Todays tape"

$30.91 1.45 (4.48%) Bid

30.43Ask

32.76B/A Size

200x800High

32.61Low

29.98Volume

578,864 (Heavy)



Investors have tossed fundamentals overboard. Given where the market seems to be heading plus the heavy day volume seemingly dumping shares of Ozark (in what looks like panic selling ) you may hit your stop sooner rather then later. I do have a few extra tin cups. If you care to have one I will have your initials engraved.

Pablo

Hi Pablo, it seems like all of my picks are ignoring the fundamentals lately. This has prompted two thoughts:
1) IBD, for one, is always urging traders not to rush in at what looks like the beginning of a new rally, but I'm also thinking, that where any individual trade is concerned, either you go with it or you don't, so I really don't like that idea about not rushing in. No bottom is going to be obvious until it's been confirmed by a bunch of highly rated stocks breaking out, and holding those breakouts. At the moment that they happen, one can only choose to commit or not to commit.
2) So, the warning not to rush in is like saying only get slightly pregnant. My thought is, take the signals.

I screwed up this past Friday taking small losses. The God's were not kind. Not sure where to go with it from now on as any trade seems to be no better then a guess. Maybe it is best to sit on the side lines for awhile. Another problem now rears its head. Given the new economic realities will the market again perform as it did over the past few years or will it stagnate or gain at a much diminished rate for the next 5-8 years?

BTW: I tried to buy Nutra-Pharma but was scared away by the extreme lack of liquidity. So I bought a few shares of Nanologix to spice up my life and allow Petro to send me spirited mocking messages. It was fun. More fun then watching my bond holdings which I think is about as exciting as watching a fly crawl up a wall.

Pablo

Here is what I am worried about. A very long protracted period of stagnation. Article to Follow:



Home Equity Lines Being Drawn Down at Unprecedented Rate



US borrowers appear to be hoarding cash and using home equity lines of credit (HELOCs) to pay bills rather than dip into their savings, according to CreditSights.



HELOCs have been drawn down at an unprecedented rate in late September with total lending by banks rising by almost $40 billion in one week. Although it is difficult to know exactly what the money is being used for, the draw downs coincide with a rise in non-transaction bank deposits - mostly non-corporate savings accounts - and a slowdown in credit card borrowing, CreditSights says.



We believe that some of that increase in savings could be borrowers effectively hoarding cash by using the HELOCs to cover planned expenditures rather than dip into their savings or use up all of their monthly incomes.



For details see: A HELOC's Chance in HEL: Examining Home Equity Borrower Behavior.



This has to be one of the dumbest financial strategies I can imagine. It is without any longterm vision of personal finances.... unless the borrower intends to default on his/her home mortgage to stretch available funds on hand. I would guess this is why credit card issuers have begun to monitor borrowing on card holders home mortgages. What I don't understand is why lenders would now be willing to give HELOC's given the continuous decline in home values. AM I missing something?

PABLO



Pablo

Hello Pablo, thanks for all of this extra info, and please excuse my delay. The last few days of each week, I have both day job and evening classes to deal with. Regarding where all of this financial crisis is going, I have a strong suspicion that it's going to be very protracted, under the best of conditions. As I see it, there are two broad alternatives that the powers that be have in their arsenal. Either let what will happen take place right now, or indundate the world with more fuel ($). They've clearly chosen the fuel route. So then, that leads to two further possibilities: in the short term, further short term capitulation in every sector that is not directly and immediately helped by all of that extra cash, and long term, a massive inflation. And to pay for all of this, a huge increase in taxes and reduction in benefits. Regarding the current market, I am utterly clueless, and could just go to cash, but suspect a move will develop out of the current volatility, so am just taking uspside breakouts as they occur (but trying to be selective), and will also jump back into all of the bear market etfs as they generate new buy signals. Right now, I'm about 50% in cash, and just trying to keep my head above water. So far, I've inhaled a bit but am still breathing. Thanks again! ( and good luck with our NNLX)

There are only three Covester outperformers who own NNLX. One is a true believer. Two are well-meaning fools.

Pablo

I am hunting around in the back of the closet for the old Dunce Cap.