Thursday, January 21, 2010

Do you believe Jamie Dimon and Lloyd Blankfine?

JPM and Goldman Sachs are insolvent when only realistic spreads for illiquid derivative obligations are taken into account...if they actually had to liquidate their derivatives portfolio there would likely be a 12 to 20% hit to the values presuming that the contracts are currently marked properly - which they are not. Keep in mind that when you liquidate long dated or out of the money equity options where there is not a lot of liquidity you can easily take a 5 to 7% hit based on the real market spread vs the modeled one. Imagine, the risk with something that people can't even value properly? Please read my other articles about derivatives. But ahh, what about that pesky counterparty risk?

This will not be a fun year for either firm...that's why they tried so hard to get the big bonuses last year. But Goldman Sachs holds derivative contracts at over 900 percent of its risk based capital...why worry about that when you run the treasury and fed.

Sell Signals on Daily Index

Wednesday, January 20, 2010

Updated Market

GREAT sell signals on the market this AM...

As of 12:00 this is the good bounce signals...predictive pivots point lower for the close

Update as of 12:50 Est:

Update as of 3:59 EST:

If anyone is interested...I would consider setting up an alert serivce based on the triggers in any of these charts...please let me know by contacting me through email or comments. If there is enough interest...I will put the work in or perhaps do a webinar type screen sharing session.

Looking for feedback...

Tuesday, January 19, 2010

Current Market Overview

Looks like one more push and then a roll over...should be a pretty good move. Predictive pivots in the indexes argue for selling into the close...These are indicated by the little Red lines on the right of each index. they are significantly below currnet prices...argues for downside this afternoon towards those levels... internal volume trends are not particularly good.

And here is the close: I posted the series of charts so you can see how well the systems track price...also the predictive pivots did indeed turn in to the magnet that I indicated above.

© 2009 m3, ltd. All rights reserved.