Archive for 2010

The Real Thing

Courtesy of Michael Panzner of Financial Armageddon

In a commentary for The Fiscal Times, "Cooking the Books: The 2010 Deficit Was $2.1 Trillion," Bruce Bartlett says what most Financial Armgeddon readers probably know already:

If corporate accountants used government rules for their financial statements, they’d be jailed. That’s why we rarely see the real number of the federal deficit—a terrifying $2.1 trillion last year.

Deficitvsnoc 

The most interesting part? This chart (and other data cited by Bartlett) comes from a Treasury report, "A Citizen’s Guide to the 2010 Financial Report of the U.S. Government," that basically admits we are being deceived by our government.

What a country! 





A Quiet Week Ahead (DIA, SPY, ETFs)

Courtesy of John Nyaradi

As we approach the end of 2010, I would like to wish you and your family a very Happy Holiday and healthy, happy and prosperous New Year.  It has beeen my honor and privilege to serve you this year and I look forward to continuing our work together as we face the challenges and opportunities of 2011. 

This will be a shorter than usual letter due to these shorter than usual business weeks but watch for a special New Year’s edition next Sunday as we look ahead to the issues and opportunities of the coming year. 

Looking at My Screens

Markets remain overbought and overextended as we head into the last trading week of the year.  14 Day RSI is at 70.41 which is often associated with market tops while stochastics remain overbought, investor sentiment is at extreme levels and the VIX is at extreme lows exhibiting extreme investor complacency.  Numerous red flags are flying as we close out the year. 

The View from 35,000 Feet 

The big news this week was the interest rate hike in China on Christmas Day which went largely unnoticed due to the holiday.  The Euro continued its decline which reflects ongoing concerns with sovereign debt problems there while at home the economic news was mostly positive with durable goods, employment and consumer sentiment all showing improvement last week. 

What It All Means 

Signals continue to be mixed with fundamentals at home being positive and world conditions and technical indicators flashing warnings. 

At Wall Street Sector Selector we remain in the “Yellow Flag” mode, expecting choppy to lower prices ahead.    

The Week Ahead 

Tuesday: October Case/Shiller Home Price Index, December Consumer Confidence 

Thursday: Initial and continuing unemployment claims, December Chicago PMI, November Pending Home Sales 

Sector Spotlight: 

Winners: Home Construction (ITB) Regional Banks (IAT) 

Losers: Spain (EWP) Chile(ECH) 

Wishing you a wonderful week wherever you may be. 

All the best,  

 
John Nyaradi
Wall Street Sector Selector
Publisher

Click here to learn more about John’s book and for a free membership to Wall Street Sector Selector





Outlook 2011: Five Stocks Due For a Pullback (CAT, AMZN, NFLX, X, BIDU)

Courtesy of asiablues

By Dian L. Chu, EconForecast

It is inevitable that when you have a market run up like we have had recently driven mostly by liquidity and Santa Claus Rally, many stocks would see pullbacks in the New Year.

The following are just five of such candidates that I believe capable of some meaningful downside actions, and is not intended to be an all inclusive list.

Could This CAT Bounce?

Caterpillar stock has had an enormous run and has finished the year right at its 52 week high mainly on the emerging markets and global resources/commodities trade. A very well run corporation, but there are a couple of challenges for 2011.

First of all, everybody and their uncle are already in this stock. Second, the 31 P/E Ratio for a Farm & Construction Machinery company seems a little rich when compared to an Apple for example, with a P/E Ratio of 21, and they are a tech firm which usually carry higher P/E Ratios.

Third, China, a major market for CAT, is battling an escalating inflation problem, and I expect Beijing to undergo a severe tightening during the first half of 2011, with at least three interest rate raises during 2011. Last but not least, due to global inflation pressures, CAT`s input costs are going to go up, which puts a squeeze on margins.

Look for a significant pullback to the $84 level where it should find some initial support, with the 80 level being much stronger support. If CAT breaks the $80 level this should be a warning sign for investors to re-evaluate the reasons for this technical breakdown. Is it a general stock market decline, or something company specific like a bad earnings report with poor guidance going forward.

Just remember that any noteworthy negative news regarding the global growth story could affect CAT more than the general market, and specifically, if you see a selloff in the agricultural space due to tightening measures, caterpillar will experience its share of red in market cap.

Amazon (AMZN) – It’s a VaR Jungle Out There

This is another momentum stock from 2010, and talk about high expectations built into this stock as AMZN has a lofty P/E Ratio of 74. Amazon is also finishing the year right at the top of…
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Stock World Weekly

Here’s the latest Stock World Weekly.   We hope all of you had a great holiday weekend! – Ilene

(Stock World Weekly archives here.)





Cambridge Refuses To Cave To Banker Demands To Censor Paper Which Exposes Card PIN Hack

Courtesy of Tyler Durden

Something amsuing out of England (and ever slightly less so if you happen to be the CTO for Capital One). After in late 2009 four Cambridge students uncovered a no-PIN attack that allowed those so inclined to hack ATM machines, and subsequently they made their findings public, a recent thesis paper by an Omar Choudary has summarized the findings, and has been in the public domain for some time. However, it appears that the UK banking cartel, with its 2010 bonuses finally safe and sound, has only now discovered this major weakness across their systems. But instead of taking prompt steps to fix the problem, in typical kleptocratic oligarchic fashion, the bankers’ initial demand (apparently across the Atlantic, “UK Cards Association” is another name for the bailed out crew) is for Cambridge University to censor the paper. Alas, Cambridge has not agreed to fold like a lawn chair. The response that follows is quite hilarious. What will be less hilarious is if the no-PIN “attack” works in the US just as well as it did in the UK. Zero Hedge staff is currently enjoying the “all flights canceled” weather, testing out this particular null hypothesis.

From the response by Ross Anderson of the Cambridge Computer Lab:

Second, you seem to think that we might censor a student’s thesis, which is lawful and already in the public domain, simply because a powerful interest finds it inconvenient. This shows a deep misconception of what universities are and how we work. Cambridge is the University of Erasmus, of Newton, and of Darwin; censoring writings that offend the powerful is offensive to our deepest values. Thus even though the decision to put the thesis online was Omar’s, we have no choice but to back him. That would hold even if we did not agree with the material! Accordingly I have authorised the thesis to be issued as a Computer Laboratory Technical Report. This will make it easier for people to find and to cite, and will ensure that its presence on our web site is permanent….

…Fifth, you say ‘Concern was expressed to us by the police that the student was allowed to falsify a transaction in a shop in Cambridge without first warning the merchant’. I fail to understand the basis for this. The banks in France had


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IS THE EXTREME BULLISHNESS CAUSE FOR CONCERN

Courtesy of The Pragmatic Capitalist 

By Carl Swenlin with Decision Point

Sentiment readings were very bullish across a range of indicators this week. To begin, Investors Intelligence Advisor Sentiment had its highest percentage of bulls (58.8) since the October 2007 market top.

Chart

The American Association of Individual Investors poll had the highest percentage of bulls (63) since October 2004, and the lowest percentage of bears (16) since October 2005.

Chart

Finally, the National Association of Active Investment Managers (NAAIM) shows that on average they are 81.83% invested. This is in the high end of the range and shows that these managers are quite bullish.

Chart

While high levels of bullish sentiment among advisors, investors, and money managers usually occur at market tops, market tops do not always occur when sentiment is very bullish. Sometimes people respond to the obvious and correctly align their market posture with the price trend. In situations like this we have to wonder whether or not they are wrong.

Bottom Line: An excess of bullish sentiment is a caution sign and should cause concern because such sentiment peaks are often followed by price corrections, if not bull market tops; however, we do not use sentiment as a timing tool, just a indicator to help paint a picture of the market environment. So far we have no indication from our trend-following models that there are major problems ahead. 

 





John Embry: “Gold, Silver Could Go Ballistic By Year End”

Courtesy of Tyler Durden

Sprott’s John Embry is in fine form today: in a just released oped in the Investor’s Digest of Canada, the Chief Investment Strategist of Sprott Asset Management LP, and one of the biggest fans of shiny metals in history, makes the following bold prediction, which also explains how he views the concerted attempts by the LBMA to keep gold below the $1,420 all time high: “I am not in the least bit concerned about these shenanigans because I believe considerable additional quantitative easing is inevitable, irrespective of what the Fed says or does in the short term. Goldman Sachs’s chief U.S. economist Jan Hatzius clearly shares my view as he has suggested that ultimately as much as $4 trillion maybe required although he anticipates that it will be staged. In my opinion this will act as catnip for gold and silver prices, which could go ballistic by year-end.” Presumably, he means 2011. So forget all you have heard about interest rate (real or otherwise) correlations: they don’t exist. All that does exist is the willingness of the Fed to ‘print.’ And with China increasingly starting to tighten, the Fed will need to do double duty if it wishes to keep global liquidity well-offered with near-free fiat paper. While we don’t quite share Embry’s enthusiasm for gold’s imminent escape velocity, we are confident that as long as loose monetary policy is the only means to extend and pretend the ponzi, gold will, in turn, be well-bid.

Gold, Silver Could Go Ballistic By Year End” published in Investor’s Digest of Canada

The gold price experienced a virtually uninterrupted rise of more than $200 in a 2 1/2 month period from the end of July through mid-October.  This came on the heels of an orchestrated $100 price takedown following an all-time price high in mid-June as the authorities took great pains at that time to ensure that the gold price wasn’t flying as the necessity for further quantitative easing (QE) became obvious.

Not surprisingly, we saw a replay of this mindset in late October as the gold price came under renewed attack in the aftermath of a large buildup in Comex open interest during the aforementioned price rise. With the U.S. elections and an important Federal Open Market Committee meeting (where another massive QE operation was expected to be announced) in the offing, the…
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Investor Sentiment: Extremes Persist

Courtesy of thetechnicaltake

It doesn’t take a rocket scientist (or Wall Street analyst ~ a downgrade?) to figure out that investors are extremely bullish on the equity markets.  Such extremes in sentiment will usually (85% of the time) lead to better risk adjusted buying opportunities in the future.  In other words, the next best time to be a buyer of equities will be when investors are bearish not bullish as they are now.  The markets don’t have to go down just because everyone is bullish, but if you are a "believer" and buyer at these levels, then you will need to identify a market top and get to the exits before the next guy to extract profits.  This is a very crowded trade and identifying the top is a tall order.

{click on graphs to view larger images}

Investor Sentiment 12.26.10





Guest Post: Positively Wrong: Positivism, That Is

Courtesy of Tyler Durden

The next in a continuing series (most recently The Natural Law of Civil Society)

Submitted by Free Radical

Positively Wrong: Positivism, That Is

Law is a negative concept. – Frederic Bastiat

As an element of nature, gold is what it is, no matter what form. The same cannot be said of the golden rule, however, for no matter how natural the social process out of which it evolved, the golden rule is a human construct and therefore its application can be decidedly different that of its elemental namesake.

After all, it is one thing to say, “What you do not want done to yourself, do not do to others” and quite another to say, “What you want done to yourself, do to others.” For although both are reciprocal, the first rule merely requires restraint, while the second requires intervention. That is, the first says that if John doesn’t want Joe to hit him, then John must refrain from hitting Joe, while the second says that if John wants Joe to feed him, then John must feed Joe.

As religions have differed in this regard, we note, for example, that as with Confucianism,  Judaism holds to the negative rule, saying, “What is hateful to you, do not to your fellow men,” adding an emphatic, “that is the whole Torah, while the rest is the commentary thereof.” Christianity, on the other hand, adopts the positive rule, saying, “Whatever you wish that men would do to you, do so to them,”  while Islam adopts both, including, “Do unto all men as you would wish to have done unto you; and reject for others what you would reject for yourselves.”

Insofar as the positive golden rule is adopted on a purely voluntary basis, it is perfectly acceptable in society. When the positive rule is commanded, however, then insofar as that society would be free, it is not, and therefore insofar as that society would be civil, it is not. For when the members of society are prevented, beyond the constraints of the negative golden rule, from acting freely and of their own accord and are instead forced to obey this or that positive rule, they are being required to do unto others what they might not want to do and/or be done unto as they might not want to be done. 

To one…
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D.C. & Mortgages

Courtesy of Bruce Krasting

Two seemingly unrelated developments in the nations mortgage mess this past week. They both point to how difficult it will be to bring some stability back to the system. I am wondering if they are connected.

The first came as a surprise to me. Mr. Joseph Smith was supposed to be confirmed as the Director of the Federal Housing Finance Authority. Smith was a state banking commissioner from North Carolina. He was a White House pick. Up until last week I thought he was a shoe-in for the job. Kaboom.

Smith is out. Nixed at the last minute by none other than Richard Shelby (R. AL). The ranking member of Banking, Housing and Urban Affairs waved his arms and sent Smith back to North Carolina. Senator Shelby had this to say:

Shelby’s main concern was that Smith would be a “lapdog” to outside pressure to use the GSEs, at taxpayer expense, as vehicles for large-scale homeowner assistance programs.

Lapdog? Maybe, I don’t really know. But I doubt that is the reason for canning Mr. Smith. This is politics. Senator Shelby wants his own guy running things over at the FHFA. It is much easier to steer the outcome that way. The early talk is that Mr. Smith is going to be re-nominated. I doubt it. Come Jan. 1 there is a new set of voters on this. If Shelby is saying "no" in December; the majority will say no in January.

We need a very strong hand in this position. 2011 will be the year that Fannie Mae/Freddie Mac get put on the operating table and decisions will be made what role these two dogs will have for the next decade or so. Needless to say this is a critical step if we are to have an outcome that moves us away from socialized mortgage finance. At this point the D.C. lenders are 95+% of the new mortgage market. One way or the other that number is coming down. How our dependency on Washington for the loot that keeps the real estate market alive is resolved will be make or break for the entire economy.

Normally I would say the side show political fight over this appointment was just normal D.C. fun and games. Not the case this time. Keep an eye on this fight, it…
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Zero Hedge

Johns Hopkins, Bristol-Myers Face $1 Billion Suit For Infecting Guatemalan Hookers With Syphilis 

Courtesy of ZeroHedge. View original post here.

A federal judge in Maryland said Johns Hopkins University, pharmaceutical company Bristol-Myers Squibb and the Rockefeller Foundation must face a $1 billion lawsuit over their roles in a top-secret program in the 1940s ran by the US government that injected hundreds of Guatemalans with syphilis, reported Reuters.

Several doctors from Hopkins an...



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Phil's Favorites

This Is The One Chart Every Trader Should Have "Taped To Their Screen"

Courtesy of Zero Hedge

After a year of tapering, the Fed’s balance sheet finally captured the market’s attention during the last three months of 2018.

By the start of the fourth quarter, the Fed had finished raising the caps on monthly roll-off of its balance sheet to the full $50bn per month (peaking at $30bn USTs, $20bn MBS, although on many months the (balance sheet) B/S does not actually shrink by this full amount which depends on the redemption schedule) and by end-Q4 markets also experienced some of the largest volatility and drawdowns in nearly a decade.

As Nomura&...



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ValueWalk

The Competition For Capital Has Made Stocks Cheap

By Michelle Jones. Originally published at ValueWalk.

The new year is upon us, and now is the time many investors look at what 2018 was and prepare for what 2019 might be. Recession jitters are starting to pick back up again, especially now that the full picture of 2018 is in the books. But what if you could pick only one theme for 2018? Jefferies strategist Sean Darby and team have a suggestion which is especially timely given that it appears to mark the end of an era.

StockSnap / PixabayVolatility carries into the new year

This past year was one of extremes, and the markets ended i...



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Kimble Charting Solutions

Stock declines did not break 9-year support, says Joe Friday

Courtesy of Chris Kimble.

We often hear “Stocks take an escalator up and an elevator down!” No doubt stocks did experience a swift decline from the September highs to the Christmas eve lows. Looks like the “elevator” part of the phrase came true as 2018 was coming to an end.

The first part of the “stocks take an escalator up” seems to still be in play as well despite the swift decline of late.

Joe Friday Just The Facts Ma’am- All of these indices hit long-term rising support on Christmas Eve at each (1), where support held and rallies have followed.

If you find long-term perspectives helpf...



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Digital Currencies

Transparency and privacy: Empowering people through blockchain

 

Transparency and privacy: Empowering people through blockchain

Blockchain technologies can empower people by allowing them more control over their user data. Shutterstock

Courtesy of Ajay Kumar Shrestha, University of Saskatchewan

Blockchain has already proven its huge influence on the financial world with its first application in the form of cryptocurrencies such as Bitcoin. It might not be long before its impact is felt everywhere.

Blockchain is a secure chain of digital records that exist on multiple computers simultaneously so no record can be erased or falsified. The...



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Insider Scoop

Cars.com Explores Strategic Alternatives, Analyst Sees Possible Sale Price Around $30 Per Share

Courtesy of Benzinga.

Related 44 Biggest Movers From Yesterday 38 Stocks Moving In Wednesday's Mid-Day Session ...

http://www.insidercow.com/ more from Insider

Chart School

Weekly Market Recap Jan 13, 2019

Courtesy of Blain.

In last week’s recap we asked:  “Has the Fed solved all the market’s problems in 1 speech?”

Thus far the market says yes!  As Guns n Roses preached – all we need is a little “patience”.  Four up days followed by a nominal down day Friday had the market following it’s normal pattern the past nearly 30 years – jumping whenever the Federal Reserve hints (or essentially says outright) it is here for the markets.   And in case you missed it the prior Friday, Chairman Powell came back out Thursday to reiterate the news – so…so… so… patient!

Fed Chairman Jerome Powell reinforced that message Thursday during a discussion at the Economic Club of Washington where he said that the central bank will be “fle...



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Members' Corner

Why Trump Can't Learn

 

Bill Eddy (lawyer, therapist, author) predicted Trump's chaotic presidency based on his high-conflict personality, which was evident years ago. This post, written in 2017, references a prescient article Bill wrote before Trump even became president, 5 Reasons Trump Can’t Learn. ~ Ilene 

Why Trump Can’t Learn

Donald Trump by Gage Skidmore (...



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Biotech

Opening Pandora's Box: Gene editing and its consequences

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

 

Opening Pandora's Box: Gene editing and its consequences

Bacteriophage viruses infecting bacterial cells , Bacterial viruses. from www.shutterstock.com

Courtesy of John Bergeron, McGill University

Today, the scientific community is aghast at the prospect of gene editing to create “designer” humans. Gene editing may be of greater consequence than climate change, or even the consequences of unleashing the energy of the atom.

...

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Mapping The Market

Trump: "I Won't Be Here" When It Blows Up

By Jean-Luc

Maybe we should simply try him for treason right now:

Trump on Coming Debt Crisis: ‘I Won’t Be Here’ When It Blows Up

The president thinks the balancing of the nation’s books is going to, ultimately, be a future president’s problem.

By Asawin Suebsaeng and Lachlan Markay, Daily Beast

The friction came to a head in early 2017 when senior officials offered Trump charts and graphics laying out the numbers and showing a “hockey stick” spike in the nationa...



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OpTrader

Swing trading portfolio - week of September 11th, 2017

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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Promotions

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Phil has a chapter in a newly-released eBook that we think you’ll enjoy.

In My Top Strategies for 2017, Phil's chapter is Secret Santa’s Inflation Hedges for 2017.

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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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About Ilene:

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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