Some hedge funds are raising money rather than liquidating funds. SAC, Cornell and Lehigh U. are mentioned in the article.

Broadcom (BRCM 17.75): In a conversation today I'd identified $16.37 as a reason to sell.

Pivotal Levels

In reviewing the Fibs retracement taken from 11,867 I realized that the Fibbonacci 38% is the 9337 level and I don't know why I saw 9450. The Dow hit 9363 yesterday and I guess my point is this, and it's probably moot, but whether it's 9337 or 9450, the market won't look better until it pushes through either one.

GDP -0.3% Annual Rate

As expected the economy shrank in the 3rd quarter but I'd say it was a better-than-expected number. Most prognostications were -0.5; perhaps that's what the market was telling us with Tuesday's 900 point day.
I'd say that the months ahead will certainly warrant monitoring since this 3rd quarter number will likely be revised.

Chaos and Fear

The markets are set to open lower on recession fears.

A BBC report indicating that I'm getting some of the ingredients I'm looking for: chaos and fear.

RTT News reports on Carnage.

Seeking Alpha article stating that the forced selling among hedge funds are creating opportunites. I agree but contrary to the author's opinion, I'm not certain we've seen the street flow red just yet.

Budweiser (BUD 56.93)

Is this deal in jeopardy or not? The stock has even been down into the mid-50s. Selling in the 68s was the right call but leaving the position alone at that time figured to be relatively safe considering the exit plan, the inevitable buyout.

The world view has certainly been a game-changer though. What to do now? Do you cut ties and basically break even or look for an easy 15% assuming the stock goes back to the high 68s and count on the takeover?

Rydex Inverse 2X S&P 500 ETF

Probably be wise to hedge with a little RSW now with the Dow at 8349 and S&P at 867.

BUD (55.49)

I'm growing more and more confident that the Budweiser deal will NOT happen. The stock was $68.58; should've "freed up the cash and moved on."

This Could Get Interesting

News from CNBC:

"We are in a panic mode, I don't know how else to describe it and when you're in panic mode, all rational thought goes out of the window," said City Index chief market strategist Tom Hougaard. "We've just got to let this thing rage. I think we'll see the Dow below 8,000 today."

"We've just got to let this thing rage." Finally, this is one of the smartest things I've heard lately. What? No relief, no bailout, no trauma saving policies, no intervention to save the poor little socialist system?! Oh, the horror!

It's possible that the market is trying to tell us that the Q3 GDP number expected on Thursday is going to be low, maybe -1.0% low, who knows?

Blood in the Streets

I'm not so sure that we've felt real pain yet. We'll see what happens with a market that craters. It's set to open lower today. Buy when there is true fear, tears, suicides, stories of chaos and that the end is near. You will know then that we're close to a bottom. Don't pull back or postpone your 401k contributions; now is the time to ratchet them up.

More Greenspan: Kansas City infoZine

Break Out the Defibrillator

Today was somewhat encouraging as the DOW was down a couple hundred and put together a rally to finish the day higher. However, nothing would do us better than to see a -800 day, down to around 7800, only to rebound, capping off the day +3 or 4 hundred on heavy volume. Some pivotal resistance levels to keep in mind:

• Dow 9450, (8.5% from here) laying over a fibonacci 38%.
• S&P 1010 (11%)
• NAZ 1950 (21%)

Jobless claims rise 15,00 to 478,000. CNN's release. Bloomberg's.

Incidentally, not only do utilities offer a good recession hedge but likely ourperformance in the months ahead based on the lessening costs of doing business, read lower oil prices. Although, not a utility, someone whispered AMR to me.

Foreclosure filings spike 71%; CNN.

Link to GDP data

Economic calendar from Briefing.com

Ideologue Greenspan admits to flaws in his free market stance.

Whipsaw or Chainsaw

The market's whipsaw action can be a little hard on the gastronomical reflexes, I know, but it is constructive and the nature of the beast in such an uncertain time. The market is trying to establish values, searching for the bottom or at the minimum some baseline at which to launch it's next bull market. It may take a great deal of time and you'd be fooling yourself if you think that you could time the bottom - won't happen.

"The only thing I know is that I don't know anything."

Sandisk getting killed. Samsung has backed out of their deal. Good thing we'd not speculated, even with a small stake.

General Mills (GIS 66.23)

The market will open weaker again today. Lighten up in GIS overweight position with half of stake over $65. We'll be back to equal weighted.

Broadcom (BRCM 13.80)

Broadcom will release today. The risk is there to disappoint and move the stock down but holding it through the release has an equal risk of missing an upside surprise. Either conclusion will certainly dictate a trading decision in the next day or two.

Chesapeake (CHK 22.85)

Book profits in CHK, $22.76. No remaining postion.

Loans to Cash-strapped Companies

There's hope that government provided loans will help those cash-strapped companies facing failure. You might brush aside the thought of violating free market principles. You might declare, "whatever is necessary to spare us of financial pain and suffering" but there is something far deeper than simply helping to mend a financial calamity. Most governments, worldwide, are finding it necessary to help their private sectors. Putin and the Russian President Dmitry Medvedev have pledged to provide loans to cash-stapped companies too. Oh, but, how about this tidbit from the Bloomberg article?

The $50 billion that the prime minister and President Dmitry Medvedev have
pledged to lend cash-strapped companies will extend state control over business
leaders. Billionaires seeking bailouts -- including Oleg Deripaska,
Russia's richest man, and Mikhail Fridman -- will
have to give authorities veto power over their companies' financing decisions.
``This will give the state more leverage over the country's biggest
companies and main industries,'' said Chris Weafer, chief
strategist at UralSib Financial Corp in Moscow. ``In 2008, there is only one
real oligarch: the state.''

Sound familiar?

A Little Here, A Little There

You've gotta' love Buffett. He's dipping a toe into U.S. stocks now and says, "a simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful." I couldn't agree more. I've advocated putting cash to work now, just don't be reckless.

And the Hits Just Keep Comin'

Cuomo is demanding AIG to recover bonuses paid out to former executives.

Car Dealers Say Credit Crunch Will Crush Them; see Fox News article

You know it's tough out there when strippers aren't buying houses and NASCAR is hurtin'.

DOW 8979 +401; S&P 946 +39; NAZTY 1718 +89
Today's market action may be considered fairly constructive, DOW down 400 and reversing to gain 400 on the day. I would have preferred to see 7800-7900 (down around 700) followed by the reversal to the upside, but for the most part, pretty constructive.

OK, so now we know there's going to be a recession. The only question is how severe and how prolonged? I doubt we'll see terrible GDP numbers for the 3rd qtr. but certainly for Q4 and Q1 2009. With that said we'll likely set up quite nicely for the 2008 Santa Claus Rally, January Effect and ensuing run into April. Lighten up on equities thereafter and cash coast through the Summer 2009 doldrums. Is a double dip possible?

Selectively picking away at favorites:

• Urban Outfitters (URBN): Spec stake at $22.25, underweighted.
• Broadcom (BRCM): Added at $13.96, equal weight

Treading Lightly

• Broadcom (BRCM $13.75): I'll be looking for more below 14.
• Chesapeake Energy (CHK $16.34) offers up a trade.

11:12 AM: Budweiser deal not in jeopardy? The market is telling me that it is, BUD down $2.75 to 57. Volume isn't excessive though.

Chesapeake ($17.02)

Aubrey just getting killed with margin calls. The stock is probably due for a bounce. Adding at $16.97 brings us to equal weight now.

The Blame Game

"This is the first time in American history that the federal government has applied restrictions on the compensation that goes to top executives,'' House Financial Services Committee Chairman Barney Frank said in a statement. ``We will be watching how the Treasury implements these important provisions to ensure that the restrictions are binding and enforceable.''

The first time we've applied restrictions on compensation?!

Yeah, well, no shit. That's how it works in a capitalist society. You let the market dictate what to pay. I'll bet none of the shareholders who reaped hundreds, thousands, millions, in gains over the years weren't bitching as their stock holdings rose in value. They wouldn't sell, wanted more gains, got greedy, got slaughtered and now the company executives are to blame.
I am not suggesting that there aren't excesses. Unscrupulous policies and violations of economic principles eventually get exposed and when they do the market reacts and punishes accordingly. It wasn't allowed to play out.

Unbelievable time in our history!

Read. Research. Be Patient.

• Sandisk (SNDK 16.92): Even if Samsung doesn't follow through Sandisk would probably remain in play. It's a good company with great products so the risk is minimal at these levels. Certainly one to watch. SanDisk's iPod Challenge.
• Covance (CVD 74.85) was favorably mentioned on Fast Money tonight.

I won't be doing much of anything until this market trades in range. It's also probable that we retest the lows.

Based on this list of Hedge Fund Category Indexes in Morningstar I'd say our relative performance isn't shabby.

Free Market Killer or Killer Trade?

The governement's investment into the nation's banking industry smacks of Socialism. Couple this news with the no-short list and no court or independent reviews of the Treasury Secretary and his policies and you have a government's absurd intrusion into the Free Market and a complete breach of the Constitution's limitation of power. It is simply scary. Are we headed to a socialist state?

The free market judgement is being overridden. Letting companies fail wasn't even an option. Like the Great Depression the government is stepping in to fend off disasters. In reality it will be the government intervention ultimately responsible for the prolonged suffering that will ensue from the inevitable recession. This recessionary period would have certainly come either way, whether letting the free market separate the wheat from the chaff, allowing companies to fail, or having allowed the government to intervene.

This entire process, the "bailout" and the government investments, may turn out to be the most epic trade ever put on? It may work out very favorably, very profitably for the government (not so certain taxpayers will reap any reward) but it will come with a very high cost at the expense of principle - the violation of free market principles - in a so-called capitalist society.

What a Difference Three Weeks Can Make

Thursday, September 25, Got Stocks? Compare performance now to the post of 9/25:
MTD: -3.94% QTD: -3.94% YTD: -5.23%
+13.62% vs S&P last month and +22.87% in the last 6 months.

It is obviously too early to call a bottom but as always pundits are calling their shot and claiming Friday. Positive comments surrounding government policies concerning the credit crisis worldwide is sparking confidence and buying interest. Was I one day too early?

AN getting crushed and I dropped the ball. It's been a costly mistake and very out of character. Stock is still getting its face ripped off, falling below $8, rooted primarily with concerns over credit and the ramifications in the auto financing business.

Heinz (HNZ) and General Mills (GIS) acted like aggressive stocks yesterday

GM is worth less than it was in 1929, a staggering statistic.

I did not know that McClendon (CHK) was borrowing so much to buy his stock. In fact, it boggles my mind at how many of the men running these companies gamble recklessly with their own money let alone shareholder's. Natural gas is the second most abundant energy resource in the U.S., behind coal.

Executed on Some Names

Into speculative, underweighted position:

• Chesapeake (CHK) at $23.34

Added to current positions:

• Bud (BUD) at $63.61
• UST, Inc. (UST) at $62.64

Select Names

I'm not typically a bottom feeder but to grab small positions in industry leaders when they're beaten down isn't sacrelige. Take a stab and keep the stops tight. I've been in and out of some of these names since 2000.

• Nibbled on Broadcom (BRCM) yesterday at $14.85, speculative, underweighted position.
• Must look at a little Chesapeake (CHK) soon. I've not enough hubris to think that I can call the bottom but I lose nothing by sitting idly by for the right visceral feeling to jump. Perhaps I get it at the absolute low, probably not.
• More Budweiser (BUD)
• More UST, Inc. (UST)

Discipline Saves the Day

A previous position, Cal-maine (CALM), missed earnings which shattered the stock, down another 20%. Defining the point at which to sell and having the discipline to do so avoided this meltdown. If I were to pound the table about one thing it would be preaching discipline and not the fact that getting it wrong is going to happen. Most people, the sheep, would wait to sell because they're programed to avoid losses, to hate losses, to reject losses.

Financials could never push through resistance of 302 and that too saved us from this entire calamity. The bailout news for Freddie and Fannie around 9/9 had us thinking financials and thankfully the technical vantage point, again, swooped in to save the day.