Friday, February 29, 2008

Dear Mr. Banker/Broker

Well AIG is back at the trough with more losses. I want to take a moment to offer some unsolicited advice this morning for banking and financial concern managements, so here goes.


Dear Mr. Banker/Broker

I grew up in a corporal punishment household which the stock markets can be very much like. Whenever I had bad news to deliver to my father I got it all out at once. Not only what I had done at that moment, but whatever I had done recently that he or my mom had yet to find out. I always much preferred my lickins' all at once good and hard not having to worry about what was coming down the pipe. Kinda' like the proverb the Japanese or Chinese (not sure which) have, 'anticipation of death is worse than death'. Sitting at home worrying about when dad was gonna find out, which he always did, wasn't worth the stress.

So to all you going concern financials(for now), fess up here and now. All at once, confess to your sins as ugly as they may be. Do what needs to be done, slash the dividend, reclaim all you Enron-esque entities back onto your balance sheet. Turn the floodlights on all your shenanigans like your worthless level 3 assets. Don't be afraid. Be as aggressive writing them down as you were booking full mortgage payments back in the bubble, even though customers were only making the teaser rate payments. You remember how you did that to inflate your earnings for bonus time, don't you? Sure you do now just do it in reverse. Now it will be extremely painful, and you will get a whoopin' the likes of which you probably haven't seem in your professional lifetime, but it will happen and it will be good. If not for you then for the country as a whole.

You don't have many other choices. The gig is up, we all know that you are holding these ninja and liar loans that are now worthless pieces of paper hoping, YES HOPING, they will somehow move back up to what you paid. Not only do you own them, you foisted them on the sheep at pension funds from Topeka to Taiwan. The critical problem is not subprime but rather the housing problem is only in the 2nd inning and is just picking up steam. But you already know this. You have always counseled your investment clients to sell their losers and keep their winners but paradoxically you are contravening your own advice.

Sorry, you do have another choice, the slow painful death you are now experiencing, death by thousand cuts. The choice is yours. Your deferred options and stock plans are toast and even if they aren't the public will come looking for scalps as this problem mushrooms. You can fry people with worthless internet stocks, uranium stocks and mining stocks as you have all done thru history but don't screw with their sacred bank deposits. I can guarantee you they(the masses) won't stand for it. Look up the word lynch mob for a refresher or just a cold bucket of water in the face, just in case you need it.

I wish I had better news for you today but I don't. I would normally wish you luck but you have used all of that up. If you think all these short sellers (of which I can count myself when the time avails itself) are unpatriotic, look in the mirror at what you have done and are continuing to do, just compounding the problem. I would counter your actions, past and present, are unpatriotic as you have cripled our banking system.

Sincerely,

Concerned Depositors

Getting Longer GDX


The Market Vectors Gold Miners index (ticker GDX) above, gapped thru a previously noted resistance point. I shyed away (wrongly) due to a bad mental captial drawdown day. The gap is open now 3 sessionss and the weakness today is affording me a 2nd chance, I shall not argue and simply take it. I have added another unit long here at $52.75 which will leave me with a 3 unit position.


Good speculating to you all.

Open Positions:
Long 6 units Currencyshares Japanese Yen ticker FXY @ $88.55 stop at $91.40
Long 2 units Ultrashort Xinhua China 25 ticker FXP @ $84.55 stop at $80.30
Long 4 units Ultrashort Russell 2K ticker TWM @ $83.30 stop at $75.55
Long 4 units Ultrashort Dow 30 ticker DXD @ $58.00 stop at $53.10
Long 3 units Market Vectors Gold ticker GDX @ $51.15 stop at $48.55
Long 4 units U.S. Natural Gas Fund ticker UNG @ $45.05 stop at $42.75
Long 2 units U.S. Oil Fund ticker USO @ $80.30 stop at $76.55
Short 3 units of Deutsche Bank ticker DB @ $117.15 stop at $119.40

Thursday, February 28, 2008

Getting Longer USO

My open order for 1 unit of USO at $80.26 was tripped and I was filled at 80.30. I don't know if this is good or bad but the chart just looks too good to pass up. I know many have a very difficult time buying something which is making new all time highs but as speculators that is our job. We are not Graham & Dodd value players like Buffett or Brandes. We are mercenaries wishing to fight not on the bull or bear side but with the winning side.

Good speculating to you all.

Open Positions:
Long 6 units Currencyshares Japanese Yen ticker FXY @ $88.55 stop at $91.40
Long 2 units Ultrashort Xinhua China 25 ticker FXP @ $84.55 stop at $80.30
Long 4 units Ultrashort Russell 2K ticker TWM @ $83.30 stop at $75.55
Long 4 units Ultrashort Dow 30 ticker DXD @ $58.00 stop at $53.10
Long 2 units Market Vectors Gold ticker GDX @ $50.30 stop at $48.55
Long 4 units U.S. Natural Gas Fund ticker UNG @ $45.05 stop at $42.75
Long 2 units U.S. Oil Fund ticker USO @ $80.30 stop at $76.55
Short 3 units of Deutsche Bank ticker DB @ $117.15 stop at $119.40

Crude Update.



The above chart of crude speaks for itself. As toppy and as overbought and as bubble feeling commodities and in particular crude have been called, this is a breakout plain and simple. I am placing an open order to buy a 2nd unit long of USO at $80.26 I think any weakness in crude is to be bought not sold.

Many are arguing that a U.S. slowdown will hurt demand for oil. Yes it will be energy is not exactly something we tend to go without. The rest of the world is also demanding it decoupling or not, which you know I lean to the not as well as peak oil(full disclosure). In all of this is forgotten that crude is an extremely valuable asset, possibly THE MOST VALUABLE globally.

My point is that crude can move with no economic demand as Karl Denninger aptly pointed out on his excellent blog Market Ticker that crude was flying in 1980 not due to economic growth, that was awful with 20% interest rates, but rather the Iran hostage situation. Look around the globe and take the global political risk temperature. Russia/Greece /Serbia regarding Kosovo, Turkey and the Kurds, Pakistan, China and Taiwan, North Korea which isn't even in the news now. This should help you start to get the picture. Lets suffice and call it political demand and be done with it. Combine all this will diminishing supplies(of the easy stuff) and you have a very strong formula for higher(possibly much) price. Don't even get me started on OPEC member nation reserves for that you need to read Matt Simmons and Samsam Bakhtiari work.


Housekeeping update. I was filled on 1 unit long of the U.S. Natural Gas fund ticker UNG at $45.80 This now gives me 4 units long of natural gas.




Good speculating to you all.



Open Positions:
Long 6 units Currencyshares Japanese Yen ticker FXY @ $88.55 stop at $91.40
Long 2 units Ultrashort Xinhua China 25 ticker FXP @ $84.55 stop at $80.30
Long 4 units Ultrashort Russell 2K ticker TWM @ $83.30 stop at $75.55
Long 4 units Ultrashort Dow 30 ticker DXD @ $58.00 stop at $53.10
Long 2 unit Market Vectors Gold ticker GDX @ $50.30 stop at $48.55
Long 4 unit U.S. Natural Gas Fund ticker UNG @ $45.05 stop at $42.75
Long 1 unit U.S. Oil Fund ticker USO @ $80.10 stop at $76.55
Short 3 units of Deutsche Bank ticker DB @ $117.15 stop at $119.40

Update on Natty and the Yen


As my notes above indicate, I will add a 4th unit of UNG on a move above $45.75 which will be my 4th unit long. Strength is to be bought, no question about it.

The picture of a bull market. Advance, consolidate, then advance again. The recent consolidation is over. Fasten your seatbelts and but your tray tables and seats in their upright position ! The markets recent gains will NOT hold if this vehicle of leverage (the YEN carry trade) continues its strength.


Good speculating to you all.

Open Positions:
Long 6 units Currencyshares Japanese Yen ticker FXY @ $88.55 stop at $91.40
Long 2 units Ultrashort Xinhua China 25 ticker FXP @ $84.55 stop at $80.30
Long 4 units Ultrashort Russell 2K ticker TWM @ $83.30 stop at $75.55
Long 4 units Ultrashort Dow 30 ticker DXD @ $58.00 stop at $53.10
Long 2 unit Market Vectors Gold ticker GDX @ $50.30 stop at $48.55
Long 3 unit U.S. Natural Gas Fund ticker UNG @ $44.75 stop at $42.75
Long 1 unit U.S. Oil Fund ticker USO @ $80.10 stop at $76.55
Short 3 units of Deutsche Bank ticker DB @ $117.15 stop at $119.40

Wednesday, February 27, 2008

Another Tell of a Bear Market

I was thinking about something I came across talking about debt and the social mood towards it, which got me to thinking about one Robert Prechter. A friend I worked with when I was a broker used to subscribe to his letter. The section that appealed to me, mainly because I could understand it was his section and missives on social mood. You know, ladies hemlines following the market mood. Some of his work was fascinating and insightful , such as his charts correlating stock prices and non nuclear proliferation treaties, or skyscraper construction. His work was so in depth and always lead me to say there are few who do more homework than he does, problem was he was so steadfast in his bearishness in the face of a relentlessly rising tape.

I bring all this up because as I have said numberous times, I believe that news conforms to the tape. We always find out the why later on, sometimes sooner, sometimes later but always after the fact. That being said I went to see No Country for Old Men last evening. I would suggest that it's winning of the Oscar for Best Picture is a reflection of social mood and further to that a bear market. Lets face it violence and strife would be expected to dominate in a bear market. The point of this piece is to say that No Country for Old Men winning confirms to me that we are in a bear market. Remember that as this rally tests your metal, your patience and most importantly your stops.

One last point to touch on is something I have heard countless times over the past few months. The phrase "we are talking ourselves into recession". The minute you hear someone use or say this phrase, run don't walk run away and plug your ears. Think about it for a minute and you will understand how sophomoric, no moronic it truly is. Just like retailers or car dealers blaming the weather, understand it for what it truly is, an excuse used by Polyannas' who either don't know or don't want to know what is staring them right in the face.

I did nothing with GDX as it gapped up thru our 52.25 level this morning. I will sit tight as my mental capital is being drawn down


Good speculating to you all.

Open Positions:
Long 6 units Currencyshares Japanese Yen ticker FXY @ $88.55 stop at $91.40
Long 2 units Ultrashort Xinhua China 25 ticker FXP @ $84.55 stop at $80.30
Long 4 units Ultrashort Russell 2K ticker TWM @ $83.30 stop at $75.55
Long 4 units Ultrashort Dow 30 ticker DXD @ $58.00 stop at $53.10
Long 2 unit Market Vectors Gold ticker GDX @ $50.30 stop at $48.55
Long 3 unit U.S. Natural Gas Fund ticker UNG @ $44.75 stop at $42.75
Long 1 unit U.S. Oil Fund ticker USO @ $80.10 stop at $76.55
Short 3 units of Deutsche Bank ticker DB @ $117.15 stop at $119.40

Tuesday, February 26, 2008

Getting Long USO

Well oil continues with its strength and our vehicle the U.S. Oil fund took out $80 hence I was filled long 1 unit of USO at $80.05 stop at $76.55

Some posts are great and then some are just, well, spot on. Mike Shedlock hits it out the park on his blog with his side by side profile of Moodys credit ratings of Pfizer and MBIA. Please check it out as you will be shocked.

Are you watching the Yen ? I would humbly suggest this rally may be on its last legs as I find it hard to believe it can continue in the face of the Yen strengthening. Conversely look at the dollar. I wonder how those Sovereign wealth funds feel about their U.S. investments now given the tanking currency. I have asked before, ya think they hedged it? Maybe they just used the surplus dollars that were lying around earning daily interest so they were already on the hook. Who knows?

I am not trying to pick on him but I have to disagree with Dylan Ratigans self given nickname of the Commissioner via his popular show Fast Money. Watching him during the day is painful at best so rather than beat him over the head I will humbly suggest a new nickname. The Pontificator. Watch him a while, see if you agree.




Good luck and good speculating to you all.

Open Positions:
Long 6 units Currencyshares Japanese Yen ticker FXY @ $88.55 stop at $91.40
Long 2 units Ultrashort Xinhua China 25 ticker FXP @ $84.55 stop at $80.30
Long 4 units Ultrashort Russell 2K ticker TWM @ $83.30 stop at $75.55
Long 4 units Ultrashort Dow 30 ticker DXD @ $58.00 stop at $53.10
Long 2 unit Market Vectors Gold ticker GDX @ $50.30 stop at $48.55
Long 3 unit U.S. Natural Gas Fund ticker UNG @ $44.75 stop at $42.75
Long 1 unit U.S. Oil Fund ticker USO @ $80.10 stop at $76.55
Short 3 units of Deutsche Bank ticker DB @ $117.15 stop at $119.40

Morning Thoughts

Lowe's reported numbers yesterday. Please remember that these were new, and lowered estimates by the brokerage analysts and they still still underdelivered. Get ready for much more of this on the earnings side.

Home Depot earnings falling short. But didn't I just write about that? Oh yeah, it was Lowes' and now its Home Depot. Falling short of lowered estimates. Ahhh but buy stocks. Ignore facts and buy stocks.

Monoline insurers reaffirmed AAA rating. I am speechless. You are witnessing the end of the U.S. being the center of the global capital universe. Travesty to say the least. The ratings agencies galactically comical if it were not so blatantly tragic !

I have been mulling over the news of the Visa IPO that is being bandied about on TV. I am at a loss as to why they are coming with an IPO now. Here are some simple minded thoughts as to the motivation given Visa is owned by the banks; a) the success of MasterCard b) the desperate need for cash and c) as lousy as this market is, use any significant rally as cover to get out. Here is what Floyd Norris at the NY Times said about the topic.

I came across this article regarding VIE's (variable interest entities) from Bloomberg. I know others have joked about the acronyms and how so many are out there etc. For me it is beyond being funny.

Where are the regulators?

Where are the adults?

I mean we were all so shocked at Enron's barge transactions yet we haven't learned a thing. Where is the outrage ? Oh I forgot, American Idol , or survivor, is much more important. I have a piece of advice for an investor with any significant funds invested in any hedge fund or any investment vehicle out there for that matter. Stop asking questions about performance, fees, drawdowns, etc. and start asking about whether or not they have forensic accoutants in their employ.Whether they have private investigators along with derivative experts, digging up information on corporate shennanigans. I am not kidding, this is what it has come to. Years ago this crap was one off done by rogues corporate chieftains, now it is standard practice. Listen, the FBI and CIA hire formal criminals such counterfeiters, cheque kiters and the like to gain their expertise in hunting that sort of thing out for good reason. I know many will take issue with what I am saying but the facts speak for themselves. Ignoring them when they are staring us in the face is folly of the first order.

Just caught the interview with Sam Zell on pom pom TV, sorry Mr. Zell, housing is not improving. I know you sold out Equity Office Properties to the Ivy league genius's at the top and arguing with you can unlease a profanity laced tirade along with being detrimental to you financial health but I must object. Did you not see the housing numbers yesterday, more to the point the inventory numbers. Housing is in the 2nd or 3 inning,but definitely not over, not by a long shot.

I was stopped out of my 4unit position in the ultrashort financials (SKF) by an incredible 3 cents ! Sometimes I want to laugh at the irony of it. I am having my office swept for bugs and other hi tech intel devices ! Remember stops always preserve mental capital and more often than not the physical kind.


Good luck and good speculating to you all.

Open Positions:
Long 6 units Currencyshares Japanese Yen ticker FXY @ $88.55 stop at $91.40
Long 2 units Ultrashort Xinhua China 25 ticker FXP @ $84.55 stop at $80.30
Long 4 units Ultrashort Russell 2K ticker TWM @ $83.30 stop at $75.55
Long 4 units Ultrashort Dow 30 ticker DXD @ $58.00 stop at $53.10
Long 2 unit Market Vectors Gold ticker GDX @ $50.30 stop at $48.55
Long 3 unit U.S. Natural Gas Fund ticker UNG @ $44.75 stop at $42.75
Short 3 units of Deutsche Bank ticker DB @ $117.15 stop at $119.40

Monday, February 25, 2008

Getting longer Natural Gas.

What a fabulous looking chart on Natty (tickerUNG) and as my notes indicate, what a break out, on Volume to boot ! The volume is very encouraging and I feel any weakness is to be bought, which is exactly what is happening today on lighter volume. I feel so comfortable I am adding 2 additional units hereof UNG at $44.65 which will leave us with 3 units long at $44.70

Good luck and good speculating to you all.
Open Positions:
Long 6 units Currencyshares Japanese Yen ticker FXY @ $88.55 stop at $91.40
Long 2 units Ultrashort Xinhua China 25 ticker FXP @ $84.55 stop at $80.30
Long 4 units Ultrashort Russell 2K ticker TWM @ $83.30 stop at $75.55
Long 4 units Ultrashort Financials ticker SKF @ $115.85 stop at $105.90
Long 4 units Ultrashort Dow 30 ticker DXD @ $58.00 stop at $53.10
Long 2 unit Market Vectors Gold ticker GDX @ $50.30 stop at $48.55
Long 3 unit U.S. Natural Gas Fund ticker UNG @ $44.75 stop at $42.75
Short 3 units of Deutsche Bank ticker DB @ $117.15 stop at $119.40

Friday, February 22, 2008

Getting Long Nat Gas Breakout

Listen, it would be easy to call what is happening in the commodity arena a bubble. I am not sure if it is or isn't. I am a believer in the 'Peak Oil' concept and in the least I think all the easy stuff has been found. My friend Dennis Gartman hi-lited the oil chart in his letter today with the caption, can this really be a mid point consolidation, can it really argue for crude moving to 140-150/bbl.

What are the implications? It is not our job as speculators to ask the question why. That, dear readers will be answered much later, just as Enron, Worldcom all were, stocks crash answers later. Stocks go up/down, major new contracts are then announced/or lost. . You get the picture, news conforms to the tape.

That being said I am not asking questions or arguing with the tape. Natural Gas, ticker UNG, tripped our trigger price of $44.55 so I am long 1 unit at $44.60 and I will place my stop just below todays low at $42.75. On a daily basis, todays action looks like a nice reversal bar. 1 unit will suffice.

Good luck and good speculating to you all.

Open Positions:
Long 6 units Currencyshares Japanese Yen ticker FXY @ $88.55 stop at $91.40
Long 2 units Ultrashort Xinhua China 25 ticker FXP @ $84.55 stop at $80.30
Long 4 units Ultrashort Russell 2K ticker TWM @ $83.30 stop at $75.55
Long 4 units Ultrashort Financials ticker SKF @ $115.85 stop at $105.90
Long 4 units Ultrashort Dow 30 ticker DXD @ $58.00 stop at $53.10
Long 2 unit Market Vectors Gold ticker GDX @ $50.30 stop at $48.55
Long 1 unit U.S. Natural Gas Fund ticker UNG @ $44.70 stop at $42.75
Short 3 units of Deutsche Bank ticker DB @ $117.15 stop at $119.40

Adding to Ultrashort Financials

My trigger level of $115.75 on the ultrashort financials ticker SKF was hit. I was filled on 2 units long at $115.85.

Pom Pom TV is reporting that Merrill Lynch is forecasting a 25% drop in housing prices through 2009. They also reported that Bill Gross of Pimco says the housing debacle is in the 1st inning.

Think about the implications and continue to read the charts.

Listen, I hear the pundits rant about how all these stocks are cheap. One guru this morning said over 200 stocks are on his list. I won't disagree with his assessment. The fault with his reasoning is those same stocks could stay cheap or worse get even cheaper. Just like in the tech bubble of the late 90's, stocks were expensive and remained expensive and in many cases got even more expensive. This is the flip side to that bull market and you must adjust your mindset and trading to it or suffer the consequences.

The pendulum of market psychology swings from one extreme to the other. The pendulum had of recent 2006-2007 hit and extreme in credit prolifieration and lax lending, etc. It is now swinging back and as it took years to get where we are it will take a very long time (years) for it to return to equilibrium or worse. I am not trying to be over the top but I expect it to overshoot on the negative side just as it overshot to the exhuberant side.

I say this because you are and are going to continue to be bombarded with experts telling you how cheap the financials have become. Please walk away, play catch with your kids, take your dog for a walk but do not call you broker and execute a buy order.

Just something for you to think about.

Good luck and good speculating to you all.


Open Positions:

Long 6 units Currencyshares Japanese Yen ticker FXY @ $88.55 stop at $91.40
Long 2 units Ultrashort Xinhua China 25 ticker FXP @ $84.55 stop at $80.30
Long 4 units Ultrashort Russell 2K ticker TWM @ $83.30 stop at $75.55
Long 4 units Ultrashort Financials ticker SKF @ $115.85 stop at $105.90
Long 4 units Ultrashort Dow 30 ticker DXD @ $58.00 stop at $53.10
Long 2 unit Market Vectors Gold ticker GDX @ $50.30 stop at $48.55
Short 3 units of Deutsche Bank ticker DB @ $117.15 stop at $119.40

Adding to Ultrashort Dow and Russell 2K

Triggers on Ultrshort Russell(TWM) and Dow(DXD) were hit this morning.


I was filled 2 units of longTWM at $ 83.85

I was filled 2 units of long DXD at $ 58.05


Good luck and good speculating to you all.

Open Positions:

Long 6 units Currencyshares Japanese Yen ticker FXY @ $88.55 stop at $91.40
Long 2 units Ultrashort Xinhua China 25 ticker FXP @ $84.55 stop at $80.30
Long 4 units Ultrashort Russell 2K ticker TWM @ $83.30 stop at $75.55
Long 2 units Ultrashort Financials ticker SKF @ $115.70 stop at $105.90
Long 4 units Ultrashort Dow 30 ticker DXD @ $58.00 stop at $53.10
Long 2 unit Market Vectors Gold ticker GDX @ $50.30 stop at $48.55
Short 3 units of Deutsche Bank ticker DB @ $117.15 stop at $119.40

Adding to FXY and GDX

Dennis Gartman hi-lighted the above chart in his commentary. Take a close look at the action from November 07' til now, looks like a consolidation about to power higher, don't you think. He always counsels to do the hard trade and buying crude at these levels is a very hard trade to do. Yet its the correct one. Watching USO to break $80.


The yen is on the move again moving thru our trigger of $93.25. I have added a 6th unit at $93.30. Keeping my stop the same.


I am watching this pullback in the GDX to the original breakout level of $50. I feel very comfortable adding a 2nd unit here at $50.40. I'll leave my stop intact and keep my eye on $52.25 now for a 3rd unit.



Good luck and good speculating to you all.


Open Positions:

Long 6 units Currencyshares Japanese Yen ticker FXY @ $88.55 stop at $91.40
Long 2 units Ultrashort Xinhua China 25 ticker FXP @ $84.55 stop at $80.30
Long 2 units Ultrashort Russell 2K ticker TWM @ $82.60 stop at $75.55
Long 2 units Ultrashort Financials ticker SKF @ $115.70 stop at $105.90
Long 2 units Ultrashort Dow 30 ticker DXD @ $57.85 stop at $53.10
Long 2 unit Market Vectors Gold ticker GDX @ $50.30 stop at $48.55
Short 3 units of Deutsche Bank ticker DB @ $117.15 stop at $119.40

Thursday, February 21, 2008

Idea Summary and Random Thoughts





The above chart is the U.S. Natural Gas Fund, ticker UNG. I was involved in this back in mid January at $34 and change only to be stopped out of this just north of 37, with a measley $3 profit on 3 units. Looking back at the time I let other position movements(adverse) affect me. I basically became a nervous nilly and moved my stop up too tight. The position was sound yet I over-managed it, another lesson learned.



The Boone Pickens interview this morning, prodded me to have another look. I know he is short Natty, but to me a break of $44.55 would be very bullish for the commodity. The double bottom formed implies a targeted move above the breakout level to about $55.50


I have made quite a few comments recently regarding positions I am watching and looking to get involved with. I wanted to take a minute to summarize what is my hot list so to speak, ticker symbol in red with associated comments.



GDX-currently long 1 unit. Looking to add a 2nd unit with a move above 52.25
USO-no postiton - Looking to get long 1 unit on a move above 80
FXY -currently long 5 units. Looking to add a 6th on a move above 93.25
SRS -no position - Looking to get long 2 units on a move above 118.00
SKF -currently long 2 units-Looking to add 2 more units on a move above 115.75
TWM-currently long 2 units-Looking to add 2 more units on a move above 83.75
DXD -currently long 2 units -Looking to add 2 more units on a move above 58
UNG - no position - Looking to get long 2 units on a move above 44.55





I neglected to remark in my earlier posts that my stop of $84.60 on Bear Stearns was violated this morning. I was stopped out of BSC this morning at $84.65 which is okay given we were short a unit at $89.60. They are stil headed for bankruptcy.



I want to bring up RIMM again to emphasize something very important. The Importance of stops. Now in hindsight, the opening trade on RIMM was almost the worst of the day for the stock. Many would argue to cancel or not use the stop. Please Don't ! I can provide plenty of examples where the opening trade would and has been on many stocks the best level of the day. Cancel your stop and see how you feel when the stock finishes the day 10 points worse. I have made almost every mistake a trader can make so I am emminently qualified to lecture on the subject !


Word is the CEO of Hovnanian Homes has called a bottom for housing to come here in 2008. I would agree with him wholeheartedly if during the year we see at least a 1/3 of them in disappear via bankruptcy. If and when that happens along with a material reduction is supply(months of inventory currently around 11) we can start to discuss a bottom. Until then, trade the facts and the charts, not his hope. Insiders are smarter than the average bear but they are not infallable. These are the same CEO's and insiders who used corporate cash reserves and in some cases borrowed money(you can't make this up) to buy stock at the highs.

Another item, many are not aware of, is that insiders were buying in 29 thinking stocks were cheap only to get crushed in the more destructive leg down circa 1930-32.



Good luck and good speculating to you all.


Open Positions:

Long 5 units Currencyshares Japanese Yen ticker FXY @ $87.54 stop at $91.40
Long 2 units Ultrashort Xinhua China 25 ticker FXP @ $84.55 stop at $80.30
Long 2 units Ultrashort Russell 2K ticker TWM @ $82.60 stop at $75.55
Long 2 units Ultrashort Financials ticker SKF @ $115.70 stop at $105.90
Long 2 units Ultrashort Dow 30 ticker DXD @ $57.85 stop at $53.10
Long 1 unit Market Vectors Gold ticker GDX @ $50.15 stop at $48.55
Short 3 units of Deutsche Bank ticker DB @ $117.15 stop at $119.40

Yen and Crude Update.

See my comments below on crude.


I return to the old standby, the Yen. The yen has, is, and will continue to be the tell for this market. Yen weak then market strong, Yen strong then market weak. The above chart shows the bull market in the yen quite clearly. I want to get long a 6th (quite probably final) unit on the Yen with a move thru 93.25. This is becoming a large position but I am quite comfortable with it given the enormous size of the carry trade.


Debt aversion and leverage aversion are the order of the day going forward and I am trading accordingly.


My gut is pushing me to add to the already insulated GDX position but Iwill wait for a correction to develop and see how the stock reacts. I know how it will since it in full bull regalia bull it should pull back on lighter volume a test of the $50 will get me interested for a 2nd unit long.


I caught the interview with Boone Pickens this morning on pom pom TV. and while I agree with his assessment that crude could pull back $10-15/bbl but correct me but didn't it already do this recently. I am a firm believer in the validity of moves thru the century mark, brought to my attention by Jesse Livermore in Reminiscences of a Stock Operator. Like he, I have no idea why but stocks tend to run when they go thru 100, 200 etc. Crude has gone thru $100 on the April contract. I am using the USO as my vehicle due to my need for sleep and a social life, which unfortunately futures, gold and oil in particular, often deprive me of.


USO (chart top of page) gapped higher 2 trading sessions ago and the gap has held. It is holding today the 3rd day. I want to get long right here and now but I will wait, wait for it to bust thru $80 to get long a unit. Like flies attracted to light everyone is circling and I want to make sure this activity of recent is for real. I hate fading a trade of someone as shrewd as Boone Pickens hence I will wait. Patience is a virtue, especially with me !
Before I forget, as important as we over here are economically, the rest of the world is demanding more of a product we have less and less of. Remember that when they tell you a recession over here makes $100 unsustainable. That and read Twilight in the Desert to get yourself up to speed on the complex subject.

Good luck and good speculating to you all.

Open Positions:

Long 5 units Currencyshares Japanese Yen ticker FXY @ $87.54 stop at $91.40
Long 2 units Ultrashort Xinhua China 25 ticker FXP @ $84.55 stop at $80.30
Long 2 units Ultrashort Russell 2K ticker TWM @ $82.60 stop at $75.55
Long 2 units Ultrashort Financials ticker SKF @ $115.70 stop at $105.90
Long 2 units Ultrashort Dow 30 ticker DXD @ $57.85 stop at $53.10
Long 1 unit Market Vectors Gold ticker GDX @ $50.15 stop at $48.55
Short 3 units of Deutsche Bank ticker DB @ $117.15 stop at $119.40
Short 1 unit of Bear Stearns ticker BSC @ $89.60 stop at $84.60

Rimm shot !

Well, Rimm blew the doors off with their numbers and the stock has gapped higher right thru our 100.90 stop. I was stopped out of 1 unit at $109.10. Now it could be worse, it could have gapped up to 119. Stops are our friend and ally, never forget that no matter how much Rimm hurts today.

I was filled long 1 unit of the Market Vectors Gold etf ticker GDX at $50.10 as it broke thru $50 per my outline yesterday.

This market seems schizophrenic, ya think ! There seems to made a major tug of war going on here which I believe is amplified due to the extreme amounts of leverage being employed by the banks, hedge funds, et al.

Some charts later on.


Good luck and good speculating to you all.


Open Positions:

Long 5 units Currencyshares Japanese Yen ticker FXY @ $87.54 stop at $91.40
Long 2 units Ultrashort Xinhua China 25 ticker FXP @ $84.55 stop at $80.30
Long 2 units Ultrashort Russell 2K ticker TWM @ $82.60 stop at $75.55
Long 2 units Ultrashort Financials ticker SKF @ $115.70 stop at $105.90
Long 2 units Ultrashort Dow 30 ticker DXD @ $57.85 stop at $53.10
Long 1 unit Market Vectors Gold ticker GDX @ $50.15 stop at $48.55
Short 3 units of Deutsche Bank ticker DB @ $117.15 stop at $119.40
Short 1 unit of Bear Stearns ticker BSC @ $89.60 stop at $84.60

Wednesday, February 20, 2008

Getting Long the Ultrashort Dow....again.

The chart above of the Dow tracking stock, the Diamonds ticker DIA, show a pennant formation bounded by the green lines. This morning we gapped down below the lower boundary, we are now rallying, recovering some of the earlier losses. This is headed south, I want to get back in this trade I was so mercilessly stopped out of while on vacation. Hence I go back to my favourite vehicle to execute this strategy, the Ultrashort Dow ticker DXD. Getting long 2 units of DXD at $57.75 with a stop at $53.10


Isn't it interesting how the talking heads on CNBC, people like Dennis Kneale, Bob Pisani, et al are relegated now to remarking how it is the market isn't off worse given this news release or that. The denial phase is slowly ebbing into realization. Before you start thinking of buying indiscriminately, it will also pass to capitulation or the giving up stage. Where tehy swear off stocks for good. We are a long, long way from that. With much money to be made on the downside before we get there.


Listening to the pundits remark how the Dow was only off 80 with the CPI numbers today. This is becoming a daily routine now. Watch for it.


Garmin announces their numbers and they blow the doors off.... and after the initial buy the news (remember how I feel about news) it is getting crushed. This is proof positive that we are in a full fledged bear market. Others can argue against this fact till they are blue in the face but earnings such as Garmin posted, were we in bull mode, would be causing a chain reaction to the upside. In bull markets bad news is neutral, neutral news is positive, and good news is wildly positive. The exact opposite is true for bear markets and Garmin is another such example. Rallies are to be sold not bought. Govern yourself accordingly and trade as such.

Open Positions:

Long 5 units Currencyshares Japanese Yen ticker FXY @ $87.54 stop at $91.40
Long 2 units Ultrashort Xinhua China 25 ticker FXP @ $84.55 stop at $80.30
Long 2 units Ultrashort Russell 2K ticker TWM @ $82.60 stop at $75.55
Long 2 units Ultrashort Financials ticker SKF @ $115.70 stop at $105.90
Long 2 units Ultrashort Dow 30 ticker DXD @ $57.85 stop at $53.10
Short 3 units of Deutsche Bank ticker DB @ $117.15 stop at $119.40
Short 1 unit of Bear Stearns ticker BSC @ $89.60 stop at $84.60
Short 1 unit of Research in Motion ticker RIMM @ $94.90 stop at $100.90

Market Vectors Gold ETF


The above chart of the market vectors gold etf (ticker GDX) looks interesting. I know we are in a bear market and you can only have 3 positions; neutral, short or very short. But that hasn't stopped my friend Nat Gas, ticker UNG, from powering higher without me on board anymore. Sometimes small profits like we had on UNG can be more frustrating than losses! Perverse isn't it !

A move above $5o on the GDX (chart above) will be enough to compell me to stick a toe in the water going long 1 unit with a stop at $45.80. Remember we will let market action dictate so we wait for the market to tell us by waiting for it to punch thru 50.


Good luck and good speculating to you all.



Open Positions:

Long 5 units Currencyshares Japanese Yen ticker FXY @ $87.54 stop at $91.40
Long 2 units Ultrashort Xinhua China 25 ticker FXP @ $84.55 stop at $80.30
Long 2 units Ultrashort Russell 2K ticker TWM @ $82.60 stop at $75.55
Long 2 units Ultrashort Financials ticker SKF @ $115.70 stop at $105.90
Short 3 units of Deutsche Bank ticker DB @ $117.15 stop at $119.40
Short 1 unit of Bear Stearns ticker BSC @ $89.60 stop at $84.60
Short 1 unit of Research in Motion ticker RIMM @ $94.90 stop at $100.90

Position Updates

Well the weak opening today has triggered our SKF buy. I am now long 2 units Ultrashort Financials ticker SKF at $115.60 with a stop at $105.90

Regarding the Ultrashort Russell (ticker TWM) I am watching $84 now as a level where I would like to add a 3rd unit long.

On Deutsche Bank (ticker DB) a break below $108 will force me to add a 4th unit short.


Good luck and good speculating to you all.


Open Positions:

Long 5 units Currencyshares Japanese Yen ticker FXY @ $87.54 stop at $91.40
Long 2 units Ultrashort Xinhua China 25 ticker FXP @ $84.55 stop at $80.30
Long 2 units Ultrashort Russell 2K ticker TWM @ $82.60 stop at $75.55
Long 2 units Ultrashort Financials ticker SKF @ $115.70 stop at $105.90
Short 3 units of Deutsche Bank ticker DB @ $117.15 stop at $119.40
Short 1 unit of Bear Stearns ticker BSC @ $89.60 stop at $84.60
Short 1 unit of Research in Motion ticker RIMM @ $94.90 stop at $100.90

Tuesday, February 19, 2008

Long the Ultrashort Russell 2K

When I wrote my post about my interest in the Ultrashort Russell 2000 ticker TWM I was eyeballing the chart when I said I was watching 82.50. Upon more detailed dissection, after I was filled, the number is more like $83. That does not mitigate my earlier mis-step which I will not make again. I did go long 2 units at $82.55 per my post, not bad considering the top tick today was 82.56 !

Needless to say I am now long 2 units of the Ultrashort Russell 2K ticker TWM at $82.60 with a stop at $75.55

Regarding todays market action up 120 in the morning to now red. Not good for the bulls as this has the markings of a significant reversal day. Volume did show up but unfortunately for the bulls it was on the downside. But hey who needs that when stocks are cheap on a valuation basis.


Good luck and good speculating to you all.

Open Positions:

Long 5 units Currencyshares Japanese Yen ticker FXY @ $87.54 stop at $91.40
Long 2 units Ultrashort Xinhua China 25 ticker FXP @ $84.55 stop at $80.30
Long 2 units Ultrashort Russell 2K ticker TWM @ $82.60 stop at $75.55
Short 3 units of Deutsche Bank ticker DB @ $117.15 stop at $119.40
Short 1 unit of Bear Stearns ticker BSC @ $89.60 stop at $84.60
Short 1 unit of Research in Motion ticker RIMM @ $94.90 stop at $100.90

Safari Pictures

I have posted a few pictures from our safari in Tanzania, These pictures were chosen from our first 2 days in Tarangire National Park. Did I tell you how wonderful it truly was? Oh yeah, I did! I hope you enjoy them as much as we are((we took about 7-800 per day) and I will try to post more over the next little while. I posted the pictures from the bottom up so if you scroll down and them view them from the bottom up it will flow a little because some are sequence pics. Enjoy.



The blue means he's the 'Big Man' on campus !

What a great idea !

A nap huh...... a nap !


I'm tired, time for.....


Wait for me, its hot today.

Teens wrestling in the yard.







Snake for breakfast anyone?

Holding up traffic, but we weren't about to argue with them.


This is a sausage tree. Those things hanging are about 18 inches x 6 inches and weight about 5lbs. Not the tree you want to picnic under !


Cape Buffalo giving us the slip. Moves pretty good for 700+ lbs


Notice the little bird over his left eye. It is an oxpecker having lunch.


What a view !


Afternoon stroll.

I'm hungry.

Family meeting down by the water.

















Shorting more Deutsche Bank

The above chart of Deutsche Bank paints a very bleak picture. The facts surrounding the banking industry are self evident. The pennant being formed looks encouraging to the bears, as they are usually resolved in the opposite direction they are entered. I am adding a 3rd unit short to my DB position(my chart notes indicate my next position adds as 2 and 3 but should read 3 and 4) here at $111.60 as the stock experiences a low volume sympathy rally to its upper pennant boundary. I intend to add a 4th unit short if and when Deustche Bank breaks below the lower pennatnt boundary at 108, hopefully on some volume. I will leave my stop alone for now.

Good luck and good speculating to you all.

Open Positions:

Long 5 units Currencyshares Japanese Yen ticker FXY @ $87.54 stop at $91.40
Long 2 units Ultrashort Xinhua China 25 ticker FXP @ $84.55 stop at $80.30
Short 3 units of Deutsche Bank ticker DB @ $117.15 stop at $119.40
Short 1 unit of Bear Stearns ticker BSC @ $89.60 stop at $84.60
Short 1 unit of Research in Motion ticker RIMM @ $94.90 stop at $100.90

Ones to Watch

The above is the tracking stock of the Russell 2000 ticker IWM. As my notes indicate, it looks very tired volume is missing in action. It looks to be nothing more than a relief rally which are common in bear markets.

The Ultrashort Russell 2K is my preferred vehicle for getting short the Russell. Watching and waiting for the $82.50 area to get broken to the upside as our call to action, 2 units should suffice when the time comes.

The Ultrashort financials although frustrating still look appealing. Someone remind me to cool my heels and wait for market action to confirm the move before getting involved. I have targeted the recent highs of $115.50 as the starters pistol to commence operations on this one, 2 units to start.


Our friend Ultrashort real estate ticker SRS is sitting here biding its time getting ready for action. A move above 118 will get me excited and involved once again 2 units to start.


Good luck and good speculating to you all.


Open Positions:

Long 5 units Currencyshares Japanese Yen ticker FXY @ $87.54 stop at $91.40
Long 2 units Ultrashort FTSE/Xinhua China 25 ticker FXP @ $84.55 stop at $80.30
Short 2 units of Deutsche Bank ticker DB @ $119.85 stop at $119.40
Short 1 unit of Bear Stearns ticker BSC @ $89.60 stop at $84.60
Short 1 unit of Research in Motion ticker RIMM @ $94.90 stop at $100.90

Getting Short China via FXP

The above in the Xinhua China 25 index. Not a pretty sight.

The above is a chart of the Ultrashort FTSE Xinhua 25. It is pulling back to some support in the $84 area with the 50 day moving average as another valuable ally. I am going long 2 units (hence short China) here at $84.50 with a stop just into the early January gap up at $80.30


Well, Northern Rock gets nationalized, Credit Suisse has another billion in losses, not due to market conditions but internal mis-pricing!! Gold is up over $20/oz and the yen is strong, yet against all this the equity markets are higher. I have said before I put a premium on price action but given the short bus riding equity players a large grain of salt is necessary in watching equities. I am watching for volume and some sustainability of this rally given the preponderance of negative(bearish) factors.


Fittingly I have been stopped out of MasterCard (MA) at $207.80 and Ultrashort Financials (SKF) at $109.20 for small losses. This is part of trading and must be embraced and expected. DO NOT let it frustrate you or you and stop using them(stops) or you will end up like Nick Leeson and Jerome Kerviel in the anals of market obituary lore as examples of trading suidcide.

Good luck and good speculating to you all.

Open Positions:

Long 5 units Currencyshares Japanese Yen ticker FXY @ $87.54 stop at $91.40
Long 2 units Ultrashort FTSE/Xinhua China 25 ticker FXP @ $84.55 stop at $80.30
Short 2 units of Deutsche Bank ticker DB @ $119.85 stop at $119.40
Short 1 unit of Bear Stearns ticker BSC @ $89.60 stop at $84.60
Short 1 unit of Research in Motion ticker RIMM @ $94.90 stop at $100.90


Monday, February 18, 2008

Presidents Day

A holiday here in North America with Presidents Day in the U.S. Family Day in Canada. The story of the day is the nationalization of Northern Rock by the UK government. I do not support nationalization in any way shape or form but the G7 could learn a lesson from guys like Chavez and Putin. At least when they nationalize assets they are assets like oil fields with reserves and mines with ore. Correct me if I'm wrong but isn't the UK nationalizing liabilities ?

We also got news today that another SWF(sovereing wealth fund) Qatar is buying into Credit Suisse and plan 15 billion more in banking and finance investments. In his classic, Reminiscences of a Stock Operator, Jesse Livermore recounts how the novice measures his bargains in the market by how many points it has sold off from its highs. The Quatari news evokes the thought, more money than brains but that is harsh and I don't want to pick on them. The may be much shrewder investors than the Chinese (Blackstone anyone). Besides this move may look like an extremely shrewd investment in 15 or 20 or even 25 years, especially if you don't take into account currency risk. Do you think they hedged the trade. Oh I forgot hedge is code for leverage not really hedge.

I want to touch on the auction rate bond situation over here which I mentioned briefly a couple of days ago. If these are such vaunted investments why did Citi and Goldman step aside and not bid. Answer, no capital. So let me get this straight in my simple little mind. Goldman and Citi, et al, won't step up to the plate and invest/lend the New Jersey Port authority money at 20%. And against this I am supposed to swallow the notion stocks are cheap and should be bought. Again my simple little mind doesn'tcompute this conundrum. Someone please explain, or as Ricky Ricardo would say, Lucy you got some splaining to do!

As usual the boys over at Comstock had another great piece, this should be must reading for anyone speculation the markets.

The markets seem to be resting or catching their breath here before the next big move. As regular readers know I put a premium on price action preferring to let the market tell me rather than guessing. Many have and are currently arguing that with all the bad news coming out the markets have not tanked and have actually held up quite well and that based on this "tape action" the market has bottomed.

While I agree the markets have held up here, the preponderance of the evidence is still negative. The housing market shows no signs of recovery and actually is getting worse. Banks balance sheets are such they cannot even step into markets considered good quality. I was told beack in the thralls of the tech bubble that the market knew all about the ficticious tech garbage and yet continued to power higher. Yes, it certainly did. Till one day it didn't any more and 3 years late the market was off 70+%(nasdaq) Just like the foolishness uttered by Chuck Prince, former CEO of Citi who at the time of the credit bubble said 'the music is playing so we need to get up and dance'. To which I reply........ NO YOU DON'T !

This market will bottomed when people have sworn off stocks, vowing never to buy them again. Tops are made amidst unbridled euphoria and bottoms are made amidst abject pessimism(thank god for a thesaurus).

Keep that in mind the next time you want to follow a Sovereign wealth funds lead into an investment.


Good luck and good speculating to you all.

Open Positions:

Long 5 units Currencyshares Japanese Yen ticker FXY @ $87.54 stop at $91.40
Long 2 units Ultrashort Financials ticker SKF @ $113.65 stop at $109.30
Short 2 units of Deutsche Bank ticker DB @ $119.85 stop at $119.40
Short 1 unit of Bear Stearns ticker BSC @ $89.60 stop at $84.60
Short 1 unit of Research in Motion ticker RIMM @ $94.90 stop at $100.90
Short 1 unit of MasterCard ticker MA @ $199.30 stop at $ 207.70






Friday, February 15, 2008

Getting Short RIMM and MasterCard.



I want to get short an exploratory position of 1 unit here on MasterCard. Readers know how I feel about the card companies. Lets face it, if AMEX is having problems what do you think is going on at the lessers like MA. Shorting 1 unit here at $199.40 while watching closely to add a 2nd unit on a move below $195.


The above chart is f one of the four horseman RIMM. Horseman or not it has a nice rectangle formed with reinforcements in the form of the 50 day. shorting 1 unit here at $95 with a stop at $100.90
Good luck and good speculating to you all.
Open Positions:

Long 5 units Currencyshares Japanese Yen ticker FXY @ $87.54 stop at $91.40
Long 2 units Ultrashort Financials ticker SKF @ $113.65 stop at $109.30
Short 2 units of Deutsche Bank ticker DB @ $119.85 stop at $119.40
Short 1 unit of Bear Stearns ticker BSC @ $89.60 stop at $84.60
Short 1 unit of Research in Motion ticker RIMM @ $94.90 stop at $100.90
Short 1 unit of MasterCard ticker MA @ $199.30 stop at $ 207.70

Getting Long ULtrashort Financials.....again

The time has come to get re-acquainted with our old friend the ultrashort financial ticker SKF. The break of the Feb 11 high is compelling enough for me to want to get long 2 units. Therefore I am doing just that getting long 2 units here at $113.60

The above chart of the ultrashort real estater ticker SRS is an old (profitable) friend I want to get back into. A move above the recent high of 117.60 would be enough to do it. I have flagged 118 a round number for myself although 117.6 is the precise level. 2 units are what I have in mind.
Good luck and good speculating to you all.


Open Positions:
Long 5 units Currencyshares Japanese Yen ticker FXY @ $87.54 stop at $91.40
Long 2 units Ultrashort Financials ticker SKF @ $113.65 stop at $109.30
Short 2 units of Deutsche Bank ticker DB @ $119.85 stop at $119.40
Short 1 unit of Bear Stearns ticker BSC @ $89.60 stop at $84.60

The Old Playbook

I remember reading years ago Peter Lynch's book One Up On Wall Street. In it, the former all-star manager of Fidelity's Magellan fund dishes many nuggets of wisdom. One of the comments tha stuck out to me then and still does now was full of humility, something sorely missing on Wall St., a place where many cannot even spell the word let alone know what it means.



The passage which Iam recalling from memory is where Mr. Lynch admits that much of his success was due to the raging bull market he had to work with in the 80's. I was thinking of this comment as I hear pundit after expert after sage telling me how we are not in a bear market. That this market offers value, that stocks are cheap and should be bought. Like Mr. Lynch many of these so called experts have only operated in bull markets, but unlike him, their hubris prevents them from understanding where the their success was borne.



Unfortunately for them the landscape upon which they succeeded has changed dramatically and it calls for a different approach, you cannot be on auto pilot and buy the dips as many have made a career of so to speak. Many will crash and burn spectacularly. But just as night turns to day and summer turns to winter, change happens. Many pooh pooh'd and ridiculed the arrival of puny Microsoft on the scene against the 900 lb gorilla IBM. How did that work out. The smooth pavement of the interstate many have invested upon this cycle (25+ years), is changing to an off-road pot hole ridden challenge.


Throw the Old Playbook out !!

This is not to say they cannot succeed at it, my issue is that they are looking in the rear view mirror, they have the old play book when a different one is required. Don't be one of these. The banks are not showing up for the bond auctions. NJ port authority goes from paying 4.3% to 20% and there is no problem. I am no fan of Chuck Schumer but his comment mentioning this fact to Mssr.'s Bernanke and Paulsen was spot on and conveniently brushed over. Senator Mendes and his remark about not having his head in the sand are worh remembering. You are not unpatriotic when you question blatant lies and hubris.



All of this is happening with the major indices only down about 9-11% from their highs. Consider it a gift that all this is happening at this juncture. Get defensive. I am short because in a bear market, as you all know,there are only 3 positons one can have; neutral, short or very short. Currently I am only short but expect to get back to very short as this rally resolves itself, (may already have!) You do not have to be short.



Remember, CASH IS AN INVESTMENT DECISION, contrary to what many experts, whose compensation, coincidently, is a function of you not being in cash or being defensive. Gee, I wonder what advice you would get if cash paid these so called experts as much as equtiy based products ? Are they thinking with their wallet or yours? Interesting question, don't you think.


Okay, Empire Index down, but no recession imminent. Laughable, completely laughable. Best Buy warns today about business going forward. But Paulsen still, like a trained seal repeats how strong the economy is. I have mentioned before, you want to know about the economy, watch Panera, Starbucks, JC Penney, Brunswick, Harley, Darden(Pizza Hut, Olive Garden, Red Lobster).

Be careful to not confuse rising oil prices with a strong economy and vice versa. Supply is falling while demand is increasing. Many only know to equate rising oil prices with a strong economy and falling prices with a weak one. We are in a recession and we will see rising oil prices as the rest of the world demands a product there is simply less of.

Mike Shedlock, who does excellent work, has some pictures of Dubai you need to see. You think maybe they need more of the world's energy. Now how many other places around the globe are developoing, maybe not to this extent but developing none the less. Again the old play book will be no good but many will still be following it. Energy is in a bull market, so what is your position, remember you have 3 to choose from. I am neutral, nervous about it but neutral.

Good luck and good speculating to you.


Open Positions:

Long 5 units Currencyshares Japanese Yen ticker FXY @ $87.54 stop at $91.40
Short 2 units of Deutsche Bank ticker DB @ $119.85 stop at $119.40
Short 1 unit of Bear Stearns ticker BSC @ $89.60 stop at $84.60

Thursday, February 14, 2008

Short Sellers = Dirt Bags

Well it's offical, I am a dirt bag. I am short stocks so I operate in the shadows. I am watching Dennis Kneale on CNBC discuss MBIA and the shorts with Charlie Gasparino and Herb Greenberg. How do I know I am a dirt bag? Well of course because Dennis Kneale says so, thats why.

I am a short seller ergo I am despicable. The good thing about Dennis Kneale on pom pom TV is that he is a firm reminder of what a great country we live in. That you can spout the most IQ questioning utter nonsense, on a regular basis mind you, and yet remain in the employ of a financial news concern. Media and technology editor, go figure.

Dennis Kneale makes me think of the phrase "the only thing worse than someone who knows nothing is someone who thinks he knows something".

Listen to him at much risk to your financial health.

Financials update

The Dow Jones Financials (above) puts in context the recent rally. Lower lows and lower highs are the order of the day and it equals a bear market. Remember SKF is my preferred play on this so it is one to watch for re-entry.

Lehman Bros. has been a big nothing for since August. The pressue cooker is building and is going to explode in one direction or the other. My guess is that it's to the downside but I will let the tape tell me. Level 2 and level 3 assets are troublesome but hey, a problem is not a problem til it's a problem.


Bear Stearns (above) is in no mans land right now, so patience is required. I have no doubt that they are headed for the trash heap no matter what Joe Lewis thinks. Reputation is gone which means they are the walking dead and their level 3 assets seals their death sentence. I know some will say I am talking my book as I am short but really why would you do business with them. Incorporating their hedge funds in the Cayman Islands. Why? oooops we already have that answer ! Are you still doing business with them, well you deserve what you get. I am adusting my stop down to $84.60 just so we don't let a winner become a loser.



I wanted to bring Deutsche Bank to your attention as it has basically gone sideways as the rest of the financials have rallied. The AIG news recently along with the UBS news today makes me itch to get more short. DB has formed a pennant here not making much progress as the rest of the financials have rallied which tells me it is weaker of the flock and much like the predators we saw on safari the weakest are picked off from the herd. In speculating parlance we like to short the weakest or put our rocks in the wettest paper bags for they break easiest. As my notes indicate I am itching to get further short and am watching 108 closely


Well surprise, surprise UBS announces that the rot is spreading and IS NOT CONTAINED. Oh yeah, buy financials. AIG and now UBS, you do not need a PhD to figure out more are coming, throw a dart at the wall with the names.


It is my opinion that equipment bonds or asset bonds are going to become de jour. These bonds are secured by the assets of the company in question. For example a rail company could issue bonds secured by their locomotives. A mining company could do the same with it's equipment or better yet its reserves of ore. Needless to say the psychology has changed. Risk is being shunned not embraced. This cycle will run it's course and it will end when it ends and not a moment before.


Our financial markets have basically have become a cesspool of financial chicanery where you cannot trust anyone or thing you are buying or dealing with. It is pervasive, this is not one off. It has become business as usual. As we all know a rising tide lifts all boats and papers over many losses. The bear market we have entered now will reveal all the filth, it will not be pretty and the masses will be looking for scalps.


I talked before in this blog of how trust is the most important asset in the financial markets when you are dealing with an intangible product like investments. This trust not only has been lost it has been abused and defiled. Is it any wonder why I am short the financials. I truly believe that many of the names we see today like Bear Stearns, Morgan Stanley will cease to exist in the future.

Good luck and good speculating to you.


Open Positions:

Long 5 units Currencyshares Japanese Yen ticker FXY @ $87.54 stop at $91.40
Short 2 units of Deutsche Bank ticker DB @ $119.85 stop at $119.40
Short 1 unit of Bear Stearns ticker BSC @ $89.60 stop at $84.60

Wednesday, February 13, 2008

Ramdom Thoughts


Far be it from me to beat a dead horse but I want to bring up an old friend again Blue Nile (NILE). Most people drone on and on about winners, of which Nile was not for me, rather it whipped me leaving me frustrated. I want to bring your attention to the head and shoulders pattern I was basing my bearish call on. It implied a target, remember targets are generalizations or guideposts, of about $40. This is the distance from the head to the neckline. At the time many would have found this preposterous. Well look what happened today !! I bring this up as yet ANOTHER reminder that stocks can fall much farther than any of us can imagine at the time. I was told I was nuts to short, at the time, a $71.50 stock that had fallen from 105. It was too late I missed the move I was told. Stocks are never too low to short and never too high to buy. Remember this, it will serve us well.


Moving on, every notice how ebulent the financial (pom pom) tv hosts and guests are when the market is moving up. Notice how dour and blah they become when it is down.


When the stock you manage goes down you must blame the short sellers. They are the bad guys of course right MBIA. Without them, your stock would be what, say triple digits? If they are so bad why don't they ban short sellers? Makes me wonder what Goldman would do then?


As I indicated before I left on vacation I view this rally as very suspect. The volume is lacking on the upside and has been very evident on the downside. Nothing has changed no matter how many stimulus packages are provided. The bubble in housing has burst and the genie cannot be put back in the bottle. Ask the Japanese, they're in a 17yr bear market for housing. You really think we will get off this easy?

This rally in various sectors is going to give us very advantageous short selling entry points. But as always I will let the tape do the talking and I will do the reacting to it.


This rally is an exercise in raising the dead so to speak. Remember my comments regarding Louise Yamada and how she opined regarding financials, that the bear market rallies, can be furious but they are to be sold. Nothing has changed here. As a matter of fact as the housing market worsens, and it is and will continue, the situation the banks find themselves in will get worse and worse, compliments of the leverage they employed.


Have the level 3 assets, sitting there like zombies on the books of the financials, miraculously become whole and given life (marketability)? I would think the AIG announcement should put that question to rest, dont't you think?


Has the LBO debt that's been sitting, rotting on their books suddenly become saleable. They can't even bid at muni auctions?


Do you think this is getting serious yet. Are you expecting Maria or Dylan from CNBC to warn you about this. Don't count on it. As for me, I just write an obscure blog so I must be tin foil hat wearing wack job !

Good luck and good trading.


Open Positions:

Long 5 units Currencyshares Japanese Yen ticker FXY @ $87.54 stop at $91.40
Short 2 units of Deutsche Bank ticker DB @ $119.85 stop at $119.40
Short 1 unit of Bear Stearns ticker BSC @ $89.60 stop at $95.70

Back From Safari

We have returned back from our safari trip to Tanzania last evening safe and sound. 17 hour fights can wear you out but had a 4 hour layover in Amsterdam which helped getting back in tune with market happenings over the last 24 hours as I was completely out of touch with the markets while away.

What I can say is that if you have the opportunity to go on safari I would highly recommend it. There are not enough adjectives to describe the beauty, the vastness, and the tranquility of it all. Tanzania is a truly beautiful country. We were treated exceptionally and met some wonderful new friends, like out guides Roman, Solatay, Lucas and Daniel. Jambo fellas ! (Swahili for hello).

We have tons of pictures of which I will attempt to post some of the more interesting ones over time.

While I was away, I was stopped out of my 2 units short position on KB Home at $28.15. Small loss given the cost of $25.55

I was also stopped out of my 5 units short ultrashort Dow position at $53.55 again for a loss of 2.55 per unit. Given the low trade that day was $53.50 only to reverse and head back up is extremely frustrating. I will be watching for a chance to get back involved with this trade. Stops can be extremely frustrating but they are mandatory to your financial survival !

I will have some charts and thoughts later today. Good trading to you all.


Open Positions:

Long 5 units Currencyshares Japanese Yen ticker FXY @ $87.54 stop at $91.40
Short 2 units of Deutsche Bank ticker DB @ $119.85 stop at $119.40
Short 1 unit of Bear Stearns ticker BSC @ $89.60 stop at $95.70