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Archive for 2010

Matthew Simmons: Lightning Rod for Gulf Oil Controversy

Courtesy of George Washington

Washington’s Blog

Matthew Simmons has made a lot of big claims about the oil spill (see videos below).

Because of his background, Simmons has been interviewed repeatedly in television, newspaper and radio media. Simmons was an energy adviser to President George W. Bush, is an adviser to the Oil Depletion Analysis Centre, and is a member of the National Petroleum Council and the Council on Foreign Relations, and is former chairman and CEO of Simmons & Company International, an investment bank catering to oil companies.

People have become polarized around Simmons as a lightning rod. For example, people who believe all of Simmons’ claims believe that anyone who questions any of Simmons’s claims is working for BP. On the other extreme, people who think Simmons has gone senile or is simply talking his book (he’s short BP) tar and feather anyone who questions BP’s version of the Gulf narrative as being a crazy Simmons follower.

So let’s assess Simmons’ claims one-by-one. And – more importantly – let’s refocus the discussion away from one person and towards the Gulf itself (Simmons himself will either be vindicated, proven off-base, or something in between. But that is his personal concern, not ours).

BP’s stock Will Go to Zero

Simmons predicts that BP’s stock will go to zero. he might be right. Fines under the Clean Water Act are $4,300 per barrel of oil spilled into the Gulf of Mexico. And civil and criminal damages could be substantial.

But BP has been doing everything in its power to lowball the amount of oil spilled into the Gulf (and see this), even though it easily could have easily quantified how much oil is spilling. If the government allows BP to get away with lowballing the spill number, the fines won’t bankrupt BP.

Similarly, if the government let’s BP maintain its $75 million liability cap on economic damages, let’s BP hide the extent of the damage to the Gulf (see this and this), to perform only a superficial clean up of the Gulf and fails to press criminal charges (or let’s BP off with a slap on the wrist), then BP might survive by selling assets.

And remember, BP is still one of the largest suppliers of oil to the U.S. military. See this and this.

In…
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With Stocks, It’s Not the Economy

Decoupling between stock prices and the domestic economy – and Zachary Karabell explains why he believes this trend will continue. – Ilene 

With Stocks, It’s Not the Economy

By Zachary Karabell, courtesy of TIME 

 

Illustration by Harry Campbell for TIME

From the beginning of May until late June, stock markets worldwide declined sharply, with losses surpassing 10%. The first weeks of July brought only marginal relief. Ominous voices began to warn that the weakness of stocks was a direct response to the stalling of an economic recovery that has lasted barely a year. Anxiety over debt-laden European countries — most notably Greece — combined with stubbornly high unemployment in the U.S. to create a toxic but fertile mix that allowed concern to blossom into full-bloom fear.

The most common refrain was that stocks are weak because global economic activity is sagging. A July 12 report by investment bank Credit Suisse was titled Are the Markets Forecasting Recession? With no more stimulus spending on the horizon in the U.S., Europeans on austerity budgets and consumer sentiment best characterized as surly, the sell-off in stocks was explained as a simple response to an economy on the ropes. 

It’s a good story and a logical one. But it distorts reality. Stocks are no longer mirrors of national economies; they are not — as is so commonly said — magical forecasting mechanisms. They are small slices of ownership in specific companies, and today, those companies have less connection to any one national economy than ever before.

As a result, stocks are not proxies for the U.S. economy, or that of the European Union or China, and markets are deeply unreliable gauges of anything but the underlying strength of the companies they represent and the schizophrenic mind-set of the traders who buy and sell the shares. There has always been a question about just how much of a forecasting mechanism markets are. Hence the saying that stocks have…
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A Bearish Predisposition?

Courtesy of Leo Kolivakis

Via Pension Pulse.

From systemic risk of capitalism, we move on to more current events. I had lunch today with Greg Gregoriou, a professor of Finance at SUNY (Plattsburgh) Greg has published many books and articles, and his most recent article with Razvan Pascalau on the optimal number managers in funds of hedge funds has garnered much attention.

Interestingly, while some major funds of hedge funds lost out in the crisis, assets from global pensions remain stable. Moreover, hedge funds are much more focused on meeting institutional demands:

Pension funds globally typically allocated less than 5 per cent of their portfolio to hedge funds or funds of hedge funds (while targeting an allocation of 6-10 per cent), and while this share has increased over the last few years, many expect it to double or triple in the years ahead.

 

In the US, private sector pension funds look to allocate on average up to 10 per cent of assets to hedge funds, a little ahead of America’s public sector pensions, which target about 8 per cent. In the UK, some of the biggest schemes allocate up to 15 per cent of their portfolio to hedge funds. In continental Europe, the take-up of hedge funds by pensions has been more mixed, but pension funds in some markets, such as the Netherlands, have embraced hedge funds and other alternative investment strategies.

 

The global economic crisis provided only a temporary interruption in the growth of institutional investments. Investors pulled about $300bn (£197bn, €232bn) out of hedge funds between October 2008 and June 2009, but inflows returned to healthy levels in the second half of 2009. Recent surveys by Credit Suisse and Deutsche Bank suggest the industry may attract $200bn-$300bn of new capital this year. It appears a large part of redemptions that followed the 2008 crunch were from wealthy individuals rather than institutions, and that institutions continued contributing new capital throughout most of 2009.

 

As part of their own growth and maturation, and in response to greater institutional investor demand, hedge fund managers and firms of all sizes have become more institutionalised in terms of their internal systems, structures and general operational infrastructure. This can be seen in the use of risk management


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Cheeky's Futures Charts – July 25

Courtesy of RobotTrader

Futures are off and kicking….

 

Indexes

 

 

Energy

 

 

Metals

 

 

Agricultural commodities

 

 

Bonds

 

 

Currencies

 

 

 

New Zealand

 

 

Australia

 

 

Japan

 

 

Korea

 

 

Hong Kong

 

 

Dubai

 

 

Shenzen Stock Exchange

 

 

Shanghai

 

 

India

 

 





Cheeky’s Futures Charts – July 25

Courtesy of RobotTrader

Futures are off and kicking….

 

Indexes

 

 

Energy

 

 

Metals

 

 

Agricultural commodities

 

 

Bonds

 

 

Currencies

 

 

 

New Zealand

 

 

Australia

 

 

Japan

 

 

Korea

 

 

Hong Kong

 

 

Dubai

 

 

Shenzen Stock Exchange

 

 

Shanghai

 

 

India

 

 





Weekly Market Commentary: Pushes Higher

Weekly Market Commentary: Pushes Higher

Courtesy of Fallond Stock Picks 

The S&P closed the week up 3.55% higher but hasn’t yet cleared the highs of the bear flag which lurk at 1,131 but so far the initial decline from 2010 highs has honored Fibonacci retracements

($SPX)

via StockCharts.com

In support, the NYSE Summation Index looks to have flinched and jumped early. A stochastic ‘buy’ is undermined by the lack of the oversold condition in the index itself. 

($NYSI)

via StockCharts.com

The only S&P breadth indicator to confirm a bottom (so far) is the S&P Percent of Stocks Above the 50-d MA. It has jumped from a low of 5.4% to 66.0% in a number of weeks.

($SPXA50R)

via StockCharts.com

The Nasdaq has pulled further away from its head-and-shoulder reversal neckline but it hasn’t yet reached an oversold condition.

Nasdaq

via StockCharts.com

The Percentage of Nasdaq stocks above the 50-day MA matched its S&P cousin with a confirmed ‘buy’ signal.
($NAA50R)

via StockCharts.com

So while the S&P and Nasdaq are pointing more towards a bottom they are not fully confirmed – yet.  





All About Trends Subscriber Weekend Newsletter

All About Trends Subscriber Weekend Newsletter

Courtesy of David at All About Trends 

Friday we said:

So what if the market goes to 1131? 

First off we have to get through the 200-day moving average at 1113 which is just a futures related pop at the open on Monday away. By the way these futures related pops at the open are what causes negative RS divergence because there really isn’t any strength per say just an adjustment in price from the prior close via the pop.

Notice the Full Stoh’s are right back to being up where they were every other time we were in the zone for a turn around?

Secondly look at where the 200 day moving average is (1113). Then the 50% fibonacci retracement level off the April highs to July lows is at 1114 too as shown in the chart below.  This makes for some headwinds to overcome IF we are plowing higher. 

And lastly the red line is the SPIKE HIGH of 1131. We emphasize the spike high of 1131 because it wasn’t there long and the market started giving it back. 

So now we’ve got some decent resistance levels just overhead.

Zooming in to a different time frame and frequency we see a closer view of this recent push off the July lows.

Here too Full Stohcastics are right back up into the overbought territory which makes us pause.  We’re not going to get cute on the longside here. Sure, we may have to deal with a little inflight turbulence but that ought to be nothing new as we’ve been here before and will be here again during our trading careers.

You can also see that we broke the red downtrend channel to the upside but we’ve already talked about that being a possibility last week.  Another interesting point is the ABC up swing we’ve just seen (on negative RS divergence we might add). This also makes it time for our favorite question: 

Is it going to be a 3 waves up affair and that’s it? If so, ABC123 is currently showing and we are there in the zone.

OR 

Is it going to be 5 waves up to the…
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My Life as a White-Collar Criminal

My Life as a White-Collar Criminal

Courtesy of Sam Antar at White Collar Fraud 

Last Friday evening, Marcia MacMillan from CTV News Channel (a 24-hour news network in Canada) interviewed me and asked me what it’s like to be a white-collar criminal and what role, if any, did morality play in my decisions to commit crime.  

You can watch the interview by clicking on this link.

Reflecting on my own white-collar criminal mind leaves no doubt that money is not the only motivating force compelling hardcore criminals to commit crimes.  There was also a passion for the act, a sense of accomplishment, that made me enjoy committing my crimes. It is perhaps the same positive feelings of success that law-abiding citizens experience for a legitimate job well-done.  

To better understand the behavior of white-collar criminals, take morality out of the equation. During my years at Crazy Eddie, we never had a single conversation about the morality of our actions. We did not give a damn about right and wrong.

Hardcore criminals don’t question their unethical and immoral conduct.  Laws, morality, and ethics are weaknesses of other people. They don’t factor in except by limiting society’s behavior. In our society, morality dictates that people are entitled to the benefit of the doubt. Ironically, the “benefit of a doubt” limits the behavior of law-abiding citizens while giving criminals greater opportunity to commit their crimes.  After all, no one likes to be called "a paranoid" or "impolite."  

Our late President Ronald Reagan used to say "trust, but verify." That initial trust gives criminals the freedom to take steps to evade detection.  For example, Joseph T. Wells, founder of the Association of Certified Fraud Examiners, described certain steps I took during Crazy Eddie’s audit to successfully execute my crimes: 

Crazy Eddie’s auditors were provided a company office during their examination. They had a key to lock the desk—which they kept in a box of paperclips on top of the desk in full view. After the auditors left for the day, Eddie’s cohorts would unlock the desk, increase the inventory counts on the work-papers and photocopy the altered records. Were the auditors stupid? No, just too trusting. After all, no one wants to think the client is a crook. But it happens all too often. That’s why the profession requires auditors to be skeptical. 

I took advantage of our auditor’s initial trust of management and rigged…
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Investor Sentiment: I Am a Squirrel

Courtesy of thetechnicaltake

 

Glenn Holderreed of Quacera Capital Management and the QPM Radar sent me an email the other day describing the market:

 “Charting this market is similar to tracking the moves of a squirrel crossing a busy street. Quickly moving to the middle, no better turn back, no, no, I can make it across, oh no I better go back, shucks I can make it across. Sometimes they make it, but many get flattened. I think there are a few flattened in this market.”

{To view larger images just click on the graphs}

 

Investor Sentiment 7.25.10





LBMA Closes Off Public Access To Key Bullion Bank Trading Data

Courtesy of Tyler Durden

Is something (abnormally) fishy in the state of precious metals manipulation? GATA’s Adrian Douglas (recently famous for facilitating the emergence of whistleblower Andrew Maguire) seems to think so, after his observation that the LBMA has decided to block “access to statistics relating to the trading activities of its member bullion banks. This information has been available to the public since 1997 but as of this week it is available only to LBMA members.” His conclusion: “There is a cover-up of back-door injections of liquidity of physical gold, and the LBMA now is trying to conceal trading information. I interpret the LBMA’s move to secrecy as a sign that the opportunity to get real metal is closing fast.” Read on for his argument…

From GATA’s Adrian Douglas

The LBMA joins the gold squeeze cover-up, via GATA

The London Bullion Market Association has just taken the highly unusual step of blocking access to statistics relating to the trading activities of its member bullion banks. This information has been available to the public since 1997 but as of this week it is available only to LBMA members. (See http://www.lbma.org.uk.)

I have recently written a series of exposes of the LBMA (see References 1-4 below) using the association’s own data to show that the LBMA’s bullion banks are operating on a “fractional reserve” basis. My analysis indicates that the bullion banks are holding only 1 real ounce for about every 45 ounces of gold that they have sold, a reserve ratio of just 2.3 percent

At the March 25 public hearing of the U.S. Commodity Futures Trading Commission on precious metals futures markets I cited the LBMA’s own statistics to label the “unallocated gold” accounts of the bullion banks as a Ponzi scheme. (See Reference 3 below.) There were bullion bank representatives at the hearing but no one expressed an objection. That hearing was videotaped and posted at the CFTC’s Internet site but the bullion banks have not made any public statement rebutting what I said. In fact at that hearing Jeffrey Christian, CEO of the CPM Group, acknowledged that what is widely called the “physical market” is in reality a largely “paper market” trading gold and silver as if they are financial assets and not physical metals. Christian stated that 100 ounces of paper gold are traded for every 1 ounce of physical…
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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 jennifersurovy@yahoo.com 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.

http://www.youcaring.com/medical-fundraiser/help-get-shadowfax-out-from-the-darkness-of-medical-bills-/126743

Thank you for you time!

 
 

Sabrient

Sector Detector: Bulls leverage hopeful news to launch a tepid breakout attempt

Courtesy of Sabrient Systems and Gradient Analytics

Stocks were able to leverage some optimistic news and dovish words from the Fed to take another stab at an upside breakout attempt last week. Although readers have sometimes accused me of being a permabull, I am really a realist, and the reality is that the slogans like “The trend is your friend” and “Don’t fight the Fed” are truisms. And they have worked. Nevertheless, I am still not convinced that we have seen the ultimate lows for this pullback, especially given the weak technical condition of small caps.

In this weekly update, I give my view of the current market environment, offer a technical analysis of the S&P 500 chart, review our weekly fundamentals-based SectorCast rankings of the ten U.S. business sectors, and then offer up some actionable trading ideas, including a sector ...



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Phil's Favorites

Strange Bedfellows: To Fight ISIS, US Now Supports Iranian Revolutionary Guard, Other Terror Groups

Courtesy of Mish.

Strange Bedfellows

US Mideast relationships get stranger every day. The US has come to the defense or has given aid to three rather unlikely groups in the past few weeks.

  1. Iranian Revolutionary Guard
  2. Kurdish Workers Party (PKK), which directly supports the YPG, on Washington's list of proscribed terror groups
  3. "Moderates" fighting to overthrow Syrian president Assad. Those moderates just signed a non-agression pact with ISIS

70,000 Kurds Seek Refuge in Turkey

The Guardian reports Kurds Flee into Turkey to Escape Isis Offensive
More than 70,000 Kurds fled from northern Syria into Turkey at the weekend and tens of thousands more are trying to cross...



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OpTrader

Swing trading portfolio - week of September 22nd, 2014

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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Zero Hedge

Liquidations Continue: Stocks, Dollar Slide, Precious Metals Pounded In Asia Trading

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

Markets are very active in the early Asian trading session (following the G-20-'s warnings over excess risk-taking). Precious metal liquidations continue with silver bearing the brunt (back below pre-Lehman levels) and gold down modestly. Stocks from China to US are all down notably too. The USD is weakening as EUR strengthens on the back of ECB comments about the possibility of no more stimulus and chatter that the PBOC may be...



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Chart School

Daily Market Commentary: Higher Volume Selling, and Bearish Engulfing Pattern in Russell 2000 and Semiconductor Index

Courtesy of Declan.

In day when Alibaba took the headlines, it was left to the Russell 2000 and Semiconductor Index to warn of potential change.

The Russell 2000 experienced a large bearish engulfing pattern, although within the boundaries of the declining channel. There was an undercut of the 200-day MA, which will need to be watched on Monday. Shorts could get aggressive with a stop above 1,164 (and/or declining channel line).


The semiconductor index also experienced a bearish engulfing pattern, which doubled as a 'bull trap'.  This is a decent sho...



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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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Stock World Weekly

Stock World Weekly

Newsletter writers are available to chat with Members regarding topics presented in SWW, comments are found below each post.

Here's the latest issue of Stock World Weekly. Enjoy! Please sign in using your PSW user name and password. (Or take a free trial.)

...

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Option Review

IV Implodes On 4-hour YHOO Options As BABA Commences Trading

Investors are dumping shares in Yahoo, sending the stock down 5.0% to $40.08 after shares in Alibaba made their debut on the floor of the NYSE just before midday. Shares in BABA for their part initially traded up to a high of $99.70, a near 47% increase over the IPO price of $68.00. Typically, one would expect put options that are 5% out of the money with roughly 4-hours left to trade to see waning implied volatility. But, at the start of the trading session and ahead of the first trade for BABA, the Sep 19 ’14 40.0 strike put options were trading with 271% volatility or $0.30 per contract amid uncertainty as to how the start of trading for Alibaba would take shape.

...

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Market Shadows

Selling PVD

Selling PVD

Administradora de Fondos de Pensiones Provida S.A. (PVD) shares will not be trading on the NY Stock Exchange after today. Tomorrow, shares will be harder to sell. Strangely, I wasn't able to find information on the internet, but Paul just sent me a copy of the email he received from Interactive Brokers.

We're selling PVD out of the Virtual Portfolio today at $87.18. 

More details:

From: Interactive Brokers   dated July 18, 2014

Holders of AFP Provida S.A. American Depository Receipts (ADR) are advised that the Company has elected to terminate the Deposit Agreement effective 2014-09-18.

As of the te...



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Promotions

Last Chance! See The 'Google-Like' Trading Algorithm 'Live' TODAY

Traders and Investors,

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When you register for the webinar, you’ll also get instant access to following trading videos:

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Digital Currencies

Making Sense of Bitcoin

Making Sense of Bitcoin

By James Black at International Man

Despite the various opinions on Bitcoin, there is no question as to its ultimate value: its ability to bypass government restrictions, including economic embargoes and capital controls, to transmit quasi-anonymous money to anyone anywhere.

Opinions differ as to what constitutes "money."

The English word "money" derives from the Latin word "moneta," which means to "mint." Historically, "money" was minted in the form of precious metals, most notably gold and silver. Minted metal was considered "money" because it possessed luster, was scarce, and had perceive...



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Pharmboy

Biotechs & Bubbles

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

Well PSW Subscribers....I am still here, barely.  From my last post a few months ago to now, nothing has changed much, but there are a few bargins out there that as investors, should be put on the watch list (again) and if so desired....buy a small amount.

First, the media is on a tear against biotechs/pharma, ripping companies for their drug prices.  Gilead's HepC drug, Sovaldi, is priced at $84K for the 12-week treatment.  Pundits were screaming bloody murder that it was a total rip off, but when one investigates the other drugs out there, and the consequences of not taking Sovaldi vs. another drug combinations, then things become clearer.  For instance, Olysio (JNJ) is about $66,000 for a 12-week treatment, but is approved for fewer types of patients AND...



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About Phil:

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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