Just Thought You Should Know

Time to ‘Cover’ One of the

Biggest Trades of All Time

At the end of trading on Monday, Feb. 23, 2009, Robert Prechter closed the most successful trading recommendation of his 30-year career. His advice to “cover” the position came near the end of the trading day, when subscribers received the February 2009 issue of his Elliott Wave Theorist. This closed a “fully leveraged short position” he recommended to Theorist subscribers on July 17, 2007, when the S&P was at 1550. At the time of publication on Monday, Feb. 23, the S&P was trading below 750.

One measure of the value of this trade is the S&P mini futures contract, where each point is worth $50. A gain of 800 points on one contract equals $40,000; 10 contracts would be $400,000; 100 contracts $4 million. And so on.

A gain of 800 points in 19 months is a historical trade that, to our knowledge, has never happened before and might never happen again.

I took the liberty of looking at a S&P chart for you:

As you know C has been talking to the government.

The incoming chairman of Citigroup, Richard Parsons, showed up at the White House Monday, fueling talk that the federal government might take a massive ownership stake in the troubled banking behemoth.

Parsons’ appointment was to see Valerie Jarrett, one of President Barack Obama’s closest West Wing confidants.

Parsons got through the main gate a little before 6 p.m. A White House official confirmed the meeting but declined to offer details.

“He was here to meet with Valerie – something she often does with business leaders,” said the official.

News of Parsons’ White House visit started a buzz among financial services executives in Washington, where several said Monday night that they expected an announcement of a Citigroup deal as early as Tuesday. One executive told POLITICO that the White House is telling industry players that the Parsons visit is “a friendly meeting.”

The federal government is reportedly in talks to take as much as a 40 percent ownership stake in Citigroup, whose stock price has been battered by speculation that the government might seek to “nationalize” major banks to stabilize the financial services sector.

White House Press Secretary Robert Gibbs on Monday reiterated Obama’s belief in the importance of a privately held banking system – even as the Treasury Department signaled that it’s open to the kind of deal reportedly being discussed by Citi. A unusual joint statement by the Treasury Department, Federal Reserve and other regulators Monday also signaled the government’s willingness to do what’s needed to keep the nation’s banking system operating efficiently.

Parsons, the former head of Time Warner and one of the nation’s most prominent African-American businessmen, had been rumored as a possible pick for Commerce Secretary. But administration sources now say that job is likely to go to former Washington Gov. Gary Locke.