Archive for 2009

Chrysler Supreme Court Stay Application

Chrysler Supreme Court Stay Application

The Indiana Pensioners’ Supreme Court Stay Appeal presented below. Oddly, on page 6 the Indiana Pension Funds have for the first time noted that their first lien holdings are $100 million, whereas in all prior disclosures they noted it was $42 million. Does this number include the Oppenheimer face holdings? Otherwise it seems like a rookie clerical error that will not help their case. Alternatively, Indiana Pensioners have been purchasing Chrysler first lien debt in the open market.

Also, in the parallel case of Government Motors, a decent profiling of Judge Robert Gerber.

The Biggest Rip Off Ever?

The Perils of Securitization

The Biggest Rip Off Ever?

By MIKE WHITNEY at CounterPunch 

Is it possible to make hundreds of billions of dollars in profits on securities that are backed by nothing more than cyber-entries into a loan book?

It’s not only possible; it’s been done. And now the scoundrels who cashed in on the swindle have lined up outside the Federal Reserve building to trade their garbage paper for billions of dollars of taxpayer-funded loans. Meanwhile, the credit bust has left the financial system in a shambles and driven the economy into the ground like a tent stake. The unemployment lines are growing longer and consumers are cutting back on everything from nights-on-the-town to trips to the grocery store. And it’s all due to a Ponzi-finance scam that was concocted on Wall Street and spread through the global system like an aggressive strain of flu. This isn’t a normal recession; the financial system was blown up by greedy bankers who used "financial innovation" game the system and inflate the biggest speculative bubble of all time. And they did it all legally, using a little-known process called securitization.     

Securitization--which is the conversion of pools of loans into securities that are sold in the secondary market--provides a means for massive debt-leveraging. The banks use off-balance sheet operations to create securities so they can avoid normal reserve requirements and bothersome regulatory oversight. Oddly enough, the quality of the loan makes no difference at all, since the banks make their money on loan originations and other related fees. What matters is quantity, quantity, quantity; an industrial-scale assembly line of fetid loans dumped on unsuspecting investors to fatten the bottom line. And, boy, can Wall Street grind out the rotten paper when there’s no cop on the beat and the Fed is cheering from the bleachers. In an analysis written by economist Gary Gorton for the Federal Reserve Bank of Atlanta’s 2009 Financial Markets Conference titled, "Slapped in the Face by the Invisible Hand; Banking and the Panic of 2007", the author shows that mortgage-related securities ballooned from $492.6 billion in 1996 to $3,071.1 in 2003, while asset backed securities (ABS) jumped from $168.4 billion in 1996 to $1,253.1 in 2006. All told, more than $20 trillion in securitized debt was sold between 1997 to 2007. How much of that debt will turn out to be worthless as foreclosures skyrocket and the
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Sunday Readings

Interesting interview with Justice Antonin Scalia (below).  Click here for a free subscription to PSW Report, it’s really easy and you’ll have immediate access to all the articles. – Ilene

Tyler Durden’s Sunday Readings

  • Gordon Brown repeats vow not to go away (Telegraph)
  • Airline execs say industry outlook still grim (Reuters)
  • Extreme dumb money bullish sentiment (Technical Take)
  • Blackrock set to become largest quant fund in the world (Telegraph)
  • Monetizing debt: The grandest of larcenies (Daily Reckoning)
  • Evans-Pritchard: Merkel’s inflationary fretting may wake the bears from hibernation (Telegraph)
  • Bankruptcy filings rise to 6,000 a day (USA Today)
  • Daniel Gross: The bond war – Krugman vs Ferguson (Slate)
  • Roundup of (un)employment charts (Big Picture)
  • Justice Antonin Scalia: "The US Constitution is dead" (Fora)
  • Eli Broad’s remedy for the auto industry (Fora)


Big thanks to Gayle and Sherrie for their donations and support.


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The way of a trader

The way of a trader

Courtesy of Allan

The focus here is on the bigger picture, although eventually this post will drill down to some more tradable analysis. For starters, lets look at a time frame I have seldom or ever posted before, a monthly view of the SPX:

During the past 15 years, we see two major up moves and two major down moves. Despite the rally of the past three months, the chart shows prices still mired in the most recent down move. Observe the angles of the four major directional moves, one should stand out, the most recent down move. It is by far the steepest of them all. What do you think this means?

The chart above is again a monthly chart, this time with Fibonacci retracements. Notice how prices have just now reached a 25% retracement level of the entire two year decline and that a typical 38% retracement would come in at about SPX 1015. Also observe how short this current three-month rally has been when compared to an 18 month decline. See how Advanced GET is suggesting that the completion of wave 4 will be between 960 – 1020.

Below is a close-up of the above chart via a weekly chart:

This above chart has a more completed look to the wave 4 advance from early March. The problem is that a confirmation will not occur until the Blue Wave sell level is hit. This level was 842.99 last week and will probably be at a higher level next week. We will know the new reversal level on Monday.

Moving to a daily view of the SPX, here is an interesting perspective courtesy of Market Club:

The MC chart is on a buy with a sell basis the weekly charts under 880. I’ve added a Parabolic stop/reverse indicator which is suggesting a level of 887.65 will generate a reverse-short signal. So with a weekly Triangle sell at 880 and the daily at 887.65, we have the makings of important support levels that if breached would signal a major change of trend.

Here is a daily view of the SPX, showing a much closer Blue Wave sell level:

The daily chart above has a much closer Blue Wave reversal sell level, 918, only a little over 20 SPX points lower.

Finally, the 120-minute chart, a time frame…
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Optimistic Unemployment and Housing Forecasts Looking Downright Silly

Optimistic Unemployment and Housing Forecasts Looking Downright Silly

Courtesy of Mish

Economics may be the "dismal science" but economists as a group sure seem to be an optimistic lot. Yes, there are a handful of "doomers" like Nouriel Roubini but most economists did not see the recession coming until it was already 10 months old.

Please consider unemployment forecasts. The Fed forecast unemployment at 8.4% in 2009 and the "adverse forecast" was at 10.3% in 2010.

Hello Ben, in case you did not notice, Jobs Contract 17th Straight Month; Unemployment Rate Soars to 9.4% and Bankruptcy Filings Reach 6,000 A Day.

Adverse Assumptions

Let’s take a look at all the Fed’s adverse assumptions for the recently conducted "stress-free test" as laid out in the Fed’s Stress Test White Paper.

Click on Table for Sharper Image

1 Percent change in annual average.
2 Baseline forecasts for real GDP and the unemployment rate equal the average of projections released by Consensus Forecasts, Blue Chip, and Survey of Professional Forecasters in February.
3 Annual average.
4 Case?Shiller 10?City Composite, percent change, fourth quarter of the previous year to fourth quarter of the year indicated.

Case Shiller Housing Index

Please consider the latest Case Shiller Housing Index.

The S&P/Case-Shiller Home Price Index ? which covers 20 metropolitan areas ? showed a price decline of 18.7% in March, suggesting a greater fall in prices than expected. Analysts were looking for an -18.40% reading, following the -18.67% reading for February. The 10-city measure fell a similar 18.6%.

The numbers were even worse on a quarterly basis. The Q1 report ? which covers all nine U.S. census divisions, rather than just 20 metropolitan areas ? recorded a 19.1% decline compared to the first quarter of 2008, marking the steepest fall ever in the 21-year history of the index.

“All 20 metro areas are still showing negative annual rates of change in average home prices with nine of the metro areas having record annual declines,” said David Blitzer, Chairman of the Index Committee at Standard & Poor’s. “Seventeen metro areas recorded a monthly decline in March, with Minneapolis, Detroit and New York posting record monthly declines.”

Note that the baseline scenario for housing for 2009 is -14%. Home prices are already down 19.1% and the adverse scenario will be under

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The S&P 500 Conundrum

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Adam Hewison, co-creator of Market Club, sent me his new video analysis of the S&P 500, which he calls a "conundrum wrapped in an enigma" – here’s his intro and video below. – Ilene

The S&P 500 Conundrum

Courtesy of Adam of Market Club

A conundrum wrapped in an enigma… that’s the S&P 500 index.

I was just looking at the S&P 500 index as we come to a close for the week of June 6th. While the market appears to be higher for week, it also appears that we’re losing momentum on the upside.

This can be seen in the second attempt to close over the 950 level. Also some of our momentum indicators are showing negative divergences. This means that while the S&P 500 is making new highs for the move, the momentum indicators are not showing the same configuration and making new highs. This can often be the first clue of a potential market correction.

In this short video on the S&P 500, you’ll will see exactly what I’m looking at and why.

[Click on chart to watch the video.]



Sunday Readings

Sunday Readings

  • Gordon Brown repeats vow not to go away (Telegraph)
  • Airline execs say industry outlook still grim (Reuters)
  • Extreme dumb money bullish sentiment (Technical Take)
  • Blackrock set to become largest quant fund in the world (Telegraph)
  • Monetizing debt: The grandest of larcenies (Daily Reckoning)
  • Evans-Pritchard: Merkel’s inflationary fretting may wake the bears from hibernation (Telegraph)
  • Bankruptcy filings rise to 6,000 a day (USA Today)
  • Daniel Gross: The bond war – Krugman vs Ferguson (Slate)
  • Roundup of (un)employment charts (Big Picture)
  • Justice Antonin Scalia: “The US Constitution is dead” (Fora)

  • Eli Broad’s remedy for the auto industry (Fora)


Big thanks to Gayle and Sherrie for their donations and support.


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EXCLUSIVE: GE/NBCU TRYING TO STIFLE OTHER MEDIA’S COVERAGE OF COMPANY: Immelt Orders Nielsen Media Iced Over GE-NBCU-Obama Story: NBCU’s Zucker Follows Orders And Freezes Out The Hollywood Reporter For Past 6 Weeks

By Nikki Finke of Nikki Finke’s Deadline Hollywood Daily


It’s a very dangerous situation when any huge multinational corporation wages war against media companies. Especially when that huge multinational corporation is General Electric, which itself owns a media company, NBC Universal, and it’s using all its power and influence and money to try to harm another media company, Nielsen, and Nielsen Business Media, and its trade publication The Hollywood Reporter. This certainly sounds like a situation which the FCC, and the FTC, and the U.S. Justice Department should be investigating. Just one problem: the controversy stems from GE/NBCU’s coverage of President Obama. Here’s what happened:

According to my sources inside and outside Nielsen Business Media, The Hollywood Reporter trade publication ran a story dated April 22nd and updated on April 24th covering the "drama" at the most recent GE shareholders meeting in Orlando. THR‘s West Coast Business Editor Paul Bond wasn’t sent to the meeting, but he interviewed about half a dozen people who’d been inside the shareholders meeting and told him what transpired (see below). Bond’s THR story focused on the attempts by stockholders and Fox News Channel and other media to find out whether or not GE Chairman/CEO Jeffrey Immelt ordered his news operations to be less critical of President Obama and his policies.

Bond’s story was immediately picked up by The Drudge Report under the headline "GE shareholders outraged over MSNBC bias; Microphone cut off." It became a widely posted news story on conservative and liberal and media websites everywhere. That’s when, sources inside and outside Nielsen Business Media tell me, GE Chairman Jeff Immelt ordered a GE company-wide ban on all of The Hollywood Reporter‘s parent company Nielsen: advertising, editorial, the works… Continue here.


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Goldman Now Dominating Dark Pool Trading; Who Is Sigma X?

Goldman Now Dominating Dark Pool Trading; Who Is Sigma X?

The last time I discussed dark pools, it was in the context of SEC regulation due to the increasing sense of opacity of what happens in this subset of the stock market. A new Reuters article adds fuel to the fire, indicating that not only are dark pools aggressively taking away from exchange trading action, but it is in fact bank-run dark pools that are the primary culprit.

“Dark pools,” where orders are anonymously matched so that traders do not alert the wider market to their intentions, have triggered concerns that stock pricing may not be transparent.

But the growth of those run by broker-dealers such as Goldman Sachs and Credit Suisse are squeezing other “dark” electronic trading venues, as well as exchanges, resulting in lower fees.

“The dark pools are definitely going to grow; the wild card is any new regulation,” said Dmitri Galinov, director and head of liquidity strategy at Credit Suisse’s advanced execution services, running the bank’s CrossFinder dark pool.

Overall, dark market share rose last year, but in the last eight months hit a ceiling near 9 percent of the U.S. market.

And while dark pools controlled by independent private ventures such as ITG would be a perfectly normal response to market demand for liquidity facilitation, it is surprising to discover that a vast majority of the pools are in fact controlled by the very same recipients of TARP funding (who are now doing all they can to issue stock so they can repay their TARP bonus burden).

Dark pools owned by brokers and large market makers accounted for 70 percent of all dark U.S. equity volume in April, up from 64 percent in December and from 58 percent a year earlier, according to Rosenblatt Securities, a widely referenced agency broker that tracks 18 dark pools.

Dark pools, which usually publish trades to the consolidated tape with little detail well after they are executed, have been around for decades, but their brands have gained more exposure in the last few years.

As frequent Zero Hedge readers know, when it comes to program trading on a traditional exchange such the

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The New, New Normal

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The New, New NormalVisit John's MySpace Page

Courtesy of John Mauldin, Thoughts from the Frontline Weekly Newsletter

We are coming to a critical inflection point, perhaps the most critical point that we have had in 70 years for the US and to a great extent the global economy. The choices we make (or that Congress and the Fed make for us) will affect not just our investment portfolios but business and our jobs for a very long time. Last week I talked about the three paths we face as a nation. I want to go back to that theme and expand upon it. You need to clearly understand what the risks are so that you can interpret the actions and data that will be coming at us in the next few quarters. I am feeling a little tired today, so I am going to take the liberty to reproduce Bill Gross’s latest comments as well, which are somewhat in line with my own.

A Different Perspective on Health Care

But before we jump into the letter, I want to acknowledge the very large response I got from readers about the cut and paste I did about the differences between the national health care systems of Canada and Great Britain the health care system of the US. To say that I touched a raw nerve is an understatement. I should also admit that I learned a great deal from some very cogent and thoughtful letters. I often write about the problems with using selective statistics in gauging the economy. I have learned that you can do the same with health care statistics.

There are many letters I could quote, but let me give you a counter for the statistics from last week from Raoul Pal of Spain. And of course, there are other statistics that can be brought in to make almost any case you want. But I found these to be very thought-provoking.

"Using the Economists World in Figures I think there is a very interesting and maybe appalling story to tell. In its simplest terms a healthcare system is there to extend the longevity of live of the population. It is the single best and simplest way to judge it because we can all find examples of where one country is better than…
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Phil's Favorites

PSW's Weekly Trading Webinar - 11-24-15

The PSW weekly webinar is ready to watch if you missed the live version. Enjoy!

[Subscribe to our YouTube Channel here.]


Major Topics:

00:01:53 Quick look at the stock market.

00:02:47 Markets Overview: Germany, DAX, Nikkei, Euro Stoxx, S&P, $SPX, AMZN, WMT, VMW, EMC, GOOG


00:32:00 IBM: It does a lot of buybacks!

00:41:33 MCD

00:47:04 IBM

00:50:40 IBM: Review Positions

00:55:10 NKE

01:04:41 IBM: puts and bull calls spread

01:10:21 BID

01:22:43 TASR

01:26:20 IBM puts, trade idea

01:29:24 DOLLAR Stronger, GLD, SLV, TLT  ...

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Zero Hedge

"We Reduced Our Short In The Euro" - Did Goldman Just Hint Draghi May Do Nothing Next Week

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Over the past year, there has been no stauncher supporter of the short-EUR trade than Goldman: so staunch in fact that Goldman's top trade for 2015 was basically a short EUR trade (which however ended up being a total loss for anyone who put it on because the EUR did not drop as fast as Goldman had expected ...

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All About Trends

Mid-Day Update

Reminder: David is available to chat with Members, comments are found below each post.

Click here for the full report.

To learn more, sign up for David's free newsletter and receive the free report from All About Trends - "How To Outperform 90% Of Wall Street With Just $500 A Week." Tell David PSW sent you. - Ilene...

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Market News

News You Can Use From Phil's Stock World


Financial Markets and Economy

Asia stocks mixed amid geopolitical tension, oil eases from highs (Business Insider)

Asian stocks were mixed in early trading on Wednesday as investors assessed the geopolitical risk surrounding Turkey's downing of a Russian fighter jet, while crude oil prices eased from two-week highs.

If China Killed Commodities Super Cycle, Fed Is About to Bury It (Bloomberg)

For commodities, it’s like the 21st century never happened.

The last time the Bloomberg Commodity Index of investor retu...

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Insider Scoop

Morgan Stanley Thinks SPX Flow Is Cheap Compared To Peers, Initiates At Equal-Weight

Courtesy of Benzinga.

Related FLOW Benzinga's Top Initiations Benzinga's Top Initiations

  • Shares of SPX Flow Inc (NYSE: FLOW) have been trading at a discount to its peers since the company’s spin in September 2015.
  • Morgan Stanley’s Nigel ...

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    Chart School

    2-0 Bulls

    Courtesy of Declan.

    A second day for bulls to shine despite modest end-of-day gains. Some indices did better than others. The Russell 2000 was the key performer. It finished with a MACD trigger 'buy' and looks ready to outperform the Nasdaq 100.  This is an important development for bulls looking for more from other indices. A move to challenge - then break - its 200-day MA, would convert August-November action into a healthy basing action.

    The Nasdaq registered higher volume accumulation as a brief sojourn below the 20-day MA was reversed. It's nicely set up for a push to new swing highs.


    more from Chart School

    Kimble Charting Solutions

    S&P 500 – Dangerous for bull case, if prices turn weak here!

    Courtesy of Chris Kimble.


    The S&P 500 remains inside of a rising channel that has been in place since 2010. The 5-year trend is up.

    The 5-month trend is a different story, at this time.

    Over the past 5-months, the S&P 500 has created a series of “falling weekly closing highs,” which is represented by line (1) above.

    The S&P is testing this falling resistance line at (2) above.

    If weakness takes place at (2) above, at falling resistance, it would be concerning price action for the bullish case!


    more from Kimble C.S.


    Sector Detector: Bulls wrest back control of market direction, despite global adversity

    Reminder: Sabrient is available to chat with Members, comments are found below each post.

    Courtesy of Sabrient Systems and Gradient Analytics

    Some weeks when I write this article there is little new to talk about from the prior week. It’s always the Fed, global QE, China growth, election chatter, oil prices, etc. And then there are times like this in which there is so much happening that I don’t know where to start. Of course, the biggest market-moving news came the weekend before last when Paris was put face-to-face with the depths of human depravity and savagery. And yet the stock market responded with its best week of the year. As a result, the key issues dominating the front page and election chatter have moved from the economy and jobs to national security and a real war (rather than police ...

    more from Sabrient


    Swing trading portfolio - week of November 23rd, 2015

    Reminder: OpTrader is available to chat with Members, comments are found below each post.


    This post is for all our live virtual trade ideas and daily comments. Please click on "comments" below to follow our live discussion. All of our current  trades are listed in the spreadsheet below, with entry price (1/2 in and All in), and exit prices (1/3 out, 2/3 out, and All out).

    We also indicate our stop, which is most of the time the "5 day moving average". All trades, unless indicated, are front-month ATM options. 

    Please feel free to participate in the discussion and ask any questions you might have about this virtual portfolio, by clicking on the "comments" link right below.

    To learn more about the swing trading virtual portfolio (strategy, performance, FAQ, etc.), please click here ...

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    Digital Currencies

    Bitcoin's Computing Network is More Powerful than 525 Googles and 10,000 Banks!

    Courtesy of ZeroHedge. View original post here.

    Submitted by Reggie Middleton.

    I've decided to build our startup - Veritaseum, a peer-to-peer financial services platform, directly on top of the Bitcoin Blockchain. Many queried why I would voluntarily give up a lucrative advisory and consulting business to chase virtual coins in cyberspace. That's exactly why I decided to do it. That level of misunderstanding of what is essentially the second coming of the Internet gave me a fundamental advantage over those who had deeper connections, more capital and more firepower. I was the first mover advantage holder.

    You see, Bitcoin is not about coins, currency or price pops. It is a massive computing net...

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    PSW is more than just stock talk!


    We know you love coming here for our Stocks & Options education, strategy and trade ideas, and for Phil's daily commentary which you can't live without, but there's more! features the most important and most interesting news items from around the web, all day, every day!

    News: If you missed it, you can probably find it in our Market News section. We sift through piles of news so you don't have to.   

    If you are looking for non-mainstream, provocatively-narrated news and opinion pieces which promise to make you think -- we feature Zero Hedge, ...

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    Whitney Tilson On LL, EXACT, And Martin Shkreli


    Whitney Tilson On LL, EXACT, And Martin Shkreli

    Courtesy of Value Walk

    1) The shares of one of my largest short positions (~3%), Exact Sciences, crashed by more than 46% yesterday. Below is the article I published this morning on SeekingAlpha, explaining why I think it’s still a great short and thus shorted more yesterday. Here’s a summary:

    • The U.S. Preventative Services Task Force’s Colorectal Cancer Screening Draft Recommendation issued yesterday is devastating for Exact Sciences’ only product, Cologuard.
    • I think this is the beginning of the end for the company.
    • My price target for the stock a year from now is $3, so I shorted more yes...

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    Baxter's Spinoff

    Reminder: Pharmboy and Ilene are available to chat with Members, comments are found below each post.

    Baxter Int. (BAX) is splitting off its BioSciences division into a new company called Baxalta. Shares of Baxalta will be given as a tax-free dividend, in the ratio of one to one, to BAX holders on record on June 17, 2015. That means, if you want to receive the Baxalta dividend, you need to buy the stock this week (on or before June 12).

    The Baxalta Spinoff

    By Ilene with Trevor of Lowenthal Capital Partners and Paul Price

    In its recent filing with the SEC, Baxter provides:

    “This information statement is being ...

    more from Pharmboy

    Mapping The Market

    An update on oil proxies

    Courtesy of Jean-Luc Saillard

    Back in December, I wrote a post on my blog where I compared the performances of various ETFs related to the oil industry. I was looking for the best possible proxy to match the moves of oil prices if you didn't want to play with futures. At the time, I concluded that for medium term trades, USO and the leveraged ETFs UCO and SCO were the most promising. Longer term, broader ETFs like OIH and XLE might make better investment if oil prices do recover to more profitable prices since ETF linked to futures like USO, UCO and SCO do suffer from decay. It also seemed that DIG and DUG could be promising if OIH could recover as it should with the price of oil, but that they don't make a good proxy for the price of oil itself. 


    more from M.T.M.

    Help One Of Our Own PSW Members

    "Hello PSW Members –

    This is a non-trading topic, but I wanted to post it during trading hours so as many eyes can see it as possible.  Feel free to contact me directly at with any questions.

    Last fall there was some discussion on the PSW board regarding setting up a YouCaring donation page for a PSW member, Shadowfax. Since then, we have been looking into ways to help get him additional medical services and to pay down his medical debts.  After following those leads, we are ready to move ahead with the YouCaring site. (Link is posted below.)  Any help you can give will be greatly appreciated; not only to help aid in his medical bill debt, but to also show what a great community this group is.

    Thank you for you time!

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    Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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    Ilene is editor and affiliate program coordinator for PSW. She manages the site market shadows, archives, more. Contact Ilene to learn about our affiliate and content sharing programs.

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