It’s actually getting a little amazing to watch what’s going on in the popular media. I got the latest issue of Time magazine in the mail, and check out the back cover………
Ummmmmmmm……..don’t miss the bounce? Like buying DTG at $20.60 per share?
Folks, even if there’s more upside from here, the "bounce" already happened! Gobbling up anything with a ticker symbol in mid-March has turned out to be brilliant for anyone who managed to do so (and who hung on until now). Stocks moving up multiple hundreds of percent – or even quadruple-digits of percent – are commonplace. I mean, hell, Ford – – makers of the Taurus! – – is up 800%!
But the notion that the common man can take advantage of some impending bounce is just pathetic. But, more important for us, as we look back on this a year from now, we’ll see how it was yet another case of (…..dramatic pause.…..) the curse of the cover. <—echo-y voice.
New York Times reporters Gretchen Morgenson and Don Van Natta have dumped a gigantic bucket of kerosene on the Goldman Sachs (GS) conspiracy fire with a new report detailing the extent to which then Treasury Secretary Hank Paulson was in touch with his old bank during the pit of the crisis.
Bottom line: he was in touch with Goldman a lot.
While Mr. Paulson spoke to many Wall Street executives during that period, he was in very frequent contact with Lloyd C. Blankfein, Goldman’s chief executive, according to a copy of Mr. Paulson’s calendars acquired by The New York Times through a Freedom of Information Act request.
During the week of the A.I.G. bailout alone, Mr. Paulson and Mr. Blankfein spoke two dozen times, the calendars show, far more frequently than Mr. Paulson did with other Wall Street executives.
On Sept. 17, the day Mr. Paulson secured his waivers, he and Mr. Blankfein spoke five times. Two of the calls occurred before Mr. Paulson’s waivers were granted.
By waviers, they’re referring to ethics waivers which had barred Paulson from having any significant relationship in dealing with Goldmn Sachs issues, as Secretary of the Treasury. Clearly, this was no time to be bound by old formalities and ethics limitations that they thought would never become an issue.
It also belies the claim — which Goldman still maintains to this day — that the firm was never in danger, even with the teetering AIG and the financial crisis as a whole. What these records suggest is that Paulson was, indeed, concerned about Goldman’s condition specifically — if he’d just been talking to Blankfein about general market conditions, the waivers wouldn’t have been required.
Still though, you have to give Goldman Sachs credit for message discipline:
A spokesman for Goldman, Lucas van Praag, said: “Lloyd Blankfein, like the C.E.O.’s of other major financial institutions, received calls from, and made calls to, Treasury to provide a market perspective on conditions and events as they were unfolding. Given what was happening in the world, it would have been shocking if such conversations hadn’t taken place.”
Let’s bring current the view of the market from the perspectives of Renko and 3-Line Break Point charts, using long-term Weekly charts, intermediate-term Daily charts and short-term Hourly trading charts
Renko – Weekly
Last signal a Buy on July 13 at 881.49
Point Break – Weekly
Last signal a Buy @ 761.75 on April 27th – Sell stop @ 899.52
Renko – Daily
Sell signal August 6th @ 1000.87
Point Break – Daily
Sell stop @ 986.56
Renko – Hourly
Last Sell August 7th @ 1014.05
Point Break – Hourly
Sell August 7th @ 1012.37
Are these signals tradable? Those are some very impressive trades across the board, from Weekly to Daily to Hourly. Labeling these trades in retrospect on a Sunday afternoon with a ballgame on in the background is one thing, trading the actual signals in real time with CNBC blasting and multiple models singing, well, that’s quite a different situation.
To be termed scientific, a method of inquiry must be based on gathering observable, empirical and measurable evidence subject to specific principles of reasoning. A scientific method consists of the collection of data through observation and experimentation, and the formulation and testing of hypotheses.
Well said. So my ongoing research is in part based in turning these two charting methodologies into a real time real money algorithm. Coming soon to a blog close to your hearts.
Oh yeah, something else from John Stuart Mill:
Mill’s On Liberty addresses the nature and limits of the power that can be legitimately exercised by society over the individual. One argument that Mill develops further than any previous philosopher is the harm principle. The harm principle holds that each individual has the right to act as he wants, so long as these actions do not harm others.
With the ban of Flash orders in equity markets now practically a done deal, politicians, and hopefully regulators, will start focusing their attention on Flash derivative products which facilitate not only a two tiered market but potential market abuse by the privileged few who have access to advance looks in assorted securities classes.
While dark pools will ultimately be the critical focal point of tiered market differentiation, it seems the next immediate area of focus will be flash orders in option trades. As before, a major opponent of Flash, NYSE Euronext, provides a few on why flashed options afford club” members the opportunity to sniff out larger market moves. From Traders Magazine:
[Ed Boyle, who runs NYSE Euronext's U.S. option business] argues notes that flashed orders can enable participants receiving the flashes to trade ahead of customers whose orders are flashed, either in the stock market or in options. “When an order is flashed, there’s often not a lot of contracts available at the best price,” he said. “It’s when the market is moving fast that a customer is likely to be disadvantaged [by flash orders].” He added that flash orders proliferated in 2007 when the penny pilot began. Arca has price-time priority and maker-taker pricing for penny-quoted options.
The International Securities Exchange and the Chicago Board Options Exchange argue that flash orders benefit customers. “Customers like this functionality,” said Boris Ilyevsky, managing director of the ISE Options Exchange. “They see a direct economic benefit.”
He notes that flash order types in options are technically similar to those in equities, although the benefits are different. “Our market makers and members can match the away price through a flash auction,” Ilyevsky said. “That gives the customer the away price without paying a take fee that could, on some markets, be 45 cents per contract. The customer fee on the ISE is zero.” If there’s no response, the ISE’s primary market maker in that symbol seeks the best price through a linkage order.
Other defenders appear in the form of the CBOE, whose flash order type…
That’s what I do for a living, check out a recent guest blog post at INO.com.
"We ALL get the emails, “UOMO is going up big, buy today” , “If you’re looking for 3000% gains go long XYZ”…the dreded penny stock pump and dump! The pump and dump often plagues new traders looking for huge returns and veterans trying to play them along with the “pumper”. But it’s often very risky and millions are lost everytime the “pump” is on. But there’s one person I personally know (I was able to have a nice sushi lunch in NY with him) who trades the “pump and dump’s” and makes a KILLING doing it! You’ve all heard about him and his name is Tim Sykes. Love him or hate him, he’s one of, if not the best person out there for penny stock info and trading." Brad of INO, MarketClub.
Timothy: People often ask me what I do for a living and I love to see the look on their face when I say, “I short sell and write about hyped up and manipulated Penny Stocks”
When I first started blogging in 2007, Investopedia said it was not possible to short sell Penny Stocks. They have since changed their minds now that my big mouth has been shouting at the top of my lungs, you can short stocks under $5, it’s not as risky as you might assume, but only if you know what you’re doing.
The key to my survival and success in a decade-long career in this greatly misunderstood niche has been to be wary of everyone and every company. Most people buy Penny Stocks thinking that they have a shot at turning a few hundred or thousand dollars into millions. Certain financial websites that title articles “The Next Million Dollar Penny Stock” look to take advantage of that.
I take it one step further, looking to take advantage of those gullible suckers as they fail to realize the odds of a $1 stock becoming a $100 stock, let alone a $5 or $10 stock, are horrific. Mainly due to the fact that ALL stocks trading under $5 are flawed in some way (that’s why their stock…
U.S. Treasury Secretary Timothy Geithner formally requested that Congress raise the $12.1 trillion statutory debt limit on Friday, saying that it could be breached as early as mid-October.
"It is critically important that Congress act before the limit is reached so that citizens and investors here and around the world can remain confident that the United States will always meet its obligations," Geithner said in a letter to Senate Majority Leader Harry Reid that was obtained by Reuters.
A Treasury spokeswoman declined to comment on the letter.
Treasury officials earlier this week said that the debt limit, last raised in February when the $787 billion economic stimulus legislation was passed, would be hit sometime in the October-December quarter. Geithner’s letter said the breach could be two weeks into that period, just as the 2010 fiscal year is getting underway.
The latest request comes as the Treasury is ramping up borrowing to unprecedented levels to fund stimulus and financial bailout programs and cope with a deep recession that has devastated tax revenues.
It is expected to issue net new debt of as much as $2 trillion in the 2009 fiscal year ended September 30 and up to $1.6 trillion in the 2010 fiscal year, according to bond dealer forecasts.
The request to increase the debt limit will likely raise the ire of Republicans who have accused President Barack Obama of runaway spending. They may try to hold up the legislation in effort to win concessions on Obama’s health care reform plan.
Geithner urged Reid to not let politics hamper U.S. credit-worthiness and said he looked forward to working with the Nevada Democrat to secure enactment of legislation on the debt limit as early as possible.
"Congress has never failed to raise the debt limit when necessary. Because members of both parties have long recognized the need to keep politics away from
Some are greeting Friday’s employment report as an all-clear signal. But my advice is, keep your helmet on-- they’re still shooting real bullets out there.
Let’s start with the good news. I first called attention to the favorable turn in new claims for unemployment insurance on April 9, noting that in each of the previous 6 recessions, an economic recovery began within 8 weeks of the peak in new claims. On May 7, I concluded we had enough statistical evidence to predict with 85% confidence that new claims for unemployment insurance had indeed peaked at the beginning of April. Although there was some concern as to whether seasonal adjustment could be confounding the July readings, it’s pretty clear now that the substantial decline in new claims is the real deal.
Black line: 4-week average of seasonally adjusted weekly initial claims for unemployment insurance, from Department of Labor via Webstract. Vertical lines mark the first month of an economic expansion as ultimately determined by the National Bureau of Economic Research.
And many cheered Friday’s BLS release showing that nonfarm payroll employment fell by 247,000 workers in July, the smallest drop since August, 2008. But the problem is, if a traditional economic recovery had actually begun in June (8 weeks after the April peak in claims), the number of people with jobs should have increased in July rather than fallen by another quarter million.
Change in employment
Oct 70 to Jan 71
Feb 75 to May 75
Jun 80 to Sep 80
Oct 82 to Jan 83
Apr 91 to Jul 91
Nov 01 to Feb 02
Apr 09 to Jul 09
To put this in perspective, I took a look at where nonfarm payroll employment stood relative to where it had been at the time of the peak in unemployment claims for the current and each of the previous 6 episodes. I calculated
Here’s an excellent documentary video called "The Great American Bankruptcy." H/t Tyler Durden at Zero Hedge, who h/tipped Ian. William K. Black, a white collar criminologist, discusses the financial crisis and our pseudo-capitalistic fraud-ridden system. - Ilene
William Kurt Black is an American lawyer, academic, author, and a former bank regulator. Black’s expertise is in white-collar crime, public finance, regulation, and other topics in law and economics. He developed the concept of "control fraud", in which a business or national executive uses the entity he or she controls as a "weapon" to commit fraud.
On April 3, 2009 Black appeared on "Bill Moyers Journal" on PBS and provided critical commentary on the U.S. banking crisis. In the interview with Bill Moyers, Black asserted that the banking crisis in the United States that started in late 2008 is essentially a big Ponzi scheme; that the "liar loans" and other financial tricks were essentially illegal frauds; and that the triple-A ratings given to these loans was part of a criminal cover-up.
Discover consumer spending monitor drops for second month, “Anticipated Spending Falls for First Time Since February; Majority of Consumers Planning Cutbacks on All Discretionary Purchases” (Discover Financial, h/t Philip)
As we are in a similar situation this weekend, when stocks may have run up a bit too far to buy – it’s a good time to look at other long plays we can make "just in case" the rally continues. Our Long Shots are meant to pay off big when the market rises big while not risking too much capital but they are RISKY plays as they are not very adjustable if there is a pullback. Nonetheless, our last group has performed spectacularly so let’s review those and then make some new plays as the market swings for the fences.
C – Buying 2011 $2.50 calls for $1.14 (now $1.98) and selling the 2011 $5 calls for .56 (now $1.03). That’s a net gain of .37 on the .58 spread or 63%, which is pretty darned good for 6 weeks but our goal on this trade is a 346% profit and we’re not going to get there without some very greedy holding through some very big returns. One trick with these sort of plays is to buy a bit more than you plan to hold long-term, like 20 @ .58 ($1,160) rather than 10 ($580) since the downside curve is not very steep (unless C suddenly went BK, which was doubtful). Then you could snatch 10 off the table at .95 ($950) and you could let the remaining $210 ride and it would still pay your target $2,500 if it hits goal at expiration.
Always remember with these plays they are like betting on long shots at horse races EXCEPT, you get to change your mind and withdraw most of your bet after the race starts and you get a look at your horse’s performance. That’s a very good deal but you MUST use that power and take the bad bets off the table otherwise you blow your entire advantage!
UYG was another one that just seemed too darned cheap at $3.87 (now $5.55) and we went for the 2011 $4s at $1.38 (now 2.30), selling the $5s for $1.12 (now $1.90) so we’ve gone from net .24 to net .40, up 66% but, like C, we’re not going to get to our 300% goal without holding on through some ridiculous profits are we? Of course with this play, as well as C and others like them – just because we…
“We’re not gonna make it, are we ? People, I mean.”
“It is in your nature to destroy yourselves.”
“Yeah. Major drag, huh ?”
From James Cameron’s ‘Terminator 2: Judgment Day’.
Here is a thought experiment. It is January 2000. The last wild Pyrenean ibex has been found dead, squashed by a tree. America Online has just announced an agreement to buy Time Warner for $162 billion – the largest corporate merger in history. It is all very exciting. Suddenly, a sourceless wind rises; papers blow across t...
Reminder: Pharmboy is available to chat with Members, comments are found below each post.
Understanding the new normal of a business model is key to the success of any company. The managment of companies need to adapt to the changing demand, but first they must recognize what changes are taking place. Big Pharma's business model is changing rapidly, and much like the airline industry, there will be but a handful of pharma companies left at the end of this path.
Most Big Pharma companies have traditionally done everything from research and development (R&D) through to commercialisation themselves. Research was proprietary, and diseases were cherry picked on the back of academic research that was done using NIH grants. This was in the heyday of research, where multiple companies had drugs for the same target (Mevocor, Zocor, Crestor, Lipitor), and could reap the rewards on multiple scales. However, in the c...
Stocks closed last week on a strong note, with the S&P 500 notching a new high, despite lackluster economic data and growth. I have been suggesting in previous articles that stocks appeared to be coiling for a significant move but that the ingredients were not yet in place for either a major breakout or a corrective selloff. However, bulls appear to be losing patience awaiting their next definitive catalyst, and the higher-likelihood upside move may now be underway. Yet despite the bullish technical picture, this week’s fundamentals-based Outlook rankings look even more defensive.
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.
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Bitcoin, the virtual digital currency, has been called the future of banking, a dangerous fad, and almost everything in between, but we're finally about to get some solid data to help settle the debate.
On Monday, the Nasdaq (NDAQ) stock exchange said it would ...
Chris Kimble likes the idea of shorting the US dollar if it bounces higher. Phil's likes the dollar better long here. These views are not inconsistent, actually, the dollar could bounce and drop again. We'll be watching.
Phil writes: If the Fed begins to tighten OR if Greece defaults OR if China begins to fall apart OR if Japan begins to unwind, then the Dollar could move 10% higher. Without any of those things happening – you still have the Fed pursuing a relatively stronger currency policy than the rest of the G8. So, if anything, I think the pressure should be up, not down.
UNLESS that 95 line does ultimately fail (as opposed to this being bullish consolidation at the prior breakout point), then I'd prefer to sell the UUP Jan $25 puts for $0.85 and buy the Sept $24 call...
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.
Kim Parlee interviews Phil on Money Talk. Be sure to watch the replays if you missed the show live on Wednesday night (it was recorded on Monday). As usual, Phil provides an excellent program packed with macro analysis, important lessons and trading ideas. ~ Ilene
The replay is now available on BNN's website. For the three part series, click on the links below.
Part 1 is here (discussing the macro outlook for the markets)
Part 2 is here. (discussing our main trading strategies)
Part 3 is here. (reviewing our pick of th...
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 firstname.lastname@example.org 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.
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