Trading yesterday reversed the downward pressure from a strong support line, and allowed the market to move to a strong resistance line. Astute day traders were able to sell the Jan460C to highs of 2.70 (right to our top), from a 1.50 buy the day prior, and to trade the Jan420P from 12.80 to 14.00. Tight profits seem the way right now as the market is swinging in ranges.
We see today with light trading, and Friday also with the real traders off the floor and the kids playing. We will have end of year sell off, and new year purchase, and both signals we've been using remain strong, with puts losing steam.
Simply put, trade for tight fast profits, noting the potential for a bit more call upside, but dual trades highly likely.
Wednesday, December 31, 2008
Tuesday, December 30, 2008
We Traded Well on Monday
Subscribers often recommend books and movies to me, based on my soap box rants. Trader MF from California recommended the movie Eagle Eye recently, and I'll recommend it to you.
In it you'll see what I believe the Emperor has done in his 8 years of opening up the invasions of our personal privacy rights in the name of terrorism. The movie is exciting and great, but moreso, may help just a few of you to realize that each time another privacy law is broken we break our rights as citizens and we put trust in the few to lead the many.
I am a believer that neo conservatives tried to create a new world order this past 8 years, and that it thankfully has been aborted. I am one of those that believes conspiracies of intent are deeper than we think as citizens and that the few twist the fates of many. A good example is the 700 billion phantom dollars that were spent so quickly, yet now the banks themselves won't tell us where the money went, and credit remains tight.
As you take prudent risk, question authority, and always question intent. If a "few" seem to win, the game of black and white is being played, and you are the pawns.
Years ago at a Hindu ashram there was a Guru that was bothered by the stray cat at the ashram and he asked to have it tied to a pole during the meditations. This became the norm while this Guru lived, for over 40 years of meditative practice. The Guru died. But it had become such a common practice that within 100 years it became a religious ritual that a cat must have its tail tied to a pole during meditation. the stray cat had been "drawn" by many, was in many chronicles, and within 100 years it was a religious ritual that a cat must be tied to a pole during meditation for the meditation to be true and proper.
This is how ritual begins. This is how "fact" becomes "fact", by a situation that is later interpreted. Use this story in your study of the market.
____
Pastor Rick Warren scares the liberals, as with his right wing religious views few liberals can understand why President Obama would choose him to "lead off". It's exactly the right thing to do, to stop the divisions in this country, and to allow all points of view to be tolerated, far from Emperor Bush and his "my way" thinking. We are one nation of people, now facing unemployment of up to 10% by government statistics, thusly 20% by Floydian facts.
_________
We traded well Monday. The January 420 put was available in early trading as low as 16.20,and sold to highs of 20.40 by early afternoon. Traders were also able to take a first buy on the January 460C at 1.50 on Monday.
We'll continue to trade both these signals. The market has held well 4 times at 8350, but this is a week of both sell off and buying, and no real good news. Take tight profits. The market moved bi-directionally with real strength on Monday, and we continue to see an upside run gaining potential
In it you'll see what I believe the Emperor has done in his 8 years of opening up the invasions of our personal privacy rights in the name of terrorism. The movie is exciting and great, but moreso, may help just a few of you to realize that each time another privacy law is broken we break our rights as citizens and we put trust in the few to lead the many.
I am a believer that neo conservatives tried to create a new world order this past 8 years, and that it thankfully has been aborted. I am one of those that believes conspiracies of intent are deeper than we think as citizens and that the few twist the fates of many. A good example is the 700 billion phantom dollars that were spent so quickly, yet now the banks themselves won't tell us where the money went, and credit remains tight.
As you take prudent risk, question authority, and always question intent. If a "few" seem to win, the game of black and white is being played, and you are the pawns.
Years ago at a Hindu ashram there was a Guru that was bothered by the stray cat at the ashram and he asked to have it tied to a pole during the meditations. This became the norm while this Guru lived, for over 40 years of meditative practice. The Guru died. But it had become such a common practice that within 100 years it became a religious ritual that a cat must have its tail tied to a pole during meditation. the stray cat had been "drawn" by many, was in many chronicles, and within 100 years it was a religious ritual that a cat must be tied to a pole during meditation for the meditation to be true and proper.
This is how ritual begins. This is how "fact" becomes "fact", by a situation that is later interpreted. Use this story in your study of the market.
____
Pastor Rick Warren scares the liberals, as with his right wing religious views few liberals can understand why President Obama would choose him to "lead off". It's exactly the right thing to do, to stop the divisions in this country, and to allow all points of view to be tolerated, far from Emperor Bush and his "my way" thinking. We are one nation of people, now facing unemployment of up to 10% by government statistics, thusly 20% by Floydian facts.
_________
We traded well Monday. The January 420 put was available in early trading as low as 16.20,and sold to highs of 20.40 by early afternoon. Traders were also able to take a first buy on the January 460C at 1.50 on Monday.
We'll continue to trade both these signals. The market has held well 4 times at 8350, but this is a week of both sell off and buying, and no real good news. Take tight profits. The market moved bi-directionally with real strength on Monday, and we continue to see an upside run gaining potential
Monday, December 29, 2008
That is How Our Government Works...
Let's start with what this week can bring: dual trades. Some chartists believe that with market conditions as they are, and the end of the year, that there will be massive sell off as traders exit losing positions, or try to lock profits, and this is likely. Other chartists and talking heads believe there will be potential "Santa Claus" effect as the market tries to shift to new positions for the New Year, led by the institutional traders.
I think both are right, and we'll list both put and call, noting to all the high risk to trading in an environment that has been "flat lining" for the last several days.
As 2008 ends a doctrine has also been destroyed, and it's critical we understand it. Supply side economics as we know it( http://en.wikipedia.org/wiki/Supply-side_economics) and free enterprise economics have both been proven to be deadly wrong, and the doctrines have been destroyed.
Bubbles Greenspan, a disciple of Ayn Rand (study this dangerous philosopher to understand more fully), led us through Reaganomics ( a dismal failure) and the concept of "free enterprise without regulation will self regulate and the market will adjust to capitalism left uncontrolled, as this is "free democracy". Bubbles led us through many bubbles, and created most of them. During the Clinton administration he used the results of the internet bubble to pay off our deficit. During the Emperor's recent reign he used the bubbles to help the rich, and pay his friends, and fund a useless war.
What we have learned is obvious. Left alone, without regulation, the free market of capitalism leads to GREED and the few win, the many lose. The house of cards has fallen. And now, as regulations are finally put in, we'll be watchful as typically we will over regulate and confuse issues further:)
Surely both Democrats, Republicans and we as citizens are at fault here. We allowed the greed, we built on it, and we lived it. We all know the story now, but only part of it has unfolded, sadly.
What we see is not what is, but what we want to see.
"How government works"----
Three contractors are bidding to fix a broken fence at the White House in D.C.; one from Kentucky, another from Tennessee and the third, from Georgia. They go with a White House official to examine the fence.
The Georgia contractor takes out a tape measure and does some measuring, then works some figures with a pencil. Well, he says, I figure the job will run about $900: $400 for materials, $400 for my crew and $100 profit for me.
The Tennessee contractor also does some measuring and figuring, and then says I can do this job for $700: $300 for materials, $300 for my crew and $100 profit for me.
The Kentucky contractor doesn't measure or figure, but leans over to the White House official and whispers, "$2,700".
The official, incredulous, whispers back, "You didn't even measure like the other guys! How did you come up with such a high figure?"
The Kentucky contractor whispers back, "$1000 for me, $1000 for you, and we hire the guy from Tennessee to fix the fence."
"Done!" replies the official.
And that, my friends, is how our government works
I think both are right, and we'll list both put and call, noting to all the high risk to trading in an environment that has been "flat lining" for the last several days.
As 2008 ends a doctrine has also been destroyed, and it's critical we understand it. Supply side economics as we know it( http://en.wikipedia.org/wiki/Supply-side_economics) and free enterprise economics have both been proven to be deadly wrong, and the doctrines have been destroyed.
Bubbles Greenspan, a disciple of Ayn Rand (study this dangerous philosopher to understand more fully), led us through Reaganomics ( a dismal failure) and the concept of "free enterprise without regulation will self regulate and the market will adjust to capitalism left uncontrolled, as this is "free democracy". Bubbles led us through many bubbles, and created most of them. During the Clinton administration he used the results of the internet bubble to pay off our deficit. During the Emperor's recent reign he used the bubbles to help the rich, and pay his friends, and fund a useless war.
What we have learned is obvious. Left alone, without regulation, the free market of capitalism leads to GREED and the few win, the many lose. The house of cards has fallen. And now, as regulations are finally put in, we'll be watchful as typically we will over regulate and confuse issues further:)
Surely both Democrats, Republicans and we as citizens are at fault here. We allowed the greed, we built on it, and we lived it. We all know the story now, but only part of it has unfolded, sadly.
What we see is not what is, but what we want to see.
"How government works"----
Three contractors are bidding to fix a broken fence at the White House in D.C.; one from Kentucky, another from Tennessee and the third, from Georgia. They go with a White House official to examine the fence.
The Georgia contractor takes out a tape measure and does some measuring, then works some figures with a pencil. Well, he says, I figure the job will run about $900: $400 for materials, $400 for my crew and $100 profit for me.
The Tennessee contractor also does some measuring and figuring, and then says I can do this job for $700: $300 for materials, $300 for my crew and $100 profit for me.
The Kentucky contractor doesn't measure or figure, but leans over to the White House official and whispers, "$2,700".
The official, incredulous, whispers back, "You didn't even measure like the other guys! How did you come up with such a high figure?"
The Kentucky contractor whispers back, "$1000 for me, $1000 for you, and we hire the guy from Tennessee to fix the fence."
"Done!" replies the official.
And that, my friends, is how our government works
Wednesday, December 24, 2008
Once Upon a Time
Hamilton once said, "to a speculator debts are not to be fully covered when in business. Business is the moving of money." We have seen much of this in a full circle in the past few months as debt, and false financials, were built around a fraudulent stock market, manipulated by those at the top, who have now been bailed out by Paulson and Bush.
NO rules were put in place and the banks have frozen their lending, thus affecting businesses in all ways, while the banks hunker down to protect what is given to them, and what they did to themselves.
The head of the string is frayed and there is no needle.
The economic reports just show us more bad news. The real question is: where has the 700 billion bail out gone? What have the banks done with our money? Do you feel good about paying taxes in when you see this fraud perpetrate on ourselves, as the banks now tell us "none of our business".
Trader JK sent this, which says it best:
Once upon a time a man appeared in a village and announced to the villagers that he would buy monkeys for $10 each. The villagers, seeing that there were many monkeys around, went out to the forest and started catching them.
The man bought thousands at $10 and, as supply started to diminish, the villagers stopped their effort. He next announced that he would now buy monkeys at $20 each. This renewed the efforts of the villagers and they started catching monkeys again.
Soon the supply diminished even further and people started going back to their farms. The offer increased to $25 each and the supply of monkeys became so scarce it was an effort to even find a monkey, let alone catch it!
The man now announced that he would buy monkeys at $50 each! However, since he had to go to the city on some business, his assistant would buy on his behalf.
In the absence of the man, the assistant told the villagers: "Look at all these monkeys in the big cage that the man has already collected. I will sell them to you at $35 and when the man returns from the city, you can sell them to him for $50 each."
The villagers rounded up all their savings and bought all the monkeys for 700 billion dollars.
They never saw the man or his assistant again, only lots and lots of monkeys!
Now you have a better understanding of how the Wall Street BAILOUT PLAN will work !!!
_____
Higher risk traders only should be trading an OTM call position, for sale no later than Friday. Volume will diminish on the exchange as the week progresses.
NO rules were put in place and the banks have frozen their lending, thus affecting businesses in all ways, while the banks hunker down to protect what is given to them, and what they did to themselves.
The head of the string is frayed and there is no needle.
The economic reports just show us more bad news. The real question is: where has the 700 billion bail out gone? What have the banks done with our money? Do you feel good about paying taxes in when you see this fraud perpetrate on ourselves, as the banks now tell us "none of our business".
Trader JK sent this, which says it best:
Once upon a time a man appeared in a village and announced to the villagers that he would buy monkeys for $10 each. The villagers, seeing that there were many monkeys around, went out to the forest and started catching them.
The man bought thousands at $10 and, as supply started to diminish, the villagers stopped their effort. He next announced that he would now buy monkeys at $20 each. This renewed the efforts of the villagers and they started catching monkeys again.
Soon the supply diminished even further and people started going back to their farms. The offer increased to $25 each and the supply of monkeys became so scarce it was an effort to even find a monkey, let alone catch it!
The man now announced that he would buy monkeys at $50 each! However, since he had to go to the city on some business, his assistant would buy on his behalf.
In the absence of the man, the assistant told the villagers: "Look at all these monkeys in the big cage that the man has already collected. I will sell them to you at $35 and when the man returns from the city, you can sell them to him for $50 each."
The villagers rounded up all their savings and bought all the monkeys for 700 billion dollars.
They never saw the man or his assistant again, only lots and lots of monkeys!
Now you have a better understanding of how the Wall Street BAILOUT PLAN will work !!!
_____
Higher risk traders only should be trading an OTM call position, for sale no later than Friday. Volume will diminish on the exchange as the week progresses.
Tuesday, December 23, 2008
Forced Frugality
Fun to watch the market struggle a bit yesterday, and traders were able to buy our OTM put at 1.60 and sell to highs of 2.05 by 3.30 p.m. Volume on this option was light, and overall volume in the market is very light, before the upcoming holidays.
The market went right to our Dow projection support line. There is not much out in the market this week that is "good news", but it's possible at support lines the market may have some upbeat euphoria "pre holiday", making two way trades more likely. Despite a beginning bias to the put we'll issue a short OTM higher risk call trade pre-Holiday, and watch futures carefully.
Perhaps we should tax golf balls. This is my new thing. We tax cigarettes, booze, and all kinds of things that affect the middle class. Why not golf balls? Obama needs revenue streams, and it's this kind of tax that would go over well.
We will now see a shift to forced frugality, and perhaps a few questions on why water restrictions are "exempted" for many golf courses, but not for others. I'm not against golfers in any way,just trying to help you look at a few things differently. Who is paying for what?
In other words, what and who are we funding with our taxes, all of them, and with the institutions we use?
Remember as you move forward in life, and in trading:
Everything begins with either someone who does something, or does nothing.
The market went right to our Dow projection support line. There is not much out in the market this week that is "good news", but it's possible at support lines the market may have some upbeat euphoria "pre holiday", making two way trades more likely. Despite a beginning bias to the put we'll issue a short OTM higher risk call trade pre-Holiday, and watch futures carefully.
Perhaps we should tax golf balls. This is my new thing. We tax cigarettes, booze, and all kinds of things that affect the middle class. Why not golf balls? Obama needs revenue streams, and it's this kind of tax that would go over well.
We will now see a shift to forced frugality, and perhaps a few questions on why water restrictions are "exempted" for many golf courses, but not for others. I'm not against golfers in any way,just trying to help you look at a few things differently. Who is paying for what?
In other words, what and who are we funding with our taxes, all of them, and with the institutions we use?
Remember as you move forward in life, and in trading:
Everything begins with either someone who does something, or does nothing.
Monday, December 22, 2008
The Derivative Game
For traders that want to truly understand the economic issues of our time, and what the Bush administration did not create this, run to buy Harpers Magazine, January 2009 issue, or read it online, and STUDY The Ten Trillion Dollar Hangover.
This article explains the situation clearly, and how we got it into it. It takes the blame to the real culprits (Greenspan the lead idiot) and what Bush has done in allowing nearly every component of the economy to deteriorate in the past 8 years.
Before we talk of "socialism" or "the government" taking over (current talking head babble) learn of the situation and be part of not repeating it.
Friday Bush gave 17 billion to the "small three". So far Wall Street and the bankers have played a better hustle, led by Paulson, in the getting of money. And, the credit market remains utterly frozen, with banks raising the bar on open lines of credit, creating restrictive covenants, and generally keeping the money given them to loan.
The market hit a low of 8510 Friday, and there MAY be more downside. We open the week with no open signals.
_________
Here is how to understand the derivative game that has destroyed us:
Let's say you have a book to sell. It is a tangible product, built by words, ink, binding, advertising, a "list price", and is something marketable. But then someone says "I have a mirror, and can sell the mirror image of the book".
This is a "stock certificate". Then someone else says "I have another mirror; I can sell a mirror image of that mirror. This is derivatives. And it works a while, until you have 10,000 mirrors, and even then the image is almost perfect. People start to believe that these mirrors are almost the real thing. But at some point, the image is interrupted, a new light beam or a shadow, and then the mirrors all go.
This is what happened.
This is supply side economics, a mirror of building on debt and paying a few, not the many.
We now create mirrors again, in new massive government bail out, but these mirrors are honest in telling us we are creating debt to "pay ourselves out" and avoid the Great Depression.
We are the nation that "loaned 700 billion" recently and had the audacity to not even talk to China or Japan, who sponsor our debt.
Our arrogance has undone us, as we drive the Hummer for the bottled water. And have forgotten the war that "created the Hummer mentality".
This article explains the situation clearly, and how we got it into it. It takes the blame to the real culprits (Greenspan the lead idiot) and what Bush has done in allowing nearly every component of the economy to deteriorate in the past 8 years.
Before we talk of "socialism" or "the government" taking over (current talking head babble) learn of the situation and be part of not repeating it.
Friday Bush gave 17 billion to the "small three". So far Wall Street and the bankers have played a better hustle, led by Paulson, in the getting of money. And, the credit market remains utterly frozen, with banks raising the bar on open lines of credit, creating restrictive covenants, and generally keeping the money given them to loan.
The market hit a low of 8510 Friday, and there MAY be more downside. We open the week with no open signals.
_________
Here is how to understand the derivative game that has destroyed us:
Let's say you have a book to sell. It is a tangible product, built by words, ink, binding, advertising, a "list price", and is something marketable. But then someone says "I have a mirror, and can sell the mirror image of the book".
This is a "stock certificate". Then someone else says "I have another mirror; I can sell a mirror image of that mirror. This is derivatives. And it works a while, until you have 10,000 mirrors, and even then the image is almost perfect. People start to believe that these mirrors are almost the real thing. But at some point, the image is interrupted, a new light beam or a shadow, and then the mirrors all go.
This is what happened.
This is supply side economics, a mirror of building on debt and paying a few, not the many.
We now create mirrors again, in new massive government bail out, but these mirrors are honest in telling us we are creating debt to "pay ourselves out" and avoid the Great Depression.
We are the nation that "loaned 700 billion" recently and had the audacity to not even talk to China or Japan, who sponsor our debt.
Our arrogance has undone us, as we drive the Hummer for the bottled water. And have forgotten the war that "created the Hummer mentality".
Friday, December 19, 2008
Take Tight Profits
From a subscriber, MP, on trading on 12/17:
"Listen...regarding the 420 put...I bought today at 15.90 and sold later on at 17.10...
I then bought again at 16.20 and sold at the end of the day at 17.30
Am I alright doing that or would you have waited for more profit? I figured that I may miss a big move but I'm protecting what I have while building small profits...I can always buy again tomorrow on the put if the situation arises...
With this kind of market...I have no idea what the heck is going to happen so I'm just taking profits and getting out...is that a "good" strategy?"
The answer is: YES. Take tight profits. As an example, on 12/18 the Jan420P was available to buy as low as 14.40 and could have sold to 17.70 by 2.30 p.m. EST. These are great profits. By 3.30 p.m. this went up to 21.00, but quickly moved back to the 18.00 range. Profits are fast and fleeting.
In a market that cannot be predicted, where 100 point type moves now can occur in minutes, tight profits are part of the name of the game.
"Floyd, I bought and sold the put three times Wednesday and twice Thursday. My profits this week alone are over 12,300.00, more than I've paid for my one year of Level 3. You have taught me more in 8 months of trading than I've learned in 10 years of trading."
MBD, Georgia
___________________
One in five U.S. households ware behind on their utility bills coming out of last winter, and one in 20 households had their utility service cut off in 2007.
President Obama has a potential trillion dollar Great Depression bail out coming, and I for one just smile at the trillions spent in Iraq in the last 8 years, and the Emperor actually having shoes thrown at him while there.
Be angry about this. We've killed thousands of our own children, and hundreds of thousands of others, are nowhere, and the "war" is now secondary to our economic crisis.
Are we becoming socialistic? Heavens, no. We're trying to keep up with the likes of 50 billion dollar Bernie Madoff, now in ankle cuffs, or AIG and their ongoing parties.
Is the UAW the culprit with the "small three"?....sure, but the real culprit are the idiots that tooled up for Hummers, and have sold lousy cars, and fly private planes to Washington to ask for money:)
Put the blame on Congress, the blame on Supply side economics, and the blame on all of our citizens that have believed this rhetoric. Instead of "bringing democracy to the Middle East, how about stability to the good old USA?
"Listen...regarding the 420 put...I bought today at 15.90 and sold later on at 17.10...
I then bought again at 16.20 and sold at the end of the day at 17.30
Am I alright doing that or would you have waited for more profit? I figured that I may miss a big move but I'm protecting what I have while building small profits...I can always buy again tomorrow on the put if the situation arises...
With this kind of market...I have no idea what the heck is going to happen so I'm just taking profits and getting out...is that a "good" strategy?"
The answer is: YES. Take tight profits. As an example, on 12/18 the Jan420P was available to buy as low as 14.40 and could have sold to 17.70 by 2.30 p.m. EST. These are great profits. By 3.30 p.m. this went up to 21.00, but quickly moved back to the 18.00 range. Profits are fast and fleeting.
In a market that cannot be predicted, where 100 point type moves now can occur in minutes, tight profits are part of the name of the game.
"Floyd, I bought and sold the put three times Wednesday and twice Thursday. My profits this week alone are over 12,300.00, more than I've paid for my one year of Level 3. You have taught me more in 8 months of trading than I've learned in 10 years of trading."
MBD, Georgia
___________________
One in five U.S. households ware behind on their utility bills coming out of last winter, and one in 20 households had their utility service cut off in 2007.
President Obama has a potential trillion dollar Great Depression bail out coming, and I for one just smile at the trillions spent in Iraq in the last 8 years, and the Emperor actually having shoes thrown at him while there.
Be angry about this. We've killed thousands of our own children, and hundreds of thousands of others, are nowhere, and the "war" is now secondary to our economic crisis.
Are we becoming socialistic? Heavens, no. We're trying to keep up with the likes of 50 billion dollar Bernie Madoff, now in ankle cuffs, or AIG and their ongoing parties.
Is the UAW the culprit with the "small three"?....sure, but the real culprit are the idiots that tooled up for Hummers, and have sold lousy cars, and fly private planes to Washington to ask for money:)
Put the blame on Congress, the blame on Supply side economics, and the blame on all of our citizens that have believed this rhetoric. Instead of "bringing democracy to the Middle East, how about stability to the good old USA?
Wednesday, December 17, 2008
Split Strike Conversion Strategy
Trader MP explains the auto bail out perfectly:
http://twitpic.com/tacx
_____________
And trader Floyd is now ready to talk about Bernie Madoff, and the 50 billion fraud. It is now being defined that Madoff used the OEX as a manipulative tool. Madoff traded on 13 billion in assets and many smart investment advisers were questioning that the OEX could handle the size of Madoff's trades. Remember, he never provided an electronic statement, but only his monthly summaries.
He used "split strike conversion strategy," which is designed to earn income off a stock portfolio while protecting big declines in the market. He traded examples to his subscribers "lost 14k on the call, made 21k on the put," but the ratios were wrong. This slimebag would claim (when properly totaled) trading 22,000 contracts, when records would show only 4,639 total contracts would even trade.
This is an example of where the OEX was used with his many clients within his definition of "hedge," yet he never even made the trades. It's utterly impossible for me to understand how this could have passed by regulatory structures, and is more proof that we need controls put in place.
This all began with Ronnie Reagan, the great de-regulator, and has continued for years. We trusted free enterprise, which is not really free, but always controlled by just a few.
______________
The market yesterday showed classic flatlining, allowing buyers to take new entry to the January 420P as low as 16.00 by 2.30 p.m.
Many professional traders right now disagree with one another.
School #1: the zero interest rate game will free credit with the banks, and the market will begin to stabilize, running to 9500.
School #2: it's a sum of no gain, and the zero interest rate game will do nothing. The market will fluctuate between 8200 to 9200.
School #3: the end is near, and the market could drop another 2000 points.
Floyd is in school #2. Follow our Dow projections carefully for "steps."
http://twitpic.com/tacx
_____________
And trader Floyd is now ready to talk about Bernie Madoff, and the 50 billion fraud. It is now being defined that Madoff used the OEX as a manipulative tool. Madoff traded on 13 billion in assets and many smart investment advisers were questioning that the OEX could handle the size of Madoff's trades. Remember, he never provided an electronic statement, but only his monthly summaries.
He used "split strike conversion strategy," which is designed to earn income off a stock portfolio while protecting big declines in the market. He traded examples to his subscribers "lost 14k on the call, made 21k on the put," but the ratios were wrong. This slimebag would claim (when properly totaled) trading 22,000 contracts, when records would show only 4,639 total contracts would even trade.
This is an example of where the OEX was used with his many clients within his definition of "hedge," yet he never even made the trades. It's utterly impossible for me to understand how this could have passed by regulatory structures, and is more proof that we need controls put in place.
This all began with Ronnie Reagan, the great de-regulator, and has continued for years. We trusted free enterprise, which is not really free, but always controlled by just a few.
______________
The market yesterday showed classic flatlining, allowing buyers to take new entry to the January 420P as low as 16.00 by 2.30 p.m.
Many professional traders right now disagree with one another.
School #1: the zero interest rate game will free credit with the banks, and the market will begin to stabilize, running to 9500.
School #2: it's a sum of no gain, and the zero interest rate game will do nothing. The market will fluctuate between 8200 to 9200.
School #3: the end is near, and the market could drop another 2000 points.
Floyd is in school #2. Follow our Dow projections carefully for "steps."
Everything is Vague
Everything is vague to a degree you do not realize till you have tried to make it precise.
- Bertrand Russell
The Madoff 50 billion Ponzi scheme. First, you must study this situation. Spend at least two hours on the internet studying what was allowed to occur, and by whom.
You will see the fraud that has led our country, for many years, and brought to fruition by the Greed of the last 8 years. The blame is far reaching, deep rooted, and within our "Hummer mentality"..."the plastic water bottles in the thermos thinking" that will soon make you smile. As it may stop.
Regardless, what occurred hits those in Palm Beach, Fl, quite near my home, and makes me smile as the ease of return is suddenly seeing the 17 million condos on the market over the last weekend, as the cash came due.
Bernie knew everyone. He was the ultimate con man. And the next housing wave of disaster now seems exposed, so...the money is in cash, gold, and fast trading of OEX Options, at least in my book.
___________
Which leads to the market...."many traders are blaming high octane exchanged traded funds for the markets wild moves in the last hour of trading," says the Wall Street Journal. These are the leveraged ETF's that bet on sectors or stock indices, such as the Ultrashort Financial Proshares ETF, which allows investors to bet against financial stocks. On 8 of the last 10 worst days for the S&P500 since September 1st, 29% or more of the move took place in the final hour; on three days, more than half of the selloff occurred after 3 p.m.
What this means to us is to KNOW the event in advance, that the 3 p.m. hour will now potentially be even higher volatility, and more demanding, to the investor. I continue to often do my final trades between 4.02 p.m. and 4.15 p.m. after the general market has closed.
________
The market allowed us profits again, and the January 460C sold to highs of 13.40 by 3.30 p.m, for traders that bought Monday, and also available for new buys at 9.90. We start the day with no open positions. :)
We believe the market reacted to zero interest rates as expected, with a burst of silly of euphoria, and that the market will soon, if not already, top. We are seeing the same topping as in the past, and the market could burst above 9000, temporarily. We'll not play any more upside, but begin with the put.
- Bertrand Russell
The Madoff 50 billion Ponzi scheme. First, you must study this situation. Spend at least two hours on the internet studying what was allowed to occur, and by whom.
You will see the fraud that has led our country, for many years, and brought to fruition by the Greed of the last 8 years. The blame is far reaching, deep rooted, and within our "Hummer mentality"..."the plastic water bottles in the thermos thinking" that will soon make you smile. As it may stop.
Regardless, what occurred hits those in Palm Beach, Fl, quite near my home, and makes me smile as the ease of return is suddenly seeing the 17 million condos on the market over the last weekend, as the cash came due.
Bernie knew everyone. He was the ultimate con man. And the next housing wave of disaster now seems exposed, so...the money is in cash, gold, and fast trading of OEX Options, at least in my book.
___________
Which leads to the market...."many traders are blaming high octane exchanged traded funds for the markets wild moves in the last hour of trading," says the Wall Street Journal. These are the leveraged ETF's that bet on sectors or stock indices, such as the Ultrashort Financial Proshares ETF, which allows investors to bet against financial stocks. On 8 of the last 10 worst days for the S&P500 since September 1st, 29% or more of the move took place in the final hour; on three days, more than half of the selloff occurred after 3 p.m.
What this means to us is to KNOW the event in advance, that the 3 p.m. hour will now potentially be even higher volatility, and more demanding, to the investor. I continue to often do my final trades between 4.02 p.m. and 4.15 p.m. after the general market has closed.
________
The market allowed us profits again, and the January 460C sold to highs of 13.40 by 3.30 p.m, for traders that bought Monday, and also available for new buys at 9.90. We start the day with no open positions. :)
We believe the market reacted to zero interest rates as expected, with a burst of silly of euphoria, and that the market will soon, if not already, top. We are seeing the same topping as in the past, and the market could burst above 9000, temporarily. We'll not play any more upside, but begin with the put.
Tuesday, December 16, 2008
Are You Suspicious?
Do you want to know the truth about what the Emperor is doing in his last days? Are you suspicious? Are you beginning to believe in WHY we are out of control as a nation?
Only those with an open mind will believe this article,which is entirely true:
http://www.rollingstone.com/politics/story/24991066/bushs_final_fu
It's the story of how the Emperor is spending his last days, and what he is doing to you. Tomorrow I'll share a bit more about what "he did", as the entire 8 year period is now coming right to its ugly head.
Next, we have the new President, actively going after Afghanistan. Sigh. Soon we'll be at India and Pakistan, as we have NO understanding as a nation of the complexity of the situation, and may have just moved our war sideways. Of interest, the war is now not important anymore, we've all forgotten it.
And, the tax cuts that Maverick McCain and Obama talked about for so long...notice that taxes aren't even mentioned or "important"?
Remember, question authority and have a bit more "lack of respect", and you'll begin to see guys like Madoff and his 50 billion Ponzi scheme for what they are.
_____________
The market went from a 8700 top to a 8410 bottom in Monday's trading, and the "flat lining" was tight. The FOMC is meeting to lower interest rates this week, and it's a forgone conclusion that they will do so, yet it's now a "yawn" almost to the American people.
The January460C was available as low as 8.30 and could have sold to highs of 10.00 by day end.
Only those with an open mind will believe this article,which is entirely true:
http://www.rollingstone.com/politics/story/24991066/bushs_final_fu
It's the story of how the Emperor is spending his last days, and what he is doing to you. Tomorrow I'll share a bit more about what "he did", as the entire 8 year period is now coming right to its ugly head.
Next, we have the new President, actively going after Afghanistan. Sigh. Soon we'll be at India and Pakistan, as we have NO understanding as a nation of the complexity of the situation, and may have just moved our war sideways. Of interest, the war is now not important anymore, we've all forgotten it.
And, the tax cuts that Maverick McCain and Obama talked about for so long...notice that taxes aren't even mentioned or "important"?
Remember, question authority and have a bit more "lack of respect", and you'll begin to see guys like Madoff and his 50 billion Ponzi scheme for what they are.
_____________
The market went from a 8700 top to a 8410 bottom in Monday's trading, and the "flat lining" was tight. The FOMC is meeting to lower interest rates this week, and it's a forgone conclusion that they will do so, yet it's now a "yawn" almost to the American people.
The January460C was available as low as 8.30 and could have sold to highs of 10.00 by day end.
Monday, December 15, 2008
Supply Side Economics Create Greed
There is a 55% chance of upturn right now. Bottoms did hold in Friday's early a.m. collapse, and traders reported final profits in any open puts. Calls were also profitable for traders that bought on the
downside move at best buy, and sold to tight profits, and we open the week with more win ratios again. In Friday's alert I suggested I could not read the market well, and was growing concerned.
The comments below show the optimism of some other veterans; mine is more muted. I believe the Madoff 50 billion stock fraud that was exposed on Friday could easily just begin to hit the markets as the scale and depth of the fraud is unveiled this week.
To those that fight for free enterprise, simply study the Madoff situation and you'll see how the former head of the NASDAQ perpetrated this fraud, simply because strong government regulations were not in place. Sorry, but supply side free enterprise sounds great, but it creates greed, that left unmonitored creates the situation you are now seeing.
So the jokes that Obama will now create a socialist country of programs and free dollars is the ignorant, obvious. To the intelligent, we have yet again left ourselves no choice but our own printing of money to keep us alive, building a new house of cards.
Bear in mind when I advise a 55% chance of upturn that the odds of successful prediction are slimming, and doing so because the news of the market is by the second right now, and Detroit did not get the money that the Wall Street bankers did.
Mike Gibbons/Breakoutwatch:
The rally remains intact after the market has weathered news of mounting unemployment, falling retail sales and the uncertain future of the domestic auto industry. There is good news in that wholesale and gas prices are falling so inflation is not a concern, but the prospects of a deflationary spiral are becoming more real. During times of deflation what you could buy today will be cheaper tomorrow so consumption and investment falls. Add to that the need to save because of job insecurity and we have the makings of a more severe contraction than we are experiencing already. How much of this is already priced into the markets is difficult to know but we continue to believe the possible returns outweigh the downside risks.
downside move at best buy, and sold to tight profits, and we open the week with more win ratios again. In Friday's alert I suggested I could not read the market well, and was growing concerned.
The comments below show the optimism of some other veterans; mine is more muted. I believe the Madoff 50 billion stock fraud that was exposed on Friday could easily just begin to hit the markets as the scale and depth of the fraud is unveiled this week.
To those that fight for free enterprise, simply study the Madoff situation and you'll see how the former head of the NASDAQ perpetrated this fraud, simply because strong government regulations were not in place. Sorry, but supply side free enterprise sounds great, but it creates greed, that left unmonitored creates the situation you are now seeing.
So the jokes that Obama will now create a socialist country of programs and free dollars is the ignorant, obvious. To the intelligent, we have yet again left ourselves no choice but our own printing of money to keep us alive, building a new house of cards.
Bear in mind when I advise a 55% chance of upturn that the odds of successful prediction are slimming, and doing so because the news of the market is by the second right now, and Detroit did not get the money that the Wall Street bankers did.
Mike Gibbons/Breakoutwatch:
The rally remains intact after the market has weathered news of mounting unemployment, falling retail sales and the uncertain future of the domestic auto industry. There is good news in that wholesale and gas prices are falling so inflation is not a concern, but the prospects of a deflationary spiral are becoming more real. During times of deflation what you could buy today will be cheaper tomorrow so consumption and investment falls. Add to that the need to save because of job insecurity and we have the makings of a more severe contraction than we are experiencing already. How much of this is already priced into the markets is difficult to know but we continue to believe the possible returns outweigh the downside risks.
Friday, December 12, 2008
This May Say It All
This may say it all: Bill Miller, Legg Mason Value Trust, was the top stock picker in the U.S. This year: 16.5 billion assets to 4.3 billion assets in 2008. But, he outperformed the broad market from 1991 to 2005. In other words, the top stock picker in the country went down in defeat this last year. No ONE knows what to invest in, or what the market will do.
Supply side economics has failed, and our lack of oversight about our own greed, has begun to destroy us. Floyd calls this "the Hummer mentality," and we are now being punished. That's all I know:)
Yesterday we began to see a bit of clear direction, with sell off. And, the sell off may now not last. It's a full guessing game on how Friday shorts will play.
Trader BD writes:
Floyd:
"I must admit, I was too anxious, emotions, and entered put positions too early. No panic though.
Still ended up with +10k. :) I have sold almost all of my 420 Put position today, hold a few contracts had a couple call orders out for the Jan Call. I'll sit back tomorrow and watch for a while.
Salvaged the 350 Put position today by adding to the 420 position. I didn't want to hold the 350 beyond today as time erosion on Friday would kill it
Big couple weeks for me. +40k
Cheers,
Bill"
Trader MDL write:
"I've calculated out that I've hit 14 straight profitable trades, and lost on one. I'm trading for far fewer profit dollars now, listening to you to take the buck and not always hold for bigger profits, in a crazy market like this.
The more I learn from you the more I begin to understand about me, that I often "sabotage" my own behavior, and go "crazy" with what I think will happen"
I'm sharing successes and thoughts here because it is most important that you all realize NO ONE knows what the market will do, including the stock pickers, and the economists.
The FOMC meets next week, and interest rates will be the focus. Puts were profitable again yesterday, but make note that January issues are very low volume and remain high premium. December issues are simply too high risk.
Friday's recently have seen a "sell up"/exhaustive gap as shorts cover positions, and this could occur today. Watch futures carefully. We have an open signal to the call, and will list it as a new buy.
Puts may have strength with our "count" increasing, but the risk is high. We'll list only a December day trade put for those willing to take the risk, and exit by end of day.
Supply side economics has failed, and our lack of oversight about our own greed, has begun to destroy us. Floyd calls this "the Hummer mentality," and we are now being punished. That's all I know:)
Yesterday we began to see a bit of clear direction, with sell off. And, the sell off may now not last. It's a full guessing game on how Friday shorts will play.
Trader BD writes:
Floyd:
"I must admit, I was too anxious, emotions, and entered put positions too early. No panic though.
Still ended up with +10k. :) I have sold almost all of my 420 Put position today, hold a few contracts had a couple call orders out for the Jan Call. I'll sit back tomorrow and watch for a while.
Salvaged the 350 Put position today by adding to the 420 position. I didn't want to hold the 350 beyond today as time erosion on Friday would kill it
Big couple weeks for me. +40k
Cheers,
Bill"
Trader MDL write:
"I've calculated out that I've hit 14 straight profitable trades, and lost on one. I'm trading for far fewer profit dollars now, listening to you to take the buck and not always hold for bigger profits, in a crazy market like this.
The more I learn from you the more I begin to understand about me, that I often "sabotage" my own behavior, and go "crazy" with what I think will happen"
I'm sharing successes and thoughts here because it is most important that you all realize NO ONE knows what the market will do, including the stock pickers, and the economists.
The FOMC meets next week, and interest rates will be the focus. Puts were profitable again yesterday, but make note that January issues are very low volume and remain high premium. December issues are simply too high risk.
Friday's recently have seen a "sell up"/exhaustive gap as shorts cover positions, and this could occur today. Watch futures carefully. We have an open signal to the call, and will list it as a new buy.
Puts may have strength with our "count" increasing, but the risk is high. We'll list only a December day trade put for those willing to take the risk, and exit by end of day.
Thursday, December 11, 2008
Greedy Idiots
We believe market conditions are now at a classic standstill point, with hesitancy as the market approaches 9000, and fear over the "small three bail out."
December issue options are now eroding quickly, and January 09 OEX options remain high priced. We'll move to January expiry today, noting the premium, and that we will see some erosion in time quickly.
With this said, it's important you are reading all the fodder the talking heads are giving us. Some believe the deflationary cycle will not stop, the market will vastly worsen, and others believe a bull rally may actually occur after the first of the year.
The truth: Not one of them really knows.
In our Dow projections we define THREE distinct bottoms, and TWO distinct tops. There is no pattern to how they could play out, and although two way trades may be likely, the risk increases around the "small three" bail out.
On a political note, all of us should cry and scream over the most recent politician fervor, this time a slimey Democrat Governor in Illinois that it appears has broken every rule of ethics, and stupidity. If true, may he rot in jail.
Many subscribers have written to dialogue on the bail out of the "small 3." Allow me my soap box:
*These are greedy idiots, from the top executives to the UAW, and they historically have made lousy products. They bet on Hummers and F150's. Tough.
*The State of Michigan, Ohio, and Indiana will literally bankrupt without some form of a bailout.
*Bankruptcy may still occur, and it could be a waste of money. But who cares, we waste this much in Iraq in a month, folks, for a fool's game.
*Right now let Paul Volcker be the car czar, he's a smart man, and let's fire all the top idiots at the car companies.
Above all, quit reading the doomsayers telling us the "end of the world" by next summer, or a depression that lasts 20 years. Here's why......during Maverick McCain promises, and Obama promises just a few short months ago....remember the talk on taxes and debt...and note we are nowhere near this now, and it's a whole different game...and it will be again in the first 100 days.
The bottom line: no one knows.
The December420P was available as low as as 7.80 in early trading yesterday, and sold to highs of 11.60 by 2.45 p.m. Some traders reported trading for profits "twice".
December issue options are now eroding quickly, and January 09 OEX options remain high priced. We'll move to January expiry today, noting the premium, and that we will see some erosion in time quickly.
With this said, it's important you are reading all the fodder the talking heads are giving us. Some believe the deflationary cycle will not stop, the market will vastly worsen, and others believe a bull rally may actually occur after the first of the year.
The truth: Not one of them really knows.
In our Dow projections we define THREE distinct bottoms, and TWO distinct tops. There is no pattern to how they could play out, and although two way trades may be likely, the risk increases around the "small three" bail out.
On a political note, all of us should cry and scream over the most recent politician fervor, this time a slimey Democrat Governor in Illinois that it appears has broken every rule of ethics, and stupidity. If true, may he rot in jail.
Many subscribers have written to dialogue on the bail out of the "small 3." Allow me my soap box:
*These are greedy idiots, from the top executives to the UAW, and they historically have made lousy products. They bet on Hummers and F150's. Tough.
*The State of Michigan, Ohio, and Indiana will literally bankrupt without some form of a bailout.
*Bankruptcy may still occur, and it could be a waste of money. But who cares, we waste this much in Iraq in a month, folks, for a fool's game.
*Right now let Paul Volcker be the car czar, he's a smart man, and let's fire all the top idiots at the car companies.
Above all, quit reading the doomsayers telling us the "end of the world" by next summer, or a depression that lasts 20 years. Here's why......during Maverick McCain promises, and Obama promises just a few short months ago....remember the talk on taxes and debt...and note we are nowhere near this now, and it's a whole different game...and it will be again in the first 100 days.
The bottom line: no one knows.
The December420P was available as low as as 7.80 in early trading yesterday, and sold to highs of 11.60 by 2.45 p.m. Some traders reported trading for profits "twice".
Wednesday, December 10, 2008
Only McDonalds and Walmart are higher than a year ago
Of the 30 companies that make up the DJIA only McDonalds and Walmart have higher stock prices than a year ago. Think on this. Walmart, which abuses employees and imports most of its products, and McDonalds, which makes a terrible and dangerous product for consumption. So sad.
We watched the market immediately react to lowered outlooks for TI, and Fed Ex, and began moving to our Dow projection bottoms. The Dec420P was available as low as 8.30, and sold to 12.60. Many traders reported dual profits on this position during the whipsaw of the market today.
Here's some commentary from BD, a long term subscriber who often "journals" me his thinking in advance of the day:
Up 9 out of the last 11 sessions.
Dow did not close above 9000 yesterday Potential Bear market rally. Also coinciding with previous PnF resistance levels. Dow not closing above 50dma or 9000 not confirming SP close over 900.
Look for Put entry today up to DJI 9150
Calls only on futures open lower.
Topping here to 9150 PnF.
Look for move to 8450.
Beware of Infrastructure plays holding up the market as well as auto bailout.
All indexes breakout alert PnF.
12/8/08
50 dma Intraday High yesterday close
oex 446 445 441
djia 8941 9026 8934
spx 929 918 909
naz 1640 1583 1571
rut 505 483 481"
Suffice it to say, this is a successful trader.
And from trader DP:
Floyd,
Can’t express how good I am feeling today. Thanks again for responding to my email yesterday regarding DEC 370 Put i.e. recommeding DEC 420 PUT.
"Bought second lot this afternoon at 8.5 (exact) and Sold both the lots today afternoon with an average gain of 36%. I think its okay to miss some additional profit (if its DEC 420PUT hits 13.90 tomorrow). Current Status - NO open position sitting on the sideline"
We watched the market immediately react to lowered outlooks for TI, and Fed Ex, and began moving to our Dow projection bottoms. The Dec420P was available as low as 8.30, and sold to 12.60. Many traders reported dual profits on this position during the whipsaw of the market today.
Here's some commentary from BD, a long term subscriber who often "journals" me his thinking in advance of the day:
Up 9 out of the last 11 sessions.
Dow did not close above 9000 yesterday Potential Bear market rally. Also coinciding with previous PnF resistance levels. Dow not closing above 50dma or 9000 not confirming SP close over 900.
Look for Put entry today up to DJI 9150
Calls only on futures open lower.
Topping here to 9150 PnF.
Look for move to 8450.
Beware of Infrastructure plays holding up the market as well as auto bailout.
All indexes breakout alert PnF.
12/8/08
50 dma Intraday High yesterday close
oex 446 445 441
djia 8941 9026 8934
spx 929 918 909
naz 1640 1583 1571
rut 505 483 481"
Suffice it to say, this is a successful trader.
And from trader DP:
Floyd,
Can’t express how good I am feeling today. Thanks again for responding to my email yesterday regarding DEC 370 Put i.e. recommeding DEC 420 PUT.
"Bought second lot this afternoon at 8.5 (exact) and Sold both the lots today afternoon with an average gain of 36%. I think its okay to miss some additional profit (if its DEC 420PUT hits 13.90 tomorrow). Current Status - NO open position sitting on the sideline"
Tuesday, December 9, 2008
Analyse Why, not just How when Trading
The Chicago Tribune filed for Chapter 11, and the "small 3" are in Washington begging for money. And the market moved right up 300 plus points to the magic 9000 border. Go figure.
Of course, the market gap up was too strong for a call buy on Monday, but traders make entry to the put.
It is very likely that a Washington bail out of the "small 3" will be considered "good news" and send the market up, and it is just as likely that it may be the straw to the buying public that would break this rally.
This is the fourth time in recent months we've toyed with 9000. It held Monday, a clear sign of rally, but I remain suspicious. 8150 Friday morning to 9040 Monday afternoon....what a market.
Noam, a trader in Israel studying with us, trades to "give" to others. I find this noble, and find him inventive, creative, and a great listener. From his comments to me this past weekend:
"BTW, your philosophy is what I think too:
increasingly I feel that nothing may exist - it may all be a figment of my imagination
or a dream, since there are so many coincidences, and also because I'm the only one
who "sees", everything else may be real or not - I have no way of knowing.
So many things happen which have no logical explanation - e.g. I think of something or tell
someone about something and a short while later (seconds to days) those same things
happen in reality or I hear about them in the news, and the probability of these events
are infinitesimal not things that happen usually.
I used to talk a lot with a friend about philosophical views when I was in high school,
about what reality is or isn't or if anything actually exists and what it means to exist.
Is there anything else beside the universe, are there others in this reality/existence
or in other ones, can anyone (even god) know of everything possible since there is always
one more way to think about something? how does god know he exists or is real (whatever
that means?)
There is also a concept called a Boltzmann Brain:
Boltzmann brain - Wikipedia, the free encyclopedia
Which had me thinking that I may be a detached mind floating in limbo (all alone), and everything
I see or remember is inside of that entity.
How did the universe emerge out of nothingness and how can it exist in nothingness
if nothingness precludes the existence of anything?
How do I know that what (little) I remember is real or if it just formed this instant.
Does the universe exist continuously or blink in and out of existence with vast voids
in between (I can't say "of time") because if time stops and then restarts then how can we
know? (and it doesn't matter how long it stops since a second is the same as an eternity,
and you can't even talk about seconds or years because time has stopped.
Do you have similar thoughts?"
I do have similar thoughts, and I do know that our religious clients will immediately find "gospel" and "reason" for existence within their first responses, and this is fine, too. We as minds must be open to all, as we only know what we know, and not what we do not know. This is the most important concept of all.
What we must do as traders is to analyze the "why" of a situation, not just the "how."
Of course, the market gap up was too strong for a call buy on Monday, but traders make entry to the put.
It is very likely that a Washington bail out of the "small 3" will be considered "good news" and send the market up, and it is just as likely that it may be the straw to the buying public that would break this rally.
This is the fourth time in recent months we've toyed with 9000. It held Monday, a clear sign of rally, but I remain suspicious. 8150 Friday morning to 9040 Monday afternoon....what a market.
Noam, a trader in Israel studying with us, trades to "give" to others. I find this noble, and find him inventive, creative, and a great listener. From his comments to me this past weekend:
"BTW, your philosophy is what I think too:
increasingly I feel that nothing may exist - it may all be a figment of my imagination
or a dream, since there are so many coincidences, and also because I'm the only one
who "sees", everything else may be real or not - I have no way of knowing.
So many things happen which have no logical explanation - e.g. I think of something or tell
someone about something and a short while later (seconds to days) those same things
happen in reality or I hear about them in the news, and the probability of these events
are infinitesimal not things that happen usually.
I used to talk a lot with a friend about philosophical views when I was in high school,
about what reality is or isn't or if anything actually exists and what it means to exist.
Is there anything else beside the universe, are there others in this reality/existence
or in other ones, can anyone (even god) know of everything possible since there is always
one more way to think about something? how does god know he exists or is real (whatever
that means?)
There is also a concept called a Boltzmann Brain:
Boltzmann brain - Wikipedia, the free encyclopedia
Which had me thinking that I may be a detached mind floating in limbo (all alone), and everything
I see or remember is inside of that entity.
How did the universe emerge out of nothingness and how can it exist in nothingness
if nothingness precludes the existence of anything?
How do I know that what (little) I remember is real or if it just formed this instant.
Does the universe exist continuously or blink in and out of existence with vast voids
in between (I can't say "of time") because if time stops and then restarts then how can we
know? (and it doesn't matter how long it stops since a second is the same as an eternity,
and you can't even talk about seconds or years because time has stopped.
Do you have similar thoughts?"
I do have similar thoughts, and I do know that our religious clients will immediately find "gospel" and "reason" for existence within their first responses, and this is fine, too. We as minds must be open to all, as we only know what we know, and not what we do not know. This is the most important concept of all.
What we must do as traders is to analyze the "why" of a situation, not just the "how."
Monday, December 8, 2008
WE have NO ALTERNATIVE
Friday allowed put traders to profit in the a.m., for another profitable signal, and the afternoon, after the deepest unemployment number registered since 1974, saw every short seller in the market on high volume selling off, and raising the market beyond comprehension. This has occurred regularly on Friday's recently, with an opening downturn, and shorts covering their positions by day end.
Subscriber MP has been in dialogue with me on "communism and socialism" taking over our government, and the horrible situation we have allowed to be created now being solved by "government."
Sadly, he's both right and wrong. What is occurring is NOT communism in any way, nor is it really socialism. It's just plain and easy stupid Americans rushing to try to solve the worst financial predicament of our lifetimes without a clue of what to do.
The answer is not "let free enterprise figure it out, and let companies go broke, not bailing out." Sadly. Of course this makes sense, but to not bail out now could destroy our country, destroy states already close to bankruptcy, and literally put us in the worst depression of all time.
Quite simply, WE have NO ALTERNATIVE.
"This year will be remembered not just for the worst financial crises in American history, but also as the moment when economists abandoned their principles," writes Oliver Hart, a professor of economics at Harvard.
We all know, it's a new bail out each day now, with a shell game move of dollars, and Congress, inept in general about business, acting the tough guy.
Many economists argue what would have been so bad about letting Bear Stearns, AIG and Citi Group go into receivership. We know the argument that economics are now intertwined, and a systemic failure could occur from the contagion.
Rules must be set for this money flow, yet those setting the rules are themselves corrupted by lobbyists.
We will find that much of the shenanigans in the past 4 months, of government moves, will later be found to be influenced and beneficial to a few, and the many will again be paying.
From Subscribers:
"Floyd,
I wanted to get your opinion on what happened today. I noticed this morning that the plunger team came in a held the market because I watched XLF and noticed that they were buying the financials. I therefore bought 2 calls this morning instead of the put.
I also was watching IWM and noticed that the speculators were coming in a buying. This went on back and forth all day. I then sold the calls by the end of the day.
My only concern is that I wanted to buy 4 shares of the OEX 350 put at 2.50, but something went wrong I guess with the trade and I must have typed 18 instead of 4 contracts. So now I own 18 contracts of the 350 put at $2.50 and did not have any time to hedge.
My second concern is that the plunger team comes in on Monday and breaks through the resistance of 900 area of the SPX. If it does this then we can go to 1000 and hit the 50day moving average and then are puts are worthless. Should I buy a couple calls to hedge my short position on Monday morning if this does occur. Only reason is because I have way too much money on the put that I cannot afford to lose because of my transaction error.
This rally really stinks because it is only a short covering rally with not much volume."
Floyd: See our Dow projections below, and our new signals. Calls have the "count" but Friday's rally was indeed suspect. At the same time the market did hit one of our Dow projections lows Friday, and a bottom test may have been completed. If the market rises 100 points on Monday we'll confirm a rally.
Subscriber MP has been in dialogue with me on "communism and socialism" taking over our government, and the horrible situation we have allowed to be created now being solved by "government."
Sadly, he's both right and wrong. What is occurring is NOT communism in any way, nor is it really socialism. It's just plain and easy stupid Americans rushing to try to solve the worst financial predicament of our lifetimes without a clue of what to do.
The answer is not "let free enterprise figure it out, and let companies go broke, not bailing out." Sadly. Of course this makes sense, but to not bail out now could destroy our country, destroy states already close to bankruptcy, and literally put us in the worst depression of all time.
Quite simply, WE have NO ALTERNATIVE.
"This year will be remembered not just for the worst financial crises in American history, but also as the moment when economists abandoned their principles," writes Oliver Hart, a professor of economics at Harvard.
We all know, it's a new bail out each day now, with a shell game move of dollars, and Congress, inept in general about business, acting the tough guy.
Many economists argue what would have been so bad about letting Bear Stearns, AIG and Citi Group go into receivership. We know the argument that economics are now intertwined, and a systemic failure could occur from the contagion.
Rules must be set for this money flow, yet those setting the rules are themselves corrupted by lobbyists.
We will find that much of the shenanigans in the past 4 months, of government moves, will later be found to be influenced and beneficial to a few, and the many will again be paying.
From Subscribers:
"Floyd,
I wanted to get your opinion on what happened today. I noticed this morning that the plunger team came in a held the market because I watched XLF and noticed that they were buying the financials. I therefore bought 2 calls this morning instead of the put.
I also was watching IWM and noticed that the speculators were coming in a buying. This went on back and forth all day. I then sold the calls by the end of the day.
My only concern is that I wanted to buy 4 shares of the OEX 350 put at 2.50, but something went wrong I guess with the trade and I must have typed 18 instead of 4 contracts. So now I own 18 contracts of the 350 put at $2.50 and did not have any time to hedge.
My second concern is that the plunger team comes in on Monday and breaks through the resistance of 900 area of the SPX. If it does this then we can go to 1000 and hit the 50day moving average and then are puts are worthless. Should I buy a couple calls to hedge my short position on Monday morning if this does occur. Only reason is because I have way too much money on the put that I cannot afford to lose because of my transaction error.
This rally really stinks because it is only a short covering rally with not much volume."
Floyd: See our Dow projections below, and our new signals. Calls have the "count" but Friday's rally was indeed suspect. At the same time the market did hit one of our Dow projections lows Friday, and a bottom test may have been completed. If the market rises 100 points on Monday we'll confirm a rally.
Friday, December 5, 2008
Anyone else suspicious?
An early morning hesitancy, on low volume, allowed traders to continue to enter on our open Dec350P with lows of 2.90, to high sales at 5.90. We'll continue to list this position for this mornings trading, as both an open signal and a new buy, and will yet again NOT buy a call, despite what could be an exhaustive gap up.
Unemployment comes out today, and the truth is now finally being told. True unemployment numbers, however, just add another 10% to what we hear today, as this covers all the unemployed now off unemployment benefits, and on welfare, conveniently left off unemployment numbers since Bush has been King.
As we all know, the CEO's from the "small 3" in Detroit are in Washington begging for money. There is no real option , and the money will be given, or three states (Indiana, Michigan, and Ohio) could go bankrupt.
When relief is provided, it is not a 50/50 throw of the dice on how the market may react. In the past moves that "gave" typically provide a euphoric upside; this may not occur this time, as reality is very clear.
Is anyone else, besides old cynical Floyd, a bit curious how this all "fell apart" in three short months, and gas is now 1.36 a gallon in Missouri?
Anyone else suspicious? How can something unravel so quickly? And as it is, who hid the situation from us? Question authority.
_________________
Imagine if there really is no structure, and that there is only process. This is what actually is. It is our need as humans, as the thinkers we are, to define and we create the structure around the needs we have to define.
As you decide, therefore, that something is real, be wise enough to recognize that it is our by our definition that we see real. A rock is only real, as we know it. In another world the rock may not be even dense. There may be no definition of dense.
As we trade we must understand that the variables are always there, but there is little of constant. Each false fact we are fed leads us to our interpretation. As an example, Lancet reports the civilian casualty death in Iraq as beween 600,000 and 1.2 million. But ask 87% of all Americans and they will tell you our losses under 4000 people. We do not think here of the obvious because the obvious is not clear in our perspective.
Every week a pool guy, Bill, comes to our home in South Florida and takes care of the pool. He's been our "guy" for 16 years, and we pay him $120.00 a month, and lots of tips. He's 50, has a 24 year son working for him, his wife is a schoolteacher, and he owns a home and two trucks for his work. He is a middle class guy with a "route." He works hard, and is friendly to his clients. He keeps them.
I saw him this week and he explained to me that the middle class went away in the last 8 years, and the only jobs were at McDonald's or construction, and now the home crisis had destroyed his business, and the economy had people "shaving him on price" by the day.
His gross profits dropped by 31% in 2008, and he predicts business off by up to 50% next year.
He sold part of his business last year (active clients in one area) and used the money to pay off his one credit card, pay down his trucks in payment, and put more money in his Self Employed 401k, only to watch it go down 40% this year.
He wants to know who he can blame? And who will do something. He has told me for 8 years that they should impeach Bush for his lies, and finally, this week, he said "he was heard."
I believe he is right, and that true change could come. To do this, however, we as a public must NOT be manipulated again, not accept false facts, and pay ourselves for what we have done. Sadly, with a 7.6 billion price tag in new spending alone, we all are.
We must quit taking care of ourselves, and take care of one another.
Unemployment comes out today, and the truth is now finally being told. True unemployment numbers, however, just add another 10% to what we hear today, as this covers all the unemployed now off unemployment benefits, and on welfare, conveniently left off unemployment numbers since Bush has been King.
As we all know, the CEO's from the "small 3" in Detroit are in Washington begging for money. There is no real option , and the money will be given, or three states (Indiana, Michigan, and Ohio) could go bankrupt.
When relief is provided, it is not a 50/50 throw of the dice on how the market may react. In the past moves that "gave" typically provide a euphoric upside; this may not occur this time, as reality is very clear.
Is anyone else, besides old cynical Floyd, a bit curious how this all "fell apart" in three short months, and gas is now 1.36 a gallon in Missouri?
Anyone else suspicious? How can something unravel so quickly? And as it is, who hid the situation from us? Question authority.
_________________
Imagine if there really is no structure, and that there is only process. This is what actually is. It is our need as humans, as the thinkers we are, to define and we create the structure around the needs we have to define.
As you decide, therefore, that something is real, be wise enough to recognize that it is our by our definition that we see real. A rock is only real, as we know it. In another world the rock may not be even dense. There may be no definition of dense.
As we trade we must understand that the variables are always there, but there is little of constant. Each false fact we are fed leads us to our interpretation. As an example, Lancet reports the civilian casualty death in Iraq as beween 600,000 and 1.2 million. But ask 87% of all Americans and they will tell you our losses under 4000 people. We do not think here of the obvious because the obvious is not clear in our perspective.
Every week a pool guy, Bill, comes to our home in South Florida and takes care of the pool. He's been our "guy" for 16 years, and we pay him $120.00 a month, and lots of tips. He's 50, has a 24 year son working for him, his wife is a schoolteacher, and he owns a home and two trucks for his work. He is a middle class guy with a "route." He works hard, and is friendly to his clients. He keeps them.
I saw him this week and he explained to me that the middle class went away in the last 8 years, and the only jobs were at McDonald's or construction, and now the home crisis had destroyed his business, and the economy had people "shaving him on price" by the day.
His gross profits dropped by 31% in 2008, and he predicts business off by up to 50% next year.
He sold part of his business last year (active clients in one area) and used the money to pay off his one credit card, pay down his trucks in payment, and put more money in his Self Employed 401k, only to watch it go down 40% this year.
He wants to know who he can blame? And who will do something. He has told me for 8 years that they should impeach Bush for his lies, and finally, this week, he said "he was heard."
I believe he is right, and that true change could come. To do this, however, we as a public must NOT be manipulated again, not accept false facts, and pay ourselves for what we have done. Sadly, with a 7.6 billion price tag in new spending alone, we all are.
We must quit taking care of ourselves, and take care of one another.
Wednesday, December 3, 2008
Seeing Outside Your View
Subscriber BD summed it up well yesterday: "Looking at a two month chart a clear channel from Oct 13 has formed but can't say which way we'll go from here, at least 800 points to the downside and at least the same to the upside."
Market up turn Tuesday, an exhaustive gap upside, penetrated 8458 once, before faltering in early afternoon trading. We did not trade calls on the upside, because of the fear of reversal, nor issue an alert for downside, as we continue to believe that the "shorts" may soon be covering their positions and could trade the market up again.
This is the highest risk and most difficult to read market I have ever experienced in 30 plus years of trading. I KNOW we leave money on the table in our sales, even though profitable to 50% often, and miss 200% returns for many, and I KNOW we provide signals that are 8 to 10 profitable. Do NOT be sad if you do not make enough money, but make some. Be glad you are making money, and take very prudent risk in this type of market.
Astute trader MF says:
Hey Floyd,
After the recession is over, do you think we will have high inflation? Eventually all this free money will catch up to us. Double digit interest rates could be in our future, I think.
Strange times - we're printing money and almost everything around us is deflating in value. It seems eventually the pendulum will go the over way.
Mike "
Dead right. It may take several years, but the reversing category will be high inflation, unless our new government can control this. There is NO option, I believe, to the printing of money right now.
__________________
In Napoleon Hill's Think and Grow Rich, one of the greatest books of all time, he teaches core concepts for "believing" and visualization, much of what the book The Secret successfully marketed to a CD and a book a 9 year old could read.
When you perceive an idea outside of the norm, your brain goes to work in different ways. It sounds so simple and yet is so very hard to do. It is stretching your mind.
This is what I mean by "seeing outside of your box" or your "view."
There are several different routes to forcing the brain out of its lazy mode of perception, but the theme linking these methods depends on the element of surprise. The brain must be provided with something that it has never processed before to force it out of predictable perceptions.
And lastly, a good note from a subscriber that may sum up FEAR and GREED best:
"Floyd, in the past 10 trading days I have made 38,900 off OEX Options, fighting you all the way:) I continue to be amazed by your ability to be calm in the storm and to so accurately predict both the Dow moves, and the mood of the market. I always now sell before the top or bottom, and my risk is always reduced. Your commentaries always make me think about myself, and just reading your work makes me think. Thank you for teaching me to be "suspicious" of the market, and of our leaders, and to trade around support and resistance. I've been with you for three years, and it's been great"-MDL, Texas
Market up turn Tuesday, an exhaustive gap upside, penetrated 8458 once, before faltering in early afternoon trading. We did not trade calls on the upside, because of the fear of reversal, nor issue an alert for downside, as we continue to believe that the "shorts" may soon be covering their positions and could trade the market up again.
This is the highest risk and most difficult to read market I have ever experienced in 30 plus years of trading. I KNOW we leave money on the table in our sales, even though profitable to 50% often, and miss 200% returns for many, and I KNOW we provide signals that are 8 to 10 profitable. Do NOT be sad if you do not make enough money, but make some. Be glad you are making money, and take very prudent risk in this type of market.
Astute trader MF says:
Hey Floyd,
After the recession is over, do you think we will have high inflation? Eventually all this free money will catch up to us. Double digit interest rates could be in our future, I think.
Strange times - we're printing money and almost everything around us is deflating in value. It seems eventually the pendulum will go the over way.
Mike "
Dead right. It may take several years, but the reversing category will be high inflation, unless our new government can control this. There is NO option, I believe, to the printing of money right now.
__________________
In Napoleon Hill's Think and Grow Rich, one of the greatest books of all time, he teaches core concepts for "believing" and visualization, much of what the book The Secret successfully marketed to a CD and a book a 9 year old could read.
When you perceive an idea outside of the norm, your brain goes to work in different ways. It sounds so simple and yet is so very hard to do. It is stretching your mind.
This is what I mean by "seeing outside of your box" or your "view."
There are several different routes to forcing the brain out of its lazy mode of perception, but the theme linking these methods depends on the element of surprise. The brain must be provided with something that it has never processed before to force it out of predictable perceptions.
And lastly, a good note from a subscriber that may sum up FEAR and GREED best:
"Floyd, in the past 10 trading days I have made 38,900 off OEX Options, fighting you all the way:) I continue to be amazed by your ability to be calm in the storm and to so accurately predict both the Dow moves, and the mood of the market. I always now sell before the top or bottom, and my risk is always reduced. Your commentaries always make me think about myself, and just reading your work makes me think. Thank you for teaching me to be "suspicious" of the market, and of our leaders, and to trade around support and resistance. I've been with you for three years, and it's been great"-MDL, Texas
Tuesday, December 2, 2008
The Recession is Now Defined... Don't Make me Laugh
Last October Floyd wrote "we have entered a recession. By the time the government is willing to admit the recession exists a year will pass, and we will have moved to deflationary recession, or turned the corner. We are led by economists and politicians with no sense of reality, and we will be punished for allowing this." At Blue Chip Options, our sister site, we sold off most of our speculative positions at 14,100, and more at 11,400, and we are buying stocks again. www.bluechipoptions.com
So with my angry babbles on "we are in a recession".....
Guess I was right. The government today told us we are in a recession. The market dropped to 8100, right to our projections, and our Dec350P hit 9.40, up over 200% for the day, and returning most traders 50 to 100% returns.
I will remind the many traders that wrote me last week "why puts in such a good market," and "I think you're taking a great risk in such a strong market to bring up puts."
The market was NOT strong, just euphoric over Thanksgiving and Obama's moves, and a bit of reality set in.
I would like to repeat, just to make sure we know the issue, what George Bush said in September, and McCain confirmed while running: "The economy is sound."
And to think, this is only the 12th time in our history that the market has dropped over 50% in a day, and six of those times have been this year.
I simply laugh out loud that "the recession is now defined."
__________
Most people understand Eastern religion "karma" as "what will happen, or "good or bad karma." Actually, every thought and act you have is karma. Karma is what is. When one meditates, or hears a mantra (a tonal sound, such as I am, OM, or God)...the tonal sound helps to reduce the mind's desire to constantly think. Meditation is trying to stop your mind from thinking. I am is thusly the ultimate mantra, as I am is what God, OM, and all come to.....the many meanings of the same word. The "mantra" we hear from Eastern Religion has no real purpose, or karma.. The mantra is the surrender of what you have made "what is."
White does not always win, and black sometimes does win. This is life.
And black is not always black, nor white white. This is hard for readers to understand, as your lives have been taught around black and white, and what is obvious. Our definitions of something (what black is, the absence of light) are what we know, but necessarily all that there is. This is the statement black is not black, nor a rock hard.
Having faith in God, or Jesus, is fine. You are using scriptures (interpretations) to believe. If you allow others to believe, or not to believe, you are a true person of faith, as you have faith in what you know, and by living your life show what you believe.
It is when we KNOW that we are right that it is wrong,as we do not know that we are right. We can believe, and we can have laws, but our interpretation and openness must always prevail
I repeat again: if the children of the adults that led Hitler to power had questioned authority (or law, or what was right) Hitler would not have prevailed. White could have won:)
As you have your rights violated going through lines of security, wherever they are, recognize the incompetence of the action for what it TAKES from you.
__________
As always, we are not learning from history. In late 1989 Japanese stocks on the NIkkei average peaked at just under 40,000. Much like our Dow at 14,100 nothing could stop Japan, banks began offering 100 year mortgages, and at the peak of the bubble the Emperor's Palace and its surrounding hills in Toyko were worth more than the entire state of California. Of course, the bubble burst. Today the Nikkei is at 9000. It is 17 years later.
Japan is the world's second largest economy. Japan, however, are savers, and even during the bubble they saved. They did not have the Bushian Debt in the trillions to lead off the mess, and this is a dfiference.
Another difference is the massive consumer, corporate and government debt that did not exist in Japan. These are variables that lead to the deflation spiral now permeating our country.
Oil and gas dropping is good for our economy, short term, BUT the price trend could be a phenomenon of the future, where more and more commodities fall. They've already fallen 42% July thru October. These are more signs of deflation occurring.
Obama will now try to spend money. First print it, then spend out, and build our economy out of its shambles. More public works, more unemployment benefits, more bail outs. None of the facts provided him will be clear, and he knows this. His job is to create smart teams of people that can manage the chaos that is created and sort out the quickest remedy.
It would be smart if we could learn from the history of Japan.
And from reader RC, an article of value:
Interesting reading:
"I've been doing a little thinking this morning before the kids get up, and it occurred to me how drastically the markets have changed in the past 12 months...and how much more change is still ahead of us.
Some of it, obviously, we can control, but a large part of it we cannot-particularly when it comes to the markets. While many investors, preferring the controllable, will lament that, history shows that it's the uncontrollable events that actually produce the biggest opportunities.
Like the following:
There's a 1994 law that limits a bank from controlling more than 10% of the deposits in the United States. So what happens when, in a post-bailout world, regulators realize that rule has been violated 6 ways to Sunday? There are obviously loopholes that have been overlooked or deliberately winked at in the rush to stabilize things recently. But when the smoke clears, we could see the "new" banking landscape change dramatically if banks are forced to divest billions in deposits to comply. The winners will clearly be cash cows, while the losers...
Another thing I wonder I'm wondering about: what happens when banks (which are still hoarding cash by the way) are weaned off the US government's special lender's list and no longer have virtually risk-free capital available to them? You can bet the concept of "capital formation" will take on an entirely new meaning both here and abroad. International cash flows will become more important than ever before.
Speaking of which, what happens to US Treasuries when foreign purchasers - aka China, Japan and South Korea - figure out they can get synthetic Treasuries at higher rates by purchasing any of a half-dozen bailed-out banks offering debt at higher-than Treasury rates and being collateralized by the Federal government? We could see inflation spiral out of control, creating legendary opportunities in currencies, metals and other assets that most investors presently don't give a second thought to!
And annuities? Nobody at CNBC or CNN dares ask this question. But what happens when people figure out that the companies selling these things don't have anything remotely resembling enough underlying investments to meet even the minimum guaranteed returns? Short city!
For investors who are interested in collecting stocks as opposed to harvesting returns, the answers will no doubt be unpleasant. But for those of us who are willing to ask the tough questions, we have an opportunity to laugh all the way to the bank."
(Not sure of our subscribers source on this, but very interesting)
__________
And lastly, a Floydian question: if oil prices raised the cost of transportation and fuel so exorbitantly that food prices, etc were FORCED to go up, why is it that prices are not going down now? It's an easy answer: corporation falsely perceive that advantage can be taken of the consumer in a "short cycle" down and this is a time to build profits.
Of course this makes sense, but is any part of you feeling truly violated? Any part of you wondering why gas could lower this much? Any part of you suspicious?
I hope so.
Question authority.
So with my angry babbles on "we are in a recession".....
Guess I was right. The government today told us we are in a recession. The market dropped to 8100, right to our projections, and our Dec350P hit 9.40, up over 200% for the day, and returning most traders 50 to 100% returns.
I will remind the many traders that wrote me last week "why puts in such a good market," and "I think you're taking a great risk in such a strong market to bring up puts."
The market was NOT strong, just euphoric over Thanksgiving and Obama's moves, and a bit of reality set in.
I would like to repeat, just to make sure we know the issue, what George Bush said in September, and McCain confirmed while running: "The economy is sound."
And to think, this is only the 12th time in our history that the market has dropped over 50% in a day, and six of those times have been this year.
I simply laugh out loud that "the recession is now defined."
__________
Most people understand Eastern religion "karma" as "what will happen, or "good or bad karma." Actually, every thought and act you have is karma. Karma is what is. When one meditates, or hears a mantra (a tonal sound, such as I am, OM, or God)...the tonal sound helps to reduce the mind's desire to constantly think. Meditation is trying to stop your mind from thinking. I am is thusly the ultimate mantra, as I am is what God, OM, and all come to.....the many meanings of the same word. The "mantra" we hear from Eastern Religion has no real purpose, or karma.. The mantra is the surrender of what you have made "what is."
White does not always win, and black sometimes does win. This is life.
And black is not always black, nor white white. This is hard for readers to understand, as your lives have been taught around black and white, and what is obvious. Our definitions of something (what black is, the absence of light) are what we know, but necessarily all that there is. This is the statement black is not black, nor a rock hard.
Having faith in God, or Jesus, is fine. You are using scriptures (interpretations) to believe. If you allow others to believe, or not to believe, you are a true person of faith, as you have faith in what you know, and by living your life show what you believe.
It is when we KNOW that we are right that it is wrong,as we do not know that we are right. We can believe, and we can have laws, but our interpretation and openness must always prevail
I repeat again: if the children of the adults that led Hitler to power had questioned authority (or law, or what was right) Hitler would not have prevailed. White could have won:)
As you have your rights violated going through lines of security, wherever they are, recognize the incompetence of the action for what it TAKES from you.
__________
As always, we are not learning from history. In late 1989 Japanese stocks on the NIkkei average peaked at just under 40,000. Much like our Dow at 14,100 nothing could stop Japan, banks began offering 100 year mortgages, and at the peak of the bubble the Emperor's Palace and its surrounding hills in Toyko were worth more than the entire state of California. Of course, the bubble burst. Today the Nikkei is at 9000. It is 17 years later.
Japan is the world's second largest economy. Japan, however, are savers, and even during the bubble they saved. They did not have the Bushian Debt in the trillions to lead off the mess, and this is a dfiference.
Another difference is the massive consumer, corporate and government debt that did not exist in Japan. These are variables that lead to the deflation spiral now permeating our country.
Oil and gas dropping is good for our economy, short term, BUT the price trend could be a phenomenon of the future, where more and more commodities fall. They've already fallen 42% July thru October. These are more signs of deflation occurring.
Obama will now try to spend money. First print it, then spend out, and build our economy out of its shambles. More public works, more unemployment benefits, more bail outs. None of the facts provided him will be clear, and he knows this. His job is to create smart teams of people that can manage the chaos that is created and sort out the quickest remedy.
It would be smart if we could learn from the history of Japan.
And from reader RC, an article of value:
Interesting reading:
"I've been doing a little thinking this morning before the kids get up, and it occurred to me how drastically the markets have changed in the past 12 months...and how much more change is still ahead of us.
Some of it, obviously, we can control, but a large part of it we cannot-particularly when it comes to the markets. While many investors, preferring the controllable, will lament that, history shows that it's the uncontrollable events that actually produce the biggest opportunities.
Like the following:
There's a 1994 law that limits a bank from controlling more than 10% of the deposits in the United States. So what happens when, in a post-bailout world, regulators realize that rule has been violated 6 ways to Sunday? There are obviously loopholes that have been overlooked or deliberately winked at in the rush to stabilize things recently. But when the smoke clears, we could see the "new" banking landscape change dramatically if banks are forced to divest billions in deposits to comply. The winners will clearly be cash cows, while the losers...
Another thing I wonder I'm wondering about: what happens when banks (which are still hoarding cash by the way) are weaned off the US government's special lender's list and no longer have virtually risk-free capital available to them? You can bet the concept of "capital formation" will take on an entirely new meaning both here and abroad. International cash flows will become more important than ever before.
Speaking of which, what happens to US Treasuries when foreign purchasers - aka China, Japan and South Korea - figure out they can get synthetic Treasuries at higher rates by purchasing any of a half-dozen bailed-out banks offering debt at higher-than Treasury rates and being collateralized by the Federal government? We could see inflation spiral out of control, creating legendary opportunities in currencies, metals and other assets that most investors presently don't give a second thought to!
And annuities? Nobody at CNBC or CNN dares ask this question. But what happens when people figure out that the companies selling these things don't have anything remotely resembling enough underlying investments to meet even the minimum guaranteed returns? Short city!
For investors who are interested in collecting stocks as opposed to harvesting returns, the answers will no doubt be unpleasant. But for those of us who are willing to ask the tough questions, we have an opportunity to laugh all the way to the bank."
(Not sure of our subscribers source on this, but very interesting)
__________
And lastly, a Floydian question: if oil prices raised the cost of transportation and fuel so exorbitantly that food prices, etc were FORCED to go up, why is it that prices are not going down now? It's an easy answer: corporation falsely perceive that advantage can be taken of the consumer in a "short cycle" down and this is a time to build profits.
Of course this makes sense, but is any part of you feeling truly violated? Any part of you wondering why gas could lower this much? Any part of you suspicious?
I hope so.
Question authority.
Monday, December 1, 2008
We are Not Breathing, but Being Breathed
The first trading day of December the market moved up strongly in 2003 through 2005, and down in 2006. We await now the "results" of Black Friday buying. We've already heard our GREED allowed us to trample an employee at a Wal-mart at opening of their store in a city Friday, all for a bargain on goods made in China, in the name of Christmas shopping.
Have I said enough?
So, what's next? We saw some strong momentum this past week, on good volume Monday and Tuesday, to the upside. People are pleased with Obama's pick for an economic team, and the credit markets are beginning to move up.
Upside still definitely has potential, but the market is now becoming over extended to the upside, and euphoria is building. It is obviously an "up market" so it may soon be time to allow a bit of fear.
Some traders hold a put for opening today, and we'll list this position as both open, and a new buy, as our hedge against the consistent upside we've seen, and because we have reached market tops. Calls may have additional strength, but the count is now 8 to the call, what would normally be overextended.
Retail sales announcement vs. more Obama announcements, and what is perceived, will run the market.
______________
We are not breathing, but being breathed. Think of this. Where does "breathing" start. Who "starts us" and keeps us going? Besides the electronic brain triggers that prompt our breathing, is there something more. The breath from God, our consciousness telling us to breathe, or what?
Amazing that 6 top scientists in a room and 6 top theologians will have no real answers. Or, if they have them, they've missed the others perspectives, the point of it all.
Have I said enough?
So, what's next? We saw some strong momentum this past week, on good volume Monday and Tuesday, to the upside. People are pleased with Obama's pick for an economic team, and the credit markets are beginning to move up.
Upside still definitely has potential, but the market is now becoming over extended to the upside, and euphoria is building. It is obviously an "up market" so it may soon be time to allow a bit of fear.
Some traders hold a put for opening today, and we'll list this position as both open, and a new buy, as our hedge against the consistent upside we've seen, and because we have reached market tops. Calls may have additional strength, but the count is now 8 to the call, what would normally be overextended.
Retail sales announcement vs. more Obama announcements, and what is perceived, will run the market.
______________
We are not breathing, but being breathed. Think of this. Where does "breathing" start. Who "starts us" and keeps us going? Besides the electronic brain triggers that prompt our breathing, is there something more. The breath from God, our consciousness telling us to breathe, or what?
Amazing that 6 top scientists in a room and 6 top theologians will have no real answers. Or, if they have them, they've missed the others perspectives, the point of it all.
Wednesday, November 26, 2008
My Goad Was to Make $5000 This Week
My goal was to make $5000.00 this week at OEX, and to quit by Wednesday noon. All I focused on, at home in Florida, sitting by the pool, was futures in the morning, general news on Bloomberg online, and the news with Brian Williams. I read no papers, and had no TV on for newsbites.
I sold 26 Dec440C for profits of 4346.00 yesterday, on the fourth day I had owned, and bought 2 Dec350P at 6.80 on Monday, doubled down, at sold at 7.40. The Dec440C I bought again at 10.90 on Tuesday, and sold same day for 13.00, netting 1260.00, and I made a quick buck of profits on the put....hitting my 5k goal for the week, and out. All three trades were profitable, and I did not make too much money. If I had held out on the 440C on Monday I "could have made" 18,000, but it is this type of thinking that breeds "GREED" and I never want to earn too much in such a short time. It's too risky.
I do not often talk about my trades, but yours. I list testimonials from subscribers, but in the case above my point is this:
1. I did not believe anything that anyone said. I just listened or read, and smiled.
2. I focused on a goal.
3. I used support/resistance and Dow projections and "worked for in/out trades." I was not greedy. I made fast decisions.
During this I knew that Obama picked a cracker jack economic team, and that Paulson came on TV and babbled about what he is doing (a trader in charge of our U.S. net worth, amazing), and Bloomberg costed out our promises to date to 7.6 trillion, not even a reality to any of us, and truly a nation now in debt to rehabilitate.
In recent weeks I've moved to the transpersonal nature of my work, which is knowing YOU, and understanding what REALLY is, not the silly half realities of Congress and the House pork bellying to get the 700 billion, or McCain "flying back." Note now that the reality is far changed, that the facts are constantly changing.
Proof may be in Citi, which 3 months ago was going to BUY bankrupt Wachovia, and now will take 300 billion plus from us to just stay afloat.
The lies are so insidious, I believe, and we are caught in so much "ballyhoo" that the real realities escape us.
In coming days I'll be sharing more of Floydism thinking, how to calm in a market, how to laugh at the facts, how to question what you have been taught. Some comments from our subscribers:
"Great writings. Your writings over the past week have been well worth the subscription fee alone. I've done more questioning of beliefs and what I've been taught in the last 2 weeks, than I have in my 29 year life.
Thanks,
Mike"
And from TP in Oregon:
"Is their more then one answer to the Rock subject?"
The answer is yes, and all are right. It is how we see something that makes it as it is. It is when we are absolute in our fact of this that we create war, and religion."
And then TP wrote again:
"Once you say a rock is hard then it can not ever be anything else easily. When you settle for a truth, it will be hard to change. :) When God talks to you, how do you know its God? Be like water, have no shape. The more I know the more I know I don't know. There ya go.."
What we know is what we both want to believe, and have been told. The very FACT that we only know so much is proof of what we do not know.
Thanks for being our subscribers. Happy Thanksgiving to you and yours. We will be back with you Monday, December 1st, 2008, with NO alert on Friday
I sold 26 Dec440C for profits of 4346.00 yesterday, on the fourth day I had owned, and bought 2 Dec350P at 6.80 on Monday, doubled down, at sold at 7.40. The Dec440C I bought again at 10.90 on Tuesday, and sold same day for 13.00, netting 1260.00, and I made a quick buck of profits on the put....hitting my 5k goal for the week, and out. All three trades were profitable, and I did not make too much money. If I had held out on the 440C on Monday I "could have made" 18,000, but it is this type of thinking that breeds "GREED" and I never want to earn too much in such a short time. It's too risky.
I do not often talk about my trades, but yours. I list testimonials from subscribers, but in the case above my point is this:
1. I did not believe anything that anyone said. I just listened or read, and smiled.
2. I focused on a goal.
3. I used support/resistance and Dow projections and "worked for in/out trades." I was not greedy. I made fast decisions.
During this I knew that Obama picked a cracker jack economic team, and that Paulson came on TV and babbled about what he is doing (a trader in charge of our U.S. net worth, amazing), and Bloomberg costed out our promises to date to 7.6 trillion, not even a reality to any of us, and truly a nation now in debt to rehabilitate.
In recent weeks I've moved to the transpersonal nature of my work, which is knowing YOU, and understanding what REALLY is, not the silly half realities of Congress and the House pork bellying to get the 700 billion, or McCain "flying back." Note now that the reality is far changed, that the facts are constantly changing.
Proof may be in Citi, which 3 months ago was going to BUY bankrupt Wachovia, and now will take 300 billion plus from us to just stay afloat.
The lies are so insidious, I believe, and we are caught in so much "ballyhoo" that the real realities escape us.
In coming days I'll be sharing more of Floydism thinking, how to calm in a market, how to laugh at the facts, how to question what you have been taught. Some comments from our subscribers:
"Great writings. Your writings over the past week have been well worth the subscription fee alone. I've done more questioning of beliefs and what I've been taught in the last 2 weeks, than I have in my 29 year life.
Thanks,
Mike"
And from TP in Oregon:
"Is their more then one answer to the Rock subject?"
The answer is yes, and all are right. It is how we see something that makes it as it is. It is when we are absolute in our fact of this that we create war, and religion."
And then TP wrote again:
"Once you say a rock is hard then it can not ever be anything else easily. When you settle for a truth, it will be hard to change. :) When God talks to you, how do you know its God? Be like water, have no shape. The more I know the more I know I don't know. There ya go.."
What we know is what we both want to believe, and have been told. The very FACT that we only know so much is proof of what we do not know.
Thanks for being our subscribers. Happy Thanksgiving to you and yours. We will be back with you Monday, December 1st, 2008, with NO alert on Friday
Tuesday, November 25, 2008
The Only Indisputable Fact is That There is No Fact
Worry does not exist. We create the emotion, create the body reaction (long and short term) and argue with ourselves on what there is to worry about. If I throw a rock at you and you see it, your perception will be altered, and your fear and dread will rise. This will manifest in adrenalin rushes.
But it is not truly real, as one could see the rock coming and "not care" (it is possible) and have no fear, only calm.
We are thusly what we decide and choose to "be, see, or experience."
The only indisputable fact is that there is no fact, only our definition that there is such a thing. A rock is NOT necessarily hard.
Metaphysical study is critical to the trader, as it is our perception (individually and collectively) that creates cause and effect.
As an example, to a religious person it is indisputable that there is a God. But there is no fact of this, only interpretation of fact. There is no physical proof of a higher being, only our desire that there be one, or our interpretation of doctrines and examples.
Religious people will argue, and are wrong. It is unprovable. Atheists and non religious people will argue factually or in anger, and are also wrong. They do NOT know there is no God, they choose to believe that there is not one, and that no fact can be proven that there is.
This means both are wrong. So, is there a God, or are we God? Or is there no God. Or, is there only one God. This "false fact" thinking is the stuff of persecution and wars. Assuming there is a God, I'm sure she's smiling at us as we struggle with our training wheels.
From the Stock Traders Almanac:
TRADING THE THANKSGIVING MARKET
“For 35 years, trading the Dow Jones Industrials using the combination of the Wed before Thanksgiving and the Friday after had a great track record, except for 2 occasions. But publishing it in 1987 was the “kiss of death and Wednesday-Friday since 1988 lost 7 of 19 times versus a Wednesday-Monday with only 5 losses. The best strategy appears to be coming into the week long and exiting into strength Friday or Monday.”
And, from the market. Citi got bailed out. Now homebuilders want a bail out, and the auto industry is still asking. I continue to see 2 trillion spent before this crisis is over, and more dollars printed to do it, and a much larger deficit. Obama has his job just now managing the crisis that was created.
The market loves any good news, being classically overextended, and took a nice ride up Monday, allowing our Dec440Calls to sell to high of 15.20, the Dow hitting 8600++. Late afternoon Monday we issued a high risk trade to the put, that may require second buys, and that anticipates a negative retail weekend.
Meanwhile, we'll project Dow tops with more upside pre-holiday, making note the market diminishes in volume pre Thanksgiving, is closed for Thanksgiving, and is simply NOT worth trading Wednesday noon one. We're building a higher risk put trade on bad retail data, and on what "could" be tops.
And a rant from my 26 year old daughter:
I'm angry. I worked hard through high school and earned a full scholarship to college, and immediately after college I used the money my parents and I had saved for those first four years to pay my way through graduate school while I began my first year teaching. I'm now in my fourth year teaching (which I drive to in my fuel efficient, money saving Honda Civic Hybrid), work my father here at the OEX, as well as tutor on the side. By living frugally and working hard I've managed to do something seemingly unheard of nowadays - I live within my means. I have a total of one credit card, which is paid off in full every month and I own everything that is in my apartment. I'm a hardworking citizen who has done everything I'm supposed to - pay my taxes, and do my part for this country by educating children every single day. And I'm angry. I'm angry that these CEOs at banks and auto companies alike are not being called out for their corruption and inefficiency. I am angry that we have to save them to save this economy and that they won't stand up, take responsibility, and say sorry. I tell my students everyday to take ownership for their actions, but how will I teach them the proper behavior when everywhere they look they see that it's fine to misbehave and mess up without taking responsibility? So, I will go to work tomorrow in my fuel efficient car and show my students again and again how to properly take ownership for your actions - the good and the bad. Hopefully I'll never have to be this angry again, because maybe the one thing we can all learn from this debacle is to take ownership of our actions.
But it is not truly real, as one could see the rock coming and "not care" (it is possible) and have no fear, only calm.
We are thusly what we decide and choose to "be, see, or experience."
The only indisputable fact is that there is no fact, only our definition that there is such a thing. A rock is NOT necessarily hard.
Metaphysical study is critical to the trader, as it is our perception (individually and collectively) that creates cause and effect.
As an example, to a religious person it is indisputable that there is a God. But there is no fact of this, only interpretation of fact. There is no physical proof of a higher being, only our desire that there be one, or our interpretation of doctrines and examples.
Religious people will argue, and are wrong. It is unprovable. Atheists and non religious people will argue factually or in anger, and are also wrong. They do NOT know there is no God, they choose to believe that there is not one, and that no fact can be proven that there is.
This means both are wrong. So, is there a God, or are we God? Or is there no God. Or, is there only one God. This "false fact" thinking is the stuff of persecution and wars. Assuming there is a God, I'm sure she's smiling at us as we struggle with our training wheels.
From the Stock Traders Almanac:
TRADING THE THANKSGIVING MARKET
“For 35 years, trading the Dow Jones Industrials using the combination of the Wed before Thanksgiving and the Friday after had a great track record, except for 2 occasions. But publishing it in 1987 was the “kiss of death and Wednesday-Friday since 1988 lost 7 of 19 times versus a Wednesday-Monday with only 5 losses. The best strategy appears to be coming into the week long and exiting into strength Friday or Monday.”
And, from the market. Citi got bailed out. Now homebuilders want a bail out, and the auto industry is still asking. I continue to see 2 trillion spent before this crisis is over, and more dollars printed to do it, and a much larger deficit. Obama has his job just now managing the crisis that was created.
The market loves any good news, being classically overextended, and took a nice ride up Monday, allowing our Dec440Calls to sell to high of 15.20, the Dow hitting 8600++. Late afternoon Monday we issued a high risk trade to the put, that may require second buys, and that anticipates a negative retail weekend.
Meanwhile, we'll project Dow tops with more upside pre-holiday, making note the market diminishes in volume pre Thanksgiving, is closed for Thanksgiving, and is simply NOT worth trading Wednesday noon one. We're building a higher risk put trade on bad retail data, and on what "could" be tops.
And a rant from my 26 year old daughter:
I'm angry. I worked hard through high school and earned a full scholarship to college, and immediately after college I used the money my parents and I had saved for those first four years to pay my way through graduate school while I began my first year teaching. I'm now in my fourth year teaching (which I drive to in my fuel efficient, money saving Honda Civic Hybrid), work my father here at the OEX, as well as tutor on the side. By living frugally and working hard I've managed to do something seemingly unheard of nowadays - I live within my means. I have a total of one credit card, which is paid off in full every month and I own everything that is in my apartment. I'm a hardworking citizen who has done everything I'm supposed to - pay my taxes, and do my part for this country by educating children every single day. And I'm angry. I'm angry that these CEOs at banks and auto companies alike are not being called out for their corruption and inefficiency. I am angry that we have to save them to save this economy and that they won't stand up, take responsibility, and say sorry. I tell my students everyday to take ownership for their actions, but how will I teach them the proper behavior when everywhere they look they see that it's fine to misbehave and mess up without taking responsibility? So, I will go to work tomorrow in my fuel efficient car and show my students again and again how to properly take ownership for your actions - the good and the bad. Hopefully I'll never have to be this angry again, because maybe the one thing we can all learn from this debacle is to take ownership of our actions.
Monday, November 24, 2008
The Collapse of Ginko Financial
In my metaphysical dialogues on "what do you want" trader Mike got it:
"I finally got your rock analogy. A rock is only hard, because of my perception and what I've been taught.
So in a sense I'm nobody, not rich, not poor - I'm just the perception of myself. That's mind boggling.......almost scary.
Seems like a circle is formed. So if I'm only my pereception, then what I am I? Does it even matter?"
It does matter. More importantly, what matters is the realization one must have that "what we perceive to be real" is only our perception at that moment.
Here's an example. Close your eyes and think of a red rose. Visualize it. Now open your eyes. Can you remember what you saw? Of course, you can. But, if we were to give you an MRI right that moment, a full brain scan, we would find NO record or direct memory of a "red rose", only electrical impulses, light, and cells. Where is the red rose? Was it not "visualized"?
Religious people will say we do know, and that this is "wrong" thinking. Scientists will say that we only can't see the rose in the MRI because we are not yet advanced enough to see all we should see. Floydians will say that what we saw was consciousness, outside of our brains, and that it was our consciousness (outside of our body and minds) that "created the vision" of the red rose.
All of us are right. Those that believe only "they are right" are the absolutists, and these see "facts" as indisputable, and non corruptible. These are those with limited visions, that cannot believe there can be anything outside of what they believe (doctrines), have been taught (opinion and partial facts), or choose to believe.
Smart traders see beyond "false facts" or "what is" to understand that "what is" is only what you see".
____
We hit our lowest lows in 11 years last Thursday. Be sure to be healthy in your anger, but have it. Place blame. Think out what and who caused this, and HOW you were a part of it. Learn from the experience. As an example, 4 years ago Bushy re-elected on "fear of terrorism", and "fighting our mortal enemies, the evil ones" and America fell for it hook, line, and sinker.
Think what would have happened if Gore had become President 8 years ago. What would be different? Would it be better? Worse?
As you blame Wall Street, study health industry companies. How have they done during the 8 year "end of health insurance" of our last administration. Why are drugs cheaper in Canada than the U.S.? Why could we spend trillions in Iraq, and they now want us out, and not created a controlled health care system that does not bankrupt our citizenry and corporations? Why was waterboarding allowed? Why was wiretapping allowed? What did it accomplish?
This is the basic "lack of respect" and questioning of authority that must take place. If the young people in Germany had questioned authority, rather than blindly following their parents, Hitler may not have gained power.
The parallels are in our ability to "believe" and be "led" blindly, and our justification of false facts (such as "even though there were no WMD in Iraq Saddam was evil so it good that we destroyed him". The logic is faulty, but the patriotism makes the logic secondary, and patriotism is a way of thinking, and an emotion.
____
By mid December we believe the hedge funds will have cashed out, and they have led this severe decline, cashing out to cover the world cashing out on them. Fear is rampant. We believe another bottom test highly likely, after some upsurge (or vice versa) before market update swings.
And, from Mike Gibbons, at Breakoutwatch.com, who has good perceptions of the market:
The markets rallied strongly on Friday after the news that Tim Geithner would become Treasury Secretary. We can hope that the rally continues into next week as the rest of the Obama economics team is announced. At least Geithner already has an influential job as President of the New York Fed and can therefore have a strong influence on policy makers during the interregnum. Whether or not that influence will be positive remains to be seen. As a member of the Troika (Paulson, Bernanke and Geithner) that have been in charge of managing the fiasco so far I doubt this is change we can believe in. That aside, perception is all important in restoring confidence, so we must hope that the perception in the markets will continue to be that he is someone who can make a positive difference.
Before Friday's rally the markets set a new low and the trend of lower lows and lower highs continues as the markets continue to search for a bottom. A money manager I respect told me "My take is that after the hedge funds are finished their forced selling, hopefully by mid December, the selling pressure will be off and some sideline money will come back into the market." He thinks money will rotate into deep value stocks (but he's a value investor) and the ensuing short squeeze will force hedge funds to cover their shorts providing a massive rally. There is certainly money on the sidelines nervous that it will miss the rapid upswing, and many shorts afraid of being squeezed, as demonstrated by the intraday moves of 10-14% recently. AAII data shows that individual investors have reduced their allocations to stocks to well below the 60% long term mean and when that money comes flooding back we are likely to see many breakouts move rapidly to the upside.
Finally, a bit of insight from the "youth" side of this operation, my 26 year old daughter:
Much of what has been seen in our markets recently was observed first on the internet, economists claim. The 2007 collapse of Ginko Financial, a virtual investment bank located in the online game "Second Life" was primarily due to the unfettered, unregulated capitalism. People opened accounts within this virtual bank, which was claiming the money would earn an astronomical interest rate of more than 40%. Eventually panicked investors began withdrawing their virtual money, at a rate of roughly 250 Linden dollars to one U.S. dollar, yet the bank did not have the reserves to pay up. By the end of the crash, nearly $750,000 in actual U.S. dollars were gone, and players who had legally paid U.S. dollars for their Linden dollars were hit hard. "Second Life" is an interesting version of gaming in which players are actually entrepreneurs who have access to virtual tools with which they can actually create their own products, services, buildings, and more. Supply and demand exists within this virtual world and parallels our own very closely. Certainly, this virtual land is one to watch as it teaches us much about free markets running unregulated.
"I finally got your rock analogy. A rock is only hard, because of my perception and what I've been taught.
So in a sense I'm nobody, not rich, not poor - I'm just the perception of myself. That's mind boggling.......almost scary.
Seems like a circle is formed. So if I'm only my pereception, then what I am I? Does it even matter?"
It does matter. More importantly, what matters is the realization one must have that "what we perceive to be real" is only our perception at that moment.
Here's an example. Close your eyes and think of a red rose. Visualize it. Now open your eyes. Can you remember what you saw? Of course, you can. But, if we were to give you an MRI right that moment, a full brain scan, we would find NO record or direct memory of a "red rose", only electrical impulses, light, and cells. Where is the red rose? Was it not "visualized"?
Religious people will say we do know, and that this is "wrong" thinking. Scientists will say that we only can't see the rose in the MRI because we are not yet advanced enough to see all we should see. Floydians will say that what we saw was consciousness, outside of our brains, and that it was our consciousness (outside of our body and minds) that "created the vision" of the red rose.
All of us are right. Those that believe only "they are right" are the absolutists, and these see "facts" as indisputable, and non corruptible. These are those with limited visions, that cannot believe there can be anything outside of what they believe (doctrines), have been taught (opinion and partial facts), or choose to believe.
Smart traders see beyond "false facts" or "what is" to understand that "what is" is only what you see".
____
We hit our lowest lows in 11 years last Thursday. Be sure to be healthy in your anger, but have it. Place blame. Think out what and who caused this, and HOW you were a part of it. Learn from the experience. As an example, 4 years ago Bushy re-elected on "fear of terrorism", and "fighting our mortal enemies, the evil ones" and America fell for it hook, line, and sinker.
Think what would have happened if Gore had become President 8 years ago. What would be different? Would it be better? Worse?
As you blame Wall Street, study health industry companies. How have they done during the 8 year "end of health insurance" of our last administration. Why are drugs cheaper in Canada than the U.S.? Why could we spend trillions in Iraq, and they now want us out, and not created a controlled health care system that does not bankrupt our citizenry and corporations? Why was waterboarding allowed? Why was wiretapping allowed? What did it accomplish?
This is the basic "lack of respect" and questioning of authority that must take place. If the young people in Germany had questioned authority, rather than blindly following their parents, Hitler may not have gained power.
The parallels are in our ability to "believe" and be "led" blindly, and our justification of false facts (such as "even though there were no WMD in Iraq Saddam was evil so it good that we destroyed him". The logic is faulty, but the patriotism makes the logic secondary, and patriotism is a way of thinking, and an emotion.
____
By mid December we believe the hedge funds will have cashed out, and they have led this severe decline, cashing out to cover the world cashing out on them. Fear is rampant. We believe another bottom test highly likely, after some upsurge (or vice versa) before market update swings.
And, from Mike Gibbons, at Breakoutwatch.com, who has good perceptions of the market:
The markets rallied strongly on Friday after the news that Tim Geithner would become Treasury Secretary. We can hope that the rally continues into next week as the rest of the Obama economics team is announced. At least Geithner already has an influential job as President of the New York Fed and can therefore have a strong influence on policy makers during the interregnum. Whether or not that influence will be positive remains to be seen. As a member of the Troika (Paulson, Bernanke and Geithner) that have been in charge of managing the fiasco so far I doubt this is change we can believe in. That aside, perception is all important in restoring confidence, so we must hope that the perception in the markets will continue to be that he is someone who can make a positive difference.
Before Friday's rally the markets set a new low and the trend of lower lows and lower highs continues as the markets continue to search for a bottom. A money manager I respect told me "My take is that after the hedge funds are finished their forced selling, hopefully by mid December, the selling pressure will be off and some sideline money will come back into the market." He thinks money will rotate into deep value stocks (but he's a value investor) and the ensuing short squeeze will force hedge funds to cover their shorts providing a massive rally. There is certainly money on the sidelines nervous that it will miss the rapid upswing, and many shorts afraid of being squeezed, as demonstrated by the intraday moves of 10-14% recently. AAII data shows that individual investors have reduced their allocations to stocks to well below the 60% long term mean and when that money comes flooding back we are likely to see many breakouts move rapidly to the upside.
Finally, a bit of insight from the "youth" side of this operation, my 26 year old daughter:
Much of what has been seen in our markets recently was observed first on the internet, economists claim. The 2007 collapse of Ginko Financial, a virtual investment bank located in the online game "Second Life" was primarily due to the unfettered, unregulated capitalism. People opened accounts within this virtual bank, which was claiming the money would earn an astronomical interest rate of more than 40%. Eventually panicked investors began withdrawing their virtual money, at a rate of roughly 250 Linden dollars to one U.S. dollar, yet the bank did not have the reserves to pay up. By the end of the crash, nearly $750,000 in actual U.S. dollars were gone, and players who had legally paid U.S. dollars for their Linden dollars were hit hard. "Second Life" is an interesting version of gaming in which players are actually entrepreneurs who have access to virtual tools with which they can actually create their own products, services, buildings, and more. Supply and demand exists within this virtual world and parallels our own very closely. Certainly, this virtual land is one to watch as it teaches us much about free markets running unregulated.
Friday, November 21, 2008
You Never See Yourself Die in a Dream
According to psychologists and sleep specialists you will never see yourself die in a dream. Think about this. In your dream you may be in a prolonged high jeopardy situation, but within historical patterns of dream analysis you will not die. It is said that even in dreams the human ego remains too stubborn to admit to its mortality.
Recognizing that how you see yourself is a culmination of how you have had experiences, interpreted them, and "become" something is the most important Zen Trading rule you will gain. You do NOT know who you are.
You are actually not even what you think you are. No one is. Our reality is ONLY what we see it to be, not necessarily all, more or less than it is.
It is our perception that a rock is hard. It is NOT a reality. The sooner you can see this, the more you fight the logic that "of course the rock is hard" the faster you can become who you are, seeing rather than just believing.
______
Some analysis of stocks shows the S&P 09 earnings averaging at $87 a share. Under worsening conditions this could move to $67.00 a share, suggesting that stocks are now becoming a bargain.
There is a premise here however that S&P consensus yield is 8% (averaged shares), and could hit 10% if the S &P 500 falls to 680. Smart economists, or Floydian disciples, believe that stock prices are becoming a bargain, but will have more opportunity at lower prices, WHEN earnings forecasts, built on optimism
Many traders wrote yesterday with the FEAR that the market will drop below 7700, and follow all the chartists doomsaying predictions of a Dow drop to 6400 or less. Magazines and newspapers now show pictures of Warren Buffet looking worried and predict the Great Depression 2.
Fear leads our market.
Theoretically we believe there is a 40% chance of a market downturn to the 7200 or lower area, not because fundamentals aren't strong, or because stocks are too expensive, but simply on babbling FEAR and doomsayers.
The lack of a Detroit automakers bail out is affecting the market in fear, and the idiot CEOS show up on private planes to ask for money. Sigh. Of course, Congress does not understand anything, Paulson lied on the 700 billion, and the financial services industry is in turmoil.
What to do? Either stop trading, or take straddle trades, and tight profits. This is a market even the market does not really understand.
We leave an open signal to the call, instructed below. The Dec300P hit lows of 5.05 in early trading and could have sold to highs of 10.00, for yet another profitable day. We will hold calls thru next Wednesday.
WE are now led as much by fear as reality.
Recognizing that how you see yourself is a culmination of how you have had experiences, interpreted them, and "become" something is the most important Zen Trading rule you will gain. You do NOT know who you are.
You are actually not even what you think you are. No one is. Our reality is ONLY what we see it to be, not necessarily all, more or less than it is.
It is our perception that a rock is hard. It is NOT a reality. The sooner you can see this, the more you fight the logic that "of course the rock is hard" the faster you can become who you are, seeing rather than just believing.
______
Some analysis of stocks shows the S&P 09 earnings averaging at $87 a share. Under worsening conditions this could move to $67.00 a share, suggesting that stocks are now becoming a bargain.
There is a premise here however that S&P consensus yield is 8% (averaged shares), and could hit 10% if the S &P 500 falls to 680. Smart economists, or Floydian disciples, believe that stock prices are becoming a bargain, but will have more opportunity at lower prices, WHEN earnings forecasts, built on optimism
Many traders wrote yesterday with the FEAR that the market will drop below 7700, and follow all the chartists doomsaying predictions of a Dow drop to 6400 or less. Magazines and newspapers now show pictures of Warren Buffet looking worried and predict the Great Depression 2.
Fear leads our market.
Theoretically we believe there is a 40% chance of a market downturn to the 7200 or lower area, not because fundamentals aren't strong, or because stocks are too expensive, but simply on babbling FEAR and doomsayers.
The lack of a Detroit automakers bail out is affecting the market in fear, and the idiot CEOS show up on private planes to ask for money. Sigh. Of course, Congress does not understand anything, Paulson lied on the 700 billion, and the financial services industry is in turmoil.
What to do? Either stop trading, or take straddle trades, and tight profits. This is a market even the market does not really understand.
We leave an open signal to the call, instructed below. The Dec300P hit lows of 5.05 in early trading and could have sold to highs of 10.00, for yet another profitable day. We will hold calls thru next Wednesday.
WE are now led as much by fear as reality.
Thursday, November 20, 2008
Doomsayers Predict Moves to 6400
The man who was mentioned in my commentary yesterday, the one who wanted to be a beachcomber, quit his job, moved to Florida with his wife, and he took "his new job." His wife found other employment in the new city.
Today, ten years from the interview, he "beachcombs" an area of a Northern Florida beach, has a small "chair and windsurfer" business on the beach, and trades OEX options once a week. He makes a bit more money than he did make, and he's healthy and happy.
It's a happy story ONLY because he made a decision he wanted to make, and changed his life to accommodate his desires.
Doing what you want may lengthen, or shorten, your life. Either answer is good.
Doing what you don't want, and repeating it, is what we all seem to choose to do, and it makes us stressed, miserable, and "acting out" in unhappiness. You are what you decide. This could be the most important self help statement you'll ever read.
What you WANT does not mean "buying stuff" or possessions. It means learning who you are and what you WANT TO BE AND DO.
____
As you learn about yourself much of what you are learning is the undoing of what you have been told, and have created about yourself. For example, many dog lovers know that dogs are powerless and innocent, and it is how we treat the humblest amongst us that dominates our souls.
Often loving a dog is an opportunity for a lost or selfish human heart to be redeemed.
When it is said that all things happen for a reason, it may be true, but it is the "unreality of the reason" that makes it the most reason. In our infinite search we are learning more who we are, and what we have made ourselves.
Only when we learn that nothing is really real do we begin to see things as they are.
This is the most true in the Zen of Trading. And will be what you argue most, but remember, a rock may not be hard. It is only hard because of our "facts", and we may not have all the facts.
_____
Conservatives, for example must decide whether they really believe in less government or if they think the government should control every uterus. When we control in issues that are "not controllable" we waste.
My favorite example is our "just say no to drugs" from dear Nancy Reagan. Any psychologist alive laughed out loud at the commentary, as it breeds the exact opposite of what we want. Instead, WHY do people use drugs?
It is this lack of logic to this thinking that destroys true policies.
And lastly, more doomsayers talk on moves to 6400:
http://www.cnbc.com/id/27799264
The market yesterday hit 7847, and highs of 8550. We entered a new position to the Dec440C.
Study our Dow projections carefully, we're re-editing steps. Doomsayers see a stronger and deeper downturn. Floyd believes there will be an automotive bail out of some sorts, and that there is a 60% liklihood of more bottom testing, but not for a long period. Although I am not bullish, nor am I bearish, and believe the analysts may be creating the negative hype. Truly NOTHING is good economically, I realize, but a bail out or any "good news" may build a short term euphoria. We'll list a put for trading today, but note again the extreme conditions of the buy.
____
It is interesting to note, of course, that the CEOs of the Big Three chose to fly to Washington in private corporate jets to beg for the $25 billion in public money. The estimate for the private flight for the GM CEO was roughly $20,000 dollars round trip. Notice the lack of intelligent and personal responsibility these CEOs are showing by burning through this money, money that easily could be used for their ailing companies.
Today, ten years from the interview, he "beachcombs" an area of a Northern Florida beach, has a small "chair and windsurfer" business on the beach, and trades OEX options once a week. He makes a bit more money than he did make, and he's healthy and happy.
It's a happy story ONLY because he made a decision he wanted to make, and changed his life to accommodate his desires.
Doing what you want may lengthen, or shorten, your life. Either answer is good.
Doing what you don't want, and repeating it, is what we all seem to choose to do, and it makes us stressed, miserable, and "acting out" in unhappiness. You are what you decide. This could be the most important self help statement you'll ever read.
What you WANT does not mean "buying stuff" or possessions. It means learning who you are and what you WANT TO BE AND DO.
____
As you learn about yourself much of what you are learning is the undoing of what you have been told, and have created about yourself. For example, many dog lovers know that dogs are powerless and innocent, and it is how we treat the humblest amongst us that dominates our souls.
Often loving a dog is an opportunity for a lost or selfish human heart to be redeemed.
When it is said that all things happen for a reason, it may be true, but it is the "unreality of the reason" that makes it the most reason. In our infinite search we are learning more who we are, and what we have made ourselves.
Only when we learn that nothing is really real do we begin to see things as they are.
This is the most true in the Zen of Trading. And will be what you argue most, but remember, a rock may not be hard. It is only hard because of our "facts", and we may not have all the facts.
_____
Conservatives, for example must decide whether they really believe in less government or if they think the government should control every uterus. When we control in issues that are "not controllable" we waste.
My favorite example is our "just say no to drugs" from dear Nancy Reagan. Any psychologist alive laughed out loud at the commentary, as it breeds the exact opposite of what we want. Instead, WHY do people use drugs?
It is this lack of logic to this thinking that destroys true policies.
And lastly, more doomsayers talk on moves to 6400:
http://www.cnbc.com/id/27799264
The market yesterday hit 7847, and highs of 8550. We entered a new position to the Dec440C.
Study our Dow projections carefully, we're re-editing steps. Doomsayers see a stronger and deeper downturn. Floyd believes there will be an automotive bail out of some sorts, and that there is a 60% liklihood of more bottom testing, but not for a long period. Although I am not bullish, nor am I bearish, and believe the analysts may be creating the negative hype. Truly NOTHING is good economically, I realize, but a bail out or any "good news" may build a short term euphoria. We'll list a put for trading today, but note again the extreme conditions of the buy.
____
It is interesting to note, of course, that the CEOs of the Big Three chose to fly to Washington in private corporate jets to beg for the $25 billion in public money. The estimate for the private flight for the GM CEO was roughly $20,000 dollars round trip. Notice the lack of intelligent and personal responsibility these CEOs are showing by burning through this money, money that easily could be used for their ailing companies.
Wednesday, November 19, 2008
A Man Came to Me Years Ago...
If we are not happy, we must know why. Most people spend their lives doing what they do not want, and wonder why they are unhappy. The key psychological question I ask of clients is this: What do you want?
Most answer with "things" or possessions, a simplistic answer that breeds the "I want what I want when I want it" thinking, and leads to possessions, which really make no one happy.
A man came to me years ago and I asked this question. He was a 40 year highly successful engineer in industrial plastics, married, no kids. His wife worked. After months of therapy my "what do you want" question led to a "real answer"...I want to be a guy that sells lawn chairs and stuff on a beach, and to work on the beach all day. "I want to be a beachcomber."
As you can imagine this was radical, hard on his thinking, and most likely something he would never do.
Thusly, I asked two questions:
1. Why can you not do what you want?
2. Why is this what you want?
Write me. What do you think he answered, what do you think he did, and what do you think the "point" to my questions were. Learning why and how will help you trade.
Why do you do things that you do not want to do?
As you trade, learn about you.
Now, to shift to what chartists see, and what the market "could do." I list below two commentaries. The first discusses "market lows," and the second defines who is helping Obama plan his Presidency. George Soros is one of Floyd's financial and philosophical idols and I'm pleased to see Obama enlist true thinkers that understand money and the world as he strategizes. The end of Cheney and Wolfowitz, and perhaps true world strategy thinking.
And to shift to yesterday. The market hit highs of 8517, and lows of 8065. All three of our trades, open and new, were profitable.
1. The Dec380P hit highs of 5.20
2. The Dec440C, a new buy, was available as low as 14.00, and hit 20.20.
3. The Dec480C, our open trade, hit highs of 7.00
We are three profitable trades for three with these issues, and have NO open positions to start the day.
Most answer with "things" or possessions, a simplistic answer that breeds the "I want what I want when I want it" thinking, and leads to possessions, which really make no one happy.
A man came to me years ago and I asked this question. He was a 40 year highly successful engineer in industrial plastics, married, no kids. His wife worked. After months of therapy my "what do you want" question led to a "real answer"...I want to be a guy that sells lawn chairs and stuff on a beach, and to work on the beach all day. "I want to be a beachcomber."
As you can imagine this was radical, hard on his thinking, and most likely something he would never do.
Thusly, I asked two questions:
1. Why can you not do what you want?
2. Why is this what you want?
Write me. What do you think he answered, what do you think he did, and what do you think the "point" to my questions were. Learning why and how will help you trade.
Why do you do things that you do not want to do?
As you trade, learn about you.
Now, to shift to what chartists see, and what the market "could do." I list below two commentaries. The first discusses "market lows," and the second defines who is helping Obama plan his Presidency. George Soros is one of Floyd's financial and philosophical idols and I'm pleased to see Obama enlist true thinkers that understand money and the world as he strategizes. The end of Cheney and Wolfowitz, and perhaps true world strategy thinking.
And to shift to yesterday. The market hit highs of 8517, and lows of 8065. All three of our trades, open and new, were profitable.
1. The Dec380P hit highs of 5.20
2. The Dec440C, a new buy, was available as low as 14.00, and hit 20.20.
3. The Dec480C, our open trade, hit highs of 7.00
We are three profitable trades for three with these issues, and have NO open positions to start the day.
Tuesday, November 18, 2008
Consumers and Businesses are Not Spending Enough
Because consumers and businesses are not spending enough money to keep the economy growing the government will clearly be required to do the spending itself. Neocons and Republicans will argue, stupidly, for "free enterprise reigning" and that "bail out will socialize our country". Logistically all of this is untrue.
We are a consumer spending driven economy, for whatever right or wrong reason. U.S. economist Jan Hatzius estimates that private spending will drop by at least 6% of GDP over the next two or year. To keep that retrenchment from yanking the economy downward into real depression, the government will have to step in. Recent supply side economic thinking has been that stimulus was pointless have been proven dead wrong. Supply siders argued that American citizens would see through it and restrict spending to prepare for tax increases or spending cuts. When Emperor Bush provided stimulus, however, in 2001 stimulus DID work short term, as Americans were not far sighted enough to figure out their taxes were being raised in other areas. Now, more and more Americans realize they were defrauded, and the tax incentives or "cuts" they received were fraudulent, as their own cost of goods (property , state, and sales taxes) rose, and the net cost of products they bought increased. In other words, we spend the money we get back paying off credit card debt,and not spending more.
It is very important we realize that this recession is not "from a book." Typically by the time economists historically agree a "recession" is defined it's half over. Now, we're faltering between recession and depression and almost all economists agree that we will have only a prolonged return to health, and many economists now have a changing definition of "health." This means they have no fricking idea what's going on.
The market yesterday hit highs of 8611, and lows of 8207. Study this range around your Dow projections. We continue to believe two way trades may be possible, with the put overextended, but another bottom test potentially occurring.
Lastly, I would like to build a bit of disrespect again. Remember slimey old Halliburton, the only bidder for Iraq reconstruction. Seemed fishy? Shameful?
Now watch the Bank of New York Mellon, which is acting as our restructuring agent for the government bail out. Note it was all done before Bushy left office, note that Paulson is worth 850 million and used to be an option trader.
Have suspicion and begin your due diligence. Analyze who some of the players are that the Republicans put in key positions to flow this money out. You'll begin to see a "game has been played", and it will now be up to Obama to sort out the slime.
We are a consumer spending driven economy, for whatever right or wrong reason. U.S. economist Jan Hatzius estimates that private spending will drop by at least 6% of GDP over the next two or year. To keep that retrenchment from yanking the economy downward into real depression, the government will have to step in. Recent supply side economic thinking has been that stimulus was pointless have been proven dead wrong. Supply siders argued that American citizens would see through it and restrict spending to prepare for tax increases or spending cuts. When Emperor Bush provided stimulus, however, in 2001 stimulus DID work short term, as Americans were not far sighted enough to figure out their taxes were being raised in other areas. Now, more and more Americans realize they were defrauded, and the tax incentives or "cuts" they received were fraudulent, as their own cost of goods (property , state, and sales taxes) rose, and the net cost of products they bought increased. In other words, we spend the money we get back paying off credit card debt,and not spending more.
It is very important we realize that this recession is not "from a book." Typically by the time economists historically agree a "recession" is defined it's half over. Now, we're faltering between recession and depression and almost all economists agree that we will have only a prolonged return to health, and many economists now have a changing definition of "health." This means they have no fricking idea what's going on.
The market yesterday hit highs of 8611, and lows of 8207. Study this range around your Dow projections. We continue to believe two way trades may be possible, with the put overextended, but another bottom test potentially occurring.
Lastly, I would like to build a bit of disrespect again. Remember slimey old Halliburton, the only bidder for Iraq reconstruction. Seemed fishy? Shameful?
Now watch the Bank of New York Mellon, which is acting as our restructuring agent for the government bail out. Note it was all done before Bushy left office, note that Paulson is worth 850 million and used to be an option trader.
Have suspicion and begin your due diligence. Analyze who some of the players are that the Republicans put in key positions to flow this money out. You'll begin to see a "game has been played", and it will now be up to Obama to sort out the slime.
Monday, November 17, 2008
Accountability Should be Escalated
There is much to think about. A market that begins capitulation, and rises almost 600 points in a day, after dropping 200, and the next day dropping 300 points, all in a 10 minute close sell off.
An economy in shatters. A government that has borrowed 700 billion from its citizens, and already changed the rules on where the money will go.
And on and on.
We are now a world led by fear, and the fear of money is affecting our psychological psyches. Smart citizens worldwide are fearful.
"Nov. 15 (Bloomberg) -- General Motors Corp., burning through cash as sales slump, would cost the government as much as $200 billion should the biggest U.S. automaker be forced to liquidate, a forecasting firm estimated.
A GM collapse would mean ``more aid to specific states like Michigan, Ohio, and Indiana, and more money into unemployment and extended benefits,''Nariman Behravesh, chief economist at IHS Global Insight Inc. in Lexington, Massachusetts, said yesterday in an interview.
Behravesh's projection of $100 billion to $200 billion in costs dwarfs the $25 billion industry bailout plan that will be debated in Congress next week to prop up Detroit-based GM, Ford Motor Co. and Chrysler LLC. The drain on taxpayers from a rescue or a GM failure is a central issue for U.S. lawmakers."
Floyd-There is no choice here. If we let free enterprise reign each of our American car companies will bankrupt, sending ripples through the American economy we cannot imagine. Conservatives will argue that former tariffs or lack of tariffs allowed foreign cars to enter our mainstream; realists will compare a Toyota Camry Hybrid to a Chevy Tahoe, or better yet, the "I wanna be a soldier car", the Tahoe camouflaged as a a Hummer, to drive the city streets to buy bottled water, and we will know.
After Paulson is fired, in my dreams, each President and all senior executives of American car companies should be fired, and the executive level staffed with new faces. A true "board of directors" (what the U.S. is) would not allow the people that got us into this to remain. Accountability should be escalated.
An economy in shatters. A government that has borrowed 700 billion from its citizens, and already changed the rules on where the money will go.
And on and on.
We are now a world led by fear, and the fear of money is affecting our psychological psyches. Smart citizens worldwide are fearful.
"Nov. 15 (Bloomberg) -- General Motors Corp., burning through cash as sales slump, would cost the government as much as $200 billion should the biggest U.S. automaker be forced to liquidate, a forecasting firm estimated.
A GM collapse would mean ``more aid to specific states like Michigan, Ohio, and Indiana, and more money into unemployment and extended benefits,''Nariman Behravesh, chief economist at IHS Global Insight Inc. in Lexington, Massachusetts, said yesterday in an interview.
Behravesh's projection of $100 billion to $200 billion in costs dwarfs the $25 billion industry bailout plan that will be debated in Congress next week to prop up Detroit-based GM, Ford Motor Co. and Chrysler LLC. The drain on taxpayers from a rescue or a GM failure is a central issue for U.S. lawmakers."
Floyd-There is no choice here. If we let free enterprise reign each of our American car companies will bankrupt, sending ripples through the American economy we cannot imagine. Conservatives will argue that former tariffs or lack of tariffs allowed foreign cars to enter our mainstream; realists will compare a Toyota Camry Hybrid to a Chevy Tahoe, or better yet, the "I wanna be a soldier car", the Tahoe camouflaged as a a Hummer, to drive the city streets to buy bottled water, and we will know.
After Paulson is fired, in my dreams, each President and all senior executives of American car companies should be fired, and the executive level staffed with new faces. A true "board of directors" (what the U.S. is) would not allow the people that got us into this to remain. Accountability should be escalated.
Friday, November 14, 2008
Metaphysics and Emotion
On to metaphysics and emotion. Here's a Floydian line to consider:
*Women can always have sex. Men cannot. This is the core difference.
By this I mean that women are always desired and that if they wanted sex can always find a man, anyway in the world, that also wants sex.
Men, to the opposite, may always want sex, but are not wanted, and must pursue.
This means, to me, that men always "want" and women are, or can be, always "wanted". These core differences shake our destinies.
It is this same way in learning and studying the market. Men and women have core desires to succeed, to "win", and to "be right." Men, I believe, have more of this "hunter" methodology deeply engraved in their pysches and biases, and often struggle with "winning" and "being right." Women do not have this same intellectual drive to "win," unless they have become "manly." It's important and interesting.
Learning who we are, and what we deal with, helps us with the emotions of trading.
My 26 old daughter's perspective -
It's your commentary, but from the perspective of a woman growing up in the 1990s and 2000s there is plenty of hunter mentality in women nowadays. Nearly as much so as men. The problem is men don't see it yet and at some point it'll change a lot of this world. The perception of having this desire is what men see as being "manly," but women have always had it on some level and it's growing more and more every day - we just still know how to hide it and market it differently than men are used to seeing. Not that this is necessarily a good thing, but it definitely exists nowadays.
Nov
From The S and A Short Report, responding to the 400 point 11/13. Pay careful attention to the commentary on Paulson's great new "bait and switch program with our deficit dollar bailout.
"Wow. Yesterday was a remarkably brutal trading day.
My power went out shortly after Treasury Secretary Paulson finished explaining the Bait & Switch bailout program. So I didn't see much of the afternoon session.
I'm stunned by the carnage in the market.
The selling was broad based. It was pervasive. And it was relentless.
Of the 100 or so industry sectors, none were up on the day. It was a wholesale liquidation of everything. Financial stocks made new lows. Oil broke down. Gold and silver sold off. And many components of the Dow Jones Industrial Average are on the verge of becoming penny stocks.
Then, just to rub a little salt in the wound, after the close yesterday, Intel lowered revenue guidance. Business is weak in all areas and in all geographic regions.
The stock market futures sold off on the news. And I spent much of the early evening slapping myself on the back of the head for holding a few new long positions overnight.
But... there are some positive signs.
A tremendous amount of bullish pressure is building in many of the momentum indicators I follow. The S&P 500 is nearly 100 points below its 20-day exponential moving average – a magnet from which the index rarely strays more than 30 points. And the sentiment among CNBC anchors is as bearish as I've ever seen it.
All of this points to a bounce. And a bounce from this depressed level could yield 200 or so points on the S&P 500."
Gain a lack of respect. Paulson is worth 850 million, and ran a large brokerage. He is our Sec. of the Treasury. Bernanke is a college professor who has never had a real job. Greenspan is a disciple of Ayn Rand, and practiced supply side bubble economics. The Feds can't even define where the most pressing issues are, or what they have been. Congress actually thought they understood what they were voting on.
The Federal Reserve should be disbanded.
Let's hope that Obama has the smarts to fire these idiots and truly run this like a business. Shame on us for allowing this to happen.
QUESTION AUTHORITY. Here's why:
(CBS/AP) While the Bush administration shifts course on its $700 billion rescue plan, Congress is examining whether even bigger changes should be made in the program in light of the deteriorating economy and soaring mortgage foreclosures.
The debate may not be resolved until President-elect Barack Obama takes office on Jan. 20 and pursues policies for administering the rescue program that are likely to be more closely aligned with his Democratic allies in Congress.
In anticipation of the change of administrations, Democrats were holding hearings in both the House and Senate on Thursday examining various aspects of the most serious financial crisis to hit the country in 70 years.
That crisis was publically declared a recession on Thursday by a major global economic cooperative, the Organization for Economic Cooperation and Development, of which the United States is one of 20 members.
The Paris-based OECD said in a statement that the economies of the U.S., Japan, and Europe were in recession, and the developed world's collective economy was on track to shrink 0.3 percent during 2009.
The House Oversight Committee was examining the role that hedge funds may have played in recent market turbulence. Among those scheduled to testify was billionaire investor George Soros, chairman of Soros Fund Management.
Meanwhile, the Senate Banking Committee will hear from executives of a number of financial institutions including Bank of America, JPMorgan Chase and Wells Fargo on the issue of how the government's $700 billion rescue effort is operating and particularly whether the government should be requiring more commitments on the use of the money to address rising mortgage foreclosure problems.
CBS News investigative correspondent Sharyl Attkisson reports that the massive tax-payer bailout of the banking system - sold to the American public as a transparent your tax dollars are buying massive shares in some of the nation's biggest and most successful banks - with virtually no strings attached. And that's all allowed under Congress' plan.
Attkisson and the CBS News investigative team decided to ask the banks directly what they are doing with Americans' tax money. Their responses were, on the whole, less than enlightening.
Treasury Secretary Henry Paulson announced Wednesday that the administration had decided to scrap what had originally been the centerpiece of the program - a proposal to buy troubled assets to get them off the books of banks as a way of promoting increased lending.
Instead, Paulson said the administration will proceed with an alternative plan to spend $250 billion to buy stock in the banks as a way of bolstering their financial situation and accomplishing the same goal - getting the institutions to return to more normal lending.
Despite shifting from the original plan, Paulson insisted he did not mislead Congress, reports CBS News business correspondent Anthony Mason.
I will never apologize for changing an approach or strategy when the facts change.
Treasury Secretary Henry Paulson
"I will never apologize for changing an approach or strategy when the facts change," he said.
However, critics contend the administration should be imposing more restrictions on the stock purchases as a way of insuring that the banks will use the government resources to increase lending rather than just hoarding the cash or using it to acquire other banks or boost dividends for stockholders.
Sen. Charles Schumer, D-N.Y., said even with the changes in the rescue plan he was still disappointed in the administration's unwillingness to issue strict guidelines to ensure that participating firms use the funds to increase lending.
"In these difficult times, fear is still overwhelming confidence," Schumer told reporters on Tuesday.
More reports detailing the difficulties facing the economy were expected on Thursday with the Labor Department releasing its latest look at weekly applications for unemployment benefits, the Commerce Department reporting on the trade gap for September and the government reporting on the budget deficit for October.
The level of jobless claims was expected to remain at levels indicating the labor market is under severe strains, reflecting what many economists fear could be a deep and prolonged recession.
The government reported last Friday that the unemployment rate soared to a 14-year high of 6.5 percent in October as businesses cut another 240,000 jobs.
The trade deficit was expected to show some improvement, declining to $57 billion in September, compared to $59.1 billion in August, reflecting a big drop in the price of imported oil and a weakening economy, which is dampening demand for other imports.
The budget deficit, however, was expected to show a big increase in October, the first month of the new budget year, rising to $101.5 billion, compared to $57 billion in October 2007. The soaring costs of the bank rescue and the weak economy are expected to put the country on track to run up a record deficit for the current budget year of between $700 billion and $1 trillion, a staggering sum for a single year.
Despite its new flexibility, the administration said Wednesday it remains opposed to using the rescue fund to bail out the ailing auto industry or to provide guarantees for home loans, an idea that supporters contend offers the greatest hope for helping legions of Americans who are facing foreclosure.
Congressional Democrats felt otherwise on autos, and strongly. House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid were pressing for quick passage of a major package for carmakers during a postelection session that begins next Tuesday, and one key House Democrat was putting together legislation that would send $25 billion in emergency loans to the beleaguered industry in exchange for a government ownership stake in the Big Three car companies.
But, if recent history is any judge, an auto industry bailout may not have the desired effect. In the 1990s, Japan tried the same thing, reports Mason.
"And what that resulted in that was this sort of quote unquote 'Zombie Economy,'" Steve Massocca, of Pacific Growth Equities, told CBS News. "You had these zombie companies that were kept alive simply by the fact that the government was able to support them."
The Bush administration has concluded that the bailout bill that passed earlier does not allow loans to the auto industry.
Paulson told reporters Wednesday that the administration was exploring the possibility of setting up a program in conjunction with the Federal Reserve that would provide support for the $1 trillion market in securities that fund such vital consumer products as credit cards, auto loans and students loans. About 40 percent of consumer credit is supplied through the sale of these securities that are backed by payments consumers make on their credit cards and other loans.
The administration has already spoken for all but $60 billion of the initial $350 billion supplied by Congress, including the $250 billion for direct stock purchases from banks and $40 billion for a new loan supplied on Monday to help stabilize troubled insurance giant American International Group.
And from subscribers:
1. MP: Great job on the 440 call...I hope those who had second buys yesterday made out OK today...did she go up enough?
I bought 1 today when the DOW hit 8200 for 4.50
I bought two more near 8000 for 2.85...had an average price of 3.40
Ending up spending a total of $1020...only to sell off all three separately about 2 hours later for a 60% total profit! Made $610 today and could have sold for an extra 2.00 profit but I cannot be greedy anymore! I thought I was being greedy when I held out for 60%! But the market was rising so fast that I was a little unsure about how to take profits. I think I did OK like you already said!
2. GE: NIce trade. Bought at 3.40, and sold at 14.50. What a market. Still hold partials.
3. Jean: You amaze me. You missed the downturn yesterday, but allowed us to buy at 5.00 averages and sell to 12.50, that's what I did. What a market
*Women can always have sex. Men cannot. This is the core difference.
By this I mean that women are always desired and that if they wanted sex can always find a man, anyway in the world, that also wants sex.
Men, to the opposite, may always want sex, but are not wanted, and must pursue.
This means, to me, that men always "want" and women are, or can be, always "wanted". These core differences shake our destinies.
It is this same way in learning and studying the market. Men and women have core desires to succeed, to "win", and to "be right." Men, I believe, have more of this "hunter" methodology deeply engraved in their pysches and biases, and often struggle with "winning" and "being right." Women do not have this same intellectual drive to "win," unless they have become "manly." It's important and interesting.
Learning who we are, and what we deal with, helps us with the emotions of trading.
My 26 old daughter's perspective -
It's your commentary, but from the perspective of a woman growing up in the 1990s and 2000s there is plenty of hunter mentality in women nowadays. Nearly as much so as men. The problem is men don't see it yet and at some point it'll change a lot of this world. The perception of having this desire is what men see as being "manly," but women have always had it on some level and it's growing more and more every day - we just still know how to hide it and market it differently than men are used to seeing. Not that this is necessarily a good thing, but it definitely exists nowadays.
Nov
From The S and A Short Report, responding to the 400 point 11/13. Pay careful attention to the commentary on Paulson's great new "bait and switch program with our deficit dollar bailout.
"Wow. Yesterday was a remarkably brutal trading day.
My power went out shortly after Treasury Secretary Paulson finished explaining the Bait & Switch bailout program. So I didn't see much of the afternoon session.
I'm stunned by the carnage in the market.
The selling was broad based. It was pervasive. And it was relentless.
Of the 100 or so industry sectors, none were up on the day. It was a wholesale liquidation of everything. Financial stocks made new lows. Oil broke down. Gold and silver sold off. And many components of the Dow Jones Industrial Average are on the verge of becoming penny stocks.
Then, just to rub a little salt in the wound, after the close yesterday, Intel lowered revenue guidance. Business is weak in all areas and in all geographic regions.
The stock market futures sold off on the news. And I spent much of the early evening slapping myself on the back of the head for holding a few new long positions overnight.
But... there are some positive signs.
A tremendous amount of bullish pressure is building in many of the momentum indicators I follow. The S&P 500 is nearly 100 points below its 20-day exponential moving average – a magnet from which the index rarely strays more than 30 points. And the sentiment among CNBC anchors is as bearish as I've ever seen it.
All of this points to a bounce. And a bounce from this depressed level could yield 200 or so points on the S&P 500."
Gain a lack of respect. Paulson is worth 850 million, and ran a large brokerage. He is our Sec. of the Treasury. Bernanke is a college professor who has never had a real job. Greenspan is a disciple of Ayn Rand, and practiced supply side bubble economics. The Feds can't even define where the most pressing issues are, or what they have been. Congress actually thought they understood what they were voting on.
The Federal Reserve should be disbanded.
Let's hope that Obama has the smarts to fire these idiots and truly run this like a business. Shame on us for allowing this to happen.
QUESTION AUTHORITY. Here's why:
(CBS/AP) While the Bush administration shifts course on its $700 billion rescue plan, Congress is examining whether even bigger changes should be made in the program in light of the deteriorating economy and soaring mortgage foreclosures.
The debate may not be resolved until President-elect Barack Obama takes office on Jan. 20 and pursues policies for administering the rescue program that are likely to be more closely aligned with his Democratic allies in Congress.
In anticipation of the change of administrations, Democrats were holding hearings in both the House and Senate on Thursday examining various aspects of the most serious financial crisis to hit the country in 70 years.
That crisis was publically declared a recession on Thursday by a major global economic cooperative, the Organization for Economic Cooperation and Development, of which the United States is one of 20 members.
The Paris-based OECD said in a statement that the economies of the U.S., Japan, and Europe were in recession, and the developed world's collective economy was on track to shrink 0.3 percent during 2009.
The House Oversight Committee was examining the role that hedge funds may have played in recent market turbulence. Among those scheduled to testify was billionaire investor George Soros, chairman of Soros Fund Management.
Meanwhile, the Senate Banking Committee will hear from executives of a number of financial institutions including Bank of America, JPMorgan Chase and Wells Fargo on the issue of how the government's $700 billion rescue effort is operating and particularly whether the government should be requiring more commitments on the use of the money to address rising mortgage foreclosure problems.
CBS News investigative correspondent Sharyl Attkisson reports that the massive tax-payer bailout of the banking system - sold to the American public as a transparent your tax dollars are buying massive shares in some of the nation's biggest and most successful banks - with virtually no strings attached. And that's all allowed under Congress' plan.
Attkisson and the CBS News investigative team decided to ask the banks directly what they are doing with Americans' tax money. Their responses were, on the whole, less than enlightening.
Treasury Secretary Henry Paulson announced Wednesday that the administration had decided to scrap what had originally been the centerpiece of the program - a proposal to buy troubled assets to get them off the books of banks as a way of promoting increased lending.
Instead, Paulson said the administration will proceed with an alternative plan to spend $250 billion to buy stock in the banks as a way of bolstering their financial situation and accomplishing the same goal - getting the institutions to return to more normal lending.
Despite shifting from the original plan, Paulson insisted he did not mislead Congress, reports CBS News business correspondent Anthony Mason.
I will never apologize for changing an approach or strategy when the facts change.
Treasury Secretary Henry Paulson
"I will never apologize for changing an approach or strategy when the facts change," he said.
However, critics contend the administration should be imposing more restrictions on the stock purchases as a way of insuring that the banks will use the government resources to increase lending rather than just hoarding the cash or using it to acquire other banks or boost dividends for stockholders.
Sen. Charles Schumer, D-N.Y., said even with the changes in the rescue plan he was still disappointed in the administration's unwillingness to issue strict guidelines to ensure that participating firms use the funds to increase lending.
"In these difficult times, fear is still overwhelming confidence," Schumer told reporters on Tuesday.
More reports detailing the difficulties facing the economy were expected on Thursday with the Labor Department releasing its latest look at weekly applications for unemployment benefits, the Commerce Department reporting on the trade gap for September and the government reporting on the budget deficit for October.
The level of jobless claims was expected to remain at levels indicating the labor market is under severe strains, reflecting what many economists fear could be a deep and prolonged recession.
The government reported last Friday that the unemployment rate soared to a 14-year high of 6.5 percent in October as businesses cut another 240,000 jobs.
The trade deficit was expected to show some improvement, declining to $57 billion in September, compared to $59.1 billion in August, reflecting a big drop in the price of imported oil and a weakening economy, which is dampening demand for other imports.
The budget deficit, however, was expected to show a big increase in October, the first month of the new budget year, rising to $101.5 billion, compared to $57 billion in October 2007. The soaring costs of the bank rescue and the weak economy are expected to put the country on track to run up a record deficit for the current budget year of between $700 billion and $1 trillion, a staggering sum for a single year.
Despite its new flexibility, the administration said Wednesday it remains opposed to using the rescue fund to bail out the ailing auto industry or to provide guarantees for home loans, an idea that supporters contend offers the greatest hope for helping legions of Americans who are facing foreclosure.
Congressional Democrats felt otherwise on autos, and strongly. House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid were pressing for quick passage of a major package for carmakers during a postelection session that begins next Tuesday, and one key House Democrat was putting together legislation that would send $25 billion in emergency loans to the beleaguered industry in exchange for a government ownership stake in the Big Three car companies.
But, if recent history is any judge, an auto industry bailout may not have the desired effect. In the 1990s, Japan tried the same thing, reports Mason.
"And what that resulted in that was this sort of quote unquote 'Zombie Economy,'" Steve Massocca, of Pacific Growth Equities, told CBS News. "You had these zombie companies that were kept alive simply by the fact that the government was able to support them."
The Bush administration has concluded that the bailout bill that passed earlier does not allow loans to the auto industry.
Paulson told reporters Wednesday that the administration was exploring the possibility of setting up a program in conjunction with the Federal Reserve that would provide support for the $1 trillion market in securities that fund such vital consumer products as credit cards, auto loans and students loans. About 40 percent of consumer credit is supplied through the sale of these securities that are backed by payments consumers make on their credit cards and other loans.
The administration has already spoken for all but $60 billion of the initial $350 billion supplied by Congress, including the $250 billion for direct stock purchases from banks and $40 billion for a new loan supplied on Monday to help stabilize troubled insurance giant American International Group.
And from subscribers:
1. MP: Great job on the 440 call...I hope those who had second buys yesterday made out OK today...did she go up enough?
I bought 1 today when the DOW hit 8200 for 4.50
I bought two more near 8000 for 2.85...had an average price of 3.40
Ending up spending a total of $1020...only to sell off all three separately about 2 hours later for a 60% total profit! Made $610 today and could have sold for an extra 2.00 profit but I cannot be greedy anymore! I thought I was being greedy when I held out for 60%! But the market was rising so fast that I was a little unsure about how to take profits. I think I did OK like you already said!
2. GE: NIce trade. Bought at 3.40, and sold at 14.50. What a market. Still hold partials.
3. Jean: You amaze me. You missed the downturn yesterday, but allowed us to buy at 5.00 averages and sell to 12.50, that's what I did. What a market
Thursday, November 13, 2008
We Believe Without Questioning
First, yesterday. I watched a 400 point drop that I did not see coming, far below our bottom test. If the market cannot control itself, if the FEAR leads again, we could easily shift downwards to test 7700 again.
This I had seen, but thought we might be past it. Perhaps not.
If we do, I believe, and I believe it now, it's a time to buy stocks. Further, I believe the U.S. will be forced to bail out GM, etc, and yet again we will have no choice. We let the blood flow too long, and we will have no alternatives.
Nov. 11 (Bloomberg) -- BlackRock Inc. Chief Executive Officer Laurence Fink said he's seeing signs of ``capitulation'' in financial markets, a broad selloff that usually precedes the end of a bear market.
``A year ago, I said we won't see a bottom until we see a capitulation,'' he said at an investment conference in New York today. ``We are seeing a capitulation,'' and financial markets may begin to recover by mid-2009, said Fink, 56, whose company is the largest publicly traded asset manager in the U.S.
Ahh, Floyd and his box cutter have gotten so many people writing:) So many of you are afraid that : 1. I am breaking the law, 2. I am "pushing the envelope of decency."
Well, I've tricked you. The TSA, brilliant that they are NOT, have defined that box cutters are illegal (good, as this is the stuff of 9/11) but that letter openers (little plastic covers to hold a razor blade) are LEGAL.
This should be enough to show you what I am trying to teach. We believe without questioning.
I've been carrying one of these "gizmo" letter openers for years, and watching our Government ENFORCING us tell me it is okay, when it is a box cutter under a different name.
False facts abound.
But, there is good news around stupid, slimey GM having to be bailed out by the U.S. citizens, and around "the big three" and their collapse. We believe there is no alternative.
This I had seen, but thought we might be past it. Perhaps not.
If we do, I believe, and I believe it now, it's a time to buy stocks. Further, I believe the U.S. will be forced to bail out GM, etc, and yet again we will have no choice. We let the blood flow too long, and we will have no alternatives.
Nov. 11 (Bloomberg) -- BlackRock Inc. Chief Executive Officer Laurence Fink said he's seeing signs of ``capitulation'' in financial markets, a broad selloff that usually precedes the end of a bear market.
``A year ago, I said we won't see a bottom until we see a capitulation,'' he said at an investment conference in New York today. ``We are seeing a capitulation,'' and financial markets may begin to recover by mid-2009, said Fink, 56, whose company is the largest publicly traded asset manager in the U.S.
Ahh, Floyd and his box cutter have gotten so many people writing:) So many of you are afraid that : 1. I am breaking the law, 2. I am "pushing the envelope of decency."
Well, I've tricked you. The TSA, brilliant that they are NOT, have defined that box cutters are illegal (good, as this is the stuff of 9/11) but that letter openers (little plastic covers to hold a razor blade) are LEGAL.
This should be enough to show you what I am trying to teach. We believe without questioning.
I've been carrying one of these "gizmo" letter openers for years, and watching our Government ENFORCING us tell me it is okay, when it is a box cutter under a different name.
False facts abound.
But, there is good news around stupid, slimey GM having to be bailed out by the U.S. citizens, and around "the big three" and their collapse. We believe there is no alternative.
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