GKM

The Coming Crash of 2008: A Result of Overleveraging

drmlaka I think you've nailed. it.

This is what's going to happen today (in about 40 min). The Fed will cut 100 bps. The market will explode higher, especially crude and gold. The dollar will absolutely crater. This will look great. For a while. Then folks will wake up and see what they have done and the party will be all over but for the hangover. The Fed is going to throw the party for Wall Street and Joe Public will get to deal with the aftermath.

Bear markets do not finish like this and its been that way since the beginning of time. Bull markets in oil, gold, and Euro do finish like this as time will shortly show.

Friday's Turnaround: Raid on the Shorts

If you want to see illegal trading in the market place just look at the intra-day chart of DNA on Friday before they announced they were fast tracked by the FDA for Avastin's approval. There was a significant wave of buying about an hour before the actual announcement. Do you think someone had some insider knowledge? Absolutely. Same goes for the buy-in to CFC by BAC last year. There was huge call buying right before the announcement was made official. Not only that but there was huge call selling at the next higher strike than the offer from BAC. Do you think someone had insider knowledge? Absolutely. Has there been any prosecution in that case? Absolutely not.

Unfortunately market manipulation is prevalent in the market place as it stands today. There's manipulation like analysts talking their books, people starting rumors with no factual basis, Fed manipulation, PPT manipulation, and even Ackman coming out with a "plan" to save the monolines is probably based in some scheme. I would be willing to bet he will make a ton of money with some hedge against his monoline short position and the tip of the iceberg surfaced on Friday. In fact, the rumor might have come from him or his staff.

At the end of the day there are three things to remember: don't fight the system, the trend is your friend, and the enemy of my enemy is my friend. Fighting the system is pointless and a lost cause as evidence by the lack of substantive prosecution for the insider trading that plainly goes on. Learn to read the trends through technical analysis. No matter what someone is doing to the market they can't hide their actions in the volume and the price - that always tells the true tale. Finally, the market will always dole out the most pain possible to the greatest number. The weak shorts are going to get boot stomped here so your enemy (the market) will be your friend when you recognize that overall sentiment is extreme (in this case bearish) and you take the other side of it. That is if you are trading this market. If you are just investing, put your money in your mattress for now.

I believe that the overall trend is down but this will be a good opportunity to trade to the long side for some quick dough. Just don't forget that overall trend unless you want some market inflicted pain.

Buffett's Offer Won't Save the Monolines

There are a couple telling features about Buffet's offer. 1) Buffett realizes that the monolines are in such dire straits that they might even contemplate this. How can this be bullish for those stocks or the market? 2) Why did Buffet come public with this proposal? To put pressure on the monolines to possibly accept his offer? Is it to display altruistic intent to make up for his recent gaff of commenting how the US dollar will be worthless? I'm tending to the latter. 3) Why did he do this now? Is he worried that in the near future the monolines will start to go belly up and then he'll have more competition to deal with in some liquidation process?