Wednesday, April 30, 2008

Getting Short the S&P via SDS

I am getting long 2 units of ultrahsort S&P ticker SDS. We look to be having an outside reversal today on the underlying spiders SPY

Long 2 units of SDS at $ 57.85 with a stop at $ 55.84



Good Speculating to you all.

Open Positions:
Long 6 units Currencyshares Japanese Yen ticker FXY @ $88.55 stop at $91.40
Long 1 unit Allis-Chalmers ticker ALY @ $14.45 stop at $12.64
Long 1 unit Frontier Oil ticker FTO @ $27.90 stop at $24.64
Long 1 unit Ultrahort Real Estate ticker SRS @ $84.15 stop at $77.64
Long 2 units Ultrashort MSCI ticker EFU @ $76.25 stop at $71.72
Long 1 unit Ultrashort Financials ticker @ $99.10 stop at $91.74
Long 2 units Ultrashort S&P500 ticker SDS @ $57.90 stop at $55.84
Short 2 units Daimler AG ticker DAI @ $86.20 stops at $82.48/$81.38
Short 2 units Darden ticker DRI @ $34.55 stop at $37.18
Short 1 unit Brinker Int'al ticker EAT @ $21.25 stop at $24.14
Short 1 unit Retail Holders ticker RTH @ $97.95 stop at $100.44

Testing the Water, long SKF and EFU

As per my notes above, I need to be long this one. Citigroup raising more and more money, The people claiming the credit crisis as almost over will look back at the days of subprime as pleasant when the Alt-A/Prime pay option pay ARM fiasco gets some steam. I am getting long 1 unit of SKF at $99 with a stop at $91.74

The MSCI EAFE index ticker EFA is ralling into resistance. Call me a skeptic but with all the facts surrounding the global mess, equities seem to been anything but a bargain. That being said I will not stick around long enough for it to be fatal if I'm wrong. The risk reward seems to justify some exposure here.




I am getting long 2 units of EFU here at $76.20 with a stop at $71.72

I mistyped in the open positions section my stop on EAT it should have been reading $24.14 my apologies.


Good Speculating to you all.



Open Positions:
Long 6 units Currencyshares Japanese Yen ticker FXY @ $88.55 stop at $91.40
Long 1 unit Allis-Chalmers ticker ALY @ $14.45 stop at $12.64
Long 1 unit Frontier Oil ticker FTO @ $27.90 stop at $24.64
Long 1 unit Ultrahort Real Estate ticker SRS $84.15 stop at $77.64
Long 2 units Ultrashort MSCI ticker EFU at $76.25 stop at $71.72
Long 1 unit Ultrashort Financials ticker at $99.10 stop at $91.74
Short 2 units Daimler AG ticker DAI @ $86.20 stops at $82.48/$81.38
Short 2 units Darden ticker DRI @ $34.55 stop at $37.18
Short 1 unit Brinker Int'al ticker EAT @ $21.25 stop at $24.14
Short 1 unit Retail Holders ticker RTH @ $97.95 stop at $100.44

Getting Long Ultrashort Real Estate.

The REIT ishares paint very similar picture to the retail holders. Commercial real estate will not be immune to the ills which infect residential. Many think otherwise, believing it's different. They always claim it is til it isn't anymore. Unfortunately by then it is too late.


Which brings me to back to one of my favourites the ultrashort real estate ticker SRS. Yes, some may be getting sick of seeing it but I am drawn back again. Hopefully not like a mosquito to the light !
I am getting long 1 unit of SRS at $84.05 with a stop at $77.64



Housekeeping notes I was stopped out of 2 units longs of UGA yesterday at $54.20






Good Speculating to you all.

Open Positions:
Long 6 units Currencyshares Japanese Yen ticker FXY @ $88.55 stop at $91.40
Long 1 unit Allis-Chalmers ticker ALY @ $14.45 stop at $12.64
Long 1 unit Frontier Oil ticker FTO @ $27.90 stop at $24.64
Long 1 unit Ultrahort Real Estate ticker SRS $84.15 stop at $77.64
Short 2 units Daimler AG ticker DAI @ $86.20 stops at $82.48/$81.38
Short 2 units Darden ticker DRI @ $34.55 stop at $37.18
Short 1 unit Brinker Int'al ticker EAT @ $21.25 stop at $21.14
Short 1 unit Retail Holders ticker RTH @ $97.95 stop at $100.44

Getting Short the Retail Holders.

The time has come to test the water here with the retail holders ticker RTH. Looks like a massive bear flag to me testing the upper bounds. I am getting short 1 unit here at $98.05 with a stop at $100.44

All this chatter of stimulus cheques and the like look to me like cover for the smart money to unload and even get short, so I am.





Monday, April 28, 2008

Odds and Ends

I see we have OPEC now coming and telling us oil could hit $200/bbl and there's nothing they can do. Some hi-lights of the article include;

Opec’s president on Monday warned oil prices could hit $200 a barrel and there would be little the cartel could do to help.

The comments made by Chakib Khelil, Algeria’s energy minister, came as oil prices hit a historic peak close to $120 a barrel, putting further pressure on global economies.
EDITOR’S CHOICE

His remarks suggest Algeria wants Opec to continue to resist calls by US and European leaders for the cartel to pump more oil to help ease prices. But Mr Khelil blamed record oil prices on the weak dollar and global political insecurity.



Of course there's nothing OPEC can do, their fields are in decline. And aaaah those reserves, those unaudited take our word for it reserves. Everyone keeps blaming it on the dollar and while that is part of the story it is no way THE story. Regular readers know well what I believe is THE story.......Peak oil. But ssssssh don't tell anyone, and above all don't discuss it with anyone cause it's a secret.

In the arena of privatising profits and socializing losses we get news out of Britain that the bank bail outs are to be kept secret. Just like the Fed here will not tell anyone what is being pledged as collateral at the discount window, for fear of upsetting markets according to Steve Liesman of pom pom TV. You wonder why there is no clarity in the financials, why the books are cooked and the lies rampant. Then look no further than those charged with policing the henhouse. Pathetic, truly pathetic.

Not enough for you, then try this on for size, thanks to Barry Ritholz of The Big Picture for noting it. Corporate debt ratings bought and paid for. Gotta love the new version of capitalism, but lets bash the Russians and Chinese since they are so corrupt.

Speaking of pom pom TV, I caught a few minutes of Kudlow tonight and all the chatter of rate cuts vs pausing by the Fed. Vince Farrell who never met a market that wasn't bullish was his ususal bullish self. Everywhere and always bullish. My problem with people like Mr. Farrell is everything is everywhere and always bullish. Higher oil prices, the consumer is fine, he can afford it, bullish for stocks. Lower oil prices, great for companies lowering input costs, bullish for stocks. Weaker dollar, great for exporters, bullish for stocks. Stronger dollar, great for the economy push oil prices down, bullish for stocks.

In Mr. Farrell's world nothing is bad for stocks. Not mortgage defaults spreading to Alt-A, not increasing leverage at investment banks, not mark to fantasy level 3 asset growth at banks, not rising credit card and auto loan delinquencies, not superficial one time asset sales padding earnings growth. I would like someone to ask him if a nuke going off would be bearish for stocks or bullish.


I keep hearing over and over that the market is a discounting mechanism. I agree, but you can't have it both ways. Energy, precious metals, currency markets are they not discounting mechanisms as well? So it begs the question, what are they discounting? Please tell me, because from where I sit prices on these commodities do not bode well for the consumer.


Also those so quick to call commodities a bubble, where were you when the Nasdaq was north of 5000? Cheerleading it all the way up! Like I have said before that's a good bubble, a politically acceptable bubble, but wheat, rice, crude, gasoline, those are bad bubbles. The kind where pitchforks and torches come out.

This is not the ramblings of a frustrated bear as some may think. There is plenty of which I am bullish on. Gold, Silver, Crude, Nat Gas, Gasoline, Heating oil, but as much as I like these I am cognizant of the fact that in the credit destructive, leverage reducing environment we are in everything is vulnerable. Margin clerks can be ruthless and spare no 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 US Gasoline Fund ticker UGA @ $51.25 stop at $54.34
Long 1 unit Allis-Chalmers ticker ALY @ $14.45 stop at $12.64
Long 1 unit Frontier Oil ticker FTO @ $27.90 stop at $24.64
Short 2 units Daimler AG ticker DAI @ $86.20 stops at $82.48/$81.38
Short 2 units Darden ticker DRI @ $34.55 stop at $37.18
Short 1 unit Brinker Int'al ticker EAT @ $21.25 stop at $21.14

Index Charts.










Recently I made a satirical attempt to be humorous when I made a post entitled 'The Bond King'. In it, I mocked Bill Gross for his basically hat in hand begging of the Federal Reserve to bail out the U.S. housing market.

Today I came across a serious piece by Professor William Anderson of Frostburg State University in Maryland entitled Must Government Inflate Home Prices.

Please read this over as it is worth the effort. Besides he does a much better job shredding Bill Gross's panhandling than I ever could !

Good Speculating to you all.
Open Positions:
Long 6 units Currencyshares Japanese Yen ticker FXY @ $88.55 stop at $91.40
Long 2 units US Gasoline Fund ticker UGA @ $51.25 stop at $54.34
Long 1 unit Allis-Chalmers ticker ALY @ $14.45 stop at $12.64
Long 1 unit Frontier Oil ticker FTO @ $27.90 stop at $24.64
Short 2 units Daimler AG ticker DAI @ $86.20 stops at $82.48/$81.38
Short 2 units Darden ticker DRI @ $34.55 stop at $37.18
Short 1 unit Brinker Int'al ticker EAT @ $21.25 stop at $21.14

Start of the Week.

I am back up and running. Hopefully this new router will keep me up and running at full speed. Took most of the day Friday with some problems but so far so good.

Okay, brand new week, yet the same old same old. Bob Pisani on pom pom TV breathlessly talking about the great earnings sans financials. Would someone down there clue him in on a) the fact that earnings have been significantly massaged downwards leading to all these great beats and b) the fact that there are so many special one time items including as to be a complete joke.

Warren Buffett was on the blower this morning talking about the Mars/Wrigley deal. He touched on the fact that he expects the recession to be deeper and longer than most expect, but what would he know. Then Art Cashin was on and was asked if the market was pricing in a deeper and longer recession. Looked to me like he did everything possible not to burst out laughing at the question but he realises the severity of the situation as he has seen this all before, and replied no way.

I want to go back to Nasdaq and the tech bubble for a minute. Back when we were in the new economy, this time it's different, old metrics don't matter, worship at the alter of Meeks, Grubman, Blodgett, and Quattrone, many pundits remarked all the way down how the market had bottomed and the turn was nigh.

There were some out there vigorously disputing these bottom calls. These were the same people who had seen the insanity early on, warned investors, and yet as the market screamed still higher were ridiculed and discredited at every turn. One of the major tenets of their arguments against a bottom forming so soon was a variation on the regression to the mean idea. That markets return to their long term growth average. What they also realised from past experience was that not only does it return to the mean, it can overshoot as the ebullience and euphoria that drove the market up conspire in reverse as the pessimism and negativity push it well past reasonable levels. How else is an 78.4% drop in the Nasdaq explained.

The markets today have not even dropped to the long term average correction levels let alone overshot. Do you think that the possibility exists that this could happen. Many trading the Naz in 2000 didn't and paid a steep price for their hubris. Considering the fact we are coming out the mother of all bubbles, that being the credit/lending/housing debacle, do you think we skirt disaster?


I have been watching the bonds roll over (in price) which means yields (rates) are rising. I also noted that Bill Gross from Pimco is short the treasury market. I disagree with many of his remedies for this credit morass, but his success in fixed income is unparalleled. That being said his short position is noteworthy. You think he might see something? You think rising rates are going to be good or bad for the housing market. Just like crude and food, keep ignoring the stress and strain on the consumer at your own peril. The facts are all there for observation, and just like the Naz in 2000 the facts were plainly there. Then one day, all of sudden, the lights went on.

Housekeeping notes. I am raising my stops on 2 units short Daimler to $82.48 and $81.38 respectively.

Some charts for you later today.


Good Speculating to you all.

Open Positions:
Short 1 unit Brinker Int'al ticker EAT @ $21.45 stop at $24.14
Long 6 units Currencyshares Japanese Yen ticker FXY @ $88.55 stop at $91.40
Long 2 units US Gasoline Fund ticker UGA @ $51.25 stop at $54.34
Long 1 unit Allis-Chalmers ticker ALY @ $14.45 stop at $12.64
Long 1 unit Frontier Oil ticker FTO @ $27.90 stop at $24.64
Short 2 units Daimler AG ticker DAI @ $86.20 stops at $82.48/$81.38
Short 2 units Darden ticker DRI @ $34.55 stop at $37.18

Thursday, April 24, 2008

Getting Short Brinker and shorter Darden.

The above chart is of Brinker Int'al ticker EAT. We have a nice bear flag forming which looks to give me a low rish entry pt here the upper end. I am shorting 1 unit here at $21.35 with a stop at $24.14
The above chart is my friend Darden ticker DRI. The time has come to add I am shorting a 2nd unit here at $34.15. The consumer is tapped out plain and simple, stimulus cheque or no stimulus cheque.

Had some Internet problems yesterday. Apologies to you all. Getting some new equipment for the house tomorrow morning. Hopefully all goes well with the install.
Okay where to start oh yeah, cleaning up the street.

SEC charging a trader for false rumors regarding Alliance Data. Is this a joke or what? What, with guys like John Mack of Morgan running around, tipping off his hedgie friends. How about going after John Thain at Merrill Lynch, for his false rumors last Wednesday with claims of no need for capital, which by the way his own CFO said he wished Thain had not said. Only to issue 7.3billion in bonds and preferred less than a week later.
I realise there is a shortage of suspects in this market for the SEC to go after. Sure, with the ratings agencies and their fraudulent triple A ratings, the banks and their Enronesque accounting, the homeowners with the fraud laden mortgage apps, the appraisers and their, well you cannot even call them appraisals anymore, the brokers and their level 3 make believe, they are going after little ol'd trader at bucketshop #9. Yup, the capital markets image is completely restored on the international scene with this news.
Truly comical. Next to eunuch in the dictionary should we should find the SEC. I have an idea after the SEC finishes charging this no nothing peon, how about going after all the short sellers. Yes that will work. Here is my list for the SEC to start going after, stock short sellers. gold longs, crude longs, gasoline longs. rice longs, wheat longs. Yes go after those dastardly foes. They are undermining the republic.


Are you watching these 'great' earnings beats. Massage the numbers down, then include one time games. Yahoo with Alibaba, Bank America et al with Visa. You want to argue with me more whether the equity traders ride the short bus.


All the bubble calling of the commodity market on CNBC. Boy, they sure have found religion. No where to be found in the tech bubble or the housing bubble because of course those are good bubbles. But gold or oil bubble, bad, very bad. You can make a very good living coppering pom pom TV's analysis of any situation.



Commodities are overbought but a bubble, hardly. I would caution all the CNBC celebrities err I meant anchors and hosts, on their use of hyperbole's in describing the commodity arena. They may want to save them for when they will be more appropriate. Like when crude is $200 +, for when gold is closing in on $2K. Just a thought guys.



The housing numbers today. Yup a bottom is in. Keep listening to the talking heads on CNBC. The highlight this week has been National City. As of Friday last week they had about 650 million shares outstanding and now, well just over 2 billion. Gives new meaning to the word dilution, but yes of course, its a generational buy in the banks. Yep, generational buy, less than 6 months after the greatest credit bubble in history has popped. Please look at the tech bubble aftermath for a glimpse of what is coming. 8 years later, hmmm quite the rebound we have had in tech no? According to pom pom TV tech is great, but shhhh just don't tell people the Naz was over 5000. Why let a simple fact like that get in the way of a 30% rally off the low that you can crow about. Criminal. Are you still listening to them?



Housekeeping notes. I want to move my stop up on UGA to $54.34


Good Speculating to you all.


Open Positions:
Short 1 unit Brinker Int'al ticker EAT @ $21.45 stop at $24.14
Long 6 units Currencyshares Japanese Yen ticker FXY @ $88.55 stop at $91.40
Long 2 units US Gasoline Fund ticker UGA @ $51.25 stop at $54.34
Long 1 unit Allis-Chalmers ticker ALY @ $14.45 stop at $12.64
Long 1 unit Frontier Oil ticker FTO @ $27.90 stop at $24.64
Short 2 units Daimler AG ticker DAI @ $86.20 stops at $84.20/$82.20
Short 2 units Darden ticker DRI @ $34.55 stop at $37.18

Monday, April 21, 2008

MSCI EAFE Index

I was surfing some charts recently and one that caught my eye was the Dow Jones Euro Stoxx 50 etf ticker FEZ. I did some further digging and lo and behold, something a little more liquid.





The chart above is a daily view of the MSCI EAFE Index ishares. (ticker EFA). We have had a 3month counter trend rally. Correction if you will right into the proverbial "box". The 200day moving average sits just above here at 76.42. I remain convinced the credit crisis is NOT over, by a long shot. It is global in scope and the powers and pundits that be can wish, hope, manipulate and pray yet nothing can get this genie back in the bottle. As regular readers know I am fond of the proshares as a vehicle. This is no exception. The corresponding ultrashort proshares for the MSCI EAFE is shown below (ticker EFU)





The washout looks to be complete. I would rather be late than early but deep down I am scared of missing this train. I am currently on DEFCON 1 regarding EFU. A rally into the 76.50-75 area will more than likely compel me to act. As usual I will post if and when I do.





Good Speculating to you all.


Open Positions:

Long 6 units Currencyshares Japanese Yen ticker FXY @ $88.55 stop at $91.40
Long 2 units US Gasoline Fund ticker UGA @ $51.25 stop at $51.74

Long 1 unit Allis-Chalmers ticker ALY @ $14.45 stop at $12.64

Long 1 unit Frontier Oil ticker FTO @ $27.90 stop at $24.64

Short 2 units Daimler AG ticker DAI @ $86.20 stops at $84.20/$82.20

Short 1 unit Darden ticker DRI @ $35.05 stop at $37.18

Thoughts on Crude.

With crude pushing $117/bbl all I see and hear is talk of a bubble. When we truly had our most recent bubbles, tech and then credit/housing, none of the cheerleaders on CNBC saw it as such. but crude, now that has to be a bubble. The irony of it all is staggering.

While chewing on the price of crude, I recalled a comment maybe 12 to 18 months ago by the esteemed Barton Biggs when crude was about $55/bbl. I recall it being just around the Israel/Lebanon conflict time period. He felt there was a 20-25% fear premium in crude at the time. I wonder what his thoughts are now. I shutter to think what a serious geopolitical premium might do to crude. Considering all this, I dug up this interesting comparison put forward by Matt Simmons, the oil guru out of Houston and author of Twilight in the Desert, in a presentation he made earlier this month.


All prices are per barrel.

  • Lowfat Milk $159.18
  • Evian Spring Water $268.80
  • Budweiser $372.96
  • Carlo Rossi Blush Wine $237.30
  • Crude $117.00

So I will pose the question to all of you. Does oil look expensive to you or cheap ? How important is it to you. Just a thought.

Now in case you still want more EVIDENCE, try this on for size. Again I am lifting the numbers from Mr. Simmons presentation. All prices below are per gallon.

  • Vick's NyQuil $98.13
  • Right Guard deodorant $57.22
  • Pert Plus shampoo $35.93
  • Shout laundry spray $14.04
  • Budweiser beer $13.33
  • Coca-cola $8.00
  • Evian water $7.45

Now compare these numbers above to unleaded gasoline prices in your area. Now I will ask you again, do you think we are in a bubble in energy? No guessing, or hoping or praying like our friend Dennis Kneale on pom pom TV. The facts seem to spell a different story.

For those not aware Matt Simmons has been way out front on this issue of peak oil. His book is must reading for EVERYONE, investor or not. I cannot recommend it highly enough. What continues to floor me is the number of investment professionals who have not heard of it, let alone read it. Go figure.

I am of the opinion, though I cannot quantify this, that the market is bidding up the rails (UNP CSX, BNI, et al) due to their extensive track network. Maybe the market realises what are government is loathe to discuss, passenger rail and its viability going forward.

I also think it is the energy industry and it's constant need for repair and upgrade that is the major demand on steel, sad to say I missed that trade. AK Steel at $16 is not a nice memory for me!

National City dividend cut and capital raising. Outstanding stock increasing over 200%, gives new meaning to the world dilution. But don't worry, the credit crisis is over. Like I have said before comical if it were not so tragic.


Good Speculating to you all.

Open Positions:
Long 6 units Currencyshares Japanese Yen ticker FXY @ $88.55 stop at $91.40
Long 2 units US Gasoline Fund ticker UGA @ $51.25 stop at $51.74
Long 1 unit Allis-Chalmers ticker ALY @ $14.45 stop at $12.64
Long 1 unit Frontier Oil ticker FTO @ $27.90 stop at $24.64
Short 2 units Daimler AG ticker DAI @ $86.20 stops at $84.20/$82.20
Short 1 unit Darden ticker DRI @ $35.05 stop at $37.18

Friday, April 18, 2008

Update and Thoughts.

The stock traders like the Citigroup news, but the bond traders? They're thinking a little differently. And don't look at Libor as you will will not like what it is saying. As for Google, great news great pop, congratulations if you're long. Let me qualify that a little, if you're long form 425-450. Now if you're one of the longs north of $625 all the way to $750 well, that's another story. Caterpillar, great numbers. No doubt.

The bulls are enjoying their time and evidenced by the enthusiasm of the pom pom TV anchors. We shall see how this plays out. I still am off the opinion that the bulls need to show how all the issues that were here prior are now irrelevant. Check out Goldman Sachs increase in level 3 assets. Do you have any idea why they are moving assets into level 3, it sure is not because they are becoming more marketable.

The bulls continually hope this is the end. Hope is not enough to trade on. This is a bear market rally nothing more. The size of the move the, severity, the quickness, all indicate short covering. Some cat on TV said either the bond market or the stock market has it really wrong, and he thought that stocks had it right! My lot is with the bond traders.

I want to talk about oil for a second. With the upward run, we get talk of all the usualy suspects, speculation, the dollar, demand, recession, geopolitical risk, yet not a mention, not a word of the real culprit PEAK OIL ! Gee, I wonder why?

Global production has peaked, demand shows no sign of waning and if it does domestically it will be more than offset as emerging markets emerge. The population numbers dictate that. Believe me the Saudi's, et al would love to ramp up production at these levels but the know something most over here are yet to discover, the reserves they claim they have are not there. Now I stand to be corrected, I want to be corrected, I would love to be corrected. All they have to do is let independent auditors in to do the work. Until then, case closed.

Oh yeah, $6 or $7 /gallon gasoline is going be really bullish for that HELOC'd, credit card maxed consumer. Look at the numbers they show a consumer in worse and worse shape not better. Buy stocks on that news for sure.

The boys from Comstock have their weekly missive out which as always is worth the time to read.

Housekeeping notes, I was stopped out of multiple positions late yesterday and today.

Late yesterday I was stopped out of the following:
SKF at $104.05 for just less than a 2pt profit on a single unit.

This morning I was stopped out of the following:
QID at $43.65 for a pt loss on a single unit.
TWM at $73.70 for a pt and change loss on a single unit.
DXD at $51.75 for a 2pt loss on 2 units.
SRS at $83.20 on the gap down for a little over 3pt loss on 1 unit.
FXF at $ 97.70 for a 2 pt loss on a single unit.
LEH at $46.60 for a 5.50 pt loss on a single unit.

Good Speculating to you all.

Open Positions:
Long 6 units Currencyshares Japanese Yen ticker FXY @ $88.55 stop at $91.40
Long 2 units US Gasoline Fund ticker UGA @ $51.25 stop at $51.74
Long 1 unit Allis-Chalmers ticker ALY @ $14.45 stop at $12.64
Long 1 unit Frontier Oil ticker FTO @ $27.90 stop at $24.64
Short 2 units Daimler AG ticker DAI @ $86.20 stops at $84.20/$82.20
Short 1 unit Darden ticker DRI @ $35.05 stop at $37.18

Thursday, April 17, 2008

Getting Long the Swiss Franc, Allis Chalmers, & Frontier Oil


This heavy oil refiner located out west is an old friend I have missed. A substantial washout looks complete. This looks like a low risk entry point at this time.

I am getting long 1 unit of Frontier ticker FTO at $27.80 with a stop at $24.64


I know I wanted to get long thru 100.75 and 101 but I am very comfortable buying this low volume pullback to the lower boundary of the mentioned pennant. This may be the hook and I may be the sucker but I am comfortable. Could it be the Swiss Franc engenders confidence!



I am getting long 1 unit of the Currencyshares Swiss Franc ticker FXF at $99.55 with a stop at $97.94





I was also filled on 1 unit long of Allis-Chalmers ticker ALY at $14.35 with a stop at $12.64










Good Speculating to you all.

Open Positions:

Long 6 units Currencyshares Japanese Yen ticker FXY @ $88.55 stop at $91.40
Long 1 unit Currencyshares Swiss Franc ticker FXF @ $99.65 stop at $97.94
Long 2 units US Gasoline Fund ticker UGA @ $51.25 stop at $51.74
Long 2 units Ultrashort Dow ticker DXD @ $53.75 stop at $51.84
Long 1 unit Ultrashort Russell ticker TWM @ $74.80 stop at $73.74
Long 1 unit Ultrashort Nasdaq ticker QID @ $44.65 stop at $43.84
Long 1 unit Ultrashort Financials ticker SKF @$102.20 stop at $104.16
Long 1 unit Ultrashort Real Estate ticker SRS $86.40 stop at $84.84
Long 1 unit Allis-Chalmers ticker ALY @ $14.45 stop at $12.64
Long 1 unit Frontier Oil ticker FTO @ $27.90 stop at $24.64
Short 2 units Daimler AG ticker DAI @ $86.20 stops at $84.20/$82.20
Short 1 unit Lehman ticker LEH @ $41.20 stop at $46.59
Short 1 unit Darden ticker DRI @ $35.05 stop at $37.18

Getting Short Darden


The consumer is under seige. His tapped out his equity via HELOCs and now that fictitious appreciation is gone. The consumer, by many accounts, is 70% of this economy. This all adds up to problems. Eating out is one of the many frivolities I believe said consumer will cut out. I stand to be corrected and would welcome rebuttals but my simple thought process comes to that conclusion.
Darden(chart above) shows a rally that looks to me to be losing steam. Please note the green lines. This is fibonacci numbers. The box as I like, is the 50-62% retracement of the prior move. We are butting up against the upper end of this box.
I am getting short 1 unit of Darden ticker DRI at $34.95 with a stop at $37.18



Good Speculating to you all.


Open Positions:
Long 6 units Currencyshares Japanese Yen ticker FXY @ $88.55 stop at $91.40
Long 2 units US Gasoline Fund ticker UGA @ $51.25 stop at $51.74
Long 2 units Ultrashort Dow ticker DXD @ $53.75 stop at $51.84
Long 1 unit Ultrashort Russell ticker TWM @ $74.80 stop at $73.74
Long 1 unit Ultrashort Nasdaq ticker QID @ $44.65 stop at $43.84
Long 1 unit Ultrashort Financials ticker SKF $102.20 stop at $104.16
Long 1 unit Ultrashort Real Estate ticker SRS $86.40 stop at $84.84
Short 2 units Daimler AG ticker DAI @ $86.20 stops at $84.20/$82.20
Short 1 unit Lehman ticker LEH @ $41.20 stop at $46.59
Short 1 unit Darden ticker DRI @ $35.05 stop at $37.18

Watching ALY and MRO

Marathon is looking interesting again. Nice channel has formed and could be bottoming. For some reason this chart looks interesting. I will give it some time.

I mentioned Allis-Chalmers a while back. The chart above contains my earlier comments. This is a reminder not to forget about it! We are getting close to a breakout.

Jobless claims rising, yup that's good for the housing market. I am no rocket scientist but it seems to me you could lower rates to 0.5% and it wouldn't matter at all. If you are not employed or your income is not rising how do you afford the mortgage.

JP Morgan numbers down 50%. Merrill at a loss, by the way I was referring to Merrill's John Thain yesterday who said they don't need to raise capital. I can see the lawyers lining up right now for the lawsuits.

Just a thought on Wells Fargo, do you really believe the numbers they posted or do you think they may be in denial mode. Kinda like, hey we didn't like the bid on the assets we hold so we're still valuing them at what we THINK they're worth. Don't you wish you could do that with the Intel you back back in 200 at $65. Hey, you could argue like the financials that all the sales are distressed and therefore not reflective of the true market. Absolutely comical if it were not so fraudulent.

Better yet you could have booked your gains without selling that Intel position and pay yourself a huge bonus, but you gotta get outta dodge before the #$%$ hits the fan. You want to leave that in the lap of the next mark! This is not fiction, this has all transpired in our financial arena. Yes our capital markets, quite the example


Housekeeping notes; I am moving my stops up on the following positions.

UGA stop at $51.74
DXD stop at $51.84
TWM stop at $73.74
QID stop at $43.84
SKF stop at $104.16
SRS stop at $84.84


Good Speculating to you all.

Open Positions:
Long 6 units Currencyshares Japanese Yen ticker FXY @ $88.55 stop at $91.40
Long 2 units US Gasoline Fund ticker UGA @ $51.25 stop at $51.74
Long 2 units Ultrashort Dow ticker DXD @ $53.75 stop at $51.84
Long 1 unit Ultrashort Russell ticker TWM @ $74.80 stop at $73.74
Long 1 unit Ultrashort Nasdaq ticker QID @ $44.65 stop at $43.84
Long 1 unit Ultrashort Financials ticker SKF $102.20 stop at $104.16
Long 1 unit Ultrashort Real Estate ticker SRS $86.40 stop at $84.84
Short 2 units Daimler AG ticker DAI @ $86.20 stops at $84.20/$82.20
Short 1 unit Lehman ticker LEH @ $41.20 stop at $46.59

Wednesday, April 16, 2008

Getting Shorter The Dow.

Let me get this straight, the CEO of the company says they won't need to raise capital, and then the CFO of the same company says he wishes aforementioned CEO hadn't said that. You truly cannot make this stuff up.

Not to mention the WSJ story today about questions with LIBOR. You may banks may be lying about the rates they are paying for short term funding. Gosh, ya think? We are now dealing with pathological, professional liars. Too harsh a statement, probably for the same ones who believe the claims we are in the late innings of this mess. Just look at the facts surrounding the financials and the morass they find themselves in and my statement becomes in fact quite understated. Given this blog is for family viewing I will leave my criticism at that. The lying, the cheating, the fraud, the malfeasance have been rampant and I have commented on it before. It is ingrained and the sad part is the rest of us who DO NOT conduct our affairs in said fashion will pay the price. Savings, frugality, honesty all will go punished in the aftermath of the credit bubble.

Are you shocked by the what the Beige book release said today. Maybe you are more surprised with the markets meagre reaction. Yes I know many will claim a market that doesn't go down on bad news is bullish. And while on the surface I agree with the statement, there is much at work here on a longer term basis. I continue to believe we are in the midst of a short covering rally. It will end when it ends a not a moment before and all the excited bulls will lament the decision to get long of stocks into the most monumental financial event we will witness in our lifetimes. Hyperbole? Maybe but as I have said before a credit bubble of this magnitude and as far reaching (global) and pervasive (society wise) does not run its course over a couple of months. Every correction is believed to be temporary setback by the bulls, nothing more. They operate from the same playbook and I believe the game has changed significantly. I haven't rambled on at length about Peak Oil of which I am a FIRM believer in, which is a major if not THE major cause for crude's run. The oil issue only exacerbates the credit ones. Is this the confluence of the perfect storm, or I am the village idiot everyone makes fun of. Time will tell. But like I have said and continue to believe, future books will be written about this market and our complete unmitigated foolishness and unrivaled naivete.

I want to get more short the Dow. I am adding to my long Ultrashort Dow play (ticker DXD) with a 2nd unit long here at $54.15.


Good Speculating to you all.

Open Positions:
Long 6 units Currencyshares Japanese Yen ticker FXY @ $88.55 stop at $91.40
Long 2 units US Gasoline Fund ticker UGA @ $51.25 stop at $47.84
Long 2 units Ultrashort Dow ticker DXD @ $53.75 stop at $50.80
Long 1 unit Ultrashort Russell ticker TWM @ $74.80 stop at $72.40
Long 1 unit Ultrashort Nasdaq ticker QID @ $44.65 stop at $41.30
Long 1 unit Ultrashort Financials ticker SKF $102.20 stop at $95.80
Long 1 unit Ultrashort Real Estate ticker SRS $86.40 stop at $81.70
Short 2 units Daimler AG ticker DAI @ $86.20 stops at $84.20/$82.20
Short 1 unit Lehman ticker LEH @ $41.20 stop at $46.59

Getting short Lehman

Like my notes indicate, I won't forgive myself if I am not involved in this one when the piper arrives expecting payment. Risk/reward looks very reasonable given the downside potential. Therefore I am short 1 unit of Lehman ticker LEH at $41.30 with a stop at $46.59

Everyone kept talking about how this one was above the credit morass. This breakdown is not good for the shareholders. State Street was one of the few who had stood tall above this mess. Not a good sign for financials, not matter what the incessant nattering empty headed shills on pom pom TV continue to spout.
Housekeeping notes, I am moving my stop on 2 units short of Daimler down to 1 unit at $84.20 and 1 at $82.20. Defensive yes but given the nature of the equity markets do you blame my attempt to keep the frustration level to a minimum !


Good Speculating to you all.


Open Positions:
Long 6 units Currencyshares Japanese Yen ticker FXY @ $88.55 stop at $91.40
Long 2 units US Gasoline Fund ticker UGA @ $51.25 stop at $47.84
Long 1 unit Ultrashort Dow ticker DXD @ $53.20 stop at $50.80
Long 1 unit Ultrashort Russell ticker TWM @ $74.80 stop at $72.40
Long 1 unit Ultrashort Nasdaq ticker QID @ $44.65 stop at $41.30
Long 1 unit Ultrashort Financials ticker SKF $102.20 stop at $95.80
Long 1 unit Ultrashort Real Estate ticker SRS $86.40 stop at $81.70
Short 2 units Daimler AG ticker DAI @ $86.20 stops at $84.20/$82.20
Short 1 unit Lehman ticker LEH @ $41.20 stop at $46.59

Good Wednesday Morning.

Had some computer problems yesterday and was unable ot post. Sorry!

Okay, Intel beats the numbers, do anyway care to notice that the numbers have been significantly massaged downward so they could beat. I am not trying to be a stick in the mud but is this not common sense?

Did you catch Wamu's numbers? But hey, raising 7 billion is reason to party, right! Housing starts are down 12%, foreclosures are up, this game is just getting rolling folks.

I want all of you to read this article by Martin Hutchinson. It is well worth your time, just don't read it after you eat as it may make you sick to your stomach.

I had read last weak officials in Iceland are after profiteers in the currency who need to be punished. Politicians in the U.S. want to go after speculators in energy who are driving up prices. Where were these politicians when speculators were driving up housing prices to astronomical levels. Where were they when Flip This House came to life. It looks to me like you can only profiteer in areas they deem appropriate. We are headed down a very awful road. Crude, gold, silver, stuff that cannot be manipulated, printed and lied about are doing quite well. WHAT A CESS POOL THIS HAS BECOME.

Still don't believe me. Have a read over this article and see what you think. I will be posting some charts later on.

Good Speculating to you all.

Open Positions:
Long 6 units Currencyshares Japanese Yen ticker FXY @ $88.55 stop at $91.40
Long 2 units US Gasoline Fund ticker UGA @ $51.25 stop at $47.84
Long 1 unit Ultrashort Dow ticker DXD @ $53.20 stop at $50.80
Long 1 unit Ultrashort Russell ticker TWM @ $74.80 stop at $72.40
Long 1 unit Ultrashort Nasdaq ticker QID @ $44.65 stop at $41.30
Long 1 unit Ultrashort Financials ticker SKF $102.20 stop at $95.80
Long 1 unit Ultrashort Real Estate ticker SRS $86.40 stop at $81.70
Short 2 units Daimler AG ticker DAI @ $86.20 stop at $88.05

Monday, April 14, 2008

Crediblity..... or the lack thereof.

According to the American Heritage Dictionary under credibility we find the following;

Credibility - cred·i·bil·i·ty
n.
The quality, capability, or power to elicit belief: "America's credibility must not be squandered, especially by its leaders" (Henry A. Kissinger).
A capacity for belief: a story that strained our credibility.


I was prompted to do the above exercise after hearing comments from Mssrs. Blankfein and Mack of Golman and Morgan respectively, pronounce the credit crisis in the late innings and close to over. This begs the question, Does anyone in the financial media have the spine to call them out on this? Better yet, why are we even soliciting their opinions on the subject? The only question that needs to be asked of these esteemed chieftains of American finance would be.... " given you never saw any of this problem coming how is it you are qualified to make this statement? or ... "given you claimed it all wasn't a problem or was contained to subprime how is it you are now qualified to make this claim? or even better given you claimed it was contained and wouldn't spread beyond the sector how on earth are you qualified to make this claim?

In conclusion Mssrs. Blankfein and Mack given we have not seen any write downs from credit card receivables, auto loans, and commercial real estate YET, how is it again you are in any position to make such an outrageous claim. Beyond pollyannic hope what facts are you basing this conclusion? Like I said... credibility.... or rather the lack thereof.

How is it the blogoshpere universe was all over this problem with their meager resources and yet the highly capitalised and intellectually overflowing firms of Wall St. haven't a clue?

Okay, can we finally dispense with the phrase kitchen sink quarter regarding banking writedowns once and for all. Have we not abused the phrase to the point it is laughable when used in any context at all? Wachovia coming back to the capital markets again for more capital. Anyone want to bet the over, firms like Citi Merrill et al will all be back to the trough? Yeah sure, late innings of the credit crisis for sure. Does it look good on em'? You bet ! I am biased? Kinda, I was short GoldenWest Financial GDW way back prior to the buyout. I wasn't crushed but took a loss on what I believed was a very sound decision. My mistake was not transferring my short to Wachovia. As irritated as I was at the abject lunacy of Wachovia decision to buy GoldenWest at the time, I am comforted at what has transpired. There is justice in the world in what goes around comes around. As painful as my loss on the short of GoldenWest was, it was microscopic compared to the pain it is inflicting on its Carolina parent.

The looming bankruptcy of Jefferson County got me to thinking of an episode of Kudlow of late where the very sharp Gary Shilling continued to recommend his long standing trade of being long 30 yr. U.S. treasuries. I know many have flocked to treasuries as a safe haven in all the turmoil. My concern is the collateral being pledged by the banks and brokerages. The Fed will now tell us what has been pledged due to their according to CNBC, not wanting to spook the market. Now I am no psychic but it doesn't take a NASA scientist to figure out what is being pledged, TOXIC CRAP, pure and simple! It seems maybe bond traders are starting to get concerned.

I have talked before about owning the debt of resource companies that have reserves of ore in the ground. Coal, crude, natural gas, timber, gold, silver, you name it. These developments in the various government debt markets have me believing this more and more each day.

I watch the regional banking spider (ticker KRE) but what I cannot help but notice is that Fifth Third, Sun Trust, and Comerica (just a few) made new lows today. I am trying to make out what is going on here, besides the obvious item of new lows being bad. These banks were supposed to have minimal exposure to the crap going on. I am leaning towards the idea that the economy is worse than even I think it is, but I will work on 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 US Gasoline Fund ticker UGA @ $51.25 stop at $47.84
Long 1 unit Ultrashort Dow ticker DXD @ $53.20 stop at $50.80
Long 1 unit Ultrashort Russell ticker TWM @ $74.80 stop at $72.40
Long 1 unit Ultrashort Nasdaq ticker QID @ $44.65 stop at $41.30
Long 1 unit Ultrashort Financials ticker SKF $102.20 stop at $95.80
Long 1 unit Ultrashort Real Estate ticker SRS $86.40 stop at $81.70
Short 2 units Daimler AG ticker DAI @ $86.20 stop at $88.05

Watching the Swiss Franc

The above chart is a daily view of the Swiss Franc(ticker FXF). We have a nice pennant forming. I noted I want to get long 1 unit but I will wait for a move thru 100.75. I intent to add a 2nd unit long on a move above 101. Note the low volume happening on the pennant.

Back from vacation, relaxed, refreshed and ready to go! A quick bit of unsolicited advice, if you haven't taken a break from work, DO SO IMMEDIATELY ! You will be much more productive in all facets of your life, business, family social. It is worth the expense !


Lots of news while I was away, not to mention lots of condos for sale in Florida. I spent the bulk of my time in Orlando but did get to Tampa and Clearwater. I can assure you in talking with family and friends there along with what I saw with my own eyes, we are no where near a bottom on the housing problem.


Citi looking to unload 12 billion in leveraged buyout debt. Remember all that crap that made Merger Monday on pom pom TV a reality. The headline news was the paper was going to sell at 90 cents on the dollar but the fine print shows they are offering to eat the first 20% loss. Again this is contained to subprime, nothing to worry about here folks. Besides don't you know the economy is resilient !


Jefferson County Alabama on the verge of bankruptcy. Anyone know where Bob Citron is working now and where is his abacus ?


GE misses their numbers. And here I thought the weak dollar was great for this international behemoth. The disconnect between the reality of the facts and the delusions of the equity market participants is coming to a head. The realization that these wildly optimistic earnings estimates by Wall Street are completely out to lunch wil be a bitter pill to swallow for the short bus riders. Don't get caught in the panic.

Good Speculating to you all.

Open Positions:
Long 6 units Currencyshares Japanese Yen ticker FXY @ $88.55 stop at $91.40
Long 2 units US Gasoline Fund ticker UGA @ $51.25 stop at $47.84
Long 1 unit Ultrashort Dow ticker DXD @ $53.20 stop at $50.80
Long 1 unit Ultrashort Russell ticker TWM @ $74.80 stop at $72.40
Long 1 unit Ultrashort Nasdaq ticker QID @ $44.65 stop at $41.30
Long 1 unit Ultrashort Financials ticker SKF $102.20 stop at $95.80
Long 1 unit Ultrashort Real Estate ticker SRS $86.40 stop at $81.70
Short 2 units Daimler AG ticker DAI @ $86.20 stop at $88.05

Sunday, April 6, 2008

Getting out of Dodge !

Been a little swamped as I try to get out of town for vacation. I am really looking forward to a little sunshine in Florida. I WILL be monitoring market goings on and will try to post on anything I see as important. Continued success to you 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 US Gasoline Fund ticker UGA @ $51.25 stop at $47.84
Long 1 unit Ultrashort Dow ticker DXD @ $53.20 stop at $50.80
Long 1 unit Ultrashort Russell ticker TWM @ $74.80 stop at $72.40
Long 1 unit Ultrashort Nasdaq ticker QID @ $44.65 stop at $41.30
Long 1 unit Ultrashort Financials ticker SKF $102.20 stop at $95.80
Long 1 unit Ultrashort Real Estate ticker SRS $86.40 stop at $81.70
Short 2 units Daimler AG ticker DAI @ $86.20 stop at $88.05

Friday, April 4, 2008

The Bond King

Dear Investor

My name is Bill Gross but most of you know me as the Bond King. I am the recognized grand ruler of the fixed income universe. I manage one of the largest pool of fixed income assets known to man aka PIMCO. You may have seen myself or my Secretary of Propaganda Paul McCulley. The reason for this letter is to let you know what is going on in fixed income land. I have been in this business most of my adult life and I have never seen things like this. Down is up and up is down, now how is one supposed to make money in this type of environment. You know the saying, it's a recession when you neighbour loses his job and a depression when you lose yours. Well, I was all for capitalism and survival of the fittest Ayn Rand thing when I thought this credit thing was contained. Paul and I were okay when it was affecting all the leveraged cowboys and gunslingers out in hedge fund land but did you really expect us to sit still and let all that crap now affect us?

I must confess that capitalism is a great thing only and until it starts to interfere with Paul and my bonuses, hence our misinformation campaign. Have you noticed us on Pom Pom TV, errr excuse me CNBC a little more frequently? That's not by chance dear investors, it's all according to our master marketing campaign. Do you really expect me, the King of Bonds, to sit back and let a, quite frankly, long overdue and clearly unsustainable housing bubble collapse right in front of me. I thought so. Therefore I am calling on all civic groups, labour unions, and other social equality entities to mobilize. We need to press our government into action, big action! The Bear Stearns/JP Morgan thing was a drop in the bucket and does nothing to address the underlying disease of homes being too expensive relative to income. We need to redirect the issue to anything and everything but this issue. If they powers that be find out what the real issue is, overpriced homes, we're all cooked and by 'all' I mean all of us who borrowed more than we could handle.

The campaign is to convince government to buy all these bonds I and others like me are carrying on our (hence your) portfolio. (pension funds) Now I haven't used the leverage like my hedge fund cowboy counterparts have but I can see the writing on the wall and it ain't good! If the government doesn't step in and make a market for this toxic paper I and others like me are cooked ! We are looking at a problem that will make what happened to tech stocks look like a walk in the park.

Now I know that if you borrowed prudently, put a significant down payment, and got a fixed mortgage you may be saying why would I help you Mr. Bond King. My answer to that is screw you! If you did all the above it probably means you haven't been carrying your own weight in our consumer spending driven economy. You probably don't have a piggyback mortgage on top of your no money down, neg-am adjustable rate mortage. You probably didn't HELOC the hell out of your home and probably haven't maxed out your credit cards. Your the reason everything is going to hell in a handbasket. That fiscal stimulus rebate cheque you're about to get, if you're gonna get one, will probably be used to pay down debt. Damn it! You need to spend it! Didn't you get the memo. Damn!

I lost my train of thought.... Oh yeah, the campaign. Anyway we just gotta convince congress to bail me out, errr I mean the homeowner. Govern yourself accordingly.... or else!

Sincerely,
The Bond King !

this piece really wasn't written by Bill Gross but rather is a parody written by yours truly.

Recession.... duh?

Okay here goes. They say the hardest trade is the best trade. How hard is it to be short right now. The bulls are rocking and rolling right now. Let me get this straight. Stocks are forward looking so according to pundits, we are moving up on the indices so that means the market is looking past the bad? employment numbers and any other numbers that are bad. Okay, answer me this, when the markets were dropping were they telling you the market was forecasting recession? Oh no! of course not, the markets then had it wrong but of course now have it right. Are you starting to get the picture about these TV pundits. Almost comical if it were not so tragic. Truly !



All things are bullish. Bad news hey can you believe we are only down 50, we should be down 500 that sort of stuff. For those not paying attention to what the Comstock boyz are saying here is a snippet of what these very bright fellas have to say about current goings on:



The credit markets are still fragile and are there are hundreds of billions of dollars of debt not yet written off, some of which may come as major surprises as has been happening since August. An estimated 40% of subprime mortgage loans may default in the next two years in addition to defaults on non-subprime loans subject to rate resets. This will throw millions more homes onto the resale market forcing further major price declines. Additional defaults in other areas such as commercial real estate, auto loans, credit cards and student loans are also a strong probability. Today, in his testimony before the U.S. Senate, New York Federal Reserve bank President Timothy Geithner said "Nevertheless, we still face a number of challenges ahead. The seeds of this crisis took a long time to build up, and they will take some time to work through.Liquidity conditions in the market are still impaired and the process of deleveraging remains underway. And this will amplify the headwinds facing the U.S. and global economy."


In our view the market is not only discounting the end of the credit crisis, but a second half economic recovery as well. This is not likely to happen. The greatest credit crisis since the depression and the biggest housing bubble in history will not end with a piddling little recession and a mere 20% decline in the stock market. The economy has already stalled out and plunging home prices and deleveraging of credit will make the recession either longer or deeper or both. The rosy view of the consensus is amply illustrated by S&P's tally of analysts' bottom-up operating earnings estimates for the S&P 500 index. Simply put, they are looking for second-half earnings to jump an astounding 42% from a year earlier. These estimates are sure to be slashed substantially, and the market reaction will not be pleasant.



These guys are a lot smarter than me and have been more right than wrong. Take it for what its worth.


I was flushed out of the majority of my positions so the hardest thing to do right now is get back in. And so I shall, starting small. I am getting long 1 unit each of DXD, TWM, QID, SKF, SRS. Call me stubborn but the facts have not changed and the market always always does what it's supposed to, just never when.



Getting long the following:
1 unit of DXD at $53.10
1 unit of TWM at $74.70
1 unit of QID at $44.55
1 unit of SKF at $102.10
1 unit of SRS at $86.30



I will have some stops posted later with some charts. Continued success 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 US Gasoline Fund ticker UGA @ $51.25 stop at $47.84
Long 1 unit Ultrashort Dow ticker DXD @ $53.20
Long 1 unit Ultrashort Russell ticker TWM @ $74.80
Long 1 unit Ultrashort Nasdaq ticker QID @ $44.65
Long 1 unit Ultrashort Financials ticker SKF $102.20
Long 1 unit Ultrashort Real Estate ticker SRS $86.40
Short 2 units Daimler AG ticker DAI @ $86.20 stop at $88.05

It's Friday !

I was caught up in some personal items yesterday so my apologies for the lack of posts, or to the some the relief of not having to endure the pain! Note of interest I will be off next week vacationing in the sunny FLA! I will be monitoring markets and try to make a few posts on anything interesting I find.

Caught some of the dog and pony show yesterday on capitol hill. I truly am speechless. I was told long ago you can learn much about one's acumen not by the answers they give but the questions they ask! Yesterday was ample empirical evidence of this phenomenon ! Not a question about the constitutionality of the Bear/JPM deal. We truly get what we deserve.

Listen I do not want this market to tank, I truly don't but you cannot have the phantom economic charade we have had of the last years and not pay a price. You cannot have home prices trading at multiples that are clearly unsustainable compared to incomes. So what gives. Just like the tech bubble and with every one with half a brain doing the Chuck Prince, the music's playing so we have to get up and dance. Most knew it was a charade but played anyway planning to get a chair when the music stopped. Most never did! This time will be no different.

On the housekeeping side I was stopped out of my SKF position at $ 98.60 for a 4pt loss. Considering it was $120 a mere few days ago is beyond explanation on my part. It won't happen again to me. My stop should have been moved up at least on 1/2 my position. Always learning as they say.

Per my chart 3 days ago, KOL poked its head thru $39 I did nothing yesterday so I will wait for a pullback to get long 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 US Gasoline Fund ticker UGA @ $51.25 stop at $47.84
Short 2 untis Daimler AG ticker DAI @ $86.20 stop at $88.05

Wednesday, April 2, 2008

End of the Day.

Given today's circumstances, with Fed sticking its nose in our markets, the government sticking its nose in our phone calls all in the name of stability, the following quote compliments of Ben Franklin, which we have all seen before carries extra meaning. "Any society that would give up a little liberty to gain a little security will deserve neither and lose both. "

Listening to Bernanke's testimony and given our societal need to be coddled comforted I am convinced the Fed's mandate from in Bernanke's words, ' to ensure market stability and full employment'. Someone answer me the following question. Where was the Fed in the previous tech and most recent housing bubbles? Yes I know Greenspan thinks bubbles are only visible in hindsight, which by the way will go down in financial lore as one of the most imbecilic quotes ever, right up with the best of all time.

Seriously if we are to believe this mandate, why are they not there, as a long past economist whose name I forget used to say, to take the punch bowl away just as the party gets going. If they did in fact act responsibly when the panic was to the upside, like raising margin requirements on stocks in a bubble, or raising reserve requirements in a credit mania, or perish the thought mandate down payments on a home?

Harry Macklowe the famed real estate investor who recently had the GM building in NYC foreclosed on by lenders which was part of his empire, is a glowing example of this last issue, skin in the game. Everyone is complaining that strawberry pickers in California bought $750K homes and the like but why is no one complaining when Mssr. Maclowe amasses a $7.3 billion commercial real estate portfolio with 55 million down. For those without a calculator that's a down payment of 0.00753% or 7/10ths of 1%. Ahh yes the Fed is just what we need to ensure stability and employment.

Or like Bear Stearns with 13.4 Trillion, yes trillion resting on purportedly 80 billion or 0.00597%. Wow based on these numbers Mssr. Maclowe had 30% more skin in the game, go figure.

Mark my words this meddling by the Fed is going to make things more drawn out and much worse in the end. I cannot wait for the architects of the JPM/Bear deal to get on the Hill to explain what went on. But above all don't tell us about the paper that's been pledged as collateral because the truth of what toxic garbage it truly is might upset market stability.

I was filled on 2 units long of the US Gasoline fund ticker UGA at 51.25. I will place my stop at $47.84


Any society that would give up a little liberty to gain a little security will deserve neither and lose both. 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 Financials ticker SKF @ $102.20 stop at $98.70
Long 2 units US Gasoline Fund ticker UGA @ $51.25 stop at $47.84
Short 2 untis Daimler AG ticker DAI @ $86.20 stop at $88.05

Thoughts on Calls for a Market Bottom & UGA

I know this bear market rally, which is what it is no matter how many prognosticators claim to the contrary(like a break of 1400 on the SPX), has many of the bearish traders demoralized. If you have been trading on the short side, which is rational given we are in a bear market, the last few days has been not only monetarily painful but psychologically damaging as well. The mental capital has taken a severe hit. So what is the hard trade to do, right now. Give it some thought.

What this bear market rally has done is shake out a lot of late shorts to the party, which by all accounts was quite crowded and taken a very oversold market back to some state of neutrality. The perma-bulls can crow all they want about how the crisis is over, the journalists can be enlisted to further this story, but the facts remain the same. Housing prices, via lax(to say the least) credit were in a bubble of epic proportions. This will not be corrected in a manner of months that much I can assure you. Home prices must become affordable again in relation to peoples incomes and until that happens all other discussion is basically moot.

If you want to get a gauge as to what is going on, look at what happened in each and every rally after the tech bubble burst. The media is correct in that this credit bubble is different than the tech bubble, different in that the credit bubble dwarfs the tech bubble by a long shot ! In each and every rally, post tech top, every analyst strategist, hedge fund valet and fund manager came out of the woodwork to call a bottom. In the vain hope of attempting to pull a Henry Blodgett. For those that don't remember good ol' Henry came out and called for Amazon to hit $400 when it was trading about $100 which it proceeded to do in literally weeks and which he rode to fame and then flames when it was revealed he was internally disparaging the same stocks he was publicly touting. Nice. but hey its the shorts remember.

Anyway they were all calling a bottom at each and every turn, in the narcissistic hope of making that call of a lifetime. Thereby securing them a spot on pom pom TV's Morning Call or better yet their own Crameresque market show! The claims of selling overdone, attractive on a valuation basis, new economy, etc. continued, but alas each and every call of a bottom was wrong and the lows were broken and more selling ensued. (short sellers of course!). So not only was money lost as the bubble burst but even more was thrown away as people not involved fished for a bottom hoping to catch that falling knife.

Cisco, a real tech company with real products, real customers, real sales and real earnings unlike the rest of the junk. So tell the guy who listening to the bottom callers, bought CSCO in Jan of 2001 about 9 months following the peak at $40/share. This was down over 50% from the high water mark of $90, bottom right..., Mary Meeker, Jack Grubman, Frank Quattrone, Abbey Cohen, or my pal Henry? No the bottom was actually just north of $8 in the fall of 2003. Just a tidbit to remember when you feel like you are missing the party and feel compelled to jump in.

To think the financials at this juncture are any different given the enormity, extent and far reaching implications of this credit, derivative bubble is shall I say erroneous.


I wanted to talk about the U.S. Gasoline Fund ETF ticker (UGA), for all those Dawg fans out there. There is not a lot of data on this one yet so I have posted a 60min chart(above). It looks to me like an inverted head and shoulders formation. The neckline break would occur just shy of $51. A break of $51 would compel me to get long 2 units


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 Financials ticker SKF @ $102.20 stop at $98.70
Short 2 untis Daimler AG ticker DAI @ $86.20 stop at $88.05

Mid Day Update

I want to touch on the subject of "get the shorts" rant I had yesterday. I read the Icelandic authorities want hedge fund shorts investigating for attacking their currency. Yes I realize shorts are responsible for most of the ills the plague society but here's a shot in the dark. How does Bear Stearns CEO Schwartz com on pom pom TV, tell the world everything is A-okay only to go belly up 24 hrs later. Bernanke said he had 24 hrs notice in his testimony this morning. Okay where is the outrage at Schwartz, why is he not being investigated, doesn't Lehman have evidence of collusion regarding this issue. Bear CEO Schwartz riding off in the sunset happy, set and carefree, yet we're ready to lynch the shorts. Kinda like how we're handling the housing bubble.

A few housekeeping notes, I was stopped out of my DXD position at $53 for a 5 pt loss. Painful and probably right at the lows of this move. But as a friend always has said, "sure that $20 stock may go to $40 but it may do so via $5 first.

Stopped out of DB at 119.50. I heard a report that the regulators overseas had banned short selling in it and UBS. It matters not a whit. I am out and now that I am the stock is free to head to $80

I was stopped out of 2 units C at $24.45 for a pt loss, disgusting to say the least but who am I to argue with the tape. Its a one sided discussion.

I was stopped out of Agco at $62.80 for a 1.80 loss on 2 units.

I caught the Bernanke Capitol Hill gig today. I am gonna let you in on a little secret about the Bear Stearns collateral. They (the Fed) have absolutely no clue as to what the collateral is worth. They had 24 hrs to do the deal. As I have said before Fannie Mae couldn't produce audited financials for over 2 yrs and yet the Fed can due diligence Bear's paper in 24hrs. If you believe any of that I have a wonderful bridge to sell you, cheap mind you!


Home prices underlay all this paper and there is no end in sight for the drop in prices. Yes I heard the cat from Trim Tabs claiming the bottom is in. Not from where I sit is it in, but don't trust me ask Centex (CTX) who just sold $900 million in real estate which was written down to about $540 million to a Texas outfit for the princely sum of .......drum roll please......$161 million. 8500 lots in 11 states. But I will bet dollars to doughnuts OFHEO would find a way to spin this one positive.


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 Financials ticker SKF @ $102.20 stop at $98.70
Short 2 untis Daimler AG ticker DAI @ $86.20 stop at $88.05

Tuesday, April 1, 2008

The gold chart is well worth watching here.

Not to mention silver. The whole commodity complex is getting a big shakeout. Now that's a market we can start to talk turkey about bottoms being formed.

Well that was a quick visit with my Lehman short, 2 pts loss. Oh well, you can never tell unless you bet!

I was stopped out of my 2 unit position in SRS at $89.60 for a 2.30 per unit loss.


I was also stopped out of a 1 unit position in FXP at $84.70 for a flat trade.


I am moving my stop on C down to $24.40


This is another short covering rally, fast furious and violent. IF, and that's a big if this rally develops into something larger I will address it at that time. We are a long way away from that but I just want to say that so people don't think I am stuck in my views, perma bear if you will.


Yes, you heard the news correctly, Lehman presenting the SEC evidence to have the shorts investigated, collusion. Maybe they should focus on marking their toxic mortgages and CDO paper to market rather than focusing on the shorts. Or focus on bolstering their liquidity by raising capital even though they claim the are very solvent and highly liquid.
I read a piece that remarked how China has outlawed shorts yet it hasn't prevented their market from dropping 35-40%. Big help that's been. So continue blaming the shorts, as they start all the rumors. Why else would a "run" on any type of bank happen, bad decision making at said bank would never cause one, right? The pump and dump crowd never would do such a thing either, just blame the shorts. The shorts makes me think of Tony Montana in Scarface and his famous line... "say goodnight to the bad guy!" Shorts are the bad guy, bad investments


Good speculating to you all.

Open Positions:
Long 6 units Currencyshares Japanese Yen ticker FXY @ $88.55 stop at $91.40
Long 4 units Ultrashort Dow 30 ticker DXD @ $58.00 stop at $53.10
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 $24.40
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 Lehman

The time has come to get on board the Lehman short train. Lehman could very well be the next or new Bear Stearns. Are they going out of business, not with this Fed, but a look at their balance sheet would make the most seaworthy among us 'toss his/her cookies' so to speak!

Let me get this straight, the CEO comes out denying liquidity and capital problems. Now they come to market with a 3 billion convertible preferred with about a 7 coupon that will dilute existing shareholders, and the stock rallies. Why are they issuing this paper when a)they have access to mucho money at the discount window, and they have ample capital as their CEO maintains.

All the bottom calling bulls point to the UBS news, the Lehman news and the Deustche Bank news of losses while the market rallies as verification that the bottom is in. I will say this, this better be the end of the losses because if they continue to come, which I believe they will, the panic will be special.


I am getting short 2 units here at $41.50 with a stop at $43.30

In other housekeeping notes, I was stopped out of my 1 unit position in EEV at $79.40 for about a 3pt. loss.



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
Short 2 units Lehman Bros. ticker LEH @ $41.55 stop at $43.30

Charts on FXY, USO, and KOL

The Yen looks to be correcting an overbought condition. Volume looks to be light and as my notes indicate, those out there who have lamented not being involved in this trade are now presented with their opportunity, will they take it? I am biased as I am long a very healthy 6 units.

The USO chart (above) shows the fib retracement levels. It is my intention to get involved in this trade again so I am watching the 50-62% retracement level also known as "the box", very closely.


The market vectors coal etf (above) is rather new but shows a decent picture of the recent action. A move above 39 would pique my interest enough to test the water.

So more write downs you say UBS. Lehman raising capital, of course even though they don't need it! It all would be funny if it were not so sad. Are you being sucked in to this charade of a bottom. Yes the bottom they have been calling/praying for for months. The same ones who said it was contained now say its a bottom, they same ones who said it was contained now say the write offs are over. Like I said funny, very funny.
Did I say I was watching MasterCard as a short, someone kick me the next time I want to short that absolute stalwart of a stock. For those who think may head is made of teak or something even denser, I remind you of what happened to former stock market darlings like Garmin, Crocs et al as mild evidence in my defense. Bear with me so to speak.
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