Stock Shotz

GOLDILOCK'S IS BEAUTIFUL

james@stockshotz.tv (Stock Shotz) — Thu, 03 Dec 2009 03:48:00 +0000

Have you ever seen a more PERFECT TIME to invest? Isn't Goldilocks beautiful? Is now the time to borrow a pile of money and invest in the stock market? Can you just throw a dart at a chart and buy the stock that it hits? This is pure insanity in the Mainstream Media. They would have you believe that everything is OK--or better than OK.

Did anyone notice that the price of copper is headed up at a rapid pace while the Bank of Japan is arranging for more short term financing, while the Dubai credit woes are fresh off the press? Does that bother anyone on the street other than me? My portfolio is telling me that I am the lone dumbass on the street.

I ask you the following:

1) If this is a great time to invest in US equities, why didn't we crank up the printing presses YEARS AGO? LOOK AT HOW PROSPEROUS WE COULD HAVE BEEN IF WE HAD BEEN PRINTING LONGER.

2) If the correlation between the fall of the dollar and the rise of the domestic equity markets can continue forever, how do I go about getting adopted by someone from Zimbabwe? There must be some rich jokers there.

3) If the smart money is "all in" equities, why is gold soaring and the bond market not getting smacked?

4) Did the banks really need all of the TARP money if they are repaying it so quickly? If they didn't really need it OR if things are so great and their balance sheets are totally repaired WHY ISN'T INFLATION NOT AN IMMEDIATE CONCERN?

5) If all of this liquidity is really so great over the long haul, wouldn't SOCIALISM BE MORE PROSPEROUS THAN CAPITALISM.

I argue that the phenomenons that we are seeing in the markets are PURELY SHORT TERM AND THE MEDICINE WE HAVE TO TAKE WHEN THEY CORRECT IS GOING TO BE BITTER.

Where's Warren?

james@stockshotz.tv (Stock Shotz) — Sun, 29 Nov 2009 16:14:00 +0000

The last time that it really looked like the averages were going to roll over, Warren Buffett stepped up to the plate with his purchase of Burlington Northern and injected confidence that kept the rally in place. Now with the crisis in Dubai will the markets roll over or will we have some confidence booster that sends the rally higher? Before we answer that question, lets first analyze Buffett's bet.

Buffett said he was betting on America with this play. Now before I go into this analysis, let me state that I love my country and my analysis has only to do with what I SEE happening not what I WANT to happen. Was Buffett betting on the return of our economy or was he getting dual bang for his buck, by betting on coal and propping up other investments with his rally cry? I am of the opinion that Warren's bet was more a play on the fall of the dollar than anything else. Was he betting that coal was the only reliable source of energy that we will be able to afford? Was he betting that Congress is going to continue to push for protectionist measures and that coal would be a great play on those policies? Does Buffett understand that the American consumer still wants to buy, but the American voter is becoming more slanted toward entitlements? Does he know that the best place for a borrow and spend economy to get its energy will be internally? What do rails haul? A LOT OF THEIR REVENUE COMES FROM TRANSPORTING THE VERY THING THAT FIRES MANY OF THEIR ENGINES===COAL. So you get paid to haul what becomes not only the cheapest source of energy but perhaps one of two only affordable sources---with natural gas being the other.

Now one might argue that if my thesis is correct, why Buffett didn't bet on natural gas. It is cleaner, and we all know that "greener" is better, right. To that argument, I would question where the All-American bet would have been. There was no single investment that would have been as a diverse bet as the rails in the natural gas space. The old saying that "transports lead us out of a recession" may very well be seen again. I think right now after all the hype, I will let those smarter than myself chase the rails. As for Buffett's bet, I think he may have made a good one--albeit for different reasons that were hyped by the mainstream media.

I personally think that I may take a look at the natural gas transporters such as MMP as a way to play this economic environment. I clarify that statement by saying I am going to be very watchful as to the overall direction of the market before I commit any new "bullish" capital. I am currently holding FAZ, SDS, FCX. As always that is subject to change rapidly.

We have plugged disqus into our comment section to allow for multiple comments in a user friendly format. I challenge you to comment on the following questions as we think they are important to the overall picture. We believe that we learn from the thoughts of others and value reader input. We will NEVER sell or otherwise release your email address.

View the following SLIDESHOW FROM CNBC ON THE WORLDS LARGEST DEBTOR NATIONS

Given the other nations that are far ahead of us on a percentage of GDP basis, is the debasement of the dollar overdone?

Is the fall of the dollar in anticipation that this government will push us farther up the list?

Given the other countries on the list, is a major correction for the EUR/USD eminent?

Has the last 15% rally in the major averages been attributable to the fall of the dollar and if so, how far will the correction in the averages be if the dollar rallies significantly?

Will Santa Claus deliver one of the greatest December declines in history in 2009?

LET US HEAR YOUR THOUGHTS!

We will have more tonight!!!!

Futures Heading Higher

james@stockshotz.tv (Stock Shotz) — Mon, 16 Nov 2009 12:29:00 +0000

All I can thing of right now is the saying "The Markets can stay irrational longer than many investors can stay solvent" We are shrugging off massive debt, massive trade deficits and look to run even higher. The dollar continues to fall and the consensus seems to be that the entire world will use the lower dollar to bet the U.S. stock market. I am afraid that we are missing the boat and are in for some downside pressure. I just wonder how long I can stay solvent in the face of this "everything is wonderful" scenario.

No one seems to be worried that the farther the dollar falls, the more expensive our debt will really become (as foreign investors will require higher rates). Of course according to the markets action lately, having the Federal Reserve monetize the debt has worked really well---but we all know that is not healthy. Right now it seems like our economy is smoking cigarettes, drinking heavily, not exercising, eating pure fat, and GETTING GREAT CHECKUPS FROM DR MARKET. GO FIGURE

I do understand that the appetite for mergers is good for the markets and we have seen signs of that appetite being revived. Have you asked yourself the questions "where would we be had Buffett not decided to buy Burlington"? It seemed to me that the markets were headed down technically until the Buffett/Burlington announcement.

How can long can the Federal Reserve maintain that inflation is at bay with oil, gold, copper, corn headed much higher? We are drowning in liquidity and are choosing to look at it like "Goldilocks". The Fed should come out IMMEDIATELY AND ANNOUNCE A HALF POINT EMERGENCY RATE INCREASE. We need to curb this liquidity and curb it now. Such an announcement would strengthen the dollar and put us mentally in a much better position to combat inflation. If you read my blog about a year ago, I was arguing that the toughest thing to do would be to reign in the monetary supply while the economy was still struggling. If we don't do it now, we are headed for some massive pain on the inflation front and we all know that it is very difficult to deal with once it begins to spiral out of control. Bernanke and the Fed must believe that they can put the brakes on liquidity through open market operations at a rate faster than ever before. I don't see how, but they must have that confidence.

It shall be interesting to see where we head from here, but the futures are telling me that I will continue to be wrong at least for today.

ALL ABOUT THE DOLLAR?

james@stockshotz.tv (Stock Shotz) — Fri, 13 Nov 2009 03:08:00 +0000

Many keep arguing that the main reason for the appreciation equities is the falling dollar. How long can that continue? Treasury Secretary Geithner said that we are committed to a strong dollar. Can it be achieved? We all know that we need the dollar to be strong but can it recover?

The futures are higher this morning on the back of the statement that the Euro Zone is officially out of the recession. Due to exports, they grew in the 3rd quarter. So is it all over? Are we back in the bull market for good? First, I don't put much stock in these numbers because of the massive worldwide stimulus. If it was this easy to come out of a recession, why don't we just print the heck out of money all of the time?

Lets take a look at what is driving the currencies. The dollar is falling because of the debt and the very low interest rates in the U.S. So if other countries grow faster and raise rates, will the dollar continue to fall? It could. So we just need to get Ben Bernanke to go ahead and raise rates now? Can we or would that send the economy back into a tailspin and prompt more stimulus and increase the deficit?

My simple point is this---I don't think that we can see the dollar's fall as good for much longer. The steps necessary to strengthen the dollar will bring more pain for our economy. SO ALL OF THE CURRENT EUPHORIA IS NOT WARRANTED AND WE WILL SEE SOME DOWNWARD PRESSURE ON STOCKS.

I have been wrong thus far, but still believe a retest of the March 2009 lows is not out of the question.

The Fall of the Dollar

james@stockshotz.tv (Stock Shotz) — Wed, 11 Nov 2009 03:32:00 +0000

Those of you that have followed my blog for a while know that I will admit when I am wrong. I have missed on the recent strength of the U.S. Markets. I believe that it has a lot to do with the constant decline of the dollar. I will have short posts over the next few days due to a death in the family.

Watch this vid on the dollar and check back soon!!!

House of Cards 2.0

james@stockshotz.tv (Stock Shotz) — Sun, 08 Nov 2009 18:40:00 +0000

Did this market seem resilient this week or what? I must admit that I was surprised, but the lack of volume on Friday made me think I had forgotten about a holiday. At the risk of sounding redundant, lets go back and look at the GDP report and the FOMC statement. Is the FOMC in a corner? Was GDP really as good as was reported? If so, is it sustainable? Further, can the number be manipulated? How far can the GDP be moved by a small change in the deflator?

I submit that the GDP number was grossly overstated AND that the FOMC has painted itself into a corner. Now I am just a simple man, but didn't it sound like the FOMC said the economy is growing again, but inflation is off of the radar screen and we have no plans to raise rates in the near future? That was my interpretation. Isn't that like the weatherman who forecasts "Tomorrow will be clear to partly cloudy with a chance of rain"? If the GDP number is so improved, why would we not pull back on the debt purchased by the Fed? Wouldn't it be necessary to start moving toward neutral with money being injected into the economy? Aren't we monetizing our own debt when the Fed makes purchases now?

Don't most of us learn in Economics 101 that you can't create something out of thin air? Let me ask how, with unemployment over 10% and the worked hours still at the lows, we are expecting the consumer to rebound or even stabilize. Oh, I admit that it is great to hear earnings reports that "beat", but weren't expectations so low that beats should have been baked into the cake. And there is little correlation at this point between better than expected earnings. As a matter of fact, I would argue that more companies had better than expected earnings than had better than expected SALES. Better than expected earnings often come as a result of LABOR REDUCTIONS that outpace a decline in sales. But next could come the drop in sales as the consumer feels the heat of the extended unemployment.

The FOMC would have you believe that everything is fine, we have been through this before and have the road map to guarantee recover. We most certainly have NOT been here before! Never before have we seen our government take on this much debt---even to the point that we monetize it ourselves at an unbelievable pace. Two years ago, we lovingly had the term "Merger Monday" as things were great and deals went down on the weekend. Now we have shifted gears and have FAILURE FRIDAY, as we seem to have more financial institutions close every week.

How many of us expect the MAINSTREAM MEDIA to tell us the full story? Not this guy. Remember they make their money through advertisements. Their employees understand simple economics---consumer panic equals less advertising dollars which could mean the elimination of their jobs. So the MM will go out a find a number of so called "experts" to parade into our homes and tell us that "unemployment is a lagging indicator". That everything is fine and the natural progression from increased GDP is to a longer workweek and job creation. NOT THIS TIME I SAY. I wish it were that simple.

The FOMC says rates will remain low for an extended period of time. Do they have that much control? Anyone notice that the dollar has been falling? Can rates stay low if the dollar continues to fall? Doesn't a falling dollar mean inflation? So is the FOMC arguing that THIS TIME we will fight inflation with low interest rates? Is the Fed planning to quick injecting money into the system to combat inflation? Not according to their most recent statement. Have you heard the mainstream media analyze this predicament over the past few weeks or days? Should FOMC Chairman have had a "chat" with Speaker Pelosi before she passed nationalization of 18% of our economy equating to MORE FEDERAL DOLLARS being injected into the system. Is there anyone out there that REALLY believes that this healthcare bill will REDUCE THE DEFICIT? So if it increases the deficit and the FOMC is not worried about inflation, are we fighting inflation with higher deficits? If you could spend yourself to prosperity wouldn't everyone be rich?

How can we expect the creation of this nanny state to improve our economic situation. If we were really improving our economy, as the recent reports would have you believe, wouldn't productivity be increasing? Is there anyone out there that believes this nanny state will IMPROVE PRODUCTIVITY? IT WILL SLAM PRODUCTIVITY. The only shortage we will not have is people wanting something for nothing. When fewer make, yet more consume, doesn't the family's productivity decline. YOU BET.

We just thought the subprime mess was a house of cards. Remember when we first hear the term "subprime crisis" how many downplayed the effects. Remember all of those brokers and analysts that appeared on MM shows and ran through the drill that the company would be worth X even if you subtracted all subprime investments (then they assured you how "all would not be lost"). So are you willing to listen to that same endless parade of participants that told you it wasn't that bad===all over again? I am not. Are these not the same people that are out there trying to convince you that the housing market is rebounding. If it is rebounding why is the government extending the home buying credits? Wouldn't that be stupid in the face of inflation? Wait, are you telling me that we are combating inflation with homebuyer tax credits?

Subprime and the investment banking house of cards was JUST THE FIRST PART OF THIS CRISIS. Now we are faced with unemployment, continued real esate decline---both commercial and residential (with the major effects from the commercial downturn on the horizon). Instead of letting the free markets work like we did for the first couple hundred years of our existence, we have decided that we can't have normal corrections and must "intervene". You can't mess with free markets and when you "intervene" you only cause bubbles that WILL BURST IN THE FUTURE. The scary thing is that this time bubbles may not feel like bubbles. This time the bubbles that we are creating may feel like recession. And when they burst we may well get the longest depression in history. Believe me, the Greenspan era was dominated by bubbles and when subprime hit many months back many analyst said we had to quit living in "excesses". What will be the new definition of "excesses" Last time it was designer clothes, luxury vehicles, and other amenities. This time will it be household electricity, clean water, and routine medications? If we continue down this path it well could be.

I am interested to see how the futures traders view the bill that was passed last night. I think tomorrow could be a 5% or more down day for the markets, but we will reserve judgement until we see how the futures traders and those "across the pond" decide to open things in a few hours. For now, I am very happy that I entered the weekend net short!!!

SOCIALISM, FASCISM OR JUST TOO MUCH REGULATION?

james@stockshotz.tv (Stock Shotz) — Sat, 07 Nov 2009 15:18:00 +0000

BREAKING NEWS===HOUSE PASSES HEALTHCARE BILL. 1929 MAY BE MILD COMPARED TO WHAT WE ARE ABOUT TO FACE. THE BELOW ARTICLE WAS WRITTEN THIS MORNING BEFORE THE PASSASGE OF THE HORRIFIC BILL.

MAKE YOUR COMMENTS BELOW===WE WILL NEVER RELEASE YOUR EMAIL ADDRESS

I have written several articles about the recent move toward what I referred to as socialism only to have some "expert" come back and give me the technical definition of socialism, fascism, or some other "ism". Now truth be known I am an investor and could care less about the technical definitions. I am simply trying to make money in the markets, and many critics stop by to inject their political views.

Regardless of what you would like to term it, our government is increasing regulations in many industries and that is never good for the long term health of the markets. Now before you rush to send me a heated email saying how regulation could have prevented the banking crisis last year---keep reading. Consider how regulation is generally a "pendulum" that swings too far. The Community Reinvestment Act was partly at fault for the banking crisis last year. ANYTIME Government mandates that private business make loans to certain individuals it is a recipe for disaster.

The current healthcare debate from a financial perspective is many, many times worse for our economy. This bill could truly bankrupt our country. Six years ago, as the CEO of a company with over 250 employees I was faced with increasing cost of employee health insurance. Rates for my company had jumped double digits in the previous two years and I was very concerned. In exploring every option, I received advice from an expert to increase my deductible and copays on prescription medications modestly. Our plan structure before had no deductible and copays for medications of $5, $10, and $20 for a 30 day supply. Simply by adding a $150 deductible (very reasonable as the average hourly wage at our firm was around $18) we found that utilization was reduced tremendously. Why? Because at such low rates consumers have very little "personal responsibility" in the consumption decision. Did such a deductible deny anyone life-saving medication? NO WAY!

So consider the quagmire that any public option will create for the economy. If the government does not limit consumption, you can be GUARANTEED that they have underestimated utilization in the cost of the bill. If they do limit consumption THEY ARE TAKING YET ANOTHER STEP IN LIMITING FREEDOM. Now again, I know all of the counter arguments. Many will argue that private insurance companies are making life or death decisions when they make payment determinations and are in fact limiting freedoms now. But consider this, remember several years ago when HMO's were going to be the greatest money saving instrument in the healthcare arena. The basis of the HMO concept was to have the primary care physician "quarterback" the patients care by authorizing visits to specialists. HMO rates were much more favorable than traditional rates for the end consumer. What happened? Many consumers decided they wanted to pay more for traditional care and now some HMOs exist, but they do not dominate the marketplace. That is the beauty of the free market system, consumers get what they are willing to pay for.

So what happens if the government option offers lower copays and rates than private insurance? Another government monopoly. Oh it sounds great to have this fine plan available to everyone. And when the competition is gone what will happen to the government plan? It will either bankrupt the government or be able to quickly take action to LIMIT CONSUMPTION. EITHER WILL BE AWFUL IF NOT FATAL TO OUR ECONOMY---NOT TO MENTION THE PERSONAL FREEDOMS THAT OUR COUNTRY WAS FOUNDED UPON.

So I am the one sounding political you say? I am analyzing my next move in the market if this legislation passes this weekend. Will it end the rally, or will it cause the rally to ignite because of concerns over the weak dollar? GIVE US YOUR THOUGHTS IN THE COMMENTS SECTION!!!!!!!!

I submit that this rally began as a bear market rally and has extended of late as the weak dollar has made equities cheaper abroad. Yes it has made the earnings of our companies abroad much more valuable, but that can't last forever. While it will be a topic for a more detailed post---there is a point of diminishing return with a cheaper currency and believe me this "honeymoon phase" that we are in with the weaker dollar will come to a screeching halt soon.

Yes GDP technically grew and consumer confidence is up. Many will argue that when GDP begins to grow it signals that things are better and unemployment rates are naturally a laggard---so not to worry. But the pillar of that thesis HAS TO BE THAT GDP GROWS FAST ENOUGH TO CREATE MEANINGFUL, SUSTAINABLE JOBS. We have been propped up by the falling dollar, massive government stimulus (cash for clunkers, housing tax credits), ridiculous bailouts that have all but altered the safety of our system know as contract law. You tell me, how many things mentioned are realistically still in the governments arsenal if they need to be repeated? What will happen to the dollar if we come back to the GIMME TABLE AND START OVER WITH THE BAILOUTS AND HANDOUTS? The answer lies in the recent dollar movement DOWNWARD. Downward enough where we are guaranteed to hit the point of diminishing return. The point where inflation hits, jobs produce much less disposable income AND ARE HARDER TO CREATE.

Is it 1929 all over again? Honestly, I despise comparisons of that nature. They are tough to substantiate. What I do know is that we are in a very difficult spot and while many positively refer to this healthcare legislation as "historic", I am afraid that its economic impact on our future generations will be more accurately termed as "bankrupt". I am certainly not advocating wildly shorting everything, as there are many sectors that will benefit over the short run if this legislation passes. I do however think that we are going to see many volatile trading days ahead and while many of my peers are hanging in with a long bias, I have a short bias and am patiently waiting for those bets to pay off.

Crisis Over===OR JUST BEGINNING

james@stockshotz.tv (Stock Shotz) — Wed, 04 Nov 2009 02:07:00 +0000

THE MONEY MULTIPLIER CONTINUES TO MAKE NEW LOWS. Take a look at the chart below.

Let me tell you what puzzles me about this chart. We have had unprecedented government borrowing and stimulus, yet the money multiplier is as Dennis Gartman would say is "Moving from the upper left to the lower right" Wouldn't conventional wisdom tell us that for the economy to get going again the money multiplier would have to increase? The shaded bars depict the recessions we have seen during the given time period. Note that as we came out of the recession period the multiplier stabilized, but never really seemed to assume a bullish pattern. Yet didn't the economy resume bullish activity?

So the question is how did the economy begin churning again with the money multiplier stagnant.

What role did credit play with respect to the money multiplier? We know that the U.S. consumer relied heavily on credit during the time period. But wouldn't overly accessible credit have increased the money multiplier?

Would the dovish monetary policy of the Greenspan era have had any impact on the multiplier? Many would argue that the dovish policy would have increased the money multiplier--but did it? So if Greenspan was truly creating a "bubble" as many have argued then wouldn't the multiplier have increased?

Take a look at the steep drop in the multiplier recently. That is the point that many pundits, including many that appeared on our show argued that the credit was destroyed and deflation set in. I believe that assessment is right, but according to the experts we have fixed the financial system. So the money multiplier should be increasing? Right? But it is not.

Many would argue that this time is no different---we came out of recessions with no increase in the money supply before and we will do it again. I DISAGREE!!!! There are those who would argue that we have always used debt and that we are intelligently utilizing debt over the short run. I DISAGREE!!!! Why is this time different you ask? Let me make this point. Companies use debt because they believe that they can earn a greater return on the debt than they will have to pay. It is that simple. So why would the government borrow money? To get the economy going again? It is that simple. BUT THE MONEY MULTIPLIER IS NOW IN NEGATIVE TERRITORY. So what happens if a company borrows money--lots of it---for say 6% and then earns a NEGATIVE RETURN? They go bankrupt. And that is exactly where we are headed with our entire economy if we don't focus on being PRODUCTIVE. There is no free lunch and you can't get a multiplier effect on giveaways because it has to be paid for. It is not just a zero sum game where one pays and one receives. The giveaways are being financed and the ones paying are paying for the gift and the interest.

More inefficient government dollars will NOT get the system going again. Many have argued that we cannot see stagflation for a sustained period of time. I will in a coming post show why I think that we can. I will give you the fact that the markets looked like they did not seem to want to go lower today.

BUT IN THE LONG RUN, OUR LACK OF PRODUCTIVITY WILL SEND THE ECONOMY INTO A TAILSPIN. I AM STICKING WITH MY SHORTS AND MY INFLATION HEDGE----SOUNDS LIKE AN OXYMORON AND I WOULD HAVE NEVER BELIEVED THAT I WOULD BE WRITING THAT IN THE SAME SENTENCE.

MORE LATER

RBS Needs $42 Billion Infusion

james@stockshotz.tv (Stock Shotz) — Tue, 03 Nov 2009 12:10:00 +0000

When I woke up this morning, I turned on Blomberg to hear them report that RBS will get a 42Billion dollar infusion. Fair to say that banking is back at the epicenter of traders minds? The futures are lower (though off the lows of the morning) and I just can't see anything positive this week.

Yesterday proved that there are both some jitters and some money ready to be deployed. The see saw action yesterday reminded me of this time last year when we started a fairly rapid descent.

Is the Euro-Yen telling us that risk is ready come off of the table? The pair is down about 1% which is just another sign to me that we are going to see a rapid decline in equities (particularly financials) in the coming days. I added to my FAZ position yesterday and even though the position moved against me by the end of the day, I was content to hang on to it and wait. With bad news out of the banking sector on a daily basis I think FAZ will be a good one for me.

It always amazes me when I get comments like "have faith in your country" after I make a negative post about the economy. First and foremost, I love this country. I am proud to be an American, but I don't think the recent actions of our government are going to be good for our ECONOMY. It takes a ridiculous individual to interpret a short play on our economy as unpatriotic. It also amazes me when I see comments like "we always rebound and have always used debt". We have never used this massive amount of debt and thing will not always stay the same. We have been prosperous because we had a system of capitalism and a system that could be trusted. If we compromise those principles, things will change for the worse in a hurry.

BREAKING NEWS: BLOOMBERG REPORTS THAT BERKSHIRE HATHAWAY IS BUYING BURLINGTON NORTHERN. The futures got a quick pop off of the news, but are still in negative territory.

QUESTION OF THE DAY: WHERE DO OUR MARKETS GO IF OUR MONEY MULTIPLIER STAYS DOWN AS JOBLESS AND SAVINGS RATES INCREASE IN TANDEM WHILE GLOBAL INFLATION SLOWLY SETS IN WITH THE EXPANSION OF OTHER ECONOMIES?

Futures Point to Higher Open

james@stockshotz.tv (Stock Shotz) — Mon, 02 Nov 2009 12:14:00 +0000

At 7:15 am eastern, the futures are pointing to a higher open. Will I take criticism if the markets rally today? You bet---but part of being a successful trader is being able to accept being wrong. You just have to live to trade another day. I am not giving up on my thesis, and am still expecting us to end the week lower than we were on Friday.

Ford is out this morning with "blowout numbers" and will open much higher. While I admit that the team at Ford has done a better job than the competition during the economic downturn, I can't get excited about any numbers driven by government stimulus (Cash for Clunkers) created demand.

Why do I feel so strongly that these markets are headed down?

1. The deficit is overwhelming---enough said.
2. The falling dollar contributed to both the top line and bottom line to many companies last quarter. We are past the point of diminishing return.
3. The jobless rate is getting worse.
4. The money multiplier is in NEGATIVE TERRITORY
5. The next government stimulus (if there is one---will send the markets down as the markets have already told us that we are at the breaking point on debt)
6. Banks are failing every week.
7. Valuation got ahead of itself, money has been made and many are going to be willing to bail out of the markets with their profits.
8. The worst is yet to come for commercial real estate.
9. GDP across the globe is improving and we could find ourselves redefining stagflation.

Sound simple? If the above list seems to simple, then go take a look at how many stocks have recently violated their 200-day moving average. From a technical perspective what happens after that all important line is violated?

I will be watching volumes early this morning. Friday had some high volumes late in the day, but you have to remember that many mutual funds ended their fiscal year on Friday.

I consider the biggest risk to my thesis to be the potential that the dollar falls faster than expected. Jim Rogers has made the point on our show that if the dollar falls fast enough, the major averages can go up while you lose "real" wealth. Marc Faber has called cash a risky asset for that very reason.

I think we see 9000 before we see 10,200.

I bought FAZ on Friday (not one for the faint of heart). I am holding FCX as my inflation play. Otherwise, I am watching and waiting.

Please make your comments. We WILL NOT ever sell or otherwise release your email. I firmly believe that we learn from each other. Just keep it clean.

Eric Cantor: Small Businesses to Pay for Healthcare Overhaul

james@stockshotz.tv (Stock Shotz) — Sun, 01 Nov 2009 14:53:00 +0000

There is no doubt that any additional tax on small business will rock the stock market. Later we will have a detail about the money multiplier, the so called good GDP number and how it was worse than one of Greenspan's bubbles, and why we think the market will go below the March 2009 lows in the coming months. Stay tuned

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Government Policies Taking Us Back To 1987?????

james@stockshotz.tv (Stock Shotz) — Sat, 31 Oct 2009 18:57:00 +0000

I am not a history buff at all, but sometimes it pays not to ignore the obvious. When in history have huge defecits been good for the economy in the long run? When have artificial bubbles not burst? We saw the market make a huge rally on Thursday as we "discovered" that GDP grew during the quarter. BUT a deeper look saw the artifical increase by government stimulus-THAT CAN'T OCCUR AGAIN. Can't? Well couldn't the government just heat up the ole check writing machine and pump some more stimulus into the pockets of consumers? They could, but it would not have the same effect? Why? Because everyone knows that our NATIONAL DEBT IS AT THE BREAKING POINT!!! We are on the verge of collapse if tax, spend, regulate, and fake doesn't come to a screaching stop.

Has this been a government stimulus rally? Was the smart money on the street able to take advantage of the momentum and push the markets even higher? And perhaps the biggest question WERE THE MARCH 2009 LOWS THE LOWS OF THIS RECESSION? I believe that the smart money took advantage of the change in momentum and picked up consumer confidence. I believe that the March 2009 lows will be tested and probably broken within the next 6 months.

Taking a look at charts around various industries, we find many charts close to their 200 day moving averages. If these averages are violated, will panic set in? I believe that it will----AND THIS TIME, IT WILL BE WORSE THAN BEFORE.

I bought FAZ on Friday had a nice gain. I am looking to roll out of many of my positions and be prepared to get short. The obvious play appears to be short real estate and mortgage companies---but be careful. That trade could be crowded as many well know experts brought the thesis to the forefront of attention late last week.

Is the American consumer in the tank? Is it in worse position than it was this time last year? A government stimulated jobless recovery (and the most socialistic policies of our time) tell me that the consumer is in far worse long term shape than anyone in the MAINSTREAM MEDIA IS WILLING TO ADMIT.

No the drop might not be overnight---but our standard of living is in decline. Those willing to overspend will not be able to access the levels of credit they were able to access just 18 months ago. And those with excess income, are going to tend to save rather than spend. So how far will we contract? How far socialist will our nation become? The more socialist we become===THE MORE BEARISH I WILL BECOME. AND LETS DON'T EVEN TALK ABOUT HOW INFLATION DURING THESE TIME COULD HAMMER THE ECONOMY IF IT GETS OUT OF THE BAG.

See Congressman Michelle Bachmann speak out against SPEND NOW AND LET SOMEONE ELSE PAY LATER. SHE ALSO TALKS ABOUT WHAT IS HAPPENING TO THE DOLLAR!!

MAKE COMMENTS!!!!! LETS HAVE SOME THOUGHTFUL DEBATE HERE. WE CAN ALL LEARN FROM EACH OTHER'S IDEAS!!!!! We will never release your email address.

CHECK BACK SOON!!!!

IS IT 1987 ALL OVER AGAIN?

james@stockshotz.tv (Stock Shotz) — Sat, 31 Oct 2009 05:27:00 +0000

I have taken several months off from blogging and must say I miss the daily interaction with readers and am glad to be back. I have been telling my friends that I am reducing my holdings in stocks and believe that we could be headed for a 1987 type crash in the near future. Am I crazy? Well those of you that saw my call on UNG may think so. I lost a lot of money on that trade.

How do I recover from my losses, by analyzing what I did wrong and making another play---essentially living to play another day and by being smarter on the next trade.

I really thought we were headed for a period of massive inflation and I chose to play that through natural gas. Was I wrong on my inflation play? Was I wrong that inflation would begin with the decline in the dollar? I think I am still on the right track, but I think we are in for a very weird period first. Right now we seem to be in a quagmire whereby the strength in the dollar will hammer the markets? Wait a minute---doesn't Larry Kudlow scream for King Dollar every night? If the dollar strengthens, we lose two components that really helped earnings this quarter---exports and the boost from the exchange rates for companies earning in other currencies. If that shoe drops, we quickly find out that this market got overvalued in a hurry and the future isn't so bright. 700 on the SP by years end? Stay tuned.

I will have more this weekend and I am glad to be back. We will be bringing you interviews again in the very near future.

Natural Gas

james@stockshotz.tv (Stock Shotz) — Mon, 15 Jun 2009 12:00:00 +0000

I lost a lot trying to play natural gas last year. I bought the UNG at $38 and sold out much, much lower. I say that to temper excitement as I think Natural Gas is the play of the year. Now I know that the G8 met this weekend and according to the MAINSTREAM MEDIA, they have inflation under control as they have figured out how they can "flip the switch" and call in all of the excess liquidity. The dollar is even moving higher on the word out of the G8. I don't buy that for one second. I think we will see inflation and that will push nat gas much higher. Lets take a deeper look.

Natural Gas is undervalued in comparison to crude oil according to historical standards. Why? Because as panic subsided over crude oil, natural gas became a less viable alternative as it would take massive infrastructure spending to make a transition to power our automobiles. A conversion to natural gas is mandatory in my mind and the price of the commodity will go up as it becomes a reality in the minds of more investors. Crude oil has doubled in the past couple of months and natural gas is still working to put in a bottom. History tells us that this will change and often times these disparities right themselves in a very short time period.

Why has gas stayed down? Inventory levels have stayed surprisingly strong as prices plunged. There were several major finds and the drilling had been completed in these areas which sustained supply over the long haul as demand fell dramatically. The companies owning these wells had spent a tremendous amount of money completing these wells. They were not going to leave it in the ground as prices fell, they are pressured to recover their investment as quickly as possible. As a result, they have been producing the commodity even in the face of major declines in demand.

This trend will NOT continue as demand increase. Sure they will keep producing what they have, but will not be spending extra money to increase production until prices show a sustainable recovery. It is easier to take supply (drilling rigs) offline than it is to put it online. The cost to produce new finds is approximately $3.70 mcf. I would expect that prices would need to be sustained well over $4.50mcf before we see an all out effort to get production back online---and all the while inventories will be declining.

All of this is just the natural demand supply relationship and does not factor in the "panic spiral" that I expect we will see with the dollar/oil relationship. I think as we see the dollar fall (and it will over time in my opinion) oil will rise and Nat Gas will rise even further as it makes up ground in relation to oil. In summary, I think we could see a double in Nat Gas by the end of 2009. I just hope my prediction is better this year than it was last year.

Consumer Confidence===I have no confidence in IT.

james@stockshotz.tv (Stock Shotz) — Fri, 12 Jun 2009 12:05:00 +0000

I have no confidence in the consumer confidence number. The market may move when it is reported but we have seen it improving lately and I truly think that the number is impacted by what the Mainstream Media is saying. The gauge that I use for consumer confidence is the Money Multiplier and it is at historic lows. Confidence is worth nothing unless consumers are putting their money where their confidence is---and the money multiplier tells us that they are SAVING NOT SPENDING. We need to see the savings rate increase and saving is a good thing--but the MM is telling everyone how important the Consumer Confidence number is and it is simply not important in my book.

I think natural gas is very close to the bottom. It is down in premarket trade, but I will be looking at it today. I will do my analysis this weekend and have it posted here. The market tried to break above 950 on the S&P yesterday, but could not close above that level. I would expect a down day today to test 930-925, but the futures are hovering around the key 939 pivot at the time of this writing. If we get a down day I might be looking to add to my key "inflation" plays such as FCX,X, and oil and nat gas drillers/producers/servicers.

I will wait for more clarity and would like to see us test 925 today. Be careful until we get clear direction from here.

CONSOLIDATION---GET READY FOR THE BREAKOUT

james@stockshotz.tv (Stock Shotz) — Thu, 11 Jun 2009 12:18:00 +0000

The tight action lately (on a closing basis) shows me that we are heading for a major move in one direction. I have been wrong but I think we are going to test and break 925 on the S&P. Futures are up slightly at this time, but they are also talking about Russia and others threatening to diversify away from Dollar Denominated assets. I see the dollar continuing to fall over time and think oil is still a decent buy here if you can stand some volatility. I still like FCX and X as plays on inflation and am looking in depth at natural gas. I will have my detailed analysis on natural gas this weekend.

Jim Rogers laughs at the accuracy of government jobs numbers. I will have more when we get more clarity. See the Rogers video below.

STOCKS HEADED HIGHER?

james@stockshotz.tv (Stock Shotz) — Wed, 10 Jun 2009 11:34:00 +0000

The futures are pointing to a much higher open and are above the key 945 level on the S&P. I have been looking for a pullback and have been wrong. Jim Rogers explains in the video below that he has no shorts right now and that is unusual for him. He makes some great points and I guess I will have to listen more closely as today doesn't appear to be anything but upward for the averages and commodities.

Headed Down?

james@stockshotz.tv (Stock Shotz) — Tue, 09 Jun 2009 11:42:00 +0000

Yesterday was a very interesting day and many traders walked away with the attitude that it was a good day because we rallied at the end of the day. I am concerned as I saw many of the stocks that I consider to be leaders drop on higher volume. The futures are almost flat here, but I am looking for a down day. At the current time, the DAX futures are above the 5000 level and I need to seem them go below that level for us to get a really nice "correction" day in our markets.

There is a lot of talk on FOX this morning about how small business has been limited in terms of their normal credit during these trying times and that will hamper true economic recovery. I like BOOM here and think it will go much higher unless the market gets hammered. I would love to have a pullback day here for the market and get the opportunity to buy this one at lower levels.

The energy sector is going to continue to rise in my opinion. The dollar is going to fall slowly and that is going to cause the price of oil and gas to rise. DID I MENTION THAT FOX NEWS REPORTED THIS MORNING THAT GASOLINE HAS GONE UP 41 STRAIGHT DAYS AT THE PUMP? AND PEOPLE TRY TO TELL ME WE ARE HEADED FOR DEFLATION!!!

FCX AND X presented good buying opportunities yesterday in my opinion--and they will again, so be patient. I am looking to put some solar in my portfolio as the sector is on fire. I will have more analysis later on this sector.

Trend Reversal?

james@stockshotz.tv (Stock Shotz) — Mon, 08 Jun 2009 11:55:00 +0000

Some are saying that we had a trend reversal on Friday because the "better than expected" jobs number should have sent the market much higher. I think at best this rally is overdone. I sold a call spread on COF and have been burned but have 2 weeks to see it turn around if the stock gets below $22.50. I am curious to see how today pans out. If we roll lower, I will be ready to get short---I have my list ready. The German DAX futures are hovering right at the 5000 level (4998.5 at the time of this writing). I would like to see it fall below 4970 to confirm my short bias.

McDonalds sales are up 5.1% for the month of May--but the stock is trading lower as it sees potentially a 20% drop in earnings according to a report this morning.

Keep an eye on the Dollar, Oil, and Natural Gas as well. If the market pulls back very far--it will be key to asses whether the commodities get cheaper and the dollar stabilizes. It will be a very scary scenario if the commodities continue higher as the market falls.

I don't like to trade as much on Mondays, so I will be content to sit on the sidelines and get ready for tomorrow. If we break key levels, I will make some trades on SDS.

Jobs Report Sends FUTURES HIGHER

james@stockshotz.tv (Stock Shotz) — Fri, 05 Jun 2009 12:31:00 +0000

The jobs report has send the futures much higher. Oil is soaring as well and I am happy with my X and FCX. I sold a call spread on COF a couple of days ago and it appears that I will take a big loss on that one. I was not in the camp that thought the banks were poised to headed higher through the summer. I am surprised by this market strength.

I still think the place to be is owning "stuff". Oil, Nat Gas, Coal, Gold and Silver are going to outperform the market. I like RIG, MEE,BTU and those type stocks for the long haul. I will do more of an in depth analysis on those specific stocks over the weekend--they will be volatile in the short run. I have gotten hurt from time to time trading each of those names.

It is scary to me that this market reacted so positively to this jobs report and did not react to the announcement that the White House intends to appoint a PAY CZAR
CLICK HERE TO READ THE ANNOUNCEMENT More taxes and regulation will cause our economy to collapse.

I believe that the jobs report points more toward stagflation. This may be a trap setting up in the markets. I still think we retest the lows, BUT I HAVE BEEN WRONG.

PULL BACK COMING---BUT HOW SEVERE???

james@stockshotz.tv (Stock Shotz) — Wed, 03 Jun 2009 12:26:00 +0000

I have been pretty much on the sidelines as I have been unimpressed with the volume in the latest rally. I think we are going to see a pullback today and it is going to tell me a lot based on its severity. I have been dabbling in options--selling puts on FCX as I think it will continue to do well as inflation takes hold. I sold half of my X and hope the other half will run.

We have a great interview with John Williams of Shadow Stats coming soon and will have more market analysis when we feel like there is something to play. We don't make calls just for the sake of making them and are frankly scared of this recent rally. Good volume could change my mind---but right now I am on the sidelines.

Crisis Over?

james@stockshotz.tv (Stock Shotz) — Wed, 27 May 2009 12:24:00 +0000

I am amazed at all of the cheerleaders that want to declare this economic crisis over. We are now hearing speculation that the DOW will hit 10,000 before year end and the S&P could get into the 1200 range. We won't fight the tape--but don't share the overall economic optimism. The government deficits will play a role in running up interest rates and people seem to be forgetting that rates going up will not be great for growth and expansion.

Monsanto (MON) is down in premarket trading as they see earnings in the lower end of the range. These markets seem to be discounting the fact that while certain economic indicators look improved--we still have the possibility of dismal earnings coming from some of these companies. There is money on the sidelines and it may get suckered into these markets and make them go higher. I ask the following questions when deciding if we are on the road to total recovery:

Are interest rates going to be stable?
Are the government deficits going to cause higher taxes?
Are energy prices going to be stable?
Are jobs going to improve within the next six months?

Just something to think about as all of these points will impact consumer behavior. Consumer Confidence was great according to reports yesterday. The strange thing about this recession was that it was a pocketed recession. There were pockets of strength around the country and likewise there were pockets of weakness.

I still have a good deal of my portfolio in cash and because I am worried that we could see another leg down. The futures are strengthening right now---I got short a few minutes ago and am about to get stopped out. This run is tough to fight, but you just have to keep your losses under control.

I sold FCX put spreads yesterday as I really like that stock. I have never really utilized spreads in the past, but intend to do so in the coming months as it can help reduce my risk.

WE HAD A GREAT INTERVIEW WITH JONATHAN HOENIG THAT WILL BE POSTED LATE TONIGHT!

CHOPPY MARKETS

james@stockshotz.tv (Stock Shotz) — Tue, 26 May 2009 12:24:00 +0000

The futures are well off of the lows of the morning and point to what has become somewhat of my "theme" for these markets. CHOPPINESS I will say that I am planning to sell options in this type market. I am selling some puts on FCX. I like the company and can get some decent premiums on the options. I am also considering selling some calls on Caterpillar CAT. Even if the market rallies, I just don't see CAT jumping over the summer.

This morning gold and other commodities are down and we are hearing some of the talking heads talks about deflation again. I look at deflation talk as a great way to find what I want at cheaper prices. I don't see deflation as a problem at all. The North Korea nuclear test seemed to shake the markets for a short while, but not as much as I would have expected. As I am typing the futures are getting stronger and even though I am surprised---you can't fight the tape.

I won't make up things to say and while this is a much shorter post than normal---the market visibility is less for me. As we get more clarity, we will have more to say.

Asian Markets Head Higher---Commodities Drive

james@stockshotz.tv (Stock Shotz) — Mon, 25 May 2009 03:45:00 +0000

Check out this Article from Bloomberg as Asian Markets head higher tonight driven by oil and gold stocks. Click here to read the Article

Here what legendary investor Jim Rogers said on 5/17/2009 Part One of The Interview
Jim talks about how we must start living within our means and our current policy of spending to counter defecits is INSANITY. Jim says politicans are doing what they have to do to get re-elected and it is wrong for them to ignore the needs of 300 million Americans. WE ARE DESTROYING THE VALUE OF THE DOLLAR AND ARE THE LARGEST DEBTOR NATION IN THE HISTORY OF THE WORLD!!!! He says the Bureau of Labor Statistics has been lying to us for years about inflation. Hear him talk about the ANTI-CAPITALIST ATTITUDE. IS THE GOVERNMENT TRYING TO CONTROL THE BOND MARKET? If you are looking for a low APR credit card--check out low rate credit cards



And Part 2 of The Interview
Hear Jim talk about why he is not selling his gold and wheter or nor he is buying more.
The IMF is working to get permission to sell some of their gold and if they do, it may be a good buying opportunity.  Is Farming going to be the occupation of the future?

Are you looking for low rate credit cards?  Check out  low APR credit cards

We are going to do a show soon on CAPITALISM VS. SOCIALISM.

CHOPPY ACTION

james@stockshotz.tv (Stock Shotz) — Thu, 21 May 2009 12:34:00 +0000

I think we continue to see choppy action and I believe that one of the greatest disciplines in trading is to know when to stay OUT!!!! I have lost a lot of money in the past by forcing trades.

That said, I am more convinced than ever that we are going to see increasing oil prices. Natural gas will follow. Inventories showed that oil demand is at least stabilizing and will grow in the long term. The dollar is going to continue to be choppy but weakening and this will push oil prices upward. That combination is worrisome. Oil prices acted like a tax on the American consumer and I believe had a lot to do with consumer confidence numbers last year. I will detail the plays that I like in the oil and natural gas space in our post this weekend.

Don't get emotional about this market---it is easy to see a good run in one direction and believe that we are off to the races in that direction. Look at the overall picture and you see price action that would lead you to believe that this market could go higher. Listen to what is going on with the dollar, housing, oil, and other commodities and you know that this economy faces headwinds. My recipe for staying cautious and waiting for more clarity before putting my money at risk.