Dow 13K, Oil 125, and Economic Bright Spots

Its been a while since i posted. A few updates. First off, Walmart is doing great! A stop out of the short from last fall produced a small loss. Google went on a tear and i should have spread the calls to May/June for the continued upside that i did not participate in. And the financials have bounced but are lagging. More rough waters ahead, with Bank of America's call on losses from equity lines mounting as one example. Lets go to the charts!

Looking at the Dow Jones, it looks like there is alot of resistance at the 13K level. The broader market is alot stronger then the major indices in many sectors, and the home builder index seems to have made a major bottom. We have a period of softness ahead, as the indicators are not confirming the recent rally. The idea that capital spending will help offset the failing consumer also seems to be helping the general economy. And what about Crude? We're about near the 133 level we figured we might get to into the summer months. But 200 is coming into 2010. The dollar seems to be making a bottom here, as we become the worlds 2nd carry trade defacto. Reversals may happen, but we should see a continuation of all the above into the late summer/fall.

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All out of BSC

From the block timespan daily buy at AVG 3.75, i sold a block of Bear Stearns at 8, another at 13, and the rest is gone here at the under 11 mark. Always have open orders ready ahead of the rips. I placed mine around the 7.99 level, 12.99 level... (to get ahead of the block orders at the round numbers) Why did i post this specific set of trades? To prove the wisdom of the street and my technical signals never fail. I see the market pausing at this level. We might have one more rip to 13K and a failure and drop down to lower levels. The fundamentals of the economy are about to get worse, t... and generally things look crummy... Its time to rid the economy of waste and get lean and mean again. I've been hammering alot of code lately so my mind is fried. More posts later. My XHB is holding its own.. stop under technical support. GLD is a buy on big dips...

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Sold a bunch of the LEH Calls 19ish

Out at 19.. the highest pricing was in the 24's... almost a triple from above 7 but the market technically looks a bit soft. Going to keep a few more and see if LEH rips over 50.

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OUT April 430 GOOG Calls

Sold all the GOOG calls at the 46 Range... from 21... OVER A DOUBLE... I'm going to look at OEX Puts with some of the proceeds here. This market is at the high end of the rev range for this cycle..

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Bear Stearns revised deal

Well another chunk of BSC goes out at 13. I'm going to keep the rest of this position just in case another pop ensues. This original block was picked up at 3.75 avg. My LEH trade is completely stalled out, even though the options popped into a triple after the purchase we made. I'm unloading some here. Goog is doing great, finally rallying with this strong market. Looks like 12,600 on the dow is a bit too much for this rally. Another pop and it might be time to short a few things again. The majority of the reporting of this deal was negative, yet the technicals kept showing me that there were higher prices ahead. Dont listen to noise, use the charts as your guide, especially during times of volatility.

Tops take longer to form then bottoms.

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The US may need the IMF

There is so much bearish data coming out, i'm inclined to retract my previous statement that we may have made the low for the year (by a 50% chance). It seems that now entire governments (including our own) are having a hard time raising cash. Dejure revisits De facto...

Asian, Mideast, and European investors stood aside at last week's auction of 10-year US Treasury notes. "It was a disaster," said Ray Attrill from 4castweb. "We may be close to the point where the uglier consequences of benign neglect towards the currency are revealed."

The share of foreign buyers ("indirect bidders") plummeted to 5.8 percent, from an average 25 percent over the last eight weeks. On the Richter Scale of unfolding dramas, this matches the death of Bear Stearns.

Rightly or wrongly, a view has taken hold that Washington is cynically debasing the coinage, hoping to export its day of reckoning through beggar-thy-neighbour policies.

The Fed's emergency actions are imperative. Last week's collapse of confidence in the creditworthiness of Fannie Mae and Freddie Mac was life-threatening. These agencies underpin 60 percent of the $11,000 billion market for US home loans.

With the "financial accelerator" kicking into top gear -- downwards -- we may need everything Ben Bernanke can offer.

We can no longer exclude a partial nationalisation of the American banking system, modelled on the Nordic rescue in the early 1990s.

Is this the moment when America finally discovers the meaning of the Faustian pact it signed so blithely with Asian creditors?

As The Wall Street Journal wrote this weekend, the entire country is facing a "margin call." The US has come to depend on $800 billion inflows of cheap foreign capital each year to cover shopping bills. They may have to pay a much stiffer rent.

As of June 2007, foreigners owned $6,007 billion of long-term US debt. (Equal to 66 percent of the entire US federal debt). The biggest holdings by country are, in billions: Japan (901), China (870), UK (475), Luxembourg (424), Cayman Islands (422), Belgium (369), Ireland (176), Germany (155), Switzerland (140), Bermuda (133), Netherlands (123), Korea (118), Russia (109), Taiwan (107), Canada (106), Brazil (103). Who is jumping ship?

The Chinese have quickened the pace of yuan appreciation to choke off 8.7 percent inflation, slowing US bond purchases. Petrodollar funds, working through UK off-shore accounts, are clearly dumping dollars amid rumours that Gulf states -- overheating wildly -- are about to break their dollar pegs. But mostly likely, the twin crash in the dollar and US agency debt reflects a broad exodus by global wealth managers, afraid that America is spinning out of control. Sauve qui peut.

The bond debacle last week tallies with the crash in the dollar index to an all-time low of 71.58, down 14.6 percent in a year. The greenback is nearing parity with the Swiss franc -- shocking for those who remember when it was 4.375 francs in 1970. Against the euro it has hit $1.57, from $0.82 in 2000. Against the yen it has smashed through Y100. Spare a thought for Toyota. It loses $350 million in revenues for every one-yen move. That is an $8.75 billion hit since June. Tokyo's Nikkei index is crumbling. Less understood, it is also causing a self-reinforcing spiral of credit shrinkage throughout the global system.

Japanese investors and foreign funds are having to close their yen "carry trade" positions. A chunk of the $1,400 billion trade built up over six years has been viciously unwound in weeks. The harder the dollar falls, the further this must go.

It is unsettling to watch the world's reserve currency disintegrate. Commodities from gold to oil and wheat are taking on the role of safe-haven "currencies." The monetary order is becoming unhinged. (never doubted Dr. Ron Paul)

Few noticed last week that the Italian treasury auction was also a flop. The bids collapsed. For the first time since the launch of the European Monetary Union, Italy failed to sell a full batch of state bonds.

These are indeed historic times

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So much news...or fluff?

Some thoughts on what is ahead, even after the Fed and the GSE promise 2 trillion in liquidity to the housing debt markets.

March 24 (Bloomberg) -- Forget lower interest rates. For the Federal Reserve to keep the financial markets from imploding it needs to buy troubled mortgage bonds from banks and securities firms, say the world's biggest Treasury investors.

Even after cutting rates by 3 percentage points since September, expanding the range of securities it accepts as collateral for loans and giving dealers access to its discount window, the Fed has been unable to promote confidence. The difference between what the government and banks pay for three- month loans doubled in the past month to 2.03 percentage points.

The only tool left may be for the Fed to help facilitate a Resolution Trust Corp.-type agency that would buy bonds backed by home loans, said Bill Gross, manager of the world's biggest bond fund at Pacific Investment Management Co. While purchasing the some of the $6 trillion mortgage securities outstanding would take problem debt off the balance sheets of banks and alleviate the cause of the credit crunch, it would put taxpayers at risk.

Bill Gross handles alot more money the many of us

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BSC, block sell @ 8

Well, it was over a double in a day... so we sold a chunk. The GS numbers were good, for those still short from out 238 short, yesterday/today is the covering - to go long etc.

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Shorts getting crushed....

There is a 50% chance that we just saw the low of the year yesterday. The economy will keep failing and the XHB and XLI are an accumulate. Our positions are up very strong this AM. We'll hold these "trades probably two more days...."

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Bear Stearns, a stock turned option...

Having never had a position in BEST, im taking up some of this stock as a long under four dollars. I see this as an option with a floor at two, or a risk of 50% loss with the ability for some upside. There may be other suitors in the works who may take a look at this stock or the pieces. Quant breakup value is over 7 billion, but has leverage of over 30 billion which the FED just made good for 90 days. Its a day of bull speculation. And a low for the next few months in the market. Tremendous dow resistance at 12,200.

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