Charts SYSTEMS

[northam43]

Foxridge -

Here is the documentation for my system:

https://docs.google.com/document/d/1AJpL_AOMJ7iRH0ZcanVp6lI6EmFf9RtFS9FsSGRndFs/edit?usp=sharing


Here is the link to the SPX Cycles database:

https://docs.google.com/spreadsheets/d/1MM-R0bBKysIw4P231E9jasa6g9QAI4fVUgRUgDvkgeQ/edit?usp=sharing

[Penny Roger$]

Hey GLENO34,

Hope all is well. Digging through old boards here. Trying to see old systems that work. Turns out the 320 is fairly common place. Might have never known if not for the CCI board of yours. Reading David Larew's blog on sc. He has some good ideas. One poor idea was leaving here because as soon as he searches his name this um.. message board.. post will be in the top of that list. This site is enduring time. Would really like to see all the great chartists get together and go nuts on one board constantly.

Cheers

[gdl]

I am replying to my own post from one year ago. I find it amazing that no one changed their views even as their premise was proven false. I always look back at my written thoughts and try to correct my mistaken assumptions. I was ridiculed for just posting my trend assumptions without showing actual bets. I suppose if I had W. Buffett's ear I would be more interested in his take on the future than his daily bets.

As for my future expectations it seems I am in line with Roubini's. 2016 is my target for the big fall. Everything to date seems to fall in line with that analysis. EU and China have the political will to reverse their slow down. When all major nations are rising the debt pressures will rise with rates.


http://finance.yahoo.com/news/roubini--u-s--equities-will-be-strong-until-2016-133934757.html

[michael03332002]

http://investmentwatchblog.com/speculating-with-credit-like-theres-no-tomorrow-bloodbath-for-stocks-dead-ahead/

[nowwhat2]

"Markets ride escalators up and elevators down".....
To quote a fine quote that I heard

[michael03332002]

Gleno

you and I and probably some others can remember the dot.com days

and when it started to fall, even those that knew it was gonna go

down were amazed at the lack of bumps or ups on the way down.

This is what trapped allot of people. Those that played the down,

got out and tried to play few up moves only to get waxed and then

tried to average down and it kept on going until they were wiped out

After all this UP, it will be very hard to keep a solid down side

bias without venturing back into the bull side from time to time

and that is what will be the undoing of allot of people.

They cant stomach taking the loss because after all there has

to be a bump to the upside somewhere. IT just cant go straight

down after going straight up

yea, right

I got the loss carry forwards to prove that it dang sure can

[GLENO34]

I have no idea...Sure a lot of guru's now calling for 1950 to 2000..No other place to make any money I guess...Everyone going to the market...No one will believe how fast this all will come down when it starts...but I have no idea from where...

[Rivers 1]

So, is this "THE" top???

[Rivers 1]

Check it out. Looks like they'll tag that spike in the RUT. Amazing!!!

[gdl]

A responses to your points.
Housing is not experiencing price increase and it is not related to weather. inventory is once again building up. banks already have the spread needed to lend and they are doing just that. There is no reason why rates will go above 3 percent on 10 year note anytime soon. The good news is behind us. Wage growth has nothing to do with technological advances, only job growth does. We are already a service nation where the manufacturing jobs are already high tech. Once again there is nothing going forward that will change this mix to improve this situation. Consumer debt is once again revamping at a high rate. we don't need anymore interest rate hikes for banks to lend. Auto loans are already in a dangerous territory with very questionable loans. Credit card use is way up, home values have peaked for now, and savings is once again going back where it was prior to the crash.

You have to look at the high productivity today combined with low costs and ask yourself how much better will it get? If you increase revenue without increasing wages or other offsetting assets you only create a more indebted individual. Look at how much debt is held by individuals and how much it increased over last 4 months. that is the major reason for this stock market spurt. Will it continue?

As for your notion of jobs being taken over by outside nerds, just not so. In fact the unemployment rate for college grads in age group of 25 to 35 is 4 percent. We are the envy of the world on high-tech and other nations constantly steal our proprietary secrets. The outsourced jobs are JUST to save money on wages. You keep making excuses as to why companies pay so little. Sorry it just doesn't make sense. I am in a field where they do it now all the time. Computer programmers are abundant here in US. In fact we are usually more adapt at making change and much more productive. The cost savings is too much to pass up even with the domestic advantages.

I have never seen any legitimate reason why companies, and top 5 percent individuals, have managed to reap huge profits on the backs of everyone else. The rules and lax laws is continuing to favor this group. I see no evidence otherwise. In fact the cost cutting was exclusively on the backs of the poor and out of work. You would think that common sense dictates that you prop up the middle class and poor to help revamp this economy. Instead we are heading for a caste system.

I will guarantee you that the result of all this will not be pretty. If tomorrow, or 3 years down the line, we will fall into another depression era. Enjoy the good profits while you can. Indeed we are going into the last wave before a 20 percent haircut. SPX of 1950 should easily be reached this round. Maybe 2000+. It should also happen in a very short period of time, perhaps 2 months. My long term take is that we hit a bear run this year followed by 2 more years of growth. After that it seems very unlikely given the political direction is so obvious.

You could very well be right to stay invested, but your assumptions are just not based on real verifiable data, and not based on past experiences. As for inflation, it will not happen for a long while, no matter what the economy does. If we do manage to heat up, the world market could not sustain a whole 100 basis point move from here, let alone real inflation.

In the future you should read the government data relating to credit, debt, savings, etc... Try to be objective and not look to cherry-pick reports that conform to your notion of the world. This is not the start of the 80's. We can't sustain this debt growth going forward. something's got to give.

[optionsexpressguy]

it's like buying on sale!!!

[JLS]

Correction,

Whoops. Wrote backwards what I was thinking.

Restated: What is your opinion when the theoretical exceeds actual during a situation like this?

My thinking was that it is an opportunity and I should Buy right off the bat.

Fresh numbers at the close are 1.05 for actual and 1.50 for theoretical.

[JLS]

optionsexpressguy,

Good time for you to show up.

I should of checked in earlier this morning.

Earlier, I saw that CLF Mar 22 Calls were selling at 0.95 while theoretical was at 1.32 (I do account for risk-free rates and annual dividend within the calculation, but they don't matter much). Was thinking of buying those Calls because of that mismatch (and CLF is reversing upward, though my indicator would not indicate a Buy because of an intraday lower low of the underlying). If I did buy the Call, it would be a new position, not a closing of my current Call sale.

What is your opinion when the actual exceeds theoretical during a situation like this?

[TREND1]

Intro
(4) = no personal attacks

[optionsexpressguy]

you should have kept your trap shut and he wouldn't have schooled you bud!

[snootmagruder]

JLS, quit posting to me please

[JLS]

snoot,

Do you know that the link you just gave me, where you talk about a CLF sale, is dated 10/28/2013?

Do you know that the CLF purchase that you made, and which we are supposed to be discussing, is dated 11/07/2013?

Do you see a problem here with the dates? There is one. The sale is older. The purchase is newer.

This is the third link that in a row that you've given me which has nothing to do with the discussion.

I've already given the message number to go to for your CLF purchase that we are supposed to be discussing. Try going to Post #7566 at your regular message board where you are the moderator. Then please try to find the date when you sold that position. I suspect it is in your trade records somewhere but you never posted it, or it wasn't in the title of the post, so I can't easily find it.

With all your confusion, I'm a little concerned that you bought CLF and have forgotten about it while thinking that you already sold it. You could actually still own it and not be aware of that.

Then, after all your confusion and like some child you call me a nut job and it appears in the title of your post. That's childish. It's also not accurate. How do you expect me, or anyone, to react?

So, when you find a sale of the CLF purchase made on 11/07/13, please let me know and try to be polite about it.

[JLS]

gdl,

Toward your question, yes, I got the shares. At the time I made the phone call, I didn't have sufficient funds in the account to buy shares, and if I did I still would not want the shares because I had other things in mind that I wanted to do. At the time of expiration, a week or so later, I could have funds available depending on other ongoing trades (such as shares of my stocks being assigned away -- with my usual response that I buy them back on the first dip, then sell more Calls). As it turned out, there was sufficient cash in the account at expiration, but my intention was to use that money elsewhere. The stock that was assigned to me was BRCM. That was OK, but I preferred options-only trades for that one. So, I sold OTM Calls on that and dumped it that way at their expiration.

My main concern which prompted me to make the phone call was that I didn't want them to use margin to pay for the shares assigned to me. I don't want to use margin for anything, ever. I was initially pretty pissed off, then I decided that perhaps they misunderstood me or perhaps they do it differently depending on the account cash situation. I don't like to blame people for things that happen to me, so I decided that I should have been more specific when I called. Instead of complaining, I'll just accept it as a lesson. Fool me once, shame on you; fool me twice, shame on me.

I wouldn't conclude that housing prices aren't moving up anymore. That's very regional, and it's very seasonal. Most of the country is having a very bad winter. Housing is usually sluggish during the winter, and it's going to be a lot more so this year. On an annual basis, the national average single-family housing price during the crisis was the first time since data on that has been collected that prices declined (I'm pretty sure that's what I heard and/or read). Maybe it was the first time since the 1800s, whatever. Regionally there have been many declines -- I now, I experienced a couple -- but not nationally.

I think cash will be freed up as a result of interest rate increases, not wage increases on a per-person basis. Why rate increases? It will be more profitable for banks to loan. Those rate increases will happen slowly as the Fed loosens up slowly, and as the economy improves slowly.

Have you been watching the Ultimate Factories series on CNBC? I have. It's very interesting. If you haven't seen that program, you should look up the schedule. They just started a new series, or it's going to be any day soon. That spread of technology is one very good reason why wage growth is sluggish. It's why our citizens need to get more education if they want to find jobs. Another reason for slow wage growth, at least in technology, is that we still allow work visas. That was a practice that was started during the years when there was a shortage of high-tech workers, and for some reason that program has not been halted (at least the last time I checked with some foreign friends that I have as a result of that program). The people that come into the country as a result of that program are virtual slaves. Don't take that wrong, they get paid well. But a lot of the money they earn is sent back home to their families. The reason I call them slaves is that to work here they must have a corporate sponsor and remain employed at all times. That adds additional costs to a company so many of them don't want to do that. Added to that: anybody on that program who looses his job must find another job within 30 days or they have to leave the country. That's the slave-prisoner aspect of it. Does it take jobs away from citizens? You bet, and almost all are high-paying jobs.

There is no requirement to increase margins to increase economic growth. Economic growth can come about through increases in economic activity. Economic activity is the amount of money multiplied by the velocity of money. Money is cash and credit. Money can be that which is already here, or which comes here from outside the country. I think the last I read, 2015 will be the year when this country starts exporting natural gas in very large quantities. That will decrease imports and increase exports -- a double benefit to cash flow, and it will also create a lot of new jobs just for that new export business.

[gdl]

If you don't exercise your calls at expiration, and in the money, you received the underlying stocks? Strange. Is that what you just told me?

Regarding the mention of credit, the last 4 months data confirms consumers are borrowing at a huge rate, something not seen for the last 5 years. I didn't get a chance to get a breakdown. I do know credit card charges are a part of it. As for banks lending, yes they are revamping their old habits. the breakout of the 10 year note allowed enough spread for banks to be profitable on lending. Wages are dead in the waters. Home prices are not moving up anymore. Mortgage rates are starting to cause a slowdown in sales. Refis were manly done over the last 5 years. The past 4 months of market action corresponds to personal borrowing increases. This is not sustainable given the fact that individuals are borrowing from an already high level of debt.

I am convinced that without relief to free up cash, such as wage increases, refinancing, home value increases, there will not be a sustained retail environment. Companies have squeezed out productivity to the max, as well as enjoying a low cost environment. They can only go down from here. Gross margins are very unlikely to improve from here. If companies refuse to share the profits with their workers this 5 year cycle will experience a bear market. The Obama care situation only adds to the companies reluctance to increase wages.

Having said all that I still see a new high develop in the next 2 months or so. Current drop seems milder than I expected. If we do not retrace to 1790 - 1805 SPX range than we should already be on the last leg up.

[snootmagruder]

JLS, Here nut job, I posted the sell from the OCT 9 buy to you in fact. Your post afterward went on about how I should have held it.
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=93468391
I'm done with this.

[JLS]

snoot,

I'm nutty?

Check your links in the post you did earlier.

Anybody else who does will find out who is really nutty around here.

Those two links you posted were supposed to show a Buy and a Sell? Sorry for you. They aren't there.

Now you claim you've had four trades. Well, there's the one options trade which became worthless in two weeks. Then there's the one trade you started for which I just gave you the post number, but you haven't provided a link to where or when you sold that one.

When you figure out how to replace the other two links, which have no trades, then you can post links to these other trades which you don't link to.

[snootmagruder]

JLS, you're getting nuttier by the day. You should smoke something and chill out.
By the way, I bought and sold CLF 4 complete round trips since the initial buy oct,9 The week before Oct 9 I posted the I H&S set up coming,
I also made some comments and charts the week or two after. Anyway, why am I having to justify when and where i did anything with you?

[JLS]

gdl,

Very good advice.

I'm addicted to learning new things, and I don't care where I learn them, so I'm off to check out Royg.

You know, this whole recent thing started as I was encouraging snoot to try doing things just a wee bit differently. That got all sorts of negative response. I thought I was being constructive.

I thought maybe snoot could respond to input from somewhere else. So I suggested he go to a very inexpensive site (that used to be free but would take a donation, now he's asking $100/yr) and the guy running it is becoming a legend and has been interviewed regularly by major national trading and financial periodicals. I followed the guy for two or more years at his site and can vouch for his performance. He mostly trades chart patterns. Well, snoot insulted the guy without even visiting the site. Go figure.

[JLS]

snoot, should you go on?

Well, whatever you're smoking, I don't want any. Maybe you should go on ... to a clinic.

Your Buy Link (Post# 7468): Says something about ideal I H&S. No indication of buy or sell.

Your Sell Link (Post# 7729): That says something about tagging lower tine. No indication about any trade. And you said you sold right at the top? Would the top be somewhere near the lower tine? I don't think so, but I'll give it a chance, a small chance.

Something seems to be broken, but I tried your links several times.

Here, let me help you out. You bought CLF on 11/07/2013. (Post #7566.) You didn't say what the price was. But you said "Bought CLF, Assuming a bottom is in I hit the target perfect" The trading range on that date was from 26.77 to 28.04, so I'll assume you got the mid price of 27.40. Golly, that's more than I paid.

I'm having a little trouble finding a post where you announced selling that. Maybe check your notes, maybe forgot to sell it?

[JLS]

gdl,

I know about the 3X and the 2X.

I had (have) a system for them that I traded for a number of years. I called it the Swap System. I used software to generate the trade signals because I'm too emotional to do it in real-time myself -- better to put rules in the software and let it tell me what to do. I could trade any pair of XLong/XShort, but for some reason I stuck with SDS/SSO, probably because they track better than the others.

The object of the system was to be either Long or Short the market, never in cash.

It's rather curious what you say about credit. Are you referring to card credit or ... ?

The velocity of money is way down, and that would indicate low credit writing at banks, and the accumulation of reserves (as the Fed wanted them to do).

A lot of mortgages have much lower interest rates now, and many mortgages have been refinanced at lower underlying asset prices, so that credit must be a whole lot less than before. Maybe?

And I hear the talking heads on CNBC talking nearly every day about consumers not shopping right now, so ...

I don't know.

I'm surprised the drop today didn't happen days ago. I took advantage of the rise in stocks by selling a bunch of Calls yesterday. I have more Calls expiring this weekend, and for the most part, their underlying stocks are above the strikes so today's drop made no difference whatsoever in my balance. I kinda like that and am getting very accustomed to it. In fact, for the stocks that are above Call strikes, I hope they drop a little more before the weekend so that they aren't assigned, and in that way I don't have to buy them back -- which I would do.

At least I assume some will be assigned this weekend. It actually does happen once in a while that stocks are not assigned away even though they are above strike by a small amount. That happened to me at an expiration earlier this month. I had PHM in two accounts; no shares were assigned in one account and only 40% were assigned from the other. I've even had the opposite happen; I had stock assigned to me that was trading a few cents below the strike of the Calls I bought. That surprised me because I had already called the broker to ask what they would do with profitable Calls if for some reason I didn't exercise them on expiration Friday. I assumed cash would appear, and the guy on the phone said that's what would happen. It didn't. Shares of stock appeared, and money to buy them disappeared. I guess I shouldn't complain, I didn't have to pay any commission, I got the shares a little cheaper than if I had to buy them, and the shares went up right away the next day. Later I decided they probably gave me the shares because I had the money available to buy them; otherwise, I would get cash coming in.

[JLS]

Q,

You also did the calculation incorrectly, but mine most closely displays reality as it will unfold over time.

You don't make these types of trades so you don't know how they are done or how they are reported to the IRS.

In reality, there are two separate trades, two separate calculations -- one for Puts, one for Calls. But it is perfectly fair to combine them into one result as I did (not as you did) in order to display the most probable outcome. That outcome will be reported to the IRS over a two-year interval because the Puts expire next year, not this year.

When options trades like this are initiated as a pair, it is acceptable to refer to them as being one trade rather than two trades, and to combine P&L into once concept (though they have to be reported to the IRS separately).

In these types of trades, the Puts aren't closed, they are allowed to continue to expire. So the closing price of the Puts should be shown as $0. They are never closed by buying them back. That was your major error.

I've done these trades before, so I can tell you pretty much what is going to happen and what the most probable outcomes of these two trades are going to be.

The most significant part of the trade will close sometime this year as I sell the Calls. I will never buy the Puts back, and they are not part of the gain calculation reported to the IRS for this year's trades no matter what happens to the Calls. The reported gain on the trade will be calculated as the difference between the cost of the Calls and the sales price of the Calls, then that result multiplied by the number of underlying shares. This will all take place long before the Puts expire next year. Never mind the fact that I sold the Puts this year and the money from the sale is either in my pocket or spent. But since the Puts were part of a paired trade, it is fair to account for the gain obtained by selling the Puts, and that gain offset the cost of the Calls.

It could be that near the expiration of the Puts, January of next year, ZNGA isn't doing very well and has dropped to the point that shares are assigned to me. That assignment becomes a separate transaction, the beginning of a third trade. That would also be the end of the Put trade. The gain that I received by selling the Puts would still be there, but that gain would be reported as next year's gain, not this year's gain.

The most probabe outcome is that the Puts will expire worthless, and it will be reported that way whether or not there is assignment. If there is any damage done due to the Puts, it will be that I paid the exercise price for the stock, not the market price for the stock. I have been assigned stock before, so I know how it works. Selling Puts for the sole purpose of being assigned stock is a common way that many traders use to acquire stock.

[snootmagruder]

JLS, I have no interest in competing with you, but if you're going to post crap I guess I should respond.

OCT,9 buy right at the bottom
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=92832874

12,30 sell, right at the top
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=95390152

Your 12,30 buy, the very next post as my sell right at the very top
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=95412513

Should I go on?

[gdl]

Folks, stop with the ego trip. These boards broaden understanding of trading and method. No need to call others out. if you feel your betting style is better, or makes more profits with less risk, than say so without the "prove it" attitude. Royg1927 has a great track record using very short term option trades (day trades) with exceptional results. he doesn't berate or boast.

Move on!

[gdl]

You could also try the 3X ETF's. Some ETF's you can hold for a long time since the actual percentage moves pretty much reflect the real index. I have held the SPX ETF's for many months at a time, with little deviation to the actual percentage moves. A good number of these vehicles however is not for any long term bet.

As for the market it looks like we have a short drop that should most likely only last till Fri. or Monday. Still expecting 1790 - 1805 range.

If we do surge from there I would bet you that is the last wave before a nasty drop of 20 percent. Optimism is way ahead of reality. The amount of consumer credit these last 4 months was huge. Getting back to old habits, but without the advantage of starting from a solvent position. Savings once again depleted. If you do the math without real asset growth or wage growth earnings will take a hit. But I think I am ahead of myself here. For now it looks like a steady upward bias, leaning towards a steeper ascent.

[JLS]

snoot,

You're too generous in calling your options trade a long shot. It was an impossible shot. CLF had already made a 4-month high, and you assumed it was going to shoot very significantly higher in less than two weeks while the time value of your options is burning off.

You also bought CLF approximately 6 weeks earlier (than I bought mine), at only a slightly lower price but with the attitude it was at a bottom and would shoot significantly higher. I assume you still own it. Furthermore, since you haven't sold any Calls on it, you are making no active progress directed toward either getting your money back or making income from it. That's pretty foolish, don't you think?

Yes I did buy CLF, but not with the idea that it would go any significant amount higher. I bought it for the purpose of showing you how to trade it, and make money doing it. I decided to do it and give you the opportunity to learn something at the same time.

As I bought CLF, I knew it wasn't going higher (while you thought it was headed for $35 within two weeks) so I immediately sold the January 27.50 calls and brought in $1.17. Those expired worthless to the buyer on Jan 31.

Right away you should see a difference in my approach as compared to yours. Your approach is to throw a Hail Mary pass to a destination totally out of range. My approach is to recognize a significant risk and immediately reduce it. Your approach is to sit on your hands and wait. My approach pays a hefty monthly dividend through the process of selling Calls. Sometimes I refer to it as the pay-your-own-dividend method of investing.

The way I treat my trade is that while I am saving money in the CLF account, I should be receiving good dividends while I wait.

Your approach is to put your money in a CLF account that pays nothing.

After my fist sale of Calls expired I didn't immediately sell more calls because CLF had made a bullish reversal hammer candle a few days earlier, and broke higher the next day but proceeded to retest the low during the following days. My opinion at the time was that a double bottom would form, so I should wait for a rally off that bottom before selling new Calls.

Meanwhile, you were still doing nothing about your CLF shares.

The double bottom did form and CLF rallied to the high of 23.53 on February 14. That day was a Pythia doji day, but so was the previous day. So I could wait another day for confirmation of a top or continuation. But I decided not to wait because of the two sequential dojis and also the fact that my SR density chart showed significant overhead resistance at 24 as well as at 25, and the rally was also quite substantial off the bottom of several days earlier.

Therefore, on the 14th, I sold for $0.68 the March 22, $25 Calls. Now my total income from the Calls is $1.85. Your income for holding CLF shares is $0.

Even though your entry price may have been a dollar less than mine, by the time you get to break-even, I will have a significant profit while you are still at zero profit. And the longer it takes, the larger the difference will be between my position and yours.

Think about it. You might learn something about investing.

My way is investing. Your way is gambling.

[Qone0]

JLS,

Lesson, don't count chickens before they hatch.

That's a gain of 480% so far.

Lets try and be a little more accurate in posting "so far" gains as in today's gains.

Today ZNGA $4.50 jan 15 calls are bidding 1.33

Today ZNGA $4.50 jan 15 puts are asking .78

To close the trade today your cost basis would be .97 on the calls after closing the put side.

So what is the percentage gained "so far" now?

[snootmagruder]

JLS, your last two posts are that of a full blown narcissist. You ridicule me for an options trade that I said was a long shot and only 1% of my account. You claimed CLF had bad fundamentals yet you posted a buy on my board of it and at the top price of 27 only to see it lose nearly 50% in the next weeks and somehow you're a smart trader? Now you'll claim that selling covered calls on it made it right, yet it's only pennies and you lost big on the trade so far. Well it looks like you chased off any worthwhile traders from posting and now you can post to the dumb liberals without any worry of anyone with any trading smarts to call you on any of your dumb posts.

[JLS]

ZNGA closed today at $5.15.

Options cost for my position = $0.20 not counting commissions and fees.

Today's Jan '15, $5 Call Close was $1.16. That's a gain of 480% so far. Going to be a lot more by next January -- plenty of time to get at least a few thousand percent.

I entered six additional options trades today. One or them would have been entered at a lot better price if I hadn't been wasting my time writing to snoot.

Lesson: I can't always expect to fly like an eagle while flocking with turkeys.

[JLS]

snoot,

Oh really? I "have no common sense and have a hard time understanding real things".

Well, I understand that you don't have the common sense to get out of an absolutely awful trade, and as a result you lost a ton of money last year while stuck in 3X Bear ETFs for seemingly forever. And what did you do about it? When you finally did get out of that trade, you started trading options and penny stocks last November, in spite of my warnings, and you argued with me about that and claimed that company fundamentals don't matter. I wonder how that's working out.

You know, it takes common sense and a knowledge of real things to trade options. And it takes the same to stay away from penny stocks. Let's see how you did:

Last November you thought you could trade options so you found a stock that you thought would pop big time and set up an options trade. The stock was CLF. I tried to discourage you from doing things like that because I kinda liked you at the time and had this silly urge that I should try to protect you, but you thought I didn't have a clue. Let's see how that trade turned out. CLF was trading near 27 at the time, so you bought the $29 Calls that were set to expire in two weeks then you wrote that you expected CLF to hit 35.80 by expiration. Right away it's easy to see there is no common sense in that. Even Forrest Gump would know that didn't make any sense. Wow, you expected the stock to move by about $8.50 in two weeks!? Well, if you knew anything about the implied volatility of options, and how to calculate it, or know how to obtain that number for free at your brokerage, you would know that you were the only one that thought that.

Well ... stupid is as stupid does, and CLF never got anywhere near that number and your options expired worthless in two weeks.

If that trade required common sense and the understanding of real things, then you can just keep that stuff in the jar, and don't you dare to even think about loosening the cap because I don't want any of that stuff floating around me or anyone else.

[snootmagruder]

JLS, you didn't win a thing. I gave up because you have no common sense and have a hard time understanding real things. I don't blame Gleno for leaving, the place is overrun with liberals now. I think I'll do the same.

[JLS]

snoot -- the debate's over,

For you to produce that particular quote is pretty funny, and you will find out why soon enough.

The very fact that you put that quote here proves that you don't pay attention to details. You can only understand the housing crisis if you do pay attention to details.

As for the housing crisis debate, you gave up, so I won and you lost and I have nothing else to say on the matter. You threw in the towel. You tapped out. There are more metaphors if you want them. But the fact still remains: you lost the debate.

Given that the debate is now a dead body, we don't dig them back up, dust them off, prop them up with a stick and start all over.

Now, back to the quote ...

My comment, which you quoted, no longer applies.

You know, you do have the habit of missing details. That's why you are so confused and don't understand the housing crisis and its causes -- but I repeat myself. I thought I should repeat because your attention span seems to be so very short.

Apparently you missed the fact, the little detail, that Gleno has abandoned this message board.

[JLS]

optionsexpressguy,

Be careful -- I consider myself to be a conservative, but only in the political sense.

How do you find a needle in a hay stack?

Simple. Pick through it and throw away everything that looks like straw.

As it pertains to the housing crisis, the CRA is a Straw Man.

[snootmagruder]

JLS,

It's politics during trading hours and Gleno doesn't want that.

I guess this only applies to me and not you? (Your quote)

This board is an investment board. I never agreed to any "debate" I was only shining some light how much more widespread the LMI (low to moderate income) was and how well the liberals and government covered it up with bull crap so called studies.
Your intent was like all liberals, to win at any cost, truth or right or wrong are never part of the equation.

The facts are as I have shown, there were government "MANDATES" that forced the industry into making the bad loans.
* Banks with CRA
* GSE's with a similar program
* Mortgage companies gladly made a voluntary agreement to jump on the bandwagon and the GSE's made their huge contribution of subprimes possible all blessed by the government.
* Thousands of private mortgage brokers armed with the lax approval software provided by the GSE's churned out the rest of the subprimes

Every subprime made was influenced by the mandates

[JLS]

snoot,

You only think it proves your point, but it doesn't. All it proves is that you are a poor sport, and that you don't know anything about formal debate.

You don't know that because you don't know the rules by which formal debate is judged.

For what it's worth, to argue that your opponent proved your point for you earns you nothing in a formal debate; and because you wasted time saying it, it shows that you don't value the limited time you have for each response, and therefore you will likely loose the debate.

Rule #4 of formal debate is the essence of the brick wall principle within debate.

That rule states that arguments must be extended throughout the debate to influence the decision.

The essence of that rule ...

To extend an argument means to pursue the issue from speech to speech. The idea is not merely to repeat what was already said, but to offer new analysis or evidence of why you are still winning this argument even given the other team's last position on this argument. As a general rule, if judges do not hear you extend an issue in the final speech for either team (2NR or 2AR), it will not count. These are considered dropped arguments and the judge will disregard them.

[optionsexpressguy]

excellent you whooped him good!!! As soon as the insults and the "you are on ignore" comments come out from the conservatives they LOST!!! They are good at that!!

[snootmagruder]

JLS,

I must act like a brick wall

There you go, you proved my point, you can't argue with a liberal

[JLS]

gdl,

I think in reality no one can point a finger at any one cause for the breakdown. There were a lot of little things, and the government encouraged all of it as home ownership was the quintessential American dream, and finally too many of those little things aligned in the wrong direction.

I'd be willing to bet that if the writers of mortgages were required to rate individual mortgages according to risk, then also required to keep a significant percentage of those mortgages at all risk levels on their books (instead of packaging them all up and selling every last one of them) then this never would have happened. As it was, they were packaged (to apparently keep the overall quality high), then they were insured, which often brought them up to AAA rating. Then they could be sold to anybody and everybody, and they were, and no one would question the risk because it was AAA.

It's very likely that the mortgage industry would have been a lot more selective in writing mortgages if they had to retain a large number of them on their books.

Even if they were not required to keep any mortgages they wrote, I'll bet the collapse wouldn't have happened if the intermingling of mortgages at all risk levels into one security were not allowed. In other words, at each end of the ratings range, only the best mortgages could be packaged and sold as AAA, and the worst could also be packaged but could only be sold with a junk rating. Treat them like we treat bonds, and let buyers select their own risk level.

[JLS]

gdl,

Gee ... you haven't said anything I can disagree with. What will I do now (running in circles, screaming and pulling my hair out)!

I think the best approach going forward is to not be skeptical, but to be guarded. Or, better yet, more guarded. Because one should always be guarded when investing in a stock market. Isn't the first rule of investing: don't loose the money? The second rule: don't forget the first rule?

That said, my current method makes heavy use of options, most often along with long stock positions. In other words, I prefer to hold stock as margin instead of cash as margin. The method is designed to be guarded -- I'm long the stock by owning it, but I go short the stock by selling Calls on it. If I pick the stock right, it just churns up and down and I usually break even of make a little by the stock is assigned. But it gives me a continual monthly income by selling Calls. The minimum return I look for is 3% per month, or the stock doesn't interest me. As it has turned out, I have never gotten less that 3% per month. Most of the time I'm in the 4s, once in a while in the 5s. Three percent per month compounds monthly to 43% annually. Aim for too high of a return, you are almost guaranteed to get in a stock that is a trap as its floor drops out.

To make the most on that type of trade, I time the sale of the options using an indicator that suggests the stock has started a downtrend. I try to select stocks that will normally only go down a few percentage points then reverse back upward. Some stocks which have already dropped by a large amount, but which still have good fundamentals, are good candidates to trade this way. They also tend to have high intrinsic volatility after a large drop, so you get more for the options (very easy to get over 3%).

One possible problem with that method is that the stock can go down more than anticipated while I'm holding Calls, and I can't sell more Calls to make up for that (because I already own Calls), but I can buy Puts. Also, when the Calls expire, I want to sell more Calls but I wont get anything worthwhile if I sell those that are priced at the level that I purchased the stock, so I have to sell at a lower price. That means that the stock might get assigned at expiration at a price lower than I paid for it. To handle that, I calculate Support and Resistance levels, so I'll sell Calls at a price that is lower than the purchase price but higher than a resistance level, then wait for expiration while monitoring what happens. If it gets assigned that time, then I'll loose money on the stock, but I've been making money by selling the Calls, but it's possible that there is an overall gain. So far I haven't had that happen (where the stock has been assigned for a loss on the stock). Though I do have a position now where that could happen (CLF).

I thought in the past that CLF would be a bad stock to trade (it's fundamentals go against all the rules I use to select stocks to trade this way), so I recommended against it and stated all my reasons (which for some odd reason totally pissed off someone who thought it would be a good stock to own long). Then I decided to do it anyway and to use it as an example of how to trade it in the above manner and still make money on it overall, while anyone who only bought the stock would loose money over the same period. So far, I've sold Calls on CLF twice (the current Calls expire Mar 22) and I bought very short-term Puts (expire Feb 22) as insurance just before earnings release last week. Turns out I didn't need to buy the Puts, but it was a wise thing to do and I wouldn't change anything.

[elvisonfire]

$PVEC CHART IS OFF THE CHAIN--MASSIVE ACCUM--

http://investorshub.advfn.com/boards/read_msg.aspx?message_id=97385688

[JLS]

Reinvestment Act of 1977: Not Guilty

Snoot, that's the real reason you are done debating it.

As debates go, you didn't have a chance.

I am very familiar with generic rules of formal debate. In formal debate I must act like a brick wall, and also provide additional argument, or concede the particular point of argument.

Also within formal debate, if you do not respond to a new point of argument, the judge will mark that point of argument as being true and you cannot address it again at a later time.

Finally, you've given up and said you are done. Therefore you loose the debate.

Of course, this wasn't formal -- there was no judge.

I hope you found links to the two PDFs I mentioned and downloaded them. For anyone with an open mind, the data they presented, and their methodology would be very interesting (and educational).

If you haven't found them, I'll give them to you if you politely ask.

[gdl]

The real question should be how would the mortgage problem occur just based on the 1970's rule? If there was no toxic bundle? If the brokerage firms didn't play a huge role in cashing in on the housing boom? How much over-leverage was there if you dissect the problem into bank exposure. The CRA had valid reasons for its enactment. I do not believe we would have a world wide debt default solely on the CRA rule. It was an excuse. Is anyone suggesting banks and insurers weren't driven based on greed to look the other way and allow lax requirements? The mantra of the day was housing prices always goes up. How many times did we have to bail out big banks before? In the 70's, way before the CRA was enacted banks had to be bailed out.

Just plain old greed being allowed to build until someone came up with the mother of all trading vehicles. The other factor was the mindset change since the start of the 80's. This was a decade where we replaced cash with credit and as the decades progressed assumed credit and cash were synonymous.

[gdl]

I understand your trading style and the debate can go on forever without any truly "right" way to invest. The chicken or the egg theory. technical vs. fundamental. In this environments however I become very cautious since all prior debacles didn't recover permanently as quickly as this did. I am extremely skeptical we end 2014 in the black. The moves were too strong based on unprecedented productivity and gross margin gains. I do not advocate another economic collapse here. Just based on future expectations and an over reach on earnings gains for the future.

We shall see. In fact currently I expect the rally to continue.

Perhaps a short retrace between 1790 - 1805 before the next leg up.

I just wouldn't be as sanguine about trading in an environment where real damage to the economy is still possible, and can occur rather quickly. Housing recovery allowed all the other peripheral segments to recover as well. It is stalling here, even though I don't see a major problem. Lack of growth is all that is needed to stall the earnings picture. I am a cautious person. Perhaps too cautious.

If the market hits my upper targets in next month or 2 I would be betting heavily against further gains, regardless of the data.

[snootmagruder]

JLS, You asked if now I'm trying to blame Fannie, Freddie. That's another reason it's like talking to a brick wall debating you. I clearly showed they were brought into the game in a low income program mirroring CRA and that CRA was a catchall term for low income programs and the reason why studies showing CRA was a low percentage was flawed.

And as for sentences not in the article, Just look for the quotation marks to indicate it's a quote from the article.

I'm done with this.

[JLS]

snoot,

Why would you put a bunch of stuff in bold letters and at the same time put a link to a Wiki at the end? I only ask because your longest sentence in bold is not at the Wiki link. In fact, no part of it is at the link. Are you trying to manipulate or be devious?

At the end, I refer to two research reports, produced by a large law firm, and which relates to CRA during the period in question. I suggest you find and download them.

I am also glad that you put the 52% in your post because I have something to say about that at the end. By the way, do you know the difference between setting targets and actual performance?

I've seen that Wiki many times before, and it, like everything else which is a mix of fact and opinion, is not worth quoting from. Especially when you cherry-pick what you personally want to believe from that link.

You have the phrase, "So I'll quote what I feel and the most important points ..."

OK, so you are going to cherry-pick from that Wiki, based on your feelings, as an aid to assemble and express your opinion. No claims anymore, just opinion. That's a small improvement.

My points have always been that you look for things on the internet that make you feel good about your personal opinion(s) then you only use that for your reasoning. You do that by design. That is not how one finds truth.

Do you know what increasingly rigorous requirements really means? If you don't, then you would get everything exactly backwards.

Regarding your 52% .....................................

It's just as easy to find articles on the internet supporting CRA and that it had nothing to do with the housing market breakdown. And they even come with numbers attached. Try this one:

This following information originates from a University of Michigan law professor, Michael Barr, as he testified in February of 2008 before the House Committee on Financial Services:

"50% of subprime loans were made by mortgage service companies not subject to comprehensive federal supervision and another 30% were made by affiliates of banks or thrifts which are not subject to routine supervision or examinations."

Sort of sounds like the CRA was not involved.

A reporter provided the following interpretation:

"Problem is, half of the subprime loans came from mortgage companies with no CRA involvement at all. Another 25%-30% came from companies with very little CRA exposure. For those who left their abacus at home, that's 80% of the loans which were fully or largely outside CRA jurisdiction. More than that, the non-CRA mortgage firms made subprime loans at twice the rate of CRA-covered firms. Which basically leaves a stake in the heart of this particular theory."

Interpretation: the CRA was not at fault.

Both paragraphs claim that 80% were essentially outside of substantive regulation. Yet one of your numbers was 42%, then you upgraded that number to 52%, and that number represented regulated loans created through the CRA.

So we add the two (regulated and un-regulated) to get the total number of loans.

Guess what, that adds up to 132%. Well, somebody's fabricating fiction stories 'cause duh math just don't add up. I'll choose to believe the University of Michigan law professor and the interpretation by the reporter.

================================================================

Now let's see what a team of lawyers discovered about the CRA regulations. This team is part of a very large law firm having many offices spread across the country. There is a detailed research report with lots of numbers and charts and definitions and references that you can find and download (I want to see if you can figure out how to do that yourself). Their summary is this:

Our study concludes that CRA Banks were substantially less likely than other lenders to make the kinds of risky home purchase loans that helped fuel the foreclosure crisis.

That report was published on January 7, 2008.

They have another report, equally well constructed and documented, that they wrote and can be found and downloaded. The title is: The Community Reinvestment Act of 1977: Not Guilty

What do you suppose Not Guilty means? That their activities didn't cause the breakdown?

That report was published on January 26, 2009.

That is an equally impressive document. Surely you can find that one and download it.

[JLS]

snoot,

So are you blaming Fanny and Freddie now instead of CRA? Or is it 50:50, or what? Maybe the article blames everybody? Nobody?

My experience with Wiki is that they wont blame anybody. Instead, they will use the phrase, "some blame ...".

Hey, I'll go along with putting most of it on Fanny and Freddie, but not the CRA.

I've seen that article before. You didn't have to link to it. I did a search on that page for the following words: responsible and cause. You wouldn't need more than one hand to count the number of hits.

The only thing of interest was this: "Some economists, such as John Taylor,[152] have asserted that the Fed was responsible, or at least partially responsible ..." My emphasis of bold and underline).

I'll bet that you, snoot, would cling to that and grin from ear to ear.

Yet, the phrase 'partially responsible' means something barely over zero. You know, like 0.0001%.

Oh, and for those of you other folks who didn't read that wacky Wiki linked by wacky snoot, there is nothing in that link about teams of people dedicated to CRA compliance at any bank. As for large banks, some having thousands of branches, sure, they would probably have teams of people working on all their hundreds and thousands of regulations related to dozens of laws. So?