stocks and things: June 2008

Monday, June 30, 2008

Friday, June 27, 2008

About Shark Watch

Friday, June 27 - 5:19 PM

Afternoon Comments

Although the market was able to come off its lows late in the day after some profit-taking in crude, today was another great example of how oversold markets can become even more so. Of course, given the dismal action yesterday and over the past five days, the level of doom and gloom that is becoming prevalent, and crude that closed above $140, it’s no wonder buyers simply took their ball and went home.

Probably the most amusing thing right now is the crawl on CNBC telling us that the Dow is “almost” in bear territory. There’s no question that we’ve been in one for months now, and a bottom will only come once no one is interested in having anything to do with the stock market. Perhaps the resignation by the popular media that we won’t be bouncing right back is the first step in that happening.

Have a great weekend and we will see you on Monday.

taming oil futures

Oil
One Way to Tame Speculation in Oil Futures
By Daniel Dicker
TheStreet.com Contributor
6/27/2008 12:20 PM EDT
URL: http://www.thestreet.com/p/rmoney/oil/10423562.html

The solutions recently floated in Washington and by the talking heads on CNBC to remove speculation premium in the oil markets won't work. I'm not advocating it, but there is one idea that would work in testing how much speculation is really in the market: mandating a "liquidation only" restriction, which has in fact been used in the past.

Let me tell you about this idea and why I believe this is going to happen and what it will mean for the oil markets and your portfolio.

I've been a strong advocate for the position that the price of oil, while under fundamental upward pressure, contains an enormous speculation premium, perhaps as much as 50% of the price. Being a believer in the speculation argument has gotten me in a little bit of trouble, because my points have been easily misunderstood. For one, I've always argued that the speculation in the market has not been manipulative but just a rush to improve gains in commodities when "regular" asset classes haven't performed as well (boy, is that an understatement).

The futures markets, however, were designed as simple price discovery mechanisms and were never intended to be used as large-scale investment vehicles. Because of this, the rush to invest in oil and other commodities has had a geometric effect in price that you would not witness with other asset classes. In previous columns we have discussed these subtle but critical market differences.

Another difficulty in pointing out the overarching price inflation of speculation has been the obvious follow-up: What to do about it? Everyone wants to save the world in 30 seconds. And while I am convinced that speculation is driving the price of commodities ever higher, I am far less convinced of the efficacy of any of the proposed solutions that I continue to hear coming out of Washington and elsewhere in removing that premium. Unfortunately, some problems do not lend themselves to simple solutions, and this is one of them. Let me tell you why.

Congress, by a 402-19 vote yesterday, passed a bill "requiring" the CFTC to use its authority to curb excessive speculation in the oil market. It may be politically useful to overwhelmingly vote for a measure that makes it appear to your constituency like you're doing something, even if the measure will have no effect. And here we are faced with precisely that. Two instruments are called upon to rein in excessive speculation: position limits and margins. Let me add two more that will surely be called upon soon: a ban on pension and indexed investment in commodities. Let's take all four and describe why they'll be less than useless.
Ineffective Tools

Margin increases will have a very limited effect on the commodity markets, because the leverage on them is so high to begin with. On the New York Mercantile Exchange, for example, the current margin on a lot of crude oil for clearing members stands at $8,750. In a market trading with $140 oil, that equates to a 6.25% margin requirement. You might contrast that with your local stockbroker, who will require a 50% margin on the stocks that you own. Even with a doubling of margin requirements -- an enormous leap -- the cumulative effect would be small.

Position limit tracking would be practically impossible and even less useful; those who wanted to skirt them could easily set up associate limited liability companies and multiple outside accounts that they could move wherever they wished and avoid all invented limitations on positions. Who would be charged with keeping track of all those commodity accounts floating around out there in the many different clearinghouses and associating them with their owners? I doubt the CFTC, or anyone else for that matter, is up to the task.

More interesting is the idea of limiting pension and indexed investment in oil. But here too, the managers of those funds would be easily able to access the over-the-counter markets domestically that are either exchange or bilaterally cleared. Indeed, the oil desks at Goldman Sachs would be delighted to create any kind of strip or swap for these managers, match them through their internal desks and push the remaining lots through one of the futures markets as commercial (non-speculative) volume. Quite apart from the idea that these limitations would force business offshore, it would in fact force it back into the shadows, into the dark over-the-counter markets where the discovery of price is far less transparent than the system we are dealing with now.
Mind Reading

You see, all the solutions that I have heard proposed require that you define the motive of the participant -- that you somehow figure out which contract of oil is initiated as a true hedge or as a speculative investment, and in this, even the participants themselves would be hard-pressed to know.

That is the environment we have created. Everyone's a trader -- very little in the futures markets is "purely" hedge or "purely" speculation anymore. I remember going for an interview at a mid-cap consolidated oil company in Houston in the mid-'90s. Its physical assets (transport, refining) were significant, but its trading room was enormous, and the activity in it was far larger than the direct management of its assets required. I remember asking the VP in charge of the trading room, when is the trading you do hedging? When is it speculation? He looked at me slyly, this old Texas wildcatter, and explained, "You see, Dan, when we sell 'em and the market goes up, that's a hedge ... when it goes down, that's speculation." That simple lesson was never lost on me.

Remember, this was at one small oil company in the '90s. Today, that attitude toward oil trading and risk management has been multiplied a thousand-fold with practically every participant in the oil markets today. If Morgan Stanley sends an order based on a transport asset requirement in Oklahoma through five of its internal trading desks before a piece of what's left hits the markets at the Nymex, are those lots speculative or a hedge? I'll give you a hint: By the time it arrives, it's far more of a speculative position than a risk-management tool.

Most every hedge position, you see, has a speculative bias to it, an excess, a risk taken -- another greater profit is attempted. The risks that all of these desks take vary, but we know from the profit statements of many of these companies that the trading desks account for enormous additional revenue; none of them is engaged in pure risk management.
Silver as a Case Study

In one instance, however, the speculation premium was "successfully" tested - in the silver markets in 1980 when the Hunt brothers attempted to corner the market. As silver approached $50 an ounce in January 1980, the commercial participants asked for relief from the enormous margin calls from ever-rising prices. The CFTC and the Comex (the predecessor to the Nymex) responded effectively by imposing "liquidation-only" trading -- traders were allowed only to close existing positions and not permitted to initiate new positions.

This forced purely speculative positions to be closed rapidly, as they could no longer be "rolled" into future months at expiration. This caused the price of silver to drop by $12 the day after it was imposed, a decrease of over 20%! Over the course of the next three months, as contract months expired, the price dropped over 50%.

Silver, Historic Prices
Click here for larger image.

While I do not advocate such a move, I believe I'm not the only one in the world who will explore this idea, and I believe that in an election year this will inevitably be suggested and implemented. The effects would be astonishing and immediate. Energy funds would be buried, and commodity-biased portfolios hurt badly.

On the other side, the overall economic effect would be obviously improved enormously. Consolidated oil stocks, which would initially get hurt, would surprisingly represent terrific value again, in my view. Refining stocks would be helped as margins were restored, as would obviously the airlines and the other transports.

One thing is for sure: A "liquidation-only" market would settle finally and for all time the argument about speculation premium in the oil markets -- we'd know for sure how much of this price inflation was being driven by purely fundamental factors. For that reason alone, I expect this idea to be floated and in fact implemented soon -- and you should be prepared for it.

At the time of publication, Dicker had no positions in stocks mentioned, but positions can change at any time.

Dan Dicker has been a floor trader at the New York Mercantile Exchange with more than 20 years' experience. He is a licensed commodities trade adviser. Dan's recognized energy market expertise includes active trading in crude oil, natural gas, unleaded gasoline and heating oil futures contracts; fundamental analysis including supply and demand statistics (DOE, EIA), CFTC trade reportage, volume and open interest; technical analysis including trend analysis, stochastics, Bollinger Bands, Elliot Wave theory, bar and tick charting and Japanese candlesticks; and trading expertise in outright, intermarket and intramarket spreads and cracks. Dan also designed and supervised the introduction of the new Nymex PJM electricity futures contract, launched in April 2003, which cleared more than 600,000 contracts last year alone. Its launch has been the basis of Nymex's resurgence in the clearing of power market contracts over the last three years. Dan Dicker has appeared as an energy analyst since 2002 with all the major financial news networks. He has lent his expertise in hundreds of live radio and television broadcasts as an analyst of the oil markets on CNBC, Bloomberg US and UK and CNNfn. Dan is the author of many energy articles published in Nymex and other trade journals. Dan obtained a bachelor of arts degrees from the State University of New York at Stony Brook in 1982.

watchlist

lcav better than 5

shor better than 5

alvr better than 7

Thursday, June 26, 2008

Columnist Conversation
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Patrick Schultz
Petrobas' Reserves Keep Climbing--But Shares Weaken
6/26/2008 3:46 PM EDT
In a Bloomberg TV interview, Brazil's President Lula da Silva says his country will triple its oil reserves from their new offshore discoveries. The tripling would bring Brazil's proved reserves to nearly 38 billion barrels and placed it in the top 10 nations for oil. Without doubt, the big winner is Petrobras (PBR:NYSE) which I discuss in my Brazil series here . But as indiscriminate global selling is hitting anything and everything that moves, shares of PBR are down a quick 12% since hitting a high of $77.61 in late May

My big question is the U.S., going to triple our reserves? I would be thrilled with just a double.

Position: none

Scott Rothbort
I Was Asked For My Thoughts On The Market. So Here It IS
6/26/2008 3:08 PM EDT
I have had several emails and IMs from people asking me what my thoughts on the market are. Here it goes:

I have not gotten the panic "get me into cash" calls from clients. That is not a good sign

The time to sell was before Memorial Day when we were nearly 10% higher. If you are an investor and are selling here then think twice.

Do some risk management. Check out some of my articles in Street University.

If your allocation to Energy + Materials + Agriculture is less than 20%, get it over that level

If you allocation to financials is greater than 10%, cut it back.

If you allocation to retail is greater than 10%, cut it back.

The political issue is creating increasing uncertainty. We have a double edged sword in many people's eyes - a current do nothing Congress/Administration or a the prospects of a less business friendly Obama. In other words we can't expect help from Washington now or in the future.

I had a respected investor look at my "model" portfolio. He said that it was a great portfolio. The lesson is that sometimes bad things happen to good stocks just like Research in Motion (RIMM) today.

If you don't understand volatility then ignore the noise being spewed on things like the VIX.

Position: RIMM - long stock

Robert Marcin
The Great Unwind
6/26/2008 2:37 PM EDT
The problem with the Great Unwind is that it's immutable. The Fed can't change it. The Administration can't. The Congress can only screw things up more. The CEOs of Merrill Lynch or Citigroup can't. Vik Bob's got nothin for us.

Unwinding a 20 year debt bubble takes lots of time if done gracefully or a ton of pain if accomplished quickly. Stop demanding that the government save us from our excesses. There is no magic bullet.

Some want lower rates, but 2% is pretty low already. Others insist that higher rates will cure all. Get a clue. There is no perfect interest rate for a leverage implosion. I'm not even sure about the impact of higher rates. Japan has a strong currency with 1% interest rates. That right there proves a 5% Fed funds rate won't necessarily strengthen the dollar.

As I wrote, prepare for a sloppy economic and market environment for a while. It could be another couple of years before we work off much of the excesses of the Debt Bubble. Get used to it.

It would be helpful if the moron politicians would agree on a beneficial energy program instead of all this useless, partisan bickering. Comrade Obama's windfall profit tax is thievery. And the Adminstration's blame on refinery capacity is just stupid. We need every bit of drilling, conservation, and alternatives that's out there. And we need it yesterday.

But, the sun will rise tomorrow. Life will grind on as we know it for the most part. However, the easy credit of the past 20 years is gone for this generation. And the consumption that accompanied it is history also. Modest stagflation is a distinct possibility, if not already here, and masked by government spin in the data. Invest your portfolio accordingly.

Position: none

today

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Thursday, June 26, 2008 | 3:55 p.m. ET Daily Archives
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RealMoney.com: Rev Shark Blog

Print This Story

Protecting Capital Now Will Pay Off Later

By Rev Shark
RealMoney.com Contributor
6/26/2008 4:50 PM EDT
Click here for more stories by Rev Shark
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We had a perfect storm of negatives aligning today.

# Crude oil hit a record high

# Research in Motion (RIMM - commentary - Cramer's Take), Nike (NKE - commentary - Cramer's Take) and Oracle (ORCL - commentary - Cramer's Take) all had somewhat disappointing earnings
#

Goldman downgraded Citigroup (C - commentary - Cramer's Take) and General Motors (GM - commentary - Cramer's Take)

# The charts of the major indices all continued to break down

# Financials hit new lows

And despite all of that, we aren't getting quite enough panic to give us the sort of washout that would support a good bounce.

It was just an all around dreary day, with horrible breadth and lots of new lows in individual stocks, but volume wasn't all that heavy, and we just aren't getting the sort of action that leads to a panicky type washout and a tradable bounce.

The serial bottom callers seemed much quieter today after being wrong about how the Fed announcement Wednesday was the "all clear" to buy, but they aren't going to go away and will continue to try to entice you into this market.

All you really need to know right now is that we are in a bear market, and the indices are downtrending. That means you stay defensive, protect capital and try not to be overly anticipatory about a turn.

We probably will see an oversold bounce in the next day or two, but the big picture is an ugly one, and it's important not to let the short-term distract you from that. Protect your capital now, and you will be far ahead of the game when the market improves.

I'm going to be out tomorrow which probably means we'll have some good trading action. Good luck, and I'll see you on Monday.

P.S. Missing Lenny Dykstra's deep-in-the-money calls? They're now here..
Lenny "Nails" Dykstra's new service, TheStreet.com Nails on the Numbers, is the only place where you can now find the profit potential of his deep-in-the-money calls. Limited time to save $100.

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James "Rev Shark" DePorre is the author of Invest Like a Shark: How a Deaf Guy with No Job and Limited Capital made a Fortune Investing in the Stock Market. He is founder and CEO of Shark Asset Management, an investment management firm, and he also operates sharkinvesting.com, an interactive online community that serves and educates active investors. DePorre holds business and law degrees from the University of Michigan, is a member of the Michigan Bar Association and a former tax attorney and CPA. He lives in Anna Maria Island, Fla., with his wife and two children. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Rev Shark appreciates your feedback; click here.

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lcav

Speaking of big whacks, Buckingham Portfolio member LCA-Vision (LCAV - $5.00) provided information that seemed to blur investor 'in-sight' into the company’s near-term future, resulting in heavy selling as shares of the laser vision correction center operator fell more than 24% today. After yesterday's close, LCAV announced that CFO Alan Buckey had resigned and that Michael Celebrezze would take his place on an interim basis. No color was provided for the unexpected departure, though the news that followed likely played a major role.

LCA offered a dismal business update this morning. CEO Steven Straus said that management believed macro-economic conditions and coverage leading up to and following the April 25, 2008 Food and Drug Administration Ophthalmic Devices Panel negatively impacted the firm’s business in May and June. The bottom, or actually the top, line; procedure volume for Q2 is expected to be down 40% on a year-over-year basis.

While some investors will be discouraged by what seems to be an abundance of negative news, we still 'look' positively at LCAV shares; taking note of the company’s solid balance sheet, with little debt, its continued efforts to strengthen its long-term market presence, the tremendous growth potential of the laser-eye surgery biz and management’s announcement of increased measures to control expenses. We would now be buyers of LCAV up to $8.10 as we have revised both our LG/FG downward to $16.

For tonight’s Hotline Special we head north of the boarder to Mississauga, Ontario, home of specialty pharmaceutical company Biovail (BVF - $10.68). That name causes some to recoil in fear as the years of 'questionable' management by ex-CEO Eugene Melnyk put the company in gallons of hot water. But after a change in leadership and a modification of corporate strategy, the company is out of the emergency room, in a more stable condition and value priced for investors willing to be patient for a fuller recovery.

Under Mr. Melnyk, the co

Wednesday, June 25, 2008

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Columnist Conversation
LATEST ENTRIES
re: RIMM
6/25/08 4:53 PM ET

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ORCL
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Financials Peter
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The Un-Asked Question About The Federal Reserve
6/25/08 3:39 PM ET

Who you gonna believe, the Fed or your lying eyes?
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A Schnitzel Here....
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Trading Diary Archives Print Days Entries

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Howard Simons
The Un-Asked Question About The Federal Reserve
6/25/2008 3:39 PM EDT
The last week has given us two important illustrations about government and society. The first is Barack Obama's decision to opt out of public financing of his campaign. The second is the ongoing monetary mess.

Briefly, the problem with money in politics is not how campaigns are financed; no, the real problem is influencing government decisions is so profitable. So long as the federal government has arrogated asset allocation powers to itself, money will find its way into the system to influence these decisions.

Emerging case in point: Restrictions on commodity speculation. Once the government decides who and who is not a bona fide player in the markets, interested parties will find it worth their time and money to make sure they are classified as bona fide.

Now on to the Federal Reserve. They will be observing their 100-year anniversary in 1913, which makes them 95 years old now. Most 95 year-olds have learned a thing or two in their life, such as whether they know what they are capable of doing or not. The Federal Reserve has yet to demonstrate they know the outcomes of their actions.

Disagree? If they raised rates today, would they or anyone else be able to tell you what the impact would be over the next year on inflation, employment, interest rates, exchange value of the dollar, asset prices or anything else? History says "no." There are no deterministic outcomes to monetary policy.

There are unintended consequences, though, little things such as the Great Depression of the 1930s, the Great Inflation of the 1970s and whatever is going on today. Toss in the stock bubble of the 1990s and the real estate bubble of this decade for good measure.

My rule of thumb is simple: If you don't know the consequences of your actions, do not undertake them. Period. In this case, let's go to a rule-based system of monetary policy instead of trying to use the blunt instrument of money to influence everything in the world. Monetary policy operates with long and variable lags, which is a fancy way of saying you do not what what is going to happen or when.

My reading of the FOMC Statement today can be summarized as, "Uh oh. Now what do we do?" That is followed by some gibberish on growth and inflation. At least Greenspan's language was amusing.

Until we stop giving power to those incapable of using it, we will keep getting these problems over and over again. Einstein's definition of insanity was doing the same thing and expecting different results. Is this where we are collectively?

Position: None

Tim Melvin
Who you gonna believe, the Fed or your lying eyes?
6/25/2008 2:37 PM EDT
Fed: downside risks to growth diminishing Warren Buffett:Everything connected with construction and with consumer, I see weakness, and if anything, it's accentuating a little bit. Headlines: new home sales and prices fall in May Fed: Inflation pressure to moderate later in year Buffett: Inflation really picking up Headlines: Wheat jumps on Midwest problems. General Mills raises prices. Energy demand to increase 50% over next two decades. If there is a worse job in finance or government than Fed Chair right now I do not know what it might be. They cannot lower because of inflation pressures, and they cannot raise because the economy is too weak. The only choice left is futile deception

Position: short idiotic fiscal policy and therefore bonds

Steve Birenberg
The Fed
6/25/2008 2:35 PM EDT
The statement doesn't sound particularly hawkish to me relative to recent market speculation. I'm with Bill Gross that Fed Funds aren't going anywhere anytime soon.

One thing that confuses me is the concept that the Fed must raise rates to cool inflation. It's the Phillips Curve I guess but with GDP growth at nil I don't see how that works. Thus, the flow through must be that raising rates will firm up the dollar which will cool commodities and thus keep inflation in check. But is the correlation between the Fed funds rate, the dollar, and commodity prices strong enough for that strategy to work? Is it a strategy that makes sense given the risks to growth from higher rates and less exports.

I'm all ears and eyes if anyone wants to comment on the rates vs. inflation concept.

Overall, it seems to me that the Fed is on hold given the need to balance the risk to growth (regardless of what their statement says it exists and has risen recently) and higher inflation.

Whether the Fed on hold is good or bad for the stock market is also something that I am having a hard time figuring out.

Position: None mentioned

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Reusing Leftover Soap Pieces
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Date: 03/28/2008 Topic: Craft Tips > Soap Making
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What do you do with those little small pieces of leftover soap? Can they be used to make liquid soap? We usually just let them melt away to nothing.

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RE: Reusing Leftover Soap Pieces
Post By Bala (Guest Post) (05/28/2008)
Hey I put the leftover soap bits inside a sock and put a rubber band over it. I then throw it inside the washing machine. It leaves a wonderful personalized smell to the laundry, and the soap is fully used.

Report Spam or Abuse

RE: Reusing Leftover Soap Pieces
Post By Michael (Guest Post) (04/04/2008)
I put the pieces into a blender and add a bit of water and mix for about 10 to 15 seconds, I then gently heat this solution in the oven ( in an approved glass bowl) this second step allows all the air to escape that was infused during the mixing process. I then pour it into a mold and let it stand for a few hours to solidify. Once removed I let stand for a few days, it continues to dry and harden. The soap is then usable and is as solid and long lasting as any new bar of soap.

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RE: Reusing Leftover Soap Pieces
Post by BABBIE (99) | (03/31/2008)
Profile | Blog! | Contact
The way I use up my little pieces of bar soap is by putting them in a pump container with a very large lid with a dozen marbles and some water, let it sit for a while, then shake periodically. Adding more water as the soap slivers dissolve.
Out of habit I shake it before each use.

RE: Reusing Leftover Soap Pieces

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RE: Reusing Leftover Soap Pieces
Post By Georgetta Ruth (Guest Post) (03/31/2008)
Here what I have tried in the past. I will get one of those loofah mitts(you can usually find at the dollar store and I stuff the left over soap in the mitt. I use velcro to close up the mitt. Now I have a easy to use shower mitt, with ready made soap.

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RE: Reusing Leftover Soap Pieces
Post By Nana B (Guest Post) (03/31/2008)
I also put the old soap scrap on a new bar, but I put alittle water on the new bar where the old scrap will go and wrap in plastic wrap put in the microwave for about 10 seconds (watch it closely) and then take out let it cool and put back in the bathroom or shower. Never has the old one not adhered to the new one. My husband uses "Dial" so it has a small indentation in the middle of the new bar to start with. Makes a nice fit for the old one.

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RE: Reusing Leftover Soap Pieces
Post by mom-from-missouri (122) | (03/29/2008)
Profile | Contact
I made a draw string bag out of a washcloth. All my soap bits go into it for the shower. I hang it to dry between showers

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RE: Reusing Leftover Soap Pieces
Post by MartyD (356) | (03/28/2008)
Profile | Contact
I keep soap scraps with my sewing gear. I use them to for marking. I started doing this in the 70s when polyester was so popular. I stained a garment with tailor's chalk. It didn't wash out. I haven't bought it since.

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Request: Reusing Leftover Soap Pieces
Post by lewis_admin (1201) | (03/28/2008)
Profile | Blog! | Contact
I would like to use up those little bits of bar soap that seem to get left behind. I have think that there must be a way to re-melt them and use them up.

AA from British Columbia

Answers:
RE: Reusing Leftover Soap Pieces
To reuse bits of leftover soap, buy a container of glycerin soap from a craft store such as Michael's (they are the cheapest I've found). I get the kind that can be melted in the microwave. Find a soap form such as a small oblong plastic container and spray it with pam or whatever the glycerin manufacturer suggests. Pour in a thin layer of melted glycerin soap, then put the leftover bits of bar soap in another layer, add more melted soap. Alternate layers ending with melted soap until the bar is as big as you want. This kind of soap lasts forever because the soap bits are usually quite dry and don't melt during use.

By Lynn
RE: Reusing Leftover Soap Pieces
Don't throw away that last bit of bar soap. Save them up. Take and old panty hose leg, put the pieces of soap in it, tie it up and hang it in the shower for shower soap! Or, using a food grater, shave the soap pieces into a recycled jar and use it with some baby oil for bath bubbles. Or, when the are still wet, simply press them together to make a new bar.

Post by Denise
RE: Reusing Leftover Soap Pieces
To ensure that the soap stays together, spray alcohol on the pieces you place into the glycerin. It sometimes doesn't bind together if you don't do this. This also prevents bubbles around the edges.

Post by Xerophyia
RE: Reusing Leftover Soap Pieces
I put my soap bits together in a solo type disposable glass with a little water. it fits snug in the towel bar in the shower or on the shower door. I then use one of those fluffy netted scrubbers and simply pour the liquid soap onto it. or let it dry up to a solid and push the scrubbie in the cup to coat with soap. Works for me. (03/28/2006)

By CEIL
RE: Reusing Leftover Soap Pieces
I've been using soap pieces for years because I can't sand to throw something out that is reusable. I place all my soap pieces into a mason jar [qt.size] and pour boiling water over them.just covering the soap pieces.I let them set for about an hour and use a fork or butter knife to kinda break them up.then I might need to pour more hot water on them to fill the jar. leave them alone for a few days and when you go back you can shake the jar and you'll have nice liquid soap.I've even heated it in the microwave if some of the larger pieces didn't melt[taking the cap and ring off the jar first.] but most of the time they do.I buy hand soap in a dispenser at the .99 store and when it's all gone,I pour my soap into the container.my kids like it better because it's softer. (03/28/2006)

By Louise
RE: Reusing Leftover Soap Pieces
I put my bits of soap in a plastic container, whatever size fits your needs, add water and let the soap soften. Then I use this solution for stain removal. Seems that hand soap removes more stains than anything I have found, ring around the collar, makeup smudges, mud, etc. I thought about this one day when I was washing my hands. The hand oap cuts grease, dirt, etc. from our hands, so how about our clothing? (03/29/2006)

By Lois
RE: Reusing Leftover Soap Pieces
Make Your Own Handsoap

You can make your own handsoap from one bar of soap. Grate one (1) small bar of any kind of soap or pieces of leftover soaps and add 3 cups of water. Put mixture in a microwave safe container and zap for 3 minutes. Pour into a handsoap container with a pump when cool. Makes 24 oz. (03/29/2006)

By Ace00
RE: Reusing Leftover Soap Pieces
Along the line of putting soap pieces in old pantyhose, you can also hang one of these by the outside hose for hand washing after gardening. I usually try to stick the old slivers onto my new bar. Depends on the shape of the soap, but they usually just melt together after a few tries. No waste! (04/01/2006)

By beanygurl
RE: Reusing Leftover Soap Pieces
I have never done this, but since you have brought up the subject, I think that I will try it. Keep several of the pieces in a zip lock bag (after they have dried) and wait until you have quite a few. Try melting them in a double boiler or in the microwave. Once melted, pour into any kind of molds. Maybe you could find an old small, shallow pan at a yard sale or thrift store, spray with Pam, pour the "soap" onto the pan and put old cookie cutters into the mixture, and set them in the freezer. It should come out as shaped soap. If I am wrong, I guess that we will both have a soapy mess! (04/02/2006)

By Jamie
RE: Reusing Leftover Soap Pieces
I have ALWAYS piggybacked mine: when the bar get small, just keep it wet for a few minutes while you bathe or shower with the new bar. while both are wet, STICK the two together. Every now and again I have to do it twice but everyone knows not to throw the small one out! (04/11/2006)

By Mary, Crown Point, IN
RE: Reusing Leftover Soap Pieces
First, I try to adhere them to a larger bar I use in the shower. If they fail to adhere (mainly because of the shape of the larger bar), I them use them at the sink to wash my hands--a smaller bar shape is easier to use than in the shower. After the bar gets to a small sliver, I usually save them in a container and later grate them up to make home made laundry detergent (actually soap). Occasionally, I'll mix the grated pieces into a home made soap right before it is poured into molds. After it is cut into bars and dried, you get neat mosaic bars of soap. (05/28/2006)

By susanmajp

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The Fed Is Stuck Here

By Rev Shark
RealMoney.com Contributor
6/25/2008 4:41 PM EDT
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The S&P 500 and DJIA ended the day with some very minor gains, but the Nasdaq had a strong day, as some of the big-cap technology stocks, such as Apple (AAPL - commentary - Cramer's Take), Baidu (BIDU - commentary - Cramer's Take) and MasterCard (MA - commentary - Cramer's Take) showed some strength.

Despite the fairly mild action, there were some wild swings in key sectors, particularly the Oil Services HOLDRs (OIH - commentary - Cramer's Take) and the Financial Select Sector SPDR (XLF - commentary - Cramer's Take) which were triggered by the lack of hawkishness by the Fed.

The Fed did nothing and said nothing of importance today, but the fact that it didn't jawbone the inflation issue to a greater degree causes some weakness in the dollar, which triggered a reversal up in oils after a weak morning, and a reversal down in financials after a strong morning.

The bottom line is that the Fed really is stuck here, as the economy founders and inflation percolates. The market knows this, and that is why the action is choppy and uncertain. We have some traders anxious to push for a bounce here, but there just isn't much to support it other than their short-term desire.

Research in Motion (RIMM - commentary - Cramer's Take) earnings are out, and the market is quite disappointed with the numbers. That is going to weigh on sentiment tomorrow, and those big technology stocks that lead today may see the tide quickly turn.

Keep in mind that we are in a bear market, and the major indices are downtrending. Bounces like we had today are always suspect, especially when they come on news like that from the Fed, which really isn't that good.

Have a good evening. I'll see you tomorrow.

P.S. Missing Lenny Dykstra's deep-in-the-money calls? They're now here..
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ALL REV SHARK BLOG ENTRIES | POST A COMMENT | READ COMMENTS

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James "Rev Shark" DePorre is the author of Invest Like a Shark: How a Deaf Guy with No Job and Limited Capital made a Fortune Investing in the Stock Market. He is founder and CEO of Shark Asset Management, an investment management firm, and he also operates sharkinvesting.com, an interactive online community that serves and educates active investors. DePorre holds business and law degrees from the University of Michigan, is a member of the Michigan Bar Association and a former tax attorney and CPA. He lives in Anna Maria Island, Fla., with his wife and two children. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Rev Shark appreciates your feedback; click here.

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Tuesday, June 24, 2008

Investing
Brazil Could Lose Its Economic Thrill
By Howard Simons
RealMoney.com Contributor
6/24/2008 8:48 AM EDT
URL: http://www.thestreet.com/p/rmoney/investing/10422632.html

Perhaps you, like me, have been getting emails ranging from inappropriate to offensive about our impending election. Well, let's say the worst fears expressed therein come true, just as they did in Brazil in October 2002 with the election of the avowedly leftist Luiz Inácio Lula da Silva. Would you trade our stock market returns since then for Brazil's, and if you would, why?

Brazil's Bovespa index, whether expressed in terms of the U.S. dollar or the Brazilian real (BRL), has run rings around the S&P 500 since that time. It has been embarrassing, really, especially for those of us whose memory extends back to the Jan. 12, 1999, devaluation of the BRL, which in retrospect was the final development in the financial crisis that began in Thailand in July 1997.

Even the BRL, which did not come into its present form until October 1994 and which succeeded a series of failed currencies such as the cruzeiro, cruzeiro novo, cruzado and cruzado novo, has demolished the greenback since Lula's ascension.

The Real And Comparative Equity
Total Returns
Click here for larger image.
Source: Bloomberg

Brazil became part of the BRIC quartet, along with Russia, India and China. For those whose thought processes seldom extend beyond acronyms, this has been a rough year for half of the BRICs. While Brazil has gained 15.4% in 2008 in USD terms, and Russia 5.1%, India has lost close to 30% and China more than 40%.

What has been behind Brazil's success and, more important, what are the prospects for continuation? Part of the answer, given right up front, is that Brazil has been a beneficiary of the dollar carry trade that was discussed here in January. That's right, the dollar carry trade, as opposed to the yen carry trade. Our artificially low interest rates are financing other markets, Brazil's included, and that presents both a short-term gain and a long-term risk for Brazil.

Short-Term Rate Gap Rose
During Credit Crunch
Click here for larger image.
Source: Bloomberg
Rule Out Rate Gap

The short-term interest rate gap between two countries is often a good place to start any currency analysis, but in the BRL's case, the effect has been opposite the expected answer. Changes in the currency have led the normalized interest rate gap between six-month U.S. dollar and BRL swap rates by six months. This is the gap between BRL and USD rates divided by USD rates.

As the BRL has strengthened, short-term interest rates in Brazil have been able to fall relative to those in the U.S. If this seems to be a virtuous cycle, it is. Funny things happen to countries with responsible monetary policies. Come to think of it, funny things happen to countries with irresponsible monetary policies, too.

Interest Rate Expectations
What if we move from a simple normalized rate gap to comparing forward curves in the money market? We can measure short-term interest rate expectations by the forward rate ratio (FRR) between six and nine months for both currencies. This is the rate at which we can borrow for three months starting six months from now, divided by the nine-month rate.

Interest Rate Expectations For U.S.
Rising Relative To Brazil
Click here for larger image.
Source: Bloomberg

This measure provides us with a measure of money market conditions that are expected to prevail when the standard three-month non-deliverable forward is unwound. A FRR in excess of 1.00 indicates a positively sloped money market curve; a FRR less than 1.00 indicates an inverted money market curve.

If we subtract the Brazilian FRR from the American one, we can see how the long trend of rising interest rate expectations for Brazil relative to the U.S. has ended quite abruptly in recent weeks. A little bit of tough talking by the Federal Reserve has led the market to believe that U.S. interest rates will start to rise faster than Brazilian rates as soon as next month. As the FRR differential leads the currency by six months on average, this suggests the BRL will start to retreat soon. This, incidentally, is similar to the conclusion reached for the euro last week.
Risk and Return
Now let's add some risk measures into the mix, such as a measure of the insured returns on Brazilian government debt. We can calculate this at the three-year horizon by taking the spread on Brazilian notes over U.S. notes and subtracting the cost of a three-year credit default swap (CDS) from this raw spread.

A CDS acts like a put option on a bond; the buyer of a CDS surrenders basis points of yield to a CDS writer in exchange for a promise to deliver the underlying bond at par or a cash equivalent in the event of a default or other stipulated credit event such as a material downgrade. The riskier the bond, the greater the insurance cost.

While the normalized six-month yield gap between Brazil and the U.S. has been narrowing, look at how the insured credit spread has been widening since the onset of the credit crunch last year. If we go back to October 2007, the peak in the U.S. stock market and the time when China acquiesced to an accelerated revaluation of the yuan, marked with a green line on the chart, we see how the insured credit spread between Brazil and the U.S. has exploded higher.

Real Rose As Spreads Widened
Click here for larger image.
Source: Bloomberg

What is going on here? A simple answer is that the strong Brazilian economy can afford to outbid U.S. borrowers for U.S. funds. The higher yield in Brazil at this capital market horizon is pulling capital from the U.S. The conversion of those dollars into reals has been driving the exchange rate. This is the dollar carry trade in action.

Real Volatility Has Fallen During Rally
Click here for larger image.
Source: Bloomberg
Finally, let's add the second measure of market anxiety: the volatility on three-month BRL forwards for a holder of dollars. Once again, if we look at the rally since last October, we see declining demand for insurance even as the BRL has firmed.

The market accepts the rally, and that is bullish with a capital "B."

What can derail the Brazilian market? If Brazil has been financed by American monetary profligacy, then removal of that profligacy can end the dollar carry trade and produce as much indigestion as did Japan's furtive efforts to end the yen carry trade in 2006.

The trade is simple: If you believe the Federal Reserve will maintain its policy of keeping the real federal funds rate negative, stay long Brazil, using an instrument such as the iShares MSCI Brazil ETF (EWZ) . If you believe they will tighten, sell any funds you may have with a Latin American focus.

Howard L. Simons is president of Simons Research, a strategist for Bianco Research, a trading consultant and the author of The Dynamic Option Selection System. Under no circumstances does the information in this column represent a recommendation to buy or sell securities. While Simons cannot provide investment advice or recommendations, he appreciates your feedback; click here to send him an email.

TheStreet.com has a revenue-sharing relationship with Trader's Library under which it receives a portion of the revenue from purchases by customers directed there from TheStreet.com.

today

About Shark Watch

Tuesday, June 24 - 4:17 PM

Afternoon Comments

Although the market was able to bounce following a pretty ugly start to the day, the bulls were never really able to get anything of substance going and the result was a quick trip back into negative territory. The point losses in the indices weren’t all that bad, but when you consider that the only action to the upside came in the sectors which have taken absolute beatings lately, it’s hard to get too excited about what passed today as leadership.

Still, even though the action was weak, it did leave the possibility of a Fed-induced spike on the table for tomorrow. However, as we pointed out earlier today, any oversold bounce at this point will only give the bears an opportunity to reload their downside bets. The bottom line, then, is that we need to stay focused on the fact that this market is in a nasty downtrend, and any action to the upside should be treated for what it is: a counter trend rally that should not be expected to last.

Have a great evening and we will see you tomorrow.

Monday, June 23, 2008

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Intermediate-Term Outlook for the Indices Is Bleak

By Rev Shark
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6/23/2008 4:15 PM EDT
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CLICK HERE NOW

It was a very slow day with light volume, but once again oils stocks were strong, financials weak and the broad market lackluster. Although the indices were close to flat, we had more than two stocks declining for everyone one that advanced. However, the strength in oil stocks covered up weakness elsewhere and made things look better than they really were.

The technical condition of the major indices looks precarious at best, and even a bounce here would look to be nothing more than a setup for another leg down. The action isn't terrible, but there is no energy out there, and outside of oil stocks, there is little buying interest. We are a bit oversold, which is bringing in a few bounce players and may help to hold us up a while longer, but the intermediate picture of the indices is downright bleak, especially the DJIA, which is barely hanging about the lows of the year.

As I wrote this morning, my big concern about this market is that the Nasdaq and small-caps are going to catch-up with the DJIA and S&P 500 to the downside. The action today did nothing to change my view, and I believe it is just a matter of time before the Nasdaq and Russell 2000 break down further.

While we may see some sort of bounce soon, there is no reason to anticipate that a market bottom is at hand. Stay patient and protect that capital.

Have a good evening. I'll see you tomorrow.

P.S. Missing Lenny Dykstra's deep-in-the-money calls? They're now here..
Lenny "Nails" Dykstra's new service, TheStreet.com Nails on the Numbers, is the only place where you can now find the profit potential of his deep-in-the-money calls. Limited time to save $100.

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James "Rev Shark" DePorre is the author of Invest Like a Shark: How a Deaf Guy with No Job and Limited Capital made a Fortune Investing in the Stock Market. He is founder and CEO of Shark Asset Management, an investment management firm, and he also operates sharkinvesting.com, an interactive online community that serves and educates active investors. DePorre holds business and law degrees from the University of Michigan, is a member of the Michigan Bar Association and a former tax attorney and CPA. He lives in Anna Maria Island, Fla., with his wife and two children. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Rev Shark appreciates your feedback; click here.

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to buy?

lcav at 6?

short at 5?

alvr at 7?

buy wb opts?

Phil Erlanger

04:27:09 PM

No positions in stocks mentioned.

Latest NYSE Short Interest Numbers

Last Friday the NYSE reported the latest set of short interest numbers. Short interest numbers for the NYSE are reported as for the period of trade date June 10th with settlement date of June 13th rose to 17,654,028,383 from 16,431,281,684. The overall increase with the new data is 1,222,746,699 for an increase of 7.44%. This is the largest absolute increase and one of the top increases in the last few years. Yet, in our work short selling is starting to climb on an intensity basis but not nearly as high as last July.

1,868 names saw their short interest rise while 969 saw their positions decrease on the NYSE/AMEX.

Dedicated short sellers made 0.86% in May as reported by www.hedgeindex.com. YTD short sellers have made 2.69% through May.

MV Trivia

03:38:20 PM

No positions in stocks mentioned.

17,508
Thats how many islands comprise the republic of Indonesia! As of 2006, Indonesia's population reached 222 million people. It is the world's fourth most populous country and the most populous Muslim majority nation.

Congrats Minyan Bradley Hallwig!

Choose your Critter!

Jeffrey Cooper

03:24:01 PM

No positions in stocks mentioned.

Apple Stein n' Handle?

Is that a Stein & Handle pattern on the 10 minute chart of Apple (AAPL) today?

Click here to enlarge.

If so, that's bullish into the close on the stock.

Minyanville Staff

03:10:00 PM

No positions in stocks mentioned.

Tuesday Radar
The pace picks up tomorrow. Here's a quick look.

Economics

9:00 S&P/CaseShiller Home Price Index: 172.2 Prior
9:00 S&P/CaseShiller Composite – 20 (Y/Y): -15.9 cons.
10:00 Consumer Confidence: 56.3 cons.
10:00 Richmond Fed Mfg. Index: -6 cons.
10:00 House Price Index (m/m): -0.5% cons.

Click here for the full trading radar.

Rod David

03:01:11 PM

No positions in stocks mentioned.

Stocks mentioned this week in Barron's

* Bye, Bubble? The Price of Oil May Be Peaking - Where you want to be when the bubble bursts - DVN, APA, XTO, XOM, CVX, COP, BP, MRO, VLO
* Stocks for a Season of Caution - Focusing on good stocks with limited downsides - NBK, WMT, IBM, GE, BRKA
* This Bud's for All of You - If InBev buys Anheuser, other brewers will cheer -- with one exception - BUD, TAP, FMX
* Why Cable's Mighty Mite RCN Looks Undervalued - Small cable provider RCN is holding its own against mega-sized rivals - RCNI, TWC, CMCSA, VZ
* Beating Apple's New iPhone to the Punch - Sleek new Touch Diamond outshines Apple's smartphone -- and could put High Tech Computer on the map - GOOG, MSFT, RIMM
* A Two-Pronged Attack on a Killer - Onyx's promising cancer treatments make its volatile stock look cheap - ONXX, BAYRY
* Carl Blogs, Jerry Bumbles, Steve Balks, Yahoo! Bleeds - What's a Yahoo! Investor to do? Intel should've listened to us - YHOO, INTC, MU, STX, SHOR
* Ariba -- Dot-com Flameout's New Fire - A dot-com bomb's new lease on life - ARBA, ORCL, EBAY

Todd Harrison

02:50:55 PM

No positions in stocks mentioned.

Hut, Hut, Hike?

With the FOMC meeting around the corner and all eyes on language, some folks have offered that the tape is on hold until clarity emerges. Some top line vibes:

* Fed Fund Futures are pricing in a 12% shot of a 25 basis point increase this meeting, 36% in August and 57% chance in September.

* I don’t think we’ll see movement on Wednesday but all eyes will be on the text for hints regarding future meetings.

* Current psychology doesn’t support a rate hike due to an economic uptick. Given credit conditions, I continue to believe that raising rates would be a massive mistake.

R.P.

Jay Shartsis

02:40:00 PM

No positions in stocks mentioned.

Bottom?
So what’s bullish in here? Not Much.

The QQQQ did hold its prior low at $42.00 and has turned up. That created a positive divergence to the new lows in the Dow Industrials and S&P 500. Same is true for the RUSSELL 2000.

But how much weight can I assign this?

A good bottom probably demands a jump in the put/call ratio and a jump in the VIX, neither of which has happened. Also a discount in the VIX vs. its futures would be bullish, but remains at a premium, as July VIX has a premium of about a point to cash VIX. We will probably see a discount of about $1.50 at the low, and for a few days.

Minyan Peter

02:33:40 PM

No positions in stocks mentioned.

That's a lot of dough!
To Prof. Depew's column from earlier today, while a $15 billion reduction in credit card lines may sound significant, it isn't.

Citigroup (C) alone had over $1.1 trillion, yes that is with a "t" of credit card line commitments as of the end of March.

Sean Udall

02:28:05 PM

No positions in stocks mentioned.

Minyan Mailbag: Alvarion
Professor Udall,

What do you make of the move of Alvarion (ALVR) on Friday on heavy volume, against the direction of the market?

I have been holding ALVR for quite a while, and believe it is significantly undervalued, especially in light of recent news about the Sprint (S)/Clearwire (CLWR) WiMAX deal and now Alvarion's deal with Nortel (NT).

Thanks,
Minyan Greg

MG,

I think ALVR is one of the best of the cheapie tech plays and lately it's been inking contracts with abandon. However, today is a good example of how it can trade. Get a market where beta is weak and/or small/mid cap volume is light and bids are scarce and it can get hit pretty hard percentage wise. Additionally, you've got the added angst that is associated with Israeli stocks and the latest rumors don't help.

As of right now ALVR is sitting on some support and the daily technical averages are still mildly positive. If this level breaks then the $6's come into play again. Fundamentally, I think ALVR is one of the better Wimax plays and at two times sales and three times cash, it is well priced given growth rates.

I'll be back long again when I feel like I have a little market support, or on anything around $7 or lower.

-Prof. Udall

Bennet Sedacca

02:20:24 PM

No positions in stocks mentioned.

COME AND GET EM!!!!

That's right folks, Prudential Financial (PRU) preferred at 9%! Hoowah!! Am I buying? Nope. Not yet.

Everything seemed cheap at 7, 8 8 1/2 and now 9. Keep in mind, these securities aren't trading with spreads versus Treasuries, per se, but more like a junk bond or a common stock.

It's likely that we're getting closer and closer to these deals not getting done as Prof. Zucchi alluded to earlier.

But I have some gruesome stories from the 1990-1991 time frame that make me be patient. Even back then, 'things that can't happen', happened. So this time around, I imagine it will be prudent to be even more patient.

Risks in credit and bonds in general, remain high.

Lance Lewis

02:14:22 PM

No positions in stocks mentioned.

Minyan Mailbag: Crazy Golds
Dear Professor Lewis,

I am a loyal Minyan and greatly value your posts on the site.

I'm sure you saw it, but I just want to make sure. After the close Friday there were two very large prints for both Golden Star Resources (GSS) and Nevsun Resources (NSU). The GSS was much larger. Based on the levels they were buys. This is the type of action I love to see when long the name, as I am of both.

Looking forward to more of your color and feeling long and strong the miners.

-Minyan Nick

MN,

Thanks for the kind words.

Yes, I saw the craziness late on Friday. It was pretty wild. There's definitely been a big buyer in NSU for the last several weeks, which is good to see. However, the late day surge in volume and price on Friday in GSS, NSU, Great Basin Gold (GBN), and a few other names (while others were correspondingly knocked down on big volume, like Gammon Gold (GRS)) were probably more a reflection of some quarterly index rebalancing I suspect, even though as a bull I'd much rather it be a buyer that wanted stock so badly that he couldn't wait. :)

We saw the same thing on the quarterly expiration in March if you will recall in GSS and some other names that exploded big on the close into that expiration, while other names were correspondingly dumped.

The good news is that all the golds (including GSS) are acting well today in the face of the pounding that gold took this morning in the futures.

-Professor Lewis

David Waggoner

02:07:46 PM

No positions in stocks mentioned.

Assessing the Big Picture
In The Effectiveness of Elliott Wave Analysis I shared the 3 verses 5 wave conundrum down from the October high and the possibilities of where we were in the process. In my analysis I continuously evolve all working theses and trade in the direction of the dominant one.

I had previously considered a flat following three waves down from October as part of a five wave structure, but put it on the back burner in favor of other patterns because of ratios, and then abandoned it altogether when price broke above 1406 (the bottom of wave 1 of the five wave down thesis) since wave 4 cannot retrace past wave 1.

In reviewing multiple time frames and wave structures, I now favor an expanded flat (a-b-c) thesis as the strongest probable retracement pattern following the move down from October (A-B-C). Since it is not possible for this to be a retracement for a 3 of 5 wave structure down, I must shift my bias to a 3 wave corrective structure down from the October high.

Click to enlarge

This opens up a lot of possibilities. I mentioned in Bulls Take Heart that my short-term bias was that 3 waves had followed a possible 5 waves up from the bottom. Tying it together, the 5 waves is the C wave of the expanded flat. Since we broke below 1324 I now need to identify the structure to determine where we are in the move following the c wave of the expanded flat. Up to that point I had identified 3 waves (a zigzag) and thought we might catch a turn.

Since then, we have extended down, but the structure currently looks like another smaller zigzag.

Click to enlarge

In the short-term, I expect to hold here, or near here, and get a retracement rally of the extended 3 waves down from 1441.

The long-term confirms that we are sitting on an important level and should bounce or pause near here. Following a bounce, if we extend the 3 waves down from the October high, a .618 ratio is 1236 and a 1.00 ratio is 1108. On the other hand, if we extend the a-b-c up from here, 1432 or 1505 are equally possible targets over the intermediate term.

Click to enlarge

Todd Harrison

01:57:19 PM

No positions in stocks mentioned.

One dog's looking this way, the other dog's looking that way...

With contra-hour bearing down on the Monday minx, we've got ourselves a tape caught in headlights. To the left, the all-important financials, which are dangling on the precipice of ten year lows. To the right, we've got stubbornly sticky--dare I say almost "unnaturally sticky"--futures. In between? Market breadth, which was hanging tough but is now somewhat rough.

Some random musings as I count my blessings...

* Google (GOOG) has acted dry all session. I traded this puppy from the short side last week and covered it once it filled the first downside gap. I'm not currently involved but gun to head, my sense is that THE gap between $525 and $450 ultimately fills.

* Regarding the morning Truman Show hit, I'm not sure if I agree that this is a "great opportunity for the long-term" given my view of a multi-year deleveraging process but, as Minyans know, I bought some upside calls in the banks for a trade with an eye to defined risk below BKX 60.

* If and when that triggers, I'll likely trade some other sectors and/or indices from the short side and play the pairs given how oversold the shakin' bacon is. And yes, I know all too well that the sharpest moves through the lens of denial-migration-panic occur from an oversold condition.

* I'll tell ya, they should change the name of Facebook to "Worlds Collide!" I can't tell you how many people I've reconnected with since joining. From grade school in Great Neck to high school in Encino to Syracuse to Mother Morgan to Minyans around the world. This is exactly what an A.D.D. person needs to keep their social network in order!

* You see this rally attempt? It's likely Snappers last shot at upside redemption today. Pay particular attention to it, friends, for the next step would likely be a doozy.

* As always, I hope this finds you well!

R.P.

MV News

01:50:00 PM

No positions in stocks mentioned.

Google Alert!
Google (GOOG) shares are getting a lift.

Bloomberg notes the company is on scheduel to deliver its Android Phones

Kevin Depew

01:48:41 PM

No positions in stocks mentioned.

Under the Hood

* Despite the mixed green on the screen and Boo's seeming inability to push weakened stocks still lower, note that new point and figure sell signals are leading new buy signals by a very wide maring, 42 to 7.
* Overall sell signals are leading 91 to 27.

Adam Warner

01:46:37 PM

No positions in stocks mentioned.

A Word From Our VIX

Just a few thoughts on those rather lame volatility indices we see on our boards.

Post-expiration week tends to see a ton of call writing as everyone seeks to replace everything that expired. Summer does not encourage anyone to buy much "time". Nor does a holiday right smack in the middle of the expiration cycle. All these things suggest a lower VIX. At least in the statistical calculation we see on the board.

Yet VIX futures suggest what you see in the "spot" is essentially correct right now as both July and August trade at a very modest premium to this.

I would expect the cash VIX will hold relatively steady through the Fed meeting on Wednesday, but after that, watch out below. For those curious to see what "real" volatility is doing, important to pay more attention to the VIX forwards/futures from Wednesday through July 4th.

Lance Lewis

01:39:04 PM

No positions in stocks mentioned.

Minyan Mailbag: Conspiracy Theory - Gold Style

Prof. Lewis,

Any thoughts on the theory being advanced by Jim Sinclair and James Puplava that naked shorts are responsible for beating down the junior gold stocks? Seems like the market is willing to give anyone more benefit of the doubt than Minefinders Corporation (MFN) or similar new producers. Thanks in advance.

-Minyan Scott

MS,

Some people like to look for a conspiracy every time market prices don't do what they "believe" they should. However, I don't find that attitude very helpful or conducive to making money.

The juniors are cheap, and they "should" be acting better than they have been given where gold is. I agree with that, as do most gold bulls. But is that because there's a conspiracy of naked shorts that have decided to single out gold stocks in the one space (resources) that happens to be in a bull market equity-wise? That seems about as far-fetched as the theory that a conspiracy of "speculators" are to blame for the rise in oil and other commodity prices. (Again notice how the camp that believes oil's rise is a conspiracy similarly don't think it should be where it is and are forced to blame "conspiracy X" when oil doesn't do what they think it should, namely: "go down")

The gold shares (and the juniors in particular) have underperformed for a variety of reasons since last November. In my humble opinion, the most likely causes for this are (1) the illiquid conditions that existed in the stock market from November until March and (2) the sharp drop in the gold/oil ratio since March, which replaced illiquidity fears with fears of rising costs eating up gold mining margins.

The liquidity problem ended in March when the Fed began basically monetizing (depending on how you look at it) bad debt on the balance sheets of banks and primary dealers. However, the gold/oil ratio then began to collapse in March and provided a second headwind. That ratio "appears" to have bottomed a little over a week ago near the prior 2005 all-time low. If so, the shares (including the juniors) should be free to rally, assuming gold has another leg up to new highs like I expect. And it will have nothing to do with "running in naked shorts in juniors", no matter how emotionally pleasing such an image might be.

-Lance

Jeff Macke

01:33:31 PM

No positions in stocks mentioned.

Gone Fishin'

Hello from New York where it's Thursday in my brain as I make my way towards a trip to Canada for fishing and bonding later this week. I'm not a bobber-watcher, by nature, but I'm big on bonding and Mrs. Jeffmacke is all but kicking me out of the house with a mandate to "Find My Smile." As I so often point out, it's very seldom in my best interest to disagree with the Missus.

Here's what I'm watching when not wondering if it's possible to just have myself dipped in bug repellent in a giant vat:

* What kind of fishing will I not be doing any time soon? Bottom fishing. Picking away at long side trades in names like Citi (C) or JPMorgan (JPM) is tantamount to self-abuse, at this point.

* In other fishing metaphors, check the streaming misery flowing from crude. The stories on General Motors (GM) and the AMRs (AMR) of the world are the headlines but the American Axle's (AXL) and Lear Corp (LEA) of the world are suffering the same pain as their partners, just a little less loudly.

* Today's examples of why I don't buy dips in retail are brought to us by the letter C, as in Circuit City (CC). The not-dead-yet electronics retailer is down 20-odd percent today and the best "reason" being offered is the idea that Blockbuster (BBI) may not want to buy CC for $8 a share. You don't think?

* Duuuuuuuude.

* I simply can't believe what I just paid for a ticket to go to fishing and the fact that Northwest (NWA) isn't making money at these prices. This week may be the last time I travel more than 40 miles from home for the foreseeable future.

* And when I don't go to Vegas ever again I won't be staying at the MGM Mirage (MGM) or buying the casino stocks. Then again, I like my odds on "Red" more than I like my chances of calling a bottom in the laggers on days such as this.

Jeffrey Cooper

01:27:20 PM

Position in BG

Bunge Bungee?

Bunge (BG) has traced out a measured move today (two symmetrical legs down) and has tested the low and appears poised in a position for a snapper.

See the 10 minute chart for today here.

Click to enlarge

MV Trivia

01:15:00 PM

No positions in stocks mentioned.

Island Hoppin'

An archipelago is a chain or cluster of islands. The word archipelago literally means "chief sea" in Greek.

What is the world's largest archipelago state?

Be the first Minyan to answer correctly!

Fil Zucchi

01:07:06 PM

Position in FCSX

Here comes the panic...

* Back in April I loaded up on what were then way out of the money October 25 puts in commodity broker FCStone (FCSX). The idea was that in the next panic to come, I'd be able to roll out of my 30's. Well the panic is now here, and I am offering the 30's in scale. I'm not sure if there is a good reason to panic in FCSX - these are very tough names to track day to day - so the key for me is to remain content with my overall risk exposure.

* What I am not content about is my early departure from the dark-side of BankUnited Financial (BKUNA). If you do an archive search you'll see that this was a name singled out a long time ago for outsized troubles. I bailed with the stock in the 'teens, not wanting to play it for a total wipeout. Bad call. The stock is now at $1.30, and the company is trying to sell $400M worth of stock against its current $100 million market cap. What's worse is that it may not even get done.

* Will "deals not getting done", as suggested a while back by Prof. Sedacca just as the Banking Index (BKX) tickles the 60 level noted by Toddo, mark the bottom?

Lance Lewis

12:57:17 PM

Position in gold, gold stocks.

Gold and Gold Shares
The selling in gold this morning looked like more COMEX shorts betting on dollar strength and this Vietnam story knocking the metal down. It won't work and gold shares may be confirming that by rallying as well.

The story actually is already two weeks old and it’s not a real factor in my opinion. But that doesn’t stop somebody from selling on the news, which just hit today.

Kevin Depew

12:52:46 PM

No positions in stocks mentioned.

Monsanto

And then there are the winners. But, as Maximus said, "The time for honoring yourself will soon be at an end." Note the DeMark TD-Sequential 12 of potential 13 on the chart of Monsanto (MON).

Click to enlarge

Todd Harrison

12:46:53 PM

No positions in stocks mentioned.

More Answers I Really Wanna Know...

* What would be George Carlin's take on death? (RIP sir--you left an indelible mark on our world)

* If overbought conditions are alleviated as a function of time or price AND sideways action is basing above support (and churning under resistance), what is this chart of crude telling us?

* How many folks are banking on an Olympic run in China?

* What does it tell us that the Corn Products (CPO)-Bunge (BG) and Republic Services (RSG)-Allied Waste (AW) Merger Monday news can't offer a spark in the dark?

* Credit contraction takes many forms, eh?

* How in Gawd's name is the LOWER VXO TODAY given the Art Carnage in the financials?

* The emergency rate cut chatter is notably absent today. Is the last bullet in the chamber finally pointed inward?

* What, prey tell, will Turnaround Tuesday bring?

R.P.

Kevin Depew

12:42:17 PM

No positions in stocks mentioned.

GM

To Bennet's point on General Motors (GM), here is an interesting look at the quarterly chart with DeMark TD-Sequential overlaid.

Click to enlarge

Bennet Sedacca

12:35:47 PM

No positions in stocks mentioned.

Dandruff alert

Note the chart below of Goldman Sachs (GS) since it went public.

Click to enlarge

It's a wonderful franchise to be sure, but I always wonder how it dodges every bullet.

The weekly chart has some nasty dandruff which may portend some other things to come.

We'll see.

Jeffrey Cooper

12:30:55 PM

No positions in stocks mentioned.

Watching BG

A trade below the May low on Bunge (BG) of 106.50-ish will leave an outside down month.

The moral of the story: you have to honor your stops because you never know. But that's all the more reason to re-enter if the stock is a sell set up, as was the case in BG when it broke the 50 DMA and a rising trendline this morning.

Michael Paulenoff

12:26:33 PM

No positions in stocks mentioned.

Gold's Upleg Complete

Although the weakness in the SPDR Gold Shares (GLD) has not inflicted much if any meaningful technical damage to the overall pattern off of the 5/1 low of 83.57, today's big gap down certainly argues that the current upleg off of the 6/12 low at 84.83 into Friday's high at 89.61 is complete!

In addition, my expectation of an approaching significant low closer to the timeframe of the bottoming of the 15-18 week cycle low between July 7 and 14 suggests that today's weakness is the start of the road towards such a low, which figures to be VERY important indeed. Let's expect the GLD to press towards a test of the rising 200 DMA in the 85-84 target zone in the upcoming hours/days -- and possibly decline into the 82.90/50 area prior to a powerful upside reversal.

Click to enlarge

Andrew Jeffery

12:17:59 PM

No positions in stocks mentioned.

Anyone for 40s?
Pep 's recent post on Fannie (FNM) and Freddie (FRE) suggests banks aren't the only financial stocks probing recent lows. Consumer credit is risky business these days -- to put it mildly -- and American Express (AXP) and Capital One (COF) are quietly drifting towards lows of the year.

Click to enlarge image

Click to enlarge image

Keep an eye on 40 as an important level for both stocks. 40 also could represent a liquid asset shareholders may be looking to get long if the lows don't hold.

Bennet Sedacca

12:10:23 PM

No positions in stocks mentioned.

More on GM

As I mentioned the other day, the one name that bothers me the most is General Motors (GM).

It has huge amounts of unsold inventory, a business mix that is, well, not what it used to be, and it's about to face a wave of SUV's being sent its way as leases expire.

Judging by the way that GM's debt trades (preferreds now in the 14% range), I don't see how it can finance its way out of this mess.

And considering how many people are employed there, this company is facing the Perfect Storm. And I have no idea how GM can make it through it. Unlike SunTrust (STI), that despite being stubborn about its dividend, at least has the KO stock to sell. What does GM have? Squat.

I really think this is the biggest shoe of all, and the bad part is that I don't here much chatter about it, like I do Lehman Brothers (LEH). That's what bothers me.

Jeffrey Cooper

11:47:19 AM

No positions in stocks mentioned.

Bunge Run

50% of the the recent range in Bunge (BG) is approximately 105 to 108 while the behavior at the 200 dma at approximately 111 will be interesting.

Note how BG is making a beeline toward its 200 dma after breaking its 50 dma convincingly today.

It's at the 200 Now.

Ryan Krueger

11:40:00 AM

No positions in stocks mentioned.

Australia...
This just out...

Mining Giant Rio Tinto (RTP) has been successful in its quest to secure a freight premium for Australian iron ore, locking in the biggest-ever rise in contract prices for Australia’s most valuable commodity export.

Rio settled on an average price rise of 85 per cent for iron ore it sells to China's steel mills, who were led by Baosteel in the negotiations, beating the 71.5 per cent increase secured in 2005.

The freight premium is because Australia is so close to China instead of shipping all the way from Brazil for example, and a reminder of why I favor holding Australian dollars which benefit from this natural resource rich nation with a very desirable address.

Quint Tatro

11:34:07 AM

Positions in GS, ASTI

What I...

What I Like

*
Solar poppage in a terrible tape.
*
Hmmmm, that’s a short list.

What I Don’t Like

*
Financials trading below support.
*
Oil higher… again.
*
2–1 Negative NASDAQ breadth.
*
Goldman (GS) below 50 day.

What I've Done

*
Added a touch more Ascent Solar (ASTI).

What I'm Watching

*
The market to break day lows, while Goldman hangs on… for now.
*
Natural Gas stocks: Delta Petroleum's (DPTR) day high for an add.

Kevin Depew

11:25:56 AM

No positions in stocks mentioned.

Stock Worries

Increasingly hearing from some worried folks about the action in stocks. To follow up on some of the DeMark indicator notes from last Friday, the requirements for a swift cascade lower today were: lower open (basis SP futures) and one tick below that open, which clearly did not occur. That was the most immediate requirement for high probability selloff. Nevertheless, we still show SP not yet having completed DeMark countdown or buy setup requirements. Credit markets are really the key, and equities are taking their cues from that area.

Note the sloppy action in Fannie Mae (FNM) and Freddie Mac (FRE). A move below March lows would certainly spook some folks and on the daily charts neither have showed any signs of exhaustion.

Todd Harrison

11:19:33 AM

No positions in stocks mentioned.

Answers I Really Wanna Know...

* Is the quarter-end purge (financials) and splurge (big beta) too easy?

* Where are we in the denial-migration-panic continuum?

* Should we add the breach of DJIA 12,000--the dislocated shoulder in our dandruff pattern--onto the long list of concerns?

* Has everyone taken the time to wish my brother John Succo a very happy birthday?

* Anyone long a deuce to Coldplay tonight at MSG?

* NYSE internals are still hanging tough?

* Script a recipe for a market melt, see it play out before your eyes... and scale into bank calls into the meat of the heat?

* Heck, even Las Vegas brother business is down 45% and Beverly Hills plastic surgery is off 50%!

* Recipe? Shanghai breaking 3000? Stronger dollar? BKX 60, if and when? Social mood? Rate hike (still 31% odds by September)?

* What am I, mad?

R.P.

Terry Woo

11:10:00 AM

No positions in stocks mentioned.

Hoofy n' Boo

A few updates from this morning's Two Ways to Play:

From the Bull Pen:

* Bulls feel this is a good move for Bunge (BG). Trades below $118 (50 DMA) may act as a near-term sell-stop.
BG is trading -5.46% to $115.60.
* Those bullish on the long-term prospects for Republic Services (RSG) may fade (read: buy) as it approaches the $30 level. Another alternative is Waste Management (WMI); sell-stops near the 50 DMA ($36.80) may be an option.
RSG is trading +0.19% to $31.25.
WMI is trading unch at $38.29.

From the Bear Cave:

* Bears can play the downside in Hormel (HRL); trades above $37 may act as a near-term buy-stop.
HRL is trading +0.20% to $35.60.
* Bears looking for a related downside play might see one in Stericycle (SRCL); Buy-stops can be set above the 200 DMA ($55.65).
SRCL is trading +0.39% to $54.16.

Jeffrey Cooper

11:03:58 AM

No positions in stocks mentioned.

Trading Apple

Apple (AAPL) is testing the high of the low bar day (June 13th).

If that gives it suggests three drives down to the 200 day will play out (i.e. a 1-2-3 swing to a test of the 200 DMA) which should set up a buying opportunity.

Ryan Krueger

10:35:00 AM

No positions in stocks mentioned.

Makes Sense?
In honor of the miniest of my Minyans' first foray into strained pears last night for dinner to celebrate her first five months of trading and drooling, following her dad’s footsteps over that time, I’ll offer this view as I look out over my bib.

Large Cap is now down close to 7% for the month, Small Cap is down less than 3%. Year to date that spread is close to 1000 basis points when it was supposed to be just the opposite for so many reasons. The moves which make the least sense contain the most information.
Among the sectors, two stick out to me as presenting an unusually compelling and cheap pairing.

The two with the lowest implied volatility readings are Health Care (XLV) and Staples (XLP). I might have a very small taste of calls and puts respectively.

Bennet Sedacca

10:30:00 AM

No positions in stocks mentioned.

Why do I feel like I'm in a shoe store?

Every financial on my screen acts like a shoe. Whether brokers, money centers or regionals.

They're just so intertwined that if one actually does have some problems (Lehman (LEH) anyone?), the whole group goes with it.

As we approach quarter end, financials from insurance companies to the dealer community are shedding assets to dress up the balance sheet for quarter end. Like this really accomplishes anything, Seriously isn't it putting lipstick on a pig?

Ryan Krueger

10:24:00 AM

Position in CPO

Talkin' Corn
When I shared my firm's work on Corn Products (CPO) in the past it was usually met with sighs at best, typically silence. I remember once the only thing I could hear was ice clinking in glasses of soda beneath blank stares.

After the buyout announcement today, I’ll guess that CPO and this deal will be forgotten by this time next week on Wall Street, if not sooner. But I’ll share our view that Minyans should remember the clue it offers.

Even with the spotlight it’s been described as “another bet on Ag and corn.” It's not. The company buys corn, it doesn’t sell it. It use it to make cheap sweeteners. Ag is the global staple’s staple. It has been my favorite stock to stand first in line for the US' biggest export of all – capitalism and its allowance of those first few discretionary coins in pockets. Lotta folks around the world are right where the US three decades ago.

My favorite paired trade right now continues to long global staples, short domestic staples (including many of CPO’s customers).

Todd Harrison

10:18:08 AM

position in wb

Gate Sniffage!

* The single biggest positive on my screens? NYSE internals, which are hugging the flat line despite the single biggest negative on my screen which are...

* The financials, which are leading the downside speed. BKX 60 is a kitten's whisker away, Minyans, so keep that level on ye radar as we find our way. I have, so you know, layered in to further upside exposure in the group with an eye towards the wishbone. Should I want or need to hedge that bet, I'll look to S&P puts.

* Wachovia (WB) is my biggest bet... through options... and it has nothing to do with the takeover rumor that I heard this morning for the first time.

* Somebody PLEASE get Allanis Morrisette out of my head.

* Green beans in a red sea? Research in Motion (RIMM), Baidu (BIDU), Wal-Mart (WMT), Sears Holdings (SHLD) and the semis.

* On the heels of Friday's fugly action, we knew we knew were gonna see a downside test for this market pest. The question, quite naturally, is "was that it?" It's easier for me to believe so in the financials given the 3-5% slippage. For the broader tape? It's a toss-up... and will largely depend on the ability of BKX 60 to hold.

* Shake off the Mondays and let's play ball yo!

R.P.

Jay Shartsis

10:12:00 AM

Position in HUN

Huntsman Still Alive
Huntsman (HUN) got smashed for $8 on Thursday last as the proposed buyout at $28 was withdrawn. The issue may, however, not be dead and here’s why.

On Friday afternoon, with the stock at $12.80, ten of its call options appeared in my expensive out of the money study. For example, the Aug. 20 calls “theoretically” valued at $0.30 traded $0.42.

The theme here is that the overvaluation may be induced by “informed” buyers. That idea is strengthened by an event that took place just before the close. With the stock at $12.84, down $0.02, it’s July 15 calls rose from $0.58 to $0.72. Significant. So too their overvaluation of $0.11 to their “theoretical” value of $0.61.

This all brings up the idea that the takeover could still be alive, maybe at a reduced price. $20 would now look pretty good.

Todd Harrison

10:05:11 AM

No positions in stocks mentioned.

Can Stella Get her Groove back?

Last Wednesday, we spoke about the recipe for a market melt and those pieces are seemingly falling in place. Today, we want to look at the other side of that trade. The mood of U.S. investors, according to several polls over the weekend, has never been worse.

It’s easy to see why:

* Levees are busting in the heartland.
* Polar bears are drifting on puddles.
* Energy prices are absurd.
* Home values have fallen into the abyss.
* Wars rage in the Middle East.
* Air Fares, college tuitions and healthcare are unaffordable to those that need it most.

Wanna get away?

*
Easier said than done given the sad state of the dollar.
*
If we’re lucky enough to catch an on-time plane, be wary of landing in the midst of a natural disaster, be it China (70,000) or Myanmar (six figures).

Wanna stay home and watch the tube?

*
Writers strike stop shows mid-season and actors strike threatens the same.
*
Sports? Baseball stars on steroids, basketball referees on the take and euthanized horses at the end of a race.

So, what to do?

Hope for the best but respect the dynamic. Remember, the stock market crash didn’t cause the great depression, the social mood caused the stock market to crash. Keep your chin up, thoughts pure and mind open.

As the purpose of the journey is the journey itself, these are some of the things we’re watching in Minyanville.

*
BKX 60, which is at ten year lows. (S&P vs. BKX).
*
All 30 components of the DJIA were negative on Friday. According to Jeff Saut, this is the type of capitulatory action that precedes a bounce.
*
The latest weekly American Association of Individual Investors Survey came in at the third lowest reading this year (worse readings during the March lows).
*
Merrill's latest portfolio manager survey reveals the highest bearish in the past 10 years (more than '00 and '03) according to the FT.
*
Watch the reaction to the first press lower, which is inevitable after the type of carnage we saw on Friday.
*
S&P 1275, the March lows, is on everyone’s radar. If they can hold, the “successful retest camp” will become emboldened.

Good luck Minyans---let's play like we mean it and trade to win. This is what we've been preparing for. Let's do it!

R.P.

Jeffrey Cooper

09:58:49 AM

No positions in stocks mentioned.

Van Gogh

I hate to use the M word, but you can't be serious.

Bunge (BG) opens up 5 on news that it's buying Corn Products Int. (CPO) and then proceeds to get hit?

What was it doing up in the first place?

A buy 'em to bang 'em? Painting the tape to create bids from the big short position?

A break of the 50 dma here after this morning's monthly turnup should establish today's high as a high going forward for some time. Should.

Bennet Sedacca

09:50:53 AM

No positions in stocks mentioned.

Ho Chi Minh Update

A couple of years back, I highlighted how Vietnam resembled the Naz bubble.

Click to enlarge

It's amazing to me how people around the globe make the same mistakes over and over and over again.

As for oil, I did a quick analysis of how far Earl would have to go to get into bubble top territory based on prior bubbles.

Most bubbles move 400-500% and take 1-3 years. With everyone trying to call a top, I wonder if we can have one. But a 500% move off of the $40 base yields, ummm, $200. Ouch.

MV Respect

09:41:54 AM

No positions in stocks mentioned.

Jeff Saut's Call for This Week
Friday’s Flop (-220 DJIA) produced a pretty rare event in that ALL of the D-J Industrial Average (DJIA) components were negative on the day.

This too is the kind of capitulation action seen around market lows. Unsurprisingly in last week’s carnage, the S&P Financial Index took out its March low. Yet surprisingly, of all the indices my firm follows only the economic sensitive D-J Transports were “up” on the week (+0.9%), which is pretty amazing with crude oil at $135/bbl.

The real winner for the week, however, was sugar, which gained 13.8%! As for my firm, we're pleased with how well our recent investment recommendations (Linn Energy (LINE), Embarq (EQ), Alaska Communications (ALSK)), and of course most of our energy stocks, weathered last week’s storm. And, this morning crude oil is higher again (+$1.55/bbl.) even though Israel didn’t attack Iran over the weekend.

Witht he higher opening, look for attempts to sell stocks back down. If those attempts fail to gain much traction by tomorrow’s closing bell, the odds of a rally improve markedly.

Charles Payne

09:33:50 AM

No positions in stocks mentioned.

Silver Lining in the Financials
Regional banks started last week on the verge of total collapse and finished the week looking like stars.

There were rumors of takeovers with the leading names being SunTrust Bank (STI), which I highlighted on Friday morning and Wachovia (WB) was also mentioned in the rumor mill as a potential candidate for JP Morgan (JPM). Moreover, just the ability to say things were okay propelled these stocks much higher, albeit they're still orbits away from there old highs.

So we head into the new week with a smidgen of fresh hope that perhaps the worst case is already reflected in the share price of financial stocks. Oops, I don’t think I was supposed to use the “H’ word as it was bashed pretty good last week. Sure, it’s a human emotion and at times happens beyond our subconscious, but I would say at the end of last week even our subconscious took a hit.

MV News

09:21:55 AM

No positions in stocks mentioned.

Morning News

* U.K. home prices fell the most this year according to Rightmove Plc. The average asking price fell 1.2% from May. For the year, home prices rose 0.1%. (Bloomberg)

* Bank of America cut 2Q broker profits by an average estimate of 22%. (Bloomberg)

* MBIA (MBI) credit rating downgrade last week by Moody’s is likely to trigger $7.4 bln of payments and collateral postings, but the company said Friday it had about $15.2 bln of assets to meet the requirements. (Bloomberg)

* Citigroup (C) may begin another round of job cuts this week as part of its plan to cut it’s trading and investment-banking division by 10%. (Bloomberg)

Todd Harrison

09:13:34 AM

positions in wb, c, jpm

Morning Dew

* As our ultimate destination pales in comparison to the path that we take to get there, I used the cascading prices into BKX 60—which are ten year lows and the last level of near-term support—to buy some upside calls in the banks late Friday. Names include Wachovia Bank (WB), JP Morgan (JPM) and Citigroup (C).

* This, of course, is a pure trade. In a perfect world—and if I sense that the wheels will wobble on the wagon anew, I’ll short some S&P against them with an eye on the eye-popping wishbone we’ve been discussing. As Minyans know, one of two things must happen—either the banks must bounce or the S&P is gonna do the Wiley Coyote-Cliff thang.

* Peering around the corner, the next “best bet” for the bovine is a successful retest of the March lows. If (big, monster IF) S&P 1275 holds, the technical types would be emboldened for a trade. And yes, I offer this as “higher futures following a market melt” typically get tested to the downside.

* China Check? Down 2.5%, to Shanghai 2760. Remember, 3000 is, er, was the level of lore.

* Ya think it’s Hank Moody out there? The latest weekly AAII (American Association of Individual Investors) Survey reading came in at a -22% (% bulls less % bears),which is the third lowest reading this year (worse readings during the March lows). Merrill's latest portfolio manager survey reveals the highest bearish in the past 10 years (more than '00 and '03) according to the FT.

R.P.

MV News

09:12:44 AM

No positions in stocks mentioned.

Earnings Review!
Walgreen (WAG): $0.58 EPS vs. $0.59 cons on revs $15.02 bln vs. $15.11 bln cons.

Kevin Depew

08:33:16 AM

No positions in stocks mentioned.

Where We Stand

Below is where we stand with the point and figure bullish percent indicators for equities, based on Investors Intelligence data.

* NYSE Bullish Percent: Os (Negative) 41.3%
* S&P 500 Bullish Percent: Os (Negative) 37.9%
* Nasdaq Composite Bullish Percent: Xs (Positive) 34.4% (reverses down at 30%)
* Nasdaq-100 Bullish Percent: Os (Negative) 43%
* Russell 2000 Bullish Percent: Xs (Positive) 43.8% (reverses down at 42%)
* NYSE High-Low Index: Os (Negative) 27.6%
* Nasdaq High-Low: Os (Negative) 18.1%

Jon Doctor J Najarian

08:19:38 AM

Positions in X, APOL

Oil Continues Higher

Google's (GOOG) gPhone Hits Delays - The Wall Street Journal says Google's mobile phone will struggle to meet its 2008 scheduled launch. Google had said in November that the phones would come out by the second half of '08, but the WSJ says Sprint Nextel (S) will not be able to meet that goal. Similarly, the world's largest wireless carrier, China Mobile (CHL), will likely will have its launch delayed until late this year or early '09!

MF Global (MF) Dropped To Market Perform - Broker Keefe Bruyette cuts MF from Outperform saying it fears dilution from the converts that will provide much-needed capital for the battered broker.

More Conviction Buy List Adds and Subs - Goldman has been quite active this morning, adding US Steel (X) and Irish Pharmaceutical player Elan (ELN) to its vaunted Conviction Buy List, but removing XL Capital (XL) and Nucor (NUE) from the list.

Apollo Group (APOL) Gets Another Upgrade - The former Think Equity, now ThinkPanmure, takes Apollo Group to Buy from Accumulate citing the sharp sell-off following the weak 2Q earnings. It raised its outlook from $59 to $64 for APOL. You may recall that Credit Suisse just raised their outlook Friday as well and I still believe it is because of its online educational offerings, not the bricks and mortar.

Adam Michael

07:50:00 AM

No positions in stocks mentioned.

Bullish COT Report
Commercials went long crude oil futures for the first time since February of 2007. Open interest is also way down. My %R’s I run are throwing a maximum buy signal for crude oil. Given the fact that two times the float of the USO (crude oil ETF) is sold short, and commercials have gone net long crude oil, I’d say there is a very good chance we rip higher and soon. If we do, I expect the market to fall apart (literally)…$150 crude oil seems very doable in the short-term. I can’t underscore how bullish this COT report is for crude oil.

Gold is also throwing a buy signal on my analysis of the COT reports (for the second week in a row). I like the fact that gold had a steady advance this week but specs did not increase their long position… and open interest in gold futures is at its lowest level since last September (when gold began it monster advance). Very bullish.

I also want to remind readers of the head and shoulders pattern in the S&P 500 and Russell 2000 that seems to be getting little attention. A breakdown here measures to 1225 in the S&P 500. I'm thinking $150 oil would provide just the catalyst. Be careful out there!

Hoofy and Boo

07:40:06 AM

No positions in stocks mentioned.

Monday Radar
Earnings

Before: WAG

Events

UBS Taiwan Conference
Adam Smith Conferences Russian Retail Banking Forum
OECD Employment and Industrial Relations Conference
Ethical Company Sustainable Finance Summit
Financial Research Associates Valuation of Hard-To-Value Securities & Portfolios...

Click here for the full trading radar.

MV News

07:18:38 AM

No positions in stocks mentioned.

Good Morning Minyans
Traders shake off the Mondays as they find foreign markets all mixed up.

Asian trading closed in the red with the Hang Seng -0.13%, Nikkei -0.61%, Sensex -1.91%, Taiwan -0.33% and Shanghai -2.52%.

Europe is skewed to the upside with the CAC +0.24%, DAX +0.51%, FTSE +0.71%, ATX +0.18%, Swiss Mkt. -0.09% and Stockholm -1.27%.

In commodities, crude oil is higher +0.98 to 136.34 and gold is also up +2.1 to 903.4 this morning.

Good luck today!

©2007 Minyanville Publishing & Multimedia LLC, All Rights Reserved.

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