Saturday, June 27, 2009

The FDIC is Effectively Bankrupt

If someone asked you to invest in this "Corporation", would you regardless of yield. They are effectively bankrupt, and problem banks and outright failures are increasing dramatically. 2009 is going to make 2007 and 2008 look like child's play.

The regional banks are holding much of the commerical real estate loans and many residential loans, and these have taken a major hit already, even while the "green shoots" have been fertilized elsewhere.

"This" Has Always been a Banking Problem, partly because this has always been a credit problem. We can't live beyond our mean without credit, and yet the illusion that a 70% consumer based economy can keep going forever, is based upon credit and the idea that a business economic cycle as well as a socio-economic cycle can be "engineered out" by the financial wizardry of the Government. All of this is fallacy.

5 Banks failed on Friday, one was in know, the Fargo movie..."nice", except when the bank rep shows us to take your home, but even though they did, they still cannot flip it for enough to stay solvent. Because...well, because, home prices can drop another 30% to 50% depending on location. And because they are dropping. I "knew" this in 2004/2005 from being a contractor. The rate of change of costs were absurd, costs of building and building materials were absurd and kept going up.

And also because after a 30% in the Hawaii housing market in 1994 after the Japanese buying binge jacked prices way up and they started coming down, I bought my first house. A friend, a real friend, a realtor advised me that in 1994 I might as well jump, the overall trend is up and how much further could it go down...well, it could go down another 30%...and it did, and until 2004 I was underwater on that place. Then "miraculously" it doubled in 2 years, and I got out, coming pretty close to nailing the top.

The moral of the story--well housing can go down a lot more, and there are millions that are on the edge already...on the edge of throwing the keys on the doorstep and walking away to share a trailer park home with their in-laws.

Check out this list from the FDIC of Banks they have been forced to take over.

Junk bond yields are rising.

And I think this is truly original material, but the NTSE Advance Decline Issues is at a 50% Fibonacci.

It would be optimal to posess real data on number of new stock shares issued in the last several months--it is probably in the 100's of billions, but the dilution effect has to be enormous even if the fundamentals take a while to work into the "weighing machine", and the number of insider sales compared to buy also seems incredible by anedoctle evidence

Enough Posting for tonight. I have a spreadsheet of roughly 300 regional bankers. If feasible, I will try to post so we all together can figure out the best bets to place.

S&P 500 = $200 price target on poll, rational.

Question was asked on why 200 was even picked as an S&P 500 target.

End of week result of Poll on S&P Downside Targets.

880 -- 35%
820 -- 32%
600 -- 26%
200 -- 11%

What is interesting is that 880 was far in the lead near the beginning, but as the market melted up, the lower target filled in, with 880 hardly getting any additional votes. Hmmmm.....scientific, hell no, interesting, hell yes.

Logged in as steveo77


alphahorn 4 hours ago

why the huge gap between 600 and 200 i think most believe 450-550 is where we're heading

Logged in as steveo77


steveo77 0 minutes ago

Thats kind of to flag the super bears. I expect the S&P 500 operating earnings to be as low as $20 this whole year.

Considering reversion beyond the mean, lets say a P/E ratio of 10 is low, 15 normal, 20 high, that we will shoot to the downside, to the P/E of 10. 10 x 20 = $200. This would be poor financial results and very negative sentiment combined.

First Sortie O' Charts for the Weekend

Bulkowski (big pattern guy), see link, says there are more bearish than bullish patterns out there, indicating a bearish slant to the upcoming week. I just starting grinding through charts and annotating, read the chart directly for my comments.

And please...comment back, if you are familiair with any of these tickers, I really want ot hear what you have to say. Sometimes you have to click twice in order to get the post to publish.

Friday, June 26, 2009

Is Government an "Industry" ? Absurdity taken to a new level.

Hawaii normally trails behind the mainland by a year or two, however, in this case it looks like Hawaii is leading the pack. Did you know that Government is an "Industry". Get used to it -- big Gov is going to try to take over were "capitalism" failed. In fact it was not captilism that failed, but a lack of enforcing existing laws especially as it relates to conflict of interest.

Also note the attempt to tax websites....big Gov, big taxes. I am a believer in Government spending money inveting in things that make us stronger, making better infrastructure and systems that encourage market efficiency and competitiness. Heck, I even like the depression era work programs of creating national parks....Getting outside---it keeps us balanced, keeps us from getting too leveraged with too many lies.

This is the best business rag in the Pacific as far as I know.

I wonder if "Government Industry" has already been added to "Industrial Production" economic numbers.

A great looking Long Double Short QID

I feel real confortable in this Long position on QID.

QID is the double short on the QQQQ. Per other readers, it has a good expense ratio for buying leverage, limited theta burn. So you could keep it past a swing trade. My current thinking is we get a week or 3 of whipsaw, so take profits relentlessly.

Thursday, June 25, 2009

Interpretation of the Poll on S&P 500 Downside Targets

Poll on S&P 500 downside targets. 5 days ago I started a poll listing downside targets of 880 820 600 and 200. 880 was by far the leader, especially as the market tanked Monday, then as the week progressed and the market inched and lurched up, the 820 started gaining in popularity, and 600 and 200 both gained in percentage on the 880. OK riddle you this....Why?. As we see loftier levels of P/E ratio, perhaps people think there is a larger price to pay for overexuberance. See screen cap.

Take the poll yourself if you wish, there is 22 hours left.

I'll discuss P/E in a later post and how Wall Street is completely disregarding reality. "Reported Earnings" are in a basic sense the ones that CFO's will be in trouble if they lie about. Operating earnings are the ones that happen when Goldilocks lies about how the one time porridge stealing will never happen again, and a porridge in every bowl and a chicken in every pot will keep growing perpetually, even though we were hungry last year and hungrier now. Operating earning exclude...well...all the bad stuff that companies want to pretend were relating to just one year or one event.

Fundamentals do matter on a long term basis. But don't bet July or August options based on fundamentals.

SPY up into Head and Shoulder into July

Speaking of the CPOD (Chicken Pick Of the Day),

Don't count your Head and Shoulders before they are hatched. This is a possible pattern formation, and the H&S is a strong one, but there were so many in the 2007/2008 debacle that just by alternation I dont expect them to work as well in the next downturn. Check out the time frame. This theory also fits with Molecool's idea of some chop and whipsaw in the near future, and also with his 6-25-09 "turn date", i.e. a turn up (but that is plus or minus 3 days, so keep on your toes). Check out ES on my links page to go to Molecool's Evil Speculator--the only EW tactician that is useful in real time (no I am not getting paid to say this).

So, if you want to be in the market during the expected small increase, but plenty of chop, consider a delta nuetral strategy (have as many shorts as longs) and pick them all by short term chart patterns. Try candlesticks...great for 2 to 4 days, using daily candles.

I doubt that I will have time for another round of 20 CPOD like I did last week, for Friday trading, you are on your own.....hey share the need to click any advertisements here...there are none. Share some intersting tickers. And check back on weekend.

Wednesday, June 24, 2009

Found some leverage in one account -- and trusted a sketchy trend line

Okay, this is in fact a real life drama. A few bloggers on Evil Sepculator, Xtrends, and Slope of Hope indicated that they way prefer the tick to the minute data on charts. I have been trying it and I have determined that I prefer, well, both.

The tick data sums up data over longer time period s when trding is slow, and when I draw trend lines on TOS tick data, the trend lines automatically move somewhat. Still havent figured this out. however, I did trust this line to put capital at risk and lets see how it plays out. After a three point ES move I might set a trailing stop or buy to cover stop. We will see. You would be remiss not to start watching tick, and try watching tick and minute (whatever, 1, 3, 5, 15) side by side. Actually, the 13 minute data is my favorite. It is not unlucky, even on a spooky no moon night.


The Sharks are Feeding on Their own Kind - Major Top

The futures markets have historically been one in which few dabbled, the big brokerages, the very savy investors. In short the market makers and the major market participants. The "Club". Admittedly, I am "retail" although I like to think smarter retail than 95% of the retail. In fact, I can show profitability even when only 40% of my trades result in a profit. If you need to ask, how is that possible, then perhaps...well perhaps, you need to keep trading with small sums for a while.

The reality is---small losses, big wins. However, on futures....if you set a tight stop "they" will run your stop, especially at night. Even their computer programs are set up to cooperatively move the mark until your stop is hit...i.e. no trading going on, just the price moving until your stop is hit. The big boys dont use stops. You can't be a "big boy" just by not using stops. In fact, unless you have Stainless Steel Rat Cojones (SSRC), or are playing with mostly someone else's money, you best not even try.

But here is the point. We are at a MAJOR TOP. When the sharks start feeding upon themselves, what I mean the futures market is being hugely manipulated late means the greed has reached a whole new level. The green shoots are nothing but spray painted edifices of past glory after it has been napalm'd, and fertilized by bullshit. Homeless cities looking like depression era pictures that Grandaddy used to talk about, are sprouting up, as brokers (now become bankers to side skirt legal issues) are issuing the largest bonuses ever.

This is a great time to be healthy, strong, smart, and wealthy. Encourage all these things even whilst things push the opposite direction.

The One Channel, hanging tough but barely.

This channel and its subdivisons and Fibs has served well even through a FOMC whackiness.

Tuesday, June 23, 2009

CPOD Chicken Pick of the Day

Oh, my bad, QQQQ is not a CPOD, but then...why hasnt anyone noticed this bear flag ....although kind of steep....storing energy to rocket downward.

The yellow highlighting is bearish candlestick patterns. Old school stuff. Really works well over the 2 to 4 day span...if the overall trend if right.
If Big Ben decides to throw $1T from our grandschildrens pockets at the market, well then....we might get on run up on these CPOD if with the Candlestick Pattern.

My brother came up with a saying, probably after I shorted SAFM, he coined the CPOD, chicken pick of the day....could be any stock, but it won't be Mircosoft, Cisco, Goog.

Any semi-goofy stock. Not the ones the quants and Hal 2000's play.

These are great to short or long whenever, but maybe especially now, where you have a core position and you want to go toward delta neutral with some other picks that might appreciate greatly. These CPOD will move 2 or 3 times as much as the indices....after you picked them for special patterns.

The one channel still doing its job, until it doesn't

And One Channel to Rule Them All - My precious

Monday, June 22, 2009

The latest and greatest ES channel that accomodates a bounce

"Lucky" close on an ES short

I think the ES wants a 9 point move up. it matches a 50% Fib, and hits a channel line, but I will admit, this channel line was drawn to allow the 9 point move and the Fib to all be congruent, so it is somewhat fabricated--but aren't they all. 905 on the ES for tomorrow. Great place to load up on puts. Lucky time to close out shorts below, but note how that new lower channel was perfect support three times. The more times itbounces the stronger will be the break or bounce, but it can easily bounce 6 times, so don't make assumptions that 3 is all it will bounce.

Fly Away, Channel Break or Fake out (Or really just a desperation cover?)

On the minute bar it looks like a cup with handle....arghhh! if you are short, time to close, but wait, the other screen is showing the same action on a 144 tick aggregation. Hmmm.
The 144 tick below just look like a wave headed down. But longer we stay outside the channel the worse it is, so better not run out for dinner. If you set a stop a point or two away...almost guaranteed the market will run your stop than return to where it wants to be.

Same trade as prior post, maybe an hour later.

Channel line was broken....

Don't do what I do...low volume afterhours /ES plays

Watching paint dry is actually more exciting than after hours futures trading.
The "MM" whomever they are at this hour WILL run your stops.
So when would it make sense to place capital at risk....well, A Fib and a Bear Flag would be a good start.

And a channel line

And an intermediate trend that seems fairly clear. Time will tell.

Lets Back up a little to see another reason to stay short a least for the moment

CNBC says "Expected profit taking" at close of trading

Other BLOG comment

CNBC final seconds (On Monday). they said it was expected profit taking...

Submitted by (anon) (1243 comments) on Mon, 06/22/2009 - 16:03 #33850

and that once the fomc comments were out and we head into end of month, the markets would re-stablize.

um...why didn’t they tell me that on friday? who are they kidding?

Steveo Comment

I find that watching price and volume action and some derivitives based on those are adequate to trade from. I also like to know when big economic report or FOMC fed Speak may occur just so I dont get blindsided with a 4% move while intraday bets are placed.

I avoid Cramer, Fox, CNBC like the plague. Even if you are watching them strictly for amusement, their lies can seep into your subconscious and it can mess you up. You worry about a 15% bull rally on the golden cross, when really a strong short position should be in place or at least readied.

The media are tools of the government and HBB. I believe that until major changes in conflict of interest are made and prosecuted, there is no need to turn the TV on. The bad outweighs the possible good.

Rounding top bear flag (mini one)

Do the opposite of what happens at recent end of days....alternation is what it is called.

Wide Angle View of near term action ES

OK, finally figured another way to save a screen cap, ever since SnagIT blew up on me.

When 3 stars line up...thats about as good as it gets.

An important Coincidence say S&P to 860

Intersection of measured move from the big bear flag, and 2 channel lines...

Channel line breaking

I am not in love with this channel line, but the 50% ones are the big ones, and this one is breaking.

At the same time, expecting a big bounce at some point.

I wonder how Obama likes his "orderly markets"

Monday Shakeout and Drop

The MM and their HAL 2000's are playing this perfectly. A quick pop to clear the short stops and embolden the perma-bulls, then a massive drop. Here are some channels that I think are in play.

Just started trading for the week. Glad I had a fistfull of put and sold calls. Upset that my futures were stopped out by that overnight pop to 919 (big ouch).

Sunday, June 21, 2009

The Solstice is Today, Armistice Tomorrow, 1942 is History

OK, so I guess I have too much time on my hands, since there is nothing else to do in this recession.

Please check out this chart of the 1942 lows and what was going on at the time--in the period of a few weeks.

Bataan Death March
Doolittle Raid on Tokyo
Persecution of Jews (and worse to come)
Allied Air-lift TO China
Battle of the Coral Sea

EW theory kinds of goes overboard in saying that it is the social "mood" (wave) which makes the news, not the news which makes the "mood". Keep that in mind though, the news can move the markets temporarily, but overall I think it is financial entertainment television which tries to get us to place our capital at risk by pretending that market moves can be explained by news.

JPM, CEP, UNG and BIDU per popular request

Interesting stock CEP. The "flying pennant" looks good for long, but the MACD looks butt ugly. It is in such a no mans land between Fib's they give no guidance.

The channel I drew really seems to this might go to test the lower channel before it heads back towards 50%.

Let me know what you think? I'm am kind of more temped to do something like short FSLR as a related oil price play.

JPM - looking to buy puts on a ramp up

Set 2 of Charts for the Solstice