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i called and e-mailed QRVI- hopefully they will get back to me. i will post what my converation if i speak with them. anyone speak to QRVI management before? tia
The Futures are pointing to an Nice Big Crap-up Opening as I write this
We are expecting loads of data, which is due out at 8:30 a.m. EST, this will be a potential market mover as market players look for signs on how well consumer spending is holding up at a time when the nation may be on the verge of going heading into the BUSH war. I also have a MAJOR turn forecasted for 10:00 this morning...which could be a continuation of yesterday's move...
Uncle Al the stealth rally maker injected a measly $10.0 Billion yesterday, which was good for 60-80 Dow points alone
While the snap-back relief rally has taken on a huge push The Dow reversed 140 points on Wednesday and added 270 +/- yesterday that is a reversal of over 400 points, while the OEX rallied almost 9 points and the SPX almost 16 points off their intraday lows on Wednesday and significantly added to their position yesterday. The fact that they came after the completion of the head and shoulders and while the bullish percents are sitting in oversold territory sure tossed up a big red flag for the bad-news-bears, and I warned folks of the potential for such a move, I hope my perma bear friends heeded my warning.
The big players were out yesterday with cattle prods in hand as they continued to turn the bulls, and they came back in a stampeding fashion into the markets yesterday for no particular reason, other than it’s our right to buy…they did so by ignoring more bad economic news. Was it the rumor of mass defections of Iraqi generals that turned the tide? Did Bush come out like Jim Carry and say “I’m only joking about going to War” I amazed at the 180 degree turn around with such magnitude… they sure had the bears on the ropes yesterday…I was further amazed that the World is pricing in a rosy scenario as well as spot Gold Fell precipitously this past week, about $10.00 yesterday alone hence they are already pricing in a peaceful solution and an end to terror…and great global economic solutions…I know I have been under the weather all week now…maybe it’s the meds I’m on I must be dreaming as I do not understand this disconnect.
Yesterday we saw a HUGE I repeat HUGE Reversal Candle when added to Wednesday’s action, if this is indeed the start of another Bear Market rally like we saw in October/January/February than we should expect another big day today…and we need to monitor the herd and process. Yesterday’s gains have stimulated the Europe/Asian markets to fresh gains after a deep sell-off and we should see a positive open today. The futures are up nicely and there was no real negative news after the close. The Nasdog chart above and I am sure you will see that very strong resistance at 1350. This is going to be a challenge to the bulls after a +61 point gain on yesterday. The next significant overhead resistance in the Dow is 7,910-7,920. Couple that with news that the UN vote or no vote; has been put off until Monday and the war until April, the giddy bulls may be dancing in the streets today. As I have said there are still shorts in the market and after being hammered yesterday and seeing the result of the Osama rumors this week they will NOT want to be short over the weekend. This should provide some fuel to the markets today.
This Market is indeed wild and the pent-up demand to buy is huge as we saw on the silly-ass techno-bubble heads as they swarmed back into technology stocks without any regard towards earnings or company liquidity…after two weeks of consecutive down days the Nasdog recovered all the losses in just a day with a 61-point gain…remarkable…and it has jumped up almost 100 points from the intraday low posted on Wednesday …we are moving into a huge overhead supply at 1,350 (OHR) and the only way to get over such a supply may be a GAP/CRAP scenario.
I would expect a somewhat bullish bounce today; if the economic data supports such an event. We also have what is referred to as a "forced bottom play" tactic by big smart money. Sometimes referred to as sharks as when they see potential bullish conditions ahead, and they are looking for a good potential entry point they try to force a near term bottom as they have done during the past several day’s of sell-offs by stepping away from the bids. They sell short stocks they really want to buy to try in an attempt to find a significant support level where buyers appear. Essentially they try to run and take out the stops and take out all the weak holders and then they find out where the real buyers are lurking. When conditions are ripe for profit taking they can accelerate this process and when the market stops falling they cover the shorts and go long. What a cute game they play huh. So basically a folk, the game is still on…they have seen a 5-10% rise in stocks is just a day or so, and we could see a continuation of such a play for a few more day’s unless news of WAR or pitiful data stops them short in their tracks.
On Wednesday 15% of the S&P set new 52-week lows and Volume was down 2:1 despite the end of day relief rally. This was almost bullish compared to the 18:1 down volume we saw on Monday. Yesterday the volume was over 7:1 to the upside with over 1.7 billion shares traded. This was the most volume in a single day since late November. Yesterday started out with a gap open and sold off to just above 7,600 before charging off to a break over 7,800. It was not a raging bull but more of a determined walk by the entire herd or a few key players controlling futures action. There were numerous strong resistance points broken at 7,600, 7,650, 7,750, 7,785 and even 7,800. Please folks make no mistake this orchestrated move was set up to appear to be a very powerful move…however it was not powerful enough to propel the new highs over the new lows which came in at 110 highs to 256 lows (combined NYSE/Nasdaq), but strong enough to get the bad-news-bears attention as they scrambled to cover. However I think many of them were in denial all day…and
I’m expecting a continued rally this morning…(unless the economic news knocks the crap out of the potential) as may bears will want to cover ahead of the weekend and incase this rally has legs…especially after yesterday’s denial outlook, as many have that deer caught in the head light look
I warned my subscribers of such a situation as on the morning of 3/12/2003 when I cautioned that “Folks this market is coiling into extreme oversold conditions...I have changed my bearish out-look to BULLISH and am recommending stepping into the DJX, OEF, SMH, OEX on the long side...(or for some their favorite high beta stocks) I believe we are hours/days away from a substantial relief rally” I believe that the oversold conditions created earlier this week were just too severe to be ignored prior to a Fed meeting once the war was postponed for maybe (key word maybe) delayed for 2-3 more weeks. As I pointed out Tuesday there was likely to be some strong asset allocation moves soon. I think it was the combination of all these factors that stimulated the initial move and short covering did the rest. However this quick magnitude is greater that I expected I thought.... such a move has no foundation and has left so many gaps.
I have also heard reports that the large drops over the last month may have created serious deficiencies in market makers option accounts and along with institutional traders and they are trying to square these positions by running the markets up.
The market was definitely not moving up on yesterday on great
economic news.
The Jobless Claims fell 15,000 from last weeks upwardly revised number of 435,000. Unfortunately that meant we still had 420,000 new claims and the four-week moving average has risen to 420,000. This was the highest level since December.
The Retail Sales fell a whopping 1.6% in February and well below the consensus estimates for zero growth. The consumer is not rushing out to hold up the economy and longer and is essentially starting a cocooning stage. However the Butt-heads were full of excuses why we had weak numbers reasons given were blizzards, high gas prices, unemployment, terror alerts and war fears.
Import and Export prices both rose primarily due to high oil prices.
Next week we have Uncle Al and his band of merry followers meeting on Tuesday and there is a 32% chance of a 25 point rate cut as predicted by the Fed Funds Futures. Not a big chance but the various economic indicators could be weighing more on the Fed than on consumers, as the job-less so-called recovery could implode upon them. There are some thoughts that if the Fed cut rates they would take a bigger cut of 50 basis points to send a stronger message. A minimal 25 point cut would have no impact and they have only a few bullets left in their gun. Plus with another 50-basis point cut they could stimulate another huge round of refinancing and expand the housing bubble even more. However the odds are much better that they will change the bias to easing and plan on a rate cut at the May 6th meeting if the economy stalls or plunges further, currently the Fed funds futures predict a whopping 82% chance of a cut at that meeting.
We are on the threshold of Confessional season/warning season and the onslaught should arrive next week but there were several high profile warnings yesterday that went un-noticed or were ignored.
TYC warned that it was slashing profit forecasts for 2003 and had fired a division president for accounting irregularities. The current chairman, Edward Breen, vowed to clean up the "crap" and that heads would roll if any more problems were found inside the company.
Schwab warned that current outlooks were too aggressive in light of trading volume that was continuing to fall. They declined to issue an outlook claiming no visibility. They said trades entered had dropped 20% in February to 101,000 a day and so far in March that number had dropped another 5%.
International Paper said demand was weak and getting weaker as the quarter progressed.
MYG said that demand began falling off in February and had been decreasing rapidly since.
Folks the mantra of a demand drop appears to be the common thread, sharp drops in demand across industries in February with increasing weakness into March…is a piss-poor economic sign. The main reason given for the yesterday’s today was the removal of the war premium from the market; and the starting date pushed off until at least April 1st ((Black moon) for a WAR…3/18 is a New Moon, who ever thought we would lift off then was kidding themselves…however the market is acting like the WAR is off…and I believe that it’s a 99% GO so I must be wrong.
Geo-Political News
This should have been disturbing…Dow Jones reported that Iraq has moved artillery capable of firing chemical or biological warheads to several locations just north of the Kuwait border. US officials said the artillery posed a direct threat to the US troops in the Kuwait staging areas. US officials also said Iraq was positioning surface to surface missiles in far western Iraq in an apparent attempt to use chemical or biological weapons against Israel. NBC reported that the US military was prepared to launch preemptive attacks against the new artillery and missile sites before the Saddam has a chance to use them.
TECHNICALS as noted YESTERDAY THURSDAY !!!!! NOTE my charts are hyperlinks and do not show up here !!
Head & Shoulder Objectives
Dow H&S Objective = 7,550 - 7,560 Chart Objective Attained, and we slipped a bit underneath the targeted objective, as we slid to 7,416.64, 134 below the objective before today’s late stage relief rally brought us to a close of 7,552.07, as we sit right on the threshold of the objective zone. We have now fulfilled the objective on 3/11/2003 and tested it on 3/12.2003…this action has plunged us into deep oversold territory on the Daily chart…%K = 8.06 and %D = 11.23, RSI = 35.7 and appears to be now turning up, the bottom of my BB band reads 7,535 however MACD has establish a bearish crossover…CCI indicates a near-term bottom may be forming. The Weekly Dow Chart, is also indicating that we are at significant support and it too is demonstrating over sold conditions, however there could be 1-2 more days of selling within this set-up…but both are enjoining and could establish a trend reversal.
S&P 500 H&S Objective 790-792 Chart Objective Attained, 3/12/2003, as today we dropped into the objective zone and with an intraday low 788.90, before a late day rally pushed the SPX up to 804.19, we have fulfilled the H&S objective, and will most-likely test it on Thursday… this action has plunged us into oversold territory on the Daily chart…%K = 8.97 and %D = 15.02, RSI = 37.3 and appears to be now turning up, the bottom of my BB band reads 803.51 however MACD has establish a bearish crossover…CCI indicates a near-term bottom may be forming…however we may have an additional day or two of selling before we reach extreme oversold conditions…however the proverbial rubber band is tightening. The weekly chart indicates that the SPX could fall to 768 before a potential bottom is formed, key word potential
S&P 100 H&S “OEX” 398-402 Chart Objective Attained, 3/12/2003, as today we dropped into really skimmed the objective zone and with an intraday low 400.24, before a late day rally pushed the OEX up to 408.92, we have somewhat fulfilled the H&S objective, and will most-likely test it on Thursday again, and maybe slide a tad below it (maybe)… this action has plunged us into oversold territory on the Daily chart…%K = 10.02 and %D = 15.92, RSI = 38.9 and appears to be now turning up, the bottom of my BB band reads 803.51 however MACD has establish a bearish crossover…CCI indicates a near-term bottom may be forming…however we may have an additional day or two of selling before we reach extreme oversold conditions…however the proverbial rubber band is tightening. The weekly chart indicates a retest of the October lows at 384 +/- could be in the cards
Nasdog H&S Objective 1,137-1,140 Chart Not even close yet (Intraday lows today touched 1,253.22, we are about 130 Nasdog points away from the H&S objectives, we closed at 1,279.47, and we may not make the confirmation plunge as yet)
NDX H&S Objective 810-815 Chart Again not even close yet (Intraday lows today touched 946.79, we are about 130 NDX points away from the H&S objectives, we closed at 970.54, and we may not make the confirmation plunge as yet)
The NDX bullish percent indicator coughed up another 2- point yesterday as it traded down to 30 yesterday, however this is still well off of historical bottoming zones of (8-20) NDX Bullish Percent Chart The S&P 500 Bullish Percent Chart showed that it has given up 1-points and is at 27.40 since my last comments and is trending into the potential reversal zones associated with bottoms (12-20) this bears watching The Dow coughed up 3+ points to post deeply oversold reading of 10, DOW Bullish Percent Chart, ).
The dollar has actually caught a little relief rally as well Daily Chart of US Dollar which helped to support the rally yesterday as well.
As I stated on Monday we saw a huge potential for a reversal potential…the NYSE TRIN Chart indicates that we have entered very extreme oversold on a short term basis, we closed at a whopping 5.93 on Monday, and current reading on the 5sma = 2.05 off of the 2.46 that we saw on Monday, the 10sma has increased to 1.82, and I believe was are just hours/days away from being deeply oversold on the 20sma/50sma this foretells a looming reversal ahead and it could be quite severe, the potential for an reversal increases when we look at the Advancing/Declining Issues charts as they are also pointing to a near-tem over sold condition as well NYSE A/D Issues Chart Nasdaq A/D Issues Chart
The Dow Transportation average was very weak again today before the late day rally, as we broke the October lows with a deeply disturbing intraday hit at 1,918.12l before the late day rally helped to lift the sector into the green, to 1950.65…but I do believe the bad-news-bears have seen the technical damage and may try to claw away tomorrow Dow Transports (daily chart); The weekly chart of the Transports is extremely buried in oversold conditions, and we could be near a significant relief rally zone, key word (could) Dow Transports (weekly chart)
Another favorite indicator of mine that has been pretty reliable in predicting trend reversals in the recent past has been the Mr. VIX he has been range bound between 32-34% and 39-41% for the past couple of months, with moves to those distinct zones signaling at least short-term reversals in the equity market. Mr. VIX, which we all know measures the underlying option premiums in the OEX; usually increases as the market drops and investors become more fearful and skittish we saw the upper end of that range has been between 40-42 intraday, and especially with a topping range of 50+/- wherein we have seen an a market relief rally. The 40 mark was hit again yesterday for the first time since February 13th, and voila! A relief rally was produced as yes. We had traded as high as 41.16 intraday, but finished the day at 38.99. Investors and especially traders should monitor this market indicator on their trading screens and exercise caution with their positions short/long as we approach Mr. VIX’s range extremes.
Uncle Al the stealth rally maker injected a measly $10.0 Billion yesterday…which helped to fuel the rally "Open Market Operations" .. So far this week he has injected only 20.5 billion when compared to last week where he had injected a whopping $27 Billion, .... I expect that Uncle Al will open up the wallet again today....I expect several 9-10 billion infusion today to mitigate the Bush guns are a blazing speech that was delivered last night.... The markets are still acting like a junky waiting for their next liquidity infusion. The infusion today helped to add some slight stabilization to the DOW, and kept it from dropping as quickly as it could of. The FED is going to start to have to deal with the liquidity issue surrounding how they are going to retract some of the HUGE injections that they have flooded the markets with since the WTC tragedy. Industry "bean-counters" have suggested that any daily liquidity infusions over $9.75-10.0 billion can have the effect of lifting the DOW (60-80 points).
As I have said for a week plus now !! A perfect Storm could be brewing, if we do not see a significant rally soon
Fund managers are a very sick cancerous lot of late as the fund industry and most of Wall Street thinks that we are in a new bull market that began last October…I do not share this view of course, I saw the rally as an deeply oversold manipulative bear-market rally…however at present Fund managers are sitting on the lowest cash reserves in decades. Many funds have had to procure additional lines of credit in an effort to keep up their respective buying power. And upon reflection they are still buying the same bubble-techno stocks that they have in the past…those so-called leaders in the last bull-run… (CSCO, INTC, MSFT, JNPR, DELL, JDSU, CIEN etc.) They are still buying overly valued tech stocks many in excess of 50 times future earnings in the belief that that there are greater fools out there who are willing to pay even higher prices, on any really that can be fueled. In other words, they believe there is a chance that retail is coming back into the market in a big way and once again they will be able to dump the crap into the arms of the foolish retail green-chasers they are still dreaming of the good old days and are hoping for another irrational exuberance aura. If they funds can-not manufacture a rally, they will be in dire straights, especially if they face redemptions…these fund managers have been taking massive doses of Prozac and smoking that wacky tobacco… as they are living in an illusion, if they can not obtain a significant rally, and soon. Now folks I may be dead wrong…but I have never heard of a new bull market emerging and a bear market ending with P/E ratios at 50-75, associated/combined dividend yields at less then 2% and worse of all mutual fund cash positions at record lows coupled with the majority of ding-bat fund managers and their investors fully invested…something is very out of whack here…Bear markets don't end that way, nor do bull markets begin under such erroneous conditions…we could be seeing the set-up for a huge purge on any signs of a relief rally in the near-term as war still is a reality along with potential terror events.
T-Waves chat room intraday -is a great asset to those that have the opportunity to trade intraday.There is much sharing of information and Tetres,through hard diligent work and uncanny ability to recognise entry points both long and short puts those of us in the real time trading room at a great advantage to profit.
Creedmore
T-waves Live Chat Room is excellent....many very profitable trading set-ups with clearly defined entries and exits that even a novice can follow :)
Hello lurkers, If you want a well run trading room thats conservative and very profitable, you need to check out t-waves site. He has 3 different levels of service and a live trading room that he has on pal-talk.
Here is the link for services which has a early bird special right now.. http://www.twaves.com/T-Waves_Early_Bird_Rates.htm
I have been with his level II service for about a year and have done very well.
His latest addition of the live trading room is a fantastic addition... He follows his swing list and value plays there. He also trades his favorite day trading stocks during the day. There is also several other knowledgeable members that are on the board that are very helpful!
If you read this in time, the paltalk room is free until Friday.. Worth checking it out.
http://www.paltalk.com/paltalk10/index.htm
You need to download paltalk from this site and once this is done you need to go to groups...business and finance..look for T-Waves..the one thats not locked..
Happy Trading!
Scott
I have nothing to do with site....just thought I would share a good find...IMO
Scott
Fluffy,
Do you know how people rate the service, executions, etc of interactivebrokers? I plan on setting up an account with them shortly to trade options beginning in the new year.
thanks
Carpe Diem
Jared
Raging Bull is back online.
know-it: Any brokerage with decent commisions/execution is fine for "swing-trading". Datek, or Interactivebrokers.com,
are used by many.
Steve or anyone:
What broker would you recommend for swingtrading? TIA
It doesn't appear most had an alternate posting board. They haven't shown up on the common guesses, like similiar subject boards on Clear Station, or Silicon Investor. There is a couple dozen, or so, that communicate off the board, and are likely to come to an agreement, offer suggestions, on a substitute board in the event RB is down for good.
Steve, I joined your Level 2 service yesterday. I look forward to your work. Looks like RB is done? You guys don't know of another site where the good people at the Q's may have went to continue discussion do you? BWC
We have a perceptional battle being wager here today folks…basically speaking it is for bragging rights over the weekend…a close over 8,443 and the bulls can tout all over the air waves 4th weekly green close in a row, an this would be perceived very well ahead of next week's elections. On the other hand the bad-news bears want a close under 8,443, so the headlines can read “November starts in the RED” with the market doing its first Red weekly close since the Oct. 10th rally.
Now I have some food for thoughts folks…it goes back to a risk/reward/greed equation Since almost everyone down to the neighborhood paper boy/girl believes that Uncle Al is going to cut rates next there will be a pile of so-called investors that will want to get in before the jump that happens historically after such a rate cute, just listed to CNBC, and they are professing such a move next week. Knowing this, the shorts may be relinquishing and covering their short positions until after the fed meeting. I doubt that they will want to be very short come Monday when Ma and Pa Kettle read the weekend paper and find out that a rate cut is almost assured. Let’s face it folks, If I had a buck for every time I thought I knew a significant drop was coming on Friday, and instituted an early short position, only to see short-covering into the late day close pump the close even higher, hence I am trying to saw…beware of the power of Shorts covering. From what I can see, after today’s dismal reports there's no more bad news coming to fuel a market drop in the very near term that I can see, that we have not already digested and for some reason the Pepto-Bismol has worked as we have not puked up the overvalued equities yet. Risk/Reward…why would someone stay short between now and Monday or Election Day?
Those traders who believe there will be a rate cut, and an subsequent market rally afterwards there is no reason to be short and every reason to be long. The keyword here is "believe" since the economic numbers today make that chance much less likely in my opinion, and as you all know I believe that we will not see a rate cut (I’m in the minority group). Ma and Pa investor are starting to dip their toes back into the shark infested waters…thinking rate cut is assured and I think some of today’s buying due to this but I think more relative is the "short covering" to avoid a positive surprise by the Fed. I have been warning about that in the QQQ all week. If we see some news seep out that changes the landscape to a "rate cut not in the bag" then I think you will see weakness return.
Ticking Sound May Be Your Pension Fund
Saturday October 26, 2:26 pm ET
By Pierre Belec
http://biz.yahoo.com/rb/021026/column_stocks_week_1.html
NEW YORK (Reuters) - Wall Street is waiting for the next shoe to drop. The next smackdown may come from the big hole the stock market's crash has punched in corporate pension funds.
Corporate underfunding, as it's called, is a ticking time bomb that will cast more doubt on the profitability of the nation's largest companies and the market's rebound.
"In the years ahead, earnings are likely to be depleted by pension liabilities," says John Hussman, publisher of Hussman Econometrics and professor of economics at the University of Michigan.
"Many companies continue to make assumptions about the probable return on stocks that has no relationship with the rate of return that stocks are actually priced to deliver," he says.
Investors should wise up to the implications of companies clinging to expectations the stock market will deliver double-digit gains because what's left of their battered 401(k) retirement money is at risk, Hussman says.
By one account, 50 of the biggest American companies have seen 90 percent of their pension surpluses go up in smoke during the bear market.
BAD NEWS BELOW INVESTORS' RADAR
The sad truth is the companies will have to sweep up much of their already pencil-thin earnings to cover pension shortfalls.
While some companies have begun to infuse billions of dollars into their depleted pension funds, more than a hundred names in the Standard & Poor's 500 index (CBOE:^SPX - News) have still not acknowledged the problem.
Credit Suisse First Boston estimates that a whopping 325 of the 360 companies in the S&P 500 index that have defined pension funds will have shortfalls this year.
In a sign that not much has changed since the fairy-tale days of the 1990s, UBS Warburg, the Swiss banking giant, says 118 companies in the S&P 500 continue to report a pension surplus on their balance sheets, even through they're running a deficit after the stock market sank more than 20 percent this year. The last time the pension deficit issue dogged the nation's biggest companies was during the 1993 bear market.
The list of companies includes big-cap names such as International Business Machines Corp.(NYSE:IBM - News), Ford Motor Co. (NYSE:F - News) and Ingersoll-Rand Co.(NYSE:IR - News)
GM'S BIG BET
General Motors Corp., the world's largest car maker, this month warned 2003 earnings could be cut by $1 billion or more due to the cost of funneling cash into its $67.3 billion pension fund. In the last nine months, GM's pension fund shrank by 3 percent. GM (NYSE:GM - News) had assumed the money would grow by an unrealistic 10 percent, which exceeds the stock market's historic return of 6 percent a year.
Earlier this month, Standard & Poor's chopped GM's credit rating to just a couple of notches above junk status, saying the company's worldwide pension obligations may be underfunded by a staggering $28 billion by the end of the year. On Friday, S&P also cut Ford's long-term debt ratings to -- you guessed it -- just two notches above junk-bond status.
On Friday, the stock of Cigna Corp. (NYSE:CI - News), the third-biggest U.S. health insurer, lost almost $3.5 billion in market value -- a day after the company cut its earnings estimates because of higher costs for health benefits and pension funds. On Thursday, Cigna said shareholder equity would be cut by up to $700 million in the fourth quarter from increased liabilities to fund pensions.
In the roaring bull market of the late 1990s, few people worried about corporate pension funds. But the pendulum has swung back the other way after the 2-1/2-year-old bear market. Companies struggling to make money in the tough economic environment must now divert billions of dollars to get their pension funds up to snuff.
There is no getting around the problem.
Unless the stock market stages a dramatic recovery, corporate pension funds will no longer contribute to their earnings through recapture. The shortfalls will have to be made up from their earnings.
So the longer the bears hang around, the greater the damage to pension funds. If one study is to be believed, stocks may underperform for years.
Stocks will be viewed as a "high-risk, low-return investment," says Deutsche Bank, which estimates there's only a 23 percent chance that U.S. stocks will outperform bonds over the next 20 years.
The big issue facing investors is this: The risk of being in stocks has climbed and remains in the danger zone even after the market's bone-jarring drop.
"More pain is to be expected for equity investors and more riches for their bond counterparts," Deutsche Bank says.
Stocks may be pricing in more bad news. Since the start of the year, the market has had a series of "wonder" rallies, which have been built chiefly on companies "beating" expectations of analysts with incredibly poor forecasting records, as opposed to just plain good earnings.
MORE SWINGS THAN TARZAN
"There have been four false 19 percent rallies in the Standard & Poor's 500 index and eight in the Nasdaq during this bear market," says James Stack of InvesTech Research. "All have ended with the market going to new lows. That's not characteristic of a new bull market."
The fundamentals of Corporate America are still not sound. Poor earnings continue to be the source of Wall Street's malaise even after the recession supposedly ended.
Typically, investors focus on the future, eager to put money on the table in anticipation of a turnaround. The market turns six months before earnings start to improve. But so far the bears have still not left the building, which suggests the good times won't be rolling until at least the middle of next year.
The pension fund issue is creating a newer and perhaps a bigger problem for the stock market.
Many investors are staying on the sidelines, preferring to focus on the market's probable sub-par return. And they're ignoring the bizarre assumption of companies like GM, which are not operating in the real world, with expectations that their pension investments will grow by 10 percent.
On Friday, the three major U.S. stock indexes finished higher for the third straight week -- the longest such stretch of gains since August. For the week, the Dow Jones industrial average (CBOT:^DJI - News) rose 1.5 percent to close at 8,444, while the S&P 500 also gained 1.5 percent, finishing at 898, based on the latest available figures. The Nasdaq composite index (NasdaqSC:^IXIC - News) jumped 3.4 percent to end at 1,331.
Scott
Interesting site
You type the name of the company, not the stock symbol, into the search
http://www.internalmemos.com/memos/
Pension Issues are the next market Contagion
The first full week of the third-quarter earnings season brought a torrent of nasty disclosures, as company after company reported huge shortfalls in their employee pension funds. To make up for the shortfalls, executives are being forced to divert billions of dollars to pension plans in moves that will lower earnings, limit spending and choke expansion plans. "Everyone knew the drop in the market would affect the value of the pension funds, but people weren't familiar with what the ramifications were," said Robert Willens, accounting analyst at Lehman Brothers. IBM said it will contribute $1.5 billion to its fund by 2005, including $700 million next year alone.
Let’s face it, there is great uncertainty about future stock market returns and that should be prompting many companied to reduce their fund expectations from the high levels of the past (10-12%); to more realistic expectations, according to my calculations 6-6.5% is a realistic expectation. This past week IBM said it is looking at reducing its expected rate of return to between 8-8.5%, down 1.5% from its previous range of 10%. But I must state that even this new level may be too high, for this reason, I am very skeptical of the earnings presented by the Dow components and many of the S&P 100 starlets. I have been speaking regularly about pension fund accounting and how unrealistic the accounting premises and projections are; and how they are subject to great manipulation; along with hyper inflating the earnings outlook. Now, do not get me wrong, there are some very respectable firms/funds that have had proverbial cushions left over from the last bull market, when returns were higher than they had projected. However so many firms like IBM, GE, MMM, PG, GM, F, CAL, UTX, MOT, IR, WHR just to name a few used the surpluses to pad their profits.
During this so-called mild recession we're seeing plan assets finally melting; last Friday (sort of under the radar)
**NUI Corp. said it will record a pension expense in 2003, instead of a credit, for the first time in eight years.
This past week alone
**IBM said it will have to contribute $1.5-2.0 billion to its fund by 2005, including $700 million next year alone.
***United Technologies stated that they made cash infusions totaling $1 billion to its fund in the last 12 months; and they may need to add another 2-3 billion over the next 2-3 years.
**Ingersoll-Rand (last paragraph). On their conference call with analysts, that it may have to put more assets into its pension plan as a result of recent stock market declines. The exact amount will be determined as of November 30th, the end of the plan year. Based on current market levels, 2003 earnings per share could be hurt by 25 cents to 30 cents a share, Chief Financial Officer Tim McLevish said. He said the company was considering making a cash contribution to the plan, although it would not be required to make one.
**Motorola said it expects to contribute $150 million to $200 million to its fund in 2003.
A recent study by Credit Suisse First Boston estimates that of the 360 companies in the Standard & Poor's 500 index that have pension plans, 325 will have shortfalls by year end and only 33 out of 360 will be over-funded. Currently on my radar screen, and according to David Zion, the study's author; the airline and automobile industries will be hit hardest, companies in the S&P 500 will face a total pension shortfall of $240 billion by the end of the year simply put about the gross domestic product of Hungary. The pension fund issues are also spurring downgrades of debt downgrades, which will put additional pressure on profits by raising borrowing costs. Let’s fact it folks, accounting 101 states an underfunded pension plan is equivalent to debt, plain and simple; however you will not see a line item for it as firms burry this information deep in their 10-Q/10-K’s.
Merrill Lynch & Co. last month estimated that pension plans of 98% of the 346 Standard & Poor's 500 companies it surveyed will be underfunded by year end. Struve said: "Two-and-a-half years of negative stock market returns, a recession, weak operating earnings, and low interest rates are the perfect storm for pensions."
U.S. auto-related companies will likely end their 2002 fiscal year with more than $30 billion of underfunded pensions, more than double the level a year ago, as stocks head for a third straight annual loss, according to Fitch Ratings. General Motors Corp. and Ford Motor Co. might be responsible for $22 billion of underfunded pensions together by year end, Fitch said. Suppliers such as tire maker Goodyear Tire and Rubber Co and diesel engine maker Cummins Inc. might also face "challenges," it said. Fitch said it expects the funding shortfall for GM, which is based in Detroit, to rise this year to about $17 billion from $9.1 billion. It said the shortfall for Ford, which is based in Dearborn, Michigan, should total at least $5 billion, compared with a $596 million over funded status last year.
I personally believe there needs to be more regulation on pension fund assumptions, and a cap put in place. I do not expect that significant downward revisions will become a trend, until such measures are undertaken. There are still way to many aggressive “floundering / irresponsible and hinging on legal fraud” accounting tricks for companies to manipulate pension fund numbers.
For example, corporations' continue to use a best fit matrix which include assumptions about future wages over-time levels, as well as life expectancy, that can greatly affect the status of the pension funds. This is the next area of corporate manipulation that must be addressed.
Best of Luck
Steve
www.twaves.com
The Headlines once again have given me that warm and fuzzy feeling all over.
**Microsoft Blows Past Expectations for 1st Quarter
**Microsoft Announces Record First Quarter Revenue
**Microsoft Profits More Than Double
It’s a pity that they paint such an inaccurate picture. The street had been expecting Microsoft Corp.'s to post EPS of $0.43 on revenues of 7.1 Billion, fiscal first-quarter results MSFT utilized some interesting accounting gimmicks, and I will not be 100% sure until I see the 10K…however it appears that MSFT marked up it’s XP system as they want the public to believe there was a shift to higher-priced versions of its Windows operating system, you see MSFT recognizes revenues as systems are shipped to OEM and resellers. According to the releases MSFT guides up the December quarter to $8.5-8.6 billion in pro forma revenues, above the consensus of $8.45 billion however the guides EPS to $0.45-0.46 vs. consensus current consensus of $0.50. This makes very little sense, unless there are some significant write offs in the pipeline.
I’m not the brightest bulb in the closet, but they reported EPS of $0.50 on earnings of $7.75 billion for the quarter, now they say they intend to grow revenues by 750-850 million next quarter but that EPS will $0.04 -0.05 lighter…this is a RED Flag if you ask me. MSFT also played an other accounting trick this quarter…they used price cuts for the Xbox game console which increased their write off…as the X-Box is a losing venture…MSFT makes revenues from games/licensing fees not the console.
There was no mention at all of the impact on regarding the cancellation of the Extraterritorial Income Exclusion Act due to a World Trade Organization ruling recently. It is likely to reduce export subsidy income for several large U.S. companies including MSFT, which reportedly benefited by $0.06 worth of EPS from ETI in FY02; MSFT could see a material impact of $0.07 -0.08 this year and an impact to cash flow by $400-415 million going forward. I tried to get in on the conference call and ask this question…however they would not accept my question…(I guess I need to belong to top 10-pack of hypsters/shills)
During the Conference call:
"Results for the first quarter were exceptionally strong, exceeding our expectations," said John Conner, the company's CFO, who cited quicker than expected customer adoption of its new long-term licensing programs. The MSFT CFO said on the conference call that the "tech spending environment remains tough".
Microsoft, which has a monopoly on the desktop software market through its Windows and Office franchises, recently moved many customers to new, multiyear software- licensing plans, helping to squirrel away billions in revenue to recognize during future quarters. The predictability of that long-term revenue is really a good corporate move on MSFT’s part…as it gives it a leg up on competitors, many of whom are still struggling financially from the downturn in the PC market. Microsoft has been able to use its market heft to steer clear of many of the problems plaguing other technology companies. However many states and the Government are looking into this recent practice as many of MSFT’s customers have filed complaints. This was a strong arm tactic to increase revenues a one time last chance sale of software licenses. Their old license plan changed as of June 30th and there was a rush to buy software at the old terms. The key here folks is that this is not a repeatable event.
Microsoft Corp. reported revenue of $7.75 billion for the quarter ended September 30th, 2002, a 26% increase over revenue of $6.13 billion for the same quarter last year.
Operating income for the first quarter was $4.05 billion, compared to $2.90 billion in the same period last year.
Net income and diluted earnings per share for the first quarter of fiscal year 2003 were $2.73 billion and $0.50, which included an after-tax charge for investment impairments of $291 million or $0.05. For the same period of the previous year, net income and diluted earnings per share were $1.28 billion and $0.23, which included an after-tax charge for investment impairments of $1.22 billion.
First Quarter 2001…Microsoft Corp. reported revenue of $6.13 billion for the quarter ended September 30th, 2001, a 6% increase over the $5.77 billion reported in the prior year. Operating income totaled $2.90 billion compared to $2.78 billion in the prior year. Net income for the quarter was $1.28 billion including a $1.24 billion after-tax charge related to the impairment of certain publicly traded and private equity securities, predominantly in the cable and telecommunications industries. This charge is reflected in the $980 million investment loss reported this quarter. Diluted earnings per share for the September 2001 quarter were $0.23, including a $0.20 charge for net recognized investment losses which includes the impairment charge noted above. So EPS was $0.43 before dilution
Business Outlook
**Management offers the following guidance for the quarter ending Dec. 31, 2002:
**Revenue is expected to be in the range of $8.5 billion and $8.6 billion.
**Operating income is expected to be in the range of $3.2 billion and $3.3 billion.
**Diluted earnings per share is expected to be either $0.45 or $0.46. (Red Flag #1)
Management offers the following guidance for the full fiscal year ending June 30, 2003:
**Revenue is expected to be in the range of $32.2 billion and $32.6 billion.
**Operating income is expected to be in the range of $14.1 billion and $14.4 billion.
**Diluted earnings per share is expected to be in the range of $1.89 and $1.95.
Best of Luck
Steve
PLAY of the Week
The Games market Makers/Specialist and brokerage firms play… it looks like they filled the pool with crystal clear sparkling water, and removed the beware of corporate sharks sign beckoning new investors to plunge head first into this beautiful arena. As Clint from dirty Harry fame would say… Do you feel lucky, well do you…go ahead make my day! As soon as jyou jump in ther release a pool of Piranhas.
Now let’s put things into a logical perspective. Since IBM’s close on the 11th $57.58…IBM has made a made dash for the golden ring as it has gained $14.62 as it closed at $72.20 today however the Big-Bad-Bear persona that I attempt to keep in check and repressed is screaming this is a DEAD SHORT….as when we reflect upon the huge move of $14.62 in 5-days that move included $11.06 worth of unfilled Gaps. I am recommending November/December Puts on Big Blue on any sign of strength off of the MSFT earnings Gap/Play today. Please be patient and selective. My optimal entry target is $73.10 - $73.80 ***Disclosurer I still have a straddle on IBM, which I will be legging out of for a pure put position
How the script played out: The Street was touting IBM all day, in an attempt to bring in some new calves into the slaughter house. Most folks did not realize that IBM actually traded down on the day…Wall Street played the game in grand style with IBM in my humble opinion, like a concert violinist playing a Stradivarius.
On October 8th IBM gets down graded by Goldman Sachs as they cut 2002-03 EPS estimates based on expectations that IT spending will remain sluggish at least through 1H03; in addition to weak IT spending, firm expects a drop-off in IP transaction-based royalties as well as incremental pension-related expenses to negatively affect earnings; on the other hand, revised model shows improved profitability in IBM's microelectronics biz and slightly more savings from restructuring; cuts 2002 to $3.90 from $4.00 and 2003 to $4.30 from $4.50
IBM trades down from $58.00 to $54.80
Mid afternoon there is a report that came out that IBM was buying back shares today. An IBM spokesperson is cited, the stock was lifted off the bottom $2.50+ to close at $57.05
IBM Waffles between $54.01 and $58.50 for the next 2-trading days @ 125% normal volume…was under accumulation as we saw many large block orders being filled.
On October 11th Dan the man Niles decided to institute a mother of a Short Squeeze in IBM… He upgrades IBM to Overweight from Equal Weight; and he vaguely cites recent reduction in consensus earnings estimate and resulting ability to meet estimates (double talk for IBM is oversold and I can orchestrate a squeeze based on the recent downgrades by competing firms, especially after we have been buying), US stability offsetting European weakness, possible slight improvement in 2003 IT spending, and likelihood that any 2003 estimate cut will be modest ($0.05-0.10) (He was expecting a reduction in visibility and a slight pullback in IBM’s outlook…not a resounding upgrade at all.).
IBM gapped up to $62.00 a huge $4.42 point gap…on the upgrade and only filled $0.50 of the Gap…thus leaving $3.92 left unfilled. it closed the day out at 63.92
On October 14th Morgan Stanley reduces their estimates on IBM as they believed that IBM did not experience the normal pickup in hardware orders in the last few weeks of the qtr, and that Microelectronics remains a wildcard; cuts 2002 estimates to $3.80 from $3.82 (Wow a hole 2-cents that is a reduction of a ½ of a percent) and 2003 to $4.05 from $4.25 (below consensus of $3.93 and $4.41). The headline was all that was needed to scare some longs
IBM sold off $2.38 (still not filling the $4.41 gap) then low and behold some buyers stepped in and drove up the price to $63.42, a loss of $0.50 for the day. On light volume.
On the 15th after the Holiday the futures were on a tear…IBM again saw a huge Gap up of $4.33, as it opened at $67.75…it traded to an intraday low of $66.58 thus filling in $1.17 of the $4.33 leaving a Gap of $3.16
On October 16th IBM traded down intraday t0 $64.24, which filled in all but $0.81 of the Gap on the 15th After hours IBM reported their lackluster earnings, however they were touted as extraordinary…and the race was on.
On the 17th IBM Gapped up Huge $7.90 it opened at $72.80…and ran to $73.00 before closing at $72.20 …(Intraday low = $71.23…hence it filled $1.57 of the $7.90, leaving $6.33 unfilled). To me this is a bearish sign, to close lower than the gap.
JMHO
Hello Folks
As I promised...I have scoured what I could of IBM's earing's as release and I'm not impressed at all.
IBM Corp.'s third quarter profits dropped a mere 18%, but they still managed to beat the according to the talking-butt-heads on CNBC the street's earnings expectations by $0.03. Or did they?
IBM reported a profit of $1.31 billion, or $0.76 per share on revenues of $19.82 billion in the quarter that ended September 30th …That compares with year-ago profits of $1.60 billion, or $0.90 per share, and revenues of $19.78 billion.
IBM's Q2 revenues from continuing operations were $19.7 billion, down 6% compared with the second quarter of 2001.
Second-quarter net income from continuing operations was $445 million, or $1.6 billion before the charges, compared with $2.1 billion in net income in the second quarter of 2001. Hence IBM net income on a quarterly basis Y/Y dropped a whopping 78%....and if we use the pro forma numbers like CNBC and other hypsters wants us to IBM still was off 23.8%
Year-To-Date 2002 Results
For the nine months ended September 30, 2002, income from continuing operations was $3.4 billion, or $1.97 per diluted share, including $.64 per diluted share, or $1.6 billion in incremental pre- tax charges, associated with the realignment of the Microelectronics Division and productivity actions.
In 2001, income from continuing operations was $5.6 billion, or $3.14 per diluted share. Revenues from continuing operations totaled $57.5 billion, a decline of 6% compared with the first nine months of 2001.
For the first nine months of 2002, the loss from discontinued operations was $862 million, or $.50 per diluted share, including $.23 per diluted share, or $573 million on a pre-tax basis for asset write-offs and the loss related to the HDD sale, compared with a loss from discontinued operations of $191 million, or $.11 per diluted share in the prior-year period.
For total operations, net income for the first nine months of 2002 was $2.6 billion, or $1.47 per diluted share, including $.87 per diluted share, or $2.2 billion in incremental pre-tax charges, associated with the realignment of the Microelectronics Division, the agreement to sell the HDD business, and productivity actions. In other words IBM in 9-months has net income of 600 million or $0.60 EPS. In the prior-year period, net income was $5.4 billion, or $3.03 per diluted share. On revenues of $58.9 billion, this includes $1.4 billion of revenues from the HDD unit.
Why do I get the feeling that the talking-butt-heads have no clue… on a year/year comparison IBM revenues have increased 1.4 Billion or 2.4%...however their net income has decreased $2.8 Billion what a HIT !!!!!!
Revenues increased by (19,821-19,783) a mere $38 million or 0.19%
Gross Profit decreased (7,323 -7,434) a mere $111 million or 1.4%
3rd-quarter revenues from Continuing Operations were $19.8 billion, up 2 tenths of a percent from 3rd quarter 2001 and up 9 tenths of a percent sequentially from 2nd quarter 2002.
Pension Issues:
IBM pension assumptions for 2002 have migrated from 10% to 9.5% these assumptions are ridiculous, they have attempted to explain it away by saying that the assumptions are consistent with return assumptions of many other companies. They have continued to realize net pension income reflected by GAAP in recent periods/years. In their 8K, they waived a flag and said that in the interest of increasing their transparency, and given the current market trends and historical trends, they are looking at reducing their expected return assumption for 2003 in the range of 8% to 8.5% (Wow what a relief). They believe that this will affect the income statement by roughly $700 million next, year just a few little dollars. Then they throw in a caveat. They expect to more than offset the pension impact through $900 million in productivity savings from the restructuring actions that they took in the 2nd quarter (meaning a head count reduction). Regarding funding levels in the pension plan: “They stated it should come as no surprise that the market's downturn this year has resulted in a drop in the value of our pension plan assets. Our current working assumption is that we will start contributing as much as $1.5 billion to the U.S. pension plan, targeting the plan to be fully funded by 2005. We will not finalize this funding decision until the end of the year; (they also have other pension issues in euro-land).
Bad debt expense was up $79 million, the eighth straight quarter they have absorbed a year-to-year increase in reserves for Accounts Receivable.
Year-to-date, IBM has absorbed $480 million in A/R provisions, up $180 million from the first three quarters of last year.
IP Income was down $161 million. With economic uncertainty and consolidation, there is not as much opportunity to monetize their intellectual property.
Net pension income drew from the bottom line $88 million to cost and expense.
They were also impacted year-to-year in cost and expense by their currency hedging contracts as the dollar weakened.
Equity transactions net of impairments were actually a loss of $6 million this quarter, but last year we had a net loss of $133 million.
Elimination of goodwill amortization was another $63 million loss,
IBM had a year-to-year benefit of $29 million from real estate transactions, which included a land sale in Japan of about $50 million.
Year-to-date, they have spent $4.1 billion to buy back about 47 million shares, with $3.9 billion remaining in their last Board authorization at the end of the quarter.
IBM 3Q 2002 RESULTS
(Continuing Operations)
Actual Yr/Yr Qtr/Qtr
Revenue $19.8B 0.2% 0.9%
EPS $0.99 2% 11%*
* Excluding 2nd Quarter Charges
--------------------------------------------
IBM Credit Corporation today also reported Q3 net earnings of $63.3 million, a 44% decrease over $112.7 million in the third quarter of 2001. Net earnings for the first nine months of 2002 were $229.4 million, a decrease of 28%, compared with $320.2 million for the same period of 2001. The annualized return on average equity was 20.3%, compared with 23.6% in 2001.
New customer financing originations(a) for acquisition of information technology products and services decreased 14% to $1.2 billion in the third quarter of 2002, compared with $1.4 billion for the same period in 2001.
New commercial financing originations providing working capital financing decreased 4% to $2.6 billion, compared with $2.7 billion for the same 2001 period.
For the nine months ended September 30, 2002, customer financing originations* decreased by 11% to $4.1 billion, compared with $4.6 billion for the same period of 2001, and commercial financing originations decreased by 11% to $7.5 billion, compared to $8.4 billion for the same 2001 period.
As of September 30, 2002, total assets were $13.2 billion, compared with $15.3 billion at December 31, 2001, a decrease of 14%. Retained earnings were $1.0 billion, compared with $1.1 billion at December 31, 2001, a decrease of 9%.
-----------------------------------------------------------
During the conference call
Chief Financial Officer John Joyce said, "I am generally comfortable" with expectations for the fourth quarter, excluding the impact of the acquisition of the computer-consulting business of PricewaterhouseCoopers, which was completed October 2nd. According to Multex, analysts expect IBM to report earnings from continuing operations of $1.35 a share, up narrowly from $1.32 a share a year earlier. Analysts expect fourth-quarter revenue of $22.27 billion for the year, and Mr. Joyce said the PwC acquisition could add $1 billion to that figure in the quarter. IBM reiterated that it expects costs related to PwC to reduce earnings per share in Q4 by $0.30. Mr. Joyce said that with many customers prolonging decisions on whether to sign new services or sales contracts, he isn't able to make any predictions about the condition of business in 2003.
I am a bit confused after reading IBM’s prepared remarks and after listening to the conference call…according to their prepared text….."Looking to Q4, we will now begin to benefit from the added revenue from our enhanced Business Consulting Services. Most Street models have not yet taken this into account. After adjusting for that revenue and the earnings impact, I am generally comfortable with the range of expectations for our performance in Q4"... At first blush I am leaning towards interpreting this comment as a warning.
"The biggest change we have seen is that customers are spending much more time analyzing IT investments, both in hardware and services," CFO John Joyce said on the company's conference call. "They're taking a lot more time to make sure they're going to receive returns based on investments, so that's elongating the sell cycle."
IBM's current earnings report is somewhat cloudy as it reflects several structural changes that have taken the firm away from the business of manufacturing computer hardware and closer toward maintaining it, it is the services sector from which most of its revenues now flow. Earlier this year IBM announced the reorganization of its older aluminum-based semiconductor works, and transferred much of its PC assembly work to contract manufacturer Sanmina. IBM is also in the process of selling its hard disk manufacturing business to Japan's Hitachi.
IBM is attempting to bolster its services sector division with the $3.5 billion purchase (completed in this month) of PricewaterhouseCoopers' consulting arm. IBM has stated that it expects the acquisition to reduce its fourth quarter earnings per share by about $0.30 -$0.32 EPS. IBM said in August that it had laid off more than 15,600 workers, or 5% its global work force, which dropped to about 305,000.
Hope this was a help
Best of Luck All, May the market forces shine brightly upon you all
Steve
www.twaves.com
This is a brief out-look of what I sent to my readers this morning
To Test, Or Not to Test ... That is the Question! When I was looking at the charts this morning I’m starting to see the first sign of a diverging signal again. Since August 25th when I instituted a Major warning of a pending reversal and sell-off, the signals had been pretty clear that we would in all likelihood be re-testing the July lows. I recently “Prematurely I admit” issued a reversal call
The first stage that confirmed that plausibility came on September 3rd, when we experienced a cliff dive event for the DOW as it shed more points than a Jenny Craig group sheds ounces. Usually such a significant drop can signal a change in investor sentiment, that cliff dive was important technically as it marked the first lower low since the volatile reactionary rally from a low of 7532 on July 24th took hold. The Dow then found support and rallied up to September 11th as a patriotic gesture. Unfortunately for the bulls that high was a lower high following a lower low, a significant bearish formation. This set up was then followed by several defining days of market action which resulted in the development of a classic head and shoulders pattern, with a neckline break at 8260 that signaled the continued drop, we came within 50-60 points of completing a normal H&S retracement (I had projected a drop to 7,355 -7,365, and on Monday we dropped to 7,422 only 57 points shy), hence this may be deemed a success. However as of right this writing we still have not seen a higher high in the Dow or Nasdaq. we have recently been probing fore just such an occurrence and I believe we could very well, see such an reversal event so I am looking at several key areas of overhead resistance that I thing you all should put on your radar screens.
A key area of overhead resistance in the DOW that needs to be overcome 7,998 – 8,012, yesterday’s rally fell short of reaching this level by approximately 30 points. I have received many emails from loyal readers warning me that a potential whoosh could be around the corner. I agree, there is that potential, however that potential exists on almost any day, as many market participants are as skittish as a long tail cat on a geriatric ward. As if we experience another terror attack, large blue chip corporate scandal etc. However, I believe that since we have recently seen that the objectives of the bad-news-bears was to test the reactionary lows of 7/24 (7,532) which was just accomplished…then to probe the zone of the 7,405 -7,415 that related back 4-years ago to September 1998, which they did, they failed right at the linear regression zone of 7,460-7,480. Hence I believe we have successfully tested the July low’s and are now on stage #1 of a rebound.
So, I believe that we need to be on the look-out to ascertain whether this was in fact the first stages of establishing a true bottom or just another trap being set by the bad-news bears. A break through the 7,998 -8012 zone on the DOW above and a close above the psychological 8000 barrier would be the first sign of such a potential reversal. The bears are running around saying that since we actually saw a lower low than we did in July, that we are still on track to DOW 5000. They have a chance at being right however I believe the Bears as did the Bulls suffer from Irrational Exuberance as they will tend to overshoot rational valuations just as the bulls did. Now for my Bearish View, my balanced approach…After today's warnings after the bell, we may be close to a second retest of the July reactionary lows, as we are only 220 points away, and triple digit moves are becoming the norm of late, after failing to power through the aforementioned overhead resistance zone.
After a massive rally of almost 350 points in the Dow on Tuesday, we expected to see a retracement/pullback could be expected. That makes it hard to tell whether the failure under 8000 is a significant sign of weakness from a failed rally, or a normal pullback. We closed at 7,939 on Tuesday…hence:
A retracement of 23.6% would have resulted in a drop of 82.6 points, or a retracement to 7,856
A 38.2% retracement would result in a drop of 133.8 points, or a retracement to 7,805
A 50.0% retracement would have resulted in a drop of 175 points, or a retracement to 7,764
Prior to the White house announcement of the IRAQ resolution and the uncanny screw-up in the data feeds system wide, we had rallied from 7,803, the 38.2% retracement level up to 7,960 21-points into the Green zone the markets were demonstrating what I called a healthy retracement, some back filling and then a gradual move up, all this was happening after A warning from Dow Chemical, rocked the Dow on the open. As the President was talking the markets were waffling, then the data feed issues started a sell-off as skittish longs decide to book-em as they could not trade appropriately. The Dow traded off down to 7,850 and started to rebound into the Bear Stearns fiasco…as it appears that a clerk apparently hit the wrong button and almost turned off the S&P (imagine a clerk could do such a feat, and that there were not safe guards built into the process?). Shortly after 15:00 hours a Bear Stearns clerk was supposed to enter an order to sell $4 million worth of S&P equities, a normal type of occurrence as it was a basket sell-program, however the normal part stopped there, it is reported that the clerk rather than execute a $4 million order typed in a $4-billion dollar sell-order. It was reported that they were able to cancel all but $622 million of the orders prior to execution. This tends to explain the sudden whoosh for the end of day drop
Best of Luck folks
Steve
http://www.twaves.com/
T-Waves view Patience and discipline.
Wait for the trade come to you. The idea is to make money consistently because you are patient and disciplined and don't over-trade. Protect your assets and trade only when the odds are in your favor. Trade when a situation is a high-percentage situation and back away from all other trades. WAIT FOR THE STOCK TO COME TO YOU !! There is no need to over-trade. Every trade costs commissions, and losses can add up dramatically. A few profitable quality trades brings profits you need with low volatility for your account. This rule is used in both trading styles.
1. Patience and discipline **Bears repeating**
2. Capital Preservation (Limit losses), Always take a loss quickly and hopefully mitigate your losses, do not become emotionally attached to a stock.
3. Do not trade if your head is not in the game!
4. Observe the buy limit.
5. Don't buy gap openings that pass the buy limit.
6. Use stop loss orders. A primary ingredient for successful money management
7. Always follow a position up with a trailing stop.
8. Never EVER let a winner become a loser.
9. Utilize the concept of scaling into/or average, into and out of positions.
10. Develop a money management strategy that fits your risk tolerance and account.
Buy Limits
Nothing goes straight up or straight down. If a stock passes the recommended buy limit, don't chase it. If you miss a trade, there is always another coming right up. Often times it will come back and give you a second chance to enter. Chasing stocks up destroys the risk/reward ratio and can leave you holding the bag. Trading Gap Openings: A gap is created when the opening price is higher than the closing price on the previous day. If you are looking to buy a stock on the open and it gaps past the buy limit, be patient and wait for a pullback to enter. Gap openings are most often traps and patience will provide a far superior entry for a long position.
Stop Loss Orders:
We suggest that on most of your positions you employ a stop-loss or buy-loss. Anyone can make a wrong selection in the stock market. When this happens, it is important to adopt a defensive posture: sell (or cover) for a loss. Remember that no one establishes a position to lose money; preservation of capital is paramount. The best stop orders are mental. A hard stop (a stop limit or stop market order that you place in your trading account) resting in the market is visible to specialists and market makers and is likely to be triggered. If you can't watch your positions a hard stop is better than no stop, but in volatile issues you can have unpleasant results using hard stops. Use common sense on determining stops for your positions. We almost always suggest a stop. If your entry price is substantially higher or lower than the price at the time of recommendation you should adjust your stop accordingly. We use wide stops on volatile stocks; this is because frequently traders will stop out only to have the recommendation go up without them. Common sense is a big help here; if the stop is past your pain threshold, try a smaller position to reduce your risk.
Using Trailing Stops
Protect your profits. Plain and simple. As a position moves in your favor raise your stop to lock in profits. Many stocks that are the most profitable to trade move through extreme ranges. In some cases a trailing stop based on percentage may be more useful or use a trailing stop based on points. NEVER LET A WINNER BECOME A LOSER. Use your cost as a stop once a position moves in your favor. Remember you can always re-establish a position in a stock. Be prepared to exit positions that continue to fail at key resistance and support points. If a stock loses momentum, before it reaches our target we may close the position to secure a profit before it vanishes.
Alerts
T-Waves is dedicated to closing the communication loop on each recommendation. We have a comprehensive alert system that enables us to make you aware of changes to our recommendations. Alerts inform you when it is time to adjust your stop, take profits or make changes to your position. Many of these alerts will be included in the Evening Recaps
Best of Luck
Steve
GE Merrill Downgrade is a SHAM
Merrill Lynch came out and decided that GE needed another spanking today, as Lehman’s down grade evidently was not enough they decided to cut their 12-month stock-price target to $28 from $35 and they lowered earnings forecasts.
General Electric fell 7.2% to $24.47 on Friday, after Lehman Brothers downgraded the company’s earnings target and estimates on the stock, citing worries about the stalling short-cycle business. Lehman cut their rating after GE indicated they were less positive about results going forward. While Lehman highlighted an earnings risk in 2003, Merrill believes that 2004 could be an even more difficult year for General Electric. What a blatant SHAM, these analheads can’t predict the current or next quarter, but thy want you to believe they are accurate 12-24 months out…"While 2003 is shaping up to be a challenging year for GE, we caution that 2004 could be as challenging, if not more challenging, as the company faces its greatest 'headwinds' at Power, as domestic gas-turbine units are forecast to fall to 50 from 260 this year," Merrill analyst John Inch said. A skewed statement as the forecast is for 75; however GE expects foreign sales to more than offset the domestic reduction. After the dismal out Merrill painted, they did not change their buy recommendation on the stock a logical conclusion NOT!! They reduced their 2002 earnings-per-share estimate to $1.63 from $1.65 and its 2003 forecast to $1.70 from $1.78. The third-quarter estimate stays unchanged at $0.41, while the fourth-quarter number falls to $0.43 from $0.45. Inch agrees with Lehman that a slightly more sluggish economy near-term should pressure the short-cycle business. Inch now expects short-cycle operating profit next year of $4.7 billion, against the $5 billion that GE had targeted at last May's Electrical Products Group conference.
ANALHeads should be locked in a full porter-potty and then rolled down a large hill
JMHO
Steve
Sure, have fun eom
OFC - THANKS for taking the time for that! eom
Hi Todd:
USPIX and UOPIX are ways of playing bull and bear moves on the market, and work to provide a return approx twice that of the index. You can pull up charts of them. Minimums vary depending on what brokerage you use, and they aren't for intraday trading. There are going to similiar funds that can be traded intraday created in the upcoming months.
=========
Pivot Trading Level Formulas:
GPP = (Previous High + Previous Low +Open) / 3
GR1 = 2*GPP - Previous Low
GR2 = PP + (Previous High - Previous Low)
GR3 = 2*PP + (Previous High - 2*(Previous Low))
GS1 = 2*PP - Previous High
GS2 = PP - (Previous High - Previous Low)
GS3 = 2*PP - (2*Previous High - Previous Low)
GS0.5 = (PP + GS1) / 2 GR0.5 = (GPP + GR1) / 2
GS1.5 = (GS1 + GS2) / 2 GR1.5 = (GR1 + GR2) / 2
GS2.5 = (GS2 + GS3) / 2 GR2.5 = (GR2 + GR3) / 2
-===============
Computing Fib levels:
In a primary up move of a security that begins at 25 and moves up to and ends at
50. You have a primary move up of 25 points. The 25 point up move would then be
multiplied by 38.2%, 50.0% and 61.8% to find the retracement levels. These
numbers multiply out to 9.55 or 9 1/2 for the 38.2% area. The 50.0% level is 12 1/2
and the 61.8% level would be 15 1/2.
If and when the security corrects back to the 41 1/2, the 38 1/2 or the 34 1/2 area
you would be at or very near the areas of the Fibonnaci correction retracement
levels. If the security corrects to one of these levels and appears to be ending, you
would want to carefully consider this area as a possible position entry point.
There are other fib levels also. Use google.com and do a search, you'll turn up all kinds of info.....
Pivots, support, resistance numbers tend to work more with things like the Qs in recent years than individual stocks, though they have always been used throughout. The different than norm (historically) volatily of recent years seems to account for the lesser reality with individual stocks.
A good number of people combine them, with technical analysis of anticipated support/resistance on the NDX and have good results over time.
Steve - your turn time.....
Looks like you were off by several minutes......
Just kidding!!!
Do you calculate them from some sort of cycle analysis?
Todd
OFC - 1 more question.....
You posted to me a month ago or more some info I should be watching - pivot pts, fibo numbers, etc.
Could you post it again when you have time.........
TIA
Todd
Hi OrangeFluffyCat!
Have a quick question when you have time - How does USPIX work? And some of the like type funds???
I took your advice and joined T-Waves......
Thanks in advance!
Todd
T-Wave--from on dime at the open to .95 cents in half a day. MMM followed your call exactly. OUTSTANDING
34Simmons
Trets, what a great call on the MMM $120 calls expiring tomorrow. I was not quick enough to buy 100 @ one dime like you. Very well done.
34Simmons
You can call in your shares, then you do have your voting rights. Same as you can sell anytime you want. You don't have to call the broker and say, hey I like this price, give me back my shares. It's not up to you to check if your shares have been borrowed for short-selling, so if you have a proxy, and there's no indication of same, vote.
I'd assume the cash credit would show up with the rest of your cash, but you'd have to check with your broker and ask how they do it. I don't know with the advent of online brokers and such if they have different rules.
To keep your shares from being shorted you have to take possession of the certificate in your name. Maintaining a cash account, rather than a margin account may accomplish the same, but that depends on the broker, as ultimately it's their discretion as to whether they make shares in cash accounts available for shorting. Maintaining a margin account does automatically make your shares available for shorts. Now whether *your* shares ever get used in such a transaction is another story. Every once in a while, back in the bubble days, there would be some movement to stop evil shorts from borrowing shares by putting in very high sell orders, i.e. $25 on a 3.00 stock. That was messageboard lore. It doesn't accomplish the purpose. Brokers can still loan them if they wish.
Have a good nite
Hey Fluffy...
Good to see you in here.
I guess my question about that is: I never know that my broker has loaned my shares, I don't receive notice of it, no interest from it as far as I know, and no notification that I could invest the cash that I have, unless the broker just sweeps it into a money market sweep and that draws me interest. But I never heard that part mentioned by anyone before.
So how would I know not to vote? I own 500 shares and I want to vote on an issue. My broker simply says sorry, but you can't, we loaned out your shares. I say, NO, I want my voting priviledges.
(BTW: I do know that you can deny broker the access to loan the shares you own. I believe some margin arrangements make this priviledge to the broker mandatory however.)
Is that really how it all works?
Thanks for the response, and helping to educate me and hopefully others on this issue...
-mike
The person whose shares were borrowed does not have voting rights until his shares have been returned. That's the only right they lose.
& "Since the lender always holds cash collateral for
the entire market value of his stock, he has in essence turned
his certificate into cash while still retaining ownership. For as
long as the stock remains on loan, the cash can be invested in
some interest bearing instrument, thus bringing in extra income
to the lender and providing the incentive to loan stock to a
short seller. "
The shares you borrowed may not have been borrowed from a person's account. They may have come from inventory held by brokers (beyond what their customers own), or borrowed from other brokers' inventory, or borrowed from institutional investors.
The $24 Trillion Derivatives Monster
http://www.gold-eagle.com/editorials_02/chapmand061302.html
If JPM were to belly up, I suspect it would make LTCM look like chump change. It is also entirely possible that JPM is in an extremely precarious position right now, with the fed providing life support.
And if JPM does go bust?...... :)
34Simmons - you have to follow along, I update my targets every day here or at my message board. That post you referred to is a month old, way outdated, certainly had the fib turn date right, but market rallied to it instead of dropping.
http://trader.150m.com
Beige Book, The Case For Pessimism Grows
http://www.fmcenter.org/pdf/Beige091102.pdf
Question on the intricacies of short selling as affecting the person whom the shares were 'borrowed' from by their broker (but who receives no 'interest' on the loan)...
First, thanks Jan for reply to my earlier question.
Now, having shorted a number of times, I know how it works as far as a short seller. I do not have voting priviledge on the shares I borrowed to sell, the purchaser of those short shares does. In fact, he has no idea as to whether or not they were sold short to him, or simply sold to him by an outright sale by a seller. He owns those shares.
Now what I don't know is about the voting priviledge of the 'owner' of the shares which were borrowed and sold short. Say I outright own 100 shares of XYZ. I have never notified my broker that I would not allow my shares to be borrowed for a short sale. I own the right to vote those 100 shares.
Now my broker, and I believe that they are under no obligation to notify me of such, borrows my 100 shares of XYZ and allows them to be sold short.
How does this work as far as voting priviledge? There are only those 100 shares, but I as owner expect to vote them, and the purchaser who bought them from the short seller expects to vote them outright also. That adds up to voting 200 shares.
Can someone enlighten me as the elemental thing I am overlooking here?
TIA...
-mike
Current Jobs data STUNK... here's the Scoop
As many can tell, I am more than a little upset at the recent unemployment numbers released by our deceitful government.
I know that these are strong words but I feel passionately about the continued release of pro forma propaganda numbers from our government. (By the way some of my readers have thought I spin these numbers to enrich my analysis of a pending double dip recession please, this is so far from the truth you can see for yourself the full report is here for all to view) http://www.bls.gov/news.release/empsit.nr0.htm
This months report was filled will illusions and was inundated with crafty smoke and mirrors effects, who ever crafted it should look up Steven Spielberg as I’m sure he has a better paying job waiting in his special effects department.
The headline numbers alluded to 39,000 new jobs being created in August. What the headline numbers failed to point to was that, 22,000 of the 39,000 were hired as airport security personnel and 34,000 were teachers going back to work. I am really getting sick of the deception. Neither of these increases which totaled 54,000 are going to be repeated next month !!
In effect the employment rate should have flashed a negative sign…After the large number of jobs that have been lost and are proposed to be cut in September we could see the next number come in at 6.2+%
How many heard from the talking-butt-heads that the help supply industry, which provides workers to other businesses, added 51,000 jobs over the month, following a decline of 30,000 in July. **This means that corporations are still unsure about their staffing, and would rather hire temporary non-benefited workers
Good paying manufacturing jobs )Those jobs that help to stabilize our economy) were still slashed, as employment declined by 68,000 in August. In August, job losses were widespread, including substantial declines in electronic and other electrical equipment (18,000) and industrial machinery and equipment (13,000). After remaining fairly steady from January through July, employment in fabricated metal products decreased by 10,000 in August. Rubber and plastics manufacturing lost 7,000 jobs, offsetting the previous month’s increase.
A key point remains that after reviewing the data…53.3% of companies cut workers during August. Those jobs created by the Transportation Authority may have added to the net total of job created but they do squat to add to the GDP. They are service positions…nothing gets manufactured or sold and no equity is built into the overall economy by hiring a clerk or airport screener such employment will not keep us from a double dip recession.
This is my Take
Best of Luck to All
Steve
http://www.twaves.com/
Mike,
Try the clearstation boards -
http://clearstation.etrade.com/cgi-bin/details?Symbol=qqq
and
http://clearstation.etrade.com/cgi-bin/details?Symbol=_compx
Jan
Now that RB QQQ board has died and gone to wherever worthless boards go to, where are the respectable posters going? I was hoping it would be in here, but that doesn't seem to be the case, regretably...
-mike
Rally to sell into or is there a chance for a couple of a day upside from here? Guess only time will tell. Would like DOW to finish above 8400...but doubt it will happen. Just hope today is not just a breather before we continue down.
Good Luck all...we need it in this market!
US Bank Money Laundering -Enormous By Any Measure;
By James Petras
Professor of Sociology, Binghamton University
9-1-2
There is a consensus among U.S. Congressional Investigators, former bankers and international banking experts that U.S. and European banks launder between $500 billion and $1 trillion of dirty money each year, half of which is laundered by U.S. banks alone. As Senator Carl Levin summarizes the record: "Estimates are that $500 billion to $1 trillion of international criminal proceeds are moved internationally and deposited into bank accounts annually. It is estimated that half of that money comes to the United States".
Over a decade then, between $2.5 and $5 trillion criminal proceeds have been laundered by U.S. banks and circulated in the U.S. financial circuits. Senator Levin's statement however, only covers criminal proceeds, according to U.S. laws. It does not include illegal transfers and capital flows from corrupt political leaders, or tax evasion by overseas businesses. A leading U.S. scholar who is an expert on international finance associated with the prestigious Brookings Institute estimates "the flow of corrupt money out of developing (Third World) and transitional (ex-Communist) economies into Western coffers at $20 to $40 billion a year and the flow stemming from mis-priced trade at $80 billion a year or more. My lowest estimate is $100 billion per year by these two means by which we facilitated a trillion dollars in the decade, at least half to the United States. Including the other elements of illegal flight capital would produce much higher figures. The Brookings expert also did not include illegal shifts of real estate and securities titles, wire fraud, etc.
In other words, an incomplete figure of dirty money (laundered criminal and corrupt money) flowing into U.S. coffers during the 1990s amounted to $3-$5.5 trillion. This is not the complete picture but it gives us a basis to estimate the significance of the "dirty money factor" in evaluating the U.S. economy. In the first place, it is clear that the combined laundered and dirty money flows cover part of the U.S. deficit in its balance of merchandise trade which ranges in the hundreds of billions annually. As it stands, the U.S. trade deficit is close to $300 billion. Without the "dirty money" the U.S. economy external accounts would be totally unsustainable, living standards would plummet, the dollar would weaken, the available investment and loan capital would shrink and Washington would not be able to sustain its global empire. And the importance of laundered money is forecast to increase. Former private banker Antonio Geraldi, in testimony before the Senate Subcommittee projects significant growth in U.S. bank laundering. "The forecasters also predict the amounts laundered in the trillions of dollars and growing disproportionately to legitimate funds." The $500 billion of criminal and dirty money flowing into and through the major U.S. banks far exceeds the net revenues of all the IT companies in the U.S., not to speak of their profits. These yearly inflows surpass all the net transfers by the major U.S. oil producers, military industries and airplane manufacturers. The biggest U.S. banks, particularly Citibank, derive a high percentage of their banking profits from serving these criminal and dirty money accounts. The big U.S. banks and key institutions sustain U.S. global power via their money laundering and managing of illegally obtained overseas funds.
U.S. Banks and The Dirty Money Empire
Washington and the mass media have portrayed the U.S. as being in the forefront of the struggle against narco trafficking, drug laundering and political corruption: the image is of clean white hands fighting dirty money. The truth is exactly the opposite. U.S. banks have developed a highly elaborate set of policies for transferring illicit funds to the U.S., investing those funds in legitimate businesses or U.S. government bonds and legitimating them. The U.S. Congress has held numerous hearings, provided detailed exposés of the illicit practices of the banks, passed several laws and called for stiffer enforcement by any number of public regulators and private bankers. Yet the biggest banks continue their practices, the sum of dirty money grows exponentially, because both the State and the banks have neither the will nor the interest to put an end to the practices that provide high profits and buttress an otherwise fragile empire.
First thing to note about the money laundering business, whether criminal or corrupt, is that it is carried out by the most important banks in the USA. Secondly, the practices of bank officials involved in money laundering have the backing and encouragement of the highest levels of the banking institutions - these are not isolated cases by loose cannons. This is clear in the case of Citibank's laundering of Raul Salinas (brother of Mexico's ex-President) $200 million account. When Salinas was arrested and his large scale theft of government funds was exposed, his private bank manager at Citibank, Amy Elliott told her colleagues that "this goes in the very, very top of the corporation, this was known...on the very top. We are little pawns in this whole thing" (p.35).
Citibank, the biggest money launderer, is the biggest bank in the U.S., with 180,000 employees world-wide operating in 100 countries, with $700 billion in known assets and over $100 billion in client assets in private bank (secret accounts) operating private banking offices in 30 countries, which is the largest global presence of any U.S. private bank. It is important to clarify what is meant by "private bank."
Private Banking is a sector of a bank which caters to extremely wealthy clients ($1 million deposits and up). The big banks charge customers a fee for managing their assets and for providing the specialized services of the private banks. Private Bank services go beyond the routine banking services and include investment guidance, estate planning, tax assistance, off-shore accounts, and complicated schemes designed to secure the confidentiality of financial transactions. The attractiveness of the "Private Banks" (PB) for money laundering is that they sell secrecy to the dirty money clients. There are two methods that big Banks use to launder money: via private banks and via correspondent banking. PB routinely use code names for accounts, concentration accounts (concentration accounts co-mingles bank funds with client funds which cut off paper trails for billions of dollars of wire transfers) that disguise the movement of client funds, and offshore private investment corporations (PIC) located in countries with strict secrecy laws (Cayman Island, Bahamas, etc.)
For example, in the case of Raul Salinas, PB personnel at Citibank helped Salinas transfer $90 to $100 million out of Mexico in a manner that effectively disguised the funds' sources and destination thus breaking the funds' paper trail. In routine fashion, Citibank set up a dummy offshore corporation, provided Salinas with a secret code name, provided an alias for a third party intermediary who deposited the money in a Citibank account in Mexico and transferred the money in a concentration account to New York where it was then moved to Switzerland and London. The PICs are designed by the big banks for the purpose of holding and hiding a person's assets. The nominal officers, trustees and shareholder of these shell corporations are themselves shell corporations controlled by the PB. The PIC then becomes the holder of the various bank and investment accounts and the ownership of the private bank clients is buried in the records of so-called jurisdiction such as the Cayman Islands. Private bankers of the big banks like Citibank keep pre-packaged PICs on the shelf awaiting activation when a private bank client wants one. The system works like Russian Matryoshka dolls, shells within shells within shells, which in the end can be impenetrable to a legal process.
The complicity of the state in big bank money laundering is evident when one reviews the historic record. Big bank money laundering has been investigated, audited, criticized and subject to legislation; the banks have written procedures to comply. Yet banks like Citibank and the other big ten banks ignore the procedures and laws and the government ignores the non-compliance. Over the last 20 years, big bank laundering of criminal funds and looted funds has increased geometrically, dwarfing in size and rates of profit the activities in the formal economy. Estimates by experts place the rate of return in the PB market between 20-25% annually. Congressional investigations revealed that Citibank provided "services" for 4 political swindlers moving $380 million: Raul Salinas - $80-$100 million, Asif Ali Zardari (husband of former Prime Minister of Pakistan) in excess of $40 million, El Hadj Omar Bongo (dictator of Gabon since 1967) in excess of $130 million, the Abacha sons of General Abacha ex-dictator of Nigeria - in excess of $110 million. In all cases Citibank violated all of its own procedures and government guidelines: there was no client profile (review of client background), determination of the source of the funds, nor of any violations of country laws from which the money accrued. On the contrary, the bank facilitated the outflow in its prepackaged format: shell corporations were established, code names were provided, funds were moved through concentration accounts, the funds were invested in legitimate businesses or in U.S. bonds, etc. In none of these cases - or thousands of others - was due diligence practiced by the banks (under due diligence a private bank is obligated by law to take steps to ensure that it does not facilitate money laundering). In none of these cases were the top banking officials brought to court and tried. Even after arrest of their clients, Citibank continued to provide services, including the movement of funds to secret accounts and the provision of loans.
Correspondent Banks: The Second Track
The second and related route which the big banks use to launder hundreds of billions of dirty money is through "correspondent banking" (CB). CB is the provision of banking services by one bank to another bank. It is a highly profitable and significant sector of big banking. It enables overseas banks to conduct business and provide services for their customers - including drug dealers and others engaged in criminal activity - in jurisdictions like the U.S. where the banks have no physical presence. A bank that is licensed in a foreign country and has no office in the United States for its customers attracts and retains wealthy criminal clients interested in laundering money in the U.S. Instead of exposing itself to U.S. controls and incurring the high costs of locating in the U.S., the bank will open a correspondent account with an existing U.S. bank. By establishing such a relationship, the foreign bank (called a respondent) and through it, its criminal customers, receive many or all of the services offered by the U.S. big banks called the correspondent.
Today, all the big U.S. banks have established multiple correspondent relationships throughout the world so they may engage in international financial transactions for themselves and their clients in places where they do have a physical presence. Many of the largest U.S. and European banks located in the financial centers of the world serve as correspondents for thousands of other banks. Most of the offshore banks laundering billions for criminal clients have accounts in the U.S. All the big banks specializing in international fund transfer are called money center banks, some of the biggest process up to $1 trillion in wire transfers a day. For the billionaire criminals an important feature of correspondent relationships is that they provide access to international transfer systems - that facilitate the rapid transfer of funds across international boundaries and within countries. The most recent estimates (1998) are that 60 offshore jurisdictions around the world licensed about 4,000 offshore banks which control approximately $5 trillion in assets.
One of the major sources of impoverishment and crises in Africa, Asia, Latin America, Russia and the other countries of the ex-U.S.S.R. and Eastern Europe, is the pillage of the economy and the hundreds of billions of dollars which are transferred out of the country via the corresponding banking system and the Private Banking system linked to the biggest banks in the U.S. and Europe. Russia alone has seen over $200 billion illegally transferred in the course of the 1990s. The massive shift of capital from these countries to the U.S. and European banks has generated mass impoverishment and economic instability and crises. This in turn has created increased vulnerability to pressure from the IMF and World Bank to liberalize their banking and financial systems leading to further flight and deregulation which spawns greater corruption and overseas transfers via private banks as the Senate reports demonstrate.
The increasing polarization of the world is embedded in this organized system of criminal and corrupt financial transactions. While speculation and foreign debt payments play a role in undermining living standards in the crisis regions, the multi-trillion dollar money laundering and bank servicing of corrupt officials is a much more significant factor, sustaining Western prosperity, U.S. empire building and financial stability. The scale, scope and time frame of transfers and money laundering, the centrality of the biggest banking enterprises and the complicity of the governments, strongly suggests that the dynamics of growth and stagnation, empire and re-colonization are intimately related to a new form of capitalism built around pillage, criminality, corruption and complicity.
James Petras is a Professor of Sociology at Binghamton University in Binghamton, New York. He is the author of 57 books. His latest, Globalization Unmasked: Imperialism in the New Millenium
The URL of this article is:
http://www.globalresearch.ca/articles/PET108A
Mr. USA.....What happened to change your excellent forcast?
You thought on Aug 15th the following..............
Mr_USA_1992 $$$$$
15 Aug 2002, 07:32 AM EDT Msg. 34567 of 36500
thinking wave 4 might run to 100% fib at GR1 today, that will be about a double top with previous high about 992, a Phi-Ellipse draw on that basis puts us about NDX710ish in beginning of Sept.
34Simmons
DOW 6000?
Any thoughts on this? I know Tetres is short MMM and its mentioned specifically here.
regards,
rs
The Dow deserves to be toast
Bernie Schaeffer makes case against headline index
By Thom Calandra, CBS.MarketWatch.com
Last Update: 12:35 PM ET Aug. 29, 2002
SAN FRANCISCO (CBS.MW) - Years from now, when the carnage in stocks is over, a handful of U.S. researchers will get passing grades for sticking to their guns about the overpriced market.
Bernie Schaeffer belongs in that small group. Schaeffer's views at Schaeffer's Investment Research make him an easy target for the millions of Americans who are suffering deep portfolio losses in this, the third losing year for U.S. stocks.
"Pessimist, fear-monger, anti-American, I hear it all," Schaeffer told me over breakfast in San Francisco. "But in 1994 they were calling me Bernie the Bull on CNBC."
Back then, if Schaeffer had tried explaining the technical research that is his Cincinnati company's specialty, the general public's eyes would have glazed over. "Imagine my bringing up the VIX in 1995. No one knew about it or cared," Schaeffer said about the so-called fear indicator that measures stock market volatility (VIX: news, chart, profile) on the Chicago Board Options Exchange.
Schaeffer at age 55 is just as direct over a meal as his regular written commentaries, which tell investors they are being way too forgiving of overvalued stock indexes. His main course these days is the Dow 30 stocks that likely will become chopped liver when the stock market falls off its perch.
"I call the Dow the headline index," he says about the Dow Jones Industrial Average that is destined for toast. "It's what we see every day in the newspaper, have seen for decades. There still is nothing tremendously scary about a Dow number that starts with 8."
That's 8 as in 8,580, which is where the index was Thursday morning. Schaeffer's case against the Dow is practically airtight. Stock market believers had best stop reading now.
Schaeffer sees the Dow as a "stupid" product of a long-gone age, when a small group of industrial companies could somehow represent the entire American stock market.
The Dow is a price-weighted index, unlike other major gauges, such as the Standard & Poor's 500 Index. Essentially, that means that stocks with high dollar prices wield enormous influence. Right now, there is one stock that is holding up the Dow: the only one with a price above $100.
"The single most important stock is a company in Minnesota," Schaeffer says about 3M Co. (MMM: news, chart, profile). "It's an industrial company with what, a 30 P/E? If 3M stops levitating, just maybe people start getting scared."
Schaeffer calculates that 3M stock, not far from an all-time high of $130 or so, could wreck the Dow if investors end their love affair with the company's shares. If 3M shares were to return to their 1997-'98 lows, roughly half their current level, the Dow would get a 425-point haircut.
hat's still not scary enough, says Schaeffer. He believes investors are still far too accepting of their portfolio losses since the Dow peak of January 2000. Schaeffer Investment Research relies heavily on "fear" indicators in options trading, such as the VIX and so-called put-call ratios.
"I get a chuckle about everyone getting so excited when the VIX made it to the 50s" in the July sell-off, he says. "They figured that was plenty scary, and a good sign that we had reached a bottom."
Nonsense. The VIX, a volatility index for the country's 100 hundred largest company stocks, was back-tested into the rough waters of 1987. In October of that year, during that horrible week of selling, the fear gauge hit 175. The indicator Thursday morning, as the Dow resumed its inevitable sell-off, was an easy-peasy, hakuna-mattata (no worries, mate) 38.
"October '87 gives you an idea of what true panic really is," says Schaeffer.
Toast and other stuff
The New York University mathematics major puts a lot of faith in the idea of a full-scale retreat from stocks. In that regard, his expectation of a market washout, complete with tears, jangled nerves and tremendous point declines, is similar to those of several other pure technicians, including Paul Desmond at Lowry's Reports and his own senior quantitative analyst, Christopher Johnson in Cincinnati.
"I want to see three to six months of heavy mutual fund outflows, not this business of one month of sharp outflows," Schaeffer says, between bites of scrambled eggs and toast. "Look at it like this: The S&P 500 in this sell-off got cut in half. Nasdaq got cut in half twice. For that to happen to the Dow, it has to be at 5,875. It happened in 1973 to '76, so why not now?"
Schaeffer says the Dow's superior performance to the rest of the stock market - since the January 2000 Dow peak, the Dow is beating the S&P 500 by more than 15 percentage points - is "curious."
Does Schaeffer believe in market manipulation? "I'm not going to go as far as Bill Murphy and the gold folks about that subject," Schaeffer says, referring to the chairman of the Gold Anti-Trust Action Committee and a growing belief that commercial banks and governments work behind the scenes to inflate paper values and deflate hard assets, like gold. "But if you are going to manipulate an index, it would be the headline index."
Schaeffer sees gold - and gold mining stocks -- as investments that will fare well in what inevitably will be turmoil in coming months or years for the stock market. "Whether it's a panic or a grind-'em-down bear market, it's going lower," he says.
He recommends buying put options on the Diamonds (DIA: news, chart, profile), a trust security that trades like a stock and represents the Dow index. Put options increase in value as the underlying security, in this case the bloated Dow, declines.
Schaeffer's business in Cincinnati employs 60 people, thanks to a growing awareness of equity options among Main Street investors. The former insurance executive is quick to admit he makes mistakes.
"My biggest goof of late was being caught flat-footed by counter-trend rallies, in the 1994 and 1998 sell-offs, when I was a bull, and the September 2001 rally," he says. "Oh, and before I got it right, I got clobbered by airline puts."
In February and March, airline stocks soared, leading Wall Street to believe the worst was over for the battered industry. Schaeffer was amazed at the rally, but stuck to his guns. "I travel, and I know the airlines are in pain," he says.
Today, the airline stocks are, collectively, at half their highs from February. "What was with that rally? I want to know. Leave it to Wall Street to parse the travel figures and say, 'Oh, capacity was worse last month than it is now.'"
No wonder no one listens to Wall Street these days, Schaeffer says.
The veteran stock market researcher's views can be found online at SchaeffersResearch.com.
Thom Calandra's StockWatch by e-mail
STEVE..great call on the turn-time today...got in long QQQ calls QAVIX 40 contacts out 1/2 later with .35per..
Very glad I`m onboard your L2 subscription...
DON
Hello AJS
I will attempt to answer your questions, though vague…
My current subscription base is small…T-Waves has only be in existence as a fee based service Since May 2002, Prior to that I was publishing Weekly Newsletters and Market Reversal projection as Stocks Unlimited…I provided this service for over 18 months. There is usually ample liquidity in most of the Swing-Trade Suggestions and Option Suggestions…and yes if you are as Cheap, patient and disciplined as me you too can enter at the levels I do. As A matter of Fact I continually preach discipline & patience to my subscribers.
On the option suggestions, We play the DJX, OEX, DIA, SPY, SMH, BBH, MSFT, MMM, IBM often just for their liquidity
If a stock in the option suggestion list lacks liquidity, we utilize credit/debit spreads etc.
The Swing-Trade Suggestions and Option Trade Suggestions are suggestions formulated after Friday’s close for the following week, with detailed analysis.
During the day…I send out additional suggestions to Level II Subscribers, not include in the aforementioned lists.
I hope this helps...if not continue to ask away
Steve
Excellent example, Steve! Thanks for all your hard work,
Jan
Steve,
After looking at your website I have come up with some questions:
1. How many subscribers do you have for your service?
2. Were there enough liquidity in the options you have posted
on the following website for your subscribers to have gotten the same prices as you have had?
http://www.twaves.com/T-waves_Oprion_Trade_Execution_List.htm
3. Are the above picks intra-day picks or nightly/before the open picks?
TIA
Pictures are worth 10,000 words....
http://stockcharts.com/def/servlet/SC.web?c=$indu,uu[g,a]ieclynay[pb10!b20!b50!b80!b100!b150!b200!d2...
Information on T-Waves Turn Signals
Several readers have asked about how to play these forecasted Turn-Times... So here is a brief out-line...I will expound on this this weekend...
The turn signals are just that, signals that are generated through intense and multiple calculations. I use 11 different variables and indicators, and of as you all know these forecasts and market turns are predicted in advance I can not foretell, a week in advance which direction the turn should break...yet, I am beta testing 3-new variables that may render such information...still in it's infancy and undergoing an extensive back-testing process.
The suggested way to play the turn-signals is as follows. If the specific index is rallying into the turn signal expect a sell-off reversal to commence. And just the opposite to happen if the indexes are selling off, expect a buying reversal.
If the markets are trading in a sideways trend wait for confirmation of the trend..i.e. either a 3-5 candle trend on a two minute chart or my favorite a 3 three-minute candle confirmation to establish the market direction. Please When in doubt wait for confirmation...
The turn remains in effect until the trend is broken i.e. a higher high is made or a lower low... depending on the turn...turns can overlap trading days...and can be canceled out by subsequent turns...and/or the turn can be enhanced
Major moves can last between 6-32+/- hours 150-300 point moves
Major/Minors moves can last between 6-18+/- hours 90-180 point moves
Minor Moves can last 1-6+/- hours 50-125 point moves
Best of Luck
Steve
Hello Mike
I will be watching HRB very closely....
Hopefully we can nail it again
Steve
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