Check Out Lender Processing Services For Mortgage Data News Releases

Go to Lender Processing Services for mortgage news releases. For example, here is the "Industry Data" section and the "latest news" section. Here is the November 9 release:


"Nov. 9, 2009


Lender Processing Services' October Mortgage Monitor Report Shows Delinquencies, Foreclosures at Record Highs
New Loan Production is Holding Steady vs. 2008 With A High Percentage of FHA/VA Loans


JACKSONVILLE, Fla. – Nov. 9, 2009 – The October Mortgage Monitor report released by Lender Processing Services, Inc. (NYSE: LPS), shows record high rates for non-current loans, as well as an upswing in loan production volume over the previous year. Published by LPS, a leading provider of mortgage performance data and analytics, the October 2009 Mortgage Monitor report is an in-depth summary of mortgage industry performance indicators based on data collected as of September 30, 2009.

IWM, XHB Technical Update (11/9/2009) Under 50dma + MACD Zero Line. Will SPY, QQQQ, DIA Provide Support?

Continued from my previous post on DIA, which has been the strongest index ETF out of the majors, IWM (Russell 2000 Small Cap ETF) and XHB (Homebuilders ETF) are still under their 50 day moving average with MACD levels under the zero line.  The question is will SPY, QQQQ and DIA (large caps,tech) carry IWM (small caps) and XHB (housing) going forward, or will someone roll over and start the wave down.  Since the March lows QQQQ (tech) was the leader and supported DIA and SPY along the way.

IWM is trading right below the 50 day moving average with relative strength (RSI) at 51 and the MACD under the zero line.  When the MACD breaks below the zero line it means the 12 day moving average crossed below the 26 day moving average (faster moved below slower) and sometimes confirms downside momentum.  Of course there are head fakes.  In July there was a brief moment when 12 crossed below 26 but it quickly reversed when the market rallied hard.  Now it looks like the MACD made a new low from July (we'll see if it means anything).  Also, volume was higher on down days and lower on up days.  Watch the $59.50-$60.00 level because if it breaks above the 50dma there is probably further upside and/or failed double top or triple top test.  We shall see people.

XHB looks similar.  It is making lower highs from September, price is just below the 50 day moving average, RSI is making lower highs from August and the MACD is under the zero line with a recent MACD/9dma cross to the upside.  That's the only major difference it looks like, look at the histogram.  Also there was a huge up move on strong volume at the end of October.  So we'll see how it ends up.  Charts of IWM and XHB w/ tech's are below plus recent news articles, blog posts and option activity.

IWM (Courtesy of Stockcharts.com)


Albert Edwards of SocGen Expects New Market Lows In 2010

1) SocGen's top analyst sees market lows next year (link: Reuters)

2) Stocks Drop May Turn Into ‘Rout’ as Economy Peaks, SocGen Says (link: Bloomberg)

"Oct. 29 (Bloomberg) -- The two-week retreat in global equities may turn into a “rout” after a measure of so-called... (read more)"

3) Synchronicity and Stock Prices (link: Barron's)

4) Edwards (SocGen) pessimiste pour les marchés en 2010 (link: Reuters.fr)

ht paul kedrosky

Diamonds (DIA) Leading Major ETFs, Took Out All Resistance and Eyeing $105 (DIA, QQQQ, SPY, IWM Performance Comparison)

After using the 50dma as support last week, DIA (etf for the Dow Industrials), held September support, took out the October/November downtrend and broke through October resistance today (see charts below). During the past month DIA led the SPY, QQQQ and IWM (Russell 2000/small caps). From October 19-November 9 DIA was up 1.55%, SPY -0.20%, QQQQ +0.69% and IWM -4.78%. It is mandatory that IWM holds on to the large caps on this mountain.  I'll chart that out next.  The 3 year chart shows $105(ish) as a resistance level from July 2008 and the present value of the 2007 downtrend.  From 2007 highs/2009 lows DIA is trading between the 50-68.2% retracement level.  DIA closed at 102.42 so there could be more green % points to flip, but these long term resistance levels make me a little cautious.  And because DIA is up 60.4% from the lows and still hasn't hit orbit.  *It could go up another 60% if the US Dollar (S&Ps reciprocal) makes new lows, but probably not in Gold/S&P terms (imo).

Option Activity On ISE: $PG, $TLT, Put/Call Ratios and Trades

No charts on this post. I was scoping ISE data for high call/put ratios and $PG and $TLT made the list. Call volume was 45,603 vs. 7,825 puts. ISE Calls/ISE Puts ended Friday at 62.9 (11,062/176). PG implied volatility is at 18.66 vs. a historical reading of 19.57. PG closed at 61.04 today. The ISEE Value (calls opened v. puts opened * 100) was up 209% to 51 (under 100 though). Andrew Wilkinson of Interactive Brokers mentioned a 10,000 call spread at the 60-62.50 strike (Staples firm – Proctor & Gamble options suggest further upside). PG needs to get over $61.13 and stay below $62.50 to profit, read the link. The chart looks like it could test $62.50 resistance. The data is free under the quote section at ISE.com. You can also view the top 3 bullish and bearish securities on my sidebar widget.

TLT was another ETF that had high call volume. ISE data showed that 58,312 calls traded vs. 4,306 puts. The ISE Call/Put ratio was 4.96K/153 or 32.4 calls for each put. IV was at 14.82 and HV 15.39. The ISEE Value was up 1.9k% to 681. OptionMonster mentioned call volume on an otm November strike that was 2x open interest. Go to the article: Strategy positions for bond rally. On the chart I can't rule out a 50d or even 200d resistance test. We'll see about the long bond though. Overnight, gold spot is testing 1,110 and the DX plunged to 75.09.

Rupert Murdoch Might Remove Google Indexing [Via SkyNews] 11/2009

Let the media volatility begin. Rupert Murdoch of NewsCorp (head of WSJ, Fox, Sky) had a 37 minute interview with SkyNews.  Rupert gets into online advertising, WSJ, subscription based content, possibly removing content from Google (robot.txt) and his thoughts on YouTube/video.  At the end he gets into Australian politics.   This continues from this post NYT, WSJ, Google, HuffPost at Web 2.0 Summit on Journalism (10/22/09).  What is going to happen with online journalism?  I think freemium/ad based is the way to go but advertisers need to ante up!

Why Aren't CDS Indices Streaming On CNBC? Make Credit Default Swaps Available To Retail Investors [ABX, CMBX, CDX, MCDX]

Why aren't CDS indices streaming on CNBC yet?  Don't people realize credit default swaps were partly responsible for the financial collapse and the billions of dollars made by hedge fund managers/Goldman Sachs?  Go to wikipedia for the whole explanation on Credit default swaps.  They are essentially insurance contracts that speculators or hedgers can use to protect from losses on bond defaults.  Hedge fund manager John Paulson (post + congress testimony video) made money in 2007-2008 by shorting sub-prime mortgages via CDS indexes.  It was an amazing trade, and that is why Greg Zuckerman of WSJ wrote a book on it called "The Greatest Trade Ever".

I'm sure shady stuff went down in this closed off institutional market, especially when the trade got crowded and more expensive.  Hedge fund managers are now saying they should be banned, based on systemic risks and underlying anti-social behavior (incentive to see companies fail).  Here are David Einhorn and *George Soros's thoughts on credit default swaps (*+ Ken Griffin on the new exchange).  Soros at a conference in Beijing:"Some bond holders own CDS and stood to gain more in bankruptcy than reorganization.  It's like buying life insurance on someone else's life and owning a license to kill him" (Video).

Since Dvol believes credit default swaps still serve a purpose, I believe that credit default swaps, CDS data (indices) and more importantly signals should be transparent and available to the retail investor, retiree, small business owner, garbage man etc.  Zero Hedge recently had a long post about the CDS market:

UUP Call Volume Explodes, Trading Halts and Nov Call Options Double

This is why the options market is so fun to watch. Whether someone knew about (or caused) the filing or not, there was definitely a trade set up in the works and an institution could have doubled $3 million+ in a single day (given the 212k volume today).

On my previous post I singled out a few blocks that traded at 0.15 on the UUP November $23 strike. Today, 212,000 contracts closed at 0.30! The ETF itself spiked to an intra-day high of $23.15 before closing at $22.86 on record volume. A spike was warranted after UUP violated the 8 month downtrend and 50 day moving average on strong volume, which could confirm a reversal if it sticks. US Dollar Index technicals are worse than $UUP's.  It is below the 50dma and 8 month downtrend. We will see who follows who going forward. Also, UUP implied volatility is trending higher at 17 vs. 10 historical vol at ISE.com. The monster call volume + trading halt/8-K filing (to issue 100 million more shares) really makes Dvol wonder who the 性交 was behind this trade, and the underlying nature. I'll be watching UUP, USDX and SPY going forward. Charts below are UUP and US Dollar Index. 

UUP Halted, 8-K Filing - Powershares DB US Dollar Index Trust

Here is part of the 8K filing from SEC.gov. It is also strange that yesterday saw a 330,000 volume day on the Nov $23 calls. $UUP is halted at $22.49. *Update, $UUP looks to be up 1.2% at 1:55.
"Item 8.01. Other Events.

On November 3, 2009, PowerShares DB US Dollar Index Bullish Fund (the “Fund”), a series of PowerShares DB US Dollar Index Trust (the “Trust”), announced in a Current Report on Form 8-K that 6,600,000 of its Shares registered with the Securities and Exchange Commission (the “SEC”) were available for purchase by the Fund’s Authorized Participants. As stated in its current prospectus, the Fund creates and redeems Shares in blocks of 200,000 Shares called “Creation Baskets” and “Redemption Baskets,” respectively. Only Authorized Participants may purchase or redeem Creation Baskets or Redemption Baskets.

As of November 5, 2009, the Fund issued all of the remaining Shares to its Authorized Participants. As a result of these issuances, the Fund will temporarily suspend the issuance of additional Creation Baskets until the registration statement on Form S-3 (333-162819, 333-162819-05) which was initially filed on November 2, 2009 and registers an additional 100,000,000 Shares of the Fund (the “Registration Statement”) has been cleared by the SEC, the Financial Industry Regulatory Authority and the National Futures Association.

The Fund will issue a subsequent Current Report on Form 8-K to announce the effectiveness of the Registration Statement and its ability to resume offering Creation Baskets to its Authorized Participants.

The suspension of the issuance of Creation Baskets has no effect on the ability of Authorized Participants to redeem Redemption Baskets.

Any forward-looking statements in this Current Report are based on expectations of DB Commodity Services LLC, the managing owner of the Trust and the Fund (“DBCS”) at this time. Whether or not actual results and developments will conform to DBCS’ expectations and predictions, however, is subject to a number of risks and uncertainties, including the special considerations discussed in the Fund’s currently effective prospectus, general economic, market and business conditions, changes in laws or regulations or other actions made by governmental authorities or regulatory bodies, and other world economic and political developments. The Trust, the Fund and DBCS undertake no duty to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Any terms used and not otherwise defined herein shall have the meaning ascribed to such terms in the currently effective prospectus.
"

Robert Prechter: Significant Fall Coming, 2008 Just A Warm Up! (CNBC, 11/4)

Prechter is back and looks like he just saw a completed corrective wave. "This market rally is over", according to Robert Prechter of Elliott Wave International. He said stocks are overvalued when looking at historical bottoms, specifically dividend yields and P/E ratios. He also said poor market internals (lower volume, advance/decline ratios dwindling away) and extreme bullishness are other factors. He did not get into Elliott Waves, if I'm not mistaken. He should get into E-Wave details.
CNBC's Maria Bartiromo: "How significant could a fall be?"

Robert Prechter: "Very significant. We had I think a warm up in 2008 that was a big leg down but I think the one we're in will be at least that large. It's not going to be a U or W type of bottom. I don't think we've hit the V bottom yet, that's what is coming up". "I'm very bullish on the Dollar. I think it's going to be up for a year or two".

He thinks people should be in Treasury Bills not stocks, commodities or real estate. On his site he's offering a free 50-page eBook called "The Ultimate Technical Analysis Handbook".




Disclosure for FTC:  DV works as an affiliate for Elliott Wave International, I have followed Bob Prechter's work and am confident in the quality of his products and services.

Jim Iuorio: US Dollar Due For Big Spike, Trade Too Crowded (Fast Money)

Jim Iuorio on Fast Money touched on that HUGE volume on the November $23 UUP Calls today (more detailed info here).  He thinks we're due for a big spike in the US Dollar because the trade is too crowded.  If he's right, it could do some (short term) damage to the markets and carry trade (Roubini).  A total of 330,000 contracts moved today on that call strike. At 11:36pm USDX is up 0.29% to 75.87. If it breaks down here it could test $74-72 support. Are we due for a squeeze? Watch UUPKW at Yahoo Finance. If it spikes to 0.30 before November 20, someone doubled $4 million.


FOMC Statement, Market Reaction, SPY Volatile at 50dma (TLT, UUP, GLD, SPY Charts)

Here is the FOMC statement.

"Release Date: November 4, 2009
For immediate release
Source: FederalReserve.gov

Information received since the Federal Open Market Committee met in September suggests that economic activity has continued to pick up. Conditions in financial markets were roughly unchanged, on balance, over the intermeeting period. Activity in the housing sector has increased over recent months. Household spending appears to be expanding but remains constrained by ongoing job losses, sluggish income growth, lower housing wealth, and tight credit. Businesses are still cutting back on fixed investment and staffing, though at a slower pace; they continue to make progress in bringing inventory stocks into better alignment with sales. Although economic activity is likely to remain weak for a time, the Committee anticipates that policy actions to stabilize financial markets and institutions, fiscal and monetary stimulus, and market forces will support a strengthening of economic growth and a gradual return to higher levels of resource utilization in a context of price stability.

With substantial resource slack likely to continue to dampen cost pressures and with longer-term inflation expectations stable, the Committee expects that inflation will remain subdued for some time.

In these circumstances, the Federal Reserve will continue to employ a wide range of tools to promote economic recovery and to preserve price stability. The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and continues to anticipate that economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels of the federal funds rate for an extended period. To provide support to mortgage lending and housing markets and to improve overall conditions in private credit markets, the Federal Reserve will purchase a total of $1.25 trillion of agency mortgage-backed securities and about $175 billion of agency debt. The amount of agency debt purchases, while somewhat less than the previously announced maximum of $200 billion, is consistent with the recent path of purchases and reflects the limited availability of agency debt. In order to promote a smooth transition in markets, the Committee will gradually slow the pace of its purchases of both agency debt and agency mortgage-backed securities and anticipates that these transactions will be executed by the end of the first quarter of 2010. The Committee will continue to evaluate the timing and overall amounts of its purchases of securities in light of the evolving economic outlook and conditions in financial markets. The Federal Reserve is monitoring the size and composition of its balance sheet and will make adjustments to its credit and liquidity programs as warranted."

I looked at ETFs that track 20+ Year Treasuries (TLT), the US Dollar Index (UUP), S&P 500 (SPY) and Gold (GLD). TLT ended -0.91%, UUP -0.75%, SPY +0.26% and GLD +0.60%. So it was an uneventful day with big swings. After an initial dip and a monster spike, the rally in risk (SPY, GLD) started selling off after 3:00. Look at the chart snapshots.

FOMC Market Preview by Ashraf Laidi (CMC Markets) 11/4/2009

Here is Ashraf's most recent blog post: FX, Oil Eye Equity Inflection (November 3, 2009)


ht Stocktwits

UUP: 237,858 November $23 Calls Trade Pre-FOMC Annoucement (US Dollar ETF)

You don't see this much volume on $UUP options every day. 237,858 November 23 calls traded so far with 40,349 open. I first heard about this on Stocktwits. Looking closer at big blocks on the .UUPKW 1 minute chart (not tick): 47,800 for $0.15 moved @9:56, 36,400 for $0.10 moved @10:47 and 67,600 for $0.15 moved at 11.53. All of this action is gearing up for FOMC volatility I'm sure. Speculation or hedging is anyone's guess. A downtrend was violated recently but UUP has not cracked the 50dma yet. Traders dropped around $3.5 million so far today on these contracts. They have until November 20, 2009 to make dough if speculative. $UUP is trading at $22.54. A live streaming options chart would be great to embed right now.  I added a live $UUP chart below.

UUP volume and calls were active at the end of October also:  $UUP Volume Spiked to 2008 High, Call Volume and ISEE Ratio Analysis With Potential Trade Lurking (Link).

Hecla Beat Estimates, Stock, Calls Rage War Against $5 Resistance ($HL)

First off, Dvol has been watching Hecla Mining ($HL) since May. It has been riding the reflation trade (silver).

Thousands Of Hecla Mining Calls Open ($2.5-5.0-June, Sep'09, Jan '10 (5/20/09)
Hecla Mining Breaks Out, Calls Up On Silver Production, Cost Outlook (9/10/09)

Hecla reported earnings yesterday and beat First Call estimates by 0.09.
"Hecla Mining beats by $0.09, beats on revs Reports Q3 (Sep) earnings of $0.09 per share, $0.09 better than the First Call consensus of ($0.00); revenues rose 39.0% year/year to $95.2 mln vs the $68.7 mln consensus. Third quarter silver production was 2.7 million ounces at a cash cost of $0.85 per ounce of silver produced after by-product credits. Co reduces full year guidance for cash costs by 25% to $2.25 per ounce of silver. The co is on track to meet its full year production guidance of 10.5-11 million ounces of silver." (via Briefing/MSN)

As a result, Hecla gained 18% on 29.9 million shares, a volume level never seen before. The stock is set to rage ware against $5 resistance if it doesn't retrace some gains. Schaeffers Research came out with an excellent note about Hecla's call action the day before earnings (Option Players Bet on a Major Post-Earnings Move from Hecla Mining Company). Looking during/after the fact, call volume was still active today at the $5 strike with 6,500-7,200 contracts trading in November, December and January. The volume was under open interest on a 160% gain (for Nov) so some of that could have been fast money. The ISEE ratio was down 88% from Nov 2, however calls opened still outnumbered puts, 2.88k/116 or an ISEE value of 32.77K. Watch SLV and HL trade live below, they could get volatile.

Snapshot of $HL 11/3 (Courtesy of Stockcharts.com)

Another Breakout In Gold, Will Silver Follow? (SLV, GLD Charts, Options, Volatility)

You can't ignore gold's move today. It violated ceiling resistance and is now testing channel resistance, look at the gold chart below.  The gold ETF (GLD) is trading inside a steeper near term channel and far from channel resistance.  So do you trade off GLD or $Gold spot to game resistance.   Also, the silver ETF (SLV) rallied hard and broke above it's 50 day moving average and is around 17.50 ceiling resistance.  So will SLV follow GLD's lead here?  SLV looks like a good trade above 17.50 or below 50d/June highs (high 15s).  You can't totally factor out a potential head and shoulders pattern.  Everything moved higher on strong volume today.  This action could be setting up for the FOMC statement on rates and forward looking language.  The whole RISK trade is being tested here.  It will be interesting to see how Treasuries, the US Dollar and precious/commercial metals react tomorrow and if precious metals/S&P start to decouple.

Unusual Option Activity, Volume, Volatility and Trading Ideas for 11/3/2009

Option Activity Firehose for 11/3/2009.  I regularly visit OptionMonster, SchaeffersResearch, CrimsonMind, OptionInsider, ONN.tv, WhatsTrading, DailyOptionsReport, Vixandmore and Investingwithoptions for option information.

Unusual Options Activity:  OSIR, WFR, MU, PALM, MA, ETFC, S, AGX, XLI, MA, UNP, FRX (OptionInsider) 
Options Update: Ventas, Inc. (VTR) & Wells Fargo & Co. (WFC) (OptionInsider)
Options Intelligence Report: Life Technologies Corp. (LIFE) & Foot Locker, Inc. (FL) (OptionInsider)
Options Update: Cisco Systems Short Straddled Ahead of Earnings (SchaeffersResearch)
Option Activity Alert: McDonald's Corporation Could Face Call-Related Pressure (SchaeffersResearch)
Option Activity Alert: Bears Bet Against AngloGold Ashanti Limited (SchaeffersResearch)
Option Skews - Relatively Heavy Put Activity on Qualcomm Inc and American Express Co (SchaeffersResearch) 
Bearish signs on semiconductor ETF (OptionMonster)
Traders position for Moody's upside (OptionMonster)
Puts sold in Expeditors International (OptionMonster)
Silver bull makes leveraged bet (OptionMonster)
Downside players in VIX (Volatility Sonar/OptionMonster)

Rick Santelli vs. Steve Liesman on the Weak Dollar (CNBC)

H/T ClusterStock


US Treasury Bulls Battling Moving Averages, Fed Done Buying Treasuries (TLT, USB, UST, TYX, UST30Y)

Treasuries are at another inflection point.  The 30 Year T-Bond Price is trading right under the 50dma as well as $TLT.  The 200dma is falling and close buy.  Yields are right above the 50d and are being squeezed in a 3 year symmetrical triangle so judgment day is upon us.  The Fed finished buying Treasuries on October 29 which propped up the market and lowered interest rates.  So with decent spreads from 0-4.26% will banks (+ China) continue to support the Treasury market?  Also, if the rally in risk is at it's pinnacle like Bill Gross said, could money flow back into USTs?  I understand the argument and possibly the reason why yields are hovering above the 50d at the moment.  The US National Debt is about to hit $12 trillion (up 20%+ yoy), the monetary base doubled and there are underlying inflation and currency worries.  Not too long ago TLT broke through uptrend support (post with live TLT chart/trend).  We'll see if that move can stick.  The FOMC meets today and Wed so get ready for interesting moves (preview/Danske Bank A/S).  Charts below with trends:  $TLT, 10Y Price, 30Y Yield, 30Y Price.

Bill Gross: Six-Month Rally in Risk Assets at Pinnacle -Investment Outlook November 2009 (Midnight Candles)

Bill Gross, who runs the biggest bond fund in the world with $186 Billion under management (Pimco Total Return Fund/PTTAX), released his November investment outlook titled "Midnight Candles".  The theme is death after a brief life aka the 6 month risk rally.  He quotes a line from Macbeth, "Out, out, brief candle!" which signifies the suicide of Macbeth's wife.  Uh oh....  So Bill, which yield will be first to the party and when?  Btw he's right technically as well, TLT and Treasuries are testing 50 day moving average resistance.

Oh $DIA-ear, Do Not Break 97.13! (DIA ETF Chart aka $INDU, Industrials)

DIA (Dow Jones Industrials ETF) is testing trend support (inverse rising wedge?) and the 50 day moving average at 97.13. If those levels are violated (they could hold), look at the chart and pick the next support level. The June plateau ($88) looks like big support imo.  Also yesterday DIA saw a red volume day not seen since March.  DIA busted through a rising wedge from the March lows.  Relative strength is at 45.67 and MACD at 0.33.  It is trading at 97.29 right now.  Here is a large 9 month chart of DIA with wedges, 50dma, support, volume etc.

S&P Dec E-mini Future Weak After Testing 50 Day Moving Average (ESZ9)

The S&P Dec E-mini Future is losing strength at the 50 day moving average and short term downtrend resistance.  It is also testing long term channel support from August.  The 50dsma is at 1,048.06 and ESZ9 is trading at 1,038 after hitting a high of 1,049.  Watch that channel from AUG closely (in the blue line) going forward.  The June highs look like a nice plateau, we'll see.  What you don't want to see is a 20/50dma cross to the downside.  Watch out for that.  Charts courtesy of OptionsXpress.



Performance Gap Between Baltic Dry Index, CRB, Transports, $SEA and Shanghai Index (October, 2009)

How crazy is this market. The $VIX spiked 23.95% (Friday), Baltic Dry Index gained 3%, CIT Group filed for bankruptcy (one of largest in U.S. history), China's PMI hit an 18 month high (55.4) and US manufacturing "expanded in October at the fastest pace in more than three years" (55.7). $ES_F is up 1.38% right now (SPX emini future).

Also look at the one month performance gap between the Baltic Dry Index, CRB Index, Shanghai Index, Transportation Index ($TRAN) and Shipping ETF ($SEA). In October: $BDI +31.65%, $CRB +6.92%, Shanghai Index +2.89%, $SEA +2.48% and $TRAN -2.15%. That is a huge performance gap! Perhaps the BDI is playing catch up on the 3-5 month charts. Is China oversupplied or are commodities just getting started? Here are recent "backward looking" articles on China's growth, iron ore demand and 9 month/September import data. View the charts below.

David Rosenberg: GDP Won't See 4% In 2010, Market Will Be Lower By Year End (Bets Terranova)

David Rosenberg was on Fast Money by phone last Thursday.  Here is what he had to say about the Q3 GDP number.  Is 3.5% sustainable?  He's been battling the bulls for a while.
  • He thinks Bernanke probably has 1937-1938 on his mind so no exit strategy any time soon...
  • "There's was just so much medication that the Government administered to get that 3.5%. When you really do your due diligence and look through the number and strip out all the stimulus from cash for clunkers to home buying credits to Government spending. Actually when you look at the economy organically outside all the stimulus it was a flat number."
  • Stance on market:  "Very defensive right now.  The stock market right now is de-facto, pricing in over 4% GDP growth in the next year, and I'm not really in the double dip camp, but neither do I think we see 4% GDP growthCaution is the operative watch word."   (Pimco's El-Erian sees 2% next year btw)

The Fast Money crew (Tim Seymour/Terranova) battle his views.  Joe Terranova bets David Rosenberg that the market will be higher by year end. How about another Bolling v. Cramer bet?

Pimco's El-Erian 2010 Outlook: Still Sees 2% 2010 Growth, Market Pricing In 4%

Video from CNBC.com. Pimco's El-Erian still sees 2% growth in 2010 while the market is pricing in 4%.


Also inter-market analysis after GDP report: Q3 GDP 3.5%, SPY, UUP Bounced Off Support/Resistance, 50d (Charts, 10/29) (Distressed Volatility)

Barter on an Exchange Using Bartercard and ITEX! Exchange Cars for Advertising Space (Videos)

Apparently bartering for goods and services is popular in Australia, the UK and here in the U.S using ITEX (video). Maybe more places I'm not sure. Check out Bartercard.com videos below about the service (one from SkyNews) and read the Time Magazine article.

"Ever since the inception of Bartercard into the Australian economy in 1991, the way companies across the country conduct their day-to-day business has been revolutionised. Bartercard’s world-leading innovative trade exchange system enables over 75,000 trading members in 9 countries to benefit from the cashless economy of barter."

SPY, QQQQ Follow IYT/IWM and Break Moving Averages, VIX Spikes 24% On Halloween Scare

I hope everyone enjoyed Friday's Halloween scare. $SPY closed down 2.90%, $QQQQ down 2.68% and the $VIX spiked 24%!  SPY and QQQQ both violated the 50 day moving average and SPY killed a channel support level.  The sell off heightened fear and raised premium in the options market, reflected by the volatility index (VIX).  After QQQQ broke through a rising wedge it is now sitting on a channel.  It could blow through that as well.  To me the June highs look supportive for a correction, but there are minor areas of support that could bring whipsaws.  Transports (IYT) and Small Caps (IWM) predicted this action recently, as well as hints from Hong Kong (HSI) and the US Dollar ETF (UUP) (click links for explanations). Also my recent post on the volatility of volatility, which was very high relative to historical and the underlying, could have been predicting this VIX move. Current 10d historical volatility doubled in a week from 70% to 150% from ivolatility.com.  So there was very interesting action this week and I'm not surprised.  Below are 6 month charts w/ technicals of SPY, QQQQ and the VIX and news articles that could have been catalysts.

Q3 GDP 3.5%, SPY, UUP Bounced Off Support/Resistance, 50d (Charts, 10/29)

The news of the day was Q3 GDP at 3.5% which sparked a 2.25% rally in the S&P 500. Here is the "percent change from preceding period in Real Gross Domestic Product (GDP)" chart I cooked up going back to Q2 2006 using BEA.gov data. You can see that 3.5% was last hit in Q3 2007, so the numbers (artificially propped up or not) looked pretty good, hence the huge rally and sell off in the Dollar. The number is backward looking remember..

Real Time U.S Balance Sheet Counter, Broken Out at USDebtClock.org

I came across this national debt clock today and it is crazy. It breaks out the complete US balance sheet in real time. Numbers include: US National Debt, US Spending, Debt Per Citizen, Debt Per Taxpayer, US Budget Deficit, US GDP, US Federal Tax Revenue, GDP Per Citizen, Income Tax, Payroll Tax, Total Federal/State/Local Tax Revenue, Medicare/Medicaid, Social Security, Trade Deficits, Imported Oil, Personal Savings, Food Stamp Recipients, Auto Sales, Household Assets, Interest on Debt, Defense/Wars, US Private Debt, Mortgage Debt, Personal Debt, Credit Card Debt, Money Creation and more. It is the craziest counter I have ever seen. Go to USDebtClock.org and see for yourself. US National Debt is at $11,913,454,290,324 or $11.9 trillion.

Tudor Investment Q3 Investment Letter, Likes Gold, Emerging Equities & Commodities to Absorb Liquidity (10/15/09)

NYT DealBook has the full Q3 Tudor Investments Letter here. It looks like he's all about the "great liquidity race" and is hopping on the train with Paulson and Einhorn. Could reflexive hedge fund money drown the deflation whale?
"Our job is to identify the best performing assets of this “Great Liquidity Race.” At present, it appears those assets are gold, emerging market equities denominated in local currencies, and commodity related stocks."

Source: Seeing Next Boom, Tudor Goes For the Gold (NYT Dealbook)

HYG, High Yield Bonds Selling Off With Risk, Leveraged Loan Index Testing '08 Resistance. Does Someones Yield Have To Give?

HYG:NYSE (iShares iBoxx $ High Yield Corporate Bond ETF is moving lower with the overall correction in the pricing of risk. Nothing Bernanke can't fix though. It could be forming a double top. If it breaks the long trend it could hit between the 50 day moving average and support around $83.50. I should have charted this out earlier as more % points could have been made. HYG is up 50% since March when it formed a double bottom, pricing HY at pre-crisis levels. The S&P/LTSA Leveraged Loan 100 Index (actively traded institutional leveraged loans) is testing 2008 resistance as well (chart below). So far this year high yield bond issuance and equity refi's boosted maturities and equity. So are all debt related instruments (bonds, bank loans) priced for perfection or does someones yield have to give eventually (including equity yields).

Russell 2000, $IWM Showing Technical Risks + Option Activity Update ($RUT)

Continued from my previous post showing technical weakness on the Dow Transports ($IYT ETF). It looks like $RUT (Russell 2000 Small Cap Index) broke, or should I say pierced, through the 50 day moving average and is testing a minor shelf from August and the lows of early October of about $580. If the 50dma breakdown follows through, RUT could test $535. Btw, Hang Seng (Hong Kong) is currently down 1.59% overnight.

Carl Icahn Speaking at Yale in Robert Shiller's Class (2008), He's Trying To Block a Pre-Packaged CIT Bankruptcy (Bloomberg Video)

I saved this link a while ago and forgot to put it up. Here is Carl Icahn (hedge fund manager ($IEP), corporate raider, blogger, shareholder warrior) speaking to students at Yale in Robert Shiller's class. Date: 10/28/2009.



Source: Open Yale Courses: ECON 252: Financial Markets (Spring, 2008)

Here he is out of the classroom, trying to print money on his CIT Group debt. He owns $2 billion (face value) of $CIT debt and it's on the brink of a pre-packaged bankruptcy.

Check Out This Economic Calendar (Embeddable Widget)

This is a great widget


Live Economic Calendar Powered by the Forex Trading Portal Forexpros.com

$UUP Volume Spiked to 2008 High, Call Volume and ISEE Ratio Analysis With Potential Trade Lurking (Live US Dollar ETF Chart w/ Technicals)

There is a potential set up lurking on the US Dollar Bullish ETF ($UUP) just in time for Halloween. I touched on the big call volume on the Roubini: Beware of Humongous Dollar Carry Trade post today. Calls dominated with selective put activity. Most active call strikes:

7,450 November $23 calls with 30,750 open
35,805 December $23 calls with 96,637 open
17,114 December $24 calls with 38,816 open

Volume was WAY below open interest, so I'm not sure if the trades were bought-to-open or close. On the ISE, UUP's total option volume was 6x the average. The ISEE ratio was down -98.42% to 517. The ratio measures opening long calls/opening long puts*100 (without market makers). Closing trades? Or did the high volume skew the data. Volume on the actual ETF exploded to a level not seen since 2008 (6.9 million shares). Watch that downtrend line and support level on volume. Either it breaks through downtrend resistance or tests $22. It closed at $22.58 today. The next US Dollar judgment day is upon us. Lock and load..

Hang Seng Broke Rising Wedge, Heading For Support, Downpayment On Luxury Hong Kong Property Now 40% (HSI, HSNP)

Distressed Volatility (仿旧波动) - China Section (中国科)

Hong Kong's Hang Seng Index broke through rising wedge support. Catalysts:
Sino Land Leads Hong Kong Developers Lower on Mortgage Curbs (Bloomberg)
Hong Kong raises required deposit on high-end property to 40pc (AustralianBusiness)
Hong Kong property stocks fall after tighter mortgage rules (MarketWatch)
Hong Kong Stocks Drop Most in Three Weeks on Home Price Concern (Bloomberg)
Hong Kong Raises Down-Payment Level for Luxury Flats (Bloomberg, 10/23)


I provided static images courtesy of Google Finance to show the gap down on the Hang Seng Index (HSI) and Hang Seng Property Index (HSNP). HSI is currently down 1.63% (22,217) and HSNP is down 3.43% (28,387). I had a few posts showing a nice symmetrical triangle breakout and the Aug '09 resistance pierce to 30,000. It broke back below 29,000 support so it needs to figure itself out...

Andrew Smithers Says S&P 40% Overvalued, Banks and End of Quantitative Easing Will Be Catalysts

Economist Andrew Smithers of Smithers & Co. thinks the S&P is overvalued by 40% (based on Q-ratio). A 40% cut from the October 23 interview would equal 771 on the S&P. Two of his catalysts:
  • Banks will dilute equity to raise more capital.
  • End of quantitative easing will bring markets lower.




Related Articles:

S&P 500 Overvalued by 40%, Set to Fall, Smithers Says (Bloomberg)
Bank of America Falls as Bove Says Firm ‘Chained’ (Bloomberg)
Will The Stock Market's Rally Endure? (TheAtlanticBusiness)
A Tsar Too Far (Value Expectations)
QE according to Smithers (FT Alphaville)
The US stock market is overvalued by 40% (FT Alphaville)

Jeremy Grantham Q3 Letter: S&P Fair Value is 860, Could Overshoot in 2010

Interesting quotes from Jeremy Grantham's Q3 2009 Quarterly Letter. You can find the full PDF file at GMO.com (pdf link). His investment management firm runs $89 billion.
"Corporate ex-financials profit margins remain above average and, if I am right about the coming seven lean years, we will soon enough look back nostalgically at such high profits. Price/earnings ratios, adjusted for even normal margins, are also significantly above fair value after the rally. Fair value on the S&P is now about 860 (fair value has declined steadily as the accounting smoke clears from the wreckage and there are still, perhaps, some smoldering embers). This places today’s market (October 19) at almost 25% overpriced......"

"Conversely, I have some modest hopes for a collective sensible resistance to the current Fed plot to have us all borrow and speculate again. I would still guess (a well informed guess, I hope) that before next year is out, the market will drop painfully from current levels. “Painfully” is arbitrarily deemed by me to start at -15%. My guess, though, is that the U.S. market will drop below fair value, which is a 22% decline (from the S&P 500 level of 1098 on October 19)."

He talks about the great depression, Chinese growth etc..

Jim McCaughan: Gold Will Get Dangerous When Rates Rise (Principal Global Advisors)

I like to put different points of view on this blog. Jim McCaughan, CEO of Principal Global Advisors ($200 Billion under management), was on CNBC on 10/13/2009. Jim, like Nouriel Roubini, believes gold is a bad investment.
"There are no inflationary pressures in the US economy. Capacity utilization remains very low around 60% and there is no wage push at all with high unemployment, currently just under 10% and headed above 10%. So in those circumstances the US will not be generating any inflation for any time soon."

"I think further more that gold will get very dangerous within a year from now. When rates start going up, it becomes very expensive to hold a non-income producing asset. So though gold has positive momentum for the next few months, gold is a dangerous place to be when rates start turning up. As they will in a year or two's time."

He believes Treasuries are less dangerous because in a deflationary environment, where growth is slow, rates can remain low. He thinks 2-4% could be a new range for the next few years.

I'd prefer to just watch the charts.. Just in case Einhorn is right.

Roubini: If Dollar Carry Trade Unravels, Markets Could Crash (CNBC Video - 10/26/09), Did He Spark $UUP Call Volume Today?

Roubini was on CNBC on 10/26/2009. He said we are seeing the "mother of all carry trades" with the US Dollar. If the carry trade unravels it could reprice and/or bring volatility to the global markets since everyone is shorting/borrowing cheap US Dollars to fund risky assets around the world. Since global assets (equities, commodities, credit) are "perfectly correlated and levered" to the US Dollar carry trade, "once we have a realization that the Fed will start tightening or they can't defend the long end, global assets could come crashing and that's a risk we are facing". He thinks gold will only go higher if there is inflation or a global financial meltdown. From a trading perspective, watch the US Dollar for a catalyst.

BTW, did Roubini spark up some $UUP call buying today?? So far today, 6,000 $23 November calls traded with 30,750 open (last 0.15), 32,100 $23 December calls with 96,637 open (last 0.25) and 6,800 $24 December calls with 38,816 open (last 0.10) (hat tip OptionMonster). All volume was UNDER open interest so you'll have to decipher the nature of the volume and new open interest. Also there is nice volume on UUP, charting it out.

Transports $IYT Showing Weakness, AAR Rail Numbers Less Bad But Negative YoY, Industrials In Rising Wedge, Sector ETFs 50dma and RSI Comparisons

Numbers out of railfax through October 17 are LESS bad than July/August of this year but they are still negative year-over-year and year-over-2007. Railfax posts weekly reports using data from the Association of American Railroads. Below is a snapshot of this week's "Total North American Rail Traffic - Combined US, Canadian and Mexican Traffic". I don't see any gains over 2008 or 2007 however traffic data is LESS negative from mid-2009 to now (chart below of 13 week rolling averages). I provided the most recent AAR Rail Time Indicators video update below (for September).

Source: Railfax
Source: Railfax


Will AUD/USD, $FXA Retrace the WHOLE 2008 Move?

Will AUD/USD (Australian Dollar priced in US Dollars) and the the etf $FXA retrace 100% of it's losses peak to trough from 2008? Here is the FXA chart and I slapped on some triangles. We are at another inflection point to ride. This chart and the BRL (Brazil Real) are the underlying currencies of the successful global reflation trade so far. There have been minimal retracements. Waiting for resistive forces.....

Sergey Brin at Web 2.0 Summit 2009 (Video)

Sergey Brin (Google founder) had a conversation with John Battelle (Federated Media Publishing) at the Web 2.0 Summit on 10/23/2009. Found at OreillyMedia channel on Youtube.


Financial News for 10/24/2009: S&P, Bernanke, China, Goldman..

  • S&P 500 Retreat Signaled by ‘Bearish Wedge’: Technical Analysis (Bloomberg)
  • Bernanke Says Financial Firms Should Pay for Closings (Bloomberg Video)
  • Goldman Sachs Still Paid for Swaps on Redeemed Bonds (Bloomberg)
  • VIX Futures Show Lingering Risk of Stock Swings: Chart of Day (Bloomberg)
  • U.S. Risks Japan-Like ‘Lost Decade’ on Stimulus Exit, Koo Says (Bloomberg)
  • Irish Bar Values Plunge 40% as Pub Culture Mirrors Economy Bust (Bloomberg)
  • China Economy May Slow Next Year, Stephen Roach Says (Bloomberg)
  • Obama Declares Swine-Flu Emergency (WSJ)
  • Capmark, Big Commercial Lender, May File for Bankruptcy (NYT)
  • Capmark Financial near bankruptcy: WSJ (MarketWatch)
  • U.S. Bank Failures Exceed 100 for Year, First Time Since 1992 (Bloomberg)
  • Blackstone plans IPO for Merlin Entertainments: report (MarketWatch)
  • Existing-home sales rebound to 2-year high (WashingtonPost)
  • Suit: Cocaine, sex in Madoff's workplace (CNN)
  • Shift to e-books to hurt bookstores, analysts say (AP)
  • CIT Warns of Big Losses if Investors Reject Plan (NYT)
  • Icahn Could Become Top Shareholder at CIT Group (WSJ)
  • JAL faces $8.8 billion excess debt if liquidated: source (Reuters)
  • GM board to reconsider Opel in early November (Reuters)
  • Secondary Market Now Driven by Mega-Funds, Not LP Liquidity (PE Hub)
  • DEALTALK-Las Vegas Sands loan faces bumps, may pressure IPO (Reuters)
  • Soros says taxpayers right to resent bank bonuses (Reuters)

Big Unusual Volume On XHB November $16 Calls, Existing Home Sales and Tax Credit Speculation (Chart, Links, 10/22/09)

Big money moved into the $XHB November $16 Calls today, probably betting on the existing home sales number tomorrow at 10:00am. Also, speculators could be placing bets on a potential tax credit extension (ACUMA Comments: Extending the $8,000 First-Time Homebuyer Tax Credit-Reuters). About 100,000 November $16 calls were bought for 0.30. On the minute chart using OptionXpress (anyone have an embeddable options chart?) showed that 40,000 and 45,800 hit at .30 at around 2:36. An institution threw $2.5 million on this trade. The trade might not be speculative, it could be hedging a voluminous short position. But lets say someones got a mil to burn and wants to see XHB over $16.30 by November 20 expiration. A total of 123,000 November 16 calls traded with 7,000 open.

On the ISE, XHB option volume was 7.6x average volume and the ISEE exploded 10,600% to 856 with 21,770 calls opened/2,540 puts opened on the International Securities Exchange. The chart is being squeezed in a triangle just above $15 support from 2008. It closed at $15.38 today just above the 50 day moving average on strong volume. RSI and MACD have been trending lower with neutral price movement, however both are hovering around the neutral 50 and 0.0 level respectively. Obviously a breakout or breakdown would be a nice trade. It's also testing the downtrend from 2007. Are these calls levering up here?

XHB Chart (Courtesy of Stockcharts.com)




Articles:
Calls go through roof in homebuilders (optionMONSTER)
SPDR S&P Homebuilders (XHB) $15.28 +3.38% (WhatsTrading)
Bullish bets placed on the home builders: XHB TOL LEN (Trading RM, LLC)

Also this is interesting: Goldman Sachs Positive On Homebuilders Ahead of Earnings/Tax Credit Extension (XHB, DHI, MTH, TOL) - (Street Insider)

Hat tip Adam Warner on StockTwits today.

NYT, WSJ, Google and HuffPost at Web 2.0 Summit on Journalism (10/22/09)

Wow... The Wall Street Journal (Robert Thomson), Google (Marissa Mayer), New York Times (Martin Nisenholtz) and Huffington Post (Eric Hippeau) talk about the evolution of journalism with John Battelle of Federated Media Publishing at the 2009 Web 2.0 Summit. They talk about reporting, stealing content, traffic, advertising etc. Title:"Discussion: Whither Journalism?". Web 2.0 content jacked courtesy of Oreilly Media on YouTube. So will Rupert make a major move and bring volatility to journalism?

Niall Ferguson: US Dollar Could Lose Another 20%, $UUP Around $22 Support, Put/Call Open Interest Ratio and Short Interest (10/22)

On Tech Ticker from the Buttonwood Gathering, Harvard Economist Niall Ferguson said the US Dollar could lose 20% by year end. Major points he made:
  1. The stock market rally from the foreign investor's perspective has been an illusion because "the dollar's depreciation negated all the appreciation of the S&P 500 from March". Why would they want to hold dollars with a sliding currency and no investment returns.
  2. The real trade weighted dollar index is "only down 9% from it's post crisis peak, it could go another 20% and be well within historical probability."
  3. Reserve currencies don't last forever.
  4. "Fed could get pushed by the bond market into monetizing more debt".

The Fed Owns Crossroads Mall in Oklahoma City, $24 Million Listing Price

Bernanke will give you this mall for $24 million. Here is the Crossroads Mall website.

Articles:
FEATURE: Deserted shopping mall bleak symbol of Fed bailout (Reuters)
Fed Chairman Bernanke: Crossroads Mall landlord (NewsOK)
Bear Stearns Rescue Turns The Fed Into A Lawsuit Magnet (Business Insider)
Fed becomes reluctant landlord (Reuters Blogs)



View Larger Map

Hang Seng Property Index, Henderson Land (0012) Break Out, 39 Conduit Unit Sells For $57 Million!

Distressed Volatility (仿旧波动) - China Section (中国科)

I am testing the waters on the HKEX (Hong Kong Stock Exchange) on Google Finance. I've been watching the Hang Seng Property Index (HSNP:Hong Kong) and Henderson Land Development (0012:Hong Kong) on the HKEX for a few weeks now. The Hong Kong Property Index broke out of a symmetrical triangle recently and ran all the way up to 30,000 (above the August highs). It is currently trading at 29,952 after reaching 30,112 a moment ago. I talked about this trade on October 5 and October 13 when it was approaching the potential break out point. It could fly or retest support from here.

Henderson Land Development (0012:Courtesy Google Finance)
Hang Seng Properties Index break (HSNP:Courtesy of Google Finance)

The reason why I'm watching the Hong Kong Property sector is because Henderson Land Development just sold a unit (翠錦園:39 Conduit Road)‎ for a world record price of HKD439 million aka $57 Million!

This is from the press release:
"A Record Breaking Deal that Tops Asia

Mr. Lam stated, "The supply of new luxury residence in Mid-Levels is extremely scarce while luxury properties in such area have always been a sought after choice. We have recently witnessed record-breaking deals in luxury property market. As a result, we have offered exclusive previews of showflats of 39 Conduit Road for selected VIP buyers the past weekend. Market response has been encouraging and we have received numerous enquiries since then. Among all our deals, the top floors special units recorded a HKD71,280 per sq ft (68th floor, unit A, size at 6,158 sq. ft) deal that totaled to HKD439 million. The deal also created records in numerous area, including the followings:

* Record-high of construction price per square foot
* Price per square foot surpasses all residential properties including mansions and houses
* Set new record among properties in Asia
* Challenges to be the highest global price per square foot on split level units (comparing usable area)
* The second highest deal in '39 Conduit Road', reached HKD64,605 per sq ft (68th floor, unit B size at 6,144 sq.ft) deal that totaled to HKD397 million. The Deal also sets a record deal in Hong Kong property market. " (Source: hld.com)
Recent News & Views:

China markets up as Hang Seng property index surges 5.8pct (ProactiveInvestors.hk)
Hang Lung boss a skeptic over sky-high luxury prices (The Standard)
Legislators slam Hong Kong developer's tall storeys (AFP)
In Hong Kong, a $56.6 Million Apartment (New York Times)
Hong Kong Has World's Most Expensive Apartments (조선일보(영문판):Chosun.com)
Singapore's DBS Group retains "buy" rating for Henderson Land Dev't (HK$57.50) (ChinaKnowledge)
Hong Kong flat 'most expensive' (BBC News)
Hong Kong apartment sold for a record 57 million dollars (Rabihdagher.com w/ BBC Video)

Here it is...
Source: AFP

Prechter on Fibonacci, Fractals and Financial Markets (Video Documentary/Socionomics Institute)

Robert Prechter on Fibonacci, fractals and financial markets.
"View a 7-minute clip from the groundbreaking documentary from the Socionomic Institute, History's Hidden Engine, which discusses the existence of the Fibonacci ratio or "Golden Number" in many of life's systems, including the financial markets. To view the entire 1-hour documentary for FREE, click here." (Source: ElliotWaveIntl)



Full disclosure: Although I do work as an affiliate for Elliott Wave International, I have followed Bob Prechter's work and am confident in the quality of his products and services.

Brazil Taxing Foreign Debt, Stock Purchases, BZF, EWZ, USD/BRL at Resistance (Charts). Will It Work?

Brazil is trying to slow down hot dollar inflows by imposing a tax on foreign based "real" denominated fixed income and stock investments. Will it work? Brazil is a commodity exporter, and higher commodity prices and Chinese demand have made it a target for hot money, carry trades etc (interest rates are at 8.75%). The iShares MSCI Brazil Index Fund ETF has been on fire and so has the real. The trend is your friend, but watch out for a strong reversal (it closed at 73.20 -4.04% in after hours).

Recent option activity: EWZ saw a November Put spread on 10/16/09. 10,000 November 74 Puts were bought at $3.10 and 10,000 69 Puts were sold at $1.45 according to Andrew Wilkinson of IB. That trade will profit below $72.35. It could make it. Someone also bought 2,000 November 75 calls that day for $3.30.

Brazil Real Cut to ‘Underweight’ at RBC on Tax (Bloomberg)
Brazil’s ‘Desperate’ Tax Won’t Stem Currency’s Rise, Cunha Says (Bloomberg)
Brazil’s ‘Moment’ at Risk as Real Gains, Freitas Says (Bloomberg)
Brazil Exchange-Traded Fund Plunges 3% on Tax on Foreign Inflows (Bloomberg)

US Dollar/Brazil Real (USD/BRL)

ForexProsForex Charts Powered by Forexpros.com - The Forex Trading Portal.


BZF (Brazil Real ETF)


EWZ (Brazil ETF)


Hat tip 0HEDGE for tax news.

Will Currencies Be The Next Lehman? Einhorn's Speech (Dollar, Euro, Pound, Yen, Gold)

With all of the money printing going on globally, many people believe there will be a currency crisis and eventually a repricing of sovereign debt risk (US Treasuries priced in US Dollars, JGBs in Yen). Lets not forget the aggressive currency players betting on a prolonged period of 0% interest rates by shorting US Dollars and putting on carry trades (selling lower yielding dollars for higher yielding currencies BRL, AUD). So there are definitely people trying to profit off of the demise of purchasing power. Kind of reminds me of Lehman shorts and CDS holders pre-bankruptcy. Commodities investor Jim Rogers has been warning about a currency crisis for a while now (see his CNBC interview on June 16.).

So now hedge fund manager David Einhorn of Greenlight Capital, who publicly shorted Lehman before it's demise, is positioning for a currency crisis by buying gold. He's not singling out the US Dollar either, he doesn't have faith in the Yen, Euro or Pound. The full speech PDF is available at Rolfe Winkler's Reuters blog post. Interesting points he made:

"I believe there is a real possibility that the collapse of any of the major currencies could have a similar domino effect on re-assessing the credit risk of the other fiat currencies run by countries with structural deficits and large, unfunded commitments to aging populations..."

"I have seen many people debate whether gold is a bet on inflation or deflation. As I see it, it is neither. Gold does well when monetary and fiscal policies are poor and does poorly when they appear sensible. Gold did very well during the Great Depression when FDR debased the currency. It did well again in the money printing 1970s, but collapsed in response to Paul Volcker’s austerity. It ultimately made a bottom around 2001 when the excitement about our future budget surpluses peaked.

Prospectively, gold should do fine unless our leaders implement much greater fiscal and monetary restraint than appears likely. Of course, gold should do very well if there is a sovereign debt default or currency crisis..."


"....When I watch Chairman Bernanke, Secretary Geithner and Mr. Summers on TV, read speeches written by the Fed Governors, observe the “stimulus” black hole, and think about our short-termism and lack of fiscal discipline and political will, my instinct is to want to short the dollar. But then I look at the other major currencies. The Euro, the Yen, and the British Pound might be worse. So, I conclude that picking one these currencies is like choosing my favorite dental procedure. And I decide holding gold is better than holding cash, especially now, where both earn no yield.

Along these same lines, we have bought long-dated options on much higher U.S. and Japanese interest rates...."

He was right about Lehman and the bond insurers, so keep an eye on gold. He did say he could be wrong if "our leaders implement much greater fiscal and monetary restraint" (Volcker style interest rate policy). But he's been right more than he's been wrong... We shall see!

Medical Marijuana Inc. MJNA Up On Obama's Medical Marijuana Guidelines (Videos, Press, Charts - 10/19/09)

I don't usually look at penny stocks but today is the exception. Medical Marijuana Inc. (MJNA) and Cannabis Science (CBIS) popped today on Obama's new medical marijuana guidelines: Medical Marijuana Policy Eased by Justice Department (Bloomberg).

"Oct. 19 (Bloomberg) -- The Obama administration is advising federal prosecutors not to seek criminal charges against those who use or supply marijuana for medical purposes in accordance with state laws".


Medical Marijuana Inc. (MJNA) is up 20% today at 0.32 last time I checked. Below I found an interview with the CEO. He might be high but he thinks it is the next Microsoft! Go to the website: Medicalmarijuanainc.com.



Also, "Breaking News: Cannabis Science (CBIS) Reports Obama Administration Issues New Medical Marijuana Policy; One More Step Toward Legalization As The Federal Government Won't Prosecute Medical Marijuana If Compliant With State Law" (Reuters/BusinessWire).




This is interesting.. Crime around medical marijuana dispensaries in Colorado. They should just legalize it. Maybe we will see Marijuana Farm REITs down the road.


Full disclosure: I do not have possession of Medical Marijuana Inc or Cannabis Science and there is no recommendation to buy marijuana stocks, or pot on this post.

CIT 3/2011 Bonds at $55, CDS 40bps, Icahn Offers $6 Billion Loan

An update on the CIT Group mess... Icahn, the largest creditor is offering to underwrite a $6 billion loan. I also provided a view of the CIT Group retail note that matures on 3/15/2011. It is trading at $55 and yields 54.17%. View the quote and charts at FINRA.org's Bond Center. As of 7/16/2009 Moody's rates the bond at Ca and S&P CC. Looking at Markit's quotes, CIT Group CDS trades at 40bps up front.

CIT 3/2011 Note Price (Courtesy FINRA.org/Marketwatch)

Egan-Jones On Why Carl Icahn's CIT Overtures Are Irrelevant (Zero Hedge)
CIT’s Changes Do Little to Enhance Debt Swap, CreditSights Says (Bloomberg)
Icahn offers CIT Group $6 billion loan (AP)
UPDATE: Icahn Offers To Underwrite $6B Loan To CIT (WSJ)
Icahn Offers CIT $6 Billion Loan, Calls Board ‘Incompetent’ (Bloomberg)
Icahn offers CIT 6 bln dlr loan, blasts board (AFP)
The Daily Docket: CIT Amends Exchange Offer (WSJ/Bankruptcy Beat)
CIT Sweetens Exchange Offer (WSJ)
CIT Group Revises Debt Plan (NYT)
10/13: CDS On CIT Hover As Bankruptcy Looms (Derivatives Weekly/subscription)
10/5: If CIT fails, Goldman wins -- with a $1 billion payoff (DailyFinance)
10/5: CDS in the spotlight in Goldman purchase of CIT debt (Financial Times)

S&P, SPY Elliott Wave C, 50% Fibonacci Retracement Charts

Robert Prechter uses the Elliot Wave Principle to determine market moves. He correctly called the March lows and is now predicting a wave lower based on momentum indicators, sentiment and the Elliott Wave principle (10/5 interview). What is it....
The Elliott Wave Principle
In the 1930s, Ralph Nelson Elliott, a corporate accountant by profession, studied price movements in the financial markets and observed that certain patterns repeat themselves. He offered proof of his discovery by making astonishingly accurate stock market forecasts. What appears random and unrelated, Elliott said, will actually trace out a recognizable pattern once you learn what to look for. Elliott called his discovery "The Elliott Wave Principle," and its implications were huge. He had identified the common link that drives the trends in human affairs, from financial markets to fashion, from politics to popular culture.
Robert Prechter, Jr., president of Elliott Wave International, resurrected the Wave Principle from near obscurity in 1976 when he discovered the complete body of R.N. Elliott's work in the New York Library. Robert Prechter, Jr. and A.J. Frost published Elliott Wave Principle in 1978. The book received enthusiastic reviews and became a Wall Street bestseller. In Elliott Wave Principle, Prechter and Frost's forecast called for a roaring bull market in the 1980s, to be followed by a record bear market. Needless to say, knowledge of the Wave Principle among private and professional investors grew dramatically in the 1980s.
When investors and traders first discover the Elliott Wave Principle, there are several reactions:
  • Disbelief – that markets are patterned and largely predictable by technical analysis alone 
  • Joyous “irrational exuberance” – at having found a “crystal ball” to foretell the future 
  • And finally the correct, and useful response – “Wow, here is a valuable new tool I should learn to use.”
Just like any system or structure found in nature, the closer you look at wave patterns, the more structured complexity you see. It is structured, because nature’s patterns build on themselves, creating similar forms at progressively larger sizes. You can see these fractal patterns in botany, geography, physiology, and the things humans create, like roads, residential subdivisions… and – as recent discoveries have confirmed – in market prices.
Natural systems, including Elliott wave patterns in market charts, “grow” through time, and their forms are defined by interruptions to that growth. 
Here's what is meant by that. When your hands formed in the womb, they first looked like round paddles growing equally in all directions. Then, in the places between your fingers, cells ceased growing or died, and growth was directed to the five digits. This structured progress and regress is essential to all forms of growth. That this “punctuated growth” appears in market data is only natural – as Robert Prechter, Jr., the world's foremost Elliott wave expert and president of Elliott Wave International, says, “Everything that thrives must have setbacks.” 
Basic Elliott Wave PatternThe first step in Elliott wave analysis is identifying patterns in market prices. At their core, wave patterns are simple; there are only two of them: “impulse waves,” and “corrective waves.”
Impulse waves are composed of five sub-waves and move in the same direction as the trend of the next larger size (labeled as 1, 2, 3, 4, 5). Impulse waves are called so because they powerfully impel the market. 
A corrective wave follows, composed of three sub-waves, and it moves against the trend of the next larger size (labeled as a, b, c). Corrective waves accomplish only a partial retracement, or "correction," of the progress achieved by any preceding impulse wave. 
As the figure to the right shows, one complete Elliott wave consists of eight waves and two phases: five-wave impulse phase, whose sub-waves are denoted by numbers, and the three-wave corrective phase, whose sub-waves are denoted by letters.
What R.N. Elliott set out to describe using the Elliott Wave Principle was how the market actually behaves. There are a number of specific variations on the underlying theme, which Elliott meticulously described and illustrated. He also noted the important fact that each pattern has identifiable requirements as well as tendencies. From these observations, he was able to formulate numerous rules and guidelines for proper wave identification. A thorough knowledge of such details is necessary to understand what the markets can do, and at least as important, what it does not do. 
You have only just begun to learn the power and complexity of the Elliott Wave Principle. So, don't let your Elliott wave education end here. Join Elliott Wave International's free Club EWI and access the Basic Tutorial: 10 lessons on The Elliott Wave Principle and learn how to use this valuable tool in your own trading and investing."

I attempted to chart out some waves on SPY and also provided trends and Fibonacci retracements on the S&P 500. Mr. Prechter please comment with your thoughts.

Here is a potential "corrective" wave formation. To attempt a breakdown $SPY needs to break below 107.5 support and retest the 50 day moving average (103.74).

Charts courtesy of Stockcharts.com
Attempting wave patterns from 2007 peak to March 2009 trough. "C" must be confirmed before declaring this move a bear market rally.


The S&P 500 closed at 1,087.68 and is near the 50% retracement level (1,121.44) and 61.8% retracement (1,228.74). The S&P is also close to the downtrend that hits the y-axis around 1,160 and is near July 2008 resistance (1,200). Which number will be hit before we see a correction 1,121, 1,160, 1,200, 1228 or.... 1,576. That would be a great black swan.


Is it time to hedge a potential wave? I know this goes against the Bernanke liquidity trade, but there HAS to be a decent correction at some point! Watch the streaming S&P chart below to see what happens. By the way, visit the Afraid To Trade blog by Corey Rosenbloom for Elliot Wave analysis.