Get It?

Geithner "The vast majority of U.S. Banks have more capital than regulatory guidelines indicate". Ken Lewis "We absolutely don't need more capital". Citigroup "Regulatory capital base is strong"....and then the story from bloomberg this morning..."At least 6 banks require additional capital, according to preliminary results of Government stress tests".
So on one hand, the feds think that regulatory capital standards are great, but on the other hand, they don't. The private institutions don't seem to think they need more capital, but the feds have blatantly threatened to fire private CEO's if they don't.

Long story short, estimates put banks at another 1.1 trillion in losses and shortfall, and Bank of America at 60-70 billion. The government is at this point, politically unable to give more money away. Bank of America could convert 27 billion from preferred shares to common. However, where then does the at least 33 billion dollar shortfall come from for BAC, and where does the trillion come from for the rest of the industry?

Where will it come from? Lies. That's where it has been coming from for the last 6 weeks anyway.
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Black Gold

Should have a decent day in the energy sector tomorrow.
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All Hail The Feds!

Who will be meeting on wednesday. Yesterday the futures were down 165 points pre-market, and yet the markets only managed to drop 48 points. Usually when the futures have moved pre-market more than 120 or so points or so, the day will be very directional. This morning the futures are down a little over 100 points but I think the markets will end up relatively flat today as well in light of upcoming announcements. The markets are really looking for a reason to sell at this point, but the volume has been light so far. Watch for one or two more punches to the upside courtesy of the feds this Wednesday and this Monday. Monday, May 4th is shaping up to be a pretty big day for "selling the news".
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Stress Tests

Who wants to bet that the government stress tests will beat expectations today. Aacording to "their" stress tests all 19 of the big financial institutions will be in great shape under the worst of possibilities. It will be interesting to see if the markets decide to wave the bull crap flag on that one and sell into it.

There was no news the last 10 minutes of trading yesterday to cause the massive jump we had. Whoever put the massive order in, put it in at the market. Most institutional trades are worked in using trading algorithims and programs. The buying yesterday near the close was dropped on the market. Either they knew something no one else did, or they wanted to have a green day, or both. Either way, this market is giving me the creepers.
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No Rationale

I am telling the banks and the government are mixing it up with investors. I have not seen indicators denoting short plays as obvious in a long time. Yesterday General Motors defaulted on 1 billion dollars in notes. The IMF came out and said we are in a deep recession not seen since the 30's. Bad news is being completely ignored and snippets of good news are put on a pedestal. Volume is really low. People aren't trading because the market rally's on bearish technical and fundamental plays. Everything is drastically overbought and overdone on the buy side. The markets are no longer free. The financial power houses and the government are manipulating this market.
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No Head Fake Here!

Well, so much for the head fake before continuing down. This market wants to rally so...I'm not going to get in the way of tha freight train. Amazing how resiliant capitalism is regardless of the corruption and fundamentals!
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Whew! That Stinks!

Something smells really really bad. David Kellermann, the acting CEO of Mortgage giant Freddie Mac, was found dead on Wednesday in his home. The death was "unintended" said a Fairfax County Officer. In light of all the corruption and blatent lying to the public as of late, I wonder if there wasn't something that he knew...and wanted to come clean with....(Twilight Music in background) dodododododododoooooo.....
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Head Fake

Rally this morning is a head fake. I would like to see more volume in this sell off though. The fact that volume has thus far been relatively low supports the assumption that we are forming a "head and shoulders" bottom pattern. This means that we could see an upside starting at around 740-760 on the SPX. The next leg up would probably carry the markets to the 40-60 percent rally targets I mentioned in earlier posts.
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Nationalization Of Banks

I woke up this morning and realized that our banks have been nationalized for quite some time. A government official said this morning that they will need to "determine whether repayment (of TARP funds) is in the nation's economic interest".

I realize that this will shed more light on bad banks...good. Let the markets and the American people take this problem head on. My grandparents fought in WW2 and suffered through the great depression, we are borrowing our children's money to avoid the consequences of our own actions. Capitalism is the best way by far to improve the overall quality of life for a nation. Over the past decade we have witnessed crony capitalism. Congress and the senate accept monies from constituancies and then provide political favors in return. Our government is broken as a purely democratic institution.
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Where Is The Volume Going?

The trin, an indicator which tracks directional volume in stocks has been denoting a bearish attitude in stocks for about the past week. A sell off is coming soon. I don't know when but it is still a good idea to hedge your positions with covered calls.
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Up, Down....Up Down Up Down...Ahhhhh!

Credit Derivatives Research came out with a report today. Here are some interesting quotes I gleamed from it....

"The recent U.S. Stock rally has been sustained by small trades pushing up prices, rather than large block trades that have traditionally supported share moves"

"This equity rally has manipulative activity fingerprints all over it"

"Most of the momentum pushing shares prices higher has been made in small, after hours trading"

"Without these trades the S and P index, for example, would be around 60 points lower"

"What this means is that marginal market participants, such as mutual and pension funds, and retail investors who are really just beneficiaries of the liquidity chain, are about to get a very rude awakening"

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The Status Quo Has Changed

The attitude toward financial stocks changed today. Goldman Sachs came out of the gate early with their earnings just as Wells Fargo did. However, the market was more prepared for sky high earnings and, what's more important, had a general consensus as to why (see previous posts). There is now talk of federal investigations into Goldman Sachs and their dealings with AIG. There is also talk of investigating former Treasury Secretary Henry Paulson about possible conflicts of interest he may have had with the firm he was formerly CEO of (Goldman Sachs). All I can say is puts on Morgan Stanley and Goldman never looked better.
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Sell Calls

Sell calls on most of your long positions. The market is preparing for a decent retracement to the downside.
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That Was A Close One!

Financials were all set to sell off big time with fears of commercial real estate write offs potentially being worse than the residential CDO's were. Out of no where the CEO of Wells Fargo made an appearance on CNBC disclosing their quarterly profits 2 weeks early! Financials are now protruding a classic breakout to the upside. They should continue to show more strength as more financial institutions release their earnings. I wouldn't be suprised if more of these types of suprise anouncements surface pre-earnings for this quarter. All in all one might say we have begun the second bullish leg of a massive bear market rally. With financials however, don't forget the commercial real estate and swap exposure. Tread financials careful once the rally puckers out.

On a side note, shorting treasuries and the dollar are both plays that we can rely on long term. I picked up some TBT and some UDN as medium to long term holdings the other day.
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Free Market Capitalism!

Amidst all this talk of nationalizing everything and creating a huge government infrastructure I thought Milton Friedman said it all!

Banging The Pot

U.S. Officials and company CEO's have been banging the pot for weeks now stating that earnings could be horrible this quarter. Just in the last week or two Alcoa came out and forwarned horrible earnings. Their earnings will be horrible, but since really really low expectations have been set, I think many companies will beat expectations. Because of this we just may see stocks rally on bad earnings and outlooks. I'm telling you, this market is rigged and they will play every trick in the book to rally this market. But what can we do? It's the only game in town.
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Government Insider Manipulation Trading

Remember when the big bank CEO's came out and said the first few quarters were very good? Then, despite interest rates continuing to fall and refinances continuing to rise, they alluded that March wasn't as profitable. Why? AIG. The government has been playing games behind our backs. AIG is dead, it is a shell company. The government has given them over 170 billion dollars thus far. During January and February AIG unloaded a bunch of toxic debt at next to nothing prices to companies like Bank of America, Citi Group, JP Morgan, Goldman Sachs and the like. These companies turned around and sold those same assets at the market for billions in profits. How is that disparity legal? A trading policy was changed one month before to allow them to do so. Guess what, the tax payers took the loss on the difference between the rock bottom prices AIG sold at and the market prices the other institutions sold at.

Oh wait, there's more! Wonder why banks are buying more toxic assets now after we had to bail them out for having too much toxic crap on their balance sheet in the first place? Geither's 2 trillion dollar "asset relief" plan is going to bid market prices up on the toxic stuff. These institutions and the feds are going to make a lot of money on our tax dollars. Now we see that Obama's meeting with all the bank CEO's last week wasn't just political, it was collusion.

As a side note, this type of market manipulation is illegal.
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Great Opportunity

To go short on JP Morgan Chase. They are topping out in a big way. The big money was selling yesterday when the rest of the market was buying. Might just be a short play but I am expecting some retracement to the downside for JPM and his friends (Wells Fargo etc.) In the next day or two.
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