A Few Thoughts

I thought it worth the risk to take a punt shorting the Dow here on the new lows being made across the major indices. As mentioned in my prior post we not only violated those lows we closed there yesterday which is truly ominous indeed. I have decided to just short the actual Dow tracking stock the Diamonds and not use the Ultrashort proshares ticker DXD as has been my usual M.O. Call me afraid, call me gun shy or the like, I just feel more comfortable doing it this way given current conditions.

The bounces in the markets of late have been anemic, nothing more than violent short covering via panicked shorts who have it ingrained to take quick profits, which truly shows how sick and weak this market. More importantly you must remember that as oversold as we are in the broader indices, this is the type of environment, extreme oversold levels, where crashes occur from. I do not say this lightly.

Please beware of this as I am absolutely sick of hearing of this Hogan bottom. That the worst is over, the lows are in courtesy of the shameless pom pom network. No offence to Art Hogan, whom I know nothing about other than he took a stab at a call on a low. This is absolutely useless drivel as the hosts and majority of guests on CNBC try to fill air time as they have nothing of substance to contribute to a legitimate market discussion which is in SERIOUS trouble.

You think they do? Really? Then why, might I ask, has no one come on to tell you 3 of 4 major indices have broken and closed below their prior lows? That we are extremely oversold, and with feeble bounces a crash could be a legitimate possibility?

Of course not. Too busy telling us we are off the lows of the day and rustling up the next shill to tell us that a new and improved bottom in the market is upon us.

Bob Pisani telling us how the traders he talks to cannot believe GE is at $14. I have no idea who these traders are but they might want to prepare for GE trading at $8.

Citi trading at irrational levels according to Charlie Gasparino? Well, C is insolvent and the market is finally getting it's arms around that fact. CNBC will when the stock is trading under $2, just as they figured out AIG, FNM, GM et al. After the stock had imploded.


Pathetic, truly pathetic.

The credit markets are flashing extremely dangerous signals which market participants ignore at their own peril. I keep hearing the shills on TV say the markets are cheap, the selling is irrational. That this is all a capitulation panic induced selling. I would counter that the decline has been quite orderly, bids have been withdrawn, the smart money is selling rallies and if they aren't selling, they sure as heck aren't buying.

Further, I would counter that the general public has not even come close to panicking yet. Their advisers have been counselling them to sit tight, to hang on that equities always go up. When that happens and the public does throw in the towel we will see 4-5000 on the Dow. I hope I am wrong but I fear I am right.



Good speculating to you all and never forget that "an investor is a speculator who made a mistake and will not admit it".

Open Positions:
Short 1 unit of Diamonds, ticker DIA @ $80.30 stop $83.71
Short 1 unit Apple ticker AAPL @ $110.90 stop @ $100.53
Short 1 unit Salesforce.com ticker CRM @ $56.05 stop @ $32.56

Getting Short the Dow

I am using this relief rally to get short 1 unit here of the diamonds ticker DIA at $80.40 with a stop at $83.71 We have not only broken prior lows on the S&P and the Naz and the Russell, we closed there last night.



Good speculating to you all and never forget that "an investor is a speculator who made a mistake and will not admit it".

Open Positions:
Short 1 unit of Diamonds, ticker DIA @ $80.30 stop $83.71
Short 1 unit Apple ticker AAPL @ $110.90 stop @ $100.53
Short 1 unit Salesforce.com ticker CRM @ $56.05 stop @ $32.56

Tuesday, November 18, 2008

Mexican Peso and Petrobras






Good speculating to you all and never forget that "an investor is a speculator who made a mistake and will not admit it".


Open Positions:
Short 1 unit Apple ticker AAPL @ $110.90 stop @ $100.53
Short 1 unit Salesforce.com ticker CRM @ $56.05 stop @ $32.56

Monday, November 17, 2008

More Weekly Charts.

The spiders technology tracking stock, ticker XLK, looks very, very sick. Remember now, this is a weekly view.

The above is the semiconductor holders ticker SMH. What can I say that the chart doesn't. Yup, sure wish I had listened to those shills on CNBC on gotten long tech as a safe haven. Or as they would say on Wayne's World......NOT !!!!

I am still short AAPL and intend to stay that way. The ultimate discretionary consumer stock still has a long way to fall.

Apple's competitor Research in Motion (ticker RIMM) is faring no different.

I neglected to include the financial spiders ticker XLF in my earlier post this morning, alongside the KBE and KRE charts. So here it is.

Good speculating to you all and never forget that "an investor is a speculator who made a mistake and will not admit it".


Open Positions:
Short 1 unit Apple ticker AAPL @ $110.90 stop @ $100.53
Short 1 unit Salesforce.com ticker CRM @ $56.05 stop @ $32.56

Financials



Some may ask why I have hi-lited the financials once again. Simply put, as the financials go so goes the market. I realise this may or may not hold as much water as it used to but it still applies no matter how you cut it. For all the fanfare the financial media showers on the financials they have gotten weaker not stronger. Do not lose sight of this as it bodes further ill for the market no matter what the perpetual bottom callers may say.

The above 3 charts show a weekly view which should help clear up the picture.



Good speculating to you all and never forget that "an investor is a speculator who made a mistake and will not admit it".


Open Positions:
Short 1 unit Apple ticker AAPL @ $110.90 stop @ $100.53
Short 1 unit Salesforce.com ticker CRM @ $56.05 stop @ $32.56

Friday, November 14, 2008

How Much Further Can They Fall ?

I came across this article recently which documents how the locusts have descending upon Washington for a piece of the bailout pie. This is a great employment program, as it should really address the unemployment issue going forward. Create a bailout, then employ the unemployed to fight over it. So many bright minds in Washington I cannot count that high.

I have received quite a few email inquiries on various topics but a recent one I feel compelled to address publicly. The one in particular from reader R.W. (thanks for the note), asked the following...

With so many large cap well known, household names plummeting and now trading in the teens or single digits, how much further can they fall, I mean zero isn't that far away?

This is a wonderful question to which I would only ask that we look back to the tech bubble for some answers. Back in the tech mania, stocks were running 30 and 40 pts per week doubling and tripling in the span of a quarter. So what did the management do, they satisfied the market and started splitting their stocks, twice the shares at the half the price.

Remember all the splits Nortel (among others) did on the way up? Well, back in December of 2006 Nortel, after falling from a high of $86 and resting at about $2, executed a reverse 10 for 1 split. This means that if you had owned say 1000 shares of NT at $40 you would now have 100 shares at a cost base of $400. I would counsel that you NOT look at a chart of Nortel since this reverse split as it has had no effect as the stock now resides at $0.56. Yes you read that correctly, 56 cents.

I fully expect Nortel to come back once again to do another extremely ineffective reverse split most probably in the order of a 1 for 25 or 1 for 50.

This all leads me back to the original question. I fully expect companies like Motorola, GE, Citicorp, among many others to start the process known as the reverse split. This will make it palatable once someone breaks the ice. I expect GE to reach it's target about $8. At that time GE may make the move to reverse split say 1 for 5 which would get a stock of GE's stature back to a level they deem more appropriate.

My thoughts on stock splits, regular or reverse are just like ordering pizza. You can order a large pizza and see it come in say 8 slices. Now you can slice in into 16 slices but the question is do you have any more pizza? Of course you don't. Can you believe people bought tech stocks ahead of splits thinking it was bullish? Self fulfilling prophecy into one day it simply wasn't anymore.

As for the generalization that a stock can only fall so far. Many thought GM and Ford (Kirk Kerkorian) a bargain in the high single digits. GM resides around $3 and Ford about $2. These are drops of 60 and 70% on stocks that used to be $50/share. Something to consider when someone tells you a stock is looking really cheap based on how far it has fallen from it's highs. It would be wise to remember the sage advice from the greatest trader ever, Jesse Livermore who often remarked that a fool measures his bargains by how many points off the top it has sold. Wise counsel indeed.

Good speculating to you all and never forget that "an investor is a speculator who made a mistake and will not admit it".


Open Positions:
Short 1 unit Apple ticker AAPL @ $110.90 stop @ $100.53
Short 1 unit Salesforce.com ticker CRM @ $56.05 stop @ $32.56

Hypocrisy


American Heritage Dictionary

hy·poc·ri·sy

noun. plural. hy·poc·ri·sies
  1. The practice of professing beliefs, feelings, or virtues that one does not hold or possess; falseness.
  2. An act or instance of such falseness.

Did you happen to catch some of President Bush's speech yesterday? Sure, he's a free market guy. He's also a fiscal conservative. And if you believe any of that I have a bridge in good shape you might want to buy, good cash flows. Well, just as with Treasury Sec. Paulson's speech I have one word for Bush's.... Hypocrisy.

Yesterdays action has become very encouraging for the bulls. Just remember that they are hoping and praying for a bottom so they really are not as objective as one would like. That said, the volume was so so, would have like to see much more volume on an outside reversal, or bullish engulfing day.

We are in no mans land right now and the smart thing would be to trade small, keep stops tight and do not give to much back as this market tortures both bulls and bears. Trench warfare is being waged as each side gains ground and then gives it back. In these circumstances it is always wise to step back and look at the bigger, longer term picture. I will have some charts later today.

For those inclined to trade the long side be very very very careful, but for those watching the markets closely the last 6 months know this already. But just in case, I trust I have made myself clear. We have still not seen capitulation nor do I think we will as it will just be a slow bleed as former closely held beliefs buy and hold, stocks always go up, real estate is always local, slowly die a miserable and painful death.

Housekeeping notes;

I was stopped out of my long TWM position yesterday at $113.05 for a gain of about $20 pts on 1 unit.

Good speculating to you all and never forget that "an investor is a speculator who made a mistake and will not admit it".


Open Positions:
Short 1 unit Apple ticker AAPL @ $110.90 stop @ $100.53
Short 1 unit Salesforce.com ticker CRM @ $56.05 stop @ $32.56

Thursday, November 13, 2008

Short Covering Rally?

Short covering rallies can be very powerful. That said you must respect the movement as it will only later reveal itself. Just tightening up my stops given todays action. Who in their right mind would be buying stocks here is the question I would ask.

Housekeeping notes;

I was stopped out of my 2nd unit short of AAPL put on this morning at $92.25 for a loss of $2.5 pts on 1 unit short.

I am lowering my stop on my TWM position to $113.64

I lowering my stop on my original unit of AAPL to $100.53

I am moving my stop on CRM to just above the recent reaction highs just above $32


Good speculating to you all and never forget that "an investor is a speculator who made a mistake and will not admit it".


Open Positions:
Long 1 unit of Ultrashort Russell 2K ticker TWM @ $93.10 stop @ $113.61
Short 1 unit Apple ticker AAPL @ $110.90 stop @ $100.53
Short 1 unit Salesforce.com ticker CRM @ $56.05 stop @ $32.56

Getting Shorter AAPL

I am now short a 2nd unit of AAPL here at $89.95 as we are now breaking $90 for the 2nd time today. I will place my stop at $92.21 on this 2nd unit.


Good speculating to you all and never forget that "an investor is a speculator who made a mistake and will not admit it".


Open Positions:
Long 1 unit of Ultrashort Russell 2K ticker TWM @ $93.10 stop @ IWM $56.31
Short 1 unit Apple ticker AAPL @ $110.90 stop @ $113.53
Short 1 unit Apple ticker AAPL @ $89.85 stop @ $92.21
Short 1 unit Salesforce.com ticker CRM @ $56.05 stop @ $34.31

Watching AAPL


I want to bring your attention to the chart of Apple, ticker AAPL (chart above). Remember the pennant formation that got me short against the upper boundary, well, we are now testing the lower boundary of it. Eyeballing the pennant, it looks to be worth approximately $36 give or take a buck. A break of $90, which looks likely at the open, given Intel's earnings news, would signal another leg down with a target of $54 (90-36=54).

Some may argue to get long against the lower boundary, which is quite logical. The problem here is that we are in a bear market and if this market has proven one thing it is that things can get much worse than any of us think possible at the time. Hard trade to get short on a darling stock that is severely oversold on a gap down? You bet but we must respect that the hard trade is usually the right trade. Hopefully this is not an exhaustion gap.



Good speculating to you all and never forget that "an investor is a speculator who made a mistake and will not admit it".


Open Positions:
Long 1 unit of Ultrashort Russell 2K ticker TWM $93.10 stop @ IWM $56.31
Short 1 unit Apple ticker AAPL at $110.90 stop @ $113.53
Short 1 unit Salesforce.com ticker CRM @ $56.05 stop @ $34.31

Wednesday, November 12, 2008

Treason

trea - son

American Heritage Dictionary

- noun
  1. Violation of allegiance toward one's country or sovereign, especially the betrayal of one's country by waging war against it or by consciously and purposely acting to aid its enemies.
  2. A betrayal of trust or confidence
Origin:
1175–1225; ME tre(i)so(u)n < class="ital-inline">traïson < class="ital-inline">trāditiōn- (s. of trāditiō) a handing over, betrayal.


Well, what can one say about the Paulson speech other than to be left speechless. I wish I had something insightful to offer regarding the speech but I don't but Rick Santelli sure did. In case you missed it, Mr. Santelli, when asked what he thought of the speech, held up 2 pieces of paper onto which he had written the words BAIT and SWITCH. Couldn't have said it better myself. We have been lied to, we have been stolen from and we have been sold out for a buck. Actually I do have something insightful to offer regarding the speech and I will do it in only 1 word..... treason. Yes the word treason comes to mind.

Terrorists often take hostages and threaten the unthinkable if their demands are not met. Very similar to the game plan employed by the Fed and Treasury in their trip up to the hill for the bailout package. Threaten systemic risk to the system and scare the willies out of room temperature IQ senators, and congress folk. Pathetic. Systemic risk if we don't bail out this or bail out that. If I hear systemic risk again I am going to throw up. You want systemic risk, watch the credit and in particular the treasury market as the cost to insure government paper against default continues to rise.

I had someone ask why I watch the pompom network when I constantly complain about it so much. Well, besides the odd guest worth listening to, which come along as often as often as finding a needle in a haystack, here are a couple reasons I do, Rick Santelli, Art Cashin, Diana Olick, and Phil Lebeau. Rick and Art should be self explanatory and Diana and Phil are the only journalists on the network plain and simple as they report the facts as opposed to pimping and cheering them. Mike Morgan over at Behind Enemy Lines had a fantastic line about CNBC the other day,

"I was on the treadmill this morning listening to the headache producing chatter on CNBC. I feel like I’m sitting in on a bunch of high school girls yapping about their boyfriends. There are smiles and giggles and boobs (both on the chest and in the chairs). "

Well put Mike.


What we have is a complete and utter fiasco going on and the lights are going on even among the dimmest in our midst. The Best Buy news might even convince Larry Kudlow and Brian Westbury that we are in recesssion, but who knows they might haul out some productivity chart that says otherwise so be warned.

I keep hearing about how we must do something to stop the housing decline. This is not being uttered by some boob on the street but by the leading lights of finance and industry. Think about the statement for a second...

"WE MUST DO SOMETHING TO STOP THE DECLINE IN HOUSING VALUES."

Do you now see the sheer stupidity in the statement? Do you truly believe it is possible to stop the decline? If so you need to give your head a shake for if you do you must believe it possible to stop the wind, the tide, the laws of gravity and mother nature. It is futile to even attempt this folly as the history books will most certainly document as they ridicule our limitless ignorance.

Housing prices, like tech stock prices, like tulip bulb prices, like uranium prices, like cabbage patch doll prices must correct to levels that are sustainable. Of all the above housing prices have wonderful historical metrics based on income levels. Denial most assuredly is alive and well, in particular in the nation's capital.

I realise the Maestro a.k.a. former Fed chairman Alan Greenspan may have confused many out there that the Fed was in control everywhere and always.

I am not short the long bond right now, but to say I am itching to get so could be the understatement of the year. Karl Denninger over at Market Ticker, which by the way if you are not reading you are truly missing out, brought my attention to the bid cover ratio on the most recent government auction of paper. The risk of a massive debacle in our bond market has never been higher. We are so reliant on foreigners to fund our day to day operations, that if they were to walk we would be in a heap of trouble that would make the current circumstances look like a walk in the park. The protection of the credit rating and ability to continue as a going-concern of the Federal government, (re: me and you the taxpayer), should be the guarded at all costs and be of primary concern of the Fed, the Treasury, the congress, the Administration, lame duck or elect.

I was stopped out of my crude trade quite quickly and thankfully as crude has plunged even further today. I hope you are starting to see the reason and benefit for stops !! That said, let us not lose sight of crude as the something big, on the upside, could be in store. No not on the demand side either which is collapsing, but rather on the supply side. Let us watch the energy complex closely going forward for when the time comes it will be the place to be long rather than the 'nifty fifty'. I surmise energy will lead us.

Housekeeping notes;

Yesterday I was stopped out of my long position in COF at $33.15 for a loss of about 2.5pts on 1 unit only to watch it collapse later in the day and much further today. Such is trading and I will not whine and cry like so many on TV as my mental capital is needed elsewhere. For the record I should have been back on board as it broke down once again. Hard trade to do when the market is extended or overdone in either direction but once again the hard trade is usually the correct trade.

Good speculating to you all and never forget that "an investor is a speculator who made a mistake and will not admit it".


Open Positions:
Long 1 unit of Ultrashort Russell 2K ticker TWM $93.10 stop @ IWM $56.31
Short 1 unit Apple ticker AAPL at $110.90 stop @ $113.53
Short 1 unit of Capital One ticker COF @ $30.70 stop @ $33.11
Short 1 unit Salesforce.com ticker CRM @ $56.05 stop @ $34.31

Tuesday, November 11, 2008

Capital One Charts.

Here are the charts on Capital One, ticker COF, that I promised. Had some trouble loading them to blogger but finally have them. The chart above is a 12year weekly view, while the one below is about 16 months daily. I realise many of the technical analysis literature supports the formation of a triple bottom or top. I have no faith in fading this pattern as many are wont to do. Triple tops and bottoms rarely hold and I am trading the violation of it as COF seems to have broken once again to the downside. I am sure credit card receivables are a shambles right now. They have just not begun to admit such, thought the tape most surely has.

AMEX now a bank. Chinese stimulus package amounting to 20% of their GDP, if you believe their GDP numbers that is. Fannie Mae net worth now about $9 billion down from $40 billion again if you believe their numbers. Bloomberg suing the Politburu, excuse me I mean the Fed, for informational details on the 2 trillion with a 'T' bailout.

Boy oh boy, considering all this, along with downward earnings, hello Starbux, it sure is vexing why the stock market is completely and totally irrational in its selling off day after day. Stocks must truly be a bargain now shouldn't they Mr. and Mrs. Wall Street shills, hacks and pimps.

Housekeeping notes;

Well that was a short date with crude as I was stopped out less than 3 hours into the trading day at $49.20 for a loss of about $1.25 pts on 1 unit.


Good speculating to you all and never forget that "an investor is a speculator who made a mistake and will not admit it".


Open Positions:
Long 1 unit of Ultrashort Russell 2K ticker TWM $93.10 stop @ IWM $56.31
Short 1 unit Apple ticker AAPL at $110.90 stop @ $113.53
Short 1 unit of Capital One ticker COF @ $30.70 stop @ $33.11
Short 1 unit Salesforce.com ticker CRM @ $56.05 stop @ $34.31