Disclosure: Long PCU

Targets: 17.20, 19, 22

Stop: 14

Disclosure: Long CMI

Upside Targets: 28, 30, 33

Stop: Move up to 25.00 (Was 22.50 before today)

Hugh Johnsen was just on Bloomberg talking his book.  He likes DRI (Darden Resteraunts) and Home Depot.  I've already put Home Depot on the 'Short the snot out of' Watch list, but Darden wasn't on that list until now.  This stock is Garbage, Red Lobster will be in the Red.

I'm getting "itchy-mouse" on this one but  it's hard to get in front of anything as long as the market creeps higher.  However, from a technical standpoint, it's banging up against the 200 day moving average, which also happens to be the 50 week moving average as well.  

The idea entry for a short _position_,  imho, would be at 33

For a short _trade_ if it can't keep 27.50 it will  likely pullback to 25 in short order.

Guess the taxpayers will be buying Corporate debt soon and Pimco is positioning itself (for the 3rd time) to take the money.

SPG (Simon Property Group) is tettering at the 50.00. Bear Flag and all sorts of bearish divergences in the technicals. Commerical realestate is dead, yet the value players are recommending some REITS....They did the same thin in April/May too. I am short SPG for the long-term. They will be at 20. I'll check back here in a year or two :)

Edit: In the near-term, it depends on if it can hold 50. If it does hold above 50 on the close it might try to run to 60 once again. If it can't hold 50, then ...

[edit add labels]

Imho, I would stand down on these as a short trade by itself for now.  The "news" is known.  Using them as down-side protection in a larger group of long trades is ok.  I'm going to keep watching a select few names and monitor the headlines for any bankruptcies that might send this sector back down.  But for the time being it wouldn't surprise me to see these ease higher in the short-term.  This includes JOSB.   Sure, none of these deserve to go up, but just watch out for Bulltard Express if you insist on pressing the retailers here as trades.

OXY (Last 54.14) Upside: 60, 65, 70, stop out below 50

HAL (Last 17.24) Upside:  19, 20, 22.50, stop out below 16.50

SPWRA (Last: 35.38) Upside:  39, 43, 48, stop out below 32.50

GG(Last: 30.41) Upside: 33, 37, 40, stop out below 27.50

Gold/Oil

On several occasions I've babbled about Gold during deflation, mostly in the context of Gold vs Oil. While I've often referred to some long-term ratio averages between Gold and Oil, however one probably shouldn't own/trade Gold for that reason alone. Gold is a tricky beast to trade, especially un-hedged. There are economic inputs, seasonal inputs, currency inputs and geopolitical inputs that go into price. Then there are the random periods to where people flee to Gold simply because no one knows WTF is going on and the next week everyone exits stage left because of some unobserved input. These are the reasons I've been reluctant to go as far as setting price objectives either up or down for the metal itself and this is why I prefer to hold onto the Long Gold / Short Crude position for the foreseeable future. I can easily adjust the tilt by trading around this core holding, usually with the gold miners and the energy stocks or FX. For example, I'm uncomfortably exposed to the long side of energy as of last week, tilting the balance of the position for the time being (few weeks perhaps) to long energy stocks. If the free fall in oil resumes then I'll quickly cut these and run. Anyway, enough of this nonsense, let's get on to the surprises for 2009!

Analyst Surprises for 2009

Here is the summary of what I've read from the analysts.

1. The Market goes up.
   
2. The Market goes down.
   

Thurgy's Surprises for 2009

1. The Market goes up and down (top that analysts!)
2. S&P reaches 1170 before turning back down.
3. Gold reaches $1300 as the dollar declines and geopolitical tensions increase.
4. Oil reaches $60+ as the dollar declines, geopolitical tensions increase, and the false hope of a recovery in 2009.
5. Barney Frank solves a crisis.
6. CNBC declares a bottom, "Power Breakfast" replaces Squawk Box.

Then afterwards (mid-late 2009, early 2010)

1. Dollar reverses, rest of world in deeper crap. Trichet gets hit over head with shovel, joins back in race to zero interest.
2. Gold falls 50% from peak (sometimes in 2010).
3. Russia Defaults, Putin nationalizes Smirnoff Vodka, gets shitfaced.
4. Barney Frank solves a crisis.
5. CNBC declares a bottom, "Power Dinner" replaces Mad Money.

Then in 2011

1. S&P reaches 600 (575), will it ever stop?
2. A run on the mattress stores ensues, Sealy Posturepedic becomes largest company by market cap in the S&P 500.
3. Barney Frank solves a crisis.
4. CNBC declares a bottom, changes name of network to Power Channel.
5. Cramer actually does "Stop Trading".

*BEEP* Barney Frank's Phone Here.  Frank and the rest of the Crisis Team don't have AT&T, which means we have ZERO BARS here in "La-La" Land...so we didn't get all those calls about TARP giving Treasury unprecedented powers with no legal oversight or that it's simply the wrong plan and will not fix what ails us...I'm Barney Frank and I'm all about solving the next crisis, not preventing one.

Seems to be the majority of the headlines.  I have a hunch this Christmas will be pale in comparsion to next year.  Next Christmas will be a Hard Candy Christmas.

At least for the Year to Date that is...

More support behind the 'Commodities will lead' us out of the bear market.  Click here to go to video.

Starting at the 4:00 mark.

Not 4 weeks ago, not 2 weeks ago and not last week.  Now it's "go time".  You got a straight shot for a long trade Maverick on the S&P.   Stop out under 850.    

Hey, everyone else has called a "go time" in the past month,  now it's my turn.  :-)  This is just a short-term trade.  

Put them on your 'short the snot out of' watch list.  Be a ninja and wait,  you'll be rewarded.  They have buy ratings on these guys and the Bobbleheads are making their rounds on the airwaves.  ``Home improvement is stable".   Right.  This got my attention and reminded me of some good info I came across a month or so ago at Calculated Risk: 

Home improvement is at 1.21% of GDP, off the high of 1.3% in Q4 2005 - but still well above the average of the last 50 years of 1.07%. Maybe lenders are boosting home improvement spending fixing up all those damaged REOs!

This would seem to suggest there is significant downside risk to home improvement spending over the next couple of years.

I heard this on the television but I can't find the link to the Bloomberg article despite it appearing on the "most read".  First Gartman and now "You and Us" are going against me.  What rigorous analysis did the UBS analyst do in order to derive these numbers?  Is this the same analyst who has the $550 price target on google since March?  Maybe this is the analyst in charge of the tax evasion department, or MBS.

I'm not going to sit here an try to tell you price objectives for the yellow metal.  There are plenty of sites that will tell you exactly where gold will go, and if it doesn't, it's because of manipulation (Financial Sense).  Keep in mind most of these saw $1200 gold by now before the dollar repatriation derailed the commodity train.

Back to the $20 oil and $300 gold... This $20 oil number is logical.  We were there only 6 years ago and gold was just ~$450/oz during the same time.  Using a few numbers I did some quick 'back-of-the-toilet-paper' math to see how the gold target was derived.  

Knowing the target for oil, and the 40 year Gold/Oil ratio average of 16.50 we can now solve the puzzle:

G = O * R

G = $20 * 16.50

G = $330

I'm not saying this is how they derived their figures, but it wouldn't surprise me in the least.  How can you can pull $300 out of your ass?

Here are the problems with this.  First he's calling for a %50 drop in oil (used $40 to be fair) and over a 60% drop for gold.  Wtf?  So according to this guy, oil will outperform gold, or at the least move hand-in-hand.  Wrong answer.  Here is the problem with that.  Over the last 6 years the Gold/Oil ratio averaged just 8, half of the 40 year average.  Where does it need to be in order to maintain the long-term trend?  Ok, so this isn't enough to make you want to buy gold alone because if oil did go to $20 and we use a 30 multiple that puts gold at $600.  And honstly every time I look at a long term chart on gold I see that same $600.  Ok, so that would be bearish for the metal from where it is now.  So why am I wasting all this time blathering on gold?  Frankly I don't know where gold is going to be 6 months from now, and it would be silly pretend I do (Like the ubs guy).  However, what I can tell you is that I'm 100% bullish on gold versus oil.  This is to be viewed as one trade, not two.

My strategy has been simple: dollar for dollar, long gold and short crude.  I intend to maintain this position for at least another year, or until it's force liquidated, whichever comes first ;-)  I use the futures market for this position but you could also use the GLD/USO or some other vehicle to duplicate this.  

Now the are times when I might alter my exposure on one side or the other either through EuroDollar futures or energy stocks, depending on what the market is doing.

It's quite possible I could end up being wrong.  I have no problem looking stupid in front of people, I do it all the time.  

Dec. 20 (Bloomberg) -- Congress will use the remaining $350 billion in a U.S. bank-rescue package to force the Bush administration and President-elect Barack Obama into providing foreclosure aid as the pace of people losing their homes soars.

Lawmakers will agree to release the funds in exchange for Treasury Secretary Henry Paulson and Obama agreeing to programs that cut interest rates and forgive a portion of a mortgage’s principal, House Financial Services Committee Chairman Barney Frank said in a telephone interview yesterday. 

Thurgy: So you know that Assistant Manager at Taco Bell who bought the house down the road from you for 10x his household income?  Looks like Frank is going to knock down his principal, and not yours.  Oh, and the value of your home will still go down (not to mention you'll be paying for his break).  This is bad and will set off a wave of more foreclosures, a lot of which will be voluntary.

“The Democrats are finally getting it, that this administration is not going to do anything to help homeowners, and they are getting more proactive,” John Taylor, president of the National Community Reinvestment Coalition, said in a telephone interview. “Paulson has had the chance to do something like this all along, but has chosen not to. I think he’ll do it if a quid pro quo is held over him.”

Thurgy: Jebus H. Christmas! Here we go...more partisan blathering.  WTF is the NCRC anyway?  Sounds like they have a case of the "Mundays" and need some TARP funds to sooth those hemorrhoids.  Anyway, the current and last adminstrations helped get these people into their homes, now the next administration has to figure out how to help them out of trouble?  It was pretty crafty of the banks to get the bankruptcy laws changed in their favor wasn't it.  Where was the Senate Banking Committee then?

Frank, a Massachusetts Democrat, said in the interview he’s drafting legislation with Senate Banking Committee Chairman Christopher Dodd that would release the remaining $350 billion in exchange for foreclosure help, aid for General Motors Corp. and Chrysler LLC and provisions to hold banks accountable for stepped up lending to consumers.

Thurgy: Did someone say crisis and give taxpayer money away?  *Frank and Dodd spring into action* This "duo" remind me of a certain Robert Smigel cartoon on SNL...

Frank also plans to revise Hope for Homeowners passed by Congress in July. The program, run by the Federal Housing Administration, is aimed at helping about 400,000 homeowners by insuring as much as $300 billion in refinanced loans after servicers forgive part of the loan balance.  Few lenders have signed up because banks must cut a large portion of the loan and pay high fees.

Frank said he’s ready to act on the legislation during the final month of the Bush administration, without waiting until Obama’s Jan. 20 inauguration. “Why wait three weeks? Let’s do it,” Frank said. “We’re in a crisis now. How many people’s homes will be foreclosed?”

Thurgy raises hand:  Every one that should???  When you promote home ownership over renting, this is what happens.  When unemployment goes to 12%, how many more homeowners will need a bailout.  I think the reason Frank is ready to act now is because Chanuka is near and he can't solve crisises on Jewish Holidays.  If the only way to stop Frank from doing legislation are Jewish Holidays, then I hereby declare everyday a Jewish Holiday (not picking on Jewish people, just this dumbass).

Today I noticed one of my options had a bid/ask of 0.00/0.05 and I couldn't figure out why the market was valuing this asset accordingly.  I double-checked all my data and had my staff re-run all the data through the WOPR Computer to make sure my models were correct, and indeed they were.  I immediately got on the horn with the brokerage wanting to get to the bottom of this.  Well let me tell you the guy who answered tried telling me the options were worthless.  Can you believe?   So I kindly explained my models were showing a valuation much larger than they were and I would like to have these moved off balance sheet and into Tier 3 for now.  Apparently this guy has never heard of Tier 3 options (everyone does is, it's the latest thing) because we went back and forth for about 5 minutes before he put me on hold to speak to his supervisor after I threatened to do something silly like open an account with with that guy who flies the black helicopter on tv.  They must have been looking at all the commissioned trades I've made because I was on hold for about 45 minutes.  When they finally returned [both the supervisor and the rep], I heard them snickering and they told me that I'm such a valued customer that if I check my account this weekend they'll move it to "Tier 3" for me, no longer appearing in my "normal account" and therefore will not be on the balance sheet.

Can you believe! I totally fooled them didn't I?  Pfft, worthless.  So right about now I'm feeling clever, too clever.  Not wanting this to get to my head, I immediately tuned into Power Lunch in order to dumb myself down.  All I can say is thank goodness my Tivo turned channels to record Dora The Explorer  because after only 5 minutes of Power Lunch I was ready to declare a bottom in the bear market.  

PS. The only things not in Dora's backpack are Cramer's books.  And you thought that show was only for kids?  Even adults can learn from that girl.

Hope you didn't get long GM via Jan Calls, or you likely got to feel a little volatility crush today.  300% IV down to 80% on the 5's and 40% on the 4's.  If you had bought the 4's yesterday at the close, you only lost 20%.  If you bought the 5's looking for that homerun, you lost 50% of your money on a 17% up move in the stock.   Had you bought any of these options at the open, it's much worse.  You can always hope for GM $6+   

Can't find a Spy Hunter image with the oil slick, sorry.

Call me silly, but i'm liking some January Credit/Bull Put Spreads on the USO.  I have a bearish long term outlook on just about everything, but for the month of January I can be neutral/moderate bullish on oil.  The chart does  NOT go from the "lower left to the upper right" so Gartman would not approve.  Again, not painting a bullish picture on anything, but as a trader I am checking bias at the door.  You can either sit on the sidelines (probably wise) or take some shots here and there.  There are better ways to trade this strategy though. 

You should be licking your chops, rooting for the retailers and all those stocks you missed out [short] on the first time to continue rallying to the moon.

So that's what I heard on Gloomberg...Gartman says people more concerned over deflation rather than inflation.  And deflation is not bullish for Gold.  ROFLCOPTER!

On any day of the week you will hear one of the bobbleheads (not Gartman) say 'Investors fleeing to gold as a hedge to deflation'... the next day, 'Investors fleeing to gold as a hedge to inflation'

Trade/Invest according to the Bobble-Heads and you'll get to Brokeville.   With all due respect to Commodity King Gartman, I'm going to disagree.  

While Gold is overbought in the short-term,  overbought doesn't mean to be bearish in the long-term.  I will acknowledge gold's "technical picture" had some damage done to it over the past couple of months, but that's merely on the daily charts.  Hell, I may even short about $6billion worth of GLD puts (struck at market of course), expiration 12/2010.  There is some guy in Omaha interested in buying them.

In fact, they've got it exactly ass-backwards.  

• Gold performs the best during deflation (especially debt deflation).
• Gold does not perform too well during inflation.  
• It performs the worst in disinflation.

Edit: corrected stagflation to disinflation.  I've been looking at POT charts too much lately that I'm giggling and having short term memory problems.

$50 handle target achieved (49.75).  See: "Wynn to win?" 

Sold half this morning, because they are Dec options and up 450%.  Will Let the other half ride through tomorrow.  Market should pop into Obamanachi Wave #3 on the SEC nomination.  Expiration should bring in some nice action too.

Edit: Sorry, I had sold half of HALF.  Puts it at 1/4 the position.  I've been burned a time or ten.

Source: dshort.com

If there was CNBC back in '30, I bet they would have been calling bottoms after that monster rally from -47% (not to mention eleventy other times).  Stocks were cheap, generational buys, valuation is too good to pass up, gotta have a long-term outlook, worst is behind us.

Edit: As you can see in '29/30 the market rallied for 120 days.  So in case you are wondering just how long irrational behavior can persist in a market, there you go.  

In 'On Gold'N Bonds' it was said the gold miners should outperform the actual metal for the next few weeks and also talked about the Gold/Crude ratio, and it's long-term ratio in the boom and bust cycles.  Here are the updated graphs , once showing the performance of the miners vs the metal over the last couple of weeks, as well as an updated view of the Gold/Crude ratio.

It's time to lighten up in the miners for the short-term, they have went parabolic.  Take some off the table or put on some protective spreads.

Have taken 1/3rd off the table, targets #1 achieved in all 3 of the infrastructure names.  Trade is getting crowded but as long as the market holds above 912 at the close, these names should show strength.  Let's not get greedy.

Good stuff right here (Hat tip Ben)

We might get our nomination from Obama today, could put us in Obamanachi Wave #3.  

Blew through 1.36, now at 1.37, next stop 1.38.  Nearing overbought.

The EUR has climbed over 8% against the dollar in short order.  However, 1.36 is resistance (last trade: 1.35770)  and I wouldn't be suprised to see it pull back , and dollar denominated commodities with it,  just a bit.  Of course, Helicopter Ben could say something to destroy the dollar, but it's doubtful.  I imagine the dollar selling pressure should let up on Tuesday, just as the Euro did after the ECB cut.  Just a hunch though...

Commodities have enjoyed a nice run up, and the CRB index is on  it's 20 day moving average.  Perhaps a burst above it, then pullback to the 20 day moving average this week.  At that point it will be interesting to see what happens.  

Edit: I'm not making a bullish or bearish call here, just making observations

***Swing Trade Only WYNN Last Close 42.08

This doesn't feel natural, especially since I had been short of these guys for quite a while.  But in the last several weeks I've played the swing trade.  Has a $50 handle on it, with a stop in high 38's.

As always, counter-trend trades are risky, and should be sized accordingly.

Edit: Yes, this is a consumer name, and yes the consumer is dead.  As for a swing trade, check your bias at the door.

Disclosure: Long Dec 40 Calls

Not much commentary other than I've been liking the Infrastructure/Engineering/Construction trades lately.  As long as the market continues it's upward push, I'll continue to like these names in front of major stimulus packages in the infrastructure area.  

SPX closes the week at 880.  There were several attempts to rally beyond the Obamanachi Wave 2 (Hillary Wave) at 912.  As I see it, the S&P is two or three days from defining the next leg.  The downward sloping triangle (now marked by the declining 50 day moving average) is reaching the end.   850 has been an important pivot point (no, I'm not a member of Team 850) within the Hillary Wave.  A close above 912 would signal an upside target of 950 in the near-term.  Failing the 850 level and we head back down to 818.  

Magical Numbers:

Up: 850, 875, 912, 930, 950, 980

Down: 850, 818, 789, 750, 712

I'll also be watching the dollar this week to see how it reacts at the 82.50 area, which was the near-term target.

The economic calendar is somewhat busy this week along with the FOMC meeting Monday and Tuesday.  Should make for an interesting trading week.

-3% hint??

Anyway, after a triple tap on 850 several weeks ago, Trader Team 850 emerged, asserting it's time to get long.  The market promptly feel to 750.  Saw some posts in the last couple of days where Team 850 is reasserting self on the time to get long showing more technical indicators than you can shake a stick at.  Imho, there is a huge misconception on technicals in that people approach this purely from the scientific angle.  

While I am a technician myself, it's secondary to my analysis.

So I'm sitting here watching it snow this morning.  Nothing spectacular except I'm in South Louisiana, a rocks throw from the Gulf of Mexico.  Power is currently out, limbs are breaking under the weight of the snow.  Fortunately most of us are generating some kilowatts (hurricane spanked a time or two).  

They'll probably declare a state of emergency, lol.  The only plows they have here are on the back of tractors, and the bambi-killers used all the rock-salt in front of their deer stands.

Back shortly for a potential trade if I don't blue screen of death.  /

Imagine if CONgress spent just _half_ the time on the TARP bill as they are on automotive bailout.  I suppose when Dumb and Dumber are asking for $700B it requires nothing more than a cursory glance, negotiate some concessions, bark taxpayer protections then call it a law.  Apparently this is the only purpose congress serves. 

Now we've got most of those who voted for the bill (you know, to save the pension plans) pissed off wondering how did two guys pull the wool over the eyes of 200 no talent assclowns in the house and senate.   But they've put up their dooks making sure the taxpayer will not be rooked out of another $15B!!!!!  I mean, 160B stimulus and 360B (of 700B) for TARP, guess you better tighten up!

TARP has put $180B in the hands of 60+ banks, including the extra 20 for Citi.  This has mostly been used for loan loss reserves, or otherwise in a manner than will likely never contribute to a red cent in the form of GDP.  Too bad those 60+ banks couldn't _loan_ out to GM.  Don't blame them though, only the Government will lend to insolvent institutions (AIG,Fannie/Freddie,etc...)

Okay, both have achieved target #2, take some profit.

Sorry, no chart due to technical difficulties (blue screen of death, didn't save graph, too lazy to do-over), but FWLT is a possible long.  Upside targets are 26, 27.50 and 29, stop out below 23.  1 down, 2 up.

Dear Bill Gates,

I have a Mojave Experiment for you.  Come day trade your networth on this POS Wintendo, preferrably with no stop-losses as a testiment to Vista's stability.  I want to video you when you blue screen several times in the heat of the moment.  I don't seem to have this problem on my other computer:

$ uptime

8:07am  up 640 day(s), 20:38,  3 users,  load average: 0.23, 0.24, 0.25

Natty gas has been anything but natural as of late.  Sure Natty gas could go down another 50% from here, as can oil.  For a short-term trade however, I'll take the dollar down, 2.50 up odds.  I do not currently have a position in CHK, as I'm loaded to the gills with other related things.

Jos.A.Banks, you are a friend of mine.

I like to short you when you get out of line,

I buy up those puts and I shoot out the lights,

Cuz the consumer is dead, and you know this is right.

Waiting for it..Be mindful of the bulltards.  I'm not trying to say consumer stocks can't go up in the short-term.  However, as a trade I'm short it, expecting a pullback to 25.  

What is the long term outlook for this company?

Disclaimer: I have a long position in JEC.

Although this stock is up eleventy-thousand percent today, I wanted to share the chart.   In the short-term (especially after today) it's showing overbought on the hourly.  However,  it's worth noting that overbought conditions can persist in the shorter timeframes when a breakout occurs.   There is still plenty of upside left here, but a better entry would be on a pullback, perhaps at $45'ish.  I wasn't expecting such furious buying/buying-to-cover in the materials.  As a result, I have taken 1/3rd off the table today.

Edit: Changed pullback target in the text above, was a typo (the blue line on the chart is the actual target, remains unchaged).  Also,I will acknowlege that recommending buying on pullbacks in a bear market isn't the smartest thing to say :)

On Friday I mentioned that it would be the commodities that would lead out of the bear market and that any gyrations in the Financials, etc... would be just noise.  I should clarify that even though I said commodities would _lead_ there has to be participation from other important sectors as well.  I like to watch the financials and transports as well to gauge the overall strength of the market.

While I personally do not believe the bottom has put in, there are _tradeable_ bottoms.  Anyway, the graph shows the XLF and IYT.  Friday the XLF put in a strong close above the 20 day SMA and appears to be building on those gains this morning.  The IYT did close above the 20 day but with less momentum.  It's completely realistic to see these run up to the falling 50 day SMA. But until I see the CRB making a meaningful move to the upside I will remain skeptical and treat for what it is, a bear market rally.

• Support at 875, 850 and 818
  
• Resistance at 912 and 930
  
• Momentum: Short-term nearing overbought and looks to gap higher this morning.  Pullback is to be expected soon.
  
• Commodities: Oil long term support at $40, ready to bounce (futures up)
  

CBOE/SPX/NYSE

Priceless Chart and Comments (Priceless as in no price in the graph).

• Put/Call Ratio: Nice steady downtrend off the October highs (lows for the SPX)
  
• Momentum:  Will likely hit overbought today.
  
• NYSE Tick: This 13 day xma together with some upper/lower zones I've added is showing levels not seen since August.  I should note that the market has consistently pulled back shortly after breaching the +200 market.
  
• Market Thrust: Would like to see this get above the zero line if we are to expect a multi-week uptrend in the market. 
  

It's worth noting that all these indicators display a positive divergence at the Nov low when compared to the October low.  

Team 850 is struggling (better eat your Wheaties).  The Battle over 818 , seperates the Geithner Wave and the Hillary Waves.

Edit: This is a 30-minute chart

In the longer term perspective, when commodities turn  then we can talk bottom.  They will be the leader out of this bear market.  Otherwise, any gyrations with the financials, consumer discretionary, etc are just noise.  Let's not get all giddy if the CRB manages to overtake the 20/50 day in the short-term.  

In the short term perspective,  good luck whichever way you trade.  Any multi-week rally could/should pull up the commodities/commodity related names.  Holding things longer than 30 seconds these days seems dangerous.

From Bloomberg

$25 Oil

Crude traded below $50 for a fourth straight day, down from a record $145.29 in July. It may fall below $25 next year if the recession that’s slashing fuel demand around the world spreads to China, Francisco Blanch, commodity strategist at Merrill Lynch, wrote in a report today.

Thurgy: From Goldman's $250 call to Merrill's $25 call, both called for the same year (2009),  just 6 months apart.   Goldman was probably short along side of their "$250 target" with the caveat (it might pull back).  Merrill's price target is much more realistic and in tune with reality.  

In Cramer News:

TheStreet.com Cramer: We Need Some Failures 12/02/08 - 10:41 AM EST

TheStreet.com Cramer: Dow 7350 Was the Low 12/04/08 - 12:01 PM EST

Click for larger image

A different look at the market from a moving average perspective (10,20,38,50,100,155,200 SMA).  Plotted underneath is the Money Flow in the SP500 and a custom indicator I've been tinkering with (not moving average related).  Nonetheless, both show a positive divergence over the last month or so.  However, I should note over the past several days the PUT/CALL ratio (not shown) has ticked higher, but the 10SMA is improving, nearly a 1:1

Just don't forget to strap on the 4-point harness before trading and keep your hands in the ride at all times until it comes to a complete stop.  This is still a bear market with a 60 VIX.  Counter-trend trades are not the best place to get super-aggressive.  

Possible Longs:

JEC,GG,DAL,ADM,RL,DB

Got resolution?  Click for larger image

A daily,weekly,monthly view of the USD.  In short, the dollar looks to be getting ready to stall.  Watching for a cross-over in the monthly stochastics.  You can see negative divergences in the daily, over-bought RSI in the weekly and not quite there on the monthly yet.  Can dixie muster up enough strength to reach 90 handle or will the "Penis Pattern" in the monthly mark death for the buck?

Click for larger image

Watching FXI at the 50 day SMA (27.25).  Positive divergences on several indicators and increased volume in the last month.  However it is important to note the DMI is signalling consolidation and we should expect some breakout move.  While the 3/10 MACD would suggest a move higher, we can't rely upon this indicator during compression.  The best we can do is watch and wait for the expansion move to come, whichever way it may go.  My gut says higher, but this depends on the market in general.

Click for larger image

Short-term momentum ended neutral yesterday.  From overbought, to oversold, to neutral in 3 days.  Still seeing some positive divergences in several indicators. Team 850 seems to be struggling to get a foothold.  818 is an important pivot if this rally is to continue, otherwise we'll need a Geithner-like nomination to save us.

Source: Voltage Creative 

Can't wait to see "THE Bailout" graph when it's all said and done.  We're off to a solid start in 2008.

From Gloomberg China’s November Manufacturing Contracts by Record.

China’s manufacturing contracted by the most on record and export orders slumped as a slowdown in the world’s fourth-biggest economy deepened.

The Purchasing Managers’ Index fell to a seasonally adjusted 38.8 in November from 44.6 in October, the China Federation of Logistics and Purchasing said today in an e- mailed statement. Export orders, output and new orders all contracted by the most since the survey began in 2005.

China’s export orders declined to 29 in November from 41.4 in October, the survey showed. A reading above 50 reflects an expansion, below 50 a contraction. The output index fell to 35.5 from 44.3, while the index of new orders dropped to 32.3 from 41.7.

Weaker demand for Chinese goods and a slump in construction are undermining growth. China last month announced a $586 billion stimulus package and the biggest interest-rate cut in 11 years to revive the economy and counter the risk of spiraling unemployment and social unrest.

Thurgy: In Feb 2007 people were not concerned if China blew up because of decoupling (the rest of the world would carry on). In Feb 2008 people were not concerned over the US because China and the emerging markets will carry the rest of the world. In the Summer of 2008 the BRIC's "blowed up".

Speaking of E-Trade...Brett Steenbarger points out:

Where There Is Opportunity - I was interested to see that retail traders opened a large number of accounts and increased their trading at E*Trade, even as customer assets dwindled. This pattern also manifested itself at Ameritrade and at Schwab. Indeed, according to one report, eight of the ten busiest days at Scottrade were during October, with the number of new accounts running three times the average level. It appears that volatility is bringing out the speculative sentiment among individual traders. Perhaps in response to the growing interest in trading, Scottrade has begun a program of free trader education at their branch offices. It's an interesting venture; over time we may see retail brokers developing their customers much like prop firms develop their traders.

Thurgy: More evidence the rally can go for a few weeks.  However, this also is more evidence we haven't seen the bottom yet.

Over the past week I have received thousands, maybe tens of thousands, of emails from my two subscribers asking the same questions (my staff will reply to each of you personally): 

Q. You're an idiot!

That's not a question.  

Q. What indicators do you use?

That's only available to RealMoney Hockey Silver subscribers.  But in an effort to get into the Christmas spirit I have decided to give away a couple of stocking stuffers.  Because there are investors, position traders and swing traders, each with their own goals, it requires me to talk about each of these separately.  Remember, this site does not give investment advice and you should always do your "homework" and look at the "fundies" (sarcasm)

There are so many indicators, quantitative analysis techniques, economic data, weather patterns and especially Mad Money that are the driving forces in the market.  The market is always evolving and what worked in the last cycle probably will not work in the current cycle.  However this doesn't stop the money managers (who are itching to go shopping like a woman on Black Friday) polluting the airwaves with more valuation calls based on those historical relationships of earnings/dividends/treasuries/etc.  All of this is too complicated and frankly most comparisions are lagging in nature.  There are easier methods (sarcasm).

Avoid information overload and analysis-paralysis when looking at the market.  Let's face it, neither you nor I can ever match the rigorous analysis provided by the staff at TheStreet.com (sarcasm).  However, we can use this expertise to our advantage: 

Q. How will I know when to sell?

Here is an excerpt of a recent newsletter that went out to RealMoney Hockey Gold Subscribers (note: My staff makes these graphics up on the fly).

Here is a Video Presentation From My Trading Seminar describing my how it only takes me 7 minutes a day to see if I need exit my counter-trend position trades using 2 steps.

Step 1. Go to this link and see if this book is still in stock.

Step 2. Go to this link to check out the recap

I will acknowledge the second step is not without pain.  Please consult a physican before attempting.

In the second of this two-part series I will introduce a state-of-the-art technical analysis using Obamanachi waves, a tool that, up until now, only RealMoney Hockey Platinum Subscribers had access to.

Obviously there is no RealMoneyHockey 

Nov. 25 (Bloomberg) -- Zale Corp., the biggest U.S. jewelry chain by stores, plummeted as much as 42 percent in New York trading after reporting a wider loss from continuing operations in the first quarter and rescinding its forecast for the year ending July 31.

Luxury sales may drop next year for the first time in a decade, consulting firm Bain & Co. said last month. Sales of products including Harley-Davidson Inc.motorcycles and Hermes International SCA handbags are slowing as stock prices fall and home values slide. Retailers face what may be the worst holiday-shopping season in six years, according to the International Council of Shopping Centers.

Of course others have long before mentioned the CDS bet on the big 3 (Mish, Bloomberg, etc..) and recently I had made mention of it as well...

I wrote in  GM's Gone From Suck To Blow

... a failure of GM would result in about $1 Trillion in credit default swaps being triggered,  which would crush the banks in a heartbeat.  If people thought the Lehman default settlement was reason to worry, you a'int seen nothing yet.  In my opinion, this is the reason GM can't be allowed to fail.  

and in Citi  

Remember, over a trillion in CDS on GM alone...  However, why on earth would CONgress put all this money in AIG/C/etc... then do a pre-packaged bankruptcy of the automakers which will pretty much wipe out all of that $180B?  Just thinking outloud here.

And finally in The Geithner Rally: Pfft

Perhaps this time instead of figuring out how to keep AIG afloat, maybe they can let them go bankrupt.  It's the only way to avoid putting money into a bottomless pit with all the CDS they insure. 

Here is a great article that turned out today from Institutional Risk Analytics (Hat tip Naked Capitalism):

Few observers outside Wall Street understand that the hundreds of billions of dollars pumped into AIG by the Fed of NY and Treasury, funds used to keep the creditors from a default, has been used to fund the payout at face value of credit default swap contracts or "CDS," insurance written by AIG against senior traunches of collateralized debt obligations or "CDOs." The Paulson/Geithner model for dealing with troubled financial institutions such as AIG with net unfunded obligations to pay CDS contracts seems to be to simply provide the needed liquidity and hope for the best. Fed and AIG officials have even been attempting to purchase the CDOs insured by AIG in an attempt to tear up the CDS contracts. But these efforts only focus on a small part of AIG's CDS book.

...

The Paulson/Geithner bailout model as manifest by the AIG situation is untenable and illustrates why President-elect Obama badly needs a new face at Treasury. A face with real financial credentials, somebody like Fannie Mae CEO Herb Allison. A banker with real world transactional experience, somebody who will know precisely how to deal with the last bubble that needs to be lanced - CDS.....

.... until we rid the markets of CDS, there will be no restoring investor confidence in financial institutions....

Q: Does anybody really believe that the global central banks and the politicians that stand behind them are going to provide the liquidity to fund $15 trillion or more in CDS payouts? Remember, only a small portion of these positions are actually hedging exposure in the form of the underlying securities. The rest are speculative, in some cases 10, 20 of 30 times the underlying basis. Yet the position taken by Treasury Secretary Paulson and implemented by Tim Geithner (and the Fed Board in Washington, to be fair) is that these leveraged wagers should be paid in full.

Our answer to this cowardly view is that AIG needs to be put into bankruptcy....pay true hedge positions at face value, but the specs get pennies on the dollar of the face of CDS. And the specs should take the pennies gratefully and run before the crowd of angry citizens with the torches and pitchforks catch up to them.

President-elect Obama and the American people have a choice: embrace financial sanity and safety and soundness by deflating the last, biggest speculative bubble using the time-tested mechanism of insolvency. Or we can muddle along for the next decade or more, using the Paulson/Geithner model of financial rescue for the AIG CDS Ponzi scheme and embrace the Japanese model of economic stagnation....

Our friends at Katten Muchin Rosenman in Chicago wrote last week in their excellent Client Advisory: "On November 13, 2008, Lehman Brothers Holdings Inc. and its U.S. affiliates in bankruptcy, including Lehman Brothers Special Financing and Lehman Brothers Commercial Paper (collectively, "Lehman") filed a motion asking that certain expedited procedures be put in place to allow Lehman to assume, assign or terminate the thousands of executory derivative contracts to which they are a party. If Lehman's motion is granted, counterparties to transactions that have not been terminated will have very little time to react and will likely find themselves with new counterparties and no further recourse to Lehman because, by assigning contracts to third parties, Lehman will effectively receive, by normal operation of the Bankruptcy Code, a novation."

The bankruptcy court process also allows for parties to terminate or "rip up" CDS contracts, something that has also been fully enabled by the DTCC. The bankruptcy can dispose and the DTCC will confirm....

By embracing Geithner, President-elect Barack Obama is endorsing the ill-advised scheme to support AIG directed by Hank Paulson et al at Goldman Sachs and executed by Tim Geithner and Ben Bernanke. News reports have already documented the ties between GS and AIG, and the backroom machinations by Paulson to get the deal done...

The bailout of AIG represents the last desperate rearguard action by the CDS dealers and the happy squirrels at ISDA, the keepers of the flame of Wall Street financial engineering. Hopefully somebody will pull President-elect Obama aside and give him the facts on this mess before reality bites us all in the collective arse with, say, a bankruptcy filing by GM (NYSE:GM).

You see, there are trillions of dollars in outstanding CDS contracts for the Big Three automakers, their suppliers and financing vehicles. A filing by GM is not only going to put the real economy into cardiac arrest but will also start a chain reaction meltdown in the CDS markets as other automakers, vendors and finance units like GMAC are also sucked into the quicksand of bankruptcy. You knew when the vendor insurers pulled back from GM a few weeks ago that the jig was up.

And many of these CDS contracts were written two, three and four years ago, at annual spreads and upfront fees far smaller than the 90 plus percent payouts that will likely be required upon a GM default. That's the dirty little secret we peripherally discussed in our interview last week with Bill Janeway, namely that most of these CDS contracts were never priced correctly to reflect the true probability of default. In a true insurance market with capital and reserve requirements, the spreads on CDS would be multiples of those demanded today for such highly correlated risks. Or to put it in fair value accounting terms, pricing CDS vs. the current yield on the underlying basis is a fool's game. Truth is not beauty, price is not value.

If you assume a recovery value of say 20% against all of the CDS tied to the auto industry, directly and indirectly, that is a really big number. The spreads on GM today suggest recovery rates in single digits, making the potential cash payout on the CDS even larger.

As Bloomberg News reported in August: "A default by one of the automakers would trigger writedowns and losses in the $1.2 trillion market for collateralized debt obligations that pool derivatives linked to corporate debt… Credit-default swaps on GM and Ford were included in more than 80 percent of CDOs created before they lost their investment-grade debt rankings in 2005, according to data compiled by Standard & Poor's."...

The impending blowback from a CDS unwind at less than face amount is one of the reasons that the financial markets have been pummeling the equity values of the larger banks last week. Any bank with a large derivatives trading book is likely to be mortally wounded as the CDS markets finally collapse. We don't see problems with interest rate or currency contracts, by the way, only the great CDS Ponzi scheme is at issue - hopefully, if authorities around the world act with purpose on rendering extinct CDS contracts as they exist today. Call it a Christmas present to the entire world.