Thursday, May 20, 2010

BEND OVER FOR GREECE update II

Looks like another day for the meat grinder today as the PTB try to figure out a way to implement austerity and fiscal responsibility to a socialist natiion....sorry..I am talking about Greece not us....We aren't socialist. We are corporatist. We socialize corporate loss so that we can provide private gains to the bankers. Soon I fear the scenes in Greece and Thailand will be spreading worldwide. This is a systemic breakdown the likes of which we have never seen. It will surely be a bloody day in our markets but then thats the game and we all know that you are playing with fiat if you don't own physical gold. There is a need to beat gold down here and I have no idea yet where they will push it. The article I am putting in today has recommendations on gold stock trading strategies.....but I prefer the physical. My miner core will take a beating and I will hold my final cash for the turn or short day trades....ouch.....lets play its ONLY fiat. Here is an excerpt.

Thanks to Anne Applebaum of the Washington Post for the research on the Greek provisions. Tax collection measures will of course go to a new level in Greece. It is almost a foregone conclusion that people who live in these southern Mediterranean countries have made an art form out of avoiding taxes. To get a somewhat comparable concept about just how bad it might be in Greece, a quote from the Washington Post …



“Athens, after all, is a city in which 364 people told tax authorities they owned

swimming pools – and in which satellite photographs reveal the existence of 16,974

swimming pools”

……Anne Applebaum, Washington Post May 10, 2010



Closing Comments on Greece and the Euro




Since the ECB increased the Euro money supply by $1 trillion in the last two years that is a 12% increase. That would, in theory, cause a 12% increase in consumer prices over the next 3-4 years or 3-4% per year. Add the new money that may be printed for the new bailouts ($300-400 billion over 3 years) and the conclusion is that this is bad but it is not going to make gold go to the moon.
The Euro is now a suspect currency and could lose another 25% versus the U.S. dollar. But it is not going down the drain. Not yet at least. Although if the socialists somehow prevail in Europe I will take this statement back in the future.
Currently investors are selling Euros and buying dollars and gold. The dollar now actually looks better but that will not last for long as our budget deficits will also force money supply increases in the U.S.
The Greeks cannot default or back off from these austere measures because the power structure and the elite of this country are in plenty of debt themselves and they probably are less concerned about how many protestors are arrested or knocked around than they are about declaring personal bankruptcy or having one of their corporate holdings go under. They will make sure the government takes the money and tells the people 14 months annual pay and lucrative bonuses at the expense of the Germans and others is now over. Time to go back to work.
Greece also cannot back out of the Euro because most of their debt is denominated in Euros. If they set up their own currency it would be devalued immediately – which means the debt of these well- to- do people and institutions would automatically increase.
Their will be no “moral hazard” from this bail out because the austerity program being forced on the Greeks and others will be no picnic. There will be pain. Other governments are already making blueprints on how to handle what’s coming to them soon from their own socialist mismanagement

Gold



Investing in gold is easy. Buy bullion (coins and bars) with 5-10% of your assets and never look at it again. The price is irrelevant. The long term prevails. It’s insurance. Forget the price in dollars or pounds or Euros – think ounces.



Unfortunately owning mining stocks is going to be a nightmare of volatility.



Gold could easily move up or down $200 within a few weeks. That means a lot of anxious mining stock investors. A solution is to have a 60% core positions in quality companies and allocate the other 40% to a medium term trading strategy.



Gold looks overbought and well priced for now. You have to remember that gold has had a very prolonged run up over the last 5 years - $500 to $1200 is discounting a lot of bankruptcies and a lot of inflation and world problems.



I do not see gold going to the moon right now because “the collapse of the western world” and the monetary system is many years away.



The moon shot in gold is coming but I believe it will come when high inflation rates hit the western world including Brazil, Europe, China and India. Then you will see the moon shot.



A possible collapse of the banking system in the U.S. and EU and other catastrophic events can and will be “papered over” with printed money and computer credits even if it takes trillions of more dollars and Euros. The end result will be a lot of inflation. When this inflation hits the markets then gold will again take off.



I think gold could stay in a $1050 -$1250 range for the foreseeable future. I am 80% in this frame of mind. This means gold mining stocks are going to be cash cows and great investments. If gold takes off above $1250 then all bets are off and something could be coming that no one sees.



For now I am the most nervous bull you can imagine

http://news.goldseek.com/KennethGerbino/1274335740.php

update I... May 20 (Bloomberg) -- Gold prices fell, capping the longest slump since March, as doubts about the strength of the economic recovery and Europe’s ability to contain a debt crisis prompted investors to sell commodities.

The Reuters/Jefferies CRB Index of 19 commodities fell to the lowest level in more than eight months on mounting concern that Europe’s debt will derail global growth and slash demand for raw materials. Investors also sold bullion to profit from this year’s rally to a record, analysts said.

“Money is just flying out of the commodities right now as part of the general liquidation happening in all the markets, and gold is getting hit along with that,” said Michael K. Smith, the president of T&K Futures & Options in Port St. Lucie, Florida. “Anytime there’s uncertainty, everyone goes to cash.”

Gold futures for June delivery dropped $4.50, or 0.4 percent, to $1,188.60 an ounce on the Comex in New York, capping a 3.2 percent slump since May 17. The three straight days of losses marked the longest slump since March 10.

The precious metal declined this week as commodities and stocks slid, prompting speculation that some investors sold bullion to cover losses in other assets. Gold has rallied for nine straight years, more than doubling since 2005, and touched a record $1,249.70 on May 14.

“Gold may have further to correct short term, having pushed to just short of $1,250 last week and been overbought on the charts,” James Moore, an analyst at TheBullionDesk.com in London, wrote in a report. Still, “we expect investors who missed the boat the first time may view the current dip as a buying opportunity,” he said.

Gold ‘Megatrend’

Prices have gained more than fivefold since 2000 on surging demand from investors seeking an alternative to currencies or a haven from financial turmoil. The metal is up 8.1 percent in the past two months as buyers sought to protect their wealth amid Europe’s debt crisis.

“The megatrend is still up, but the market needs to go through some minor correction,” said Wallace Ng, the executive director at Fortis Nederland NV in Hong Kong. “We will see more profit-taking on recent gains.”

update II... as if we didn't have enough problems right now.......I guess diversion works....

http://www.zerohedge.com/article/us-begins-massive-military-build-around-iran-sending-4-new-carrier-groups-region

63 comments:

  1. Let me start off with a stupid question...I will research this but I now see references on sites to buying PMs for an IRA? Its bad enough if I buy on the net there will be a paper trail, but is anyone actually locking it into an IRA? If things go nuts what would happen?

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  2. The government would declare your PMs too risky for your retirement planning and would mandate that your PMs be exchanged for much safer US Treasuries.

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  3. I know Sprott was an allowable vehicle to own through an IRA......not sure about any way to own physical other than that...google it they hold physical verifiable....

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  4. guys physical gold is NOT going to crash....this is baby and bathwater....hehehe......miners though are getting crushed.....damn ...gettin close to bounce

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  5. Red alu 2.25 looks yummy .......maybe 2.06 ...soon

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  6. Kli, was sick so just got up, picked a full position of ALU at 2.28 at market.

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  7. I'm loaded up to my chin. This is the time where I should walk away from teh screen for a little way.

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  8. Thanx re IRA - just saw it popping up on the sites such as tulving, bulliondirect and apmex. We actually have some sprott but in the taxable account...no idea why.

    Anyway, concern is if things go to heck, and it becomes illegal to own...

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  9. thoughts on SOL, S or CNAM on this momentous day?

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  10. Hey if it gets that bad homer .....we are fkd anyway in IRAs......so don't worry....as red says own alpo........picked up ANV for trade

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  11. PM IRA @ Sterling Trust in Waco, TX. You need to fund the account first, then coordinate between PM dealer and Sterling to arrange funds transfer and PM shipment.

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  12. I hear ya kli - in fact I was wondering if we would get to a point in time where it might be smart to cash in the IRA and take the penalty, then convert to harder assets. Most folks (including us have been building that bad boy up, any discretionary going to pay for college). kind of between a rock and a hard place.

    ALU or not to ALU...hmmmm

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  13. So Joe thought PAL was a buy at 3.8 - does that mean he's doubling down at 3?

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  14. I cashed out 1 IRA account this year rather than roll it over. The FEDS did everything they could to delay payment and give me to opportunity to re-consider, yeah screw um, paid the taxes and buying some shelter near the courts, hospital and police station.

    Can it go lower, yes (1040)? Do I care, No. If you are glued to the ticker, the best thing is the hourly technicals on SP500 bottom out before trying to fill the gap. Heck even a couple days of slow rangebound is all that is needed bottom out the daily. Going back to bed, have fun all.

    Start preparing your lives for what's coming, Greece and Thailand are just foreplay.

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  15. some ones buying SWC now.......wooo

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  16. joe only trades intraday.....so when I relate his trade becareful....and time will tell whether 3.8 was a terrible buy.....and if he were trading longer term like us...then he would average down at 3....

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  17. Shut up....thiz iz serious bizznuss for me...its my retirement account...never mind its only fiat monopoly money...OBTW Gold is greeeen...as red said stochs gettn there

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  18. BTW in case you don't get it that was sarcasm and this is all a big JOKE......hehehehe but its the only casino in town.....so i gotta play

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  19. ALU news......

    http://www.reuters.com/article/idUKWEA324220100520?type=companyNews

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  20. btw kli, you misspelled the word 'business'

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  21. TDameritrade is completely down. no client access. Ain't that a bitch ---

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  22. Oil broke 68 now at 65 as predicted.....woowooww

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  23. if the S&P breaks 1,174, this could turn into a quick slide to 1040 ... not sure if this is the time to jump into the oil bet

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  24. Confused, just saw an article that 5000 barrels per day is being captured. Wasn't that what we were told was leaking...apparently not based on a BP spokesman..

    '"Whatever the number, people can see we're trying to contain the flow and stop the spill," the spokesman said.'

    When is Kevin Costner showing up with the water world pump (for anyone that thinks I am kidding, I can assure you I am not"

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  25. oil at 60 is a buy......but dont hold if it breaks it.....futures contracts today make UCO SUCK.....stick with miners....safer...hehehehe

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  26. they thought they could drain 2000 barrells with the inserted pipe ... actual spill more lilkely to be between 25-50k barrells per day

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  27. 5000 bpd coming from the noaa, higher estimate than BP. But I think the tone of the article implied of course BP couldn't say they were getting 5000bpd if they said that's all that was leaking. What a mess. Where's Kevin Costner anyway? Is it a pump or a treatment device they have? I just hope Mr. Costner knows those gills he had in Waterworld were not real.

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  28. I started an entry position in a commodity fund in my 401K. Weighted to oil. Unfortunately I started it yesterday, ouch. Even broke the short term trading round trip rules by a week to do it. I know 65 was called for, it is just an entry point. I didn't want to miss anything (ha ha ha).

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  29. Ah glad to have find your blog Kli, I used to post sporadically on the SKF boards and still lurk there among other places. What a great resource this blog is for like minds to discuss all the crap going on. I loaded on on SSRI, PAL, and SWC today, may be a bit too early but i don't mind holding, looking at ALU too. Still have my physical I bought during the crash of 08 and will hold it for a long long time. Anyhow just thought I'd say hi, and thanks for providing this blog.

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  30. spooky...please drop in to comment anytime...great lunch today...and i am happy to see wolf is squeezing my miners....

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  31. A lot of "fear out there" gonna pressure the german "parliament" just like they pressured the congress in 08....my bet is they fold but doesn't change my trade..gold... this is setting up now for a squeeze from hell....

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  32. S&P making a run for the HOD ...

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  33. (Reuters) - Alcatel-Lucent (ALUA.PA) Chief Executive Ben Verwaayen said he was on track to turn the loss-making telecom gear maker around after a painful merger, helped by a boom in consumers surfing the Internet on the go.

    The CEO is betting that telecom operator spending on networks will help Alcatel-Lucent overcome its traditional weakness in mobile where it is smaller than rivals Ericsson (ERICb.ST), Huawei HWT.UL and Nokia Siemens Networks NSN.UL.

    Telecom operators are not engaging in "catch-up" spending after the recession, rather it is being driven by investment in new services and technology, Verwaayen said at the Reuters Global Technology Summit in Paris on Thursday.

    "They are not just building inventory up in the old stuff," said Verwaayen, who took over the helm of Alcatel-Lucent in September 2008.

    Instead operators are seeking to change the business model fundamentally to find a way to make money by "putting broadband capabilities into the palm of your hand."

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  34. Good lord look at those moves on the Euro. Central Banks and the Fed are trying their best to keep that piggy afloat. Moves like that are why I do not play Forex.

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  35. slaughter ... having a large cash position and swing trading the S&P helped to contain my daily loss. Down 2.5% and feeling like a winner :) ... i took off some of my mining bets at the EOD - that S&P move to 1170 was not pretty

    red/joe, any thoughts on what buttons the central banks will decide to push tomorrow?

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  36. Kind of a big comeback for oil, or is that only because the market came down within the last half hour?

    I saw a blurb on flow continues in Gulf and heavy oil comes ashore. Oh boy.

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  37. oil price is dropping because Deepwater spill is making cheap oil available to everyone. Think about it - if you lived in Lousiana, you could now power your fishing boat for free - what a blessing.

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  38. Hope you're right about that squeeze Kli.. I'm determined not to be shaken out of my core but I am starting to get a little seasick up here.

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  39. down 77K....thinking about ...yes....I'm thinking about "IT".....thank goodness I just realized that there is a higher power that determines goodness and evil within the world....yes you are right.....golf...gotta go play....and sorry fiat is fiat...as far as i am concerned being in a shitty down move is opportunity...hehhehe...at least i have to convince myself...

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  40. wolf - funny, but not funny...but funny.

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  41. KLI: Will we see another down day tomorrow?

    I'm thinking about showing some love for FAZ.

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  42. bought some out of the money SSO calls at 2 minutes before the close which allowed me to lighten up on my miner exposure. If they reverse things tomorrow, calls will come in handy - if not, I'll feel better about loading up more around S&P 1,040 (or below) ... but that was one sick move at the EOD, and all that with the central banks intervening in FX markets like there's no tomorrow

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  43. EOD very bearish....hedges are liquidating to cover margin....GS pulled the rug on em....not me though I like it in the butt.....waaaaaaa..anyway I'm an investor now. This is way to easy right now...so careful on the short side at this juncture....I was wrong on the hard short squeeze...but eventually I will be right...as you can see am as unsure as anyone...but I would not want to be sleeping on shorts tonight for certain...Red are you OK ...need an IV???

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  44. Come on KLI.... You know every cell of your blood wants to play with FAZ or SKF tomorrow.

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  45. not really Jay.....seriously...it may be a big payoff but this rattlesnake is conrnered...I cannot believe this poni is going down without massive manipulation ahead. They have no one buying this stupid market for one thing..so to make bonus this year they are shorting the chit out of it....but they will kill the entire market (and maybe they will) if they let this correct much further...not only that I think they have to ramp up the "fear" for a variety of reasons not to mention more stimulus ahead more spending ahead and lst of all shorts have to feel bold enough to get back in the market to get fleeced.....but I do agree its all a ponzi

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  46. tomorrow's gonna be a bitch. The 1,040 level is almost too obvious a level for the market to go there (unless it plunges right through). Government likely won't let the market get too close to 1,040, let alone fall through it. Epxecting a -2% day tomorrow with at least two 20-30 point swings on the S&P ....

    the way things went the last few months, they're gonna close it within reach of 1,040 too keep everyone guessing over the weekend while they try to hammer out a yet another shock&awe intervention by the EZB/Fed/BoJ ... if they intervene, good for stocks --- and if they decide not to intervene, kiss S&P 1000 good-bye ... eitehr way, going into the weekend long or short will be a tremendous gamble - might be worthwhile straddling the market with puts and calls at EOD tomorrow

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  47. Ok, just passing out in between between chores. Another day or week of bottoming could happen, nothing special about 1040. Don't over trade the bottom, pick your strategy or stay out or you could join Kli and the 300 GS Spartan party without any Trojans. None of this is meant to be trading or financial advice and should be considered entertainment only with what you can afford to lose.

    Well outside of the more comfort zone swing trades like PBR and ALU, there are SWC, PAL and GFI and JAG. The Chinese stuff like CNAM is only for those willing to go toe to toe with the GS MM specialist intraday, not me at the moment. Stuff like SOL has good support around the 4.50-4.75 range.

    What's going on? To stay Master of Universe you got to cull some of the upstart wannabees playing with the new funny fiat freshly minted from the FED. Yes there will be a massive short squeeze but not until the daily RSI and Stochs properly bottom out. I am currently looking this a wave 5 about to finish versus the bear count of halfway through a 3 but hey what do I know about EWI so take it with a grain of salt? Stay Out if it is stressful you will be much happier plus saner.

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  48. Whatever the wave count is GS will manage to use it screw the trade to the maximum....but dont worry its all funny money...you aren't gonna get it out of your account one day anyway....hhehehe

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  49. Yep use or lose Kli, none of the banks from the Fed to local credit union were happy when I cashed part of my IRA to pay off a house.

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  50. one of my partners had 2.2 m in a 40lK...I tried to get him to cash half pay the penalty and buy physical....he didn't ...when they get through with him .....he will be lucky if he has any.

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  51. I have to apologize for my miner entry and exit post, I was exactly what I preached against for so long - biased. Assuming trend continuation and stick saves by the ponzi which had worked for a year, my calls were crap when that premise was overruled by some market reality. They have the bigger picture in mind to preserve the game, and will allow a smaller meltdown to prevent shorter term the monster smack down. I stated 2 weeks ago that the spike-down invalidated my former model, and then continued under that same premise to give the miner entry/exits in my zeal to believe the breakout would continue, without doing a reset in terms of market analysis. Probably they will contrive some news on the weekend if we have continuation down tomorrow, has to be a squeeze in here somewhere.

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  52. hehehhe.......agree...but where is it???hehhehe...only the algo knows

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  53. Hey Analyze - all big boys a girls here. But not to worry, there is landmark, groundbreaking financial reform is coming our way!!

    http://www.washingtonpost.com/wp-dyn/content/article/2010/05/20/AR2010052003503.html

    There are other big words in there, profound, milestone, etc. We are saved!!!

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  54. The only safe way to try to pick that is watch for a divergence on downside with leading indices, or a UUP exhaustion gap fill and downside overshoot continuation. Given all the news and angst this is still a currency game. UUP has a topping pattern, but I think that may be invalid given that a couple indices like retail and trans overshot the low today of the flashdown, so I would not judge this immediately as being divergent right here, since the leading indices are a mix and still as a composite leading SPX to the downside. Day trade and hold nothing overnight is the survival rules shorter term.

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  55. From Nadeem:



    http://www.marketoracle.co.uk/Article19647.html

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  56. I included excerpts from the article. I don't know why it won't publish, sorry. JD

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  57. Kli, CRM had an earnings miss and miserable forecast tonight, short off the gap and play accordingly. I may short the Q's if I see a U/D bias resume, but my main play will be to target that pos specifically. A gift is something SPX upside for a CRM gap fill or gap resistance testback and short for the draw down after amateur hour. Puts are reasonably priced, but exit on a winning trade 2 hours before close since I expect some reversal games in that timeframe and the MMs will draw to flatline to have volatility contraction cost people into the OPEX close. One could sell volatility there but pass for me. Max pain on everything is out the window here, so if there is shit news, now is the time to air the dirty laundry. GS has maintained +50% LR since its drawdown, so I may hit that early for something ITM to throw my hook out there. FSLR is basing for a move lower, but you can play that back month on the puts side based on concerns over China stimulus being removed as a natural function of their forced slowdown via Fed to align currencies - unless it breaks down, save it for next week. Once the BP truth is known, we switch over to clean energy plays.
    If the longside premise had continued, I was eyeing a couple favorite horses of mine on the retail side, HD and BBBY, once we hit a bottom...BOOM, both are pretty liquid and you can stair step them up with call spreads if we have a bull trend emerge. I tend to game calendar versus backmonth on those and toggle around to rotate dollars based on the technicals on the path up for positions like that while selling the put side to align premiums lower. Another play off CRM miss is GOOG which has a steady path down, while BIDU is the reverse short squeeze play once we have our USD short squeeze levels hit. The counter-trend trade on a weekend "solution" is GE and ZION ATM June calls if you want to game a squeeze but play it light. I will probably pick something up ATM/slightly OTM with minor cash into close tomorrow as a casino, if I miss I miss, but you have to play. If we hit armaggedon where doom persists and all is sell, BIDU comes into play as a laggard that dives off its trend for bailing MMs, but one step at a time. GL tomorrow.

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