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February 2010

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25

A Request to Bearish Bloggers, the State of the Emperors Attire, and Watched Pots

February 27, 2010 – Comments (20)

Okay, fair warning, this is another one of binv's crazy idea posts. But bear with me, I think the request part has some merit and I think the ideas I present will at the very least be a good read.

What are chances of this post actually mattering or accomplishing its goals: Well I put the odds of a big name bearish blogger actually reading this post at 1 in 10000 and the odds of them actually trying out this idea at another 1 in 10000. So I think this post has a 1 in 100 million chance of having an impact or conversely will be 99.9999999% ineffective. .... never tell me the odds :)  [more]

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23

Existing Home Sales... "Uh Oh" Edition

February 26, 2010 – Comments (13)

Another good and thought provoking chart from Jake.  [more]

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42

Something Very Strange Is Happening With Treasuries

February 25, 2010 – Comments (4)

Here is a fantastic seekingalpha article by Graham Summers. Read the whole article, it is definitely worth it. Here is a very interesting passage below  [more]

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9

Financial Crisis Testimony That Would Be Worth Watching...

February 24, 2010 – Comments (1)

This is from Jesse's Café Américain - Here Financial Crisis Testimony That Would Be Worth Watching...

Is it impossible to get to the bottom of the bank bailouts?

Perhaps a change in questioning tactics might prove fruitful.

Even if it didn't it might at least be more entertaining...
  [more]

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10

Hathor Exploration

February 23, 2010 – Comments (3)

I am not being a tout here. This is not a "Buy NOW!" post. But I want to call your attention to Hathor Exploration (HAT.V / HTHXF). I did a write up on Hathor back in November: A Look at Two Junior Canadian Miners - http://caps.fool.com/Blogs/ViewPost.aspx?bpid=294226 and http://marketthoughtsandanalysis.blogspot.com/2009/11/look-at-two-junior-canadian-miners.html.

I stated my fundamental case for being bullish, as well as the technical case. My technical observation was that the pattern was consolidating in a very large bullish continuation triangle. Since November, the last wave of the triangle has itself become a triangle. You think of triangles like a spring being compressed. It is a balanced fight between bulls and bears right to the apex.  [more]

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14

Steve Saville: The "Too Big to Fail" Lie (as applied to US banks)

February 23, 2010 – Comments (0)

The "Too Big to Fail" Lie (as applied to US banks)
by Steve Saville

February 22, 2010


[excerpt]    

"They are too big to fail" was the reason given for using trillions of dollars in money and guarantees to 'bail out' several large US banks during 2008-2009. Their failure, it was argued, would all but bring the entire economy to a standstill; such were the size and scope of their operations. Providing the banks whatever financial support they needed to remain in business was therefore touted as serving the "public interest". However, the "too big to fail" argument was a giant, multi-faceted lie.  [more]

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25

Of Modeling, Risk, Financial Innovation, and Liquidity Crises

February 21, 2010 – Comments (10)

I was reading the Feb 13th issue of The Economist and they have a section on risk and risk modeling for financial institutions. The one that I thought was particularly relevant was the article about liquidity risk - "When the river runs dry: The perils of a sudden evaporation of liquidity". The whole section is a very well written set of pieces, as most Economist articles are, but was not as hard-hitting as I think the topic deserves (I think a lot of punches were being pulled and a lot of the conclusions for future systemic risk were not being fully drawn).   [more]

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24

Former Regulator Talks Fraud and the Big Bank Getaway

February 19, 2010 – Comments (11)

This is a fantastic video / interview with Bill Black, former banking regulator who has had very smart and relevant things to say on the current crisis for the past couple of years. Another person in power (or was in power) not being listened to.   [more]

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12

Fed Raises Discount Rate... More "Unwind" in the Future?

February 18, 2010 – Comments (10)

Newest post from one of my new favorite sites  [more]

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15

John Hussman: The Federal Reserve's Exit Strategy: Unlegislated Bailout of Fannie and Freddie

February 16, 2010 – Comments (2)

John Hussman of www.hussmanfunds.com puts out a Weekly Market Comment (which I highly encourage you to read every week). Per usual, this is another good article. The actions of the Fed during the last round of the crisis (Quantitative Easing and the massive purchase of MBS's) and the current round of the crisis (see below, more MBS purchases) show that the course of action was always going to be debt monentization on a massive and unprecedented scale.   [more]

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27

Nightmare Macroeconomics

February 15, 2010 – Comments (6)

This is a fantastic article, a highly recommended read.  [more]

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16

PSW: The Fed / CDS Development

February 11, 2010 – Comments (2)

Phil at Phil's Stock World wrote an article this morning that deals with the Greece bailout, new Fed CDS Developments, and some housing related news. The second one is of major interest because it dwarfs the other two in potential impact.

The Greece bailout is small potatoes in comparison. I am not being flip (not overly so at least), because these small potatoes will become large potatoes in the not-too-distant future. The progression would be something like Dubai -> Greece -> Portugal -> Italy -> Spain -> Ireland. Fears over sovereign debt grows in one economy and then spreads to the next larger one. In fact, I fully expect that Greece will be bailed out, and no it is not a good thing. It is moral hazard kicked into a higher gear, because then the pressure is off the next most susceptible economy to change its ways because it will expect to get bailed out.... which of course it will. Which spreads the risk to the next large economy (hence the progression). The latest issue of The Economist had a much smarter plan regarding the IMF handling the default, but nobody wants that.... well politicians don't want that, so moral hazard it is. But at least until the systemic risk spreads a little more, the Greece Default issue is not the major economic news.

On the other had, something I have been hearing very little about has a much bigger potential impact: The new Fed CDS policy. If you are interested, read on below.  [more]

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26

Is It Déjà Vu All Over Again for the Dow

February 10, 2010 – Comments (26)

Adam Hewison at Market Club always puts together excellent videos regarding the analysis of all kinds of asset classes. Here is his newest one regarding the Dow. In particular, he is noting the the comparison between the move down and the retracement of the Dow in 2007-2010 to the behavoir in 1929-1933. This is nothing new, I have brought up the comparison several times myself. But I am a nobody. Adam Hewison has been trading for many years and has been calling trends sucessfully for years.

Now, don't take this out of context. He is not saying that we are going to get the exact same move or even a similar move. He is just noting many of the similarities to the price behavior. And like I pointed out before (What To Look For As a Long Term Trend Change Confirmation - http://caps.fool.com/Blogs/ViewPost.aspx?bpid=330257) ***IF*** Jan 2010 was the peak retracement and we have a massive bear market ahead of us, it will need to be confirmed. And that link shows you what to look for (in my opinion) for a trend change confirmation.  [more]

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43

Choices

February 09, 2010 – Comments (25)

Mole's newest post on evil speculator is righteous. Quite literally. I have said many times that Financials are the cancer of the economy: Financially My Dear I Don't Give a XLF, Do You Smell Something?, Financial Carcinoma -- Denninger: Did You Need a PhD For That?, The Long View, Sometimes the Truest Points are Made Through Humor. These posts express my disdain (both subjectively and objectively) for financials in a number of ways: angrily, technically, humorously, etc. (And like I have also said before: while financials are at their core not evil businesses (they do perform a necessary economic function of dispersing wealth / adding liquidity to the marketplace for the trade of resources), the fact that US monetary policy and congressional action has encouraged the economy to be financially top-heavy to the point that these are simply vampire companies is evil). But I could not express my feelings better than how Mole does below

--------------------------------------  [more]

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10

John Hussman: Cautiously Pessimistic

February 09, 2010 – Comments (2)

John Hussman of www.hussmanfunds.com puts out a Weekly Market Comment (which I highly encourage you to read every week). Per usual, this is another good article. The sentiments are very similar to the ones I describe in Taking a Step Back: The Case for Staying Bearish for the Near Term - http://caps.fool.com/Blogs/ViewPost.aspx?bpid=338359  [more]

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29

Gold - China's End Game?

February 08, 2010 – Comments (8)

I have been pondering China's stance on Gold for awhile. India and Chinese cultures have historically valued gold more than western cultures. But that does not fully explain why the Chinese Central Bank and the Chinese Government's position on Gold, i.e. the fact that they are actively encouraging their citizens to buy it. I linked to a fastastic article back in November that discussed the issue Jeff Clark, Casey Research: How and Why China Will Flood the Gold Market - http://caps.fool.com/Blogs/ViewPost.aspx?bpid=300352. But this article focused on the Central Bank growing its reserves and encoraging the the public to accumulate. But it did not say WHY. Think about it: Why would a central bank, who is purchasing gold, tell the population to do the same? It would increase the purchase price for the central bank (which are net accumulators with a seemingly long term hold horizon, not net sellers).  [more]

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23

Taking a Step Back: The Case for Staying Bearish for the Near Term

February 06, 2010 – Comments (14)

Many of us who perform Elliott Wave Analysis have been looking at the current move down as impulsive wave structure. It has certainly been sharp and clearly against the trend of the last 10 months.

Is it the start of bear market? Is it the start of Primary Wave 3 down?

My answer is: For the big picture it doesn't matter yet.

I know, this is a false statement, because it actually does matter, but I am coming at the from the viewpoint of actionable trading observations.

Maybe this is the start of a bear market, maybe it is a pause in the continuation of a bull market, maybe we are all going to die in the next 8 minutes because the Sun went nova (based on the speed of light, we have an 8 minute delay of what is actually taking place on the sun).  [more]

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12

Analysis Update: ATPG and AMX (Feb 5)

February 05, 2010 – Comments (6)

I want to review two calls I made on Jan 17 regarding ATPG and AMX:
- http://caps.fool.com/Blogs/ViewPost.aspx?bpid=328534 and Analysis Update: ATPG and AMX  [more]

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10

Volatility Decay of Leveraged ETFs - A Third Study

February 05, 2010 – Comments (3)

The post will be another looking into Volatility Decay and a response to some of the questions on my other blog. Please see these two posts for reference:

anchak - 2/3/4.../n X Leveraged Strategy : Weapons of Wealth Destruction or Creation - Attempt at DIY Primer - http://caps.fool.com/Blogs/ViewPost.aspx?bpid=132045

binve - Volatility Decay of Leveraged ETFs - Another Study

binve - Volatility Schmalatility  [more]

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18

Volatility Decay of Leveraged ETFs - Another Study

February 04, 2010 – Comments (7)

I discussed Volatility in my recent post: Volatility Schmalatility, and I think volatility will be increasing substantially in 2010. This will certainly affect options pricing and Leveraged ETF performance (which is the point of this post)

First, you might ask "What is Volatility Decay"?. My friend anchak put together a fabulous comprehensive post on the subject and how it relates to leveraged ETFs. If you have not read and recced his original post, please do so now: 2/3/4.../n X Leveraged Strategy : Weapons of Wealth Destruction or Creation - Attempt at DIY Primer - http://caps.fool.com/Blogs/ViewPost.aspx?bpid=132045  [more]

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17

Spinach Frittata

February 03, 2010 – Comments (3)

I am continuing with the count that I have been showing since Friday
- Captain Crunch - Friday
- Update on the ES Count / Pattern - Monday
- Omelette au Fromage - Tuesday

I think we are still in Minor 2. Now there are two main options
1) My preferred: The move yesterday was the A leg of Minor 2
2) Alternate: The move yesterday was the C leg of an Expanded Flat that started in the middle of last week.  [more]

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20

Volatility Schmalatility and ContraryInvestor: Cycle Logical Issues?

February 02, 2010 – Comments (4)

Here is another excellent post by ContraryInvestor. I agree with their volatility assessment (I think it will be going up *a lot* this next year. Even if we get a trading range and not a crash, I think it will be a very volatile one). Hence my VXX pick in Caps today (I was waiting for an ending move on the VIX with a breakout and then buy the pullback, which is what we are getting today).  [more]

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