Barry Ritholz:

The bankruptcy report on Lehman is both revealing and damning. Once again, the investing public learns — after the fact — the basic truisms of modern markets:

-Major accounting firms are worthless to investors. They were either unable or unwilling to detect fraud amounting to 50 billion dollars. The incompetents at Ernst & Young deserve the same fiery death as Arthur Anderson; Whether they are hired guns or paid whores, they — like the rating agencies — are worthless to investors.

-Corporate management engages in fraud all too regularly: Am I reading this correctly — that Dick Fuld’s defense will be “I didn’t know that Lehman was a giant Ponzi scheme, and I was unaware we were hiding billions in bad debt and leverage off balance sheet?”

Based on the release of the bankruptcy court report, LEH was technically insolvent perhaps years before it collapsed;

-The Shortsellers turn out to be the good guys. Consider the absurdity fraud of “protecting” the bankster frauds — fromt he truth, as revelaed by Einhorn et. al.

-The SEC is utterly incapable of comprehending how markets function. They believe the criminals who commit the fraud, and  ignore the whistleblowers who uncover it;

-The ban on short selling is an indictment of the inability of the SEC to understand WTF is going on, and a reward tot he criminal corporate management teams;

-The Media did a terrible job uncovering the fraud as well. Some media folk were used by CEOs. Some of the TV press who relied on access to their subjects, actually rallied to the defense of these CEOs, including Fuld, and trashed the short sellers. Most notably Charlie Gasparino from his CNBC days, but their were others as well.

-The Analyst community, for the most part, failed as well.  The few who publicly acknowledged the debacle were notable for being so far outside of the herd. 95% of them were wrong.

Pathetic

All in all, the entire system failed. The situation is utterly disgusting, and if the investing public pulls its money out of the completely corrupt public markets for a generation or more, it would not surprise me . . .

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I think it’s utter fucking horse that the baby boomers got to spend the bulk of their working years stockpiling assets on leverage and artificially low rates and I get to “enjoy” the bulk of my working years “shoveling worthless dollars into a chinese incinerator.”

Has anyone noticed that the huge ticker of the dow on CNBS has been in green font, even when trading lower?  Since it’s clearly no accident, the question is why?  I mean, I get their m.o., but at the same time, I don’t.  Does green make me incrementally more positive on the whole market, or even specific stocks?  It’s fucking ludicrous.  It’s ostentatious.  It’s CNBC.  That’s a good slogan, btw, take it, pro bono.

What other subliminal messages do they throw at us?  I mean, if it’s going to be be green font on down days, why not a pie in the face to any guest who doesn’t agree with what MCC tits are saying?

And this begs the question…what if St. Patty’s day is a down day?  Can COMCAST implement a mandatory green tie policy?  That would make me ridiculously bullish.

In my very first “Rip or Explode” post, I cited Dr Pepper Snapple Group Inc. (DPS: 35.83 +2.52%) as a stock that worked well, we just missed the entry.

Today DPS showed up on my scan again:

This is a textbook example of what I like to see out of the “Rip or Explode” scan that I post, and quite a few end up exhibiting similar momentum.  The challenge is twofold: get the right stock, and manage the exit.  Had I entered on the first entry (which is what I prefer), there’s no telling I would have held this long.  This is why to capture to extra momentum, you would want to set a trailing stop.  I sell automatically when I’m up 15-25% percent, but depending on the size of the position, I will trail with a stop, and you can see why.

Take (HSNI: 29.56 +0.54%) , highlighted in the same post as DPS, except that this one did have a valid entry:

And look at it now, up 33% from entry in less than 2 weeks:

This is what you most ideally want to see from the list.

Now, compare this to some other picks from last week:

Greenlight Capital Re, Ltd. (GLRE: 25.085 +0.10%) : Still above support so I’m giving it a chance, but the stop is tighter because based on pattern it should be popping here.

(AHD: 6.5899 +1.07%) : This stock had strong resistance at 7:30 which it could not break.  The selling has been light on this pullback, but like GLRE, when a stock doesn’t fit to the pattern you have to be cautious.

Crosstex Energy, Inc. (XTXI: 9.10 +1.00%) : This one looks better than AHD to me, but they are both in similar patters in the same sector, so they will probably trade the same.

All of these stocks are slightly weaker than I like them, but still in their uptrend.  Since the market is overbought and these stocks have underperformed over this time, you would expect them show what they’re made of now, or they will sell-off.

XTXI and AHD are still up from entry, while (LIWA: 9.04 -1.09%) and GLRE are down a couple percent from entry.

All told, the small gains and losses on these so-far “failed” trades is +/- 0-8%, compared with gains of +20% on the winners.

First, and update on recent Rip or Explode picks:

Stops are tighter and two are at breakeven.

I’ve decided to change the format of this.  Rather than track the stocks in a spreadsheet like the one above, I’m just going to list more stocks that pop up on the screen.  The spreadsheet reflected a portfolio dedicated to the scan.  Therefore, that list was a secondary parsing as to what I thought were the best setups.  Instead, I’ll just offer a wider array of stocks.

(YUII: 9.743 -1.49%) , which was on the list already but I was sold, (WILC: 6.11 +0.99%) , and (SLK: 0.00 N/A) are my favorites after a quick glance.

But there’s also

(RST: 25.95 -0.15%) , Ruby Tuesday, Inc. (RT: 10.57 -0.38%) , Sonic Corporation (SONC: 10.97 +4.58%) , (MAPP: 15.99 +0.06%) , Brunswick Corporation (BC: 15.87 +1.93%) , Skechers USA, Inc. (SKX: 33.97 +1.13%) , Force Protection, Inc. (FRPT: 6.40 -0.93%) , Boise Inc. (BZ: 5.66 +3.66%) , and (SYZ: 0.00 N/A) that may be worth browsing.

I lot of the breakouts from yesterdays scan (not posted) ended up reversing today, with only about 33% moving higher today.  It appears that short term momentum is waning/reversing, so while it makes sense to watch these stocks, I am not taking a position in any of today’s selections.