Monday, March 31, 2008

Ready to add to EEV

Everyone is talking about the new Fed powers, when the real issue is the letter by the SEC to end FASB 157 and with it mark to market accounting. Unconscionable to say the least, but I would think this is the reality of the phrase, you get what you deserve. I shake my head at the ignorance involved in this decision. Instead of transparency and clarity we get obfuscation, denial and hope. A true travesty of economic and financial justice.

Oh yeah, by the way, buy stocks on that decision ! As I have oft said, books are going to be written about this period marvelling at our outright selfishness, unbound greed, economic ignorance and overall abject stupidity. We all know what we would have done leading into the top of the market in 1929 with hindsight now. I believe we are in just such a place again, what are you doing about it?

The chart of the EEM (above) looks ready to roll over. A break of the 133 level looks like an appropriate level to watch for. I have been playing this via the ultashort emerging market ticker EEV. The corresponding break out of the EEV would be $83.40. I intend to get long a 2nd unit of the EEV on a move thru $83.40



Good speculating to you all.


Open Positions:
Long 6 units Currencyshares Japanese Yen ticker FXY @ $88.55 stop at $91.40
Long 1 unit Ultrashort China25 ticker FXP @ $84.55 stop at $84.85
Long 4 units Ultrashort Dow 30 ticker DXD @ $58.00 stop at $53.10
Long 2 units Ultrashort Real Estate ticker SRS @ $92.85 stop at $89.65
Long 2 units Ultrashort Financials ticker SKF @ $102.20 stop at $98.70
Long 1 units Ultrashort Emerging Mkts ticker EEV @ $83.3 stop at $79.45
Short 3 units of Deutsche Bank ticker DB @ $117.15 stop at $119.40
Short 2 units Citigroup ticker C @ $23.45 stop at $25.40
Short 2 units AGCO ticker AG @ $61.00 stop at $62.75
Short 2 untis Daimler AG ticker DAI @ $86.20 stop at $88.05

Watching MasterCard...

The daily chart of MasterCard (above) looks to have formed a good looking double top. I have not had any success with this of late, but why should that stop me.


I have blown up the 2nd touch of the double top on the daily (above). Interestingly it shows another double top formed inside of that touch. A break of 214.85 would imply a target of 199.50 for this intraday double top.
The daily double top needs to break 160.80 and a break there would imply a target of $94. Is this outrageous or what? Is there anyone out there who's not super bullish on MasterCard, and for good reason. It has been an absolute bulldog in this market.
I am intending to get short 1 unit on a break below $214.50 and I will place my stop at $222.60 if I get a filled.

Good speculating to you all.

Open Positions:
Long 6 units Currencyshares Japanese Yen ticker FXY @ $88.55 stop at $91.40
Long 1 unit Ultrashort China25 ticker FXP @ $84.55 stop at $84.85
Long 4 units Ultrashort Dow 30 ticker DXD @ $58.00 stop at $53.10
Long 2 units Ultrashort Real Estate ticker SRS @ $92.85 stop at $89.65
Long 2 units Ultrashort Financials ticker SKF @ $102.20 stop at $98.70
Long 1 units Ultrashort Emerging Mkts ticker EEV @ $83.3 stop at $79.45
Short 3 units of Deutsche Bank ticker DB @ $117.15 stop at $119.40
Short 2 units Citigroup ticker C @ $23.45 stop at $25.40
Short 2 units AGCO ticker AG @ $61.00 stop at $62.75
Short 2 untis Daimler AG ticker DAI @ $86.20 stop at $88.05

Friday, March 28, 2008

Another Rant

I must admit there is most definitely no shortage of things to write about regarding the current goings on in the markets. Some days I just do not know where to start. As you know I prefer the charts when speculating but that does not stop me from having completely useless opinions as to what is happening and why its wrong but I digress.

I caught a story this morning out of China that the government their is trying to find ways to prop up the market. It seems to me just a few short months ago they were looking for ways to cool off the markets there. Why are they meddling, will they never learn? That was a rhetorical question, of course they won't. The government there, just like here, believes they know better. Can you think of a greater oxy moron?

I want to address all these pundits argue there is no recession and you should BUY STOCKS. Then, when the facts are so overwhelming that these same pundits cannot deny its existence any more, what do they say? Of course they say that these same signals discount recession already, it's priced in, the markets a discounting mechanism, BUY STOCKS. Do you notice a pattern here?

I want to make something very clear right here. I am a free market, Austrian school market participant. I believe the free market should rule everywhere and always, at all times. I hear all this banter about limits on this regulation or that. I have heard that the self policing doesn't work, Wall St. proved that and more oversight regulation and rules is necessary.

What is missed is that the problems are caused by all the tinkering and meddling. Good intentioned or not, THERE SHOULD BE ZERO INTERVENTION IN THE MARKETS PERIOD.
This applies to the Fed as well. Who are they to set interest rates? If you believe so why aren't they setting milk and bread prices. Wow, I better be careful they may be headed in that direction. Why are bank deposits guaranteed by anyone. Why should an investment account be insured by anyone. Why are taxpayers footing the bill for any private entity. Too big to fail is a pipe dream fosterd by career beaureacrats intent on protecting their careers and pensions.

If under this "Brave New World" if a bank wants to leverage itself up to 35 X its capital base then in the course of full disclosure, WHICH IS PARAMOUNT AND IS GETTING THE SHORTEST SHRIFT OF ALL, who am I to stop them. But you can be darn sure I won't have a nickel of my money on deposit with them.

I used to have clients come in my office and complain about a mutual fund, or a particular position in the portfolio, complaining how it only made, say 5% while their friends fund made 24%. My question was how? I proceeded to ask this one client, in particular the following question. If you gave me 100K and I got you 5% and you gave a competitor of mine another 100K and he got you 24% who gets your next 100K? Easy, she replied, the 24% guy. Next I asked if she knew I bought her government bonds for the 5% and he played craps in the back room of the social club downtown, would Mr. 24% still get her 100K?


I think you get the point. DISCLOSURE full and complete unobstructed DISCLOSURE.... in ENGLISH !


This means you need one disclosure regulator that has teeth. Quite frankly if this means bringing back the guillotine so be it. Fear can be quite a motivator! This way, if you want to gamble, go ahead and gamble. The shareholders, deposit holders, employees will all know up front what is going on. Heads you win and tails you lose, not like it is now with heads you win tails you still win and others shoulder your loss.

You lose you get wiped out. PERIOD. End of discussion.

No more taxpayer financed golden parachutes, or reckless subprime ponzi schemes. You want safety get a safe, or a shotgun. Or better yet find a bank with maybe gold in its vaults, or crude in storage. Sounds crazy huh. Real confidence.

Ask yourself a question, would you put money in a bank run by Warren Buffett? Notice how I said not owned by him but rather RUN by him. Why?

Because he owns M & T Bank, he doesn't run it day to day, absentee landlord, so to speak. Now I don't know the extent of MTB's problems and to what extent they are "in the muck" like the rest of the banks but the price action of their chart sure speaks to issues there.

My point is we don't need any guarantees, insurance, bailouts or the like if people are forced to accept their losses as readily as they accept their winnings.


Good speculating to you all.

Open Positions:
Long 6 units Currencyshares Japanese Yen ticker FXY @ $88.55 stop at $91.40
Long 1 unit Ultrashort China25 ticker FXP @ $84.55 stop at $84.85
Long 4 units Ultrashort Dow 30 ticker DXD @ $58.00 stop at $53.10
Long 2 units Ultrashort Real Estate ticker SRS @ $92.85 stop at $89.65
Long 2 units Ultrashort Financials ticker SKF @ $102.20 stop at $98.70
Long 1 units Ultrashort Emerging Mkts ticker EEV @ $83.3 stop at $79.45
Short 3 units of Deutsche Bank ticker DB @ $117.15 stop at $119.40
Short 2 units Citigroup ticker C @ $23.45 stop at $25.40
Short 2 units AGCO ticker AG @ $61.00 stop at $62.75
Short 2 untis Daimler AG ticker DAI @ $86.20 stop at $88.05

Long the Ultrashort Emerging Mkts.

Just as I was publishing my last post I was filled long on 1 unit of the ultrashort emerging markets or as I like to call it submerging, ticker EEV at $83.25 with a stop at $79.45


Good speculating to you all.

Open Positions:
Long 6 units Currencyshares Japanese Yen ticker FXY @ $88.55 stop at $91.40
Long 1 unit Ultrashort China25 ticker FXP @ $84.55 stop at $84.85
Long 4 units Ultrashort Dow 30 ticker DXD @ $58.00 stop at $53.10
Long 2 units Ultrashort Real Estate ticker SRS @ $92.85 stop at $89.65
Long 2 units Ultrashort Financials ticker SKF @ $102.20 stop at $98.70
Short 3 units of Deutsche Bank ticker DB @ $117.15 stop at $119.40
Short 2 units Citigroup ticker C @ $23.45 stop at $25.40
Short 2 units AGCO ticker AG @ $61.00 stop at $62.75
Short 2 untis Daimler AG ticker DAI @ $86.20 stop at $88.05

Getting Short Daimler, Watching EEV again

The chart of Daimler(above) looks ripe to short. A nice double top forming up against a descending trend line. I am getting short 2 units here at $86.15 with a stop just above the formation at $88.05

The Emerging Markets is a trade I have been involved with prior from the short side. It looks like the time has come to re-visit this one. As usual I will do so via my favourite (below) the ultrashort emerging markets ticker EEV on a move thru 83.20 1 unit for now.




Good speculating to you all.


Open Positions:
Long 6 units Currencyshares Japanese Yen ticker FXY @ $88.55 stop at $91.40
Long 1 unit Ultrashort China25 ticker FXP @ $84.55 stop at $84.85
Long 4 units Ultrashort Dow 30 ticker DXD @ $58.00 stop at $53.10
Long 2 units Ultrashort Real Estate ticker SRS @ $92.85 stop at $89.65
Long 2 units Ultrashort Financials ticker SKF @ $102.20 stop at $98.70
Short 3 units of Deutsche Bank ticker DB @ $117.15 stop at $119.40
Short 2 units Citigroup ticker C @ $23.45 stop at $25.40
Short 2 units AGCO ticker AG @ $61.00 stop at $62.75
Short 2 untis Daimler AG ticker DAI @ $86.20 stop at $88.05

Thursday, March 27, 2008

Truth is Stranger than Fiction

You guys want to make sure you read this article. Bankruptcy examiner claims auditor may have aided in New Century fraud? You can't make this stuff up folks and as the saying goes truth is stranger than fiction. Tom Clancy should be stocking oodles of material for his upcoming books!

Oracle came out with their numbers last night which you are all aware of by now. The part that caught my eye was the comment by one of their executives reported on CNBC, I cannot remember which, who said to the effect we need to stop talking about recession as it affects orders. Remember what I said about corporate execs who use this line. Run don't walk as fast as you can from the stock. Just like when a retailing exec blames bad business on the weather, again run don't walk.

We got the news today that the commodity exchanges are raising margin requirements on various ag contracts. Nothing wrong with that. Make sure the players are real playas' and not wanna be's.

And speaking of commodities, it is my personal opinion that we are not in a bubble but that this is truly a demand outstripping supply story. I heard Maria quip that BHP Biliton has a higher market cap than Citigroup. Well money honey, I remember the day when Microsoft was worth more than the entire gold stock universe. Oh yeah, that's right you were hyping MSFT with all the other TV gurus. The caveat here, mines don't come online overnight, they take years so in the meantime....

Now having said this, any sell off in commodities is in my view a margin call, de-leveraging exercise, nothing more. It is my hope to get gold back to a mid 8 handle, I think it would be a gift. Crude still holds par, so that should show you its strength.

How many of you caught the Meredith Whitney interview on CNBC tonight? If you missed it I suggest you watch it. It is worth your time but a word of caution, it is not for the faint of heart. She minces no words and actually talks and acts like a buy side analyst. Oppenheimer ought to lock her down before she bolts.

Listen, I don't have any idea who the next Bear Stearns is. What I do know is that these guys all have paper on their books that they have continually screamed is worth more than the value the street is bidding. Basically they don't like the bids they see. They are hanging on and hanging on as the price continually erodes, hoping for better prices. As Ms. Whitney says, had they sold months ago, taking their medicine, they would have received much better prices. Now they are on sitting on the same junk and she expects it all to come to market at the same time exacerbating the problem. My take is that selling months ago would have destroyed their bonus packages so therein lay the reason. But what would a cynic like myself know.

Oh how fitting this all is. Remember my admonition that he who panics first panics best. Even now it still applies. I was always taught no matter how much it hurts the wallet and the psyche your first loss is your best loss ! We all would do well never forget this. I repeat those calling a bottom in financials and the markets are in for a rude shock. This financial cess pool is only now unravelling, it is going to get far uglier before it gets better.


Today's market action was interesting in that it was a day where the market rolled over with out the yen leading the way. Normally a declining yen has portend a stronger equity market. I don't know what to make of this yet but my gut tells me that selling like this without the aid of the yen carry-trade (de-leverage) unwind speaks of out and out selling.


Good speculating to you all.

Open Positions:
Long 6 units Currencyshares Japanese Yen ticker FXY @ $88.55 stop at $91.40
Long 1 unit Ultrashort China25 ticker FXP @ $84.55 stop at $84.85
Long 4 units Ultrashort Dow 30 ticker DXD @ $58.00 stop at $53.10
Long 2 units Ultrashort Real Estate ticker SRS @ $92.85 stop at $89.65
Long 2 units Ultrashort Financials ticker SKF @ $102.20 stop at $98.70
Short 3 units of Deutsche Bank ticker DB @ $117.15 stop at $119.40
Short 2 units Citigroup ticker C @ $23.45 stop at $25.40
Short 2 units AGCO ticker AG @ $61.00 stop $62.75

Wednesday, March 26, 2008

Mid Week Thoughts

I caught a piece yesterday on pom pom TV which is one of the first times I have seen a discussion about what the real underlying problem is with the credit crisis. The fact that home prices got way out of whack with incomes and until that changes, either incomes rise to a level commensurate or home prices fall back. Take your pick. My money is on home prices regressing to the mean so to speak !

I was reading about the MF Global disaster where 1 prop trader cost the firm big money. I understand that MF removed the safeguards on this trading account so he could trade quicker. He proceeded to put a trade on he could never ever ever afford to meet. This got me to thinking about the global multinational investment and commercial banks. They are no different than this cat at MF. They, and by they I mean the ENTIRE INDUSTRY, took the other side of derivative trades that they IN NO WAY, SHAPE OR FORM CAN EVER MEET. I have read reports that there are approximately 1 trillion in derivative swaps on GM and yet GM has a market cap of about 13 billion. How do you hedge, GM bonds? Good luck. So you hedge with another investment bank hence the exponential growth. This is an unfolding disaster of epic proportion.

Will we get through it?

ABSOLUTELY, no question about it !

But as we do, the pain will be extraordinary, the likes of which none of this generation has experienced. We have to face it, in many cases kicking and screaming. We as humans naturally would prefer to avoid any pain. We had a Fed compliments of Alan Greenspan who was all to happy to oblige our wishes. No more recessions, no more economic pain. A repeal of the traditional business cycle of ups and downs. Well it is now time to pay the piper and we unfortunately are going to have to pay for these past excesses, lump sum, balloon payment, here and now.

What is unfolding is going to annihilate financially, the many who are unprepared. Hopefully we will not be among them. Oh and by the way, the deals and bargains that will be available when we have settled this bill will be the stuff dreams are made of.


Good speculating to you all.

Open Positions:
Long 6 units Currencyshares Japanese Yen ticker FXY @ $88.55 stop at $91.40
Long 1 unit Ultrashort China25 ticker FXP @ $84.55 stop at $84.85
Long 4 units Ultrashort Dow 30 ticker DXD @ $58.00 stop at $53.10
Long 2 units Ultrashort Real Estate ticker SRS @ $92.85 stop at $89.65
Long 2 units Ultrashort Financials ticker SKF @ $102.20 stop at $98.70
Short 3 units of Deutsche Bank ticker DB @ $117.15 stop at $119.40
Short 2 units Citigroup ticker C @ $23.45 stop at $25.40
Short 2 units AGCO ticker AG @ $61.00 stop $62.75

Tuesday, March 25, 2008

Some Random Thoughts

So the Case/Shiller Housing numbers came in today. No so good were they. Lets not even talk about the consumer confidence numbers. I will repeat it again, until all these pundits and experts throw in the towel and stop calling a bottom we cannot have one. Bottoms are formed when participants give up, say uncle, and just walk away. Until then, it is only wishful thinking and believe me, there is plenty of that on Wall St.

Are you paying attention to the volume in this market. The volume on these rally days is sorely lacking and in my opinion, pathetic. Why is no one talking about it. These rallies are panic driven which is the calling card of short covering. These are people who buy back stock at any price. Ask yourself if this buying is the buying of traders who think the bottom is in or is it the buying people who are short and are running for cover from sniper fire (apologies to Hilary Clinton) at any price? I believe it is the latter.

I am recalling this from memory but I heard Art Cashin, the head of floor trading at UBS, this morning call the shorts in this market: the most jittery group he has ever seen in his years on the floor. As an exercise in enlightenment punch up a basket of the financials XLF, C, BAC, AIG, WM, COF, WFC, MER. Look at the most recent action and now compare it to the action of late January. It doesn't matter which you look at they all look the same; sharp, fast, and short lived. Like I said, short covering.

I see earnings are being revised downwards for Q1 which is not going to make the "but the markets cheap on a valuation basis" robots very happy. This is factual news yet what I see is Bob Doll and Larry Fink of Blackrock's call of a bottom, being replayed over and over on pom pom TV. Do you now see why I call it pom pom TV. Now I am not asking that they be the negative news network but reporting of the facts good or bad would be refreshing.


Now we are getting the news the Clear Channel deal is not going through. I am in no way involved in this as a trade but I do have some thoughts. Thoughts like, were the bankers involved in this fiasco capable of having any. Have they not had enough? Are they that stubborn or just that stupid. Just what an over leveraged, financially hemorrhaging beast needs more of, just what got it that way in the first place! MBA's gotta love em'!

Don't you remember all those leveraged buy outs (LBO's) day in and day out? Don't you recall merger Monday on pom pom TV? What do you think happened to all the bonds used to finance those deals? Here's a hint, look on the balance sheets of all the participating banks and if you don't find it on their balance sheets, hire a forensic accountant so he can sleuth around the off balance sheet entities for it. I GUARANTEE it's there. It's there all right, rotting like a dead fish only without the smell. This lack of smell is why the big investment/commercial banks are so good at hiding the stuff. How else can we explain how the majority of highly paid sell side analysts on the street missed it.

Chrysler bonds created via the Cerberus deal were floated at 14-16% if memory serves, with no takers, so now they sit on the books of banks like JP Morgan. Gee, I wonder if they're marked to market? Wait, don't answer that.

Housekeeping notes, I was stopped out of half of my 2 unit long position on FXP at $96.55. Not nearly the profit it was a week or so ago but nothing to sneeze at. Still long 1 unit.

Good speculating to you all.


Open Positions:

Long 6 units Currencyshares Japanese Yen ticker FXY @ $88.55 stop at $91.40
Long 1 unit Ultrashort China25 ticker FXP @ $84.55 stop at $84.85
Long 4 units Ultrashort Dow 30 ticker DXD @ $58.00 stop at $53.10
Long 2 units Ultrashort Real Estate ticker SRS @ $92.85 stop at $89.65
Long 2 units Ultrashort Financials ticker SKF @ $102.20 stop at $98.70
Short 3 units of Deutsche Bank ticker DB @ $117.15 stop at $119.40
Short 2 units Citigroup ticker C @ $23.45 stop at $25.40
Short 2 units AGCO ticker AG @ $61.00 stop $62.75

Getting Short AGCO .... again

Getting short our friend AGCO ticker AG. The strength of Monsanto gives us the cover we need. I am now short 2 units of AG @$ 61.05 with a stop at $62.75


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 China25 ticker FXP @ $84.55 stops at $84.85/$96.65
Long 4 units Ultrashort Dow 30 ticker DXD @ $58.00 stop at $53.10
Long 2 units Ultrashort Real Estate ticker SRS @ $92.85 stop at $89.65
Long 2 units Ultrashort Financials ticker SKF @ $102.20 stop at $98.70
Short 3 units of Deutsche Bank ticker DB @ $117.15 stop at $119.40
Short 2 units Citigroup ticker C @ $23.45 stop at $25.40
Short 2 units AGCO ticker AG @ $61.00 stop $62.75

SRS Correction

Interesting bar yesterday on Deustche Bank (chart above). A shooting star, or exhaustion bar just as it reached resistance. A break of the low of that daily bar, 112.78 should be the start of a new leg down.

I noticed that CNBC has been running and re-running clips of BlackRocks Bob Doll's bullish "bottom" comments. Correct me if I am wrong but is this not the same Bob Doll of BlackRock that is going to 'manage' the book from Bear Stearns on behalf of the FED ooops I mean JP Morgan?

In my haste to post, I made an error noting my 2nd unit of SRS was purchased at 93.90 when in fact it should have read 2nd unit of SRS at $92.90.



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 China25 ticker FXP @ $84.55 stops at $84.85/$96.65
Long 4 units Ultrashort Dow 30 ticker DXD @ $58.00 stop at $53.10
Long 2 units Ultrashort Real Estate ticker SRS @ $92.85 stop at $89.65
Long 2 units Ultrashort Financials ticker SKF @ $102.20 stop at $98.70
Short 3 units of Deutsche Bank ticker DB @ $117.15 stop at $119.40
Short 2 units of Citigroup ticker C @ $23.45 stop at $25.40

Getting Short Citigroup... among others.

As my notes indicate, this rally is no different than the one that occurred in late January. Low volume short covering driven. Things are getting worse not better and tis better to believe in the tooth fairy and Santa than the power of the Fed to make this credit crisis all go away.

I am now short 2 units C at $23.50 with a stop of $25.40

I am using the intra day weakness today to add a 2nd unit to both SKF and SRS. Adding to winners is usually a good thing.

I am long a 2nd unit of SKF at $103.55

I am long a 2nd unit of SRS at $93.90










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 China25 ticker FXP @ $84.55 stops at $84.85/$96.65
Long 4 units Ultrashort Dow 30 ticker DXD @ $58.00 stop at $53.10
Long 2 units Ultrashort Real Estate ticker SRS @ $93.35 stop at $89.65
Long 2 units Ultrashort Financials ticker SKF @ $102.20 stop at $98.70
Short 3 units of Deutsche Bank ticker DB @ $117.15 stop at $119.40
Short 2 units of Citigroup ticker C @ $23.45 stop at $25.40

Charts on TIE, GLD, SLV, USO,and UNG

Thornburg doing an issue of senior notes at, ahemmm 18%. They are also suspended dividends on their preferreds'. Ah yes, the evidence of a credit crisis past over. Just waiting now for the S&P and Moodys triple-A stamp on this one.




I put the chart of Titanium Metals (above chart) because all I heard when this was running was how great and indicator this was of the global economy. Funny, all is quiet now on that front.


The Gold chart (above) looks to be reaching some trendline support. Is it time to get in the water. Maybe. I stayed away from Gold because I was scared of the margin call trade. The forced de-leverage. It is upon us, has it run its course? Not sure yet but I am watching with a close eye.


The silver chart (above) shows similar circumstance to gold. Restoring some health to an overextending market, shaking loose the more thinly capitalized latecomers to the party. The trend is still up, and in an uptrend or bull market one can have 1 of 3 positions, long, very long, or neutral. It will serve us well to remember that.



In the crude chart (above) I have included the fibonacci retracement levels of the most recent run. We are approaching a major support zone, the late 07-early 08 consolidation. The energy market, like precious metals, is in clear bull mode. I would expect this pullback to be shallower. So how can you like crude if you think the economy is going into a bad recession. Easy, peak oil. We are running out of the stuff, the easy stuff is gone. The harder to get, heavy, pain in the butt to refine into usable products, is what we are chasing now. The harder it is to get, the more energy is required to get it out of the ground.
Asia, and in particular the middle east are developing like crazy, simple matter of fact. Their wants and needs and rising just like ours. To deny this is folly. Any significant washout in crude must be viewed as an opportunity to get involved.



Natural Gas is simply a great looking chart. This pullback to and below the break out level looks to have shaken out the pikers like myself. I see myself getting reacquainted with this one in short order.

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 China25 ticker FXP @ $84.55 stops at $84.85/$96.65
Long 4 units Ultrashort Dow 30 ticker DXD @ $58.00 stop at $53.10
Long 1 unit Ultrashort Real Estate ticker SRS @ $92.70 stop at $89.65
Long 1 unit Ultrashort Financials ticker SKF @ $100.70 stop at $98.70
Short 3 units of Deutsche Bank ticker DB @ $117.15 stop at $119.40

Monday, March 24, 2008

Taking a punt on Ultrashort Financials.


This pullback seems more hope induced than based on any concrete facts. The incessant talk of financials bottoming is wonderful cover to get shorts out at fat levels. Besides, I won't forgive myself if I don't use this pullback for what it is, a gift to get involved in SKF again at very reasonable levels. I am long now 1 unit of SKF at $100.60 with a stop just below at 98.7

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 China25 ticker FXP @ $84.55 stops at $84.85/$96.65
Long 4 units Ultrashort Dow 30 ticker DXD @ $58.00 stop at $53.10
Long 1 unit Ultrashort Real Estate ticker SRS @ $92.70 stop at $89.65
Long 1 unit Ultrashort Financials ticker SKF @ $100.70 stop at $98.70
Short 3 units of Deutsche Bank ticker DB @ $117.15 stop at $119.40

Getting Long Ultrashort Real Estate.

I think the time has come to re-visit the Ultrashort Real Estate ticker SRS. The exuberance in this market seems to be quite frightening to the bears, which is a good contrarian sign. Lots of bulls claiming the credit crisis is over and done. The evidence doesn't support this but they don't want to hear it. Cramer claims this is 'the bottom' and I am very comfortable coppering his trade. Again my stop is tight here but I am watching with an eye to adding if if moves in my direction.


I am getting long 1 unit of SRS here at $92.60 and I will have my stop at 89.65. This will do for now.



Housekeeping notes, I was stopped out of 3 units of EEV at $ 82.60 for a small gain given my cost basis of $82.15





I was also stopped out of both units of AGCO at $ 56.70 and 58.15. Entry on this was 60.15 so a small profit there.








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 China25 ticker FXP @ $84.55 stops at $84.85/$96.65
Long 4 units Ultrashort Dow 30 ticker DXD @ $58.00 stop at $53.10
Long 3 units Ultrashort Emerging Mkts ticker EEV @ $82.15 stop at $82.65
Long 1 unit Ultrashort Real Estate ticker SRS @ $92.70 stop at $89.65
Short 3 units of Deutsche Bank ticker DB @ $117.15 stop at $119.40

Saturday, March 22, 2008

Russell 2K update

If you have the time please take a trip over to Karl Denninger's blog Market Ticker. Seems he went toe to toe with Dick Bove of Punk Ziegel regarding his call on Bear Stearns along with his 'generational buy' call on the banks. Please check it out his most recent posts, its worth your time.

I want to bring your attention again to the Russell 2K ishares, AGAIN !


Please don't think I'm trying to beat a dead horse. But I see nothing wrong with this cup and handle on the chart. Now that I am out and unbiased, I find it just as, if not more, compelling. I had a look at the Spiders, ticker SPY, and they are showing the same thing.

I intend to use this 'Bove rally' to get back involved in this trade again using my preferred vehicle the ultrashort Russell 2K ticker TWM. Due to the fact the TWM is 2x the underlying I will use the most recent reaction highs on the IWM as my stop point, these were 68.83 and 68.93.

Remember I said a few days ago that I thought the Fed would end up with egg on it's face regarding the Bear Stearns/JP Morgan deal. Well this might just be the start of it. Congress sniffing around never ends well, for anyone!

And on the lending front. I noticed CIT drew down their lines of credit. Expect more of this, wouldn't you if you thought your bank was gonna pull it. Maybe beleaguered homeowners(oxymoron if their ever was one) will do the same. Oh yeah, I forgot they did that already via HELOC's, etc. I'll take the under on CIT's bankers ever seeing a nickel of this back !

On the housekeeping side of things, I am adjusting some stops. Do not interpret this as waffling in any way. I am intent on keeping some profits and constantly increasing the equity in my account.





I am adjusting my stop on the ultrashort Xinhua China, ticker FXP, staggering them. So 1 unit at $84.85 and 1 unit at $96.65. Just protecting some profits and not get shaken from a well insulated position.





Also moving my stop on 3 units long of ultrashort Emerging(submerging?) markets, ticker EEV, to $82.65. Again not wanting to let a winner turn to a loser while attempting to let the winner run.





Livermore was so right when he said sitting is the hardest thing. Most speculators have the urge to sell their winners and tuck their small minuscule profits in their pocket, only to watch the stock go flying to the upside. He always counselled to be calm when you have a profit and nervous when you have a loss. Most do the opposite.





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 China25 ticker FXP @ $84.55 stops at $84.85/$96.65
Long 4 units Ultrashort Dow 30 ticker DXD @ $58.00 stop at $53.10
Long 3 units Ultrashort Emerging Mkts ticker EEV @ $82.15 stop at $82.65
Short 3 units of Deutsche Bank ticker DB @ $117.15 stop at $119.40
Short 2 units of AGCO ticker AG @ $60.15 stops at $58.10/$56.65

Thursday, March 20, 2008

March Madness Begins...

My apologies for not posting earlier today. I had a date with March Madness, so I was concentrating on far more important things, like filling out my tournament brackets along with getting comfortable in front of the TV. I read recently that the NCAA tournament is second only to the Superbowl in popularity. Enjoy the madness !




Many are talking about the dramatic ongoings in the credit markets. Many market watchers are discussing the 3 month treasury bill yield and offer much more insight than I ever could. The 3 month bill is currently yielding 0.57% vs 2.25% for Fed funds. I found the following chart which shows the 3 month T-Bill yield vs the S&P futures and thought you should see it. The while is yield while the red is the S&P.
The chart seems to show some correlation. Does anyone want to hazard a guess as to what has the credit markets so panicked yet the equity markets seem oblivious to? This chart should go a long way to explaining the rationale for my incessant 'short bus rider' comments towards the general equity trading population.
I don't know about you but the above chart has me extremely worried. This is happening after all that the Fed has done rate cut wise, not to mention opening the discount window to everyone and backstopping the JP Morgan/Bear Stearns deal. Check that thought, I'm not extremely worried, I'm petrified. The chart makes me think I'm not short enough. I hope all of you have taken precautionary measures (regarding you cash and deposit assets) to protect yourself against the fallout from this. Believe me, it's gonna be breathtaking. And what if all the fear mongering, short selling, pessimistic curmudgeons (like myself) are wrong. Well then, protected yourself was an inexpensive exercise that took some of your time and effort, not much else.
Housekeeping notes I was stopped out of USO at $79.60 as it gapped lower thru my stop of $80.80 this morning.
I am adjusting my stop on AGCO down as a staggered stop. 1 unit at $56.65 and the 2nd at stop $58.10 in an attempt to not let a winner turn to a loser.
Enjoy the long weekend !

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 Dow 30 ticker DXD @ $58.00 stop at $53.10
Long 3 units Ultrashort Emerging Mkts ticker EEV @ $82.15 stop at $76.90
Short 3 units of Deutsche Bank ticker DB @ $117.15 stop at $119.40
Short 2 units of AGCO ticker AG @ $60.15 stop at $58.10 and stop at $56.65

Wednesday, March 19, 2008

Late Day Wednesday.

To call today frustrating would be a severe understatement. Getting stopped out of my 5 units of TWM at $82.50 only to see it bottom at 80.20 and reverse to close on the highs of the day. Lets just say I stepped outside for some fresh air and to cool off. (didn't want to break anything!) Has this changed anything regarding my view on using stops... absolutely not, they will most certainly save your trading life one day ! Should I have used staggered stops at different price levels, like I did with USO, perhaps. I will do some some work on that.

When I was outside getting that fresh air, I though of what I was told once by a wizened trader who told me the always does what it is supposed to just never when. He also used to remark that the market likes to make its move, either up or down, with as few people on board as possible. It will bore you to death so you move on and miss the move. It will back and fill stopping you out numerous times stinging you with losses to the point you throw in the towel looking for easier money elsewhere.

On Wednesday March 12 I stated the following:

My personal opinion is that the market is getting ready for an awful smashing. This is not based on any technical or proprietary indicator but rather my gut from observing how this tape trades and treats its victims. It seems to hold on by the weakest of tenets and cannot demonstrate any staying power. At some point we will wake up to a broad market that gets treated like a Wellpoint or Humana. Prepare yourself for it.


The tape action of the last few days has not altered my view one iota. As a matter of fact I feel more confident in my assessment. Today's actions helps, believe me. I consider the action of yesterday and Tuesday last week (multiple hundred pt up days) as succeeding in chasing more and more shorts out of positions each time. We may have to go through this a again ( getting unlikelier) before it really tanks. This way it would do it with a few of the shorts on board as possible, frustrating the maximum number of participants.

How many bears on Bear Stearns caught the bulk of the move. I wish I could say I did. I remind you of Louise Yamada's visit to CNBC when she counselled on the violence and swiftness of bear market rallies.

The Asian markets seem to have a better handle on what is going on here than we do. Many would attribute this to our cheerleading financial media. I caught the money honey's interview with the Honeywell CEO in which he remarked, basically, we have to stop being negative as this is the problem. Yup talking negative is taking the market down via psychology. I have to categorize this excuse up there with the retail CEO's blaming bad sales on the weather.

So many are intent on calling a bottom and as chief technician of Oppenheimer, Carter Worth said on CNBC today, "Why?"

I agree with Carter, why the obsession with finding the bottom? What are you missing out on 10-15%. Many astute traders have called the first and last 10% of a move the most expensive. Listen we are in a bear market. Did you notice everyone on CNBC's enthusiasm is missing today. Gee I wonder why? I thought their reporting was objective and unbiased. We are in a bear market and as my friend Dennis Gartman always says in a bear market you can only have 1 of 3 positions; short, very short or neutral. Remember that.


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 5 units Ultrashort Russell 2K ticker TWM @ $84.95 stop at $82.90
Long 4 units Ultrashort Dow 30 ticker DXD @ $58.00 stop at $53.10
Long 3 units Ultrashort Emerging Mkts ticker EEV @ $82.15 stop at $76.90
Long 2 units U.S. Oil Fund ticker USO @ $80.30 stop at $80.80
Short 3 units of Deutsche Bank ticker DB @ $117.15 stop at $119.40
Short 2 units of AGCO ticker AG @ $60.15 stop at $65.45

The Day After

Quite the day yesterday wasn't it. Wild and wolley, full of volatility ! Yet this is what the prognosticators believe is how a bottom will be formed following the grandest speculative credit orgy/ponzi scheme mankind has even seen!

I would think not. Yesterday I heard that Pimco wants the Fed to buy mortgages, yes buy mortgages. I am not surprised that the largest bond fund manager in the world wants government support of its position. Tis human nature to want any and all support of their position.

We have a generation of financial managers who believe intervention of any sort is the be all end all. That the Fed can ride to the rescue and save the day. Recessions, loan losses, etc are all a thing of the past. Case in point Bear Stearns, which I hear has some directors blaming poor ol' Mr. Bernanke. What no mention of the King bartender of credit Mr. Greenspan? Bernanke is not blameless for sure but he inherited much of the mess we are in. I laugh at Bear Stearn lack of self examination. It certainly had nothing to do with their drunken participation in the orgy. I can guarantee their were skeptics at Bear Stearns who were counselling caution of the path Bear was taking, were the proverbial stick in the mud at director meetings warning of the perils of such leverage being employed. I can also guarantee that these people were ridiculed, derided, and ostracised by their colleagues. The same colleagues whom are now blaming others. The psychologists and sociologists could write paper after book on this for sure.

As painful as yesterday was I still view it as short covering. In examining the tracking stocks of the major indices I did not see a massive increase in volume the bulls should be looking for. Everyone wants a bottom, is praying for a bottom, and quite frankly is desperate for one. Believe me I am short and am on the definite lookout for one.

News this morning is the easing of capital requirements on Fannie and Freddie. Yes, that will solve everything. More liquor for the alcoholic. What a wonderful reward for a company, Fannie, that took years to get the books in order so they could deliver their financials to the market. Future generations will read books about this credit debacle, in particular about decisions like this with Fannie and ridicule how gallactically ignorant we were, just as we do with decisions of 1928-1932.


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 5 units Ultrashort Russell 2K ticker TWM @ $84.95 stop at $82.90
Long 4 units Ultrashort Dow 30 ticker DXD @ $58.00 stop at $53.10
Long 3 units Ultrashort Emerging Mkts ticker EEV @ $82.15 stop at $76.90
Long 2 units U.S. Oil Fund ticker USO @ $80.30 stop at $80.80
Short 3 units of Deutsche Bank ticker DB @ $117.15 stop at $119.40
Short 2 units of AGCO ticker AG @ $60.15 stop at $65.45

Tuesday, March 18, 2008

Fed Day.

Got a bit on my plate todayso a quick post. Suffice to say we are no where near out of this mess, not by a long shot. I continue to remind you of this because the cheerleaders on tv are trotting out the propaganda machine. The time to buy, its a bottom, don't miss out, could have been worse, blah, blah, blah crowd.

Some housekeeping notes. I was stopped out of half my USO position yesterday at $82.25 leaving me with 1 unit which I will move my stop up on to $80.80.

I was also stopped out of my UNG position yesterday at $ 44.40 yesterday in a very violent day on the commodity side.

I am going to keep my eye on an this and see how it plays out.

The talk is of 100 basis pt. cut today and the equity crowd is trying to bully the Fed into it, helped by pom pom tv that brings out the marching band every day we have a rally. I have no doubt the Fed will not disappoint them. The Fed has no clue where rates should be and is only magnifying the problem. I suggest that the Fed stop it, just stop it all. Let the correction occur, stop tyring to stave off a day of reckoning.

Many are calling yesterday a bottom, I've lost count. We are no where near a bottom. Goldman and Lehman's earnings, I guess everything is okay right. Buy financials at your own risk. The Fed is trashing the currency via interest rates, is rewarding drunken speculation, and is penalizing frugal and sober decision making.

Watching the Bear Stearn/JP Morgan deal. I'll bet dollars to doughnuts the Fed gets massive egg on its face over this one.


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 5 units Ultrashort Russell 2K ticker TWM @ $84.95 stop at $82.90
Long 4 units Ultrashort Dow 30 ticker DXD @ $58.00 stop at $53.10
Long 3 units Ultrashort Emerging Mkts ticker EEV @ $82.15 stop at $76.90
Long 2 units U.S. Oil Fund ticker USO @ $80.30 stop at $80.80
Short 3 units of Deutsche Bank ticker DB @ $117.15 stop at $119.40
Short 2 units of AGCO ticker AG @ $60.15 stop at $65.45

Monday, March 17, 2008

Ready to Add to Ultrashort Russell 2K

The above chart shows how significant the 64 level is. A break of it would force me to add a 6th unit to my preferred vehicle for playing this, that being long the ultrashort Russell ticker TWM.

I want to touch on the people aspect of Bear Stearns that CNBC is touching on today. It ties into something I posted earlier about how we have learned nothing from Enron or Worldcom? This may be painful for many to hear but considering these people worked for an investment firm I am shocked the majority of their net worth is in one basket. In these firms training programs day 1 that is the first thing taught. I want to shake these people and say "what were you thinking". You're the genius when the stock went up and now it's cratered and you've been hard done by, screwed over. You cannot have it both ways.

Flashback....I had the opportunity to entertain a senior employee of my old employer who had many years and much company stock, north of 85% of his net worth tied up in the company stock! I pleaded and pleaded that it was an imprudent position and must be adjusted. The client countered the bank was sound as any and was comfortable holding it, besides it was doing quite well. I pressed, the client got offended, at my lack of commitment to the stock of the company I worked for,(and which I owned as well) and for my intransigence to his decision. I relented and the issue was left alone. Months proceeded to pass and then the Enron blow up hit the papers and stories of employees life savings evaporating began to emerge. Gut wrenching stories that made you sick. Well shortly thereafter my phone rang. Said senior employee wanted to sit back down and discuss diversifying his assets.

I am not trying to downplay what has happened at Bear, it is awful, truly saddening. Rather I share this with all of you so it doesn't happen to you.

If you have the bulk of your net worth in any one investment, any one firm, any one maturity, any one anything, change it..... IMMEDIATELY !

Protect yourself. Do not wait for a crisis of life altering magnitude to happen to you and your family. Be prepared, hope for the best plan for the worst.


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 5 units Ultrashort Russell 2K ticker TWM @ $84.95 stop at $82.90
Long 4 units Ultrashort Dow 30 ticker DXD @ $58.00 stop at $53.10
Long 3 units Ultrashort Emerging Mkts ticker EEV @ $82.15 stop at $76.90
Long 4 units U.S. Natural Gas Fund ticker UNG @ $45.05 stop at $45.45
Long 2 units U.S. Oil Fund ticker USO @ $80.30 stops at $80.45 and $82.35
Short 3 units of Deutsche Bank ticker DB @ $117.15 stop at $119.40
Short 2 units of AGCO ticker AG @ $60.15 stop at $65.45

The Take Away

With all the chatter regarding Bear as to what happened, why, how etc. the issue I want to touch on is what are we to take away from this Bear Stearns exercise. Well for me it is simple, run don't walk away at the first sign of trouble. I am not kidding, I know sometimes sarcasm gets the better of my keyboard at times but on this subject I am dead serious. They (shareholders) didn't learn from Enron, didn't learn from Worldcom, and once again Bear Stearns. As Jesse Livermore said in his classic Reminiscences of a Stock Operator, "speculation is as old as the hills, nothing has changed."

The cockroach theory of there is never just one(problem) must be embraced. You want to have hope and faith? Save that for your favourite sports team. I do. Every Sunday with my beloved Detroit Lions. I root and hope and pray and curse, but I never, ever, ever bet(speculate) on them. Why? I love them too much. Clouds my judgement. Can't think straight.

So disassociate yourself from it. But it's Bear Stearns, 85 years in business you say? What no stops in place? No uncle point? Not gonna get whipped out again are ya? Unfortunately you deserve what you get. Sorry but that's the truth of the matter.

For those that think dollar cost averaging still works we now have yet another example to add to our list of infamy. Mr. Joe Lewis, currency speculator extraordinaire. I am not kidding this guy is a Tiger Woods in the trading world. That a pro's pro could get dismantled so unmercifully tells you that markets can be and most often are indiscriminately brutal. No one is safe. Discretion is the better part of valor. Live to fight another day.

I would guess that Joe Lewis will take some time off after this, he will look back on his trade and will identify what went wrong. He will identify what happened fix it and be back on top in short order, count on it. Let us all learn from Mr. Yasuo Hamanaka of Sumitomo copper fame (flame), Nick Leeson of Barings Bank, Jerome Kerviel of Societe Generale, and now Mr. Joe Lewis. Averaging down is the absolute unequivocal guaranteed path to speculating annihilation.


I want to ask all the pundits who think we have overpriced debt paper on the downside. Where were these guys when tech stocks were being overpriced on the upside. Simple, they were long the crap so it served their purposes.

Steve Forbes is now advocating suspending mark to market for these firms because there is no bid on these securities due to panic. Does he not think there's a legitimate reason there's no bid. Unbelievable ! Drink the kool-aid. Keep that rotting smelly body in the basement. Something is worth what the market will pay. So based on Mr. Forbe's (who obviously is much smarter than the market) well thought out analysis(not), since we had a panic in tech stocks to the upside should we, by his logic, not have suspended mark to market back then?

When there is no bid for a security in my trading account I don't get any value. My broker values it at zero! And it leads to a margin call. Prepare yourself for every dim witted, hair brained scheme to keep the charade going. Pain avoidance is at the root of it all.

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 5 units Ultrashort Russell 2K ticker TWM @ $84.95 stop at $82.90
Long 4 units Ultrashort Dow 30 ticker DXD @ $58.00 stop at $53.10
Long 3 units Ultrashort Emerging Mkts ticker EEV @ $82.15 stop at $76.90
Long 4 units U.S. Natural Gas Fund ticker UNG @ $45.05 stop at $45.45
Long 2 units U.S. Oil Fund ticker USO @ $80.30 stops at $80.45 and $82.35
Short 3 units of Deutsche Bank ticker DB @ $117.15 stop at $119.40
Short 2 units of AGCO ticker AG @ $60.15 stop at $65.45

Unique Situation

Bear Stearns sold in a stock exchange to JP Morgan for $2. Hang on though, stop the presses, I just got an email from a value, GARP, fundamentals trump all else, ivy league, don't rock the boat, buy the dips, equity fund manager telling me the stock has a book value of $80.

The money honey is on pom pom TV this morning calling Bear Stearns a 'unique situation'. So, given the obvious fact I am not an English major, I thought I would double check and look it up as my father used to tellme to do.

u·nique /yuˈnik/ Pronunciation Key - Show Spelled Pronunciation[yoo-neek] Pronunciation Key - Show IPA Pronunciation
–adjective


1.existing as the only one or as the sole example; single; solitary in type or characteristics: a unique copy of an ancient manuscript.
2.having no like or equal; unparalleled; incomparable: Bach was unique in his handling of counterpoint.
3.limited in occurrence to a given class, situation, or area: a species unique to Australia.
4.limited to a single outcome or result; without alternative possibilities: Certain types of problems have unique solutions.
5.not typical; unusual: She has a very unique smile. –noun
6.the embodiment of unique characteristics; the only specimen of a given kind: The unique is also the improbable.


Based on this definition I would humbly suggest to Maria and her producers that an alternative choice of word might be in order for the situation. Why do I say this.....well, couple of reasons, Lehman for one, and Morgan Stanley for two. Level 3 assets dear readers, level 3 assets mixed. But hey, they're triple-A rated, so nothing to worry about here.

The discussion of all the Bear business going elsewhere and a boon for everyone else, well, lets just say that all those hedge funds with fancy Greek and mythological names designed to impress that populate the globe like dandelions on your lawn, they won't be around much longer.

So the Fed sneaks in like a thief in the night and cuts the discount rate a 1/4 pt also extending it to primary dealers. Boy, that really fooled the currency boys didn't it. Bernanke and his Fed colleagues think the currency boyz are as stupid as the equity ones. Wrong assumption Ben. You should have sat at a currency desk or bond desk, buy side mind you not sell as that would be an absolute waste of time, before you took over the Fed. You could have skipped out of Princeton for an afternoon and watch that the currency and credit guys do homework. They DO NOT TURN ON CNBC to find out what to buy like the equity zombies do. They are chess players thinking 3 moves ahead. Merger Monday anyone? And those primary dealers, they have to provide triple-A paper to get funds. Remember that Deustche Bank bond when you think of triple-A paper, yeah that paper with a 43% delinquency rate.

But hey, S&P said last week this subprime crisis is almost over so stop worrying.

The situation is now moving from the denial phase to the realization phase. Watch the sparks fly.


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 5 units Ultrashort Russell 2K ticker TWM @ $84.95 stop at $82.90
Long 4 units Ultrashort Dow 30 ticker DXD @ $58.00 stop at $53.10
Long 3 units Ultrashort Emerging Mkts ticker EEV @ $82.15 stop at $76.90
Long 4 units U.S. Natural Gas Fund ticker UNG @ $45.05 stop at $45.45
Long 2 units U.S. Oil Fund ticker USO @ $80.30 stops at $80.45 and $82.35
Short 3 units of Deutsche Bank ticker DB @ $117.15 stop at $119.40
Short 2 units of AGCO ticker AG @ $60.15 stop at $65.45

Saturday, March 15, 2008

Weekend Rant

I do not possess a masters or PhD in any vocation, so lets get that out there right away. What I do possess is a simple BA which doesn't even qualify me to drive a bus. I also possess is a healthy dose of skepticism about what I am told by people with those same graduate and post-graduate degrees who are running things.

The Fed, the SEC, the Treasury were created, after major problems, basically to save us or at least protect us from them happening again. How ironic that the opposite is occurring and they are the root of the problem and if not the root them they have magnified the problem substantially. A couple of quick refresher points before I begin. I note just a few knowing this list of points could go on for pages.

  • The rating agency frauds. (Recently a bond sold by Deutsch Bank in May 2006 is AAA at both S&P and Moody's even though 43 percent of the underlying mortgages are delinquent. think about that for a minute!
  • The CPI data yesterday. Energy prices dropped 1/2%. I can't stop laughing.
  • Bear Stearns official denials of liquidity problems. Bailout 24 hrs. later.
  • Liar and Ninja mortgage loan operations. The laughing ended months ago on this one now its anger.
Where am I going with this? Well lets look at Bear Stearns problem. Back on Jan 8 I posted how Bear Stearns problems were rooted in credibility and trust, at the time I said:

"Now in the case of Bear, where you sell an intrinsic product, your reputation is paramount. And in this case it is toast, kaput, you would be better of starting from scratch. Can you say E.F. Hutton or Drexel Burnham Lambert, of course you cannot and for good reason."

We are heading down the same path as Bear Stearns. A crisis of confidence is on our doorstep and many of those don't know it or won't recognize it. David Walker resigned as U.S. comptroller general out of frustration. Should this not tell us something?

The dollar is tanking yet our Fed chairman tells us most have expenses in U.S. dollars so it doesn't matter. Did I hear that correctly or is my hearing going? Wake me up and tell me it's a bad dream. I am no forex expert but what I can tell you from what little I know of the field, is that the currency does reflect the climate of investing in a country. When things are good and well the currency is strong and when things are lousy the currency is weak. Fairly simple and straightforward, right? Well explain to me why the intelligentsia don't get it. I understand the short bus equity crowd missing it but everyone at the helm?

I have, for some while, a bearish speculating posture now because the market tells me it is correct to do so. The rising equity balance in my accounts tell me the same. I am no perma-bear though, in fact quite the contrary. I want to see things be better, there is much satisfaction is stealing victory from the jaws of defeat. ( any recall the Buffalo Bill comeback against Houston Oilers years ago!) but to ignore what is happening around us is folly of the first order and will ensure destitution.

I believe the Fed is actually hastening our demise. I sent out an SOS for Paul Volker the other day and I meant it. We need someone who has spine, who understands financial market mechanics, who understands psychology and above all, who understands that doing the right thing, though temporarily PAINFUL, everywhere and always trumps the easy or expeditious thing.

We function in a fractional banking system and CONFIDENCE is paramount ! This is not a joke or a punch line, but a fact. The whole financial system functions on this basic foundation. In my opinion the foundation has become rotten and if not restored threatens the whole system. Look what it has done to Bear Stearns.

We need to stop manipulating and lying about official data. We need to stop denying what the real problem is, overpriced real estate that cannot be sustained, and suffer the ramifications of that correction. Someone please explain to me why this is so hard for many to swallow!

Confidence is not lost when people are told the truth, it is lost when you tell them something that their 12 year old child knows is a bold-faced lie. Confidence is not lost when people go through tough times. It is tested, it is challenged, just like in athletics you learn more about your team and players when they are losing not when they are winning. We are currently failing this test badly.

Bad economic news, tell everyone all is okay.
More bad economic news, tell everyone it's contained.
Still more bad news, tell everyone the naysayers are doom and gloomers, and shortsellers!.
Even further bad economic news, manipulate the data.
Even worse economic news bail out the instigators and facilitators who created the mess.

What does the above playbook result in? Easy, our DEMISE plain and simple or in the least a significantly lowered standard of living with much hardship.

The Fed is not the Salvation Army. You are on all on your own. Individuals. institutions alike. Mark all your positions to market NOW. No bid then the mark is zero! The manipulation and outright lying about official data must stop. The dollar must be protected at all costs and not via manipulation. Jawboning, forget it, where did that get us. Rate cuts should be stopped as the signal open season on the dollar. What I am about to say next will sound bizarre but rate hikes are in order, in the least to stabilise the situation. Stop with the games and the charades. Actions that you mean business need to be the order of the day. The Mugabe playbook from Zimbabwe doesn't work, unless you own a wheel barrel manufacturing plant! When our dollar index is at 40 cents but all the investment houses and banks are still standing will all be well ?

Didn't we learn he Japan playbook from the 90's doesn't work either. Or have you missed what happened to their economy and stock markets. For what its worth the Nikkei was almost 40,000 back in 1989-90 and is now just under 12,000 (I will let you can do the math). Sure, they cut interest rates to zero, let the currency tank, ignored, hid and obfuscated bad loans as if they didn't exist, to the point people there put their money in the post office, yeah that's right the post office. What's that phrase again, return of capital or on capital, I forget.

Where does this all get you? Well it got them what some have called and I wholeheartedly agree, the lost decade. I personally believe it would have been much worse for Japan had it not been for their high societal (personal) savings rate, but what do I know, I an not a PhD in economics now am I? Scary thing about us, as indebted as we are. I don't want to even cross that bridge!

Sorry for the diatribe but wanted to get that out there. Know this this is not the end of the world and remember that crises and adversity do not build character THEY REVEAL IT !

As a aside and a positve note please have a read of this feel good story, I am a dog/pet lover so it hits close to home and having also experienced a house fire, well it hits even closer. Enjoy your weekend.

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 5 units Ultrashort Russell 2K ticker TWM @ $84.95 stop at $82.90
Long 4 units Ultrashort Dow 30 ticker DXD @ $58.00 stop at $53.10
Long 3 units Ultrashort Emerging Mkts ticker EEV @ $82.15 stop at $76.90
Long 4 units U.S. Natural Gas Fund ticker UNG @ $45.05 stop at $45.45
Long 2 units U.S. Oil Fund ticker USO @ $80.30 stops at $80.45 and $82.35
Short 3 units of Deutsche Bank ticker DB @ $117.15 stop at $119.40
Short 2 units of AGCO ticker AG @ $60.15 stop at $65.45

Friday, March 14, 2008

Getting Longer Ultrashort Russell 2K

Well the IWM has taken out 65.50 which represents the handle. Based on this I have added a 5th unit long of the TWM filled at $91.45

I completely understand those hesitant to short into a hole like we have today. Unfortunately I know of no other way to trade. Stocks are never too high to buy nor are they ever too low to sell.


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 5 units Ultrashort Russell 2K ticker TWM @ $84.95 stop at $82.90
Long 4 units Ultrashort Dow 30 ticker DXD @ $58.00 stop at $53.10
Long 3 units Ultrashort Emerging Mkts ticker EEV @ $82.15 stop at $76.90
Long 4 units U.S. Natural Gas Fund ticker UNG @ $45.05 stop at $45.45
Long 2 units U.S. Oil Fund ticker USO @ $80.30 stops at $80.45 and $82.35
Short 3 units of Deutsche Bank ticker DB @ $117.15 stop at $119.40
Short 2 units of AGCO ticker AG @ $60.15 stop at $65.45

Russell 2K ishares.


I ususally don't post intraday charts but the above is a 15 min chart of the IWM. Remember the upside down inverted in the mirror cup and handle. This should show where the handle would be broken to the downside. I will be participate via my preferred TWM adding a 5th unit to my positioin on TWM on the move by the IWM below 65.50. I am watching for an increase in the volume as this occurs.


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 $82.90
Long 4 units Ultrashort Dow 30 ticker DXD @ $58.00 stop at $53.10
Long 3 units Ultrashort Emerging Mkts ticker EEV @ $82.15 stop at $76.90
Long 4 units U.S. Natural Gas Fund ticker UNG @ $45.05 stop at $45.45
Long 2 units U.S. Oil Fund ticker USO @ $80.30 stops at $80.45 and $82.35
Short 3 units of Deutsche Bank ticker DB @ $117.15 stop at $119.40
Short 2 units of AGCO ticker AG @ $60.15 stop at $65.45

Getting Shorter AGCO

Credibility, take a minute to look up the word. Eliot Spitzer, Bear Stearns CEO, CPI numbers, CDO's ... oh I'm sorry I thought I said cess pool.

Bear Stearns needs to be bailed out, fitting, one day after CEO tells us everything is A-Okay. Oh and Vince Farrell telling us that Ace Greenberg's denial of problems at Bear Stearns day before, you could take it to the bank. My question is what bank Vince? Bank of Banana Republic. Cheerleading shills nothing more. What a sad sad joke. JP Morgan the old man himself must be rolling in his grave.

Pledging mortgage collateral to the Fed for money and a haircut but the Fed knows how to value this crap. If I were a broker I would margin call to death all my hedge fund clients, take their junk collateral triple-A rated crap immediately and pledge it before everyone else does. He who panics first panics best.

SOS to Paul Volker we need you back ASAP !

I was filled on a 2nd unit short on AG at $58.75 as it broke the 59 level. I am now short 2 units at $ 60.15.


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 $82.90
Long 4 units Ultrashort Dow 30 ticker DXD @ $58.00 stop at $53.10
Long 3 units Ultrashort Emerging Mkts ticker EEV @ $82.15 stop at $76.90
Long 4 units U.S. Natural Gas Fund ticker UNG @ $45.05 stop at $45.45
Long 2 units U.S. Oil Fund ticker USO @ $80.30 stops at $80.45 and $82.35
Short 3 units of Deutsche Bank ticker DB @ $117.15 stop at $119.40
Short 2 units of AGCO ticker AG @ $60.15 stop at $65.45

Thursday, March 13, 2008

Russell 2000...Inverted Cup n Handle?

The chart of AGCO (above) paints a sad picture. Hovering on its lows of the last few days the stock looks tired. I would welcome a rally into the 61.50 62.00 area to get short a 2nd unit. Failing that a break of $59 would also do the trick.

A few days ago in my post The Beat Goes On I spoke of the concept of looking at a chart inverted and would it change your stance, introduced via Barry Ritzholz's blog The Big Picture. Well I wanted to put it into practice and not being the most sophisticated, technologically, (or socially for that matter) I did the following which I would encourage you to also. The chart in question is below and is the Russell 2000 tracking shares or more commonly known as the IWM.


Being without the technological wherewithal I improvised and took above said chart and printed it. I then took that page turned it upside down. Then I walked over and looked at it in the mirror. Go ahead and do this. What are we looking at. Well to my untrained eye, it looks like a dandy cup n' handle. Now I am no William O'Neill, for the uninitiated he is the founder of Investors Business Daily and I believe the originator of the cup and handle formation but I could stand to be corrected on that one, but it sure looks like one me.


From my limited knowledge of the formation you need heavier volume at the edges of the cup and light volume thru the bottom or cup part. Now would it have been easier to just look at the short or ultrashort russell for a look. Well I did but I wanted to have a look at it without leverage which the TWM has 2x and with participation which the RWM doesn't have.



The above chart is the ultrashort Russell 2K (TWM) and I must tell you it looks like a stretch version of the upside down, inverted, looking at it in the mirror IWM chart. Now if this is a cup with a handle the potential move is the height of the cup portion. The handle portion should be 5% below the old high point and much more than 5% then reliability declines. So lets look at the IWM first and them TWM.
  • IWM- the height of the cup is about 8.5 pts (72.5-64) which would imply a downside target of $55.50 (64-8.5=55.50) the handle starts at $64 and 5% of that is $3.2 so 64+3.20=$67.20
  • TWM- the height of the cup is about 20 pts (96-76) which would imply an upside target of $116 (96+20=116). The handle starts at 96 and 10% (remember TWM is 2x the underlying) of that is 9.6 so 96-9.6=86.40
The IWM closed today at $67.88 and the TWM closed at $86.40
I will be watching this very closely as a move below approximately 65.75 to 66 on the IWM accompanied by substantial volume would signal a break below the handle and be the proverbial whistle for all aboard.

Don't take my word for it, try this exercise for yourself and any cup and handle practitioners out there, I would be interested in your feedback on any flaws you may see with my calling this a cup n' handle. Your thoughts would be appreciated !



Well S&P came out today and told us all what we all should know and that is the end of subprime write downs is in site. S&P stated...


"The positive news is that, in our opinion, the global financial sector appears to have already disclosed the majority of valuation write-downs of subprime" asset-backed securities, Standard & Poor's credit analyst Scott Bugie said in a statement.

Funny, no mention of Alt-A, prime, commercial or LBO paper. Did I neglect to mention this is the same firm that has a triple-A rating on MBIA and Ambac. Did I neglect to mention these are the same guys who saw none of this, NONE, coming and yet now have the audacity to tell us it's almost over. I think that should clarify everything. As I said before it doesn't take much to rev up the short bus riding equity crowd. The real pros must roar at the ease of it. As for the end of the write downs I will rely on the cats who SAW it coming and have been on top of it every step of the way. Nouriel Roubini, Mike Panzner, Mike Shedlock, et al.


Couple of housekeeping notes I am moving my stop up on ultrashort emerging mkts ticker EEV to $76.90. I am also moving my stop up on ultrashort Russell 2K ticker TWM to $82.90
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 $82.90
Long 4 units Ultrashort Dow 30 ticker DXD @ $58.00 stop at $53.10
Long 3 units Ultrashort Emerging Mkts ticker EEV @ $82.15 stop at $76.90
Long 4 units U.S. Natural Gas Fund ticker UNG @ $45.05 stop at $45.45
Long 2 units U.S. Oil Fund ticker USO @ $80.30 stops at $80.45 and $82.35
Short 3 units of Deutsche Bank ticker DB @ $117.15 stop at $119.40
Short 1 unit of AGCO ticker AG @ $61.60 stop at $65.45

Carlyle Group.... again !

There is so much news out there on the Carlyle group that is in depth and very insightful. After some thought of the situation I will throw this out to you. Carlyle is in a heap of trouble, no doubt. We all hear the name David Rubenstein thrown around and while he is fairly anonymous, many of the investors, oh excuse me advisers to the fund are not. I am recalling these from memory so excuse me if they are a little off, but the investor reads like a who's who of power people. George H.W. Bush, James Baker, George Schultz, John Major, Art Levitt. I could go on but I trust you see the point. I have noticed many of these names in context with Carlyle and they are all political heavyweights.

Now I stand to be corrected but a fund that has the, lets just call it connections, that this one does, yet is having its credit lines and margins called is nothing but ominous. If any fund had the wherewithal to withstand the onslaught of margin clerks it was this one and it failed. So if this is the case, what of the little guys out there. Brace yourselves for I am! This is not alarmist or hyperbole. It is solely to counter the complacency and anti pessimism rhetoric emanating from Kudlow, Kneale, and every other dime a dozen market expert. But don't take my word for it go to the horse's mouth Nouriel Roubini. His blog is linked in my favourites. I suggest you read his work for he has foreseen this thing coming a mile away. Was ridiculed back in the 'containment' days. So you can listen to someone like him who saw it coming and, I warn you, his thoughts will scare you or you can listen to the myriad number of pundits who hadn't a clue yet are telling you not to worry. The choice is yours.

Retail Sales expected increase and we get a decrease. As you know I am fond of watching revisions. Mark my words this number as bad as it is will get revised down. That is the trend.


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 Ultrashort Emerging Mkts ticker EEV @ $82.15 stop at $74.90
Long 4 units U.S. Natural Gas Fund ticker UNG @ $45.05 stop at $45.45
Long 2 units U.S. Oil Fund ticker USO @ $80.30 stops at $80.45 and $82.35
Short 3 units of Deutsche Bank ticker DB @ $117.15 stop at $119.40
Short 1 unit of AGCO ticker AG @ $61.60 stop at $65.45

Wednesday, March 12, 2008

Update

I am watching this market and am watching and waiting for the yen which strengthens as I speak exert its pull on the equity markets. Be patient, give it time for it surely will.

I omitted noting that I was stopped out of my 2 unit long SRS position with a $4.60 loss on 2 units. As the band DEVO used to sing.. Crack that Whip ! Okay already I say uncle. I guess we should never underestimate the willpower of the commercial real estate bulls whom there are legion of. They will throw in the towel just like the residential bulls did but it often feels like a root canal in the process.


Some may be wondering, I know this because I do sometimes myself, why doesn't this cat (me) buy the pullbacks instead of the breakouts that way he won't get whipped so much. The problem with buying pullbacks is you never know if it is finished pulling back. I admit I don't mind adding to a winner on a pullback this way you are using the house's money. I have learned (the hard way) that I must buy/short breakouts. Just wanted to clarify that.

The temper of this market seems more prone to gaps than I have seen before in my 16 short years of regular day to day market watching. It seems to me that the problems we face out there are readily apparent to even the dimmest among us yet none of the equity market participants will act on it till the other guy/gal does first. Never underestimate the ability of the market to grasp what it wants and ignore what it will.

My personal opinion is that the market is getting ready for an awful smashing. This is not based on any technical or proprietary indicator but rather my gut from observing how this tape trades and treats its victims. It seems to hold on by the weakest of tenets and cannot demonstrate any staying power. At some point we will wake up to a broad market that gets treated like a Wellpoint or Humana. Prepare yourself for it.

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 Ultrashort Emerging Mkts ticker EEV @ $82.15 stop at $74.90
Long 4 units U.S. Natural Gas Fund ticker UNG @ $45.05 stop at $45.45
Long 2 units U.S. Oil Fund ticker USO @ $80.30 stops at $80.45 and $82.35
Short 3 units of Deutsche Bank ticker DB @ $117.15 stop at $119.40
Short 1 unit of AGCO ticker AG @ $61.60 stop at $65.45

Defensive?

They brought out expert after pundit telling you health care was defensive and a good place to hide in this market. They of course is Pom pom TV otherwise known as CNBC. The next 2 charts tell an abominable story. Most would not have had the nerve(I among them) to short the health care stocks due to their attributes blah, blah, blah. Yet by not knowing their names or if I would have changed the names we may have jumped all over them. Something to consider.




On the housekeeping side, I was stopped out of an exploratory position in DUG at $38.25 for a $3.20 loss on 1 unit.
I am moving my stop up on UNG to $45.45 just so I don't let a winner turn into a loser.
Don't let all this CNBC and financial media hype alter your view. Don't let it make you emotional. I read a piece last night by Lee Adler called Band-Aid on a ruptured jugular. Have a peek just so you can put this Fed move in context. Oh yeah, before I forget are home prices rising, because thats the foundation this house of cards is built on. I urge you to continue to watch the Yen, the dollar, the bonds, and always remember the equity traders, of which I am one, ride the short bus!

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 Ultrashort Emerging Mkts ticker EEV @ $82.15 stop at $74.90
Long 2 units Ultrashort Real Estate ticker SRS @ $118.25 stop at $113.75
Long 4 units U.S. Natural Gas Fund ticker UNG @ $45.05 stop at $45.45
Long 2 units U.S. Oil Fund ticker USO @ $80.30 stops at $80.45 and $82.35
Short 3 units of Deutsche Bank ticker DB @ $117.15 stop at $119.40
Short 1 unit of AGCO ticker AG @ $61.60 stop at $65.45