Milton Friedman On Capitalism

I have listened and read so many economic misconceptions recently that I think all readers will benefit from Milton Friedman`s words. I am going to post his best video interviews over the next few weeks, especially on weekends.

Have a great trading day.

Bill Gross Calls QE A Ponzi Scheme So Large That Probably Should Be Renamed To Sammy Scheme In Honor Of Uncle Sam.

Bill Gross is very critical of quantitative easing effors from the Federal Reserve and eevn calls it a a "Ponzi Scheme":

"The Fed, in effect, is telling the markets not to worry about our fiscal deficits, it will be the buyer of first and perhaps last resort. There is no need – as with Charles Ponzi – to find an increasing amount of future gullibles, they will just write the check themselves. I ask you: Has there ever been a Ponzi scheme so brazen? There has not. This one is so unique that it requires a new name. I call it a Sammy scheme, in honor of Uncle Sam and the politicians (as well as its citizens) who have brought us to this critical moment in time. It is not a Bernanke scheme, because this is his only alternative and he shares no responsibility for its origin. It is a Sammy scheme – you and I, and the politicians that we elect every two years – deserve all the blame.
While Gross isn't sure if QE 2 will work due to our liquidity trap predicament, he is sure who to blame for getting us into this mess. Gross targets the politics of the country at large."

And Bill Gross adds,

"Each party has shown it can add hundreds of billions of dollars to the national debt with little to show for it or move our military from one country to the next chasing phantoms instead of focusing on more serious problems back home. This isn’t a choice between chocolate and vanilla folks, it’s all rocky road: a few marshmallows to get you excited before the election, but with a lot of nuts to ruin the aftermath."

The impact of this politcal mess and QE 2 is extremely limited returns for investors in the bond market (and the stock market too). That's because the combination of inflation and negative interest rates is creating a uniquely bad environment for bondholders, according to Bill Gross.

Related: SPDR Gold Trust (ETF) (NYSE:GLD), United States Oil Fund LP (ETF) (NYSE:USO), iPath S&P GSCI Crude Oil Total Return (NYSE:OIL) , ProShares UltraShort DJ-UBS Crude Oi ETF (NYSE:SCO), ProShares UltraShort QQQ (ETF) (NYSE:QID), Direxion Daily Finan. Bear 3X Shs(ETF) (NYSE:FAZ), SPDR S&P 500 ETF (NYSE:SPY) , ProShares UltraShort S&P500 (ETF) (NYSE:SDS), iShares Russell 2000 Index (ETF) (NYSE:IWM), ProShares UltraShort QQQ (ETF) (NYSE:QID), PowerShares QQQ Trust, Series 1 (ETF) (NASDAQ:QQQQ), ProShares UltraShort 20+ Year Trea (ETF) (Public, NYSE:TBT), iShares Barclays 20+ Yr Treas.Bond (ETF) (Public, NYSE:TLT)

Fantastic Trading Session. It Does Not Get Much Better Then This.

Today I am sharing with all the readers the report sent to subscribers after the closing bell. We had a phenomenal performance in our "Earnings 1 Day Plays", hitting 5 in 5 for a cumulative performance of 25.67%. The system also did great today and is trading at new all time highs.

The daily stock picking system has gained +2.90% in today`s session Las Vegas Sands Corp. (LVS) +3.93% and The Progressive Corporation (PGR) +1.86%). It was a very good day for the system after a few subpar sessions. (DSP System`s October Performance (to date): +4.44%)


Extra System Trades Summary:

- I am still short eMini S&P Futures as an intermediate short play ( spreadsheet);

- There were no intraday trades on oil, the system did not trigger any signals; Nymex Oil Futures, had a quiet session on regular trading hours;

- we have a few "earnings 1 day" plays at work and by the look of it we will cash in big tomorrow; Our long play are rising on after hours trading: F5 Networks, Inc. (FFIV) 5.23% , Illumina, Inc. (ILMN) 2.71%, JDA Software Group, Inc. (JDAS) 9.26%, Life Technologies Corp. (LIFE) 2.01% and our short play is Century Aluminum Company (CENX) is falling -6.46%. So, its 5 in 5 for us tonight. It does not get much better then this, does it?

- finally our forex EURUSD short is gaining some traction and its up 110 ticks since we opened it; I am expecting it will hit our target in 2-3 days;

Have a great day.

Housing Data Disappoints. Stocks Down.

"A disappointing report. Home prices broadly declined in August. Seventeen of the 20 cities and both composites saw a weakening in year-over-year figures, as compared to July, indicating that the housing market continues to bounce along the recent lows."

David M. Blitzer, chairman of the index committee at Standard & Poor's

related: iShares Dow Jones US Home Const. (ETF) (Public, NYSE:ITB), Lennar Corporation (Public, NYSE:LEN), D.R. Horton, Inc. (Public, NYSE:DHI) , PulteGroup, Inc. (Public, NYSE:PHM) , The Ryland Group, Inc. (Public, NYSE:RYL)

Volcker On Inflation

"Inflation is not a problem right now. It won't be a problem next year, it won't be a problem for several years. I see no possibility, frankly, that a deflation will take place. Over a period of time, price stability will be conducive to a strong economy."

Paul Volcker

Related stocks and ETFs: SPDR Gold Trust (ETF) (NYSE:GLD), Market Vectors Gold Miners ETF (NYSE:GDX), Newmont Mining Corporation (NYSE:NEM), AngloGold Ashanti Limited (ADR) (NYSE:AU), Harmony Gold Mining Co. (ADR) (NYSE:HMY), Randgold Resources Ltd. (ADR) (NASDAQ:GOLD), Barrick Gold Corporation (USA) (NYSE:ABX), NovaGold Resources Inc. (USA) (AMEX:NG)

Is Bank Of America (BAC) Ready For A Bounce?

Bank Of America (BAC) is very oversold and looks poised for a recovery rally:

On other topic, if you are into alternative rock, watch this live performance, "The National - Secret Meeting":

A Holocaust For Savers

"The free money game for the banks has been a holocaust for savers and the elderly. It’s also been the most despicable corporate giveaway in American History.”

in The Reformed Broker

Related stocks: Bank of America Corporation (NYSE:BAC), JPMorgan Chase & Co. (NYSE:JPM), Citigroup Inc. (NYSE:C) , Morgan Stanley (NYSE:MS), Goldman Sachs Group, Inc. (NYSE:GS)

A Great Trader Is Like An Athlete.

"A great trader is like a great athlete . You have to have natural skills, but you have to train yourself how to use them".

Pit Bull Trader

Schiff: The Gold Standard Will Come Back

"At some point the world is going back to the Gold Standard"

Peter Schiff, in Max Keiser Show

Commercial Real Estate Prices Keep Falling. Should You Worry?

"The Moody’s/REAL All Property Type Aggregate Index measured a 3.3% decrease in August, bringing the index to 105.37. This is the lowest recorded result since the beginning of the downturn, surpassing the old recession level low of 107.98, which occurred in October 2009. National prices are 7.6% below the value recorded last year. Since the peak in October 2007, prices have fallen 45.1%."

For a long time, pundits were referring to the fall in commercial real estate has the next shoe to drop that would create another meltdown in banking like in 2008. Very little has been written or said about this topic in the last few months, but the termites are still in the building`s foundations.

Today is Champions League night again, and I will leave with one of the best goals of the 2009/2010 edition. A brilliant move from Arsenal`s Samir Nasri (the audio is in a strange language but it really does not matter :)).

Related stocks: Bank Of America (BAC), J.P. Morgan (JPM), Citigroup (C), Wells Fargo (WFC), Morgan Stanley (MS), Goldman Sachs (GS), Simon Property Group (SPG), Kimco Realty Corporation (KIM), Boston Properties, Inc. (BXP)

Time For A Rebound In The VXX ETF?

Even with all the contango issues affecting the iPath S&P 500 VIX Short-Term Futures ETN (NYSE:VXX) price, its probably time for a rebound in this ETF:

Today is Champions League night. I am looking forward to the classic, Real Madrid - AC Milan. I am betting on a easy win for the spaniards.

Have a great trading session.

The Market Correction Is Here. Fasten Your Seat Belts.

There`s no Goldman Sachs trading call that can stop this market correction now...


Fasten your seat belts. I am short and shorting.

Goldman Sachs: Stock Market Outlook

“We expect the S&P 500 will rise another 2% to reach our year-end 2010 target of 1200. We anticipate US equities will trade sideways during 1Q 2011 as economic uncertainty remains high. Our revised 12-month price target of 1275 (from 1250) reflects a potential price return of 9% from current levels. The cost of equity should decline slightly as 2011 progresses and investors turn their attention to the economic growth prospects for 2012.”

Source: Goldman Sachs (NYSE:GS)

Related: SPDR S&P 500 ETF (NYSE:SPY) , ProShares UltraShort S&P500 (ETF) (NYSE:SDS), iShares Russell 2000 Index (ETF) (NYSE:IWM), ProShares UltraShort QQQ (ETF) (NYSE:QID), PowerShares QQQ Trust, Series 1 (ETF) (NASDAQ:QQQQ)

Felix Zulauf Expects A Correction In Most Assets Going Into The Year End.

"Zulauf believes gold is in a secular bull market, but that the near-term move is overextended. More specifically, Zulauf says the downside in the dollar is overdone and he foresees a dollar rally into the year-end. This will cause a correction in most assets – equities, commodities and gold. He says the correction in gold as a buying opportunity, however."

In The Prag Cap

Related: SPDR Gold Trust (ETF) (NYSE:GLD), United States Oil Fund LP (ETF) (NYSE:USO), iPath S&P GSCI Crude Oil Total Return (NYSE:OIL) , ProShares UltraShort DJ-UBS Crude Oi ETF (NYSE:SCO), ProShares UltraShort QQQ (ETF) (NYSE:QID), Direxion Daily Finan. Bear 3X Shs(ETF) (NYSE:FAZ), SPDR S&P 500 ETF (NYSE:SPY) , ProShares UltraShort S&P500 (ETF) (NYSE:SDS), iShares Russell 2000 Index (ETF) (NYSE:IWM), ProShares UltraShort QQQ (ETF) (NYSE:QID), PowerShares QQQ Trust, Series 1 (ETF) (NASDAQ:QQQQ)

This Week`s Swing Trades And Earnings Plays

These were the trades we took last week. I am adding live intraday signals on Nymex Oil Futures (CL) and on eMini S&P Futures (ES) to the trading subscription service, starting Monday.

I have also updated the system`s performance chart. The system is now up 102.60% year to date and up 4% in October.

Have a great weekend.

Related stocks: LDK Solar Co., Ltd. (NYSE:LDK) , VMware, Inc. (NYSE:VMW), DIRECTV (NASDAQ:DTV), Gannett Co., Inc. (NYSE:GCI) , Equity Residential (NYSE:EQR) , Huntington Bancshares Incorporated (NASDAQ:HBAN) , ConocoPhillips (NYSE:COP) , Southern Copper Corporation (USA) (NYSE:SCCO) , NetApp Inc. (NASDAQ:NTAP), Ford Motor Company (NYSE:F), Market Vectors Gold Miners ETF (NYSE:GDX), Cummins Inc. (Public, NYSE:CMI), The Southern Company (Public, NYSE:SO)

The US Dollar Is Poised For A Rally.

I had to share these stats with you:

"Based on the net speculative positions in the USD there is a 100% chance (based on past occurrences) that the dollar will rally from here. According to a report today from Credit Suisse the US dollar has rallied 100% of the time from these levels on a 3 month basis."

Source: Credit Suisse

Related ETFs: Related ETFs: SPDR S&P 500 ETF (NYSE:SPY) , ProShares UltraShort S&P500 (ETF) (NYSE:SDS), iShares Russell 2000 Index (ETF) (NYSE:IWM), ProShares UltraShort QQQ (ETF) (NYSE:QID), PowerShares QQQ Trust, Series 1 (ETF) (NASDAQ:QQQQ), ProShares UltraShort 20+ Year Trea (ETF) (NYSE:TBT), iShares Barclays 20+ Yr Treas.Bond (ETF) (NYSE:TLT)

Stephen Roach: Quantitative Easing Will Not Work.

Great video interview with Stephen Roach. This man is not always right (actually his track record is nothing to be impressed about) but he has some very good points on QE.

Have a great trading day.

Soros: A Downturn In 2011

"George Soros, one of the few investment gurus who actually predicted the credit crisis, now believes the global economy is at substantial risk of a downturn in 2011. Soros believes the stagnant economy will result in continued low employment, but an increase in corporate M&A."

in The Prag Cap

There was a rumor out today that Lòreal may bid for Avon Products (AVP). That wouldn`t surprise me at all...

M.D.C. Holdings, Inc. (MDC) Is Down For The 10th Consecutive Session.

M.D.C. Holdings, Inc. (NYSE:MDC) is down for the 10th consecutive session. If it sinks a bit further I may give it a shot on the long side later today.

Pulte Homes (PHM) was also on a 7 day losing streak, but has opened lower and reversed. I am watching these names for trading opportunities.

Stock Market Cartoon: October Is A Dangerous Month To Speculate In Stocks

Investor Sentiment Continues To Rise. A Correction Is Looming.

"The group behavior continues to build momentum as the herd becomes convinced that stocks have nowhere to go but up. This week’s sentiment surveys showed a continuing rise in bullish sentiment. The AAII hit an usually high level of 49% while the Investors Intelligence Survey also jumped to a fresh multi-month high of 43.6%. Charles Rotblut of AAII elaborated on the results:

“Individual investors continue to react positively to this fall’s global rise in stock prices, as can be seen in the survey results. The 21.3-point spread between bullish and bearish sentiment suggests that optimism remains below levels that would be considered excessive, however. (The bull-bear spread has topped 40 points nearly 70 times since 1987.) This suggests that though many individual investors are hopeful, concerns about the economy, interest rates and the federal deficit have not faded into the background.”"

in The Prag Cap

Related ETFs: iPath S&P 500 VIX Short-Term Futures ETN (NYSE:VXX), SPDR S&P 500 ETF (NYSE:SPY), iShares Russell 2000 Index (ETF) (NYSE:IWM), ProShares UltraShort S&P500 (ETF) (NYSE:SDS), SPDR Dow Jones Industrial Average ETF (NYSE:DIA)

The Secular Bear Market: A Technical View

An interesting technical analysis on the secular bear market in US equities: LINK

Have a great trading day.

George Soros: Germany Is Sending Europe Into A Deflationary Spiral

Deficit reduction by a creditor country such as Germany is in direct contradiction of the lessons learned from the Great Depression of the 1930s. When both creditor and debtor countries reduce their deficits amid high unemployment they set in motion a deflationary spiral in debtor countries. It is liable to push Europe into a period of prolonged stagnation or worse.

George Soros, October 5th

US Stocks Are Vulnerable, Says Shilling

"With the slowing U.S. economy, looming deflation and likely resumption of eurozone woes, stocks in general appear vulnerable"

Gary Shilling, A. Gary Shilling & Company, Economic Consultants

The Stock Market Rally Is On Shaky Ground And Severely Overextended

"The stock market rally is on shaky ground and severely overextended. It is being propelled by a combination of momentum-oriented trading strategies and dubious fundamental assumptions. The traders have no real fundamental beliefs and will, as usual, head for the exits as soon as the trend begins to waver."

in Comstock

Related ETFs: iPath S&P 500 VIX Short-Term Futures ETN (NYSE:VXX), SPDR S&P 500 ETF (NYSE:SPY), iShares Russell 2000 Index (ETF) (NYSE:IWM), ProShares UltraShort S&P500 (ETF) (NYSE:SDS), SPDR Dow Jones Industrial Average ETF (NYSE:DIA)

There Has Been An Above Average Level Of Bullish Sentiment For 4 Consecutive Weeks

“Though there has been an above average level of bullish sentiment for four consecutive weeks, it remains a cautious optimism. As is evidenced by the recent rebound in bearish sentiment, many individual investors continue to worry about the pace of the economic recovery and the uncertainty coming out of Washington. Yields are also an issue, and I continue to receive frequent calls about how to find dividend-yielding stocks.”

Charles Rotblut, AAII

Related ETFs: iPath S&P 500 VIX Short-Term Futures ETN (NYSE:VXX), SPDR S&P 500 ETF (NYSE:SPY), iShares Russell 2000 Index (ETF) (NYSE:IWM), ProShares UltraShort S&P500 (ETF) (NYSE:SDS), SPDR Dow Jones Industrial Average ETF (NYSE:DIA)