Joined Jan 1, 1970
509 Blog Posts

Short China (Again)

With civil unrest breaking out all across China, due to this current “crisis of capitalism”, I decided to bottom fish AND profit from the riot hub of China, Guangdong Province, as distasteful as that might sound.

From toys, to textiles, to furniture and footwear, factories and plants are being closed across the region.

Bought 8,000 FXP @ $38.47

Some 40 million Chinese are expected to lose their jobs. While that is a low percentage compared to the total population, you have to consider the effects of 40 million people hanging around the street corners, bumming cigarettes and asking to wash the windshield of your rickshaw.

Even the Communist Party officials are preparing for “mass-scale social turmoil”. All this will put a dent in the “Chinese growth story”.

China is now the U.S. of the 1930’s. The global depression will be complete.

Read more about our most egregious times…(here).

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Christmas Shopping and Bottom Fishing

‘Tis the season to be jolly, and if you have it, spread some cheer and greenbacks.

Just realize that I’ve been extremely busy trying to plan the gifts (not presents) I will be giving in three days hence. For those uninformed, there’s a difference between a present and a gift.

A present is an item or trinket that you buy for another person. It is common, ordinary. Usually, it requires little thought. It’s easy, simple, generic.

On the other hand, a gift is much more personal. It carries with it, some sort of significance to the person receiving it. Gifts are personal and require the giver to think about, reflect on and take great care and consideration as to the recipient and how the gift would fit that person like a glove. Gifts are what a person truly wants or needs. Hence, they are timely, thoughtful and illicit that “wow” response.

Betwixt my forays into expensive stores, I did manage to do some bottom fishing today, buying:

95,000 COMS @ $2.20

105,000 Q @ $3.07

84,000 AAI @ $4.39

See, I’m not messing around. Despite the gloominess in the markets, ’tis the season to celebrate light and life. I’m betting on a benevolent rally that will be good to orphaned stocks, beaten up and downtrodden.

There is still hope, even for the downcast.

I also plan to donate 10% of any profits on these trades to various charities that help the hungry, the poor and the oppressed. That’s the least I can do to express my thanks and gratitude for life, family and friends.


UPDATE: Back again from shopping…. my trader also informed me that I also bought 9,100 shares of INT @ $34.25 today, as my buy price did get triggered.

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The DevilDog Depression of 1873 – 1896

Since DD raised the question, I thought it would be worth a few minutes of my time to see what in the blue blazes our resident bear and doom-and-gloomer was trying to communicate when he replied to my post on “Setting Up for A Shakeout?”, by retorting, “What happened in 1873?”

This from Wikipedia:

” The Long Depression (1873–1896) affected much of the world and was contemporary with the Second Industrial Revolution. At the time it was regarded as the Great Depression, remaining so until the Great Depression occurred in the 1930s. It was most notable in Western Europe and North America, but this is in part because reliable data from the period is most readily available in those parts of the world. The United Kingdom is often considered to have been the hardest hit by the Long Depression, and during this period it lost much of its large industrial lead over the economies of Continental Europe. The Depression is usually believed to have ended by 1897. The global economy grew at an impressive rate from that year to the start of World War I.”

The Panic of 1873 was the start of the Long Depression, a severe nationwide economic depression in the United States that lasted until 1879. It was precipitated by the bankruptcy of the Philadelphia banking firm Jay Cooke on September 18, 1873, following the crash on May 9, 1873 of the Vienna Stock Exchange in Austria (the so-called Gründerkrach or “founders’ crash”).

On September 19, 1873, a great crash ensued on Wall Street, which ushered in the Panic of 1873. During this period, credit was impaired, and many banks and financial institutions were forced into bankruptcy.

All this sounds eerily familiar.

Speaking of bankruptcy, there are now 25 banks that appear on this year’s FDIC’s “Failed Bank List”. In 2007, there were only 3 banks that failed. Before that, there were only four bank failures, which happened in 2004.

With this year’s number only sitting at 25, I’m afraid that we’re only getting started.

Will we get a repeat of DevilDog’s most favorite time in American history?

Stay tuned…..I’m sure he’ll let us know.

Oh yeah, I almost forgot….”new lows this month!”

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Setting Up for a Shakeout?

Check out SPY:

A shakeout occurs when a stock makes a double top, breaks a double bottom, and then reverses back up. When the stock breaks a triple top, the shakeout is completed. In the case of SPY, a double top has formed at 92. A double bottom break would occur below 86, at 85. The buy signal would be a reversal up to 88, and the shakeout would be completed at 93, thus paving the way for the assault on 100-plus, going into late December / early January.

It’s interesting to see a potential scenario like this unfold where the market pulls back over the next few days, shaking out the weak bulls, and then proceeds to sprint higher. This would be consistent with past history.

A market move of the magnitude like we saw yesterday, as a result of the Fed announcement, has happened four times since 1995. In every case, the market pulled back over the subsequent 1 – 4 days, holding it’s pre-announcement levels, then rallied up anywhere from several more weeks to several months.

Think I’m kidding? Look it up.

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This pic of Jimbo inspires me. No, really.

Despite my bearish overtones regarding the demise of the U.S. economy, the stock market, and an imminent Armageddon rising, I’m looking to go long on Wednesday morning for a short term trading foray. Yes, I am a capitalist, laughing at fear in it’s face while trying to coax more coin from my trading account.

Yeah, that’s right. You trade what is. We’ve established a near term bottom in the market, thanks to BooYah Ben’s bold and bodacious 75 bip move that sealed the deal today. I’m certain of it.

The depression has temporarily been put on hold. Sorry to make many of you worry unnecessarily. Just know that with every stupid government interventionist move, the severity of “El Depressionario” ratchets up another notch.

So, big picture, we’re still headed for disaster, but you can adeptly make money on the long side while the sun is briefly shining. Odd, no?

Thanks to the moon and it’s lunacy, we’re going to rally well into the New Year, with financials leading the way. Didn’t I say that before?

Tomorrow, assuming the market is up after all the gunslinging traders jockey for position, I’m looking to go long names like: XOM, PBR, CVX, BP, TOT, CVX and SLB, …maybe even some FXP to add some moxie to the mix.

Of course, such a reversal in short term sentiment wouldn’t be complete without helpings of BAC, MSFT, JNJ, and PG. My wife thinks I should buy LULU. What do you think?

This move to the long side of stocks is not to be confused with going all in, loading the boat and shoveling all cash into the blast furnace. Take advantage of the rally. But, trade with an ear to the ground and nose to the wind.

Have a great day and enjoy the scenery of your choosing.

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The Deflation Spiral Has Begun

Consumer prices dropped last month, the most since 1947. Yeah, much of it was due to energy prices spiraling down, but still…..

Deflation is a reality that is here and now. Look for consumer spending to continue to decline, as people favor saving money, rather than blowing it on worthless Chinese toys and Pet Rocks over the Christmas season.

The foreign markets continue to get the BRIC to the cranium, which shows just how far reaching this crisis has come. It was not too long ago that every other financial writer and blogger was expounding on and singing the praises of how all the emerging countries were going to “de-couple” from the U.S. due to their newly found prosperity. Yeah, right. And, just in case you didn’t realise [sic] it, trade activity can no longer be counted on to catapult U.S. activity forward.

As recently as last month, the IMF revised it’s forecast for a slowdown in global growth from 2.95%  to 2.2% for 2009. That might be optimistic. (By the way, the IMF stands for International Monetary Fund, not “Impossible Mission Force”). I say that because we know that the manufacturing sector is bad, but one only need look at the non-manufacturing numbers, to get a full flavor of how bad this is getting.

  Non-Manufacturing Manufacturing
Index Series
Direction Rate
NMI/PMI 37.3 44.4 -7.1 Contracting Faster 2 36.2 38.9 -2.7
Business Activity/Production 33.0 44.2 -11.2 Contracting Faster 2 31.5 34.1 -2.6
New Orders 35.4 44.0 -8.6 Contracting Faster 2 27.9 32.2 -4.3
Employment 31.3 41.5 -10.2 Contracting Faster 7 34.2 34.6 -0.4
Supplier Deliveries 49.5 48.0 +1.5 Faster Slower 2 48.4 49.2 -0.8
Inventories 46.0 48.0 -2.0 Contracting Faster 3 39.1 44.3 -5.2
Prices 36.6 53.4 -16.8 Decreasing From Increasing 1 25.5 37.0 -11.5
Backlog of Orders 39.5 44.0 -4.5 Contracting Faster 4 27.0 29.5 -2.5
New Export Orders 34.5 50.0 -15.5 Contracting From Unchanged 1 41.0 41.0 0.0
Imports 40.0 52.0 -12.0 Contracting From Growing 1 37.5 41.0 -3.5
Inventory Sentiment 65.0 67.5 -2.5 Too High Slower 138 N/A N/A N/A
Customers’ Inventories N/A N/A N/A N/A N/A N/A 55.0 55.0 0.0


Observe how the index of new export orders has collapsed from 50.0 in October, to 35.5 in November. In addition, imports are decreasing, AS ARE PRICES.

Deflation is here, as treasury bond prices have correctly predicted. A low interest rate policy by the Fed and fiscal authorities will hold levels here or lower. That means that bonds may continue perform well for an extended time. The stock market is toast.

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