Tuesday, May 25, 2010

Testing Gold on the Short Side


As I have said before regarding this deflationary global garage sale, when there is no bid for anything else, they will hit the bid on gold. Given this technically we have a descending channel inside of a descending channel on GLL which caught my eye. I do note there is no question that we could re-test the lows made back around $38.5

As my notes above indicate I am enamored with the high volume push off $38.5 and the recent 2 day low volume consolidation. Thus, I am prepared to test the water and short gold here this morning. I wish to do so via a long position in the Proshares ultra short gold ticker GLL here at $41.30 with a stop at $39.88

I am keeping an eye on the $43 level as an area to add when taken 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 @ $42.45
Long 1 unit Ultrashort Real Estate ticker SRS @ $49.10
Long 2 units Direxion Tech 3X Bear ticker TYP @ $10.52
Long 1 unit US Dollar Bull ticker UUP @ $22.52 stop @ $22.52
Long 1 unit ishares Barclays 20yr Treas ticker TLT @ 92.15 stop @ $92.15
Long 1 unit ishares Barclays 20yr Treas ticker TLT @ 93.48 stop @93.48
Long 1 unit Proshares Ultrashort Gold ticker GLL @ $41.40 stop @ $39.88

Monday, May 24, 2010

The Twilight Zone Keeps On

Every Monday Morning James Kunstler author of the book Long Emergency pens a piece over at his blog Clusterf$%k Nation that I never miss. Jim is a very colorful writer and speaker who minces few words, which immediately makes me like him!

In his latest blog post entitled Out of Darkness James relays a very disturbing story from the realm of banking and real estate that was he was told at a conference recently. This story tells you more about the state of the banking and banks today than any Wall St. analyst would ever dare, as it shows you how perverted they have become in their delusional world of extend and pretend, Kudlow-esque, goldilocks delusion.

Here is what James has to say:


"I heard a lot of stories during the meeting in Atlanta last week but one really stood out. It was about the money and revealed a lot about what is going on in our banking system these days. A New Urbanist developer had gotten a small project going for a traditional neighborhood. Despite the global financial clusterfuck, the developer was able to meet the payments of his commercial loan. But the FDIC sent bank examiners around America and they told the small regional banks that if they had more than twenty percent of their loans in commercial real estate (CRE) they would be put out of business. The banks were ordered to reduce their loads of CRE by calling in the loans and liquidating the assets. Ironically, the banks only called in their "performing" loans, the ones that were being regularly paid off, because they were ignoring and even concealing the ones that weren't being paid.

The developer in question had his loan called in when the FDIC descended on his bank. He couldn't pay off the $3 million in one lump, of course. The FDIC's agents are going to seize and sell off his project if he can't get it refinanced in short order. He can't get it refinanced because there is now such a shortage of capital in the banking system that no one can get a loan for anything. Also, since it is now well-known that the bank failed, the vultures are circling above his project hoping to buy it for a discount, so even the few private investors who have money won't throw him a lifeline. By the way, the FDIC agents told him they are doing this because they now expect that virtually all commercial real estate loans in the USA will fail in the months ahead. Pretty scary story, huh? And he was one of the good guys."

Yes, readers we live in a parallel universe or twilight zone as I have called it before where up is down, down is up. Performing loans are called non-performing loans are ....... simply ignored and wished away. Yes, the twilight zone lives on!

Either way one must marvel at this glowing example of banking management at it's finest! They must have studied under the tutelage of Professors the likes of Munnell, Rosen and Farmer. Beautiful !

This story is only one item in an ocean of news but like cockroaches there is never just one. But hey, who am I to question this supposed recovery right. Just another idiot blogger bumbling and babbling on. Do yourself a favor and turn off Larry Kudlow and the rest of the propaganda crowd and tune into another idiot blogger like Charles Hugh Smith over at the blog Of Two Minds.

Now Charles is no run o' the mill idiot blogger like yours truly. No, Charles is the author of the fantastic book Survival + Structuring Prosperity for Yourself and the Nation and had an excellent post the other day entitled Suppressing the Cognitive Dissonance of a Bogus Recovery outlining just a few reasons a person with a room temp IQ and a clean urine sample to boot might question the purported recovery we keep getting reminded about daily by the main stream media (gee, I wonder why?).

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 @ $42.45
Long 1 unit Ultrashort Real Estate ticker SRS @ $49.10
Long 2 units Direxion Tech 3X Bear ticker TYP @ $10.52
Long 1 unit US Dollar Bull ticker UUP @ $22.52 stop @ $22.52
Long 1 unit ishares Barclays 20yr Treas ticker TLT @ 92.15 stop @ $92.15
Long 1 unit ishares Barclays 20yr Treas ticker TLT @ 93.48 stop @93.48

Odds and Ends

Spain had a problem last week with a debt auction. They were supposed to sell 8 billion Euro in notes and for some strange reason (demand?) scaled it back to about 6.5 billion. Now some have called this a auction failure, how dare they. Maybe Spain should prosecute those dastardly enough to undermine the good of the people, huh? Or maybe Spain should enact a ban on calling a failed bond auction a failed bond auction. You can split hairs deciding whether or not it was a failure but just remember Spain is purportedly party to the group that will bail Greece out. too funny.

Greeks protested in the streets last week against the austerity measures to be imposed on them (re: no more retirement at 45) just as the German Bundestag houses were to vote on the bailout. The irony of this is just fantasticly humorous. Of course the vote went through as it was a bailout for German banks and nothing less.

Speculators are you adversary are they Ms. Merkel? Markets are out of control you say? I wish you best of luck against 'the markets' and might I suggest you pick up a mirror and look into it as it is brain dead politicians like you who are out of control rather than markets.

The Germans, not finished with their lunacy and while on a roll wen on to announce the banning of naked shorting which makes me recall the quote from Reminiscences of a Stock Operator;

"he who sells what isn't hisn, must buy it back or go to prisn"

Do you understand the type of risks short sellers take. Continue to hate them people, just remember when they are run out of town as the bad guy and they disappear you often can get this.

One thing I can assure you of is that these government leeches located all over the planet will continue to do the wrong thing everywhere and always while at he same time preserving their way of life remaining fat and happy suckling at the public tit.

Regular readers know my antipathy for the Ivory tower types who inhabit or rather infest the campus's of colleges nationwide. I have minced few words insulting imbeciles likes of Roger Farmer of UCLA and Ken Rosen of Cal-Berkeley and their ideas and remedies for our predicament. So much so I have considered sponsoring an Imbecile of the Year Award. I have refrained from giving the award out prematurely simply because as soon as I am convinced I have found richly deserving recipient, another one shows up and one-ups your winner. This morning we get that.

I owe much thanks to Mish over at his great blog Mish's Global Economic Trend Analysis as he continually links great articles surrounding this economy. Over the weekend he had a great piece called Padded Pensions and What to do About Them.

In this piece there is a link to an article out of the NY Times Can States Fix Their Pension Problems? The article interviews quite a few people on the issue and what to do about it. While reading through it one recommendation simply jumped off the page at me.

One Alicia H. Munnell uttered the following statement;

"The key question is what should be done. A major increase in contributions is not realistic at this time. Because of court rulings, states and localities have virtually no ability to cut benefits for existing employees and may have only limited ability to increase employee contributions. And any changes for new employees will take a long time to have any substantial effect.

That means if funding levels are to be restored quickly, the money must come primarily from taxes. But the recession has significantly reduced tax revenues and increased the demand for services. Thus, finding additional taxes will be extremely difficult. The only real option is to wait for the market and the economy to recover."


I want you to read that last line again so it can sink in because originally I thought it was a misprint. Okay, slowly now...... the only real option is to wait for the market and the economy to recover.

What does one say about this other than to seriously consider asking Ms. Munnell for a urine sample to find out what type of mind altering drugs she is on. But first lets find out who Alicia Munnell is.

Well, she is Professor of Management Sciences at Boston College's Carroll School of Management. She also serves as the director for the Center for Retirement Research at Boston College. You can read more of Ms. Munnell's eye popping resume here
.

What does one say to the parents out there sending your kids to Boston College and paying these type of fees other than suggesting they keep drinking the higher education kool-aid alongside all those fantastic school ratings reviews hence preventing septic shock to their system. In the least, in doing this, these parents can continue to brag about where their child is attending school to all their acquaintances at the country club, employment propsects be damned.

Do you see why I think a 6 figure investment in a college education taught by the likes of Rosen at Cal-Berkeley, Farmer at UCLA, and Munnell at Boston College, 3 members of my All-Imbecile Team is a colossal waste and one of the biggest scams operating?

Yes, lets wait for the economy and the market to recover good professor. Critical thinker are you? The only thing correct about higher education is that the people teaching it are high. Someone please explain to me why drug testing is not mandatory for these people because you cannot tell me she believes the garbage she is spewing about waiting for the market to recover for if so, then she is far denser than even I imagine. I think I have made my point and will leave the good professor alone.

Now, for those that missed it or for those that chose to dismiss it I suggest you re-read what shall now be referred to as the Glass Theatre Analogy:


“The biggest problem, getting back to Galbraith, is that in the process of facilitating sellers, all the new technology does not produce any buyers. I know most will disagree with that, but keep in mind that demand is a state of mind. It runs away at the first sign of trouble. Put another way, the same emotions that motivate sellers cause potential buyers to hold off. Sell is preordained, but buying requires a complex greed analysis. Which leads me to my “glass theater analogy.” We are all familiar with the most common analogy for panic: when someone yells “Fire!” in a crowded theater. The problem, of course, is that there are 50 rows of seats, but just two aisles leading back to two doors on the back wall. Grown men and women may trample small children to escape getting fried.

“There are a couple of problems extending that analogy to the stock market, so I made some changes in my “glass theater analogy”. The biggest problem in the market is that, even if you choose the aisle seat, last row, you can’t escape unless you can find someone to take your seat. As Galbraith pointed out so many years ago, you can’t be a seller unless someone else will buy. (What a dirty little secret!). Another big problem, considering the speed of the technology today, is the basic transparency. It’s as though the back wall of the theater were made of glass, and all the potential patrons can see what’s happening inside. It’s right there on their screen! Who is going to take your seat when they can see the carnage going on in there? Which leads me back to last week’s mysterious plunge. First of all, remember that reading Alan Abelson the Saturday before the 1987 Crash, he indicated we had already had it with the 230-point drop the week before. The newspapers last weekend sounded a bit like a post mortem too. “The SEC is trying to get to the bottom of it.” I can save them the trouble. What do you expect when your weapon has a seven cartridge magazine in the butt compared to a single load, wad and ball. You get 1000 points in 15 minutes. Wait until the human nature kicks in again someday, in a big way. It might become 5000 points. You could retrace this bear market rally in a hurry.


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 @ $42.45
Long 1 unit Ultrashort Real Estate ticker SRS @ $49.10
Long 2 units Direxion Tech 3X Bear ticker TYP @ $10.52
Long 1 unit US Dollar Bull ticker UUP @ $22.52 stop @ $22.52
Long 1 unit ishares Barclays 20yr Treas ticker TLT @ 92.15 stop @ $92.15
Long 1 unit ishares Barclays 20yr Treas ticker TLT @ 93.48 stop @93.48

Wednesday, May 19, 2010

How Stupid Do They Think We Are?

The other day I noted the fact that Goldman Sach's, who according to it's CEO Lloyd Blankfein "does God's work", did not have a losing day trading in the latest quarter. Yes you read it correctly, they did not have a losing day trading in the entire quarter!

The next day I came across this article 4 Big Banks Score Perfect 61 Day Run out of the NY Times.

Then, as noted in my piece yesterday on high frequency trading, I alluded to a firm the NY Times reported on, and you can read about here which, according to it's founder, has not had a losing trading day in 4 years.

After considering this for a few days I simply must chime in on this. It's not enough that 1 firm, is savvy enough, bright enough and with a little luck able to turn in a quarter with no losses but 4 other firms as well? And now a high frequency outfit going 4 years without a loss!

Who the hell do they think I am? Lloyd Christmas from Dumb and Dumber? Is one supposed to even dignify bullshit like this with a comment? Now, I am no statistics major and many consider me a short bus rider but I know enough to know bullshit, insider trading, a ponzi scheme or a mish mash of all 3 when I see it.

As for the Goldman shareholders along with shareholders of those other perfect shops with perfect trading records this quarter I wish you luck when the music stops because it will and when it does it will not be pretty. I know you're long and strong and could care less "how they do it". My guess is you most certainly will care in due time and if you believe this horseshit of no losing days, and I would expect scores more out there do than don't, well then the earth must still be flat too.

Actually why shouldn't we expect a prozac'd public out there to believe bullshit like this perfect trading quarter. Past experience shows they should eat it up since history has shown that vast numbers believed:

Bernie Madoff's investment returns.
the unemployment numbers.
that home prices would rise indefinitely
that internet stocks with no sales were worth billions
that letting Lehman fail was a mistake
that bailing out banks prevents martial law


But just try and tell the public Dancing with the Stars is unavailable. Tell them that Survivor, Idol or Amazing Race are off the air and dollars to doughnuts says the pitchforks and the boiled rope would appear in a heartbeat for sure.

So to answer my initial question of how stupid do they think we are? Maybe plenty stupid.

Deflation and Gold

The facts convince me we are in the grips of a deflation many cannot comprehend let alone manage money in, which leads me to a confession. Regular readers know I own physical gold an silver, even thought it has not appeared below in 'open positions' functioning as insurance for me as it is no one's obligation and never defaults on its obligations.

Well, I did something last week I may well regret but after much discussion we (my wife and I) sold our physical gold and silver. As usual my timing was lousy as I did before Gold made its rocket shot. To say it was extraordinarily tough decision to make is putting it mildly. But it seems I heard somewhere prior that the hardest trade is the correct one?

Regardless, I believe that the deflation we are facing will result in lower prices for everything across the board and this will include gold. I also believe that the one asset that will never go "no bid" is gold (one could probably throw crude in here as well), can you say the same about AAPL or GOOG?

I also acknowledge the allegations of manipulation in the gold and silver markets as still being out there. I read a piece recently from an interesting blog I stumbled across recently called Jubilee Prosperity. The writer, who goes by the pseudonym? Rick Cash, seems very, very, astute. He caught my eye with an old Templeton quote he used where the old man said:

"assets always correct the amount they are financed"

Anyway Mr. Cash mentioned the circumstance with the precious metals, their manipulation and whether there is gold to back the paper promises in a piece entitled "In God not gold, We Trust - Counterfeiting II" where he remarked;

"If you found out your gold is counterfeit, what would you do?
Sell it or buy more?!

The record of every default was lower prices.


I offer his comments simply as something for your consideration. I can assure you that I HAVE !

Now before the gold cats go off on me I fully recognize that gold can defy this and I fully expect gold to lose the least in this deflation ,sometimes he who loses the least is the winner. You must remember that the global mother-of-all credit bubbles has burst and the globe faces a massive, never seen before in any one's lifetime, de-leveraging or if you prefer garage sale as MOST EVERYONE fights to raise cash.

The phrase cash is king truly needs to be ones' mantra.

Now you can forget about Wall St. embracing this (cash) because cash pays no fees and hence no country club memberships, no Botox, no trophy wife , no Porsche lease payments and no alimony installments hence the stay invested 100% of the time fee generation mentality.

Find me a fund pension or fund manager who is bearish and is in cash (fat chance) and I will show you someone (A) of significant character and one who understands fiduciary duty but I will also show you (B) someone who now has the employment longevity of an ice cube in the mid day sun.

Sorry, but that is how Wall St. operates. Bring in the fees and commissions and the keys to the kingdom are yours, but God help you if you don't. It simply means you're on the 60 day achieve or leave program champ! Best of Luck to ya!

Housekeeping notes;

Fittingly I was stopped out of CRM yesterday at $87.35 for a flat trade only to watch it tank. should have had a market on close stop. Doesn't matter as da boyz would find a way to jam one on that as well.

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 @ $42.45
Long 1 unit Ultrashort Real Estate ticker SRS @ $49.10
Long 2 units Direxion Tech 3X Bear ticker TYP @ $10.52
Long 1 unit US Dollar Bull ticker UUP @ $22.52 stop @ $22.52
Long 1 unit ishares Barclays 20yr Treas ticker TLT @ 92.15 stop @ $92.15
Long 1 unit ishares Barclays 20yr Treas ticker TLT @ 93.48 stop @93.48

Monday, May 17, 2010

More High Frequency Trading

I had a discussion recently with an old friend regarding the issue of high frequency trading (HFT). He wanted to know what it was all about and how it affected the melt down on May 6.

Our conversation then morphed into what to do about it the blatant wrongs that come with HFT. I am no expert on HFT and probably know just enough to be dangerous so stand advised that I realize this is a very complex subject. Given this and based on my understanding of the HFT game I have some strongly held beliefs which many in the field would considered simpletonian at best. I on the other hand prefer the idea that simple is elegant. Simple is understandable. Simple prevents you from getting taken to the cleaners. Now remember, this all assumes one has a room temp IQ to start with.


From what I have be able to dig up the HFT firms account for less than 5% of firms involved in the trading of markets but account for approximately 60-70% of all trading volume. I read recently that the holding period for many positions is less than 10 seconds but I cannot confirm this. These numbers should scare the wits out of any moron let alone a highly decorated Harvard MBA. These high frequency trading firms rely on the proximity of their servers being as close as possible to the servers of the exchanges where they do business for their edge.

So based on this here is my fix.

This is a free country, you want to trade the capital markets based on a computer program, a ouija board, sunspots, or the traffic patterns of downtown Madrid go right ahead. You want to close out your positions and shut everything down if a black cat suddenly crosses your path on the the way to Subway go right ahead, you are free to do so.

No one, and this applies to all market participants, gets a geographic proximity advantage with the exchange over anyone else. That means that Firm A's server cannot be located any closer to the exchange than Firm B's thereby negating the advantage this currently provides. No if ands or buts about it. If we cannot implement technology to referee the game properly and keep the playing field level for all then technology cannot play. PERIOD !! Spare me the diatribe. We got along fine without this shit before and will again.

No one get to see anyone else's buy or sell, long or short orders until entered and submitted into the exchange database which then becomes public info and can be seen by all participants.

Orders entered must remain entered for a minimum time period without exception or exemption (ie: my father-in-law is Duncan Niederauer is no longer an acceptable exemption) and is subject to a Draconian cancellation fee if cancelled prior to this period's expiration, again no if and or buts about it.

As for those saught after trading rebates from the exchanges to players for providing all this vaunted liquidity. Don't make me laugh as that is too hilarious for even my itty bitty cranium to buy. How does this rebate program strike you? None, nada, zilch, zip, zero, piss off. Got it now.
You want a rebate call Apple or Verizon.

This is just one idiot bloggers ultra-simpleton solution to the high frequency trading dilemma.

Now if a HFT firm can go 4 years without a loss under my rules, well, more power to em'! But be forewarned that if you circumvent these rules you (the principals of said firm) won't pay a paltry,nominally inconsequential monetary penalty. Rather you will pay for your crimes dearly via capital punishment. This is also know as consequences and also serve as a deterent (imagine that!).

Just so we're clear, and I mean crystal clear you can and should peruse many of the books and websites outlining the forms of medieval punishment for a primer on what could be in store for those who violate the rules.

This might make you re consider the age old defence of pleading guilty and paying a paltry monetary fine while neither admitting nor denying wrongdoing while riding off into a nirvanic sunset with your loot.


Housekeeping notes:

I want to get defensive and adjust my stops on a couple of positions.

First up I want to move my stops upward on my TLT positions to break even on each.

Next up I want to adjust my stop down on my CRM position to break even which is $87.35

Lastly I want to adjust my stop up on my long UUP position to break even at $22.52



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 @ $42.45
Long 1 unit Ultrashort Real Estate ticker SRS @ $49.10
Long 2 units Direxion Tech 3X Bear ticker TYP @ $10.52
Long 1 unit US Dollar Bull ticker UUP @ $22.52 stop @ $22.52
Long 1 unit ishares Barclays 20yr Treas ticker TLT @ 92.15 stop @ $92.15
Long 1 unit ishares Barclays 20yr Treas ticker TLT @ 93.48 stop @93.48
Short 1 unit Salesforce.com ticker CRM @ $87.35 stop @ $87.35

Sunday, May 16, 2010

Yet More Insight From Idiot Bloggers

Regular readers know that 3 things I subscribe to regarding the markets so wholeheartedly they should be tattooed on my you know what are;

  1. News conforms to the tape
  2. It takes a lot of buying to put a market up it takes a mere lack to buying to bring a market down.
  3. He who panics first panics best

I used to share this with clients during my prior life as a broker, some got it, many did not. I bring this subject up again as a prelude to something I read today at Rick Ackerman's great site Rick's Picks. Rick is a long time successful trader with a large following. thought I am not a subscriber to his services I do like to visit his site on a regular basis to keep up on Rick's thoughts and musings on the market.

Today Rick had a reader and long time market watcher of some 30 years submit a piece for a recent post entitled Why Traders Get Trapped in a Panic. The writers comments were extraordinarily insightful relating to the markets and in particular item #2 of mine above only taking it a much more cerebral step further. The comments are so insightful, so spot on I just had to share them with you (and wish yet again I was smart enough to come up with something like it!).

Rick Ackerman introduces the piece by saying this about the piece; "he explains why shouting "Fire!" on Wall St. is not quite the same as shouting "Fire!" in a crowded theater." So without further adieu:


“Many years ago, while reading John Kenneth Galbraith in “The Speculative Episode,” it dawned on me that the world wasn’t necessarily becoming a safer place, particularly on Broad and Wall. If you think about military history, we’ve gone from flintlocks during the Revolutionary War with a range of 40 feet to the Spencer Repeating Carbine at Pickett’s Charge in the Civil War (every Confederate soldier died), to Hiroshima. On Wall Street, we went from the ticker tape running three hours late on 16 million shares in 1929 to program trading in 1987 when we didn’t have the Internet and you had to call your broker to know what was happening that day in the market.

“Today, everyone has a quote in the corner of their screen at work or they watch CNBC at home. They are responsible for allocating their 401K online and many trade the rest of their nest eggs there too. The data processing capabilities out there can handle tens of billions of sell orders in a single day and on top of that, we have the CBOE and the E-Mini. Algorithmic Trading programs do umpteen trades a millisecond and make up 70% of the volume, one HAL versus another.

Technology Produces No Buyers

“The biggest problem, getting back to Galbraith, is that in the process of facilitating sellers, all the new technology does not produce any buyers. I know most will disagree with that, but keep in mind that demand is a state of mind. It runs away at the first sign of trouble. Put another way, the same emotions that motivate sellers cause potential buyers to hold off. Sell is preordained, but buying requires a complex greed analysis. Which leads me to my “glass theater analogy.” We are all familiar with the most common analogy for panic: when someone yells “Fire!” in a crowded theater. The problem, of course, is that there are 50 rows of seats, but just two aisles leading back to two doors on the back wall. Grown men and women may trample small children to escape getting fried.

“There are a couple of problems extending that analogy to the stock market, so I made some changes in my “glass theater analogy”. The biggest problem in the market is that, even if you choose the aisle seat, last row, you can’t escape unless you can find someone to take your seat. As Galbraith pointed out so many years ago, you can’t be a seller unless someone else will buy. (What a dirty little secret!). Another big problem, considering the speed of the technology today, is the basic transparency. It’s as though the back wall of the theater were made of glass, and all the potential patrons can see what’s happening inside. It’s right there on their screen! Who is going to take your seat when they can see the carnage going on in there? Which leads me back to last week’s mysterious plunge. First of all, remember that reading Alan Abelson the Saturday before the 1987 Crash, he indicated we had already had it with the 230-point drop the week before. The newspapers last weekend sounded a bit like a post mortem too. “The SEC is trying to get to the bottom of it.” I can save them the trouble. What do you expect when your weapon has a seven cartridge magazine in the butt compared to a single load, wad and ball. You get 1000 points in 15 minutes. Wait until the human nature kicks in again someday, in a big way. It might become 5000 points. You could retrace this bear market rally in a hurry.


Much thanks again to Rick and his astute reader who were gracious enough to share their thoughts with the rest of us in the blogosphere.

Are you starting to understand the venom in my tirades against propaganda TV (CNBC) most especially when they have the nerve to call us idiot bloggers when there is the above type of discussion going on in the blogosphere?

Either way, don't hold your breath waiting for a discussion as insightful as the one above from the likes of Kudlow Caruso-Cabrera, Insana, Pisani or Liesman from the station made famous by stock pumping and the octobox.


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 @ $42.45
Long 1 unit Ultrashort Real Estate ticker SRS @ $49.10
Long 2 units Direxion Tech 3X Bear ticker TYP @ $10.52
Long 1 unit US Dollar Bull ticker UUP @ $22.52 stop @ $21.97
Long 1 unit ishares Barclays 20yr Treas ticker TLT @ 92.15 stop @ $89.68
Long 1 unit ishares Barclays 20yr Treas ticker TLT @ 93.48 stop @90.88
Short 1 unit Salesforce.com ticker CRM @ $87.35 stop @ $90.47

Thursday, May 13, 2010

Circuit Breaker Primer

Given what happened last Thursday when bids simply disappeared and many found the sell button I thought a quick summary of what levels the vaunted NYSE circuit breakers would shut down the exchange.

The following is taken directly from the NYSE Euronext site which you can visit here

NYSE Circuit Breakers In response to the market breaks in October 1987 and October 1989 the New York Stock Exchange instituted circuit breakers to reduce volatility and promote investor confidence. By implementing a pause in trading, investors are given time to assimilate incoming information and the ability to make informed choices during periods of high market volatility.

I love the phrase "promote investor confidence". I have a few ideas for promoting investor confidence but unfortunately I am not in charge. Lucky for soooo many out there for sure. That said here is a summary of the circuit breakers as of the Q2 2010 under rule 80B of the NYSE.

In the event of a 1010 point (10%) decline in the Dow;
Before 2:00 Dow is halted for 1 hour
Between 2-2:30 Dow is halted for 1/2 hour
After 2:30 no halt.

In the event of a 2010 point (20%) decline in the Dow;
Before 1:00 Dow is halted for 2 hours
Between 1-2:00 Dow is halted for 1 hour
After 2:00 Dow is closed for the day

In the event of a 3200 point (30%) decline in the Dow;
Regardless of the time the market closes for the day.

all times provided are EST.

I provide this information as a quick and easy reference point so that in the future one is not left scrambling madly to figure out when they're gonna shut down the markets because it is tanking.


quick sidenote: this European bailout has given rise to some calling it 'Le TARP' which I think is a complete misnomer. If you're gonna call it something, call it what it is,
"Die Geld von Deutschen und geben die Griechen", also known as taking money from Germans and giving it to Greeks. Just like here take from taxpayers and give to banks. Oh yeah, and stuff Fannie and Freddie with all the bad paper, right Mr. Kanjorski?

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 @ $42.45
Long 1 unit Ultrashort Real Estate ticker SRS @ $49.10
Long 2 units Direxion Tech 3X Bear ticker TYP @ $10.52
Long 1 unit US Dollar Bull ticker UUP @ $22.52 stop @ $21.97
Long 1 unit ishares Barclays 20yr Treas ticker TLT @ 92.15 stop @ $89.68
Long 1 unit ishares Barclays 20yr Treas ticker TLT @ 93.48 stop @90.88
Short 1 unit Salesforce.com ticker CRM @ $87.35 stop @ $90.47

Wednesday, May 12, 2010

Short some Salesforce.com- CRM

Do you remember this chart below? A weekly view of Salesforce.com ticker CRM.



You can see some of my previous comments which I made back on April 13th here.



The daily chart above shows potentially an exhausted relief rally. The intraday 60 minute chart shows each subsequent high of the last few days accompanied by less and less volume. Call me crazy but punting CRM short here looks reasonable. For what its worth insiders seem to be crowding the exits of late as well.

I am punting 1 unit short of Salesforce.com ticker CRM here at $87.45 with a stop at $90.47




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 @ $42.45
Long 1 unit Ultrashort Real Estate ticker SRS @ $49.10
Long 2 units Direxion Tech 3X Bear ticker TYP @ $10.52
Long 1 unit US Dollar Bull ticker UUP @ $22.52 stop @ $21.97
Long 1 unit ishares Barclays 20yr Treas ticker TLT @ 92.15 stop @ $89.68
Long 1 unit ishares Barclays 20yr Treas ticker TLT @ 93.48 stop @90.88
Short 1 unit Salesforce.com ticker CRM @ $87.35 stop @ $90.47

Tuesday, May 11, 2010

Adding to my Long Bond Trade

I like how the bonds are trading today in particular the long end. We seem to have digested the blow off the other day and have settled above the prior trading area. Note in the equity indices they are struggling to recapture the high tick of Thursday's trading bar. Don't even get me starting on the volume of SPY, DIA, IWM, QQQQ, and MDY !

That said, I am also watching the Euro, for those with limited quotes this can be done via the FXE, which has had the most anemic bounce. If this is all it can bounce with the "shock and awe" I would counsel Weber, Trichet, Merkel, Sarkozy and Co. to keep fresh linen (if you know what I mean) close by.

Based on this (and some other small items..... hint crude) I am prepared to add a 2nd unit long to my TLT position here at $93.38 with a stop on this unit at $90.88


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 @ $42.45
Long 1 unit Ultrashort Real Estate ticker SRS @ $49.10
Long 2 units Direxion Tech 3X Bear ticker TYP @ $10.52
Long 1 unit US Dollar Bull ticker UUP @ $22.52 stop @ $21.97
Long 1 unit ishares Barclays 20yr Treas ticker TLT @ 92.15 stop @ $89.68
Long 1 unit ishares Barclays 20yr Treas ticker TLT @ 93.48 stop @90.88

Reader Question and Fannie/Freddie Absolution

The following is a question from a reader L.T. who hails from down under, the lovely country of Australia;

"I am totally in Cash (in the bank - spread around), except for a reasonable amount of physical Gold and folding cash.

My 401K accounts are in the nearest thing I can get to cash, which is (unfortunately) Money Market accounts. It is these that I am really concerned about as I am sure these funds will break the buck sooner or later.

Do you have any ideas on what/where/how to protect the monies in 401K accounts?

I am sure many of you readers would be interested if you have some thoughts on the matter."

Well L.T.,

I love the treasury only funds whereby the underlying paper is direct federal obligation paper. You can call your plan administrator to find out particulars for your account.

I also love having individual treasury securities for your account like T-bills and the like, remember short duration are the least risky, if such a phrase exists anymore.

It sounds like you are extremely defensive which I obviously agree with. You may wish to consider some of the inverse etf's which might serve as added protection for your account. By inverse etf's you can forget the 2x or 3x ones and focus on the 1:1 short etf's like proshares EFZ, EUM, and DOG. I am not an investment advisor but a hypothetical account that had 5% of its capital invested in some of these 1:1 inverse etf's could act as insurance if the buck was broken on any of the money market funds.

Remember now that I am not a licensed investment advisor and this should not be taken as investment advice. You should consult with your own personal advisor who knows your individual circumstances.

We are in a alternate universe so it would behove one to explore all options to protect against actions those in power may execute. One must guard against the unexpected as it seems to be becoming more commonplace.

This way the rank and file passengers travelling this voyage in steerage (a la the Titanic) don't remain locked down below when tragedy strikes.

As a side note I hope some of you happened to catch Paul Kanjorski on Propaganda TV (CNBC) this morning. Pathetically defending and deflecting all criticisms directed towards the taxpayer black holes government wards Fannie Mae and Freddie Mac have become and then on cue Steve Liesman is right there to tea bag Kanjorski as only a veteran CNBC tea bagger can.

Fortunately for us we have Rick Santelli there to take this dirt bag Kanjorski and Liesman with their lies and half truths to task. Fortunately some of us are not strung out on Prozac and Zoloft and are paying attention.

Sure Kanjorski, Fannie and Freddie had absolutely nothing to do with the housing bubble. Maybe if you close your eyes and keep repeating this often enough you might actually start to believe it.

Sure Fannie and Freddie had no trouble filing their financials on time either did they? What planet do you live on Paul? I am going to cut this rant off right here and spare our devoted civil servant further insult and simply suggest that Mr. Kanjorski head back to Washington and get back on the phone to do what he does best, grovel for campaign donations.


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 @ $42.45
Long 1 unit Ultrashort Real Estate ticker SRS @ $49.10
Long 2 units Direxion Tech 3X Bear ticker TYP @ $10.52
Long 1 unit US Dollar Bull ticker UUP @ $22.52 stop @ $21.97
Long 1 unit ishares Barclays 20yr Treas ticker TLT @ 92.15 stop @ $89.68

Monday, May 10, 2010

More Debt Always Fix Too Much Debt

Markets are in overjoyed mode today as are the boobs and boobs in chairs on CNBC ebrace with love the mantra that more debt always fixes the problem of too much debt. What a relief it must be for these simpletons to see the high frequency trading (HFT) machines back up running and functioning in a more approriate fashion (that is, in buy mode).

The trigger for this seems to be news that
the ECB and IMF have crafted an approximately 1 trillion loan bailout to save the world and stop the Euro crisis. From what I can ascertain the IMF is on the hook for just shy of 300 billion of this package. Now the U.S. portion of IMF responsibility is about 17% so yes, the U.S. taxpayer is on the hook, now to bail out German, French and other Euro banks that foolishly lent money to people who neither can nor are willing to repay.

Yes readers more debt with solve our indebtedness problems. Ya think ya need a Harvard MBA to figure that one out? This package out of Europe is their version of shock and awe to stop the spread of contagion. The quotes on the wires remark how they will crush the speculators. It seems to me Dick Fuld of Lehman said something similar to that previously? Yup, the speculators are the bad guys here. The speculators are the root of the problem. It could positively never be the politicians or their policies.

Never in all my life did I ever believe we could witness the level of insanity on display now. I lived, advised and traded through the tech bubble and then could not believe what was going on. I thought that was the pinnacle of insanity. Then comes this. The numbers now appearing will, in the fullness of time, make that tech debacle look like child's play.

It all reminds me of the Isaac Newton quote, who, while brilliant, lost a fortune in the South Sea bubble and said at the time;

"I can calculate the movement of the stars but not the madness of men".

I hope you are closely watching this parade of pumpers on CNBC and Bloomberg talking this market up. Remember who they are, quite probably they are managing a portion of your 401k. You think they will be held to account for their incessant 'buy the market', 'I love the market here', ' put new money to work here' mantra.

Now what I am about to say is extraordinarily important and you must never forget. Whatever you do you must absolutely under any circumstances never ever sell. You got that?!!

Every sell off is a buying opportunity. Every crisis a bailout opportunity.

In all seriousness I believe this is yet another gift from the trading gods for you to get out of this market, which I am most certain few will take advantage of. Rather most will use it to buy or in the least fall right back asleep. You can rest assured you will never hear your broker or Wall St. advise you to get out as that would wreak havoc on their income and hence good humor.

Stop watching the equities,, and instead please focus on the dollar, the euro, and the bonds for your tells and let Jim Cramer and the other thugs and charlatans focus on pumping the stock market. After all they all need someone to sell to.

Do you really believe the economy is recovering with these crises popping up on a regular basis?

Do you really believe the jobs numbers when over 40 million are on food stamps?

Do you really believe things are getting better when Fannie Mae is losing money hand over fist, quarter after quarter?

Do you really believe Goldman Sachs can have a quarter with no losing trading days, yes you read that right, Goldman had no days with a trading loss.

Well, then if you do then by all means go all in this market just like the ECB, heck it's only money! Oooops I almost forgot the ECB and IMF money is really yours, at least for 17% on this side of the pond if you exclude the open Fed swap lines to Europe!



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 @ $42.45
Long 1 unit Ultrashort Real Estate ticker SRS @ $49.10
Long 2 units Direxion Tech 3X Bear ticker TYP @ $10.52
Long 1 unit US Dollar Bull ticker UUP @ $22.52 stop @ $21.97
Long 1 unit ishares Barclays 20yr Treas ticker TLT @ 92.15 stop @ $89.68

Thursday, May 6, 2010

Integrity, Trust and Confidence..... Yeah Right !

Are you watching to what has happened to our capital markets, not just today but what has transpired over the last 24 months, supposedly the most efficient on the planet and the envy of all?

Do you still believe bailing out Wall St. prevented Armageddon or merely postponed it via a can kick down the road?

Do you still believe the economy is improving with no income growth and no job growth, only debt growth?

I have said it before and will shout it out again LETTING LEHMAN FAIL WAS THE ONLY THING "THEY", THOSE IN CHARGE DID RIGHT !!

Yes the criminals we call leaders told us that if we didn't bail out Wall St. it was Armageddon and anarchy, that martial law was imminent.

Well if this shit, shennanigans and games we are witnessing with our faux markets is 'Armageddon avoided' according to them I will take Armageddon any day of the week.

The computer trading games are run by the big boyz, Goldman Morgan Stanley, JP Morgan you name em', they're doin' it. The same banks and brokers, that YOUR CONGRESSPERSON VOTED TO BAIL OUT WITH YOUR MONEY are the same banks and brokers that are high frequency program trading (HFT) with YOUR money as collateral.

This high frequency trading is simply the sham illusionary trading of shares back and forth to each other at penny increments creating the illusion of liquidity, hence my name of faux markets. I have harped ad nauseum on the lack of volume attendant this rally month after month with this purported market. It constantly reminds of accounts of the stock market back in the 20's where the newspapers of the day used to recount games like this in the markets as "the laundry was active." in reference to washing stocks.

We have pundits on propaganda TV (CNBC) calling out the EU brass as useless for not engaging in quantitative easing, the buying of bonds to support the market, in their bond market. Overt meddling and manipulation called for openly. How stunningly pathetic the depths some will stoop to shill for their positions.

As if thats not enough when all these banks and brokers lose, AND THEY WILL LOSE, you dear taxpayer, will pay to cover the losses.

Listen, this market is ripe to go down for some time. You can blame it on anything you want to. Sunspots, monsoon rain patterns, or any other reason you heart desires. The high frequency trading programs, that have been trading shares back and forth have masked a market that many, with half a functioning cranium, have abandoned.

You want to read a piece on the stock market that will make your hair stand on end? Try this one from Ian Gordon of Longwave Analyst.


I wrote the following a few days ago regarding the integrity of our markets and I feel the need to repeat it here again...

"I have a question for our current and former market leaders. Men like John Bogle, Warren Buffett, Bill Gross, Richard Russell, Peter Lynch, et al.

Where is YOUR outrage at all of this?

Why are YOU not standing up separating yourself from the pool of maggots?

Are you not concerned with the survivability and continuity of our markets?
Do you not possess and inherent love for the markets. They are your 'office'. Do you not wish to see them survive and prosper or are you that greedy that you will forfeit their survival to make a buck and look the other way?"


I anxiously await a public comment by any of the above mentioned though I won't hold my breath.

I want you to read this article called Fraudonomics by Mark Ames. It was brought to my attention by Karl Denninger over at the Market Ticker. The piece is an
absolute must read. Mr. Ames uses foul language but it is well worth it.

I have said it before and will say it again. Integrity, trust and confidence are pararmount in capital markets and once lost are difficult at best if not impossible to regain. Our capital markets make make the Zimbabwe and Nigerian stock market look legitimate.

So please spare me the fat finger story bullshit.

Watch the hacks on CNBC defend and deflect, self preservation. Read Ames article and you start to understand that the Larry Kudlows of the word, these self proclaimed patriots are simply perpetuators of the scam or the bezzle. These so called patriots are not patriots at all but rather they are part of the cancer. There are perpetrators and perpetuators of the scam, each has its role to keep the ponzi going at all costs, right Larry? Stick to you job as perpetuator and while at it keep telling everyone the wizard exists even when the curtain has been pulled back proving otherwise.

Patriot my ass. More like charlatan extraordinaire.

Sickening, absolutely stomach turning sickening.

Will someone please summon the adults into the room as we are in dire need of them.


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 @ $42.45
Long 1 unit Ultrashort Real Estate ticker SRS @ $49.10
Long 2 units Direxion Tech 3X Bear ticker TYP @ $10.52
Long 1 unit US Dollar Bull ticker UUP @ $22.52 stop @ $21.97
Long 1 unit ishares Barclays 20yr Treas ticker TLT @ 92.15 stop @ $89.68

Village Idiots Gone Wild

Remember all those algorithm trading programs also know more commonly as high frequency trading (HFT) many have talked about pushing this market up on fumes.

Wasn't it all so much fun when it was to the upside. I guess no one considered it turning on its master and working in reverse. Like Frankenstein gone wild.

I BEG YOU MY READERS WITH ALL I HAVE, PLEASE TURN OFF CNBC.

FAR MORE DANGEROUS THAN THIS MARKET AND ALL IT'S RISKS, ARE THE VILLAGE IDIOTS RUNNING WILD ON CNBC !

I CANNOT STRESS THIS ENOUGH.

Capitulation huh?

These idiots on CNBC couldn't spell capitulation let alone know what it means.

Housekeeping notes:

I was stopped out of my long GLL position around noon today at $41.74 for a loss of about $1 1/2 pts on 1 unit long.


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 @ $42.45
Long 1 unit Ultrashort Real Estate ticker SRS @ $49.10
Long 2 units Direxion Tech 3X Bear ticker TYP @ $10.52
Long 1 unit US Dollar Bull ticker UUP @ $22.52 stop @ $21.97
Long 1 unit ishares Barclays 20yr Treas ticker TLT @ 92.15 stop @ $89.68

Wednesday, May 5, 2010

Book Report - What Goes Up Eventually Comes Down.

I was not chomping at the bit for another book to read given the fact that;
(a) I had just finished Charles Smith's Survival + Structuring Prosperity for Yourself and the Nation, which absolutely must be on your reading list,
(b) I had just picked up a pleasure read entitled Paul Revere's Ride and
(c) the weather has turned fantastic here in mid Michigan and the new Calloway Hyper X Driver I just bought needs some attention.

Not withstanding all these distractions What Goes Up Eventually Comes Down
by Bill Helming was brought to my attention by a close friend (thx Art!). Needless to say I started on his copy while mine was on route and I could not put it down.

For a little background on the author Bill Helming which you can read his C.V. here. Suffice to say Helming is no rookie or sell side zombie/hack for Wall St. operation. Helming has been in the ag business all his life. As a disclaimer I have never met or spoken with the man.

Bill does not say X will happen simply because he says so which normally would qualify him for permanent guest status on the propaganda network (CNBC). Bill also does not say Y will happen and baffle you with so much bullshit you don't know whether you're coming or going which would normally qualify him to run the Fed or Goldman Sachs CDO desk.

What Bill Helming does do is outline in a clear, concise, easy to understand manner what is transpiring around us and what it means for you. His book includes many graphs which are straightforward, lucid and easy to comprehend. The best part of What Goes Up Eventually Comes Down is that it is ultra current in that Bill wrote the book during the 7 months of June-December 2009 and was published in early January of this year.

Now, for those of you looking for rainbows, nirvana and Goldilocks, I suggest you continue pounding the kool-aid with your friends Larry Kudlow, Jim Cramer and the rest of the Boobs and Boobs in chairs on CNBC (hat tip to Mike Morgan for that one!).

Bill pulls no punches as to what he sees on the horizon for us and our economy. He also makes painfully clear that he would prefer to be proven wrong about what he sees coming.

I cannot recommend What Goes Up Eventually Comes Down strongly enough to anyone with even a remote interest in their financial future. Books like this should be required reading for all but I would especially call on the inflationists and hyper-inflationists out there to give this book a chance, in particular chapter 7. This book is worth its price simply for that chapter alone.
Do yourself an enormous favor and order a copy today. You will not be disappointed.

Full disclosure and for what it is worth I receive no commission, fees, gratuities of any type for this review and recommendation of What Goes Up Eventually Comes Down.


Quick side note on deflation, That Calloway Hyper X driver I just bought was a $300 club last season and I just picked mine at Dick's for $106 with taxes. This is just another small anecdote but I think it does reflect the current environ. Hardly inflationary I would think.


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 @ $42.45
Long 1 unit Ultrashort Real Estate ticker SRS @ $49.10
Long 2 units Direxion Tech 3X Bear ticker TYP @ $10.52
Long 1 unit US Dollar Bull ticker UUP @ $22.52 stop @ $21.97
Long 1 unit ishares Barclays 20yr Treas ticker TLT @ 92.15 stop @ $89.68
Long 1 unit Ultrashort Gold ticker GLL @ $43.05 stop @ $41.74

Tuesday, May 4, 2010

Gold Heresy?


My decision to short gold via a long position in GLL (daily chart above) was not made lightly. I also realize that doing so will be considered heresy by the many out there who adore the shiny metal. I even badgered myself with insults before putting on the trade. It is said the hardest trade is the right trade and right now, given all transpiring around the globe both political and economic, being short gold feels that way.

The GDX and HUI continue to lag gold itself. This is a negative divergence and demands your attention. I realize the inflation/hyperinflation and hence gold bulls out there will disagree but they continue to overlook increasing unemployment, bankruptcies, and yes foreclosures.

Okay here goes. I believe that the markets have turned into one giant casino. The financial tail is attempting to wag the broader economic dog so to speak.

The financial institutions we have come to know are masquerading as traditionsl sound banks of yesteryear. Having gambled away all they had and what they didn't have, they have used taxpayer money, not to clean up and solidify their balance sheets but rather to propriety trade (mainly via algorithm robots) for their own account energy, precious metals, and stock markets, and anything else they think they can 'win it back' in.

One big orgy of double down to get back to even so to speak with gold, crude and S&P futures leading the way.

The massive deflationary de-leveraging is still underway, as a result of the mother of all credit bubbles, despite temporary surges in these and other various asset classes.

Quick side note on deflation. My wife and I called Sirius to advise them we would not be renewing service in my vehicle. They said they were sorry to hear and would connect us to the cancellation department. The cat there was nice enough and asked us if we would renew the service if we could get it at half price to which we decided yes.50% off without haggling. This is just one small anecdote but I think it does reflect the current environ. Hardly inflationary.

Pay attention to what gold, oil, equities and bonds all did back in 2008. Speaking of bonds.....

I have received some e-mail regarding my long bond position (ticker TLT). Most of it along the lines of "how can you buy long bonds with government finances in the shape they are in" alongside the "we have record deficits and debt to GDP numbers that would make a 3rd world dictator cringe." Also noted was the bubble in bonds (in my opinion the junk and muni bond market is where you should be scared witless) noted by many a market luminary predicting an utter demise in our bond market.

I disagree for many of the same reasons noted above with gold. I would counter the luminaries who predict a debacle in the bond market with a reminder that the same arguments and warnings were shouted from the rooftops about the Japanese government bond markets (JGB's) for years yet yields continued to plunge and bond prices to rise as deflation continued its death grip on the land of the rising sun.

Note today's possible break away gap on TLT.


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 @ $42.45
Long 1 unit Ultrashort Real Estate ticker SRS @ $49.10
Long 2 units Direxion Tech 3X Bear ticker TYP @ $10.52
Long 1 unit US Dollar Bull ticker UUP @ $22.52 stop @ $21.97
Long 1 unit ishares Barclays 20yr Treas ticker TLT @ 92.15 stop @ $89.68
Long 1 unit Ultrashort Gold ticker GLL @ $43.05 stop @ $41.74

Long some GLL

I realize many out there may consider this heresy but I am getting long one unit of the Proshares Ultrashort Gold ticker GLL here at $42.95 with a stop below recent lows $41.74

Charts and commentary coming ASAP !


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 @ $42.45
Long 1 unit Ultrashort Real Estate ticker SRS @ $49.10
Long 2 units Direxion Tech 3X Bear ticker TYP @ $10.52
Long 1 unit US Dollar Bull ticker UUP @ $22.52 stop @ $21.97
Long 1 unit ishares Barclays 20yr Treas ticker TLT @ 92.15 stop @ $89.68
Long 1 unit Ultrashort Gold ticker GLL @ $43.05 stop @ $41.74