Wednesday, May 21, 2008

Adding to Frontier - FTO

It seems Moodys had a mistake in their computer software used to rate derivative debt. Does this mean the black box, intellectualites could be wrong......Nooooooo ! Say it ain't so ! My grandfather often said, regarding the game of speculation, that he who turns over the most rocks
usually wins.

Story making the rounds via Bloomberg regarding market participants who cannot cover their bet. The fact that entities could write paper, collect the premium and have no hope in hell of ever paying off the other side of the obligation should illuminate the state of our capital markets. Sophisticated huh !! Books will be written..... but I have said that before.

So to all those "institutional investors" out there who didn't want to do the homework, I can only say... Caveat emptor! Brilliance is only exceeded by their hubris and laziness.

So why does the market levitate near all time highs if things are so bad. To quote the pretty faces, on pom pom TV who in the face of any red print wail, " can't believe we're not worse blah blah blah". The reason we are still levitating where we are is the same market participants who bought the crap are the same ones buying the market plain and simple. The same ones who bought CDO after CLO after RMBS are the same ones buying the market cause its cheap on a forward earnings basis. When thought of in this light we should actually be surprised the market is not pushing 16,000.

Just like the credit markets denial, denial, denial until is so overwhelming it becomes panic panic panic. You disagree, look at energy. Peak oil my ass, you doom and gloomer, loser. $75 denial, $100 - denial, $125 -denial. Oh, my maybe there isn't enough oil. What do we do? What do we do ! Where's FEMA when you need them. Like they are fond of saying on Wall St., a problem isn't a problem til it's a problem.

I have heard a commercial for Mad Money, Cramer's hit show, right up there with American Idol and Survivor in my opinion, anyway one of the testimonials is "no one made a dime panicking". to which I would reply, many were wiped out by NOT panicking!

Always remember, he who panics first panics best !!

Housekeeping notes;

I was filled on a 2nd unit long of Frontier Oil ticker FTO at $28.50, leaving me with 2 units long. Excellent volume day on Frontier which we need to pay heed to.

Good speculating to you all !

Open Positions:
Long 6 units Currencyshares Japanese Yen ticker FXY @ $88.55 stop at $91.40
Long 1 unit Allis-Chalmers ticker ALY @ $14.45 stop at $16.64
Long 3 units Ultrashort Dow DXD@ $50.12 stop 2/1 at DIA $132.68/130.26
Long 2 units Ultrashort Financials ticker SKF @ $103.90 stop at XLF $26.72
Long 1 unit Currencyshares Swiss Franc ticker FXF @ $96.25 stop at $93.82
Long 2 units Frontier Oil ticker FTO @ $28.25 stop at $25.26
Short 1 units Daimler AG ticker DAI @ $86.20 stop at $82.48
Short 1 unit Brinker Int'al ticker EAT @ $21.25 stop at $24.14
Short 3 units Retail Holders ticker RTH @ $96.72 stop at $98.56
Short 2 units Goldman Sachs ticker GS @ $191.53 stops at $197.68/$193.58
Short 2 units Darden ticker DRI @ $36.35 stops at $40.27/$38.34
Short 3 units Lehman ticker LEH @ $43.70 stops 2/1 at $47.46/$45.48
Short 2 units Deutsche Bank ticker DB @ $117.03 stop at $120.18

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