Las Vegas Sands (LVS) Narrows Loss

What a day to report earnings...

Yesterday evening, Las Vegas Sands (LVS) - among the hottest stocks in the market - reported its first quarter data. I had sold off almost all the position far too early in mid March. I placed a limit order at a small gap in the lower $17s that was created in early March. Amazingly, in yesterday's plunge LVS did NOT fill that gap, instead falling tot he 200 day moving average before rebounding like a yo-yo. As you can see below we are going to have some very screwed up charts in the near term as we deal with complete outliers created by yesterday's action.



Fundamentally the report was an improvement, but the stock is still trading on things other than earnings power. This is another backdoor way to get exposure to Asia, although the company obviously continues to have a large stake in U.S. ventures.

Via AP:

• Casino developer Las Vegas Sands Corp. said its first-quarter loss narrowed as its gambling revenue rose and cuts that began last year helped keep its costs in check. The Las Vegas-based company led by billionaire Sheldon Adelson said Thursday that it lost $28.9 million, or 4 cents per share, compared with a loss of $80.9 million, 12 cents per share, a year earlier. Excluding one-time items, the company's net income was $53.5 million, or 7 cents per share, compared with $8.9 million, 1 cent per share, last year.
• Sands' net revenue was $1.33 billion, a figure it called a record high, compared with $1.08 billion in last year's first quarter.
• Analysts polled by Thomson Reuters expected Sands to earn 2 cents per share on revenue of $1.31 billion.
• Sands said its quarterly revenue in the Chinese gambling enclave of Macau rose 24.2 percent to $945.8 million. The company said its net income for its Chinese operations increased to $113.3 million, compared with $36.9 million during the first part of 2009.
• The company last month opened the its newest resort in Singapore. Adelson said the Singapore casino is attracting high-rolling gamblers from unexpected places, including Singapore, Indonesia and Malaysia.
• In Las Vegas, where the gambling market is struggling, Sands said its Venetian resort was 89.3 percent full at $202 per night, while room and occupancy rates were higher at the company's Palazzo resort.
• "This was a pretty solid result all around," said Sanford Bernstein analyst Janet Brashear. "They are showing better margins and you can't do that unless the tide has turned."

Debt was the major issue for this company, causing it to plunge near bankruptcy not 15 months ago.

• Sands said it had $3.93 billion in unrestricted cash and short-term investments. It said its total debt as of March 31 was $10.46 billion, with $131.3 million due this year. Another $1.35 billion is due next year.

Long Las Vegas Sands in fund; no personal position

x

A Picture Worth a Thousand Words

Yes it was real. And it's time to pin it on some hapless quasi government entity like Citigroup. Case closed. Move along. No more questions. Back to your regularly scheduled, low volume, melt up tomorrow. (with +0.5% coming in premarket if you are good children)

'nuff said.

[click to enlarge]



p.s. One can only imagine all the stop losses triggered today, leaving people with wonderful realized losses.

Redux from June 2009: Joe Saluzzi on HAL9000

I wrote a few times in the blog I believe circa 2008 that due to the quants, we will one day have Oct 19, 1987 repeat... but instead it will happen in 15 minutes. I think today was a preview of that. When you have a market dominated by a handful of players, who control 70% of the volume ... and all basically mimic each other. Well that sings Black Swan event. About a year ago I wrote this:

I will repeat what I said last year - this might keep working for a year, 2 years, 5 - even 10. But eventually this will turn on itself and cause a another Black Swan. Just as humans are apt to do, although I expect the speed of this Black Swan event caused by HAL9000s to be extraordinary. I could see October 19, 1987 literally happening within a 10 minute time frame especially if we continue down this path and even more money goes into these strategies. But until that day, certainly incredible wealth will be created by a small subset of firms while the rest of the investing class just looks like a 1910 Model T trying to buy stocks on... fundamentals (chortle). As we now know everything in financial America is about exploiting narrow windows, even if it breeds massive instability down the road - and then have the taxpayer clean up the mess. So we're on track here.

Long time readers will know I've been using HAL9000 for years to reference the quants... the algos...the machines. No one in position of power will question the owners of HAL9000 until something very bad happens. Because said owners are among the greatest lobbyists and want thing to keep going as they are. We are in a locust society...

I want to bring over a piece from Joe Saluzzi from Jun 2009 on the blog; [Joe Saluzzi Comments on HAL9000] Joe being one of the only mainstream guys allowed on financial TV to talk about it. In a truthful manner.

A few quotes:

• Over 60% of equity volume comes from the high frequency traders (HFT). Basically, HFT’s are computers that execute trades with extremely low latency.
• Our equity market is being controlled by machines that are nothing more than two bit, SOES bandits. They cloak themselves under the mantra of liquidity providers but they are really just locusts and are feeding off the equity market until it doesn’t suit them anymore.
• what damage would they have done? We will be left with a shell of a market that is used to being led around by computers. Real people and real capital are a scarce resource in today’s market.

------------

But don't worry - you'll be assured today's festivities were all just part of "the normal market" and just a fat finger or a computer error. Remember these are a benign class of computer who are only here to "provide liquidity" and skim a little bit off the top for themselves. Just ask them.

Just remember that Russian guy who dared steal Goldman's algo code and had the full force of the FBI borne on him within days. Who knew some computer code could be so important to national security. Investigate Madoff even when handed to the SEC on a silver platter? Give us a decade or two. Goldman quant code on the other hand? Bring every government agency to bear - we must fix this in 3 days or less. Justice *will* be served.

All part of your natural "free market".

Oh My.. We're Crashing

Unbelievable.
Unbelievable.

The other gap just filled !!!!!

1078!

I am selling my puts!!!!!!!! wow!

EDIT 2:57 PM - wow! quants gone mad... something went haywire and drove the market for a minute to -7%. After the gap filled we immediately popped back to -5% and now in the mid -4%. I'm stunned. Can't wait to show today's chart to anyone who does not believe in gaps filling on indexes.

Here is your "liquidity" baby. Good job HAL9000, thanks for nothing.

EDIT 3:08 PM - that happened so quickly I did not even get good prices on my puts. Wish I had the agility of a supercomputer - I could of sold the puts, turned around and bought calls and then sold the SPY calls 15 minutes later and said goodbye for the year, I'm going to the beach.

So the only question is whose HAL9000 went ballistic. Goldman's? RenTech's? Or Getco's? [Aug 28, 2009: WSJ - Meet Getco, High Frequency Trade King] But don't worry folks, they only provide liquidity... no one should question how RenTech has the best record of any hedge fund in history or Goldman makes money 98% of the trading days. Nothing to see here - just like Bernie. Don't ask, don't tell policy. Shh... they're just the smartest guys in the room.

Gap #1 on S&P 500 Filled! And How!

Wow, this is going down so fast I cannot keep up with the updates. Yesterday morning I wrote a piece to mind the gaps [Minding the Index Gaps]... gap #1 filled! That was 57 S&P points higher.



I added some SPY puts maybe 20 minutes ago and maybe 20 S&P points higher, can't type fast enough to keep up...

Wow, someone tell Ben to cut interest rates in an emergency move.

What's that?

Oh!

S&P 1150 Broke

The market has fallen and cannot get up...




How quickly things change. Hard to really place any meaningful new positions ahead of a news event such as tomorrow morning's labor data*, or with the headline risk that comes out of Europe each night.

*I need to revise my guestimate for tomorrow's job gains, I was thinking well over 400K but I heard on CNBC someone say that they don't need as many census workers as they anticipated because the pool of applicants is so overqualified versus previous years. That's what happens when all your engineers and scientists are now unemployed since their jobs are in Mumbai. But at least they are efficient census workers. So if there is only say 175K census workers versus the 400K I was anticipating the number might come in around 200-250K instead?

----------------------------------------

For the bulls, a break of some support level and then a late day reversal with preferably a close at the high of the day is what they are seeking.

For bears, after months of news not 'mattering' and being laughed off the airwaves and blogosphere... well it is funny how quickly things change.

I don't really see any support below 1150 until the 200 day moving average of 1100. Perhaps I am missing something obvious. Only pit stop is that gap in between at 1124. I would think the market is getting oversold here and prone for a snapback rally soon. But we've seen moves continue in 1 direction much longer than normal the past few years.

Until things become more clear...

Swimming in cash

x

EDIT 2:15 PM - wow, 1136 hit. I was stopped out of my SPY puts not 26 hours ago at 1172! Could that nasty first gap at 1124 actually fill today?

EDIT 2:35 PM - are you kidding, 1126.



EDIT 2:38 PM - gap filled! 1124

Bookkeeping: Restarted Cummins (CMI) After Great Quarter

As stated coming into the week I want to redeploy some funds from weaker areas to stronger, and diversify the portfolio into sectors I have had little exposure to. One such area is industrials. This is not normally an area I ply except for a few names, and Cummins (CMI) is one of them. While an American global corporation, this engine company definitely gives a nice exposure to emerging Asia, as they were in India and China before it was fashionable. [Sep 23, 2007: Stock to Watch: Cummings Hitting on all Cylinders] Unfortunately, the company still has heavy exposure to the U.S.

Technically, the stock spiked 2 weeks ago in a stellar quarter and I thought "missed another one". But with the market weakness it has come back to "fill the gap" and now sits at the 20 day moving average. I am hoping this first purchase of a 0.6% exposure under $69 is a 'loser' and the stock drops a more - at least to the 50 day ($64s) where I'd be adding. If that support breaks I will have to reassess but for that to happen I think this selloff will need to be of the '8 to 10%' variety. Which certainly can happen. If so, purchase in the low to mid $50s should be very possible. For today I just went to create a starter stake and this purchase is more on fundamentals than technicals.


Fundamentally, this might have been one of the best 'beats' of the quarter on the bottom line (40 cents) as a huge amount of costs (read: human beings) were taken out the past few years [Feb 11, 2009: WSJ - Cummins Engine Shifts Gears Amid Stall] (Full report here).

EPS estimates for 2010 have been raised from $2.49 (30 days ago) to $3.10 (7 days ago before quarter) to $3.53. 2011 is currently over $5.11. Of course if the world goes into a new tailspin we know these numbers mean nothing but for now it is what it is.

• Engine maker Cummins Inc. Tuesday reported sharply higher first-quarter profits on improved sales in fast-recovering markets like China and India, and the effect of restructuring charges in the year-ago quarter. The company also raised its 2010 sales forecast.
• The company said it earned $149 million, or 75 cents per share, up from $7 million, or 4 cents per share, in the first quarter of 2009, when it posted restructuring charges of $66 million. Sales rose to $2.48 billion, up 2 percent from $2.44 billion. Analysts surveyed by Thomson Reuters expected quarterly earnings of 35 cents per share on revenue of $2.42 billion, on average.
• Cummins said that three of its four business divisions showed improved profits in the quarter. The biggest improvement was in the engine and components unit.
• Cummins saw a higher demand for its products in China, India and Brazil, primarily among manufacturers of trucks, construction and power-generation equipment.
• One weakness for Cummins remains the North American market.
• For all of 2010, Cummins now expects sales of $12 billion, up from prior guidance of $11 billion. Analysts expect $11.32 billion of sales.

Long Cummins in fund; no personal position

Bookkeeping: Stopped Out of 2/3rds of Remaining HDFC Bank (HDB)

Despite a wild valuation that seems excessive, I held a material position in HDFC Bank (HDB) as the "no one loses... valuation no longer matters" stock market continued ever upward. I did take half of the position off after a big run 1 month ago in the $145s, and then sat with the rest. Up to about a week ago that sale price was good, as the stock just went sideways. The stock began another run post earnings, but topped out mid $150s. Going into this week I had a stop loss order ready (in the $137s) below the 50 day moving average, and the selloff of the past hour triggered it. Hence 2/3rds of what I had left just was flushed - locking in about a 14% gain.



This is a position I'd like to remount but at a lower price (and better valuation). Something near the 200 day moving average would be a good place to begin rebuilding if and when. For now we only have a 0.33%ish exposure remaining.

Long HDFC Bank in fund; no personal position

x

S&P 500 Slumps Down to January 2010 Highs

Graphical example of what I was speaking about in previous post and why S&P 1150 might be some support for at least a cursory oversold bounce.

[click to enlarge]


EDIT 11:50 AM - the predictable cursory bounce off 1151ish did happen, and we go 4-5 quick S&P points. Now we are back to rolling over and in the 1151s. Now the real action happens.

EDIT 11:55 AM - Selling the puts bought about an hour ago here at 1151 area. I think this will provide support for a few hours and tomorrow morning we have news event risk with the monthly jobs report. Plus I need to soak in a victory. If 1150 breaks one can rejoin the fight.

x

Yesterday's Head Fake Over the 50 Day Moving Average Ruined a Nice Index Trade

I am mostly "out" of the market right now with a less than 15% long exposure but I am still chaffing over yesterday's lost opportunity. In the morning after the market gapped down and then rallied, I started first with a more conservative short using TNA ETF around S&P 1166. S&P 1171.50 was the 50 day moving average so I wanted to have something short against my much larger long position (I was about 20% allocated yesterday morning). Then as the bounce continued I went more aggressive with SPY puts around 1170.50. Since these options can lose (or make) a lot of money in a short time if the market is volatile, I vowed to sell with no questions asked if S&P got over 1172.50.



The market drifted around S&P 1168-1171 for an hour or so ...held down by the 50 day moving average. Things look fine. Then they/it spiked the market through the 50 day causing me, and I am sure others who fear the now almost constant "V" shape bounce on no news. The S&P peaked just under 1176. Then rolled right over.

I let go of both positions for moderate losses, but by the end of the day both would have been profitable. 10 S&P points on a near term SPY option can create a windfall. With the propensity for futures to be marked up 80% of the days since March 2009 I doubt I would have held them overnight so today's action would have been icing on the cake but most likely I would have not participated.

Reviewing my trade mentally (which I think is useful to everyone - especially your "losers"), I don't think I would have done anything differently but truly that 45 minute spike crushed a nice idea.

As for today, the S&P 500 has now broken below yesterday's lows and as I believed yesterday the intermediate term still seems lower. I cannot really find any support other than January 2010 highs ("1150") on the chart since the move up was relentless and without pause, creating very few natural support areas. If this move continues down, that will most likely be an area to make a stand for the bulls - we are most likely oversold "soon".

EDIT - as a reminder, below S&P 1150, next areas of importance... (a) gap #1 S&P 1124, (b) 200 day moving average 1100, (c) gap #2 S&P 1078. But for today I'd be tickled just with 1150 since I want a win of any kind.

I am going to (once more) attempt a SPY put position here but since my hand has gone ice cold for the past few weeks, my position size each time I am in a bad phase gets smaller and smaller. That way if the ice continues, the consequences are smaller. This too shall pass - it's been a very good 11 months of almost non stop wins since Jun 2009 and getting slapped around by the market happens from time to time.

EDIT 11:20 AM - that was quick, here we are in the S&P 1151s. Now it will be interesting to see if 1150 has any meaning and provides a support for bulls.

Long SPY May 115 Puts in fund; no personal position

x

"The Generals" (Leadership Stocks) Flashing Trouble

I always like to keep an eye on the leadership stocks i.e. "momo" favorites of the institutional fast money. Let us exclude Apple (AAPL) which at this point exists in it's own sphere of world domination - and Goldman Sachs (GS) which is in a whole 'nother sphere - many of the other 'go to' names are flashing trouble.

The amazing thing is *how quickly* it has happened - some of these stocks were gliding along their 20 day moving average 3-5 sessions ago without a care in the world... and in a span of a few days are now below the 50 day moving average. Now.... due to the relentless rally without pause from mid February to late April there are huge air pockets of no support, just as we see in the S&P 500.

Here are some of the names

Priceline (PCLN)



Visa (V)



Freeport McMoran & Gold (FCX)



Amazon (AMZN)


Normally I would include Google (GOOG) but since the Chinese blowup it has been acting horribly - whereas the "Chinese Google" is acting as if there is not a care in the world.



Now theoretically these are all "short set ups"... on any bounce to the 50 day moving average from below you can put on low risk shorts with stop losses on any break above. That said, except for a few weeks here, and a few weeks there the past 14 months "theory" has meant little.

--------------------------

Looking away from individual names, ETFs have taken on a far more important role versus even 3-4 years ago as computerized algo programs live to trade these things...

....we mentioned the Financial ETF (XLF) a few days ago as a key tell - thus far it is holding in.



Two others to keep an eye on... the consumer discretionary sector as represented by SPDR S&P Retail ETF (XRT) was near (at?) an all time high a few weeks ago, [Apr 14, 2010: SPDR S&P Retail ETF (XRT) Approaching All Time High] it has drawn back to support but still is ok.



And the commercial REIT iShares Real Estate ETF (IYR) - as "extend and pretend" has become the U.S. mantra (just don't call is Japan) - is among the strongest.



No positions

Freddie Mac (FRE) Requests $10.6B in Additional Bailout Funds

Lots in the shuffle yesterday was a day end request by Freddie Mac (FRE) of $10.6B in bailout funds. [Sep 7, 2008: Bailout Nation Continues - Fannie/Freddie Now Owned by You] Fannie Mae (FNM) should have its hands out in the next few days. $10 billion used to actually mean something, now it is not even worthwhile of being part of the headline news.

• Freddie Mac (FRE), the second-largest provider of U.S. residential mortgage funds, on Wednesday asked for an additional $10.6 billion in federal aid after it lost $8 billion in the first quarter.
• The new request will bring the total tab for rescuing Freddie Mac to $61.3 billion.
• The company warned it would continue to need billions more in government funds because the housing market remains fragile.

No surprise now, as these firms are essentially being run for loss to help misrepresent free market prices in home values.

Just add it to the tab and let the hockey stick default rates continue. [Feb 1, 2010: 2 Graphs Showing Part of the Reason for the Christmas Eve Taxpayer Massacre] Remember as of Christmas Eve (perfect timing for the news cycle) the US taxpayer in on the hook for unlimited monies for the next 3 years to make sure FranFredron are happy campers. Why? Because Tim Geithner said so. [Jan 5, 2010: WSJ - The Treasury Department's Christmas Eve Masscare of the US Taxpayer]

Of course reform for Fannie, Freddie is nowhere to be found in any "financial regulation". [Feb 9, 2010: WSJ - No Exit in Sight for US as Fannie, Freddie Flail]

• Treasury Secretary Timothy Geithner has said he does not expect any substantive changes to the system until next year at the earliest. (kick the can Tim)
  

To show you how socialized the US housing market has become, data last week showed that the 4 main entities (Fannie, Freddie, FHA, VA) have upped their share from an already astounding 90% of mortgages last year to just under 95% in Q1 2010.

[Nov 14, 2008: Freddie Mac First to the Trough]
[Jan 25, 2009: Freddie Mac Saddles Up for Another $35B]
[Mar 12, 2009: Fredie Mac is Back for More of Your Grandkids Money - $30.8B]
[May 8, 2009: Fannie Mae with Next $19 Billion Bailout]

Ford (F) "Double Top" Indeed

If you are newer to technical analysis and want to know what a double top looks like, look below. Of course you never know until after the fact but if you spot it early and have the gumption you can make some nice bucks off these formations, which are bearish. On April 29th I wrote [Apr 29: Looks Like a Potential "Double Top" in Ford] The chart looked like this:



Today? Double top.... indeed.



Of course with almost every stock moving in concert with the greater market nowadays (I have called this student body trading) knowing which way the market is going to move in now 90% of the battle (in the old days it was maybe 60% of the battle). So how much is Ford specific and how much is baby with the bathwater trading, who knows.

On the positive side, it was identified in theory with Ford. On the negative, no monetary gain was made.

As an aside, outside of the overall index charts, I am seeing a lot of stocks finally beginning to break down similar to Ford. Hence anyone with discipline will be taking stop losses on these type of positions as they break support, rather than attempting to catch falling knives.

No position

Bookkeeping: Stop Losses Trigger in Discover Financial (DFS), Quality Systems (QSII) and L&L Energy (LLEN)

What a frustrating day. My earlier short positions would have now paid off in spades... one of those type of weeks. 2 steps behind the curve.

On the long side, I placed a lot of stop loss limit orders in coming into the week - some of which are now triggering.

First all of speculative coal small cap name L&L Energy (LLEN) had a stop loss of $10.25 which hit. I had been stopped out of half the position two Friday's ago, and this is the other half for about a 14%ish loss. I am actually surprised at how well this one held in yesterday. And with that all 3 coal or coal related (equipment) names have been dumped this week.



Second, two thirds of Discover Financial (DFS) has been stopped out at just over $15 for a 7% loss.


EDIT 3:15 PM -- oops one more, Quality Systems (QSII) was stopped just over $62.00 this morning... another case of 2/3rds of the position gone. In this case it was mostly unrealized gains that went poof and I lost about 2.5% on the shares.



Long exposure is now down to under 14%.

Long Discover Financial, Quality Systems in fund; no personal position

x

Head Fake City

HAL9000 has really evolved into a sharpshooter daytrader. The intraday head fakes are quite impressive; it has certainly been smoking me left and right the past few weeks.

Today... looked like the 50 day would hold serve all morning.
Then we broke over.... scurry to cover fearing V shape move up.
Now we broke back under....

30 minutes from now? Who knows.

Too tricky of an environment to mess with, not my skill set to outguess this computer on a 30 minute interval with these type of shimmy and shakes. (as an aside Investopedia - which tracks my trades - has a 20 minute limit on holding positions so you can't daytrade even if you want to. With the action the past week you need to be jumping in and out in 5 minute intervals, not to mention 20 minutes)

It still *seems* like the intermediate term should be down... but HAL is not making this easy.

x

Bookkeeping: Throwing Some Hedge On

With this gap down open, and then retrace we have a nice opportunity to throw a lower risk hedge on the table. With the S&P 500 below the 50 day moving average, we can use that as a ceiling to stop out of an index short position. While we're heavily in cash, I want to marry the remaining longs with some index exposure short, so I'll go with short TNA ETF at about a 7.5% exposure up here near S&P 1166. I am not ready to play the SPY game here after having my teeth knocked in 3 times in the past 7 sessions.



Any move over and above S&P 1171 will basically make this form of insurance policy one that did not work out, and my main worry nowadays is that sort of chicanery would happen in a premarket session. As always, the close of the day is far more important than the intraday action but this early morning bounce after a combined 3%+ drop in most markets yesterday and the opening minutes today makes sense. Now, if the market acted like it used to, it would stop at or below the 50 day and roll over. I can only go by probabilities and assume at some point this market acts like it used to. If the market just goes straight back up through the 50 day like a knife through hot butter ... then we'll exit this position with a loss.

On the flip side, any move below the low of the day (i.e. S&P 1160 is broken) would be a cherished victory for bears.

EDIT 10:22 AM - Already right back to 1170.40 so here we are at the 50 day moving average not even an hour into the session; let's see if there is an ounce of resistance or V shaped bounce it is.

EDIT 10:26 AM - the 50 day seems to have restrained the bounce, so I am going to attempt a SPY put (May 116) position for the very short term with same logic as used above but with an even more low risk entry point. Since my directional plays on the market have been horrid the past 2 weeks, I will go smaller than usual, about a 4.5% exposure. S&P 1172.50+ and this will be gone. Period.

EDIT 11:44 AM - ok I tried.. failed again. This is an epic winning streak - sheesh. April and May the past 2 years have not been kind. I stopped out of both the TNA ETF and and SPY puts since we seem headed higher and the 50 day moving average is going to be an after thought.

-----------------------------------------

Over the intermediate time frame, I will be looking to purchase some of the better performing stocks (based on fundamentals) whose charts are still ok.... or stocks in sectors I have little exposure to in increments over time. However if this is a more serious correction of 7-10% (which it looks to be the beginning of) some of those positions might be punted right back out since there is 100 S&P points before all gaps are filled.

In the long term, if the gaps we discussed this morning *are* filled it is going to be one interesting moment in time since it will mean the indexes broke through the 200 day moving average. Which almost seems impossible in this era of constant liquidity pumping by the Fed.

Short TNA ETF in fund; no personal position

[Video] Jim Rickards Speaks Truth on CNBC "I Can't Find Any Metric Where U.S. Isn't As Bad or Worse as Greece" - Anchors Can Only Scratch Head

For all those (looking at you Joe Kernen) mocking Europe for its problems... the reality is (as we've pointed out MANY times) the U.S. is fiscally in as bad of shape (if not worse) in terms of balance sheet than Europe's black sheep. And we are not even counting unfunded liabilities. But the ability to print money from thin air is the magic elixir that allows Messi style (shout out to soccer fans) kick the can policy. That is truly the only difference at this point - there is nothing inherently "superior" to the US situation than Greece, dear apologists. We just have been given that much more rope to hang ourselves with as the reserve currency.

When one sits around and realizes how incredibly awful the situation would be without the ability for central banks to simply print, print, print - you truly shudder.

This morning Jim Rickards attempted to spell this same idea out. Thankfully a commercial break could not come fast enough...

Becky: (giggle) "You're not suggesting that the United States in the same situation as Greece?"

Jim: "I'm having trouble finding a Greek metric where the U.S. isn't as bad or worse than Greece or will be shortly."

Becky: "We have our currency and we can inflate it" (pom pom wave!)

(Video) At Least 3 Dead in Greek Austerity Protests

The video coming out of Greece this morning seems to have moved human traders to realize this is not all about numbers on a spreadsheet. At least 3 deaths so far in protests/riots to the austerity required to get the bailout monies.

It appears likely the S&P 500 will open below the 50 day moving average if current fair value holds... and this will be the 2nd day in a row of material gap down openings, and 3rd in 6 sessions... after only 2 previous I can find for all of 2010.

Via BBC:

• At least three people have been killed in the Greek capital as protesters set fire to a bank during a general strike over planned austerity measures. The fire brigade said three bodies were found inside the bank in Athens. Two other buildings are also on fire.
• Petrol bombs were thrown at police who responded with pepper spray, tear gas and stun grenades. Protesters are angered by spending cuts and tax rises planned in return for a 110bn euro (£95bn) bail-out for Greece. Measures include wage freezes, pension cuts and tax rises.
• Outside parliament, a group of protesters rushed up a flight of steps, taunting MPs to come out and calling them "thieves". Riot police forced them back, but right next to parliament, others groups set buildings on fire - including a tax office.
• The Greek protesters' ire is aimed against symbols of capitalism, says the BBC's Malcolm Brabant in Athens.
• Flights in and out of Greece stopped at midnight, and trains and ferries were not running. Schools, hospitals, and many offices are shut.

(email readers will need to come to site to view)

Minding the Index Gaps

It has been a long while since we looked at the major indexes in relation to some old "gaps" created by premarket magic. To review, gaps on individual charts sometimes never fill, but generally do. Gaps on indexes... except for perhaps a rare exception decades old, always seem to fill. (obviously it has been helped by 2 epic bear markets in 1 decade) And usually do it rather quickly - within 6-9 weeks.

Currently there are 2 major gaps for both the S&P 500 and NASDAQ - essentially its the same chart, so I'll just speak S&P 500. I had thought somewhere between late March to mid April we'd see a quick gap fill because (a) that's usually the time frame it happens considering the original gap was in mid February and (b) we have not had one 10% correction this entire rally from March 2009; the largest has been 9%. Hence as the indexes marched ever upward, filling the gaps from their peak will now require a 10%ish correction (a bit more).

[click to enlarge]





Buying the dip has been the "go to" game plan for months and it has been a "can't lose proposition". Anyone with caution was laughed and mocked at by both the market, and the bull crowd. Finally in the past week or so we've seen 2 occasions the "buy the dip" crowd finally lost. So the obvious danger here is a trend works until it doesn't. With both major indexes having dropped to their 50 day moving average we have an obvious "buy the dip" moment. But with the non stop rally for 2.5 months, the variance between the 50 and 200 day moving average is substantially wider than it has been in a long while - perhaps the greatest of this entire rally. Hence we have a big air pocket and lack of support below the 50 day.

And then of course there are those gaps... which at this point if both fill would actually take the markets below the 200 day moving average. So... buy the dip, any dip? For the very nimble another opportunity ... but judging by the multiple distribution days we've seen the past 2 weeks, the increase in volatility (market indecision), and the reasons outlined above - the risks are rising.

Until the 50 day moving average is clearly broken on a closing basis, such talk is premature ... but with the action the past week it is now time to dust off these observations.

Financial Select SPDR (XLF) at Key Support

Financial Select SPDR ETF (XLF) and all it's levered offshoots have become one of the favored "go to" playthings for institutional hot money. Not to mention the small fry retail guy. This was one of the 3 sectors leading the charge off the February 2010 lows (industrials, consumer discretionary, financial) as institutions went to the "playbook". [Mar 7, 2010: CBSMarketwatch - Riding the Rally, How to Money in the Bull Market's 2nd Year] While the other two sectors are still in relatively good shape, XLF was hit by the Goldman Sachs fallout and 6 sessions ago came back to touch the 50 day moving average, before bouncing during last Wednesday's & Thursday's rebounds. Now it is back to its 50 day moving average and hanging in by a fingernail ... this is going to be a key level for what has become one of the most important ETFs in the market. Keep an eye on it; this is essentially the "American Oligarch" ETF.

Components and weightings as of 5/3/10.

	Name	Symbol	Index Weight
1	Bank of America Corp.	BAC	10.07%
2	Wells Fargo & Co.	WFC	9.75%
3	JPMorgan Chase & Co.	JPM	9.61%
4	Berkshire Hathaway'B'	BRK.B	7.21%
5	Citigroup Inc.	C	4.82%
6	Goldman Sachs Group Inc.	GS	4.37%
7	American Express Co.	AXP	3.14%
8	U.S. Bancorp	USB	2.89%
9	MORGAN STANLEY	MS	2.36%
10	Bank of New York Mellon Corp.	BK	2.10%

No position

Skyworks Solutions (SWKS) Impresses the Street

Doing some catch up on portfolio company earnings from late last week... Skyworks Solutions (SWKS) reported a quarter / guidance much as they did 3 months ago [Jan 21, 2010: Skyworks Solutions Beats Estimates, Raises Guidance - But Still Sold Off], but this time the market was happy about it. It's just the random nature of markets reactions to earnings I suppose. I didn't see much different than the TriQuint Semi (TQNT) quarter which got a big fat snore from the market... but Skyworks had a gap up last Friday on very similar data. It has since retraced to the bottom of the gap up open. I sold some ahead of earnings to be cautious and most likely will end up trying to buy those shares back at the same price I sold them very late last Thursday. Let's see if this gap fills.



I continue to love the positioning of names in this sector as true secular growth stories - they are in the middle of all the action with mobile internet and increasingly the smart grid.

A quick look at the earnings and guidance below, please keep in mind Skyworks - like TriQuint - increased guidance mid quarter so this is a beat versus a raised expectation. Looks like analysts have moved up consensus from $1.02 to $1.14 for 2010, not a bad value for a $17 stock.

• Cellphone chipmaker Skyworks Solutions Inc's (SWKS) second-quarter results edged past market expectations, helped by expanding opportunities in smartphone, broadband access and smart grid applications, and the forecast a strong third quarter.
• The company expects third-quarter earnings of 30 cents per share, excluding special items, on revenue that is 10 percent to 15 percent higher on a sequential basis. Analysts were looking for third-quarter earnings of 25 cents a share, before special items, on revenue $243.9 million.
• For the second quarter ended April 2, Skyworks earned $27.7 million, or 15 cents a share, compared with a loss of $5.7 million, or 3 cents a share, a year ago. Excluding items, the company earned 24 cents a share, narrowly beating analysts' expectations of 23 cents a share.
• Revenue rose 38 percent to $238.1 million, ahead of analysts' estimate of $232.2 million.
• "We believe Skyworks remains one of the best positioned players in the handset front-end semiconductor market and regard current valuation levels as attractive," Kaufman Bros analyst Suji De Silva wrote in a note. "Skyworks also continues to see strong growth outside its core handset market from wireless infrastructure and energy meter reading content," said the analyst, who raised his price target on the stock to $20 from $18.
• "We believe the company could exceed its 25 percent operating margin in the near to medium term," Svanberg said. For the second quarter ended April 2, Skyworks posted an adjusted operating margin of 20.5 percent.

Long Skyworks Solutions in fund; no personal position

HAL9000 Triggers Stop Losses Below the 50 Day; Let's see if the Market Bounces Here

After an uninspiring cursory bounce off support the first time around (the S&P 500 could only bounce to about 1176) the computers took the index down below the 50 day moving average of 1171.5. That likely triggered a rash of stop losses... which the computers then can collect and then move the market back up over 1171.5. Or at least that is how I think the computers think. Still trying to learn the ways of the HAL ....



Just as the first cursory bounce off support about an hour ago meant little, this first shake out below the 50 day most likely is just computer gamesmenship... well technically I guess it's not having much to do with men since 70% of volume is automatic nowadays. Let us call it gamessiliconship. The behavior after the "shake out" below the 50 day is the thing to watch here once those stop losses were stolen. Even a move back up of 2-3 S&P points here would create bountiful win for the dominant quant hedge funds (and Goldman Sachs super whirling computers).

Even as bears feel good at this moment, they have to know the S&P futures buyers are gunning for them ;) Good theater at least.

EDIT 12:48 PM - reader Sam makes a great point, if you use simple moving averages rather than exponential it was a perfect bounce off the 50 day SIMPLE moving average. You can see that in the chart below.



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Spanish Banks Spanked as Contagion Risks Spread

Obviously Portugal and Greece (aka Bear Stearns) are sideshows to the much larger Spain (aka Lehman). [I'll save a crisis in the UK or Japan as Fannie, Freddie]

Together the former 2 are not even 5% of Euro zone GDP whereas the latter is the 4th largest member and about 11% of GDP I believe. Truth be told, while Spain's economy is horrid (20% unemployment i.e. they have honest government reporting, an American style credit bust as "financial innovation" went wild, without the ability to print money at will to make it all "go away") its sovereign balance sheet is not nearly as horrid as Greece (or ironically, America's!). [Feb 5, 2010: Sovereign Risk Chart - Where Would the US Fit in, on Europe's Scale?] But again - printing money from thin air is a wonderful way to do partial, slow defaults ... the US, UK, and Japan are doing that. Spain cannot. Which makes me wonder if before all this is over the European Central Bank will get new powers that mimic the Fed because having your central banker print like mad and take government debt onto its balance sheet seems to be the only real solution in a world gone mad on kicking the can down the road. (sidenote - while the ECB is prohibited from directly buying government debt, it can do so in the secondary market... bu until now has not.)

Whatever the case - Portugal, which should have been next, is losing some attention as we're seeing Spain face attack. A couple of their major banks are looking like US banks circa 2008. Below we see Banco Santander (STD) and Banco Bilbao (BBVA)


Perhaps Spain needs to change some accounting rules, make a cute stress test (in which no one fails), hand the banks unlimited free money so they can make profit just by turning on the light, and tell the world the taxpayers of the country will bear every loss of the bank and thus the bank cannot fail? Outrageous? ... nah, it's the U.S. solution. But again it is all circular... that works fine and dandy when the taxpayer will bear the losses and you can print endless supplies of new money to offset said losses... Spain cannot.

Worst case scenario is the US taxpayer will bail out Spain via the IMF... "worked" for Greece. Or my own favorite nuclear option - the Fed can turn Spain (and Greece and Portugal) into 'bank holding companies'... that also "fixes" everything.*

*that can't really happen... or can it? ;)

Please turn your grandchildren upside down and shake out his/her pockets again - the Europeans need them ... thank you.

Knock knock

Who's there?

IMF.

Oh no, not again

No positions

Bookkeeping: Some Sales

Obviously our long exposure is not huge coming into the week at just over a quarter of the portfolio but I still want to make some adjustments, especially when charts have degraded. I obviously dropped 2 names yesterday first thing in the morning as their charts had turned for the worse late last week.

First, Atheros Communications (ATHR) despite a stellar earnings report and far better valuation than 80% of the things rising almost every day without pause has broken below the 50 day moving average intraday. Barring an "invisible hand" hockey stick recovery in the markets, it could end the day in quite bad position and being our top holding I don't want to take chances - I've cut 75% of the stake.


I am going to lock in some more profits in Lennar (LEN), 1/3rd of the position to lock in some profits - the chart is still fine, I just want to keep some of the unrealized gains on the books.


Cut Riverbed Technology (RVBD) exposure in half... it has come in nicely to a support area but I don't like that gap right below. If the market remains weak it should fill sooner rather than later.



Selling half of Skyworks Solutions (SWKS) for almost identical reasons as Riverbed above... after gapping up Friday on good earnings, the stock looks more apt to "fill" now that in the "can't lose" market of the previous 2.5 months. Actually it looks even more likely to fill since it is way above any support.



Placing a bunch of stop losses on other positions which are still holding support.

I am not touching any index plays right now - long or short - because my hand has turned stone cold the past few weeks trying to make even short term guestimates on what the market will do. Plus the moves in pre-market have really messed with some trends. But this could be a 'heads and shoulders' situation for those who play the technical game. There is still an ultimate gap to fill at 1078 if and when... I would normally say it's time to press shorts once the 50 day moving average is broken but I said that on the 20 day moving average and twice in the last week the premarket action crushed that trade. So for now, will focus on hunkering down.

EDIT 11:30 AM - Long exposure has now been culled to 20% of the portfolio. A few other major positions now have stop losses in place so that number can drop from here quite easily. I will not be duped by the premarket games that surely will be played tomorrow morning or later this week. The prevailing trend DURING THE DAY the past 6-7 sessions has been down. The premarket action has been creating dislocations - both in the charts and in the game plans of shorts since you are forced to stop out if you have a conservative game plan.

So for now I expect to underperform any big market days to the upside caused by SPY futures being bid up, but I'll also underperform any big down days. Back to cash is king mode. The S&P 500 now sits in a band between its 50 day and 20 day, and obviously it at the very low end of that range. I'd expect the computer to hold the fort here - let's see what sort of bounce off S&P 1173 we get.



Long all names mentioned in fund; no personal position

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Wow. Second Terrible Tuesday in a Row.

Completely debilitating action the past week for those who are using technical analysis. Support, resistance lines have meant little on this lousy S&P 500. Olivia Newton John failed us and I sold the SPY calls for a loss. I was "joking" yesterday when I said let's watch the S&P slice right back down below the 20 day moving average, causing me yet another loss on the index play.



This makes 5 of the past 6 sessions that we've either jumped over or below the 20 day moving average. But the action is worse than that because much of the moves 'up' have been in premarket the past 5 days, whereas the moves 'down' have been during the market day.

So here we are in a snap to the 50 day moving average. Again, to reiterate if not for all the marking up in premarket we'd be substantially lower. The second interesting point, a week ago Tuesday was only the 3rd day this year I saw a gap down open as the "premarket games" have almost always been in the bulls favor or at worst neutral. This makes 2 gap downs in a week... Terrible Tuesdays to now offset Magical Mondays?

What now... in theory the market bounces off the 50 day moving average at least once.

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Strategic Defaults in Q1 2010 Rise to One Third of All Foreclosures vs One Fifth a Year Ago

As predicted in multiple pieces since November [Nov 25, 2009: America's Stealth Stimulus Plan; Allowing It's Home "Owners" to be Deadbeats] ... America's hottest trend (no, not Twitter... or vampires) is catching on. Once word passes among the neighbors of how easy it is, and "keeping up with the Joneses" becomes much harder to do when Joe and Sally down the street are living the high life due to no longer bothering with the small detail of a housing payment, well more people want in. [Apr 15, 2010: More on Anecdotal Benefits of Strategic Default] This is the stealth stimulus plan that just keeps on giving. [Apr 13, 2010: One out of Ten US Mortgages is Now Delinquent ... Which is Great for Consumer Spending]

While it is impossible to know the EXACT figure of strategic default vs true distress as a % of all foreclosures (but it's pretty easy to guess, just look for the folks who are making all their other payments and only sniffing their nose at the mortgage pymt), we have some solid roundball figures from this study.


Via University of Chicago/Northwestern study:

• The researchers found that the number of homeowners willing to default when the value of a mortgage exceeds the value of their house, even if they can afford to pay their mortgage, dramatically increased compared to just a year ago.
  
• The percentage of foreclosures that were perceived to be strategic was 31 percent in March 2010, compared to 22 percent in March 2009.
• “There is a contagion effect, it’s like a disease,” said Paola Sapienza, one of the professors who conducted the study. (correction - it's like a blessing... see monthly consumer spending figures and consumer discretionary stocks)
  

Any why not... the government/Fed is actually sponsoring the whole affair - the master plan is working to perfection. Keep bank funding rates at zero to demolish U.S. savers (the lowest caste of Americans)... hence letting banks out earn the losses on their balance sheet by taking money from the Fed for essentially free and buying US Treasuries (or speculating in the markets) for risk free return. Heck they might even make a loan or three - old school style.

Of course those mortgage losses don't even have to be observed under new accounting rules the lobbyists (via politicos) pushed through in spring 2008, until the actual taking back of the home. Up to that point whatever the banks judge the value to be, it is; and we all know about banks judgement by now, right? So why would the banks be in a hurry to go after delinquent mortgage holders? Answer - they are not. Hence scores of suburban (and city) America are scorched with squatters... not for 6 months or 9 months, but 18, 24 (or more).

• One likely reason for this growing trend is the increasing perception that lenders are not going after borrowers who walk away.
  
• “With more and more homeowners believing that lenders are failing to pursue those who default on their mortgages, there is a risk that a growing number of homeowners will walk away from their homes even if they can afford monthly payments.” said Sapienza.
• “Even in recourse states, where banks have the legal means to go after delinquent borrowers, the evidence shows that they are doing very little,” Ms Sapienza said.
  

Moral hazard baby! Now coursing through every vein of society from business to peasant.

Even more ironic... the strategic default probability increases when neighbors see neighbors bailed out by government riding to the rescue to those who took out that "can't miss" option ARM with zero percent down (we'll roll in the closing costs too!). Once they realize there is "no soup for you" if you are a responsible America... they have more incentive to join the party themselves.

• The results also indicate that the likelihood of strategic default increases by 23 percent when homeowners learn that their neighbor with negative equity has received a partial loan for forgiveness.
  

Ah, unintended consequences.

---------------------------

Conclusion: Everything is going along perfectly. Banks win (as they always do). Consumer spending can surge [Apr 14, 2010: SPDR S&P Retail ETF (XRT) Approaching All Time High] even without any real adjusted gains in income. Many don't even need jobs anymore to shop since the government ATM is on full blast. [Jun 5, 2009: 1 in 6 Dollars of Income Now Via Government; Highest Since 1929] Working just takes time away from going to the mall anyhow. As for mortgages, we're up to 1/3rd of foreclosures by choice, and if things progress hopefully this can get to 50% by 2nd half 2011. The old house ATM of 2004-2007 is replaced with the new house ATM (2009-?). In the perfect nirvana economy, everyone will take out a mortgage and default on it within a few quarters (if not immediately wink wink) - thus driving consumer spending to the stratosphere and giving the U.S. a few +20% GDP quarters. Banks will take massive losses but have no risk of failing because they are "too interconnected" (at least if you are the top 6-7 banks). We'll print more money (remember that solves everything), create more housing programs (of which half the money will be immediately p***ed away) [Mar 26, 2010: Half of US Home Modifications Default - Again], and then quietly each quarter we can funnel another $10-$20 billion into Fannie, Freddie [Jan 5, 2010: WSJ - The Treasury Department's Christmas Eve Masscare of the US Taxpayer] to keep the perfect ponzi going forever. When a debt obligation is only a piece of vaporware - your economy can truly surge to unprecedented heights. Granted it's banana republic-ish but we've passed that rubicon a long time ago folks.

The only loser in this game is the lowest caste in American society: the saver. Thankfully she does not raise much fuss other than writing incensed comments on newspaper websites, but that's only the portion of the caste who even understands what is going on. Most simply shake their head each time they roll over that 1 year CD and wonder in abstract form "what is going on?"

My favorite quote from one of the myriad stories on this study:

• “People are starting to change their way of thinking. It’s almost become trendy to walk away from your home,” he said.

Boo yah fellow Banana Republic citizens... boo yah.

Olivia Newton John Comments on Today's Action

I don't know what just happened around 12:15 PM EST but in the words of Olivia Newton John

"Let's Get Vertical, Vertical
I wanna get vertical, let's get into vertical"



(note - this video is so wrong... so very wrong. Aside from Olivia. Those of you under the age of 35 who are not aware of such video and music... be afraid. Very afraid.)

My suspicion is Goldman was assured through back channels this is all a charade and it will be business as usual. They just need to be flogged publicly for appearance sake. Word got to Blankfein around 12:10 PM.

--------------------------------

I switched from those nasty SPY puts to some SPY calls. Hopefully the market can dump tomorrow back below the 20 day moving average so I can lose money yet again. Rinse. Wash. Repeat.

But most of all be physical ....err vertical.

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Bookkeeping: Stopped Self Out of SPY Puts

Analysis: arrrrghhhhh!!!!!!

If you are a technician this chart just makes you laugh. Or cry. Or both as you bang your head on the wall, considering how often we are violating the 20 day in both direction back and forth. And how little of it is during the actual trading day.



I sold the SPY puts (symbol: ARGH!) I put on late Friday when the S&P 500 broke support. That's twice in a week it has meant nothing. Another loss although modest this time around! Getting whipsawed both ways ... impossible right now without being active in premarket. If you take out premarket advances I believe this market would have already fallen to the 50 day... just back out the two 0.5-0.6% moves in the past few sessions and you are there.

I really hope this is a head and shoulders formation forming - I need to short something and win. Before Labor Day. Until then, see my analysis on line one.

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Matt Taibbi: The Feds v Goldman Sachs

From the man who coined Goldman Sachs (GS) the "vampire squid wrapped around the face of humanity" ... we have Matt Taibbi's latest take via Rolling Stone. Again, let it be said that some of the best work on our financial oligarchy is being done by a guy in a music magazine. That tells you what a farce corporate media has become. Then again, when almost all outlets are funding the same lobbyist groups (or mirror images) as those funded by the banking cartel... is is surprising?

Some great cutaway quotes:

• Just under a year ago, when we published "The Great American Bubble Machine" [RS 1082/1083], accusing Goldman of betting against its clients at the end of the housing boom, virtually the entire smugtocracy of sneering Wall Street cognoscenti scoffed at the notion that the Street's leading investment bank could be guilty of such a thing. Attracting particular derision were the comments of one of my sources, a prominent hedge-fund chief, who said that when Goldman shorted the subprime-mortgage market at the same time it was selling subprime-backed products to its customers, the bait-and-switch maneuver constituted "the heart of securities fraud."
• Goldman isn't dead – far from it. But this new SEC suit officially places it at the center of a raging national discussion about the hopelessly (BLEEP!) state of American business ethics. As a halting, first-step attempt at financial regulatory reform makes its way toward a vote in the Senate, the government has finally thrown open the door and let a few of the rottener skeletons tumble out.
• On the surface, the failure-to-disclose rap being leveled at Goldman feels like a niggling technicality, the Wall Street equivalent of a tax-evasion charge against Al Capone. The bank will try and – who knows – might even succeed in defending itself in a court of law against these charges. But in the court of public opinion it was doomed the instant the SEC decided to put this ghastly black comedy of a fraud case on the street for everyone to see.

....

• In metaphorical terms, Paulson was choosing, as sexual partners for future visitors to the Goldman bordello, a gang of IV drug users, Haitians and hemophiliacs, then buying life-insurance policies on the whole orgy. Goldman then turned around and sold this poisonous stuff to its customers as good, healthy investments.

....

• These flighty Tourre e-mails boasting of cashing in on a disaster and chuckling over the "surreal" experience of power-lying right in the face of a business partner are Goldman's very own Ben Roethlisberger drunken (BLEEP!)-waving moment. It is hard to imagine any company from now on doing business with Goldman and not picturing its fruitcake executives text-boasting to each other about the pleasures of screwing over their own clients.
• So within the space of a few days, Goldman issued three different explanations, which progressed from (a) we absolutely, positively didn't do it, to (b) if we did do it, we didn't make any money doing it, and finally on to (c) if somebody did it, it was only that French cat Tourre, and here's his head if you want it. These guys couldn't find the truth if it was sitting in their lap playing the ukulele, and that's the basic problem that the entire financial-services sector – an industry that requires trust and confidence to thrive – is struggling to overcome.

And finally... and Matt should of added at the end ... "thankfully, you dear reader - at least if you are in the United States, have an explicit backstop of all this so the next time these bets go bad en masse.... we'll be needing your grandkids money, thanks! Until then Goldman will be able to fund themselves at below market rates aka Fannie, Freddie since everyone knows the government will protect them... heads they win, tails they still win. It's like your local gambling sharkie- fully backstopped by the United States of Oligarchy."

• In the year since – and this, to me, is the main lesson from the SEC case against Goldman – the public has quickly come to accept that when it comes to the once-great institutions of modern Wall Street, literally no deal that makes money is too low to be contemplated.
• There is more fraud out there, and everyone knows it: front-running, manipulation of the commodities markets, trading ahead of interest-rate moves, hidden losses, Enron-esque accounting, Ponzi schemes in the precious-metals markets, you name it. (no Matt - that's crazy talk! shhh! All that is happening is a few good hearted insitutions are "creating liquidity" - just ask them.) We gave these people nearly a trillion bailout dollars, and no one knows what service they actually provide beyond fraud, gross self-indulgence and the occasional transparently insincere public apology. (liquidity Matt!!)
• The Goldman case emerges as a symbol of all this brokenness, of a climate in which all financial actors are now supposed to expect to be burned and cheated, even by their own bankers, as a matter of course.

----------------------------------

Old Taibbi stuff:

1. Apr 6, 2010: Matt Taibbi - Looting Main Street
2. Dec 11, 2009: Matt Taibbi - Obama's Big Sellout
3. Jun 2009: Matt Taibbi - Goldman Sachs, The Wall Street Bubble Mafia
   
4. March 2009: Matt Taibbi - The Big Takeover (must read)
   

Bookkeeping: Closing Bucyrus (BUCY) and Alpha Natural Resources (ANR)

Well apparently I caught the "coal train" much too late this year, unlike 2007 when I was early. The coal stocks and 'related fare' have had a few rough weeks... as of late last week both Alpha Natural Resources (ANR) and mining equipment maker Bucyrus (BUCY) had broken support on their charts, so I am going to close out the last of each position, both are 0.5%-0.6%ish type of exposures. 5% loss on the former and 7% on the latter.


Recall I had dumped 60% of Bucryus last Thursday on the initial break below support saying:

So from here my standard operation procedure is to cut back exposure on the initial break of support and watch what it does with less on the line. If the stock quickly recovers we can continue the position; if not we are forced to exit and revisit another time.

The decision was made for me... forced to exit and revisit another time.

----------------------------------------------------

With copper at a 7 week low, and coal stocks flailing... and the Chinese stock market at 7 month lows, one would assume one should be worried about the global growth story to some degree since it centered around China. But no worries - the Ben Bernanke (and now Trichet) Forcefields are around us... and as long as they keep the premarket open, we can fend off every selloff with a 0.5, 0.6% markup in premarket whenever needed. Boo yah.

No position other than long central banker forcefields

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