Friday, July 31, 2009

The Tail 'thinks' It Wags the Dog

Please read this post today from Karl Denninger over at the Market Ticker blog which I have copied in its entirety.

From Yahoo News:

On the eve of the August recess, members are reporting meetings that have gone terribly awry, marked by angry, sign-carrying mobs and disruptive behavior. In at least one case, a congressman has stopped holding town hall events because the situation has spiraled so far out of control.

“I had felt they would be pointless,” Rep. Tim Bishop (D-N.Y.) told POLITICO, referring to his recent decision to suspend the events in his Long Island district. “There is no point in meeting with my constituents and [to] listen to them and have them listen to you if what is basically an unruly mob prevents you from having an intelligent conversation.”

Really?

Well Tim, guess what: you work for your constituents, not the other way around.

It would appear to this commentator that the Reps and Senators who feel "besieged" by their constituents in town hall meetings might have paid better attention in September and October when they were told by 300:1 margins not to pass the EESA/TARP bill.

Or when they were told repeatedly to NOT try to advance amnesty for illegal aliens and refuse to enforce our immigration laws.

Or when they were told repeatedly to quit bailing out the irresponsible, looking the other way while the populace is looted systematically by those in the banking and other "coddled" industries.

There are a whole host of issues like this, and Congress seems to think (because it has gotten away with it for years) that ignoring the voters is not only acceptable, but is indeed a good idea.

Let me remind Mr. Bishop, along with the other Congressfolk, that the entirety of our government serves at our pleasure, not the other way around. Specifically, let me cite The Declaration of Independence:

....That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed, — That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness....

Loud voices of dissent and sign-waving constituents are an unmistakable sign that our government has pressed the line of tolerance, and may, if it does not reverse course, exceed it.

And before someone claims that I am some sort of "right-wing nut" or similar, let me point out that the above text is not mine - they are the words of the founders of our nation, who believed that absent consent government does not exist - that's tyranny, not government.

Prudence, indeed, will dictate that Governments long established should not be changed for light and transient causes; and accordingly all experience hath shewn that mankind are more disposed to suffer, while evils are sufferable than to right themselves by abolishing the forms to which they are accustomed. But when a long train of abuses and usurpations, pursuing invariably the same Object evinces a design to reduce them under absolute Despotism, it is their right, it is their duty, to throw off such Government, and to provide new Guards for their future security.

How close to the line has our government come?

I have no idea, but this much I do know: I do not want to discover that the line has been crossed.

Again:

  • Stop the looting and start prosecuting. The bankers, lenders and others in the "bizness side" have been literally robbing the people for over two decades. This includes both so-called "captains of the banking industry" and government officials who have looked the other way and in some cases (e.g. OTS) actively conspired to conceal the truth. Taxpayers have lost hundreds of billions as a consequence yet nobody has gone to prison for it nor are there even outstanding indictments. There is no reason on God's Green Earth why Goldman Sachs should be allowed to keep the roughly $13 billion in AIG pass-through money, nor why they should, having elected to become a bank holding company, be able to keep using their "VaR" risk model (instead of the more-stringent BANK risk limits.) There are dozens of examples; Goldman is hardly alone in this regard.
  • Quit voting FOR bills you did not read - end to end! There's no excuse for this. The Stimulus Bill, EESA/TARP and more - this is absolutely common behavior and it's outrageous. Sorry, there is no emergency that demands passing a 1,000 page bill until every member has read it from one end to the other, personally. If you need to pass something fast then it needs to be simple enough that it can be read in the hour you get before the vote! I don't care what the emergency is - if you haven't read the bill cover-to-cover the only acceptable vote is NO.
  • Quit spending more than you make. We are here because we have turned into a nation of Madoffs, and nowhere is it more evident than in Washington DC. We cannot have a sustainable economic recovery until the debt-to-GDP ratio is restored to a rational and sustainable ratio. This means much less spending; promising that which cannot be paid for is how we got into this mess.
  • Represent your constituents and TELL THE TRUTH. We're tired of being lied to, and government has done a LOT of lying. The idea that "the economy is improving" is just one example; go ask your unemployed constituents what they think of this claim. Fact: The economy stinks and it stinks because Washington DC conspired to blow a bubble after the 2000 tech implosion. You're culpable; take responsibility and do the right thing instead of trying to blow air into a popped balloon!

Our government has become an unacceptable and unaccountable den of liars and thieves, and the people are getting damn tired of it. The evidence of extreme dissatisfaction, which may rise beyond the soapbox and ballot box if this trend is not reversed and soon, is clear. Nobody with a shred of intelligence wants to see the inevitable outcome of a government that refuses to follow the law itself, refuses to prosecute criminal wrongdoing by favored parties, and refuses to listen to the electorate on the issues of the day, instead mollycoddling those who have committed massive fraud upon the public and giving them hundreds of billions of dollars in hand-outs funded by the very people they ripped off in the first place!



Good speculating and remind them to please don't ever forget that "an investor is a speculator who made a mistake and will not admit it".


Open Positions:
Long 1 unit US Gold ticker UXG @ $3.05 stop @ $2.28
Short 2 units Wells Fargo ticker WFC @ $25.10 stop @ $26.26/27.41
Short 1 unit JP Morgan ticker JPM @ $37.99 stop @ $39.61

End of the Month

Remember that Fox News request for details of the the Fed's lending shenanigans in particular what type of collateral was accepted by the Fed. Well today we get news that Judge Alvin Hellerstein has denied that request ruling in favor of the Fed.

Don't you just love a democracy? I know I do.

So we get news the economy is shrinking worse than had been previously estimated yet equities are rising once again. It just goes to show you how the markets can remain irrational far longer than most can remain solvent. What was the Clinton campaign slogan, oh yeah, "It's the economy stupid !"

Interesting little blurb from Bloomberg on corporate earnings. Namely that they are not all they're purported to be. But why let something trivial like that get in the way of a party. In my next life I get to come back as a real live equity floor shill on the NYSE, or a leading equity strategist at a major Wall St. house. Where everything everywhere and always is good for equities and hence for my crumb dependent existence (re: Bonfire of the Vanities)

Good for equities that is, until my clients, the people I would rely on to think, as I would only be required to sell as that is what I would be paid to do, tell me it isn't anymore. Oooh the good life.

I want to touch on all these "experts" calling an end to the recession. I might be completely mistaken but aren't these the same cats who were denying the existence of a recession in the first place? Just wondering.

Regarding the market, it just seems to me that it is too easy here. The market has turned up and has exhibited extraordinary strength in the face of what amounts basically to underlying garbage. But, just as with the tech bubble, equities denied reality and continued to push skyward defying any and all that stood in its way.

Sadly I know of few that walked away with winnings from that event.

Very few pundits have the internal fortitude to admit error. Even fewer can admit when they don't really know whats going on for fear it would be a sign of weakness. The ol' if you don't know, say it louder as that will signify authority. That or the "baffle em' with bullshit" always is an option. I am in the "I have no idea camp right now!"

Suffice to say I will be re-reading Paul Tudor Jones commencement speech once again.

Housekeeping notes;

I was stopped out of the following positions yesterday.

1 unit of SRS at @ 15.78 for a loss of almost 1 pt on 1 unit.
1 unit of SDS at @ $47.27 for a loss of 1 3/4 pts on 1 unit.
2 units of AAPL at $162.12 for a loss of just shy of 4 1/4 pts on 2 units


Good speculating and remind them to please don't ever forget that "an investor is a speculator who made a mistake and will not admit it".


Open Positions:
Long 1 unit US Gold ticker UXG @ $3.05 stop @ $2.28
Short 2 units Wells Fargo ticker WFC @ $25.10 stop @ $26.26/27.41
Short 1 unit JP Morgan ticker JPM @ $37.99 stop @ $39.61

Wednesday, July 29, 2009

Long SDS


I am punting the the S&P 500 short once again via getting long the ultrashort S&P, ticker SDS. I am getting ling 1 unit of SDS here at $48.96 with a stop just below the recent lows.



Good speculating and remind them to please don't ever forget that "an investor is a speculator who made a mistake and will not admit it".


Open Positions:
Long 1 unit US Gold ticker UXG @ $3.05 stop @ $2.28
Long 1 unit Ultrashort RE ticker SRS @ $16.61 stop $15.78
Long 1 unit Ultrashort S&P500 ticker SDS @ $49.06 stop @ $47.48
Short 2 units Wells Fargo ticker WFC @ $25.10 stop @ $26.26/27.41
Short 2 units Apple ticker AAPL @ $158.01 stop @ $162.11
Short 1 unit JP Morgan ticker JPM @ $37.99 stop @ $39.61

Dow Jones U.S. Real Estate Chart


A 2 year daily view of the Dow Jones US Real Estate index, ticker $DJUSRE, (above). I have decided not to post a chart of the i-shares real estate ticker IYR as it is basically identical to the one above.



Good speculating and remind them to please don't ever forget that "an investor is a speculator who made a mistake and will not admit it".


Open Positions:
Long 1 unit US Gold ticker UXG @ $3.05 stop @ $2.28
Long 1 unit Ultrashort RE ticker SRS @ $16.61 stop $15.78
Short 2 units Wells Fargo ticker WFC @ $25.10 stop @ $26.26/27.41
Short 2 units Apple ticker AAPL @ $158.01 stop @ $162.11
Short 1 unit JP Morgan ticker JPM @ $37.99 stop @ $39.61

Punting SRS Long

Many will want to ignore this post as I am getting long, yet again, 1 unit of the Ultrashort Real Estate ticker SRS yet again here at $16.51 with a stop at $15.78.

I will be posting a chart on the Dow Jones Real Estate index, ticker ($DJUSRE) along with the i-shares real estate (IYR).



Good speculating and remind them to please don't ever forget that "an investor is a speculator who made a mistake and will not admit it".


Open Positions:
Long 1 unit US Gold ticker UXG @ $3.05 stop @ $2.28
Long 1 unit Ultrashort RE ticker SRS @ $16.61 stop $15.78
Short 2 units Wells Fargo ticker WFC @ $25.10 stop @ $26.26/27.41
Short 2 units Apple ticker AAPL @ $158.01 stop @ $162.11
Short 1 unit JP Morgan ticker JPM @ $37.99 stop @ $39.61

Short some JP Morgan - JPM


The daily chart of JP Morgan (chart above) shows a clear divergence between the price and the volume. As the little old lady in the old Wendy's commercials used to say "Where's the Beef?" I am asking the same only in regard to volume.

Some might argue JPM is forming a double top here. Based on this, I am prepared to punt 1 unit of JP Morgan, ticker JPM, on the short side here at $38.09. As my notes above indicate, a stop just above the recent highs should suffice.



Good speculating and remind them to please don't ever forget that "an investor is a speculator who made a mistake and will not admit it".


Open Positions:
Long 1 unit US Gold ticker UXG @ $3.05 stop @ $2.28
Short 2 units Wells Fargo ticker WFC @ $25.10 stop @ $26.26/27.41
Short 2 units Apple ticker AAPL @ $158.01 stop @ $162.11
Short 1 unit JP Morgan ticker JPM @ $37.99 stop @ $39.61


Failure

There has been a lot of posts on the net linking on old PBS video done on one of this era's great traders Paul Tudor Jones. The video is great but for some real meat and potatoes stuff please read Mr. Jones commencement speech on failure given to the Ninth Grade Class at the Buckley School.

It is well worth your as well as a couple of loved ones time for sure.



Good speculating and remind them to please don't ever forget that "an investor is a speculator who made a mistake and will not admit it".


Open Positions:
Long 1 unit US Gold ticker UXG @ $3.05 stop @ $2.28
Short 2 units Wells Fargo ticker WFC @ $25.10 stop @ $26.26/27.41
Short 2 units Apple ticker AAPL @ $158.01 stop @ $162.11

Tuesday, July 28, 2009

Shorting More Apple - AAPL

I am using a short term break down of Apple, ticker AAPL, thru the $158 level to add a 2nd unit short here at $157.96.



Good speculating and remind them to please don't ever forget that "an investor is a speculator who made a mistake and will not admit it".


Open Positions:
Long 1 unit US Gold ticker UXG @ $3.05 stop @ $2.28
Short 2 units Wells Fargo ticker WFC @ $25.10 stop @ $26.26/27.41
Short 2 unita Apple ticker AAPL @ $158.11 stop @ $162.11

Couple of Thoughts

I have received some emails asking if I was on vacation due to my lack of posting. Unfortunately I am not, as I sit here at my post looking at chart after chart after chart. Again, my apologies for the BPO chart the other day as it looks like my chart feed provider Prohet.net has some type of error with the data thus skewing the chart. This happens.

As I look at chart after chart I see the same thing across the board, low volume rallies. Now for those that do not see this I suggest you look at a weekly chart which is a much more difficult animal to paint. Volume has noticeably waned the entire ride up.

I realize many out there suggest you close your eyes and play the tape in front of you. I agree with this, to some extent, but I try to marry the technicals (the charts) with the fundamentals. Hence I will pass on a great looking pattern if I do not like the underlying fundamentals. Hence you will not see me trading housing on the long side in the current environment.

Yes I do realize the bottom will be formed amidst bad news but what I need to get my head around is that we are exiting a speculative credit and debt bubble of a magnitude only the history books will be able to do justice to. You do not correct this type of euphoria (1)this quickly and (2) with this "lack" of pain.

I have mentioned countless times before that one need only to look to the aftermath of the tech bubble or to Japan for empirical evidence. Anyone who shrugs these 2 examples off as meaningless or irrelevant will pay a very steep price I can assure you. This rally like others before it will end when it ends and not a moment before. I surmise that the same forces, that numbly propelled this fume based rally will head for the exits just as indiscriminately.



Good speculating and remind them to please don't ever forget that "an investor is a speculator who made a mistake and will not admit it".


Open Positions:
Long 1 unit US Gold ticker UXG @ $3.05 stop @ $2.28
Short 2 units Wells Fargo ticker WFC @ $25.10 stop @ $26.26/27.41
Short 1 unit Apple ticker AAPL @ $158.15 stop @ $162.11

Friday, July 24, 2009

Chart of the Day



They say a picture is worth a thousand words. Weekly chart (top) and daily chart (lower).



Good speculating and remind them to please don't ever forget that "an investor is a speculator who made a mistake and will not admit it".


Open Positions:
Long 1 unit US Gold ticker UXG @ $3.05 stop @ $2.28
Short 2 units Wells Fargo ticker WFC @ $25.10 stop @ $26.26/27.41
Short 1 unit Apple ticker AAPL @ $158.15 stop @ $162.11

They Look Cheap

I received an email from a reader (thx N.S.) regarding Microsoft, Bank America and General Electric. In particular he remarked how cheap they were, from their historical highs and that they are so close to zero they must be worth a punt. Jesse Livermore, in his book Reminiscences of a Stock Operator, said that the average person in the market measures his/her bargains by how many points off the top the item has sold off.

One could take his statement even further and apply that to its price in relation to zero, the closer it is to it the better the buy. Especially one with a household name.

I have oft counselled in the past that the wave of the future hallmark of the bear market will be reverse stock splits which is nothing earth shattering given it is the exact opposite of the splits that accompanied the bull. So with this in mind lets look at Microsoft and General Electric.

Here is the split history on Microsoft. Amount and date.

2:1 - 9/21/87
2:1 - 4/16/90
3:2 - 6/27/91
3:2 - 6/15/92
2:1 - 5/23/94
2:1 - 12/9/96
2:1 - 2/23/98
2:1 - 3/29/99
2:1 - 2/18/03

What this all means is that for an individual who bought 100 shares of MSFT in 1986 would now own 28,800 shares, assuming he hung on in Buffettesque style. Who is to say Microsoft cannot come out and announce a reverse 1 for 5 split. This would then result, using the above example, the individual now owning 5760 shares with the current share price rising from last nights close of $25.56 to $127.80.

I would now ask reader N.S. if MSFT would look "as cheap then" as it does now?

Let move on to General Electric and it's split history

2:1 - 6/871
2:1 - 6/2/83
2:1 - 5/26/87
2:1 - 5/16/94
2:1 - 5/12/97
2:1 - 5/8/00

This results in the 100 share lot owner now possessing 9600 shares. With GE trading as of the close last night $11.95 a reverse 1 for 5 split would leave the holder with 1920 shares and the share price would jump to $59.75.

The point I am trying to make is that when you think the stock cannot go any lower as it is hovering in the single digits or is a teenager just remember that this could change very quickly. Your premise for punting should be based on more than just being close to zero.


I want to talk about the game for the the privileged few the market has become. Joe Saluzzi over at Themis Trading has been at the forefront of the HFT (high frequency trading) debate, along with Zero Hedge and Market Ticker. The NY Times has finally shed some light on this issue with an article today.

Karl Denninger over at Market Ticker in his piece High Frequency Trading is a Scam outlines how wrong this practice is but as it is working in your favour (hint, the market is going up so its okay) no one cares to complain.This will only become an issue once the market rolls over and the scheme stops working in the desired direction.

HFT is just another perk the Wall St. boyz think they are entitled to, which harkens back in the good ol' days of the internet bubble and the pay to play games that were played in the white hot IPO market. Remember the thug Frank Quattrone? Anyway, this is just more of the same that the purported smartest, best schooled, better pot to piss in crowd think is their God given birthright to take.

Notice how 'lucky sperm club' poster boy Steve Forbes is mum on this issue but will hoot and holler for an abolition of mark to market accounting. You think he is plain stupid on this account or just conflicted? Above all else, keep the charade going as you cannot have a financial magazine, let along a market scam without the fresh suckers continually lined up. If Mom and Pop public takes their roll and goes home would spell enormous doom for the perpetuators of this game and they know it, hence the propaganda!

I continue to recommend you all watch and re-watch the movie The Sting. It should be required viewing for anyone considering participating in the markets in any fashion.

Zipper your pockets because as sure as shootin' anything that isn't nailed down will be taken.

Housekeeping notes;

I was stopped out of my SDS position at $49.92 for a loss of just shy of 1 pt as SPY hit my sotp of $96.31

Good speculating and remind them to please don't ever forget that "an investor is a speculator who made a mistake and will not admit it".


Open Positions:
Long 1 unit US Gold ticker UXG @ $3.05 stop @ $2.28
Short 2 units Wells Fargo ticker WFC @ $25.10 stop @ $26.26/27.41
Short 1 unit Apple ticker AAPL @ $158.15 stop @ $162.11

Wednesday, July 22, 2009

A Short Story

You might be asking why is he getting back into a position after he just got whacked.... yet again. Couple of reasons.

The first reason, is that I have experienced all too often the pain that comes from identifying a position and yet not participating in said position. Case in point Back in January of this year, I was playing around with a long position called Uranium Energy ticker UEC. I never posted the position on my blog because it was a junior and a super speculative position that was not as liquid as one might like.

That said I got involved in UEC at the $0.45 area and was stopped out of the posittion. Undaunted I was back in at the $0.55 are only to be stopped out yet again. For a multitude of reasons which include but are not limited to losing track of, getting busy with other ideas, blah, blah, blah, you know the story forgot about UEC.

For those interested UEC is trading today at $2.84 and having hit a high a few weeks ago at $3.40. I do not need to tell you that the pain of getting stopped out twice for small losses absolutely pales in comparison to the pain of missing that type of winner !!

It reminds me, yet again, of a story recounted by a trader who was stalking a position which triggered a buy. This cat manages over a billion so he matters. Anyway his 'system' triggered a buy and he was stopped out. The item then triggered another buy which the trader followed again only to be stopped out. This scenario of buy trigger and stop for small loss occurred 5 times. The position yet again (entry #6 mind you) triggered a buy and as fate might have it, the position went up, as I recall, something like 5 fold.

The point here, and I am making an educated guess, is that 95% of all professional traders, let alone part time and weekenders, would NOT have come back to that same trade 3 times let alone 6. But this fella did. Maybe that's why he is a pro's pro.

You think it might have behoved this trader/blogger to come back to UEC for a third or fourth helping. I should think so.
You tell me whats more important, mental captial or physical capital? Lesson is hopefully learned and class is dismissed.

Speaking of bloggers, I happened to catch and exchange between Michelle Caruso Cabrera and Charlie Gasparino regarding Goldman Sachs. In the discussion Gasparino went after bloggers, yet again, in particular ZeroHedge with disparaging comments which included the phrase "moronic bloggers".

It could be me but I swear I heard Michelle Caruso Cabrera of CNBC in that exchange with Gasparino remark that the phrase "moronic bloggers" was redundant. What can one say about CNBC that cannot be ascertained and verified in 5 minutes of viewing.

Like Mike Morgan has oft said about pom pom TV, errr excuse me CNBC.... it has become nothing but chairs filled with boobs and boobs.



Good speculating and remind them to please don't ever forget that "an investor is a speculator who made a mistake and will not admit it".


Open Positions:
Long 1 unit US Gold ticker UXG @ $3.05 stop @ $2.28
Long 1 unit Ultrashort S&P500 ticker SDS @ $50.85 stop @ SPY $96.31
Short 2 units Wells Fargo ticker WFC @ $25.10 stop @ $26.26/27.41
Short 1 unit Apple ticker AAPL @ $158.15 stop @ $162.11

Stopped out of SDS.... and long yet again!

I am getting short the S&P yet again via the SDS here at $50.75. The orginal premise for the trade is still intact so I shall stay with it.

Housekeeping notes;

I neglected to post that I was stopped out of my long SRS position yesterday at the open $17.81 for a loss of just over a pt on 1 unit.

Earlier today I put on SDS position to get short the S&P and was stopped out as the SPY violated my stop. I was stopped out of SDS at $50.22 for a loss of just over 3/4 of a pt on 1 unit.

Yes I know I am a nut bar but you can never tell till you place your bet.


Good speculating and remind them to please don't ever forget that "an investor is a speculator who made a mistake and will not admit it".


Open Positions:
Long 1 unit US Gold ticker UXG @ $3.05 stop @ $2.28
Long 1 unit Ultrashort S&P500 ticker SDS @ $50.85 stop @ SPY $96.31
Short 2 units Wells Fargo ticker WFC @ $25.10 stop @ $26.26/27.41
Short 1 unit Apple ticker AAPL @ $158.15 stop @ $162.11

Long SDS


I am getting short the S&P here via the ultrashort proshares, ticker SDS. I am long 1 unit here of SDS at $50.90 with a stop at SPY $96.11

For many you might be thinking regarding the above SPY chart "where have I seen that before?". It is the "2B" move courtesy of Victor Sperandeo in his book Trader Vic, Methods of a Wall Street Master. Don't be fooled by the cheesy title as it is a great read today as it was back in the early 90's.

So one might say I am short the S&P by being long the SDS courtesy of the 2b move on the spiders.


Good speculating and remind them to please don't ever forget that "an investor is a speculator who made a mistake and will not admit it".


Open Positions:
Long 1 unit Ultrashort Real Estate ticker SRS @ $18.85 stop @ $17.84
Long 1 unit US Gold ticker UXG @ $3.05 stop @ $2.28
Long 1 unit Ultrashort S&P500 ticker SDS @ $51.00 stop @ SPY $96.11
Short 2 units Wells Fargo ticker WFC @ $25.10 stop @ $26.26/27.41
Short 1 unit Apple ticker AAPL @ $158.15 stop @ $162.11

Short some Apple


I am prepared to fade today's excitement with Apple, ticker AAPL as it bumps up against the top line of the drawn channel. Yes, I am fully aware that I am nuts as Apple is the bomb and shorting it is heresy.

I am short 1 unit of AAPL here at $158.25 with a stop at 162.11




Good speculating and remind them to please don't ever forget that "an investor is a speculator who made a mistake and will not admit it".


Open Positions:
Long 1 unit Ultrashort Real Estate ticker SRS @ $18.85 stop @ $17.84
Long 1 unit US Gold ticker UXG @ $3.05 stop @ $2.28
Short 2 units Wells Fargo ticker WFC @ $25.10 stop @ $26.26/27.41
Short 1 unit Apple ticker AAPL @ $158.15 stop @ $162.11

Long US Gold




As an aside and for what its worth the CEO just bought 4 milion shares of UXG at $2 recently. I will still rely on the technical pattern as it factors all in.

So based on the charts I am getting long 1 unit of US Gold ticker UXG, this morning here at $2.95. The CEO buying will count for a warm fuzzy feeling.



Good speculating and remind them to please don't ever forget that "an investor is a speculator who made a mistake and will not admit it".


Open Positions:
Long 1 unit Ultrashort Real Estate ticker SRS @ $18.85 stop @ $17.84
Long 1 unit US Gold ticker UXG @ $3.05 stop @ $2.28
Short 2 units Wells Fargo ticker WFC @ $25.10 stop @ $26.26/27.41

Monday, July 20, 2009

Some Random Thoughts

Well CIT which was supposedly 'well capitalized' seems to have found 3 billion in necessary funding in the 12th hour. Funny how a well capitalized outfit needs that type of infusion to stay afloat. Ah yes, I forgot not a solvency issue just some liquidity hiccups. Nice to know the $2 plus billion CIT received in Federal bailout money last year is secure. Nothing to worry about according to King Henry Paulson, the taxpayer is protected !

Some of you may or may not have heard the story making the rounds last week, and mentioned by Dennis Gartman in his daily letter, that the Comex was allowing for the delivery of ETF shares in the place of actual physical gold bullion against a futures positions. This, dear readers is smoke, and where there is smoke there is fire. I suggest you keep close eye on this situation as I will be. Of course the Comex is well capitalized, right? Of course they are.

People tend to forget that gold is a commodity but it is money. When tust is lost, when people start welshing on their end of a financial alchemy deal.... and can't deliver the agreed upon item whether it be gold, oil, a car, etc.....well I will let you fill in the blanks.


Earnings or lack thereof. What does one say when a company can report numbers that would make the hair on your neck stand up, and not in a good way. Eaton, ticker ETN, saw its earnings drop 92% with an accompanying 32% fall in revenue yet the stock gapped up and was off to the races because it beat the lowered expectations (remember the SNL dating skit).
This is what we are supposed to stand up and cheer about? Sorry if I care not to get out of my seat.

Massage the numbers down so that a toddler could get over them.
Yes, dear readers less bad is good. That is, until it isn't anymore. I have hilighted Eaton but the list goes on and on Haliburton, Johnson Controls etc.


I don't know if any of you are familiar with the story of baseball player turned financial guru Lenny Dykstra. I am and though I am not a regular watcher of the Daily Show with John Stewart, I did come across this excellent video clip from his show on said subject courtesy of Calculated Risk blog.

Please watch it as it will give you a tad more insight into the legendary Jim Cramer. Suffice to say that nothing more need ever be said about James Cramer of CNBC. Never, ever. Jury's out. Case closed. Beside, Dykstra is not bankrupt, he's not insolvent he just has a liquidity problem that a relaxation of mark to market accounting rules would fix in a jiffy.

A friend passed on to me the latest report from Richard Russell, the author of the famous Dow Theory Letters. Just in case you're not aware, it is the longest running market letter out there as he has been writing it since 1958. Mr. Russell is the senior statesman in the letter writing business with Harry Schultz right behind him. I do try to stay abreast of what Mr. Russell is thinking and saying as he has forgotten more than most on Wall St. will ever know so lets just say that he knows a wee little bit about the markets and leave it at that.

In his latest letter dated July 15, Mr. Russell had this to say after going thru a litany of underlying indicators which are flashing bearish warning signs;

"According to Dow Theory, the great primary trend of the stock market continues to be bearish. If so, on a valuation basis alone, the bottom of this bear market has NOT yet been seen. All the above suggest that the March lows in the averages will be violated somewhere ahead (there is no way of timing this). "

He goes on to say the following;

"I've given this next statement a lot of thought. I don't think most analysts understand the amazing power and tenacity of the great primary trend of the market. Most of today's analysts have had no experience with bear markets. We're now in a primary bear market. Most people believe that if the Fed does this or that, the bear market can be halted or reversed. Nothing could be further from the truth.

The fact is that in the market, nothing is more powerful or insistent than the primary trend. The primary trend can best be compared with the tide of the ocean. All man's efforts to thwart or turn the tide are like so many sand castles built on the edge of the nearest waves. The incoming tide will wash all the sand castles away, if not the first wave the with the second or the third. Thus, the incoming tide will conquer all.

This is why all of Obama's and Bernanke's and Geithner's
'sand castles' will be washed away by the bear market. All that will be left will be crippled corporations and monster debts. Obama believes that Roosevelt with spending and alphabet agencies ended the Great Depression. Sorry, President Obama, you are wrong. The Great Bear market and Depression finally ended when the bear market died of exhaustion on July 8, 1932. That was the day when the Dow Jones Industrial Average halted its decline at 41.22. At that time, the Dow provided a dividend yield of 10.2%. That's when the bear market actually ended. It ended the way all bear markets do - in utter exhaustion."


Just thought you might find his thoughts noteworthy. But hey what would he know

Housekeeping notes;

I was stopped out of the following
1 unit of SDS at $52.35 for a loss of about 2.5 pts on 1 unit.
1 unit of FXP at $10.56 for a loss of about 2 1/4 pts on 1 unit.


Good speculating and remind them to please don't ever forget that "an investor is a speculator who made a mistake and will not admit it".


Open Positions:
Long 1 unit Ultrashort Real Estate ticker SRS @ $18.85 stop @ $17.84
Short 2 units Wells Fargo ticker WFC @ $25.10 stop @ $26.26/27.41

Thursday, July 16, 2009

High Octane

I don't do it as often as I used to but I must confess that I played hookey yesterday. I golfed with a good friend who has a very smooth swing. A very enjoyable day for sure which coincidently spared me from watching the carnage that yesterday was first hand.

What can one say about the last couple of days of trading but "WOW" and stand in awe of the power of the move. I would counsel the SEC to remember the last 2 days the next time the perma bulls complain about the short sellers. There are few things that can move a market like shorts on the run and the last 2 days was prima facie evidence of this. There is no higher octane fuel for the market like scared short sellers.

That said, I am not here to complain or whine or blame anyone but you had better be prepared for the the flip side of this. If you really believe that Intel's numbers were that rosy, and they weren't, if you continue to believe the shills talking on CNBC about the recession being over, if you really believe unemployment has peaked, well then this is precisely the market for you. Just make sure you have a seat when the music stops because I assure you it will not be a pretty sight.

Nothing at the root of the problem has been fixed, absolutely nothing. Delay and pray, nothing more. I am not here to be your morning downer but everyone supposedly knew how overvalued the Nasdaq was back in 1999-2000 yet everyone got caught in it. Just keep that in mind when the bought and paid for, commission dependent shills tout this market as a buy.

Here is some required reading I thought you might find interesting, or in the least fair and balanced.

Sprott June Report

By the way I don't know how many of you noticed the VIX moving higher lockstep with the S&P. For those not familiar with the VIX, the VIX, which is a volatility index 'usually' rises as the S&P fall and vice versa. This is a red light warning signal on the dashboard, its up to you to decide if it's worth paying attention to.

Full disclosure.... I sure as hell am.

I also want to point out that you should be very careful about disregarding the head and shoulders that all were talking about of recent as a failed pattern as I recall the admonition of a wisened old trader friend who used to counsel me the following; "the market always, always does what it is supposed to.... just never when."



Housekeeping notes;

On Tuesday I was stopped out of my long AZO position at $158.15 for a loss of about 1/4pt on 1 unit short.

I was stopped out of the following smorgasbord of positions yesterday;

SRS at $18.94 for a flat trade leaving me with 1 unit long.
SDS at $53.35 for a loss of about 1.5 pts on 1 unit.
FAZ at $44.60 for a gain of 1 pt on 1 unit.
BLK at $178.55 for a loss of about 1.5 pts on 1 unit short.
GS at $ 152.75 for a loss of about 2.5 pts on 1 unit short.


Good speculating and remind them to please don't ever forget that "an investor is a speculator who made a mistake and will not admit it".


Open Positions:
Long 1 unit Ultrashort Real Estate ticker SRS @ $18.85 stop @ $17.84
Long 1 unit Ultrashort S&P500 ticker SDS @ $54.75 stop @ $52.38/53.38
Long 1 unit FTSE Xinhua China ticker FXP @ $12.70 stop @ $11.44
Short 2 units Wells Fargo ticker WFC @ $25.10 stop @ $26.26/27.41


Tuesday, July 14, 2009

Goldman and Cheesecake Factory.

Not the most sophisticated technical look at Goldman Sachs but it works for me, as the simpler it is the more I like it.


A regular reader (thx G.R.) asked me to have a look at Cheesecake Factory, ticker CAKE (chart above). While showing a possible inverted head and shoulders and my notes indicating that it looks more constructive than DRI and YUM there are some issues.

When you consider the rally off the lows for all 3 CAKE, DRI, and YUM Cheesecake has had the most lacklustre rally. Which would indicate to me that in the bigger picture this one, CAKE, is the weakest.

We often forget that, just as it is in the animal kingdom in which predators go after the weakest of the herd as they represent the best odds of a kill, so should we as speculators. Going after the weakest as shorts and the strongest as buys.

Given this rationale, Cheesecake may very well be the better choice of the 3 for a short, in that it is the sickest, due to its anemic rally when held in comparison to its competitors.

Further to this, maybe I should back off shorting that best of breed Goldman Sachs. Problem is I do not believe, like so many other zombies, that they are best of breed but rather they are everything that is wrong with our capital markets but again I am just jealous as my resume wouldn't even get me an interview for a job in the mail room.



Good speculating and remind them to please don't ever forget that "an investor is a speculator who made a mistake and will not admit it".


Open Positions:
Long 2 units Ultrashort Real Estate ticker SRS @ $18.85 stop @ $17.84/18.94
Long 2 units Ultrashort S&P500 ticker SDS @ $54.75 stop @ $52.38/53.38
Long 1 unit Financial Bear 3x ticker FAZ @ $43.60 stop @ $44.60
Long 1 unit FTSE Xinhua China ticker FXP @ $12.70 stop @ $11.44
Short 2 units Wells Fargo ticker WFC @ $25.10 stop @ $26.26/27.41
Short 1 unit Autozone ticker AZO @ $157.95 stop @ $158.11
Short 1 unit Blackrock ticker BLK @ $177.15 stop @ $178.51
Short 1 unit of Goldman Sachs ticker GS @ $150.35 stop @ $152.71

Short Goldman Sachs - GS

I am using the "party like its 1999" atmosphere surrounding Goldman Sachs and its taxpayer subsidized earnings beat to get short the stock. I am shorting 1 unit of GS here at $150.45 with a stop at $152.71

I will get some charts up asap.

Good speculating and remind them to please don't ever forget that "an investor is a speculator who made a mistake and will not admit it".


Open Positions:
Long 2 units Ultrashort Real Estate ticker SRS @ $18.85 stop @ $17.84/18.94
Long 2 units Ultrashort S&P500 ticker SDS @ $54.75 stop @ $52.38/53.38
Long 1 unit Financial Bear 3x ticker FAZ @ $43.60 stop @ $44.60
Long 1 unit FTSE Xinhua China ticker FXP @ $12.70 stop @ $11.44
Short 2 units Wells Fargo ticker WFC @ $25.10 stop @ $26.26/27.41
Short 1 unit Autozone ticker AZO @ $157.95 stop @ $158.11
Short 1 unit Blackrock ticker BLK @ $177.15 stop @ $178.51
Short 1 unit of Goldman Sachs ticker GS @ $150.35 stop @ $152.71


Monday, July 13, 2009

YUM Brands

I was doing my work on Darden Restaurants and I thought it wise to have a look at YUM Brands, ticker YUM, given it has earnings coming out tomorrow after the close.

The weekly chart (above) shows the large head and shoulders formation made through 2008 (green). We broke that neckline and met and exceeded the downside target.

We have had quite the corrective pattern in Yum since the low in the fall of 2008. Elliot wavers might be inclined to ball this an 'a-b-c' correction. What did catch my eye was 2 things.

First was that this rally seems to have stalled as it came up and kissed the neckline of the previous head and shoulders (green) from underneath and second looks to be forming another head and shoulders (blue or turquoise if you like) here near the top of a nice looking channel (purple).


A daily chart of Yum (above) offers a close up view of the channel and recent head and shoulders pattern. One note of caution here, as good as this pattern looks along with the context of where it is forming, Yum's earnings come out tomorrow.

I never put anything past da boyz and the games they like to play. Could YUM gap up on a beat of Stewart Smalley's lowered expectations? Of course. Shake and bake and stop out all the shorts who think they got this one by the 'you know what'.

Would a gap up above the recent highs, around 37, be an exhaustion gap or a continuation gap? Gotta love speculating no? Sorry, I meant to say investing because speculators are bad, or rather they are only good when the item being speculated on moves in the desired direction. Like crude oil now for instance, but yet again I digress.


I almost wish I had not looked at YUM as it has some attributes that make me like it, on the downside, as much or more than Darden. Maybe, and I am thinking out loud here, I should put 1 unit short of each and let the market tell me which one is correct. This seems reasonable to me.


Good speculating and remind them to please don't ever forget that "an investor is a speculator who made a mistake and will not admit it".


Open Positions:
Long 2 units Ultrashort Real Estate ticker SRS @ $18.85 stop @ $17.84/18.94
Long 2 units Ultrashort S&P500 ticker SDS @ $54.75 stop @ $52.38/53.38
Long 1 unit Financial Bear 3x ticker FAZ @ $43.60 stop @ $44.60
Long 1 unit FTSE Xinhua China ticker FXP @ $12.70 stop @ $11.44
Short 2 units Wells Fargo ticker WFC @ $25.10 stop @ $26.26/27.41
Short 1 unit Autozone ticker AZO @ $157.95 stop @ $158.11
Short 1 unit Blackrock ticker BLK @ $177.15 stop @ $178.51

Some Charts of Interest.













Good speculating and remind them to please don't ever forget that "an investor is a speculator who made a mistake and will not admit it".


Open Positions:
Long 2 units Ultrashort Real Estate ticker SRS @ $18.85 stop @ $17.84/18.94
Long 2 units Ultrashort S&P500 ticker SDS @ $54.75 stop @ $52.38/53.38
Long 1 unit Financial Bear 3x ticker FAZ @ $4.36 stop @ $4.46
Long 1 unit FTSE Xinhua China ticker FXP @ $12.70 stop @ $11.44
Short 2 units Wells Fargo ticker WFC @ $25.10 stop @ $26.26/27.41
Short 1 unit Autozone ticker AZO @ $157.95 stop @ $158.11
Short 1 unit Blackrock ticker BLK @ $177.15 stop @ $178.51

Tuesday, July 7, 2009

Dumb as a Bag of Hammers

I caught an interview last week, actually it was the day the unemployment numbers were coming out, that CNBC had with Nassim Taleb. He is the much sought after speaking and author of the much heralded book Black Swan, The Impact of the Highly Improbable.

He, as usual, had many comments that were insightful but one in particular stuck out to me. He was recounting how he was in 'the green room' prior to the show, and was looking at the survey of analyst expectations for the employment numbers.

He mentioned how he focused on the list of analyst names next to the numbers which form the basis for the street expectation. He went on further to chuckle and remark how "none of them saw any of this debacle coming". It is comments and analysis like this that resonates with a simpleton like myself.

Why is it that those that saw none of this still are being sought after for opinion and insight, if one would go so far to call it that? Is it me? Am I being overly harsh and critical of people that......

didn't see the sub prime bubble,
didn't see the corporate over leverage,
didn't see the consumer over leverage,
didn't see the NINJA/Liar loans,
didn't see the Enronesque off balance sheet entities,
didn't see the neg-am adjustable rate option pay mortgages,
didn't see the unsustainable debt to income or equity levels
didn't see the association of appraisers letter screaming about appraisal fraud,
didn't see the free money M&A bubble


But it gets better.

I heard this morning Laura Tyson, former U.S. trade rep and now member of the Obama economic dream team, has indicated we need a second stimulus as the first one was not enough. Sure Laura, and a third and a fourth and a fifth. Just keep banging your head against the wall as you most certainly know better because you are so much more enlightened than the rest of us, especially those subversive, fear mongering, glass half empty, short selling internet bloggers.

As has been said before the only thing worse than someone who knows nothing is someone who thinks they know something. Truly horrifying as basic math skills 101 tells this blogger that the interest burden of this stimulus, yes interest burden dear reader as we no have the dough, will kill us.

I wake up every day believing more and more that people like Ms. Tyson, I am picking on her this morning but I must include the likes of Paul Krugman, Greg Mankiw, the administration prior and current et al. are truly trying to sabotage the economy.

Do they not see where this is headed?
Do they not possess basic math skills?
Do they not care about the survival of the republic?

I see decisions being made int the name of the good of the country when the exact opposite is really the case. Something wicked is coming this way. I hope I am wrong in this regard but absolutely nothing I have witnessed over the last 18-24 months has changed my view and quite frankly has only emboldened my belief.

I urge all my readers to be prepared for what is coming. I urge you to turn off or turn down the tube and visit the must visit sites on the right site of this blog. They are absolutely required reading if you want to survive this coming storm.

Contrary to what the plethora of history revisionists populating Washington, Wall St. and our mainstream financial media want you to believe, the debacle that has unfolded before us was MOST CERTAINLY foreseeable. Remember those must visit sites I implored you to visit earlier? They saw it coming well in advance and were pounding the table for all to take notice and took a ton of heat for it.

So again as Nassim Taleb indicated, why are we continue to solicit, listen, consult and seek the counsel of those that not only saw none of this, but now in what I consider the ultimate act of hubris tell us they have all the answers on how to fix it!

Someone needs to explain this all to me as I must just be dumb as a bag of hammers as I just don't get it. Yes of course, that must be it.


Good speculating and remind them to please don't ever forget that "an investor is a speculator who made a mistake and will not admit it".

Open Positions:
Long 2 units Ultrashort Real Estate ticker SRS @ $18.85 stop @ $17.84/18.94
Long 2 units Ultrashort S&P500 ticker SDS @ $54.75 stop @ $52.38/53.38
Long 1 unit Financial Bear 3x ticker FAZ @ $4.36 stop @ $4.46
Long 1 unit FTSE Xinhua China ticker FXP @ $12.70 stop @ $11.44
Short 2 units Wells Fargo ticker WFC @ $25.10 stop @ $26.26/27.41
Short 1 unit Autozone ticker AZO @ $157.95 stop @ $158.11
Short 1 unit Blackrock ticker BLK @ $177.15 stop @ $178.51

Monday, July 6, 2009

FTSE Xinhua China 25 - FXI


Given that I am back for a 3rd helping of FXP I thought it might be helpful to have another look at the underlying chart driving this trade. So here is an update on the FTSE Xinhua China 25, ticker FXI (chart above).

The gap down last Thursday is a very powerful signal. I am fully aware that many of the, on the payroll shills have pooh poohed the run rate last week, which by the way is fancy speak for volume. To which I would counsel you have a look at the volume on SPY, DIA, IWM, and QQQQ. You tell me if it is to be ignored.

Remember now, I am now short this via being long the ultrashort Proshares double inverse China etf ticker FXP, which goes up when FXI goes down and vice versa.

Long Some FXP


I am back from a wonderful long weekend enjoying the beauty that is northern Michigan, Petoskey, Charlevoix and Harbor Springs to be exact.

Much thanks to our wonderful hosts who besides being great friends, treat us like royalty. thank you again guys !!

I am now back at my post with a rested, relaxed with a clear head. Last week I was unceremoniously stopped out of my short China trade.

I thought about that trade over the weekend and the more I thought the more I needed to be in the trade. So once again I am back to the trough for another helping, visit number 3 to be exact.

I am getting long one unit of the Ultrashort FTSE Xinhua China 25, ticker FXP here at $12.60


Good speculating and remind them to please don't ever forget that "an investor is a speculator who made a mistake and will not admit it".


Open Positions:
Long 2 units Ultrashort Real Estate ticker SRS @ $18.85 stop @ $17.84/18.94
Long 2 units Ultrashort S&P500 ticker SDS @ $54.75 stop @ $52.38/53.38
Long 1 unit Financial Bear 3x ticker FAZ @ $4.36 stop @ $4.46
Long 1 unit FTSE Xinhua China ticker FXP @ $12.70 stop @ $11.44
Short 2 units Wells Fargo ticker WFC @ $25.10 stop @ $26.26/27.41
Short 1 unit Autozone ticker AZO @ $157.95 stop @ $158.11
Short 1 unit Blackrock ticker BLK @ $177.15 stop @ $178.51

Thursday, July 2, 2009

4th of July

The 4th of July holiday weekend is upon us and I want to wish all my readers a very safe and enjoyable one. I am starting the weekend a little early and I counsel all my readers to do the same if they can make it happen.

Enjoying good weather, good food and a fireworks display with friends and family, well how much nicer can it get!

I will be back at my post on Monday but before I go one item to address. I continue to receive email with questions regarding my daily blog ending missive of.....
Good speculating to you all and please don't ever, ever forget that "an investor is a speculator who made a mistake and will not admit it".

Some readers out there, maybe new to markets and speculating seem to be a little hazy on what I am getting at. I am reprinting below what I have posted prior on this subject.

Translation: We are all speculators no matter what your perception of the term. When we put on a position, long or short, we are engaging in a transaction that item X will rise or fall, period. Nothing more nothing less.

The investor reassures his/her self that he is smarter, saner and more rational than the speculator whom he/she regards as the recklessly, impulsive gambling type.

The investor convinces him/her self that they have done more homework studying the 'value' in item X and that they are long term investors. Based on this superior investigation the investor will hang on to a losing position comforted by the value they believe exists, or worse still, will dollar cost average that position, (that is buying more of said underwater position) rather than admitting the error of their ways and exiting the position ASAP, thereby taking the loss now while it is small before it becomes breathtakingly enormous.

I note the following 'investors' of some infamy;

Nick Leeson of Barings Bank
Yasuo Hamanaka of Sumitomo Copper
Jerome Kerviel of Societe Generale
William Miller of Legg Mason
John Meriwether of Long Term Capital Management
Brian Hunter of Amaranth Capital


So based on this I continue to wish all my readers good speculating and remind them to please don't ever forget that "an investor is a speculator who made a mistake and will not admit it".


Open Positions:
Long 2 units Ultrashort Real Estate ticker SRS @ $18.85 stop @ $17.84/18.94
Long 2 units Ultrashort S&P500 ticker SDS @ $54.75 stop @ $52.38/53.38
Long 1 unit Financial Bear 3x ticker FAZ @ $4.36 stop @ $4.46
Short 2 units Wells Fargo ticker WFC @ $25.10 stop @ $26.26/27.41
Short 1 unit Autozone ticker AZO @ $157.95 stop @ $158.11
Short 1 unit Blackrock ticker BLK @ $177.15 stop @ $178.51

Wednesday, July 1, 2009

Tin Foil and Black Helicopters


Please click on the link below to watch this clip from Bloomberg television.

It features Joe Saluzzi of Themis Trading talking about program trading and dare I say market manipulation.

It is well worth the few minutes of your time. FYI the NYSE is now no longer requiring firms to report their program trading as they are decommissioning the DPTR (Daily Program Trading Report) but who cares what this is when American Idol is on in 5 minutes.

Or you can just turn on Dennis Kneale and Larry Kudlow of CNBC and bet on hope.



Good speculating to you all and please don't ever, ever forget that "an investor is a speculator who made a mistake and will not admit it".


Open Positions:
Long 2 units Ultrashort Real Estate ticker SRS @ $18.85 stop @ $17.84/18.94
Long 2 units Ultrashort S&P500 ticker SDS @ $54.75 stop @ $52.38/53.38
Long 1 unit Financial Bear 3x ticker FAZ @ $4.36 stop @ $4.46
Short 2 units Wells Fargo ticker WFC @ $25.10 stop @ $26.26/27.41
Short 1 unit Autozone ticker AZO @ $157.95 stop @ $158.11
Short 1 unit Blackrock ticker BLK @ $177.15 stop @ $178.51

Ya Just Had to Know


A few days ago in a post Message vs Messenger I wrote the following;

"Maybe this will all work out for Mr. Buffett and his shareholders or maybe it won't.
I can assure you this much, that if it does not work out for the best, Dennis Gartman's criticisms will look preposterously tame compared to the venom that will come out of the woodwork. If you doubt me, read some market history, in particular the history of some of the more venerable market oracles of days gone by. Names such as Richard Whitney, Charles Mitchell, Irving Fisher, among others."

It got me to thinking further about the fate that had befallen prior market pundits and the wrath a bear market can inflict not only financially but reputationally.


I almost forgot about this hit piece on Dick Bove done by the cerebral one David Faber hi-lighted by the cats over at Zero Hedge. You can view the clip clicking the line above, fast forward to 2:20 for the salient part. Now I realize David Faber is a highly acclaimed intellectual and recently published author. I also, mind you, am no giddy fan of Dick Bove but it truly takes the proverbial cake to see Faber and CNBC ridiculing him for a bad call. The irony is only increased as it is being done by one nicknamed 'the brain'. CNBC ridiculing someone for a bad market call considering the breathless cheerleading they do is akin to former Merrill internet analyst and former Rando House proof reader Henry Blodgett chastising someone for being a lying, duplicitous, dirt bag but I digress.

You see dear reader bloggers, (this one included as you can click on the LEH link under archive by symbol down the right side of this page to see my thoughts on Lehman which I was short of prior to and during August 2008) yes those same ones that other CNBC empty suit of a financial journalist Dennis Kneale claimed as inhabiting "the anonymous, dark and cowardly corners of the blogosphere" were openly ridiculing Mr. Bove back on Aug 21, 2008 when he made his bull call on Lehman.

Unlike you Mr. Brainiac Faber who had no backbone to do it then but now see fit to ridicule him today July 1,2009 almost a year later with the benefit of 20/20 hindsight. I have a nickname for you Mr. Faber, mind you it is far less flattering than the one you currently possess.

Pathetically CNBC is a day late and a dollar short but as usual right on schedule in their attempts at revisionist history. Anyone watching the markets with an IQ higher than room temp knows CNBC for the fraud that it is, of this there is no debate any more. The pom pom network always knows better in hindsight as the internet bubble so aptly proved. I have often said there is a massive shortage of mirrors in this country and the studios of CNBC in New Jersey is ground zero. The problem I have is that I have to endure hours of useless drivel for that one tidbit or morsel of genuine genius or outright lunacy a guest on the network may provide.

This takedown of Dick Bove is to be expected as this is the consequence of a bear market. Bull markets make genius' out of idiots and bear markets do the opposite, as ruthless as they can be. It reminded me of what happened to the celebrated Professor Irving Fisher after the crash in 1929. According to John Kenneth Galbraith, in the classic book "The Great Crash" who recounts this;

'Professor Irving Fisher tried hard to explain why he had been wrong. Early in Nov 1929 he suggested that the whole thing had been irrational and hence beyond prediction. In a statement that was not a model of coherence, he said: "It was the psychology of the panic. It was mob psychology, and it was not, primarily, that the price level of the market was unsoundly high... the fall in the market was very largely due to the psychology by which it went down because it went down".'

Galbraith went on to state that "one trouble with being wrong is that it robs the prophet of his audience when he most needs it to explain why."


Ahh but Mr. Faber is not alone is his quest for absolution. Many others are doing the same even the Maestro himself, Alan Greenspan is making the rounds vociferously defending himself. Do us all a favour and disappear Mr. Magoo. It's pathetic.



Good speculating to you all and please don't ever, ever forget that "an investor is a speculator who made a mistake and will not admit it".

Open Positions:
Long 2 units Ultrashort Real Estate ticker SRS @ $18.85 stop @ $17.84/18.94
Long 2 units Ultrashort S&P500 ticker SDS @ $54.75 stop @ $52.38/53.38
Long 1 unit Financial Bear 3x ticker FAZ @ $4.36 stop @ $4.46
Short 2 units Wells Fargo ticker WFC @ $25.10 stop @ $26.26/27.41
Short 1 unit Autozone ticker AZO @ $157.95 stop @ $158.11
Short 1 unit Blackrock ticker BLK @ $177.15 stop @ $178.51

Anonymity Reigns

Some may or may not have this on their radar screen so I will give some background to those that do not.

Dennis Kneale is a contributor/host/comic relief man on CNBC. I was always taught that not always but quite often one can learn much about another's level of acumen by the questions they ask rather than answers they give.

Recently, via his forum on CNBC, he has embarked on a campaign to call this recession dead. Besides the fact that this is wishful thinking of the first order based on hope and a few fabulously massaged statistics, he took especial affront to the blogosphere. Here is the link to view it.


Mr. Kneale is in no uncertain terms the village idiot plain and simple. His grasp of things economic and market related is so shallow as to render one speechless. I hate to be so harsh but I find it extremely hard to find a more appropriate adjective, village idiot, to describe him given his litany of past utterances. Some will say, 'ya gotta give him credit for speaking his mind.' To which I would suggest that at this point we are beyond speaking our minds and we need some adults in the room who have some grasp of the issues we face, the problems that caused it and remedies thereby but I digress yet again.

But rather than focus on Dennis Kneale, whom I have criticised ad nauseum in these pages, I wish to focus on his attacks upon the blogosphere of which I am an inhabitant.

His comment last evening regarding blog criticisms as "the anonymous, dark and cowardly corners of the blogosphere" is particularly telling.

I am one of those bloggers who writes under a nom de plume as they say. So does Zero Hedge who was called out by Mr. Kneale along with many others on the web.
We are not the first to write anonymously nor will we be the last. Anonymous writings have been around far longer than the internet for sure. Am I to believe Mr. Kneale that our anonymity renders our information moot? That simply refusing to identify ourselves invalidates our point? Tyler Durden (nom de plume) over at Zero Hedge responded as follows to the issue;


Fourth, as pertains to anonymity, Mr. Kneale would be well-advised to read the Zero Hedge manifesto:
though often maligned (typically by those frustrated by an inability to engage in ad hominem attacks) anonymous speech has a long and storied history in the united states. used by the likes of mark twain (aka samuel langhorne clemens) to criticize common ignorance, and perhaps most famously by alexander hamilton, james madison and john jay (aka publius) to write the federalist papers, we think ourselves in good company in using one or another nom de plume. particularly in light of an emerging trend against vocalizing public dissent in the united states, we believe in the critical importance of anonymity and its role in dissident speech. like the economist magazine, we also believe that keeping authorship anonymous moves the focus of discussion to the content of speech and away from the speaker- as it should be. we believe not only that you should be comfortable with anonymous speech in such an environment, but that you should be suspicious of any speech that isn't.

Wow! Tyler got your head spinning now Dennis? Yes, I know you are a product of the status quo. First it was the Drudge Report and sites like it. Now virtually every journo goes there to get the "scoop". You couldn't undermine him and others like him so now it's on to the bloggers.

Yes, Dennis the same crew who all saw the housing bubble, the credit bubble, the subprime bubble coming. Yes, that which has so befuddled you and your mainstream brethren. It is obvious the threat, you and your minions in the mainstream financial media recognize bloggers as posing. Charlie Gasparino, who is one of the better reporters out there, knows it all too well, hence his unmitigated animosity to us.

Anonymity dear Mr. Kneale is the pinnacle of equality as it forces one to address the message and not the messenger. Think of what one has read and now imagine now that you do not know who has written it. Interesting test no? One might have to actually address the merits of the argument and not whether the article came from a blog or the Times or Forbes.

Anonymity is just as useful in technical analysis which, it now seems, you are now fond of using since someone obviously has told you about the golden cross and you think emboldens your recovery call. Like the saying goes, the only thing worse than someone who knows nothing is someone who thinks they know something.

Getting back to anonymity in trading, a wizened trader once told me to print my charts and cover or cut the names off the top to remove the inherent bias that one has for a particular position or sector. Shall we do the same with a political or economic issue? I surely would think it useful.

Further to this, would Warren Buffett's market moves be so wonderful were they not made by the Oracle of Omaha himself? Who else gets a pass like he did with his fund, Berkshire shares down 45%, Ron Insana? The former anchor of CNBC who then attempted a fund of funds and was shaken out didn't. Forget for a moment the absolute lunacy of a fund of funds and remember that Mr. Insana's performance actually did better than the market for a while. Were his name Ron Buffett, nephew of the Oracle or Ron Insana former Julian Robertson protege and now Tiger Cub spinoff made a difference?

Back in my first year of college I got into a heated debate with a senior academic official of the university who also taught a public administration course. He was, by the way, an absoutely awesome professor the likes of which we sorely need more of. The debate focused upon whether or not my name should appear on my paper which he advocated. I argued that only my student ID number should appear.

I seem to remember backing up my argument with a study that had been performed some time prior, which concluded that the first grade you received on a paper all subsequent papers, (barring a mushroom cloud) graded slightly higher or lower. Basically if you got a C on your first paper you pretty much were range bound from C+ to C-.

I submitted my papers anonymously as I do my blog because I wanted it to be judged on its content and nothing else. Now if I looked like Pierce Brosnan that would be another story but then I would need to fork out mucho dough to get my head massaged with a shrink wondering if they liked me for my cover or my content.

Housekeeping notes;

I neglected to note that I was stopped out of my DRI position Monday at $33.57 for a loss of just over 1/2 pt on 1 unit short.

Today I was stopped out of my FXP position at $11.68 for a loss of almost 3/4 of a pt on 1 unit long.

I was also stopped out of my ARO position at $35.57 for a loss of just over a 1/2 pt on 1 unit short.


Good speculating to you all and please don't ever, ever forget that "an investor is a speculator who made a mistake and will not admit it".


Open Positions:
Long 2 units Ultrashort Real Estate ticker SRS @ $18.85 stop @ $17.84/18.94
Long 2 units Ultrashort S&P500 ticker SDS @ $54.75 stop @ $52.38/53.38
Long 1 unit Financial Bear 3x ticker FAZ @ $4.36 stop @ $4.46
Short 2 units Wells Fargo ticker WFC @ $25.10 stop @ $26.26/27.41
Short 1 unit Autozone ticker AZO @ $157.95 stop @ $158.11
Short 1 unit Blackrock ticker BLK @ $177.15 stop @ $178.51