Wednesday, March 31, 2010

Mystery Chart of the Day

Regular readers know I often recommend one take a chart and remove or black out the names, numbers and dates as to remove the inherent bias one may have to a index, sector, company, or commodity to assist in determining once stance, bullish or bearish..

The chart below has the name, dates and prices removed. Anyone care to guess which way price action went from here?



I will post the original chart soon as well as what happened next.... unless it is a current, rather than historical chart, which we then will have to wait for it to play out.


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


Open Positions:
Long 1 unit Direxion Large Cap 3X Bear ticker BGZ @ $19.34
Long 2 units Direxion Small Cap 3X Bear ticker TZA @ $12.06
Long 1 unit Direxion Emerging Mkts 3X Bear ticker EDZ @ $60.50
Long 2 units Direxion Financial 3X Bear ticker FAZ @ $19.65
Long 2 units Ultrashort Xinhua China ticker FXP @ $8.49
Long 1 unit Ultrashort Real Estate ticker SRS @ $9.82
Long 2 units Direxion Tech 3X Bear ticker TYP @ $10.52
Long 1 unit US Dollar Bull ticker UUP @ $22.52 stop @ $21.97
Short 1 unit Daimler ticker DAI @ $52.23 stop @ $52.23



Tuesday, March 30, 2010

Something to Consider.... Or not.

I came across the following piece from one Jeff Clark of The Growth Stock Wire. It got me to thinking about that old market adage that men lose their wits all together only to slowly regain their sanity one by one.

I tend to disagree with that statement as sell offs tend to become cascading waterfalls rather than orderly sell offs, which argues that men either sober up or panic (take your pick), either way it is done as a group.....which is why Mr. Clark's piece below resonates with me.

Take it away Jeff.

We're Headed Toward Another Bolshevik Revolution

By Jeff Clark

March 30, 2010

In the world of technical analysis, price action is king.

I'm bearish. Everything in my heart, my soul, and my mind tells me I have to be short the stock market. But I've avoided making large downside bets because the price action – the king – has been so persistently positive.

The peasants, however, are not very enamored of his royal highness. Volume is weak. Negative divergences exist on nearly every momentum indicator. Sentiment indicators show remarkable investor complacency. And the world news is highly negative.

Yet, the king continues to reign.

But here's the thing...

When kingdoms are overthrown, it happens overnight. It's an instantaneous transition of power. One day, the king is in charge, the next day it's a religious zealot, a military general, or a drug kingpin.

It always comes off as a surprise. But in hindsight, there are always plenty of warning signs.

Think back to the Bolshevik Revolution. The Russian royal family was slaughtered overnight, but the peasants were unruly for months beforehand.

The CIA was aware of turbulence in the Middle East long before the Shah of Iran was exiled in 1979.

The Berlin Wall collapsed overnight. But the blueprints for its destruction were drawn out months ahead of time.

In hindsight, all of these events were predictable and foreseeable.

The same is true of the stock market crash in 1987... Economic conditions were faltering. Interest rates were rising. The public's appetite for risk was growing. And stocks were rallying on the back of deteriorating technical conditions.

Anyone, with even the simplest understanding of market conditions, could have called the crash in 1987. In fact, many of the brightest analysts did. But they were early and their reputations suffered as stocks continued to climb despite the overwhelming technical divergences.

I remember 1987 well. I was a young trader, and I was on the wrong side of the market for five months before my bearish bets finally paid off. In August 1987, I was so perplexed by the market's action I considered leaving my trading post and pursuing another career. Heck, standing behind the plexiglas booth at the local gas station and putting $10 on pump number 5 was a more attractive career path than what I was doing at the time.

When it finally happened that October, the crash of 1987 took almost everyone by surprise, and it seemed to happen overnight. By now, though, we all know the warning signs were everywhere. So, too, were the warning signs when the Internet craze crashed and burned in 2000.

Today isn't any different.

I know, I've been bearish for months and I've been wrong – even though I haven't bet heavily in that direction. I'll wear the egg on my face for as long as necessary.

Every day, I wake up and I look for reasons to be bullish on the market. There aren't any – except the king remains in power. Meanwhile, the peasants grow more and more restless, and the tension continues to build.

Months from now, we'll all look back at this time – much as we all look back at October 1987 and March 2000 – and we'll remark on how obvious it all was.Yet we'll be surprised that it happened out of nowhere.

Best regards and good trading,

Jeff Clark



Do you remember when your were little and your grandma's or mom would say "if you don't tell a lie you never need remember what you said".

It is always the lie that covering up the original lie that is one's undoing and often ends up being worse than the original offence.

That said, we have a Fed who is the mortgage market. We have a Fed who is quantitative easing in the bond market with foreigners disappearing. Now we now have credible accusations of manipulations in the precious metals markets. Yet given all this, there seems to be an all out black out by the mainstream media of this story.

Eric King of King World News has a must listen interview with one Andrew Maguire and GATA's Adrian Douglass. Believe me, just as the media was humiliated covering balloon boy, they (financial media in this case) will be equally humiliated not covering Preciousmetalsgate.

Listen to some of the facts provided in the interview and see if the hair on your neck does not stand on end. Forget potential price action or curb appeal for a second and focus on the foundation of the house for a change.

I would never say markets are manipulated for that would make me a tin foil hat wearing, black helicopter fearing nut job out of me. A real live kook!



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


Open Positions:
Long 1 unit Direxion Large Cap 3X Bear ticker BGZ @ $19.34
Long 2 units Direxion Small Cap 3X Bear ticker TZA @ $12.06
Long 1 unit Direxion Emerging Mkts 3X Bear ticker EDZ @ $60.50
Long 2 units Direxion Financial 3X Bear ticker FAZ @ $19.65
Long 2 units Ultrashort Xinhua China ticker FXP @ $8.49
Long 1 unit Ultrashort Real Estate ticker SRS @ $9.82
Long 2 units Direxion Tech 3X Bear ticker TYP @ $10.52
Long 1 unit US Dollar Bull ticker UUP @ $22.52 stop @ $21.97
Short 1 unit Daimler ticker DAI @ $52.23 stop @ $52.23

Monday, March 29, 2010

Recession's Over?

I realize the Fed, Wall St. and the boobs and boobs on CNBC truly believe the recession is over. Unfortunately I simply do not. Now the Fed, Wall St. and the propaganda-in-chief CNBC will throw chart after graph after ratio to show that it is and you're a tea bagger to think any different. A campaign of what I like to call "baffle em' with bullshit". I, instead, prefer the more mundane mainstreet evidence that a simpleton's simpleton, like myself, can understand.

Information like this story courtesy of Danny Westneat of the Seattle Times Recession's Untold Story. It surrounds a job vacancy as a dog-kennel assistant.


There are bad hours (lots of weekends and holidays). There's low-as-it-goes pay — as in minimum wage, $8.55 an hour.

"It's not most people's dream job," Palumbo laughs. "Usually I get high-school kids applying. Or maybe a college kid for the summer. I've never seen anything like this."

Two weeks ago Palumbo posted a want ad on Craigslist for a part-time dog-kennel assistant.

So far, 260 people have applied.

I remember a few years ago when farms, kennels and horse outfits had trouble finding any workers, other than undocumented immigrants. So Palumbo went through the résumés with me, obscuring the names. I wanted to know: Who now wants to be a dog-kennel assistant?

A laid-off graphic designer applied. So did a freelance photographer. Two out-of-work teachers sent résumés. Remarkably, so did someone in their mid-40s who had worked as a financial controller at an environmental-services company.

"There are a few people in here, such as accountants, who are so overqualified for this job," Palumbo said. "I know people just want to work but I don't think it would make much sense for me to hire them."

advertising

The rest of the applicants read like a recession roll call.

There are past customer-service reps from WaMu, AT&T, J.C. Penney and Sprint. A slew of retail clerks and cashiers, as well as out-of-work waiters. The biggest group, by far, is dozens of laborers, construction workers, landscapers and maintenance workers.


And the money quote

"It's simply amazing to me, and I still can't believe it," he said, "that from age 14 up into their 60s this many people are dying to be a minimum-wage dog-kennel assistant."


Yup, Bernanke must be right, recession's over! Move along readers, nothing to see here.

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


Open Positions:
Long 1 unit Direxion Large Cap 3X Bear ticker BGZ @ $19.34
Long 2 units Direxion Small Cap 3X Bear ticker TZA @ $12.06
Long 1 unit Direxion Emerging Mkts 3X Bear ticker EDZ @ $60.50
Long 2 units Direxion Financial 3X Bear ticker FAZ @ $19.65
Long 2 units Ultrashort Xinhua China ticker FXP @ $8.49
Long 1 unit Ultrashort Real Estate ticker SRS @ $9.82
Long 2 units Direxion Tech 3X Bear ticker TYP @ $10.52
Long 1 unit US Dollar Bull ticker UUP @ $22.52 stop @ $21.97
Short 1 unit Daimler ticker DAI @ $52.23 stop @ $52.23

Saturday, March 27, 2010

JP Morgan Manipulates PM Markets ?

For those of you who may have missed this piece, and I know you missed it because the mainstream media refused and refuses to cover it, we got extraordinary news, via the net and the blogosphere, that an employee at JP Morgan has turned whistleblower. One Andrew Maguire has stepped forward exposing JP Morgan's market manipulation scheme of precious metals.

It appears Mr. Maguire, sent emails to staffers at the SEC, (aka Keystone Cops formerly run by chief eunich Chris Cox), that JP Morgan actively manipulates the gold and silver markets. It also appears Mr. Maguire sent emails to the SEC regarding the dates and times these machinations by JP Morgan were taking place. Sadly the staff at the SEC are to busy
surfing porn to have the time to follow up these leads from Mr. Maguire. Yes, it appears the staff over at the SEC is far to busy and overworked to seriously follow up and investigate leads like this. Deja vu all over again. But Madoff and Stanford were just too complicated to unravel. Lehman was just too hard to discover. shhhh don't tell anyone or we will get more new regulation with teeth in it courtesy of Sargent Schultz errr, excuse me I meant Chris Dodd.

One might conclude that they are shocked that the likes of CNBC, Bloomberg, Forbes, et al. have not offered any coverage of this story surrounding too big to fail JP Morgan. Not me. What I am shocked at is how the likes of CNBC, Bloomberg, Forbes, et al. have not come out swinging impuning and savaging Mr. Maguire's character.

I am shocked that we have not already learned that he preferred, tranny dominatrix porn, that he smoked pot as a freshman in college and is purported involved in a string of meth labs, or that 15 yrs ago he dated a girl whose 2nd cousin passed off some bad cheques. Maybe he even has attended a Tea Party event. Either way this lack of character assassination is what shocks me.

The one thing that will not shock me is the strange eery tendency for the completely random, highly improbable and often tragic events that seem to befall people like Mr. Maguire once they step forward in this fashion.

Things like OD'ing on aspirin, crashing into a tree while skiing a green run, electrocuting yourself in the bathtub while operating a toaster. All of these black swan-type events tend to become white swans once you cross them.

Stay safe Mr. Maguire I wish you all the best. I applaud your onions (as Bill Raftery would say) for stepping forward with this information.


In all seriousness will someone over at CNBC, Bloomberg, or any other of the mainstream financial media outlets explain to me why this is not worthy of coverage. Come on guys step up to the plate and tell us. You continually say you are insulted by the idiot bloggers out there who you claim can say whatever they want be it substantiated or not, without repercussions.

Prove me wrong. Explain why this story is bogus. The boy in the hot air balloon can be riveting journalism but the manipulation of the precious metals markets is not. And you need to wonder why we are in the pickle we are in financially.



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


Open Positions:
Long 1 unit Direxion Large Cap 3X Bear ticker BGZ @ $19.34
Long 2 units Direxion Small Cap 3X Bear ticker TZA @ $12.06
Long 1 unit Direxion Emerging Mkts 3X Bear ticker EDZ @ $60.50
Long 2 units Direxion Financial 3X Bear ticker FAZ @ $19.65
Long 2 units Ultrashort Xinhua China ticker FXP @ $8.49
Long 1 unit Ultrashort Real Estate ticker SRS @ $9.82
Long 2 units Direxion Tech 3X Bear ticker TYP @ $10.52
Long 1 unit US Dollar Bull ticker UUP @ $22.52 stop @ $21.97
Short 1 unit Daimler ticker DAI @ $52.23 stop @ $52.23

Thursday, March 25, 2010

Some Pleasure Reading

Below is a fantastic piece from Paul Craig Roberts. Must reading for sure.

Truth Has Fallen and Taken Liberty With It

By PAUL CRAIG ROBERTS

There was a time when the pen was mightier than the sword. That was a time when people believed in truth and regarded truth as an independent power and not as an auxiliary for government, class, race, ideological, personal, or financial interest.

Today Americans are ruled by propaganda. Americans have little regard for truth, little access to it, and little ability to recognize it.

Truth is an unwelcome entity. It is disturbing. It is off limits. Those who speak it run the risk of being branded “anti-American,” “anti-semite” or “conspiracy theorist.”

Truth is an inconvenience for government and for the interest groups whose campaign contributions control government.

Truth is an inconvenience for prosecutors who want convictions, not the discovery of innocence or guilt.

Truth is inconvenient for ideologues.

Today many whose goal once was the discovery of truth are now paid handsomely to hide it. “Free market economists” are paid to sell offshoring to the American people. High-productivity, high value-added American jobs are denigrated as dirty, old industrial jobs. Relicts from long ago, we are best shed of them. Their place has been taken by “the New Economy,” a mythical economy that allegedly consists of high-tech white collar jobs in which Americans innovate and finance activities that occur offshore. All Americans need in order to participate in this “new economy” are finance degrees from Ivy League universities, and then they will work on Wall Street at million dollar jobs.

Economists who were once respectable took money to contribute to this myth of “the New Economy.”

And not only economists sell their souls for filthy lucre. Recently we have had reports of medical doctors who, for money, have published in peer-reviewed journals concocted “studies” that hype this or that new medicine produced by pharmaceutical companies that paid for the “studies.”

The Council of Europe is investigating the drug companies’ role in hyping a false swine flu pandemic in order to gain billions of dollars in sales of the vaccine.

The media helped the US military hype its recent Marja offensive in Afghanistan, describing Marja as a city of 80,000 under Taliban control. It turns out that Marja is not urban but a collection of village farms.

And there is the global warming scandal, in which NGOs. the UN, and the nuclear industry colluded in concocting a doomsday scenario in order to create profit in pollution.

Wherever one looks, truth has fallen to money.

Wherever money is insufficient to bury the truth, ignorance, propaganda, and short memories finish the job.

I remember when, following CIA director William Colby’s testimony before the Church Committee in the mid-1970s, presidents Gerald Ford and Ronald Reagan issued executive orders preventing the CIA and U.S. black-op groups from assassinating foreign leaders. In 2010 the US Congress was told by Dennis Blair, head of national intelligence, that the US now assassinates its own citizens in addition to foreign leaders.

When Blair told the House Intelligence Committee that US citizens no longer needed to be arrested, charged, tried, and convicted of a capital crime, just murdered on suspicion alone of being a “threat,” he wasn’t impeached. No investigation pursued. Nothing happened. There was no Church Committee. In the mid-1970s the CIA got into trouble for plots to kill Castro. Today it is American citizens who are on the hit list. Whatever objections there might be don’t carry any weight. No one in government is in any trouble over the assassination of U.S. citizens by the U.S. government.

As an economist, I am astonished that the American economics profession has no awareness whatsoever that the U.S. economy has been destroyed by the offshoring of U.S. GDP to overseas countries. U.S. corporations, in pursuit of absolute advantage or lowest labor costs and maximum CEO “performance bonuses,” have moved the production of goods and services marketed to Americans to China, India, and elsewhere abroad. When I read economists describe offshoring as free trade based on comparative advantage, I realize that there is no intelligence or integrity in the American economics profession.

Intelligence and integrity have been purchased by money. The transnational or global U.S. corporations pay multi-million dollar compensation packages to top managers, who achieve these “performance awards” by replacing U.S. labor with foreign labor. While Washington worries about “the Muslim threat,” Wall Street, U.S. corporations and “free market” shills destroy the U.S. economy and the prospects of tens of millions of Americans.

Americans, or most of them, have proved to be putty in the hands of the police state.

Americans have bought into the government’s claim that security requires the suspension of civil liberties and accountable government. Astonishingly, Americans, or most of them, believe that civil liberties, such as habeas corpus and due process, protect “terrorists,” and not themselves. Many also believe that the Constitution is a tired old document that prevents government from exercising the kind of police state powers necessary to keep Americans safe and free.

Most Americans are unlikely to hear from anyone who would tell them any different.

I was associate editor and columnist for the Wall Street Journal. I was Business Week’s first outside columnist, a position I held for 15 years. I was columnist for a decade for Scripps Howard News Service, carried in 300 newspapers. I was a columnist for the Washington Times and for newspapers in France and Italy and for a magazine in Germany. I was a contributor to the New York Times and a regular feature in the Los Angeles Times. Today I cannot publish in, or appear on, the American “mainstream media.”

For the last six years I have been banned from the “mainstream media.” My last column in the New York Times appeared in January, 2004, coauthored with Democratic U.S. Senator Charles Schumer representing New York. We addressed the offshoring of U.S. jobs. Our op-ed article produced a conference at the Brookings Institution in Washington, D.C. and live coverage by C-Span. A debate was launched. No such thing could happen today.

For years I was a mainstay at the Washington Times, producing credibility for the Moony newspaper as a Business Week columnist, former Wall Street Journal editor, and former Assistant Secretary of the U.S. Treasury. But when I began criticizing Bush’s wars of aggression, the order came down to Mary Lou Forbes to cancel my column.

The American corporate media does not serve the truth. It serves the government and the interest groups that empower the government.

America’s fate was sealed when the public and the anti-war movement bought the government’s 9/11 conspiracy theory. The government’s account of 9/11 is contradicted by much evidence. Nevertheless, this defining event of our time, which has launched the US on interminable wars of aggression and a domestic police state, is a taboo topic for investigation in the media. It is pointless to complain of war and a police state when one accepts the premise upon which they are based.

These trillion dollar wars have created financing problems for Washington’s deficits and threaten the U.S. dollar’s role as world reserve currency. The wars and the pressure that the budget deficits put on the dollar’s value have put Social Security and Medicare on the chopping block. Former Goldman Sachs chairman and U.S. Treasury Secretary Hank Paulson is after these protections for the elderly. Fed chairman Bernanke is also after them. The Republicans are after them as well. These protections are called “entitlements” as if they are some sort of welfare that people have not paid for in payroll taxes all their working lives.

With over 21 per cent unemployment as measured by the methodology of 1980, with American jobs, GDP, and technology having been given to China and India, with war being Washington’s greatest commitment, with the dollar over-burdened with debt, with civil liberty sacrificed to the “war on terror,” the liberty and prosperity of the American people have been thrown into the trash bin of history.

The militarism of the U.S. and Israeli states, and Wall Street and corporate greed, will now run their course. As the pen is censored and its might extinguished, I am signing off.

Paul Craig Roberts was an editor of the Wall Street Journal and an Assistant Secretary of the U.S. Treasury. His latest book, HOW THE ECONOMY WAS LOST, has just been published by CounterPunch/AK Press.

Great piece Mr. Roberts.

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


Open Positions:
Long 1 unit Direxion Large Cap 3X Bear ticker BGZ @ $19.34
Long 2 units Direxion Small Cap 3X Bear ticker TZA @ $12.06
Long 1 unit Direxion Emerging Mkts 3X Bear ticker EDZ @ $60.50
Long 2 units Direxion Financial 3X Bear ticker FAZ @ $19.65
Long 2 units Ultrashort Xinhua China ticker FXP @ $8.49
Long 1 unit Ultrashort Real Estate ticker SRS @ $9.82
Long 2 units Direxion Tech 3X Bear ticker TYP @ $10.52
Long 1 unit US Dollar Bull ticker UUP @ $22.52 stop @ $21.97
Short 1 unit Daimler ticker DAI @ $52.23 stop @ $52.23

Wednesday, March 24, 2010

Thoughts on Gold


First off, I want the gold bulls out there to know that I truly do love them. I am not being sarcastic. I do not believe gold is a barbarous relic. I have owned gold for a long time and was accumulating it for clients in my previous life under $400 an ounce. This is not an infomercial, either, it is simply fact.

Full disclosure, I own no gold shares but I do own physical gold (Krugerrands) and silver bars for as regular readers know all to well, I consider the precious metals the ultimate insurance. They are no ones obligation and cannot be defaulted upon. Please forgive me ignorant tin foilness if I prefer to trust hundreds upon hundreds of years of history as opposed to the promises of federal agencies (ergo politicians) such as FDIC, Social Security, Medicare, etc.

The above chart is a daily view of the Market Vectors Gold Miners etf ticker GDX.

My comments on the chart are self explanatory. The HUI looks the same by the way.

I still believe, even though the powers that be will do everything in their power to make you want to disbelieve, that debts are either paid back or defaulted upon. Unfortunately the hangover from the mother of all bubbles, the easy credit bubble lay dead ahead for us, default. Now I could be wrong as income and employment alleviate this, but till now I see none of this. In this period of default, things that abundant, something for nothing, easy credit provided get liquidated.

I used to ask my grandfather why men jumped from ledges after losing everything in the stock market crash in 29'. His response was that that jumped not because they lost what they had, they jumped because they lost WHAT THEY DIDN'T HAVE !

His comments always have stuck with me but those even more so. He also told me people lost their property (farms) in the depression as a result of taxes owing rather than a note or mortgage but I digress.

The point here is that, the giant sucking sound of easy (and for that matter, medium and hard to get) credit disappearing is like a giant margin or liquidation call.

Imagine you made X in income when things were good but with Dr. Greenspan at the pusher, easy credit and leverage gave you and most all around you 2x or 3x buying power. It doesn't take a genius to see this stokes demand for all things big time. Many have called this demand pull forward.

Now imagine things get soft or worse deteriorate significantly and your 3x buying power not only going back to 2X or X but maybe 0.7X as you get furloughed or laid off. The rub here is the 2X obligation built up in good times remains. You do not need to be a Princeton PhD in economics to figure this out because I have, small hint; it is not conducive to rising prices (re:inflation or rising prices)


Gold figures prominently in this, as it more than likely than not will down less than other assets percentage wise. Gold offers excellent liquidity because you can always sell it, no matter what amount you have. As Art Cashin is fond of saying, "when you can`t sell what you want to sell, you sell whatever you can". Gold has a perpetual bid, while the jet ski, the Tag watch, the F150, the CDO, may not.

Just something to consider.

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

Open Positions:
Long 1 unit Direxion Large Cap 3X Bear ticker BGZ @ $19.34
Long 2 units Direxion Small Cap 3X Bear ticker TZA @ $12.06
Long 1 unit Direxion Emerging Mkts 3X Bear ticker EDZ @ $60.50
Long 2 units Direxion Financial 3X Bear ticker FAZ @ $19.65
Long 2 units Ultrashort Xinhua China ticker FXP @ $8.49
Long 1 unit Ultrashort Real Estate ticker SRS @ $9.82
Long 2 units Direxion Tech 3X Bear ticker TYP @ $10.52
Long 1 unit US Dollar Bull ticker UUP @ $22.52 stop @ $21.97
Short 1 unit Daimler ticker DAI @ $52.23 stop @ $52.23

Friday, March 19, 2010

My Sentiments Exactly

Comstock Partners, Inc.

Fundamentals Don't Matter Until They Do

March 18, 2010

The market rallied when the FOMC said it would keep the Fed Funds rate at current levels for an extended period just as it rallied when it became likely that the EU would paper over (at least temporarily) the Greek financial crisis. The market apparently continues to have great faith that the various central banks throughout the globe will continue to bailout and guarantee that they would never let any entity fail and would assure continued economic growth indefinitely. In other words, what economists and strategists used to refer to as the "Greenspan put" has now essentially become the "Bernanke put". We at Comstock have no such conviction that piles of additional debt issued or assumed by governments can cure the problems that were brought on by too much debt in the first place.

In this connection the delusions and hopes associated with the current rally bear a lot of resemblance to the unwillingness of investors to recognize reality at the market tops of March 2000 and October 2007. In the late 1990s and into early 2000 the market gave enormous valuations to tech stocks with no earnings and, in many instances, little or no sales as thousands of people with no market experience spent their time day trading their way to huge profits that evaporated, along with their initial capital, in the ensuing market carnage.

When the game ended with big losses and a potentially deep recession, the Fed stepped in by keeping interest rates at 1% for an extended period and encouraging, along with others, a massive boom in housing. Despite warnings by reputable individuals such as Paul Volcker and by institutions such as the IMF and the World Bank, the stock market soared.

Even when the dangers of the housing boom started to become evident in the media and the industry began to weaken, the stock market surge continued unimpeded. In August 2006 an article in Barron's described in detail the number of new mortgages and home-equity loans that were interest-only, no-money-down and adjustable-rate. Other articles explained so-called "liar loans" whereby purchasers were able to get mortgages with no documentation of income or assets. In the same period various mortgage lenders went public with their dire problems. These companies included, among others, H&R Block, Impac Mortgag, Countrywide, Accredited Home Lenders and Washington Mutual. During the following period revelations came out almost daily how mortgages were packaged and sold, sliced and diced and distributed all over the globe. In June 2007 two big Bear Stearns hedge funds came close to collapse and still Wall Street didn't get it. The stock market kept rising into October as investors belittled the importance of subprime mortgages, and, in any event, assumed the Fed would take care of everything.

Now, once again the markets are assuming that central banks around the world will save the economy despite the severe problems that are known to all and despite the fact that the S&P 500 has already experienced two declines of more than 50% within the same decade. The economic recovery remains extremely weak, plagued by consumer deleveraging, a weak labor market, tight credit, a hidden inventory of homes to be foreclosed, significant amounts of toxic debt still on the books of major financial institutions and the dire financial condition of state and local governments.. In addition there are the continuing problems of sovereign debt, the unsustainable boom in China and the threat of "beggar thy neighbor" policies as illustrated by the current trade and currency tensions between the U.S. and China.

Meanwhile, as in 2000 and 2007, the stock market is once again flying upward, feeding on its own momentum and the faith that governments will never let bad things happen. The general feeling seems to be that fundamentals don't really matter any more as long as the market is rising. As past massive declines have proven, however, fundamentals don't matter until they do.


The above piece is courtesy the cats over at Comstock Partners. Thanks again.

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


Open Positions:
Long 1 unit Direxion Large Cap 3X Bear ticker BGZ @ $19.34
Long 2 units Direxion Small Cap 3X Bear ticker TZA @ $12.06
Long 1 unit Direxion Emerging Mkts 3X Bear ticker EDZ @ $60.50
Long 2 units Direxion Financial 3X Bear ticker FAZ @ $19.65
Long 2 units Ultrashort Xinhua China ticker FXP @ $8.49
Long 1 unit Ultrashort Real Estate ticker SRS @ $9.82
Long 2 units Direxion Tech 3X Bear ticker TYP @ $10.52
Long 1 unit US Dollar Bull ticker UUP @ $22.52 stop @ $21.97
Short 1 unit Daimler ticker DAI @ $52.23 stop @ $52.23

Fedex and Caterpillar

In yet another example of something you simply cannot up, friend and fellow blogger Michael Panzner has brought to my attention quite the interesting contradiction today that all should be aware of.

In his post, Shouldn't Somebody Be Looking Into This?, Mike hi-lights the reversal in economic opinion the cats over at Fedex seem to be having.

Many believe the recovery and that if you simply give it time, it will improve day by day or in the case of Fedex you might even have to wait a week.

Such is the case here. Lets rewind back to March 11 this year, yes March 11 of last week, where courtesy of the FT we got this news flash that Fedex Warns on U.S. Recovery.

Now fast forward back to today where Fedex Sees Economic Recovery Spreading.
So which is it.

Mike Panzner sums it up this way:

"I'm not sure if 1) somebody has been misquoted; 2) this is one of the most egregious examples of expectations management I've ever seen; or, 3) somebody forgot to take their meds (or took way too much), but either way, shouldn't an editor, a regulator, or a doctor be looking into this?"

This is the market in which we live. This is the political climate in which we live. Sadly it seems we get what we deserve.

Further to this Karl Denninger over at Market Ticker brings up an interesting piece he dug up regarding the Caterpillar numbers. His post If the Economy is Recovering....(CAT) offers the following;


Co reports retail sales of machines declined 20% y/y in Feb and sales of reciprocating & turbine engines to retail users & OEMs declined 33% y/y in Feb

Another source off the wire has even uglier numbers:

 Caterpillar Inc Reports 3 month dealer statistics;
Dec-Feb sales - filing
- Retail Sales of Machines:
              Feb.10    Jan.10    Dec.09
Asia/Pacific DOWN 2% UP 1% DOWN 12%
EAME* DOWN 22% DOWN 35% DOWN 41%
Latin America DOWN 20% DOWN 15% DOWN 24%
ROW* DOWN 15% DOWN 19% DOWN 28%
North America DOWN 30% DOWN 40% DOWN 46%
World DOWN 20% DOWN 27% DOWN 35%
Sales of Reciporcating & Turbine Engines
to Retail Users & OEMS by Business Sector
                Feb.10   Jan.10   Dec.09
Electric Power DOWN 26% DOWN 27% DOWN 27%
Industrial DOWN 15% DOWN 22% DOWN 44%
Marine DOWN 23% DOWN 18% DOWN 29%
Petroleum DOWN 47% DOWN 46% DOWN 46%
Total DOWN 33% DOWN 33% DOWN 36%

(Hattips to rebeltraders and aztrader)


The above in blue was pulled directly from Karl's site. (thanks Karl)

The above 2 items harken back to that old line of ...... if it looks like a duck, if it sounds like duck, if it smells like a duck, maybe just maybe it is. In our case you simply need to substitute bullshit for duck and you're good to go.


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


Open Positions:
Long 1 unit Direxion Large Cap 3X Bear ticker BGZ @ $19.34
Long 2 units Direxion Small Cap 3X Bear ticker TZA @ $12.06
Long 1 unit Direxion Emerging Mkts 3X Bear ticker EDZ @ $60.50
Long 2 units Direxion Financial 3X Bear ticker FAZ @ $19.65
Long 2 units Ultrashort Xinhua China ticker FXP @ $8.49
Long 1 unit Ultrashort Real Estate ticker SRS @ $9.82
Long 2 units Direxion Tech 3X Bear ticker TYP @ $10.52
Long 1 unit US Dollar Bull ticker UUP @ $22.52 stop @ $21.97
Short 1 unit Daimler ticker DAI @ $52.23 stop @ $52.23

Wednesday, March 17, 2010

Let The Good Times Roll

Those of the 80's with recall with much fondness the above referenced song by The Cars. I use this title for this post because this song title sums up the markets perfectly. Nothing can stop it.

I came across this article today via the WSJ in which the FDIC is looking for buyers for 3 Puerto Rican banks. But of course this is nothing to concern yourself with as Harley Davidson, the epitome of conspicuous consumption, has a moonshot on rumors of a takeover.

The Dick Fulds' of the world will stop at nothing chasing another dollar. Speaking of Dick-I'm gonna burn the shorts in Lehman- Fuld, anyone know his whereabouts? (maybe down in Uruguay, next door to Hank Paulson?)

While on the topic of Lehman, I am not going to re-hash what I have said but what I want you to focus on is how long a charade can continue going when significant interests are fully committed to keeping it going.

Think back to Lehman equity trading as Lehman was swirling down the toilet. It defied all logic at the time, which one needed only a few minutes to figure out, (full disclosure I was short Lehman back then) and refused to decline. Only to finally succumb.

Think back to General Motors as it was swirling down the toilet. Yes, the same GM that was borrowing money to pay interest on borrowed money. That mattered little as the charade that was GM's finances carried on. Until finally one day, it didn't anymore.

Think back to Enron, ditto the above.

Think back to World Com ditto the above.

Think back to the Nasdaq bubble and the likes of Bathroom.com, Barber.com, and that quarter after quarter out performer Outhouse.com
, yet again ditto the above.

This market will simply ignore the facts until one day it suddenly doesn't anymore. Foreclosures, delinquencies, credit contraction, job losses, muni and state financial implosion matters not a whit until this market has it's epiphany. The moment when all of this "shit", for lack of a better word, will matter and how.

What was the quote by Orwell again, oh yeah I remember it now,

"during times of universal deceit, telling the truth becomes a revolutionary act".


Lies, piled on top of fraud, stacked upon avarice. Orwell's quote is a perfect fit for this market, for our corporate climate, and most fitting of all for our political leadership.

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


Open Positions:
Long 1 unit Direxion Large Cap 3X Bear ticker BGZ @ $19.34
Long 2 units Direxion Small Cap 3X Bear ticker TZA @ $12.06
Long 1 unit Direxion Emerging Mkts 3X Bear ticker EDZ @ $60.50
Long 2 units Direxion Financial 3X Bear ticker FAZ @ $19.65
Long 2 units Ultrashort Xinhua China ticker FXP @ $8.49
Long 1 unit Ultrashort Real Estate ticker SRS @ $9.82
Long 2 units Direxion Tech 3X Bear ticker TYP @ $10.52
Long 1 unit US Dollar Bull ticker UUP @ $22.52 stop @ $21.97
Short 1 unit Daimler ticker DAI @ $52.23 stop @ $52.23

Friday, March 12, 2010

Lehman, Nothing to See Here. Move Along Now

The Lehman news overnight and their balance sheet games is what I want to touch on this morning. Zero Hedge has the summary which you can read here. But you don't have to, as there are much more pressing matters of import like American Idol and America's Top Model.

What does one say about the Lehman now that post mortem we know for a fact that the fraud and deceit was pervasive and endemic and yet somehow, miraculously no one is responsible?

Pom Pom network side note. This morning the boobs and boobs on CNBC were discussing the Lehman revelations. You just gotta marvel at their nerve to even comment on the subject.

From Joe Kernan having the gall to mock Erin Callan now, when during the crisis when they had people like her front and center all he could do was his best tea bagging, ass kissing gig, to "the brain" David Faber proclaiming how when Lehman was drowning he and few others had little understanding of what an SIV - structured investment vehicle- was.

Yup, you read it right. Purported financial reported nicknamed 'the brain' pulling a Sargent Schultz (re: Hogan's Heros) on us. Could it be that just maybe nicknames on CNBC are like nicknames in the World Wrestling Federation?

I would have more respect for them at CNBC if they would just come out and say what is common knowledge. The fact is that they blew it. They didn't have the onions to ask the tough questions when they had people like Fuld, Callan, or any one of the hundreds others involved in this heist on the set because they need the sponsors. the ad dollars and that trumps all else.

If they could do this then at least then I could have some respect for their character. Come to think of it, no wonder there is a shortage of mirrors, I would get sick of looking at myself as well if I had compromised my principles like they boobs and boobs at CNBC have. Yet another example of why it's a bull market in Prozac in this country.

Back to my original thought. You want to me to get out my dictionary and thesaurus and go on an insulting diatribe against Dick Fuld or Erin Callan?

Come on. What good what that do? I mean beyond stating indisputable facts.

Ya think the're gonna do some time?

You think dirt bags like Harry Reid, Charlie Rangle, John Bohner and the like are gonna hold anyone accountable?

Don't make me laugh. That would take onions which is something in seriously short supply in this country, along with mirrors.

No my friends, the elite and privileged have circled the wagons and jail time, which in my opinions would be a gift for those responsible, is a non starter as it would violate their perimeter which they cannot tolerate.

No people like Fuld and Callan, and if you want to dig further, Mozillo (Countrywide), Raines (Fannie), Perry (Indymac), Casano (AIG) are all safely ensconced in the million dollar flats with their comfortable net worths well intact.

I ask THE question again. What lengths would you go to in a effort to make $5, 10, 20 million in net worth? Would you hide liabilities in a structured vehicle off balance sheet whilst going on TV proclaiming all is fantastic.

If caught how much time would you do if allowed to keep said net worth?

Dollars to doughnuts you would do it standing on your head.

My stomach had turned this morning.

I have been trying very hard to forget the goings on up here in Lansing Michigan. Things like a current mayor and now wanna-be governor who thinks Michigan needs a state owned bank to make business and student loans. (Didn't we try that already on a national level with Fannie, Freddie and Sallie with disastrous results?)

Or a police chief retiring at age 46 with a full pension only to enter the private sector as a security consultant with a 6 figure salary. I owe my high school guidance counsellor fat lip for not cuing me in on the spoils of public service.

Yes, in an attempt forget that type of crap I have the Lehman news to console myself with. I have talked in this blog about the lack of trust in our capital markets countless times. It matters not currently but mark my words, there will come a day when it matters plenty and it will be a pretty sight. Nothing to see here, move along now.

Housekeeping notes;

I was stopped out of my FXA position Wednesday of this week at 91.75 for a loss of just over 2 pts on 1 unit short.


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


Open Positions:
Long 1 unit Direxion Large Cap 3X Bear ticker BGZ @ $19.34
Long 2 units Direxion Small Cap 3X Bear ticker TZA @ $12.06
Long 1 unit Direxion Emerging Mkts 3X Bear ticker EDZ @ $60.50
Long 2 units Direxion Financial 3X Bear ticker FAZ @ $19.65
Long 2 units Ultrashort Xinhua China ticker FXP @ $8.49
Long 1 unit Ultrashort Real Estate ticker SRS @ $9.82
Long 2 units Direxion Tech 3X Bear ticker TYP @ $10.52
Long 1 unit US Dollar Bull ticker UUP @ $22.52 stop @ $21.97
Short 1 unit Daimler ticker DAI @ $52.23 stop @ $52.23


Tuesday, March 9, 2010

Global US Dollar Liquidity Growth .... or lack thereof.

A friend brought to my attention, via Gold Digest, quite an interesting piece by Jay Taylor, the editor of Jay Taylor's Gold Mining and Technology Stocks. Jay's piece entitled 'Looking Over Into the Abyss' which somehow managed to escape my attention, carried with it a most interesting chart, one which Jay mentions Charlie Clough followed closely. Regular readers know my affinity for the former chief strategist at Merrill Lynch who was sadly was run out of dodge for being too bearish on stocks.

I have reproduced the piece by Mr. Taylor below for your viewing pleasure.


Looking Over Into The Abyss?
Jay Taylor
We have never subscribed to the notion that the policies given to us by our ruling elite would fix our economy. In fact, we are of the mind that each "remedy" is making everything far worse. Why? Because all the so-called fixes involve printing more money, which is to say creating more and more debt at a faster and faster pace. Since debt combined with mal-investment that results from huge amounts of money pumped into the economy in a short period of time, policies provided for us have been pathological.

Check out our chart of Global U.S. Dollar Liquidity Growth (GUSDLG) below. We started tracking this data series after Charlie Clough of Merrill Lynch reportedly used it during the Asian crisis in the late 1990s.' Since we believe that inflation and deflation are a monetary phenomenon, I took a great interest in this stat and began charting it weekly.

GUSDLG has been a road map for the stock market and commodities markets. When it rises, it indicates the system is inflating. When it decreases, it indicates the fuel that drives prices higher is not sufficient to sustain the fraudulent high prices those rose not from the creation of wealth but from fiat (debt). There is a yet-to-be determined lag time between the change in GUSDLG and prices, but ultimately when GUSDLG declines it seems to guarantee falling asset prices.

I would like to call your attention to a couple of points regarding this chart.

  1. The first peak of 52-week liquidity growth was at 14.66% in March of 2000. This top corresponded almost perfectly with the dot com stock market bubble. When this measure of liquidity decreased to 0.08% in February 2001, trillions of dollars of wealth were lost in stocks. As GUSDL was bottoming in 2001, panic was setting in at the Fed and the U.S. in general as visions of a deflationary depression was growing. It was at that time that Ben Bernanke wrote his paper, "Deflation, Making Sure it Doesn't Happen Here." His remedy? The same as Mr. Greenspan's during the Asian crisis. Simply print mountains of more money, which of course resulted in huge amounts of more debt since debt is the "raw material" from which our fiat money is created.


  2. Greenspan followed Bernanke's recommendation. The second peak occurred in April of 2004 with the annual rate of liquidity growth at 21.85%. This rise in liquidity pumped into the economy by the Greenspan Fed was the fuel that drove the housing market to its insanity and what is causing so much pain in America now. Let's give a big round of applause to Alan Greenspan for "fixing" our economy!! When GUSDLG was brought down this time to a bottom of 9.21% in September 2005, it set the stage, for the greatest deflationary plunge in asset prices since the Great Depression following the Lehman Brothers failure in September 2008.


  3. True to form, the Fed hit the monetary accelerator lake a mad angry drunk, boosting GUSDLG to an insane 48.07% by January of 2009. Up until about seven weeks ago, GUSDLG had been decreasing in a gradual fashion, from 48.07% in January 2009 to 32.02% in late October 2009. However, take a look at what has happened since October 26, 2009. GUSDLG has fallen off a cliff to close this past week at an annual growth rate of 16.87%. In my view, the plunge in the stocks and commodities this past week is not unrelated to the massive and very rapid decline in GUSDLG. Moreover, if you recall the deflationary devastation of wealth that occurred following the peak of March 2000 and the peak of April 2004 (albeit delayed in that event) you have to be very worried about what is in store for asset prices NOW!


Indeed Dr. Robert McHugh believes Wave (C) down has begun. Agreeing with him would be Ian Gordon and Robert Prechter. If this is the start of the dreaded (C) wave down, we may be in for some very hard times. Indeed, our Model Portfolio fell sharply this week to a year-to-date gain of a mere 1.12%, down from 8.44% last week. To try to improve our chances for higher returns, I am suggesting you consider some more aggressive hedges, like increasing exposure to the Prudent Bear Fund or buying ProShares Short S&P500 (NYSE-SH).

26 January 2010

Jay Taylor, Editor of J Taylor's Gold & Technology Stocks
www.miningstocks.com


Thanks for the insight Jay, much appreciated.



Housekeeping notes;

EDZ experienced a reverse 10:1 split which adjusts my cost accordingly (hint, moving the decimal over one to the right).

Today I was stopped out of my GS short at $171.22 for a loss of about 9 1/4 pts on 1 unit. Enjoy the run bulls, I will simply leave it at that as the volume on it and this overall market simply amazes me. Enjoy it till it ends for when it does... awww heck you can just blame the shorts.

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


Open Positions:
Long 1 unit Direxion Large Cap 3X Bear ticker BGZ @ $19.34
Long 2 units Direxion Small Cap 3X Bear ticker TZA @ $12.06
Long 1 unit Direxion Emerging Mkts 3X Bear ticker EDZ @ $60.50
Long 2 units Direxion Financial 3X Bear ticker FAZ @ $19.65
Long 2 units Ultrashort Xinhua China ticker FXP @ $8.49
Long 1 unit Ultrashort Real Estate ticker SRS @ $9.82
Long 2 units Direxion Tech 3X Bear ticker TYP @ $10.52
Long 1 unit US Dollar Bull ticker UUP @ $22.52 stop @ $21.97

Short 1 unit Daimler ticker DAI @ $52.23 stop @ $52.23
Short 1 unit CurrncyShr Aus Dlr ticker FXA @ $89.65 stop @ $91.71
Short 1 unit Goldman Sachs ticker GS @ $162.05 stop @ $171.21

Sunday, March 7, 2010

Customers Are Priority One !

In what can only be described as yet another example of the hubris and sense of 'rules are for others' we get news today that Goldman Sach's chief economist Jim O'Neill is part of a group that is attempting to gain control of the world renowned English football club Manchester United from of all people Malcolm Glazer and his family.

For those that aren't aware, and the fly in the ointment for Jim O'Neill here is that Mr. Glazer is a customer of Goldman Sachs. No check that. Mr. Glazer is a very BIG customer of Goldman Sachs with Goldman helping him raise 500 million pound sterling in a bond offering back in January for the club resulting in share of the fees for Goldman which amounted to 15 million pounds.

It now appears that Goldman brass are none to happy with Mr. O'Neill participation in the hostile advances towards a customer's asset(gee whiz whodda thunk it !), in particular Mr. Glazer who took time to voice his displeasure to chief of doing God's work Lloyd Blankfein.

Acutally this shit is just too funny. You really couldn't make this up if you tried as no one would believe you.

Is one to now infer that Goldman has miraculously develped an ethics enforcement division now?

Did Mr. Glazer not get the memo that this is simply unbridled free market capitalism done the Goldman way? The kind where you don't get all tangled up in crap like fiduciary responsibility and other assorted business ethics concerns. No, if a client shows up and has something you want, you damn well step up like a man and take it. That's how you make partner and that's how you land a central banker job!

Just make sure you take proper precautions against any potential backlash from said decision, like pulling a Kashkari. Which I realize wikepedia nor the urban dictionary have an entry yet for but is simply known as holing up in the mountains after the heist. As former Goldmanite turned Treasury bag boy Neil - cash and carry, emphasis formerly on the cash but now on the carry - Kashkari has done. That or simply stay put and get your gun permit and be done with it.


Ahhh I am just being to harsh and judgemental. Mr. O'Neill was simply an overzealous football fan of Man U and let his emotion and loyalty to it cloud his judgement and get the better of him. He and Goldman would never front run a customer. Nor would they cut a customer off at the knees. Customers are priority one are they not?

Either way don't you just love it when hungry cannibals turn on one another. It simply could not be happening to a nicer group of people. They would eat their young if it didn't cause indigestion.


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


Open Positions:
Long 1 unit Direxion Large Cap 3X Bear ticker BGZ @ $19.34
Long 2 units Direxion Small Cap 3X Bear ticker TZA @ $12.06
Long 1 unit Direxion Emerging Mkts 3X Bear ticker EDZ @ $6.05
Long 2 units Direxion Financial 3X Bear ticker FAZ @ $19.65
Long 2 units Ultrashort Xinhua China ticker FXP @ $8.49
Long 1 unit Ultrashort Real Estate ticker SRS @ $9.82
Long 2 units Direxion Tech 3X Bear ticker TYP @ $10.52
Long 1 unit US Dollar Bull ticker UUP @ $22.52 stop @ $21.97

Short 1 unit Daimler ticker DAI @ $52.23 stop @ $52.23
Short 1 unit CurrncyShr Aus Dlr ticker FXA @ $89.65 stop @ $91.71
Short 1 unit Goldman Sachs ticker GS @ $162.05 stop @ $171.21

Friday, March 5, 2010

Yet More Insight From Comstock


The piece below comes to you courtesy of the perma-bears over at Comstock Partners. You know, the same perma-bears who steadfastly warned any and all about the tech bubble back in the 90's. To their credit they followed their work and refused to listen to market that defied logic. Sadly many did not preferring the sizzle and excitement of market intellectuals like Jim Cramer, Mary Meeker and Henry Blodgett.


Comstock Parners, Inc

Why the Rally Can't Be Sustained

March 04, 2010

In our view the strong rally off last year's March low is a contra-cyclical move within a secular bear market that started in March 2000. We have been undergoing a major credit crisis, followed by severe decline in income, a collapse in asset prices and record debt. A number of detailed studies have shown that economic recoveries following such events are of short duration and extremely weak at best. Despite massive efforts at stimulation, we see no reason why the outcome this time will be any different, and the evidence so far supports this view. The economy is going through a process of deleveraging debt that is creating strong headwinds against a self-sustaining recovery.

The major drivers of previous economic recoveries in the post-war period have been housing and consumer spending that was spurred by easy credit conditions. Those drivers are just not working this time around. Despite the herculean efforts of the Fed and the White House, credit still remains tight. Bank loans are down 27% from a year earlier while consumer credit is down 4%, the most since World War II. Although the monetary base has soared over the last 15 months, M2 money supply is down 0.3% and MZM money supply is down 4.2% annualized over the last three months. The strong growth of GDP in the 4th quarter was mostly due to a return to more normal inventory levels while real final sales remained weak. Consumer spending has picked up a bit, but only in comparison to the extremely low level of a year earlier. In the period ahead consumers will continue to be restricted by high unemployment, tight credit conditions, sub-par wage increases, lower net worth and the need to raise savings rates and pay off debt.

A number of factors that helped growth in the past year will no longer be operative in the year ahead. The cash for clunkers program temporarily spurred auto sales, which have reverted back to sluggish sales levels. The housing credit for first-time home buyers goosed housing demand for a while, but the extension of the program does not seem to be having the same effect, and, in any event, ends on April 30th. Furthermore the Fed's $1.25 trillion program to purchase mortgages ends on March 31st. As we pointed out in our comment two weeks ago economic momentum already seems to have peaked in the 4th quarter as a number of recent indicators have come in under expectations.

In addition we don't think the sovereign debt problems have ended with Greece any more than we thought the subprime loan problems ended with Bear Stearns. It remains to be seen whether Greece can carry out its promises of austerity and there is no need for us to dwell on the now well-publicized budding financial crises in the rest of the EU's Southern tier. As we previously pointed out the debt problems have not gone away, but are in the process of being shifted from private to public entities.

Some may wonder why we continue to emphasize the global financial and economic problems and what this has to do with the stock market. In our view this has everything to do with the stock market. The entire rally has been based on the belief that we can undergo a V-shaped recovery and that modern governments just will not allow the kind of unraveling that has followed all other major credit crises. However, governments can only try to halt the malaise by increasing their own debt and running up huge budget deficits that cannot be sustained. In the U.S. we are already seeing the backlash as the public, while still demanding that the government somehow create more jobs, is also rebelling against the prospect of ever-increasing deficits.

Therefore if the market, as we believe, is discounting events that will not happen, the disappointment will be severe---and in a market increasingly dominated by trend players, the rush for the exits can be something to behold. The market peaked on January 19th at 1150 intraday on the S&P 500, declined to 1044 and now has bounced back to 1122. After the March 2009 low the index moved 62% in six and a half months, but only 4% in the last five and a half months. In our view this is all part of a topping formation that will be followed by a substantial decline in the period ahead.



Thanks much for the insight fellas.

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

Open Positions:
Long 1 unit Direxion Large Cap 3X Bear ticker BGZ @ $19.34
Long 2 units Direxion Small Cap 3X Bear ticker TZA @ $12.06
Long 1 unit Direxion Emerging Mkts 3X Bear ticker EDZ @ $6.05
Long 2 units Direxion Financial 3X Bear ticker FAZ @ $19.65
Long 2 units Ultrashort Xinhua China ticker FXP @ $8.49
Long 1 unit Ultrashort Real Estate ticker SRS @ $9.82
Long 2 units Direxion Tech 3X Bear ticker TYP @ $10.52
Long 1 unit US Dollar Bull ticker UUP @ $22.52 stop @ $21.97

Short 1 unit Daimler ticker DAI @ $52.23 stop @ $52.23
Short 1 unit CurrncyShr Aus Dlr ticker FXA @ $89.65 stop @ $91.71
Short 1 unit Goldman Sachs ticker GS @ $162.05 stop @ $171.21


Thursday, March 4, 2010

Punting Goldman Sachs


Back on Feb 1 I posted a monthly chart on Goldman and stated the following comment;

"Time will tell if GS will rally back to the neckline giving those who missed it a 2nd chance."

Well today, a little over a month later, patience has proven to be a virtue as we are getting that chance as Goldman rallies back up to kiss the neckline from underneath. I am therefore punting 1 unit of Government Sachs, you know the cats doing God's work, short here at $162.15 with a stop at $171.21


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

Open Positions:
Long 1 unit Direxion Large Cap 3X Bear ticker BGZ @ $19.34
Long 2 units Direxion Small Cap 3X Bear ticker TZA @ $12.06
Long 1 unit Direxion Emerging Mkts 3X Bear ticker EDZ @ $6.05
Long 2 units Direxion Financial 3X Bear ticker FAZ @ $19.65
Long 2 units Ultrashort Xinhua China ticker FXP @ $8.49
Long 1 unit Ultrashort Real Estate ticker SRS @ $9.82
Long 2 units Direxion Tech 3X Bear ticker TYP @ $10.52
Long 1 unit US Dollar Bull ticker UUP @ $22.52 stop @ $21.97

Short 1 unit Daimler ticker DAI @ $52.23 stop @ $52.23
Short 1 unit CurrncyShr Aus Dlr ticker FXA @ $89.65 stop @ $91.71
Short 1 unit Goldman Sachs ticker GS @ $162.05 stop @ $171.21





Monday, March 1, 2010

Questions for Mr. Buffett

I notice Warren Buffett is on CNBC this morning with his interviewer of choice Becky Quick. Yes, readers I will leave that issue all alone as I have said enough on it previously. But since Mr. Buffett is taking questions this morning from the peanut gallery this idiot , fringe blogger has a couple of em' for the oracle.

Two Questions from Lansing, Michigan Mr. Buffett and please excuse my lack of homage and diefication that you are so accustomed to receiving from your darling hostess from CNBC.

1) Mr. Buffett do you remember the movie A Few Good Men ? (hint Jack Nicholson played the fantastic Col. Nathan Jessop) I ask this because your statement today that "the finances of U.S. States and Municipalities have deteriorated dramatically" directly contradicts one's belief that an economic recovery is under way.

Just as Col. Jessop in the movie was asked under oath why
if Sanitago was ordered to not be touched, and your orders are always followed, was Santiago to be shipped off the base?

Why then are state and muni finances deteriorating if the economy is improving? How is it then one is to credibly believe that the economy is recovering in the slightest given their dependence on tax revenues?

2) Mr. Buffett - regarding your comments about shorting and to not do it, instead just buying companies that would prosper if the exchange closed for years. If one had this foresight to buy, lets say Citibank ticker C, say about 10 years ago at the (right?) price of then $25 and the stock exchange had in fact been closed since then as you suggested - how do you reconcile this lack of prosperity with Citi now at $3.50?

If you prefer Mr. Buffett you can insert any other name in there if Citi is too tough an example. Ford, GE, Merrill Lynch or any other, go ahead take your pick.


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


Open Positions:
Long 1 unit Direxion Large Cap 3X Bear ticker BGZ @ $19.34
Long 2 units Direxion Small Cap 3X Bear ticker TZA @ $12.06
Long 1 unit Direxion Emerging Mkts 3X Bear ticker EDZ @ $6.05
Long 2 units Direxion Financial 3X Bear ticker FAZ @ $19.65
Long 2 units Ultrashort Xinhua China ticker FXP @ $8.49
Long 1 unit Ultrashort Real Estate ticker SRS @ $9.82
Long 2 units Direxion Tech 3X Bear ticker TYP @ $10.52
Long 1 unit US Dollar Bull ticker UUP @ $22.52 stop @ $21.97

Short 1 unit Daimler ticker DAI @ $52.23 stop @ $52.23
Short 1 unit CurrncyShr Aus Dlr ticker FXA @ $89.65 stop @ $91.71