Friday, July 30, 2010


Covered the remaining short hedged positions at 1085 on the ES. Presently, we are continuing to hold the hedges, which makes us long...for free.

Steve Meyers Interview - Interesting...

Dow Bear Flag completing...

For some perspective on the stock market, today's chart presents the Dow divided by the price of one ounce of gold. This results in what is referred to as the Dow / gold ratio or the cost of the Dow in ounces of gold. For example, it currently takes 9.0 ounces of gold to "buy the Dow." This is considerably less (80% less) than the 44.8 ounces it took to buy the Dow back in 1999. While the actual Dow currently trades significantly higher than its March 9, 2009 lows (currently up 60%), the most recent rally that occurred in the Dow priced in gold is fairly similar to several bear market rallies that have occurred since late 1999. It is also of interest that the Dow (priced in gold) is once again testing resistance of its accelerated downtrend.

Thursday, July 29, 2010

SSO Daily Swing Covers

Any unhedged short risk is now flat

Unhedged short risk...which reflects a few accounts -  flat now. 1110 to 1091 for ES...on this trade.

For the record, on a conservative (small position size) allocation basis accounts are up 10% for the month with the daily systems. On an aggressive basis, meaning larger risk allocations as a percentage of liquidity, live accounts are up over 30% for the month.

ES RVS Swing Shorts hedged up

We have now hedged up our short exposure and will hold these hedged positions short going forward.

TRN: Who regulates the regulators?

Look around the world. The Western world that is most influenced by US economic thought, right, the Brits, the Spanish, the Greeks, the Latvians, the Icelanders, they all had their own versions of this crisis, not driven by the US crisis, but driven by these perverse incentives that I've talked about and this belief that you didn't need to regulate or supervise. - William K Black

Market Comments

We covered most of our shorts today close to the 1099.5 level on the ES...and 647 TF is now flat from 667 also. Interestingly, the market may be postured for some upside probing...however the ES Swing system still has an open position an will look to add short if that is the case. All in all a very good day in a challenging environment. We are holding the remaining short as we close the books on a tremendous month.

Wednesday, July 28, 2010

Market Comments

Russell has been very strong as it is usually a good target for shorts in momentum moves and they have been getting smoked. The problem is that the Russell is very easy security to get burned with. We have seen it on this rise. The shorts got hammered so I was looking for capitulation. If you thought that 615 was a good short, then 630 seemed much better and finally 670 took you out - most likely a very damaging result.

Today struck me as a short capitulation day on the RUT especially for many reasons. The open sucked, so I shorted the TF and NQ  in a rare discretionary trade around the open. I covered that trade in the 663 area and am now left with the core short position. But what was interesting is that the leading index, (i.e. RUT) lagged big time today and its still lagging overnight. This is a classic capitulation setup. Strongest index at the open weakest at the close.

Matt Fraily/ sent me this chart which also shows a potential for a major turn on the Russell...I think this is an interesting chart...

Tuesday, July 27, 2010

SSO Daily Swing Goes Short

ES RVS Daily Swing Adds another position

Bank Earnings and Accounting Eccentricities...

"UBS rises on the SIX Swiss Exchange, having gained as much as 7.6% shortly after markets opened.
The bank's bottom line included a CHF595 million gain due to a fall in the market value of its own debt, compared to a CHF1.21 billion charge a year earlier."
There go the accounting rules again...I really like that rule as your financial condition deteriorates you make money because you are short your own debt.

Monday, July 26, 2010

Sunday, July 25, 2010

Green Derivatives...just the thing to "fuel inject" the economic engine of the US

WASHINGTON (MarketWatch) -- Green Exchange got its approval from federal futures regulators this week to launch a trading platform that will list contracts tied to credits and allowances for greenhouses gases. 
The Commodity Futures Trading Commission said Friday it had approved the exchange's application Thursday. The announcement of its approval comes just one day after U.S. Senate Democrats decided to table a climate-change bill. That bill would have helped spur a much larger derivatives market to help companies offset their carbon emissions. 
Green Exchange was introduced in 2007 under the New York Mercantile Exchange and a group of banks and brokerages. Its products have been listed at Nymex, which is now owned by CME Group (CME 286.56, +4.84, +1.72%) . The CFTC said those products will now be listed on Green Exchange, which will become a stand-alone entity. 
A spokesman for Green Exchange couldn't be immediately reached for comment.
"We think the Green Exchange has all the right elements to really compete in the marketplace, and achieving the milestone of this approval one of those elements," said Evan Ard, managing director of Evolution Markets, a founding member of the venture. "But there's still a lot of work to be done to effectively compete in the marketplace." 
The CFTC's approval of the Green Exchange now sets the stage for competition between CME and its major rival IntercontinentalExchange Inc. (ICE 108.36, +1.84, +1.73%) , which this year acquired the Climate Exchange PLC (CLE.LN) in a $597 million deal. 
ICE's acquisition will make it a dominant force in Europe's estimated EUR100 billion carbon market. The U.S. market is still quite small, although it has great potential to grow. Point Carbon, a consulting firm, expects the global carbon market to grow $170 billion this year. 
Both CME and ICE are targeting European and U.S. markets with their ventures. But Point Carbon estimated in March that 63% of the trading in the U.S. carbon market was done off-exchange. 
Without a climate-change bill, it could be challenging for both exchanges in the U.S. to build emissions-trading businesses. 
CFTC Commissioner Bart Chilton, who has been advocating for a climate-change bill that will help create a large carbon futures market, said Friday he hadn't lost hope despite the Senate's inaction. 
"There has been and will be green trading," Chilton said. "The question now is when we will get it together and do what needs to be done for our planet. The added benefit to doing the right thing environmentally is that it will fuel-inject the economic engine of our democracy--something last I checked, we sorely need."
 Well, posted this CFTC's Bart Chilton On Financial Reform, Position Limits, and Curbing 'Disruptive Practices' post. I have to tell you I gave Bart the benefit of the doubt in his statements and to make his case on the feeling was that he was pontificating horse manure. If there was one thing this Financial reform bill was not it is "Heroic". Nor is it particularly patriotic. There are some things that are certainly constructive in it, but not things that big players will not be able to bypass if they really want to - and I am sure they do and will!

However, Chilton sounded like a government lobbyist to the US public not an official protecting them. I do not discount that he may actually mean some or all of what he says...but he lost all credibility with this BS in the article above. The absolute last thing we need are super leveraged derivatives on more products that only exist in the minds of a few computers owned by Goldman and JPM and a few other inside players.

If we trade carbon offsets or derivatives based on them we are really amplifying the problem that exists in many of the commodity markets regarding physical commodity fraud. For example, Gold and Silver vehicles - ETF's and futures. The Gold and Silver backing them, either does not exist in amounts required or does not exist at all. But the elements Gold and Silver actually do exist as physically identifiable objects with which it is possible to validate collateral or discover fabrication.

Green products, however, are quite a different story.  Carbon offsets and carbon trading have NO practical accountability and do not physically exist in an easily verifiable way that is enforceable or manageable.  Therefore, they have no verifiable price. That does not make for a quality market and will further undermine the futures markets in general. Why else do you think Al Gore went to Goldman Tax with the idea? Fraud is a great business. These products are fraudulent from the outset. Is that what will really drive "...fuel injection in the US economic engine"? Why not trade Mel Gibson derivatives via ICE...ohh, I forgot, we already very nearly do that!

Chilton is just one of the crew, in my book and simply adds more evidence to the pool that usurps integrity in the, so called, "Financial Reform Bill".

Banks and Bailouts repaid ahead of schedule???

Well, that's what we are supposed to believe...perhaps we should examine where these guys are getting the money to repay early, and yet can pay bonuses exceeding their profits and additionally still pay for all their lobbyists and shenanigans.

Clue: As long as they don't really have to make the money, they can borrow it into existence and then repay the loan like magic...GM is a great and simple example of the complexity going on at Goldman and JPM and BAC and MS...while individuals continue to get bad press for paying one credit card with another worth only a fraction of these guys obfustations.
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