DryShips: 117 Mln Debt Waiver, 300M Convertible Notes ($DRYS Financials/Technical Charts 11/18)

Big day for DryShips today ($DRYS). I knew something was about to happen given the monster call volume during the past week (link). They announced a $117 Million debt waiver and a $300 Million convertible senior note offering for working capital, vessel acquisitions and general corporate purposes. The capital raise could weigh on the stock as it is dilutive if converted. In May they raised $475 million in equity and they've been getting debt covenant waivers since February.  This is also interesting:  "The Company also intends to enter into an equity underwriting agreement with Deutsche Bank Securities Inc. pursuant to which Deutsche Bank AG or its affiliates intend to sell shares of the Company’s common stock that they will be entitled to borrow from the Company under the share lending agreement".   DRYS is down 0.34 (-4.81%) to $6.74 in after hours trade. We will see how investors/traders react. The massive call volume lately has been very peculiar... Connecting it with the chart, are people playing a breakout, hedging or selling? Even today, DRYS calls were active vs. puts on the ISE. The ISEE widget to the right shows Calls: 5,798, Puts: 243, ISEE 2,386. Also, the Baltic Dry Index/$BDI is on fire. It doubled from 2200 to 4400 in less than a month.

I provided two live charts below, one looking at the massive 11 month symmetrical triangle formation and one looking short term. IMO, the ultimate catalyst is coming and will bank coin once the triangle is broken w/ volume. I also added a few fundamental charts from Wikinvest.com including current assets vs. liabilities trend, current ratio trend, cash & equivalents, income statement snapshot and Price/Book ratio trend. I'd provide more data but there is too much data for one post, technically and fundamentally. You can find great financial data and interactive charts at Wikinvest.

Meredith Whitney Hasn't Been This Bearish In a Year, XLF (11/16, Video)

Meredith Whitney, like Whitney Tilson, is bearish on residential real estate and banks. She sees no fundamental root to this rally. XLF closed RIGHT at the 50 day moving average today and is brushing up against the 3 year downtrend. Live real-time chart below, watch it.
"I think you have to wait for a leg down in valuations, everything is expensive right now".  "I think the banks go back to tangible book value".

Snoop Dogg on CNBC, Midnight Love Video (1997) | DV Entertainment

Big Snoop Dogg was on CNBC yesterday...

Soros Invests $52 Million In Ford During 3rd Quarter (13F Filed 11/16/09), Mitch Albom CBS Interview On Detroit 11/10/09

Is positive reflexivity hitting the auto industry and possibly Detroit? We will see. Soros Fund Management, a $6 billion hedge fund run by George Soros, filed a 13F for his holdings ending on September 30, 2009. It shows he invested $53 Million in Ford or 7.3 million shares.  It's not up there with his $340 Million Petroleo Brasileiro (PBR), $277 Million Hess (HES), $266 Million Potash (POT), $250 Million LSI Corp (LSI), $242 Million SPDR Gold Trust (GLD), $228 Million Linear Technology (LLTC), $340 Million or $138 Million Verizon (VZ) investments, but it still deserves attention for the D.  Maybe Soros can purchase some Detroit GO bonds while he's at it.

Source:  http://www.sec.gov/Archives/edgar/data/1029160/000101143809000622/form_13f-soros.txt



T2's Tilson: Shifting Into Low Beta Stocks, Ramping Up Short Book (Homebuilders, $XHB)

Value fund manager and T2 Partners founder, Whitney Tilson, was on BloombergTV (full video link) a few days ago talking housing and fund allocation. He thinks we are "much closer" to a bottom in housing and there will be "one more leg down" with "5-10% downside from here". He said there are no more sudden shocks to the system but "years of elevated losses ahead of us". Regarding CRE, he said the $250-500 billion estimate in commercial real estate losses will create a "headwind for the financial system that will keep it weak". Smaller banks will be hurt.  After his quotes I added a chart of XHB with trends.

Obama Holds Town Hall With Students In China (Video: Shanghai 11/16/2009)

Obama was in Shanghai, China on 11/16/2009 holding a town hall meeting with Chinese youth. Video via Whitehouse.gov.

Henry Blodget on News Corp's Threat to Remove Content From Google

 From: Murdoch's Just Trying To Bludgeon Google Into Throwing Him A Bone (Link: BusinessInsider).

Bernanke Speech at Economic Club of New York (Text, 11/16/2009)

Speech
Chairman Ben S. Bernanke
At the Economic Club of New York, New York, New York
November 16, 2009

On the Outlook for the Economy and Policy

When I last spoke at the Economic Club of New York a little more than a year ago, the financial crisis had just taken a much more virulent turn. In my remarks at that time, I described the extraordinary actions that policymakers around the globe were taking to address the crisis, and I expressed optimism that we had the tools necessary to stabilize the system.

JP Morgan's Thomas Lee: S&P 500 To Hit High 1100s By Year End, Sees Payroll Surprises

JP Morgan's Chief Equity Strategist Thomas Lee has been right on 2009 so far. The Tom Lee trend is your friend until it hits a bend. He thinks we will see upside payroll surprises and a ramp up into year end. He favors small caps and high beta cyclicals to play the payroll, labor and cyclical recovery. This includes the steels, home builders, paper stocks, casinos and specialty retail.  He sees a domestic growth story as well. "I think we're going to comfortably close above 1100 by year end.  It is pointing to high 1100s as a more reasonable target by year end, not 1100 itself".  By the way, the 50% retracement level on the S&P hits 1121.

First Decade Of 21st Century Summed Up In 7 Minutes (Newsweek Video)

Wow, this was a really sh**ty decade. At least the Ipod and social networking sites were invented.



"The Decade in 7 Minutes: NEWSWEEK rewinds the first 10 years of the new century, reminding you of the best, worst, and unforgettable moments. (Source: NewsweekVideo)

Roubini Is Back: The Worst Is Yet To Come, Damage Will Be Extensive

Deflation whale coming?  Well there are plenty of US Dollars and Treasuries to buy.  Roubini has been bearish on gold and believes the USD carry trade unwind is inevitable.  We'll see who gets knocked out here going forward, should be interesting.

The worst is yet to come: Unemployed Americans should hunker down for more job losses (NYDailyNews.com)

Bill Gross: High Yield Corporate Bonds Overvalued, Watch HYG JNK Rising Wedge + Credit Spreads (IEF, LQD, HYG) If Re-Pricing Of Risk Occurs

This market and low volatility is making Dvol repeat posts because nothing is moving. This post is about high yield corporate bonds, continued from:

HYG, High Yield Bonds Selling Off With Risk, Leveraged Loan Index Testing '08 Resistance. Does Someones Yield Have To Give? (Blog post: 10/28/2009)

Bill Gross (largest bond fund manager in the world?) has been on the scene lately talking about high yield debt and risk in general.

Bill Gross Says Value Diminishing in Credit Markets (Bloomberg: 11/13/2009) 
Bill Gross: Six-Month Rally in Risk Assets at Pinnacle -Investment Outlook November 2009 (Midnight Candles) (Blog post: 11/2/2009)

After reading Gross's comments and looking at the charts of HYG and JNK (high yield corporate bond ETFs from iShares and SPDR series) there appears to be an inflection point building via a rising wedge.  Meaning bulls need a speed injection to get over the hump (administered free of charge by you know who).  I provided charts of $HYG and $JNK as well as a live $HYG chart.  Most recent yields based on distribution are:  HYG 9.77%, LQD 5.45%, 10Y Treasury 3.43%.  ALSO look below at the performance spread between HYG, LQD and IEF.

Barack Obama and Yuio Hatoyama's Speech In Tokyo 11/13/09 (Video, Script)

President Barack Obama spoke in Tokyo on Friday about US-Asian alliances, economy, climate change and North Korea etc. Here are two speech videos from Whitehouse.gov, first from Japan's Prime Minister Yuio Hatoyama and then President Obama. I also included the full speech script. Currencies will be interesting to watch this week when Obama arrives in China. Something to read: China rounds on U.S. rates as global economic risk (Reuters).

Bill Gates, Buffett On What Industry(s) Will Produce The Next Bill Gates (CNBC, Keeping America Great Transcript)

These are quotes from the CNBC Town Hall event, Warren Buffett and Bill Gates: Keeping America Great, taped Thursday, November 12, 2009 at Columbia University in New York City. The full transcript is here. I found this question interesting:

Doug Kass: Market Ignoring Short Term Warning Signs, Intermediate Challenges [Fast Money Video 11/12/09]

Doug Kass of Seabreeze Partners was on Fast Money on 11/12/2009 and he thinks there's some "whistling passed the graveyard in this market". "Investors are being dismissive of a number of intermediate term challenges and importantly a lot of short term warning signs are being ignored or being rationalized away in the tide of rising world stock prices". For example he mentioned: New mortgage applications dropped to the "lowest level in 9 years", housing demand was uneven since Labor Day (via Bob Toll), U.S rail car loadings were "down 15.3%" in October vs. last year [worse than September] with weak consumer sentiment. He also mentioned an NFIA (National Federation of Independent Business Index) data point. Here is his follow up at TheStreet.com: Kass: My 'Fast Money' Recap.

DRYS at Week Inflection Point, Symmetrical Triangle Squeeze (Chart, 11/13/2009)

Like I said in the previous post, DRYS is at a major inflection point.  Looking closer, there is a symmetrical triangle squeeze approaching on the 1 week/60 minute chart. This chart is at the close on 11/13/2009. Protect..

Continued from: Get Ready For A Move In Dryships -DRYS (Charts, Call Options Active, Links) (11/12)

DRYS - 60 Min - 11/13/2009 (Freestockcharts.com)



DRYS links today:

Option Skews - Relatively Heavy Call Activity on DryShips Inc, Cisco Systems Inc, QLogic Corp, Seagate Technology (SchaeffersResearch)
Fair Wind From The East Lifts Bulk Shippers (Investopedia/11/12)

Watch IWM, UUP and UUP:IWM 50 Day Moving Averages and Trend Lines

The Russell 2000 ($IWM) ETF is selling off at it's 50 day moving average.  The small caps are by far the slack of the market.  As DV has said before, the Industrials ($DIA) are leading the maret.  $UUP (US Dollar ETF) is seeing activity again in it's calls, after they doubled.  Calls are active in the November and December $23s, however I have no idea what the nature of the trades are as over 220k are open.  The ISEE value (ISE customer calls opened/puts*100) on the widget says Calls: 7,921, Puts: 237 = ISEE: 3,342 (top three bullish). Also $UUP busted through 50 day resistance again and the UUP:IWM ratio is above the 50dma, while UUP:SPY and UUP:DIA are not. If that has any significance.  So the small caps really need a jolt here.  They are just as important as the large caps for the economy.  Is this just profit taking and/or temporary confusion in risk?  Or is the "the six-month rally in risk assets at its pinnacle" (Bill Gross)?  Check out the charts.  All charts courtesy of stockcharts.com.

Get Ready For A Move In Dryships -DRYS (Charts, Call Options Active, Links)

I hope you like information overload. Is DryShips about to explode? $DRYS is being strangled in a symmetrical triangle and DRYS will explode in one way or another soon. Today's pierce of the 50 day moving average could help with an upside test. The Baltic Dry Index (shipping cost index) is up 39% in a month, while DRYS is only up 2.07%. BDI/DRYS diverged from July to September (BDI trended lower/DRYS trended higher). They don't always dance together (BDI is spot, DRYS contracts mostly fixed), but it is the overall barometer of dry bulk shipping costs. Here is the DryShips Q3 Presentation (via Dryships.com/IR), press release and info on a $71 million debt waiver ($117M to go.. they have debt issues). This post is focusing on the chart and option activity for a trade.

Trader Who Saw Psychic Last Night Bought 3Com Calls Before HP Buyout

At 12:00p today 3,800 November $5 COMS Calls exchanged hands at $0.65 ($247,000) and 3,100 December $5 COMS Calls at 0.80 ($248,000) or $495k total (via THQLA, THQKA from my option chart).  That's the right to buy 690,000 shares of 3COM ($COMS) at $5.00 for $495,000 up front.  To be in the money COMS would have to move above $5.65 and $5.80 before November and December expiration.  After the close:  HP to buy 3Com for $2.7 billion, $7.90/share.  

Tomson Riviera Unit Sells At Record Price, 0258 Testing $4 at 2007 Highs (Tomson Group 湯臣集团 Charts )

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

I've been writing about property stocks on the Hong Kong Stock Exchange during the past month because I keep reading stories about record multi-million dollar unit sales.  A 39 Conduit unit in Hong Kong sold for $57 Million and now a luxury apartment in Shanghai at the Tomson Riviera sold for a record $14 million (h/t Shanghai Daily).  I charted out the Hang Seng Property Index and Henderson Land (0012) in October and spotted a symmetrical triangle inflection point on .HSNP which worked out well from 28k to 31k.  The Hang Seng Properties Index is now unfortunately under 28k, which is now new resistance.  There could be repercussions on the long side if it can't get over 28k. Here are links, but back to Tomson..

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)



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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