BP now stands for Bad Publicity

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After creating one of the biggest disasters in US history with the Gulf Oil Spill, British Petroleum (BP) has tried to buy ads on Google to get their message through, however, they have not just stopped at buying ads for Google search and have been promoting their message on YouTube too.

BP plc (ADR) has concluded that its “top-kill” attempt to seal its broken well in the Gulf of Mexico may have failed due to a malfunctioning disk inside the well about 1,000 feet below the ocean floor. If the casing is compromised the well is that much more difficult to shut down, including the risk that the relief wells may not be enough. If the relief wells do not result in stopping the flow, the next and drastic step is to implode the well on top of itself, which carries other risks as well. The real doomsday scenario here… is if that casing gives up, and it does come through the other strings of pipe. Remember, it is concentric pipe that holds this well together. If it comes into the formation, basically, you‘ve got uncontrolled [oil] flow to the sea floor. And that is the doomsday scenario. -Naked Capitalism

The U.S. Coast Guard gave BP Plc 48 hours to find more capacity to contain its leaking oil well in the Gulf of Mexico after scientists and researchers doubled their estimates of the spill’s size.Based on government estimates, the drillship isn’t capturing as much of the spill as BP predicted earlier this month. In a June 4 interview with CBS, Suttles said the system would be capable of capturing as much as 90 percent of the flow.

If BP does not comply with this order, and cannot give a satisfactory reason why, this will put them further on the back foot in their meeting with Obama next week. Readers are correctly cynical as to whether the Administration will live up to its tough words, but the groundwork is being laid, which would make failure to follow through even harder to defend.

Separately, BP said its board will meet June 14 to discuss whether to cut or defer its second-quarter dividend payment following the spill. This is causing BP’s Major British Shareholders to Ditch The Company While American Ones Are Staying. Major UK institutions including Legal & General, M&G, Scottish Widows, Threadneedle and Axa have all trimmed their holdings since the Deepwater Horizon rig sank. US pension funds – including Calpers, the Teacher Retirement System of Texas and Ohio Public Employees Retirement System – have held their stakes in the company despite the dramatic fall in the share price.

If you think BP is a good buy right now check out this article: The Ultimate Contrarian Bet: BP

Lets see what today has in store for BP and the rest of the market.

Happy Trading

Update 1pm : – Senate Majority Leader Harry Reid (D, Nev.) and members of the Democratic caucus on Monday asked BP Plc (BP) to set aside $20 billion in a special account to be used to pay for economic damages and clean-up costs of an ongoing oil spill in the Gulf Coast.

Update 3:30pm: To demonstrate that it’s responsibly taking care of the oil spill and listening to public complaints, BP has touted the fact that it has set up call centers to handle the response. However, one of the operators at the BP Call Center in West Houston has revealed that she and the other 100 employees are just PR props; BP isn’t actually doing anything with the thousands of calls it receives: ““We’re a diversion to stop them from really getting to the corporate office, to the big people,” said Janice. … Because the operators believe the calls never get past them, some don’t even bother taking notes.”

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World Cup Friday

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If you notice lower volume during the next 30 days you can bet that the World Cup is affecting traders (or maybe just me) with matches at 7AM 9:30AM and 2PM every day. I guess this would mean that soccer fans would come back for the last 30 minutes of trading during the “Adult Swim” hour.

The Data is out and during Q1 household debt contracted 2.2% annually while State and local government debt expanded at 4.25% annually. The financial sector “shed” ~$1.3 trillion in debt (on an annualized basis) in Q1. Is anyone surprised the federal government added almost that same amount? -EconomPic

From 8:30 to 10 am some exciting news come out such as the retail sales data and consumer sentiment. You can check up on them at the Economic Calendar.
Retail Sales Fall, But Not As Bad As Reported Demand plunged at building-material stores, reflecting the end of a government appliance rebate, and sales fell at auto dealers, in contrast to industry figures which showed a gain.  Subtracting those outliers we still have a decline, which shows weakness. Just not as weak as early reports would indicate.

The BP Oil Disaster has become large enough at the moment to cover Albania which now makes Albania the New Frontier for Oil Investors.

Keep in touch using the comment box and even make your pick for the World Cup Champion to be crowned July 11th.
I hope you like the new speed of the website thanks to our seamless move to a new host.

Make some money and think before you hold into the weekend.

-K

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1077 Proves to be $SPX resistance again.

By On · 27 Comments

Going into the open today 1077 was on the radar as a heavy resistance. It will now try to become a death cross of two averages i use that can be seen as the blue and red lines in the Special Investing Freak $SPX chart.

As for what happened today I decided it is best to sum it up using this image and text. (Click To Enlarge)

I bought Puts early on then called top of 1077 in a comment at around 10:50 with the top on the market coming at around 11:30 where I decided it was time to make true to my preaching and sell my calls. Sold puts at end of day and am flat for the next day opening so i can sleep well ;)

Keep checking the comments for latest news and talk and feel free to participate (dont be shy)

-K

Let’s just say

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Debt Reducing Tuesday

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Bennie Balloon Bernankie has something to say about the koolaid.
“My best guess is that we’ll have a continued recovery, but it won’t feel terrific. Even though technically we’ll be in recovery and the economy will be growing, unemployment will still be high for a while and that means that a lot of people will be under financial stress,” he said. Via CalculatedRisk

But there is GREAT NEWS…You can use your credit card to Help Reduce National Debt. Via The Mess That Greenspan Made
Its ok that everyone is financially strained you are still welcomed to help especially if you have a credit card with 13 trillion dollar limit. ;)

There are two ways for you to make a contribution to reduce the debt:

  • You can make a contribution online either by credit card, checking or savings account atPay.gov
  • You can write a check payable to the Bureau of the Public Debt, and in the memo section, notate that it’s a Gift to reduce the Debt Held by the Public.

And as mentioned yesterday the G20 Meeting relied more on taking the koolaid away and tightening the belts of the countries.
Here’s what Germany decided to do:
Germany will cut child payments, pare government payrolls and boost taxes on energy firms with nuclear power plants in an effort to save 81.6 billion euros ($97.6 billion) between 2011 and 2014 in a package approved by Chancellor Angela Merkel’s Cabinet on Monday. -Marketwatch
and how it would look if the United States did something very similar. (Click the option to View as One Page for easy reading)
Of course all these news were already priced in today and greenshoots galore tomorrow.
Make money!!

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Its another Manic Monday

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Without going into many links I will summarize what I read. BP can’t stop leak still, Hungary is the next Greece and this time it might not be bailed out since the G20 meeting was all talk about Fiscal Policy (bailouts) are not sustainable and austerity measures are the way to go. to top it all Iran is not willing to take the next Gaza aid ship to its destination by providing naval escort (Read: Israel can’t attack without starting a war)

Here is an Update of the InvestingFreak Special SPX chart the Red Line (250MA is broken for now so lets see if it holds broken and turns into resistance. to the downside i see 1040 and to the upside a retest of 1104 at least is possible although not all this action might come monday. (Click Image to Enlarge)

So there you have it. Fun week ahead but lets all make money whichever way it goes.
Also visitors are always welcomed and encourage to comment and participate in daily market discussions, your posts wont be deleted or censored unless they contain inappropriate content and links.

S&P futures are down 9 points since the open.  On top of the page in the “Economic Calendar” tab you have easy access to the daily calendar happenings and live commodity futures.

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Quick Update

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I hope you all have been enjoying the profits these past few weeks.

To the followers of InvestingFreak’s Current Picks I thank you for your support and I hope the $SPX April 27th Sell signal (along with the other symbols) made you some good money especially if you traded SPY puts. As Shown Below the market has corrected over 10% since then and there still no buy signal.

We now have a 
Button on the right hand side.

To those that have already donated we would like to Thank You! for helping us pay the hosting bills. We hope you continue to enjoy the content on this site.

Lastly I would like to inform you that there won’t be any updates from May 22 to June 1st because even Freaks need to take breaks.

Make some money next week and donate 10% to us. ;)

-K

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Germany Tries to save the day AGAIN -2008 Part 2 Begins-

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So today Germany’s Merkel decided to pull a good trick over the nekkid shorts.

There is much surprise that the German government has declared a ban on naked short selling, including CDS, as of midnight tonight, with no prior notice or the niceties demanded by the banks when government chooses to act. This action seems to have perturbed some and confused many.

Germany is claiming that this move will stop the Speculators

The ban will also apply to naked short selling in shares of 10 banks and insurers that will last until March 31, 2011, German financial regulator BaFin said today in an e-mailed statement. The step was needed because of “exceptional volatility” in euro-area bonds, the regulator said.

HMMM Where oh Where Have I heard this story before…  Oh Yeahh.. September 20, 2008 German regulator bans short-selling in financial stocks

Germany on Saturday halted short-selling in financial shares, when investors borrow company stock to sell it, following the example of Britain and the United States. The ban affects 11 shares including those of AAreal Bank, Allianz, AMB Generali, Commerzbank, Deutsche Bank, Deutsche Boerse, Deutsche Postbank, Hannover Re, Hypo Real Estate, MLP and Munich Re.    BaFin, said short sales were banned with immediate effect until the end of the year, underscoring that they could lead to huge losses in the current global financial turmoil.

Roll Back to May 18, 2010….

Allianz SE, Deutsche Bank AG, Commerzbank AG, Deutsche Boerse AG, Deutsche Postbank AG, Muenchener Rueckversicherungs AG, Hannover Rueckversicherungs AG, Generali Deutschland Holding AG, MLP AG and Aareal Bank AG are covered by the short-selling ban.   “Massive” short-selling was leading to excessive price movements which “could endanger the stability of the entire financial system,” BaFin said in the statement.

I wonder what happened last time they tried protecting the banks? Well I will examine it below but what’s that I hear you say? This Time is Different?  It sure is!!
During the last Crisis we had Lehman go bankrupt and Bear Stearns collapse.  Two years later we don’t have any financial institutions going down. We Have Countries that are crumbling and their “shareholders” (taxpayers and citizens) revolting.    Greece is Bear Stearns because of the trillion dollar bailout and Portugal might as well become Lehman because unless Europe is willing to print a trillion for every country they bail (which I know they can if they want) and euro dropping to parity and beyond with the dollar…. someone will have to hold the bankruptcy stick.

Anyways Lets look at how the last short selling ban affected the financial institutions they tried to protect.

I’m using Dow Jones Germany Index for a Benchmark as to compare returns.

Company Sept to Dec 2008 May 2010 – March 2011
Dow Jones Germany Index (USD) DEDOWD -23% TO
Allianz SE  AVL -30% BE
Aareal Bank AG ARL -64% FILLED
Commerzbank AG CBK -61% OUT
Deutsche Bank AG  DBK -50% ON
Deutsche Boerse AG DB1 -15% APRIL
Deutsche Postbank AG DPB -65% 2011
Hannover Rueckversicherung AG HNR1 -18% WHEN
MLP AG MLP -26% BAN
Muenchener Rueckversicherungs-Ges. AG MUV2 +7% ENDS

Oh myyyyyy Germany Saved the day as speculators were on the sidelines watching and missing out on 18 to 65% gains (its what you do when you short and if you’re not familiar just Google “selling stocks short”)

The Previous ban was 3 months and the protected stocks crashed an average of 46%. The New Ban will be around 11 months and will crash how much? It will crash aplenty so I will not make an exact percentage call on this one. But I will be doing one thing this time around though.  I’m putting German Financials on a Bank Watch List that I will check back on April 1st 2011.

Make plenty of money these next few weeks even if my blogging is sporiadic at best. (Offline life always comes first)

-K

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Current Stock Signals 5-15-2010

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Due to my time constraints in the next two weeks I will be posting more sporadically.  Here are the current signals for symbols I follow.

You can also find this at the top on Current Picks Page.. I hadn’t updated it in two weeks but as you can see the major signals are from late April so nothing was missed.

My System caught onto the downdraft about a week before the “fat finger” occured and from what I just observed going through these charts is that the “fat finger” was very skinny and precise… nuff said because I need to keep this one a secret. Enjoy

Market Indices and other important Quotes
(Note: I understand you can’t purchase an index so bear with me these are just signals)

Symbol Buy Date Sell Date
$SPX 4-27-2010
$INDU 4-30-2010
$COMPX 4-30-2010
QQQQ 4-30-2010
IWM 5-12-2010
SPY 4-27-2010

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
The Rest of the Symbols (More will be added per request)

Symbol Buy Date Sell Date
IYR 5-14-2010
AAPL 5-4-2010
DRYS 4-19-2010
SDS 4-30-2010
SRS 5-14-2010
SSO 5-14-2010
SKF 4-30-2010
JNK 5-14-2010
HYG 5-14-2010
REW 4-27-2010
QID 4-30-2010
QLD 4-30-2010
XLF 4-26-2010
DIG 4-28-2010
DUG 5-14-2010
SMN 4-30-2010
VXX 4-27-2010
BBT 5-10-2010
BID 5-11-2010

Make Some Money… Ok A Lot of Money!
-K

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Special: Best Lesson Ever On How To Find Shares To Borrow of Stocks at Different Brokers

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Let me just warn you that short selling is even more dangerous than buying (aka going long) stocks.

Why?

If you buy a 1000 shares of MCGI at 2.3, you will pay $2300 + commission. Thus, most you can lose is $2300 and there is no limit on your reward– it could go as high as $4, or $100 per share.

If you short sell a 1000 shares of MCGI at 2.3, you will pay $2300 + commission. Here is the catch: you bet that the price will go down, so THEORETICALLY you can only make 100% of your investment if the price will go down to $0 (zero, null, nada, nic, vlere). THE PROBLEM: the price of the stock can go up infinitely, so you can lose the value of your whole account if you are not being careful. I recommend to never, ever, under no circumstance, leave the short position open without you looking at the price action and being ready to pull the trigger within seconds. If you still do not understand what short selling is or are confused about something, please leave a comment with your question and I will do my best to answer it.

If you understand the risk of short selling, you are half way there. In order to short a stock, you need to borrow shares from your broker. Below is the list of some brokers and how I go about borrowing shares from them.

Thinkorswim: their platform will tell you whether given stock is easy to borrow or hard to borrow by showing you ETB or HTB in the top right corner of the quote window. If it is ETB, you can just execute sell order which is equivalent of shorting. If it is HTB, you have two options: call them or chat with them live on the website. I generally prefer to chat with them as it is the easiest and most convenient for me. I connect with Trade desk, and say “Hi, do you have a 1000 shares of MCGI to borrow?.” If they do not have shares, the person will say “none” or “none available.” If they are available, the person you are speaking with will ask you for your account # and the price you want your order to be placed. I usually would reply with “Set sell lmt order at $x.xx”" — I recommend to ALWAYS set your order higher than it is now at as sometimes it could take them 10 seconds and sometimes 2 minutes for your order to start working.

TD Ameritrade: there is no way to know whether the stock is short-able or not. You can try executing the sell order and it will either get executed or not. If not, you will be simply given an error message saying: rejected. Note that TD has implemented Thinkorswim’s software recently so it might be possible to know whether it is short-able or not. I personally have not used TD for a while; I never liked TD and their high commissions.

E-trade: tired them in the past. My experience has been negative (but maybe they changed since then?). Just like with TD, you can’t know whether it is short-able. You can try executing sell order and it will either be successful or rejected.

Sogotrade: You can know whether given stock is available to borrow by using this URL: http://www.gndt.com/support/shortlist.htm or simply calling them. The list is updated only once during a day so it is possible that shares of desired stock might be already borrowed and not available anymore. Generally speaking, in my experience, Sogotrade usually has shares to borrow of stocks you can’t find with other brokers. Don’t ask me why, I don’t know…

I will add more brokers if anyone is interested.

- Kamil

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Market Correction: Special Edition Results [Animated Charts]

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If you’ve been following my blog recently you might have noticed my April 28, 2010 “Special Edition: Here comes the red ink, correction begins.”
On April 27th The SPX stood at 1183 and it swung as low as 1065 during the past 7 trading days to ultimately close at 1110.

As I wrote on the 28th

I finally had time to check on the market a big grin came to my face. A lot went on today and news blamed Greece and Portugal downgrades for the sharp drop. Nobody ever talks about the technical analysis because it is beyond the mind of Joe the Plumber.

The first chart was the EUR/USD which broke an ascending triangle on the daily back in December.  Below is an animation of Apr 27 and May 7 to show the move. If you have trouble viewing the animated image please leave me a comment because it’s the first time I’m using animated content. (CLICK TO VIEW ANIMATION)

Next we’ll move onto the $TED Spread which jumped nearly 100 percent since the 28th. (Click to View Animation)

Lastly I will leave you off with the Investing Freak Special SPX chart animation. Boy was this a move, the red line is the 250 day moving average in case you are wondering. (Click to View Animation)

Where do I see us heading from here? We still haven’t broken some key supports such as the 1088 trendline and the 1060 250Day moving average. So if we drop another 50 point we will still be good to go for a bounce. If more crazy days are upon us?  I will check with BID ( Sotheby’s ) to see if it’s gone below 22 to initiate heavy short positions.

Thats just me and as always these are my opinions and even though they work for me I cant guarantee them working for you.

Have a good weekend and be on the lookout for the latest Current Picks signal changes coming up this weekend.

-K

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