The good news is the market said “fuck it” and bought stocks despite what the Fed had to say. The bad news is the fucking Fed will be out and about tomorrow, trying to induce market calamity.

NFLX is the truth and TWTR is Fred Wilson’s shitting grounds.

Market breadth was only 37% today, so I have nothing, whatsoever, to celebrate this evening.

More later.

San Francisco Federal Reserve Bank President John Williams on Thursday renewed his call for an interest-rate hike “sometime later this year,” citing near-full employment and rapidly rising house prices that may be a sign of excessive economic optimism

“Excessive economic optimism”, Fed Williams says.

BEHOLD:

Literally fuck my life. No words.

News of Apple possibly cutting back on semiconductor orders had the stock sucking dick earlier today. Now the stock is off by less than 1%.

Large cap stocks in the green include GOOGL, MSFT, HDB, WFC, AMZN, JPM and PG.

Using the real time momentum screener inside Exodus, the following stocks are at the highs of the session:

CELG, BID, VMW, SOL, CHTR, SQM, NAT, LH, JBLU and NOW.

Should the markets go back down towards the lows of the day, I fully expect centaurs from hell to appear on the NYSE tomorrow morning, kicking traders headlong into the machines and making a big mess about things, as a general observation.

NOTE: The S&P is now flat, reversing a 20 point deficit.

As I look at the deflationary vortex and toss things into it, I am truly amazed at Janet Yellen. I’d like science to seize her brain upon death and examine it for defects, for the benefit of the world. I feel it’s important that we begin to understand how the distorted mind works. The mind that alters, alters all.

For some reason, the Federal Reserve, and all its “Fed Governors” (they’re not really governors, but lackeys who play fetch with the chief), do not look at the news, nor the stock market. They do not see entire commodity driven sectors off by 40% over the past 3 months, or the price of crude dropping like an anvil from $100 to $44 in less than a year.

Our dollar is at new highs, up 15% over 1 year. As such, our Fortune 500 companies are bearing a horrible brunt with their overseas businesses.

The bottom line is this: The Fed is using a strong labor market as an excuse to raise rates. None of their inflation targets have been hit and there is no reason to believe inflation is on the horizon either, considering that the single largest avenue for high wage employment (oil and gas) has been shut the fuck down.

What they should be talking about is another round of QE. Instead, we must wait for them to knock on our doors, this Halloween, and hope they do not stab us in the faces upon opening it.

Today’s hybrid mover screen, surprisingly, has almost 200 names to sort through, have a look HERE.

Markets are weak today because Wall Street is pricing in the complete and utter destruction of the eastern part of the United Steaks.

More on this later.

As we circle jerk down the drain, I am reminded of how the Fed, led by that lunatic Greenspan, kept raising rates in 2006–despite the fact that housing was derailing.

Markets are near session lows, off 50 NASDAQS, coming off the worst quarter for stocks since 2011–and fucking Fed Lacker is making a speech about raising rates NOW.

Please tell me this isn’t happening in real life.

In other news, TWTR is still a retarded corporation, one that was thrusted upon the people by the anti-christ himself.

We are in a hit and run type of environment, if you can’t be quick, it will be wise to sit firmly in cash, or short, at least until we see the Yen completely back off.

Still holding the Twitter bird, which looks to be a mistake.

It’s still somewhat of a mixed bag for me, and will continue to key on the Yen for clues. So far we still have the breakout look, similar to Crude, before today’s action. Something to be mindful about.

Here’s an updated daily chart:

ETF,  Month’s Up %, Average Monthly Return

XPP, 100%, +11.6%

TQQQ, 80%, 11.35%

FAS, 83%, 8.23%

Stock, Month’s Up %, Average Monthly Return

V, 85%, 4.75%

MA, 88%, 7.2%

GS, 81%, 4.79%

DEO, 78%, 3.1%

MS, 77%, 5.4%%

CTSH, 76%, 10.7%

VLKPY, 100%, 16.4%

NXPI, 80%, 8.8%

NDAQ, 76%, 5.8%

UNFI, 77%, 3%

INTU, 77%, 8%

MSTR, 77%, 20%

GNRC, 80%,19%

AAL, 90%, 15%

DAL, 87%, 13%

BBW, 80%, 10%

Overall, October is the single best month for the market, historically.

For full report, member of Exodus click here

Without China, commodity producers are like dicks without balls.

On that news, because we live in bizarro land, futures are flying, alongside Asian indices.

I bulked up myself in black gold on Wednesday, adding $APC & $EMES to go along with my beloved $NOV.

There are so many cheap names left for dead in the space, one being $BBG, which keep landing on numerous scans.

On the runner screen, we have: OAS, WLL, EXXI, SCLA, SD, RIG, UPL, SWN, RRC, & CHK

Get ready for the GUSH:

Not much has changed, with biotech still leading the pack, which goes to show you what an insane run it has been for the industry. The full contest link can be found HERE. One more quarter to go to close out the year.

The following are the winners and losers of Q3, grouped by market cap. At the end are the reported holdings and 3 month returns of Greenlight Capital. Naturally, I am unsure as to the nature of his downside hedges. But his portfolio of concentrated “value” stocks treaded dreadfully the entire quarter. I am sure his losses are severe.

BIG CAP WINNERS

MIDCAP WINNERS

SMALL CAP WINNERS

And now for the losers.

BIG CAP

MID CAP

SMALL CAP

David Einhorn’s Greenlight Capital’s basket of hand woven defeat

Three cheers for the short sellers who profited from the misery of the majority.

My favorite stocks down here are AMCX, SHAK, JAZZ, CLX and TWTR. I know that contradicts my previous sentence about the company being drilled into the ground. That’s sort of the point. We’re supposed to go lower. But we won’t. Then when we’re supposed to go higher, we’ll go lower. Everyone loses, ultimately. The house (Goldman Ball Sachs) always wins.

At the end of October, I will begin, in earnest, buying up oil and gas shares. I am strictly using seasonality stats for this position.

Alas, I am relieved we’re entering Q4, despite the fact that we’re not out of the woods yet. Plenty of market turmoil has transpired in October. However, considering the recent damage done to the markets, coupled with strong seasonal trends supporting an October rise, I like my chances long here–teetering on the brink of disaster.

What are your top picks heading into Q4?

CLICK HERE FOR CHARTS

Charts of interest include:

__

That $WMT is offering a low risk setup with a stop under recent lows. Which one is your favorite here?

The company has one of the best platforms in the world, one that is not going away in my opinion. But, the company lacks leadership, which is the reason for the dismal stock price.

Hopefully that changes soon and the stock can begin to move higher with conviction.

I will continue to hold long here.

Here’s a look at the leading industries on the day:

CLICK HERE FOR CHARTS

Tickers in focus inside out trading room, 12631, include: SUNE, CHK, VIPS, OAS, CLR, SLCA, YOKU, YELP, & SGY 

Icahn will not stand to be upstaged by a low earner like Donald Trump. If there’s personality to be thrown around, there is none more personable than Carl. This is obviously a prudent move to continue his CNBC fight with Bill Ackman from 2013 – Icahn will simply control the FCC, then tell Bill to go wherever the hell he likes.

I wonder what the other two cabinet positions will be? Will Icahn seize the FDA and give Herbalife immunity? Or better still, maybe Uncle Carl will own the FTC and attain status of Sole Dealmaker Of The American Union? The possibilities are endless.

Suffice to say with the Executive Branch at his back, one Bill Ackman is about to be recipient of some serious tax audits. I would cower in fear, if I were him.

The weekend has offered no respite, as HCLP and SLCA are both down another ~8% and EMES is off another ~12% on Monday.

Here’s a preview of what’s to come.

All three are going to slash their distributions. Of course they are…they’re yielding like 20% and it’s an industry freeze. They’ll walk it back to ~10% yield, those of us who’ve been here from the start will be back to what we were making two or three years ago, and all three companies will be better off for it.

Now things are getting out of hand. I cannot speak for SLCA or EMES, because I don’t own either. I never wanted to own either. But I do speak for HCLP when I say a great company is going for peanuts.

Now, I am not adding to my position. I restructured back in December, I ended up with about 1/2 my account in cash (after factoring in losses into this year) and it has been single handedly responsible for keeping me alive. My losses have been horrific; without that restructuring they would have ended me (and that is not an exaggeration).

So I’m not buying until the recovery is already well underway. If I had been so fortunate to be outside this fire, looking in, then I would be nibbling incrementally, every couple of weeks. But that is not a luxury I personally get to enjoy.

So far for the year, I’m down about 15% – that’s about 40% peak to trough if I’m counting from when this process all started a little over 12 months ago. I guess if I’m looking big picture, I’m fortunate that’s all that’s happened. There are people out there who have lost 70% because of this oil catastrophe.

For the moment, I am more than content to sit on lots of cash and wait this thing out. I’ve dug into my companies and am very confident they’re going to make it. But not everyone gets to say that.

There are vast expanses of the oil and gas industry that are about to be swallowed whole. We have a backwater culture that still crucifies people to thank for this.

The company stood out as being a very solid business – good cash flow, strong sales, steady as she goes growth, boring business with few new competitors – you know, the kind of company that nobody wants to own.

Here, TIS is holding up very well, and I am quite surprised it is still down at $26 a share.

TIS is relatively small with only $210 million in assets, but it’s a good enough target for me. The shares are worth about $10.42 apiece by my estimation, and are currently going for $26. In the first six months of the year, we’ve seen a big increase in share value, even after issuing new shares, up from about $8.62 as of December 2014.

The companies operations are rewarding shareholders richly as of late. Net sales climbed 40% from the first six months of 2015 over the first six months of 2014. Basic income per share rose to $0.55, up from $0.40 period over period – 37.5% increase, matching the sales growth. Cash from operations is up 59.5%. It looks to me like this is real; not just a financial gimmick.

I had purchased this company in part because I saw an off radar business with solid fundamentals. But I also guessed that TIS would have the opportunity to make a lot of above average returns in the near future, thanks to all the meltdowns in South America leading to scarcity of basic paper products.

I still need to confirm where TIS is shipping product to, but even if that isn’t exactly what’s happened, I seem to be getting a pretty big payoff anyway. The company has a focus on US markets, but there is also some elusion to “Away From Home” sales, following the acquisition of Fabrica in Mexico. Regardless, TIS is growing at a 40% clip for the moment, and management seems eager to keep a fast tempo pace going.

It might be harder to materialize windfall gains than with a bigger company, since it’s unlikely institutional shareholders will come in and bid up the business. But that’s alright, I can get paid with distributions just fine.

Part of that is because I have quite enough to contend with already in terms of volatility. But besides that, this isn’t a clear buy, even with the price of Volkswagen paper down 50%.

I tend to love playing the distressed buys, but my preferred environment is different than this. I make investments in names like Anadarko Petroleum following a major accident where I could reasonably conclude there were legal protections they could hide behind that the market wasn’t factoring in. Or in companies like Ruger after some kids get shot at school and investors vastly overestimated the influence of the anti-gun lobby to spin that straw into gold.

But here everything smells wrong. The company is down big for a reason; yes the idea that governments can mandate improvements in something like engineering is fucking stupid, but they took it a step too far.

Maybe they’re not the only ones either…

We need to let this shake out. And understand that with Volkswagen, there’s no front stage guy who’s going to get the blame. No legal barrier tap and dance that slips them out of harms way. No secret save coming here.

The German government will probably protect them to some extent, but this is a big blow to them. The Germans have been huge on this green crap, public sector financing of it and all. Now, their native sons have taken a piss on the front door.

Sit it out, grab a bag of popcorn, and watch the environmentalists desperately try and erase any lines drawn between this and their regulatory initiatives.

Cain mocks the gods, and dares them to continue this beating!

I was going to post some real bearish doomspittery …I’m talking about some seriously depressing DOW 0 lamentations. I was going to strip you of all hope and send you into the barren dessert on a 40 year pilgrimage of woe. Self-flagellation and tears were to be in the plentiful supply; cheer and optimism nil.

And then I looked up the DOW going back as far as I could. I looked up the S&P going back as far as I could. I looked up the NASDAQ too.

How weak are we!?

What is this selloff, next to seven years ago? We are having a little bear market because we get a bear market about every seven years with very high confidence. I know this, because my initial strategy from a few years ago was to be in cash by now…before I got ultra greedy making 200% in oil stocks and charged head first into my own demise. I’ll find the posts later where I laid this out and link to them.

The prophesiers of doom keep reading those burned entrails, more insistent than ever that their last 1,000 failed prophesies are just circumstantial. Not evidence of anything.

In 2014-15 yes it is true that the wall of our home has sagged in. In 2009, the roof of our house collapsed on our heads. Tell me, what terrible unforeseen disaster has the market missed which equates to that? Why am I expected to run screaming from a little wall which needs propping up when I already experienced the whole thing coming down on top of me?

Black swans happen to comfortable people in states of sloth. This market has been hyper alert, looking for the next BIG ONE every day for seven years. How afraid can I be that we’ve missed something huge when everyone is constantly looking so hard and so diligently?

BIG ONE happens when you aren’t looking. When practically no one is looking. When rules of thumb become adopted as incontrovertible LAWS OF THE UNIVERSE. Where is any of that happening?

Even such staples as “don’t fight the Fed” are questioned daily. There is an entire 24/7 cottage industry dedicated to fighting the Fed. Nothing they say is taken seriously and we have had frequent periods of high short selling going back to 2008.

With so much energy dedicated to inspecting the structure and so little commitment one way or another in terms of outlook, how do we have the potential to collapse?

This was on the books from last year, and I’ve held it now for about 12 months. I’m going to retain HCLP and BAS, but VOC was just too ugly to keep around right now.

I want the tax deductions this year, to start the clean up process. I like VOC but it’s an ugly pure play on oil prices. I would have thought buying this thing after a 50% drop was a pretty safe venture, but really who saw the extent of this fiasco in oil prices?

In November, I’ll take another look at VOC, after the write off is locked in.

Of course the Fed isn’t going to raise rates. Have you taken a look outside, of late?

I had been previously sold on the idea that the Fed might have made some symbolic gesture today; a fractional point or something to that effect. But there is no serious merit to any argument involving meaningful interest rate hikes, either imminently or accretive for the span of some years more yet. There never was.

The Fed needs you to believe they still have any control left. This is how confidence games work.

If I say “cross me and I’ll abduct your first born”, well maybe that will hold power over you for a while.

But the day you say “abduct my first born and what stops me from beating your head in?”…well that’s the day I stop being a meaningful threat.

The Fed is quickly approaching “un-meaningful threat” territory.

Now, will we rally again? That is not so clear.

What we’re seeing here makes much more sense in terms of the environment. HCLP is a company that is almost growing through this oil correction. BAS is collapsing, and that makes perfect sense.

Here we note first that accounts receivables have been cut in half (unlike HCLP where they were actually growing). This is exactly what I should expect of a company which is in the business of drilling wells when oil falls like this.

Total current assets have dropped by 25% and now stand a full $100 million less than they were, in a span of 6 months.

BAS is also taking this is an opportunity to write off anything they can on the books. That makes sense – might as well take advantage of the storm where you can.

Debt for BAS is not unreasonable, and is one of the more attractive aspects of the company. Whereas many of their competitors are in real threat of default, I think BAS has repayment under control with a debt to equity ratio of 5.4.

I’m putting the intrinsic value of BAS at about $4.00. The company trades around there today. There is no premium for these shares at this time, no risk threshold to overcome. That sort of makes sense, since the company is losing money on paper, and Wall Street has decided this entire sector is suspect. But that’s also a nice floor to be working up from.

BAS lost $1.20 per share in the most recent three months reported, and a full $2.00 per share for the past six months on record. But here I view the most important element to be where those losses stand against amortization and depreciation.

BAS has done a stellar job of idling operations and cutting staff apace of the revenue collapse. They have kept their real cost outflows below where the revenue line is at. If we look past the write down of equipment, the company has been cash neutral for the past six months – a remarkable effort on their part.

Now, obviously equipment of an oilfield services company is under some sizable strain and must be replaced. But here, BAS has three factors working in their favor.

Firstly, BAS is not using all of their equipment, because they have idled operations. Provided proper maintenance and storage, their current size operations can last twice as long as before they scaled down.

Secondly, newer generations of equipment in this industry has reported longer lifespans and cheaper costs. I would imagine having so many now distressed oilfield services companies will also do wonders to get already built equipment from manufacturers to BAS at a yet more fabulous price. This was something I had been looking for before any of this happened to boost BAS profitability. It may not help save them.

And Finally, BAS is not going to have to buy much equipment for the foreseeable future; the CEO has set down a strategy of acquiring or merging with weaker competitors and absorbing their existing equipment along with. They are specifically creating target lists based on how well these prospects have maintained their service equipment and the average age of it.

So although each double digit percentage down day roils my stomach, when I see what the company is doing I almost have no more fear.

You can see the expert management at play here in the cash flows section best. Although income has reversed from a negligible gain to an $81 million loss, the cash coming into the business is barely down at all ($88 million versus $94 million a year ago). Paper profits determines investor sentiment, but cash is going to determine who lives and dies.

BAS is religiously guarding cash, keeping it flowing into the business…current tribulations not withstanding. After repaying debts (they aren’t even trying to raise more money right now) and other financing activities, BAS still saw cash increase by more than $10 million.

BAS is a most extreme tale for me. Back in September of last year, I sat tight because I had a 75% profit margin to work with. Yet, I have somehow still lost 50% of my principle. I will be the first person to tell you, I did not see this coming.

But although my heart is scared and weak, my head says “stay put”.

It’s always pretty rough when it’s your carcass getting chewed on, but that realization is pretty important to my overall strategy right now.

I’ve been keeping a close eye on the positions I’ve been keeping and their balance sheets.

Take HCLP:

Net cash from operations has actually increased to $58.0 million from $53.6 million. The increase has come from growth of accounts receivables, which sets up a discussion about what future business for HCLP might look like. The company is under hardship, yet they have more customer money on deposit than ever?

Yes, they are offering concessions to customers. The whole sector has to do their part to survive. But the company is clearly not going anywhere, and much of the growth they experienced in late 2013 and early 2014 is here to stay. When will the market price that in?

I also see that HCLP has quadrupled investments into property, plant, and equipment from where they were last year. Again, hardly the mark of a business readying itself for a long winter.

I’m estimating HCLP’s intrinsic value at around $2.30 a share. That puts price to book at 6.5X (admittedly a little pricey) but at current rolling 3 months of earnings, that still leaves a risk threshold of the company at about 10 years (completely reasonable absent any growth).

So we have a company which was growing like a weed up until about 6 months ago, which is seeing cash deposits for future business soar, and which is reinvesting at an attractive rate. Why would earnings continue to stagnate? Even without new drilling, HCLP sand is going to be in high demand to maintain existing wells.

So tell me, if I fled now after the fire is smoldering, where would I go that’s better?

Saudi Arabia decided to play the world’s worst move (effectively maiming OPEC), spiked the oil markets when they could least handle it, and sent oil into the abyss touching off a second massive sector implosion in oil and gas names. But not just oil & gas, as the market became terrified of economic stagnation led by fears out of Europe and Asia, and the entire energy sector followed oil down the hole.

We are now experiencing what I view as the third wave of the same phenomenon that began in early 2014, more than a year later, as the entire stock market collapses 10% in a short span of time, led by China’s markets and the intensely poor decision making of a command/control economy trying to have their cake and eat it too.

That being said, I haven’t yet seen any indication that the real economy is retracting.

Job growth seems present and in my own local markets where I have a good ear to the ground concerning hiring and pay policies, I am actually hearing talk of wage hikes. The last five years, our local job market at least was terrified of the HR monsters that were federal regulations (chiefly PPACA), not to mention we are still reeling from 2009 in some respects. But I think as we clear away from the implementation of these federal regulations, especially with rigid conservatives now holding fast against, we are going to start to see some wage growth. Employees are actually demanding it now, voting with their feet when they can.

This should do wonders for the economy.

With regards to oil specifically (which is chiefest of my concerns) the EIA is suggesting that the current imbalance between consumption and production of oil is 2 million barrels per day. This is the cause of our stockpiling and the foremost reason oil has sunk so far. Saudi Arabia’s move to curtail US production has been a failure and so far the long feared wave of insolvencies has held to a slow drip, even from the most precarious of businesses.

A 2 million barrel imbalance is not all that bad and I believe that, barring some sort of real demand destruction, we’ll just float along at these levels until the market becomes more comfortable with oversupply. I don’t think oversupply necessarily will force pricing lower as it would take a very specific set of circumstances which include not having a merger & acquisition brokerage occur. Yet we see M&A activity is very healthy in this current time period and I have to believe that if oil goes much lower you would see US markets consolidate aggressively.

Besides this, the global imbalance is equivalent to about one major oil producer globally. And in this current environment, we also should be aware that civil unrest is a powerful destabilizer of oil production (via civil war) with positive likelihood.

Sources of new supply are questionable. New well development at these oil prices are unprofitable and only large state sponsored development is probable. Yet, economic weakness is harming state budgets and may make it difficult to attain approval for unprofitable ventures. The largest foreign state controlled sources of oil are also some of the most sensitive to this oil price shock.

Altogether, I continue to believe that the most likely outcome in oil markets is unknowable yet still predictable production locations going offline from internal unrest. Venezuela is pegged as the most likely location for such an event, do to the extreme nature of their current state of affairs, and because their leadership is proven incapable of handling the situation. But Venezuela is hardly the only candidate; just the best.

Outside of that, the economic uncertainty that hit everyone’s radar earlier this summer is now coming back under control. Bond yields continue to subside across all major foreign issuers, and I would not be surprised if the EU crisis in particular remains hidden from view for another full two years.

Domestically, I expect monetary policy to remain accommodating, but would not be surprised if Yellen raises interest rates some token amount, to try and claim some victory for the Federal Reserve. I cannot expect how the market will react to his, but believe the raise will be mostly symbolic anyway, so any effects should be temporary in nature.

I think I am a terrible trader even after all this time. Luckily, it mostly works out for me as fundamentals do eventually assert some influence on equities after an indeterminate amount of time. But sometimes I don’t have the patience or interest in waiting for my view of the world to cycle around.

Then there’s The Wife and her astute technical analysis, skipping happily along and saying “What’s your issue, Lotto Boy? Why do you fight so hard?” All the while booking seemingly easy gains in a good tape and laughing at me from the sidelines when I’m fighting a difficult tape. The Lao Tsu of trading, she seems to be, and I cannot argue with the results.

I have found peace in the world by following the herd with technicals while also peeing my pants in excitement when fundamentals and technicals line up nicely. This makes my life less drama prone and allows me to focus on more important things like “Just how hot is Racer X vs Racer 5?” “Why do they call it a drought?” and my personal favorite “Just who are these people who have invaded my California?” These are much easier to digest on a daily basis than “Why is TSLA going higher when units are OBVIOUSLY stagnating?” (That was a Feb 2014 argument I had with myself. I did not win, which is a problem when you are arguing with yourself.)

Which brings us back to semis. The fine folks at ISI recently gave us this:

“The SOX is just now emerging from a 14-year base. The decisive breakout from a well-defined 100 point trading range bounded roughly by $550 on the low end and $650 on the high end projects measured upside to $750. This is where moves begin, not where they end.” Moreover, “with January the best month historically for Nasdaq performance, we don’t see why this breakout wouldn’t work into the new year.”

Here is ISI’s chart of the idea:

The below charts are The Wife’s take on the SOX breakout:

Meanwhile, INTC keeps poking 37 and AMAT claws toward 25. You mean we go higher?!? How on God’s green earth is that possible? My initial response is to scoff, guffaw, and generally whine about the obvious inanity of the comment “This is where moves begin, not where they end.”

Unfortunately for me, such grumbling usually leaves me in the king chair watching the little lines draw themselves further up and to the right. Luckily, The Wife sets me straight, stuffs a sock in my mouth and pushes the buy button anyway. (I chewed through the red rubber ball like a dog, so we are on to tougher and more pliable toys – like I said, the Lao Tsu of…oh, nevermind…)

Let’s give ISI the credit and assume the SOX not only goes higher but does so with gusto in January. How will this happen?

The SOX is the aggregation of multiple other stocks, a derivative as it were. We are drawing lines on a chart of a derivative and saying this means the components go higher as a result, as opposed to drawing lines on a chart of certain stocks and saying the SOX goes higher. The tail wags the dog? My bloods bubble a little just considering the idea.

There is indeed only one way the SOX goes higher: its component stocks must go higher. Let’s look at those components. The chart at the bottom breaks down the SOX into its components with market cap quotes after the Dec 12 close when the SOX was at 671.

• The Top 3 are INTC, QCOM and TSM. I get it and this makes sense to me. These guys are 48% of the SOX. My personal feeling is that INTC and TSM go flat and QCOM goes lower into January. It is hard for me to believe the SOX goes higher without at least stability from these three, and I think these “three” go lower as QCOM goes lower.
• The Top 5 includes TXN and ASML who add 13% of the SOX. How ASML made it up here is beyond me, but the lunatics who bid the thing up in the first place likely don’t give up until end-2015 at the earliest; the SOX could get a boost from ASML.
• MU, AMAT, AVGO, BRCM and SNDK are the next five and add another 16% of the SOX. The Top 10 comprise 77% of the SOX. I am most definitely bearish on MU and SNDK which means they go higher just to piss me off. These can be offset by AVGO and BRCM. AMAT likely goes sideways.

It is impossible for the SOX to go higher without these Top 10 stocks also going higher. That’s a problem for me. But, if the SOX goes higher, my guess is that ASML, MU, AVGO, BRCM and SNDK make the push.

Well that was fun. Did you know CREE is still in the SOX at #29? And why is FSL or NXPI in the SOX? Nevermind, I am sure I can look that up later. If FSL and NXPI can be added, surely we can remove MCHP simply because of its idiotic CEO. I need to go have a talk with the guys in Philly.

So there we have it: the chart of a derivative says it is not just going higher but 15% higher (per ISI), and my personal view is that the components of SOX go lower through January.

I know how this ends. I’ll be hopping around the house with a scowl on my face simply because I am short some stocks. Meanwhile, the SOX will go higher simply because the chart says so as QCOM, ASML, MU, AVGO, BRCM and SNDK add ~$100bln to the SOX. The Wife will yell at me to “Settle down and quit scaring the dog!” I will go sulk in the corner king chair to watch the stocks and her portfolio go higher.

So do yourselves a favor and go buy some semis. Don’t fight it. And let The Wife show you how to do it stress free.

My great grand aunt Fanny lived in Ferguson, Missouri. “All the white people there were crazy,” insists her niece. That is her memory from visiting Fanny in the late 60s and early 70s. Fanny’s sister, Ola Pearl, my great grandmother, lived in Decatur, Illinois where she dug goldfish ponds three to four foot deep and coated them in concrete. I used to swim among the goldfish while Ola Pearl pulled carrots out of the garden.

My great grandfather Andrew was a violinist. Perhaps the little musical talent I possess came from this man, Ola Pearl’s husband. He supported the entire extended family during the Great Depression by playing in the symphony for the people who had the financial wherewithal to keep living well as the rest of the country starved. When he died and my grandmother was cleaning out his home, she found a coffee can under the stairs with over 20 grand cash. He never trusted the bankers. The goldfish ponds had been dry for a decade, and I have not been back to Decatur since.

I now sit in a town across the great and muddy Mississippi from Ferguson, celebrating all that my family has accomplished, whilst watching my biscuits float in sausage gravy grease. Despite the splendor surrounding me, I don’t feel safely removed from the tragedy there, and neither should anyone else.

That government, not mere private prejudice, was responsible for segregating greater St. Louis was once conventional informed opinion. A federal appeals court declared 40 years ago that “segregated housing in the St. Louis metropolitan area was … in large measure the result of deliberate racial discrimination in the housing market by the real estate industry and by agencies of the federal, state, and local governments.” Similar observations accurately describe every other large metropolitan area. This history, however, has now largely been forgotten.¹

In 40 years times the informed opinion that government was responsible for deliberate discrimination has been replaced by the informed opinion that government is the solution to the deliberate discrimination by government. Leaders of other large metropolitan areas such as Mayor de Blasio were unavailable to comment. At the time of this writing, De Blasio was comically busy trying to don two hats – one hat for his leadership of the government agencies that practiced deliberate racial discrimination, and the other one as fixer for the same policies he was elected to continue.

What in the fuck, you may ask, does this have to do with me?

Enter Janet Yellen.

Yellen is faced with the same task as the leaders of the large metropolises: wield governmental authority to fix problems caused by government. The St. Louis fed, located 12 miles from Ferguson, published research in 2010 which highlights this conflict:

Some argue that targeted lending also threatens the Fed’s political independence, which is crucial to pursuing a stable monetary policy.²

From the same St. Louis fed research:

Fed officials acknowledge the problems of too-big-to-fail policies, but contend that without another means of resolving the failures of firms that pose systemic risk, policymakers had little choice but to protect creditors from taking losses to avoid catastrophic consequences for the financial system and economy.²

Five years ago it was informed opinion that the Fed was responsible for To Big to Fail. Two weeks ago we had Jamie Dimon and Citibank lobbying Congress to repeal Section 716 of Dodd-Frank. Considering that the Wall Street banks and financial interests have contributed “an average of about $2.3 million…to elect or influence each of the 535 members of the Senate and House of Representatives,” it should be no surprise the Section 716 was repealed.

Government regulators at the local, state, and federal levels failed to halt, indeed they endorsed, discriminatory practices of the real estate and financial sectors that played significant roles in the segregation of housing in St. Louis and nationwide.¹

The results of this practice, where government makes problems and then makes worse problems trying to fix the original problems, has been demonstrated on a small scale in Missouri. The Fed is doing the same thing, except the repercussions will be felt on a much larger scale. If Ferguson was a firecracker, the failure of Federal Reserve policies will be nuclear.

Welcome to Ferguson, Missouri.

¹ The Making of Ferguson: Public Policies at the Roots of Its Troubles

² http://research.stlouisfed.org/publications/review/10/03/Wheelock.pdf

 Merry Christmas you filthy animals!

It sure looks like the weakness in the U.S. Dollar today is giving precious metals and miners a shot at bouncing back yesterday’s apparently rollover. And, yet, even if this is a bottom for the metals and miners you can expect sharp shakeouts like yesterday.

I am keying off the UUP, Dollar ETF daily chart, below, to see if it loses $23.23 to the downside (just below).

If it does, I suspect metals and miners can sustain another move higher.

Also note top shelf miners like RGLD SLW are acting quite well today–Perhaps even like leaders.

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Courtesy of The PPT algorithm, here are the most current top five readings from my “12631 RELATIVE STRENGTH” custom-made screen, identifying which stocks are exuding some of the best performances to the market at-large at any given moment.

I look for stocks whose Daily PPT Hybrid Score surges, while the Weekly Hybrid has been negative over the past week. This can often yield stocks which are emerging from consolidations.

Members can click here to view and save the screen.

Sorted for at least 500,000 shares of daily average volume to ensure liquidity.

Please click on image to enlarge.

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Union Pacific continues to be a poster child for the QE market, even with QE tapered now.

On the monthly chart, note the largest rail basically reverse crashing to the upside. More than anything else, it is a sight to behold. But it also indicates the rail is basically pricing in a global economic boom in the coming months, which is quite interesting in and of itself.

I am stuck in a few positions, debating cutting them and wiping the slate clean this morning.

Keep an eye on laggards like NILE for a squeeze higher if the market continues to melt-up.

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Drop me your top morning watchlist tickers.

For you night owls out there, feel free to drop me any market/trading-related topics you would like me to cover in a weekend video.

In addition, anything else about the current market, feel free to drop below.

Speak your mind, night owls.

With a strong close on Monday, Cree is back on watch on the long side for a short squeeze higher from beaten-down conditions.

On the daily chart, below, note the potential bottoming formation being scalloped out. I view any further strength as actionable.

Drop me your top tickers overnight.

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Enjoy tonight’s video, and enjoy your evening. 

Direct Vimeo Link Click Here

Instead, it is always (including me) asking, “where’s the volume?”

Volume was rather light today, as the market grinded a bit higher. The bond market is closed tomorrow, and volume may be even lighter in equities.  Metals and miners gave some a chunk of Friday’s gains, while crude oil is finishing out on the lows.

Setups are still few and far between for swings.

More in my video market recap after the bell.

See you there.

Further cementing the many mixed signals in the market would be the spreads we are seeing in consumer-related stocks.

On the one hand, beaten-down high end auction house Sotheby’s is finally staging a strong rally today. The first daily chart, below, indicates as much with price breaking a steep resistance downtrend line for 2014 heretofore.

On the other hand, Ford is still a short setup and weak, once again, today. On the second daily chart, note the bear continuation pattern still in play.

Which one is telling the truth about where consumer discretionary stocks go from here? I do not think anyone knows that answer for sure. So, for now, the setups are on an individual basis, on their own merits with Ford still a short.

Also be on watch to see if Sotheby’s gets rejected this week by its declining 200-day moving average (yellow line on first chart).

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I first suggested Wal-Mart as a long-term investment idea back in this post in October 2011.

At the time, the stock was thought to be on the cusp of becoming a creative destruction victim and trading in the low-$50′s.

The updated monthly chart, below, shows the potential for another imminent leg higher, despite all of the talk about the firm becoming obsolete or marginalized in a new, online world. I think you can make an add after earnings, barring no massive move either way.

So, would another breakout in Wal-Mart make it bullish for the market at-large? Not necessarily, if you look back at the stock’s strong rally in the first half of 2008. More on that in one of my videos this week.

The firm reports earnings this Thursday, November 13th.

Regarding a few other long-term investments: CPL PKX have been laggards but not quite at the point where I am cutting them yet. I also have a few consumer staples still in the long-term portfolio.

All in all, though, my long-term investment portfolio still has the highest level of cash on hand since 2009.

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I’m sitting here in my bunker having given up all hope for the country. Pass the cheeba. Pass the wine. Pass the Ritz crackers. We’ll be here a while, so relax a bit.

I must admit I’m amazed at the resiliency of humanity.  I’m amazed at the tendency for things to right themselves through natural and perhaps quasi-divine processes.  I guess, like physics, economics have laws that cannot be contravened, though perhaps they can be more easily bent for a period.  We can rest assured, however, that like gravity’s effect on a rubber ball bounced off the tarmac, we are assured of a rebound by nature.

One true economic law is you will get what you incentivize, if you will forgive me that vulgar neologism.  When this country was formed it was a haven for the oppressed and those seeking a new start, true.  But it was also an immediate draw for those whose nature tended towards the burlesque, the hustle, and even the long con.  The rule of law was late to the game and sometimes absent, so those who survived even in the great cities of the 18th and 19th centuries did so on wit, courage and often times some manner of guile.  That formative chemistry served us well for almost 150 years and provided us not only with the capital, but the innovative drive to subdue the wilderness and become traders on a scale never before seen in history.  Our frontier justice and hustler’s creed, in a sense, turned a soup of opportunity into a civilization whose standard of living surpassed those of the wealthiest Romans and Turks at the apex of Empire.  All of that success a result of incentivized behavior.

After less than 150 years, we turned to the Age of Statism.   It is no modern age, of course but rather one visited and revisited by mankind numerous times over the course of his recorded history, and now so again in America.  The draw of Statism reflects man’s nature — his desire to consolidate power and impose his will upon the many.  Dressed as chivalry and noblesse oblige prior to the Enlightenment, this will to control comes dressed in similar patronizing robes today — first for your children and later ensuring your eternal childhood.

The statist door, cracked by Wilson, thrown open by FDR and later Johnson and Nixon, is now blown off it’s hinges by Obama and his club of cronies.  The Constitution, once the citzenry’s protection against such thuggery, now lies in tatters, largely ignored if not openly mocked.  Where our originating culture had once incented hard work and innovation, our new state insinuated the easy out of the dole and the forgiving excuse of eternal victim-hood.  Corruption became not some invasive element to be combatted, but a necessary institutional tool as it has been for centuries in lesser governments the world over.

What lies ahead for us, amidst the foundering bread and circuses, as the microcosms of statist corruption– the Detroits, Chicagos,  and San Bernadinos — silently implode under the weight of their diseconomic burdens?

Are these municipalities harbingers of a greater collective future?

Will the country split?

Or will we reform under a renewed interest in localized solutions and community building?

I can only hope for the latter as  I prepare to cope with an increasingly sclerotic and burdensome, top-down authoritarian system that will be punctuated by misery, increasing poverty and failing infrastructure.  Compound interest can be a terrible thing when arrayed against your interests.  And that interest is coming due, one way or another my friends.

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Ben said he wasn’t going to allay his QE moves today.  “Surprise Suprise!” as Gomer Pyle was wont to say.   Apparently, Ben is prepared to go out with a bang.  Let’s hope it’s smaller than the Big Bang, eh? Concentrate on the high quality stuff for now.  I was buying more AEM, RGLD and SLW today.  Everything else will be increasingly risky, so you may want to just stick with the ETF’s.  If you buy NUGT, make sure you have a call selling plan firmly in place.  Same goes for AGQ.  Best to you all.

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Aw geez, I just had an extremely clever and full of info blog post to make up for my long absence.  In it, I went over the weather conundrum, my summer exploits, the state of our miserable economy as guided by the clown show in Washington, etc. etc.

But like a dumbass, when I went to insert my graphic, I inadvertently went “away” from the site and lost the whole fucking caboose.  Goshdamnitalltohell. Fuck me.

My apologies, I’ll try to summarize.

One, I’ve been buying NUGT for five weeks to various painful degrees of success.

Two, the 120-month exponential moving average on the dollar ($USD for you Stockcharts buds) was breached for the first time in a decade in late 2002, leading to our glorious metals revolution.  Since then, the dollar has bumped but not pierced that line on a monthly basis FOUR TIMES since that initial drop, all of those time led to sad days upon the ascending attempt (the saddest effort ending the first time in February of 2009) and happy, glorious days upon the subsequent failures (remember March 2009 friends?), at least for we PM fans.

Three, the last attempt lasted THREE PLUS MONTHS, from March to June.  We are now enjoying another rapid descent.  If we turn back up again here, on the dollar, I can probably tell you the PM bull is dead.  If not, we are headed to Nirvana once again, sans the blown out brains of the lead singer, etc.

Here’s the thing, don’t buy NUGT tomorrow, as it will probably pull back on a test of $1350.  However, if we breach that level like “butter” with no pullback, be prepared to get aggressive.  In the meantime, we might get a present from SLW‘s “miss” tonight.  AG, EXK and SLW are nascent monsters once again.

All that said, you should also have TBT, as the bonds are beginning their own slow motion train wreck, courtesy of the Bernanke-Obama Hubris Nexus.

Be well.  I appreciate you all.

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Because when one semi-retires from something, no one wants to hear that the semi-retiree has been doing nothing. That would represent pure laziness and sloth. Why would one semi-retire if he was going to do nothing? Indeud, I have been enjoying semi-retirement, having recently purchased a beautiful piece of property on the Cacapon River, West Virginia’s cleanest river.

I caught a nice smallmouth shortly after this picture was taken.

So life is good. Which is a nice segue to the reason I am posting this, which is that my Fidelity Sector Fund Rotational System killed it in July, and surged ahead of its $SPY benchmark.

The system rocketed up 7.5% in July, once again outperforming $SPY, which gained only 5.2%. The system is also outperforming $SPY in August, but the month is not even half-finished.

Year-to-date, the system has logged gains of 20.8%, and that is net of fees, commissions, etc. $SPY has gained 19.1% YTD.

The top five ranked Fidelity Sector Funds are as follows:

1. FSAVX (Automotive)
2. FSRPX (Retailing)
3. FBSOX (IT Services)
4. FSRBX (Banking)
5. FSPHX (Healthcare)

The system rotated into some new funds last week. It is currently holding FSAVX, FSRBX, and FSRPX.

I’ll leave you with a little chart porn. Below is the equity curve and monthly performance for the system, starting in 2012. I use 2012 because that is when I started trading the system in real-time. Click on the graphic to make it larger.

Best to everyone!

Scene: The Oval Office. Obama sitting behind the big desk feeling both confident of his achievement yet scared about the financial goings on in the world at that moment.

Obama: Hey Tim, these banks are really pricks. They destroy the world of finance, force us (the government) to bail them out, and they won’t play ball. What do I do with them? Let’s put these cocksuckers in their place!

Tim: Congratulations, Mr. President. You’ve accomplished what few men ever could. Feels great, I bet. But I’ve got to burst your bubble a little bit now, sir as we’ve got some real problems.

Obama: Burst my bubble, Tim? That won’t happen! I’m on cloud nine and we are gonna clean house. Tell me what we need to do to own these fuckers and I’ll do it!

Tim: Let me ask you a question; Do you want to be the President who presided over the Greatest Great Depression where the world completely falls apart? Do you want to be the man who presides over the obliteration of the worldwide banking system as we know it? Do you want to be the man who single handedly took the American way of life and dumped it in the gutter?

Obama: Is this a rhetorical question, Tim?

Tim: Or do you want to be the President that took over this country, that is swimming in a world of shit, and cleaned it? Made it shine like a motherfucking diamond? Would you like to be remembered as the President who presided over the greatest economic comeback, a miracle!, in the history of the financial world and to preside over one of the greatest stock market rallies in history? Hmm? What’s it gonna be, Mr. President?

Obama: Again, with the rhetorical questions Timmay! The answer is obvious! Now stop fucking around and get to the point. I’ve got a lot I can do here. Programs to help the poor. An entire infrastructure to rebuild. Peace to make with our enemies. Come on!

Tim: Do you really want to know what you should do? What you must do? You won’t like it, Mr. President. You won’t like it one bit. But if you don’t do it, you will be remembered as the worst President since Herbert Hoover.

Obama: Go on then.

Tim: Well, the first thing that you’ll have to do is to shut up.

Obama: Excuse me?!

Tim: That’s right. You must not say a word when we give banks and Wall Street an endless treasure trove of dollars. When we give them trillions of dollars.

Obama: What the fuck are you talking about? I’m not giving one red cent of Taxpayer money to those bastards.

Tim: You won’t have to. Not one red cent! That is the beauty of the situation.

Obama: Go on…

Tim: As you know, Mr. President, I was the Chairman of the New York branch of the Federal Reserve, you know, those guys who regulate the money supply.

Obama: You mean Greenspan?

Tim: He resigned just before the shit hit the fan. Perfect timing, huh? It’s now his hand-picked successor, Ben Bernanke.

Obama: Oh yeah. I remember. He’s the guy who said  the housing mess was contained and there would be no financial problems or recession!

Tim: Right. That’s the guy. But I told him to say those things to delay the financial panic. He knew exactly what was coming but was under my strict instructions to falsify in order to avert it. It eventually cost the taxpayers 700 billion dollars anyway. In fact, most of his “facts” that he speaks publicly will be untruths designed to build confidence in the financial system. Mr. President, aside from using raw dollars to meet our goals, the most important thing that must be bought is confidence. Confidence in the economy, in the banking system and most importantly, in markets.

Obama: Using “raw dollars to meet our goals”?  Where the fuck is this money going to come from, Tim? And what exactly are we going to be doing with it?

Tim: Not us, Mr. President. Them. The Federal Reserve and Chairman Bernanke. They will create the money out of thin air. That is their job! It will show up as a debt on their balance sheet. Not ours. Not the governments. not the taxpayers. Theirs.

Obama: I don’t get it. How is this money going to be used? Shovel-ready projects? Are we going to buy houses from the Foreclosed upon? Give the money away? What!

Tim: We are going to buy shit, Mr. President. They will be deemed “investments” as it will be the shitty housing paper that banks fucked themselves with. Maybe we can get them to buy some government debt as well. And the beauty of it all is that there will be no government involvement, no government oversight. Nothing. It is not required according to their mandate. A committee will make a decision and it will be implemented using freshly minted money. No Congress, no Senate, no Republicans, no Democrats. I promise you that if you keep your mouth shut, everyone will too. It will work to everyone’s advantage who has capital or access to capital.

Obama: What? No oversight? How is that possible?

Tim: Easy. Did Greenspan need approval to lower interest rates? Nope. Bernanke won’t need approval to add debt to the Fed’s balance sheet. They’ll just print the money, buy assets in the marketplace, prices will rise and everyone will be happy again. But it will take some time and a lot of money. And that money will find its way in to the stock market.

Obama: How much time, how much money? And why the stock market

Tim: At least to the end of your first term, Mr. President and certainly trillions of dollars. The stock market is the only true arbiter of confidence in this country. Companies won’t spend or hire when their stock price is down. Consumers won’t spend if their retirement accounts are down by half! It is the most public and easily manipulated barometer of the economy, even though it really doesn’t reflect the economy. Really, it  just helps those who already have the money come to the realization they could and should spend and hire.

Obama: So let me get this straight. If I just shut the fuck up about giving trillions of dollars to the fuckers that brought us to this fucked up place in our financial history, everything will be fine?

Tim: That is absolutely correct, Mr. President. The building blocks are already in place. Everyone is already on board. All I need is your approval and promise to NEVER SAY A WORD ABOUT THE MONEY, ever.

Obama: I don’t like this, not one fucking bit. I’ve got to go against everything I believe in as a human being. But I guess that’s what one must do when they become the most powerful person in the land. If it is that easy, then you have my word, Tim. And if you are right, you can retire at the end of my first term to fame and fortune. But you better be right or I will blame it all on you. And you will go down in history as the worst Treasury Secretary ever. Got it? Now get outta here! I’m planning a trip to the most stable Islamic country in the Middle East, Egypt.

Tim: Yes sir, Mr. President…Thank you, sir…You won’t be sorry.

Why do we need to analyze anything? For markets, all that matters is the “stimulus”. There are no consequences as long as those who control the capital say so. Sure, we can speculate on individual stocks or “play” them in some way. But the fact is that an uncontrolled entity with no oversight is printing cash money and buying assets with it to the tune of billions and billions of dollars every day. In fact, the ten largest hedge funds on earth have assets under management roughly equal to just four months of this artificial stimulus. It is not normal market function it is something else entirely. And few really care as long as the game continues.

I recently got into a small twitter debate about the scheme of things nowadays and I was told to just suck it up and play within the new, identified parameters. The truth is that I find it difficult to suspend my disbelief in order to participate fully in this artificial schema, though I do own old man stocks from the past few years at considerably lower prices.

The question is continually asked about how this free money regime will finally end. I don’t know. No politician will have the guts to order it. No banker will have the stones to say enough. No regulator will have the power to end it. As long as it benefits those with capital, it cannot stop until some larger crisis develops. And I don’t know when or how it will be. Just that it will eventually be.

So in the meantime, listen to those who have been successful finding the cleanest crap out there and follow.

Six years ago, many things were different about finance and financial blogging. The retail investor had risen like a phoenix from the ashes of the 2000 bear market. They still believed that they could beat the market, and beat the experts. Technology and software was exploding, and these developments gave the little guy a belief (maybe an erroneous one) that they could stand shoulder to shoulder with “professionals” (I use that term lightly). Then came the crash of 2008.

Fast forward to 2013, and I think the strength and numbers of the retail investor have been greatly diminished. Conversely, the strength and numbers of finance websites and bloggers have greatly increased. For a small fish like myself, this makes it hard to excel as competition grows and the number of interested eyeballs decreases.

There are numerous sites out there that exist in pretty much the same space as my blog. These bloggers, researches, statisticians and traders are very good at what they do, and they do it full-time.  My full-time job has become more and more demanding, and the outcomes that I can produce there are much more important to our planet than whether or not I can write about quantifiable strategies that can beat the market. As I have become more and more invested in the work I do full-time, the number of hours I spend on it have increased in both mental and physical terms. My boys, 12 and 7, and my wife, also compete for my attention. In the end, something had to give, and it just makes sense that the 1-2 hours a evening that I spend researching and writing is not generating enough of a return to be sustainable.

I love iBankCoin. This blog has been a huge part of my life for a long time. Blogging here has afforded me incredible opportunities. I have met incredible people, and I have been able to use it to network with people who have helped me develop my skills in a way that would never have been possible without the blog.

I will still write here from time to time. I plan to keep posting updates to my Fidelity Sector Rotational System, and I would like to write about abnormal market behaviors. But I can no longer keep up the day-to-day updates.

To my partners Fly, Chess, RC, and Mr. Cain Thaler,  keep up the excellent work fellas. Fly, I think you know that I hold you in the highest regard, and you are without a doubt one of the few distinguished gentlemen left in this world.

If anyone would like to contact me in the future, my email is woodshedder73 at the google mail.

Best to everyone,

Wood

Needless to say, I’ve got a lot to say. But it will have to wait a little while longer.

I’m taking care of some “issues” that arise in one’s “late youth”. If I make it, I’ll have a lot more to say next week.

I promise…

Equity Performance Optimization with Factor Tilts — (Geeky title, Great article!)

Mean Reversion revisited: S&P 500 (What changed in 1987?)

Is Diversification Really a Free Lunch?

The Value of Stop-Losses and Stop-Gains in Enhancing Risk-Adjusted Return

Some of these articles, and more, can be found over at The Whole Street.

After seeing Hanna’s breadth results, I’m very curious about what the results of this study will be. As I’m writing this, I still do not know.

The Rules:

• Buy $SPY at the close after 3 consecutive higher closes AND the close is beneath the 50 day simple moving average
• Sell $SPY at the close X days later
• No commissions or slippage included
• All $SPY history used

The Results:

There were 94 occurrences of this setup and 39 trades were able to be held for the full 50 days.

As the chart shows, this setup under-performs $SPY buy and hold. This may be due to the requirement that $SPY close beneath the 50 day moving average. I would call the results of this setup neutral to bearish.

The results posted by Quantifiable Edges are more bullish than my results. I would like to see that breadth study add the condition for the close to be beneath the 50 day average.

I have written many, many times about how hard it is to find a study that yields bearish results. The market has a bias to the upside, and study after study shows the bias. This study, however, does not. The results, while not earth-shaking, should be viewed as a caution signal. My interpretation is that we can expect more volatility, more up and down, while ultimately moving sideways, for at least a few weeks.

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Crushed? Debilitated?  Blown out beyond all reason?  Yes, you could say that.

Sentiments levels?  Dead!

Long term bull trend? Dead!

Neidemeyer?  Dead!  (Ok, so Animal House was on tonight)

All kidding aside, we saw a similar “interruption” in the last great secular  bull cycle in the mid-70’s (’74-76) when the Fed and the Fisc made promises to “Whip Inflation Now.”  That 50% pullback from was followed by a 350% price move to the peak in 1980.   Are we in for the same shennanigans?  Well, we’re now 36%+ off the highs in the gold price, and more than 67% off in the Gold bugs ($HUI) index.

What’s even crazier is the stretch $HUI has taken below it’s 200 day moving average, the traditional “revert to the mean” line of demarcation.  Usually, if we get more than 20% below that level, we are going to see a reversion.   We are now 46.5% below the 200 day Simple Moving Average.

If I had any credibility left I’d tell you I’m looking for a bounce here.  So maybe consider that comment ironically, if that helps….

My best to you all, really!

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I think gold’s flirtation with $1400 is drawing to a close, and we will soon join the great asset swell.  I am thinking about a small “opener” in NUGT.   I’m of the mind we will proceed to $20 with long due haste, where many gaps will be filled, to much rejoicing.

Then we will rest.

The nice thing is that we could get knocked back to $10 before the morning even starts, but that would be an even better launch pad.  Play with stops at the lows.  That is all.

And yes, even the dogs will have their day here soon, but why not start with the more quality stuff? RGLD, SLW and AUY, along with the dividend bearers (NEM and AEM my favorites).

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This has been going on for over four years and during this entire time the “money” stayed locked in the closed loop of the financial/investment system and sent the prices of assets ever skyward. And during all this time, the economy and everything related to it was subject to the disclaimer of “weakness”. Housing, credit creation, employment, production, consumption, spending. Anything you can think of was “weak”.

Then, suddenly, after months and months of obscene amounts of stimulus “money” pointed directly at banks and government, the major averages made new all-time highs. That’s right, as “weak” as everything was, markets made new highs. Some say it is the markets discounting better times ahead. Others say it is a recovery in corporate profits.  Others attribute the rise to the Feds stimulus. But most non-finance people have no idea why the market has done what it has done. And if you ask them about the Federal Reserve and the stimulus, they have not a clue as to how, why or how much.

I’m not bemoaning  these new highs because I think they are contrived or for any other reason. But what I have noticed is that now that markets are here, at all time highs, all the “weakness” has remarkably disappeared. It’s like someone flipped a switch or turned a page. All of those bad mortgages and underwater homeowners. All those unemployed or underemployed, vuala! it no longer matters. As the markets rallied, no negative news mattered. It made no difference that nothing was really improving, simply a stabilization at depressed levels. Now, its all good and if you are still having problems then you must truly suck.

Now the Japanese have gotten into the act. Their markets and currency are on a wild ride, greatly upsetting everyone in their region but producing (up until last week) some serious one way action.

I’m not sure what the point is in this exercise other than to vent about how we have spent ridiculous amount of wealth on nothing but keeping the government afloat and saving the balance sheets of the big banks. Plus, the creation of the thirty million dollar condominium apartment in Manhattan. Not one road has been fixed with all this money. There has been nothing, NOTHING done with all this insane amounts of capital other than to buy government bonds and MBS. BTW–the quasi-government agencies buy every new mortgage originated no matter who does the origination. There is only Fannie, etc.

And to make matters even worse, all the money used to buy MBS paid “full boat” and then the sellers (banks) hypothecated the money times 10 at least. So now we are levered to the hilt, again.

And they are not going to stop. They simply cannot.

So what about all those people left behind, the ones that don’t have a multi-million dollar pied a tier in Manhattan, a McMansion in the tri-state area and a beach house?  Well, you’re screwed because the government, media, banks, and the markets say that its time to move on up. Don’t get left behind!

One month of sustained gains has changed the picture everywhere. Most now truly believe that the problems and malaise that were evident as recent as last month have been nullified and that it is clear sailing regardless of the facts.

During this past month, the S&P 500 index has moved up over 125 points or over 8%. This gain comes after a rally that began in November of 2012 when the Federal Reserve promised to keep their monetary stimulus in place until unemployment reaches the mystical level of “full employment”.

That gave stock investors the green light to buy regardless of any news or scenario. We are now at all time highs for most of the indices and almost every indicator is past almost every record. There has been no pullback or correction and because “everyone” expects the overdue pullback, it has not yet happened.

Regardless of the reasons for this historic market, it has taken on the characteristics of past bull market phases. First the most economically sensitive groups rallied sharply. Then consumer stocks, then technology. Then the reach for anything with a safe yield combined with the “margin expansion” explanation. Then, finally, the short covering of the “worst” companies combined with the out-performance of the most lagging groups like shippers and Chinese scam companies.

Like in other bullish phases, it has taken the ability to set aside all caution and concern for risk in order to maximize profit. The exception is the long-term hold of those “old man stocks” with yield that has experienced historic multiple expansion. Even they are past historical multiple peaks.

But there is a road map and warning signs that must be heeded. The first to rally and most economically sensitive group, namely commodities, are very weak and have been this entire year. A year when records are being broken everywhere. Yet, according to analysts, during these historic gains the market is getting cheaper, not more expensive. Every doubter has hung up his hat after being “gored” by the bull. They have all been banished to a cave where they are cannibalizing each other just to survive as the market goes up every day without as much as a two day pause.

Certainly the latest phase in this Bull Market is fueled by endless POMO and by the April contributions to 401k’s combined with the largest “towel throw” in the past four years. And now with a one way market, low volatility and stability, we are invincible. But are we?

With 10% days in precious metals there is some new volatility afoot. Even if there is not and all negatives continue to be ignored, the technicals alone mandate a retracement that tests the breakouts that have occurred in individual stocks and the major indices.

A simple test of the latest primary breakout. After a parabolic breakout, that is the best case.

And based on my commentary you may think me “bearish”. “Agnostic” is the preferable description while I hold much of my old man stocks bought shortly after this record setting Bull Market began in 2010-2011. I have gone along for the ride without some mystical target top. I can appreciate that we are where we are, but can certainly doubt and even dislike how we got here!

Allow me to quote Bill Gates: “Success is a lousy teacher. It seduces smart people into thinking they can’t lose.”

Today alone we have a big POMO day, David Tepper presenting his rip-snortingingly bullish “Tepperisms”, a terrific Tuesday being the 19th up in a row, a technical breakout for the major indices to new all time highs and massively monstrous moves in the heavily shorted names. It remains disassociated from the true economics and reality of the world yet is the picture of technical and situational perfection for markets to trade higher.

With Option Expiration coming on Friday and this being T+3 for Friday, it all feels a little blow-offie to me.

Maybe I’m just thinking in a anachronistic and linear way. Going without as much as a 5% correction since the QE-Forever rally began on November 16, 2012, we have gone above every historical norm of market action. This is precisely the reason that one can never say never nor always when it comes to market action.

Needless to say, the griddle is hot. Perhaps it can go on forever but I’m thinking that things are almost at the tipping point of being too lopsided based on the action both above and under the surface. My guess is that Op-Ex on Friday is the day to watch.

I Am Become Ben, Destroyer of Worlds

Joe Wiesenthal reports on Bernanke rage among hedge funders, and sure enough, here’s Paul Singer declaring not just that he dislikes Bernanke’s policies but that BB is destroying the very fabric of society.

He wonders why everyone hates zero percent interest rates because they are good for everyone and that inflation is better than the alternative. Ask those who live off the interest how they’re doing. But its not interest rates that has everyone all pissed off. It is something else entirely.

BERNANKE HAS DISRUPTED THE PRIMAL FORCES OF CAPITAL’S NATURE!

Buy creating capital (no pun intended) through the simple act of digital printing, and buying “assets” day after day, week after week, month after month and year after year, he has seismically shifted the rules of investing, capital formation and the ebb and flow of markets.

He has single handedly so warped investor psychology that there is a bone-fide expectation (self-fulfilling) that markets only go in one direction.

It removes the opportunity that comes with the mispricing of assets in a moribund economic environment. Instead, most assets are simply “too expensive” based on any traditional metrics or historical norms and those prices are “justified” based on the flow of cash from the FED. And please don’t give me a boilerplate answer about how the market has a 15 multiple. That is mostly based on Apple’s huge earnings and the too big to fail banks and their fictitious “earnings”.

So, why is Ben hated? There you go. Plus, this is the same reason that this is “the most hated rally in history”.

Here is the speech that Mr. Bernanke should receive:

http://www.youtube.com/watch?v=jxiT30N6ti4

Can Early Favorite Orb pull a “Big Brown” and win from the far outside post position?

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My apologies for not ringing in this week, but Derby Week is like Mardi Gras down here and I’ve a lot of responsibilities. Many of them include chaperoning Large Net Worths around, paying close attention to their words of wisdom, and occasionally matching them bourbon for bourbon, deep into the evening.

Gold an silver seem to be hanging in reasonably well, here, and $1,450 seems to be holding well. That’s a level to keep your eye on. In the meantime, I like AUY, NEM, AEM, and of course SLW and RGLD. All on sale now.

As for the Derby itself, I have to admit a certain loyalty to Rick Pitino’s magic horse, Goldencents, which, donning Kevin Ware’s #5 at Santa Anita, scorched the pack for the highest Beyer speed rating of any of the Derby preliminaries (105).  Nobody else came even close to that in the Derby prelims, which lends the cold credibility.

I also like Normandy Invasion, and not just for the cool, retro-WWII name.  I liked the way Normandy was making good time to almost overtake Verrazano in the Wood Memorial at New York’s Aqueduct Racetrack last month.  That race was a mile and an eighth.  I think with the extra 1/8 of a mile left in the Derby, Normandy should be sitting pretty.

Last I like the big winning colt, Orb… caution, this horse will likely be the favorite once all the Louisville Cardinal fans (Pitino’s GoldenCents) and multi-Derby winning jockey Calvin Borel fans (he will ride mud horse favorite Revolutionary) get too drunk to remember to bet by the 11th race.  Orb has done nothing but win, and is coming off a sparkling win in the Florida Derby.  The problem with this horse is it’s coming off the 19th hole, which has been a traditionally tough place to win from.  Big Brown, however, won from #20 position in 2008 (see above) so anything is possible if you have a super horse.  The question remains… is Orb enough of a Super Horse to win it?

Tune in tomorrow evening at around 6 pm on NBC!  Look for me hanging off one of the balconies, hopefully not by one of my more delicate extremities.

Best to you all, and happy happy Derby!

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What we now have, culminating with Apple’s huge debt offering (even though it has a hundred and fifty billion dollars in the bank), is based on the greatest IOU in history. And most are debts that cannot and will not ever be repaid. My guess is that most of the Sovereign portion will be “forgiven” or “extinguished”. I’m  wondering if Central Bankers even have to repay debt.

For markets, the inmates have completely taken over the asylum. This is Attica and the authorities don’t even know where to begin to control the situation. But as long as markets are rising, there will be no call for bloodletting or the chopping off of heads. All country bond yields will hover just above zero, yet there will still be outrageous demand because there is simply so much money, so much liquidity that must find a home outside of cash.

We’ve been harping on the reality of the “Fantasy Market” for a couple of years now without trying to bet against it. QE has so perverted and warped the investment process that the markets have bought into a version of the Stockholm Syndrome because free money for markets are benign and good. For example, I pleaded for everyone to buy Verizon (VZ) around $30. Wall Street told you not to. I begged! And those who bought had to wait a year. Some even lost patience. Now the stock 80% higher and its yield has been cut in half. Yet it is now parabolic and you are told to buy it.

Now even the most bearish have thrown in the towel knowing that the trillions of dollars plunged into then markets has so changed the psychology of big investors as to prevent the liquidation of any real portfolios. Sure, there are flash crashes and big and fast moves. But the liquidity pumping from all corners has assured everyone that everything will be “market-perfect” until it ends, regardless of economic fundamentals. As long as we are “left alone” and the liquidity stays locked in the “closed loop” of the financial system, there is no limit.

But if you want to be anachronistic and think that chart patterns make a difference, or that “sell in May and go away” has a chance, please notice the formation of what may be a perfect near-term double top combined with a series of negative divergences. Historically, this is a very bearish pattern. I would lighten up if I was trading near-term but I am not prepared to bet against the greatest shift in investor psychology with endless liquidity in history.

After the worst week of the year for equities, a miserable year for anything economically sensitive like “metal” and the worst week for gold, silver and copper in decades, we are enjoying our best week of the year in all of the above.

European economies are plunging but their markets are soaring. Precious metals have rallied sharply. American indices are the number two performer in the entire world this year, right after Japan, and they are about to make new half-decade highs as the month ends.

Stocks routinely gallop or plunge 10-20% a day on no news. Lagging groups are now leading. Everyone is breathing a giant sigh of relief that there will be more free money forever.

Funny, while the markets were correcting there was a different FED HEAD Jawboning every single day. Now that the market is rallying, they have receded into the woodwork.

Someone wrote this week that the world has become a giant accounting fraud. Let me add that it is also a giant insider trading scheme perpetuated from the highest reaches of government. And we in the ever-shrinking world of finance, are only to happy to abide.

In fact, we depend on it.

The 1,350 to $1,400 area is going to be important here.   We banged against $1,400 a couple of times over the past two days and were not able to surpass it until this  early this morning, when we had a quick break and then a jet to over $1,420.  There was a lot of selling into that break, and so a retest of $1,400 will be increasingly important to see if this will be a failed bear flag or an actual recovery from the recent oversold condition. 

We are as of this writing, trading at $1,407.

There is a possibility that we could snap back extremely hard on this recent down-plunge.  There are stories all over the internet about large physical purchasing going on.  This could be anecdotal (well, it IS anecdotal), or it could reflect the difference between the paper and physical markets.   If the last couple of days action was a desperate move to combat an imminent physical delivery problem (as some have speculated), we could see a torching of the shorts like none have encountered since early 2009.   Stay vigilant and nimble here.

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With economically sensitive stocks and commodities crashing, everyone is now worried that the reality of the real world is about to displace the distorting fantasy of QE, POMO, ZIRP and free money from helicopters.

Just because Apple has gained and lost $600 billion in market value over the past year?

The astrological signs have moved into disunion. The heavens are shifting. The major indices have pulled back and everyone is scared.

Yea of little faith in St. Ben! A little ebb & flow is a good thing. But just be careful in chasing the winners as they are more than a little expensive, historically.

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I don’t need to tell any of you who were paying attention about Friday’s crater job on the precious.  Coming about on the Friday before options expiration week, at at the end of a long and dreary down cycle, it certainly looked nicely timed to shake the trees loose of many golden and silver ducats.  Friday was a nice day to make that first physical purchase and tomorrow morning may be even better as a result of the follow through.

I’m holding on to what I’ve got for the almost inevitable mean reversion play here.  The precious miner bullish percentage index (“$BPGDM“) is at absolute ZERO.  The last time we hit zero on that scale was in December of ’08, at the very nadir of the financial meltdown.  What’s more the Hulbert gold sentiment rating is off the chart completely (yes, below -20, otherwise known as “uncharted territory.”)  We lost another $50 tonight before the rebound, and we could even see $1400 tomorrow.  Is this the time to give up the ghost?  No, it’s blood in the streets time.   You know what Mr. Rothschild said about the time to be looking to buy, right?  Consider that the Buying on Weakness number for GLD was its highest ever on Friday at $144 mm in block trades.  That’s the big boys out collecting.

The best bet right now is physical, and or waiting for the turn, with wariness and apt cunning.  Fly got some AG on Friday, and while he may have been a touch early, I think he’s got the right idea.  The fast flyers will rebound 20+% when this plunge is over.  I also like the fat dividend alpha males like AEM and NEM here… they too have been beaten down over-harshly.

Hang on, folks, we’ve been through these before.

Best to you all.

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I  know quite a few of you might expect a post today about tonight’s National Championship Final down in Atlanta, where my beloved Redbirds will be playing Cain’s Be-sooted (sic)  Maize and Blue Marvel Comix Characters (no bologna).

However, I will humbly defer, due to an acute allergy to all bad ju-ju and other such superstitious toxins.  I learned my lesson after taking Wichita State a little too casually and as a result experiencing four or five apoplectic cardiac arrhythmias during Saturday evening’s semifinal game.

Let’s take this time then to talk Kentucky Derby and one of my favourites (sic) in both the equine and suspension categories – Verrazano — the Winner of this weekend’s Wood Memorial Derby Prep at Acqueduct.     I am usually very partial to the winner of the Wood Memorial, as it’s quite often racing against the best 3-year old competition prior to the Derby, and what’s more important, racing in very similar conditions to that of the Derby itself. 

This is extremely important, and often overlooked by fans of the Florida, Louisiana,  Arkansas and Santa Anita Derbies (the other noted Triple Crown prep races).   While there’s much difference in attitude between my native home and my adopted one, there’s actually very little difference in overall climates.  We might get slightly milder winters and less hurricanes down here in the Bluegrass, but for the most part our weather patterns, up to an including ambient temperatures are very similar. 

Moreover, the Wood Memorial at Acqueduct , is conducted in a similarly aged (and aging) facility, and on a dirt track — no small matter in this age of synthetic (read “rubber”) surfaces.   So I like the winner of this race way better than I do the palm-swaying pooftahs down in California or Florida.   Mind you, The Illinois Derby (which is no longer considered a Derby prep), in Cicero, IL, is another similarly-conditioned race, but it never seems to draw the same top flight competition that the Wood, Florida, Arkansas, Louisiana and Santa Anita races do.   

(Rumor has it the Illinois was dropped from the Derby trials because Gap and Yap has been caught waving a sparking taser at the horses there one too many times, and they lost their insurance coverage.)

Pulling back to Verrazano, he’s a plucky “working” horse with a lot of muscle to him, and he reminds me of former Kentucky Derby winner Fusiachi Pegasus in that regard.   He ran something of a slow Wood Memorial (finish time for the 1 and 1/8 miler was 1:50:37) , but that could mean nothing, given he was only following the pace horse (ChrisandtheCapper) for the first three quarters of his run, and biding his time to make his move.  What’s important is that he held of his competition in a very game Vyjack (who fell to third after going neck and neck), and a surging Normandy Invasion, who took second at the wire. 

The only smoke on his horizon may be that Verrazano’s jockey, John Velasquez, who also rode Florida Derby winner Orb (see below), got hurt late yesterday in a fall at Acqueduct.  A change in jockey can be a big problem for a young horse

I also like Orb, the Florida Derby winner and of course Goldencents (whatta name!), the Rick Pitino-owned colt that just took the Santa Anita Derby prep from Bob Baffert-trained favorite Flashback.   I will have more to say about those ponies in the coming weeks, but for now, let’s hope Verrazano is not a Bridge Too Far. 

Oh, and cover those silver shorts too, while you are at it.

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UPDATE: Breaking… Flashback has been pulled from the Derby Trail due to a bonechip injury resulting from last Saturday’s Santa Anita Derby.  Out for at least two months.  

Pitino wins again!

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Everything’s relative, I guess, including pain.  Today’s revisit to the recent lows (and no, we’re not there yet) is not as painful as, say — a bloody compound tibial fracture jutting messily out of one’s shin.  That said, it sure has been a frustrating six months, hasn’t it?   And yet, if you look at all the major charts, it looks like at this late point in the cycle, the worst we are going to get is a revisit to the end of February lows, which — not insignificantly– were at the 200-week exponential moving averages for most gold and silver stocks.  Royal Gold (RGLD) is still my favorite here, but you’d have to be crazy not to take advantage of the yielding plays available through NEM, AEM, and even ABX — and those are large caps you’d never see me recommending in a “normal” market.

But this isn’t normal.  There’s a concerted, global (read Big 8) effort to devalue currencies — and therefore reprice debt — the world over.  The only way those central banks can get away with this kind of routine, and save their debauched systems, is to get it done under cover of a “deflationary” scenario.  The easiest path to that is to keep their foot on the less liquid large commodity and precious metal markets.   This whole American Earl Revolution is a God-send to the central bankers, because it’s bringing supply on line in a period of global currency inflation.  Ask yourself why oil prices have remained so stubbornly high, however, despite the onlining of so much new supply in the world’s greatest petroleum consumer.

How much longer can this kind of thing go on? Until the little guy cries “uncle” as loud as Soc Gen just did?  Given that I was expecting a retest, and the large volume bars we saw at the late February lows, I am thinking this week and maybe the next will be the final washout.  I’m still holding tight to my remaining cash, however.  Like in late February of 2009, I don’t expect these prices to hang around for very long once the next cycle takes flight.   That said, I think there will be ample time to take part once the bull trend resumes.

Best to you all, and Go Cards!

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PS – this retrace is also an excellent time to buy some physical, if you’ve been holding off, including 100 oz silver bars and nice liquid gold coins like Maple Leafs or Eagles.
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Defense wins championships, right?  It also keeps one alive to survive and advance.  With Cypress pulling out the last minute levers to confiscate “excess deposits” in order to balance its public accounts, how good are you feeling about “independent” depository institutions right now?

Sure, I know.  None of that stuff could ever happen in the U.S.   We’ve only got $20 trillion or so in 401k assets across the country.  We’re only a Bloomberg decision away from your friendly gummint deciding that asset plan could be much more “sustainable” under their “supervision.”  And heck, what’s safer than gov’t treasuries after all?’

Remember, they are just looking out for your best interests.

But own some physical gold and silver anyway (now’s a great time to pick some up for the longer haul).  And you know what?  A Kimber ACP might not be the worst idea either.

Best to you all.  Go Cards.

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My dear Ab,

I sometimes wonder whether you think you have been sent into the world for your own amusement. I gather, not from your miserably inadequate report but from that of the Infernal Fly, that the patient’s behaviour during the first raid has been the worst possible. He has been very frightened and thinks himself a great coward and therefore feels no pride; but he has done everything his duty demanded and perhaps a bit more. Against this disaster all you can produce on the credit side is a burst of ill temper with a dog that tripped him up, some excessive cigarette smoking, and the forgetting of a prayer. What is the use of whining to me about your difficulties? If you are proceeding on the Enemy’s idea of “Analysis” and suggesting that your opportunities and intentions should be taken into account, then I am not sure that a charge of heresy does not lie against you. At any rate, you will soon find that the justice of Hell is purely realistic, and concerned only with results.

You have let slip a grand opportunity with our ally The Fly, one which came with great effort and coercion. The howl of sharpened famine for that loss re-echoes at this moment through all the levels of the Kingdom of Noise down to the very Throne itself. All that sustains me is the conviction that our Fundamentals, our rejection (in the face of all temptations) of all silly nonsense and claptrap, must win in the end. Meanwhile, I have you to settle with. Most truly do I sign myself

Your increasingly and ravenously
affectionate uncle

Screwnote

A grand thanks to The Fly for the opportunity to write here. Good luck to all!

Take, for instance, Mr. Doug Leggate of BAML and I believe of former ML fame. I am actually a big fan of the original ML commodity analysts because they do as they say and say as they do. Or at least “said,” hard to say for sure these days. Anyway.

Shall we revisit the idea of “price = volume”? Yes, let’s.

Our good man takes last week’s oil report and says

Crude inventories fell 3.7mmbbls driven by higher utilization as WTI discounts arguably provided the incentive to run. A spike in mid west refining runs is also likely responsible for a ~1mmbbl draw at Cushing bringing the total draw to 3.2mmbbls or ~10% since early June, and total stocks back to exactly the level of 2010. With this backdrop we suggest Cushing inventories are not the driver of a near doubling of the WTI-Brent differential to $20 since early April. Rather we point to external events and the confluence of North Sea production outages, a 30% increase in E Coast utilization and the IEA oil release; we view as transitory.

Can we be honest here? Please? Let’s just get right out there and say that North America is currently producing more oil within its continent than it can consume. Cushing inventories were not the driver of the WTI-Brent discount, but simply a symptom. Much like we see stock prices drift lower in search of a buyer, WTI drifted lower in search of an acceptable arbitrage. Inventory built up (negative volume) as the differential increased in search of buyers, not the other way around. Domestic consumption was unable to fill volume, and thus price looked for the Brent arbitrage to find a bottom.

Does this not suggest we are producing enough oil within the continent to at the very least satisfy our consumption? Let’s all be sure to remember that the WTI-Brent spread widened to abnormal levels in Q4 of last year, not Q1 of this year. While the “Arab Spring” or “Spring Arab” or “I’m a bouncy schoolgirl on the corner” is the popular reason for the differential, take a step back and consider just how bad the Republicans would look if we suddenly discovered that the US was exporting oil products rather than importing crude.

For the record, I am still a registered Republican. I was from the moment I had the opportunity to sign up. In disgust and protest I have not voted Republican for 11 years. I wait hopefully for the opportunity to vote Republican again. This past week’s events suggest I might never vote Republican again.

I will bet $5 that Leggate voted for Bush.