AC Investor

( click to enlarge )

( click to enlarge )

MPEL looks to have found support at these levels and could make an upside move soon. I’m watching the stock on Tuesday and I’m buyer if the stock can break through Monday’s high of $3.49. If the stock does break resistance, we should see a good short-term bounce.

( click to enlarge )

OSIR hit resistance again on Monday, but did not break through. This stock is setting up for a nice upside move and I’m going to be there when it occurs. Technically, my model remains long in short-term targeting $8. The Relative Strength Index is moving higher, which is a sign of growing strength in the stock. Also the MACD is giving a positive indication. Keep a very close eye on the stock as it will move quickly once it breaks through resistance.

Jason Farkas

Does increasing government share of U.S. economy bode well for the recovery? On the contrary, writes EWI’s Jason Farkas

Citigroup spiked in the final hour of trading on Monday. Today on Fast Money there were mixed feelings on how Citi will act in 2010. We are in the camp that C should be an easy double in the next 12 months. Citi is now testing the 10 day moving average currently at $3.40. If Citi can close over this level it would be very bullish and signal a short term trend change. Citigroup hasn’t closed above the 10 day moving average since falling below this level when it was trading at $4.20. Keep an eye on the high from last week at $3.44. If Citi breaks above this level, we will be adding to our core position. As for now we are long from $3.30 with our stops at $3.07 lower support. Market Club has a very interesting take on how CITI is playing out after the past volume surge. The “Trade Triangles” paint the picture. CLICK HERE and just enter the ticker (C) your name and e-mail address for the FREE No strings Attached Report sent realtime to your in-box!

FREE Trend Analysis for Citi Here

Another holiday trading extravaganza!!!

Last week the market fell into its regular holiday tradition of light volume, as institutions and big traders enjoyed the holidays thus allowing prices to drift higher. We still have one more week of light trading volume before this year and holiday season is officially over.

Trading during low volume times is regularly misinterpreted. Many traders figure they should not be trading this time of the year but from my experience, the last two weeks of the year are amazing for short term swing plays or day trading. The market seems to be much more predictable when the large program traders are not involved.

Also the more speculative plays (small and mid cap stocks) always seem to out perform as buyers bid the prices higher into the light selling volume. This is most likely why we are seeing the NASDAQ and Russell 2000 indexes making some nice gains of late.

Take a look at the charts…

Broad Market & NASDAQ Low Volume Rally

GLD ETF Trading – Daily Chart
Gold prices broke down as expected in early December and are now nearing a possible bottom. The past 3 weeks have provided some very exciting day trades shorting spot gold prices. In the next few weeks I will be starting to provide more spot gold charts and intraday price action for all the international traders and futures traders 

I did not provide the chart of silver as it trades very similar to gold. When the time comes I will provide detailed analysis for entry and exit points for members.

Crude Oil USO Trend Trading
USO fund had a very nice pullback in early December and I pointed out a spec play at $35.50 with targets set at $37, $38 and $40. So far the first two profit taking targets have been reached.

Sorry for all the lines on the chart but sometimes it’s the only way to remember where all the crucial levels are for trading pivot points.

Natural Gas UNG Trend Trading
Natural gas trades like a bucking bronco. It’s a tough ride if you do not understand market psychology and apply strict money management to your positions.

Last weeks price action closed with a bearish candle after testing resistance twice. We could get a short trade this week depending on what happens from here. Let’s keep our eyes open for a low risk setup.

Market Trends Trading Conclusion:
This year has been fantastic for making money, but next year will most likely be much more difficult if we see the market top and head south or trend sideways. The market topping is not an event; rather a process and trend following systems will start having more losing trades than winners as the market momentum shifts from up, to sideways then down.

Don’t get me wrong, I am not saying I think its going to roll over and head south, cause quite frankly no one knows what its going to do from this point forward. This is the reason we are in cash and patiently awaiting new low risk opportunities to place our money. The joy of trading with technical analysis is that you don’t care which direction the markets go because the analysis, if done correctly, allows you to profit in all market conditions using different trading strategies.

The board market, in my opinion, is way overbought due to the holiday rally. But we must remember there is another low volume week as we approach New Years and this could extend the rally more. Smaller trading positions should be used until we enter the New Year and volume steps back into the market.

Gold and silver are in a short term down trend and trading near a resistance level. We could see prices drop quickly or rally from here. So we are letting things unfold before making a commitment.

Oil continues to move higher and last weeks weakening US dollar helped give oil a boost.

Natural gas is trading at resistance and looks ready to head back down. The daily and 30 minute chart did not setup a signal to short Natural Gas, but it was very close.

As usual, I will update on the market and provide daily updates and trades to members.

Free Gold ETF Trading Newsletter

Chris Vermeulen
www.GoldAndOilGuy.com – Gold Newsletter

MISH

Losses continue to mount at Fannie and Freddie where Obama has virtually declared no loss is too big for taxpayers to pay.

Please consider U.S. Move to Cover Fannie, Freddie Losses Stirs Controversy.

The Obama administration’s decision to cover an unlimited amount of losses at the mortgage-finance giants Fannie Mae and Freddie Mac over the next three years stirred controversy over the holiday.

The Treasury announced Thursday it was removing the caps that limited the amount of available capital to the companies to $200 billion each.

Unlimited access to bailout funds through 2012 was “necessary for preserving the continued strength and stability of the mortgage market,” the Treasury said. Fannie and Freddie purchase or guarantee most U.S. home mortgages and have run up huge losses stemming from the worst wave of defaults since the 1930s.

“The timing of this executive order giving Fannie and Freddie a blank check is no coincidence,” said Rep. Spencer Bachus of Alabama, the ranking Republican on the House Financial Services Committee. He said the Christmas Eve announcement was designed “to prevent the general public from taking note.”

In exchange for the funding, the Treasury has received preferred stock in the companies paying 10% dividends. The Treasury also has warrants to acquire nearly 80% of the common shares in each firm.

The companies on Thursday disclosed new packages that will pay Fannie Chief Executive Officer Michael Williams and Freddie CEO Charles Haldeman Jr. as much as $6 million a year, including bonuses. The packages were approved by the Treasury and the Federal Housing Finance Agency, or FHFA, which regulates the companies.

At Freddie, annual compensation will total as much as $4.5 million for Bruce Witherell, chief operating officer; $3.5 million for Ross Kari, chief financial officer; $2.8 million for Robert Bostrom, general counsel; and $2.7 million for Paul George, head of human resources.

Excuse me for asking the obvious question but how in the hell can the head of human resources for a company that is losing hundreds of billions of dollars a year be worth anything, let alone $2.7 million.

This is precisely the problem with regulation. Fannie and Freddie should not exist at all, it was an act of regulation that created them, it is an act of regulation that keeps them in business, and it is regulation that defends its policies that lose taxpayer money to the tune of hundreds of billions of dollars, and it is regulators that are approving ridiculous salaries for a company that should not even be in business.

The only thing that makes any sense is to shut down Fannie and Freddie totally, yet regulation and regulators have not taken step one in that direction. Yet, people scream for more and more regulation.

The latest proposal is to create a regulator of regulators, some sort of systemic risk all knowing wizard who supposedly would have prevented this crisis.

Never mind that thousands of people knew Fannie and Freddie would blow sky high, including some Fed governors. Ironically, we cannot even get rid of the GSEs after they have blown sky high and losses continue to mount.

Never mind that regulators continually get into bed with those they are supposed to regulate.

All Hail The Grand Poobah

Instead we can look forward to the creation of the post Grand Poobah of regulators.

Grand Poobah is a term derived from the name of the haughty character Pooh-Bah in Gilbert and Sullivan’s The Mikado (1885). In this comic opera, Pooh-Bah holds numerous exalted offices, including “First Lord of the Treasury, Lord Chief Justice, Commander-in-Chief, Lord High Admiral… Archbishop of Titipu, and Lord Mayor” and Lord High Everything Else. The name has come to be used as a mocking title for someone self-important or high-ranking and who either exhibits an inflated self-regard or who has limited authority while taking impressive titles.

The term “Grand Poobah” was used on the television show The Flintstones as the name of a high ranking elected position in a men’s club. Fred Flintstone and his friend Barney Rubble were members of the Loyal Order of Water Buffaloes Lodge No. 26. The lodge is a spoof of men’s clubs like the Freemasons, the Shriners, the Elks Club and the Moose Lodge.

The only regulation we need is a sound currency, no fractional reserve lending, and a balanced budget amendment. Instead we can look forward to the the creation of some sort of regulatory Grand Poobah, an idiotic waste of time and money.

CalculatedRisk

Courtesy of Phil’s Stock World

First of all, what are you doing here?

Why it’s Christmas Eve, Mr. Scrooge – Most global markets are having a half day so, if you are waiting for a Santa Clause rally on a half-day’s trading, you are very likely to be disappointed.

Remember Marley, who cried: “Business! Mankind was my business. The common welfare was my business; charity, mercy, forbearance, and benevolence were all my business. The dealings of my trade were but a drop of water in the comprehensive ocean of my business!”

Marley was a man who worked and worked until the day he died and regretted it every day after. If you don’t believe in an afterlife and you don’t believe in leaving behind the World a better place than you found it, at least find some time for yourself so people don’t call you “a squeezing, wrenching, grasping, scraping, clutching, covetous old sinner!“

Those covetous old sinners in Congress passed the Health Care Bill in the Senate today with a 60-39 vote (Republican Jim Bunning did not vote against the bill but was too chicken to actually vote for it) so we can pretty much count on it moving through the House and on to Obama’s desk in the very near future. While it’s a total botch-job of a bill, at least America has taken the first civilized strep to recognizing that health care is a right and not a privilege – Tiny Tim would be very proud!

We were told by Fox that Health Care reform would destroy the universe but the market has taken the December passage of the bill very much in stride so maybe we should have just gone for it with Universal Health Care after all… Oh well, maybe next year! Meanwhile, we’ll be looking for good investing opportunities once we get a handle on the final bill but I still favor the device space (IHI, MDT, BSX, JNJ, GE, ISRG) as well as big pharma (MRK, PFE), who will be able to serve tens of millions of new customers. Hospitals (UHS, THC) should also start filling up and we always like our CELG as well as AMGN, who should also benefit from adding a population the size of England to the health care rolls right here in the USA. I’m waiting for the final bill but home health care providers (AMED, ADUS, GTIV) also look like winners so lots of fun investing opportunities in one of the fastest growing markets on Earth – US citizens who have access to health care!

I’m also done being a grinch about the economy in general as we are over our technical levels and, despite the non-existent volume, if we do manage to hold up through the first week of January, there will be nothing to do but go with the flow in 2010. For the moment, we’re still pretty darn bearish in anticipation of possibly worse than expected Jobs and Durable Goods reports today but a 20% miss in GDP Tuesday and a 25% miss in Housing Starts yesterday didn’t seem to bother the bulls so why should another 450,000 job losses and a few less washing machine sales?

Despite the total lack of home building in America, copper flew all the way up to $3.25 in overnight trading, erasing almost an entire month of losses all in a single, low-volume rally – yet no arrests will be made. In fact, the Hang Seng rallied, led higher by metal producers and getting back over the 21,500 mark and the Nikkei broke their own 10,500 mark as the dollar held 91 Yen despite the sell-off yesterday. That put Japanese exporters very much in the Christmas spirit, especially with rumors circulating in Asia that the US GDP will jump to 4.5% in Q4 based on yesterday’s petroleum inventories.

Bah, humbug you say? Well maybe so but but oil jumped to $77.50 in overnight trading as news spread of a 4.9Mb draw in crude stocks last week. I thought that number seemed like nonsense and I did a little research and found out it’s not nonsense at all. It turns out the number you are being presented with is total unmitigated bullsh*t! Without going into a big thing let’s just focus on one simple fact – America imports oil. How much oil do we import? Usually around 10Mb a day to supplement our own production. How much oil was imported last week? Why just 8Mb a day, 1.5Mbd less than the same week last year.

What happens when you fail to deliver 10.5Mb of oil during a week? Well, oddly enough we don’t get a 10.5Mb draw in our record stockpiles (327.5Mb) but we did get a 4.9Mb draw and that allows the NYMEX crooks to pretend there is demand while Criminal Narrators Boosting Crude cut to the NYMEX at virtually every commercial break so Sharon can gush about how the market is roaring back. This isn’t just poor journalism – this is a criminal deception of the American people and the $5 jump in crude since last week costs global consumers $430M a day – merrry friggin’ Christmas to us!

Adding insult to grievous injury to our economy, the US refining cartel not only ran at just 80% capacity (after Katrina and Rita they were at 85%), depriving us of refined products but imports of refined petroleum products were also cut by 600,000 barrels a day from last year. That’s another 4.2Mb a week that they short-changed us in order to jack up the prices! Our total imports were down 2.2Mb a day, which is down 15.4Mb for the week – almost an entire day of American usage parked offshore in tankers so JPM and GS can put the squeeze on us for another few billion in bonus money – yet no arrests will be made…

Please take the time to send this information as a Christmas card to your Congresspeople, the official EIA PDF is simple enough to read and the damage that is being done to our economy is evident to anyone who has to fill up a tank of gas this weekend as once again they jack up the prices ahead of holiday weekend driving in order to rip off as many people as possible. By the way, if you have a credit card that guarantees you a better price if the product you buy goes down in price after you buy it – use it to buy gas and demand a refund when these BS prices come down – maybe we can get AXP on our side in fighting this nonsense…

Also boosting commodities this morning is Gang of 12 member BCS, who announced that Central Banks will avoid the dollar in 2010 to stop it from rallying. And, of course, there is renewed speculation that our own Fed will keep rates near zero for at least another year. There’s nothing like speculation about what Central Banks will do to take the steam out of a currency move and BCS managed, as I noted earlier, to push copper all the way back to $3.27 and gold touched $1,107, up $20 from yesterday’s low. If this sounds like the same nonsense that was used to drive down the dollar this summer – it is – but it worked then and the IBanks will go back to the well again and again until investors wise up, which is often never…

Durable goods came in up huge at 2% ex-auto, way better than 1.1% expected but, including autos, we were up just 0.2%, way less than the up 1.2% expected. Jobless claims for the week before Christmas came in right at 452,000, which is the lowest level since last September so yay, I guess.

There’s a great story in the USA Today this morning about how Detroit is very concerned about our nation’s orphans. No, not the poor children who have no parents – they couldn’t care less about them. What they do care about is the 3M orphaned customers who either lost their dealer because of closings in 2009 or whose current car brand is going out of business. Urban Science, a consultant firm in Detroit, says 1,467 dealers closed in 2009. The bulk were General Motors or Chrysler dealerships. They were forced out of business when the car makers filed for bankruptcy and could close weak dealers. GM is killing the Pontiac, Saab and Saturn brands. Its Hummer brand will likely be sold to a Chinese company. That leaves Pontiac, Saab and Saturn customers needing a new place to service their cars. This will be an interesting marketing story to follow next year!

Have a very Merry Christmas – it’s been a wonderful 2009 for the markets and we’re fininshing up over 20% if this holds up. Can we make another 20% in 2010? I’m still a bit skeptical but the recovery has already been miraculous and we’ll be going over ways to protect ourselves over the weekend as we get ready for what will hopefully be a happy New Year!

Phil’s Stock World provides frequent intraday news updates similar to this one to members. As part of a special opportunity, readers of The Market Guardian blog are offered a free subscription. Use referrer code “Braunie” (which is included in the links here) and select the $49 per month option and – using my code – your $49 subscription will be free (monthly fee will be waived) and you will receive a 20% discount on premium services, should you find Phil’s Stock World to be a valuable resource. Click here to sign up.

Speculative plays

ADCT – ADC Telecommunications – The stock broke resistance on Tuesday, which should be the start of another upside move.

ETFC - E*TRADE Financial Corporation – Chart looks bullish in all time frames. There could be a possible takeover target according to many sources. Watching for a close above $1.79 on heavy volume.

AIG – American International Group had a great day on Tuesday. $32 is the next resistance level that if broken, could send shares back to retest $33.

S - Sprint Nextel – I expect to see a good upside move once the stock breaks through resistance now at $3.91.

BAC – Bank of America Corp – Watching for a close above $15.86 ( 50-day moving average )
LVS – Las Vegas Sands Corp. – Watching for a close above $16.07 ( 50-day moving average )
CRIS – Curis – Chart looks bullish in all time frames. Watching for a close above $3.09
OCNF – This stock can pop big time on any positive news. Stock looks cheap to me.

FREE Analysis For ETFC Here

Phil’s Stock World

Yes! Once again the futures are up!

Who could have guessed such a thing? At 7:30, we have about a half-point gain in the US futures despite the fact that oil is languishing at $73.35 and gold is down to $1,091 with silver failing $17 for the first time since October and copper bouncing off $3.12 again. So no one wants any commodities but the economy’s great??? Perhaps it’s because, according to the Rasmussen Report, that as of yesterday, 52% of Americans were not done with their holiday shopping. In fact, according to what has to be either an idiotic survey or a survey of idiots, 24% of adults have not even started their shopping yet – with just 2 shopping days left!

Sixteen percent (16%) of adults say they will be spending more money on gifts this holiday season compared to past years. That’s up seven points from last week and the highest level measured so far this year. However, most (63%) say they expect to spend less money this year.

I suppose we can always hope that the 16% who spend more will spend more than 4 times what the other 63% cut back and then all our Retail Christmas wishes can still come true. So forget the disappointments of Black Friday and Cyber Monday and Super Saturday and Snow-Bound Sunday – we still have “Take What’s Left Tuesday” and “Whatever is On-Sale Wednesday” and “Thoughtless Gift Thursday” for all the real last-minute enthusiasts.

I’m sure if this week disappoints, the media will be waiting to spin how great they expect the post-holiday rush to be as everyone comes in for the sales (as retailers desperately race to clear their shelves so they have less to load on trucks when they close 20% of their stores and lay off a few million people next quarter). Why would the media spin retail so positive? Who do you think pays their bills? The most important message the media needs to send every minute of every day is: “Advertising works!”

So get out there you last-minute maniacs and shop or the economy drops! Unfortunately, no one will tell you this is happening but me and I almost feel silly to keep saying it BUT LOOK AT THE SIGNS! We’ve been reading the tea leaves since the weekend with our PSW Holiday Shopping Survey, which has given us mixed reports from aroud the country and I urge Members to contribute their shopping anecdotes as it gives us a great picture of what’s hot and what’s not this year – miles better than the Rasmussen Report!

China, where they make all the stuff we buy, had another down day on the Shanghai Composite, dropping 2.3% and now off 12.5% from the December 7th high, a drop that is pacing the 25% drop in the Baltic Dry Index over the same period (2 weeks!) as the logical connection between lack of Chinese economy and lack of shipping actually holds, despite all the other silliness in the Global Markets. Bulls should be terrified that there is any logic to the markets anywhere in the world as logic is the bitter enemy of this rally and should sanity rear it’s ugly head in 2010, the markets will be sorely tested indeed!

The mainland’s misfortune was shrugged off by the Hang Seng, which gapped up 250 points thanks to their futures and finished up 143 points on the day, only falling 107 points in real trading (and most if it right after lunch), much like our own 60-point dip from the fakey, fake, fake open we had yesterday. By the way, my FREE play of the day yesterday, right in the Morning Post, to short oil at $75 in the futures yielded a gain of $1.50, which is $150 per contract so don’t say I never got you anything for Christmas! Back to Asia though – we are long on Japan and the driving dollar sent the Nikkei up 2% – flying over our 10,200 line all the way to 10,378. That should give us nice gains on our EWJ calls, probably enough to cash them out this morning.

I’m a little more worried about Japan than I was yesterday as Eisuke Sakakibara, formerly Japan’s top currency official, said the yen may climb to 80 per dollar in the first half of next year, hampering the economic recovery. “ A strong yen would cause stock losses and enhance deflation, which may cause Japan’s economy to slip into a double-dip recession,” Sakakibara said at an event today in Tokyo hosted by Citigroup Global Markets Japan Inc. Japan’s government would find it difficult to intervene effectively to weaken the yen, said Sakakibara, who became known as “Mr. Yen” during his 1997-1999 tenure at the Ministry of Finance for his efforts to influence the yen rate through verbal and actual intervention in the currency markets.

I found that statement and it’s timing (coming during a dollar rally) a bit strange and I don’t know who pays Sakakibara to say what so we have to take his statement at face value and exercise a little caution regarding Japan. Of course, Sakakibara was not alone on the gloom squad yesterday – also ignored by the rallying markets was Chinese central bank Governor Zhou Xiaochuan, who said that reserve ratios for lenders remain an important tool, fueling speculation that requirements may be increased to limit the risk of asset bubbles. A record 9.2 trillion yuan ($1.3 trillion) of loans in the first 11 months of this year drove a recovery in the world’s third-biggest economy, pushing up stocks and sending property prices to their biggest gain in 16 months in November. As I mentioned, the Shanghai Composite Index fell 2.3 percent today to the lowest close since Oct. 30 on concern the government may tighten policy.

Phil’s Stock World provides frequent intraday news updates similar to this one to members. As part of a special opportunity, readers of The Market Guardian blog are offered a free subscription. Use referrer code “Braunie” (which is included in the links here) and select the $49 per month option and – using my code – your $49 subscription will be free (monthly fee will be waived) and you will receive a 20% discount on premium services, should you find Phil’s Stock World to be a valuable resource. Click here to sign up.

By Nico Isaac

How banks are spending YOUR money might shock you

• “Beyond stock movements, there is other evidence that the banking industry is back on its feet.” (Forbes)
• “Banks are returning to profit. The assumption is banks have seen the worst of losses. Since they were the ones to lead us into this crisis, they will be the ones to lead us out.” (Bloomberg)
• “Happy days are here again. The panic’s over. Gloom is gone. We have emerged from the fleeting shadows on to the sunlit uplands of optimism once more.” (Associated Press)