Yesterday was a bit sticky there but we’re just grinding along now.  Only 680 points before the S&P is done.  Now people are calling for it to go to 400.  Wow where were they when the S&P was 1000 or 900 or 800 or 700…wait…they waited for the S&P to go to 700.  What happened to this guy that was calling for gas to be at $25?  Well he isn’t talking anymore now that oil has stabilized.  What about all the analyst in 2008 saying that the market will recover?  Rhetoric, rhetoric, rhetoric.  Everyone can talk but no one walks.  Tired of listening to Roubini who is on television everyone hour talking about the collapse of our world while in fact, he has most of his retirement money in the stock market.  Or perhaps I should listen to those who point out the mistakes of demand side economics who blame the length of the Great Depression on it while they suggest that free markets are the absolute answer to all problems while at the same time they praise supply side economics which first started this fiscal irresponsibility that is now blamed on demand siders.  Well what really brought us out of the Great Depression?  Well supply siders say it wasn’t the New Deal, it was World War II.  Wait a minute, what did we do in World War II?  Answer, government spending!  Yes spending.  Demand side.  It’s all rhetoric.

While congressmen will always be a critique and blame the government for what they are doing?  But rather they criticize but have no answers?  What is there answer?  Let them fail?  Well what are the ramifications of letting Citibank, General Motors or AIG fail?  Will it cause Lehman II  or Lehman III?  Will this be the point that drives us to the Great Depression?  No one really knows but is it safer to tread a longer correction without the depth and despair or perhaps should be allow for the intense “creative destruction” of free markets?  Oh long will it take for someone to replace the influence of Citibank or General Motors or AIG?  Those are the questions that the critics will not answer.  They rather criticize without solutions.  Is it better to do something or just stand still?

Yet the argument goes on.  What caused this mess?  Was it government influence in the markets or was it the free markets?  Well let’s look at the government place in the market.  Well we have this antitrust thing they do.  Well that hasn’t really been in effect since forever.  Look at the reversion of the phone companies.  AT&T almost back together.  What about regulating financials?  Well let’s see, regulation was rather dismal?  Well it’s not quite government interference in free markets.  Let’s look at free markets.  Well people think free markets are nice and orderly where we get this nice simple equilibrium price where it utterly fair?  Well we need to define fair?  Well in free markets, it is a matter of survival of the fittest without regards to anything else.  Nothing.  Who cares about the disabled and elderly or even the young.  Who cares about our environment.  Who cares about deficits and leaving something for the children of the future.  Who cares about waste and uneven distribution of anything.   Who cares of equal footing for the discriminated and so on.  The free markets in historical terms has always been looked at as a “jungle” where only the strongest survive.

In this world, the strongest is the ones with access to the information.  It is now an information game.  Perfect competition can only be possible where there is low barriers of entry and perfect information.  Now information is the barrier because most things are not.  How does this information flow?  Well information only flows within a selected group of people while discrimination prevents the flow to other groups.  When is the last time, you heard a big shot executive give a tip to a single teenage mother in East Los Angeles?  Information is not free or is it a privilege.  Privilege is based on membership.  Don’t get me wrong, I’m a supporter of free markets, but only if it’s fair to a certain extent.  Free markets are inherently unfair because of biases and preferences of human beings.

Now let’s look at the another problem.  The classic problem of the tragedy of the commons.  While every cattle farmer tries to optimize their profit by fattening up their cows, they ruin the pastures they all use.  Well some people say where are those pastures?  We have many pastures.  The pasture of our fiscal accounts which is being decimated by gives aways to the rich, pork for those lobbies, and wars that benefit nothing more than oil companies and no bid contractors.  Well that sounds like the government’s problems.  Let’s keep in mind that the people have not run the government for decades.  Lobbies and corporates have run the government for a rather long time and that can be easily argued.  What other pastures?  Well look at the environment.  We are slowly creating our doom while decimating the world in which we live.  For our children, we refuse to change to a clean fuel source and refuse to create financial incentives to prevent this.  At this time, we still argue that using cap and trade policies are very un-American and anti-business.  What about being anti-humanity?  Come on people.  There are many pastures that we destroy while pursuing the goal of optimizing profits.

Perhaps this may sound a bit socialist but the absolute choice of free markets is logical.  It is perhaps necessary to bring these arguments in the forefront.  It is merely an opinion based on years of economic study and analysis.  People should not bring one sided stories especially from academics who most of the time refuse to accept the truth until it is obvious.

Disclosure: Long: UNG, SRE, AAPL, MSFT, CHK (Yes, crazy as it sounds, I’ve uber long going into the weekend)

(got out of my WFC position this morning at breakeven – after studying a bit of bank trading history for the last year, it seems that once a bank hit single digits, it never got back above $10)

These days, I don’t have much time to watch television let alone movies.  But this video has been surging through the internet and since I’m a fan ot Jon Stewart and good old comedy because even when our portfolios are spiraling down in the toilet because we were told to hold forever because we all know that no companies ever go bankrupt and real estate prices never goes down in value.  But I’m a little bit tired of watching Roubini interviews and Jon Stewart is much more funny, I’m posting this.  By the way, I’m tippy toeing back into the market again and have been punished by the blacklash again my Wells Fargo position but I still have my calls.

This may sound rather insane or crazy.  But I picked up some calls on Wells Fargo after all the financials  have been smashed up and thrown in the trash.  It’s not really that I think Wells Fargo will survive or  not because I truly don’t know.  I wish I could say that I knew what was in the books or it would be nice to say that I could truly analyze it if I got my hands on it but I cannot at least at this time.  Seriously though, I would need an army of people much smarter than I to do it.  So I list to the best indicator of all.  Price.  All the information in the world boils down to a price.  If it goes up, it’s good.  If it goes down, it’s bad.  So I bought a decent amount of calls and see a price target within the next 3-4 days of $12-$13.  It’s at $9.20 right now. We’ll see.  Hold on tight, it’s gonna be a bumpy ride!

There was a rally this morning mostly based on commodities. I was fortune enough to have been long RIO and PBR. I’ve exited it all my positions since they were all up 9-11% so I’m calling it a morning but I’m watching out for a retracement back lower for the day. You all should keep your eyes peeled as there should be upside to about S&P 750 or so. That’s another 5% upside from here but in old day terms…that’s really 2.8% upside. I’m going to be looking for shorts again as the market approaches higher levels but for now, let the squeeze run a little bit.

Disclosure: No positions.

Wow, the infamous “perma bear” super short seller Doug Kass calls a bottom.  I still don’t think it’s in yet but it’ll sure be nice to rally since I’m net long now. Also I would like to add that our president suggested going long as well. Hmmm…..we’ll just have to remember the date March 3, 2009….is this the bottom?

Doug Kass’s call is at the very end of the video…so be patient…because I was thinking when the hell is it when I was watching. Patience is golden….it also goes for trading too.

Looks like the move down is running out of steam technically.   There is a bullish divergence at this time but there are a lot of resistance on the way up but if one strong move makes it burst then there can be a lot of up movement fueled by short covering.  I am pretty much in but I have stops on everything of course so I suggest that to everyone as well.  STOPS.  Don’t make them too shallow but at reasonable places because you can easily be whipped out but be sure to adjust them upward as you profit.  Don’t give it back because for sure traders will always take it if it’s not protected.  So good luck people.

Disclosure: Long: ATHN, FCX, RIO, PBR, MS  Short: None

UP UP AND AWAY!!!

I’m in the process of covering many of my shorts coming into today.  I think there is one slight leg down.  It looks like it’ll be around 700 level on the S&P but it might not get there.  But I’m picking at some long positions now.  It’s not large but it’s a tip toe to benefit from the squeeze.  If the market gaps down tomorrow, you all better watch out.  It might be insane.  Anything can set this sucker off now.  But I’m researching some good short squeeze candidates but I think solid names like MS, FCX and MON or even GDX which have been beaten and are market favorites will move pretty well in a squeeze but we all just have to be vigilant for now.  Yes I’m still very bearish but it seems overdone on some aspects in the short term.

Disclosure: Short: ACC, COF  Long: None

So the market has hit new lows and it seems like there are global shoes to fall now.  I spoke to a friend regarding the coming possible international problems.  He apparently was a little shocked to hear about the state of our world not just economy.  Fortunately he took it like a man.  Here are the two problems that I think will or may come:

1. US – commercial property meltdown and futher dillution of shareholders.  REIT meltdown will force sales of properties in a bidless market and thus pushing down valuations.  Government will need to pass a bill to stimulate commercial investments.

2. East European defaults triggering more problems in banking systems thus another credit crisis but this one not caused but Eastern European excess.

3. Japan squeezed.  The decline of the Japanese economy because of the continued soft export market forcing corporate bankruptcies and pressure on Asian banking system.  Let’s not forget about Hong Kong and Taiwan too.

4. Latin America – let’s not talk about them because they have had a lost century.  When is there not a crisis there?

Also watch this video of John Mauldin talking about Europe.

Here is a video of John Mauldin whose perspective I love from August 2006 but the Reagan Administration guy was right about the market going up another 20% from that point but of course then it dropped over 50%.  Hey it’s all about timing but I love how Kudrow keeps talking about how efficient is the market.  Yes it is efficient but not always when the truth is hidden.

Disclosure: Short: ACC, USO, COF, HCP

As I speak the market is about flat today.  There isn’t much follow through on any of the rallies so it’s over pretty much.  The squeeze is over – well most of it.  The public rhetoric is done because everything that has to be said is now said.  It is now time for action and results.  Results will probably not come soon enough for most of us.  What else can they say other than that we will save your nation from ruin?  Housing and subprime is over now.  We have written down most of it but now we will tend with the growing consequences of these problems which is unemployment and risk aversion.  We all have been hurt.  Consumers are scared to spent, drugged up with debt like a junkie – now trying to find sobriety through saving and caution.  Banks are scared to lend like the local drug dealer who got so much easy money and was used to living like a king with their jets and lavish parties.  We all need some time to recover now.  It seems that it may be a very long recovery now because once you’re hurt, you don’t quite get back on that horse after hitting your head on the floor.  There was no real rally.  Let’s face it.  We’re going lower.

Disclosure: Short: ACC, HCP, COF, USO

There may be a little ways to go on the rally but the resistance is solidly at 820 on the S&P but first it has to get above 790 which I don’t know if it may get there.  I am going to take off some of my longs.  Actually I took off half of my Bank of America positions because of the insanely quick run up but I’m started shorting COF again because Geithner is speaking tomorrow and for some reason, we don’t seem to like that man even though I remember last year on the announcement of his appointment, we rallied like a banshee.

But at this point, we’re going to churn at this range for a very long time.  I see a new range between 700s-800s for a while in the market as the winners will rise and losers will die.  It’s a stock pickers market now.  The market will now start to diverge.

In terms of my trading, it’s been just a little about flat this month and at one point, I was down a bit.  I have been so spoiled the last few months because I haven’t had a losing month in over a year now so being down this month was somewhat devastating but it’s all in the course of a trading career.  I have decided that my day trading experiment failed because I was not consistent enough and trading way too much and not making enough.  Churn churn churn.  That’s all it was so I’ve decided to collect myself and study my results for a while before trying again.  I was trading off five minutes charts which was a bit insane because a fellow trader told me that even most professionals don’t do five minutes.  I was like really?  Yes, I’m an idiot.  Anyways, I have decided to focus on a longer time frame like 10 to 30 minutes and refocus on my swing trading which has been suffering because of my lack of attention.  So we’re going to try to refocus and get some more things done.  I’m going to probably get a little list for everyone before the stress test.  It’s nothing scientific but it’ll be fun because I miss doing my research.

Disclosure: Long – BAC, GLD, USO, UNG, BRK.B, RHIE (speculative)  Short: HCP, COF