We take a 1/4 short position right here
Sell short 25 shares USO @ 70.23
Stop @ 72.25
That Giant Sucking Sound
Friday, November 30, 2007
A Sure Thing:USO
It's a sure thing that the US dollar is going to fall below 70 on the USDX and to even much lower levels. If you look at the chart of the United States Oil Fund USO(Link 1) you can see that this last move began on September 18 after the FED surprised the markets with a 50 basis point cut. The chart which really tells the tale of the USO however is the weekly chart(Link 2). Pay attention to the last two bars. The next to the last bar indicates that the USO ended the week higher that it started. Where as the very last bar indicates that it's ending the (this)week lower that it started. A classical topping action. This together with the weekly stochastic rolling over from above 90 indicates that it can go down a ways without much in the way of support. About to 80 or so I'd say. The FED will of course continue to criminally manipulate the markets. Any mutterings about an interest rate cut will send gold and silver rocketing toward their recent highs. However the price of oil is dependent on among other things demand for the overall economy which is slowing where as gold and silver are not(at this time)being a hedge against the devaluing dollar. Make no mistake the precious metals deserve a good pull back as well, but shorting them is I'd say a little dangerous. So we will concentrate on the USO. Right now the set up is all most perfect momentum wise. The stochastic in both the weekly and 15 min. charts are rolling over. The only negative is that the stochastic on the daily chart is turning up from under 20. I'm not concerned since the weekly chart trumps the daily chart. The 15 min. chart will be rolling over in about 15 minutes from now so you can wait until then if you want. I will put up the alert soon.
Link 1:http://bigcharts.marketwatch.com/quickchart/quickchart.asp?symb=uso&sid=0&o_symb=uso
Link 2:http://bigcharts.marketwatch.com/advchart/frames/frames.asp?symb=uso
Link 1:http://bigcharts.marketwatch.com/quickchart/quickchart.asp?symb=uso&sid=0&o_symb=uso
Link 2:http://bigcharts.marketwatch.com/advchart/frames/frames.asp?symb=uso
Mission Impossible
Even in a free country the government has a legitimate need for secrecy or deceit. It might be to prevent a public panic that could impede an ongoing or planed evacuation from the location of an infectious disease outbreak. They could say there was a gas main rupture. It could be an attempt to restore moral in time of a perceived national crisis, "There is nothing to fear but fear itself". As a kid I can remember asking my father why the TV news always counted more north Vietnam casualties than American ones. It can easily be argued that in time of war the government has the obligation to engage in secrecy and deceit. We have all seen those FBI and Pentagon documents punctuated with big black blobs where something was redacted. Whenever I used to see that struck me that the government was protecting us from some very serious internal or external direct threat and I would feel grateful. Growing up of course changed that. Now seeing all those black splotches in the absence of any obvious direct threat, internal or external make me question what it is they hiding from us and I feel suspicious. e.g. the 13 minute gap in the Nixon tapes, the secrete energy meetings of Vice President Dick Cheney and in case you don't know the US FED meets in complete secrecy(no one can verify what they did) and releases only minutes that can come from who knows where. And now we have the plungers. Officially known as The President's Working Group on Financial Markets are redacting documents. What are they hiding from us? I think we all have some idea, but first from the New York Post.
THE TREASURY'S MISSING MINUTES MYSTERY
November 29, 2007 -- AFTER a year and a half of stalling, the US Treasury finally complied with The Post's requests for information about The President's Working Group on Financial Markets - by delivering 177 pages of crap.
In essence, the Treasury's Freedom of Information officials said that the Working Group - affectionately nicknamed the Plunge Protection Team - doesn't keep records of its meetings.
How interesting and convenient!
Included in the 177 pages that the Treasury said responded to our request on the actions of The President's Working Group were 53 pages on which something was redacted - blacked out so that the discussion was unreadable.
Many of those 53 pages contained no words at all - just a big black blob.
Starting in June of 2006 The Post asked for an accounting of the actions of The President's Working Group, which was formed under President Reagan. The Group seems to have the ill-defined task of keeping an eye on the financial markets. We also asked for e-mails related to our request through the Freedom of Information Act (FOIA).
The Working Group operates out of the Treasury Department and includes the heads of the various exchanges in the US, as well as top-ranking government officials.
Hank Paulson, the Treasury Secretary, and Ben Bernanke, the head of the Federal Reserve, are the two most prominent members.
Back in August, Paulson said in a television interview that "we've reenergized The President's Working Group on Financial Markets."
The Wall Street Journal last year said that Paulson, upon becoming Treasury Secretary, was insisting that the Working Group meet every six weeks.
Whatever the schedule of meetings, one of those meetings occurred on Aug. 17 - the day the Federal Reserve surprised the financial markets with a cut in its discount rate.
According to records that someone else got from Bernanke's office through a FOIA request, there was an 11 a.m. conference call on Aug. 17 of the "PWG" - the President's Working Group.
Fed Governor Kevin Warsh and Patrick Parkinson, a Treasury staffer, took part in that call, according to Bernanke's phone log.
The day before - Aug. 16 - Bernanke and Paulson had lunch, but it isn't clear whether this was just two guys having a meal or if it, too, was related to The President's Working Group.
Hours after that lunch, word got around on Wall Street that the Fed was about to make a move and the stock market staged a tremendous rally.
The next day those rumors of Fed action proved accurate.
So what's the Working Group up to?
I suspect the group is ready to come to the rescue of the financial markets - even equities - in the case of a meltdown.
And as I've said in the past, that would be a completely acceptable task as long as it remains a limited power that is used infrequently.
But who decides when a rescue is needed?
And if no records are kept, who is held accountable if The Working Group's power is abused?
George Stephanopoulos, a former top aide to President Clinton, tried to calm fears right after the terrorist attack in 2001 by explaining that The President's Working Group was at the ready to prop up the stock market.
I, too, had a similar conversation with a Fed official in Sept. 2001.
But the chance of abus ing this presi dential man date - even for personal gain - is great whenever an orga nization operates in secrecy.
And that's exactly how The President's Working Group is operating.
Included in the pile of manure we received from Treasury this week is an internal e-mail dated April 9, 2007 that Heidilynne Schultheiss, director of the Treasury's Office of Financial Market Policy, sent to six people.
The subject "Minutes of PWG Meetings?"
"Hi All, We received a FOIA request asking for minutes of meetings of the President's Working Group on Financial Markets (PWG). As far as we know, minutes are not (and never have been) kept . . . A search of our records turned up nothing," Schultheiss wrote.
That same day someone at Treasury named Mary Kertz e-mailed a bunch of folks "re: meeting notes from last PWG meeting on Financial Markets."
The e-mail said: "Thanks. Just spoke with Norman - he said the Fed Chairman had said he believed minutes were recorded for these meetings. Strange."
I don't know who Norman is. But I agree that having a powerful organization like this meet in secret is very, very strange.
And extremely dangerous.
http://www.nypost.com/seven/11292007/business/the_treasurys_missing_minutes_mystery_378734.htm?page=0
THE TREASURY'S MISSING MINUTES MYSTERY
November 29, 2007 -- AFTER a year and a half of stalling, the US Treasury finally complied with The Post's requests for information about The President's Working Group on Financial Markets - by delivering 177 pages of crap.
In essence, the Treasury's Freedom of Information officials said that the Working Group - affectionately nicknamed the Plunge Protection Team - doesn't keep records of its meetings.
How interesting and convenient!
Included in the 177 pages that the Treasury said responded to our request on the actions of The President's Working Group were 53 pages on which something was redacted - blacked out so that the discussion was unreadable.
Many of those 53 pages contained no words at all - just a big black blob.
Starting in June of 2006 The Post asked for an accounting of the actions of The President's Working Group, which was formed under President Reagan. The Group seems to have the ill-defined task of keeping an eye on the financial markets. We also asked for e-mails related to our request through the Freedom of Information Act (FOIA).
The Working Group operates out of the Treasury Department and includes the heads of the various exchanges in the US, as well as top-ranking government officials.
Hank Paulson, the Treasury Secretary, and Ben Bernanke, the head of the Federal Reserve, are the two most prominent members.
Back in August, Paulson said in a television interview that "we've reenergized The President's Working Group on Financial Markets."
The Wall Street Journal last year said that Paulson, upon becoming Treasury Secretary, was insisting that the Working Group meet every six weeks.
Whatever the schedule of meetings, one of those meetings occurred on Aug. 17 - the day the Federal Reserve surprised the financial markets with a cut in its discount rate.
According to records that someone else got from Bernanke's office through a FOIA request, there was an 11 a.m. conference call on Aug. 17 of the "PWG" - the President's Working Group.
Fed Governor Kevin Warsh and Patrick Parkinson, a Treasury staffer, took part in that call, according to Bernanke's phone log.
The day before - Aug. 16 - Bernanke and Paulson had lunch, but it isn't clear whether this was just two guys having a meal or if it, too, was related to The President's Working Group.
Hours after that lunch, word got around on Wall Street that the Fed was about to make a move and the stock market staged a tremendous rally.
The next day those rumors of Fed action proved accurate.
So what's the Working Group up to?
I suspect the group is ready to come to the rescue of the financial markets - even equities - in the case of a meltdown.
And as I've said in the past, that would be a completely acceptable task as long as it remains a limited power that is used infrequently.
But who decides when a rescue is needed?
And if no records are kept, who is held accountable if The Working Group's power is abused?
George Stephanopoulos, a former top aide to President Clinton, tried to calm fears right after the terrorist attack in 2001 by explaining that The President's Working Group was at the ready to prop up the stock market.
I, too, had a similar conversation with a Fed official in Sept. 2001.
But the chance of abus ing this presi dential man date - even for personal gain - is great whenever an orga nization operates in secrecy.
And that's exactly how The President's Working Group is operating.
Included in the pile of manure we received from Treasury this week is an internal e-mail dated April 9, 2007 that Heidilynne Schultheiss, director of the Treasury's Office of Financial Market Policy, sent to six people.
The subject "Minutes of PWG Meetings?"
"Hi All, We received a FOIA request asking for minutes of meetings of the President's Working Group on Financial Markets (PWG). As far as we know, minutes are not (and never have been) kept . . . A search of our records turned up nothing," Schultheiss wrote.
That same day someone at Treasury named Mary Kertz e-mailed a bunch of folks "re: meeting notes from last PWG meeting on Financial Markets."
The e-mail said: "Thanks. Just spoke with Norman - he said the Fed Chairman had said he believed minutes were recorded for these meetings. Strange."
I don't know who Norman is. But I agree that having a powerful organization like this meet in secret is very, very strange.
And extremely dangerous.
http://www.nypost.com/seven/11292007/business/the_treasurys_missing_minutes_mystery_378734.htm?page=0
Thursday, November 29, 2007
Close an Eye and Short The Bond Insurers
I was not going to short Ambac ABK and MBIC MBI tomorrow because technically they are still a bit over sold. At least they are not perfect shorts yet. Then I came across this great piece by Reggie Middleton's Boom and Bust Blog and my denial is defeated(Link 1). To me the title says a hell of a lot.
Ambac is Effectively Insolvent & Will See More than $8 Billion of Losses with Just a $2.26 Billion Market Cap
Painful though it is to say this may not be a pure technical trade any more. In a prior post entitled Close Your Eyes and Short The Banks I said that the banks exposed to subprime backed mortgage bonds are all insolvent. So why would the bond insurers be any more solvent? We maybe able to carefully enter at an optimal chart point, but to what advantage? I have been in and out of short positions on Countrywide Financial (CFC) from the forties. It would have been a lot easier and I would be a lot wealthier if I just went short and never looked at the chart. Before two days ago I never would of dreamed to think about shorting a ham and egg sandwich without a stop(and certainly not publicly). But ask your self this: if the Street criminals cannot keep Countrywide(Bear Sterns) afloat what chance does Ambac or MBIC have?
And notice how lately the rating agencies have found a relatively small pulse with regard to issuing downgrades compared to the noise about it in the financial press. If you didn't know better wouldn't you think the agencies were just charging to the rescue? These credit rating agencies who had been breaking their necks to see no evil now come out downgrade the same junk they knew was toxic while issuing AAA rating to them. So of course they are late to the party. From MarketWatch.com(Link 2) "Bill Ackman, who runs $6 billion hedge fund firm Pershing Square Capital Management LP, has criticized bond insurers and has been shorting, or betting against, them for years." FOR YEARS. That's what happens when there is a possible 6 Billion Large to score for using common sense. I mean I'm a construction worker who wouldn't lend a dime to an minimum wage earning illegal alien. I'd rather just buy him a beer. I like the guy don't get me wrong, but I know he's broke. So I buy each round not expecting him to buy the next. Then how could all these smart guys at Moody's, Standard & Poors and Fitch not know better? They rate the risk of buying beaucoups of bonds backed by subprime mortgages at AAA? Essentially saying that if I lend my money to the big Street firms I can expect with a AAA degree of certainty that my minimum wage illegal pal will repay the entire loan. Right! Apparently there is more profit for the raters to paint over the rust than to use common sense. More than the $6 billion Ackman made that is. Now a few warnings and fewer downgrades later and I am suppose to think what? That the credit raters suddenly found religion or maybe even just got a good scare from a highly publicised series of congressional harassment(Link 3)? Yes that's exactly what I'm supposed to think, but I don't and you shouldn't either. I do think it's a song and dance designed to rebuild public confidence in the Hindenburg of investment vehicles, prop up the share price of companies like Ambac and MBIA and score a few gratuitous points with the voters. A nice ancillary benefit nearing an election year, but it ain't meant to help you and me none and it wont. I love my charts and will never give them up, but the stench of the scam can't take shape on a chart. For that you need a lota smarts or lotsa bitter memories. The latter is clearly my forte. So tomorrow I will Alert you when I garner my nerve, close an eye and short the bond insurers-with the other eye lid twitching nervously toward the charts.
Link 1:http://reggiemiddleton.typepad.com/reggie_middletons_perpetu/2007/11/ambac-is-effect.html#more
Link 2:http://www.marketwatch.com/news/story/ackmans-winning-bets-against-mbia/story.aspx?guid=%7BFE2A0B83%2D4C2C%2D42A2%2D9B65%2DFB24A94D892C%7D&tool=1&dist=bigcharts&symb=ABK&sid=2096
Link 3:http://www.marketwatch.com/news/story/credit-rating-agencies-return-crosshairs/story.aspx?guid=%7BAFB9C89A-9AE3-4718-8817-39918E371C23%7D
Ambac is Effectively Insolvent & Will See More than $8 Billion of Losses with Just a $2.26 Billion Market Cap
Painful though it is to say this may not be a pure technical trade any more. In a prior post entitled Close Your Eyes and Short The Banks I said that the banks exposed to subprime backed mortgage bonds are all insolvent. So why would the bond insurers be any more solvent? We maybe able to carefully enter at an optimal chart point, but to what advantage? I have been in and out of short positions on Countrywide Financial (CFC) from the forties. It would have been a lot easier and I would be a lot wealthier if I just went short and never looked at the chart. Before two days ago I never would of dreamed to think about shorting a ham and egg sandwich without a stop(and certainly not publicly). But ask your self this: if the Street criminals cannot keep Countrywide(Bear Sterns) afloat what chance does Ambac or MBIC have?
And notice how lately the rating agencies have found a relatively small pulse with regard to issuing downgrades compared to the noise about it in the financial press. If you didn't know better wouldn't you think the agencies were just charging to the rescue? These credit rating agencies who had been breaking their necks to see no evil now come out downgrade the same junk they knew was toxic while issuing AAA rating to them. So of course they are late to the party. From MarketWatch.com(Link 2) "Bill Ackman, who runs $6 billion hedge fund firm Pershing Square Capital Management LP, has criticized bond insurers and has been shorting, or betting against, them for years." FOR YEARS. That's what happens when there is a possible 6 Billion Large to score for using common sense. I mean I'm a construction worker who wouldn't lend a dime to an minimum wage earning illegal alien. I'd rather just buy him a beer. I like the guy don't get me wrong, but I know he's broke. So I buy each round not expecting him to buy the next. Then how could all these smart guys at Moody's, Standard & Poors and Fitch not know better? They rate the risk of buying beaucoups of bonds backed by subprime mortgages at AAA? Essentially saying that if I lend my money to the big Street firms I can expect with a AAA degree of certainty that my minimum wage illegal pal will repay the entire loan. Right! Apparently there is more profit for the raters to paint over the rust than to use common sense. More than the $6 billion Ackman made that is. Now a few warnings and fewer downgrades later and I am suppose to think what? That the credit raters suddenly found religion or maybe even just got a good scare from a highly publicised series of congressional harassment(Link 3)? Yes that's exactly what I'm supposed to think, but I don't and you shouldn't either. I do think it's a song and dance designed to rebuild public confidence in the Hindenburg of investment vehicles, prop up the share price of companies like Ambac and MBIA and score a few gratuitous points with the voters. A nice ancillary benefit nearing an election year, but it ain't meant to help you and me none and it wont. I love my charts and will never give them up, but the stench of the scam can't take shape on a chart. For that you need a lota smarts or lotsa bitter memories. The latter is clearly my forte. So tomorrow I will Alert you when I garner my nerve, close an eye and short the bond insurers-with the other eye lid twitching nervously toward the charts.
Link 1:http://reggiemiddleton.typepad.com/reggie_middletons_perpetu/2007/11/ambac-is-effect.html#more
Link 2:http://www.marketwatch.com/news/story/ackmans-winning-bets-against-mbia/story.aspx?guid=%7BFE2A0B83%2D4C2C%2D42A2%2D9B65%2DFB24A94D892C%7D&tool=1&dist=bigcharts&symb=ABK&sid=2096
Link 3:http://www.marketwatch.com/news/story/credit-rating-agencies-return-crosshairs/story.aspx?guid=%7BAFB9C89A-9AE3-4718-8817-39918E371C23%7D
S&P500
I am waiting to see if yesterdays gap and run was the beginning of the Christmas rally or just a short covering rally. Based on the volume for the SPY I'm leaning toward the latter. We want to see that gap from 143 to 144 in the 15 min chart to fill. That means the prices fall into the range of 143-144. That would also get the SPY back into the downtrend and under it's 8 day EMA. Right now it's under the 200 dma. It will probably stay there. For now stay out.
http://bigcharts.marketwatch.com/quickchart/quickchart.asp?symb=spy&sid=0&o_symb=spy&freq=1&time=8&x=26&y=14
http://bigcharts.marketwatch.com/quickchart/quickchart.asp?symb=spy&sid=0&o_symb=spy&freq=1&time=8&x=26&y=14
Wednesday, November 28, 2007
Trade Alert2: S&P500
Well the upper downtrend line in the SPY was broken with force, along with the 8 day EMA. If you read the Trade Alert: S&P500 posted at 10:25 this morning you can see this is exactly what I was talking about. A huge gap up giving no chance to enter. We would have had to chance being in last night. Can we get in? Hard to say or where. The stochastic is turning up and still has a lot of room to continue. However we are approaching the 200 day SMA from below and this could provide resistance especially considering that the volume is less than 200 million shares. What I am looking for is a retracement off of the 200 dma to about 145-ish or the top of the prior downtrend line. If it pops up from there we go in. I will not chase this. A picture is worth a thousand words. http://bigcharts.marketwatch.com/advchart/frames/frames.asp?symb=spy&time=8&freq=1
Close You Eyes and Short the Banks
I swear I could just short all the banking index right here right now. I don't care for fundamentals, but any bank that has exposure to subprime mortgages is insolvent in my modest opinion. You might think that my opinion does not count sense I have never seen the books and could not possibly know the likely exposure to mortgage back assets and the associated risk. Well neither does any one else and that includes the credit rating agencies who co conspired in the fraud by giving the most toxic waste the highest ratings.
The banks are insolvent just like a chicken running around with it's head cut off is dead.
All these maneuvers are just buying time. Citi getting funded by Abu Dhabi, the Slush Fund(my name for it) or so-called Superfund that has been in the works since September and bleeding out bad news in small increments like this with Bear Sterns. From Bloomberg http://www.bloomberg.com/apps/news?pid=20601087&sid=aLHMLlb4YxWM&refer=home
"The cuts are in addition to the 300 announced on Oct. 29, said the person, who declined to be identified because people at the securities firm are being told today. Bear Stearns will shed at least 20 positions in London and make further reductions at its U.K. Rooftop Mortgage Ltd. unit, "
The banks are insolvent just like a chicken running around with it's head cut off is dead.
All these maneuvers are just buying time. Citi getting funded by Abu Dhabi, the Slush Fund(my name for it) or so-called Superfund that has been in the works since September and bleeding out bad news in small increments like this with Bear Sterns. From Bloomberg http://www.bloomberg.com/apps/news?pid=20601087&sid=aLHMLlb4YxWM&refer=home
"The cuts are in addition to the 300 announced on Oct. 29, said the person, who declined to be identified because people at the securities firm are being told today. Bear Stearns will shed at least 20 positions in London and make further reductions at its U.K. Rooftop Mortgage Ltd. unit, "
Alert GS
Goldman Sachs gaped up this morning. DON'T chase it. The stochastic on the 15 min. chart is nearly 100% and rolling over. Let it come back to you. If the stochastic goes all the way down and turns back up as the price makes a higher low that's where you go in. The only reason I'm playing with this is that if a Xmass rally is to ensue it will have to be soon and be with GS. Given that the Xmass bonuses are on the line I'm betting on "up". If they can't move the market up another rate cut rumor is expected.
Tuesday, November 27, 2007
Trade Update: GS
I wanted to give GS enough room to move today and failed. We were in @ 210.34 and stooped out at 207.80. Times 25 shares that's a loss of 63.50. As with the SPY the 8 or 10 day EMA provides the best indicator of future direction(not considering volume). The stochastic is rising from the 20% mark, but it is already very close to the 8 day EMA. With the 100 and 200 dma providing support between 200 and 210 and the 8 day squeezing down a break of the downtrend could be explosive. You can also see a W formation taking place with the right hand side of the W forming. All this in the daily chart.
http://bigcharts.marketwatch.com/quickchart/quickchart.asp?symb=gs&sid=0&o_symb=gs&x=41&y=13
The 15 min. chart shows a little hump at 215 which GS should be easily able to overcome if it is to rally and lead the rest of the market to higher ground.
http://bigcharts.marketwatch.com/quickchart/quickchart.asp?symb=gs&sid=0&o_symb=gs&freq=7&time=3
When trading it is very helpful to have an early warning system for the overall market. That early warning system is Goldman Sachs. If the market is going to rally then The Golden Godfather will lead the way. With it's CEO and US Treasury Secretary Hank Paulson heading the Plunger Protection Gang GS can buy as many shares of it's own stock as it wants with inflationary dollars electronically deposited by the FED into offshore accounts and transferred to discrete accounts known only to GS partners. If you want to know which way the market will go it will go with Goldman Sachs. To have a sustained market rally it is necessary for GS to lead the way.
http://bigcharts.marketwatch.com/quickchart/quickchart.asp?symb=gs&sid=0&o_symb=gs&x=41&y=13
The 15 min. chart shows a little hump at 215 which GS should be easily able to overcome if it is to rally and lead the rest of the market to higher ground.
http://bigcharts.marketwatch.com/quickchart/quickchart.asp?symb=gs&sid=0&o_symb=gs&freq=7&time=3
When trading it is very helpful to have an early warning system for the overall market. That early warning system is Goldman Sachs. If the market is going to rally then The Golden Godfather will lead the way. With it's CEO and US Treasury Secretary Hank Paulson heading the Plunger Protection Gang GS can buy as many shares of it's own stock as it wants with inflationary dollars electronically deposited by the FED into offshore accounts and transferred to discrete accounts known only to GS partners. If you want to know which way the market will go it will go with Goldman Sachs. To have a sustained market rally it is necessary for GS to lead the way.
Trade Update: S&P500
I was unable to watch the market all day, but it looks like we were stooped out of our SPY short position @ 142.5 around 10:30. So we are out of our S&P500 position, the details are listed below.
As I see it the best indicator for the SPY(IVV) is the 8 day EMA. There is a lot of noise beneath this moving average as the market trades in a wide down trend. We will see about shorting the SPY into it's 8 day EMA. However any break above the 8 day EMA will surely result in short covering and a powerful rally. The problem with this kind of situation is that if the short covering occurs unless you have a powerful day trader platform you may never catch the long end of it. Most of the shorts will have their stops at around the same place and this could force an intraday gap as the specialist plays their games. You're much better off to be in already, but if the 8 day EMA is not broken then it's smarts. This is only one reason that I prefer to go long and short on the same market and let my stops sort it out.
So what's next for the SPY? Not sure, but I say more downward pressure for the medium term.
The stochastic is turning up from 20% in the daily chart and that will probably get us back to the 8 day EMA. But after that more meandering down with no end in sight(except "the" bottom). We are approaching the years low 136.75 with less than 400 million shares of daily volume. What will signal a turn around? Well a break of the 8 day EMA is not enough. If the short covering has no follow through it WILL fail as the shorts see the rally lacks staying power and short again(like me). Notice(see link) that the turn around in August occurred with almost 600 million shares most of it buying. That's follow through and that's what it will take for me to enter with more than a 1/4 position. So to wrap up:
If the SPY fails at the 8 day EMA go short.If the SPY breaks the 8 day EMA on light volume stay out.
If the SPY breaks the 8 day EMA on volume of at LEAST 500 million shares take a 1/4 position with a stop @ the 8 day EMA.
http://bigcharts.marketwatch.com/quickchart/quickchart.asp?
S&P500 Tally:sold short 25 shrs SPY @ 144.54bought to cover 25 shrs @ 142.5.
Difference=(25)(1.95)=48.75,
sold 25 shrs SPY @ 147.06bought to cover 25 shrs @ 142.5.
Difference=(4.56)(25)=114.
sold 25 shrs SPY @ 147.06bought to cover 25 shrs @ 142.5.
Difference=(4.56)(25)=114.
We hedged the short with 50 shares of IVV
bought 50 shares IVV @ 145.35sold 50 shares IVV @ 144.25
Difference=(50)(-1.01)=-50.5.
Net profit = 112.25.have
Difference=(50)(-1.01)=-50.5.
Net profit = 112.25.have
Alert GS
The stochastic on GS are off the bottom and rising in the 15 minute chart.
Buy 25 shares GS @ 210.34 stop @ 207.80
Buy 25 shares GS @ 210.34 stop @ 207.80
Trade Alert
The market will gap up here. Let it fade, put a stop on the spy @ 142.5 and keep an eye on Goldman Sachs GS
The Colour of Money
The true colour of money is gold. Let me say that here gold represents a variable that represents anything of intrinsic value. The reason is that is what gold historically is. A fix quantity of gold now will buy the same as it would at any time in the past. A fixed quantity of gold has intrinsic value to humans which is why gold is true money. Unfortunately no fixed amount of money is correct for the economy all the time and sometimes it will be necessary to increase the money supply by adding silver. You could start with anything of a fixed amount actually and add or subtract anything else of a fixed amount as necessary and maintain a stable currency. Yak dun has been used in remote areas of the Himalayas. The point is fixed amount. Why? Because inflation is not prices going up, it is the value of money going down. It's the same simple formula, prices = a function of supply and demand. The more money in circulation the less the value of each unit(dollar). See Ron Paul School Ben Bernanke.
http://youtube.com/watch?v=yAwvlDJgJbM&feature=related
We will enter the metals market after a pull back. Some symbols to consider GDX, SLW, and PAAS.
http://youtube.com/watch?v=yAwvlDJgJbM&feature=related
We will enter the metals market after a pull back. Some symbols to consider GDX, SLW, and PAAS.
Monday, November 26, 2007
A Sure Thing
What does a collapse of the US dollar mean for the overall economy? That's easy disaster. What does it mean to the stock market? That's not so easy. First an absolute market collapse will probably not occur because the "plungers" wont let it. That's why I'm not a raging bear short everything in sight. Just look at the prior post regarding the Countrywide Financial short. Second stock prices may find support from the collapsing dollar itself and the stock market could be at or near all time highs at the depths of the upcoming great depression. And yes that is supposed to make you feel a lot better while standing in the bread lines. The only safe have is gold(precious metals). Notice how the expected crush of gold by world Central banks did not occur on this visit to 800 dollar area. The governmental manipulation of gold is not occurring because each sell off is met with buying as a hedge against the falling dollar. They are losing control. The only sure thing is that the dollar will collapse and now we are even encountering peak gold. This from The Daily Reckoning.
NEVER ENOUGH GOLD JEWERLY
by The Mogambo Guru
Ambrose Evans-Pritchard at The Telegraph.co.uk reports that the U.S. Academy of Sciences calculates that “some 26 percent of all the copper and 19 percent of all the zinc that ever existed in the earth’s crust has already been lost to mankind, mostly wasted in milling or smelting or buried in landfills.”Gregory Wilkins, of Barrick Gold, says that the same thing is happening in gold, as “Global mine supply is going to decrease at a much faster rate than people generally believe. Many of the new mines that people are anticipating will never come into production.”Kevin McArthur, chief executive of Goldcorp, is quoting Mr. McArthur as agreeing, and that “global output was on a relentless slide.” The point of the whole thing is that “The era of ‘peak gold’ has arrived”, which is truly momentous, because it means that the “easy to get at” gold has been gotten to, and the rest of the gold left in the earth is harder to get to, and thus the rate at which gold is being discovered, has collapsed when compared with the old days, which is just like the collapse in new discoveries of oil, which is where you get the phrase “peak oil”, and they both have crucially to do with how a rising demand growth curve and a falling of supply growth intersect at that place called Lonely Street. Oops! Sorry! That’s Elvis Presley!I mean, falling supply and rising demand intersect at that precise point that is scientifically referred to as “Expensive like you wouldn’t freaking believe!” And since everything from fuel to fertilizers to plastics to medicines to everything you can name under the sun is made from oil, then you are going to see inflation in prices like you will not freaking believe, which means that the currency will buy less per unit like you will not freaking believe, which means that people are going to be hungry and broke and miserable and rioting like you will not freaking believe.And here is where I reveal why I am so insanely bullish on the future of gold, and how I am actually salivating at the prospect of having so much money that I can spend my time gallivanting about in a carefree manner, playing golf, and hiring lawyers to, as my old high school said in its school song, “fight until we have victory, and all our enemies have gone away”, which I always thought was kind of a stupid creed, since my enemies could be massing just over that hill in preparation to attack us, and our best course of action is to immediately track them down and kill them all in a frenzied orgy of blood, and then dance like ghouls on their dismembered bodies, swaying to the hypnotic sounds of captivating rhythms on the bass line, but they called me mad! Mad! Hahahaha! I’ll show them madness! But this is not about stupid sanity hearings or about psychiatrists recoiling in horror at what I “see” in their stupid ink blots, or how traitorous neighbors and family members are lying their heads off in their testimony, but about why I am so bullish on gold. Easy. Mr. Evans-Pritchard reports that inflation is hitting gold mining, too, and “Costs are rising at $60 an ounce annually. They will average $460 by next year. From tires to diesel fuel and the geologists’ salaries, mine inflation is running at 15 percent.”Inflation of 15 percent! Yow! At that rate, dividing 15% into 72 as per the “Rule of 72”, this means that costs will double in about five years! That means that it will cost $920 an ounce to mine gold in five years, which means that gold is selling right now for $140 below the cost of mining gold in five years! And while supply may be falling, Junior Mogambo Ranger (JMR) Ed S. sent me a posting from the Gold Anti Trust Action Committee that Reuters reported that “Global gold demand in the third quarter rose 19 percent year-on-year to 947.2 tonnes on the back of robust inflows into bullion investment funds and improved jewelry consumption, industry-sponsored World Gold Council (WGC) said on Thursday.”Even more significant, Milling-Stanley said, “The increase in investment demand has replaced jewelry buying as the major source of growth for the third quarter.” It was then that I wished if I knew of any time in my whole freaking life when some woman ever said to me, “Don’t buy me any more jewelry! Buy gold bullion as an investment, instead!” And I laughed.The details, in case you are interested, are that they all wanted more jewelry, and that their wishes were answered, in that “Total gold supply for the third quarter was 1,045 tonnes, up 16 percent year-on-year due to significantly increased official-sector sales.”And in a related news item, the St. Louis Post-Dispatch reported that some outfit called Missouri Coin “sold seven times as much gold and silver as it did a few months earlier.” Wow! A 700% increase! And this is seemingly borne out by Junior Mogambo Ranger (JMR) Chad K., who writes, “I went to purchase some silver today. There is now a 4-8 week waiting period and prices cannot be locked in.” She says that “I am glad I started listening to you weirdo gold bugs a few years ago and purchased when the dealers actually had some.”Me, too, Chad! Me, too!Until next time,The Mogambo Gurufor The Daily Reckoning Mogambo sez: If it weren’t for gold, we would be in a mess with no place to go for safety. If it weren’t for silver, we wouldn’t have such a startling upside potential.
And if it weren’t for corrupt people in and out of government who have created the mess, neither one of these assets would make us as filthy stinking rich as they are going to make us, as the ultimate value of fiat currency is always literally zero, meaning that when all the money is gone, the skimpy 5 billion ounces of gold extant in the world will be, theoretically, ALL the money, and the people who have some of it will have their share of everything! Wheee!Editor’s Note: Richard Daughty is general partner and COO for Smith Consultant Group, serving the financial and medical communities, and the editor of The Mogambo Guru economic newsletter - an avocational exercise to heap disrespect on those who desperately deserve it.
NEVER ENOUGH GOLD JEWERLY
by The Mogambo Guru
Ambrose Evans-Pritchard at The Telegraph.co.uk reports that the U.S. Academy of Sciences calculates that “some 26 percent of all the copper and 19 percent of all the zinc that ever existed in the earth’s crust has already been lost to mankind, mostly wasted in milling or smelting or buried in landfills.”Gregory Wilkins, of Barrick Gold, says that the same thing is happening in gold, as “Global mine supply is going to decrease at a much faster rate than people generally believe. Many of the new mines that people are anticipating will never come into production.”Kevin McArthur, chief executive of Goldcorp, is quoting Mr. McArthur as agreeing, and that “global output was on a relentless slide.” The point of the whole thing is that “The era of ‘peak gold’ has arrived”, which is truly momentous, because it means that the “easy to get at” gold has been gotten to, and the rest of the gold left in the earth is harder to get to, and thus the rate at which gold is being discovered, has collapsed when compared with the old days, which is just like the collapse in new discoveries of oil, which is where you get the phrase “peak oil”, and they both have crucially to do with how a rising demand growth curve and a falling of supply growth intersect at that place called Lonely Street. Oops! Sorry! That’s Elvis Presley!I mean, falling supply and rising demand intersect at that precise point that is scientifically referred to as “Expensive like you wouldn’t freaking believe!” And since everything from fuel to fertilizers to plastics to medicines to everything you can name under the sun is made from oil, then you are going to see inflation in prices like you will not freaking believe, which means that the currency will buy less per unit like you will not freaking believe, which means that people are going to be hungry and broke and miserable and rioting like you will not freaking believe.And here is where I reveal why I am so insanely bullish on the future of gold, and how I am actually salivating at the prospect of having so much money that I can spend my time gallivanting about in a carefree manner, playing golf, and hiring lawyers to, as my old high school said in its school song, “fight until we have victory, and all our enemies have gone away”, which I always thought was kind of a stupid creed, since my enemies could be massing just over that hill in preparation to attack us, and our best course of action is to immediately track them down and kill them all in a frenzied orgy of blood, and then dance like ghouls on their dismembered bodies, swaying to the hypnotic sounds of captivating rhythms on the bass line, but they called me mad! Mad! Hahahaha! I’ll show them madness! But this is not about stupid sanity hearings or about psychiatrists recoiling in horror at what I “see” in their stupid ink blots, or how traitorous neighbors and family members are lying their heads off in their testimony, but about why I am so bullish on gold. Easy. Mr. Evans-Pritchard reports that inflation is hitting gold mining, too, and “Costs are rising at $60 an ounce annually. They will average $460 by next year. From tires to diesel fuel and the geologists’ salaries, mine inflation is running at 15 percent.”Inflation of 15 percent! Yow! At that rate, dividing 15% into 72 as per the “Rule of 72”, this means that costs will double in about five years! That means that it will cost $920 an ounce to mine gold in five years, which means that gold is selling right now for $140 below the cost of mining gold in five years! And while supply may be falling, Junior Mogambo Ranger (JMR) Ed S. sent me a posting from the Gold Anti Trust Action Committee that Reuters reported that “Global gold demand in the third quarter rose 19 percent year-on-year to 947.2 tonnes on the back of robust inflows into bullion investment funds and improved jewelry consumption, industry-sponsored World Gold Council (WGC) said on Thursday.”Even more significant, Milling-Stanley said, “The increase in investment demand has replaced jewelry buying as the major source of growth for the third quarter.” It was then that I wished if I knew of any time in my whole freaking life when some woman ever said to me, “Don’t buy me any more jewelry! Buy gold bullion as an investment, instead!” And I laughed.The details, in case you are interested, are that they all wanted more jewelry, and that their wishes were answered, in that “Total gold supply for the third quarter was 1,045 tonnes, up 16 percent year-on-year due to significantly increased official-sector sales.”And in a related news item, the St. Louis Post-Dispatch reported that some outfit called Missouri Coin “sold seven times as much gold and silver as it did a few months earlier.” Wow! A 700% increase! And this is seemingly borne out by Junior Mogambo Ranger (JMR) Chad K., who writes, “I went to purchase some silver today. There is now a 4-8 week waiting period and prices cannot be locked in.” She says that “I am glad I started listening to you weirdo gold bugs a few years ago and purchased when the dealers actually had some.”Me, too, Chad! Me, too!Until next time,The Mogambo Gurufor The Daily Reckoning Mogambo sez: If it weren’t for gold, we would be in a mess with no place to go for safety. If it weren’t for silver, we wouldn’t have such a startling upside potential.
And if it weren’t for corrupt people in and out of government who have created the mess, neither one of these assets would make us as filthy stinking rich as they are going to make us, as the ultimate value of fiat currency is always literally zero, meaning that when all the money is gone, the skimpy 5 billion ounces of gold extant in the world will be, theoretically, ALL the money, and the people who have some of it will have their share of everything! Wheee!Editor’s Note: Richard Daughty is general partner and COO for Smith Consultant Group, serving the financial and medical communities, and the editor of The Mogambo Guru economic newsletter - an avocational exercise to heap disrespect on those who desperately deserve it.
Alert CFC
This one is easy. We will now short Countywide Financial CFC. This seems awfully late to the party, but this blog is less than a month old and this thing is going to zero. I was in and out of CFC from the forties. The last time I was short the rumor that Warren Buffet was buying them was being spread and I was st oped out. I told my friends at the time that it was a scam. It was the specialist who probably spread the rumor to support CFC at $17.00 the price paid by Bank of America when they dumped $2 billion into it. I said they were desperate and they were.
Sell short 1/2 position CFC @ 8.65
Sell short 1/2 position CFC @ 8.65
Alert SPY
With the stochastic rolling over from about 95 on the 15 minute chart it looks like this rally attempt will take a breather right here. Add another 1/4 position to the SPY short.
Sell short 25 shares of SPY @ 144.54
Sell short 25 shares of SPY @ 144.54
Trade Update
Well this is my first post since Tue. Nov 20. I was on the road and out of touch with the market. It looks like our short of 25 shares of SPY @ 147.06 on Wednesday the 14 th is doing well with the SPY closing Fri at 144.13. We also entered long 50 shares of the I V V @ 145.35 and got stoped out @ 144.25. That's a $55.00 loss on the IVV.
In case you don't know the IVV and SPY are identical. They are both ETFs tied to the S&P500 symbol SPX. You can see by clicking the link that they are both at the top of their down trending channel. If a break of that trend line occurs the shorts will cover and we will get a short covering rally. Ultimately though all rally will be sold into as long as these artificially high market conditions persist. So I will issue a stop above 145 on the SPY or another long hedge with IVV.
http://bigcharts.marketwatch.com/quickchart/quickchart.asp?symb=spy&sid=0&o_symb=spy&freq=1&time=8
In case you don't know the IVV and SPY are identical. They are both ETFs tied to the S&P500 symbol SPX. You can see by clicking the link that they are both at the top of their down trending channel. If a break of that trend line occurs the shorts will cover and we will get a short covering rally. Ultimately though all rally will be sold into as long as these artificially high market conditions persist. So I will issue a stop above 145 on the SPY or another long hedge with IVV.
http://bigcharts.marketwatch.com/quickchart/quickchart.asp?symb=spy&sid=0&o_symb=spy&freq=1&time=8
Tuesday, November 20, 2007
Crossing The Rubicon
This is a cogent article from blog.wired, but it downplays the threat. It says oil won't run out in our lifetimes. I have seen charts indicating otherwise. On CNBC of all places I saw a chart that shows world oil production as a horizontal line, then falling off a cliff to nearly zero in 2026. Others indicate that the Rubicon was crossed in 2006. The point is this is all true but occurring now in my opinion.
There is growing concern within the petroleum industry that we are approaching a limit to the amount of oil that can be pumped each day, and it might arrive before alternative fuels can be adopted on a large enough scale to avert severe energy shortages, the Wall Street Journal reports.
The story offers what the Journal calls "a significant twist" on the theory of peak oil while underscoring the urgent call to move beyond oil that the International Energy Agency made earlier this month in its annual World Energy Outlook. Taken together, they make a convincing argument that we've entered the end of oil and must move quickly, boldly and decisively to supplant oil as our primary source of energy.
No one, least of all the oil industry executives quoted by the Journal or the analysts who wrote the World Energy Outlook, is saying the wells will run dry in our lifetime, or even our children's lifetimes. There's still a lot of oil left to be pumped. But there is a growing belief that several factors are converging to create a practical limit to how much we can pull from the earth each day.
In other words, after seeing worldwide production rise an average of 2.3 percent annually since 1965, we may be approaching a plateau beyond which production will not climb. According to the Journal, that ceiling could be 100 million barrels a day, and said we could hit it as early as 2012.
That isn't nearly enough, and it is entirely too soon. Find out why after the jump...
As we noted in "The End of Oil Is Upon Us. We Must Move on - Quickly", the World Energy Outlook says worldwide demand for energy will climb 55 percent by 2030, with the burgeoning economies of China and India driving almost half the increase. The IEA said that "alarming" growth will within a generation threaten energy security, accelerate global climate change and possibly bring worldwide shortages and conflict if we do not adopt sustainable energy in a big way, and soon.
"All countries must take vigorous, immediate and collective action to curb runaway energy demand," Nobuo Tanaka, head of the IEA, said. "The next ten years will be crucial for all countries... We need to act now to bring about a radical shift in investment in favor of cleaner, more efficient and more secure energy technologies."
That said, fossil fuels will remain the leading source of energy, providing 84 percent of our needs, and oil will continue to dominate the picture as daily demand rises from 85 million barrels today to 116 million in 2030, according to the report. The IEA - an energy watchdog group representing 26 nations, including the United States - says we've got enough oil to meet demand even if we don't do anything to change course. That may be so, but as the Journal notes, producing it is another story entirely.
In the past three weeks, the Journal reports, Christophe de Margerie (chief executive of the French oil company Total SA, the world's fourth-largest petroleum company), James Mulva (chief executive of ConocoPhillips, the third-largest energy company in the U.S.) and Shokri Mohamed Ghanem (chairman of the Libya National Energy Corp.) all have said publicly that they don't see worldwide production topping 100 million barrels a day, and we could hit that ceiling as early as 2012.
Of course, that's by no means a consensus within the industry, and the Journal quotes two high-ranking oil industry executives who say, essentially, there's nothing to worry about. And, the Journal points out, "the industry has long been beset by doom and gloom scenarios, which so far haven't panned out." But most of those scenarios have revolved around the idea that worldwide production would peak, then begin a long, slow and irreversible decline. That theory, called peak oil, was first put forth by geophysicist M. King. Hubbert in 1956, and remains a subject of no small debate that we won't delve into here.
The question, according to the Journal, isn't one what's available, but what can be pumped and how quickly. It quotes Deputy Energy Secretary Clay Sell, who says:
We know that the world is not running out of energy resources, but nonetheless, above-ground risks like resource nationalism, limited access and infrastructure constraints may make it feel like peak oil just the same, by limiting production to something far less than what is required.
The Journal lists several factors that are converging to create the plateau, not the least of which is the widespread belief that the world's giant oilfields have already been discovered and are being tapped out, and most of the promising fields yet to be developed are inhospitable for reasons of geography, geology or political instability.
Moreover, a labor pool that is shrinking even as it is aging, construction bottlenecks and skyrocketing equipment costs are making it harder, and more expensive, to develop new oil fields and move the oil once it's pumped. And, the Journal notes, the industry simply isn't spending enough to meet future need. You have to wonder - how can it? According to the IEA, $22 trillion dollars of investment must be made in the supply infrastructure alone just to meet projected demand.
Most of the world's biggest oil fields are aging, and their production is falling. There is widespread speculation that the Ghawar oil field in Saudi Arabia, the world's largest, is petering out, which is significant because it likely has produced more than half the oil that has flowed out of the kingdom. At the rate oil fields are being depleted, simply maintaining our current production of 85 million barrels a day will require producing at least another 4 million daily barrels every year. That, according to the Journal, is roughly five times the daily production in all of Alaska, and doesn't account for any increase in demand at all. So it might already be too late, Matthew Simmons, a peak oil proponent who wrote "Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy" and chairman of energy investment banking at Simmons & Co. International, told the Journal:
Peak oil is likely already a crisis that we don't know about. At the furthest out, it will be a crisis in 2008 to 2012. Global warming, if real, will not be a problem for 50 to 100 years.
So what's the answer?
Well, oil companies are increasingly looking beyond petroleum. The Journal says Total is taking a hard look at going into nuclear energy and ConocoPhillips may begin using coal to produce natural gas. There's been a lot of talk about Canada's oil sands helping out, with proponents saying they could hold as much as 180 billion barrels of oil. But despite years of effort and tens of billions of dollars of investment, we're only getting 1.1 million barrels of crude a day - and few expect to pull more than 3 million a day by 2015, the Journal notes. Nuclear's a tough sell in many quarters, but it will undoubtedly grow more attractive as oil prices climb. But using coal, oil sands and other fossil fuels does nothing to address the problem of global climate change.
Of course, as crude oil prices continue climbing - the IEA, in the World Energy Outlook, says we could see it hit $159 a barrel by 2030 - it will make alternative sources of energy more appealing and more viable and more cost-effective. We pointed this out in "Why $5 Gas Is Good For America" and outlined in "How Hydrogen Can Save America" and "Cellulosic Ethanol: How One Molecule Could Cure Our Addiction to Oil" how those fuels might move us beyond petroleum.
The Jounal notes that oil production may reach its plateau before these alternatives can be adopted on a scale sufficient to head off "energy shortages, high prices and bare-knuckled competition for fuel." The time has come to act. The IEA says we've got 10 years to figure it out and begin moving, once and for all, beyond oil.
Will it be enough?
http://blog.wired.com/cars/2007/11/the-end-of-oil.html
There is growing concern within the petroleum industry that we are approaching a limit to the amount of oil that can be pumped each day, and it might arrive before alternative fuels can be adopted on a large enough scale to avert severe energy shortages, the Wall Street Journal reports.
The story offers what the Journal calls "a significant twist" on the theory of peak oil while underscoring the urgent call to move beyond oil that the International Energy Agency made earlier this month in its annual World Energy Outlook. Taken together, they make a convincing argument that we've entered the end of oil and must move quickly, boldly and decisively to supplant oil as our primary source of energy.
No one, least of all the oil industry executives quoted by the Journal or the analysts who wrote the World Energy Outlook, is saying the wells will run dry in our lifetime, or even our children's lifetimes. There's still a lot of oil left to be pumped. But there is a growing belief that several factors are converging to create a practical limit to how much we can pull from the earth each day.
In other words, after seeing worldwide production rise an average of 2.3 percent annually since 1965, we may be approaching a plateau beyond which production will not climb. According to the Journal, that ceiling could be 100 million barrels a day, and said we could hit it as early as 2012.
That isn't nearly enough, and it is entirely too soon. Find out why after the jump...
As we noted in "The End of Oil Is Upon Us. We Must Move on - Quickly", the World Energy Outlook says worldwide demand for energy will climb 55 percent by 2030, with the burgeoning economies of China and India driving almost half the increase. The IEA said that "alarming" growth will within a generation threaten energy security, accelerate global climate change and possibly bring worldwide shortages and conflict if we do not adopt sustainable energy in a big way, and soon.
"All countries must take vigorous, immediate and collective action to curb runaway energy demand," Nobuo Tanaka, head of the IEA, said. "The next ten years will be crucial for all countries... We need to act now to bring about a radical shift in investment in favor of cleaner, more efficient and more secure energy technologies."
That said, fossil fuels will remain the leading source of energy, providing 84 percent of our needs, and oil will continue to dominate the picture as daily demand rises from 85 million barrels today to 116 million in 2030, according to the report. The IEA - an energy watchdog group representing 26 nations, including the United States - says we've got enough oil to meet demand even if we don't do anything to change course. That may be so, but as the Journal notes, producing it is another story entirely.
In the past three weeks, the Journal reports, Christophe de Margerie (chief executive of the French oil company Total SA, the world's fourth-largest petroleum company), James Mulva (chief executive of ConocoPhillips, the third-largest energy company in the U.S.) and Shokri Mohamed Ghanem (chairman of the Libya National Energy Corp.) all have said publicly that they don't see worldwide production topping 100 million barrels a day, and we could hit that ceiling as early as 2012.
Of course, that's by no means a consensus within the industry, and the Journal quotes two high-ranking oil industry executives who say, essentially, there's nothing to worry about. And, the Journal points out, "the industry has long been beset by doom and gloom scenarios, which so far haven't panned out." But most of those scenarios have revolved around the idea that worldwide production would peak, then begin a long, slow and irreversible decline. That theory, called peak oil, was first put forth by geophysicist M. King. Hubbert in 1956, and remains a subject of no small debate that we won't delve into here.
The question, according to the Journal, isn't one what's available, but what can be pumped and how quickly. It quotes Deputy Energy Secretary Clay Sell, who says:
We know that the world is not running out of energy resources, but nonetheless, above-ground risks like resource nationalism, limited access and infrastructure constraints may make it feel like peak oil just the same, by limiting production to something far less than what is required.
The Journal lists several factors that are converging to create the plateau, not the least of which is the widespread belief that the world's giant oilfields have already been discovered and are being tapped out, and most of the promising fields yet to be developed are inhospitable for reasons of geography, geology or political instability.
Moreover, a labor pool that is shrinking even as it is aging, construction bottlenecks and skyrocketing equipment costs are making it harder, and more expensive, to develop new oil fields and move the oil once it's pumped. And, the Journal notes, the industry simply isn't spending enough to meet future need. You have to wonder - how can it? According to the IEA, $22 trillion dollars of investment must be made in the supply infrastructure alone just to meet projected demand.
Most of the world's biggest oil fields are aging, and their production is falling. There is widespread speculation that the Ghawar oil field in Saudi Arabia, the world's largest, is petering out, which is significant because it likely has produced more than half the oil that has flowed out of the kingdom. At the rate oil fields are being depleted, simply maintaining our current production of 85 million barrels a day will require producing at least another 4 million daily barrels every year. That, according to the Journal, is roughly five times the daily production in all of Alaska, and doesn't account for any increase in demand at all. So it might already be too late, Matthew Simmons, a peak oil proponent who wrote "Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy" and chairman of energy investment banking at Simmons & Co. International, told the Journal:
Peak oil is likely already a crisis that we don't know about. At the furthest out, it will be a crisis in 2008 to 2012. Global warming, if real, will not be a problem for 50 to 100 years.
So what's the answer?
Well, oil companies are increasingly looking beyond petroleum. The Journal says Total is taking a hard look at going into nuclear energy and ConocoPhillips may begin using coal to produce natural gas. There's been a lot of talk about Canada's oil sands helping out, with proponents saying they could hold as much as 180 billion barrels of oil. But despite years of effort and tens of billions of dollars of investment, we're only getting 1.1 million barrels of crude a day - and few expect to pull more than 3 million a day by 2015, the Journal notes. Nuclear's a tough sell in many quarters, but it will undoubtedly grow more attractive as oil prices climb. But using coal, oil sands and other fossil fuels does nothing to address the problem of global climate change.
Of course, as crude oil prices continue climbing - the IEA, in the World Energy Outlook, says we could see it hit $159 a barrel by 2030 - it will make alternative sources of energy more appealing and more viable and more cost-effective. We pointed this out in "Why $5 Gas Is Good For America" and outlined in "How Hydrogen Can Save America" and "Cellulosic Ethanol: How One Molecule Could Cure Our Addiction to Oil" how those fuels might move us beyond petroleum.
The Jounal notes that oil production may reach its plateau before these alternatives can be adopted on a scale sufficient to head off "energy shortages, high prices and bare-knuckled competition for fuel." The time has come to act. The IEA says we've got 10 years to figure it out and begin moving, once and for all, beyond oil.
Will it be enough?
http://blog.wired.com/cars/2007/11/the-end-of-oil.html
Alert
We continue to watch Ambac and MBIA. For Ambac(ABK) it's 52 week low is 20.55. A break below that and by by. Similarly a break below 29.50 for MBIA(MBI) will send it tumbling. In the chart you can see that they are forming support around their 52 lows on badly oversold conditions. We will wait for a rally to short into these. The rally is likely to be short lived.
MBIA, Ambac Shares Sink On Concerns On Further Write-Down Fears
http://insurancenewsnet.com/article.asp?n=1&neID=20071120375.4_2e01008448493eea
MBIA, Ambac Shares Sink On Concerns On Further Write-Down Fears
http://insurancenewsnet.com/article.asp?n=1&neID=20071120375.4_2e01008448493eea
Monday, November 19, 2007
Warning
Along with the implosion of the mortgage lenders, home builders and the banks there is a new kid in trouble on the block. It is the bond insurers most notably Ambac and MBIA. No one knows just how toxic the bonds are that they cover even as some toxic shock has been felt. It fact so shocking is it that MBIA is short term over sold. But technicals wont matter it they receive credit downgrades and go to zero. Right now they are looking for reinsurance themselves and trying to raise cash. Click on link. We will keep our eye on AKT. With stochastic over 80 and turning over on puking volume it could present a decent short.
http://www.ft.com/cms/s/0/b5923e8c-95fb-11dc-b7ec-0000779fd2ac.html?nclick_check=1
http://www.ft.com/cms/s/0/b5923e8c-95fb-11dc-b7ec-0000779fd2ac.html?nclick_check=1
Rough Start
It appears that the S&P500 will be in a choppy range between 1400 and 1500. The market will open lower on a Goldman Sachs downgrade of Citi -see the link however it usually rallies into thanksgiving. So if I were to trade this week I would look for stocks with relative strength during the pullback and consider entering on strength. If I were going to trade this week that is.
http://ftalphaville.ft.com/blog/2007/11/19/9012/goldman-on-citi-sell-before-the-next-15bn-hits/
http://ftalphaville.ft.com/blog/2007/11/19/9012/goldman-on-citi-sell-before-the-next-15bn-hits/
Sunday, November 18, 2007
The Band Played ON
I tell people the next Great Depression is already here. Their inevitable response is "It doesn't feel like a depression". Well the Titanic didn't sink immediately after striking the iceberg either, though her fate was sealed while the band played on. The stock market and overall economy is in a similar situation doomed to sink under the weight of the credit bubble and falling value of the dollar. But the general public like the band play on. What are the warning signs that the novice investor and general public continue to miss?
This article from MoneyandMarkets should provide a good answer.
http://www.moneyandmarkets.com/Issues.aspx?NewsletterEntryId=1194
This article from MoneyandMarkets should provide a good answer.
http://www.moneyandmarkets.com/Issues.aspx?NewsletterEntryId=1194
Golden Godfather
One reason for starting this blog is to inform novice investors of the criminality of Wall Street. You must understand that Wall Street is not inundated with criminals, but in fact is a criminal organization, a mafia and the Godfather of that mafia is Goldman Sachs.
The first thing I watch when the market opens is GS. The reason is simple. The banking index is 25% of the the DOW 30 and GS is the largest trading firm in the world. If Hank Paulson wants to bring the market up into the next election as he did the last he will use GS to do it. GS will buy their own stock to move up the BKX which in turn brings up the DOW. Most novice investors are taught that the DOW is the stock market. Notice how it is always listed DOW NASDAQ S&P500 in that order. With the DOW going up people start buying tech, etc and up goes the NASDAQ and finally the S&P500. It's like leading 1000 mule team. You only have to control the head of the lead mule. And when the Plunger Protection team wants to juice the market who better than GS to do it through? Maybe I would be a brilliant trader too if I had this kind of information? http://infowar.tribe.net/thread/bfb0acb6-3655-40a9-8d6e-e5ef435aafc0#f4b7f911-3c2c-48ad-8054-c6a54ce66c58
"The central issue, as best I can determine, is whether Goldman had any insight that other firms didn't have during the May and June period when subprime mortgage securities were deteriorating in value. "
The first thing I watch when the market opens is GS. The reason is simple. The banking index is 25% of the the DOW 30 and GS is the largest trading firm in the world. If Hank Paulson wants to bring the market up into the next election as he did the last he will use GS to do it. GS will buy their own stock to move up the BKX which in turn brings up the DOW. Most novice investors are taught that the DOW is the stock market. Notice how it is always listed DOW NASDAQ S&P500 in that order. With the DOW going up people start buying tech, etc and up goes the NASDAQ and finally the S&P500. It's like leading 1000 mule team. You only have to control the head of the lead mule. And when the Plunger Protection team wants to juice the market who better than GS to do it through? Maybe I would be a brilliant trader too if I had this kind of information? http://infowar.tribe.net/thread/bfb0acb6-3655-40a9-8d6e-e5ef435aafc0#f4b7f911-3c2c-48ad-8054-c6a54ce66c58
"The central issue, as best I can determine, is whether Goldman had any insight that other firms didn't have during the May and June period when subprime mortgage securities were deteriorating in value. "
Friday, November 16, 2007
Plunger Alert
Well it looks like the plunger group is right on time. Look at the SPX or DJIA in the 15 minuite chart. Up sharply in the last half hour for no reason. Boy this thing is rigged. What really kills me are these guys who just don't seem to get it. As if
Markets poised for severe fall, says King
The Bank of England Governor has issued an extremely unusual warning on world stock markets, indicating that shares may be heading for a major fall.
Mervyn King said the full impact of the credit crunch had not yet been felt on equity markets in the West and in developing countries, saying that the possibility of share price falls were one of the biggest risks facing the world economy.
His warning came as the Bank gave a firm indication that it plans to cut interest rates as many as three times over the next two years to protect Britain's economy in the wake of the credit crunch. The signal caused the pound to drop to a four-year low against the euro, with the single currency now worth 71.13p.
"It is very striking that despite the developments we've seen in the last three months , despite the stresses and strains in the banking sector , equity prices are higher now than they were in August," he said, unveiling the Bank's Inflation Report, which said the strength of share prices had been "surprising".
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He added: "This is true around the world, and in emerging markets they're 20pc higher. There must be some downside risks there.
"That's factored into our projections. That's the bigger risk to the global economy than the narrower one focused on the banking sector."
The Governor's warning echoes the Bank's recent Financial Stability Report, which said that the UK stock market is "particularly vulnerable" to a downturn. It is highly unusual for a central banker to comment directly on share prices. One of the most renowned examples was former Federal Reserve chairman Alan Greenspan's comment about "irrational exuberance" in the US stock market in the 1990s.
Mr King said: "The repricing of risk hasn't really fed through to equity markets, and if there were to be an adjustment of risk premia in equity markets with a fall in asset prices then that could have a bigger impact on the world economy."
His warning was echoed by Stuart Gulliver, global head of investment banking at HSBC, who said equity markets are not reflecting the prospect of slower growth ahead.
The Governor also issued an unexpectedly severe warning on currency markets, expressing "major concern" over the effects China's dollar peg is having on worldwide exchange rates and economies.
He said: "The difficulty in the world economic system at present is that a number of major economies have flexible exchange rates... others, like China, have linked theirs to the dollar and that is causing great currency tensions.
"I came away from the [International Monetary Fund] meeting more concerned about the implications of these tensions, because the unwinding of [global economic] imbalances is not just a hypothetical prospect, but is happening now. And I think this is a major concern."
The dollar recently slumped to a 26-year low against sterling, and has hit record levels against the euro. Many experts feel the impact of its devaluation has been intensified by the Chinese refusal to loosen its currency's peg.
The Bank cut its growth forecast for next year from around 2.8pc to 2.2pc, though some economists said even this was optimistic.
A number have now forecast that it will deliver the first of its rate cuts as soon as next month.
Mr King said he had not considered resigning over the Northern Rock crisis, and denied that the UK financial system had been damaged by the episode.
"The underlying structures are sound," he said. He added that he was confident that UK banks would weather the coming storm, as they calculate their losses, saying: "The big five banks have made over the past few years about £100bn of profits.
"If ever there was a moment when it was helpful for banks to have made large profits it must be now.
"They will provide the cushion which guarantees the stability of the banking system and it is strong and stable." inside
Markets poised for severe fall, says King
The Bank of England Governor has issued an extremely unusual warning on world stock markets, indicating that shares may be heading for a major fall.
Mervyn King said the full impact of the credit crunch had not yet been felt on equity markets in the West and in developing countries, saying that the possibility of share price falls were one of the biggest risks facing the world economy.
His warning came as the Bank gave a firm indication that it plans to cut interest rates as many as three times over the next two years to protect Britain's economy in the wake of the credit crunch. The signal caused the pound to drop to a four-year low against the euro, with the single currency now worth 71.13p.
"It is very striking that despite the developments we've seen in the last three months , despite the stresses and strains in the banking sector , equity prices are higher now than they were in August," he said, unveiling the Bank's Inflation Report, which said the strength of share prices had been "surprising".
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He added: "This is true around the world, and in emerging markets they're 20pc higher. There must be some downside risks there.
"That's factored into our projections. That's the bigger risk to the global economy than the narrower one focused on the banking sector."
The Governor's warning echoes the Bank's recent Financial Stability Report, which said that the UK stock market is "particularly vulnerable" to a downturn. It is highly unusual for a central banker to comment directly on share prices. One of the most renowned examples was former Federal Reserve chairman Alan Greenspan's comment about "irrational exuberance" in the US stock market in the 1990s.
Mr King said: "The repricing of risk hasn't really fed through to equity markets, and if there were to be an adjustment of risk premia in equity markets with a fall in asset prices then that could have a bigger impact on the world economy."
His warning was echoed by Stuart Gulliver, global head of investment banking at HSBC, who said equity markets are not reflecting the prospect of slower growth ahead.
The Governor also issued an unexpectedly severe warning on currency markets, expressing "major concern" over the effects China's dollar peg is having on worldwide exchange rates and economies.
He said: "The difficulty in the world economic system at present is that a number of major economies have flexible exchange rates... others, like China, have linked theirs to the dollar and that is causing great currency tensions.
"I came away from the [International Monetary Fund] meeting more concerned about the implications of these tensions, because the unwinding of [global economic] imbalances is not just a hypothetical prospect, but is happening now. And I think this is a major concern."
The dollar recently slumped to a 26-year low against sterling, and has hit record levels against the euro. Many experts feel the impact of its devaluation has been intensified by the Chinese refusal to loosen its currency's peg.
The Bank cut its growth forecast for next year from around 2.8pc to 2.2pc, though some economists said even this was optimistic.
A number have now forecast that it will deliver the first of its rate cuts as soon as next month.
Mr King said he had not considered resigning over the Northern Rock crisis, and denied that the UK financial system had been damaged by the episode.
"The underlying structures are sound," he said. He added that he was confident that UK banks would weather the coming storm, as they calculate their losses, saying: "The big five banks have made over the past few years about £100bn of profits.
"If ever there was a moment when it was helpful for banks to have made large profits it must be now.
"They will provide the cushion which guarantees the stability of the banking system and it is strong and stable." inside
Alert GS follow up
We are out of GS @ 223.35. We entered 25 shares @ 228.3 for $123.575 loss. If there is going to be a Santa Clause rally GS will have lead, but right now the entire banking sector is weak. We really need a nice sell off, but we probably wont get it. Expect a lot of chop from now through Thanksgiving day.
Bond to Insurers Implode
In the wake of recent mortgage lenders implosions and home builders implosions, it seems that there will be a wave of bond insurer implosions. Of note is Ambac. We will seek to take advantage by shorting into the sector. This story is from marketwatch.
http://http//www.marketwatch.com/news/story/security-capital-hit-cdo-downgrades/story.aspx?guid=%7B7D035313%2DB075%2D46BE%2DA5F7%2D6A173EC8EB8A%7D&siteid=yhoof
http://http//www.marketwatch.com/news/story/security-capital-hit-cdo-downgrades/story.aspx?guid=%7B7D035313%2DB075%2D46BE%2DA5F7%2D6A173EC8EB8A%7D&siteid=yhoof
Alert
We are going to enter a long position on the S&P500 using the IVV. The stochastic are turning up in the 15 min chart as in comes up out of the 145 support area. We are short the spy @ 147.06, with a stop @ 148.29. Don't worry about it just let yourself be stooped out.
Buy 1/2 position 50 shares IVV @145.35 stop @ 144.25
Buy 1/2 position 50 shares IVV @145.35 stop @ 144.25
SPY
If the SPY can hold yesterdays low 144.54 it will have formed a lower high. The trend line from the Aug. low of 137 to the March low of 136.74 to yesterdays low will remain intact. On the other hand there is a down trend mentioned in yesterdays post from the Oct. high of 157.52 to 144.54. They can't both last forever. The stochastics are undet 50 and moving up. When down trends like that are broken the shorts(like us) run for cover and the price will away fast. We want to be in. Since we are short the SPY I like the IVV to enter the long side on.
Thursday, November 15, 2007
Alert
The SPY are in a downward channel beneath the 100 dma. Click the link to see the chart, http://http//bigcharts.marketwatch.com/quickchart/quickchart.asp?symb=spy&sid=0&o_symb=spy
They made a high of 157.52 in mid October, then hit 155 latter in the month, then 152 last week before dropping beneath the 200 dma. That is a series of lower highs. They went all the way down to 144 before returning to 152. Right now the SPY sit @ 146 in the downward channel above support @ 145. Also the stochastic is moving up as the volume is going down, that's a divergence. We will add to the short if SPY breaks under 144. If that downward channel is broken to the upside with any force we will have to go long in an attempt to catch the resulting short covering. That my be a little tricky as we will be covering and going long during the short covering. You can easily miss the short covering if you are not in in time, let alone covering and going long. I f that happens I will use the IVV to go long and just let my self get stoped out on the SPY.
They made a high of 157.52 in mid October, then hit 155 latter in the month, then 152 last week before dropping beneath the 200 dma. That is a series of lower highs. They went all the way down to 144 before returning to 152. Right now the SPY sit @ 146 in the downward channel above support @ 145. Also the stochastic is moving up as the volume is going down, that's a divergence. We will add to the short if SPY breaks under 144. If that downward channel is broken to the upside with any force we will have to go long in an attempt to catch the resulting short covering. That my be a little tricky as we will be covering and going long during the short covering. You can easily miss the short covering if you are not in in time, let alone covering and going long. I f that happens I will use the IVV to go long and just let my self get stoped out on the SPY.
US Stock Futures Point to Lower Open
Never mind guessing what will happen overnight did you see what happened at the close? They rang the bell a minute early and all the floor traders booed! Those last 15 minutes are when the big institutions do most of their program trading. Was a huge sell block coming down the pipe? I don't know, but judging by the sound of it someone got screwed. Hope it's not us. If they did try to prop it up it's not working so far. We will look to add to our short position.
http://http//ap.google.com/article/ALeqM5gHs5OM3gFG_DytQQZFbWfgPT08MAD8SU4PF00
US Stock Futures Point to Lower Open
Wall Street headed for a lower opening Thursday after the Labor Department reported a moderate rise in consumer price inflation that met market expectations.
The Labor Department's Consumer Price Index rose by 0.3 percent in October, in line with September's increase and analysts' forecast. The increase came as energy prices rose at the fastest pace in five months and food prices continued to tick higher.
Investors also reacted to a Barron's report late Wednesday that a General Electric Asset Management bond fund has suffered losses in mortgage-backed securities. The General Electric Co. unit is offering investors the option to redeem their holdings in the short-term institutional bond fund at 96 cents on the dollar. The losses in the bond fund raised concerns that the squeeze on credit markets could spread and hurt small investors.
Meanwhile, Barclays Capital became the latest financial institution to record a writedown on losses stemming from turbulent credit markets. The unit of Barclays Group PLC took a $2.7 billion charge in the third quarter but the also said Thursday that its profit beat last year's strong performance.
In earnings news, J.C. Penney Co. reported a 9 percent drop in fiscal third-quarter profit on weak sales and cut its fourth-quarter outlook, indicating that housing woes are taking a toll on shoppers as well. Consumers, wrestling with rising food and gas prices, appear to be curtailing retail purchases.
Dow Jones industrial average futures fell 40, or 0.30 percent, to 13,235. Standard & Poor's 500 futures fell 5.10, or 0.35 percent, to 1,473.00. Nasdaq 100 index futures dropped 6.50, or 0.32 percent, to 2,051.00.
http://http//ap.google.com/article/ALeqM5gHs5OM3gFG_DytQQZFbWfgPT08MAD8SU4PF00
US Stock Futures Point to Lower Open
Wall Street headed for a lower opening Thursday after the Labor Department reported a moderate rise in consumer price inflation that met market expectations.
The Labor Department's Consumer Price Index rose by 0.3 percent in October, in line with September's increase and analysts' forecast. The increase came as energy prices rose at the fastest pace in five months and food prices continued to tick higher.
Investors also reacted to a Barron's report late Wednesday that a General Electric Asset Management bond fund has suffered losses in mortgage-backed securities. The General Electric Co. unit is offering investors the option to redeem their holdings in the short-term institutional bond fund at 96 cents on the dollar. The losses in the bond fund raised concerns that the squeeze on credit markets could spread and hurt small investors.
Meanwhile, Barclays Capital became the latest financial institution to record a writedown on losses stemming from turbulent credit markets. The unit of Barclays Group PLC took a $2.7 billion charge in the third quarter but the also said Thursday that its profit beat last year's strong performance.
In earnings news, J.C. Penney Co. reported a 9 percent drop in fiscal third-quarter profit on weak sales and cut its fourth-quarter outlook, indicating that housing woes are taking a toll on shoppers as well. Consumers, wrestling with rising food and gas prices, appear to be curtailing retail purchases.
Dow Jones industrial average futures fell 40, or 0.30 percent, to 13,235. Standard & Poor's 500 futures fell 5.10, or 0.35 percent, to 1,473.00. Nasdaq 100 index futures dropped 6.50, or 0.32 percent, to 2,051.00.
Wednesday, November 14, 2007
Alert
It's hard guess what will happen overnight. They seem determined to keep this thing up. GS is to big a risk right now so I will short the spyders with a 1/4 position.
Sell short 25 shares of SPY @ 147.06 with a stop @ 148.29
Sell short 25 shares of SPY @ 147.06 with a stop @ 148.29
Prelude to a Depression
To see why the risk of financial companies has not fallen, but actually risen read this from Chris Laird at the PrudentSquirrel .http://www.prudentsquirrel.com/breakingnews/14_11_07.htm
"The West (US,EU, Canada) is in the midst of a gigantic and spreading credit crisis that may well to lead it into a depression, if it is not fixed soon. So far, Central bank infusions (Over $1trillion worth in a few months since July!) have been the only thing that has stopped a massive bank liquidity crisis from shutting down commerce. But the damage to credit markets thus far is so huge, and worsening rapidly, that a very bad outcome seems assured. Gregory Peters of Morgan Stanley said there is a better than 50% chance of a systemic banking crisis that will hammer credit markets at this time.
So far, equity markets have barely reflected this turmoil to the degree it should. That is going to rapidly change. "
"The West (US,EU, Canada) is in the midst of a gigantic and spreading credit crisis that may well to lead it into a depression, if it is not fixed soon. So far, Central bank infusions (Over $1trillion worth in a few months since July!) have been the only thing that has stopped a massive bank liquidity crisis from shutting down commerce. But the damage to credit markets thus far is so huge, and worsening rapidly, that a very bad outcome seems assured. Gregory Peters of Morgan Stanley said there is a better than 50% chance of a systemic banking crisis that will hammer credit markets at this time.
So far, equity markets have barely reflected this turmoil to the degree it should. That is going to rapidly change. "