Plunge Protection Team, Black Helicopters, Etc.

I thought I would take a moment to Address the wide spread myth, nee belief in the Plunge Protection Team, and work it into yesterdays tape. The PPT is a growing myth involving a group officially known as the Presidents Working Group on the Markets. Set up after the big one in 1987, it exists as an advisory group to the president on the financial markets. Unofficially it has the duty of intervening in the open markets in the event of a cataclysmic one day drop in the markets, maybe. In the insane tape we have seen over the last 12-16 months dozens of terrifying market plunges have mysteriously turned around very late in the day, to erase gains and even turn the market positive, with no apparent reason. This phenomena leads many, especially dedicated short sellers to believe some shadowy federal organization is organizing nefarious bull raids to save the markets from destruction. As I am not a fan of black helicopter theories, I see this as the rantings of not so nimble short sellers who have had there profits taken from them, when they took there eyes off the markets momentarily.

Yesterdays tape and how I traded it explains a lot. Seeing the market yesterday morning attempt on several times to make new highs and failing right at the previous days highs, I initiated short positions at about 1100 am est. My instincts proved correct and the market continued to drop steadily til about 2pm. Some time in mid afternoon having built up substantial profits, and not wanting to risk them going to this mornings release of GDP and Continuing Jobless Claims, i covered my shorts and felt quite swell about my self! Covering shorts involves buying back previously sold shares, giving the market somewhat of a bounce. I can assure you minds far greater than my own with laughably larger account bases(read Beeeelions, mwha ha ha ha ha) executed exactly the same strategy, multiplying the effect. At this point I was done for the day doing the happy dance. I suspect sharp bulls and even sharp bears realized this phenomena, and bought into it, magnifying the squeeze. Voila! the PPT. If the Govt could really organize such a trick, COULDN'T WE SOLVE THE ENTIRE BANKING/ECONOMIC/BUDGET DEFICIT/WORLD HUNGER/AND THE BATTLE OF THE SEXES, BY SIMPLY SPECULATING WILDLY IN THE FUTURES MARKETS(since they know when they will successfully manipulate the markets), BOOK HUGE PROFITS, AND CALL IT A DAY? It is not that easy sports fans. This mornings release of the GDP numbers and Jobless claims at 820 EST, should set the tone for today's trading, good numbers should send the market scalding higher, let's go get em!

Make or Break for this Bull

I always root for the badly out gunned bull in the Spanish bull fights. I take great pleasure in seeing the exhausted and battered Toro deliver a horn to the ass of some Fop matador prancing for the crowds, and tormenting this majestic animal. Having done exceedingly well in the bear market that engulfs us I am hoping to not get similar treatment. "You mess with the bull you get the horns"

Today should be a critical day for the markets recent meteoric rise from the lows of 666 on the S&P 500. The major averages are flirting just above the key 50 day moving averages, which could act as critical support and a place for the bulls to make a stand. This mornings release of Durable Goods Orders at 830 am EST and sales of existing homes at 10 am EST, should provide the cues for today's action. More importantly I feel that the market is now going to be forced to stand on its own. The federal govt, the Treasury and Federal Reserve have taken massive, heroic efforts to revitalize the markets, but all the cards now seem to be on the table. Should we falter here I fear it is time for the doctor to enter the room and inform the patient it is time to get his affairs in order. We are heading into earnings season which should be the ultimate arbiter of corporate health. Gauzy assurances from CEO's of dubious credibility will be put to the test with actual earnings numbers and official guidance. Should earnings season prove ugly, and March employment numbers due out on April 3rd continue to disappoint, we could be in for another horrific plunge to retest the lows or worse. As mentioned earlier I feel an orderly pull back to 710 or so on the S&P, would be healthy and a great area to deploy some capital on the long side. Yesterdays orderly descent fits into that scenario. Lets try and trade the tape we have, not the one we want!

Quadruple Witching

When Churchyards yawne, and Hell it selfe breaths out Contagion to this world” (Hamlet).

(the above quote links to a cool vid of Courtney Love and Hole doing a cover of Donovans Season of the Witch, something to get the blood pumping on this busy day)

The above description above could aptly describe the trading environment of the past 18 months. More closely I chose it to refer to Quadruple witching. Today sports fans we have contracts for stock index futures, stock index options, stock options and single stock futures (SSF) all expiring. Traders delight or despair, depending how your performance has been YTD! Personally i would love to just phone it in and rock out to a scantily clad grunge queen, but this is not to be.

As noted earlier Chairman Ben Bernanke left interest rates unchanged, yet launched an aggressive asset buy back program. In a nut shell he is going to inflate the currency, in an attempt to jump start the economy one more time. This seems like a page taken from a South American Banana republic, and most likely will also lead to inflation ramping up dramatically. For the average investor this is a good chance to refinance the old ranch one more time, and put a few more dollars in your pocket every month. The major indexes lurched upwards on the news, failed at serious overhead resistance, and sold off rather briskly yesterday. Cant say as I have had too many shower celebration moments lately. I faded this rally earlier than would have been perfect and am now positioned rather bearishly, and uncomfortably so. I don't like hoping the market bails me out. A healthy correction to around 710 on the S&P on LOWER volume, would set the stage for a more healthy resumption the recent upward move. As it stands currently, this has all the halmarks of a suckers rally. Led by broken financials, and empty comments out of disgraced CEO's, a lack of real volume, a pullback is needed to get me on board for any further advance.

I generally pen these missives early in the morning, sort of as a traders journal for myself before the open . The other morning I was interrupted by one of the little gladiator twins. Seems he had a tooth desperateley in need of removal, but was somewhat hesitant to deliver the coup de grace to the wobbly fang. What a scene! Despite my extortions of Virtus et Honor! much wailing ensued. The fairy did deliver a pair of nice Susan B Anthony's however.

I know what you're thinking. "Did he fire six shots or only five?" Well, to tell you the truth, in all this excitement I kind of lost track myself. But being as this is a .44 Magnum, the most powerful handgun in the world, and would blow your head clean off, you've got to ask yourself one question: Do I feel lucky? Well, do ya, punk?

Fed day. At 215 pm today the FOMC will release the results of their 2 day meeting. Bulls should be asking themselves if they feel lucky after the recent blistering LOW VOLUME run up from the lows of S&P 666. In case anyone is wondering, Chairman Ben Bernanke has fired all six shots. The Fed Funds rate is at .25%, click, click, out of bullets, and the 18 month old bear market seems only to smile right back at him. The only tool left is "quantitative easing", the equivalent of pistol whipping with the empty .44 Magnum. Seeing as how rates can not go below 0%, hopes of a further run up in the equity markets hinge on comments(read talk is cheap) of further expanding the fed balance sheet and buying treasuries and other assets. Should the fed or treasury print any more money, stock up on wheel barrows, you will need one to bring all that cash to the store and buy 1 loaf of bread, as inflation will soon run at levels only seen in Zimbabwe or Wiemar Germany.

Had another Good Fellas moment yesterday. Sold shorts into the early morning weakness, only failed to capitalize on the afternoon run up as I had mentioned yesterday morning. The stink was too great for me to bear and I chose to fight for neither side and remain on the sidelines. It should be a real snooze fest until the fed announcement, then fireworks either way.

Bad day for the Financials!

My hero Meredith Whitney, Finnie slayer extrodinaire, has an hour of face time on CNBC. Visions of Ken Lewis $BAC and Vik Pandit $C drinking copious ammounts of GREEN bleach!! Here is to a big gap down at the open, Thanks Meredith!

Erin go Bragh!

"May you be in heaven a half an hour before the devil knows you are dead"

Irish proverb



To all you barbarians and others not so blessed, it is your lucky day, because you are all Irish today! Tomorrow is a different story, so make the most of it. Amidst a holiday known in large part for imbibing and general frivolity, I cant help but think of the greatness of the simplest of folks(of every background) who crossed an ocean in steerage, armed with little more than a dream and made this country great. It gives me resolve in difficult times like out country now faces, to think such stock still runs through our national make up.

As I watched yesterdays positive open fade to red I could not help but feel like Ray Liota in Good Fellas. The scene where he is celebrating in the shower after learning of the success of the airport heist he had so meticulously planned. Alas 5 in a row was far too much to ask of a rally built on little more than a temporary oversold condition and fluff out of some miscreant financial CEO's. Eerily enough in the last 12 months we have had 2 other explosive rallies of 9%, in October and December, and both were stopped cold at the 30DMA, which is right about where yesterday's Bi@#$ slapping occurred. A healthy dose of down side follow through this morning and an intra day reversal to the upside would make me a very happy Leprechaun. Either way lets strive to pull profit from whatever the tape hands us today.

Off to drop a tough briny slab o beef in the pot for hours of simmering, add in some potatoes, and cabbage, and you have the food o the gods!

Chuck e Cheese

Took the little gladiator twins to Chuck e Cheese this weekend. They apparently had a good time. Strangely enough I seemed to be the only adult male or female not sporting a tattoo on his or hers neck or throat! There is a God however as I learned they served draught beer in hearty 16oz portions!

Fed Chairman Ben Bernanke conducted a rare interview on 60 Minutes last night, conducted himself admirably, and gave the impression of a steady hand at the wheel.

To the markets, a busy week ahead. Housing starts, PPI, CPI, and a Fed meeting, will drive the tape. More importantly is weather this recent bounce is the one, or just another failed bear market rally. Volume is the weapon of the Bull. In this recent advance, volume has been acceptable but not spectacular, and each day of the advance is on less volume than the last. An 8% rise on middling and declining volume, sparked by gauzy comments out of broken financials, inspires in me less and less desire to hold my dwindling long positions. Should we continue at this pace, we are just setting up the equity pins to be knocked down by the bears.

The most recent bear plunge that is seared into my memory is the Tech wreck of almost a decade ago now. This grueling event lasted a full 31 months, The basis of that sell off was essentially the bursting of an overheated tech/dot com bubble. This time around the underpinnings of the sell off, a real estate/banking/credit crash seem much more severe and we are only 18 months into this plunge. Either way it shouldn't matter as we always strive to fight on the winning side in this arena, but it is something to look out for.

Perhaps in honor of St. Patricks day, futures are looking very green this morning. Fading a Monday morning gap up on day five of a dubious stock advance... easier money than walking into a bank branch with a mask and a gun!

Is that the best you got?

Is that the best you got?

For all the bluster out of the Bull pen heralding the arrival of the bottom and the next big run up, DJIA + 3.91 pts or .06% , on substantially lower volume, is the best follow through we get? A tape where the high of the day is reached 20 minutes after the opening followed by aimless churning and a steep sell off into the close leaving us fractionally positive, is the validation? For all the failed long only "professional" money management types doing the bottom is in happy dance over the last few days, that was "IT" I think that Bruce Springsteen said it best in his 1980 album The River, I don't wanna fade away Oh I don't wanna fade away, but fade is exactly the order of for the day for this market. With numbers on Initial Jobless claims due out momentarily, and it is doubtful they will be benign, lest we get a Bernie Madoff conviction rally, or some fireworks out of the congressional hearings on Mark to market accounting, I predict pain, pain. I have gone longer over the past week, my inclination is to round up any profits on the long side, and leap back to the warm familiar embrace of the 3 bears. Here is to hoping I am wrong!

UPDATE 1 915 AM EST.....GE rallies on S&P downgrade, phew only to AA+, retail sales crushed, but less than expected and continuing un employment claims print a record high. This is starting to have all the hallmarks of a world class suckers rally, Treasury Secretary Geithner should announce resignation immediately if we want to have any hope of follow through.

Cry Havoc and let slip the dogs of war!

Cry "Havoc!" and let slip the dogs of war, That this foul deed shall smell above the earth ...


The lines above from Shakespeare's Julius Caesar sort of sums up how I feel in going very long and participating in the apparent rally we find ourselves in. However I think it is critical to enter the markets every day with the demeanor of a mercenary in the Belgian Congo, fight for the winning side. If you have taken even a passing glance at my earlier missives one might surmise that a) I am very doubtful :"the bottom" is in, and b)my admiration for the Big Red Frown(aka Citigroup) is somewhat lacking at this point. Ergo any rally led with the giddiness of pundits stepping to the plate and pointing to the left field bleachers, and worse by piles of headlines proclaiming roughly "Citigroup chief says all is well......back in the water kids", I am going to have a hard time with. That said we are coming off of deeply oversold conditions by any measure, and god knows we have rallied on worse. Remember the "Tim Geithner" rally commencing late on Friday the 21st of November of last year. That now comical moon shot gave us a gain top to bottom of over 20%. Some technicians would say that qualified as a new bull market. We know how that ended. Chatter regarding the re reinstatement of the up tick rule is little more than face time for the cameras for Rep Barney Frank. Pricing in decimals and the explosion of ECN's really negate any lasting practical effect it will have.

Futures looking decidedly green this morning, let us see if we can get some follow through here. I would love to think I could take my eyes off of the screen for a few blessed moments and let leveraged long positions ride for a bit. Here is to fighting for the winning side!

Death Star

Amongst the biggest of the awful ironies of the current financial crisis we find ourselves in is the case of Citigroup aka Shi#*%Group, or the big red frown. Repeated, earnest, and desperate attempts are being made to save this august(cough, cough) financial institution. My rough cocktail napkin figures put the taxpayer dollars sunk into $C currently at approximately $45,000,000,000, yes that is BEEElion with a B. The wire services are reporting early this morn that Vic Pandit is now Confident on capital strength! I would like to thank god for small miracles, but similiar assurances out of AIG(death star twin) keep coming to mind

What is so ironic is that prior to the current calamity, a long list of state and federal regulatory and compliance organizations were going to great lengths to punish, fine, censure and otherwise slap a newspaper across the nose of Citigroup. Do Enron, Worldcom, research scandals, or Jack Grubman ring a bell? How about the "Dr Evil" bond traders, this is where a handful of Citigroup bond traders manipulated/crashed the Euro bond markets for some monumentally small(read chump change) amount of profit. The Japanese government revoked the charter and of and ejected the Citigroup private bank from the country for various and sundry regulatory and compliance scandals. How about the Federal Reserve barring Citigroup from any acquisitions or deals, until they cleaned up there morally handicapped outfit.The very reason that the much maligned Chuck Prince, the career attorney and corporate counsel was installed as CEO was to clean up all the legal mess and save C from corporate capital punishment. I don't think I have the band with to detail all the various transgressions. Yet as of this writing round the clock efforts are being made to save this Firm! The irony is almost too rich for words.

Futures pointed decidedly positive this morning, perhaps this is the start of the much heralded rally. God knows I cherish the thought of luxuriating in the pleasures of $SSO for more than a morning, I am just cautious to bearish about the viability of any sustained rally at this point. Stay nimble and lets carve some profits out of the market we have, not the one we want.

Nice Bottom.....NOT!

Sorry Sports fans, but in the humble opinion of this simple country speculator, the bottom is definitely not in. As ugly, and at times physically painful as it is to see the beloved markets plumbing such ghastly depths, the sentiment is far too giddy and hopeful for any meaningful bottom. One market economist from a respectable enough investment house had quite a run on the cable outlets calling the bottom last November. CNBC even named it after him, and tracked the Google rankings. Alas the market violated his bottom in a fashion that would make a mother cringe and look away. Strange, we hear much less from him now. Notable short sellers have now taken up the task, some even calling it to within a 48 hour window! For what it is worth the bottom will come when all the breathless anticipation is nonexistent. We will bottom when the sirens on the cable networks stop looking for it, and announcing that we are off our worst levels of the day. We will have a bottom six or seven months after retching at how ugly the tape is, gives way to dry heaves and ultimately the very sore stomach of apathy. A couple months after no one cares anymore is when it usually happens. Till then, embrace this volatility.

We might get a welcomed bounce this coming week. Behold the thermo nuclear weapon of the bull camp, suspension of mark to market accounting. Our feckless leaders on capitol hill will be mugging for camera time whilst supposedly pondering the idea of letting our nations banks and investment houses mark to fantasy, balance sheets groaning under the weight of worthless assets. The mere suggestion should give us some upward momentum. Actually suspend or alter FA SB 157, SHAZAM, 2000 DOW points before you can even max out your margin account buying a 3X leverege financial ETF, helooooo $FAS! Stay nimble and lets see if we can carve some more profits out of the market we have.