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Fed Turdsday and Other Goodies 2/13/03

 

Today is Turdsday. You know what that means. We pause for a moment to review the Fed's weekly releases for context and perspective. Money, after all, makes the world go round. It's what drives sentiment and the markets. The more we have the more we gamble, and vice versa. Of course sometimes more is less, such as when the mushrooming destruction of an unstable credit bubble creates a need for ever more credit, a need which cannot be met. When that happens, folks are very unhappy indeed. Such are the times we live in now.

 

As usual Doc examines the Feed, chronicles the market cycles, and tells us where this shipwreck is heading, with hot pictures of naked stock charts, the Long Bong Hit, Uncle Buck and the Golden Stool. Will Uncle Buck ever get out of his sick bed? Will the Golden Stool ever recover, or is the move over now that Cramer is on board? Drop by your stock proctologist's office, and get the inside picture, all in the Anals tonight.

 

Stoolies, log one in. If you're not a stoolie already, become one Now! And don't forget to join Doc during the market day in Stooltrading Beta as he plots the market's twists and turns for you, in advance yet!

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The Bearish Case:

 

The mother of all bear signals. Possible landslide dead ahead. The VXN wedge.

 

Here's how it will work: Market gaps up on the open and runs on the DELL hysteria, a 25 point upday. Everyone will think today was the bottom, and everyone who is short will go long. The dippers are already loaded.

 

The VXN falls back down to the wedge boundary, a satisfactory "retest" of the breakout area.

 

The Arch Crawford disaster hits over the weekend.

 

Massive downside gap on Tuesday. Stranding all the dippers and the shorts who went to the Dark Side.

 

Point of recognition at hand.....

 

Another unfilled downside gap.

 

Well, how do you like that scenario, PileDriver??

 

Falling VXN Wedge

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Guest BEARDRECH
GE, still one of the largest-crap stocks, hit a new 52-week low of 21.30 today, but rallied back above 22 to close down only 0.08.

 

After the close we found out why:

 

GE To Pimp Single Moms

 

Sorry, GE. You'd be better off with the jailbabes thing ... more provocative.

My god machinehead--

You weren't exaggerating--unlike the markets,declining cultures have no bottom--at this rate it wont be long before all of us will be hanging around the red hot molten core of the earth, shaking each others hand with an asbestos glove, while the other hand, will be pirouetting, ever so daintily, towards our friends about-to-be-picked-pocket...

Now that the future is almost here im really getting serious about finding a good school for teaching me how to swing from the branches of trees while nibbling a banana

beardrech :shocked :shocked :shocked

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Mark, now you're talking :wink2:

 

Whatever the outcome the bounce will be short lived and/or weak. I agree with tonights take by Doc (& SG) - just a preliminary pop. Much more downside looms ahead eventually.

 

I scowered high and low my personal indicators and I too cannot find anything that even remotely points to anything significant or lasting in a rally from here. Its just not there so I must stay the course whether I like it or not. Its just part of the game. I will NOT second-guess my indicators or the market, I will not try to think or "feel" too much, I will follow my stops to the end wherever that takes me from here. Its a game of making money, not "see I told ya so". :wink2:

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Mark,

 

Welcome aboard the soul train. Remember "dirt" is funky, gold the only real game in town. To you others not converse with gold please take the time to visit Golden Stool as the Gnomes of ZooRich who work there have much to offer in the way of advice and TA.

 

Doctor Gold (masquerading or simply raiding as a Norse Deity.)

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Pile-the box is cleaned out pm away-Boy Plunger-I understand you had a good ladder so did I-but at the bottom today I closed all but the lower rungs-the purpose of a ladder is take profit hence risk off the table don't hedge that leads nowhere on a down move close all but the lowest rungs and rebuild your ladder when the trend either resumes or tops-you could have bought some calls say 1 for every 3 puts-that to would work- Trade Safe!

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Dont want to give away all my indicators and tricks. I have been trading options for 5 or 6 years, started by selling covered calls on the techs during the bull mania, it was very easy to make 10% + a month on some of the supermodels.

Soon after began dabbling in puts and uncovered calls after reading all the success stories...have since moved to selling options as well, as thats where the really big money is. Huge risk but huge reward, I trade via a broker and pay a single yearly fee, 1500$, which allows me unlimited trading, so no commissions, which is a big advantage from the get go. Since I am unable to "game " the tape daily I usually wait for an established trend and go with deep in the money options at least 1 month out. I usally know my exit point before I enter and will take singles and doubles as opposed to a Home run( learned that the hard way). Frequently trade during CAPONE week as there is usually lots of volatility, and maxpain can provide some clues as to where the market needs to move. I also follow a number of daily indicators when I can which signal short term trend changes. Hope that helps ...trade safe .....lookin to reload puts mid morning on any upside spike as I think we rollover into the weekend! Using margin TRADING portfolio up ~ 40% this year.

 

If there is anyone left who doesn't know the risks of selling naked options, "fooled by randomness" by Nassim Taleb is a very good and entertaining read about the subject.. It's amazing to read that Neiderhoffer blew up twice by selling naked SPX puts..

 

Options, like the Russian saying "you can't bite your elbow", so close, yet impossible..

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Guest BEARDRECH
Nice piece as usual, Mark. However, before you become too feverish over those doubloons in your pocket, I suggest you trot down to Blockbuster and rent "Treasure of the Sierra Madre" with Bogart in the lead role. :wink2:

buttkus

any person who references "Treasure of Sierra Madre" as metaphor for anything is my man--

Are you by any chance a resident of Chicago--pronounced Shikaaawgo,the shiboleth of windy city expatriots like me--

If you are--heres one for you--Im sitting in Comiskey Park Thanksgiving Day,in the fifties watching the Cardinals(in case you didnt know it was once the other football team in chi) when i suddenly realize the guy sitting next to me was Sid Luckman--(by the way this is one of the few times dduring my adolescent yerarsi ever entered a sports stadium legitimatly;i usually snuck in)

i kick me friend and call his attention-Look look-he stares in disbelief--like anti-goldbugs he also wore a cognitive fig leaf which separated him from any formof reality-- i finally turned to the six-button-bennied-camel haired coat and asked-ever so gently i might add-Are you,and before i could finish he reached in his picnic basket and said-"sure kid you want one? and handed me a turkey sandwich--

Despite such strories and experiences to this day i loath and despise current professional sports

Tell me if you are please--merciless has left us and i would like to know a fellow chicagoan is on the board--im was born in new york but my adolescence was spent in the environs of Chicagoland-so im somewhat androgenous

Beardrech :D :rolleyes:

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polyp,

 

Hi Guys,

Just a quick thought with political overtones. I am posting it here because I think it has implications for the markets. We may be underestimating the shrewdness of the Shrub administration. They may be kiling not two but several birds with their Iraqi adventure.

To keep the economy afloat the Gubmint needs to keep the sheep spending - to keep the sheep spending they need to print dollars to hand out to sheepie in the form of mortgage refinancing cash-outs. Printed dollars are also needed by the Plunge Protection Team to buy stocks so that the indices do not go into a free fall and scare the sheepies into saving. They also need to maintain sheepie buying power by propping up the dollar at the same time - goals that might seem mutually exclusive.

Therefore to keep up the value of the dollar they need to ensure that furriner demand for the dollar exceeds the supply from the printing press - a pyramid scheme that they cannot continue indefinitely.

However, they might keep the scheme going on for quite a bit longer than we imagine in the follwing manner. Iraqi oil is going to be maintained "in trust for the Iraqi people" which means furriners will be allowed to buy oil but only with dollars. In addition they have manged to use the Iraqi situation to engineer a schism in the EU - which does not bode well for the Euro - a rival to the dollar. If the Europeans are bickering then furriners will sell Euro and buy dollars so dollar demand is maintained. The Europeand are falling for the old old Divide and Conquer thing. Pretty clever don't you think!!!

By the way if Gold becomes a serious threat to the dollar Shrub will simply issue an edict confiscating it!

So what if a few Iraqis, and a few sheepie sons and daughters are killed in the process - sheepie can continue to drive SUVs and buy McMansions oblivious to erosion of their personal freedoms and ultimately will lose everything in the crash that will surely follow. Shrub's handlers off course will be living it up in their gated communities guarded by sheepie's children.

 

 

Thought about the scenario you mentioned last night quite a bit today and was drawn to the fact that the euro really trades as if the British government has brought their currency into the fold. On the expectations of it I would even say. Should they not do so, then the currency is really bastardized I would think and would be, in the end, irrelevant.

 

Perhaps the schism is intended in the manner your portrayed. If so, they are damn good, which seeing all the ham handedness they have been operating with these past few months would be a quite a surprise.

 

Definitely something I want to consider and think about more, thanks for throwing it out there.

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Guest BEARDRECH
Dudes and Dudettes,

 

check out Ike's interview with Arch tonight. He's still calling for Armageddon on Sunday. He thinks Saddam might pre-empt and attack US!  :o  :angry:  He went 200% short today.

 

I'm short but sure hope he's wrong. :(  :cry:

 

"trade safe"

 

marketviews tv

 

That interview is a bit scary-sounding. The geopolitical tension right now is amazing. Everybody's apparently feeling it here in the states: my wife went to the grocery store (Costco) today and the place was PACKED. She had to wait in line to get in! Everybody's out buying water and canned goods and duct tape (presumably to hang themselves with, since I don't see what good it would do in an actual attack).

 

It's crazy right now. People in this country are scared. Do we all sense something real coming? Or is it just from government/media-driven chimeras?

what me worry? i'm as calm and cool and collected as a first class cucumber--but as someone once reminded me--the guy who manages to keep his head while evryone around him is losing theirsa doesn't know what the f**k its all about

beardrech :angry: :ph34r: :grin: :o

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