Financial topics

[Higgenbotham]

My plan is to wire out of my account if the markets exhibit a steep fall from right here.

The S&P has been stable for the past 10 hours so I will keep the money in my account and continue to play for a move higher toward October 5 (October 5 or thereabouts being the preferred time frame to put on a trade). The market is also now showing indications that a rally could extend into the early to mid October time frame, with October 11-13 being the probable time frame. If the market doesn't rally into those time frames, I will probably do nothing.

[vincecate]

The S&P has been stable for the past 10 hours so I will [...]

When I look it seems the S&P is down 3% in the last 10 hours.

http://finance.yahoo.com/q?s=SPY

[Higgenbotham]

The S&P has been stable for the past 10 hours so I will [...]

When I look it seems the S&P is down 3% in the last 10 hours.

http://finance.yahoo.com/q?s=SPY

That's the ETF that only trades during the day session. This is the best free chart I know of now for around the clock trade (ino used to have really great charts).
http://www.barchart.com/chart.php?sym=E ... &x=55&y=13

[Higgenbotham]

S&P Basic 4 Year Cyclicals

I'm going by memory on this so these may be off by a day here and there but they are mostly right.

February 22, 2007 HIGH
February 18, 2011 HIGH

March 14, 2007 LOW
March 16, 2011 LOW

July 19, 2007 HIGH
July 21, 2011 HIGH

August 16, 2007 LOW
August 08, 2011 LOW

October 11, 2007 HIGH

I'm not following the news closely, but if there's one more rabbit that can be pulled out of the hat, it will likely be done this weekend to avert a slide into October. There were additional interest rate cuts on September 18, 2007 after the Bear Stearns hedge funds went to pennies on the dollar.

[OLD1953]

All metals have taken a steep slide in the last 24 hrs, according to Kitco, and I've long thought that when the money comes out of commodities to try to back the leverage on the stock market, we are getting close to the end. If the slide in metals continues tomorrow, it's a strong signal that the party is over.

[Higgenbotham]

Wired money out of my account this morning. Party is over.

[vincecate]

Wired money out of my account this morning. Party is over.

Higgie, you are far more worried than I am about brokers failing and people not getting the wealth that their statement says they have. In a country where the idea of "too big to fail" is now encoded as law, I think the government would print as much money as need to protect customers at brokers with the government's SIPC insurance.

http://www.sipc.org/how/brochure.cfm

It has been a bad week for me. My S&P puts expired a week ago and my silver options are down sharply. I bought more silver options late yesterday.

I expect to keep buying silver options if prices stay low. The Jan 2014 SLV calls are available now. When I buy a call, I think there is some computer that borrows money at crazy low interest rates and buys SLV and also an SLV put. So it is almost as if I am borrowing money at crazy low interest rates and buying SLV. In any case, it seems a way to take advantage of crazy low interest rates. Leverage can be dangerous though, clearly.

On the bright side, I did sell some calls when they were much higher than now, so it is like I bought twice as many for the same money. Result is I now own more SLV calls than I ever have before.

[richard5za]

Wired money out of my account this morning. Party is over.

Higgie, which account? Bank account, or some other account?

Richard

[Higgenbotham]

Higgie, you are far more worried than I am about brokers failing and people not getting the wealth that their statement says they have. In a country where the idea of "too big to fail" is now encoded as law, I think the government would print as much money as need to protect customers at brokers with the government's SIPC insurance.

http://www.sipc.org/how/brochure.cfm

I don't think the government will replace brokerage account funds. If you put your brokerage funds into treasury bills and the bills turn up missing, the SIPC may replace those. People need to look at exactly what the cash in their account is and where it is going to come from. If you're concerned about fractional reserve banking (and the payments system lockup) then it would be prudent to be even more concerned about your broker (and the counterparties that will owe them funds).

Higgie, which account? Bank account, or some other account?

Richard

Futures account.

[Higgenbotham]

When there is a big debacle like happened in silver over the past 2 days, accounts can and do go debit. Large accounts. There may be accounts at Friday's close that have a minus sign in front of them followed by a very large number. Or there may not be. Even if it's suspected that can be enough. Or as happened last June when there were concerns about European debt in the money markets, contagion doesn't materialize even though it appears possible or even likely. After the 2006 silver debacle I called my desk supervisor and asked him how many accounts he lost, about a dozen? He paused for a minute and said no, we must have lost 50. That was just one desk out of dozens. So this year we have the same thing but maybe even more severe and maybe that will have enough effect to start a contagion, but who really knows.

The 2005 Refco bankruptcy is an interesting case study of an account that went debit. A large account. That was hidden for a long time. It was amazing to watch the Refco bankrupcty unfold and see the ignorance of account holders posting on the message boards. But most shocking was to witness the ignorance of the big funds from all over the world that had hundreds of millions on deposit with Refco and all the blatantly stupid things they had done to leave their backsides wide open. I would have to believe that if such a bankruptcy were to be repeated today, contagion is a lot more likely. Also, I don't believe the firm that bought Refco out is even a US firm.