Friday, October 31, 2008

The Market is Irrational

The market did hold up yesterday, with a Dow top at 9306, and a low of 8937. Economic indicators showed some positives yesterday, just enough to keep the market slightly buoyant. I don't trust it, and remain convinced we'll have a downturn, just as soon as the "euphoria" builds and more and more say that the "market is now turning around."

The election will stir the pot, and provide a possible strong upside. It is likely we could have downturn prior to upside around the election, and we now hold an OTM November put and are making a recommendation for a December put, which we'll hold as a part of a straddle.

The count is skewed. I find it irrational, as I find the upward moves too hesitant on volume to show true confirmation. All but 4 of the top 30 blue chips advanced, and it is very possible for a stronger upside. No news is really good. The world economy has not improved.

Watch the following video; Suze Orman discusses the upcoming credit card crisis - http://www.msnbc.msn.com/id/21134540/vp/27452795#27452795

Thursday, October 30, 2008

We are Watching a Market Literally Driven by Fear

The market hit highs of 9404, and lows of 8900, and our new buy to the call was profitable to 3.00 per contract. We're hitting on all cylinders.

We are watching a market literally driven by fear, and even a huge interest rate drop was unable to hold the market up near closing. Counts are skewed, options are extraordinarily expensive, and volatility is at massive extremes.

There is NO doubt that there is money to be made in this market, but there is also massive amounts of money available to lose. The market could easily have topped yesterday, and we will issue an alert to the put, noting the high risk, but on the assumption we may have another sell of and bottom test.

Floyd has no logic, or chart study, that will confirm what I believe will next occur. NO one does. I believe the market may soon be hitting a top, if it has not already, and that a large potential drop could easily occur in advance of the election next week. This is just my intuitive "gut" read of the massive volatility we are experiencing.

With gas prices low, Hummer sales may increase:)

Wednesday, October 29, 2008

It is Shocking, Amazing, ...and Funny

What a difference a day makes. The market is now "happy" that the FEDS may lower interest rates, and we saw a steady run up yesterday. Traders were able to buy the November440C only above prior day close, as the market gapped up early, but for those that did, went from 17.00 to 38.00 by 3 p.m.

It is shocking, amazing, and relatively funny that FEAR led us the last few days, and now the "thoughts" of an interest rate cut could move the market over 900 points. Study our Dow projections carefully to see what steps could next occur. 900 points in a day on pure conjecture.
_______

Maverick Palin tells us all she did in Alaska with the pipeline. Of course, real study shows what really happened:

http://www.msnbc.msn.com/id/27374946/

We are all Keynesian economists now. Keynes believed that government could tame the business cycle and guarantee good times indefinitely. Stimulate demand by spending more than they take in. Keynes argued that the only way to prevent depression was for government to become the spender of last resort. We will hit 1 trillion in deficit in 08, thanks to Bush, we are leading to socialism, and sadly, there now may be no choice.

Deficit spending may be our only way out, but laugh out loud when you hear McCain tell us he will balance the budget in the next four years. I suspect our deficit could double in that time, no matter whom is elected President.

The Cadillac Escalade is now available as a Hybrid. Please read this twice, and have a lack of respect.

Next, a bit on futures, and how they are now much harder to understand in relation to what the market will do:

Oct. 28 (Bloomberg) -- Federal Reserve Chairman Ben S. Bernanke and his colleagues usually sit down for their interest- rate meetings with a clear idea of what investors think they'll do. Not this time.

One key indicator, futures contracts, no longer provides an accurate signal of where the Fed will set its benchmark interest-rate target. The problem: Traders look at the rates banks charge each other for overnight loans when figuring out their bets on what the Fed will do, and for the last six weeks the Fed has failed to get those overnight rates to line up with its target.

The disconnect means Fed policy makers will find it harder to gauge whether markets will stabilize after the interest-rate decision they make at a two-day meeting starting today. Futures trading suggests a one-in-three chance that Fed policy makers will cut the target by three-quarters of a percentage point, to 0.75 percent. By contrast, only one of 64 economists in a Bloomberg survey foresees that outcome.

Bernanke and his colleagues are ``going to be less confident about the response to their policy action because they don't know what is already priced into markets, and investors are skittish,'' said Vincent Reinhart, a former Fed monetary- affairs director and now resident scholar at the American Enterprise Institute in Washington. ``It just adds another bit of uncertainty.''

The Federal Open Market Committee will announce its interest-rate decision today in Washington at about 2:15 p.m. New York time. Of the 64 economists surveyed by Bloomberg News, 35 forecast a half-point reduction from the current 1.5 percent rate, 17 economists expect a quarter-point cut, and 11 predict no change.

To Floyd, an interest rate cut is ludicrous and horrible, so I'm sure they will do it:)

Tuesday, October 28, 2008

Nice Profits on the Call

In February 2000 one of the Street's most powerful executives petitioned the slimey old SEC (have NO respect) to allow his firm and others to raise their levels of leverage. He wanted the commission to alter something called the net-capital rule, which he said "is the single most important factor in driving significant parts of our business offshore." Four years later the Bushy neocons amended the rule, allowing Wall Street to borrow even more money to finance its businesses. At the most aggressive investment banks leverage ratios reached 30 to 1; for every every dollar in equity capital it had, the firms were borrowing $30.00

That CEO was Henry Paulson, then the CEO of Goldman Sachs, now the U.S. Treasury Secretary. All of this occurred under a Republican led judicial, congressional, and executive led focus, long before Democrats took over Congress.

Bill Clinton was part of this, as he allowed Greenspan to lie and use his Ayn Rand thinking, and he allowed the de-regulation. It worsened with a Presidency only interested in "victory", at any cost. We were led by those that "gained" from this. KNOW that.

It is important we know WHO caused these problems. False facts may otherwise mislead our small intellects again. Sarah cannot be President, and there is a 1 in 3 chance. Oh, my God.

From a subscriber in Israel:

"Hi floyd,
I thought you may be interested to read this article, which is in line with your (our :-) ) political thinking."

http://finance.yahoo.com/banking-budgeting/article/106023/Five-Myths-About-the-Election-and-the-Stock-Market

From a subscriber after reading my Atlantic article on TSA in yesterday's alert:

"Floyd, often I think you are 'out there' until you prove to me how wrong I am. When I finished the article on TSA and our airports I gained SO MUCH DISRESPECT I finally began understanding what you say when you tell us to 'not believe what you are told.' I was shocked, and appalled. Thanks for sharing this information"-BLD

GM, which now makes a HYBRID Cadillac Escalade (please laugh) and Chrysler, big on the muscle cars, have now filed with the FEDS for aid. Of course we must bail out bad businessmen that make crap cars and didn't catch the market right, it's the American way. Sigh.

The market Monday was classically schizophrenic, with highs of 8639 and lows of 8135. We were able to profit well on the Nov440C, buying as low as 18.40 and selling to 24.00. Puts were also profitable for us, but took a trader with true "online regiment" to catch it, and we'll keep this position open.

"Nice profits on the call. Bought 10 and made 3.00 per contract quickly, got out, and sat back. What a market". Jerry from Des Moines

Monday, October 27, 2008

Mark My Words

Many subscribers have kept a good dialogue on my "show some disrespect, and question authority" soapbox rant. TSA security is a good example, and in my teaching to eliminate FALSE facts, and
NOT believe in WHAT IS TOLD TO YOU TO BELIEVE, without proof, read the following article to truly understand airport security:

http://www.theatlantic.com/doc/200811/airport-security


If you read this and do not understand my lack of respect, you're missing the basics. Again and again we take away basic human rights, and NEVER really address the issues.


In the past two years the Democrats that were elected have been blocked 94 times by Senate filibuster. Do not believe that "the Democrats" are responsible because they "did nothing" this past two years. Yet another false fact circulating our news bites. Republicans love to use this, but they were the filibusters.

Greenspan, supply side economics and huge deficit spending, and lack of regulation, led to this debacle. Believing that your taxes have not already been raised again and again is best evidenced by oil at all time lows, gold and silver falling, and all stocks at values close to 1981. Don't be misled by false facts on what will happen with taxes.

Chrysler is laying off 25% of its white collar workforce, a sad statement that their lack of action, and their GREED, led to what is happening to them. They, and GM, deserve this.

We have watched a nation build debt on GREED and power in the last 8 years, and are now a nation, influencing a world, led by FEAR. I am depressed as I write this that there is not much good in my mind for Americans, as we are a polarized nation. Whoever wins, we all lose.

Under the best of circumstances we will still begin the new Presidency with a polarization of opinion so diversive that the name calling and false facts from all political candidates now is sad. The last Soviet premier Nikita Khrushchev once observed that America would be destroyed from within. If Obama wins the right will just keep ranting, feeding their Radio and TV audiences with rhetorical red meat that divides America on abortion, prayer, guns, and silly stupid things that have nothing to really do with leading our country.

What is fearful is that whoever wins cannot begin to implement any plan they have, as the economic circumstances are so extraordinary with the lack of regulation that NO ONE knows how much it will cost to fix it, and if money can be kept "real enough" (remember, paper money is CREATED value, and thusly NOT real)

Before the market opened Friday FEAR was rampant the exchange would actually "stop."


New York University Professor Nouriel Roubini said curbs placed on U.S. futures trading today shows his prediction that markets will be shut down amid panic selling is coming true.

``This morning, even before the markets in the U.S. opened, the S&P futures fell by more than their daily limit,'' resulting in curbs on futures trading, Roubini told a conference in Madrid today. ``What I said yesterday has already started.''

Roubini said yesterday that policy makers may need to shut down financial markets for a week or two as investors dump assets. Trading in futures on the Standard & Poor's 500 Index and the Dow Jones Industrial Average was limited today after declines of more than 6 percent. Trading of U.S. stocks would be suspended for an hour should the Dow Jones Industrial Average decline 1,100 points to 7,591.25.

``Things are getting worse, they are not getting better,'' Roubini said. There's an increased risk of a ``multi-year economic stagnation'' in the U.S. and ``we have a whole set of emerging market economies in trouble. Even a few of them going bust may cause systemic trouble.''

Russia's RTS exchange today stopped trading after stocks slumped more than 10 percent. Europe's Dow Jones Stoxx 600 Index slid 8.5 percent. The MSCI World index of global stocks has lost 45 percent this year as the fallout from the U.S. housing crisis toppled banks from Seattle to Paris.

Still, Roubini said he doesn't expect the economic consequences of the current crisis to be as severe as the Great Depression. ``During the Great Depression, output in the U.S. fell by more than 20 percent, I don't believe that's going to be the case,'' he said.

In July 2006, Roubini predicted the financial crisis. In February this year he forecast a ``catastrophic'' meltdown that central bankers would fail to prevent, leading to the bankruptcy of large banks exposed to mortgages and a ``sharp drop'' in equities.

Roubini said that the European Central Bank should provide ``much more monetary easing'' and governments around the world must put together a massive fiscal stimulus package after action so far failed to halt the stock-market rout. The U.S. bank bail- out plan will likely require between $600 billion and $700 billion, he said.

Floyd believes our overall investment in this debacle will be over 2 trillion. 700 billion for the first "house bailout", 135 billion to slimey old AIG, and all the rest to the banks to extend us credit again. Mark my words, as we'll see the tally within one year.

Roubini, a former senior adviser to the U.S. Treasury Department, said earlier this month that the world's biggest economy will suffer its worst recession in 40 years.

Bubbles Greenspan, in turn, only partly admits he was wrong. Bernanke is still studying his history books. Bushy boy told us three months ago that our fundamental economy was strong. McCain voted with Bush 90% of the time for 8 years; HOW is he a maverick? How are THEY not responsible?

The market Friday went from a high of 8733 to a low of 8147. We issue new Dow projections in today's alert.

Abortion and same sex marriage have NOTHING to do with the state of our world, and no law that is created will CHANGE anyone that believes otherwise. Focus on what is important, not your own doctrines. Your doctrines may not be others. This is the stuff the wars are made of.

Trader MP sends a great article on the FEAR in the market:

"What to do in Times Like These: A Financial World in Panic
The GotForex Weekly Newsletter
by Rob Booker
The financial world is panicking again. Today I scrapped this week's idea for a newsletter when I woke up and saw that just since midnight, the GBP/JPY had fallen 1,400 pips. The Dow Jones Industrial Average futures contract fell overnight by 550 points, until further selling was frozen by the exchange because the maximum allowable drop had occurred. There are some of you who, in times like these, panic along with everyone else and now you're holding onto some really bad trades. Perhaps you're getting close to a margin call. Perhaps you're wondering if it is even safe to trade at all.

Here are some thoughts about what is happening, and what to do, to do in times like these.

1. The world financial indexes are dropping precipitously. The US dollar has, so far, been the major beneficiary. Money is flowing out of emerging market economies which attracted huge amounts of investment during the past 8+ years. Money is still flying out of real estate, technology stocks, and financial stocks, and just about anything else you can invest in.

The US dollar is gaining on all of this as investors are pouring money into US treasurys. The data above shows that purchases of perceived "safe" investments like T-Bonds and Notes have been strong, but money has been flying out of US equities. It might seem paradoxical, but so far, the US currency has been the major beneficiary of what started as a US financial crisis. The cold economic front has now moved off the east coast of the United States and is spreading to Europe and beyond, and as that happens, money has been going into what investors believe to be the safest investments possible: bonds backed by the US government. None of this means that the pattern we're seeing above will last forever. The US dollar could reverse course if the market becomes more calm over the course of the next few weeks and months. The greenback could lose ground if the world begins to perceive that the US government has taken on too much toxic debt and now looks like an irresponsible financial corporation. Or if the US job market implodes (see newsletter from a few weeks ago). There are plenty of scenarios I can imagine where the US dollar turns the other way again. None of those scenarios are playing out right now.

2. With the financial markets still in turmoil despite the efforts of global financial leaders, investors across the planet are panicking. This generally means that traders are making decisions based on their emotions -- sudden decisions without a lot of planning or thought. It also means that they are holding onto bad trades and then praying at night that the trades correct themselves. Rational thinking can be clouded by overpowering fear. Fear does not produce good trading results.

3. Are you taking enough time to be patient? In times like this, are you taking a bit of extra time before you trade, to think about how your decision could play out both positively and negatively? Before you enter an order, consider what the worst case scenario is. What is the worst that can go wrong? What do you stand to lose if your stop loss is hit? What percentage of your account will you lose if that happens? Is that an acceptable amount? It can happen, no matter how "safely" we believe that we put our stop loss. Realizing that it can happen is a big part of realizing that maybe you should just walk away from some trades.

4. What will you do if your trade goes right? What's your game plan for a trade that does move in your favor? What is your plan for managing the trade, for taking profit, for moving the stop along the way? What is the basis of your decision to do that? These are the types of questions you want to answer (and not quickly) before you enter the trade. Once the trade is on, our emotions can start to cloud our judgment.

5. Never trade alone. Do you have someone else you can trust with whom you can talk about your trading? This doesn't mean you're weak, or that someone else is going to make your decisions for you. It means that you have someone to talk with if things go really wrong. Someone that will listen to your ideas about how to get out of a trade (good or bad) and who will help you stay on track with that plan. Perhaps many of you need no such person, and you are independently able to stay on track, avoid bad decisions, and see the world objectively on a regular basis, even in the face of massive financial loss.

The most important thing in times like this is to realize that there are times when not trading is just as smart as trading. That the market is so volatile and unpredictable that it makes more sense to back away from the currencies, the stocks, the everything -- and just watch. At the same time, these could be -- but we don't know for sure, of course -- a time of great opportunity, where currencies or other investments represent a bargain.

Only you can know for yourself how should best approach trading in a time like this. What's right for you may not be right for others. What matters is that you have an understanding of risk, of how to manage a bad situation, a plan to deal with a trade that goes right or wrong, and a person in whom you can confide about your trading.

Let me know how you're doing in times like these. I'd love to hear from you.
Happy trading!
Rob"

Friday, October 24, 2008

Impeach Bush, Fire Bernanke, Fire Paulson...

Here is another example of a false fact, and how we must learn to see through the subterfuge. Mavericks McCain and Palin have been telling us "the surge is working" in Iraq, and blaming Obama for not seeing it, and Obama rightly has responded with "so if its working, what has it accomplished?" McCain (he's a maverick like Joe the Plumber, who is not even really a plumber) says we have to "give it time" to work out.

But the truth is:

"(CBS/AP) The Bush administration on Wednesday warned of "real consequences" for Iraq if it rejects a newly negotiated security pact.

Without a deal, the United States could be forced to end its military operations.

The White House said Iraqi security forces are incapable of keeping the peace without U.S. troops, raising the specter of reversals in recent security and political gains if the proposed security deal is not approved by the time the current legal basis for U.S. military operations expires Dec. 31.

"There will be no legal basis for us to continue operating there without that," White House press secretary Dana Perino said. "And the Iraqis know that. And so, we're confident that they'll be able to recognize this. And if they don't, there will be real consequences, if Americans aren't able to operate there."

Underscoring the tenuous nature of Iraq's security improvements, at least nine people were killed and 14 wounded in a bombing in a busy area of Baghdad Thursday morning, Iraqi officials said"

Bushy won last time on "fear" and "protection," McCain is trying to invoke patriotism and "we must win gracefully," but the IRAQIS themselves can't make it work.

The real truth: the "surge" game from McCain is a political sham to invoke our "patriotic" thinking. Don't fall for the lies.

The elections will cost 5.3 billion, in the ads you all hear and see. Do you really know the candidates, or know "news bites"? Think what 5.3 billion could do for our country? And think what the "news bites" have falsely made you believe.

For years Floyd has ranted about banks being slime, and Greenspan no scholar, but a bubble builder. I was made fun of by many subscribers, as we know, as Greenspan was loved. Another example of "unfiltered facts."

Read below, which I'll translate first: "HI, IT'S ME, BUBBLES, AND I WAS WRONG ON EVERYTHING AND YOU ARE ALL NOW GOING TO PAY". Here's how Greenspan said it:

(CBS/ AP) Former Federal Reserve Chairman Alan Greenspan says the current financial crisis has uncovered a flaw in how the free market system works and that has shocked him.

Greenspan told the House Oversight Committee on Thursday that his belief that banks would be more prudent in their lending practices because of the need to protect their stockholders had proven in the latest crisis to be wrong.

(Floyd: Banks and stock brokerages are all slime, and finally got caught. I've been preaching from the soapbox for years)

Greenspan said he had made a "mistake" in believing that banks in operating in their self-interest would be sufficient to protect their shareholders and the equity in their institutions. Greenspan said that he had found "a flaw in the model that I perceived is the critical functioning structure that defines how the world works."

He bluntly called the current financial crisis is a "once-in-a-century credit tsunami" which will have a severe impact on the U.S. economy, driving unemployment higher.

``Yes, I found a flaw,'' Greenspan said in response to grilling from the House Committee on Oversight and Government Reform. ``I was shocked because I'd been going for 40 years or more with very considerable evidence that it was working exceptionally well.'' Greenspan added he was ``partially'' wrong for opposing the regulation of derivatives.

Greenspan's contrition came after lawmakers and Fed watchers increasingly blamed the former Fed chairman for helping cause the crisis with lax oversight of the housing boom and derivatives markets. Normally afforded deference by Congress, he endured almost four hours of questions from lawmakers less than two weeks before a national election.

``Greenspan is finally taking some responsibility for his actions,'' said Paul Kasriel, director of economic research at Northern Trust Co. in Chicago and a former Fed official. ``The damage has been done. His reputation has definitely been tarnished.''

Good. Now impeach Bush, fire Bernanke, fire Paulson, and let's start again. Show some disrespect. Respect has what has gotten us in this trouble.

Credit cards are next, and the slimey old banks will take even more of a fall.

And, it is this fear and confusion like this that creates a market that hits 8835 to the upside in one day, and 8240 to the downside. Swings that in the past would be incomprehensible. The Nov440C was available as low as 23.00, TWICE, and sold to highs of 29.50 to 30.00, TWICE. Incredible opportunity for profits, despite the high premium to the option, and noting the high risk. We'll repeat this same signal for Friday.

Sell all OTM calls by end of day, at stop loss or gain.

Thursday, October 23, 2008

Our System is not Even Capitalism

Elizabeth Warren writes "Go in any appliance store in America and look for a toaster with a one in five chance of exploding. You won't find one. But at any mortgage broker in the country in recent years it has been possible to purchase a loan with a one in five foreclosure rate, and the broker doesn't even have to tell you the odds. Why the difference? Toasters, like every product you touch or taste, are tested for safety.

In the financial services market actual costs and unfavorable terms are actually concealed. Can you imagine if Bush and McCain's ideas to privatize social security had actually taken place?

We are now, if you haven't figured it out, nationalized and socialized by a Republican administration that let it get so far out of hand they had no choice. Democrats are surely at fault here also. We are all.

We need more unfiltered truths, more questioning of authority, and more arguing. Show some basic "disrespect" as you hear the pontificating.

James K. Galbraith tells us "our system is not even capitalism. Our economy has a large public sector, which at its best was competently concerned with research, defense, financial stability, environmental safety, social security, and large measures of education, health care, and housing. Today after eight years of of attack on real government, and wild spending, all these functions are damaged and in peril".

This is part of what the market is "deep breathing" over, and figuring out. It is all coming to the surface, and it's bile.

Yesterday finally the market began breathing again, however, and our OTM put trades were very profitable:


Floyd:

Yesterday purchased:

20 - Nov 300 Puts @ 1.05
5 - Nov 380 Puts @ 5.40
3 - Nov 400 Puts @ 8.00

Sold all at the open.

Nice!!!

Didn't like how the Nov 300's were trading.

Will sit on hands and wait for volitility to calm and premiums to erode a little....

Big range on the VIX today, looks like downside is very likely.

_____

Hooray, I actually managed to profit 49% on my puts!
I thought they were "nuked" for sure.
Now the trick will be to sell the calls so that either I don't lose on
the combined strangle, or maybe even manage to get a profit.
BTW - last time I wrote you of my 40% profit in which I was so glad about,
turned out it was premature - the other side of that trade eventually lost 81%,
so the combined strangle lost quite a bit back then (in percentage terms,
I didn't invest too much money). So I don't want to repeat that mistake and
celebrate too soon.


The above scenarios say it all. Trader 1 played the puts, profitably, and trade 2 is caught in our straddle, with the puts only profitable. Because of the volatility of VIX calls have lost even more value.
It is hard to read where a market bottom might occur, but a rebound is likely. We'll use our OTM call and continue to hold through Friday, and issue a HIGH risk alert to an ITM call, on the "guess" that a market bottom
may soon trigger some slight upsell.


And from Germany, Advanced Mentoring client PC was pleased with my decision to NOT offer a new trade yesterday:

I have read that "God" appeared to Solomon in a dream and told Solomon to ask for anything he wanted. Solomon chose wisdom, with that he could do the rest himself.

I think of all the gifts a man can bestow on another, the finest is to teach him how to think; subject-specific that is. Sir, you are teaching me this, in my chosen subject, to ask the questions, what, why, how? and to look beyond the obvious where all the lambs sit. From this it is possible to take the "do nothing option" at appropriate times because it the correct, informed and thus decisive "action" to take rather than simply unable to do anything through fear of not knowing what to do as a rabbit in the headlights.

Your advice in today's alert confirmed the reasoning I was applying, which was/is..... Big Money will not buy OTM Calls, to even push up the price for their own benefit, for fear of getting stuck with them whilst they anticipate another nose-dive in the market, nor will they bid up Puts they sell for fear that they will sell faster than hot cakes and have to pay out on them from the same nose-dive. Money must move and trading must go on so ITM is "safer" so all the fish are gathering into a smaller pond as it requires less speculation, the "cost" for that is that all money which is available to be made must come from the ITM range and this ramps up the bid and ask prices. 2 days of half-volume in the market generally so big business is doing what it always does in every market, attempt to make the same "income" from less sales, potato prices go up in a time of shortage. The demand does not rise, the demand for potatoes is stable without an increase in population so the rise in price is simply because the seller can charge more to those who really wat them. On the other hand, I "noticed" the volume on individual options, particularly OTM Puts, "someone" is quietly accumulating them. I didn't think to make that a study when I noticed it yesterday when the market was open (pennies often drop a little later) but will study today and include Calls in it. There are times to watch and wait :-)

Your guiding hand and wisdom are steadily changing my life, empowering me to conquor fear, let us call it by its name, and to intelligently apply the knowledge you place before your students, truly the act of a mentor.

To say "simply heart-felt Thanks" is simply to say too little!! You add something to me every day."

Wednesday, October 22, 2008

VIX is Dropping

All options that are OTM are so low in volatility that it makes it impossible to trade profitably. VIX is dropping, and ITM and ATM options are at hugely high premiums. When this is true, we know what to do....stop trading.

Don't try to make money when there is no money to be made.

Take any open calls or puts and sell for up to a 25% profit from your averaged cost, and use as a stop loss for any open OTM option Friday of this week.

We will not issue a new trade or break our almost spotless recent record with the type of volatiity we are seeing. Tuesday the market moved from just over 9300 to just under 9000 in the course of the day, with options only moving pennies. It's simply too high risk a market to trade OTM, and ITM and ATM are simply too high risk.

Political commentary: Volker was a brilliant statesman, and Secretary of the Treasury. Want facts? Check what occurred within his tenure, and what he did. This man is on Obama's team.

Sarah Palin is not a President, and there is a 1 in 3 chance she could be. Elect smartly in the highest risk time in your lives.

Tuesday, October 21, 2008

If Banks Fail...

So, the former Secretary of Defense has figured the obvious out: But he said McCain’s choices in the last few weeks — especially his selection of Gov. Sarah Palin of Alaska as his vice presidential running mate — had raised questions in his mind about McCain’s judgment.


“I don’t believe [Palin] is ready to be president of the United States,” Powell said flatly. By contrast, Obama’s running mate, Sen. Joe Biden of Delaware, “is ready to be president on day one.”

Powell also told NBC’s Tom Brokaw that he was “troubled” by Republicans’ personal attacks on Obama, especially false intimations that Obama was Muslim and the recent focus on Obama’s alleged connections to William Ayers, a co-founder of the radical ’60 Weather Underground.

Stressing that Obama was a lifelong Christian, Powell denounced Republican tactics that he said were insulting not only to to Obama but also to Muslims.

“The really right answer is what if he is?” Powell said, praising the contributions of millions of Muslim citizens to American society.

“I look at these kind of approaches to the campaign, and they trouble me,” Powell said. “Over the last seven weeks, the approach of the Republican Party has become narrower and narrower.”



Question Authority. Here's another false fact, a great example: "The FDIC now insures deposits up to $250,000.00". Thusly, this means our money is safe. BUT....the FDIC only has on deposit to cover bank failures 46 billion. Oops....we believe we are safe because we are told we are, with "insurance", and forget it is a LIE. 46 billion won't cover even Bank of America's potential failure, so even the "safer" $250,000 is just another fraud.

Believe what you want, but it's obvious we're under insured in values for what could occur, and just hoping it all goes away. 46 billion. This should make you angry. Think what YOU spend in IRAQ each month.

If banks fail, we'll just have to print more money:)

in 2006 the total aid to the developing world from OECD countries amounted to 325 billion, and only 1/3 of this came from governments of countries members of the Organization for Economic Cooperation.

Oops, our bail out of AIG alone was 125 billion. What a great and loving country we are:) So, this is what we must learn:

1. There is not nearly enough money backing FDIC, thusly making it as high risk and deceptive a "safety valve" as we could have, but we as citizens BELIEVE what is told us.

2. We bailed out AIG with more than DOUBLE FDIC, just one insurance company, and all that the FDIC is defined as is insurance. It's the same fraud game, this time perpetrated by the government, on you and I.

3. If banks fail, the good guys will argue, the government will come running in and put more money in FDIC. This is true, but each time we print or borrow the money to do this, we de-valued the Bushian dollar more.

Don't be fooled by the ads on who will cut taxes the most. Neither will. Your taxes have already been raised. Your net worth has dropped by 35%. Be smart.

The market was quite interesting yesterday, rising to our first Dow top, but showing calls to lose value, and puts to not lose value proportionately. This is a sign typically that "something is up", as it's too early for November options to lose premium. It shows many institutional traders are still exiting and "playing positions" and that two way trades may continue to be likely.

From subscribers:

"I loved your commentary that you wrote today. It is so great to read unfiltered truth. You know if I had been stopped like that I would have probably let the officer look in my trunk, out of fear. Fear of authority. I wish I had the knowledge and presence of mind to know my rights and refuse. I think so many of us turn of the cell phones, because of our ignorance and fear. We have forgotten how to stand up for ourselves or never learned it in the first place. I am so glad you are here"-AG


"I am often troubled by your commentaries, until I begin to see the real truths exposed. Your arguments about false facts I used to tell my wife you were ad nauseum about...himmmm, now I wish we had been all listening to you about "Bubbles Greenspan", and "supply side economics benefits only the few. I pay more for your "take no crap" thinking than the service, and it's worth it"-JW

Monday, October 20, 2008

VIX is Settling Down

VIX is settling down. This fear/greed indicator was at all time highs this past few weeks, as the majority of the market players exited positions and ran for cover. At 7700 as a test, and repeated tests at 8000 we believe the market may be beginning to show some signs of health. Buffet wrote an article in the New York Times just last Friday discussing his readiness to begin buying stocks, as we now have values. We agree. The market is slowly taking in the outright fraud perpetrated on this country and the world, and beginning to open the credit markets.

Things are not better, there is still a 10 billion "build democracy in Iraq" war, a massively high unemployment rate, and issues that will take years to fix. But, the market may be ready for relief.

The DJI made its biggest one week gain measured from close to close since March 21, 2003 after a week of erratic trading which saw the VIX reach its highest level ever on Friday. For the S&P 500 it was the best week since February and for the NASDAQ the best since August 8. The performance could have been better were it not for a late sell-off on Friday driven either by traders closing positions before the weekend, mutual fund redemptions or the settling of options contracts.

Friday also saw the TED Spead ease the most for the week as it fell by 11%. But as the following chart of the TED spread over the last year shows, it has a long way to fall before inter-bank lending will revert to its more normal level. We can think of the TED spread as an index of fear - a measure of the extent to which banks distrust one another and fear they will not be repaid for any loans they make. Until this fear index comes down volatility will continue.

Floydian tirades last week on question authority have prompted some great emails from subscribers, as we discuss what I mean by "do not trust the rule makers." Here's an example, and HOW it affects the market:

1. When 9/11 occurred we rushed to be safe. The TSA was born for air traffic "Terror" , and never have a more ridiculous set of rules ever been put in place to take away our human rights, and do little to help us with terrorism.

I travel regularly and am amazed how easily people in this country have simply accepted being treated like criminals as we move through these lines, even though statistically safety checks prove so much is never caught.

My favorite is that we must turn our cellphones off as the boarding door closes, and for the flight, because "cell phones can interfere with airplane radio reception." And most passengers dutifully follow the rules.

Not Floyd. I refuse. This is a joke rule, and is not true. If you believe that the voluntary asking of 200 people on an airplane to "turn off the phones," without enforcement (meaning, how many like me won't or don't turn off the phone), truly could impede the safety of the airplane, you are naive and believe still there are WMD in Iraq:) Imagine the ridiculousness here....an airplane worth millions, constantly upgraded, allowing cell phones to interfere with reception.

I studied it when it came out, and can find NO proof and NO fact that this is true. I refuse to do it. I've flown 100's of times since this rule was put in place, and not one of the planes have crashed. Either I personally have endangered the lives of all the other passengers on my flights, or the rule is bogus. And trust me, I'm probably 50% of the plane that ignores, or forgets these rules. So why are they rules?

Do not argue now and tell me "why not just do it"...as this is the same argument as "why don't you let the police look at something of yours if they stop you if you're not guilty", as the logic becomes that you do not have rights.

My daughter was stopped by the police several years ago while I was her passenger and the officer, who saw her with a faulty back light, asked to look in her trunk. I told him to pound sand. He said "if you weren't guilty of something you would have no problem with this." I told him to pound sand and go visit the Constitution, as we had done nothing wrong, and felt violated that my child was being even "accused" of anything. He gave her a ticket for the faulty tail light, which she deserved, and told me "people like you make it difficult for law enforcement".

Read this sentence above twice. If you don't get the issue, you're part of the problem. I was simply an old white guy in a nice car, wearing a suit, with a bad tail light. This "officer" of the "law" felt that we may have been complicit in some other crime, for whatever reason, and suggested we "show him" so he could be certain. I got his badge number and wrote to the city to file a complaint, which of course, was never even answered.

1 in 3 new Atlanta police officers are hired when they have criminal records.

Do not let America become Amerika. It is these "little things" that we miss. When Greenspan told us for years that lowering interest rates was good, I called him Bubbles Greenspan, and was not a popular "host" at OEX.

When I tell us now that deficit spending created this aura of illusion I've been argued with for several years, and suddenly all my "false facts" arguments are become sadly true....the facts were false.

This is how the cellphone on the plane is like the stock market. Some things you are told are simply NOT true. Question authority, respectfully. When the airlines find a way to make wireless profitable for them, suddenly it will be "safe" to allow cellphone usage. Just wait.

There are no WMD in Iraq.

From subscriber YH:

"I am somewhat nervous that many people are talking about a possible market crash next week or a week later. I am interested to know your opinion?

Your Dow projections say that deepest bottom is 7700, what time frame are you indicating?"

As you study our Dow projections today, make note that we continue to see a potential bottom test, as low as 7700 on the Theoretical Dow, within the next 7 to 10 days. This is now only a 50% likelihood, however, with more credit markets potentially freeing up and comments like Buffet made (buy American stocks now) beginning to free the market. We believe the market is close to, or has, tested its bottoms.

Friday, October 17, 2008

I Hope You Watched the Debates

What a difference a day makes. We started the day with a tight upsurge, allowing puts to be bought, promptly the market began crashing on fear, allowing puts to be sold profitably, and the market then moved directionally. Highs of 9012 on the theoretical Dow, to lows of 8157. Read our Dow projections carefully to see how we caught this run, now still holding calls that we think could now be profitable by day end today.

I hope you watched the debates and have a clear idea of who and how you would vote. Get the "newsbites" out of your minds, and do not trust all the "mudslinging and false facts" that both candidates are now resorting to.

Vote for who you think can change the situation that our country has gotten in to, the economic disaster that leads us, and with analysis of who and why we got in this mess. Question authority. Less than 2% of the boxes that are put on a commercial airliner are checked for explosives, for example, but I am required to take my shoes off to go through security. This is an invasion of my personal rights IF security is lax in so many other areas.

For the past year the President of our country has told us we did not even have a recession. Our Federal Reserve chairman insisted we were in "good shape" and moving forward. Hold them people accountable for their lies and inaction. Have a sense of disrespect for how you as citizens have been treated.

This is the proper questioning of authority.

Thursday, October 16, 2008

We Need More Irreverance

The market moved beyond our lower Dow projections yesterday, once again trying to test bottoms, based on horrifying retail sales, and ongoing FEAR in the market. We saw bottom moves to 8538, and will now reproject potential downturn. It appears nothing is working to stop this.

We made a second buy to our November call, and missed entry on this massive downswing. The bloodbath appears far from over. Manufacturing came in soft, retail came in soft, and now that oil is dropping.

We've hit 9 of 10 of our last trades profitably, through this shocking disaster, and may now have our second potential loss. Every time we miss an opportunity for profit, such as a 700 point swing day, it's because we are incapable of charting irrationality and FEAR as we are seeing it. As I told subscribers today, I never worry about what I didn't buy, I worry about what I did buy:)

Last week in a meeting I said "we need more sacrilege in the world". Several people "raised their eyebrows" and asked me to explain, and another person in the room said it more "softly" than old Floyd, using the word irreverence.

Using irreverence settled the room down, but it got me thinking.

1. We MUST question authority. (What authority got us in the mess we are in?)

2. WE MUST have more cynicism, and less "belief". (The economy is sound, and there is no recession-Bernanke 90 days ago)

3. We MUST distrust more, not trust.

4. We MUST have more disrespect of "rules", until they are proven to us to be valid.

Part of our issue as a country is that we believe "newsbites". We believe "doctrines" or our religion, and don't see that others may see things differently.

In other words, we judge, or try to influence others.

This is much like "bringing democracy" to the Middle East, a brazen, rude and utterly ridiculous thing to even consider, and NOT in our rights. We were not asked to do this.

This is much like trying to legislate abortion, when it is a personal and religious decision, and has NOTHING to do with our courts or law.

And, this is much like our current babbles on economics, where we are led by "soundbites" of what each candidate will do. What is sad is that the soundbites have become the medium, and now many people actually believe that Obama worked with a terrorist, or will raise taxes.

It is the same "reverse logic" that Karl Rove won the second term presidency for Bush on, the "bad blood" and "who do you trust to help us with terrorists" angle.

It holds true for the stock market. Having a bit less "trust" and a bit more cynicism is what you pay me to teach you. Question authority.

Be more irreverent. Trust fewer facts. Believe less, question authority. This is what is necessary to have a thinking society.

Wednesday, October 15, 2008

Dramatic Opening, But Then...

Years ago Warren Buffet explained it all, and of course, we were searching for WMD in Iraq, bringing democracy to the world (they didn't ask), and didn't listen.

http://www.marketwatch.com/news/story/derivatives-new-ticking-time-bomb/story.aspx?guid=%7BB9E54A5D%2D4796%2D4D0D%2DAC9E%2DD9124B59D436%7D&dist=TNMostRead

For years Floyd has ranted on his soapbox on:

1. Deficit spending creates an aura of debt is okay. We did this to ourselves.

2. It appeared to Floyd in the past 8 years that the multinational corporations, banks, oil industry, and Wall Street all seemed to be massively benefiting, even while unemployment was increasing, as the only jobs being found were in housing. Floyd believes our unemployment rate is almost DOUBLE what our government facts say. My rants have been around "the hat trick" that has occurred, no bid contracts, privatizing of social security (can you imagine?), and borrowing money from Communist China,now up to a trillion dollars.

3. Keynesian, or trickle down economics, began with Reagan (actually Coolidge) and makes Americans believe that tax cuts are the answer, when the real tax increases take place around the tax decreases, and America foolishly believes they are "saving money" from the Government. We need more irreverence.

Cash derivatives, without regulation, BEGAN in the U.S. and we are 80% of the market worldwide. WE created this financial crisis. I continue to predict our end cost to buying out this debacle will end at over 2 trillion.

Do NOT believe a single number the government is giving you. It will change by the hour, and all the whoopla on what the "house voted" through will be irrelevant, as we find more ways to now nationalize and internationalize money, because of our own stupidity.

The market yesterday moved up at opening dramatically, in a bit more euphoria, allowing put buyers to take entry, and to profit on the initial downturn after the opening gap. Our traders made entry to the November550C at below prior day close, and could have sold for up to 1.00 per contract profits, twice. We continue to hold this issue.

As you compare "Mavericks John and Sarah" and Obama, ask yourself who is running the most organized and effective campaign, as these are indicators of how they will run the country. Vote smartly.

Don't repeat the same mistakes we've made for 8 years. Bush and neocons destroyed this nation's wealth. Don't live in FEAR again. Certainly citizenry are guilty here, we all are, but is from the top that we are led. Place blame fairly.

The market went to highs Tuesday of 9834, above our first Dow projected top, but quickly retreated to 9045 before closing just slightly down.

Tuesday, October 14, 2008

FEAR and GREED in Action

Friday's market looked like capitulation selling, the type of panic that often marks an important bottom. Monday's turnaround was waited for all weekend, as the world leaders met to "become one giant bailout", and resurge the market. It appears, for the short term, that world government intervention and guarantee may have stemmed the tide, just as the capitulation selling at 7700 Friday may have "slowed the fear".

It is important to understand that first GREED developed this market situation, begun in the U.S., and developed with supply side deficit build trickle down economics led by a liberal Republican administration. We took away all regulations, and allowed Wall Street to lead their greed, and our own. Insurance on subprime mortgages became a bad bet, and by the time Bernanke and Paulson brought it to the world, it was too late.

That same GREED led the world to follow us, with the same false books, and the same lack of attention to details.

And we followed it with FEAR. As the market began panicking, the news took over the events, and we saw a world lead to FEAR and panic selling. It is that easy to ignore all reason, and we saw a perfect example of FEAR and GREED in action.

This past weekend was, in theory, the "answer". The world waited for a solution, and the solution was "intervention". Without any sense of logic as to how and what this does the world reaction was one of relief, of being quick for "solution", and only later will we all begin to consider who and how we pay for the nationalization of our banking, worldwide.

Of course, both Presidential candidates now have economic plans:) Hopefully, we as an American people will this time study what supply side Keynesian economics does NOT do.

And soon, we will figure out what this "bailout" will cost.

The market hit massive new highs of 9468 on a almost 1000 point gain.

Many traders wrote us Monday asking when we would buy puts.......and smartly, we did not during the day on Monday. We have a new signal to a November call today, noting to buy at "best buy", on what may be an opening downturn.

Downside will occur, the "happiness" may not last, but let's watch for a bit more euphoria.

There will be more euphoria, highly likely. If the continued plunge protection team action shows magic and euphoria, watch futures, and buy our recommended calls at up to 20% above prior day close, watching our Dow projection tops carefully.
Two way trades are still likely, and we're watching.

WASHINGTON (MarketWatch) -- Global efforts to rescue the international banking system gathered force Monday, with Europe leading the way to provide money to shore up its financial sector and calm the nerves of consumers and investors, and the U.S. hinting it's on board with its own package.
U.S. officials were putting finishing on Washington's version of a rescue package and announced they would unveil it before the U.S. markets opened Tuesday.
Treasury Secretary Henry Paulson and Federal Reserve Board Chairman Ben Bernanke met with top chief executives of the largest banks and Wall Street firms, and after the meeting details of the package began to leak out.

Monday, October 13, 2008

The Market Needs a Psychiatrist

In 1979 Chrysler got bailed out, with 1.5 billion dollars. Friday GM hit lows of 1950 prices. Friday McCain told us he would balance the budget within his term, enough to make even a true Rebublican shake their head, as it's not even thinkable. It's also obvious McCain has hired Karl Rove and friends, and the mud slinging beautifully twists things to help the not so smart Americans to believe that Obama worked with a domestic terrorist, or is a liar. It's so sad that we could lose 40% of our market capitalization and find a Presidential candidate not able to explain why he voted 90% of the time with Bush.

There is no doubt that this situation was excaberated by Bushian free enterprise, no regulation, and massive debt building. This is supply side economics, that began with Reagen (actually Coolidge) and has been bailed out in the past by the following administration. This time it is too late. They got caught before it was over, and what we did led the world to a credit crisis, as we are still the super power.

The market needs a psychiatrist, as do all the traders that have dealt with it. Watching the market manipulation that took place Friday was exhausting, and the Plunge Protection Team that Bushy has led may now be up to the entire G8 over the weekend.

Here's the facts:

7842 as a low and 8942 as a high. 1000 points. The October 360P was available as low as 3.00, and could have sold to highs of 11.50. Many traders reported buys on this position two to four times during the trading day, with profits of 2.00 to 4.00 per contract.

We predicted the last bottom at 7700. Some chartists believe this may be the bottom. Much we think will depend upon G8 commentary, and if the credit markets can begin to open up this coming week. The time the bailout bill wasted away in the House should make you angry, and this led to the meltdown, but your larger anger should be why we only found about this, how it could have been so well hidden from the American public, a few short weeks ago.

Those of us that know what has been done, and know the "false facts" and have been preaching them knew the house of cards could unravel anytime, as supply side liberal Republican economics does not work. This is the issue.



From subscriber DY:


Hey Floyd!

Pretty wild market action. I am staying on the side.


I think our economy along with the world economy is broken. What started with subprime type bad loans mushroomed with CDO and other Derivatives that has/will overwhelm the financial system. Confidence has eroded and Government(s) have done things that create variables that have no historical comparisons thereby increasing uncertainty.
Subprime and Fannie were only the trigger. It was the trickle down deficit spending that the U.S. led the world to. The blame lies in how we handled this situation, and that we ignored what we knew.


The Great Depression market lost 89% and took 2-3 years. Because of technology (internet, media, computers etc), if we plunged 90%, would we er expect it to be faster than 2-3 years?
Yes, I'd suggest 18 months as a minimum


If so, how much faster? In this scenario, how fast do things adjust? Things like wages, prices, production levels, inventories, real estate prices, defaults, foreclosures, (un)employment etc (I know this seems rather random but I am just writing what comes to mind).
Much depends on the credit markets and what G8 does. Effectively, the world governments will have to bail out the markets. There is no longer a free market enterprise, but a government guaranteed market.

The "new world order" Bush has wanted may well be in process




Will everything adjust at the same time or will we have rolling recession/depression where different sectors of the economy will adjust differently?
Too early to tell,but likely financial stocks could gain the most short term. Right now, it's all conjecture.


Thanks again for your guidance. Because of you, i place all 401K (about 250K+) into interest bearing account (3%) in late Jun, dow at 11,300 or so. Really takes the pressure off.
Glad you did this.


And lastly, commentary from Mike Gibbons that has merit:

"As the markets closed on Friday we were cautiously optimistic that Friday's trading may have set a floor under the markets and that we may even have seen the bottom, at least for a few months. That optimism was tempered following a promising but disappointing news conference by Treasurer Paulson.

First the good news:
The four indexes we track all closed substantially higher after testing double and triple bottoms. The support level for the DJI was at around 8000, for the S&P 500 at around 850, for the NASDAQ Composite at 1550 and for the Russell 2000 at 470. Although the DJI and S&P 500 closed down it has to be considered that they recovered from very deep declines as did the NASDAQ and Russell 2000 which closed in positive territory and posted their first accumulation day in 15 sessions. The DJI and possibly the S&P 500 would have closed positive were they not weighed down by a fall in energy stocks as crude oil for November delivery fell 10%.

The Lehman Brothers CDS auction was concluded at around 3pm without the dire consequences for financial stocks that had been feared. This sparked an immediate recovery as it appears no one firm would fail. (A contrarian view is that the rally was due to short covering as the shorts did not want to be exposed to unpredictable Government intervention over the weekend).

Treasurer Paulson announced "We are developing strategies to use the authority to purchase and insure mortgage assets and to purchase equity in financial institutions, as deemed necessary to promote financial market stability,". This was a welcome about-face from two weeks ago when the emphasis was on buying derivatives (toxic assets) only and he refused to consider purchasing mortgages directly and injecting liquidity into banks.

Now the bad:
Paulson did not go as far as he should have done. In addition to taking equity positions in banks, he should also guarantee inter-bank loans, as the British have done. This seems essential if banking institutions are to have the confidence to start lending to one-another again.

The G7 statement on Friday was weak. It contained the usual trite catchphrases - take decisive action, all necessary steps, take action where appropriate, etc. but lacked any specificity. We will hopefully get a more substantive final communique over the weekend."

Friday, October 10, 2008

8 of 9 in a Row for Great Profits

Another happy day in the stock market, with massive two way turns. This allowed our traders, on the morning run up, to buy the Oct420P as low as 3.40, and sell to highs of 16.00, for another profitable day.

A number of subscribers also reported day trades on the put, as the market moved around support lines, locking in quick $1.00 per contract profits.

Puts are obviously overextended, and all market makers are hoping for an "up" day. If world governments cannot stem this tide, 7700 is still highly likely. We saw it yesterday in the last hour, with a 600 point downturn as the market moved under 8555

"I tried to step out and catch a call, stop loss out at -20% in 3 minutes. I have not lost a trade for a couple of weeks. Man I have made bank more then I have ever for a long run. Are you thinking of any calls or is 8700 just a stopping point to lower bottom? Thanks for everything you are a good pilot."TP

"Sweet Floyd. Paid 3.70 for the put, and closed my eyes, and sold it for 15.00. 8 of 9 in a row for great profits" BJ

False facts have led us down. Not having all the facts could lead us down again:

Todd Palin Was Registered Member of Alaska Independence Party Until 2002

"The McCain camp today disputed rumors that presumptive vice presidential nominee Sarah Palin was ever registered with the secessionist Alaska Independence Party by releasing years of voter registration history . . . but it looks like that doesn't apply to her husband.

This afternoon, the director of Division of Elections in Alaska, Gail Fenumiai, told TPMmuckraker that Todd Palin registered in October 1995 to the Alaska Independence Party, a radical group that advocates for Alaskan secession from the United States. (Just what we need, a "first dude" that wants to secede Alaska from the U.S...and his wife could be President)

Besides a short period of a few months in 2000 when he changed his registration to undeclared, Todd Palin remained a registered member of AIP until July 2002 when he registered again as an undeclared voter."


Also:

Cheney said "deficits don't matter".-9 months ago

Bush said " the economy is fundamentally strong and recession signs are weak"-90 days ago

McCain said "I need to do a bit more studying on the economy. It's not my strong suit" -5 months ago

Thursday, October 9, 2008

Bernanke is Now Ready to Cut Interest Rates

The October 440P was available as low as 3.40, and sold to highs of 9.00, allowing our winning streak to continue. However, we'll stop loss the Oct580C, our first loss in this debacle

I lost it in my commentary yesterday, and I'd like to tell you why.

I was flying to the midwest from Florida, and sitting next to me on the plane was a woman with a McCain button. I asked her a few questions as to why, and found she was an imbecile. "I do not believe in abortion, and Sarah Palin has a good view on this" to "McCain is a hero, and I respect him," "We need to be in Iraq because they will find WMD."

Sorry, it just did me in.

And our country is being lost to imbeciles like this lady that vote. Of course, she did not know much of the financial meltdown, and said "Wall Street" was greedy and they are getting what is coming to them. My anger was over the idiocy of our people arguing over small things, and missing the big things. We could easily now elect another four years of this, and I'm just amazed. I am sick of God being discussed around politics.

Bernanke is now ready to cut interest rates.

This is what the economists are worried about. Paulson and Bernanke ran to Bush when the lies had multiplied beyond recognition, and a hasty plan of action drawn up. We had no choice but to do something, but typically were left with no time to do it, and no analysis, as the lies had perpetrated right to the bitter end.


From subscribers:

1. I think your email was perfect. I think it is time for all Americans to wake up and in so doing take the lead in correcting the injustices we ourselves have perpetrated at home and abroad. We are only here because of our won actions and unless we realize the cause of our problems it will be very difficult to solve them. You taught me that. You have been standing up for as long as I have known you. Yesterday you left no room for misunderstanding. If the democrats would stop worrying about winning the election and spoke aw frankly as you do, I think their message would be heard much clearer. Thank you. Your emails are always a breath of fresh air. I hope its fever spreads and helps others to hold true to what they know is right from wrong.

2. Ssshhh!!

Everyone with strong clear view and a sense of justice fears going too far in speaking the blindingly obvious. You have probably got this concern by having expressed yourself similarly in the past and seen that you scared the life out of someone who was wrapped in their bubble of naivity by standing there with a huge hatpin.

What should we say to these situations and ruined lives? "Oh well, never mind?" I often see an elderly lady in the supermarket near me. Almost bent double with arthritis, always in the same shabby thin coat that won't stand a cold wind, bandages round both feet, you've seen "her". I see her counting her coins before she goes to the till, only ever coins, I've never seen her with Euro notes, and only the absolute basics in her basket. I saw her once at the chocolate section, checking prices and her coins. She moved on. I called after her so that she could see me standing up after picking up something from the floor. I told her that she must have dropped the €2 coin, she was confused of course but I said I saw her drop it so she felt obliged to take it and probably wasn't sure she hadn't dropped it. I hoped she would then go to get chocolate but she came to stand behind me at the till, not even this simple, tiny "treat" in her basket.

I gave her my place because "she would be quicker than me." I went to get the chocolate she had studied and caught her at the door. I asked her if she would do me the honour of taking this small gift, telling her because my mother is about her age and as she is in England I couldn't give it to her. I worried it would attack her pride so played that dirty trick on her. ;-) she took it after some hesitation and sent my mother her greetings. Up the street young men, rather healthy looking young men are begging in the street. This lady has her pride and she somehow pays her way. Heaven forbid the old girl has to climb a 4 flights of steep stairs with her shopping in her hand to reach her appartment as a 78 year old neighbour of a friend has to.

$700 billion!!!! dollar bail out of incometence and shirking a social responsibility because the House of Representatives saw their portfolio dive by 777 points in a day, to see it dive even deeper the second they did it!!!! When this happened in 1929, grown men who had never known want were sticking their heads in gas ovens, so great was their fortitude in the face of adversity!! My God, some people responsible for this mess are going to feel embarrassed and shuffle in their shoes when they stand in front of their maker and explain their path through this life as ladies like this walk our streets of democracy after 2 devastating wars in Europe and a current war we tired hearing of quicker than Vietnam!!

And you, lovely lovely man, were concerned you went too far?? Keep shouting!! I am proud to call you friend!!

No, no, you will never lose those of us who can see!!

3. I like how blunt and angry you were, but the blame is not just with Congress and Bush, but the American people for not seeing the greed. We all knew better. I was shocked when Bush was able to talk the American people into a second term (played on our fear of terrorism), and am more shocked we could even consider another Republican administration. Hopefully you at least got people to think that abortion rights have nothing to do with our Government.

Wednesday, October 8, 2008

Sorry, It Just Did Me In

The October 440P was available as low as 3.40, and sold to highs of 9.00, allowing our winning streak to continue. However, we'll stop loss the Oct580C, our first loss in this debacle

I lost it in my commentary yesterday, and I'd like to tell you why.

I was flying to the midwest from Florida, and sitting next to me on the plane was a woman with a McCain button. I asked her a few questions as to why, and found she was an imbecile. "I do not believe in abortion, and Sarah Palin has a good view on this" to "McCain is a hero, and I respect him," "We need to be in Iraq because they will find WMD."


Sorry, it just did me in.

And our country is being lost to imbeciles like this lady that vote. Of course, she did not know much of the financial meltdown, and said "Wall Street" was greedy and they are getting what is coming to them. My anger was over the idiocy of our people arguing over small things, and missing the big things. We could easily now elect another four years of this, and I'm just amazed. I am sick of God being discussed around politics.


Bernanke is now ready to cut interest rates.


This is what the economists are worried about. Paulson and Bernanke ran to Bush when the lies had multiplied beyond recognition, and a hasty plan of action drawn up. We had no choice but to do something, but typically were left with no time to do it, and no analysis, as the lies had perpetrated right to the bitter end.



From subscribers:

1. I think your email was perfect. I think it is time for all Americans to wake up and in so doing take the lead in correcting the injustices we ourselves have perpetrated at home and abroad. We are only here because of our won actions and unless we realize the cause of our problems it will be very difficult to solve them. You taught me that. You have been standing up for as long as I have known you. Yesterday you left no room for misunderstanding. If the democrats would stop worrying about winning the election and spoke aw frankly as you do, I think their message would be heard much clearer. Thank you. Your emails are always a breath of fresh air. I hope its fever spreads and helps others to hold true to what they know is right from wrong.


2. Ssshhh!!

Everyone with strong clear view and a sense of justice fears going too far in speaking the blindingly obvious. You have probably got this concern by having expressed yourself similarly in the past and seen that you scared the life out of someone who was wrapped in their bubble of naivity by standing there with a huge hatpin.

What should we say to these situations and ruined lives? "Oh well, never mind?" I often see an elderly lady in the supermarket near me. Almost bent double with arthritis, always in the same shabby thin coat that won't stand a cold wind, bandages round both feet, you've seen "her". I see her counting her coins before she goes to the till, only ever coins, I've never seen her with Euro notes, and only the absolute basics in her basket. I saw her once at the chocolate section, checking prices and her coins. She moved on. I called after her so that she could see me standing up after picking up something from the floor. I told her that she must have dropped the €2 coin, she was confused of course but I said I saw her drop it so she felt obliged to take it and probably wasn't sure she hadn't dropped it. I hoped she would then go to get chocolate but she came to stand behind me at the till, not even this simple, tiny "treat" in her basket.

I gave her my place because "she would be quicker than me." I went to get the chocolate she had studied and caught her at the door. I asked her if she would do me the honour of taking this small gift, telling her because my mother is about her age and as she is in England I couldn't give it to her. I worried it would attack her pride so played that dirty trick on her. ;-) she took it after some hesitation and sent my mother her greetings. Up the street young men, rather healthy looking young men are begging in the street. This lady has her pride and she somehow pays her way. Heaven forbid the old girl has to climb a 4 flights of steep stairs with her shopping in her hand to reach her appartment as a 78 year old neighbour of a friend has to.

$700 billion!!!! dollar bail out of incometence and shirking a social responsibility because the House of Representatives saw their portfolio dive by 777 points in a day, to see it dive even deeper the second they did it!!!! When this happened in 1929, grown men who had never known want were sticking their heads in gas ovens, so great was their fortitude in the face of adversity!! My God, some people responsible for this mess are going to feel embarrassed and shuffle in their shoes when they stand in front of their maker and explain their path through this life as ladies like this walk our streets of democracy after 2 devastating wars in Europe and a current war we tired hearing of quicker than Vietnam!!

And you, lovely lovely man, were concerned you went too far?? Keep shouting!! I am proud to call you friend!!

No, no, you will never lose those of us who can see!!

3. I like how blunt and angry you were, but the blame is not just with Congress and Bush, but the American people for not seeing the greed. We all knew better. I was shocked when Bush was able to talk the American people into a second term (played on our fear of terrorism), and am more shocked we could even consider another Republican administration. Hopefully you at least got people to think that abortion rights have nothing to do with our Government.

Tuesday, October 7, 2008

We Need More "Question Authority" Thinking

You hire me to be rude and sacrilegious, praise God. If you don't, you should, as I have been telling you endlessly....

We must put blame on this situation. 80% of the problem with this country is that we blame no one, and are NOT nasty enough. I'm sick of it. Figure it out, and place blame.

Abortion and gay marriage have NOTHING to do with the REAL issues we have. How many of us are caught up with this silly and ridiculous garbage in our thinking, or better....that we are surrendering in Iraq. Go vomit in the corner, and surrender.


1. McCain was part of the Keating 5. Dispute this. For those of you ready to vote, that do not know who Keating was, study.

2. Sarah Palin is the answer. There is a 1 in 3 chance Sarah will be the President. If you believe Sarah is up to this precarious situation, think again. Life is too short to even analyze the type of FOOL that would think Sarah could be President.

If I lose subscribers from this, good. We have now hit the beginning of the bottom.


This situation is now out of control. You caused it.


Now Europe is following us, the lead nation in the world, in the collapse of supply side economics, the printing of money to cover debt. Just a few short years ago the Euro was at all time highs, the European economy booming, and I repeat what Floyd said 8 months ago:

"The USD dollar will strengthen as the Euro begins its collapse, and we as a people will be stupid enough to believe this is our doing, not the collapse of more of the economic fraud that has prevailed for 7+++ years. None of this occurred under President Clinton.

1. A war that has led to a deficit of over 1 trillion.

2. A war in Afghanistan that was lost to terrorists, and we now begin again.

3. Iraq a continuing 10 billion a month, with no end in site. Perhaps it is time to "raise the white flag." Perhaps we should never have raised the red, white, and blue flag in a country we weren't warranted to to begin with.

4. Unemployment now down 9 straight months, with real unemployment figures close to 16%.

5. The dollar at all time lows of 7.5 years, and oil at all time highs, and no energy plan for the future.

6. Human rights and Constitutional Rights violated.

I could go on and on, but all 6 are facts. Now couple this with no regulations, and a free enterprise methodology that rewarded only those that bribed (lobbied) ((Both parties guilty here), and I repeat my next two predictions:

*Credit card debt has been fraudulently led in financials, and will be found to be false. Banks will write down more debts, and the 700 billion will be double this. The bail out will not work, is under budgeted, and will double in size.

*If McCain is elected we will increase our debt with military exposures, lead to more world interventions and cost, and continue to deregulate, all while we have been taxed already (before he was elected).

I'm not much more happy with Obama and team, don't get me wrong, but I know that Sarah Palin has a 1 in 3 chance of being our President, and it is a bad Disney movie to think of her as a world leader, doggone it.

And if you really believe she could be President, go back to school. She has a 44% positive rating.

We need more sacrilege and more "question authority" in our thinking. Shame on us for believing.

Monday, October 6, 2008

My Hopes and Dreams are Coming True

My hopes and dreams are coming true:

1. OJ was finally found guilty and will go to jail

2. Bush was found guilty (I pray we realize as a nation) and will leave office as the worst President of all time. He has been caught leading a bunch of rogues to the trough of money, and the trough of money is now gone. All of his "great plans" have failed miserably. Supply side economics has been exposed (although the American people to do not yet know or understand this, still filled with soundbites and false innuendo). This is NOT Congress, folks, but "from the top". We deregulated reason, and built a nation built on debt, and fear of terrorism.

The terrorism is right here, and we voted for it.

On Friday, puts hits 2.25, and calls hit 6.10. After the signing, the market collapsed in FEAR.

We've made profits on each signal during this debacle, over the past 10 days, and now have our first losing position to the call, with profits to the straddle hedge put.

The bill passed. We have spent $700 billion. Trust me, it's not enough, and just starting. The entire game is over, and 8 years of Republican abuses are clearly coming to light. It is that simple, as the CORE principles that have led our country (the family values bull you've heard so long) are supply side economic based. Cheney said "deficits don't matter".

The market allowed calls to hit good profits before the news, but the horrific jobs report that came out prompted economists to predict the recession may be worse.

Floyd has said: the recession BEGAN in October of 2007. And Floyd has been talking "false facts" lead our government for years, with little interest. It's now all coming true. They KNEW these books were false. Their own books are false. Put the blame where it belongs. Sarah Palin will not solve this, doggone it:)

From Trader Mike:

Some interesting information I've read over the last week................

When asked why the amount had to be $700 billion, a classic answer was given:

"It's not based on any particular data point, we just wanted to choose a really large number." a Treasury spokeswoman told Forbes.com Tuesday.

I always like to look at history for what will happen in the future. It seems we keep on making the same mistakes. If history is our guide this $700 billion dollar price tag will only be the beginning. The original estimate for the Resolution Trust Corporation (RTC) bailout of the Savings and Loan (S & L) Crisis was $30 billion. It ended up costing $145 billion, a multiple of nearly 5 times.

During the S & L Crisis, L. William Seidman, Chairman of both the FDIC and RTC made this observation:

"Only three months after the cleanup started it was already evident that the problem was far worse than anyone in government had envisioned, including me, and it was getting worse everyday. We were faced with taking the most politically unacceptable action of all, having to admit we made a big mistake."

How much you want to bet that this $700 billion won't be enough?


In one of your upcoming newsletters, please explain further on your comment "Do not teach your children never to be angry; teach them HOW to be angry.".

Anger has no value with focus. To point fingers, scream, or blow up accomplishes nothing; to show anger with logic, facts, and without emotions makes the anger have value.

Smart people are angry to solve, not to complain.

Friday, October 3, 2008

All the Gyrations

All the gyrations of the past three days have lost 1 trillion to the markets, while Congress lies and manipulates as we bail the federal government out. That is what we are doing. We are borrowing to keep banks alive. All the gyrations, and we're back to near where we headed in the crash on Monday.

The Oct420P was profitable to 1.50 yesterday as the world studied the slimy bill that the Senate has now led to the House, and we now wait for what our representatives, afraid to even vote to lose their jobs with us, can agree to. The Oct580C was also an incredibly great day trade, with moves from 3.80 to 4.50 occurring five times, for astute day traders.

"Nice day, Floyd. .70 on the put, up to 1.20. Played the call for a total of 7 times this week around support lines, profiting a total of $7800.00 so far, and still have "inventory". I like how you explain what is really happening"-J.P.


And from a new subscriber:

"I just made my first profit: the OXBVD puts which I bought Tuesday (2 days ago),
just got filled on their GTC order at a 40% profit.
I'm so excited, that this actually worked!
Now I'm anxious to see if my calls get filled, or at least don't lose more than what
I've won in the puts.
I understand that if the calls don't get filled by the end of Friday then I should sell them
at whatever price I get just before the market's close on that day, is that true?" NC-Israel
(BE sure and note our change to stop loss below)


One out of three Vice Presidents become President during their term in office. If you believe Sarah Palin would be a good President after watching the debates last night we have a strong difference in opinion on what is necessary to save our country.

Smart thinking is not listened to by TV or newsbites. Smart thinking comes from reading history, economics, other points of view, and being open to extraordinary thinking, not limited to a single secular perspective.

The larger question is why our credit and banking situation was allowed to deteriorate to such a point that it was necessary to create the bills we now have. Who led this? Who didn't stop it? Why didn't we know?

This has nothing to do with Wall Street and the greed of CEO's. It's led first, and should be questioned, by what Government and leaders allowed it to fester and calmly for the past 6 years told us it was okay. (Check what Bush and McCain both have said about our economy until 2 weeks ago. Everything was "fine").

In a nutshell: our government has created false financials and facts with money for years. Now the world is printing money to give to the banks to keep us afloat, as the banks have no money because of the false financials. This is not a bail out, but a debt infusion to keep the world economy afloat, led by the U.S. and our dedication to unregulated bribe driven (lobbying) free enterprise.

Be careful as you take the soundbites in. History is being made.

And as we hear of Russia, and Iran, and all the "evil":

"Do not take sides; if you take sides, you are trying to eliminate half of reality, which is impossible. For many years the United States has been trying to describe the Soviet Union as the evil side...If we look at America deeply, we see the Soviet Union. And if we look deeply at the Soviet Union, we see America. If we look deeply at the rose, we see the garbage; if we look deeply at the garbage, see the rose. In this international situation, each side is pretending to be the rose and calling the other side garbage. "

Thich Nhat Hanh

Thursday, October 2, 2008

Do We Never Learn From History?

The market moved from highs of 10,922 to lows of 10,591 in a day, allowing astute day traders to profit to both put and call. Calls many bought and sold three times for .80 average per contract prices, as the market moved in 100 point increments like clockwork as investors hesitated.

But astute is the word, as the volatility in the market was exhausting to all, as the market whipsawed around the idiots in the Senate, now getting ready to get a bill to the idiots in the House, and both parties posturing right and wrong.

Only after the bailout occurs will we begin to unravel the mess, and find the true damage.

If the bailout does not occur, the banks will freeze, and 7000 is highly likely. It is that simple.

It is NOT just Freddie/Fannie, and banking...it is the house of cards of supply side money falling.

When the only jobs being created during a bubble are around the bubble (housing) and unemployment data is falsified, while interest rates are lowered, scoundrels have been running to the bank as they supersize us, and feed us debt. And all of us ate.

No one stopped anything and the spending just kept going.

For years in our services Floyd used to criticize, ridicule and call names at Greenspan, specifically Bubbles Greenspan I called him, because I consider:

1. Greenspan a disaster that allowed our bubbles to be created.

2. A "world order" advocate Greenspan believed in big company only free enterprise, and promoted the Federal Reserve.

3. Two other versions of Federal Banks failed before the Reserve. If Floyd were in charge he would immediately disband the Federal Reserve, return to the Gold Standard, fire Bernanke and fire Paulson.

Obviously I'm not and we may elect Sara Palin President.

Sigh.

It won't be long before my thinking above becomes "real". For years I was laughed at on Greenspan, as I was "against the flow of the obvious", but am now being vindicated as the mortgage fraud, which Greenspan perpetrated years ago, now unravels. He perpetrated many things, leading with low interest rates. Clinton wisely used the proceeds of the last bubble, which Greenspan led, to pay down the Reagan and Bush 1 Debt. Sadly, the next bubble we used to pay oil companies and Halliburton, and the 700 billion war in Iraq, and now have debt that we have no idea how to pay off, with more being voted in this week.

Economists in think tanks that have no reality should not run our country. Bernanke is a professor who has never had a job. I'll leave you with the next rants...the Federal Reserve should be abolished.

Do not teach your children never to be angry; teach them HOW to be angry.

There is a saying in the Middle East that a foreign journalist who comes there and stays a week goes home to write a book in which he presents a pat solution to all of the Middle East's problems. If he stays a month, he writes a magazine article filled with "if's and "but's" and "on the other hands"s. If he stays a year he writes nothing at all, for the complexities and paradoxes of this explosive area have left him bewildered and confused.

From a 1962 editorial in the Saturday Evening Post.

Do we never learn from history?

Wednesday, October 1, 2008

Do NOT believe the market will stay UP

Ahh, what a difference a day makes. The market rebound took us to tops of 10,908. Day traders on the Oct580Calls were profitable to 38% and up.

We continue to own a straddle, with an OTM put that should be a smaller position, and a call we hope to have strong upside on the signing of some diluted, connived, socialist bill that it is fully necessary to keep our banking alive....all based on supply side economics failing.

Three months ago Wachovia said they had 4 billion in bad debt on mortgages. When they bankrupt sold to Citi today they listed 40 billion.

These are the false facts that have lead us. We still have these false facts in our Federal Government, from false unemployment to deficits, and it will take several years for us to regulate ourselves out of the mess we have allowed to be created.

Calls have the upside potential of 52%, to market tops that may ease at 11,340 area. It is an anything goes market.

McCain's economic guru, Phil Gramm, rammed deregulation of financial services through Congress. They even named the bill after him.

Deregulation makes GREAT sense and is right IF GREED and structures are not in place to allow only certain people to win (Halliburton winning the bids for Iraq comes to mind). Do NOT forget this information while the false facts and partisan name calling continues.

Obama is not a perfect answer. Sarah and the Ruskies in Alaska is the perfect answer, for our own possible annihilation, if McCain were to die. We are right now doing two things:

1. Electing the best of the worst (Obama over McCain), or not.

2. Dealing with 8 years of supply side economics and debt building, the reverse of true Republicanism. These are NOT conservatives in any way.

When Bush was reelected four years ago he began work on privatizing social security.

McCain voted right with him.

Can you imagine what would be happening now if this occurred? The financial meltdown we have now is only partly "housing," and the supply side economics without regulation that have led the Republicans this past 8 years, and how McCain has voted, are the cause of our issues.

Remember the privatizing of social security as you vote next month.

"Republicans, who have won so many elections painting Democrats as socialists and pinkos, have now done so much irresponsible deregulating and deficit spending that they have to avoid fiscal Armageddon by turning America into a socialist, pinko society with nationalized financial institutions and financial czars accountable to no one and no law".

We are at a precipice, and even if it gets better, it may not last long. It depends on how we think in the next few years.

Now we have to fix what we have wrought. Any bill will only be the beginning.

Whenever two good people argue over principles, they are both right.

Most people, including McCain, that are Republicans call themselves conservative, and call Democrats Liberal. It so amuses me, as true Conservatives such as Dwight Eisenhower nor Barry Goldwater would recognize today's Republican Party. There is nothing conservative about recklessly and unjustifiably invading a sovereign nation, suspending habeas corpus, and amassing the large debt in U.S. history. This is what has occurred within the Bush administration, BEFORE the recent financial crisis that will cost us up to a trillion.

These are facts. McCain voted with this 90% of the time. Thusly it would appear evident he would continue to work in the same way that he has worked. What has occurred that would make him be different than how he has been, and how would he do this, let alone Sarah Palin if he were to die?

These are honest questions. Answer them first, before you consider Obama/Biden, as the key decisions revolve around the philosophies the Republican Party currently follow, which are by NO means conservative.

It is not understanding the above that has us in the situation we are in, which will worsen.

Do NOT believe the market will stay UP. Nothing we are doing even begins to solve the real problems, we are only solving the immediate illiquidity and inability to lend.