Stock Incubator

[dalcindo]

Re: $XAU - Gold continues its descent ...

... As the greenback persists into its bullish trend. The two are maintaining an inverse relation, suggesting that investors are becoming risk-adverse as they turn to the USD for shelter.

Technically, note the continuation of the pre-decline pattern, suggesting further decline ahead:

$XAU&p=M&yr=10&mn=0&dy=0&i=p13615158739&a=153926756&r=463">

[dalcindo]

Re: $WTIC - Testing support of short-term channel:

$WTIC&p=W&yr=3&mn=0&dy=0&i=p69038667033&a=145313107&r=484">

- Dalcindo

[dalcindo]

Re: A Diamond In The "Rough Times?"

Hi, Xxx!

This stock (HGUE) offers very little day to day data to provide any precise analysis. The monthly and weekly charts show a sustained rise up to current levels, at which point it has remained in some sideways trading pattern. Once the price break either walls of the channel, it should help dictate a better direction.

There are many ways to select a stock that can weather an overall bearish market. Some fundamentalists use the top-down fundamental approach, looking at large sectors, industries and narrow it down to top dogs.

Technical analysts could certainly use the same top-down approach using charts of larger scopes that encompass large industries, then narrow it down to leading companies. This would be my preferred methodology given an otherwise too large a pool of stocks to chose from.

I once discussed about the second approach using ETF's that define specific sectors, industries or specialized segments of an economy. Consider looking into this site for leading ETFs and its leading components, for instance.

Once that ETF is discerned by percentage performance, they pare it down to its top dog.

In the case that you may be undecided between several bullish ETFs, then construct a relative strength chart that expresses that ETF against the S&P 500 (SPX), and chart that relative strength line against that of other similar ETFs expressed against the same SPX.

The rest of the selection is purely up to you. If you feel that added fundamental data on the pared-down company is worth having, then go for it. As a pure technician, I use the fundemantal news of broad market events to get a sense of the "tides" (that "lift all boats"), but I firmly believe that all relevant information is already inscribed within the price, where savvy market participants, privy investors, and excellent fundamentalists have already settled their positions, as expressed in price.

hope this helps.

- Dalcindo


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Message in reply to:
Hi Dalcindo,

I found your Stock Incubators Board.
I checked out your public lists.
I have not read your messages on the other board
you follow yet, but I will.

My reason for writing is to ask you about
what stocks stay up while the market falls.
I noticed today that while the market fell there
are still stocks that rose in price.

I am convinced a stock I own quite a bit of is
a long term play of the highest degree based on
the fundamental research I did. I also feel we
could be in for quite a reversal in the market.

Short term, by the chart, it has been in a channel.
Each time it hit the bottom of the channel and BB
it jumps to the next level. I expect that to happen
next week on Name Change from Hague Corp (HGUE) to
Quantum Materials Corp., and the company must
satisfy Rice U., which gave the company an Exclusive
License to its Quantum Dot technology, that it can
prove scalability to mass production. Which I believe
it will be able to do.

So the question is, can this penny stock, with a small 45 mil
float, weather a drop in the market, and rise against it?
What are the chances? Can you tell by the technicals?

Thanks in advance for anything you can tell me,

Xxx

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

DAA

[dalcindo]

Follow-Up: SPX, QQQQ, COMPQ, VIX & TRIN
- VIX Short-Term vs. Mid-Term Futures; NAHL & NAAD: An Alternate, Relative Strength View:

---------------------------
See addendum below for prior note in reference to this discussion
---------------------------


VIX Short-Term vs. Mid-Term Futures:
Last week, we discussed the use of esoteric use of relative strength charting, pitting time-sensitive VIX values (one short-term value set against a mid-term value).

At the close of last week, several charts on SPX, DJIA, COMPQ were sounding the bearish growling alarm on market-wide declines. At the same time, the VIX rallied and in a second step, broke prior moving averages.

The relative strength charting that was established to detect subtle sentimental changes now clearly demonstrates a "panic" mode, expressed in the sudden rallying of the VXX vs. VXZ relative strength candles.

While the 45 and 90-daily EMA's have provided consistent resistance over the prior 9-month rally, watch this time for a favorable violation of this historical resistance trend.

Considering other indicators, the alarm was already resounding from the positive discrepancy in ChiOsc against the A/D and OBV lines (a very reliable technical event per empirical observation).

Going forward, expect support lines to continue to carry the lines upwards, suggesting added bearish market-wide outlook.



NAHL & NAAD - Nasdaq New highs/lows and New Advancing/Declining Stocks:
From a different technical perspective, new highs/lows (NAHL) and new advancing/declining (NAAD) stocks in the Nasdaq are charted comparatively below. Here, look for NAHL's support line, which has been in force since the market rally in MARCH 2009. While its corresponding MACD and Slo STO are stretched to the oversold territories and are likely to curl back up within the next few days. The extent of that expected rally may be defined by whether or not NAHL's support lines hold or cede to the bearish pressure. For now, look at -50.00 as a reference point of support/resistance level, since it marked the return of the bearish trend in late 2008/early 2009 and the start of the bullish rally that typified most of the year 2009.


COMPQ and TRIN - 36-Mo., Daily Chart:
A direct look at the daily COMPQ chart provides some interesting indications of early bearish reversals, especially when NAAD and NAHL lines are overlaid herein, and a line expression of TRIN underneath that chart reveals its insidious path within a well define rising channel.

The TRIN is the advance/decline ratio divided by the advance volume/decline volume ratio. Its expression is contrarian to market development, and a rise in the value - as is the case currently - reflects a growingly bearish market. In mid-SEP 2009, TRIN broke through its overhead resistance and pursued its upwards, bearish path within a narrow and well-defined channel, as per chart below.


SPX and Direxion's BGA, TNA, ERX and FAS:
The SPX chart below integrates a relative strength expression of Direxion's BGA, TNA, ERX and FAS, thus showing major ETFs in terms of large caps (BGA), small caps (TNA), energy (ERX) and financial sectors.

The expression in relative strength against the SPX helps develop a sensitivity against market wide conditions, such that a relative performance by market cap or sectors may provide some "inner sense" of particular directional trends, since each of these ETFs are expressions of bullish expectations.

Overlaid is an Expansion/Contraction Model (ECM) which provides further technical details, whereby a maximum distance in the relative strength of each Direxion's elements represents a "MAX Expansion", which signals an imminent MARKET DECLINE expressed by SPX. Conversely, a maximum overlap in the relative strength of each Direxion's elements represents a "MAX Contraction", which which signals an imminent MARKET RALLY expressed by SPX (See next chart below: "SPX & Expansion/Contraction Model Phases", which details the expansion and contraction phases as it relates to SPX's behavior).

As the chart highlights a bearish mode conclusively, look for the 200-daily EMA line to provide ultimate support. Interestingly, this would correspond to the bullish channel's midline as well.


QQQQ:
Finally and briefly, the last chart highlights two bullish channels of different influential timeframes.

On 01 JAN 10, a "TECH-NOTE" annotation called for an imminent violation of the shorter-timeframe channel, while the longer-timeframe channel remains in support.

Putting the big picture together, let's see how VIX's short-term vs. Mid-term futures relative strength chart compares to the development of QQQQ, where the short-term channel failed to provide support and the next (longer-term) channel becomes directional measure, whereby a failure of support may conclusively strengthen the rising feeling that we may possibly experience a double-dipping depression - Time shall tell:


VIX Short vs. Mid-Term Futures - 12-Month, Daily Chart:



$NAHL & $NAAD - 12-Month, Daily Chart:
$NAHL&p=D&yr=1&mn=0&dy=0&i=p82970532783&a=184984772&r=10">


COMPQ - 36-Mo., Daily Chart:
$COMPQ&p=D&yr=3&mn=0&dy=0&i=p55752849789&a=170716285&r=882" rel="nofollow noopener noreferrer ugc" aria-label="user uploaded image">$COMPQ&p=D&yr=3&mn=0&dy=0&i=p55752849789&a=170716285&r=882">


SPX and Direxion's BGA, TNA, ERX and FAS - 8-Month, Daily Chart:
$SPX&p=D&yr=0&mn=8&dy=0&i=p46323128039&a=168155028&r=315" rel="nofollow noopener noreferrer ugc" aria-label="user uploaded image">$SPX&p=D&yr=0&mn=8&dy=0&i=p46323128039&a=168155028&r=315">

SPX & Expansion/Contraction Model Phases:
$SPX&p=D&yr=1&mn=0&dy=0&i=p10820744957&a=168815788&r=530">


QQQQ - Top 4 Holdings: AAPL, QCOM, MSFT, GOOG - 12-Month, Daily Chart:


- Dalcindo


PS: Please, feel free to review and comment on these and similar braod market charts at: http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID2140281 .

DAA


----------------------------------------------------------------
Message in reply to:
TECH-NOTE: VIX Short-Term vs. Mid-Term Futures - An Alternate, Relative Strength View:

VIX:
VIX stands for Volatility IndeX - It inversely measures the implied volatility of the market, such that a declining market will cause VIX to rise, and a advancing market will cause VIX to decline.

More specifically, VIX offers a composite view of at-the-money puts and calls options trading on the most liquid market: The SPX 500 - Offering traders the largest sample of directional forecast at any particular timeframes (daily, weekly or monthly).

READING THE CHART:
In pitting the short-term VIX futures (VXX) against the mid-term VIX futures (VXZ), I have put together a chart that presumably provides early signals of market reversal. Therefore, a rise in the chart indicates a relative BEARISH, short-term market downturn, whereas a decline in the chart indicates a BULLISH, short-term market upturn.

Although this relative strength chart on VIX futures only covers some twelve month of data, there is already a sense in the data that the market might - just might - be turning.

TECHNICALS:
Technically speaking, this 12-month, daily chart remains extremely BULLISH since MAR 2009, the time that the market marked its sustained rally. Hence, the sustained depressed RSI, and secondary indicators (CCI, Wm%R, CMF) dwelling in the red the majority of the time.

HOWEVER, some important negative divergences have developed over time:
- RSI remains in a relative negative divergence;
- MACD remains in a protracted negative divergence since mid-JULY 2009;
- The institutional buying indicators have recently developed a same negative divergence, namely: ChiOsc is diverging against A/D and OBV lines - A discreet signal which has provided consistent reversal signals in other charts.

OVERALL - Although not confirmed as of yet, the market is forming contradictory signals that contrast with prior positive divergences that have dominated the rally. Expecting the market to consolidate at this time might be more prudent than expecting a continuation of the rally, IMHO. But, expecting the market to decline based on the paucity of clear signal would be too premature and way speculative at this point. In any case, there is still reason to think that things are turning around, especially if this VIX relative strength chart starts to rise above prior highs.

This same and other more abstract charts can be read at: stockcharts.com/def/servlet/Favorites.CServlet?obj=ID2140281


VIX Short vs. Mid-Term Futures - 12-Month, Daily Chart:

[dalcindo]

Weekly Scans - Week of 25 JAN 10:

Notice how this week's scan is thinning out as the market is reversing to the down-side. There are hungry bears coming out of the woods!

Notice below some resurgence of financial and real estate institutions, as well as ascent of Denny's, which is likely buoyed by cost-conscious consumers who remain on the look-out for affordable dining out opportunities.


Bucking Bull:
NRF NorthStar Realty Finance Corp. NYSE
Count: 1


Bull Pop:
SOMX Somaxon Pharmaceuticals NASD
Count: 1


ROW x STO:
DENN Denny's Corp. NASD
SOMX Somaxon Pharmaceuticals NASD
Count: 2


Have a great tradig week!!!

- Dalcindo


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

A QUICK note on the scans:
- Bucking Bull scans for bullish trend reversals that "buck" the trend;
- Bull Pop looks for unusual "pops" in priorly bearish trending stocks;
- ROW x STO screens out positively divergent stocks over weeks (The name merely stands for: RSI Over Weeks cross-reference against weekly Slow Stochastics).

DISCLAIMER:
I chose to scan stocks only at the close of each trading week, assuming that stocks that continue bullishly into the week-end are likely to remain in the trend. Therefore, although these scans occur at the close of the trading week, their bullish activities might have been underway several days prior.

-----------------------------------------------------------------
DAA

[dalcindo]

Trading Methodology: UTC vs.DTC; ECM Model


-------------------------------------------------------
(Following is a reply to PM inquiry - See content below)
-------------------------------------------------------

Hi, Xxx!

The set up usually depends on multiple timeframes (daily, weekly, monthly) with correlations between RSI and price highs/lows.

Over the years, I have been able to guestimate within seconds a reliable trendline and determine from UTC and DTC lines specific crossing points which I have called "Convergence-Hi" or "Convergence-LO", which are points where buyers and sellers have built a consensus for significant resistance or support to occur, respectively.

In addition to this methodology, I have also constructed a very simple model called the Expansion/Contraction Model, or ECM where a basket of stocks (usually indices or ETFs) are plotted against one another, but they are all charted in relative strength against the SPX. This usually becomes a confirmation chart (i.e.: lagging indicator of market-wide consensus for early reversals) for the industry or sector it represents (for instance, look at the first few chart in my StockCharts.com public list: http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID2140281 ).

Please, lfeel free to contact me about any specifics regarding this or other methodologies. I am not finished learning about technical analysis, at least not until I turn 100, LOL.

- Dalcindo

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In Response To The Following:
Sent By: Xxx To: dalcindo Date: Thursday, January 21, 2010 8:06:27 PM

hey thanks for the chart just got super busy with school :) How do you set up your (im assuming) UTC = uptrend channel and the DTC? Looking like parallels to the RSI support line for the UT and im guessing you connect the start point to the corresponding price point on the chart and so on. If you get a minute and want to give me a breakdown at your leisure i would love that. My TAs ok (i like to think ha) and always looking to get better
-----------------------------------------------------------------

DAA

[dalcindo]

Re: XEU - Euro Index Prepares For Reactive Rally:

Recent rally in the USD has pushed the EURO counterpart to oversold territories. Here, the EURO Index (XEU) reflects this extended position and favors unwinding to the upside, IMHO.

Note how the support line drawn in the upper bullish channel has provided significant support to XEU, adding additional substance to a scenario that would favor a bullish retracement. Look for such likely rally to occur up to the 200-daily EMA:

XEU - 12-Mo., Daily Chart:
$XEU&p=D&yr=1&mn=0&dy=0&i=p15361391357&a=157802164&r=989" rel="nofollow noopener noreferrer ugc" aria-label="user uploaded image">$XEU&p=D&yr=1&mn=0&dy=0&i=p15361391357&a=157802164&r=989">

- Dalcindo

[dalcindo]

Re: USD - Pre-Rally Pattern Confirmed:

USD rallied significantly - Looking for some technical unwinding overhead: Probable resistance at 45-Monthly EMA = $81.00 and 200-Weekly EMA, per monthly and weekly charts below, respectively:

$USD - 10-Year, monthly Chart:
$USD&p=M&yr=10&mn=0&dy=0&i=p63061874823&a=151130118&r=800">


$USD - 36-Mo., Weekly Chart:
$USD&p=W&yr=3&mn=0&dy=0&i=p90483639212&a=145313114&r=293">

- Dalcindo

[dalcindo]

Re: RIFIN - Testing Support:

Critical bearish points are:
- RSI signaled a bearish reversal per weakening of rally posted on the 3rd day of January. Now tests 50-line;
- RSI's weakness reflected in price resistance and subsequent decline;
- MACD forming a third lower high in this 12-month chart, providing further credence to RSI's bearish reversal signal;
- ADX's D(+) and D(-) lines crossed over, signaling a bearish reversal.

OVERALL - Leading and lagging indicators are lining up for a strong BEARISH reversal signal:

RIFIN - 12-Mo., Daily Chart:
$RIFIN&p=D&yr=1&mn=0&dy=0&i=p73140201353&a=170893338&r=696" rel="nofollow noopener noreferrer ugc" aria-label="user uploaded image">$RIFIN&p=D&yr=1&mn=0&dy=0&i=p73140201353&a=170893338&r=696">

- Dalcindo

[dalcindo]

Re: QQQQ & ONEQ - Bearish Critical Technical Point

QQQQ - Nasdaq 100 Trust - 60-Mo., Weekly Chart:



ONEQ - 36-Mo., Weekly Chart:


- Dalcindo

[dalcindo]

F/U: ECPN - 12Month, WEEKLY Chart:

(Link above for chart)

ECPN started the week at the top of prior candle, testing bullish channel, but remaining at prior high.

It remains too premature at this point to assess whether this bullish rally is sustainable, especially as the stock starts the week at prior high without furthering any advance beyond last week's high - a pivot point that remains a strong resistance target for this current trading week, IMHO.

- Dalcindo

[dalcindo]

Re: ECPN - 12Month, WEEKLY Chart:

Hi, Xxx!

ECPN falls in the great find category. In my opinion, you should keep this one to yourself, trade it technically for a while, then see if fundamentals and trading outlook synchronize together.

Technically speaking, the weekly chart is begging for some unwinding of the price. In fact, the 90-weekly-EMA has imposed a solid overhead resistance.

Additionally, a Fibonacci grid from MARCH low at 0.005 to recent recent high of 0.160 puts the first significant 38.2% Fib support at 0.100, which happens to be have been a significant historical resistance turned into a now likely support.

I have put together a 12-month, MONTHLY chart including significant channels for support and resistance.

-----------------------------------------------------------------
I will post this chart anonymously on my site for tracking purposes.
-----------------------------------------------------------------


ECPN - 12-month, WEEKLY Chart:


- Dalcindo

[dalcindo]

TECH-NOTE: VIX Short-Term vs. Mid-Term Futures - An Alternate, Relative Strength View:

VIX:
VIX stands for Volatility IndeX - It inversely measures the implied volatility of the market, such that a declining market will cause VIX to rise, and a advancing market will cause VIX to decline.

More specifically, VIX offers a composite view of at-the-money puts and calls options trading on the most liquid market: The SPX 500 - Offering traders the largest sample of directional forecast at any particular timeframes (daily, weekly or monthly).

READING THE CHART:
In pitting the short-term VIX futures (VXX) against the mid-term VIX futures (VXZ), I have put together a chart that presumably provides early signals of market reversal. Therefore, a rise in the chart indicates a relative BEARISH, short-term market downturn, whereas a decline in the chart indicates a BULLISH, short-term market upturn.

Although this relative strength chart on VIX futures only covers some twelve month of data, there is already a sense in the data that the market might - just might - be turning.

TECHNICALS:
Technically speaking, this 12-month, daily chart remains extremely BULLISH since MAR 2009, the time that the market marked its sustained rally. Hence, the sustained depressed RSI, and secondary indicators (CCI, Wm%R, CMF) dwelling in the red the majority of the time.

HOWEVER, some important negative divergences have developed over time:
- RSI remains in a relative negative divergence;
- MACD remains in a protracted negative divergence since mid-JULY 2009;
- The institutional buying indicators have recently developed a same negative divergence, namely: ChiOsc is diverging against A/D and OBV lines - A discreet signal which has provided consistent reversal signals in other charts.

OVERALL - Although not confirmed as of yet, the market is forming contradictory signals that contrast with prior positive divergences that have dominated the rally. Expecting the market to consolidate at this time might be more prudent than expecting a continuation of the rally, IMHO. But, expecting the market to decline based on the paucity of clear signal would be too premature and way speculative at this point. In any case, there is still reason to think that things are turning around, especially if this VIX relative strength chart starts to rise above prior highs.

This same and other more abstract charts can be read at: http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID2140281


VIX Short vs. Mid-Term Futures - 12-Month, Daily Chart:


- Dalcindo

[dalcindo]

TECH-NOTE: $INDU - Reached Significant Fibonacci Extension Level

BEARISH Developments:
- RSI ffailed 70-level multiple times against a decelerating price; formed a negative divergence
- MACD nears reversal signal since tipping at 400.

A significant note on the Fibonacci grid drawn: Consider the zero origin and 100% base overlaying the chart, and pay particular attention to the significant 23.6%, 38.2%, 50.0% and 61.8% - See how the price validated each levels on its way down, then back up, completing the retracement at 100% and now forming a MOST significant consolidation per analysis above.

OVERALL - These technical development are very significant and increase the likelihood of a significant resistance at current level followed by a likely decline.

$INDU&p=W&yr=3&mn=0&dy=0&i=p77836767296&a=154030889&r=4511">

- Dalcindo

[dalcindo]

Article - JPMorgan loan losses overshadow higher Q4 profit
- By Elinor Comlay, NEW YORK

(Source: http://www.reuters.com/article/idUSTRE60E1UO20100116 )

Fri Jan 15, 2010

NEW YORK (Reuters) - JPMorgan Chase & Co reported deep losses on mortgage and credit card loans in the fourth quarter, damping hopes that consumer credit is on the mend.

Strong investment banking results helped quarterly profit soar to $3.3 billion, topping Wall Street expectations. But analysts had been hoping for signs that the bank's credit costs were leveling off or even starting to fall, particularly for consumer loans.

"Consumer credit may be close to a bottom here, but it's not getting better, and people wanted JPMorgan to say it's getting better," said Ralph Cole, portfolio manager at Ferguson Wellman Capital Management, which owns JPMorgan shares.

Losses at the second largest U.S. bank were in line with typically cautious guidance the bank had given in recent months but its projections for 2010 were hardly any more sunny.

"We don't know when the recovery is," Chief Executive Jamie Dimon said on a conference call with investors.

JPMorgan is the first of the major banks to report fourth-quarter numbers and its results may bode ill for competitors.

The New York-based bank's overall quarterly profit amounted to 74 cents a share, beating analysts' average estimate of 61 cents, according to Thomson Reuters I/B/E/S. Year-earlier earnings were $702 million, or 6 cents a share.

Revenue, excluding the impact of assets that have been packaged into bonds and largely sold to investors, totaled $25.2 billion, falling short of analysts' average forecast of $26.8 billion.

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

For a graph on JPMorgan's results, see: link.reuters.com/gaz73h

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

JPMorgan shares fell 1 percent to $43.68. Shares of other major banks also fell, weighing on the broader market.

"The logic is, as goes JPMorgan, so goes the rest of the banks," said Matt McCormick, portfolio manager and banking analyst at Bahl & Gaynor Investment Counsel in Cincinnati.



CONSUMER EXPOSURE

The bank's large mortgage and credit card businesses have seen rising credit costs in the last year, offset only by record investment banking revenue.

Losses even on prime mortgages almost tripled to $568 million compared to a year earlier. The bank set aside a total of $4.2 billion to cover mortgage, home-equity and other consumer loan losses in the fourth quarter, up $653 million from the same quarter a year earlier.

To be sure, total credit losses excluding the impact of securitizations actually slipped to $7.8 billion from a high of $8.1 billion in the third quarter.

But much of that decline is due to a reduction in credit card losses related to a May offer allowing card customers to defer payments for a month. That deferral slowed the pace at which customers were delinquent at the end of last year, and pushes some customer defaults into the first quarter of 2010. Total credit losses were up 72 percent from the fourth quarter a year earlier.

"JPMorgan is the bellwether. It is the best, most well-capitalized, best-managed bank," said Jamie Cox, managing partner at Harris Financial Group in Colonial Heights, Virginia. "You would hope they'd be the first bank to be able to begin the process of paring down loan loss reserves."

JPMorgan's credit losses could indicate further trouble for Citigroup Inc, which reports quarterly results on Tuesday, and Bank of America Corp, which reports on Wednesday. Both banks have large consumer exposure. Bank of America shares fell 3 percent to $16.31, while Citi shares fell 1.4 percent to $3.46.



INVESTMENT BANK COMPENSATION

For JPMorgan, which acquired investment bank Bear Stearns Cos in March 2008, investment banking profits helped mop up consumer and commercial losses, even though fixed income trading revenues fell from record levels in the third quarter.

The unit generated a fourth-quarter profit of $1.9 billion, compared with a loss of $2.4 billion in the same quarter a year earlier but down 1 percent from the third quarter.

The profit was helped by JPMorgan setting aside less money than expected to pay its investment bank employees. For the year, compensation expense was just 33 percent of revenue, much less than the industry standard of 45 to 50 percent, contributing to the better-than-expected bottom line.

The low compensation expense bamboozled even some of the most accurate analysts, as measured by Thomson Reuters StarMine. These analysts earlier this week expected earnings to be as much as 3.6 percent below the consensus.

Even if compensation expense was lower than expected, JPMorgan is set to pay its banking staff handsomely. It set aside a record $9.3 billion to pay investment banking employees, even as executives appeared before the Financial Crisis Inquiry Commission this week to explain anticipated high bonuses and lack of loan growth.

JPMorgan's wholesale and consumer loan books shrank 22 and 11 percent respectively compared to the fourth quarter last year.

Dimon, who was named Banker of the Year by American Banker magazine in December, said he expects the bank to make more loans once the economy recovers. When pressed as to when he expects the recovery, he said, "There are some good signs out there, but we don't know."

(Reporting by Elinor Comlay; additional reporting by Leah Schnurr, Clare Baldwin, Jonathan Spicer and Dan Wilchins; editing by John Wallace, Bernard Orr)

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

- Dalcindo

[dalcindo]

Article - Has Greece delivered another Trojan horse?
- By Ian Campbell


(Source: http://blogs.reuters.com/columns/2010/01/15/has-greece-delivered-another-trojan-horse/ )

Jan 14, 2010 18:57 EST

Greece’s economic statistics are dubious in more than one sense. The country probably bent its figures to get into the euro zone. Now, the EU is angry that Greece has not been straightforward about the size of its fiscal deficit. But the greater doubts concern how an uncompetitive, highly indebted, weakly governed country can live with a strong currency such as the euro.

The Trojans were shocked after Greek guile got them in. The feeling may be similar at Eurostat, the European Union’s statistics office. There is particular anger at Greece’s increase of its estimate of the fiscal deficit last year from a tolerable 3.7 percent of GDP to a quite intolerable 12.5 percent.

A revision that huge in the course of the year is ridiculous – and shows something worse than incompetence. Greece’s finance ministry blames interference in the statistics office by the previous government. But the EU, which says it has been applying intense scrutiny to Greek figures since 2004, also seems to have lacked sufficient insight. The Greeks were still keeping a lot of danger in the dark.

With the numbers out in the open what Greece and the zone face is ugly. The country has a fiscal deficit of about 13 percent of GDP, government debt of about ten times that, and prices and wages that have risen far faster than those of France and Germany for a decade. Greece is uncompetitive and, as a member of the euro zone, cannot devalue.

That suggests its growth and unemployment will get worse, along with its deficit and debt. Crisis is coming. The only way to avoid it — with or without an ugly exit from the zone – is profound reform. Greece needs to balance the government’s budget, or come close to that, while the private sector cuts wages in order to become internationally competitive again.

The process will be a brutal marathon. But before it has even begun Greek workers are protesting – louder than Irish ones, who have already started the slog. It’s not clear that Greece can make it to the zone survivors’ finish line.


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

- Dalcindo

[dalcindo]

Weekly Scans - Week of 18 JAN 10:

Bucking Bull:
CDII China Direct Industries Inc. NASD
EXXI Energy XXI Ltd. NASD
HT Hersha Hospitality Trust NYSE
PAL North American Palladium Ltd. AMEX
PEIX Pacific Ethanol, Inc. NASD
PZG Paramount Gold and Silver Corp. AMEX
SMI Semiconductor Manufacturing Intl Corp. NYSE
Count: 7

Bull Pop:
BBI Blockbuster, Inc. NYSE
LAVA Magma Design Automation Inc. NASD
SNBP Sinobiopharma, Inc. NASD
VTPI Vital Products, Inc. NASD
Count: 4

ROW x STO:
BBI Blockbuster, Inc. NYSE
ETFC E*Trade Financial Corp. NASD
HT Hersha Hospitality Trust NYSE
MMAM Medical Makeover Corp. of America NASD
ZQK Quiksilver, Inc. NYSE
Count: 5


Have a great tradig week!!!

- Dalcindo


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

A QUICK note on the scans:
- Bucking Bull scans for bullish trend reversals that "buck" the trend;
- Bull Pop looks for unusual "pops" in priorly bearish trending stocks;
- ROW x STO screens out positively divergent stocks over weeks (The name merely stands for: RSI Over Weeks cross-reference against weekly Slow Stochastics).

DISCLAIMER:
I chose to scan stocks only at the close of each trading week, assuming that stocks that continue bullishly into the week-end are likely to remain in the trend. Therefore, although these scans occur at the close of the trading week, their bullish activities might have been underway several days prior.

-----------------------------------------------------------------
DAA

[dalcindo]

Re: SPX - Testing support ...

I agree. Looks like it's going to be peeling that floor support off from under the feet:

$SPX&p=D&yr=0&mn=8&dy=0&i=p46323128039&a=168155028&r=596" rel="nofollow noopener noreferrer ugc" aria-label="user uploaded image">$SPX&p=D&yr=0&mn=8&dy=0&i=p46323128039&a=168155028&r=596">

- Dalcindo


-------------------------------------------------------------------
Message in reply to:
today's black candle sweep out previously 2 section gain,
enter descending mode officially next week, JMHO
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[dalcindo]

Re: USD - Support at 45- Daily EMA; Pre-Rally Conditions Lined Up:

14 JAN 10 - TECH-NOTE: Pre-rally conditions have lined as USD finds support at its 45- daily EMA following four days of decline.

$USD - 12-Mo., Daily Chart:
$USD&p=D&yr=1&mn=0&dy=0&i=p37871331019&a=163937806&r=209">

- Dalcindo

[dalcindo]

What Fed Watches ...



(Source: http://www.dailyfx.com/forex/fundamental/article/what_fed_watches/2010-01-14-0458-Dollar_Weighed_by_Building_Risk.html )

- Dalcindo

[dalcindo]

Re: SPX - Bearish per Expansion/Contraction Model:

Yikes! The relative strength lines have completed a maximal expansion, calling for contraction move, which is usually associated with SPX decline. So, chart favors decline from here on.

$SPX&p=D&yr=0&mn=8&dy=0&i=p46323128039&a=168155028&r=596" rel="nofollow noopener noreferrer ugc" aria-label="user uploaded image">$SPX&p=D&yr=0&mn=8&dy=0&i=p46323128039&a=168155028&r=596">

- Dalcindo


---------------------------------
Message in reply to:
SPX forming evening star yesterday
need a confirmation today
---------------------------------
DAA

[dalcindo]

Re: ANYT - Weekly Chart:

Drawn in this WEEKLY chart are speculative bullish channel and momentum support lines. Great bull stock, IMHO, but look for development of overbought conditions in weekly chart: the technicals are calling for some necessary unwinding of price, IMHO:

ANYT - 198-Month, Weekly Chart:


- Dalcindo

[dalcindo]

Re: ONEQ - QQQ Index Fund: Looking toppish; Could possibly test support line:

- RSI formed negative divergence after second high > 70-level;
- Price reached significant level corresponding to resistance line of moderate significance (6 prior validation overtime; recent shallow retracement from current level);
- Secondary indicators (CCI, Wm%R, CMF) are taut to the overbought side, suggesting increased likelihood of price unwinding;
- PPO form sustained negative divergence since MAY 2009;
- ADX's D(+) is turning dowm to complete third lower-high since JULY 2009.

- Overall - Chart indicates price congestion at current level; favors imminent decline vs. consolidation; watch for support line in effect since late 2008.

ONEQ - 36-Month, WEEKLY Chart:


- Dalcindo

[dalcindo]

Weekly Scans - Week of 11 JAN 10:

Bucking Bull:
ASX Advanced Semiconductor NYSE
CBAI Cord Blood America Inc NASD
GNVC GenVec, Inc. NASD
IDN Intellicheck Mobilisa, Inc. AMEX
PLM Polymet Mining Corp. AMEX
Count: 5

Bull Pop:
BBX Bankatlantic Bancorp, Inc. NYSE
IMMU Immunomedics, Inc. NASD
NEXM NexMed, Inc. NASD
PEIX Pacific Ethanol, Inc. NASD
PTSH PTS Inc. NASD
WNYN Warp 9 Inc. NASD
Count: 6

ROW x STO:
AOGN Avalon Oil and Gas Inc. NASD
BLDP Ballard Power Systems, Inc. NASD
DEJ Dejour Enterprises Ltd. AMEX
IMMU Immunomedics, Inc. NASD
VICL Vical Inc. NASD
Count: 5

Have a great trading week friends!

- Dalcindo


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

A QUICK note on the scans:
- Bucking Bull scans for bullish trend reversals that "buck" the trend;
- Bull Pop looks for unusual "pops" in priorly bearish trending stocks;
- ROW x STO screens out positively divergent stocks over weeks (The name merely stands for: RSI Over Weeks cross-reference against weekly Slow Stochastics).

DISCLAIMER:
I chose to scan stocks only at the close of each trading week, assuming that stocks that continue bullishly into the week-end are likely to remain in the trend. Therefore, although these scans occur at the close of the trading week, their bullish activities might have been underway several days prior.

-----------------------------------------------------------------
DAA

[dalcindo]

Re: $XAU

Hi, Fox13!

Thank you.

Agreed on bearish potential - XAU chart below (10-year, monthly view) offers a reliable monthly timeframe where indicators seem to line up in favor of a bearish down-turn:


$XAU - 10-Year, Monthly Chart:
$XAU&p=M&yr=10&mn=0&dy=0&i=p13615158739&a=153926756&r=13">

- Dalcindo


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

Message in reply to:
Great charts Dalcindo! GLD got some short signals:
Chart 1: Gartley Bearish Butterfly (confirmation of short if it falls under 110)
Chart 2: Previous waves structure and short term SELL signals.

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

[dalcindo]

Re: VXX:VXZ - Short vs. Mid-Term VIX Futures:

Chart below pits short-term outlook in the VIX sentimental index against mid-termers, possibly distilling some dynamic changes in relative market expectation among traders.

In broad and general terms, the value of VIX increases when the market declines and decreases when the market rises, as VIX reflects aggregate short and long positions in futures (i.e: puts and calls, respectively). So, sentimentally speaking, VIX decreases with a smug or complacent market expectation that "things should calm down", indicating a collective bullish expectation; whereas VIX increases with a jittery or panicky market expectation that "things should turn heat up", indicating a collective bearish expectation.

A discrepancy of the two outlooks should provide some insight in dynamic sentimental changes, where a rise in the chart suggest short-term "panic" relative to the longer market expectation, and vice-versa.

VXX:VXZ - 12-Month, Daily Chart:


- Dalcindo

[dalcindo]

Re: QQQQ - Critical Technical Point Reached; Chart expected to unwind from 2009's sustained rally.

Since early March 2009, QQQQ has left a winding trail of white candles reminiscent of the plume of smoke left behind a rocket aiming straight for the moon. "Houston, we had lift-off!!!", indeed. Now comes the long-expected earth's gravitational pull, IMHO.

Again, my unsolicited 2-cent chatter:

(See: 60-month, WEEKLY chart below)

Factors playing IN SUPPORT OF expected decline are:
- Fundamentals: USD is expected to continue its rally, stressing US markets downwards
- Technicals: Price reached a critical technical point, testing the upper border of bearish channel; favors retracement to 42.5 area, IMHO.


Factors playing AGAINST expected decline are:
- Fundamentals: NFP data release tomorrow, expected flat or better-than expected, supporting a continued rally in the market (especially DJIA);
- Technicals: WEEKLY price's 5,9,21-EMAs remain in bullish spread; 45-EMA about to cross over 200-EMA; Weekly 14-RSI still resides over the 70-level; A/D and OBV lines show no sign of buyers disinterest as indicators remain over their 21-EMA.

Overall:
- WEEKLY chart has primary and secondary indicators taut to the overbought side, increasing likelihood of price to unwind.
- Likely support: 42.5
- Likely Resistance: Upper border of bearish channel (i.e.: current levels); next resistance level = 47.5 if market plays out against current technical expectations, IMHO.

QQQQ - 60-month, WEEKLY chart:


- Dalcindo


-------------------------------------------------------------------
Message in reply to:
QQQQ Feb 2010 44.0000 put (QQQNR)
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[dalcindo]

Re: USD - Resistance = 81.20

... ahead of NFP data release tomorrow.

$USD - 12-Mo., Daily Chart:
$USD&p=D&yr=1&mn=0&dy=0&i=p37871331019&a=163937806&r=209">


$USD - 10-Year, monthly Chart:
$USD&p=M&yr=10&mn=0&dy=0&i=p63061874823&a=151130118&r=926">


- Dalcindo

[dalcindo]

Opinion - Inflation ... A Darwinian Reality?


Inflation to me is nor good or bad: It just is. Shakespeare said it: There is no good or bad, but thinking so makes it so. Whereas in its myopic political interest, the role of government may be to get some reaction out of the masses, using such emotional term as inflation, I believe that there may be only little to no correlation between what government think they can do to control prices and the natural evolution of our market, both domestic and world-wide.

The price of oil may rise every time a middle eastern conflict develops. But, this change in price often reaches an extrinsic and arbitrary value rather than a real and intrinsic value, considering that world capacities are estimations at best (let alone that known reserves are based on the non-sand extractable reserves estimated at about 20% of that particular reserve, so how precise are we when the price of oil fall at one level or another?). In fact, we realized out of this recent recession that markets are neither self-sufficient nor efficient, but require some measure of regulatory supervision, the excess or lack of which justifies short-term political positions conditioned by individual interest rather than global market concerns.


Economic price control offers a very fine balance that promises equal amount of praises and criticisms: turn the knobs one way or the other to alter short-term profitability, and you are sure to get a reaction - The trick is, does it get you re-elected? Does it guarantee the large subsidies needed for political survival? And, does it really matter in the long haul or in the universal scheme of things?

One can agree that inflation remains a trigger word taught to the masses as it carries emotional connotations guaranteeing knee-jerk reactions more than edifying meaning, it seems. In fact, politicians seem to use that word more for political effect, prodding their constituents with it, but without much education as to what it really means in terms of economic reality at home, IMHO. As it turns out, the public is an amnesic, but highly adaptable audience, and the politicians know and expect that.

Considering that inflation is a natural economic development (as the domestic/world consumer base keeps rising, the demand for goods and services follows, and the price rise inadvertently), then the tools that any government possess to curb its advance is only temporizing - And arguably in vain in the long-term.


Venice will for ever remain under threats of rising oceans, and price of goods and services will continue to rise - These are two threatening economic phenomenons for the people involved, but I'd say that the first is focal and catastrophic, whereas the second is global and manageable, as it remains part of an evolving economic reality of the world, whose countries have adapted tools (policies and laws) to make it an intrinsic part of doing business in the world throughout the ages. At the risk of belaboring the world oceanic image: When the price rises on one side of the ocean, the tide is bound to lift all boats, forcing living masses to adapt to new levels of economic obligations year over year, generations after generations. Markets have become archeological sites of what our species does to one another. Prices remain natural elements that will selectively stress people, companies, economies and countries in and out of existence, IMHO.

In this past decade, the price at the US pump more than tripled, then declined by a few percentages. Incidentally, instead of a mass reaction, the American consumer continued to purchase the largest vehicles in the world, while alternative energies remain an economic curiosity to profit-seeking corporations whose thinning subsidies and growing disinterest (comparative advantages to old technologies and cost of conversion being the leading deterrent) are likely to keep us on track with the old internal combustion engines.

More recently, the minimum wage was increased, imposing more stress on the largest community of employers in the US (i.e.: small business owners, ergo: largest voting base, so the state of Colorado for instance is now reverting this trend, not surprisingly. See: http://www.bostonherald.com/business/general/view.bg?articleid=1222337&srvc= ). But a much neglected effects is its inflationary pressure as a larger revenue base spurs increased demands for products and services. However, that same increase in demand is bound to drive prices higher, as it now exceeds inventories that were drastically contracted by fearful manufacturers. But, what incentives do manufacturers really have to match that demand, as our economy has not convinced anyone (employers and employees, manufaturers and importers, credit lenders and investors) of its certain recovery?

Markets are people, and people are fraught with emotional handicaps and predictable behaviors. The politician's prediction is that rising prices will cause people to adjust rather than act as a group to control prices - An economic impossibility, by the mere fact that "inflation" is a word that reflects a forgiving reality, in which people are prone to adapt and soon forget the emotional blur that got them to react in the first place. Politicians are skilled to the extend of knowing and using this very fact, IMHO.

For this reason, if market are people, then I think that markets cannot act, as if wanting or desiring any particular direction - They can only adapt. Much like the ocean water threatening the city of Venice, the price of goods and services may ebb back and forth, but the natural evolution of markets are that its prices will always rise, the masses will continue to pitch new mental settlements at levels relative to where rising economic tides force them to live; and governments will continue to throw sticks and stones at the ocean for dramatic effect, receiving public praises and blames when there may be little or no correlation, IMHO.


- Dalcindo


----------------------------------------------------------------
Message in reply to:
strong USD will Fuel Inflation,
in turn would increase interest rate, which market doesn't want
----------------------------------------------------------------

[dalcindo]

Opinion - $USD Rise A (Literal) Necessary Evil?

Call it a wild correlation, but I see the rise of the Dollar coinciding with a recent closed-door visitation by the Obama administration in China (The world press was shut out of most interviews, and the outcome was criticized by our domestic press as too conciliatory tone towards China). Considering that these two countries have little pleasant matters to discuss (Taiwan independence and its recent arms purchases from a Bush-era agreement; human righs violation, opposite socio-economical ideologies; suspected Chinese subsidies in middle-eastern terrorist factions; China's leading environmental blemishes, ... etc), except for , may be, the need for China to receive some comforting news regarding their subsidies of our trillion-dollar debts.

In some practical economic terms, one could say that China owns America, if one equated the largest American debt ownership to asset ownership, whose leverage rests primarily on the value of the Dollar - The higher the Dollar, the more"they" own. Then, it stands to reason that a rise in the Dollar would boost the total asset value of Chinese ownership. And, in some political way, the US government can continue to assure the international community of investors that the Almighty Dollar is not about to be replaced by some other currency, therefore the US remains a place of growth, prosperity and investment worth. In other words, the Dollar hegemony carries on as the leading capitalist currency of the free world.

So, one can argue that the rise in the Dollar is good for China, which continues to subsidize our growth, which in turn allows our consumer base to continue to bolster Chinese exports. Indeed, China gets to have its cake and it it too.


Although a rise in the USD may correlate negatively with exports - making it more expensive for foreign importers to have the same products at a higher premium from our larger manufacturers - the same US/Chinese cynical co-dependence assures our government revenue that aims at supporting its domestic agenda.

The current primary concerns are jobs and ultimately political projection. While large corporations tap blood money from exports of their goods and services, small businesses remain the largest employers in the US - notwithstanding the larger political constituency of the two. Unfortunately, a stronger dollar also makes for cheaper international products and services, thus turning our domestic consumers away from our small businesses.

Overall, our foreign exchange system remains historically enmeshed within a complex world political system, forcing compromises with undesirable creditors (Here, let's call it China) to maintain a same century-old "World Order". The cost here is our growing subservient position to countries unbecoming of our free market expectation and world image projection. When the US goes to China for reprimand, the world looked at it as Daddy going to Timmy's bedroom to give a spanking, not Daddy going to Timmy's bedroom for room service. But, it seems that this family dynamics has now turned this way, IMHO.

As mommy always said: "Don't slap the hand that feeds you."

- Dalcindo

[dalcindo]

Re: CNA

Right on! Watch for that lower resistance @ 5.75, IMHO.

- Dalcindo

[read_this_n0w]

CNO entry 5,29

[dalcindo]

$XEU:$USD Technical Targets for the next days, weeks, months:

Today's fundamental market results weighed down on USD's recent prancing rally. Shorting the pair with continued bearish expectations, below are various timeframes of interest using oanda.com trading platform software:

Short-term:
05 JAN 10 High = 1.4484
06 JAN 10 Low = 1.4283
- Fib Value:
161.8 = 1.4157 (High probability)

Intermediate-Term:
24 NOV 09 High = 1.5144
21 DEC 09 Low = 1.4217
- Fib Value:
161.8 (extended Fib) = 1.3636 (Low probability)

Long-Term:
24 NOV 09 High = 1.5144
02 MAR 09 Low = 1.2456
- Fib Values:
23.6 = 1.4509 (current overhead support; reliable)
38.2 = 1.4117 (Expected target)
50.0 = 1.3795 (Low probability)
61.8 = 1.3478 (Low possibility)

[dalcindo]

Re: ERX - H&S Formation

Agreed. Updated chart to highlight on such formation over past 9-month period (MAR 2009), although there seem to be some smaller discreet ones as well with recent peak as same head.

ERX - 9-Month, Daily Chart:


- Dalcindo

[dalcindo]

Re: SBUX - 60-Minute & Monthly Charts:

Look for support at levels indicated in 60-minute chart as far as short-term outlook; If support holds, consider persistence of the current trading range.

In the mid/long-term outlook, look at monthly chart below for significant technical resistance ahead - In this particular timeframe, I am expecting further deterioration based on technicals seeking unwinding from recent taut oversold activities, as well as global market retreat going into 2010, IMHO:

SBUX - 60-minute chart:



SBUX - 5-Year, Monthly Chart:


- Dalcindo

[dalcindo]

Re: $WTIC - BULLISH On Technicals and Fundamentals Supports:

TECHNICALS:
$WTIC has been testing the bearish channel midline since early OCT 2009 offering narrow-gauge trades within its $70-80 range.

Correspondingly, its weekly RSI has ranged within a tight, albeit persistently BULLISH 50-60 range, as it remains over its 45-EMA as well as 9-RSI's 14-EMA trendlines, the combination of which suggests strong buying support for the commodity at current price levels - In real world parlance, there seems to be some anticipation that fundamentals might carry some favorable news and lift $WTIC to new highs.

Looking at secondary indicators in CCI, Slow STO, PPO and ADX, same bullish expectation is expressed in their respective lines, considering their positive positions relative (CCI, Slow STO, PPO), validation of their respective bullish trendlines (Slo STO), and lack of bearish trend expression (ADX).

FUNDAMENTALS:
Look for improving world-wide market data releases these coming weeks, especially in the large Asian manufacturers and occidental consumers to drive this commodity to new heights.

OVERALL - BULLISH outlook; Mind the shorter bullish channel (BLUE), as it may provide the technical lift to new heights, when and if the price gives it further validation:


$WTIC - 36-Mo., Weekly
$WTIC&p=W&yr=3&mn=0&dy=0&i=p69038667033&a=145313107&r=651">

- Dalcindo

[dalcindo]

TECH-TALK:

Re: " ... On that note a question, whats the value of using EMA overlays on your ChiOsc OBV and A/D? I've got sma on mine i think a 14-period. Also i use BB overlays on the RSI and they've proven very effective, any thoughts? No rush."

Hi, Xxx!

First, EMA vs. SMA is a matter of choice, and may be belief in what this technical info brings you. SMA puts emphasis evenly over past period, whereas the EMA considers the period covered, but adds emphasis on most recent events.

Second, BB is in effect a similar look-back tool as using the 9-RSI's 14-EMA. I have preferred that method over the BB initially by recognizing reliable signal, then by habit - especially when that habit continues to provide same reliability as well as frees the charts of visual clutter.

There is no one better over the other. The first right of passage in technical trading, turns out (IMHO), is to realize that no such holy grail exists. The second is to realize that a stock can go up or down for a myriad of reasons. Thinking that up or down is good or bad only makes it so, IMHO.

Have a great time in this new first week of 2010!

Dalcindo

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


Message in reply to:
well done and i agree 100%. Whenever people from the board PM me on the next move, i try putting in the softest terms that buyers are not going to feel comfortable putting their cash behind something until we have a solid few weeks of action at current levels with no big red flags of an impending crash, or even better the price forms a nice stable channel down to historic support levels. All the fundamentals are there for this (usually i couldn't care less and would rather not know) but its always a technical battle. That RSI has to come down, its one of the main indicators i use and i would almost never be caught purchasing up there. Imagine me telling you though i think you've got some experience on me. On that note a question, whats the value of using EMA overlays on your ChiOsc OBV and A/D? I've got sma on mine i think a 14-period. Also i use BB overlays on the RSI and they've proven very effective, any thoughts? No rush.

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

[dalcindo]

Re: ANYT - 12-Month, DAILY Chart:

PRO/CONs:

PROs:
- RSI remains extremely bullish as the daily 14-RSI bounced off of the 9-RSI's 14-EMA (a solid signal);
- Price formed a continuation pattern. Look for 9-EMA for trend continuation; look for 0.079 for first support and 0.069 for ultimate support;
- All secondary indicators (CCI, Wm%R and CMF) remain dedicated to the buying side
- While both ADX continues its ascent, D(+) curls upwards adding further credence that traders continue to favor buying pressure;
- PPO kinks back upwards after a shallow decline to prior peak

CONs:
- Recent bullish price action has stretched all indicators to taut oversold territories, building a technical expectation that the price should unwind a bit prior to further rally;
- ChiOsc failed its 21-EMA, forming a negative divergence with A/D and OBV lines - A discrepancy that can be used as warnign for imminent decline/retracement, although NOT the best signal to rely upon, IMHO.

OVERALL - BULLISH mid-term outlook; unwinding expected in the shorter term, IMHO.



- Dalcindo

[dalcindo]

Article - Inside The Great American Bubble Machine

Matt Taibbi on how Goldman Sachs has engineered every major market manipulation since the Great Depression


(Source: Rollingstone.com, URL: http://www.rollingstone.com/politics/story/28816321/inside_the_great_american_bubble_machine )

By MATT TAIBBI
Posted Jul 02, 2009 8:38 AM



In Rolling Stone Issue 1082-83, Matt Taibbi takes on "the Wall Street Bubble Mafia" — investment bank Goldman Sachs (click here to read the whole story). The piece has generated controversy, with Goldman Sachs firing back that Taibbi's piece is "an hysterical compilation of conspiracy theories" and a spokesman adding, "We reject the assertion that we are inflators of bubbles and profiteers in busts, and we are painfully conscious of the importance in being a force for good." Taibbi shot back: "Goldman has its alumni pushing its views from the pulpit of the U.S. Treasury, the NYSE, the World Bank, and numerous other important posts; it also has former players fronting major TV shows. They have the ear of the president if they want it." Here, now, are excerpts from Matt Taibbi's piece and video of Taibbi exploring the key issues.

Matt Taibbi On Goldman Sachs' Big Scam


From Matt Taibbi's "The Great American Bubble Machine" in Rolling Stone Issue 1082-83.

The first thing you need to know about Goldman Sachs is that it's everywhere. The world's most powerful investment bank is a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.

Any attempt to construct a narrative around all the former Goldmanites in influential positions quickly becomes an absurd and pointless exercise, like trying to make a list of everything. What you need to know is the big picture: If America is circling the drain, Goldman Sachs has found a way to be that drain — an extremely unfortunate loophole in the system of Western democratic capitalism, which never foresaw that in a society governed passively by free markets and free elections, organized greed always defeats disorganized democracy.

They achieve this using the same playbook over and over again. The formula is relatively simple: Goldman positions itself in the middle of a speculative bubble, selling investments they know are crap. Then they hoover up vast sums from the middle and lower floors of society with the aid of a crippled and corrupt state that allows it to rewrite the rules in exchange for the relative pennies the bank throws at political patronage. Finally, when it all goes bust, leaving millions of ordinary citizens broke and starving, they begin the entire process over again, riding in to rescue us all by lending us back our own money at interest, selling themselves as men above greed, just a bunch of really smart guys keeping the wheels greased. They've been pulling this same stunt over and over since the 1920s — and now they're preparing to do it again, creating what may be the biggest and most audacious bubble yet.

See Taibbi discuss Goldman Sachs' big scam.

NEXT: Goldman Sachs' Role in the Housing and Internet Busts

Click here to read Matt Taibbi's entire piece, "The Great American Bubble Machine."

Advertisement

Matt Taibbi on Goldman Sachs' Role
in the Housing and Internet Busts


From Matt Taibbi's "The Great American Bubble Machine" in Rolling Stone Issue 1082-83.

The basic scam in the Internet Age is pretty easy even for the financially illiterate to grasp. Companies that weren't much more than pot-fueled ideas scrawled on napkins by up-too-late bong-smokers were taken public via IPOs, hyped in the media and sold to the public for megamillions. It was as if banks like Goldman were wrapping ribbons around watermelons, tossing them out 50-story windows and opening the phones for bids. In this game you were a winner only if you took your money out before the melon hit the pavement.

It sounds obvious now, but what the average investor didn't know at the time was that the banks had changed the rules of the game, making the deals look better than they actually were. They did this by setting up what was, in reality, a two-tiered investment system — one for the insiders who knew the real numbers, and another for the lay investor who was invited to chase soaring prices the banks themselves knew were irrational. While Goldman's later pattern would be to capitalize on changes in the regulatory environment, its key innovation in the Internet years was to abandon its own industry's standards of quality control.

Goldman's role in the sweeping global disaster that was the housing bubble is not hard to trace. Here again, the basic trick was a decline in underwriting standards, although in this case the standards weren't in IPOs but in mortgages. By now almost everyone knows that for decades mortgage dealers insisted that home buyers be able to produce a down payment of 10 percent or more, show a steady income and good credit rating, and possess a real first and last name. Then, at the dawn of the new millennium, they suddenly threw all that shit out the window and started writing mortgages on the backs of napkins to cocktail waitresses and ex-cons carrying five bucks and a Snickers bar.

And what caused the huge spike in oil prices? Take a wild guess. Obviously Goldman had help — there were other players in the physical-commodities market — but the root cause had almost everything to do with the behavior of a few powerful actors determined to turn the once-solid market into a speculative casino. Goldman did it by persuading pension funds and other large institutional investors to invest in oil futures — agreeing to buy oil at a certain price on a fixed date. The push transformed oil from a physical commodity, rigidly subject to supply and demand, into something to bet on, like a stock. Between 2003 and 2008, the amount of speculative money in commodities grew from $13 billion to $317 billion, an increase of 2,300 percent. By 2008, a barrel of oil was traded 27 times, on average, before it was actually delivered and consumed.

See Matt Taibbi discuss Goldman Sachs' role
in the housing and internet busts.

NEXT: Goldman Sachs Graduates in the Government

Click here to read Matt Taibbi's entire piece, "The Great American Bubble Machine."

Advertisement

Matt Taibbi Runs Down Goldman' Sachs Graduates with Government Positions


From Matt Taibbi's "The Great American Bubble Machine" in Rolling Stone Issue 1082-83.

The history of the recent financial crisis, which doubles as a history of the rapid decline and fall of the suddenly swindled-dry American empire, reads like a Who's Who of Goldman Sachs graduates. By now, most of us know the major players. As George Bush's last Treasury secretary, former Goldman CEO Henry Paulson was the architect of the bailout, a suspiciously self-serving plan to funnel trillions of Your Dollars to a handful of his old friends on Wall Street. Robert Rubin, Bill Clinton's former Treasury secretary, spent 26 years at Goldman before becoming chairman of Citigroup — which in turn got a $300 billion taxpayer bailout from Paulson. There's John Thain, the asshole chief of Merrill Lynch who bought an $87,000 area rug for his office as his company was imploding; a former Goldman banker, Thain enjoyed a multibillion-dollar handout from Paulson, who used billions in taxpayer funds to help Bank of America rescue Thain's sorry company. And Robert Steel, the former Goldmanite head of Wachovia, scored himself and his fellow executives $225 million in golden-parachute payments as his bank was self-destructing. There's Joshua Bolten, Bush's chief of staff during the bailout, and Mark Patterson, the current Treasury chief of staff, who was a Goldman lobbyist just a year ago, and Ed Liddy, the former Goldman director whom Paulson put in charge of bailed-out insurance giant AIG, which forked over $13 billion to Goldman after Liddy came on board. The heads of the Canadian and Italian national banks are Goldman alums, as is the head of the World Bank, the head of the New York Stock Exchange, the last two heads of the Federal Reserve Bank of New York — which, incidentally, is now in charge of overseeing Goldman.

But then, something happened. It's hard to say what it was exactly; it might have been the fact that Goldman's co-chairman in the early Nineties, Robert Rubin, followed Bill Clinton to the White House, where he directed the National Economic Council and eventually became Treasury secretary. While the American media fell in love with the story line of a pair of baby-boomer, Sixties-child, Fleetwood Mac yuppies nesting in the White House, it also nursed an undisguised crush on Rubin, who was hyped as without a doubt the smartest person ever to walk the face of the Earth, with Newton, Einstein, Mozart and Kant running far behind.

Rubin was the prototypical Goldman banker. He was probably born in a $4,000 suit, he had a face that seemed permanently frozen just short of an apology for being so much smarter than you, and he exuded a Spock-like, emotion-neutral exterior; the only human feeling you could imagine him experiencing was a nightmare about being forced to fly coach. It became almost a national cliché that whatever Rubin thought was best for the economy — a phenomenon that reached its apex in 1999, when Rubin appeared on the cover of Time with his Treasury deputy, Larry Summers, and Fed chief Alan Greenspan under the headline the committee to save the world. And "what Rubin thought," mostly, was that the American economy, and in particular the financial markets, were over-regulated and needed to be set free. During his tenure at Treasury, the Clinton White House made a series of moves that would have drastic consequences for the global economy — beginning with Rubin's complete and total failure to regulate his old firm during its first mad dash for obscene short-term profits.


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Article - Obama's Big Sellout

The president has packed his economic team with Wall Street insiders intent on turning the bailout into an all-out giveaway

(Source: Rollingstone.com, URL: http://www.rollingstone.com/politics/story/31234647/obamas_big_sellout )


By MATT TAIBBI
Posted Dec 09, 2009 2:35 PM


Barack Obama ran for president as a man of the people, standing up to Wall Street as the global economy melted down in that fateful fall of 2008. He pushed a tax plan to soak the rich, ripped NAFTA for hurting the middle class and tore into John McCain for supporting a bankruptcy bill that sided with wealthy bankers "at the expense of hardworking Americans." Obama may not have run to the left of Samuel Gompers or Cesar Chavez, but it's not like you saw him on the campaign trail flanked by bankers from Citigroup and Goldman Sachs. What inspired supporters who pushed him to his historic win was the sense that a genuine outsider was finally breaking into an exclusive club, that walls were being torn down, that things were, for lack of a better or more specific term, changing.

Then he got elected.

What's taken place in the year since Obama won the presidency has turned out to be one of the most dramatic political about-faces in our history. Elected in the midst of a crushing economic crisis brought on by a decade of orgiastic deregulation and unchecked greed, Obama had a clear mandate to rein in Wall Street and remake the entire structure of the American economy. What he did instead was ship even his most marginally progressive campaign advisers off to various bureaucratic Siberias, while packing the key economic positions in his White House with the very people who caused the crisis in the first place. This new team of bubble-fattened ex-bankers and laissez-faire intellectuals then proceeded to sell us all out, instituting a massive, trickle-up bailout and systematically gutting regulatory reform from the inside.

How could Obama let this happen? Is he just a rookie in the political big leagues, hoodwinked by Beltway old-timers? Or is the vacillating, ineffectual servant of banking interests we've been seeing on TV this fall who Obama really is?

Whatever the president's real motives are, the extensive series of loophole-rich financial "reforms" that the Democrats are currently pushing may ultimately do more harm than good. In fact, some parts of the new reforms border on insanity, threatening to vastly amplify Wall Street's political power by institutionalizing the taxpayer's role as a welfare provider for the financial-services industry. At one point in the debate, Obama's top economic advisers demanded the power to award future bailouts without even going to Congress for approval — and without providing taxpayers a single dime in equity on the deals.

How did we get here? It started just moments after the election — and almost nobody noticed.

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'Just look at the timeline of the Citigroup deal," says one leading Democratic consultant. "Just look at it. It's fucking amazing. Amazing! And nobody said a thing about it."

Barack Obama was still just the president-elect when it happened, but the revolting and inexcusable $306 billion bailout that Citigroup received was the first major act of his presidency. In order to grasp the full horror of what took place, however, one needs to go back a few weeks before the actual bailout — to November 5th, 2008, the day after Obama's election.

That was the day the jubilant Obama campaign announced its transition team. Though many of the names were familiar — former Bill Clinton chief of staff John Podesta, long-time Obama confidante Valerie Jarrett — the list was most notable for who was not on it, especially on the economic side. Austan Goolsbee, a University of Chicago economist who had served as one of Obama's chief advisers during the campaign, didn't make the cut. Neither did Karen Kornbluh, who had served as Obama's policy director and was instrumental in crafting the Democratic Party's platform. Both had emphasized populist themes during the campaign: Kornbluh was known for pushing Democrats to focus on the plight of the poor and middle class, while Goolsbee was an aggressive critic of Wall Street, declaring that AIG executives should receive "a Nobel Prize — for evil."

But come November 5th, both were banished from Obama's inner circle — and replaced with a group of Wall Street bankers. Leading the search for the president's new economic team was his close friend and Harvard Law classmate Michael Froman, a high-ranking executive at Citigroup. During the campaign, Froman had emerged as one of Obama's biggest fundraisers, bundling $200,000 in contributions and introducing the candidate to a host of heavy hitters — chief among them his mentor Bob Rubin, the former co-chairman of Goldman Sachs who served as Treasury secretary under Bill Clinton. Froman had served as chief of staff to Rubin at Treasury, and had followed his boss when Rubin left the Clinton administration to serve as a senior counselor to Citigroup (a massive new financial conglomerate created by deregulatory moves pushed through by Rubin himself).

Incredibly, Froman did not resign from the bank when he went to work for Obama: He remained in the employ of Citigroup for two more months, even as he helped appoint the very people who would shape the future of his own firm. And to help him pick Obama's economic team, Froman brought in none other than Jamie Rubin, who happens to be Bob Rubin's son. At the time, Jamie's dad was still earning roughly $15 million a year working for Citigroup, which was in the midst of a collapse brought on in part because Rubin had pushed the bank to invest heavily in mortgage-backed CDOs and other risky instruments.

Now here's where it gets really interesting. It's three weeks after the election. You have a lame-duck president in George W. Bush — still nominally in charge, but in reality already halfway to the golf-and-O'Doul's portion of his career and more than happy to vacate the scene. Left to deal with the still-reeling economy are lame-duck Treasury Secretary Henry Paulson, a former head of Goldman Sachs, and New York Fed chief Timothy Geithner, who served under Bob Rubin in the Clinton White House. Running Obama's economic team are a still-employed Citigroup executive and the son of another Citigroup executive, who himself joined Obama's transition team that same month.

So on November 23rd, 2008, a deal is announced in which the government will bail out Rubin's messes at Citigroup with a massive buffet of taxpayer-funded cash and guarantees. It is a terrible deal for the government, almost universally panned by all serious economists, an outrage to anyone who pays taxes. Under the deal, the bank gets $20 billion in cash, on top of the $25 billion it had already received just weeks before as part of the Troubled Asset Relief Program. But that's just the appetizer. The government also agrees to charge taxpayers for up to $277 billion in losses on troubled Citi assets, many of them those toxic CDOs that Rubin had pushed Citi to invest in. No Citi executives are replaced, and few restrictions are placed on their compensation. It's the sweetheart deal of the century, putting generations of working-stiff taxpayers on the hook to pay off Bob Rubin's fuck-up-rich tenure at Citi. "If you had any doubts at all about the primacy of Wall Street over Main Street," former labor secretary Robert Reich declares when the bailout is announced, "your doubts should be laid to rest."

It is bad enough that one of Bob Rubin's former protégés from the Clinton years, the New York Fed chief Geithner, is intimately involved in the negotiations, which unsurprisingly leave the Federal Reserve massively exposed to future Citi losses. But the real stunner comes only hours after the bailout deal is struck, when the Obama transition team makes a cheerful announcement: Timothy Geithner is going to be Barack Obama's Treasury secretary!

Geithner, in other words, is hired to head the U.S. Treasury by an executive from Citigroup — Michael Froman — before the ink is even dry on a massive government giveaway to Citigroup that Geithner himself was instrumental in delivering. In the annals of brazen political swindles, this one has to go in the all-time Fuck-the-Optics Hall of Fame.

Wall Street loved the Citi bailout and the Geithner nomination so much that the Dow immediately posted its biggest two-day jump since 1987, rising 11.8 percent. Citi shares jumped 58 percent in a single day, and JP Morgan Chase, Merrill Lynch and Morgan Stanley soared more than 20 percent, as Wall Street embraced the news that the government's bailout generosity would not die with George W. Bush and Hank Paulson. "Geithner assures a smooth transition between the Bush administration and that of Obama, because he's already co-managing what's happening now," observed Stephen Leeb, president of Leeb Capital Management.

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Left unnoticed, however, was the fact that Geithner had been hired by a sitting Citigroup executive who still had a big bonus coming despite his proximity to Obama. In January 2009, just over a month after the bailout, Citigroup paid Froman a year-end bonus of $2.25 million. But as outrageous as it was, that payoff would prove to be chump change for the banker crowd, who were about to get everything they wanted — and more — from the new president.

The irony of Bob Rubin: He's an unapologetic arch-capitalist demagogue whose very career is proof that a free-market meritocracy is a myth. Much like Alan Greenspan, a staggeringly incompetent economic forecaster who was worshipped by four decades of politicians because he once dated Barbara Walters, Rubin has been held in awe by the American political elite for nearly 20 years despite having fucked up virtually every project he ever got his hands on. He went from running Goldman Sachs (1990-1992) to the Clinton White House (1993-1999) to Citigroup (1999-2009), leaving behind a trail of historic gaffes that somehow boosted his stature every step of the way.

As Treasury secretary under Clinton, Rubin was the driving force behind two monstrous deregulatory actions that would be primary causes of last year's financial crisis: the repeal of the Glass-Steagall Act (passed specifically to legalize the Citigroup megamerger) and the deregulation of the derivatives market. Having set that time bomb, Rubin left government to join Citi, which promptly expressed its gratitude by giving him $126 million in compensation over the next eight years (they don't call it bribery in this country when they give you the money post factum). After urging management to amp up its risky investments in toxic vehicles, a strategy that very nearly destroyed the company, Rubin blamed Citi's board for his screw-ups and complained that he had been underpaid to boot. "I bet there's not a single year where I couldn't have gone somewhere else and made more," he said.

Despite being perhaps more responsible for last year's crash than any other single living person — his colossally stupid decisions at both the highest levels of government and the management of a private financial superpower make him unique — Rubin was the man Barack Obama chose to build his White House around.

There are four main ways to be connected to Bob Rubin: through Goldman Sachs, the Clinton administration, Citigroup and, finally, the Hamilton Project, a think tank Rubin spearheaded under the auspices of the Brookings Institute to promote his philosophy of balanced budgets, free trade and financial deregulation. The team Obama put in place to run his economic policy after his inauguration was dominated by people who boasted connections to at least one of these four institutions — so much so that the White House now looks like a backstage party for an episode of Bob Rubin, This Is Your Life!

At Treasury, there is Geithner, who worked under Rubin in the Clinton years. Serving as Geithner's "counselor" — a made-up post not subject to Senate confirmation — is Lewis Alexander, the former chief economist of Citigroup, who advised Citi back in 2007 that the upcoming housing crash was nothing to worry about. Two other top Geithner "counselors" — Gene Sperling and Lael Brainard — worked under Rubin at the National Economic Council, the key group that coordinates all economic policymaking for the White House.

As director of the NEC, meanwhile, Obama installed economic czar Larry Summers, who had served as Rubin's protégé at Treasury. Just below Summers is Jason Furman, who worked for Rubin in the Clinton White House and was one of the first directors of Rubin's Hamilton Project. The appointment of Furman — a persistent advocate of free-trade agreements like NAFTA and the author of droolingly pro-globalization reports with titles like "Walmart: A Progressive Success Story" — provided one of the first clues that Obama had only been posturing when he promised crowds of struggling Midwesterners during the campaign that he would renegotiate NAFTA, which facilitated the flight of blue-collar jobs to other countries. "NAFTA's shortcomings were evident when signed, and we must now amend the agreement to fix them," Obama declared. A few months after hiring Furman to help shape its economic policy, however, the White House quietly quashed any talk of renegotiating the trade deal. "The president has said we will look at all of our options, but I think they can be addressed without having to reopen the agreement," U.S. Trade Representative Ronald Kirk told reporters in a little-publicized conference call last April.

The announcement was not so surprising, given who Obama hired to serve alongside Furman at the NEC: management consultant Diana Farrell, who worked under Rubin at Goldman Sachs. In 2003, Farrell was the author of an infamous paper in which she argued that sending American jobs overseas might be "as beneficial to the U.S. as to the destination country, probably more so."

Joining Summers, Furman and Farrell at the NEC is Froman, who by then had been formally appointed to a unique position: He is not only Obama's international finance adviser at the National Economic Council, he simultaneously serves as deputy national security adviser at the National Security Council. The twin posts give Froman a direct line to the president, putting him in a position to coordinate Obama's international economic policy during a crisis. He'll have help from David Lipton, another joint appointee to the economics and security councils who worked with Rubin at Treasury and Citigroup, and from Jacob Lew, a former Citi colleague of Rubin's whom Obama named as deputy director at the State Department to focus on international finance.

Over at the Commodity Futures Trading Commission, which is supposed to regulate derivatives trading, Obama appointed Gary Gensler, a former Goldman banker who worked under Rubin in the Clinton White House. Gensler had been instrumental in helping to pass the infamous Commodity Futures Modernization Act of 2000, which prevented regulation of derivative instruments like CDOs and credit-default swaps that played such a big role in cratering the economy last year. And as head of the powerful Office of Management and Budget, Obama named Peter Orszag, who served as the first director of Rubin's Hamilton Project. Orszag once succinctly summed up the project's ideology as a sort of liberal spin on trickle-down Reaganomics: "Market competition and globalization generate significant economic benefits."

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Taken together, the rash of appointments with ties to Bob Rubin may well represent the most sweeping influence by a single Wall Street insider in the history of government. "Rather than having a team of rivals, they've got a team of Rubins," says Steven Clemons, director of the American Strategy Program at the New America Foundation. "You see that in policy choices that have resuscitated — but not reformed — Wall Street."
While Rubin's allies and acolytes got all the important jobs in the Obama administration, the academics and progressives got banished to semi-meaningless, even comical roles. Kornbluh was rewarded for being the chief policy architect of Obama's meteoric rise by being outfitted with a pith helmet and booted across the ocean to Paris, where she now serves as America's never-again-to-be-seen-on-TV ambassador to the Organization for Economic Cooperation and Development. Goolsbee, meanwhile, was appointed as staff director of the President's Economic Recovery Advisory Board, a kind of dumping ground for Wall Street critics who had assisted Obama during the campaign; one top Democrat calls the panel "Siberia."

Joining Goolsbee as chairman of the PERAB gulag is former Fed chief Paul Volcker, who back in March 2008 helped candidate Obama write a speech declaring that the deregulatory efforts of the Eighties and Nineties had "excused and even embraced an ethic of greed, corner-cutting, insider dealing, things that have always threatened the long-term stability of our economic system." That speech met with rapturous applause, but the commission Obama gave Volcker to manage is so toothless that it didn't even meet for the first time until last May. The lone progressive in the White House, economist Jared Bernstein, holds the impressive-sounding title of chief economist and national policy adviser — except that the man he is advising is Joe Biden, who seems more interested in foreign policy than financial reform.

The significance of all of these appointments isn't that the Wall Street types are now in a position to provide direct favors to their former employers. It's that, with one or two exceptions, they collectively offer a microcosm of what the Democratic Party has come to stand for in the 21st century. Virtually all of the Rubinites brought in to manage the economy under Obama share the same fundamental political philosophy carefully articulated for years by the Hamilton Project: Expand the safety net to protect the poor, but let Wall Street do whatever it wants. "Bob Rubin, these guys, they're classic limousine liberals," says David Sirota, a former Democratic strategist. "These are basically people who have made shitloads of money in the speculative economy, but they want to call themselves good Democrats because they're willing to give a little more to the poor. That's the model for this Democratic Party: Let the rich do their thing, but give a fraction more to everyone else."

Even the members of Obama's economic team who have spent most of their lives in public office have managed to make small fortunes on Wall Street. The president's economic czar, Larry Summers, was paid more than $5.2 million in 2008 alone as a managing director of the hedge fund D.E. Shaw, and pocketed an additional $2.7 million in speaking fees from a smorgasbord of future bailout recipients, including Goldman Sachs and Citigroup. At Treasury, Geithner's aide Gene Sperling earned a staggering $887,727 from Goldman Sachs last year for performing the punch-line-worthy service of "advice on charitable giving." Sperling's fellow Treasury appointee, Mark Patterson, received $637,492 as a full-time lobbyist for Goldman Sachs, and another top Geithner aide, Lee Sachs, made more than $3 million working for a New York hedge fund called Mariner Investment Group. The list goes on and on. Even Obama's chief of staff, Rahm Emanuel, who has been out of government for only 30 months of his adult life, managed to collect $18 million during his private-sector stint with a Wall Street firm called Wasserstein-Perella.

The point is that an economic team made up exclusively of callous millionaire-assholes has absolutely zero interest in reforming the gamed system that made them rich in the first place. "You can't expect these people to do anything other than protect Wall Street," says Rep. Cliff Stearns, a Republican from Florida. That thinking was clear from Obama's first address to Congress, when he stressed the importance of getting Americans to borrow like crazy again. "Credit is the lifeblood of the economy," he declared, pledging "the full force of the federal government to ensure that the major banks that Americans depend on have enough confidence and enough money." A president elected on a platform of change was announcing, in so many words, that he planned to change nothing fundamental when it came to the economy. Rather than doing what FDR had done during the Great Depression and institute stringent new rules to curb financial abuses, Obama planned to institutionalize the policy, firmly established during the Bush years, of keeping a few megafirms rich at the expense of everyone else.

Obama hasn't always toed the Rubin line when it comes to economic policy. Despite being surrounded by a team that is powerfully opposed to deficit spending — balanced budgets and deficit reduction have always been central to the Rubin way of thinking — Obama came out of the gate with a huge stimulus plan designed to kick-start the economy and address the job losses brought on by the 2008 crisis. "You have to give him credit there," says Sen. Bernie Sanders, an advocate of using government resources to address unemployment. "It's a very significant piece of legislation, and $787 billion is a lot of money."

But whatever jobs the stimulus has created or preserved so far — 640,329, according to an absurdly precise and already debunked calculation by the White House — the aid that Obama has provided to real people has been dwarfed in size and scope by the taxpayer money that has been handed over to America's financial giants. "They spent $75 billion on mortgage relief, but come on — look at how much they gave Wall Street," says a leading Democratic strategist. Neil Barofsky, the inspector general charged with overseeing TARP, estimates that the total cost of the Wall Street bailouts could eventually reach $23.7 trillion. And while the government continues to dole out big money to big banks, Obama and his team of Rubinites have done almost nothing to reform the warped financial system responsible for imploding the global economy in the first place.

The push for reform seemed to get off to a promising start. In the House, the charge was led by Rep. Barney Frank, the outspoken chair of the House Financial Services Committee, who emerged during last year's Bush bailouts as a sharp-tongued critic of Wall Street. Back when Obama was still a senator, he and Frank even worked together to introduce a populist bill targeting executive compensation. Last spring, with the economy shattered, Frank began to hold hearings on a host of reforms, crafted with significant input from the White House, that initially contained some very good elements. There were measures to curb abusive credit-card lending, prevent banks from charging excessive fees, force publicly traded firms to conduct meaningful risk assessment and allow shareholders to vote on executive compensation. There were even measures to crack down on risky derivatives and to bar firms like AIG from picking their own regulators.

Then the committee went to work — and the loopholes started to appear.

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The most notable of these came in the proposal to regulate derivatives like credit-default swaps. Even Gary Gensler, the former Goldmanite whom Obama put in charge of commodities regulation, was pushing to make these normally obscure investments more transparent, enabling regulators and investors to identify speculative bubbles sooner. But in August, a month after Gensler came out in favor of reform, Geithner slapped him down by issuing a 115-page paper called "Improvements to Regulation of Over-the-Counter Derivatives Markets" that called for a series of exemptions for "end users" — i.e., almost all of the clients who buy derivatives from banks like Goldman Sachs and Morgan Stanley. Even more stunning, Frank's bill included a blanket exception to the rules for currency swaps traded on foreign exchanges — the very instruments that had triggered the Long-Term Capital Management meltdown in the late 1990s.

Given that derivatives were at the heart of the financial meltdown last year, the decision to gut derivatives reform sent some legislators howling with disgust. Sen. Maria Cantwell of Washington, who estimates that as much as 90 percent of all derivatives could remain unregulated under the new rules, went so far as to say the new laws would make things worse. "Current law with its loopholes might actually be better than these loopholes," she said.

An even bigger loophole could do far worse damage to the economy. Under the original bill, the Securities and Exchange Commission and the Commodity Futures Trading Commission were granted the power to ban any credit swaps deemed to be "detrimental to the stability of a financial market or of participants in a financial market." By the time Frank's committee was done with the bill, however, the SEC and the CFTC were left with no authority to do anything about abusive derivatives other than to send a report to Congress. The move, in effect, would leave the kind of credit-default swaps that brought down AIG largely unregulated.

Why would leading congressional Democrats, working closely with the Obama administration, agree to leave one of the riskiest of all financial instruments unregulated, even before the issue could be debated by the House? "There was concern that a broad grant to ban abusive swaps would be unsettling," Frank explained.

Unsettling to whom? Certainly not to you and me — but then again, actual people are not really part of the calculus when it comes to finance reform. According to those close to the markup process, Frank's committee inserted loopholes under pressure from "constituents" — by which they mean anyone "who can afford a lobbyist," says Michael Greenberger, the former head of trading at the CFTC under Clinton.

This pattern would repeat itself over and over again throughout the fall. Take the centerpiece of Obama's reform proposal: the much-ballyhooed creation of a Consumer Finance Protection Agency to protect the little guy from abusive bank practices. Like the derivatives bill, the debate over the CFPA ended up being dominated by horse-trading for loopholes. In the end, Frank not only agreed to exempt some 8,000 of the nation's 8,200 banks from oversight by the castrated-in-advance agency, leaving most consumers unprotected, he allowed the committee to pass the exemption by voice vote, meaning that congressmen could side with the banks without actually attaching their name to their "Aye."

To win the support of conservative Democrats, Frank also backed down on another issue that seemed like a slam-dunk: a requirement that all banks offer so-called "plain vanilla" products, such as no-frills mortgages, to give consumers an alternative to deceptive, "fully loaded" deals like adjustable-rate loans. Frank's last-minute reversal — made in consultation with Geithner — was such a transparent giveaway to the banks that even an economics writer for Reuters, hardly a far-left source, called it "the beginning of the end of meaningful regulatory reform."

But the real kicker came when Frank's committee took up what is known as "resolution authority" — government-speak for "Who the hell is in charge the next time somebody at AIG or Lehman Brothers decides to vaporize the economy?" What the committee initially introduced bore a striking resemblance to a proposal written by Geithner earlier in the summer. A masterpiece of legislative chicanery, the measure would have given the White House permanent and unlimited authority to execute future bailouts of megaconglomerates like Citigroup and Bear Stearns.

Democrats pushed the move as politically uncontroversial, claiming that the bill will force Wall Street to pay for any future bailouts and "doesn't use taxpayer money." In reality, that was complete bullshit. The way the bill was written, the FDIC would basically borrow money from the Treasury — i.e., from ordinary taxpayers — to bail out any of the nation's two dozen or so largest financial companies that the president deems in need of government assistance. After the bailout is executed, the president would then levy a tax on financial firms with assets of more than $10 billion to repay the Treasury within 60 months — unless, that is, the president decides he doesn't want to! "They can wait indefinitely to repay," says Rep. Brad Sherman of California, who dubbed the early version of the bill "TARP on steroids."

The new bailout authority also mandated that future bailouts would not include an exchange of equity "in any form" — meaning that taxpayers would get nothing in return for underwriting Wall Street's mistakes. Even more outrageous, it specifically prohibited Congress from rejecting tax giveaways to Wall Street, as it did last year, by removing all congressional oversight of future bailouts. In fact, the resolution authority proposed by Frank was such a slurpingly obvious blow job of Wall Street that it provoked a revolt among his own committee members, with junior Democrats waging a spirited fight that restored congressional oversight to future bailouts, requires equity for taxpayer money and caps assistance to troubled firms at $150 billion. Another amendment to force companies with more than $50 billion in assets to pay into a rainy-day fund for bailouts passed by a resounding vote of 52 to 17 — with the "Nays" all coming from Frank and other senior Democrats loyal to the administration.

Even as amended, however, resolution authority still has the potential to be truly revolutionary legislation. The Senate version still grants the president unlimited power over equity-free bailouts, and the amended House bill still institutionalizes a system of taxpayer support for the 20 to 25 biggest banks in the country. It would essentially grant economic immortality to those top few megafirms, who will continually gobble up greater and greater slices of market share as money becomes cheaper and cheaper for them to borrow (after all, who wouldn't lend to a company permanently backstopped by the federal government?). It would also formalize the government's role in the global economy and turn the presidential-appointment process into an important part of every big firm's business strategy. "If this passes, the very first thing these companies are going to do in the future is ask themselves, 'How do we make sure that one of our executives becomes assistant Treasury secretary?'" says Sherman.

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On the Senate side, finance reform has yet to make it through the markup process, but there's every reason to believe that its final bill will be as watered down as the House version by the time it comes to a vote. The original measure, drafted by chairman Christopher Dodd of the Senate Banking Committee, is surprisingly tough on Wall Street — a fact that almost everyone in town chalks up to Dodd's desperation to shake the bad publicity he incurred by accepting a sweetheart mortgage from the notorious lender Countrywide. "He's got to do the shake-his-fist-at-Wall Street thing because of his, you know, problems," says a Democratic Senate aide. "So that's why the bill is starting out kind of tough."

The aide pauses. "The question is, though, what will it end up looking like?"

He's right — that is the question. Because the way it works is that all of these great-sounding reforms get whittled down bit by bit as they move through the committee markup process, until finally there's nothing left but the exceptions. In one example, a measure that would have forced financial companies to be more accountable to shareholders by holding elections for their entire boards every year has already been watered down to preserve the current system of staggered votes. In other cases, this being the Senate, loopholes were inserted before the debate even began: The Dodd bill included the exemption for foreign-currency swaps — a gift to Wall Street that only appeared in the Frank bill during the course of hearings — from the very outset.

The White House's refusal to push for real reform stands in stark contrast to what it should be doing. It was left to Rep. Paul Kanjorski in the House and Bernie Sanders in the Senate to propose bills to break up the so-called "too big to fail" banks. Both measures would give Congress the power to dismantle those pseudomonopolies controlling almost the entire derivatives market (Goldman, Citi, Chase, Morgan Stanley and Bank of America control 95 percent of the $290 trillion over-the-counter market) and the consumer-lending market (Citi, Chase, Bank of America and Wells Fargo issue one of every two mortgages, and two of every three credit cards). On November 18th, in a move that demonstrates just how nervous Democrats are getting about the growing outrage over taxpayer giveaways, Barney Frank's committee actually passed Kanjorski's measure. "It's a beginning," Kanjorski says hopefully. "We're on our way." But even if the Senate follows suit, big banks could well survive — depending on whom the president appoints to sit on the new regulatory board mandated by the measure. An oversight body filled with executives of the type Obama has favored to date from Citi and Goldman Sachs hardly seems like a strong bet to start taking an ax to concentrated wealth. And given the new bailout provisions that provide these megafirms a market advantage over smaller banks (those Paul Volcker calls "too small to save"), the failure to break them up qualifies as a major policy decision with potentially disastrous consequences.

"They should be doing what Teddy Roosevelt did," says Sanders. "They should be busting the trusts."

That probably won't happen anytime soon. But at a minimum, Obama should start on the road back to sanity by making a long-overdue move: firing Geithner. Not only are the mop-headed weenie of a Treasury secretary's fingerprints on virtually all the gross giveaways in the new reform legislation, he's a living symbol of the Rubinite gangrene crawling up the leg of this administration. Putting Geithner against the wall and replacing him with an actual human being not recently employed by a Wall Street megabank would do a lot to prove that Obama was listening this past Election Day. And while there are some who think Geithner is about to go — "he almost has to," says one Democratic strategist — at the moment, the president is still letting Wall Street do his talking.

Morning, the National Mall, November 5th. A year to the day after Obama named Michael Froman to his transition team, his political "opposition" has descended upon the city. Republican teabaggers from all 50 states have showed up, a vast horde of frowning, pissed-off middle-aged white people with their idiot placards in hand, ready to do cultural battle. They are here to protest Obama's "socialist" health care bill — you know, the one that even a bloodsucking capitalist interest group like Big Pharma spent $150 million to get passed.

These teabaggers don't know that, however. All they know is that a big government program might end up using tax dollars to pay the medical bills of rapidly breeding Dominican immigrants. So they hate it. They're also in a groove, knowing that at the polls a few days earlier, people like themselves had a big hand in ousting several Obama-allied Democrats, including a governor of New Jersey who just happened to be the former CEO of Goldman Sachs. A sign held up by New Jersey protesters bears the warning, "If You Vote For Obamacare, We Will Corzine You."

I approach a woman named Pat Defillipis from Toms River, New Jersey, and ask her why she's here. "To protest health care," she answers. "And then amnesty. You know, immigration amnesty."

I ask her if she's aware that there's a big hearing going on in the House today, where Barney Frank's committee is marking up a bill to reform the financial regulatory system. She recognizes Frank's name, wincing, but the rest of my question leaves her staring at me like I'm an alien.

"Do you care at all about economic regulation?" I ask. "There was sort of a big economic collapse last year. Do you have any ideas about how that whole deal should be fixed?"

"We got to slow down on spending," she says. "We can't afford it."

"But what do we do about the rules governing Wall Street . . ."

She walks away. She doesn't give a fuck. People like Pat aren't aware of it, but they're the best friends Obama has. They hate him, sure, but they don't hate him for any reasons that make sense. When it comes down to it, most of them hate the president for all the usual reasons they hate "liberals" — because he uses big words, doesn't believe in hell and doesn't flip out at the sight of gay people holding hands. Additionally, of course, he's black, and wasn't born in America, and is married to a woman who secretly hates our country.

These are the kinds of voters whom Obama's gang of Wall Street advisers is counting on: idiots. People whose votes depend not on whether the party in power delivers them jobs or protects them from economic villains, but on what cultural markers the candidate flashes on TV. Finance reform has become to Obama what Iraq War coffins were to Bush: something to be tucked safely out of sight.

Around the same time that finance reform was being watered down in Congress at the behest of his Treasury secretary, Obama was making a pit stop to raise money from Wall Street. On October 20th, the president went to the Mandarin Oriental Hotel in New York and addressed some 200 financiers and business moguls, each of whom paid the maximum allowable contribution of $30,400 to the Democratic Party. But an organizer of the event, Daniel Fass, announced in advance that support for the president might be lighter than expected — bailed-out firms like JP Morgan Chase and Goldman Sachs were expected to contribute a meager $91,000 to the event — because bankers were tired of being lectured about their misdeeds.

"The investment community feels very put-upon," Fass explained. "They feel there is no reason why they shouldn't earn $1 million to $200 million a year, and they don't want to be held responsible for the global financial meltdown."

Which makes sense. Shit, who could blame the investment community for the meltdown? What kind of assholes are we to put any of this on them?

This is the kind of person who is working for the Obama administration, which makes it unsurprising that we're getting no real reform of the finance industry. There's no other way to say it: Barack Obama, a once-in-a-generation political talent whose graceful conquest of America's racial dragons en route to the White House inspired the entire world, has for some reason allowed his presidency to be hijacked by sniveling, low-rent shitheads. Instead of reining in Wall Street, Obama has allowed himself to be seduced by it, leaving even his erstwhile campaign adviser, ex-Fed chief Paul Volcker, concerned about a "moral hazard" creeping over his administration.

"The obvious danger is that with the passage of time, risk-taking will be encouraged and efforts at prudential restraint will be resisted," Volcker told Congress in September, expressing concerns about all the regulatory loopholes in Frank's bill. "Ultimately, the possibility of further crises — even greater crises — will increase."

What's most troubling is that we don't know if Obama has changed, or if the influence of Wall Street is simply a fundamental and ineradicable element of our electoral system. What we do know is that Barack Obama pulled a bait-and-switch on us. If it were any other politician, we wouldn't be surprised. Maybe it's our fault, for thinking he was different.

Correction: Due to an editing error, the original version of this story incorrectly identified Jamie Rubin, Bob Rubin's son, as a former diplomat in the Clinton administration.

Watch Matt Taibbi discuss "The Big Sellout" in a video on his blog, Taibblog.

[From Issue 1093 — December 10, 2009]


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

Dalcindo

[dalcindo]

Re: INIX, EXPH - TA Explained:

Hi, Xxx!

Happy new year! Sorry for this late reply.

INIX is still looking good. My recent TA on this bullish stock remain in effect in a WEEKLY timeframe.

EXPH is looking a tad bearish on a weekly scan. First of all, its weekly 14-RSI strives to remain at or above the 40-line, which is a technical requirement to consider it bullish (remember that a RSI oscillating between the 80-40 range corresponds to a bullish stock; 60-30 range, a bearish stock, and 40-80 range a sideways trading stock).

PRO/CONs:

PROs:
- Secondary indicators such as CCI, Wm%R and CMF are diverging positively against price
- ADX line is tapering off following a significant decline, allowing a speculator to infer a likely reversal of that bearish trend and that a bottom may have been reached at this current price level.
- A/D, OBV and ChiOsc lines (which represent buying/selling interests) are tapering off and may possibly roll upwards.
- ChiOsc has crossed over its weekly 21-EMA

CONs:
- Weekly 14-RSI failed 9-RSI's 14-EMA (a major bearish signal that occurred last week)
- Weekly price has declined sharply and recently consolidated into a symmetrical triangle, which favors continuation of prior (here, bearish) trend
- CCI, Wm%R and CMF (despite their positive divergence), are a long way up to offer a buying signal)
- Of all buy/sell signals, A/D and OBV lines remain under their weekly 21-EMA (compared to ChiOsc), favoring a persistantly selling pressure.

All IMHO; hope this helps.

- Dalcindo


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Message in reply to:
Hey Dalcindo,
so I'm very interested in technical analysis and ever since your technical breakdown of INIX I have been even more so interested. Would you be able to give any sort of analysis on EXPH? This is the first stock that I made money in and it kind of got me started. I got out
of it after what has been called a false breakout
in the middle of September.
On Friday, this stock appears to have broken out
of a bearish channel. It appears as though here have been two bearish channels, the new (and steeper one) starting a few weeks ago (I think).
Thank you in advance for any tech info on this (INIX or any other!) stock.
Merry Christmas - vaya con dios!

XXX XXX

[dalcindo]

Weekly Scans - Week of 04 JAN 10:


Bucking Bull:
ANX ADVENTRX Pharmaceuticals Inc. AMEX
CGEN Compugen Ltd. NASD
SATC SatCon Technology Corp. NASD
Count: 3


Bull Pop:
GOVX GeoVax Labs, Inc. NASD
Count: 1

ROW x STO:
GOVX GeoVax Labs, Inc. NASD
WTSLA Wet Seal, Inc. NASD
Count: 2


Merry Christmas and a Happy New Year 2010 to you all!

- Dalcindo

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

A QUICK note on the scans:
- Bucking Bull scans for bullish trend reversals that "buck" the trend;
- Bull Pop looks for unusual "pops" in priorly bearish trending stocks;
- ROW x STO screens out positively divergent stocks over weeks (The name merely stands for: RSI Over Weeks cross-reference against weekly Slow Stochastics).

DISCLAIMER:
I chose to scan stocks only at the close of each trading week, assuming that stocks that continue bullishly into the week-end are likely to remain in the trend. Therefore, although these scans occur at the close of the trading week, their bullish activities might have been underway several days prior:

[dalcindo]

Re: SPX & BGU, TNA, ERX, FAS (Direxion's BULL ETFs) - A Relative Strength View:

NOTE: BGU, TNA, ERX, FAS are all charted against $SPX. I thought it worth noting that their aggregate lines are nearing another MAX Expansion pattern, especially as SPX is also reaching a significant TOP (See also how SPX's PPO is nearing yet another validation of its own resistance at these corresponding price levels for both SPX and BGU, TNA, ERX, FAS altogether).

I believe that violation of SPX's shorter-term support (BLUE) line may provide an early signal of reversal as we lunge into the new yar 2010.

$SPX&p=D&yr=0&mn=8&dy=0&i=p46323128039&a=168155028&r=596">

- Dalcindo

[dalcindo]

Weekly Scans - Week of 28 DEC 09:

Bucking Bulls scan resulted in a great sample of likely bullish industries going into 2010: Pharmaceuticals, Communication and Energy!

A QUICK note on the scans:
- Bucking Bull scans for bullish trend reversals that "buck" the trend;
- Bull Pop looks for unusual "pops" in priorly bearish trending stocks;
- ROW x STO screens out positively divergent stocks over weeks (The name merely stands for: RSI Over Weeks cross-reference against weekly Slow Stochastics).

DISCLAIMER:
I chose to scan stocks only at the close of each trading week, assuming that stocks that continue bullishly into the week-end are likely to remain in the trend. Therefore, although these scans occur at the close of the trading week, their bullish activities might have been underway several days prior:

Bucking Bull:
ACHN Achillion Pharmaceuticals Inc. NASD
CHTL ChinaTel Group Inc. NASD
Q Qwest Comm Intl, Inc. NYSE
TPLM Triangle Petroleum Corp NASD
Count: 4


Bull Pop:
Count: 0


ROW x STO:
Count: 0


Merry Christmas and a Happy New Year 2010 to you all!

- Dalcindo

[dalcindo]

Article - Trading Lessons Learned by the DailyFX Team in 2009

Source: http://www.dailyfx.com/forex/analyst_picks/debate/2009-12-24-1824-Trading_Lessons_Learned_by_the.html



Thursday, 24 December 2009 18:24 GMTBy DailyFX Research Team

At DailyFX, each one of us actively trades and we wanted to take this opportunity to share with you, real trading lessons that we have learned in 2009. Hopefully, by not repeating the same mistakes we did, you will be able to improve your trading performance in 2010.



One of the most important keys to successful trading is proper money management. Indeed, it’s essential to make a conservative use of leverage and always use stops to protect your account from sudden losses. For instance, in the first half of 2009, some of my analysts had a series of losing trades, mostly because we were holding long positions in the dollar. In hindsight, I think we should not be buying dollars while the US Federal Reserve was implementing quantitative easing and the US Treasury was printing money to pay for the massive stimulus plan. However, we can’t go back and change that and more importantly this is not the point that I’m trying to make. Instead, I’m trying to say that no one is 100% profitable, not even those gurus that sell their services for thousands of dollars. So, if you want to trade long enough to learn with your mistakes it’s essential to keep your position size according to you account equity and risk taking profile. In my case, despite the many months of losses, I managed to keep enough equity in my account to make a strong comeback in the second half of the 2009. In fact, what could have been a very bad year, ended up being my most profitable year so far. Happy Holidays and good luck with your trading for 2010!




Without question, my biggest mistake(s) this year was being too early (and wrong) in calling for a US dollar reversal-both in my analysis and my own trading. I was ‘sure’ that the EURUSD had topped in June, then August, September, October, and November. I was wrong, losing money and not sleeping well. The EURUSD market environment of June through November, and especially August through November, was a difficult one to analyze (at least for me). From June 1st to the November high, the EURUSD rallied 7%, a decent 6 month rally but not impressive in the context of that time’s recent history. In the six months before June, the EURUSD had experienced rallies of 17% and 14% with a 15% decline in between. I expected that the high volatility environment would continue and assumed that each medium term reversal would lead to a larger decline (as had been the case for the last 11 months). A larger decline did begin in late November but I was wrong for the better part of 6 months, which is a long time to be wrong in a highly leveraged market such as FX. There are several lessons that I take from this experience: being early can be just as bad as being late; if you are sure you are right, you are probably wrong; do not ignore trend indicators. Use a filter such as a 1 or 3 month moving average in order to keep yourself on the right side of the trend for a longer period of time. For example, the EURUSD was above its 3 month (63 day) moving average for all of June through November. It closed below the average on December 7th, at 1.4756. Waiting until then before ‘turning bearish’ the EURUSD would have saved me a lot of money and stress; and finally simple is usually better. This sounds simple, but it is difficult in practice.



Looking back, 2009 was an interesting year. It was perhaps more straightforward and consistent than what I had expected. While it is my general rule of thumb that I do not fight larger trends, I spent the second half of the year looking for risk appetite to collapse and the US dollar to subsequently rally. However, as John Maynard Keynes said, “the markets can remain irrational far longer than you or I can remain solvent.” In fact, heading into the close of the year, I have maintained my bias on the greenback and risk trends. And, while the currency has started to show some signs of life, the more prominent trend in sentiment has yet to reverse course. Looking to the source of my counter-trend convictions, it is my fundamental half fighting my technical side. At the beginning of the year, the global economy was mired in the worst recession and just coming off the worst financial crisis since the Great Depression. Naturally a recovery from extremely oversold levels was warranted (a quick reversal was attempted and rejected in December) as things settled; but fear developed into a return to the market and then to outright speculation far more aggressively than the expectations for returns and lingering risk would suggest. Yet, this is an incredibly value evaluation: risk appetite is overblown. This is where you turn to technicals. Wait until there is a confirmed reversal in underlying price action (and not in just one security; but across the board) before jumping in on a fundamental position. This is a lesson I will be putting into practice in 2010 and beyond.



For the latter half of the year I was convinced that financial markets would once again falter, sending the US Dollar substantially higher against all currencies except the Japanese Yen. I was so sure in my conviction that I allowed it to color all of my analysis and made bad trades—buying dollars despite the clear strength of the trend in the other direction. This perhaps wouldn’t have been so bad, but when the turn finally came, I had lost so much faith in my analysis that I didn’t fully take advantage of the move.
The lesson learned was surely that, no matter how much evidence there was of a strong dollar reversal, I shouldn’t have pigeon-holed myself into a single bias. My trading account and certainly the strength of my forecasts suffered as a result, and I should have been disciplined enough to truly wait for signs of a turn. This would have allowed me to take full advantage of the year-end Dollar turnaround when the EUR/USD finally broke below my “line in the sand” at 1.4630.



As cliché as it sounds, 2009 proved to be a year that reinforced John Maynard Keynes’ infamous pronouncement “the market can stay irrational longer than you can stay solvent.” While thankfully my solvency was protected by a religious adherence to conservative money management techniques, the market certainly remained irrational far longer than I would have expected. Risky assets raced higher and the US dollar tumbled, seemingly going beyond the scope of any reasonable correction (which would have been quite reasonable after the sharp moves in 2008) despite this year seeing the first contraction in global economic growth in the postwar period. Indeed, global stock markets rose to the highest levels relative to earnings in nearly seven years. My commitment to the belief that risk-taking had gone too far, too fast while the greenback had become grotesquely oversold led to much frustration as trying to capture a turn from the bottom on the US currency continuously failed to yield positive results.

In retrospect, this experience brought with it a valuable lesson and an amendment to my trading strategy. Previously, I would develop a fundamentally-based world view and directional bias on major currencies and then use technical analysis to identify entry and exit points. Most often, this meant that my attention to the technical picture was most intense when entering a position and tended to become much less so if the trade moved into profit. Looking back over the charts, the signs of an emerging US Dollar downturn were evident, but I overlooked them as my focus centered on what I believed (and continue to believe) to have been the correct fundamental world view. However, as aptly noted by Bruce Kovner, “Fundamentalists who say they are not going to pay any attention to the charts are like a doctor who says he’s not going to take a patient’s temperature.” To extend this metaphor, I head into 2010 intent to check my patient’s temperature regularly throughout treatment rather than just for the initial diagnosis.



The biggest trading mistake I made during 2009 was getting out of positions too early. After identifying solid targets, I would allow brief periods of volatility to shake my conviction and take me prematurely out of profitable trades. It can be difficult to leave profits on the table when price action goes against you, but in the long run you will most likely have more losing trades then winners and if you don’t capture the full profit potential of your winners then you will ultimately come out on the losing end. Failing to determine whether you are a long-term or short-term trader could be a costly mistake. If you are taking a longer view, then you shouldn’t at times trade like a short-term trader. For instance, if your target is 500 pips away then you must be willing to except proportionate draw downs in order to reach your objective. It is unlikely that you will see one way price action from the onset of the trade until the target is met. I typically do better with a longer-term perspective and therefore will take bigger positions when I see desirable set-ups. However, I often see opportunities based on event risk and short-term changes in sentiment that will provide potential for profits. On those occasions I will make smaller bets which cure my impulsive nature but doesn’t risk erasing all of my winnings from my longer-term positions.



The spillover effects of the financial crisis sparked extreme market conditions paired with increased volatility in 2009, and there are many lessons to be learned from the market reactions that developed throughout the year. There were some profitable trades that I failed to realize when implementing my usual trading practices which have worked well during normal market conditions, and I found myself increasing the flexibility of my strategies and tailoring them to adapt to shifts in the trading environment. While attempting to catch short-term tops and bottoms or adding to winning positions, increasing the leverage on the trade in expectations for a favorable move had become a habitual discipline given the large movements across the currency market, and in some cases led to substantial losses which could have been minimized. Rather than keeping a fairly tight stop for leveraged trades, placing wider bands with lower leverage helped to avoid getting stopped out on sharp spikes in the exchange rate as well as the risk for loss, and has certainly helped to improve my turnover of profitable trades compared to the number of losing positions.



My trading methodology is contrarian based and as such, I will look to take advantage of extreme overbought and oversold situations in anticipation of a near-term necessary corrective bounce. While the methodology works quite well most of the time, there are those rare situations in which the irrationality of market price action takes things to a whole new level, with the market going hyper-parabolic and accelerating even further in the same direction despite already being severely overextended. This is what happened to me in late September 2009.

I had been watching the GBP/AUD cross closely and noticed that the market was approaching oversold levels. The market had already dropped quite sharply below key psychological barriers by the 2 handle and we were now trading in the 1.8800 area when the daily RSI crossed below 30. Everything was aligned properly and I then established a long position and was very excited with the prospect for an immediate bounce. However, this was not the case, the market continued to drop another 13 big figures down into the 1.7500 are before finally finding a bottom. While I was fortunate enough to place some stops, I made the fatal error of adjusting my initial stop-loss and provisioning for a bigger loss, which eventually occurred.

Here are some takeaways from this experience that I think are invaluable. 1) I would never put myself in a position in which I would be compromising so much equity in such a short time. At the time, I was up a good deal on the year and gave up a substantial amount of profit on this trade. 2) A trader should always be prepared for the worst case scenario and be able to price this in ahead of establishing the position, so that he/she is able to properly and confidently proceed. It is of critical importance to have a game plan when entering a trade and to never change your exit strategy once you have committed to this plan. Otherwise, you will be at risk to making a poor decision under pressure that more often than not will produce unfavorable results.



The DailyFX Research Team Wishes You Happy Holidays!


©2009 DailyFX. All Rights Reserved.

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

Merry Christma to you.

Best,

Dalcindo

[dalcindo]

Re: USD Index Bearish Fund (UDN)

A very short note here to point out that this bearish directional ETF just touched a technically significant point as it rallies right at the bottom of the channel drawn this past November:

$USD Index Bearish Fund (UDN) - 12-Mo., Daily



- Dalcindo

[dalcindo]

Stock On Watch: STWF

Water is definitely the clear oil of the future, IMHO.

Very interesting business prospects, subsidiaries, distribution centers and proprietary assets.

A long-term co. to keep watching.

Entered @ 0.055 LONG position.

- Dalcindo

[dalcindo]

Weekly Scans - Week of 14 DEC 09:

Bucking Bull:
GPK Graphic Packaging Holding Co. NYSE
JYHW Jayhawk Energy, Inc. NASD
NVLT Novelos Therapeutics Inc NASD
Count: 3


Bull Pop:
LNG Cheniere Energy, Inc. AMEX
Count: 1


ROW x STO:
NWD New Dragon Asia Corp. AMEX
PZG Paramount Gold and Silver Corp. AMEX
Count: 2


Have a great trading week!

- Dalcindo

[dalcindo]

Re: XEU:USD - Rally materialized; expect more short-term rally; long-term SHORTING.

Well, as it turns out, our expected rally materialized with peak reaching 1.44113 @ 2015 central time so far.

Judging from the 15-minute chart, a Fib retracement to the 38.2% level continues to provide credible support so far around 1.4370.


Same chart's RSI remains bullish over the 50-line following a shallow retracement, while MACD tapers off its decline at 0.0007 with a histogram retracing towards the zero-line: all remains bullish for another rally, expectedly.

Slow STO also rings a positive signal in support of added rally going forward.

OVERALL - As indicated before, the long term XEU:USD outlook favors SHORTING the major, with an interim period seeing a rally towards the 1.444 are per Fib's gid on daily chart.

Happy trading.

-Dalcindo

[dalcindo]

Re: XEU:USD - Still: Watch for significant rally per daily chart.

Overnight, XEU:USD has reached a significant nadir BELOW 1.44 (Low: 1.4328).

As discussed before, dailu USD charts still favor a continued rally of the USD, HOWEVER, I do expect an interim XEU:USD rally in the 5-min, 15-min, and 60-min charts with the following 50% Fib targets:

5-min: 1.43736

15-min: 1.44597

60-min: 1.45505

Overall: LONG XEU:USD for the short term; SHORT XEU:USD for the mid-term - All IMHO.

- Dalcindo