Thursday, August 26, 2010

8/26/10 Fading Desolation Row



Sentiment changed on a dime, as it often does. That leaves the door cracked for a possible rally tomorrow, IMO.

I'm willing to give more time and 'space' to plays on the long side- buying funds and blue-chips with RSI7s in the teens/twenties/thirties is usually worth a shot.

Ticker Last RSI7d RSI7w RSI7m
AMAT 10.71 24.14 24.08 33.69
BAC 12.66 21.61 28.06 32.39
CSCO 21.21 29.23 31.75 40.21
INTC 18.48 21.19 27.35 41.33
WFC 23.60 14.51 26.12 36.87
XOM 58.91 35.08 39.43 31.95
FSRBX 14.87 14.54 29.80 38.17
FSELX 36.02 36.59 32.40 42.43
FSENX 38.25 20.58 38.61 40.64

I like all the above companies/funds. The question is whether the bear continues straight down without a break, as it did in 2008.

That's why it's called trading.

156 comments:

  1. Is that Glen Campbell? I was just thinking of that song yesterday.

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  2. CP- That was James Taylor. I switched music links on you. Desolation Row was a better fit.

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  3. Yahoo shows that UNG has actually outperformed INTC over the past 3 months, so I guess I should not be complaining. :)

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  4. Even AA (of which I own 900 shares) has outperformed INTC over the past 3 months! Man, INTC is really oversold here.

    Given such a state of affairs, I have just purchased 200 shares of INTC at $18.19 and placed a sell limit order for these shares at $19.19.

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  5. David- Some people would rephrase the 3-month comparison as grasping at straws ;)

    I zoomed out to a 2-yr comparison, and now I feel like buying UNG.

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  6. CP,

    I have CHN in an old symbol list for international closed-end funds but I have not followed it. I see there is data on it back to at least 1993. They probably know what they are doing. 93 was before China was in vogue. A convenient source of info for any CEF can be found at www.cefconnect.com.

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  7. 2nd_ave -- UNG should only be bought at deeply oversold levels so as to play an inevitable rebound in a short order. All the long-term charts of UNG are obviously affected by the monthly contango. I am sure you will sell your INTC if it bounces a few percent next week, so both you and I are simply waiting for a short-term bounce, in UNG or INTC, and hence only the recently created oversold condition is important.

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  8. David - I have some concerns about the long term competitiveness of INTC. I think the iPad (which doesn't use INTC chips) could hurt Intel over time. Aaple's iTV won't either.

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  9. INTC did it to themselves. It will be 2 yrs before their money dump has any payback at all.

    What were they thinking?

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  10. Re: Just who WAS "the devil in Miss Jones"? newSubmitted by 2nd_ave (4499 comments) on Thu, 08/26/2010 - 20:23 #67916 (in reply to #67914)
    36 years ago...1974 was a signature year for me- it opened on the streets of San Francisco (where I remember seeing long lines at night for the second of the two films mentioned) with evenings spent backpacking to different crash pads, and ended on an academic 'high' on the streets of Ann Arbor, where I managed to hit my stride after struggling with the transition to college life.

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  11. Like little kids where the money just burned a hole in their pockets and got blown on cheap made in china toys that fall apart the first day.

    Honestly, how in this economic environment could anyone put money into ANYTHING that wouldn't start paying back within the year? Better just to give it back to shareholder in the form of stock buyback or special dividend, IMO, than just throw it away.

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  12. And no, I think their products are the very best, and when I think they have been beaten to a pulp to where they will NEVER, EVER consider just throwing away shareholders money like that (Heads should roll from top mgmt or BOD), THEN I would risk my money on their stock, because their products are so good.

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  13. CP/cb- I'm going to refer back to this conversation when INTC bumps up against 30 in a year.

    Or maybe I'll just silently recall this conversation when it slips into single digits...

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  14. For a little known old but rising international closed-end fund, look at The Turkey Fund, TKF. Still making higher highs.

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  15. Re: Just who WAS "the devil in Miss Jones"? newSubmitted by 2nd_ave (4500 comments) on Thu, 08/26/2010 - 20:51 #67922 (in reply to #67917)
    George- I was twenty in '74, and if the term 'stock market' came up in a conversation, I would have shaken my head over the music and returned to more pressing topics ;) Back then I might even have taken the redhead seriously.

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  16. Here's my (amateur psychologist) take on this week's action:

    (a) After distributing stock at RSI7s in the seventies last April, insiders are now engaged in talking the market down to accumulation zones.
    (b) In order for this to work, the media has to truly convince us we're headed for bad times.
    (c) Now that they have us all thinking we're about to retest the March '09 lows, well...they're picking up the same stocks they sold in April.

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  17. GRMN - I'm gonna try to off the shares I picked up AH @ $26.75 tomorrow for $27.33.

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  18. "I switched music links on you. "

    Unfortunately I don't watch any of the videos b/c I don't have the patience to wait while a 20-30 min download takes place.

    Severe bandwidth limitations way out here in the sticks...

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  19. For all you gassy folks out there, WSJ:

    Coal Gets Burned By Low Gas Price

    Fall in the Cost of One Resource Used to Fuel Power Plants Is a Drag on the Other

    BY MARK PETERS

    A slump in prices of natural-gas futures is having a knock-on effect in the U.S. coal market.

    Gas prices have fallen so far, trading Wednesday at a five-month low of less than $4 a million British thermal units, that gas-powered plants are able to capture a bigger share of the market.

    That is sapping demand for coal and driving down prices of Central Appalachian coal futures. The front-month contract settled at $60.05 a ton Wednesday on the New York Mercantile Exchange, down 15% since reaching a 20-month high of $70.87 a ton Aug. 5.

    Once natural-gas prices reach $4, "you ...

    Just search using the headline for full article.

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  20. Intel used to take my thin-film optimization ideas and test them out but never gave me any kind of feedback on how well they worked out.

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  21. AMD used to work with us so closely, constantly giving us both positive and negative feedback, that I can remember growing various thin SiO2 samples for them in our research center late into Christmas eve on one occasion.

    Whatever they wanted, we fell over backwards trying to provide.

    They're the good guys in my book...

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  22. Big moves in the currency markets tonite newSubmitted by Bill Cara (1713 comments) on Thu, 08/26/2010 - 21:24 #67931
    Something's up. Maybe Wall Street is reviewing advanced copies of BB's speech for tomorrow?

    TED newSubmitted by Bill Cara (1713 comments) on Thu, 08/26/2010 - 21:29 #67933
    Why is nobody talking up TED Spread? I'm all ears.

    http://www.bloomberg.com/apps/quote?ticker=.TEDSP:IND

    Could it be because there is plenty of liquidity in the system, and the fear mongers have to complain about other things?

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  23. Coal - Ouch, that makes sense I suppose but throwing up NG power generation stations isn't easily done at the drop of a hat is it?

    I see I need to read this article...

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  24. David- Any comment on the above TED spread post?

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  25. TED Spread - I've heard that same question several times lately, from TOF I think or David, can't remember which.

    I don't see any big currency moves.

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  26. RIG - I probably should've bought this one instead of GRMN.

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  27. Re: TED/ TLT newSubmitted by 2nd_ave (4502 comments) on Thu, 08/26/2010 - 22:27 #67940 (in reply to #67933)
    (a) Is it possible that bond yields tell the real story (high risk present in the markets), whereas the declining TED spread is an attempt by monetary authorities to stem (what they also see as) increasing risk?

    (b) Alternatively, do bond yields simply reflect the current 'bond bubble?' Are there vested interests in seeing bond yields drop this low- which is to say, who's on the other side of the trade (for instance, would it surprise anyone to learn that Beijing deliberately revises data to [artificially] inject more risk into global markets, in order to offload Treasurys at all-time highs?

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  28. Actually, I'm an Intel lover. Its just luck that I've not been trying to invest anymore, or I'd have been as screwed as all the other shareholders.

    My guess is that many of them felt the same as me, and sold their shares in disgust or dismay, or now because they are losing money on them.

    I looked at the chart and wouldn't be afraid to buy it at these levels, because the pain they have caused their shareholders will be an opportunity to those who are not. No matter how bad this depression gets, Intel will survive it, IMO.

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  29. Beijing - T's - Not only would running up treasuries allow Beijing to unload perhaps but fear has taken a toll on Commodities prices, allowing them to switch from T's into Commodities?

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  30. CP- There you go- never underestimate the Chinese.

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  31. There's not much doubt in my mind Intel will continue to thrive, even at the expense of the entire semiconductor industry.

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  32. Nor should we underestimate INTC.

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  33. 2nd - I consider myself pretty well schooled on the way Asians conduct business, they're way up there on the scale when it comes to conducting a slick operation to maximize their positions.

    You don't hear much about China (at least not as much as I would anticipate) and it's not easy to get a true grasp on what's going on there, I rest assured they're taking maximum advantage of the unfortunate situations existing elsewhere.

    ie: It wouldn't surprise me if they weren't involved in some of this tape banging up and down.

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  34. As an example, just a couple of nights ago I read an article where the author was postulating that part of PIMCO's current pinch relates in large degree to the size of their book in comparison to China's.

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  35. 2nd - I've been noting the absolute collapse in the TED spread from time to time. It's one of the flies in the ointment that is keeping me somewhat bullish. I know the ECB and IMF are backing Europe and that has had an impact...but when it is this low AND equities are this low, it makes me scratch my head and think I should be long(er) this market.

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  36. I'm alive, just really busy. Had 5 winners and 4 losers today...Unfortunately, my 4 losers where bigger positions so I gave back 1/3 of yesterday's gains. Think INTC :)

    Somethings going on here that doesn't pass the smell test. My guess? I think a message is being sent to DC. (Not to you CP) Not making excuses at all. Just can't shake the feeling that we're all in a very high stakes game we don't belong in.

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  37. Yikes CP- I posted before I saw yours relating to China. I think it's a little closer to home. Take a look at today's daily for HUN. Explain that? Huge volume on the up move then....

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  38. call me superstitious, i don't feel good about this market and Long is too long for me. I was able to lighten up on the open this am.

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  39. "China's gold demand surges 26% in Q2: WGC
    By Zhou Yan (China Daily)
    Updated: 2010-08-26 10:24

    SHANGHAI - Gold demand in China increased by 26 percent year-on-year in the second quarter, spurred by a robust increase in retail investment demand for the yellow metal, the World Gold Council (WGC) said on Wednesday."

    http://www.chinadaily.com.cn/bizchina/2010-08/26/content_11204400.htm

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  40. "Geely says net profit up 35% in H1
    (Xinhua)
    Updated: 2010-08-26 09:54

    HONG KONG - China's leading auto maker Geely announced Wednesday that the company earned 805 million yuan (about $118 million) in the first half of 2010 for its shareholders, up 35 percent year-on-year.

    The company, which was listed on the Hong Kong Stock Exchange in 2005, achieved a sales turnover of 9.24 billion yuan in the six months ending on June 30. The figure represents an increase of 55 percent from the same period last year.

    With 195,734 units of Geely vehicles sold in the first half of 2010, Geely is confident it will achieve the 400,000 target set for the whole year despite increasing competition in both domestic and overseas markets. "

    http://www.chinadaily.com.cn/bizchina/2010-08/26/content_11205466.htm

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  41. "Agricultural Bank stops lending to developers
    Updated: 2010-08-26 17:41

    Agricultural Bank of China Ltd has frozen lending to property developers as it reviews outstanding loans to the industry, Bloomberg reported Wednesday, citing two people with knowledge of the matter.

    The bank's loans to property developers increased almost 28 percent in the first half of this year, the sources, who wanted to remain anonymous, said, adding that the bank issued the order to branches nationwide on Aug 23 and will restart loans at the end of this month after the review is completed.

    Chinese banks are tightening loans to the real estate industry after the government began a clampdown on property speculation in April.

    Agricultural Bank has just completed the world's largest initial public offering this month, raising $22.1 billion. It had 432 billion yuan ($63.5 billion) in outstanding loans to property developers as of Dec 31, accounting for 14.4 percent of all corporate loans.

    The banking regulator didn't give a definite answer whether it issued the freeze order, according to a National Business Daily report.

    Spokesmen from Industrial and Commercial Bank of China and Bank of China told reporters they knew nothing about such an order.

    Banking analyst Wu Yonggan, of Guoatai Junan Securities, told National Business Daily that if other banks follow suit in the coming days, then the move might be on regulator's orders.

    In the first half of this year Chinese banks advanced 1.38 trillion yuan in new loans to property developers and home buyers, down 26 percent year-on-year, the central bank said in its quarterly monetary report published on Aug 5."

    http://www.chinadaily.com.cn/bizchina/2010-08/26/content_11209819.htm

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  42. TED spread: I think this indicator was relevant to us only when the banks were in the danger of failing, and at that point TED spread did indeed reflect the probability of that happening and hence was important for the markets.

    Right now, no big banks are going to fail in the near future because of the huge cash reserves they built up in the US and because of the IMF and the ECB support they are getting in Europe. The recent spike was due to the fear of some banks failing because of the Greek problem, but after IMF & ECB decided to kick the can down the road for a couple of years, it is only natural for the TED spread to return to levels that show no bank failures on the horizon.

    The stocks, however, are going down now not because of the danger to the *financial* system (due to banks failing) but because of the problems in the *economy*. Hence, the TED spread is an irrelevant indicator now.

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  43. Check this out: "In the always fickle AAII measurement of stock market sentiment of individual investors, today’s Bull reading at 20.7 is down from 30.1 last week and is at the lowest level since March ‘09 when it got as low as 18.9 when the S&P’s were below 700. Bears rose 7 pts on the week to 49.5 but still remain below the recent high in July at 57.1. The March ‘09 high in Bears hit 70.3."

    http://www.ritholtz.com/blog/2010/08/bulls-reach-lowest-since-mar-09-according-to-aaii/

    The stocks must rally tomorrow or next week at the latest.

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  44. Dollar is up, that's not what I expected. Is this due to the better than expected US-GDP figure?

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  45. if you have ameritrade, open up the think or swim application and look at the weekly charts for several stocks like INTC, CSCO, BAC, GE, GS, AAPL, DOW, AA, etc. The thing I noticed is that the companies that are cyclical and have great balance sheets like INTC and CSCO are pretty much right at the point they were at in Oct 08, which might act as solid support. INTC at $17.5 is right at support. So the downside risk is minimal and it provides a good stop out point. Companies like DOW, GE, etc that are below those points it could be argued were permanently impaired and it will take a lot more work to get them up above the Oct 08 levels.

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  46. Landry-

    Random Thoughts:

    The market sold off fairly hard after attempting to rally.

    This action puts it at new multi-week lows, near the bottom of its trading range, and not too far from new lows for the year.

    So far the indices remain stuck in a range but the sector action continues to deteriorate.

    For the aggressive, look for issues that are in the early phases of breaking down (e.g. First Thrusts. Email me if you need the pattern).

    Futures are firm pre-market--keep an eye out for OGRes (see my website for more on trading gaps)

    As a general statement, as long as the market remains stuck in a range, for the most part, stay out of it.

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  47. Isn't this good Friday? I'd anticipated more enthusiasm but at least we're not selling off...

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  48. quad intc at 18.16, last try, me thinks

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  49. My vehicle was just passed by a snail!

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  50. God forbid, but is INTC trying to fill the gap at 16.90?

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  51. Cheapy...Don't sell!! You will crush the ask!!

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  52. Today's the front month roll in Natty FWIW.

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  53. intc halted? news pending i guess

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  54. GS is taking a shitter. You might get your 128 CP.

    Oh, I get it. Bernanke speaks right now...

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  55. Yep. INTC cuts guidance by 800M.

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  56. All doom and gloom this morning. That's good.

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  57. It's always hard to tell with a halted stock. But INTC's bid seems to be holding up.

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  58. Come on, man. Let's shake out those weak hands!

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  59. I'm hanging on by my finger nails 2nd!....Just kidding. For some reason I'm flat right now.

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  60. Wyoming wait staff employment indicators just went through the roof, must be some kind of government sponsored low-wage jobs creation convention...

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  61. RAS has held 1.40 for like the 100th time.

    TOF- Take another look for us. Thanks.

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  62. CP- That's REALLY funny and fast. :)

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  63. Shoulda' known we'd retest 1040 today...

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  64. Mark - I'm steering clear of RAS. Won't work in this environment I'm afraid.

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  65. INTC gap FILLED!!!!!! GO baby!!

    WTF did they halt it again??

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  66. i think those trades in intc were erroneous, still looks halted to me

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  67. nope, it's back - 18.20!

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  68. NVDA - small position

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  69. I want to see INTC >18.50...so cb can take his family out for $1 tacos tonight...

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  70. Cheapy you Fing DOG!!! :)

    I can't believe this shit.

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  71. out of INTC with $1475 profit after screaMING at the screen and pounding on the table for 20 min

    What a piece of shit

    lucky to get out with a profit... frigging 10,000 shares

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  72. See what happens when you trade with cheapy?

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  73. JB- I'm guessing it did open and on an off exchange ecn those were real. I'm calling gap filled!!

    Fing A!!!! Tacos on Cheay!!!

    OK, that enough !!!! for one day. But dang, this is one crazy time.

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  74. JB- I'm showing 6.5M shares on that down bar...Just saying...

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  75. jeeez! bad nes at the bottom forces covering. i never would have guessed it, and it was a nightmare.

    so relieved to be out of it

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  76. mark - you could be right, and I see the bars too, just weird....either way great job cheapy!

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  77. A/D is really good. So is volume. I think this one sticks.

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  78. jpm is loading up, again, on iwm...."somebody" wants mr market much higher today

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  79. as mark always says" better lucky than good", plus $$$ is $$$!

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  80. Scared the crap out of the dog again.......

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  81. My energy stocks are really starting to move now.

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  82. i keep looking at erx, but no go, chart is starting to look really nice

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  83. Your dog probably thinks you're psychologically unstable...

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  84. holy shit i've had a busy morning. i waited until we got the reaction from news on INTC before making a move, but then after seeing that they were reacting positively to their news, i bought a few OCT $16 calls at $2.55, which are now underwater a little bit and a few STT Sep $33 calls at $2.52 which are overwater a little bit. I also bought more REDF at $1.89, more eBay at $22.6, and some INTC at $18.3.

    I'm sticking my neck out here and saying that we are going higher and I will be putting all of my money on the long side by the close. I don't want to miss what I think will be a nice rally and feel as though I can limit my downside to S&P under 1,035.

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  85. CADC - MM refuses to let me add under $3

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  86. Cheapy - here's a source for various subliminal self-help tapes, fairly wide selection on this user-friendly site:

    www.innertalk.com

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  87. My dog thinks I'm a psycho killer, RAN upstairs and hid under the bed.

    I went up and coaxed her back down, but she still is hiding behind a chair.

    I really get LIVID when its time to buy

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  88. and PS, no I couldn't pull the trigger to buy in that panic. Just didn't have the guts.

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  89. running out of gas, or just a pause?

    my dog sits most of the day under my desk, laying on my feet - not fun when it's 110!

    CP - even if you could get into CADC, aren't you worried about being able to get out? love the biz, hate the low vol

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  90. Bernanke - Recovery is "inherently uncertain"? Interesting...

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  91. closed a DGP position bought yesterday for $1300 while it was there to take.

    I've calmed down now, but sometimes don't understand my own psyche. I should be happy I seem to be lucky.

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  92. Days like this make me nervous. I'm out preforming SPY by 3X. That usually never holds up. Man I hope this holds up on a Fri.

    Got to run...

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  93. jb - I'll worry about getting out once it's trading over $6. One problem at a time...

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  94. Thanks for the link, cp. Didn't see the post b4.
    To be honest, one of the few things I've learned in the past 8 yrs is that when I'm in complete panic, screaming POS at the screen and banging the table while losing a fortune on something, more often than not its time to buy, not sell, because there are thousands of others out there doing the same, clicking the last gasp "DUMP NOW AT ANY PRICE" button, and once they give up, there is nobody left to sell.

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  95. cheapy - i agree with your 8:11 statement. that's what had in mind when i came into the market today. i knew there was going to be panic and i wanted to take advantage of it. so far i haven't seen big profits but i have a great feeling about this being a nice tradable bottom

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  96. "My dog" sleeps in my lap on cool days like today when he's chilly. Nice to know I'm useful for something...

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  97. Re: Reopening BAC/WFC newSubmitted by 2nd_ave (4504 comments) on Fri, 08/27/2010 - 11:28 #67986 (in reply to #67977)
    Someone asked what 'negativity' has to do with the 'rain in Juarez:'

    When you're lost in the rain in Juarez
    And it's Eastertime too
    And your gravity fails
    And negativity don't pull you through
    Don't put on any airs
    When you're down on Rue Morgue Avenue
    They got some hungry women there
    And they really make a mess outa you

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  98. CP - too bad we can't swap our dogs body temp.

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  99. 2nd - That song is my favorite Dylan song.

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  100. BGZ - Double bottom @ 15.95 from yday (~SPX ~1060)

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  101. 1076 possible today maybe? I've got my doubts... although global markets were quite green, including Shanghai.

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  102. GRMN - Off @ $27.11

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  103. It's nice to be nice to the nice. -Frank Burns.

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  104. Great trade with INTC, cheapy! And great performance (I mean theatrical)! :))

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  105. UNG - What's up with that?

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  106. Today's move in the market could really have some legs. Not because it is originating from the important support level, but because, as I mentioned last night, the percentage of bullish investors as of yesterday was the lowest since March 09, and such a move up can really ignite a nice short covering rally that will feed on itself.

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  107. I thought I was banking some coins with PST today (I bought 200 shares at $40), but then I look at TBT and saw that I was actually banking peanuts... Could it be that the bond traders have relaxed, stopped worrying about the imminent recession, and now the capital will start flowing from bonds into stocks again, at least for the short term?

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  108. ECU.to ECU Silver Mining Inc.

    Finally making a charge up from the role reversal line of $0.62cdn.

    By the looks of things, we are all having a profitable day for a change.

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  109. Just bought 500 more shares of HNU.TO at $3.90, bumping up my total position in it to 4000 shares. It will rebound, no questions about it. I may even lose a grand or two on my July - September purchases as it might not rebound to July levels if contango eats up a big chunk of it. But losing one or two grands is going to be *noise* in my portfolio relative to the impact of the rising ECU.TO (of which I have a huge position), which is up another 5% today.

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  110. For a few days this week I was a bit upset about letting go of my large TWM position at $22. Guess what? TWM is below $22 right now.

    Ultrashorts rise more that 2X when the market goes down every day, but then they get KILLED during a rebound, as they drop to much lower levels than they were before the V-shaped drop in the market took place.

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  111. SD is holding up pretty well despite the collapse of the NG prices, which are going to eat up into SD's 3Q earnings (it derives 1/2 of its revenue from NG). I just bought 500 more shares at $4, bumping up my total position to 2250 shares.

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  112. HNU.to UNG:

    Close to buying. I think it will give us some good coin. I just want to wait as I seem to buy too soon and then have to steam a while for it to prove me right.

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  113. +300 today? anyone?

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  114. Coal - Wasn't some author just pointing out how NG has been putting the hurt on coal? Hmm, I guess that was backward looking...???

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  115. TMV - pssst, this one's longer term, apparently the rats are deserting in droves...??

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  116. To make sure that I don't "let a profit turn into a loss," I am moving up my sell stop limit order on PST to $40.02/$40, which is the price at which I entered it.

    Similarly, I am placing a sell stop limit order for INTC at $18.20/$18.19, which is the price at which I bought it yesterday.

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  117. End of month rally? Some kind of rebalancing?

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  118. I have just downloaded the latest WLI index time series and I see that the WLI index rose slightly this week, to 120.9 from 120.7 recorded last week. The WLI Growth index rose again to -9.9%.

    The last 10 values for the Growth index are as follows (in percentage terms): -7.4, -8.4, -9.3, -9.9, -10.7, -11, -10.7, -10.2, -10.1, -9.9. Do you see a pattern here? That's what I've been alluding to in my post on this topic last week: if the WLI index remains stable now (which it has for the past 11 weeks, after the EXPECTED sharp decline that followed a sharp spike to the highest level EVER recorded in the summer of 2009), then the WLI Growth index will rise to 0%. That will DEFINITELY catch attention of the media and might ignite a large rally in stocks. In fact, the smart money has probably caught onto the trend already and maybe that's why they are keeping the floor under S&P at 1050-ish for the past month.

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  119. Anybody here going to short the enthusiasm?

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  120. by the way, i know people are bearish on big caps like INTC (and i too have some skeptical thoughts about competitive threats from Apple) but at what price are they honestly expecting to get in at? i mean we're taking about a company with $4.50 a share in cash and trading at 9 to 10 times earnings. back out cash and its trading at 6 times earnings.

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  121. cp - will establish small BGZ & FAZ positions before the close, but Monday may see a cash influx.

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  122. David - Smart, I agree with your train of thought. It's possible you may have actually discovered an indicator that leads equities prices.

    Of course I'd be shocked if the media were to lead us to anything of value, they're considerably more adept at insinuating future direction based on recent history for some reason.

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  123. thinking the same Kyle, if it wasn't friday. kinda expect monday to be another mutual fund monday

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  124. A similar situation to the one I described for the ECRI WLI index is now occurring in the Consumer Metric index:

    http://www.consumerindexes.com/index.html

    which has already dropped to an amazing -5.43% growth rate, almost reaching the spike down to -6% it had in 2008. The actual Index, however, is still at the same level now where it was 1 month ago. If the index remains stable, then its *growth rate* (which is based on a 3-month smoothing of the actual index) is going to level off at 0%. The drop in the Growth index here was just as predictable as for the ECRI WLI index, and we should have expected an even larger magnitude of the drop because for a few brief months consumers went crazy with spending money on cars (cash-for-clunkers) and houses (housing credits), which are big ticket items and *usually* correlate well with real economic activity. This crazy spending has ended only in April, and that's why the consumer metric growth index still has not turned up yet. But it will if the actual index remains flat for a while longer.

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  125. Good point Kyle, might be better off trying to catch Monday's enthusiastic peak, and waiting would provide research opportunity inclusive of today's close.

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  126. "David - Smart, I agree with your train of thought. It's possible you may have actually discovered an indicator that leads equities prices."

    It actually might be the case, CP. The financial media usually tries to sell the obvious facts to the people, and the majority of the analysts are simply extrapolating the recent trends to predict the future. Thus, a "stable" -10% for the WLI Growth Index for the past couple of months seems to suggest that the economy is going down fast at that rate, doesn't it? Especially when every drop below -6.7% in the past led to a recession in a short order. I doubt that many pundits are predicting what will happen to the growth index based on the recent trends in the index itself. Thus, for a while longer they will be "selling" to us the fact that we have a high risk of a double dip, while the smart money is quietly accumulating stocks at these levels.

    After all, haven't we all waited for a 20% drop in stocks in order to bump up our exposure during this crazy rally from March 2009 lows? Given the extreme optimism and confidence of all investors in April 2009, such a drop could not have occurred without some very convincingly looking bad news, which is what we go. But now, in the light of today's promise by Bernanke to restart large-scale asset repurchases, only crazy people will short this market, since we have already seen what happens to stocks when the Fed starts buying crap that was laying heavy on the shoulders of private investors. Jeremy Grantham wrote in early 2009 that in the past stocks were much more sensitive to bailouts and moral hazard than to the true economy, and the rally we got off the 2009 lows amply proves his point. S&P 1400+ in one year!

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  127. Nice close, bet we see 1070 again early next week.

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  128. TWM closed at $21.50 today -- what a joke! A whole week's of growth erased in one day. That's why I am not holding ultras for a long-term anymore.

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  129. When Grantham pointed out that stocks are sensitive to moral hazard, I didn't take that to mean moral hazard was positive for equities prices, I interpreted the inverse.

    To me, so many of these guys are masters at the art of being vague.

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  130. BWEN - +0000000000000000.62%! Alternative energy is running crazy!!!

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  131. CP, by moral hazard Grantham meant the promise of bailing out those who made risky bets that turned sour. When such a mood is in the air, this is EXTREMELY positive for the stock market that was depressed precisely because of the fear of all those bets going bust.

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  132. I prefer "inherently uncertain" considerably more than "sensitive to moral hazard", b/c the imaginary contrast is considerably more comprehensive.

    It's similar to saying "Plan for rising unemployment" which could lead one to believe cutting the fat makes for a more efficient business model.

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  133. David - I agree with you. I went 100% long at the close. I was long in a lot of things before the close but I moved my LT trading account into the SPY and MidCap index funds at the close. I also bought more STT and now hold STT, eBay, GCI, REDF, and INTC. I will use the 1,030 level as a stop out point.

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  134. CP - "Anybody here going to short the enthusiasm?"

    I did twice today by shorting QLD for small profits when it got to its higher levels.

    I am still long/short with a bias toward short. That bias cut into my profits today but I am still well ahead since buying SDY in early August and shorting whatever 2x ultra I could get my hands on.

    I remain bearish for the long term until something is done to fix the monetary system and reduce debt. Kicking the can down the road wont do it. Besides, my black box is still saying beginning bear stage for all three time frames on all three indices. That wont change unless we breach 1080 and that is only for the short term.

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  135. A nice post from davefairtex on CC:

    confirmation new
    Submitted by davefairtex (2165 comments) on Fri, 08/27/2010 - 16:03 #68015

    I'm calling this a likely confirmation of Wednesday's low, with the second bounce off 1040 earlier this morning. That move down this morning certainly faked me out of a position or two, but re-entry was just a mouse click away. Ignore the twinge of regret at bailing out at the cycle low, take a few bucks hit, buy back in, little harm done. Best day in weeks for me.

    Fridays have historically been pretty bearish lately, today was an amazing exception to the rule. Mondays on the other hand have been generally bullish. One wonders if it will continue to hold true. I'm guessing this thing will continue up for at least another few days. Our leader today is oil, followed by homebuilders, industrials, and financials.

    If it were Utilities at the top and bonds were staying even, I'd probably take profits, but that fleeing bond money (down -2.8%!!) might just chase the equity market here, at least for a little while. After all, stocks are a bargain at these levels. RIght?

    Now we have the weekend to hear from our friends in the media how cheap stocks are, how good the valuations will be, and that should get everyone all prepped to wade in on monday morning.

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  136. No offense intended, folks, but things re SOOO BAD that you can't even buy a stock like Intel and hold it for one frigging hour without having to endure a life threatening panic.

    Good riddance to all these frigging stocks!!!!!

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  137. What I don't get is why mom and pop are still owning their mutual funds?

    Why no big redemptions?

    I don't see how they are able to take the continuous pain...

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  138. I wonder if/when the tax loss selling starts. A lot of people must be sitting on losing positions and have income from earlier in the year to offset it against.

    In addition, if nothing happens to prevent cap gains rates from getting hiked, it will almost force those sitting on LT gains to sell.

    Historically, that has happened in Sept or Oct, but things are generally so bearish already that I can't imagine that piled onto all the economic troubles already on the plate...

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