Super Year End Discount ....????

??? wakakakkaka

4) 6) 7) FKLI - intraday trade, 5) FCPO - position trade

4)21.11>FKLI SHOT 3@845-BUY 3@851 = -18 (21.11)

5)21.11>FCPO SHOT 1@1399-BUY 1@1495 = -96 (24.11) *POSITION TRADE

6)21.11>FKLI LONG 6@850-SELL 6@857 = +42 (21.11)

7)21.11>FKLI LONG 6@865-SELL 6@869 = +24 (21.11)

Dow Jones Industrials Crash Analysis - Great Depression Versus Today

Article Submitted by: Sol Nasisi
The Economy

I've wondering how the performance of the Dow in 2008 compares to the drop during the Great Depression. To find out, I graphed both and set them side by side. The results are interesting...

Today, as I watched the Dow sink below 8,000, I wondered how the sell-off of the last six months compares to the sell-off during the Great Depression. The chart below shows what I found. To create it, I graphed historical data taken from the DJ Indexes website for the Dow Jones Industrial Average.

Let me explain how to read the chart.

The years 1930 and 2008 are time 0 on the x axis of the graph. I then looked at the 21 years before 1930 and 2008 to see how the markets performed before the 1930 and 2008 crashes. I also charted the 10 years after the crash in 1930, represented by the positive numbers on the X axis. The left Y axis shows the Dow's price during the early part of the 20th century and the right Y axis shows the Dow's price in more modern times. One other note on the methodology is that I used the closing price of the Dow on November 11 of each year.

As you can see by looking at the blue and pink lines, before both crashes there was a sharp run-up in the value of the Dow. But the data shows that the pre-crash bubble is much bigger now than it was prior to the Great Depression. While the Dow increased about 2.5x during the priod 21 years before the crash of 1929-1930, it increased over 6X from 1988 to 2008.

In 1929, with Black Friday, the Dow began to deflate and it hit a bottom in 1932. By that point, the Dow was down almost 75% from its peak a few years earlier. Today, the Dow has fallen about 42% from its high of 13,850. As the chart shows, if this economic downturn is not over and comes close to approaching the early severity of the Great Depression, then the Dow is not done falling. It's important to note that the largest damange to the market happened at the beginning of the Depression. While economic problems continue until the beginning of World War II, the stock market began to recover from its lows in 1936. What does that mean? It means that even if our current downturn doesn't last as long as the Depression, it could be as deep for a concentrated period of time, and during that time cause further equity losses.

I don't usually use Wikipedia as a source but I came across this entry on the Great Depression and thought it appropriate. You can decide if there are parallels to today:

The Great Depression was not a sudden total collapse. The stock market turned upward in early 1930, returning to early 1929 levels by April, though still almost 30 percent below the peak of September 1929.[6] Together, government and business actually spent more in the first half of 1930 than in the corresponding period of the previous year. But consumers, many of whom had suffered severe losses in the stock market the previous year, cut back their expenditures by ten percent, and a severe drought ravaged the agricultural heartland of the USA beginning in the northern summer of 1930.

In early 1930, credit was ample and available at low rates, but people were reluctant to add new debt by borrowing. By May 1930, auto sales had declined to below the levels of 1928. Prices in general began to decline, but wages held steady in 1930, then began to drop in 1931. Conditions were worst in farming areas, where commodity prices plunged, and in mining and logging areas, where unemployment was high and there were few other jobs. The decline in the American economy was the factor that pulled down most other countries at first, then internal weaknesses or strengths in each country made conditions worse or better. Frantic attempts to shore up the economies of individual nations through protectionist policies, such as the 1930 U.S. Smoot-Hawley Tariff Act and retaliatory tariffs in other countries, exacerbated the collapse in global trade. By late in 1930, a steady decline set in which reached bottom by March 1933.

The quote doesn't touch on the obvious parallels in the banking system. Although there haven't been as many bank failures, the magnitude of the financial failures today are enormous - Bear, Lehman, Fannie, Freddie, Wachovia, Washington Mutual, Countrywide, National Citi, AIG. I realize not all of these were failures but many of the banks listed were purchased at firesale prices to prevent a failure.

The question to ask yourself about this recession is whether you think it's like the relatively mild downturns of 2001-2002, and 1991-1992 and even 1980 or is it really the worst economic downturn since the Great Depression? Because if you believe the latter, then that blue line has further to fall.

How the Mighty Have Fallen: Buffett, Other Legends Feel Bear Market Bite

Feeling mauled by the seemingly undying bear market? Take a look at the year-to-date performance for some biggest of the big-name investors and consider yourself in good company:

• Warren Buffett (Berkshire Hathaway): -43%
• Ken Hebner (CMG Focus Fund) -56%
• Harry Lange (Fidelity Magellan): -59%
• Bill Miller (Legg Mason Value Trust) -50%
• Ken Griffin (Citadel): -44%
• Carl Icahn (Icahn Enterprises): -81%
• T. Boone Pickens: Down $2 billion since July
• Kirk Kerkorian: Down $693 million on his Ford shares alone

My guest John Roque, managing director and technical analyst at Natixis Bleichroeder, suggests these staggering losses are simply a matter of the fact that "a bear market gets everyone" — even Wall Street legends.

Look no further than Warren Buffett: Shares of his Berkshire Hathaway have tumbled as his recent investment in Goldman Sachs has raised more concern about his exposure to financials than inspired confidence. The cost of credit-default swaps (CDS), or insurance against default, on Berkshire's debt has nearly tripled in two months and is wider than CDSs on many other insurance and financial firms, Bloomberg reports.

Of course, Buffett is truly a long-term investor and his defenders say it's far too soon to judge his investment in Goldman, or his much-ballyhooed "Buy American" call in October. But in a true bear market, "everybody gets taken to the cleaners," Roque says, maybe even the "Oracle of Omaha."

The Great Crash of '08 (Cont.): Dow Below 7600, S&P at 11-Year Low

Unprecedented. Historic. Ugly.

Even veteran traders were agog Thursday as the "Great Crash of 2008" added another chapter to its grisly tale.

The Dow fell 444 points, or 5.3% to 7553.56, breaching its October 2002 lows, and the Nasdaq tumbled 5.1% to 1316.

The S&P 500 fell 6.7% to 752.44, its lowest close since 1997; the index is now down 49% for the year and on track for the worst annual decline in its 80-year history, Bloomberg reports.

The Dow was actually up nearly 200 points at its high of the session, but stocks plummeted in the afternoon after:

• A speech by Treasury Secretary Paulson in which he said: "There was no playbook for responding to a once or twice in a hundred year event."
• Rumors of Congressional relief for automakers proved unfounded, although GM and Ford each closed higher.
• Layoff announcements by JPMorgan and Bank of NY Mellon.
• Citigroup tumbled anew, despite reports Saudi Prince Alwaleed will raise his stake in the bank to 5% from 4% currently.

Beyond floundering financials, basic material stocks like Foster Wheeler, Temple Inland, Mosaic and Chesapeake Energy were the big losers Thursday as commodity prices tumbled again.

In addition to more evidence of economic weakness, including the Philadelphia Fed survey and index of leading indicators, commodity producers continue to be punished by hedge fund selling. Hit by redemptions and falling market prices, assets in hedge funds shrunk by $155 billion in October alone, according to Hedge Fund Research.

Hedge funds still had about $1.56 trillion in assets as of Oct. 31, which may just mean the great unwinding still has a ways to go.

If Stocks Are So 'Cheap,' Why Are They Still Going Down?

After recovering from their initial decline, stocks were struggling midday, with the Dow threatening to violate its October low of 7882.

With the S&P and Nasdaq having failed their "retest" yesterday, the Dow is almost certain to follow suit sooner vs. later. Many market watchers believe a retest of the October 2002 closing lows of Dow 7286, S&P 777 and Nasdaq 1114 are likely before this brutal bear market ends.

"I think it's pretty reasonable to look to the '02 lows as the next support area," says John Roque, managing director and technical analyst at Natixis Bleichroeder. "But ultimately, the market will find support at a lower level than that."

Roque predicts the S&P will hit 680 and the Dow the high 6000s before this downturn is over.

As to the claim stocks are "cheap" and long-term investors should be buying, Roque has a simple response: "Have they stopped going down? If they haven't stopped going down, they're not cheap. If people have no confidence to own [stocks], they're likely to go lower."

In other words, the habitual bottom-pickers are going to get burned yet again.

Recession or Depression? Finding the Trigger ...

Recession or Depression? Finding the Trigger ...

Posted By:Daryl Guppy

The key question facing markets these days is the difference between recession and depression. A recession is an economic slowdown that may last for 6 to 18 months. A depression is an economic pullback that may last from two to four years. We'd rather not have a recession at all but if we have to choose one or the other, I'd rather be recessed than depressed!

In either case, the market moves in anticipation of the event. The market decline develops before the fundamental signs of a recession or depression become evident. The market leads the confirmation of conditions.

The market also leads a recovery. In a recession, the market will develop strong trending behavior many months prior to the official confirmation of the end of a recession. This recovery provides trend trading opportunities.

In a depression the market will develop a long-term consolidation pattern. This is an investment period that lays the foundations for generational fortunes. Trend-trading opportunities do not develop for several years. This consolidation and accumulation phase concentrates on creating income flow from dividends. The fundamental end of a depression is not recognized until many months after the market has already reacted.

Right now, market is hovering near significant support levels. The closest of these we call recession support targets. The lowest of these we call depression targets. Many analysts have compared the current market situation to the market collapse in 1929. This week we look at charts from the 1929 period. In particular we look at the similarity of behavior.

The above chart is the weekly Dow for 1929 to 1930. The significant features are these:

• The rapid fall is followed by a rebound and rebound failure.
• The primary rebound failure occurs rapidly with another market collapse.
• The pile driver low is retested within 12 months
• Support, defined by the pile driver low, is not successful

The pink circle shows the comparable position of today’s market. This is a period of high volatility, but volatility lessens and the market moves into a more clearly defined trending behavior. This pattern of behavior suggests that a rebound from the current support levels may persist for around 20 weeks.

The important feature is the rapid failure of the trend line followed by a rapid failure of the pile driver low support-level. The failure of pile driver support brings the really bad news. This failure is acute because the pile driver low support does not equal any previous historical support level.

The low of the market develops in 1932, about three years after the 1929 crash. The key trigger is the failure of support set by the pile driver low. The disaster is that it takes 25 years for the market to exceed the high of 380 set in July 1929. This is why the Depression is referred to as a generational event. The current situation has the potential to have the same generational impact.

The key trigger that separates a recession from a depression is the behavior of the rebound from the pile driver low. After the 1987 crash the rebound quickly developed strong trending behavior. The move above the midway point in the market fall signaled a continuation of the uptrend. This is recession behavior. Depression behavior is when the market fails to move above the midpoint of the extreme fall area.

On the current Dow chart, the area near 12,000 is the key level to watch. Failure to move above this level suggests a depression scenario may develop.

A sustained move above 12,000 signals a recession. There is one caution in this analysis. The Dow has not yet developed a confirmed pile driver bottom pattern on the weekly chart. The low of this pattern will determine the mid-point resistance level that is used to signal a recession recovery.

Markets will not behave the same way as in 1930, but they will develop in a similar fashion. There is a high probability that these behaviors will develop in shorter time frames.

3) FKLI - intraday trade

3)20.11>FKLI SHOT 3@854-BUY 3@850 = +12 (20.11)

2) FKLI - position trade

2)20.11>FKLI SHOT 2@852-BUY 2@872 = -40 (27.11)*POSITION TRADE

BEHIND THE MONEY: Dow's Bermuda 'Triangle' Points to More Lost Returns Ahead, Analysts Say

BEHIND THE MONEY: Dow's Bermuda 'Triangle' Points to More Lost Returns Ahead, Analysts Say

The Dow average is forming a pattern that's generating a lot of chatter among the technical analyst community (there's a community?) and the Fast Money traders. Using a bar chart for the Dow, draw a trend line from the September intraday high diagonally down, touch the November 4 high and keep going. Then draw a straight line across the lows, touching the October 10 intraday low and the low made during the day last Thursday (right before the monster intraday rebound) until you connect with the hypotenuse. You're looking at a right triangle, also called a wedge among chart worshippers. The Dow is clearly bouncing around within this triangle, posting lower high after lower high.

"We know only that 'triangles' such as this one tend to resolve themselves to the downside,'' writes Dennis Gartman this morning in The Gartman Letter, which is standard reading on Wall Street trading floors everywhere. But he's not alone by any means.

"A case can be made that the equity base could be a 'triangle,' which is often a continuation pattern within a dominant trend," said Mary Ann Bartels, Merrill Lynch's Technical Research Analyst, in a note to clients yesterday. "In the S&P 500's case, the triangle carries the risk for a breakdown" of another 13 to 19 percent, said Bartels, who was the No. 2 ranked technical analyst in the latest Institutional Investor magazine poll.

And our very own Jeff Macke said on the Fast Money conference call this morning, "It sounds silly, but I've made a lot of money trading evil triangles." He cautions that a few more fake rallies within this triangle could point to a pretty severe breakdown as frustrated investors throw in the towel.

Are enough people talking about this Bermuda "triangle" that it will become a self-fulfilling prophecy? That's pretty much what technical analysis is all about. Voodoo or not. It is being talked about enough to give some credible traders some pause.If we form yet another lower high today (which looks like the case), watch for the triangle chatter to get even louder.

4) FCPO - position trade

4)14.11>SHOT 1@1460-BUY 1@1467 = -7 (19.11) *stop change to 1467 from 1522

6) 7) FKLI - intraday trade

6)13.11>SHOT 3@867-BUY 3@870 = -9 (13.11)

7)13.11>LONG 3@870-SELL 3@870 = -0 (13.11)

5) FKLI - intraday trade, 3) FCPO - position trade

5)12.11>FKLI LONG 3@886-SELL 3@889 = +9 (12.11)

3)12.11>FCPO SHOT 1@1542-Buy 1@1455 = +87 (14.11)

2) FCPO - position trade

2)11.11>LONG 1@1595-SELL 1@1542 = -53 (12.11)

4) FKLI - position trade

4)10.11>LONG 1@898.5-SELL 1@852 = -46.5 (20.11)

Hedge fund managers 'funereal' in midst of crisis More pain expected, but some look for opportunities in 'rubble', PART 4

Part 4

By Alistair Barr, MarketWatch

Last update: 8:32 p.m. EST Nov. 7, 2008

'Carnage'

Seth Klarman, a top-performing value investor and head of The Baupost Group LLC, told clients in an Oct. 10 letter that the economic downturn could be "vicious and protracted."

"The financial market collapse and bailout makes us sick," he wrote. "There is likely more carnage to come."

The U.S. dollar will likely weaken and its reign as the world's reserve currency could end, Klarman predicted. Longer-term, U.S. interest rates may rise as foreigners have to be enticed more to invest in dollar-denominated assets, he added.

The recent Treasury Department bailout has yet to be paid for and should add to inflationary pressures over time, especially when the economy begins to recover, he said.

Hedge fund managers 'funereal' in midst of crisis More pain expected, but some look for opportunities in 'rubble', PART 3

Part 3

By Alistair Barr, MarketWatch

Last update: 8:32 p.m. EST Nov. 7, 2008

Buffett bashing

"Be careful buying ANYTHING today," Kyle Bass, managing partner of Hayman Advisors, warned in an Oct. 17 letter to investors.

"There will be a time to buy stocks," he added. "That time is a few years into the future when the strong have separated themselves from the week ... a time when unemployment has hit 10% and U.S. GDP has dropped 4-5% (maybe more)."

He criticized Berkshire Hathaway Chairman Warren Buffett who advised investors to buy U.S. stocks in a New York Times column last month.

"Mr. Buffett has enough money to be able to have his holdings drop 50% and still fly in his jets and live the way in which he has become accustomed," Bass wrote. "Do you have enough capital to take what you have left, cut it in half, and continue to live the way you have for the past few years? I don't."

Hedge fund managers 'funereal' in midst of crisis More pain expected, but some look for opportunities in 'rubble', PART 2

Part 2

By Alistair Barr, MarketWatch
Last update: 8:32 p.m. EST Nov. 7, 2008

'Funereal'

Steve Galbraith, a partner at Lee Ainslie's Maverick Capital, read about 25 letters other hedge funds sent to their investors in October.

"The tone of the discourse was funereal," he wrote in Maverick's own Oct. 9 letter to clients. "The global economy has already entered a grim recessionary period akin to those of the '90s and '80s rather than the shallow post tech bubble recession of 2001-2002."

The Maverick Fund, Ltd. was down more than 7% last month through Oct. 17, leaving it off roughly 26% so far this year, according to a hedge fund performance report compiled by HSBC's private bank.

In Maverick's Oct. 9 letter to investors, the firm reported that its funds lost between 14.4% and 40.6% during the third quarter.

"I cannot find words to describe our disappointment, embarrassment and shock over the above results," Ainslie wrote.

Oct. 1 marked the 15th anniversary of Maverick Capital, during which time Ainslie has outperformed the S&P 500 handily.

But Maverick couldn't shelter from what Ainslie called a "perfect storm" of hedge fund de-leveraging and failure, short selling bans, slumping equity markets, faltering prime brokers and a spike in volatility.

Hedge fund managers 'funereal' in midst of crisis More pain expected, but some look for opportunities in 'rubble', PART 1

Part 1

By Alistair Barr, MarketWatch

Last update: 8:32 p.m. EST Nov. 7, 2008

SAN FRANCISCO (MarketWatch) -- In the midst of the worst financial crisis since the Great Depression, several top hedge fund managers sent a grim message to their investors in October: it isn't over.

One said he was sickened by the crisis, while another admitted shock and embarrassment at the severity of the market slump and the losses his firm suffered. A third warned clients to be careful about buying anything and said it will be years before investors should buy stocks.

Such pessimism is often taken as a sign that markets may have hit a bottom and most of the managers realized this. Indeed, some said they'd already begun buying securities that they think are cheap enough to discount all the gloom.

The Standard & Poor's 500 index slumped more than 16% in October, while credit markets collapsed.

Spreads on investment-grade corporate debt jumped by 151 basis points, while junk bond spreads surged by 521 basis points to a record 1,617, according to CreditSights.

Losses in these markets so far this year reached 19% and 31% respectively, prompting the fixed-income research firm to ask "Can it get any worse?"

Hedge funds have been hit particularly hard by this market collapse. The average manager lost 5.43% in October, leaving them down more than 15% so far this year, according to preliminary estimates on Friday from Hedge Fund Research.

That puts the $1.7 trillion industry on course for its worst year since at least 1990, when HFR began tracking performance. Before 2008, hedge funds had only one down year in that time: in 2002 they lost 1.45% on average.

3) FKLI - intraday trade

3)07.11>LONG 3@894-SELL 3@894.5 = +1.5 (07.11)