Thursday, October 30, 2008

Chart on Apple Inc. - AAPL

I am once again short AAPL and have now posted the chart (above) which shows a large pennant forming. We are now testing the upper boundary of that pennant which provides what looks to be a nice, measurable, low risk area to enter a short sale of this glorified consumer retail stock.

I realise the devotees of all things AAPL are legion but I am at a loss to see how this stock doesn't suffer a fate I wouldn't wish on my worst enemy. It is as it should be that Apple is just the stock a cat like Jim Cramer would want to own. A high priced, extremely discretionary, luxury item as we head into an economic environment few alive have seen or worse can imagine.

I have had some luck prior with AAPL on the short side and have been watching from the sidelines since. Today provides a nice entry point for a short sale. I am short 1 unit at $110.90 and have placed my stop just above today's highs. I realise the more aggressive out there would suggest a stop with more breathing room and I would agree. Such is trading.

I love how the pom pom network continues to drag out the bullish shills telling any and all to buy. That stocks represent great value. I can only laugh as I suspect we will be having a value conversation a many months down the road as the S&P500 hits the 4-500 level sporting a P/E multiple in the mid to high single digits. Then we will be able to have a VERY SERIOUS valuation discussion. Until then it would be wise to remember these shills have one priority, THEIR OWN. For if they didn't they would have been having an overvaluation discussion, as many blogs out there were with the Dow north of 12,000. That is water under the bridge but I trust you get the point.

Yup, bailout nation lives with the line getting longer by the day, consumer on the ropes while that same consumer represents 70% of the economy, layoffs by the drove being announced guaranteed to further worsen an already brutal housing market and yet these so called pundits, and I use that term loosely with them, continue to tell you to buy stocks. Lunacy of highest order.

So now that even the dimmest among us who have been denying recession and most probably cannot continue to do so for fear of ridicule from even the most polyannic of polyannas, will be front and center telling us how now that we are in recession it is time to buy stocks as the market is discounting all.

Yup, buy stocks when the economy is good, buy stocks while you deny recession, buy stocks when you admit recession. Quite the strategy isn't it. Probably spend the better part of 60 seconds coming up with it. I notice Brian Westbury hasn't been on TV of late as he is probably recalibrating the numbers is his no recession, productivity will save us scenario. My issue with cats like this or that Nobel candidate David Malpass, who I am amused to learn has resurfaced after his stint at Bear Stearns. My question is do you think he used the Bear stint on the C.V?, is their disdain for anyone with a bearish or negative viewpoint or outlook.

I can assure you that there will be a time to be bullish and I don't mean just ordinarily bullish, but wild eyed, go down to the bookie and borrow money kind of bullish. That time will come when ignoramus's like Dennis Kneale tell you that you are nuts to be looking at stocks. When Larry Kudlow tells you that stocks are very risky, now that's assuming that the pom pom network is still in business.

Karl Denninger over at Market Ticker had a great piece called Stop Paying Your Morgage Today, which I highly recommend as we all need to learn how to game the system like the banks, brokers, private equity do. And you thought John Snow and Dan Qualye were at Cerberus for their financial acumen did you?

Mike Panzner via his fabulous blog brought my attention to an article written by a Mr. Phil Williams entitled Recession or Depression? It is well worth you time as he outlines what is happening in a very coherent way. I also want to wish Mike congratulations as his popular best selling book Financial Armageddon, will now be available in Korean and Japanese. For those that haven't read Mike's book I cannot recommend it enough as it is almost a clairvoyant blueprint for what is transpiring now. I get no renumeration from Mike by pumping his book but I take pleasure in doing so in light of the grief and ridicule he often received on Kudlow's show for his bearish perspective, at the hands of the gallactically inferior bullish panelists alongside the shameless market pimping host himself.


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

Open Positions:
Short 1 unit Apple ticker AAPL at $110.90 stop at $113.53
Short 1 unit Salesforce.com ticker CRM @ $56.05 stop at $34.31

Getting Short AAPL

I am getting short 1 unit of Apple ticker AAPL here at $111 as we have a nice pennant forming on the daily and we are butting up against the upper boundary. I will have a chart for you shortly.


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

Open Positions:
Short 1 unit Apple ticker AAPL at $110.90 stop at $113.53
Short 1 unit Salesforce.com ticker CRM @ $56.05 stop at $34.31

Wednesday, October 29, 2008

Housekeeping Update

Housekeeping notes;

I was stopped out my 2 unit SDS position yesterday at $101.75 and 95.85 for gains of 11 and 5pts respectively on each unit.

I was also stopped out of my long FXY position at $101.60 for a gain of just over $4pts on 1 unit

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

Open Positions:
Short 1 unit Salesforce.com ticker CRM @ $56.05 stop at $34.31

Tuesday, October 28, 2008

Market Shenanigans ?

I want to touch on the trading action in the markets which many are commenting on. You must realise the basic premise that capital markets need trust to function properly. That trust has not only been broken but it has been manipulated and taken advantage of to an extreme never before witnessed.

Some are calling the late day sell off manipulated etc. Last I heard a margin call sellout is not manipulation but in today's environment with the likes of Paulson, Bernanke, Cox and Co. anything is in the realm of possibility.

That said, many will recall an oft repeated (on these pages) and virtually completely ignored adage 'that it takes a lot of buying to put a market up and a mere lack of buying to put a market down'. I believe we are experiencing a buyers strike. The sound rational, experienced money is leaving the building or may have already left. Forget the reasons as that is meaningless drivel for CNBC types. The fact is what counts and the fact remains that buyers have left the building as they cannot trust financial statements, they cannot trust management statements, and most importantly they cannot trust regulators to keep a level playing field. This leaves the market to the black box, momentum, type traders. Our capital markets are quickly spiralling downward on par with the foreign currency black markets that existed in communist countries.

Exaggeration you say? Maybe, but give it some time.

I realise some may find this to simple but this is what I believe is going on. There are fewer and fewer bids so it is feasible to hit "air pockets" where there is no bid under the stock. I suggest you fasten your seat belts and keep your tray tables in the upright and locked position as this is going to be very uncomfortable ride. If you have any experience trading the pink sheets, or the Vancouver stock exchange, or some of the overseas markets you will begin to start appreciating the big picture of what is transpiring.

You must keep your head when others around you are losing theirs. Stop listening to this drivel about averaging in or 'legging' into positions. Do not be a hero here. I am absolutely dying to buy some of the names (tickers) I shared with you in a post recently but I will not as I do not relish getting my head handed to me. Besides I want to keep my gains and this is exactly the time ego and success can cloud ones judgement. Trade smaller, trade smarter.

I will repeat once again Jesse Livermore's admonition that "it was never my thinking that made me the big money it was my sitting", got that !!

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

Open Positions:
Long 2 units of Ultrashort S&P ticker SDS @ $90.60 stops $101.88/$95.94
Long 1 unit Japanese Yen ticker FXY at $97.15 stop at $101.68
Short 1 unit Salesforce.com ticker CRM @ $56.05 stop at $34.31

Monday, October 27, 2008

Start of the Week

I believe that the markets have become numb to the Fed and Treasury. I also believe we have moved past the point of no return now. We have a Fed, Treasury and government for that matter, who almost to the point of insanity believes it knows better and it can influence the outcomes of all it touches.

The markets have woken to the fact that there is no Wizard and worse the guy behind the curtain has an IQ that is barely room temp. Some may laugh at this and normally I would be rolling on the floor but the problem is we are now looking at the sinking of all to save the well connected few.

Forget the fact that banks are not using the taxpayer funded bailout money for consumers but rather for acquisitions. One of the first rules of capitalism is that you fund successful ventures, departments or divisions of your business and you close the money losing ones. The logic being that if you don't, the money losing division, just like a disease if not removed will spread and consume the host. This is where we are now.


Instead of letting these banks fail and fail they would for they are all insolvent, Citi, Wachovia, Wells, JP Morgan, Bank America, Morgan we bail them out pouring good money in after bad. Instead of having confidence in a country, in our system, in the ability of smaller, sounder, banks who know how to make loans and run their business to step in and replace their larger insolvent competitors.

We are all but assured of a depression now with this meddling by the government. It pains me to no end to say this. I wish it were not so. I completely understand why one would be inclined to almost think some of these decisions by Fed and Treasury are being done to sabotage the economy. What other explanation could one come to when you look at what damage is being done.

Logic would dictate that if all of their actions so far have resulted in what we have, would not attempting the opposite actions be worth investigation. It surely cannot result in anything worse we have been dealt.

I pulled the following from a piece off Bloomberg entitled Gulf Bank Customers Rush for Deposits After Currency Losses.

Kuwait's benchmark share index fell 2.7 percent to 9,839.8 in early trades today, after losing 3.5 percent yesterday. The index is down 22 percent for the year.

About 40 stock traders in Kuwait marched from the Kuwait Exchange to the Seif Palace, where the cabinet sits. They are demanding that Kuwait's Emir Sheikh Sabah al-Ahmad al-Jaber al- Sabah act to halt the decline in share prices in the country, stock trader Mohammed al-Dosari said today in an interview outside the exchange.

``I used to have 400,000 dinars to trade with, and now I only have 20,000 dinars,'' said al-Dosari. ``This is a big national disaster. We don't want the government to make the market go up, we just want to stop this panic.''

Please read the last paragraph again and you will understand that government intervention will continue and continue with all its attendant unintended consequences. We are living with lies on top of more lies on top of more lies on top of fraud and deceit on top of cover up lies. It cannot stop until all that are insolvent are permitted, no rather forced to go bankrupt so we can begin to rebuild.

This poor boob of a trader in Kuwait most definitely wants the government to make the market go up. I suggest he take his his remaining 20,000 dinars are run for public office as he would be most well suited for that position, better yet a central banker as he has the complete skill set necessary for the job. Taking a 400,000 dinar stake and turning it into 20,000 makes him eminently qualified to run the Fed, the Treasury, the IMF, the World Bank or any bank or brokerage. Sadly I am not joking, as he is just as qualified as Hank Paulson or John Mack maybe more so for at least he had the spine to take his OWN stake and go it along. More than I can say for the above 2 clowns who need OPM (other peoples money) to make a living.

I suggest you acquaint yourself with what is going on in Iceland, Argentina, Pakistan, and other areas of the globe on a societal level. I suggest you prepare and protect yourself because I can assure you NO ONE ELSE will. These cats on pom pom TV telling you to ignore the doom and gloomers will be nowhere to be found when you need them. I want to ask the 'market is cheap' crooners on TV how they will feel when we have 10 or 12% official unemployment rate which those born at night but just not last night would know would translate into a real world rate of about 15-20%.

I want to touch on something very important. The subject of energy. Regulars readers know I am a peak oil proponent in that I am fairly versed on the subject and am a long term bull on energy. That said you don't have to be rocket scientist to side step an oncoming freight train which is what we have seen with the bear market in crude and gold along with other commodities.

I believe the concept of peak oil still is intact. The Saudis will not let any outside agencies audit their reserve claims. Same goes with Iran, so much like the financials we have to take them at their word and we know where that will get us. That said, this bout of global depression induced demand destruction will pass, simple demographics suppport this. This, along with the fact we see irreversible production declines across the board, Cantarell, Ghawar et al. spell a much higher price for crude down the road. My question is what is in store for us economically if we have an S&P at 500-600 and a Dow in the 5-6000 area and crude embarks on a supply contrained rally from say around $50 to the $200 level.

Can't happen? Sure, keep believing that and you may get a gig on CNBC.

Government's printing money, (aka paper) and bonds are included here, under a beggar thy neighbour policy. I posit this because the further this market drops one is inclined to look for buys, its human nature. I am trying to suggest we might, I know I will, limit my universe to the commodity arena.

USO, UNG, KOL, UGA, UHN, GLD, SLV, CCJ, GDX, OIH, XLE, DBA, CCJ, SU, SLB, RIG, NOV, PXP, XTO, CHK, APA, APC, BTU are all at the top of my hit list.

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

Open Positions:
Long 2 units of Ultrashort S&P ticker SDS @ $90.60 stops $101.88/$95.94
Long 1 unit Japanese Yen ticker FXY at $97.15 stop at $101.68
Short 1 unit Salesforce.com ticker CRM @ $56.05 stop at $34.31

Friday, October 24, 2008

Major Market Indices

The S&P500 tracking stock aka the Spiders, ticker SPY (chart above) has clearly broken out of the pennant formation and in the direction of the trend preceding it. The pennant looks to be worth $27 pts at its widest point. If we use $91 as the break level we can subtract the width $27 and come up with a target of $64 on the SPY. Crazy? Maybe but don't be so sure.

Remember my Deutsche Bank (ticker DB) target of $44 took some heat from many. Just in case you were wondering DB broke $40 today. So you could say a $64 target on the SPY's might be on the high side. You cannot underestimate the profit erosion that needs to be priced in to earnings for this recession. I truly wish it weren't so.

The Dow tracking stock aka the diamonds, ticker DIA (chart above) paints an eerily similar picture to the S&P. The pennant or triangle if you prefer, is worth $25 at its widest point and if we use the $86 level as the breakout to the downside and subtract that $25 we come up with a target on the DIA of $61.


The Quad Q's the tracking stock of the Naz (chart above) shows a different picture. Recently I posited that the Naz could have formed a double bottom. A readers email, thx for the note T.L, asked if this made me bullish. As my notes that day clearly indicated;

'The Naz could be forming a double bottom here but given the other 2 major indices it could be very suspect.'

We now have an either or scenario developing here on the Naz. As my notes on the chart (above) indicate we have either a falling wedge, which is bullish, developing, or a descending triangle which is bearish.


The Russell 2K tracking stock, ticker IWM, (chart above) looks very similar to the Dow and S&P. The pennant on the IWM looks to be worth $16pts. If we use $50.5 as the break level we can subtract $16 and come up with a target of $34.50 for the IWM.

Is the hard trade right now to be long or short?

Personally all is see and hear is bottoms being called. Remember what I have said about this before, the bottom will occur when all stop calling for it. You could also add to that sentence that when all the bottom callers have been completely and utterly discredited.

Some are claiming the markets are severely, extremely, overwhelmingly oversold. That this is irrational, that this makes no sense. To this I say, no doubt. The problem is markets can remain oversold and overbought for very long periods of time, they can irrational, and non-sensical far longer than any of us can remain solvent, decimating speculators in the process.

Many are of the want to jump all in here, and while this could be just the perfect contrarian thing to do I would counsel otherwise. I urge you to ditch all your oscillators, your MACD, stochastics, etc, and any other measures of extremes in sentiment for they have led many a speculator to his financial grave. Besides, the margin clerk could care less.


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

Open Positions:
Long 2 units of Ultrashort S&P ticker SDS @ $90.60 stops $101.88/$95.94
Long 1 unit Japanese Yen ticker FXY at $97.15 stop at $101.68
Short 1 unit Salesforce.com ticker CRM @ $56.05 stop at $34.31

The Great UnWind Continues

I love the conversation this morning when the futures were halted, lock limit down 550 pts. In particular my favourite is the reference that there is no reason for it the limit down. This ailment, in my opinion, is called willful ignorance and seems to be of epidemic proportions among politicians, bureaucrats and financial types today.

For those that have been prepared for this storm(short or in cash), which contrary to mainstream political and financial opinion was well foreseen by many, I will offer the following advice from Jesse Livermore.

It was never my thinking that made me the big money it was my sitting.

Have your stops in place which were put in place when you were of sound mind with no personal attachment to your position. Are you hearing these types on TV telling people that if you haven't already sold it is too late. I wonder how they will feel if, which is quite possible, we see the S&P at 400 or 500? I would surmise they would wish they had sold. The bottom is years away my friends, just like the tech bubble, Japan, gold, uranium, tulip bulbs, etc.

Just as many, in particular Kirk Kerkorian, who is quite intelligent when it comes to things speculative, thought Ford cheap at $8 after it had fallen from over $60. A stunning 75% loss from only $8 as it now sits around $2. Just some food for thought, when pom pom TV trots out the shills, like Ned Riley, telling, no imploring, no begging you to buy, to remember a fool measures his bargains by how many points from the top its has sold off.

Housekeeping notes;

I am adjusting my stop upward on 2 units long of SDS to $101.88 and $95.94 respectively.

I am moving my stop downward on my 1 unit short of CRM to $34.31

I am moving my stop up on my 1 unit long of FXY to $101.68

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

Open Positions:
Long 2 units of Ultrashort S&P ticker SDS @ $90.60 stops $101.88/$95.94
Long 1 unit Japanese Yen ticker FXY at $97.15 stop at $101.68
Short 1 unit Salesforce.com ticker CRM @ $56.05 stop at $34.31

Thursday, October 23, 2008

Thursday Morning

It seems that I have been doing a lot of watching of the tape as opposed to blogging and trading lately with yesterday being another example of that. I like to do this as I need to stay in tune with the patient just as an intensive care physician stays with his/her patient round the clock to stay in synch with the patient's status. I think this wise.

That said did you notice not only the gap down yesterday on the tracking stocks of both the Dow(ticker DIA) and S&P(ticker SPY) which happened on larger volume than the 3 day prior run up. It is little things like this that can and often are a tell as to what is happening. Unfortunately this can get lost in the shuffle.

I am of the belief something larger is afoot here and it is not good. I think the stock boyz are finally getting a clue and almost like the last one to find out bad news and holding the bag they are not happy about it. We were way oversold and should have popped much higher from the recent lows. Instead we did not. Some claim that crashes occur from extremely oversold levels. Just something to think about amidst all the hype of pom pom TV that this is indiscriminate selling, which by the way you would be well served to ignore. I would give them (CNBC) a pass if on the way up it was indiscriminate buying but we all know they don't operate that way.

My personal opinion is the stutter stepping down of this market decline is actually doing more harm than good as it is keeping people from doing what they should and that is get defensive, get smaller, sell down positions. Instead, you sell today, get a 300 pt rally the next day and feel stupid. The only thing is we go down 500 the next two days. The point being is it is 3 steps down, 1 or 2 steps up, etc. You get the picture.

That said, the equity market seems to be waking up to the fact, of a recession larger and more painful than even some of the more pessimistic among us had feared is here. That unemployment is headed for double digits, even by the government's lowball doctored stats. That pension funds are severely underfunded. That the cancer is spreading and the Fed''s balance sheet does have a limit, sorry Steve Leisman it is not infinite, it is finite to the point foreigners step up to buy our paper.

All this is now being priced in on a furious, almost a catch-up pace. I realise this infuriates the polyannic ignoramus's like Dennis Kneale et al but the pendulum has now swung and is in motion and to guess where it stops on the downside is as futile as when it swung to the upside, Larry Kudlow and Dennis Kneale's protestations notwithstanding.

Housekeeping notes;

Yesterday I was stopped out of my long TBT position at $59.30 for a loss of just over 3/4 of a pt on 1 unit as it gapped down at the opening.

I was stopped out of my long CBI position at $11.75 for a very small gain on 1 unit.

I am moving my stop on FXY upwards to $97.68


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

Open Positions:
Long 2 units of Ultrashort S&P ticker SDS @ $90.60 stop $84.34
Long 1 unit Japanese Yen ticker FXY at $97.15 stop at 97.68
Short 1 unit Salesforce.com ticker CRM @ $56.05 stop at $42.12

Tuesday, October 21, 2008

Getting Shorter the S&P500


I have posted a 60 minute chart of the Spiders, ticker SPY (chart above), the tracking stock for the S&P500. Sometimes a shorter duration chart can be valuable as a barometer of the short term health of the market, which my preferred daily and weekly charts cannot. As my notes on the chart indicate this 2nd rally up in the pennant looks to be very tired and seems to be rolling over. $99 should contain any rally with a move above that implying a test of the upper boundary about the 103 level.


Housekeeping notes;

I was just filled on my order for a 2nd unit long of Ultrashort S&P500 ticker SDS at $90.70


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

Open Positions:
Long 2 units of Ultrashort S&P ticker SDS @ $90.60 stop $84.34
Long 1 unit Japanese Yen ticker FXY at $97.15 stop at 96.72
Long 1 unit of Ultrashort 20yr TBond ticker TBT @ $60.10 stop at $60.19
Long 1 unit of Chicago Bridge/Iron ticker CBI @ $11.55 stop at $11.79
Short 1 unit Salesforce.com ticker CRM @ $56.05 stop at $42.12

Tuesday Morning Thoughts

I am looking to add to my short S&P position (via the ultrashort proshares ticker SDS) on a move above the 90.60 level. I will have some charts asap.

I want to touch on this absolutely comical claim by many on financial television about how the market is not trading on fundamentals. Oh really? And it was trading on fundamentals over a year ago? Or better yet, was it was trading on fundamentals back in 1999? Of course it wasn't but in bull markets we don't mention that little secret because bull markets are fun. But in bear markets we parade out many shills claiming the market is not trading on fundamentals and ergo is inherently ultra cheap on a valuation basis.

Just don't pay attention to companies like Texas Instruments or Sun Microsystems. Gotta love American Express this morning. Is there a new degree out there I am not aware of called financial engineer. I know about chemical, geological, physical, and electrical but am not aware of financial. Hold it! Wait a minute. Yes I am familiar with the designation of financial engineer, but under its more commonly known name called the MBA.

I would think the buyers of AXP this morning are going to wish they had sold into this strength in the very near future.

Yesterdays low volume rally was my clue to test the short waters again and while I may be early amidst all the claims of "the market holding up well amidst all the bad news", earnings need to be drastically reduced and until that happens this market is by no means cheap.

So what happens when all the chirping about credit markets "getting better" passes? What are we left with. Yes those fundamentals all those buy, buy, buy shills keep talking about. Do you really think the pros out there are not aware of the stunning deterioration in those same fundamentals, in particular earnings. Do you think the pros are buying the fiscal stimulus news or selling into it?

Maybe these are some questions you should ask yourself when your friendly broker calls to tell you to buy Wells Fargo because because it is cheap, Buffett owns it and it is on the protected, survivor list.

I noticed Mr. Ratigan of CNBC, whom I applauded the other day, go after Mr. Paulson in a rant late yesterday afternoon. Dylan you are getting warmer now. You are definitely on the right track. Who'd a thunk the guy who made 500 million orchestrating the fiasco would not only get a free pass but be asked to fix the mess. Now we still have the apologists like Maria" money honey" Bartiromo, claiming we should grovel at Paulson's shoes as we are lucky to have him at the helm.

You know what's lucky Maria, is that Paulson is not on the rack right now, which we can thank Desperate Housewives, America Idol, Survivor and America's Got Talent, along with abject ignorance of all things financial as sufficient diversions of the masses.


And for the last time, this is not a liquidity crises. This is a too much debt, too much accounting chicanery, too little transparency, too much lying, crisis of insolvency. I will not lend to you if I suspect you are cooking your books, or if I even have an inkling you cannot pay me back. And if and this is a big if I do decide to lend to you, it will carry a heavy premium a.k.a. higher rates, to compensate me in case you flake out.




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

Open Positions:
Long 1 unit of Ultrashort S&P ticker SDS @ $90.35 stop $84.34
Long 1 unit Japanese Yen ticker FXY at $97.15 stop at 96.72
Long 1 unit of Ultrashort 20yr TBond ticker TBT @ $60.10 stop at $60.19
Long 1 unit of Chicago Bridge/Iron ticker CBI @ $11.55 stop at $11.79
Short 1 units Salesforce.com ticker CRM @ $56.05 stop at $42.12

Monday, October 20, 2008

Getting Short the S&P 500

I am taking advantage of this low volume rally dayin the markets to stick my toe in the short waters again. I will do this via the Ultrashort S&P500 ticker SDS

I am long 1 unit of SDS here at $90.25 with a stop at $84.34




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

Open Positions:
Long 1 unit of Ultrashort S&P ticker SDS @ $90.35 stop $84.34
Long 1 unit Japanese Yen ticker FXY at $97.15 stop at 96.72
Long 1 unit of Ultrashort 20yr TBond ticker TBT @ $60.10 stop at $60.19
Long 1 unit of Chicago Bridge/Iron ticker CBI @ $11.55 stop at $11.79
Short 1 units Salesforce.com ticker CRM @ $56.05 stop at $42.12

Friday, October 17, 2008

End of the Week

As my notes indicate, the Diamonds ticker DIA (chart above) look to be developing a pennant formation and while it is early yet it may be worth watching

The Spiders ticker SPY (chart above) look very similar to the Dow. Remember pennants and flags are continuation patterns and more often than not are resolved in the direction of the move prior.

The Naz could be forming a double bottom here but given the other 2 major indices it could be very suspect.

I am travelling today and will be away from my post. That said for those interested in some 'market valuation' reading material I would direct you over, once again to the boys over at Comstock and their weekly missives. Their post this week views the market as fairly valued and certainly not cheap as many pundits would have you believe.

Some may have noticed my "lack of activity' lately. To be blunt, there has not been much to do for to short the market at these levels would be virtual suicide given the propensity for multi-hundred point rallies by nostalgic stricken bulls, striving for the good ol' days. That said a break of the recent lows would spell much further weakness.

I would counsel anything thinking of getting long stocks here, on any significant basis, to remember how far the pendulum swung to the euphoric side and remember it can and most probably will swing as far on the despondency side. I say this as objectively as I can for to ignore this will most surely cost you dearly.


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

Open Positions:
Long 1 unit Japanese Yen ticker FXY at $97.15 stop at 96.72
Long 1 unit of Ultrashort 20yr TBond ticker TBT @ $60.10 stop at $60.19
Long 1 unit of Chicago Bridge/Iron ticker CBI @ $11.55 stop at $11.79
Short 1 units Salesforce.com ticker CRM @ $56.05 stop at $42.12

Thursday, October 16, 2008

3 Cheers for Dylan Rattigan

I have been none to kind to the pom pom network, aka CNBC. All too often I have taken to task the "pretty faces"on the cheer leading network for their shameful pimping of stocks, their management, along with other assorted financial officials and politicians.

Well today I write about Dylan Rattigan, who I have oft referred to as 'the pontificator' due to his long winded dissertations. That said, I happened to catch his rant on air this morning about 11am in which he went off on the mistrust in the markets, the lack of transparency among the financials, the lack of details of the minutes of these meetings amongst Paulson & Pals where our tax dollars are being thrown around with abandon that would make a drunken sailor blush. Well done Dylan!!

I believe Mr. Rattigan has had the proverbial light go on. I think he finally gets it. It is a shame that it took 6000 odd Dow pts for it to happen but none the less I must give credit where credit is due. Give em' heck Dylan.

Next up, I would encourage Mr. Rattigan to question Mr. Paulson as to why we should believe a word that comes out of his mouth as he was an orchestrator in chief of this debacle while CEO of Goldman earning over $500 million while leaving this in his wake.

Please don't be afraid of him Dylan. Your spine is showing now and it looks great but you cannot stop here. Let it all out, you have the pulpit to do it. I know you read the blogs out there. You don't have to admit it but I know you do. You have to, all the hacks you have interviewed have been so wrong that logic would dictate the opposite might be correct.

I would bet dollars to doughnuts you read Mike Panzner over at Financial Armageddon, and Mish, and Karl over at Market Ticker, and Charles over at Of Two Minds, and Mike Morgan among many others. Why not have cats like this on and discuss markets with them.

Why not ditch the regular crew on Fast Money for a night, heck give em' a couple of nights off, and invite on cats like these and have an open discussion of why we are here, where we are going and what can be done. I would love to come on but I have a face made for radio as opposed to television.

So yes 3 cheers for you Dylan Rattigan, your rant made me proud, made me feel like you get it. Start pressing the buttons of the culprits, they are among you, you see them every day. John Mack, Stan O'Neal, Dick Fuld, Franklin Raines, Jimmy Cayne, Hank Paulson, Chris Cox, Chris Dodd, Angelo Mozilo, Bill Willumstad. Please don't let me down.

Housekeeping notes;

Yesterday I was stopped out of my GLD position at 82.45 for a very small loss on 1 unit.

I was also stopped out of my AU position at $17.90 for a flat trade on 1 unit.

I was also stopped out of my GFI position at $7.50 for a loss of just over 1 pt on 1 unit.

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

Open Positions:
Long 1 unit Japanese Yen ticker FXY at $97.15 stop at 96.72
Long 1 unit of Ultrashort 20yr TBond ticker TBT @ $60.10 stop at $60.19
Long 1 unit of Chicago Bridge/Iron ticker CBI @ $11.55 stop at $11.79
Short 1 units Salesforce.com ticker CRM @ $56.05 stop at $42.12

Wednesday, October 15, 2008

Quick Note

Away from my desk early in the day but will be back mid afternoon.

Housekeeping notes;

I was stopped out of my short position on IBM yesterday at $97.75 for a gain of just over $31 pts on 1 unit.

I am adjusting my stop on GLD upwards to $82.49, again another defensive measure.

I am also adjusting my stop on FXY as well upwards to $96.72

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

Open Positions:
Long 1 unit Spder Gold ticker GLD at $82.70 stop at $82.49
Long 1 unit Japanese Yen ticker FXY at $97.15 stop at 96.72
Long 1 unit of Ultrashort 20yr TBond ticker TBT @ $60.10 stop at $60.19
Long 1 unit of Anglogold ticker AU at $17.90 stop at $17.94
Long 1 unit of Goldfields ticker GFI at $8.60 stop at $7.57
Long 1 unit of Chicago Bridge/Iron ticker CBI @ $11.55 stop at $11.79
Short 1 units Salesforce.com ticker CRM @ $56.05 stop at $42.12

Tuesday, October 14, 2008

Charts on FXY and GLD

Here is the Japanese Yen ticker FXY (chart above) I promised. Notice we have retraced back to the gap and are now sitting on top of it. This looked like a good entry point where one could define his/her risk to either entry into the gap, halfway into it, or at the bottom of it. I have chosen just below the midway point of it, to give it a little room to breathe.

I have not had much luck with gold, ticker GLD (chart above) of late getting stopped out on seemingly regular basis one could stop one's watch to. That said, I am long gold, ticker GLD here as we look to have formed some type of consolidation. I really do not know the intracacies of the inner workings of the gold market as well as others might but when one cannot readily buy a Krugerrand or a Maple Leaf at a moments notice, something seriously and I mean SERIOUSLY is amiss. Call me simpleton but I find it hard to find this comforting.


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

Open Positions:
Long 1 unit Spder Gold ticker GLD at $82.70 stop at $79.29
Long 1 unit Japanese Yen ticker FXY at $97.15 stop at 95.89
Long 1 unit of Ultrashort 20yr TBond ticker TBT @ $60.10 stop at $60.19
Long 1 unit of Anglogold ticker AU at $17.90 stop at $17.94
Long 1 unit of Goldfields ticker GFI at $8.60 stop at $7.57
Long 1 unit of Chicago Bridge/Iron ticker CBI @ $11.55 stop at $11.79
Short 1 unit Int'l Bus Machines ticker IBM @ $129.05 stop at $97.71
Short 1 units Salesforce.com ticker CRM @ $56.05 stop at $42.12

Getting Long GLD and FXY

I am getting long 1 unit of GLD this morning here at $82.60 with a stop at $79.29


Also those inclined to look at the Yen ticker FXY, it is sitting on the topside of the gap($96.90) which should be support, and a clear risk defined area as a break could fill the gap. I am getting long 1 unit of the yen ticker FXY here at $97.05 with a stop at 95.89

I will post a charts on these later today as I cannot upload them to blogger at this time.

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


Open Positions:
Long 1 unit Gold Spider ticker GLD at $82.70 stop at $79.29
Long 1 unit Japanese Yen ticker FXY at $97.15 stop at 95.89
Long 1 unit of Ultrashort 20yr TBond ticker TBT @ $60.10 stop at $60.19
Long 1 unit of Anglogold ticker AU at $17.90 stop at $17.94
Long 1 unit of Goldfields ticker GFI at $8.60 stop at $7.57
Long 1 unit of Chicago Bridge/Iron ticker CBI @ $11.55 stop at $11.79
Short 1 unit Int'l Bus Machines ticker IBM @ $129.05 stop at $97.71
Short 1 units Salesforce.com ticker CRM @ $56.05 stop at $42.12

Worth Reading

Mike Panzner over at Financial Armageddon brought my attention to a recent Barrons interview with Jeremy Grantham over at GMO partners. The article is worth your time as anything Grantham has to say about the markets you ignore at your own peril. That said, one particular quote from Mr. Grantham caught my eye,

The terrible thing -- after all this pain -- is that the U.S. equity market is not even cheap. You would imagine that, given the amount of panic, that it would be. But it started from such a high level in 2000 that it still has not yet worked its way down to trend, although it is getting close. But the really bad news is that great bubbles in history always overcorrected. So although the fair value of the S&P today may be about 1025, typically bubbles overcorrect by quite a bit, possibly by 20%. That is very discouraging.


I posted some work by Jason Zweig yesterday which speaks to this exact situation but in more obvious fundamental valuation levels. As I have said before and will repeat again today markets can and do swing much further in either direction than we can ever dream imaginable. What we also know is that just as markets swing to euphoric optimism, they can reasonably be expected to swing to despondent lows. The point is they OVERSHOOT. To expect otherwise is to, well, lets just say you could anchor CNBC's daily broadcast. The one caveat is that you have to be beautiful.

I a question for readers both here in the U.S. but more importantly overseas. First off, thank you for taking time to read my small contribution to the speculating community. I stay in contact with a very sizeable local coin and bullion dealer on a regular basis here in Michigan. In the last 6 weeks, a situation has developed where they have nothing for sale.

No Krugerrands, no Maple Leafs, no Pandas, no Gold Eagles, no Buffalos, no British sovereigns, no Kangaroos, no 100 oz silver bars, no nothing. Now I am no rocket scientist but something is going on. There are no lines there, other than those hawking possessions for cash given the economy, but it seems to me something is up.

My question to my readers, is this happening in your locale? Germany, UAE, Philippines, Argentina, Mexico, Britain? Please let me know. I would respect your anonymity and not reveal your name but would appreciate any "on the street" help. Thanks in advance.


Housekeeping notes;

I was stopped out of my SDS position at $92.35 for a gain of just over 30 pts on 1 unit.

I am moving my stop up on my TBT position to $60.19.

I am also moving my stop up on my AU position to break even level of $17.94.

I am also moving my stop up on my GFI position to $7.57

I am also moving my stop up on my CBI position to $11.79

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


Open Positions:
Long 1 unit of Ultrashort 20yr TBond ticker TBT @ $60.10 stop at $60.19
Long 1 unit of Anglogold ticker AU at $17.90 stop at $17.94
Long 1 unit of Goldfields ticker GFI at $8.60 stop at $7.57
Long 1 unit of Chicago Bridge/Iron ticker CBI @ $11.55 stop at $11.79
Short 1 unit Int'l Bus Machines ticker IBM @ $129.05 stop at $97.71
Short 1 units Salesforce.com ticker CRM @ $56.05 stop at $42.12

Monday, October 13, 2008

Columbus Day

With the holiday, markets are trading very light as banks and bonds are closed today. Please do not read too much into todays action as volume is light, participants are few and quite frankly this bounce is way, way, way overdue. That said stops are to be honored, light volume or not.

I came across the following article by Richard Shaw which discusses P/E and whether or not this market is cheap. The article uses some work by Jason Zweig 10 yr weighted average earnings which seem more reasonable. That said, the reading is not for faint of heart. From Mr. Zweig's article comes this;

Robert Shiller, professor of finance at Yale University and chief economist for MacroMarkets LLC, tracks what he calls the "Graham P/E," a measure of market valuation he adapted from an observation Graham made many years ago. The Graham P/E divides the price of major U.S. stocks by their net earnings averaged over the past 10 years, adjusted for inflation. After this week's bloodbath, the Standard & Poor's 500-stock index is priced at 15 times earnings by the Graham-Shiller measure. That is a 25% decline since Sept. 30 alone.

The Graham P/E has not been this low since January 1989; the long-term average in Prof. Shiller's database, which goes back to 1881, is 16.3 times earnings.

But when the stock market moves away from historical norms, it tends to overshoot. The modern low on the Graham P/E was 6.6 in July and August of 1982, and it has sunk below 10 for several long stretches since World War II -- most recently, from 1977 through 1984. It would take a bottom of about 600 on the S&P 500 to take the current Graham P/E down to 10. That's roughly a 30% drop from last week's levels; an equivalent drop would take the Dow below 6000.

Could the market really overshoot that far on the downside? "That's a serious possibility, because it's done it before," says Prof. Shiller. "It strikes me that it might go down a lot more" from current levels.

In order to trade at a Graham P/E as bad as the 1982 low, the S&P 500 would have to fall to roughly 400, more than a 50% slide from where it is today. A similar drop in the Dow would hit bottom somewhere around 4000.

As I have said previously, the pendulum can and does often swing to extremes in both directions. Something to keep in mind when the the shills on TV tell you the market is cheap.

Housekeeping notes;

On Friday I was stopped out of my long KGC position at $12.95 for a loss of 2.5 pts on 1 unit.

I was also stopped out of my long GG position at $24.40 for a loss of just over 5 pts on 1 unit.

This morning I was stopped out of my short AAPL position as the stock gapped up on the opening at $104.75 for a gain of just over $73 pts on 1 unit.



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


Open Positions:
Long 1 unit of Ultrashort S&P ticker SDS @ 61.75 stops at $92.43
Long 1 unit of Ultrashort 20yr TBond ticker TBT @ $60.10 stop at $53.93
Long 1 unit of Anglogold ticker AU at $17.90 stop at $15.39
Long 1 unit of Goldfields ticker GFI at $8.60 stop at $6.14
Long 1 unit of Chicago Bridge/Iron ticker CBI @ $11.55 stop at $9.88
Short 1 unit Int'l Bus Machines ticker IBM @ $129.05 stop at $97.71
Short 1 units Salesforce.com ticker CRM @ $56.05 stop at $42.12

Sunday, October 12, 2008

Some Items to Consider




Gold

In my most recent comments on gold (ticker GLD) I had indicated I had hoped for a pullback into the 80-82 level. Well the action this week, as fast and furious as it was provided that opportunity. I chose to involve myself in this trade via gold equities rather than the gold ETF. In hindsight, the smarter play may just have been sticking with the ETF, see weekly chart 3rd from top.

For those interested in minutia, I bring your attention to the London Gold fix price, which is basically the physical market for gold. The Friday Oct 10 AM fix was $918/oz while the PM fix was $900.50. Now lets compare that to the Comex number (which is the paper market) which was $850.90. Now I am no missile engineer but even I think something is up with this and while I am not the black helicopter type I am also no ones fool. Given how little respect the banks and global monetary authorities have for disclosure and truth I am prepared to believe anything and am more inclined to trust the physical markets much more than paper ones. Just remember the physical market is for people paying for and taking the gold.

I have been squarely in the deflationary camp for some time, but like any good speculator I am not married to my stance or position. I am married to my wife and my beloved Detroit Lions but not my positions. That said, I am not oblivious to what is going on with the monetary aggregates. The tsunami of money the Fed and treasury are pumping into the financial system, which many are calling potentially Wiemar Germany hyper inflationary.

If you click on this link, The St. Louis Fed Adjusted Monetary Base you can see how the chart has spiked almost vertically since mid-September. I believe this monetary floodwater is in and of itself not inflationary but rather deflationary, because that is what cash is. The banks and lending institutions must lend this money out, via the fractional reserve system, for it to become inflationary. I am no monetary policy expert, but even I know that you cannot force people to lend and you most certainly cannot force people to borrow. I will repeat again, case study is Japan and it's called pushing on a string. Until this lending and borrowing starts these injections are not inflationary but rather deflationary. I am on full alert as they have a very high probability of becoming inflationary and is why I own gold.

The monetary aggregates have broken out but as of yet gold is still deciding. So I am early on gold but lets face it, and as I said before, with all these potential scenarios looming, hyper-inflation, deflation, equity markets closing, bank holidays looming, if I am gonna be long anything at this point it may as well be gold. I value my health and gold lets me sleep.

Gold Bug Index

I want to touch on the $HUI or the Amex Gold bug index. (weekly chart top of page) As my notes indicate we look to have a beautiful head and shoulder broken, which is a stark reminder that no matter how much you absolutely love, are enamored, think it's the magic ticket with a trade on a fundamental basis, the charts don't lie. To call shorting the golds given what was transpiring a tough trade is putting it mildly but it was the correct call. Again the tough trade is usually the right trade. The head to neckline on the $HUI about 520 to 380 for a value of 140, the break of the neckline occurred at about 390, so 390 less that 140 would give a speculator the target of 250. Well looky here we seem to have found some support of substance right there. Something to think about.

Equities

The equity markets have plummeted in almost straight line fashion. I have posted a weekly chart of the S&P (2nd from top). This decline looks to be the point of recognition by the short bus riding equity boyz waking up to the reality the credit markets have long known. What a hangover they must have. For those trading markets for any length of time can attest, markets, no matter which or what, can rise or fall much further than any of us dream possible with this recent acton yet further evidence of it.

That said, nothing falls or rises forever, but it can just long even to render many insolvent. I keep hearing this interviews, with traders on the floor of the NYSE who claim a "rip the face off the shorts" rally is coming, in the order of magnitude of a 1000 or so points. I do not disagree with this call as it would restore some technical health to a market that is severely oversold, but we know this matters little to the margin clerk. Which takes me to my next point. These "traders" on the floor, along with many in the markets, Vince Farrell and Mike Holland for sure, would dearly love to kill all the shorts, problem is, the shorts are not the reason for this decline. This decline is being fueled by the big boyz. The big pension funds, hedge funds, insurance companies who are facing major margin calls coupled with client redemption requests.


You are witnessing the selling of long stock. Stock that many of these funds have been holding for years, and while profitable for some time, is coming back on the market in waves. Sure there is some short selling going on, some black box trading happening but as an example, has this simple, run of the mill speculator/blogger recommended a short recently? No I haven't, and for good reason, this is not the time to be putting out lines of short stock. This is the time to enjoy your line that should be well in the money, insulated from market noise and the games the boyz try to play. This is precisely the time to get defensive, to be tightening up the proverbial leash on your positions, (re. stops).

I wonder how many heavily long or short traders slept this weekend with what may or may not transpire out of the G7 meetings ?


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


Open Positions:
Long 1 unit of Ultrashort S&P ticker SDS @ 61.75 stops at $92.43
Long 1 unit of Ultrashort 20yr TBond ticker TBT @ $60.10 stop at $53.93
Long 1 unit of Goldcorp ticker GG @ $29.50 stop at $24.42
Long 1 unit of Kinross Gold ticker KGC @ $15.40 stop at $12.98
Long 1 unit of Anglogold ticker AU at $17.90 stop at $15.39
Long 1 unit of Goldfields ticker GFI at $8.60 stop at $6.14
Long 1 unit of Chicago Bridge/Iron ticker CBI @ $11.55 stop at $9.88
Short 1 unit Int'l Bus Machines ticker IBM @ $129.05 stop at $97.71
Short 1 units of Apple ticker AAPL @ $178.05 stop at $102.21
Short 1 units Salesforce.com ticker CRM @ $56.05 stop at $42.12

Friday, October 10, 2008

Housekeeping Notes

Just some quick housekeeping notes.

I was stopped out of my last unit of DXD just before the close yesterday at $92.05 for a gain of $34 pts

In a continuing effort to get smaller given market events, I am covering 1 unit each of my short in AAPL and CRM.

I covered 1 unit short of AAPL at $92.85 for a gain of about $85 pts per unit.

I covered 1 unit short of CRM at $32.65 for a gain of about $23.25 pts per unit.

I am also lowering my stop on my IBM short position to $97.71

I was also stopped out of my AEM position at $43.60 for a loss of just over 5 pts on 1 unit.

I was also stopped out of my NEM position at $31.80 for a loss of about 3 pts on 1 unit


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


Open Positions:
Long 1 unit of Ultrashort S&P ticker SDS @ 61.75 stops at $92.43
Long 1 unit of Ultrashort 20yr TBond ticker TBT @ $60.10 stop at $53.93
Long 1 unit of Goldcorp ticker GG @ $29.50 stop at $24.42
Long 1 unit of Kinross Gold ticker KGC @ $15.40 stop at $12.98
Long 1 unit of Anglogold ticker AU at $17.90 stop at $15.39
Long 1 unit of Goldfields ticker GFI at $8.60 stop at $6.14
Long 1 unit of Chicago Bridge/Iron ticker CBI @ $11.55 stop at $9.88
Short 1 unit Int'l Bus Machines ticker IBM @ $129.05 stop at $97.71
Short 1 units of Apple ticker AAPL @ $178.05 stop at $102.21
Short 1 units Salesforce.com ticker CRM @ $56.05 stop at $42.12

Chicago Bridge & Iron - CBI

I want to bring your attention to a something I have been watching for some time. Chicago Bridge & Iron ticker CBI (chart above). I realise we are in a bear market and in a bear market the majority of stocks go down.

That said we look to have a massive washout possibly coming to an end. I am prepared to stick my toe in the water getting long 1 unit here at $11.55 with a stop just below the recent lows of 10.34. Small risk possibly massive reward setup. I realise some may see this type of relationship with many stocks out there, energy names especially like XTO, CHK, APA, SU, but I think, as my notes on the chart indicate.

A President and congress faced with massive unemployment, which I believe unfortunately is on the horizon, might start a massive public works/infrastructure program. I know I would. You're hearing pleas for the government to buy futures I say at least get something tangible for your risk. New bridges, roads, mass public transit, some societal benefit rather than throwing the money down the rat holes out there like AIG.

In this regard also on mine and you should have on your watch list are ABB the Sandinavian conglomerate and Bombardier, the Cdn company. They make mass transit subway cars, among other things, for those inclined to look into them further. Just a thought given what is transpiring.

I hope this note finds all my readers and visitors well. Hopefully we can remain calm and keep our heads while others around us are losing theirs.

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


Open Positions:
Long 1 unit of Ultrashort S&P ticker SDS @ 61.75 stops at $99.74
Long 1 unit of Ultrashort Dow ticker DXD @ $57.85 stop at $92.43
Long 1 unit of Ultrashort 20yr TBond ticker TBT @ $60.10 stop at $53.93
Long 1 unit of Agnico Eagle ticker AEM @ $48.80 stop at $43.61
Long 1 unit of Goldcorp ticker GG @ $29.50 stop at $24.42
Long 1 unit of Kinross Gold ticker KGC @ $15.40 stop at $12.98
Long 1 unit of Anglogold ticker AU at $17.90 stop at $15.39
Long 1 unit of Newmont Mining ticker NEM @ $34.85 stop at $31.86
Long 1 unit of Goldfields ticker GFI at $8.60 stop at $6.14
Long 1 unit of Chicago Bridge/Iron ticker CBI @ $11.55 stop at $9.88
Short 1 unit Int'l Bus Machines ticker IBM @ $129.05 stop at $104.89
Short 2 units of Apple ticker AAPL @ $178.05 stop at $97.51/$102.21
Short 2 units Salesforce.com ticker CRM @ $56.05 stop at $38.71/$42.12

Thursday, October 9, 2008

Pain Avoidance

Many have heard of the old adage that adversity builds character. I disagree and as an old coach of mine used to always say adversity doesn't build character it reveals it. Well, this market is sure revealing the character of many of the leading lights of the market.

I caught a piece of Fast Money tonight and got to hear one of the traders, Joe Terranova, whine about how the government should be in this market buying futures to support the stock market. Yes you read that correctly, the government buying stock futures to prop the market up. You just cannot make this stuff up. I do not know Mr. Terranova and I am sure he is liked by all, did well on his SAT's and went to the finest of schools, but again he provides us with another example of the contagious disease of 'when I win, I am brilliant, when I lose, it's somebody elses' fault.'

Government buying futures huh, sure, great idea for tax dollars. Gee, Mr. Terranova wouldn't be stuck in a long position that is now severely underwater would he? Pathetic. Funny how these brilliant traders cannot find a mirror as this would surely reveal whom is to blame. Someone should introduce Mr. Terranova to stop loss orders and if he already knows about them then he should have nothing to complain about. Government buying futures. According to this perverse logic the government should have been selling futures into the tech bubble. Wanna bet he was mysteriously absent in arguing for that back then? I didn't think so.

Did anyone catch the debate this morning between Jim Chanos, head of Kynikos and former FDIC chair and current bandleader of the lets ditch mark to market crowd, Bill Isaac. It was great stuff, the shame is that it is occurring now when it should have happened back in 2005-2006 but we had more important stuff to worry about, things like American Idol and Flip that House.

Steve Forbes, is another of the lets ditch mark to market. I am truly amazed at the idiocy of these so called financial and policy experts. Sure, get rid of mark to market. Lets do more of what got us into this mess. Let's have a global coordinated 100 basis point rate cut. More of what got us into this mess. The history books yet to be written are going to question whether or not we had a room temperature IQ.

Everything is about pain avoidance. Slowdown in the economy, no problem just lower rates. Cannot afford a down payment on home, no problem create no money down mortgages. Cannot afford the monthly payments for the mortgage, no problem create a pay option negative amortization product. No bid on your portfolio of mortgage back securities, no problem move em' to level 3 category and carry em' at par. Pain avoidance at every turn. Now in the thick of this mess nothing has changed, every remedy that is proposed has its foundation based on this principle, pain avoidance.



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


Open Positions:
Long 1 unit of Ultrashort S&P ticker SDS @ 61.75 stops at $99.74
Long 1 unit of Ultrashort Dow ticker DXD @ $57.85 stop at $92.43
Long 1 unit of Ultrashort 20yr TBond ticker TBT @ $60.10 stop at $53.93
Long 1 unit of Agnico Eagle ticker AEM @ $48.80 stop at $43.61
Long 1 unit of Goldcorp ticker GG @ $29.50 stop at $24.42
Long 1 unit of Kinross Gold ticker KGC @ $15.40 stop at $12.98
Long 1 unit of Anglogold ticker AU at $17.90 stop at $15.39
Long 1 unit of Newmont Mining ticker NEM @ $34.85 stop at $31.86
Long 1 unit of Goldfields ticker GFI at $8.60 stop at $6.14
Short 1 unit Int'l Bus Machines ticker IBM @ $129.05 stop at $104.89
Short 2 units of Apple ticker AAPL @ $178.05 stop at $97.51/$102.21
Short 2 units Salesforce.com ticker CRM @ $56.05 stop at $38.71/$42.12

Some Quick Thoughts.

My apologies for my earlier post but I wanted to get it as quick as I could.

That being said I have gotten less short of the market by selling some SDS and DXD.


Housekeeping notes;

Sold 1 unit of SDS at 108.60 for a profit of almost 47pts.
I am also adjusting my stop on my remaining unit of SDS upward to $99.74

Sold 1 unit of DXD at $93.40 for a gain of about 35.5 pts.
I am also adjusting my stop on my remaining unit of DXD upward to $92.43

I am long 1 unit each of the following golds.

1 unit of Agnico Eagle ticker AEM at $48.70
1 unit of Goldcorp ticker GG at $29.40
1 unit of Kinross Gold ticker KGC at $15.30
1 unit of Anglogold ticker AU at $17.80
1 unit of Newmont Mining ticker NEM at $34.75
1 unit of Goldfields ticker GFI at $8.50


If the powers that be cannot arrest this market decline or at least slow it to an acceptable rate, they will most certainly close the exchanges. While I would vehemently disagree with this type of action, what I want is not what I will get. Am am suggesting this based on their prior actions.

You can say what you want about my decision to jump into the golds here as being emotional and quite frankly I cannot deny that it may have something to do with it. I watch the sector regularly as any trader worth his salt does, and they have been in freefall along will all else. That being said if I am going to be long of anything at this juncture, and if they are going to close the exchanges, then it sure as heck might as well be nice basket of liquid gold stocks.

I will have some charts on the above golds in the near future for you to critique.

I am also moving my stops down on 2 units short AAPL to $97.51 and $102.21

I hope everyone who stops in to catch this blog is very well prepared for what has transpired this week. If you have been stopping by Prudens Speculari and others like it you have been out in front of what is transpiring.

I wish them no ill but it is truly sad to watch our friends on pom pom TV as this unfolds. The confusion amongst them, the grasping at straws for answers would be comical if it were not so sad. When I say sad, I mean sad for the poor souls who lean on the station and their resident shills they drag out on a daily basis pimping stocks.

But what would a bunch of useless, braindead, too much time on our hands group of bloggers know anyway. I caught Erin Burnett's interview with Peter Eliades today in which she hilighted his performance, which was up 18%, good for you Peter. Anyway, in the exchange, she mentioned that the last time she had him on the show, he had been very bearish and then I think accidently she let slip that she took a lot of heat for having him given his bearish prognostications.

This small example is yet another in a long list of examples of why CNBC is often referred to as CNBS, financial porn, and my own little contribution, pom pom TV.


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


Open Positions:
Long 1 unit of Ultrashort S&P ticker SDS @ 61.75 stops at $99.74
Long 1 unit of Ultrashort Dow ticker DXD @ $57.85 stop at $92.43
Long 1 unit of Ultrashort 20yr TBond ticker TBT @ $60.10 stop at $53.93
Long 1 unit of Agnico Eagle ticker AEM @ $48.80 stop at $43.61
Long 1 unit of Goldcorp ticker GG @ $29.50 stop at $24.42
Long 1 unit of Kinross Gold ticker KGC @ $15.40 stop at $12.98
Long 1 unit of Anglogold ticker AU at $17.90 stop at $15.39
Long 1 unit of Newmont Mining ticker NEM @ $34.85 stop at $31.86
Long 1 unit of Goldfields ticker GFI at $8.60 stop at $6.14
Short 1 unit Int'l Bus Machines ticker IBM @ $129.05 stop at $104.89
Short 2 units of Apple ticker AAPL @ $178.05 stop at $97.51/$102.21
Short 2 units Salesforce.com ticker CRM @ $56.05 stop at $38.71/$42.12

Urgent Update

I am selling 1 unit of my SDS position along with 1 unit of my DXD position. I want to be smaller here given what is going on. I feel it is just the prudent thing to do.

I am also buying a basket of gold stocks as I speak. I will have prices for you as soon as I can. I am trying to get this out a quick as I can

1 unit each of

AEM
KGC
GG
GFI
NEM
AU

They are all very liquid and will help me sleep at night.

Getting Short the Long Bond

We have the Dow down as 300 as I write this yet the long bond, ticker TLT is ignoring this. 2 weeks ago treasury bond, which really means safety, prices would have spiked yet they are not. Based on this I am getting short the long bond via the Ultrashort 20yr ticker TBT here at $60.00

I will have some stops posted later on along with some charts.


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


Open Positions:
Long 2 units of Ultrashort S&P ticker SDS @ 61.75 stops at $81.89/$76.91
Long 2 units of Ultrashort Dow ticker DXD @ $57.85 stop at $72.69/$67.89
Short 1 unit Int'l Bus Machines ticker IBM @ $129.05 stop at $104.89
Short 2 units of Apple ticker AAPL @ $178.05 stop at $102.21/$107.31
Short 2 units Salesforce.com ticker CRM @ $56.05 stop at $38.71/$42.12

Questions and Answers

I have received quite a few questions over the last few days given the market action of late. I thought I would respond to them, publicly, via the blog so they and others could benefit or disagree if they choose. Some may find this simple, basic or redundant but I thought it worthwhile for those that took the time to write in.

D.S. asked.... Why are gold equities selling off so hard?

I believe the primary reason gold equities are being sold due to margin calls. This along with the energy sector was one of the few areas market players could actually find a bid for to sell to offset margin calls let alone mark market losses yet to be realised. Many players in the markets are so extremely over leveraged that a small landslide can expand to full blown avalanche. Better to stand aside, stops help in this matter, avoid the oncoming locomotive and look for a more advantageous entry point.

E.W. asked.... How far do you envision major market indices dropping?

You have to be careful with this one for if you predict, say the S&P to double you immediately qualify to be a Wall St. strategist whereas you predict it to fall in half and they send the men in white coats. That being said, I firmly believe we are coming out of the mother of all credit bubbles which was global in nature. Markets tend to swing to extremes for that is human nature euphoria to depression. I see no reason to expect this drop to be much larger than many of the expects predict. I keep hearing the markets have fallen 20-30% so it is time to get in. Don't fall for this for as far as markets can swing to the overtly optimistic side they can EQUALLY fall to the egregiously pessimistic side. This is fact, not bias. Yes I am short with trailing stops but until number like 1325 and 1450 on the S&P are taken out to the upside everything else is noise.

I am sorry to say this but it is what the tape is saying.

R.L. asked....Are you still in the deflation camp given all the liquidity injections and if so, why are you long gold?

Yes I still am. I am no expert in this area but given our fractional reserve system, unless these injections are lent out and the multiplyer effect allowed to take hold, cash is deflationary. The debts written over the last few years are being defaulted upon, hence capital is being destroyed faster than it can be replaced.

I am long gold because it helps me sleep at night. I also believe that at some point this deflationary cycle will run its course, and all this liquidity will hit the pavement creating dare we say a hyperinflationary environment. We are a long way away from that but I am very content to hold gold. The other reason I am long gold is because if you happen to visit your local coin dealer you may find that he/she is out of Krugerrands, Eagles, Buffalos, Kangaroos, Pandas, etc. You may also find it very difficult to find 100 oz. silver bars. This may be something, it may be nothing but I am not prepared to be ambushed by it being SOMETHING !

You can call me names after reading this if you want but forewarned is forearmed.

M.A. asked... I keep hearing over and over again to leg in or to average into this market, is this sound?

Many financial advisers, always playing with others money recommend this strategy also know as dollar cost averaging. As I have said before if averaging down worked, Nick Leeson formerly of Barings Bank, the former bank of the Queen of England before he took it down averaging down into Nikkei futures, Nick and Barings would be lord of the manor. Instead he went to jail, the bank is gone and the Queen is the Queen.

I have a sheet of paper posted over my trading terminals that serves as my daily trading reminder. It says only 3 words, "losers average losers".

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


Open Positions:
Long 2 units of Ultrashort S&P ticker SDS @ 61.75 stops at $81.89/$76.91
Long 2 units of Ultrashort Dow ticker DXD @ $57.85 stop at $72.69/$67.89
Short 1 unit Int'l Bus Machines ticker IBM @ $129.05 stop at $104.89
Short 2 units of Apple ticker AAPL @ $178.05 stop at $102.21/$107.31
Short 2 units Salesforce.com ticker CRM @ $56.05 stop at $38.71/$42.12

Wednesday, October 8, 2008

Housekeeping Notes

Housekeeping notes;

I am adjusting my stops yet once again. Just being defensive given what is transpiring. When the dealer is crooked you have to keep a close eye on your chips. That being said I am;

Moving my stop on SDS to $81.89 and $76.91

Moving my stop on DXD to $72.69 and $67.89

Moving my stop on IBM to $104.89

Moving my stop on AAPL to $102.21 and $107.31

Moving my stop on CRM to $38.71 and $42.12


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


Open Positions:
Long 2 units of Ultrashort S&P ticker SDS @ 61.75 stops at $81.89/$76.91
Long 2 units of Ultrashort Dow ticker DXD @ $57.85 stop at $72.69/$67.89
Short 1 unit Int'l Bus Machines ticker IBM @ $129.05 stop at $104.89
Short 2 units of Apple ticker AAPL @ $178.05 stop at $102.21/$107.31
Short 2 units Salesforce.com ticker CRM @ $56.05 stop at $38.71/$42.12

Worth a Laugh

I don't know if any of you got to see the following SNL skit (link below) on the bailout. With all the seriousness of the situation we find ourselves in I thought I might share a good laugh with you. Ironically the skit carries with it more truth than many of us probably would ever care to admit, but given our societal wide state of denial this should come as no surprise.


SNL Bailout



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


Open Positions:
Long 2 units of Ultrashort S&P ticker SDS @ 61.75 stops at $76.91/$71.89
Long 2 units of Ultrashort Dow ticker DXD @ $57.85 stop at $67.89/$62.69
Short 1 unit Int'l Bus Machines ticker IBM @ $129.05 stop at $112.71
Short 2 units of Apple ticker AAPL @ $178.05 stop at $107.21/$115.31
Short 2 units Salesforce.com ticker CRM @ $56.05 stop at $42.12/$46.19

Tuesday, October 7, 2008

Gap Now Open 2 Days.

Have a look at the chart of the XLF (above). Thank goodness for the ban on short selling. Can you imagine what would have happened had the government orchestrated manipulation not been in place. What a relief that the government is there to protect us from the evils that lurk in the dark.

Uh oh, Houston, we have a problem. The banks are breaking down, yet once again as evidence by the banking index (KBE Banking Index chart above). Expect the usual chorus of bottom callers, even though their ranks have been thinned.

As the title of this post indicates, the gap on the Spiders is now open 2 days with 3 being the magic number for me. Please notice today's action on all 3 of the major indices not only took out yesterdays lows but closed below them as well. That being said, absolutely nothing is sacrosanct when the manipulators in chief, (the Fed and Treasury) always at the ready and capable of heaving another short term taxpayer sponsored life preserver which triggers a massive 500 pt short covering rally so be on guard, even though they inevitably wind up they way they all do. Useless waste of our money.



I thought it prudent to tighten my stop levels today given what is transpiring in the markets. Actually, let me correct that last statement. I thought it prudent to tighten my stop levels given the level of manipulation by the authorities in the markets.

I also want to address many of the pundits out there claiming that all of our ills we presently see our credit related. These are probably the same crew of gurus who believed the global de-coupling thesis which we all know the answer to now. We are in a recession with only the blindest of the blind still in denial. Just as the credit crisis was denied by those till they just couldn't do continue their stance without their sanity being called into question, the recession will be denied in similar fashion.

I have to laugh at the financial TV's obsession as to when and where the bottom will be. First of all relax, we are a long long way from a bottom, at least a bottom that holds for longer than a week. What are so many afraid of missing out on that fosters this obsession with a bottom? I can assure you, yet again, that this the market will not bottom until the bottom callers stop calling bottoms and completely and utterly discredited.

I have been receiving questions via email from some readers which I will publish, respecting requests for anonymity, along with my thoughts in my next post.

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


Open Positions:
Long 2 units of Ultrashort S&P ticker SDS @ 61.75 stops at $76.91/$71.89
Long 2 units of Ultrashort Dow ticker DXD @ $57.85 stop at $67.89/$62.69
Short 1 unit Int'l Bus Machines ticker IBM @ $129.05 stop at $112.71
Short 2 units of Apple ticker AAPL @ $178.05 stop at $107.21/$115.31
Short 2 units Salesforce.com ticker CRM @ $56.05 stop at $42.12/$46.19

Quick Update

Some charts later today.

Housekeeping notes;

I was stopped out of my long TBT position yesterday at $57.20 for a loss of 3.25pts on 1 unit.

I am adjusting my stops on AAPL down to a unit each at $107.21/$115.31

I am adjusting my stops on CRM down to a unit each at $46.19/$42.12

I am adjusting my stop on IBM down to $112.71

I am adjusting my stop on SDS to $76.91 and 71.89

I am adjusting my stop on DXD to $67.89 and $62.69

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


Open Positions:
Long 2 units of Ultrashort S&P ticker SDS @ 61.75 stops at $76.91/$71.89
Long 2 units of Ultrashort Dow ticker DXD @ $57.85 stop at $67.89/$62.69
Short 1 unit Int'l Bus Machines ticker IBM @ $129.05 stop at $112.71
Short 2 units of Apple ticker AAPL @ $178.05 stop at $107.21/$115.31
Short 2 units Salesforce.com ticker CRM @ $56.05 stop at $42.12/$46.19

Saturday, October 4, 2008

Okay, Now What?

Could Fridays' action be the wake up call on the dis-connect between the stock market and what has been going on in the credit markets. Boy would I have loved to be in the room with Pelosi, Frank, Reid et al for the look on their faces as the markets reversed. upon passage of the bailout, ooops excuse me I meant to say rescue package!

I keep hearing people say we need to stabilize housing prices. Where were these people when house prices were on the rise? Surely they didn't look the other way because it suited their purpose for they were all over crude oil's rise lamenting and screaming for relief. You can rest assured more "bills" are coming down the pipe with you the taxpayer on the hook, in an effort to arrest housing's decline. Unfortunately there is absolutely nothing that can be done to stop this, including Mr. Gross's extremely intelligent friends idea of blowing up houses and starting over. Housing, like all else must run it's natural course whether we like it or not as this is how the markets work.

If you don't like it, I suggest we just close up shop period for everything else is window dressing.


The boys over at Comstock have another great read this week entitled "We Hope To Be Wrong", especially so for those in the denial camp who are slowly moving over to the realisation or acceptance camp. Realising that pom pom TV and its attendant shills have been part of the problems. Imagine trying to concentrate on a major league game of poker with a knockout attractive lady hovering over you plying you with drinks, trying to make conversation. Got the picture, now you see CNBC's role.



If it is financial, reporting and some insight you want then it is the internet you must turn to. Rick Santelli and Art Cashin are excluded, to which I would also exclude Diana Olick for her OBJECTIVE work in the real estate area.

Today's early news was the Citi/Wachovia/Wells fiasco. I am no way in favor of government, excuse me, TAXPAYER funds being used to fund, assist or backstop any deals, good or not. That said I realise the Wells deal is better for the taxpayer but rule of law is rule of law and it seems to me at first glance and not knowing all the gory details that Citi and Wachovia had a deal of necessity orchestrated by the FDIC. The issue here is that should the deal be overturned without compensation to Citi then we have another example of the rules being changed in the middle of the game, as Rick Santelli has said often this is a major problem right now.

Quick note to chief Keystone Cop Chris Cox of the SEC, who I know for sure is working diligently investigating Lloyd Blankfein's attendance at that AIG resurrection meeting, along with his statements of immaterial exposure to AIG when in fact it was 20 billion, and the insider trading spike in GS stock before the close the day before Buffett announced his injection of capital that of course was not needed, I suggest that since the ban on short selling financials and some select titans of global might like GM and GE is not working (GE by the way is down 18% since it was added to the NO SHORT list), you just cancel the ban and take the page from the Pakistani market authorities and just close the exchange.

Instead of getting the President and treasury and the Fed to declare the economy resilient get then to declare an ECONOMIC EMERGENCY, have the President declare economic martial law, and shut it all down. This way stocks cannot go down any more and all our problems will be solved.

You can then trot out the regular shills like Vince Farrell and other averaging down, buy the dips, Greenspan worshipping, never met a rate cut we didn't like, need a bull market to manage money charlatans who can echo how this is precisely the prudent thing to do to arrest this completely irrational, not echoing fundamentals panic in our market place. Cooler heads to prevail.

As has been said before the ONLY thing worse than someone who knows nothing, is someone who thinks they know something.

Housekeeping notes;

I was stopped out of 2 units of HL yesterday at $3.85 for a loss of about 1.5pts on 2 units.


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



Open Positions:
Long 1 unit Ultrashort 20yr Treasury ticker TBT @ $60.50 stop at $57.32
Long 2 units of Ultrashort S&P ticker SDS @ 61.75 stop at $57.69
Long 2 units of Ultrashort Dow ticker DXD @ $57.85 stop at $53.79
Short 1 unit Int'l Bus Machines ticker IBM @ $129.05 stop at $126.36
Short 2 units of Apple ticker AAPL @ $178.05 stop at $177.76
Short 2 units Salesforce.com ticker CRM @ $56.05 stop at $60.62