Behind Bars

[wndysrf]

Mark?s Market Commentary ? December 20, 2002

 

Yet again, the bull spin was put out there on the street in the PreMarket. Al Green, terrified of a negative weekly close when there are only 5 critical shopping days left, instructed the Control Room operators to drag out some former bears.

 

Old man Barton Biggs was on Hee Haw this morning, saying that a new cyclical bull market had begun because there were ?bears all over the place?. Barton had a difficult time keeping a straight face during the interview. His eyes were wandering the whole time, gawking at the hostess, unable to avoid the perfume, the soft suggestive glances, the delicate breasts screaming ?touch me?.

 

Must be a nightmare to be an old bear put out to pasture, only to become bullish at his new employer in order to squeak out a few more years before retirement. And then to be interviewed by luscious, inviting, women half his age who torture him with their eye-batting, the accidental bump of the thigh, the soft hand touches on the forearm?

 

Its now time for the Alan Newman synopsis. Last month?s newsletter has some classic quotes.

 

Newman found that after the 1987 crash, the bear-to-bull ratio was above 2.0 for at least 13 weeks and at least 6 weeks in a row. The October lows were tested on December 4, and the bearish sentiment was even more extreme than the October 19 lows.

?Gloom was universal?, he says.

 

Contrast that sentiment to what we see today:

 

?Not only do we have an enormous consensus about THE bottom, we now have an equally large contingent nodding heads and approving the inevitable pullback before another ascent to the heavens. What is truly amazing is the extent to which the overwhelming cadre of bulls are depending upon the ?Greenspan Put?. Highly charged expectations are still very much in place. We see this attitude as extremely dangerous.?

 

Next, Newman attacks valuation and indexing once again:

 

"The QQQ has become everyone?s favorite gambling instrument and have nothing at all to do with the reality of fundamentals. The Nasdaq 100 has skyrocketed a resounding 45.6% in less than two months. Why would stocks rise so rapidly unless they were bargains and well worth the soaring cost? A glance of the Q?s a few days ago placed us in awe, if not an outright dumbfounded stance."

 

"Looking at the top 10, which represents 44% of the $828 billion in market cap, the group now trades at a collective P/E ratio of 63.5!! And that?s pro-forma earnings, not operating earnings or core earnings. These ?cream of the crop? stocks is typically overvalued by a wide margin due to the cumulative effects of indexing. As a stock receives more and more sponsors, indexers are required to buy more shares, as each camp tends to reinforce the other camp's decision to pile on."

 

Newman next looks at the insider selling among the top 10, and finds that there were 137 sellers to 3 buyers in the group during the last 6 months.

 

Measured in number of shares, the ratio jumps to 517 shares sold for each share purchased.

 

A graph listing the top 10 stocks show insiders at MSFT, QCOM, DELL, and INTU as the largest sellers.

 

So much for bargains.

 

Next, he uses IBM as an example. The stock has rocketed by 66% to a market cap of $146 billion in less than 8 weeks, yet the company reported 3 full years of negative revenue increases, and negative profit improvement. Yet management still insists on buying back the stock, so they can unload at more favorable prices. Last year, the ratio of insiders selling vs. buying was over 67 to 1.

 

It appears that Cheat Street was let off the hook with some type of fine. Citigroup?s share of the penalty is a measly $350 million, a stark pittance compared to the giant earnings reported last quarter from ?consumer lending? and ?derivative trading? and ?mortgage-backed issuance? and all the rest.

 

Buddha was astounded at the settlement:

 

?Not enough room in maximum security at Attica to house all the filth that is spilling its guts now to Spitzer in a year ending, gift wrapped deal to cleanse the banking and brokerage pigpens. A $1 billion fine does not even scratch the wart off the back end of this Hog Monolith.?

 

?I suggest we propose the building of a new Field of Dreams in Times Square. A Disney style Zoo, replete with bars, cages, swing sets and live jungle botanicals. Enough acreage needs to be cleared to house the thousands of prime grade criminals who aped and jimmied price over last 10 years. The central attraction will be cage SPX 1250 where female Silver Back, GorillaWomanCohen will be kept in full public view and within child?s throwing distance of a continuosly stocked pile of rotting vegetables.?

 

?Al Green, the Lizard King will be caged in the Reptiles wing and be guarded closely by a long, trailing, electric circus prod. Other ZooMates high on the most wanted list are Sandy Vile, Jack 'Hatchet-Face' Grubman, Henry Blockhead, Kennie-boy Layoff, Bernie 'oh Canada' Ebbers, Maria Fartaroma, Lex Luther Welch, the list goes on and on and there simply is not enough space here to honor all of the inductees.?

 

?Keeping in mind the nature of the crimes committed, a 24-hour a day loudspeaker system rigged to ear splitting decibel levels will keep the cage members abreast of the daily ticker, the overnights, political newsbreaks, weather changes, anal cyst rumors, earnings warnings, etc. Children who score direct hits with souring Eggplants on the backsides of any inmates will be awarded Golden Eagle standard coin.?

 

As I indicated the last few days, a year end jam job was in order. But the follow through today was pathetic. Now the Final Top has once again been signalled, as Abby ?Planet of the Apes? Cohen was rolled out in her wheelchair from her cloistered Opium Den to once again issue a 30% rise in the S & P for 2003.

 

What kind of bonus will she get this year?

 

Have her bosses looked at the result of her 2002 picks this year?

 

How about 3 years in a row, predicting a higher year end close?

 

Is anybody paying attention?

 

When will we finally see this creature behind bars? At the Cheat Street Petting Zoo?

 

Note that within hours of this announcement, the markets started to roll over. Who needs Prechter, Neely, Crawford, and all the rest of the market psychics when the most reliable market top indicator has once again issued a sell signal?

 

Nowhere but Hollywood and Wall Street are celebrities rewarded for spectacular failures and catastrophic errors.

 

Why hasn?t Michael Eisner been fired?

 

Who approved that collossal $140 million budget on Treasure Island, which was only able to skimp out with a $35 million gross after 4 weeks at the box office?

 

I guess after cashing out over $500 million in Disney options over the last several years, his brain has swelled to the point that his eyes are getting pushed even closer together, and that ruby colored bottom lip is about to explode from the pressure.

 

???????????..

Position Summary:

 

An interesting chart is AMGN, which may be completing a ?three drives to a top? bearish wedge. The stock exploded up on high volume a few days ago, but volume failed to follow through. Strong possibility of a stranded ?island top? setting up on this one. Note that everybody who bought the stock in 2000 ? 2001 is still in a losing position.

 

 

 

Supermodels are now sold out, and I expect a bounce out of this sector, which usually comes at the expense of the biotechs.

 

Another half long on GG at $12. Average cost now $11.

 

Half short on JPM at $25

Half short on AMGN at $52

 

We are 42% short, 22% long, 36% cash.

 

Half Short:

 

LOW at $42

KSS at $66 Covered half at $56

INTU at $53

C at $38

TGT at $34

MBI at $50

JPM at $25

AMGN at $52

 

Quarter Short:

 

FRE at $68

CFC at $49

KBH at $49

LEN at $56

TOL at $27

BBBY at $35

COCO at $40

 

Full Long:

 

GG at $11

 

Half Long:

 

BGO at $1.31

HL at $4.10

PAAS at $5

DROOY at $3.35

GLG at $9

MDG at $16

[Fartpolio Manager]

Yes, between Maria's orgasm on 12/2 and the Mother Superior's latest proclamation there can be no doubt about what's in store for the market...

 

Course there could be a really silly rally before the end of the year, I better set my alarm early for 1/6/02, because as in past years, the professionals will come back from the "Holidaze" and promptly undo it... Gee I hope the futures come in positive that morning, because I am done until then...

 

Happy Holidays...

[PileDriver]

I agree, just like last year. Foolish nonsense up until first couple of days after New Year's and then crapper time.

[Hypertiger]

Nice picture...

 

The Hypertiger churn and burn milking operation untill Christmas scam is still holding up... Just barely. Next year churn will give way to burn unfortunatly...

 

Once the Mutual fund suck is over, if it even shows up there will be nothing to support this mess except the FED and the remaining morons/fools...

 

I wonder how much burning oil fields and blown up pipelines will be worth ha ha ha ha ha... Schorched Earth policies begin next year along with wild cornered animal stage...

[Guest]

Nice commentary as always

 

POG went through $340 today!

Can't help but think that it is on

its way back towards $330 now.

If that happens, surely it will drag

the Hewey down into the gutter

as well? Really thin markets over

X-mas, which makes me think that a

right shoulder is under construction

on the broads. End-of-year beckons

like a hooker on Broadway.

It doesn't take a whole lot of firepower

to move an illiquid market like the HUI

and that's why I liquidated my gold

longs today. Got bids 15% under market

over the holidays. Merry X-mas all!

[Guest]

Great commentary Mark and Buddha

 

?I suggest we propose the building of a new Field of Dreams in Times Square. A Disney style Zoo, replete with bars, cages, swing sets and live jungle botanicals. Enough acreage needs to be cleared to house the thousands of prime grade criminals who aped and jimmied price over last 10 years. The central attraction will be cage SPX 1250 where female Silver Back, GorillaWomanCohen will be kept in full public view and within child?s throwing distance of a continuosly stocked pile of rotting vegetables

 

I don't know if you can get it built in Times Square but, considering what has been proposed so far for the World Trade Center site, you should be a shoo in there.

[roidrage]

How do the Spitzer settlements compare to this one?

 

From Michael Lewis' article:

 

The amount Jonathan Lebed handed over to the government was determined by haggling between Kevin Marino and the S.E.C.'s Philadelphia office. The S.E.C. initially demanded the $800,000 Jonathan had made, plus interest. Marino had countered with 125 grand. They haggled a bit and then settled at 285.

 

rr

[Jorma]

Someone on IDS the other day said he saw Spitzer on the Street in the morning, shook his hand and told him go get'em. I would have said screw the money, get a conviction, but of course that was impossible. I don't fault the guy. If it weren't for him there would have been nothing. Besides, the power is just too much to fight.

 

An abusrd part of the settlement, besides the obligatory non admission of guilt, is a $500 million dollar fund to buy 'independent analysis', whatever that is. I don't think Mark or Doc or the Color Commentator will be getting any calls. Another howler is that the NYSE and NASDAQ is getting some of the coin. Why do I feel that I was born on the wrong planet?

 

Some of the gory details.

http://www.nytimes.com/2002/12/20/business...20CND-WALL.html

 

Another priceless story in the Times about US Technologies and its chaiman Mr Earls, a low grade grifter, jailer for profit and freind to the mighty,, whose board the old influence peddler and aborted Accounting Board member William Webster sat on. Mr Earls lawyer was suprised yesterday when when a criminal complaint was filed yesterday. He didn't realize that with the approaching weekend and holidays filing charges now would mean the story would not be covered. This story was on the NYTimes web site with a headline for at least 3 hours, then bubye.

 

 

http://www.nytimes.com/2002/12/20/business/20EARL.html

[The End]

If someone could accept my perameters and load a chart filled with MY e-wave mumbo-jumbo i would be glad to share. :grin:

 

Ano has got it but he ain't around.

[brian4]

Happy Holidays Gang-Yup it is day one of the "Field of Dreams" rally to suck all the remaining SHEEPIE in one more time-DA BOYZ will distribute to the sheepie right thru the holidays and the cash will allow them to be SHORT and ready for the NEW YEAR. I am long a full position SPX Jan.900 Calls bought two days ago and will ride them as far as THEY can push it up-having said that I started buying March SPX puts today at 880 and will ladder them up as the market rises so I too will be ready for the new year-What is coming in January (my guess the top will be in 10th to 17th) will be horrible and a revelation for the general public not just here but around the world fold in a war and possible terrorism and the point of recognition of the meaning of DIRE STRAITS will have been reached. I had some e mails from some stoolies concerned if POG has topped-my advice was POG is going to fall back and consolidate for awhile (barring some unseen event) which makes it a GREAT time to buy-A lot of pundits-Neely, Prechter and a host of others have been calling for a collapse in GOLD but they've been doing it for years and have been wrong every time-no different now. If you can get your head around going long till the new year there is some coin to be made-tight stops tho-Trade Safe!

[The End]

B4,

 

No harm no foul but, Neely has not been Prechter on gold. He went long 76 contracts on gold two weeks ago. He's a short term guy.

 

If ever i need to defend Doc, Be rest assured i will.

 

The above says that Neely only recently has discussed gold at sub $200. Where as P has said it fur years. By the way P has also stated, everyone should own a bit o' gold just in case he is wrong. :grin:

 

 

Let me ask a question. If one believes we are in or entering a deflationary recession/depression why would one NOT think gold should/could/will go down?

 

 

I still hold but, we did hit N target on the fucutures and since we are down 5%.

 

Wndy, 1/10 is my bday. I just hope for us bears that mid Jan produces a high and Not a low.

[wndysrf]

Over 2 billion traded on the Nasdaq, yet they couldn't get it going.

 

Must be the new single stock futures that is pushing around all this volume.

 

Possible saucer bottom on the QQQ's, ready to make another run for the highs.

 

Got buy orders ready for MXIM, MCHP, KLAC, NVLS for the tape paint and the post season jam.

 

We have gone down 13 days from the Dec. 2 highs. Another 13 day rally starting on Monday means we top out around January 10, which is the next big Gann turn date.

 

That will put in a another top on the Nasdaq, probably a little shy of the Dec. 2 highs.

 

Ready to Riverboat this rally into the New Year.

 

Now, back to the champagne and the girl in the blue lingerie....

[Guest]

The Financial Times runs a scathing article on gold miners and their current valuations. Unfortunately I can't find a link to it but you'll find it in today's paper edition. The paper further reports that some mining companies were reported to be selling forward. This may deter further speculation and pave the way for a test of $330. If it holds - we're off to the races again.

 

The commercials and bullion banks vs. the rest of the world

[brian4]

END- Prechter also said two years ago "My record on GOLD is not that great if I am wrong and it does not go down-I will just start accumulating it" Now I agree GOLD as I have said before may well go to $200.- an ounce in the deflationary depression-however EVERYTHING else will go a hell of a lot lower. One thing that is ignored is what happened to the big miners in the great depression-Homestake then the biggest was trading about $12.- a share in 29 after the crash it rose to about $20.- and then fell to $6.- 3 years later in 1932 it was trading well over a $100.- a share in 1932 dollars-if that same scenario applied today at the depths of what is coming the big boys might well have share prices we can only dream of-remember the quote "those who ignore history are doomed to repeat it" Trade Safe!

[Old Habits]

B4, interesting to see you a little cautious toward the end of the year. I actually expect a year end run up as well. It seems that alot of us here are thinking the same, maybe it won't happen.

I did see alot of large blocks of Nascrap pass by on the ticker afterhours. If it does rally, it sounds as though most of us will be covered. Good luck to all.