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goldminingXpert (29.44)

The Market Is About To Plunge (Day 6, Vol. 4)

Recs

43

May 05, 2009 – Comments (42) | RELATED TICKERS: GM , DE

I have better things to do, like study for final exams, than lecture ignorant feeble-minded posters that somehow think that the parade of bullishness will continue unabated despite the ongoing depression. That said, I did say I'd keep posting until this bear market rally distinctly ended. Well today, we fact have exciting news:

GM IS DONE! If you have common stock, you own 1/100th as much as you did yesterday. GM has decided to do what we all knew (well, we being people with IQs over about 65) all along was going to happen and declare their common stock worthless. While I'm surprised there is no bankruptcy yet, this is still a positive sign.

However, proving again the simple maxim that my cats know more about the stock market from overhearing my ramblings than the average trader, the futures have started dropping as traders had not "priced in" the blatantly obvious. The futures are dropping...

and dropping

and dropping

and dropping

and dropping

 

 

and so on

With the S&P futures down more than 2% already this evening and signs pointing to more exciting activity such as the hareraising volatility in the FOREX market tonight, it appears that we finally have a top in the S&P. With the death of GM--it should open well under 10 cents tomorrow, people will start thinking and realize all the stock they bought in ongoing PROSECUTABLE CRIMINAL SCAMS such as American Krapital (ACAS) and Bulls*it Homes (BZH) is worthless too. Oh, and how about Bank of the American Government? Needs $30 billion in capital yet you ignorant fools are buying it at $10 a share? Are you nuts? Are you mad? Investing in a ponzi scheme is smarter than that! 

Finally, it appears order may return--all the garbage like S will return to the land of magic pennies as the S&P heaves, sputters, and then crashes down into the 600s. The cheap-money stimulus crack induced high you bulls all feel will turn into a long and painful hangover. I fear the brain cells you lost during this druggy high will be dearly missed as you panic the next time we hit the skids.

(Sorry for the tone everyone--I'm a little angry. I, as a bear, feel the same emotions you bulls felt with the market at 666. The hopelessness, confusion, and rage you felt courses within my every heartbeat. Is America and in particular the few of you who are morons reading this that taunt me with oblivious comments really so stupid as to be buying stocks NOW? Particularly stocks in clearly and obviously bankrupt companies like GM? It makes me weep.) Back to studying. Enjoy the blood red futures, I know I am.

P.S. a clip from Karl Denninger's blog post on GM:

"

You didn't/don't hold the stock, did you?

If so, I hope you sell tomorrow, assuming it opens over 2 cents/share. 

Seriously.

No really, I'm not kidding.

In a filing with the SEC late this afternoon it was disclosed that the GM "restructuring" would:

Increase the number of authorized shares to 62 billion (!) Reduce the par value to one cent. Effect a 100:1 reverse split for the existing shareholders.

The effect of this as disclosed would be that the existing common shareholders would have their holdings reduced in value to one percent of their current market value.

So as of 4:00 Eastern today, your $1.85 stock price would be.... drum roll please..... $0.0185 per share[. . .]

PS: You think there's a thing called "senior debt" in this country any more?  Uh, no.  There is not.  The Capital Structure no longer has ANY legal meaning.  Guess what this does to the banks in particular (anyone with government "rescues") along with the potential for ANY firm in the US?  Yep."

 

42 Comments – Post Your Own

#1) On May 05, 2009 at 11:04 PM, soycapital (< 20) wrote:

Thanks I needed that since I went off and bought some KFT last week. Shoulda.....Woulda... Oh well, I'll hold it!!

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#2) On May 05, 2009 at 11:15 PM, RVAspeculator (28.90) wrote:

I was seeing REAL bear capitulation on the bearish message boards when we hit 907.    I’m talking hard-core bears who had been short since 780 saying “We are never going down again”, im covering everything. This is why you scale into positions.  Calling exact tops and bottoms is almost impossible.  

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#3) On May 05, 2009 at 11:17 PM, Imperial1964 (97.76) wrote:

Just take it easy.  Bear market rallies happen, even up to a 50% rally.  It will reverse.  That's just how things go.

I'll allow that we could have already seen a bottom.  But I do know this rally won't last.

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#4) On May 05, 2009 at 11:17 PM, goldminingXpert (29.44) wrote:

Yes RVA, today was a dark day. A friend of mine blew up his account--margin called and couldn't meet it. Terrible day. Tomorrow is looking much brighter.

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#5) On May 05, 2009 at 11:35 PM, uclayoda87 (29.19) wrote:

I don't know why, but while reading your blog I got the craving for popcorn.  Then it dawned on me:  GM (pop), C (pop), BAC (pop) ...

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#6) On May 05, 2009 at 11:42 PM, DonnerDiv (34.10) wrote:

Son:

Get a grip.  Take a deep breath.  You are too hard-wired into the day-to-day.  They go up; they go down.  Get some perspective.

Wild suggestion...go away for two weeks and check back in.  The S&P may go to 500 or 1000.  The world will not end, whichever comes.

It's a marathon, not the 100 meter dash.  You are a good CAPS gamester.  How's real life portfolio going?

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#7) On May 05, 2009 at 11:53 PM, Tastylunch (29.22) wrote:

bummer I closed my GM redthumb one day too early.

tmr should be nuts I'll be sad to miss it.

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#8) On May 05, 2009 at 11:56 PM, goldminingXpert (29.44) wrote:

Tasty: I actually closed mine as well and never got to reopen it as I was busy interviewing columnists for my editorial staff next year. Oh well, better to do well in my real job than in a game. From the looks of the futures, the FAZ I bought at 9 is going to get a breath of fresh life tomorrow. BAC is going to get demolished tomorrow.

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#9) On May 05, 2009 at 11:59 PM, drummnutt (< 20) wrote:

Bear/Bull.

I'm a realist. I'm happy to wear both hats (or neither), depending on circumstance. Don't limit your perspective!

BTW, it is going to be hard not to say "I told you so!" when we hit 1000 soon.

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#10) On May 06, 2009 at 12:02 AM, uclayoda87 (29.19) wrote:

Tastylunch

You may be able to still red thumb GM before it goes sub $1.50, after hours it's $1.66 (down 10%).

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#11) On May 06, 2009 at 12:04 AM, RainierMan (80.21) wrote:

I think you might be right. GM, banks needing more money, bonds are not acting well, new reality checks about the deficit spending. It seems like the mood may be turning.

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#12) On May 06, 2009 at 12:05 AM, binve (< 20) wrote:

Again, right with you.

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#13) On May 06, 2009 at 12:28 AM, mistermiranga (97.04) wrote:

Not sure why some folks are so concerned about short selling. It drove the S&P up an additional 30 or so and made the bulls some coin.

It would be interesting to somehow see the stats on short postions covered over the past few weeks. From what I have been reading the bears have definitely raised the white flag...907 has a way of making you taste a bit of acidity in the back of your throat (speaking from experience). 

I think it was a hockey player that spoke so wisely about the key to success...all else being equal it is he who can handle the most pain that will emerge victorious.

I appreciate those (bull and bear) that put themselves out there with conviction and do their homework. Good luck to all...  

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#14) On May 06, 2009 at 12:32 AM, whereaminow (21.21) wrote:

goldminingXpert,

Great series here.  Excellent work on GM. I'm excited that I have the red thumb on that sucka. Only wish I was shorting it in real life.

I was thinking about something the other day.  What if we are in the midst of another bubble?  The Fed created $6.3T of new money in the last year.  Where did those dollars go?  To the banks mostly.  What did they do with it?  Is that money being pumped into the market to re-inflate the bubble?  Makes me wonder.  I may blog about this.

David in Qatar

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#15) On May 06, 2009 at 12:33 AM, motleyanimal (88.74) wrote:

A correction of 8%-10% would be a normal event. Let us prepare for it and not fear it.

Uhhhhhh.....Who said that?

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#16) On May 06, 2009 at 12:41 AM, pjani06 (29.08) wrote:

you have cats?  more than 1?  not too many years ago, the days I was in college, it was rare to find a co-ed who maintained pets larger than a fish.  nice.

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#17) On May 06, 2009 at 1:04 AM, kaskoosek (56.09) wrote:

There is some thing wrong here.

 

Is anyone bullish? Obviously no, so how come stocks are still rallying?

 

Who are the people who are buying?

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#18) On May 06, 2009 at 1:09 AM, awallejr (83.80) wrote:

Curious how CAPS treats reverse stock splits.  Red thumb something to 1cent, it goes there then reverse split brings it back to 1$.

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#19) On May 06, 2009 at 1:24 AM, tonylogan1 (27.87) wrote:

I am the worst!!! I have a red thumb on GM in CAPS, but I sold June 2 Puts on it for $1.14... It's been a money maker it looks like until tomorrow morning...

Depending where this thing opens, I may sell 10X the puts in the AM to average down.... If the puts trade at 1.80 or higher, I'm going to sell the heck out of em, on the chance that the stock rallies back above 20 measley cents once people realize that the 100 for 1 split is suggested, and has not happened yet.

If this market has shown us anything, it is that there are people dumb enough to pay $2.00 for a share of GM, even though we all know they are broke.

That is enough for me to make a bet there are still dumb enough people that this thing will stay above 20 cents for at least a month...

At least I'll be making cash on my main position (short SPY and IWM)

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#20) On May 06, 2009 at 1:29 AM, JibJabs (91.96) wrote:

DonnerDiv is right. Calm down- your tone is unwarranted. There are, always have been, and always will be people that you don't agree with. Better learn now that self-righteous anger attracts few converts and you probably don't want them anyways. Besides, it's not worth the blood pressure.

Still long and not worried about the squiggly lines in the interem. 

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#21) On May 06, 2009 at 2:08 AM, Sickdaze (< 20) wrote:

I want to see recovery as much as anyone and I'll go long and stay there when I see fundamentals or even rational optimism.  But I'll stay short until I see a change from what has been going on lately.  (I've been short since mid April and it hasn't been fun so I hope you're right.)

As far as I'm concerned when I invest it's about making money but it's also about sanity.  I only have money in right now that I can afford to lose.  If I lose it because I didn't buy into something I didn't believe in then so be it but I'll continue to invest based on my personal analysis and I'll take my knocks as lessons.  Over time I hope this will be profitable but whether it is or not I'll keep my sanity.

There are plenty of bulls that aren't borderline retarded simply because they have read this differently as of late.

Time will tell.

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#22) On May 06, 2009 at 4:20 AM, awallejr (83.80) wrote:

Personally I would love it that everyone here on CAPS makes money.  However, I am a bull in nature, so I will always at least root for an upturn.  This, obviously, will hurt the bears.  It is impossible for me to try to convince bears to become bulls.  At best all I can do is say "don't fight the tape."

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#23) On May 06, 2009 at 4:55 AM, notsolilaznboi (34.86) wrote:

"Personally I would love it that everyone here on CAPS makes money.  However, I am a bull in nature, so I will always at least root for an upturn.  This, obviously, will hurt the bears.  It is impossible for me to try to convince bears to become bulls.  At best all I can do is say "don't fight the tape.""

someone needs to learn to write...
 

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#24) On May 06, 2009 at 9:17 AM, Londamania (65.84) wrote:

It's 9:05 am and the futures are all up - big - on the "less bad than predicted ADP unemployment report."  S&P future has broken the next resistance line...if it opens and climbs from there, looks like we will run even higher for a while (as in weeks perhaps even).

 No one is going to be able call this and it is probably best for everyone to stop trying.  Oversold?  Probably.   But no one not even the analysts of all people know for sure - there are just too many variables in play right now to accurately predict earnings 6 months from now.

But we need to call this market for what is right now - it is a bull market right now not a bear market rally.  It will end at some point - maybe this summer or fall, but for now the market is going to minimize bad news and maximize good news because their are plenty of the market participants in bull market mode.  If a rally goes from March into July and then peters out will you still be calling that a bear market rally?  That seems a bit of a stretch.  The market is in bull mode now - ignore that at your peril.  It will take a major event to knock it off this mentality - and GM failing apparently isn't one since most everyone already knew that was coming.

The day Alstry and Goldminer give in and jump on the train - will be the day to get out :)  That's when we will know the last bear has been sucked in.  :) 

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#25) On May 06, 2009 at 9:20 AM, DeerHunter73 (72.97) wrote:

I said back in March the S&P had bottomed and im sticking with this. I also said back in March the S&P was going to 950 and would hold that by the end of the year. Currently the S&P is trading at 14.5% P/E. That number is not a guess or my own math it’s a fact. People have said we should be at 14, what number are we at? Surprisingly BAC is UP this morning why I don’t know and personally don’t care for that stock or bank. In order for the S&P to drop 300+ points, banks would have to collapse” JPM,GS,MS,BAC,C etc” and go under like bear Stearns or Lehman, Those days are behind us thank god. Even if this STRESS TEST showed extensive bad news the most we would loose in the S&P is 100 - 150 points taking us back to 750 to 800. Then the market would be considered CHEAP again, if that were the case then I guess that bear market rally would take us to 1100 right?  I respect your opinion on the S&P but your numbers are just unrealistic. 80% + in the S&P have reported and 69% have BEAT expectations. Oil is slowly gaining ground. Not like last year when it spiked 100 a barrel in a few months. People still think we will have 200 a barrel by 2010 THAT’S NOT HAPPENING EITHER. China has reported better then expected globally The market isn’t giving up 300 points the GOV won’t let that happen either. Printing presses will prevent that. We all know they love printing money. There not wanting to do that either. I would be a lot less worried about the S&P dropping 300+ points and a little more worried about inflation when in sets in. When the fed starts to raise interests rates.

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#26) On May 06, 2009 at 9:22 AM, Londamania (65.84) wrote:

Woops above I meant Overbought not Oversold sorry...coffee still seeping in apparently...

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#27) On May 06, 2009 at 9:37 AM, awallejr (83.80) wrote:

"someone needs to learn to write..."

Or someone needs to learn to read.
 

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#28) On May 06, 2009 at 9:48 AM, biotechmgr (34.88) wrote:

That's a great and well worn ploy, denigrate the intelligence of others when cornered and on the defensive with a wrong call.

And you were too early, the futures reversed and we have another pop today.

You are right, this rally won't last forever but it may last longer than any of us think. Better to admit you are wrong than try to keep up this tirade against the "feeble-minded". Try to remember that at your age you may not know everything and be infallible despite what your hormones are telling your brain.

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#29) On May 06, 2009 at 10:07 AM, omegamel (93.80) wrote:

All the bears trying to predict a downturn like they can.  Everyone, even the "feebleminded" knows that the market will have downturns.  Eventually goldminingXpert will be right (for a change) and he can rant on how he "predicted" it. 

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#30) On May 06, 2009 at 10:11 AM, OleDrippy (34.85) wrote:

# 8 GMX:

"BAC is going to get demolished tomorrow"

As of 9:06AM CST, BAC up 9.5%... How is that trade working for you?

THIS is what kills people, and why I'm convinced day trading doesn't work for MOST people. Being right is only half the equation, being ON TIME is equally (if not more) important.

Peter Schiff may have been right about his call, but he was early (or still may be early) and consequently lost his clients a lot of money.

GMX, are you right about BAC, perhaps. But with this insane market and goofy government interventionism, how can ANYONE be certain about ANYTHING? I wouldn't be willing to bet the farm.

Disclsure: I lost 90% on ACAS and may God have mercy on those sonsabitches lying souls. 

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#31) On May 06, 2009 at 10:37 AM, goldminingXpert (29.44) wrote:

I see the tone of comments went from useful to full bore moronic as soon as the futures spiked. Now that the nasdaq has had a heart attack, will the stupid comments cease? I'm not holding my breath.

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#32) On May 06, 2009 at 10:41 AM, grandmah2 (< 20) wrote:

Just remember to keep perspective: First, look at how much the market fell - that's a result of a lot of people, both retail and institutional investors, dumping a lot of stock.  Excess supply = dropping prices - Econ 101.  Then, add in the short sellers fueling that fire.  Now, everyone sees stocks going up 10, 20, 30, 50, 100%, or in some cases, 5x since 3/9.  Who doesn't want to jump back on that bandwagon?  So, all those who sold out are trying to buy back.  It doesn't have to be rational.  And don't forget, your timeline may be much different than other people - I think there are lots of investors that have been waiting to see what happens, now they jump back in.  Maybe you think the rally should be over, maybe someone else thinks it's finally looking like a sure bet.  Like I said, doesn't have to make sense.  In fact, the market in general doesn't make sense, it just does what it does.

It really makes me wonder whether all those short sellers are just trying to buy back their own naked shorts.  That's gotta burn.  Look at the short ratios over the past 6 months - they go up, prices go down.  Sooner or later, gotta buy that stock back.  Presto, prices go up.

Second, look at the volume during the drop.  Sure, it was higher.  But the majority of stock holders bought in at a much higher price, so who wants to sell now, *especially* seeing prices coming back up.  Capitulation is over, optimism (or at least hope) is back.  Maybe you see a 10% correction from profit taking, but who's going to sell stock at a loss now?   If prices dip, someone's waiting there ready to buy back into the market.  Demand and supply rule.  Excess supply over the last 6 months = pent up demand.  Like I said, doesn't have to be rational. 

Personally, I believe we'll see another net 10-15% up, and then stall there for a couple of years until the world recouperates a bit.

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#33) On May 06, 2009 at 10:50 AM, russiangambit (29.24) wrote:

> It really makes me wonder whether all those short sellers are just trying to buy back their own naked shorts. 

You give yourself away with this statement. There are very few naked shorts today since SEC started enforcing the rules last summer. Not to mention that naked shorting is illiegal.

It is possible that shorts are covering. We saw it Monday, I think. Those who haven't covered on Monday will wait for 950 level to decide what to do. So, if we break 950, expect another pop.

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#34) On May 06, 2009 at 10:57 AM, awallejr (83.80) wrote:

People seem to forget that there is still a TON of money on the sidelines earning maybe 1%. 

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#35) On May 06, 2009 at 10:58 AM, givmeabreak (29.04) wrote:

Ah yeah, the GMX contrarian indicator rolls on. I'm sure you make some correct calls, but I never have seen them when I read your posts or comments on others' blogs. This one is in reference to FAZ.

I am looking at FAZ sink even lower. Can you give me some other picks that you like?

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#36) On May 06, 2009 at 11:05 AM, StevesStox (62.05) wrote:

GoldMiningExpert, I notice in this post that now you are letting your emotions dictate your posts in light of your original market thesis not happening as quickly as possible.

The best thing for you to do now is to admit that you were right once on a major market move, but chances are you do not have the experience nor expertise to predict market trends on a regular basis like you once did.

Sincerely,

Steve

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#37) On May 06, 2009 at 11:12 AM, goldminingXpert (29.44) wrote:

The best thing for you to do now is to admit that you were right once on a major market move, but chances are you do not have the experience nor expertise to predict market trends on a regular basis like you once did.

Ooh, so I'm old and senile now. If my brain is fading most of you are doomed as I'm only a college student and I'm already over the hill.

Ah yeah, the GMX contrarian indicator rolls on.

What major calls have I been wrong about? I mean, I've made more than my fair share of stupid picks (DNDN comes to mind) but when exactly have I been a great contrarian indicator? 86% of my picks are correct.

but who's going to sell stock at a loss now?

People were selling at 670 S&P, why shouldn't they sell now that the market is up 30%. Anybody who bought in 2009 can now get out with a gain and lots of people will. Not you apparently though.

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#38) On May 06, 2009 at 11:23 AM, DeerHunter73 (72.97) wrote:

ill wait for the 950 to 1000 level to sell. Buy back when 800 to 850 is the new cheap low. Then again maybe not

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#39) On May 06, 2009 at 3:26 PM, biotechmgr (34.88) wrote:

Looks like GMX has failed the stress test.

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#40) On May 06, 2009 at 3:33 PM, DeerHunter73 (72.97) wrote:

500 ? 600 ? 912.72+8.92....................950-1000... Stress test has had no effect and by the looks of it, it wont either..

 

Im not being rude just makin a joking comment here " I hope you do better on your finals then you did calling the 600 again" Those can be tough, Took mine 20 years ago

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#41) On May 06, 2009 at 6:18 PM, OctoStalin (40.51) wrote:

The rally has gone to far and the market is overvalued. The market should fall and will most likely perform poorly in future. I doubt however that the market will fall steeply in the short term without some REALLY negitive news.

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#42) On May 06, 2009 at 6:24 PM, FastTradinOutlaw (< 20) wrote:

Dow jones 20,000 next summer.

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