America turns on a dime

Don't forget that America is a dynamic country that turns on a dime. It likes trends, and as they always say: America loves a comeback. While we all know there is more downside coming (after this little [how little ? most important question] rally), it is slowly sinking in that perhaps the world won't end.

I foresee the coming of a very enthusiastic alternative energy bubble ... erm I mean trend.

TRAVERSE CITY, Mich (Reuters) - Chrysler LLC on Wednesday outlined plans to launch a new car-based SUV modeled after the Jeep Cherokee, as other major automakers took the spotlight at an industry conference to pitch their own hurried responses to the surging demand for more fuel-efficient cars.

http://www.reuters.com/article/businessNews/idUSN1331201920080813

Which reminds me, Americans are cowards who will only do what the market says it wants. If the customer wants fat stinky cars, then we got 'em priced to move until the oil is gone.

The United States now leads the world in the amount of electricity it generates from wind energy, according to the American Wind Energy Association (AWEA). The trade group's second-quarter market report, released on August 5, finds that the wind industry installed a total of 1,194 megawatts (MW) in the second quarter, bringing the total installed U.S. wind capacity to 19,549 MW.

http://media-newswire.com/release_1070628.html

Yeah, but you can't fuck with the Dutch for style.










and I'm still shorting the shit out of the US every single day until the finance industry is bled dry (and into the hole) and we stick all of that capital into new energy. then and only then may you resume shopping.

and don't think that we don't know that the dollar will resume down (maybe later) and oil and commodities will resume back up.

again I will say : the best thing about the short term exuberant top in oil (part of its bull run) is that it woke everybody up to the need to invest in alternatives now.

Solar will probably resume very shortly. In the last "oh we don't have to worry about oil" pullback Solar has been hated and I've been elsewhere. An industry like solar needs many phases of boom and bust in order to shake out the weak companies and to keep the brutal analysis trained on them to see who will become MAJOR producers.

MOO ! GROWL ! MOO ! GROWL !

What a hilarious week in the market. We have some determined cows out there. Nobody can tell which way its going to run. This sideways movement : bear trap or is it going to get some traction ? The dollar is the same thing : rally to uh... 1.50 ? before we resume ?

Seems to me its not ready for a real run up (before the inevitable fall back). But I remain hedged both ways. In fact I've been fairly well by simply collecting moves in either direction. Eventually (like right now?) I'm going to get caught holding something the wrong way.

In scalping you learn certain movements. Quivering, lurching up and then selling off hard. Some call them head fakes, and if the market is controllable (small float, big money) then it could be a real head fake by a real person. People love to personify the market or say that smart money will do this or that. And they will, but its also true that its a lot of guys staring at computer screens desperately trying to figure out which way it will go.

There is an attitude now that we should just get the selling over with sharp and quick. OK, are we done now ?

The US appears very rich what with all the developments and shopping centers and displays of corporate wealth . Now we have to imagine/realize that a large amount of that HAS to go under and physically disappear before the accounts are balanced. Cause its borrowed and fictitious. And that will take much longer than 2008. Bennigans/Steak-and-Ale just went down. The look of the country will change by the time its over.

Its a game of musical chairs. The smartest players will still have chairs when the music finally stops, but we go through these rounds. The realization is spreading that there are less chairs than was assumed.

Traders don't mind this. People and banks holding significant amounts of worthless paper would like another round to maybe shift some of this into somebody else's pocket.

Look at the market after 2001. What is now started cannot possibly be less than 4 years. Look at the sideways 70s. That's the optimistic turnout.

what happens when the shorts really getting going ...

For once I'm going to agree with The Cramer on this one. What exactly is going to happen when more and more of middle class America all start piling into short funds ? (oh right, by then we will have sold off enough for a good rally) Its creating a nasty environment, although the current market does need to be sold down (still). There's a lot of fictitious wealth in there. I'm just trading, making money up and down during the day, so no, "I don't care" or to be more accurate I'm disconnected from the underlying businesses that I'm several layers of abstraction away from.

I think the shorts are now heavily favored because they can instill fear and panic that the longs don't have the ability to do. They can destroy businesses -- the ultimate goal -- and the longs can't. I don't like that, I don't like it because the great history of the stock market shows that it works better if we regulate the shorts, to make it so they can't overwhelm the longs. The creation of wealth, not the destruction of wealth, is what the market is supposed to be about, it is why it is worth participating in at all, otherwise the mattress or bonds -- only good for the most solvent of operations -- make more sense.

http://www.thestreet.com/s/cramer-shorts-are-not-and-should-not-be-equal

But the Uptick rule is irrelevant in this day and age. A short ETF, in its internal implementation, can simply be programmed to sell harder on the first uptick. (I really wish I knew exactly how these things execute their buys/sells of the underlying)

And how exactly is the entire or frightened America going to sell dollars for GLD ? Many of these new fangled ETFs are constructed with derivatives and futures strategies. What happens if the derivatives market undergoes a major collapse due to parties not being able to pay ? With this many robot driven planes in the sky, eventually something is going to collide, no ?

High Oil Price a very good thing for earth

The good thing about high oil prices is that its spurring attention towards peak oil and alternative energies right now.

I also think its inflated and pushed and now maybe even peaked. I don't have the guts to short it right now. (any trader that thinks that's guts is just stupid. and people that stupid deserve to lose. I'm not that stupid.)

The talk in Mom and Pop-ville is that those damned oil speculators have caused the price to go so high and now The Damned Congress is going to do something about it. But the speculators didn't do it, they were just along for the ride. Its Big Oil itself that did it.

And as I said, its not a bad thing. Its made people think and it may get the US to reduce consumption. And it will probably come back down, maybe to the 90s (but what do I know).

America knows how to party

Worldwide Markets Crash ! For days on days without end ! The decoupling theory is dead ! Everybody panic !

The US markets were closed Jan 21 (MLK day). Last week and the week before I said I would sell off some Asia funds. I was just ... waiting for that bounce. I hate mutual funds. I wonder what the NAV will be today. Not pretty. Forget bounces. You can always find safer conditions to make that 4% or whatever bounce. If the thing is moving down, its likely to keep moving down. Yes, there will be a bounce, but only after you sell it. (they can sense fear).

So, the US will crash today. Futures screaming down. Foregone conclusion. Here we go.

On Jan 5th when the jobs report came out way under expected levels (5% unemployment) I just knew what would happen that day. Its would go down. I bought QID (double short the NASDAQ 100) on the open, sold it at the end of the day peak and made $650. Very pleased with myself.

Today, Jan 22nd I figure I'll do the same thing, but you can never be sure. The market opens screaming red, QID already +8%, SKF (short the financials) is +10%. Damn, its already priced in.

Then, Uncle Ben gave us 75 points so we can all go out and get drunk on cheap credit for a little while longer. I understand, he needed to. The stock market may be overvalued, and it may need to move lower, but it can't move lower that fast. That instability will cause financial institutions to fail, and that cascades into the whole economy. Still, I want to short the financials. Just out of ... shadenfreude.

So the market opens and begins to rally.

SKF went from +10% on the open to -10% at one point ! (MBIA) is up +40% because Barrons said "well, they aren't nearly as fucked as Ambac" ! LDK was -15% pre-market, -4.3% by lunch. I did not make any money on these moves.

But now where ? Its lunchtime. Nobody really knows. The VIX (CBOE volatility) is high which means shit is choppy. Right about now I would prefer a nice soft undulating wave in a quiet industry.

But I get the feeling this is the turning point in the plummeting.

The markets (US and Asia) are oversold. Its certainly not the time to short the market. It would be the time to happily take your shorts off the table.

The smartest thing to do now is to buy, but just a bit. The next few days could go up or down. Things may be cheaper later, but they are cheap now. Either way things will go up at some point, and they may even rage up for the rest of the week. So its time to accumulate.

Ron Paul and the Gold Bugs

I am bemused by Mr. Ron Paul. Let's just say more bemused than I was by Ralph Nader, and for that same reason I'm glad that RP is a Republican and not a 3rd partier.

http://www.thestreet.com/s/ron-paul-get-back-to-gold/markets/marketfeatures/10397859.html?puc=_dm

The problem with going back to the Gold Standard (which is not going to happen) is that the global economy dwarfs the amount of physical gold. I think they used to use a factor of "9 times the amount of physical gold". So what would they do now ? 1000 times ? Inflation would still exist.

In the interview, the congressman also said he thought different currencies backed by precious metals should be legalized and allowed to compete with each other. In particular, he suggested that the exchange-traded funds that hold inventories of bullion, streetTracks Gold Shares (GLD) and iShares Comex Gold Trust (IAU), could issue certificates that could be spent as money.

Competing currencies would also legitimize Liberty Dollar, an Evansville, Ind., company that got in trouble with the FBI and the U.S. Mint for making its own solid silver coins, some stamped with the image of Paul. The firm was raided just before Thanksgiving and all materials were confiscated, including the Paul dollars.

Paul acknowledged that competing currencies could only occur with substantial changes to the criminal law and the tax code. Currently, it's illegal to try to spend precious metals coins as if they were currency, he said. The tax code also means that the changing dollar price of gold creates taxable capital gains. That's something which would need to be repealed, he says.

None of that is going to happen. I think he is only running to publicize ideas, which is a good thing.

Maharishi Mahesh Yogi (International Transcendental Meditation, friend of the Beatles) has issued his own Raam currency for many years. It is tolerated in the Netherlands as a small scale alternative currency, though the gov't occasionally warns against its stability.

Hedge funds suck the alpha out of the mutual funds

The crazy volatility we have been seeing over the last year has, I think, been amplified by hedge funds that react very quickly, by automated trading strategies that don't mind taking any trend (up or down) and running with it hard. The quants and the agile and the traders have been making money, and the effect of this is that volatility is increased and encouraged.

Long only mutual funds, buy and hold strategies and index funds are going to suffer badly. Hedge funds will take all of the alpha out of the system. Owners of antiquated mutual funds (the mom and pop retail investors out there) are going to suffer.

But then the market is going down, so they will expect to suffer. They (average people) may not realize until its too late that this really going down.

Traders (like me) will make money. I hold very few things right now. On friday (Jan 4th, 2008) I bought 350 shares of (QID) (double short the NASDAQ) on the open and sold it at the very end of the day at its peak. +$589 for the day. That paid the rent.

I have two asian mutual funds, and I will be selling some of that off. Personally I expect further pullback in China, though the longer term is obviously still up. I'll be there in an ETF when that restarts.

Relatively safe ETF picks for the start of 2008 :
(SKF) short the financial sector
(SRS) short the real estate sector