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FDIC Report: 117 Financial Institutions In Trouble, One Big Problem, I Do Not Believe It

Today the FDIC came out with their report of possible troubled financial institution list. it counted 117 as possibly troubled, up from 90 the previous quarter.one small problem, I believe this nonsense like not at all. The only reason that there were not far more on the list as banks refuse to realize the true value of the loans they hold. This was witnessed recently by I believe Merrill when they sold loans at $7 billion when they they had them on the the books just weeks before at $37 billion.

 Today;s number of banks in trouble was comical, at best. It has to be far worse than indicated and people that believe otherwise are wrong. I have said this for over a year, and have been proven correct each and every time, and am right again. This is nonsense. The banks should be required to write down the value of the loans to CURRENT values NOW and move on. They refuse to do so. The list is FAR bigger than 117 and there needs to be something done about the financial institutions that continue to “hide” bad debts on their balance sheet. And I mean something punititive. Then again, this was supposed to be illegal, as Cramer has alluded to many times.

Consumer Confidence Up? This Is Clearly An Indictment On Public Education

Consumer Confidence numbers released today were up to a reading of 53. Much was made of of the number as a “percentage”. This is complete nonsense. If consumer confidence was 1.0 and then moved to 2.0 it would be the largest percentage move of all time, by far. Would that be meaningful? Uhhhh no.

The facts are the facts are the facts. Real incomes in the U.S. have fallen for 8 years. Real incomes in China are skyrocketing. Maufacturing is at an all time low in the U.S. Manufacturing is at an all time high in China. Literally 100% of the wealth in the United States is held by those over 40 (prior to free trade with China). Consumer debt levels are at all time highs and consumer delinquncies are rising rapidly. Those ARE the facts.  

And consumer confidence up? From what and why? Election hysteria is the only possible answer. The eternal hope for massive change. Unfortunately the change that would be made by an an all Democratic Congress and Obama presidency would very, very likely cause a worldwide depression, if addopted in full. The trade issue with China, while i am in 100% in support that it is a massive mistake has to be handled with great care. If we place significant protectionist tariffs, nationalize both FNM and Freddie Mac, nationalize healthcare, we WILL go into a depression, IMO. Without question the stock market will be FAR lower than it is today. That is a given.

I would provide an outline of what i believe needs to be done but unfortunaely nobody cares, lol.

Market Direction: While The Chart Still Says Long….

While the chart still says long above 1261 cash, 1260.50 futures, I have a belief probably not widely shared. Most seem to believe the more times an area or trend is tested the stronger it becomes. I believe the exact opposite. It tells me the market wants to break it and likely will, at some point - but nobody wants to be the lone ranger in taking it out.

If we revisit the lows soon, I do not believe they will hold next time around. The market continues to test the 1261 area. I am a firm believer that the first test of an area will almost always hold. The second test is questionable, the third test is likely to fail. The market has pooked around the 1263-1265 area the last two days to see the resolve. It appears weak, at best. I could be wrong, but do not expect the next visit to this area to hold if and when we get there.

Market Update: My Gap Rule Rules The Day

I said before the market opened that “if we were going to reverse it should come early” It reversed 5 mins in and we haven’t looked back. I later said “if we hold the low and clear 1280.75 the gap should fill, at least”.

The strength has taken me by surprise a little, but I mentioned there really was nothing of significance up top to stop the move.

New Leadership: Retail - Only problem Is Facts Say Otherwise

The retail space exploded higher today. Not really that surprising because money has been rotating out of commodities and energy and has to go somewhere. The problem with this is only one small thing - it makes no sense. Retail profits are falling and will continue to do so, IMO. If these stocks continue to rise, this will be the next implosion. The U.S consumer is dead in the water and to bid these stocks up like things are improving is complete nonsense. I think I have mentioned about a billion times rthat the markets have nothing to do with logic, so do not fight it - for now. But this will end very badly if we march higher into October in this sector.

U.S. consumer debt levels continue to rise at a scary pace. 10% of all disposable income now goes to pay the interest on credit cards. Real incomes have fallen for 7 years. And you want to bid up retail chains? Ha. What comedy. Retail chains will ONLY go higher long term if real incomes increase. Period, end of debate. The odds of that happening are near zero as I see things. But they are being bid up on falling oil because people will now have more “income” to spend. One small problem with that thesis, people arent spending income, they are charging it and the cards are maxed.

This “trend” will end very badly eventually. U.S. consumer spending as “leadership” is comical - at best. These companies will warn when earnings are released next quarter, if not sooner. Be careful chasing this nonsense, but do not fight the trend - for now.

BloggingStocks: 3 Questions To Ask Your Stock Broker (comedy but play along)

This is pure comedy, but play along. They have a post that says here are three questions to ask your stock broker. First of all, you have to remember that brokers are paid to sell, they are not analysts. With that said, the average person should have their money wisely managed by a professional. But you need to choose the firm based on their integrity and competence of their analysts FIRST and then choose a broker you like within that firm. Some brokers may be far better than others AND may make their clients more than others, but in general, that isn’t the basic premise of being a stock broker. They get paid on assets under management, not profits.

With all that said, here are the 3 questions you should ask, according to the article.

1. What is the most important factor that will affect my returns?

The correct answer, according to the article is asset allocation. I agree, for people that do not understand the markets, this is correct.

2. What is the standard deviation of my portfolio? Hmm, I think what they are digging for is the Beta for their investments. If they put people in high beta stocks, then there is implied risk. Ok, I agree. People’s investments should have different beta’s depending on age, etc.

3. Are you able to put together a group of stocks that will be able to beat the market over the “long term”?. The correct answer is supposedly no, that you cannot beat the markets over the long term.

 Interesting stuff, like not at all. Unfortunately, IT IS ALL 100% TOTAL AND COMPLETE CRAP. You cannot beat the market if you are a salesperson. You cannot beat the market if you watch shows on TV and take their “expertise”. You cannot beat the market if you do not know what you are doing. I will agree with all that. But to say that the market cannot be beaten long term is complete nonsense. All of this beating the market “long term” nonsense goes back to the this supposed efficient market hypothesis. The market is NOT efficient on ANY level, and I have made that assertion at least 100 times on here. It is total nonsense. The markets are driven by fear and greed which is reflected in supply and demand. Nothing more. If the market was “efficient” would AEM have climbed to $90 when it is likely not even worth $35? No. it has nothing to do with anything.

Let’s look at it this way. My opinions are up what 50%? 60%? 70%? More? in 4 months? I haven’t bothered to figure it out. And this doesn’t count my “view” to exit all energy and commodity stocks, which have plunged. And doesn’t count my long term view that FNM had little value, nor my view that GM would go to $10, homebuilders would go far lower, etc. etc. And it doesn’t even count my calls that “if you want to be long IBM should trade higher”. Nor my view to avoid AAPL near $200. I am not counting any of that. And I am just some amateur typing “in his garage” so to speak after work and studying the market while drinking 4 Bud lights after work? lol. And the best and brightest minds alive cannot beat the market but somehow I can?  True, 4 or 5 months isn’t “long term”. But I would be up FAR more if I had 8-10 hours a day to put into this, not 4 or 5. I do not even consider it a challenge to beat the market on my calls. My standard (which I will never live up to) is to never be wrong. I get completely aggravated when I make a wrong call and will study the chart until my eyes are red to see what I missed. Then again, i think i have only been wrong once, GE, and i thought the SP would reverse and take that play out, which it did. But I made the call, so I will live with it.

No, people can beat the market, but they aren’t paid to beat the market with YOUR money. They are paid to sell and properly allocate assets based on your risk profile, not make above average returns. So you can ask your broker 893 questions, it is not even relevant. The “best’ salespeople will simply answer the questions better than the others. Nothing more. To imply that this means they are “good brokers” is total and complete nonsense. They might be, they might not be. But answering questions correctly certainly is not an indication, of any kind. if you want to have a stock broker to manage your money (and most people should), you need to make your decision on the firm and their analysts and THEN try and find one you trust within that company.

Sorry for another “rant” but i am so tired of hearing this “cannot beat the market long term” stuff related to some efficient market hypothesis concept taught in schools. I just think it is total nonsense and not even close to accurate.

Man I Missed Some Easy Longs

Sorry about not making more calls to be long off the recent lows - BUT working 9 hours a day kinda got in the way of the site - ha. Looking at a LOT of charts, there were plenty of stocks to be long off the low. That is what is driving this market. If you get enough stocks where traders are “likely” to be long above, then the market will rise.

As I have mentioned, I will try and make more individual stock calls rather than market related going forward. If I had a pay site i would have made probably 40 or 50 stock calls to be long in the last 2 weeks. But 14 hour days counting the 5 I spend on this get to me and my eyes get tired looking at the PC 15 hours a day, lol. See PAY me to look at charts 15 hours a day rather than work!

Trade Opinions: Remember Valid Three Days Only

I have posted my opinions and put the results for day one and day three for a reason. Day 4 “may” change things, it depends. I am trying to make my calls as simplistic as possible, therefore I have limited it to three days. It is possible that my opinion may be valid, but a severe spike may cause a reversal in two days. Possible, but not likely, but I have to make some limitation to keeping it simple. it is also possible the trade could last far, far longer than three days. You will have to look and see what is going on after three to decide. I do not have the time to walk everyone through the why or when. This is why I have repeatedly thought of making a pay site. If I had 100 people paying me per month, I would make 10 calls a day with firm numbers and a follow up. But this is free and I make virtually nothing from it, as I have mentioned. This site is for my friends and fun at this point.

I am either going to make this a pay site, or going to have to be a stock broker or beg a hedge fund to hire me. I know it is complete silliness to expect a hedge fund job from a blog, but records are records. The point of a hedge fund is to make money. If I can beat their so called experts, then they would be fools to not hire me. But I know the world is not that simple.

Market Recap: Blow My Own Horn

It doesnt get any easier than today. Ever. I said last night to watch for a reversal early. Bingo, reversed 5 minutes in and never looked back. I said 7 mins after the open in my intraday comments “the trade is long”. I later said “this checkdown to 1266 was likely a gift”. I made 71 posts in all (far too many, I need a life). I also mentioned early “all the charts have a negative bias, I believe they are all wrong”.

There were many reasons I believed a reversal early was likely. But the key is to understand timing. The markets are not just about price, they are about time AND price. I firmly believed that we had to reverse EARLY or we were likely in trouble. It obliged and made the low 5 minutues in. I was long on the futures (paper only) 6 or 7 minutes into the day very near the low. Once we got “agreement” from other charts we never looked back. There several reasons I believed we had to reverse early on, partly price related, partly time related. Point being, when I make an opinion to be “long above X”, many times, it depends on time, generally time of the day and what still could “possibly” happen.

I looked at Tradestalker comments after the close, and he seems to think we should reverse no higher than 1310, or at least thats how I read his comments. Maybe so, not sure. We look at the markets a bit differently. But he does have an uncanny way to know likely tops or resistance that I cannot see when we reach “new” areas. I still have not figured his method out, and not going to pay the big money to take his personal training, although I would like to as I believe it would “fill in” many gaps of knowledge for me. I do mean be a member, he has a training class where he actually teaches you how and why he has his numbers where they are.

I would not chase this higher, for sure. But if we do get a sell off Monday and do not clear today’s high first, the trade is long above today’s low, that I know.

Today: A Lesson In Stops

I have mentioned that I generally just trade paper on the SP futures while writing for this. One reason is that it is hard to trade while trying to write. The other reason is, quite frankly, I do not have the temperament to trade the SP futures as I get far too jumpy.

Today, it was reasonably clear to me that we had most likely made the day’s low 30 mins in. I also said we were likely to reverse near 1275 and it did with a low of 1275.25. It then moved all the way to a high of 1283. I saw no sign of a high and the gap had not totally filled. Therefore, I was convinced that we would eventually move higher. Even though just paper, I could have easily been up 5 to 6 points twice. If money, and you have that early - turn the pc off and head to the pool, lol. In addition, it would have been greedy as I thought we would likely reverse once the gap filled near 1287.

 Here is the problem. News had broke that Moody’s put AXP debt on credit watch for a possible downgrade - and I did not know it until it was too late. Once 1275.25 cleared, you have to exit and wait and see what will happen - not guess. I kept thinking - this doesn’t make sense…this doesn’t make sense. Well, it did make sense once I found out about AXP.

Anyhow, do as I say, not as I do. Know when you are right and know where you are wrong. If wrong, exit. It doesn’t matter why as there may be something going on that you are not aware of or you may have missed something that others see. Apparently I am the grasshopper that needs to learn from myself.

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