RBA Raises Cash Rate By 25 Basis Points To 3.75%, AUD/USD Down Initially, Yield Differentials, AUDJPY, AUDUSD Live Charts (12/1/2009)

 The Reserve Bank of Australia raised rates by 0.25% to 3.75% on 12/1/2009.  Below is the statement by RBA Governor, Glenn Stevens.  AUD/USD traders initially sold the news, it is now at 91.45.  Below is the AUD/USD 1 minute chart.

[Courtesy of ProRealTime.com via FXStreet.com]

Charting Out Credit Default Swap Indices [US High Yield, Global, Europe Crossover, 11/27/2009]

It is time to check out the CDR Indices (credit default swap indexes) again via Credit Derivatives Research. You can see updated charts of the CDR Government Risk Index, CDR Counterparty Risk Index, US Investment Grade, Global, US High Yield, Europe Investment Grade, Europe Crossover, Asia and Australia on their homepage. I charted out snapshots of the US High Yield (CDR Liquid 50 NAHY Index), Global (Composite of CDR Liquid Indices) and Europe Crossover (CDR Liquid 40 EUXO Index) CDS indices below courtesy of creditresearch.com.  They look to have broken, or at least pierced through the downtrend from the peak in Feb/March. Thoughts?

Australian Dollar Future Pierced Uptrend On Dubai, Now Riding Support [ADZ9, Chart]

The Australian Dollar December Future (ADZ9) pierced through the 6 month uptrend on Dubai debt worries, but this morning it is now riding the uptrend by a thread.  Ride or die!  If it fails here again, timber....

Why Didn't 'Med Grow Cannabis College' Buy The Pontiac Silverdome, Detroit Unemployment Rate 29.7%

It looks like medicinal bubonic chronic could provide a catalyst for job growth in Detroit.  The Detroit-Livonia-Warren, MI unemployment rate is at 17.5% with Detroit at 27.9%.

Detroit-Warren-Livonia Unemployment Rate Trend (St. Louis Fed)

Detroit Unemployment Rate Trend (BLS.gov)

Sunday News: UAE Dubai Debt Bailout, Chavez Threatens Banks, Iran, Ireland, PSQR, CMBS, Hotel Sector, US Treasury, Mortgage Servicers

Distressed Volatility | Sunday Night News | 11/29/2009

Dubai Default Swaps Show No Distress on Abu Dhabi’s Bailouts (Bloomberg)
UAE to back banks amid Dubai meltdown (AP)
Global Insight: Dubai’s neighbours are wary (FT.com)
Switzerland Votes to Ban Minarets (WSJ)
Debt in the desert shows how we must not proceed (thepost.ie)
U.A.E. Central Bank Eases Credit After Dubai World Debt Delay  (Bloomberg)
The Geopolitics Of The Dubai Debt Crisis: It's Iran vs. The United States (BusinessInsider)
Chavez threatens to nationalize Venezuelan banks (AP)
Iran to Build 10 More Nuclear Sites, State News Agency Says (Bloomberg)
U.A.E. Removes Sunday London Times From Newsstands (WSJ)
China 2009 Gold Demand, Output May Gain to Records, Group Says  (Bloomberg)
Iran earmarks $20 million to "resist" West rights abuse (Reuters)
Iran and Venezuela sign 12 documents of cooperation (President.Ir)
Hotel owners, like home owners, behind on payments (AP)
UAE moves to counter Dubai fallout but markets wary (Reuters)
Abu Dhabi to aid Dubai on "case by case" basis (Reuters)
Treasury to meet with mortgage servicers Monday (Reuters)
PSQR Investor Report October 2009 (ZeroHedge.com)
Goldman Sachs Conviction List (SHIFTCtrlGroup)
Five CMBS Case Studies (ZeroHedge.com)
Abu Dhabi [Unlikely to Pay All Dubai's Debts/Graciously Assisting Sovereign Brother] (ZeroHedge)

and one more for good luck..

Japan Preparing To Launch Quantitative Easing; What Are Three Lost Decades Among Hyperdeflationary Friends (ZeroHedge)

Peter Schiff, James Bullard, Alan Blinder Debate At Princeton's Business Today Event [Tech Ticker from 11/22]

Peter Schiff, St. Louis Fed President James Bullard and former Fed Vice Chair Alan Blinder argued at Princeton's Business Today event 11/22. Peter Schiff said "Ben Bernanke has never gotten anything right". Embedded from Tech Ticker. Go Austrian Econ!

October Cass Freight Index: Monthly Shipments Down 4.6%, Annual Shipments Down 12.2% [Interactive Time Chart]

The Cass Freight Index is an interesting index you should follow. It is run by Cass Information Systems, Inc. They process over $17.5 billion in annual freight payables. Here is the definition of the index from their site (http://www.cassinfo.com/frtindex.html).  I first came across this index at the Journal of Commerce.

$18 Billion Worth Of Dubai Debt Coming Due In Next 18 Months (Video, Links)

The question is, will this put extended pressure on the USD carry trade? This aint no black swan event, but this plus the commercial real estate debt implosion should keep a cap on debt financing for a while, unless hedge funds/private equity pick up the slack imho.

RBS Led Dubai World Lenders; HSBC Most at Risk in UAE (Bloomberg)
Pimco: Dubai triggers "overdue correction" in stocks (Reuters)
UAE faces up to $184 billion total debt: BofA-Merrill Lynch (Reuters)
Abu Dhabi banks have big Dubai exposure-bank execs (Reuters)
Banks, world leaders play down Dubai debt threat (Reuters)
Dubai Crisis May End in ‘Major’ Default, BofA Says (Bloomberg)
Dubai Debt May Be Higher Than $80 Billion, UBS Says (Bloomberg)
Dubai Shows Limits of Government Rescues, Roubini’s Das Says (Bloomberg)
Dubai Is Dead Long Live Dubai (TheDubaiLife)
Gulf Research's Woertz Doubts Dubai Debt `Contagion' (BloombergTV)
Powering the Dubai Overshoot (Gregor.us)
Dubai knew debt would 'hit markets'(UKPA)
Redeker Says Dubai Fallout May Hit U.K. Property, Pound (BloombergTV)

$IRX, 3 Month T-Bill Yield Volatility, Investors Getting Short and Safe Or Banks Getting Liquid For Year End (Charts, Articles)

I'm sure you have all seen the action in 3 month Treasury bills lately.  There are also stories out about T-bill yields going negative recently.  You can see yield volatility on the 3-month T-bill discount rate below ($IRX at Stockcharts.com).  On October 18th and 19th $IRX went from 0.55% to 0.05%!  50 basis boints cut in two business days to just about 0%.  It since rallied and fell to 20 basis points (0.20%).  3-Month bills were yielding 2% this summer.  The last time $IRX hit 0% was during the financial crisis (November/December 2008, 2nd chart below).  Some say the action is related to banks getting liquid for year end. Others say investors are getting safe and short term to battle WAVE C or the bond bears.  As I mentioned a few days ago, 20+ Treasury Bonds ($TLT) and 30 Year yields are approaching judgment day (pierced through downtrend today).  I don't trade 3-Mo bills or run a money market fund so any input here would be great. If gold and the markets implode or yields spike, bills seem like the place to be imo.

News Links [Dubai, Markets, GE, Japanese Prime Minister, White House, Bolton etc]

This is one big retweet for @bored2tears on Twitter.  Interesting articles.

Dubai in deep water as ripples from debt crisis spread (TimesOnline)
Bolton puts off retirement to run new China fund (Independent.co.uk)
Japanese Prime Minister warns of double-dip slump (TimesOnline)
Dubai finds Eid not such a good day to bury bad news about Nakheel (TimesOnline)
The brazen art of gatecrashing a party at the White House (NYT)
Dubai's Woes Shake U.A.E., Region (WSJ)
Dubai’s Nakheel May Need $2 Billion for Developments (Bloomberg)
Is GE Having a Yard Sale? (Forbes)

Someone Bought Extreme Upside Dec VIX Calls On Monday (VIX Futures Curve STEEP)

Someone on Twitter (hat tip) mentioned an interesting trade in the $VIX (volatility index) options on Monday via the OptionMonster Volatility Sonar Report. A trader sold 20,000 Dec 40 Calls for 8 cents and bought 40,000 December 60 Calls for 4 cents. The VIX closed at 20.48 on Wednesday, around the 52 week low. Also look at the VIX futures curve, the VIX April future is trading at a 34% premium to cash! Someone was expecting volatility it seems... OptionMonster provides a daily video from the floor of the CBOE here.

Dubai Mess Gutting Futures Overnight, DJZ9 -267pts, DXZ9 +0.38 (Videos, Charts)

Overnight, Dow December Futures are down 267 points, or down 2.56% [10,175]. Uptrend and floor support is at 10,030.  The Dollar Index December Future is ready to test the downtrend.  For my domestic and overseas readers I provided news videos on the Dubai debt situation.


Thanksgiving US Dollar Rally (Dollar Index, EUR/USD, USD/CAD, AUD/USD, GBP/USD, USD/BRL)

On Thanksgiving Day the US Dollar Index rallied to $74.80 and needs to break above $75 (new resistance) and break through that downtrend line to confirm underlying strength.  I charted out USDX, EUR/USD, USD/CAD, AUD/USD, GBP,USD and USD/BRL below.  I'm mainly monitoring commodity currencies at this point via Canadian Dollar, Australian Dollar and Brazilan Real for confirmed downside reversals.  Debt de-leveraging out of Dubai could provide a catalyst.  Structures will be tough to break from the beginning of the year.  We'll see next week.  Oil is down 2% to $76.  Gold sold off from 1195 to 1180 but since rallied back to 1191.

AUD/USD, Dow Futures -1.8%, FTSE -3%, Dubai CDS Widening [11/26/09, Charts]

Thanksgiving Day update on AUD/USD, Dubai, Dow Futures and FTSE..

AUD/USD (Austrailian Dollar priced in US Dollars) just broke below a wedge support level and pierced through the 50 day moving average to the downside. AUD/USD is currently at 0.911147, -1.19%.  AUD and other commodity currencies have been rising with the reflation trade since the beginning of the year.  The Aussie so far almost retraced the whole 2008 down move. You can also look at the long term $XAD/$GOLD performance dislocation and say the gap must be closed somehow. I'll chart $XAD/$GOLD performance and other commodity currencies later.

Treasury Yields, TLT, FOMC Minutes (Charts,Put/Call,COT,Shorts,Technicals,Links)

Soon a decision will be made on 20+ Treasuries (ETF: $TLT). TLT is at $95.60. Does risk reappear and send TLT to $106 or will Treasuries be under pressure, sending TLT to $88. I provided a live chart below of TLT, static chart of 30 Year T-Bond Yield, articles of recent option activity, put/call ratios, short interest data and US Bond large speculator COT from Schaeffers Research. As you can see there is a short bias with low volatility.
  • Put/Call Ratio: 1.27, up from .60s in September
  • Short Interest Uptrend, As of 11/1/2009: 12.94 Mln Shares, up from 7.57 Mln 6/15/09
  • Schaeffers TLT VIX: 0.12, at 52 week low
  • U.S T. Bond COT: Large Speculator Net Short position doubled to -120k from -60k recently

General Electric $GE January 2011 $22.50 Calls Active, 135,000 Opened On ISE So Far, JP Morgan Had Positive Comments (Charts)

While browsing my blog I saw on the ISE Put/Call widget that GE call options were active. So far on the ISE, 135,000 Calls traded verses 2,000 puts with an ISEE Value (ISE customer calls opened/puts*100) of 6,869. Ebay was second place at 6,771 FYI. The actual contract in play was the January 2011 $22.50 Call and most of the volume occurred between 11:00-12:00p, from $0.70-$0.75. This is just under million being put to work for January 2011, even if just a hedge.  Since GE is trading at $16, if this trade is a spec long then it's betting on 40% upside by January 2011, or a volatility spike.  Here is a snapshot courtesy of Optionsxpress of .VGEAX (GE January 2011 $22.50 call).  I also provided a chart of GE itself and it's at a wedge inflection point (chart courtesy of Stockcharts.com). JP Morgan had positive comments about GE today and the DOE is making moves with smart grid spending, related? Read articles below.





Articles on the trade:
Options & Future Only Highlight Positive GE Research Call (GE) (24/7 Wall Street)
JP Morgan Talks Up GE After CFO Interview (Barron's)
DOE smart-grid trials fund utility-scale energy storage (CNET)
GE Applauds the Department of Energy's Announcement of Smart Grid Demonstration Projects across the Nation (BusinessWire)

Birinyi Says Market Structure Similar To 1982 (Chart), Don't Have To Have A Correction (Video)

"We don't have to have a correction", Birinyi told Bloomberg. He thinks the market has structural similarities to 1982, look at the chart of the early 80s below. The posts below show various market bottoms.  1)Charts Comparing 1974, 1982, 2002 Market Bottoms To Today, 80s Recovery, 2)Dow 1929 Bear Market Rally Compared To 2009 Rally (Charts + Smoot Hawley).  Also Robert Prechter of Elliot Wave International was just on Fast Money saying the closest comparable was the 1930s.  Terranova brought up the rally in 2003.  So which one is it people..

Ashraf Laidi: Unwinding of Risk Appetite Trades, Dollar Stabilization Towards End Of Year A Possibility

Ashraf Laidi (CMC Markets) was on BloombergTV discussing currencies (USD/CAD, USD/AUD, EUR/USD, USD and Yen patterns), the stock market, unwinding of risk appetite trades and the possibility for dollar stabilization towards the end of the year. Follow Ashraf Laid on Twitter @Alaidi.

Prechter: Dow's 50% Retracement, Largest Wave Structure We've Lived Through, Decline Coming in 2010 (Fast Money Video - 11/23/2009)

 Robert Prechter was on Fast Money tonight.
"The Dow has retraced 50% of the decline, this is the same amount that it retraced going into April of 1930 after the 1929 crash (example).  I think we're in for a very large decline in 2010, I think it's going to be at least as big as what we saw in 2008.  I recommend people get as safe as they possibly can with their money.  This wave structure is the LARGEST that we've lived through (can't use 2003 as template).  I'm very bullish on something that everyone hates these days, that is the US Dollar".

Respect the wave people....  Download Prechter's free 50-page eBook:  The Ultimate Technical Analysis Handbook (Guide to Elliot Wave, MACD, Fibonacci and more).

President Obama, Chinese President Hu Jintao Joint Statements (Video) 11/17/2009

President Obama, Chinese President Hu Meet in Beijing

The President and President Hu Jintao of China make a joint statement to the media after their extended bilateral meeting in Beijing. November 17, 2009 (Public Domain). Video Source: Whitehouse.gov.

Fun fact: As of September 2009, China, Mainland was the largest holder of US Treasuries at $798.9 Billion (treas.gov/tic).

Peter Schiff in 2006 and 2007 [Video]

I could watch this over and over and over again.

Peter Schiff Was Right 2006 - 2007 (2nd Edition)

Peter Schiff: Gold To Decouple From Stocks, Disagrees With Roubini On Gold Bubble ($SPX:$GOLD, Video 11/20/2009)

What Schiff says here is interesting because the $SPX:$Gold ratio lost 13.6% (1.10 to 0.95) from its peak at the end of August. Mainly because gold has been outperforming the S&P. If gold keeps rising with a lower market that would not be good. $SPX:$Gold is trading under the 200dma and an ounce of gold is worth more than the S&P. Schiff also disagrees with Roubini that gold is in a bubble. We shall see. These guys have both been right at different times. Monetary Base is up 134% in 2 years.
"Gold is still in the process of decoupling from other assets and rising despite the fact that assets like stocks are falling".

$SPX:$GOLD (Courtesy of Stockcharts.com)

Adjusted Monetary Base At $2.01 Trillion From $857 Billion In 2007, Up 134% [FRED Database]

On 11/18/2009 the St. Louis Adjusted Monetary Base (BASE) hit $2,010 Billion aka $2.01 Trillion. This is up 134% from $857 Billion on 11/27/2007 (data source, St. Louis Fed).



Source: http://research.stlouisfed.org/fred2/series/BASE

Financial News: Bills Yielding Zero, Gold Set To Hit 1,200, SocGen Preparing For The Worst

Bills Yielding Zero as Stocks Soar Make Bernanke’s 1938 Moment (Bloomberg)
Texas Pension Fund Plans Investment in Private Equity in Asia (Bloomberg)
Is Gold Set To Hit $1,200 Within 24 Hours? (Zero Hedge)
Top 100 Most Active Cash Bonds (Zero Hedge)
*Israeli warplanes pound Gaza (Reuters Video)
Iraq's Oct. oil exports drop due to attacks (AP)
Carlyle Group’s Rest-Stop Deal: Private Equity Goes Mr. Clean (WSJ/DealJournal)
Cellphone Entertainment Takes Off In Rural India (WSJ)
U.S. dollar no longer a one-way bet (Reuters)
Microsoft and News Corp eye web pact (FT.com)
Zhou Says China Has Excess Capacity in Manufacturing (Bloomberg Video)
Asian Stocks, Aussie Gain on Economy Outlook; Gold Hits Record (Bloomberg)
MacroTwits w/ GregorMacdonald, 11/22/2009 Archive (Stocktwits.tv)
Chicago Fed chief sees 10.5% jobless peak (FT.com)
*Bets rise on rich country defaults (FT.com)
Deutsche Bahn signs $26B Qatar railroad deal (AP)
China to float 15b yuan T-bonds next week (ChinaDaily)
Report: Ill. prison deal could create 3,000 jobs (AP)
Microsoft Offers To Pay News Corp To "De-List" Itself From Google (BusinessInsider)
SocGen: Prepare Yourself For The Worst Case Scenario! (11/19, BusinessInsider)

If you have other good stories, put link in comment.

SPY, DIA Hitting 50% Retracement, Downtrend Resistance Level From 2007 (Live Charts, Technicals, Fibonacci)

Both the S&P and Dow are testing downtrend resistance from the 2007 peak and the 50% fibonacci retracement level from 2007 peak/2009 lows. "Two major forces collide in the index markets" -INO Chart Video. Both indexes blew through the 38.2% retracement without a problem but DID retrace 9% from the initial downtrend test. So we'll see if these levels weigh on the Dow and S&P going forward (w/out a currency crisis). I advise you to watch Adam Hewison's video at INO.com here where he goes through the chart. Anybody think the market indexes could decouple from precious metals and other reflation trade recipients? That is what Peter Schiff believes and I'll embed a video of his explanation. There a bunch of moving parts to the S&P 500 (forward earnings, underlying currency) so hard to say. The S&P is moving inversely with the US Dollar at the moment and running with gold, though underperforming. Gold is hitting new highs tonight, up 11.83, 1.03% to 1,162 wow.

Warren Buffett Interview With Charlie Rose 11/13/2009 (Video/Script)

Here is a recent interview with Warren Buffett on Charlie Rose on 11/13/2009. On CharlieRose.com there isn't a direct url to the video or embed feature, so you are on your own at charlierose.com. He talks about his railroad investment, the financial crisis, regulation, investments etc.
"WARREN BUFFETT: Well, it was-- it really was an extraordinary time in this country. We came closer to a financial meltdown than certainly any time I have ever seen, and probably in certain respects even -- there was even more panic than the Great Depression, because it came on so fast and so unexpected.

And the whole country wanted to deleverage, corporations, individuals, and fortunately we had a government that responded. It was -- when we talked last, it was a little question of whether Congress would respond like they should. They finally did, and I -- I felt they would in the end.  I mean, in the end, they come together for things that are this vital to the country. But we had the right people in Washington. If we’d had a group that behaved like a deer in the headlines, that deer would have gotten run over."

Transcript: http://www.charlierose.com/download/transcript/10711

Tim Geithner Testimony, Q&A Video/Script at Pittsburgh G-20 (11/17/09)

Here is Treasury Secretary Timothy Geithner testifying before congress and answering questions at the Pittsburgh G-20 on 11/17/2009. Hat tip CSPAN embed feature.

BDI Futures Curve in Backwardation (IMAREX Freight Futures, Options, OTC Forwards)

FYI: You can find BDI Futures closing prices at exchange.imarex.com. TheBusinessInsider pointed this out in the story below or here.
"At Imarex you can trade Freight Futures, Freight Options and OTC Freight Forwards (FFAs) as well as Index Futures on the Baltic Dry Index (BDI). (Imarex)"

Source: Freight Forwards Curve Warns Of Baltic Dry Index Collapse (EGLE, DRYS, GNK) (Business Insider)

$DRYS Suspense Continues: Options Active, Implied Volatility 75/HV 63, Broke Below 50dma

They raised the offering to $400 Million.
ATHENS, GREECE--(Marketwire - 11/19/09) - DryShips Inc. (NASDAQ:DRYS - News) (the "Company" or "Dryships"), a global provider of marine transportation services for drybulk cargoes and off-shore contract drilling oil services, today announced the pricing of its previously announced public offering of convertible senior notes. The offering size was increased from $300 million to $400 million. The sale of the convertible notes is expected to close on November 25, 2009, subject to customary closing conditions.

The convertible notes, which are being issued at a price equal to 100% of their face value, will have an interest rate of 5%. The convertible notes will be senior unsecured obligations of the Company. The initial conversion price for the convertible notes will be $7.19 per share. Continued...


DRYS options are gearing up for November expiration tomorrow.  On the ISE, DRYS options traded 2.87x average volume.  ISE Calls 12,941 v. ISE Puts 4,868.  Total Call/Put volume was 1.79.  It closed below the 50dma (6.73) at $6.53 and Implied volatility stood at 75.43 w/ historical volatility at 63.25.  At some point vol will sell on an underlying move, imo.  As of 11/18, from Schaeffers Research, the put/call open interest Ratio is at 0.29, around the 1 year low.  Live monthly chart below with symmetrical triangle inflection point. This is a risky stock, use protection.

$XHB, $XLF, $IWM Back Below 50DMA, Nikkei Testing 200DMA [Charts]

XHB, XLF and IWM are under their respective 50dma's and the Nikkei ($NIKK) broke support and is about to test the 200dma. Will housing, financials and small caps drag SPY to the 50dma?   Futures unchanged, we'll see.

Pontiac Silverdome Sells For $583,000, 1% of $55 Million Cost to Build | Videos, History Of Silverdome


In a distressed sale, the City of Pontiac, MI sold the Pontiac Silverdome to a Toronto developer for $583,000, 1% of the cost to build the place. It was built for $55 million in 1975. Pontiac paid out $1.5 million a year for upkeep. Did Apostolopoulos take on any debt? The developer said the dome will be used to hold sporting events and Major League Soccer.   Look at the history of this place!  Shouldn't there be a "historical landmark" premium? Watch the history of the Pontiac Silverdome in the video below. The Detroit Lions and Pistons played there, Hulk Hogan body slammed and pinned Andre the Giant there, Pope John Paul II celebrated Mass there and Elvis Presley, Michael Jackson, Led Zeppelin, Pink Floyd and The Who all performed there. "Silverdome Assets:  A high bid delivers an array of assets...127.5 acres of land, 3 storage buildings, practice field, restaurant, private suite; and more". Watch the auction videos at Williams&Williams.  Nice scoop?

Paulson & Co. 3Q Letter, 13F Holdings [GLD, BAC, WYE, AU, SGP, C]

Paulson & Co. [DV's Hedge Fund 2007-08 MVP, run by John Paulson] released their 3Q letter and updated holdings (13F filing). John Paulson has been killing it on $GLD and DV's been actively watching GLD since May.  $GLD is up 21% since 9/1/09 while $SPY is only up 9%.  The set up was as follows..

Paulson Buys GLD, GDX. Laidi Long Gold/Oil Pair Trade
(5/20/09)
Gold Spot Eyeing $1,000, GLD at Inflection Point (2 Year Chart)(8/6/09)
John Paulson Keeps GLD Investment, Watching Symmetrical Triangle (8/13/09)
GLD Call Options Active at Dec, March $100 Strike (8/28/09)
GLD Breaks Out, December $100 Call Up 49% (Charts: GLD, Comex Gold Futures) (9/3/09)


*FYI, this is all very backward looking data.  For the quarter ended 9/30/09, Paulson's top 6 holdings via GuruFocus were:

GLD (Gold Spider), $3.1 Billion, 15.2% of portfolio
BAC (Bank of America), $2.7 Billion, 13.21% [took some profits]
WYE (Wyeth), $2.5 Billion, 12.27%
AU (AngloGold), $1.7 Billion, 8.54%
SGP (ScheringPlough), $1.6 Billion, 7.95%
C (Citigroup), $1.4 Billion, 7.1% [initiated]

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)