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.

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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….











Agricultural commodities










New Zealand












Hong Kong






Shenzen Stock Exchange









Cheeky’s Futures Charts – July 25

Courtesy of RobotTrader

Futures are off and kicking….











Agricultural commodities










New Zealand












Hong Kong






Shenzen Stock Exchange









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



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. 



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.



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



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


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.


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

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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Zero Hedge

Nigeria Slashes Oil Prices, Admits There Is A "Huge" Cargo Glut

Courtesy of ZeroHedge. View original post here.

Something ironic happened on the way to OPEC's alleged production cut: the world finds itself drowning in excess oil.

We touched on this first last week when we observed that according to the latest OPEC monthly production numbers, OPEC had produced a record 33.4mmbpd, with some expectations that by the time the November Vinna OPEC summit takes place, there will be another million barrels in output.  And while the market, or at least the marginal price setting alg...

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Alluvial Capital Management Q3 2016 Letter: Long MMAC Capital Management

By VW Staff. Originally published at ValueWalk.

David Water‘s Alluvial Capital Management client letter for the third quarter ended September 30, 2016.

Also see

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Phil's Favorites

Existing Home Sales Surge 3.2%, Median Price Declines 2.4%

Courtesy of Mish.

Existing home sales jumped 3.2% to 5.47 million at a seasonally adjusted annualized rate vs. the Bloomberg Econoday consensus of 5.35 million SAAR.

However, the report was not entirely glowing. Median prices declined 2.4% and August was revised lower by 0.6%.


Existing home sales surged 3.2 percent in September to a 5.470 million annualized rate that exceeds Econoday’s high estimate. The key single-family component leads the report, up 4.1 percent to a 4.860 million rate while condos, where choices are limited and permits for new building are on the rise, fell 3.2 percent to a 610,000 rate.

Home owners have been re...

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Market News

News You Can Use From Phil's Stock World


Financial Markets and Economy

China Capital Flow Crackdown Results in $148 Billion Bust (Bloomberg)

China’s campaign to crack down on illegal capital outflows saw its currency regulator bust underground banking operations that involved more than 1 trillion yuan ($148 billion).

European banks risk lagging Wall Street in blockchain race (Reuters)

The blockchain technology behind bitcoin was designed to do away with banks. In an ironic reverse, investment banks are now racing t...

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Kimble Charting Solutions

Doc Copper, Dangerous place should it slip!

Courtesy of Chris Kimble.

I doubt that one needs to be reminded that Doc Copper remains in a downtrend, creating lower highs and lower lows since it highs back in 2011. This down trend finds itself facing what could be a critical short-term test of support at this time.


Since 2011, almost every time Copper has moved above its 200MA line, it ended up being much closer to a high than a low!

Over the past 12-months, Copper has created a na...

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Insider Scoop

Exclusive: Ecoark Looks To Tackle The $160 Billion Food Waste Problem

Courtesy of Benzinga.

The fresh food supply chain undergoes a ton of waste. The loss in fresh food nearly costs producers and retailers $160 billion in the US alone. Despite this huge sum, the market to cut down this waste has largely gone unaddressed by corporate America.

Ecoark Holdings Inc (OTC: EARK) is taking steps to address this market and it could ultimately be a win for several parties: the grower, the retailer and the c... more from Insider

Members' Corner

More on GFC, SOL and SOB

Courtesy of Nattering Naybob.

Over at SA, following up on Monday's - A Higher Standard of Living? SOL or SOB? 

AriCool - "NN, thanks for the detailed (and entertaining) response. I'll take a stab at two of your points:

re "Yet, the earnings of both men and women fell. How can household incomes go up when the earnings of both sexes go down? Easy: The number of workers per household went up."

I beg to disagree. That is no evidence of falling SoL b/c at the same time from the 50s to 90s the size of houses soared to become McMansions, number cars per family and rate of buy new car quickl...

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Chart School

Neutral Day for Indices

Courtesy of Declan.

Markets were unable to build on premarket gains, but did manage to finish the day where they started.

The S&P closed with a narrow range doji, a doji which finished below Friday's bearish black candlestick. The pattern of the last five days is playing more in bears favour, but with support around 2,115 holding there is still a chance a broad swing low is in play; confirmation comes on a move above 2,160. Trading volume sided with bulls on a confirmed accumulation day.

The Nasdaq was able to push above Fri...

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Swing trading portfolio - week of October 17th, 2016

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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Mapping The Market

The Most Overlooked Trait of Investing Success

Via Jean-Luc

Good article on investing success:

The Most Overlooked Trait of Investing Success

By Morgan Housel

There is a reason no Berkshire Hathaway investor chides Buffett when the company has a bad quarter. It’s because Buffett has so thoroughly convinced his investors that it’s pointless to try to navigate around 90-day intervals. He’s done that by writing incredibly lucid letters to investors for the last 50 years, communicating in easy-to-understand language at annual meetings, and speaking on TV in ways that someone with no investing experience can grasp.

Yes, Buffett runs an amazing investment company. But he also runs an amazing investor company. One of the most underappreciated part of his s...

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Digital Currencies

Gold, Silver and Blockchain - Fintech Solutions To Negative Rates, Bail-ins, Currency Debasement and Cashless

Courtesy of ZeroHedge. View original post here.

By Jan Skoyles

I was so pleased yesterday by the announcement that I have joined the Research team at GoldCore as it meant that I could finally start talking about it and was back in a role that lets me indulge in my passion by researching and geeking out on all things gold, silver and money.


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Epizyme - A Waiting Game

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

Epizyme was founded in 2007, and trying to create drugs to treat patient's cancer by focusing on genetically-linked differences between normal and cancer cells. Cancer areas of focus include leukemia, Non-Hodgkin's lymphoma and breast cancer.  One of the Epizme cofounders, H. Robert Horvitz, won the Nobel Prize in Medicine in 2002 for "discoveries concerning genetic regulation of organ development and programmed cell death."

Before discussing the drug targets of Epizyme, understanding epigenetics is crucial to comprehend the company's goals.  

Genetic components are the DNA sequences that are 'inherited.'  Some of these genes are stronger than others in their expression (e.g., eye color).  Yet, some genes turn on or off due to external factors (environmental), and it is und...

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All About Trends

Mid-Day Update

Reminder: Harlan 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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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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