Case Shiller Home Price Index Down 3.2% in Second Quarter, At 2003 Levels Nationally

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Yale's Robert Shiller still sees uncertainty with home prices. was on BloombergTV see the video below. From S&P press release on May 25, 2010:

David Rosenberg Sees S&P at 900-925, Gold at 3000 Reasonable (SPY, GLD) - Bloomberg Video

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David Rosenberg, Chief Economist and Strategist at Gluskin Sheff + Associates, was on Bloomberg Television Friday giving his views on the S&P 500 and Gold price. In short summary, Rosenberg would be "interested" in the S&P between 900-925 (w/ no double dip recession) and believes gold will hit 3,000 an ounce in the next several years, which is a conservative forecast. That's more than double where gold stands today folks. David does not see $90 or $85 EPS on the S&P next year and sees revenue growth cutting short. Front month June gold contract (GCM10) is at 1,215. Watch for a confirmed ascending triangle breakout, above ceiling resistance, or lack thereof. Look at the 3 yr $GLD chart below.  Video below courtesy of BloombergTV.

Israel Raid of Flotilla Off Gaza Coast: Articles, Video Footage Links, Differences [#Flotilla, #Israel, #Gaza]

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Links to articles and videos on the Flotilla raid off Gaza.  See my middle east link fest from April, aka beware of geopolitical volatility in the middle east.  You never know if this sh* will escalate into something bigger.  Peace in the middle east people.  I embedded a news video from Reuters and threw up a bunch of links to articles.  It's a lot of noise, but I'm just showing the differences of views.

Hugh Hendry Debates w/ Columbia's Jeffrey Sachs on European Debt Crises (May 26, 2010 on BBC Newsnight Video)

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Happy Memorial Day to my US subscribers. Watch Hugh Hendry of Eclectica Asset Management (based out of London) debate with Columbia Professor Jeffrey Sachs on how to solve the Greek/European debt crisis. Hendry, who is probably short Greek sovereign debt (via CDS), vulnerable European banks or the Euro in some form (which has been the right trade) recommends you panic.  Sachs says bail them out, Greece will be able to *service* its debt under normal market conditions in the near future.

Amid the Financial Turmoil One Economic Indicator is Soaring - Guest Post

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Guest post by

Amid the Financial Turmoil One Economic Indicator is Soaring

The financial world is coming unglued again. Greece has pushed the E.U. to the brink. Global stock markets are tumbling.

And yet, at the same time at least one economic indicator is soaring. The Baltic Dry Index.

Greece Stock Index Tests March 2009 Low, NBG Downgraded By JP Morgan to Sell, Almost at $2 Low

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DJ Greece Index
First Dubai hit the March 2009 low back in December (2009), now add Greece to the list.  Below are charts of the Dow Jones Greece Stock Index ($GRDOW) and Greece (Athens) General Share ($ATG) from  The Greek indexes are still in a descending channel but they could bounce at support. $ATG is just above the March low.  I need to see Greece base out here and violate the channel with crisp green volume before turning bullish.  This action could be pricing in a double-dip recession for Greece.  The European Union Labor Chief even warned of a double dip recession in Europe (WSJ).  With Greek austerity measures (lower wages, higher taxes) and banks tightening up again, there could be a double-dip right around the corner. Remember, indexes are forward looking and reflexive.

S&P Future +2.19% Overnight Testing 200 Day Average, Dollar Index Nervous on Uptrend (ES_M, DX_M Charts, $UUP, $SPY Related)

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S&P Future Update:  The June E-mini S&P Future is up 1.91% tonight, testing the 200DMA and downtrend resistance level [it is now up 2.19%].  The $1,050 floor and flash crash low are holding for now.  Tonight's move is a decent reversal from Tuesday when ES was down 2.50%.  There are still plenty of bulls out there, look at my link fest from earlier.  Bulls still need to clear the 200DMA and downtrend resistance level for breakout confirmation.  I put up charts of the E-Mini S&P June Future (ESM10) and Dollar Index June Future (DXM10).  The Dollar is looking nervous at uptrend support, it's still holding but watch for a break.  ES gave back some gains, up 1.98%.....  Looks like fresh green volatility.

E-mini S&P Future (Snapshots from OptionsXpress)
June Dollar Future DXM10

Einhorn Shorts Moody's, Rosenberg Sees 30% Decline, Gold Update (XAU/USD, 5/26/2010)

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This link fest is almost as important as my previous link fest, a re-test of the highs of importantness if you will. I'm also watching gold and provided a look at the gold spot chart priced in US Dollars (XAU/USD) below. It broke out on the hourly chart, we'll see if it hits 1,230 again. Also take a look at the live US National Debt clock embedded below courtesy of zFacts.

Whitney Tilson Explains Short Homebuilders Bet, $ITB Technical Update (Fast Money Video, 5/24/2010)

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Part II of my first post on $ITB (DJ Home Construction Index ETF) with a link to Whitney Tilson's full housing report. Tilson of T2 Partners was on Fast Money last week explaining his "short" bet on the homebuilders or $ITB (ETF). Today $ITB pierced through the 200DMA but rallied back to close green at $13.79.  Watch the 200DMA, flash crash low and $12 support, which is also the 38.2% retracement level. If those levels get violated, I'm thinking $9-$10 is on the table (July, 2009 low and 61.8% retracement).

Leader Capital's John Lekas Sees 4,200 On Dow By Q2 2011, Interest Rates and LIBOR Higher (CNBC Video)

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Like David Tice who runs the Prudent Bear Fund, Leader Capital's John Lekas is one of the rare ones calling for a 50% decline from here on the Dow. He sees the Dow hitting 4,200-5,000 by the second quarter of 2011.  He said increasing LIBOR, interest rates and lower earnings (S&P EPS $85 to $55) will be the catalysts.  The Dow closed at 10,043 today.  In October of 2009 on CNBC, John was calling for 6,900 by the end of 2009 (which didn't pan out) and 4,200 by the end of 2011.

Overnight Volatility- S&P June Future Down 2.5%, Dollar Near Highs ($SPX, ES_M, DX_M, GC_M, SPY Charts)

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The June E-Mini S&P Future is down 2.5% to 1,043, the June Dollar Future is up 0.77% to 87 and June Gold is down 0.52% to 1,187.  According to Robert Prechter of Elliott Wave (see Tech Ticker), the S&P is in a minor wave 3 of 5 pattern.  The S&P future took out the flash crash low and 5/21 low just now.  There are still issues in Europe (Spanish bank bailouts, the Euro), North Korea/South Korea tensions and Dollar funding risk premium (Libor rate) is on the rise.  Roubini summed up everything on CNBC last week.  Technically, the S&P retested the 200 day moving average and failed.  I'd like to see a strong base and downtrend break before getting long the S&P or $SPY ETF.  SPY also needs to get back above the 200DMA.  The US Dollar Index is near the 5/19 high and Gold is in an ascending triangle plotting its next move.  Watching to see how equities react tomorrow and GLD:UUP (Gold/Dollar ETF) ratio!  If 1,050 doesn't hold, the June 2009 base of 950 looks like support.  Charts below are courtesy of OptionsXpress.

Archive Videos: 2010 TechCrunch Disrupt Conference #TCdisrupt

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Watch the 2010 TechCrunch Disrupt conference embedded below on LiveStream. Find it originally at Find full presentations on the video library widget. I found out about this conference from SecondMarket on Twitter. They are trying to disrupt private illiquid stock and debt markets!

After May Sell Off Prechter Still Sees Long Bear Market, Likes Cash Not Gold (Has Too Many Bulls)

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First off, did you listen to Robert Prechter (Elliott Wave International) in April when he said "between now and May is the 3rd best selling opportunity since 2000"?  He called that one right!  Prechter was on Tech Ticker last week giving his prediction that stocks are in for a very long bear market.  By the way, Distressed Volatility is not a perma-bear blog as the name implies, I let chart technicals decide direction.  Embedded videos are used to promote different opinions whether they agree with the chart or not.  If you want recent bullish commentary see posts with Barton Biggs (Traxis Partners).  Prechter said we are in minor Wave 3 (of 5) of C?  Elliott Wave people correct me if I'm wrong.  Here are key points Prechter made and the Tech Ticker video.

Roubini Sees 20% Downside, Be In Cash or German Short-Term Debt (CNBC Video 5/20/2010)

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Last week Nouriel Roubini (NYU Professor/Roubini Global Economics) was on CNBC.  Here are key points he made from the video below (5/20/2010).

South Korea's Lee Responds to Alleged Torpedo Attack, North Korea Said Will Retaliate With War If Attacked, Keep Eye On Geopolitical Volatility

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South Korean President Lee Myung-bak addressed the attack today in a statement found at JoongAng Daily (see embedded Business Insider post). I embedded videos from and AP showing evidence that the torpedo came from North Korea, Hillary Clinton's statement and a North Korea Naval Officer threatening to retaliate with an "all out war" if there's a response. North Korea denied the attack. Something to be aware of people, geopolitical volatility et al.   South Korea decided to suspend trade w/ North Korea.

Live BP Video of "Deepwater Horizon" Well Oil Spill

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Watch oil leak from that busted Deepwater Horizon oil well in the Gulf of Mexico. It's a live stream by BP. For more information on the leak go to  I also embedded a video with oil spill forecasts updated by WKRG (Mobile/Pensacola).

Gartman on Technical Damage Done to Markets, Euro (Bloomberg, 5/21)

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Dennis Gartman, who runs the Gartman Letter, talked about the Euro and technical damage done to just about every market (from US equities to England to China) on BloombergTV Friday 5/21. Back in February I threw up charts of the PIIGS (Portugal, Ireland, Italy, Greece, Spain), Goldman Sachs ($GS) and Shanghai ($SSEC, $FXI) that were below their 200DMA.  I noted that John Murphy's ChartWatchers blog mentioned that we'd test the 200DMA, and we broke it last week (first during the "flash crash"). A few days ago Gartman said to sell gold positions (as a trade) and he timed the sell off very well.  Gold hasn't officially broken down yet. I'm watching the 50 day moving average and uptrend from the lows on GLD (SPDRS Gold ETF). If those levels get taken out there could be a $100 support test (from breakout). I'm watching to see how the market reacts at 200DMA resistance.  Enjoy the video courtesy of BloombergTV.

Google Golden Cross, Sentiment and 50% Retracement Watch ($GOOG Short Interest, Put-Call Ratio Trend)

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I just did a post on the Google TV Keynote which you should check out. GoogleTV is coming this fall. I felt like charting out $GOOG and it doesn't look pretty at the moment.  It looks similar to the market indexes. $GOOG is in a short term downtrend, look at the dotted line on the chart. If the powers that be can trade GOOG through that downtrend and break back above the 38.2% retracement level, there could be hope for at least a rally to the moving averages. If the market continues to roll over, aka SPY can't take out 200DMA resistance, $GOOG could head on down to the 50% retracement level around $439. Floor support resides at $447 from June 2009 and $375 from February 2009. GOOG is currently trading at $472. Oh and watch the 50/200 day moving average on the chart.  If the 50 day moving average (blue) crosses below the 200 day moving average (red) ("golden cross") it usually signals confirmed weakness ahead, with rallies and retests along the way.  There are exceptions.

Footage From Top of Burj Khalifa Tower Spire! [Video from ImreDubai]

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I just thought this was cool.  Look down from the Burj Khalifa (aka Burj Dubai) tower courtesy of ImreDubai.  It is 828m above sea level, "the tallest man-made structure ever built".

Google TV Keynote Video [Google I/O 2010], Coming Fall 2010 on Sony TVs at Best Buy, Watch Intro Videos and CEO Partner Panel #GoogleTV, $GOOG

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Here are a few videos from the Google TV keynote presentation (Day 2) at the 2010 Google I/O conference. Google TV is set to hit stores in Fall 2010 at Best Buy. It will run on Chrome and Android. Google is partnering with Sony (integrated TVs), Logitech (companion box), Intel Atom Processor (chip set), Adobe (Flash), Dish Network and Best Buy . I embedded Google TV introduction videos and the 22 minute CEO Partner panel with Eric Schmidt (Google), Paul Otellini (Intel), Howard Stringer (Sony), Jerry Quindlen (Logitech), Charlie Ergen (Dish Network), Shantanu Narayen (Adobe) and Brian Dunn (CEO of Best Buy). Find more videos at the GoogleDevelopers Youtube channel. Who wants to start a business channel?

Whitney Tilson Bets Against Housing (ITB), Paulson is Bullish (BZH, Beazer Homes)

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If you didn't already know, there's a battle on the direction of housing right now. Whitney Tilson of T2 Partners is betting against housing, or short $ITB (Dow Jones US Home Construction Index), while John Paulson is betting on V-shaped scenerio.  ITB and other housing ETFs recently had a false ceiling breakout, took out an uptrend and broke through the 50 day moving average.  On this huge down day it is trading just above the 200 day moving average.   If we can't hold here, $12 and $9 (July 2009 low) are next if housing does a back flip.  Last time I checked $ITB was trading at $13.09.

Euro/Dollar Parity After Bounce? (INO/MarketClub Video Update) $EURUSD

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Watch the most recent INO/MarketClub video on EUR/USD (Euro to US Dollar).  I put these videos up because not only am I a proud affiliate, Adam Hewison (the founder) has actually been right the majority of the time on these free videos and the trade triangles appear to manage risk quite well.  He combines chart technicals and the proprietary trade triangle technology to make trading decisions (subscription link).  He thinks the Euro could bounce here but overall the trend is down and could possibly hit 1:1 with the $USD.  It's possible, anything can happen people, also Gary Shilling thinks so as well.  You can find free video updates at the MarketClub blog or on Youtube.

Leveraged Loan/High Yield Bond Market Update (Charts, S&P LCD Videos for May)

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Here's an update on the leveraged loan and high yield bond market by S&P LCD from their Youtube channel LCDComps. I also follow them on Twitter @LCDNews.  Check out the S&P/LSTA US Leveraged Loan 100 Index chart. After a monster run, the Leveraged Loan Index is testing January 2010 support levels.  There are two indexes, click the links for further explanation. Retail can't trade leveraged bank loans, only banks and financial institutions "over-the-counter", but it doesn't hurt to KNOW how they're being priced.  Retail investors can trade high yield bond ETFs (HYG, JNK et al.). See recent posts on high yield bond ETFs by clicking the labels at the bottom.

Courtesy of SPBDLLB:IND

Courtesy of SPBDLL:IND

US Leveraged Loan / High Yield Bond Market Analysis (May)

European Leveraged Loan/High Yield Bond Market Analysis (May)


Videos: Anti-Government Protests by Red Shirts in Bangkok, Thailand, Global Revolution Trend Intact

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There are anti-Government protests going on in Bangkok, Thailand. The "Red Shirts" are running a campaign to oust the Prime Minister. Rioters burned 27 buildings including banks, hotels, shopping malls and the Thai Stock Exchange (Bangkok Post via Bangkok Metropolitan Administration). They also raided Thai Channel 3. It is just me or is this global anti-Government protest trend intact? See recent blog posts with anti-Gov protest videos to see what I mean. Below are Thai protest videos from various news organizations.

Institutional Investors Keep Buying Dips (Robert Shiller of Yale)

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According to Yale Economics Professor Robert Shiller, the stock market is "highly priced" and his own buy-on-dips confidence index is "sagging". He said institutional investors are the only ones buying these dips and worries about a double dip recession. Watch the full interview at and see recent blog posts featuring Robert Shiller here. If interested here's a free online course by Robert Shiller at Open Yale Courses, ECON 252 Financial Markets.

Does SPY Revisit Flash Crash Low of 105.25, Broke Monday Low (Chart)

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SPY broke through Monday's low (5/17). The flash crash low was $105.25.

SPY (SPDRS S&P 500 ETF) courtesy of


Welcome Back Volatility, Where Does SPY Bottom? 200DMA, May Crash Low OR June 2009 High/Support (Charts/Videos) (SPY, DIA, XLF, VXX, LDQ, TLT, IEF, UUP)

PG Loses 30%, But Closes Down 2%! (Chart), NYSE CEO on Sell Off (Video)

Interesting Reads at Zero Hedge Today (5/6/2010), SPY Lost 9% at One Point

Germany Bans Naked Short Selling in 10 Banks, Insurers and Eurozone Government Debt (Naked CDS)

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Germany's BaFin (financial regulator) decided to temporarily ban naked short selling in 10 German banks and insurance companies and ban naked credit default swap speculation in European Government debt.  Below are ten financial institutions that made the cut (BaFin press release). Get ready for an interesting day tomorrow. EUR/USD is trading at 1.21936, blew right through 1.25 support, pretty crazy out there.
Market chaos warning after German ban on shorting - (
Germany Bans Naked Short-Selling, Swaps Speculation (Bloomberg)
The Definitive Incomplete Analysis Of Today's German Shock And Awe (Zero Hedge)
German ban on risky bets seen backfiring (Reuters)
German regulator issues naked short-selling ban (BusinessWeek)
Swaps Soar on Germany’s ‘Act of Desperation’: Credit Markets (Bloomberg)

Jim Cramer Likes Gold ($GLD), Gartman Sells Anticipating Pullback

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Jim Cramer on Mad Money yesterday (video below) gave reasons to own Gold and said it could be headed to $2,000oz.  Dennis Gartman of the Gartman Letter advised clients to "rush to the exits", anticipating a technical pullback (CNBC article). They are looking at two different time frames I believe. It makes sense that traders would get scared at the December 2009 high ($119.54) and flee back to home base (support), forming a double top. Traders might re-evaluate another breakout attempt at the 50DMA or uptrend support level. If that uptrend from late 2008 gets broken on strong volume I'd be careful with protection (IMO). I don't think we've seen the official parabolic move in gold yet (being only 20% above the March 2008 high, before the crisis/FX printing spree?) but that's just me. A spike in Treasury yields would take my attention away from gold though on a structural basis.  Right now I'm watching the US Dollar/Gold (UUP:GLD) ratio and FXB:GLD, FXE:GLD etc. Boo yaahh... Below is a chart of $GLD and the Mad Money video courtesy of

Don't Be Misled By 13F Filings, They Don't Disclose Shorts, Credit Default Swap Exposure (CDS)

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People, don't be misled by 13F SEC Filings reported by hedge funds and institutional investment managers every quarter. They don't have to report short positions or naked credit default swap exposure (credit insurance) against underlying long positions. Meaning 10 million shares of Company X might just be part of a large net short position. This is an interesting comment on the potential nature of Paulson's MGM holding this Q.

13F-Reports are filed quarterly by institutional investment managers (managing more than $100 million) less than 45 days after the quarter ends at 13D-Reports are filed when institutional investment managers own 5% or more of a company within 10 days of the purchase. They must report material changes (acquisitions or dispositions) greater than 1% of the holding.

"Large Volume" Trades Outside Recognized Exchanges, Dark Pools

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Today on CNBC Larry Tabb of Tabb Group explained that any "large volume" trades outside recognized exchanges in dark pools. It seems to me like high speed liquidity, front-running and hiding trades (whether over-the-counter or in dark pools) for hedge funds and investment institutions is more important than market transparency. At least start a High Frequency Trading ETF to let retail investors join the front-running party.

Illinois Has $4.5 Billion In Unpaid Bills, $1.75 Billion Due June 10 (Short Term Debt), Higher Taxes Looming?

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Illinois' financial update by Distressed Volatility Public Finance (DVPF)

The April 2010 Illinois Comptroller Quarterly, by Illinois Comptroller Daniel Hynes, stated they had $4.496 Billion in unpaid bills and $1.75 Billion + interest that must be repaid on June 10. Below is part of the quarterly report (PDF here).  Read the articles below and also check out the daily cash balance chart comparing 2007-2010.  Higher taxes coming?

'Meltup' (National Inflation Association Video), $TIP ETF Chart (Treasury Inflation Protected Securities ETF)

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If you're concerned about potential inflation (higher prices) down the road, watch the video below from the National Inflation Association.  Also you know what else is interesting?  The iShares Barclays TIPS Bond Fund is at all time highs.  TIPS are Treasury Inflation Protected Securities.  See the NIA press release, Meltup video and $TIP chart below.

RBS's Bob Janjuah: Gold to 1,500, Euro/Dollar Parity, S&P 850 Fair Value, Treasuries Long Term Problem

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Bob Janjuah, RBS (Royal Bank of Scotland) Chief Market Strategist, was on Bloomberg TV (Youtube, last week and gave his views on the S&P, technicals, EUR/USD (Euro-to-US Dollar), Treasury yields, inflation and gold. I posted links to some of his recent reports here but he pretty much covered everything in this video.

Below are highlights and the embedded video.

Skating The California Foreclosure Monster

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This is an interesting video called "Cannonball" about skating the pools of foreclosed homes in Fresno, CA. It's a deep video about the housing / economic crisis in California and has some strong language FYI. Thanks Reformed Broker for the video (via Good Magazine and originally

Distressed Volatility Links 5/16 (Rosenberg, Roubini, Jim Rogers, El-Erian, Shiller, Chavez)

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PIMCO's El - Erian Says U.S. Inflation May Accelerate - Reuters/NY Times
David Rosenberg Part 1: "Why The Depression Is Ongoing" - Zero Hedge
David Rosenberg Part 2: "Gold Increasingly Being Viewed As Currency Of Its Own" - Zero Hedge
Bloomberg's Tom Keene interviews Pimco's El-Erian - Zero Hedge
Robert Shiller: Fear of a Double Dip Could Cause One - NYT
Bailout Is ‘Nail in the Coffin’ for Euro, Rogers Says - BusinessWeek
Roubini Says Greece May Lead Euro Exodus, China Faces Slowdown - BusinessWeek
NYU’s Roubini Says ECB Has ‘Room to Maneuver’ to Back Recovery - BusinessWeek
Loan on mall partly owned by Simon about to default - Reuters via The CRE Review
Biggest Tea Grower Plans ’War Chest’ for Acquisitions (Update2) - Bloomberg
Greece Considering Legal Action Against U.S. Banks for Crisis - Bloomberg
Newest Addition to the Team, Taste_Arbitrage: Flash Crash - Stone Street Advisors
Bangkok fighting leaves 30 dead, 232 injured - AP
‘Iron Man 2’ Tops Box Office for 2nd Weekend With $53 Million - Bloomberg
Skateboarders’ Paradise Amidst the Real Estate Carnage - Reformed Broker
Banks Embrace ‘Extend and Pretend’ as U.S. Hotels Await Rebound - Bloomberg
Funding Curves Update and A Curious Observation - Professor Pinch
Chavez asks Venezuelans to tweet on speculators - AP

Oil Prices Drop Further in Week as Euro’s Travails Continue - Guest Post

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Submitted by

Oil Prices Drop Further in Week as Euro’s Travails Continue

Oil Market Summary from: 05/10/2010 to 05/14/2010

Crude oil prices plunged nearly 4% on Friday and were off almost 20% from their 18-month high less than two weeks ago, as the euro continued to lose ground against the dollar and U.S. oil inventories continued to build.

Welcome Back Volatility, Where Does SPY Bottom? 200DMA, May Crash Low OR June 2009 High/Support (Charts/Videos) (SPY, DIA, XLF, VXX, LDQ, TLT, IEF, UUP)

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In the short term it looks like SPY (SPDR S&P 500 ETF) broke the uptrend from March 2009 AND near term $115 support. So technically support is yet to be seen. That is the question of the day. Where will SPY (S&P 500 ETF) find confirmed support?  Today (Friday, May 14) $SPY closed down 1.80% to $113.90 on worries over Euro sovereign debt. Check out the flight to investment grade bonds (LQD), Treasuries (IEF, TLT), US Dollar Index ETF (UUP) and Volatility Index (VXX). Gold (GLD) closed down slightly.

Diaspora (Personally Controlled Social Web Server) vs. Facebook

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Check out Diaspora, "an open-source, privacy-aware, personally controlled do-it-all web server". It seems like you're centralizing all your social data and have ultimate control on your own server. Is this a Facebook killa? Students at NYU are behind this and it looks like they raised $100,000. I'm down. Check out the introduction videos, presentation to ISOC-NY and recent articles.

GLD, SLV, GDXJ Above Resistance, Why Art Thou Lagging GDX? (Also Check Out Implied Volatility)

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The fundamentals for precious metals continue to look good. The EU/IMF backstopped European sovereign debt with a trillion dollars of Euros, the Euro continues to sell off against the Dollar and gold (currency volatility), Freddie Mac needs an additional $10.6  billion in aid, Fannie Mae needs $8.4 billion and I'm starting to think municipalities might need help paying their bills as well (watching MCDX).  There is no doubt that fiat money dilution is putting a bid under precious metals, whether as a currency crisis hedge, inflation hedge or sh* hits the fan hedge.  Check out the charts of $GLD, $SLV, $GDX, $GDXJ, $HL and GLD, SLV implied volatility.

Jim Iuorio Likes Silver, Not Just Catch Up Trade to Gold (SLV, GLD)

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Jim Iuorio of TJM Institutional Services (who called the massive US Dollar rally in November - video) had some words about gold and silver today on CNBC.

Irene Aldridge (Able Alpha) Explains High Frequency Trading Strategies and What Could Have Caused the Crash Last Week (BNN, 5/7/2010)

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The Terminator Irene Aldridge, of high frequency trading firm ABLE Alpha, was on BNN (Business News Television in Canada) discussing high frequency trading, different strategies (market making, statistical arbitrage, event arbitrage) and what could have sparked the crash last week.  She thinks a giant order in the futures market by a human or computer was responsible, whether erroneously ("fat finger") or purposely to manipulate the market.  She said these trading algorithms are only as good as the person who programs them.  Go ahead, trade against her.... Make her day.
Irene Aldridge on BNN (5/7/2010 - link)

High Frequency Traders Are Like Hackers (Mark Cuban's Thoughts On Wall Street)

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Read Mark Cuban's blog post about Wall Street, it is interesting.  What Business is Wall Street In? - BlogMaverick, May 9, 2010.

Gold, Dollar Futures Diverging With S&P E-Mini Future (ES_M, GC_M, DX_M, GLD, SPY, UUP, May 11 Charts)

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Since April 27, the June Gold and Dollar Index future have been diverging with the June E-mini future.  This marriage looks familiar.  I'm charting out the gold and silver ETFs tomorrow and watching resistance (GLD, SLV).

E-mini S&P June Future vs. Dollar Index Future vs. Gold Future
(Snapshots courtesy of OptionsXpress)

Euro Going To 1.20 By 4th Quarter (FX Concepts John Taylor), EUR/USD Technicals (Chart)

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John Taylor of FX Concepts, the biggest currency hedge fund in the world, thinks the trillion dollar European bailout will just delay the fall to 1.20 on EUR/USD.  He thinks it will hit 1.20 in the 4th quarter and potentially lower.  Taylor is a Dollar bull favoring US over European economic growth and I'm sure forward looking US/EU interest rate differentials are part of the equation.  The chart does not look healthy.

Nothing Fazes Barton Biggs, Next Move in US Market is Up 15-20% Led By Technology, Sees Lower Euro

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Nothing fazes Notorious B.I.Ggs (Barton Biggs of Traxis Partners) when it comes to US stocks. He was on Bloomberg last Monday thinking 2010 S&P EPS would hit $88-90. That translates to $1424 with an average 16 multiple. That's also 23% above today's close ($1159). $PG broke through the March low 3 days later (lol) and that didn't even faze him (see chart).  On Bloomberg Biggs said the next move in the market is 15-20% higher led by technology stocks.

Greenland Proceeds with Plans for Offshore Drilling in Arctic Waters - Guest Post

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Guest post by

Greenland Proceeds with Plans for Offshore Drilling in Arctic Waters

While the oil spill from a sunken drilling rig in the Gulf of Mexico threatens to become an environmental disaster, plans are proceeding for opening up new drilling territories in the iceberg-infested waters off Greenland.

Rep Alan Grayson: Federal Reserve Owns Red Roof Inn Through Bailed Out Bear Stearns Commercial Mortgage Securities Trust

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This is interesting, we own a hotel chain. Watch Rep. Alan Grayson explain how the Federal Reserve owns the Red Roof Inn through a bailed out Bear Stearns CMBS.  I remember on 3/31/2010 Crain's Chicago reported that a Chicago (Streeterville) Red Roof Inn was hit with a foreclosure suit and the debt was part of a $455 Billion CMBS in default.  I did a search and found the actual mortgage in a Bear Stearns CMBS Trust:  Bear Stearns Commercial Mortgage Securities Trust, Series 2007-PWR17 ( and Bear Stearns Commercial Mortgage Securities Trust, Series 2007-PWR18 ( The New York Fed recently disclosed their holdings and BSCMS_07-PW17 A4, BSCMS_07-PW18 A4, BSCMS_07-PW18 A3 were on the list. Also remember in October 2009 I blogged that the Fed owned and was trying to sell the Crossroads Mall in Oklahoma for $24 million?

Insuring USO From Oil Volatility Monster w/ Put Options ($OVX) - Reflection of April Complacency Capitulation and Failed Breakout (May/July USO Puts)

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Look how put options on the Oil ETF $USO actually made long portfolios MORE money on the failed ceiling breakout. In other words, if traders were trying to time an oil spot spike above that 6-month ceiling resistance level and hedged against oil volatility monster risk ($OVX was at 2 year lows, as far as the chart can see), they not only protected their capital (depending on hedge ratio) but made more money on the other side of their own trade, Goldman RMBS desk style!

Reading: David Rosenberg on 3,000 Gold, JPM Silver Probe, Squawking the S&P Crash, Copper Pierced 200DMA, Venezuela Inflation Hits 30%

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News you can use for Sunday May 9, 2010

Venezuela inflation rate hits 30%, highest in Latin America - USA Today h/t @futureshock
JP Morgan silver probe by CFTC, DoJ - Zero Hedge
EU Preps Euro Fund to Fight ‘Wolfpack,’ Debt Crisis - Bloomberg
Britain rejects Eurozone bailout fund - (h/t market ticker)
Indonesia Hit by Magnitude 7.4 Quake, USGS Says - BusinessWeek
Copper future pierces 200DMA - chart at Pragmatic Capitalist
Ben Lichtenstein of TradersAudio squawking the crash from S&P 500 pit! - Zero Hedge (mp3)
David Rosenberg: The Case For Gold Going To $3,000 Is Getting Stronger - BusinessInsider
ECB advises Spain to make tough economic reform - Reuters
BP Oil-Collection Chamber Clogs, Removed From Leaking Gulf Well - Bloomberg
Oil at $65 a barrel may sound alarm bells for OPEC - Reuters
Rogers, Faber Advise Paring Investments as U.S. Stocks Slump (5/7) - Bloomberg

What Do These 8 Technical Indicators Mean for the Markets? - Guest Post

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What Do These 8 Technical Indicators Mean for the Markets?
May 7, 2010

Editor's Note: The following article is excerpted from Robert Prechter's April 2010 issue of the Elliott Wave Theorist. For a limited time, you can visit Elliott Wave International to download the full 10-page issue, free.

By Robert Prechter, CMT

Technical Indicators

It is rare to have technical indicators all lined up on one side of the ledger. They were lined up this way—on the bullish side—in late February-early March of 2009. Today they are just as aligned but on the bearish side. Consider this short list:

    Germany Approves Greek Aid, Moody's on Italy, Portugal, Spain, UK, RMBS, BP and EUR/USD Rallies (5/7/2010)

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    Since hedge funds are gaming the hell out of credit ratings agencies, like the US subprime mortgage crisis back in 2007, below are a few updates from Moody's this week. By the way, Economist William Engdahl does not see any EU contagion risk. We'll see what happens. The German Parliament today approved their portion of the Greek aid package, which is 22.4 Billion Euros out of 110 Billion (read full article at NYT Dealbook).  EUR/USD rallied to 1.2705 from 1.261 earlier in the morning.

    Joe Saluzzi, Irene Aldridge, Santelli on The Crash of May 6, 2010, High Frequency Traders Shut Down Amid Turmoil

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    Remember all the drama with high frequency trading last year? Well today saw the second largest intraday market swing (1,010) since 1987.  October 10, 2008 came in first place during the financial crisis. Irene Aldridge of Able Alpha, Joe Saluzzi of Themis Trading and Rick Santelli spoke about the intra-day crash in the video below. The WSJ reported that big HFT players (Tradebot Systems Inc, Tradeworx) shut down during the market turmoil, pulling liquidity/"buyers of last resort" out of the market, which is what Joe Saluzzi and Dennis Dick of Bright Trading have been warning about.  There's always the Fed though!  By the way look what happened to PG. Insane..

    PG Loses 30%, But Closes Down 2%! (Chart), NYSE CEO on Sell Off (Video)

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    The chart of the day is $PG (Procter & Gamble), which lost 30% at one point but rallied back to close down only 2%! It even took out the March 2009 low! Some say it was a trader's fat finger (ordering a billion shares instead of a million) combined with high frequency traders taking out stops. The NYSE CEO explains what happened in the CNN Money video below. The market took a surprise hit as well, down 9% at one point. Who knows what happened, but check out the print on the chart and read the articles.

    The Cover-up: BP's Crude Politics and the Looming Environmental Mega-Disaster - Guest Post

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    Guest Post by

    The Cover-up: BP's Crude Politics and the Looming Environmental Mega-Disaster

    We have been informed by sources in the US Army Corps of Engineers, Federal Emergency Management Agency (FEMA), and Florida Department of Environmental Protection that the Obama White House and British Petroleum (BP), which pumped $71,000 into Barack Obama's 2008 presidential campaign -- more than John McCain or Hillary Clinton, are covering up the magnitude of the volcanic-level oil disaster in the Gulf of Mexico and working together to limit BP's liability for damage caused by what can be called a "mega-disaster."

    Interesting Reads at Zero Hedge Today (5/6/2010), SPY Lost 9% at One Point

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    Interesting reading at Zero Hedge today giving the scoop. I'm going to write about $USO/$OVX, $USO puts gone wild, ETF ratios and currencies tonight. EUR/USD fell off a cliff today and is testing support in the descending channel as well as the 1.24 floor. Also at one point today $SPY, the S&P ETF, lost 9% (fat finger?, hedge fund liquidation? or.... weakness ahead for the economy).

    $SPY Intraday 5/6/2010 (

    Google Chrome Browser Speed Test Video, Faster Than Potato Bullet, Sound Waves and Lightning

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    The Google Chrome browser is faster than a potato bullet, sound waves and lightning. I might have to download Chrome, I currently use Firefox and Safari on a Macbook. Thoughts? Find more videos at their Youtube channel. I added the behind the scenes segment (hat tip fbonacci).

    Economist William Engdahl Does NOT See Greek Contagion Risk, Compares Eurozone Crisis to 1997 Asian Financial Crisis

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    On 2/16/2010 I put up a video with economist William Engdahl (see here) talking about the Greek fiscal debt crisis and complex derivatives partly responsible for the eventual €110 billion IMF/EU bailout a few days ago. Here he is 3 months later on RussiaToday.

    Engdahl compares what's going on in Europe to the 1997 Asian Financial Crisis when the "smallest weak link" in the chain was targeted. In this case it's Greece in the Eurozone chain. He still blames Goldman for designing the special derivatives that allowed Greece to hide their true debt/deficit back in 2002.

    Engdahl DOES NOT see Greek contagion risk infecting Spain and Portugal. The credit default swaps (held by America and City of London? lol) of Spain and Portugal are moving higher though.

    Brown Brothers Harriman: Euro to 1.18, Greek Bailout is Disguised Bank Bailout (Marc Chandler)

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    Marc Chandler, global head of currency strategy at Brown Brothers Harriman, was on Bloomberg on May 4 talking about the Euro and Greek debt bailout.  By the way, rioters tried to storm parliament today protesting the austerity measures and EUR/USD broke below 1.31 support.


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    The large speculative S&P E-mini future shorts (see April 28 post) and the $IWM puts opened on April 15 are making loot or successfully hedging this breakdown. The 61.8% retracement definitely had a say in this sell off, imho. I've been behind the curve reporting on $SPY but as you can see it formed a head and shoulders top, took out the $118 floor and today broke through the 50 day moving average and long term uptrend from March (see charts below). Now $SPY bears have to battle the strong $115 support level.

    Thousands of Greeks Riot Against Austerity Package (Videos, 5/5/2010)

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    Greeks continue to protest against the austerity package. Watch the videos below.

    Marc Faber: China Looks Weak Technically, Could Crash in 9-12 Months, State Street Rates China Tactical Underweight (FXI, EWH)

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    Feeding off my previous post full of goodies on China (FXI, EWH charts, Jim Chanos on Fox etc), Marc Faber of the Gloom Boom & Doom Report thinks the Shanghai and Hong Kong stock indexes look weak "technically" (lower highs during 2009 and below resistance). He also mentioned that industrial commodity prices, industrial sensitive currencies (Aussie) and related equities (Freeport, Rio-Tinto) are all acting "heavy".  He then dropped the "crash" call.

    Mahmoud Ahmadinejad on Charlie Rose and RussiaToday (May 4)

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    Watch interesting interviews with Mahmoud Ahmadinejad (President of Iran) on Charlie Rose and RT America (embedded below) while he was in New York for the UN Nuclear Conference.

    Clear Resistance Above $FXI, April China PMI, Jim Chanos on Fox, Vitaliy Katsenelson Report, Charts (Shanghai Composite, Hang Seng, $FXI, $EWH)

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    Jim Chanos was on Fox Business last week chatting with Charlie Gasparino about the potential property bubble forming in China. He thinks China's growth is on a treadmill to hell and the property boom is a house of cards.  It might be time to hedge China or potentially ride a retracement (in my opinion).  Options are getting more expensive though.  Implied volatility on FXI and EWH (option premium) has been creeping up since March, FXI (25 to 33), EWH (19 to 24).  Way off the peak though.  The Government is tightening up and could affect growth going forward. People talk about Greek contagion affecting Europe, what about China contagion (US market, commodities)?  I charted out the Shanghai Composite, Hang Seng, Hong Kong ETF (EWH) and China FXI and they broke the uptrend line.

    Deepwater Horizon Oil Spill Explained, Ways To Contain Leak (Video)

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    Al Jazeera explains the Deepwater Horizon oil spill.

    EUR/USD Support Hits at 1.31 or 1.24, Euro Shorts Hit Record (COT)

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    Support for EUR/USD hits at 1.31 or 1.24 imho, if it stays inside the descending channel.  It's currently trading at 1.31576, -0.35%. We'll see who in Euro-land is on deck after the IMF/EU bailed out Greece.  The immediate term April low to test is 1.31147 (from 4/28).  1.31 must hold here or EUR/USD will hit the 20s.  I've been watching EUR/USD sell off since late 2009 when the US Dollar broke out.  It's been one hell of a ride for the Euro.  Maybe shorts will target the US Dollar soon to give Europeans a break.  Large speculators in the Euro are still piling on the short side.
    "Hedge funds and other large speculators raised net wagers on a euro drop by 25 percent to 89,013 contracts in the week ended April 27, Commodity Futures Trading Commission data shows".  [Bloomberg]
      Below is the monthly chart. 

    EUR/USD (Euro/US Dollar - Courtesy of

    NYU's Altman Sees High Yield Bond Correction (JNK, HYG), Plus Greek Contagion Risk (Spain and Portugal) Feeding Into Euro

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    Edward Altman, a finance Professor at NYU, thinks a correction is near for high yield bonds.  Below are quotes, the Bloomberg Video and charts of HYG and JNK (high yield bond ETFs) in a rising wedge, waiting for a catalyst.
    "I'm concerned that it's come back too fast and too furious and the spread between high yield bonds and 10-year Treasuries now below 4.5% is too low given the risks in the market. So, it's very nice to see this recovery. The world was on a verge of elimination of its financial markets and now its come roaring back. But I think too fast, too furious and there will be a correction".

    Ahmadinejad, Clinton Full Speech Videos at UN Nuclear Conference, US and Others Walk Out (New York)

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    Iranian President Mahmoud Ahmadinejad spoke in New York at the United Nations Nuclear Non-Proliferation Treaty (NPT) Review Conference. The first video is his full speech. The next video shows US Reps and other countries walking out and the last video is Hillary Clinton's speech. It was Ahmadinejad vs. Hillary Clinton. If interested Mahmoud Ahmadinejad spoke at the Tehran, Iran Nuclear Conference a few weeks ago (videos).

    Barton Biggs of Traxis Sees $88-90 EPS in 2010, $100 in 2011 (Video)

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    Barton Biggs aka Notorious B.I.Ggs of Traxis Partners thinks US earnings momentum will continue. He sees 2010 and 2011 S&P EPS (earnings per share) between $88-90 and $100 respectively. So.... 89 * 16 multiple = $1424 S&P in 2010 and 100 * 16 multiple = $1600 S&P in 2011. The S&P is currently trading at $1,204. JP Morgan's US Equity Strategist Thomas Lee thinks 2010 S&P EPS could hit $81, which would equal $1,296 on a 16 multiple.   Hmmmm... What do you think folks?  The video below is courtesy of Bloomberg.

    Lloyd Blankfein CEO of Goldman Sachs on Charlie Rose (April 30, 2010)

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    Here is Lloyd Blankfein (CEO of Goldman Sachs) on Charlie Rose on 4/30/2010. Berkshire Hathaway's Warren Buffett (owner and client of $GS) still thinks highly of Lloyd B and recently said he should not step down.
    "Asked whom he would like to see run Goldman if Blankfein were replaced, Buffett said: "If Lloyd had a twin brother, I would vote for him. I have never given that a thought." "[MSNBC]

    If interested here is the video of Lloyd Blankfein during the congressional testimony.  For the Charlie Rose video click here.

    JNK (High Yield Bond ETF) and Credit Spread Analysis, How High Does JNK Go? (IEF, TLT, LQD, JNK)

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    [Update: I originally started this post with $JNK option activity but the massive call volume didn't transfer to open interest. I'm thinking it could have been gaming the monthly dividend (dividend capture using covered calls)]

    In my opinion, these high yield ETFs aren't worth the fight until yields break out or people re-price credit risk on an event. These rising wedges and ceiling tests keep breaking out to the upside.  I was surprised to see HYG (more liquid high yield ETF) and the S&P leveraged loan index so resilient during all of 2009. You have to respect ZIRP (zero interest rate policy)! By the way, the Fed Funds rate is still lounging between 0-0.25% (Fed statement, April 28). So how high does the value of junk go from here?

    Mergers, Liquidations, Bailouts and a Mining Tax (Sunday Night News)

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    Continental and United to combine- Associate Press
    Greece Gets $146 Billion Rescue on EU, IMF Austerity Package - Bloomberg
    Movie Gallery to close all U.S. stores, shutting 2,415 Stores - Reuters
    Australia unveils mining tax - Reuters
    TEXT-Rio Tinto says concerned about Australia mining tax - Reuters
    Australia Opposition Leader Abbott: Deeply Hostile To New Mining Tax - WSJ
    IMF/EU Bails Out Greece (€110 billion), Papandreou Text - Distressed Volatility
    Faber Says China's Economy May `Crash' in Next 12 Months - Bloomberg Video
    Senate's Goldman Probe Shows Toxic Magnification - Wall Street Journal
    China Raises Banks’ Reserve Ratios to Cool Economy (Update2) - BusinessWeek
    Update to Fed Rent-to-House Price Graph - Calculated Risk

    IMF/EU Bails Out Greece (€110 billion), Papandreou Text, Greek Finance Minister, Riots (Videos)

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    Greece got a bailout Sunday from the IMF (International Monetary Fund) and EU (European Union).  There will be harsh austerity measures (increase in taxes, lower public sector wages, pension reform), read this Reuters article: Greek cabinet to discuss tough new austerity steps and listen to the Greek Financia Minister speak below.  Specifically on the bailout, WSJ reported that,
    "Greece reached a historic deal with other euro-zone countries and the International Monetary Fund for a three-year, €110 billion ($146.5 billion) bailout". [full WSJ article]

    Roubini On Greece Debt Restructuring, Second Half US Growth, Euro (Bloomberg - 4/28/2010)

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    Nouriel Roubini (Prof at NYU, was on BloombergTV with Willow Bay on 4/28/2010. Here are a few key points he made about restructuring Greek debt, Euro-Zone contagion risk, potential double dips, the Euro and US growth in the second half of 2010 (+ the video). This just hit the wire: Greece Reaches Bailout Deal With EU, IMF - WSJ.

    On Greece/Euro-Zone

    Dow 61.8% Retracement Level In Play, Could Pose Challenge To Market (DIA, DJI)

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    In the video below, Adam Hewison of MarketClub points out that the Dow (DJI) is trading at the 61.8% retracement level (2007 peak/2009 trough). This area could pose a challenge to the market, in his opinion. I will zoom in on short term support levels later that must hold.

    Eric Sprott Talks Up Silver on CNBC, Silver Ready For Big Breakout? (SLV, GLD, PHYS)

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    Eric Sprott on CNBC 4/15/2010
    Eric Sprott, who runs Canadian hedge fund Sprott Asset Management, was on CNBC a few weeks ago talking with Maria Bartiromo.  He is bullish on silver and gold and bearish on the market and cyclical metals.  His firm just started a new gold ETF in March called the Sprott Physical Gold Trust ($PHYS) which offers a "physical delivery option", unlike GLD.  I will chart out SLV and the silver future tomorrow and look at the options.  Unlike GLD, SLV hasn't broken through the 2008 highs yet.  Longs are closing in on the big battle though.  Below is the CNBC video and key points he made during the interview.

    FOMC Statement April 28, Expects Low Rate For Extended Period, Closed All Special Liquidity Facilities Except CMBS TALF (Federal Reserve)

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    Release Date: April 28, 2010
    For immediate release

    Private Greece Bailout?, Chicago Pensions Lack Assets, Buffett Defends Goldman, Pensioenfonds Vervoer Dumps Goldman, Housing Recovery vs. Tax Credit End

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    Interesting news for 4/30-5/2/2010

    SOME CRACKS IN THE FOUNDATION? (David Rosenberg Market Update) - PragCap
    Aust unveils mining tax, cuts company rates - NZHerald
    Update: Greece poised to sign rescue deal with EU, IMF - Reuters
    Germany sees private sector helping Greece - Reuters
    Greece sees rescue deal on Saturday, thousands protest - Reuters
    Why SEC Has Strong Case Against Goldman, Part 1 - Suna Reyent
    Greece Faces `Unprecedented' Cuts as $159B Rescue Nears - Bloomberg
    Buffett strongly defends Goldman; Berkshire net up - Reuters
    Chicago Pensions Lack Assets to Ensure Payment, Commission Says - Bloomberg
    Faber Says Greece Needs Debt Writedown of as Much as 50% - Bloomberg
    Euro Falls Versus Dollar for Fifth Month as Greece's Budget Crisis Spreads - Bloomberg
    Paulson Saw Trading Risk At Goldman, Other Brokers in 2007 - Forbes
    Housing Recovery Won't Be Derailed by End of U.S. Tax Credit, Agents Say - Bloomberg
    FDIC concerned with swaps rules in Democrats' bill - Reuters
    Pension fund set aside Goldman Sachs - (translated to English)
    Dutch plan dumps Goldman Sachs from €7 billion portfolio - Pensions & Investments
    16 Crafar-owned farms receivership sale ($100M) attracting buyer interest in Asia - NZHerald

    Video of Greeks protesting Government measures (via Reuters).