Trading Desk Blog for Oct 4, 2010 [See post-close report]

October 4, 2010 by CTA Trading Desk Bookmark and Share

Bill Cara has extended his vacation another week, taking care of business in Nassau, moving office and residence to Freeport Bahamas. He welcomes Cara Community members to continue your discussions.

CTA Trading Desk Post-Close Report

While many momentum oscillators peaked several weeks ago the US equity market has managed to shrug off any negative divergences, simply treading water as stocks worked off their overbought condition. Many Bulls were convinced once S&P 1130 was broken to the upside the path of least resistance was higher – a test of the yearly high of 1220 a mere formality.

In hindsight every pattern is obvious, the victor of the skirmish readily apparent; however, in the heat of the battle the eventual outcome is often very much in doubt.

We bring this up to highlight the perils of forecasting future market direction. Prognostications often begin to affect objective judgment, resulting in seeing only things that validate your hypothesis. This inherent bias causes traders to rationalize holding onto losing positions, a sure way to financial ruin.

Yes, the market is overbought – does it have to go lower? No, but since it has lost momentum it makes sense to take some money off the table or at the very least trail stops. If the market begins to carve out a pattern of lower tops and lower bottoms then (and only then) can one say the near-term trend has turned lower.

If the market continues to meander around 1150 and eventually accelerates higher, then price action will tell you equities have resumed their upward course. Those wishing to increase longs will have a defined stop loss level to limit their risk.

We believe the S&P will trade back under 1130, but until it actually does this idea is merely conjecture. The important 50% retracement of the September rally is just below 1100 (1098.5), a level Bulls must defend on any subsequent sell off.

The poor relative performance of the financial sector over the past month (XLF-0.48%) remains a concern, as does the amount of money that was channeled into high beta performance enhancers towards the end of the third quarter.

Volume continues to be sub-par, price action lethargic – hopefully we don’t have to wait for election results to get this market out of the doldrums.

Have a great evening.

– Patrick Veech

Login or register to post comments Bookmark and Share Comments Cara 100 Update Submitted by Bull Hunter (1444 comments) on Mon, 10/04/2010 – 08:11 #70661

(continued from previous blog)

CAT – Caterpillar downgraded to Hold from Buy at Gabelli based on valuation.

Login or register to post comments Calendar for today Submitted by Vadym Graifer (1486 comments) on Mon, 10/04/2010 – 09:04 #70662

10:00 US Aug Factory Orders, Aug Pending Home Sales

Events
China/Europe Summit Meeting.

Earnings
After the Close: MOS.

Login or register to post comments Cara 100 Update (Final) Submitted by Bull Hunter (1444 comments) on Mon, 10/04/2010 – 10:06 #70663

AMZN – target increased at Citigroup to $190. Company should continue to benefit from improving online traffic and spending trends. Buy rating.

BBY – numbers upped at Goldman through 2011. Company should benefit from resurgent wireless demand. Neutral rating and new $44 price target.

BUCY – price target boosted at Barclays to $80 from $75 on higher Terex estimates. Maintain Overweight rating.

COST – price target boosted at BofA/Merrill to $70 from $66. Expect traffic at discount stores to remain solid. Maintain Buy rating.

FCX – cut from Top Picks Live List at Citigroup. Stock is already pricing in higher copper prices. $92 price target.

NE – estimates lowered at Citigroup through 2011. Company will lose revenue fro two rigs in current litigation. Buy rating and $36 price target.

QCOM – estimates, target boosted at Goldman. Shares of QCOM now seen reaching $52. Estimates also upped, given higher tablet computer demand. Buy rating.

Login or register to post comments …. Submitted by baz22 (1408 comments) on Mon, 10/04/2010 – 10:37 #70664

starting in ‘ cxm ‘…

Login or register to post comments VXX @ 17.14 Submitted by 2nd_ave (4716 comments) on Mon, 10/04/2010 – 10:41 #70665

A bet that volatililty will soon replace the recent complacence.

Login or register to post comments decadence and the election of 2010 Submitted by federico (27 comments) on Mon, 10/04/2010 – 10:49 #70666 (in reply to #70665)

Just saw this article. A lot of truth in this unsettling piece. http://www.marketwatch.com/story/america-on-the-br…

Login or register to post comments Raise your hand if you’re long Submitted by 2nd_ave (4716 comments) on Mon, 10/04/2010 – 11:00 #70667

80% of the class raises their hands. Then they sell the market off 2%. It drops to 50%. Then they sell it off another 2%. It drops to 30%. Then they ramp it up.

To pick one stock at random- at this point INTC @ 18.29 within a few days might leave only strong hands holding.

Login or register to post comments Meredith Whitney calls for 80k layoffs for wall st in next 18mo Submitted by NYUGrad (2872 comments) on Mon, 10/04/2010 – 11:04 #70668

This is u.s.

http://bit.ly/cQlIWH

That is going to be horrific for New York City

Login or register to post comments Re: VXX @ 17.14 Submitted by goldbug58 (128 comments) on Mon, 10/04/2010 – 11:04 #70669 (in reply to #70665)

hope you see VXX in 20s on that bet soon.

Login or register to post comments Re: VXX @ 17.14 Submitted by 2nd_ave (4716 comments) on Mon, 10/04/2010 – 11:07 #70670 (in reply to #70669)

I won’t be holding that long- but if we do see 20 by the end of this week don’t forget to hit the kill switch…

Login or register to post comments Re: Meredith Whitney calls for 80k layoffs for wall st in … Submitted by Dr. Strangelove (770 comments) on Mon, 10/04/2010 – 11:08 #70671 (in reply to #70668)

The German’s have a word for this: Schadenfreude.

http://en.wikipedia.org/wiki/Schadenfruede

Cheers.

Login or register to post comments Re: VXX @ 17.14 Submitted by Bull Hunter (1444 comments) on Mon, 10/04/2010 – 11:09 #70672 (in reply to #70670)

I’m holding for the 80-90 range.

“Let The Games Begin!”

Login or register to post comments SPX intra and closing supports under the 1142.06 low today Submitted by gforce (358 comments) on Mon, 10/04/2010 – 11:13 #70673

1139 and 1136…divide by ten and is also more or less SPY

Login or register to post comments Re: VXX @ 17.14 Submitted by goldbug58 (128 comments) on Mon, 10/04/2010 – 11:13 #70674 (in reply to #70672)

80-90 ? My, you really are a bull (at least on VXX).
Most everything I look at on $SPX charts is rolling over and pointing down, so maybe this is the start of a correction, “maybe” being the critical term in that statement.

Login or register to post comments Re: Meredith Whitney calls for 80k layoffs for wall st in … Submitted by NYUGrad (2872 comments) on Mon, 10/04/2010 – 11:15 #70675 (in reply to #70671)

For me its quite the opposite. I live here. and as a new yorker i have seen a gradual decline in business and overall quality of life, with rising expenses, taxes, etc.

I have family members and friends who feed their family with wall st paychecks.

as for M Whitney, maybe she does enjoy it. I am sure when someone is regarded as right all the time, there is a sense of hubris that sets in.

Login or register to post comments Re: VXX @ 17.14 Submitted by 2nd_ave (4716 comments) on Mon, 10/04/2010 – 11:18 #70676 (in reply to #70672)

When dip buyers start to get screwdoodled (as our friend shark used to say), and prices drop to the point where mid-September buyers lose conviction, then the selling should begin in earnest.

Login or register to post comments Selling TZA Submitted by jet8400 (71 comments) on Mon, 10/04/2010 – 11:18 #70677

Setting limit sell at 26.90

Login or register to post comments Re: Selling TZA Submitted by 2nd_ave (4716 comments) on Mon, 10/04/2010 – 11:27 #70678 (in reply to #70677)

A ton of window dressers departed last Friday- you could probably get away with a higher limit.

Login or register to post comments Re: VXX @ 17.14 Submitted by Bull Hunter (1444 comments) on Mon, 10/04/2010 – 11:39 #70679 (in reply to #70674)

Hi goldbug58,

Maybe I’m crazy* ….but I look at VXX as a long term investment.

At this level, you buy it, tuck it away, and wait for the next major downturn/market crash/black swan…… then you hit the lottery.

Of course, if none of these events ever occur again in your lifetime….

Regards,
BH

* Full Disclosure: I did have a grandfather who was rarely let out of the attic. To his dying day, he steadfastly maintained that he was Martin Van Buren.

Login or register to post comments Re: Selling TZA Submitted by jet8400 (71 comments) on Mon, 10/04/2010 – 11:33 #70680 (in reply to #70678)

Perhaps I could make some more off it but not worth the risk. I’ll take the quick 5%. I think we’ve just seen low of the day. POMO tomorrow. I’ll be on the golf course. Thanks to TZA for the greens fees.

Login or register to post comments Re: Meredith Whitney calls for 80k layoffs for wall st in … Submitted by 2nd_ave (4716 comments) on Mon, 10/04/2010 – 11:36 #70681 (in reply to #70675)

I’m guessing Dr. S is referring to ‘what goes around, comes around.’ The Wall Street bail out was at Main Street’s expense.

Login or register to post comments Re: Selling TZA Submitted by 2nd_ave (4716 comments) on Mon, 10/04/2010 – 11:38 #70682 (in reply to #70680)

Congratulations on a nice trade.

Login or register to post comments Re: Selling TZA Submitted by 2nd_ave (4716 comments) on Mon, 10/04/2010 – 11:44 #70683 (in reply to #70680)

‘I think we’ve just seen low of the day.’

Maybe. I would have agreed with you last week. Today I’m less certain- leaning more towards dip buyers/latecomers bidding prices up here, only to be met with a ton of supply.

Login or register to post comments Re: Selling TZA Submitted by jet8400 (71 comments) on Mon, 10/04/2010 – 11:52 #70684 (in reply to #70682)

Thanks 2nd. I hope we pop back up. Selling 1150 has been way too easy. If there weren’t any suckers out there, we wouldn’t have seen 1148 this morning and I’m sure a good amount of people have been wishing for a pull back since last week. Maybe one more hoorah for the too late.

Login or register to post comments Consumer Bankruptcy Filings Up 11% Submitted by Bull Hunter (1444 comments) on Mon, 10/04/2010 – 11:56 #70685

http://tinyurl.com/25ag7nz

——

“Make no mistake : we are headed in the right direction” – Barack Obama

Login or register to post comments Re: Selling TZA Submitted by 2nd_ave (4716 comments) on Mon, 10/04/2010 – 11:59 #70686 (in reply to #70684)

Sometimes you have to wonder if it’s really as easy as waiting for the same patterns to recur over and over again- yet that’s exactly what happens in every other interactive setting in life. As far as I know, people fall in love/break up and fight/make up today in the same pattern(s) that occurred 5 years/40 years/200 years/10,000 years ago…

Login or register to post comments Re: Consumer Bankruptcy Filings Up 11% Submitted by 2nd_ave (4716 comments) on Mon, 10/04/2010 – 12:07 #70687 (in reply to #70685)

BH- That quote was taken out of context- I think he was speaking at an NACBA convention in Detroit.

http://www.nacba.org/

Login or register to post comments Re: Consumer Bankruptcy Filings Up 11% Submitted by Bull Hunter (1444 comments) on Mon, 10/04/2010 – 12:14 #70688 (in reply to #70687)

LOL. Good one, 2nd.

——-

“At this juncture . . . the impact on the broader economy and financial markets of the problems in the subprime markets seems likely to be contained,”

–Ben Bernanke 3/28/2007

Login or register to post comments Re: Selling TZA Submitted by 2nd_ave (4716 comments) on Mon, 10/04/2010 – 12:14 #70689 (in reply to #70686)

Speaking of recurring pattens, I’ll bet the fish are jumping around Vad’s boat and he’ll have a tough time deciding which to nominate as catch of the day. And no one has time to be slapping anyone around with a wet trout.

Login or register to post comments Quick – Sell Your Credit Card Stocks ? Submitted by Bull Hunter (1444 comments) on Mon, 10/04/2010 – 12:22 #70690

Visa, MasterCard, Amex drop on anti-trust concern:

http://tinyurl.com/2btqzo3

—-

“I don’t see (subprime mortgage market troubles) imposing a serious problem. I think it’s going to be largely contained.” , “All the signs I look at” show “the housing market is at or near the bottom,” –Hammerin’ Hank Paulson 4/20/2007

Login or register to post comments Re: Quick – Sell Your Credit Card Stocks ? Submitted by 2nd_ave (4716 comments) on Mon, 10/04/2010 – 12:26 #70691 (in reply to #70690)

You’re right- this guy always appears to be wound too tight to play strings- he’d have to be a percussionist.

Login or register to post comments What’s wrong with Wall Street? Submitted by Dave M (114 comments) on Mon, 10/04/2010 – 12:29 #70692

From Wall Street Journal:

What’s wrong with Wall Street? I don’t mean the painfully slow and dreadful new Oliver Stone movie. I mean the real Wall Street. The stock market has been on a tear this month and is up a few percentage points for the year. But the stocks of most Wall Street firms are actually down close to 15% for the year.

It wasn’t supposed to be this way. The Federal Reserve’s near-zero interest rate policy makes it almost impossible for Wall Street not to make money by borrowing at next to nothing and buying anything, especially Treasury bonds. This gives banks easy profits and the wiggle room to write off the toxic mortgage assets that never got cleared out.

While most firms won’t release earnings for another three or four weeks, Jefferies investment bank set off air raid sirens last week by announcing disappointing earnings, which CEO Richard Handler blamed on “painfully slow trading.” And there’s more trouble down the road.

One obvious problem is that the yield curve has flattened. While short-term rates are near zero, Ben Bernanke’s Fed, via quantitative easing, has been working furiously to lower long-term mortgage rates. In January, Wall Street could borrow in the short-term market at 0.15% and buy 10-year bonds paying close to 4%. Today they can still borrow cheap at 0.14%—but 10-year bonds are only paying 2.6%. That’s a huge difference in nine months, and profits suffer.

Meanwhile, trading in equities at NYSE Euronext is off 21% from a year ago. NASDAQ is seeing lower volumes from this spring as well.

http://tinyurl.com/286kyok

Login or register to post comments POMO schedule Submitted by Hammer1 (55 comments) on Mon, 10/04/2010 – 12:35 #70693

Does anyone have a link for upcoming POMO dates?

Login or register to post comments Re: VXX @ 17.14 Submitted by goldbug58 (128 comments) on Mon, 10/04/2010 – 12:44 #70694 (in reply to #70679)

BH, I like it. I would’ve liked your grandfather too.

Login or register to post comments Re: POMO schedule Submitted by jet8400 (71 comments) on Mon, 10/04/2010 – 12:48 #70695 (in reply to #70693)

Google ny fed pomo schedule. They post it right on the fed site newyorkfed.org. They’ll release the next round on the last day they have currently posted, which is Thursday.

Correction. It says at the bottom the next schedule comes out 2pm OCT 13th. So a small break coming up.

Login or register to post comments Re: VXX @ 17.14 Submitted by goldbug58 (128 comments) on Mon, 10/04/2010 – 12:49 #70696 (in reply to #70676)

Whatever happened to the sharkster? Do I dare ask?

Login or register to post comments Re: Consumer Bankruptcy Filings Up 11% Submitted by gforce (358 comments) on Mon, 10/04/2010 – 12:52 #70697 (in reply to #70688)

Wow, such Lucidity and Clairvoyance Ben Bernanke; I trust you with my future and my children s future…not.

Login or register to post comments Re: VXX @ 17.14 Submitted by Bull Hunter (1444 comments) on Mon, 10/04/2010 – 13:03 #70698 (in reply to #70696)

“Whatever happened to the sharkster? Do I dare ask?”

It may be a sore point around here but one of the following answers is surely true:

1) Sharkie found religion. He is now a televangelist with his own show on the INSP Network.

2) He insulted our gracious host one too many times and was banned.

3) He took a job managing The Jonas Brothers and is busy hawking Purity Rings to adolescent girls.

Hope this helps.

Login or register to post comments FED Outlook Submitted by jet8400 (71 comments) on Mon, 10/04/2010 – 13:21 #70699

I’ve heard a lot of talk lately about the FED not being clear enough in its future plans. They, along with the rest of us, have to see how the future plays out before we can make a sound plan. Makes perfect sense to me. Want to know what I’m doing next month? Ask me next month and I’ll gladly tell you. Just silly to think they know the future. I hope they don’t think they do.

Login or register to post comments Re: Quick – Sell Your Credit Card Stocks ? Submitted by Vadym Graifer (1486 comments) on Mon, 10/04/2010 – 13:22 #70700 (in reply to #70690)

2:45:44
American Express Co Responds to Govt lawsuit; have no intention of settling case
– Antitrust lawsuit filed today against the company is a significant retreat from previous Department of Justice efforts to promote competition in the payments industry. The new approach would ultimately limit consumer choice, reduce competition and curtail innovation.
– The governments lawsuit claims that terms of American Express merchant contracts, which protect cardmembers against discrimination and disruption at the point of sale, violate U.S. antitrust laws.
– The Justice Departments proposed remedy would interfere with consumer choice at the check-out counter by steering American Express cardmembers to another payment network.
– The governments new legal theory ignores a key point that the Justice Department previously made and that the courts have already decided: American Express does not have the ability to force merchants to accept its products or pricing.

– CEO: “We have no intention of settling the case We will defend the rights of our cardmembers at the point of sale and our own ability to negotiate freely with merchants. We are confident that the courts will recognize the perverse anti-competitive nature of the governments case and that we will continue providing a competitive, superior service to cardmembers and merchants.The sheer number of Visa and MasterCard credit cards, and the fact that most of their customers do not carry an American Express product, makes it virtually impossible for merchants to steer customers away from the dominant networks, even if they have the right to do so. It is difficult to understand why the same agency that fought so effectively to combat anti-competitive network conduct would now undermine their own efforts by regulating our contracts in a way that limits our ability to compete.”
“The governments one-sided remedy would put more power in the hands of Visa and MasterCard, the networks that steadily increased prices for credit card transactions over the past decade, that control over 70 percent of the market and that have ten times as many cards as American Express. Anyone familiar with antitrust matters, would realize that in the real world such market power would ultimately work to the disadvantage of merchants as well as consumers.”

Login or register to post comments AAPL follow up from fri Submitted by NYUGrad (2872 comments) on Mon, 10/04/2010 – 13:36 #70701

http://bit.ly/coTCPF

No position

Login or register to post comments When is volume coming back without aid of govt? Submitted by NYUGrad (2872 comments) on Mon, 10/04/2010 – 13:38 #70702

Its Q4 already!

Login or register to post comments Re: AAPL follow up from fri Submitted by Les (3485 comments) on Mon, 10/04/2010 – 14:04 #70703 (in reply to #70701)

MACD crossover and support line noted thx. I noted Finviz’s take on AAPL and the scope for profit if the action gets bearish is interesting:

http://www.finviz.com/quote.ashx?t=AAPL

I also couldn’t help but be amused by the analyst recommendation initiated today with a price target of $430. Heck, why not $1k? Like Jack said: “to infinity AND BEYOND!”

Login or register to post comments Re: AAPL follow up from fri Submitted by jet8400 (71 comments) on Mon, 10/04/2010 – 14:12 #70704 (in reply to #70703)

AAPL $430 is out there. Not as ridiculous as gold $5,000 IMHO. Shorting Gold or AAPL is a dangerous trade and with back to back POMO days plus a growing short interest. Maybe see a pop here. Not worth the risk to me.

Login or register to post comments Re: AAPL follow up from fri Submitted by gforce (358 comments) on Mon, 10/04/2010 – 14:30 #70705 (in reply to #70703)

I happened to notice this:

http://www.bloomberg.com/news/2010-10-04/weekly-in…

People will sell stocks and buy stocks I am told, but really, does this look out of balance to anyone else? Not sure if this is truly representative however.

Login or register to post comments Re: AAPL follow up from fri Submitted by Bull Hunter (1444 comments) on Mon, 10/04/2010 – 14:35 #70706

gforce,

I’ve never been able to profit from insider buying/selling but this does look suspicious, especially going into earnings season.

Login or register to post comments Re: AAPL follow up from fri Submitted by jet8400 (71 comments) on Mon, 10/04/2010 – 14:34 #70707 (in reply to #70705)

Yikes. I’m still going to do a little reload on longs if we hit 1125 today or tomorrow morning and see where they go. Wow that’s a lot of selling though.

Login or register to post comments Re: What’s wrong with Wall Street? Submitted by Grym (2586 comments) on Mon, 10/04/2010 – 14:48 #70708 (in reply to #70692)

Dave M,

For some time I have believed this is a much larger and more pervasive problem.

Paul Farrell does a complete presentation which encompasses all of my evaluations, expectations and some I’d never contemplated.

America on the brink of a Second Revolution
Commentary: 2010 elections guarantee gridlock, anti-capitalist class war

http://tiny.cc/4cs8f

Login or register to post comments Re: AAPL follow up from fri Submitted by gforce (358 comments) on Mon, 10/04/2010 – 15:05 #70709 (in reply to #70707)

I have also been buying and setting tight(relatively speaking) stops. I feel like a greater fool but am I? I will take my medicine if dispensed…I will take my profits if dispensed.

Login or register to post comments Re: AAPL follow up from fri Submitted by jet8400 (71 comments) on Mon, 10/04/2010 – 15:09 #70710 (in reply to #70709)

Gforce,
I’m with you but selling before Friday.

Login or register to post comments Re: AAPL follow up from fri Submitted by gforce (358 comments) on Mon, 10/04/2010 – 15:13 #70711 (in reply to #70710)

I will move my stops up if prices rise that is.

Login or register to post comments IMF admits that the West is stuck in near depression Submitted by Les (3485 comments) on Mon, 10/04/2010 – 15:18 #70712

http://www.telegraph.co.uk/finance/comment/ambrose…

Login or register to post comments Re: Meredith Whitney calls for 80k layoffs for wall st in … Submitted by MoKat (202 comments) on Mon, 10/04/2010 – 15:20 #70713 (in reply to #70668)

NYU Grad

I asked you a couple of weeks ago about big layoffs coming to Wall Street. You replied that you had no knowledge
of such plans. Guess you got a heads up… thanks for providing the update.

Earnings in the financial sector are taking hits, not fatal yet, but beware of what’s ahead. The flattening of the yield curve is screwing up their borrow and buy Treasuries scheme, big expenses looming… to unwind the mortgage doc fiasco, less M&A, Are corporate bond issues growing or declining? Commercial RE loans?

I think I read or heard that 150,000 would be furloughed over a 24 month period. A big hit for NYC metro area.
Paying the rent may soon become difficult for many plus paying the government at rates heading for 60%.
Soon UHaul may be doing a brisk business.

In Michigan, during the late 70’s, we had a saying “Last one to leave.. don’t forget to turn out the lights” . People left the state seeking opportunities elsewhere. In the 50’s, southern workers moved north,. In the 70’s northern workers moved south. Foreign manufacturers set up shop in the southern states, sidestepping the union north. States granted lush incentives to build your factory. Texas was also a popular escape destination as oil was at record highs
and the good times were rollin. Can’t head back to the farm this time. Automation has eliminated the need for
most human workers. Latin American workers have a lock on what jobs do exist. In a contest, they would kick our butts.

Login or register to post comments Tape painting today…selloff should be allowed to proceed Submitted by nebish (64 comments) on Mon, 10/04/2010 – 15:20 #70714

S&P 1130 is being heavily guarded today.

A clean flush would really do some good and the recent constriction needs to resolve. Market just seems to be waiting on an event. I guess Wen’s buying Greek debt lacked the eye-brow-raising factor it should have had last night for the bulls. This sidewinder market is coiling and will soon spring and lay its fangs in longs or shorts here soon.

TLT (everyone’s ture north for the moment) looks weak today.

Login or register to post comments ADBE Submitted by davefairtex (2293 comments) on Mon, 10/04/2010 – 15:31 #70715

ADBE looked weak earlier today and given the market action, I did not think it would hold the 25.70 low so I closed my put writes. Made a small profit, even though I wrote puts at 26.20 and bought them back at 25.70. Time decay is your friend.

Login or register to post comments Hi, toby Submitted by baz22 (1408 comments) on Mon, 10/04/2010 – 15:44 #70717

looks like seed is reaching back for that sling-shot !!

Login or register to post comments For those who’ve yet to see how Consumer metrics leads GDP Submitted by Les (3485 comments) on Mon, 10/04/2010 – 15:48 #70718

http://www.businessinsider.com/consumer-growth-ind…

Dave’s mentioned it a couple of times recently. This is an easy to understand write up of how CS sees GDP bombing anytime Washington decides to get honest with itself.

Note correlation of one of CS’s charts with S&P

Login or register to post comments Financial Learning Curve–free educational videos Submitted by loannetter (809 comments) on Mon, 10/04/2010 – 15:46 #70719

The Khan Academy is a not-for-profit 501(c)(3) with the mission of providing a world-class education to anyone, anywhere-

http://www.khanacademy.org/

Their financial videos are great for those of us on the learning curve!

http://www.khanacademy.org/video/enterprise-value?…

Login or register to post comments Re: VXX @ 17.14/ Closed 17.43 Submitted by 2nd_ave (4716 comments) on Mon, 10/04/2010 – 16:00 #70720 (in reply to #70665)

BH- I turned in my lottery ticket for the $2 payoff, and will repurchase two more later in the week 😉

Login or register to post comments Re: VXX @ 17.14/ Closed 17.43 Submitted by 2nd_ave (4716 comments) on Mon, 10/04/2010 – 16:02 #70721 (in reply to #70720)

And less than 30 seconds after I closed out the position, the ask dropped to 17.37? Surreal.

Login or register to post comments Catch of the day Submitted by Vadym Graifer (1486 comments) on Mon, 10/04/2010 – 16:03 #70722

Oversold? No such thing in downtrend:

http://tradinglog.realitytrader.com/2010/10/oct-04…

Login or register to post comments Re: Tape painting today…selloff should be allowed to proceed Submitted by BillySundance (746 comments) on Mon, 10/04/2010 – 16:09 #70723 (in reply to #70714)

Nebish – one-day charts certainly looks weak on S&P and ^RUT. But I would keep in mind that we are hovering just above the gaps we created on the big gap and run that occured Sept 24th.

I for one am hoping that we get a little continuation of the pullback that would close those gaps and then show us some test below and consolidation at or around the respective 200 Day Moving averages (SPY 200DMA = 112.01, IWM 200DMA = 65.08). That would be an ideal place to consider re-establishing long positions as not only would it close those gaps but also reaffirm the trend.

However, markets are rarely so cooperative. While I am being cautious in general and have moved to a more market neutral stance in the last few trading days, I wouldn’t be surprised to see the market wrangle a few more bears into the bear traps for some rinsing and repeating action. It’s that rinsing and repeating that really serves to dishearten those on the wrong side of the trend…..both those who bought into the rally late and getting whipsawed and those that have been stubbornly trying to pick the top……….

Moral of the story – today’s action was a good sign for those of us looking for a pullback but hardly a clear signal to stick a fork in it, IMO……

Login or register to post comments $ESLR Submitted by Schleppy (68 comments) on Mon, 10/04/2010 – 16:45 #70724

Another blast from the past…had been on a nice run from .60 until today.

Login or register to post comments BREAKING NEWS… Submitted by analyst65 (215 comments) on Mon, 10/04/2010 – 17:15 #70725

The comments below from the mouth of Jim Sinclair himself, please read on..

“The following is BREAKING NEWS:

Racketeering suits (RICO), now as civil class action suits in two states, have hit the nail on the head. The civil suit says the banks do not have proper title to the homes on which they are foreclosing. This by direct inference questions if securitized debt on mortgages have real collateral behind them.

Simply stated a long time ago by Marie McDonnell and myself, THEY DO NOT.

That means legacy assets are cooked, dead, and worthless, yet are now marked up in value to cost and above. This is all thanks to FASB’s capitulation that now represents a large amount of capital for the Western world’s financial entities.

The you know what hit the fan today for those that understand. October 4th 2010, the essence of securitized debt on mortgages died!

That alone gives you gold at $1650.

http://jsmineset.com/

Login or register to post comments This fits with theme Submitted by gforce (358 comments) on Mon, 10/04/2010 – 18:20 #70727

BREAKING NEWS…
Submitted by analyst65 (213 comments) on Mon, 10/04/2010 – 17:15 #70725
The comments below from the mouth of Jim Sinclair himself, please read on..

“The following is BREAKING NEWS:

Racketeering suits (RICO), now as civil class action suits in two states, have hit the nail on the head. The civil suit says the banks do not have proper title to the homes on which they are foreclosing. This by direct inference questions if securitized debt on mortgages have real collateral behind them.

Simply stated a long time ago by Marie McDonnell and myself, THEY DO NOT.

That means legacy assets are cooked, dead, and worthless, yet are now marked up in value to cost and above. This is all thanks to FASB’s capitulation that now represents a large amount of capital for the Western world’s financial entities.

The you know what hit the fan today for those that understand. October 4th 2010, the essence of securitized debt on mortgages died!

That alone gives you gold at $1650.
———————————————————————-

Undoubtedly, we have periodically missed returns due to our aversion to risks that rely on the ability to find a “greater fool” in order to get out safely. But it is important to recognize that speculative risks are not a source of durable long-term returns. At a Shiller P/E10 of 21 and a historical peak-to-peak S&P 500 earnings growth rate of 6%, a simple reversion to the historical (non-bubble) Shiller norm of 14 would require seven years of earnings growth with zero growth in prices. Stocks are not cheap here.

Meanwhile, the U.S. financial system appears to be a nicely painted dam, behind which a massive pool of delinquent debt is obscured. A significant correction in valuations and resolution of the growing backlog of delinquent debt may finally restore strong “investment merit” to the U.S. stock market, but only after a greater amount of pain and adjustment than most investors seem to anticipate. In general, we want to take risk in proportion to the improvement we observe in the return that we expect per unit of that risk, primarily based on long-term historical evidence about what has occurred in similar conditions. For now, we remain defensive.

Login or register to post comments Re: This fits with theme Submitted by NYUGrad (2872 comments) on Mon, 10/04/2010 – 18:38 #70728 (in reply to #70727)

Doesnt really make a difference. The judge doesnt set the market price. neither does lady liberty.

The crooks run the joint.

Login or register to post comments Zooming Out & In Submitted by Illini (449 comments) on Mon, 10/04/2010 – 18:58 #70729

If you look at a weekly three year chart of SPX you can easily define a VLT trend line still sloping gently downhill. On the other hand, there is an up trend line that can be drawn from the March 09 connecting with 2010 lows in July and August. It’s a converging, sideways triangle my friends and when it breaks out either way, the results will be big, IMO.

If you can connect the dots and place the lines onto a shorter time frame, you will see that, indeed, traders are paying attention to the VLT trend line since prices have been hugging that line of late. So much for those traders who say the long term does not matter.

Login or register to post comments santoli of barrons on gold – a bubble? Submitted by jock (591 comments) on Mon, 10/04/2010 – 20:08 #70730

“As my good friend and longtime gold bull John Roque, of WJB Capital, likes to say, all the price of gold tells you is what paper money isn’t worth. At what price per troy ounce will that cease to be true? ….

Louise Yamada, the eminent technical analyst who for many years worked at the various firms that have coalesced into Citigroup and now presides over LY Advisors, last week remarked in a client note that gold—based on its current trajectory—most likely wouldn’t represent a true bubble unless and until it gets to $5,200 an ounce (from its $1,317.80 December-contract close on Friday) within a couple of years.

So, does gold seem a bit uncomfortably popular here, a kind of heads-I-win, tails-you-lose instrument? Sure.

……There is too much of a discount being placed on gold reserves in the ground based on the valuations of gold-mining stocks, for this trend to fall apart with any drama anytime soon.”

very well put, I thought …

Login or register to post comments Re: Zooming Out & In Submitted by Mackinaw (798 comments) on Mon, 10/04/2010 – 20:33 #70731 (in reply to #70729)

“So much for those traders who say the long term does not matter.”

If there is any one actually saying that, I suppose their timeframe is probably quite short, and for trades like that, they’re probably right. But if you’re not a HFT wannabe, there’s probably not much else of importance than the long-run.

Pascal Wilhem (sp?) had a few great stock analyses posted here a while back where he tempered every assessment by noting support levels that would be relevant to the short-term (day-traders), intermediate term (swing-traders), and long-term (the big fish;the big money managers; the big boys who move the market for years with their moves – you know, the Waddell-Reids and their like; the ones who, in Apr ’09, drew a line at Sept/Lehman level and said, “o.k., if this rally weakens there, we’ll sell”).

Myself, I can only look at the long-term and sometimes try and scalp some intermediate swings ’cause I’ve got a job. Furthermore it ain’t all that interesting these days.

I see that VLT trend line you’re referring to. I also see a VLT death-cross a couple of weeks ago(120dMA, 240dMA), though prices are trying to stay above the MA’s. For sure this an interesting juncture. But really it’s just levels that are only interesting to the short-term and swing traders: the big fish are fast asleep where we are.

Login or register to post comments Re: BREAKING NEWS… Submitted by Luggie (228 comments) on Mon, 10/04/2010 – 20:27 #70732 (in reply to #70725)

Hi Analyst65 – This news is bogus. Mortgages are well secured at inception – its the chain of title brought to you by the banks acting at the insistence of the lax politicians that is in question now. The current servicer has the implied authority to act on behalf of the sliced & diced mortgage as farmed out by Fannie et.al., but don’t wait for the current crop of crooks to formalize the obvious as this type of tripe news is good for the masses in these troubled times. Happy Trading

Login or register to post comments toby, Submitted by baz22 (1408 comments) on Mon, 10/04/2010 – 21:14 #70733

the ESMO kicks off Oct. 9… I am focused on Oct. 10… best of trades to ya’, baz.

Login or register to post comments clever bit of zerohedge Submitted by baz22 (1408 comments) on Mon, 10/04/2010 – 22:03 #70734

from mr. flecks…http://www.zerohedge.com/article/report-front-lines-gold-bubble

Login or register to post comments Re: Zooming Out & In Submitted by Illini (449 comments) on Mon, 10/04/2010 – 22:14 #70735 (in reply to #70731)

Mack,

Thanks for the comments. Yeah, I remember Pascal. Read his stuff whenever published.

I’m a retired senior citizen and don’t have the stamina, training or desire to be an intra-day trader. More of a long termer except for now…. when almost nothing works. Being forced into more of a swing trader.

As to “the big fish are fast asleep where we are”, maybe not. The charting shows, IMO, that they are ready to strike, up or down, wherever the minnow school forms. There is not much resistance above or below.

Login or register to post comments Anyone pick read up on the foreclosure paperwork mess? Submitted by NYUGrad (2872 comments) on Mon, 10/04/2010 – 22:47 #70736

Apparently banks cannot distinguish which banks own the title to the foreclosed home. multiple banks own the same home. And title co’s are starting to refuse to insure the transaction.

Homes in foreclosure are in limbo. Vacated previous owners are now suing banks. 90 day foreclosure moratorium is being discussed. squatters are who have yet to be vacated might have bought even more time to live rent free.

All the above is A) threatening to melt down housing as more than 65% are all foreclosure sales and B) puts into more question what these CDOs are worth on the balance sheets of banks.

Welcome to the jungle
We got fun ‘n’ games
We got everything you want
Honey we know the names
We are the people that can find
Whatever you may need
If you got the money honey
We got your disease

Login or register to post comments Re: BREAKING NEWS… Submitted by MtnGntx (180 comments) on Mon, 10/04/2010 – 22:46 #70737 (in reply to #70732)

Hehe… I disagree… is a big and very real problem.

…tripe…hehe….

hehe.

Happy trading.

Login or register to post comments Bill Cara Submitted by jet8400 (71 comments) on Mon, 10/04/2010 – 23:14 #70738

Bill,
A question for you regarding strength of the US dollar. With the abundance of natural gas able to be produced in the US, I’m thinking the price of nat gas will have to offer support to the dollar at some point. Are you seeing any correlation or have you heard any talk of this? I don’t think nat gas will do well in the US due to the “remember the hindenburg” lesson, but developing nations could use nat gas and US turn into the largest exporter. Would also help to keep price of oil down. I’ve never seen the affect of currency strength when a country finds large amounts of natural resources and was hoping you could give some insight.

No rush to reply. Hope you’re enjoying your time off.

Login or register to post comments BOJ Steps Up Asset Purchases, Lowers Benchmark Interest Rate Submitted by NYUGrad (2872 comments) on Tue, 10/05/2010 – 01:35 #70739

If corporations are multi national, and no longer pinned to a country, and countries like Japan make money free, wont hb&b just use this as an opportunity to transfer wealth from their nation to the hb&b partners, hopping from one country to the next like a parasite?

multiple countries all racing to devalue their currency with a handful of the same multinational hb&b picking up the spoils.

Isn’t that what the zeitgeist documentary all about? a race to 1 global worthless currency controlled by select group of central banks.

Login or register to post comments Wall Street is simply moving/working remote Submitted by NYUGrad (2872 comments) on Tue, 10/05/2010 – 02:26 #70740

… to Asia

http://bit.ly/b7Vqcz

Login or register to post comments Re: Anyone pick read up on the foreclosure paperwork mess? Submitted by loannetter (809 comments) on Tue, 10/05/2010 – 03:05 #70742 (in reply to #70736)

Yes. It is.

I posted this a couple of days ago:

Here’s the NYT article: http://tinyurl.com/25ctf2w

Real Estate Industry Stake Holders are split on this all this: Many want the foreclosures to just get over with. WSF is one bank not stopping their process. AFter all they are being told by Fannie and Freddie to proceed (guberment at work)

Our guys make their case: http://tinyurl.com/23ykgz5

California judges are refusing to allow MERS to foreclose on a chain of title technicality. The actual title holder will surely turn up eventually. If you bought a foreclosed home your title could be worthless!

The argument is MERS who handles the transfer of loans (on behalf of lenders) do so by proxy to to speak. So title transfers that happened so fast in and out of porfolios are being deemed ‘void’ because MERS did not ‘own’ the loan. There are huge civil fines due to MERS avoiding $2.4 Billion dollars of minicipality recording fees — causing civil suits by city governments against MERS.

If banks become any less willing to lend — selling or developing real estate will become turf for Guido’s pals.

Login or register to post comments futures 3am – AUDUSD smackdown Submitted by Les (3485 comments) on Tue, 10/05/2010 – 03:14 #70743

S&P+1.50 / +0.13%
Level1,136.30
Fair Value1,132.54
Difference3.76
Nasdaq+3.75 / +0.19%
Level1,980.75
Fair Value1,973.02
Difference7.73
Dow+2.00 / +0.02%
Level10,709.00
S&P|Nasdaq|Dow

surprise surprise the RBA puts rates on hold. I guess the Ozzies pay more attention to economic data then most – and not Washington’s bs data. So the hot ticket commodity exporter is taking a wait and see approach. That should have hot money hesitating – whether it creates a retracement or a full on selling spree will be the thing to watch.

http://caracommunity.com/content/trading-desk-blog…

I’ll be watching to see if EWA suffers with a currency pullback like Bill suggested of EWZ.

I noted some little nuggets of info sourced by Evans-Pritchard, with a wait and see message attached:

http://blogs.telegraph.co.uk/finance/ambroseevans-…

Looks like authorities from much of the world is now taking a wait and see approach. Well, except the Fed, they just wanna print…

AttachmentSize AUD/USD overnight 20.92 KB Login or register to post comments POT Submitted by Les (3485 comments) on Tue, 10/05/2010 – 05:45 #70744

I know Canada isn’t China (well, from what Vad tells me anyway), but I couldn’t help but notice the govt. sponsored report on BHP’s bid for the Potash producer. Actually, let’s compare the following statements:

“BHP has said that it if it acquires Potash’s mines, it will run them close to capacity at all times, a strategy that could lower prices and, as a result, reduce royalty and tax payments.”

http://www.nytimes.com/2010/10/05/business/global/…

“Mass-extraction of rare earth will cause great damage to the environment, that’s why China has tightened controls,” he said, repeating the official line.”

http://www.telegraph.co.uk/finance/newsbysector/in…

I dunno, maybe the Chinese and Canadian govts. have more in common than first meets the eye. Anyway, I was looking for a 145 breakdown in POT a week ago and it offered several entries since at this price. Intraday only of course, you’d be nuts to hold such a stock in the face of whatever news drives speculation even higher than it presently is.

However, the possibility of the Canadian govt. behaving more like the Chinese govt. makes that huge gap up look like an increasingly juicy breakdown, in the event of protracted and defensive negotiations from various levels of Canadian govt. attempting to maintain their fat income base on the monopolistic behaviour of Canadian producers of Potash.

139 is the gap trigger, but having bounced back to 144, a short setup from this point if the market sells off should be interesting. Again, intraday only. No position.

AttachmentSize pot_daily.png 51.08 KB Login or register to post comments PM in asia Submitted by davefairtex (2293 comments) on Tue, 10/05/2010 – 04:08 #70745

Gold & silver broke to new highs (1329, 22.25) in afternoon asian trading. PM is in a serious buy-the-dips mode at the moment – the price chart shows a linear move up, with only momentary and shallow pullbacks to allow new riders to board the train.

Got gold?

Login or register to post comments Re: Anyone pick read up on the foreclosure paperwork mess? Submitted by davefairtex (2293 comments) on Tue, 10/05/2010 – 04:54 #70746 (in reply to #70742)

Looks like Banks tried to cut corners, and now they’re caught. The civil suits by the cash-starved counties alone should trash MERS leaving a pack of lawyers fighting over their dead body. One wonders how this will all settle out with foreclosures. No doubt the title holder for ‘most” of these houses will eventually be found, but in the meantime, it’s a stimulus for all those non-paying homeowners, paid for by all those Freddie & Fannie loan guarantees (i.e. the taxpayers).

This does not have to be the end of the world for all these properties. It may now be cheaper and more cost-effective for banks to actually negotiate with homeowners (imagine that!) rather than to go through foreclosure proceedings. Deed-in-lieu agreements where the homeowner agrees not to pursue claims in exchange for no deficiency judgements and/or cash payments may well be the way forward while the much more adversarial foreclosure process proves to be risky business.

It should also make banks more receptive to short sales.

Is this really a bad thing?

Any way you slice it, this will hit bank and servicer earnings. Is this built into the price of bank stocks?

Login or register to post comments For the bond holders in the crowd Submitted by Les (3485 comments) on Tue, 10/05/2010 – 06:35 #70747

This Mauldin letter is a must read. It pertains to a new EU ruling affecting insurance companies called “Solvency II”.

It means they may have to buy up a lot of bonds to offset future liabilities:

“Solvency II will govern capital adequacy standards in the European insurance and life insurance industry. It represents a complete overhaul of the existing rules (Solvency I), which date back to the 1970s. One of the pillars of the new directive is the introduction of a risk-based approach to reserving.

Going forward, European insurers will have to be able to pass a 1-in-200 years’ event stress test, which has been designed to give the industry enough cushion to withstand even the most severe of bear markets without being forced to sell out in the darkest hour. Risky asset classes such as equities, commodities and other alternative investments will be assigned much higher reserve requirements than less risky asset classes such as bonds.”

http://www.investorsinsight.com/blogs/john_mauldin…

Various entities around Europe (definition of an insurance company differs amongst EU states) are desperately trying to remain outside of this new ruling. However, if Brussels drags more of these industries under its new regulatory umbrella, watch out.

Login or register to post comments Markets cautious after quarter-end Submitted by Les (3485 comments) on Tue, 10/05/2010 – 05:52 #70748

http://www.incrediblecharts.com/tradingdiary/2010-…

Login or register to post comments Who say Japan can’t dance???? Watch and LEARN today……. Submitted by bigwad1 (447 comments) on Tue, 10/05/2010 – 07:52 #70749

NEW YORK (CNNMoney.com) — The Bank of Japan lowered its key interest rate Tuesday to virtually 0%, citing concerns about the pace of the economic recovery.
While the reduction was slight — the rate was cut to a range between 0% and 0.1% — the Bank of Japan said it was necessary to launch a “comprehensive monetary easing policy,” due to the slowdown in the pace of Japan’s recovery. Previously the rate had been set at 0.1%.
As part of its efforts to boost the economy, the central bank also said it would purchase $60 billion (¥5 trillion) of government bonds and other assets.
Shares in Japan rallied on the news, with the benchmark Nikkei index closing up nearly 1.5%.
In its policy statement, the Bank of Japan cited concerns about heightened uncertainty in the United States and the appreciation of its currency — the yen, whose strength has hurt exports recently. Last month, the Japanese government said it would intervene in the currency market, buying up dollars to try and rein in the yen’s record run.
“Although Japan’s economy still shows signs of a moderate recovery, the pace of recovery is slowing down partly due to the slowdown in overseas economies and the effects of the yen’s appreciation on business sentiment,” the Bank of Japan’s statement said.
The central bank, which has struggled to fight deflation, pledged to maintain its virtually 0% interest rate policy until “price stability is in sight.”
With there being little room to lower rates further, the central bank identified additional steps it would take to shore up its economy.

Login or register to post comments Re: Anyone pick read up on the foreclosure paperwork mess? Submitted by Grym (2586 comments) on Tue, 10/05/2010 – 07:58 #70750 (in reply to #70742)

Thanks Loannetter.

Sometime within the past year I heard advice not to vacate if unable to pay the mortgage. “Make them produce the paperwork.” My former neighbor’s cousin went over six months unable to pay before receiving a letter and last I heard was still in her home.

————
Oh what a tangled web we weave
When first we practice to deceive. – Sir Walter Scott
————

I’m sure the guys who brought all this to our door — Paulson, Rubin,Frank, etc. — will never pay in any way.

Login or register to post comments Cara 100 Ratings Changes For POMO Tuesday Submitted by Bull Hunter (1444 comments) on Tue, 10/05/2010 – 07:59 #70751

Good morning.

POMO Injection Scheduled For Today – Outright Treasury Coupon Purchase

10:00 – ISM Services

——

AAPL – Apple initiated with a Buy at Jefferies. Target $365

MSFT – Microsoft downgraded to Neutral from Buy at Janney Montgomery citing the company’s inability to leverage its desktop franchise into mobile. The firm has a $28 price target for shares.

ORCL – Oracle initiated with a Buy at Canaccord. Canaccord expects the upgrade cycle to boost organic growth and views valuation as reasonable. Target $32

RIMM – Research in Motion initiated with a Hold at Jefferies. Target $55

WAG – Walgreen upgraded to Buy from Hold at Jefferies. Target $45

——

Mining Stocks Update:

GRS – Gammon Gold upgraded to Neutral from Underperform at Credit Suisse.

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