Saturday, February 28, 2009

"Meltdown of Wealth Offers Pres Obama a Last Chance Gasp at Capitalism"

Please come back & visit the Island Sunday night to find out how POTC handicapped this administration's fiscal policies; we trust you'll be pleasantly surprised. In our "Animal Tug of War" election piece we did in fact predict gold's rise & financial sector sell-off IF the junior Senator won. In that, even if we say so ourselves, we were far ahead of most cable talking heads. If you take a look at you'll find the following recommendations, predicated on the current President storming the White House in triumph last November. BUY Healthcare Application Software Gold (GG) iShares MSCI Africa Index (EZA) **Please consider that majority of EZA's holdings are in gold/precious metals with the potential synergies of the new President having a foreign born African father: **This kind of analysis is precisely what we coin as Psychological Financial Fusion. SELL Aerospace/Defense (NOC) Brokerages/Banks (GS) Oil & Gas (HAL) Canada Latin America U.S. Dollar

Friday, February 27, 2009

The Irony Behind Friday's National Polar Day Alarm

Greetings to all forward-thinkers, POTC hopes you read our Geithner piece, posted just 3 days ago, in which we predicted a retest of 741. Maybe it's just a coincidence, yet some will smile with glee as stocks break through the sheet of ice on a day that celebrates the Polar Bear? (Friday is National Polar Bear Day!) All political sarcasm aside, POTC is not happy with the fiscal unfriendliness of this new administration. Unless President Obama does an abrupt 180, the equity markets will be in deep t-r-o-u-b-l-e for many months to come. Will the S&P go straight down, of course not; but as forward-thinkers we must devoid our minds of our current positions and imagine we were either 100% cash or had the exact opposite position. Bears... please think like bulls, and bulls... like bears, got that? That way you'll better understand the dynamics of a bear market, one that mauls and breaks long & short dreams like twigs. Knowing that markets gap and fill (technically), pausing to breathe while getting to their eventual destination, we never fall in love with any current position if we have 30% gains. Booking profits and taking a day or two off is a good thing. We never go into a trade and talk ourselves into it becoming a longer-term position IF it has a > 15% loss. The 11 Commandments of Trading spell out the rules more fully. Many traders and most all investors lose money & sleep in a bear market, and this bear seems to have forgotten it was ever a cub! We can only hope from this 753 S&P level the market does a "lunar-tic fringe" type move, so please re-read how such a set-up can develop. It has a lot to do with the market being slightly green before 10ET (S&P +8), then selling off: S&P minus 10, then 20, then 30, and finally 40+, volume rising, chest pounding, screen flashing, etc etc. The generals like CME, GOOG, and AAPL should begin rising & fighting for their bloody lives. The generals must stage their rally before 2 - 2:30ET; both down as well as up rallies must be met with extremely high volume, you will feel it when you see it, trust us. The volatility index (VIX) should spike above 55 and perhaps touch 60 in the ultimate climactic double wash-out whipsaw bottom (see Geithner piece). Here's a look at the gauge of market volatility (traders flipping their positions while long-term investors throw in the towel). IF the VIX doesn't accelerate through at least 55 on Friday, we do NOT believe National Polar Day will bring that all important second bottom. Then we will look-forward to Monday. Until the VIX touches the S&P again (technically), bulls will remain trapped under the thick sheet of Red Polar Bear ice:

POTC definitely supports maintaining a clean environment for future generations, yet we do not believe in sacrificing billions of dollars for certain truths that are cyclical & inevitable. Who knows, perhaps controlling volcanic eruptions comes after we master the ice cap thing.

Come to think of it, the Psychology of the Call team much rather root for the Polar Bear after all. Any updates on the Clinton spotted owl are welcome. This downbound market train has left most without any Satisfaction; here's the next American superstar entrepreneur in no need of a bail-out, Adam Lambert:

Thursday, February 26, 2009

President Obama is Raising Taxes on Corporate America's Oil & Gas

The Psychology of the Call team feels President Obama's economic policy of raising taxes on U.S. oil corporations is a major blunder. As fiscal conservatives, we oppose ANY tax hikes. Our belief is capital should be created by entrepreneurship & lower taxes, putting us in direct opposition with this administration. WASHINGTON (Dow Jones)--The Obama administration Thursday proposed new charges of at least $31.5 billion over 10 years on oil and gas companies, reflecting the repeal of tax breaks for domestic production and new charges on oil and gas production in the Gulf of Mexico. -The plans, outlined as part of a fiscal 2010 budget proposal, revive long-standing Democratic efforts to turn to the oil and gas industry as the source of funding for other priorities. Among other things, the Obama budget plan calls for about $13 billion over 10 years in new charges on oil and gas companies from the repeal of a tax deduction for domestic production. -Oil companies have been fighting to maintain the tax treatment, which they say keeps jobs in the U.S. by encouraging domestic production. Congress scaled back the tax deduction last year to help pay for an extension of tax breaks for the solar and wind industries, but stopped short of eliminating it entirely. -The Obama administration also proposed a new excise tax on oil and gas production in the Gulf of Mexico, saying it would raise about $5 billion over the next 10 years. The White House said that the new tax, along with plans to charge user fees to oil companies for processing oil and gas drilling permits on federal lands, would "ensure that federal taxpayers receive their fair share." -By Siobhan Hughes, Dow Jones Newswires; 202-862-6654; (END) Dow Jones Newswires February 26, 2009 11:37 ET (16:37 GMT) Copyright (c) 2009 Dow Jones & Company, Inc.- - 11 37 AM EST 02-26-09

Wednesday, February 25, 2009

Falling Japanese Yen is a Negative Development for U.S. Equities

POTC would like to remind all forward-thinkers about Dennis Gartman's warning, made approximately two months ago on Dylan Ratigan's 'Fast Money' show. Gartman stressed the importance of the Japanese Yen's stability to the U.S. capital markets. Tonight the Yen crumbled to a 3 month low against the U.S. dollar and that could be a catalyst for many hedge funds to sell stocks tomorrow. Japan's economic crisis is turning political now and the country's confidence is eroding by the hour:
The Psychology of the Call team thanks you for your late night/early morning attention.

Tuesday, February 24, 2009

Pervasive uncertainty is weighing on lower Manhattan's psyche. Negativity is running rampant in every corner of our world, and unfortunately the sentiment of Wall Street's bankers is horrid; yet as forward-thinkers we are confident the pendulum of psychology will swing. The market is headed for a total whipsaw wash-out second bottom, yet we know all market sectors cannot continue to be painted with the same stroke. We are overweight cash until S&P accelerates through 741 and then whipsaws the most powerful short covering rally of all time. POTC believes the stock market will offer traders an excellent short-term opportunity to go long this week, even if for only a few days. The move could be 20%+ from top to bottom (S&P). We felt this low risk opportunity would come today, so perhaps the second climactic bottom will either come later today or tomorrow morning. We are very confident S&P 741 will be retested within 4 days (by Friday). Treasury Secretary Geithner's March 3rd speech is scheduled just 3 days before the all important monthly Employment report for February (March 6th before market open). We feel eroding confidence in Mr. Geithner's policy is exacerbating the downward spiral. Will anything change next Tuesday? WASHINGTON (Dow Jones)--The House Ways and Means Committee will host Treasury Secretary Timothy Geithner, in a March 3 hearing on the White House's fiscal year 2010 budget proposals, the committee announced Tuesday. -President Barack Obama will unveil his 2010 budget plan on Thursday. The House Ways and Means Committee, which has jurisdiction over tax matters, will hear testimony from Geithner on the plan. -"This year's budget comes at a time of great concern about the economy and presents us with an opportunity to work together to move our fiscal policy in new directions and seek bipartisan solutions to the economic challenges facing American families," House Ways and Means Committee Chairman Charles Rangel, D-N.Y., said in a statement. -By Martin Vaughan, Dow Jones Newswires; 202-862-9244; (END) Dow Jones Newswires February 24, 2009 12:07 ET (17:07 GMT) Copyright (c) 2009 Dow Jones & Company, Inc.- - 12 07 PM EST 02-24-09

Sunday, February 22, 2009

POTC's Time Sensitive Trading Alert for March: Strangle Sears Holding

Greetings to all,
The markets around the world are searching for bottoms: the German DAX, the Japanese Nikkei, and our Dow Jones 30 index are at or near 52 week lows. The psychology couldn't be more pessimistic as witnessed by the rise in gold to $1,000, yet POTC believes there is a fantastic low risk opportunity in Sears Holding (SHLD). Sears reports their Q4, '09 results before market open on Thursday, February 26th.
POTC feels confident putting a strangle position on SHLD options. On Monday we will buy 20 call contracts for March at the $45 strike between $.70 - $.80:
& 10 put contracts for March at the $30 strike between $1.40 - $1.60
The total dollar amount for the stated number of contracts in this strangle position comes to approximately $3,000. We will provide an update on the trade as it evolves, beginning on Tuesday afternoon. ~IF this trade doesn't fit your 10% account parameter (First Commandment), please adjust accordingly, as we consider a balanced strangle equal to one position.~
Besides the earnings catalyst this Thursday from SHLD, another important driver will be an earnings report from General Growth Properties Inc. (GGP) on Monday, February 23rd after market close. We know GGP will report very negative news, yet because the market is so oversold and psychology so gloomy of late, we are entering a strangle position in SHLD and looking-forward to a violent reaction in either direction.
It's possible the market ignores the negativity from GGP due to extremely oversold technical conditions and the very large short position in SHLD ends up propelling share price through $45 in a blink. Short interest stands at 15M shares, equal to a 13 day average daily volume coverage time frame!
The inverse price violence is as likely, making good sense for strangling.
Fundamentally SHLD looks to be in deep balance sheet, income statement, and cash flow trouble, yet Psychological Financial Fusion teaches us to never rely solely on fundamentals or technicals, but to respect both with a little sprinkling of psychology. President Obama's speech Tuesday night adds that political/policy final dark horse element to the mix which many traders overlook. POTC feels this administration has made mistakes, yet some talking heads are rushing to judgment too quickly. The policy pendulum may swing on a dime, so exhibit caution.
The Psychology of the Call thanks you for your continued support and wishes the week ahead is filled with better trade management & greater returns.

Today marks the 277th Birthday of President George Washington

We cannot imagine the emotional hardships our first President, George Washington, experienced. The hard life of this greatest fighting hero should be studied and remembered during our current economic struggle. One thing we know for certain is no President today will ever sacrifice for country and state 1/billionth of the valiant President George Washington: The Psychology of the Call team reminds all forward-thinkers to keep your heads up, respect the people around you, and take advice from gold bugs like Glenn Beck and Peter Schiff with a grain of salt (cum grano salis). We're so proud to be living in the United States of America. It was President George Washington who gave us the first & best example that our red, white, and blue stripes will never run or give in to any battle:

Friday, February 20, 2009

The Patiently Trained Psychological Eye is Open to Educational TV

{The Seven Psychological Pillars to Profits}

{1} We believe in patience. A patient trader waits for superior opportunities to enter and exit. A trader who forces trades after winning or losing will set himself up for avoidable losses. Do not allow a gamblers' mentality to take control of your behavior. Not trading for a couple days will clear your mind and reward you more often than not.

{2} We believe in trading higher priced liquid stocks. They tend to have much smaller option spreads and to exhibit greater volatility, and volatility is the key to making money. Volatility in these higher priced stocks like CME or GOOG can be caused by stock specific news related to conference calls, executive presentations, earnings releases, management changes, law suits, technology/patents, sector news, and short interest. Volatility is also caused by the overall market/S&P. Take advantage of that S&P volatility by setting specific entry and exit points based on support & resistance lines.

{3} We believe in only trading above average entry points.

{4} We believe the market will be around next Friday, next month, and next year (with the new anti Wall Street populism, this theory is being tested). Yet we take at least one day a week off in order to clear our minds. Cultivate a hobby because a healthy life style contributes to a healthier mind and thus better risk:reward set-ups. Better trading decisions result when we are well rested and involved in other things besides trading. Go fishing, go antiquing, visit a museum, plant a vegetable garden, do anything other than thinking about the markets (yes, we are serious; try it!).

{5} We believe investor sentiment/psychology and S&P swings affect individual stock movements in the short run more than any fundamental metric or ratio. Exhibit caution when attempting to trade on backward looking fundamental analysis and supposed forward-looking analyst estimates, as they are usually too optimistic due to the misleading PR spin of many firms. It makes more sense to go long after a stock has been downgraded than upgraded, as institutions have vested interests in their recommendations. It also makes more sense to go long a stock that has lowered their guidance than raised, especially if it's above its 200 day moving average.

{6} We believe there is only one Warren Buffet (and even his buy & hold prowess is being questioned in '09). Buy & hold is not recommended in today's market. You must master market mechanics through what we call Psychological Financial Fusion and you will become a very successful trader by understanding how fundamentals, technicals, politics, and psychology are intertwined and work to whipsaw long & short positions from day to day.

{7} We acknowledge the importance of always maintaining a minimum 30% cash balance in your account, and recommend booking profits of 30% or more (especially on Friday). Wise traders shrink into the weekend to avoid the risk of negative/positive geo-political events/shocks.

The Psychology of the Call team wishes all a happy & healthy weekend!

Thursday, February 19, 2009

The Incredible Sinking REIT Ship

POTC predicts Morgan Stanley's (MS) gigantic REIT exposure will sink their shares back under $15 by March.
The commercial real estate fall-out will hit the wires like a tsunami wave on Monday Feb 23rd after market close.
GGP will report a likely bankruptcy filing for nearly $27B worth of debt.
Forward-thinkers must set up trades accordingly; consider buying $35 puts on VNO, $16 puts on MS, or $90 calls on SRS for March expiration.
The entire night crew of the Psychology of the Call team wishes all a profitable end of week.

Wednesday, February 18, 2009

Pervasive Bad News

Bad news pervades everywhere we turn!
POTC senses a climactic sell-off is upon us. The question now is whether Wednesday's sell-off (should it happen) will be met with a Geithner policy reflex rally. That's the $64,000 poser. The rally could take us into Thursday & perhaps Friday's option expiration IF something substantive were announced by Geithner or the SEC.
If Wednesday's sell-off (once again, should it occur) is not met with any clarity from Geithner or the SEC, and the bounce doesn't happen, the pain will probably accelerate through Friday's close. We are very skeptical about anything positive from Geithner after witnessing President Obama's 100% partisan spending act. It's difficult for POTC to make a short-term directional call this Tuesday night, and we are saddened by the latest developments out of Washington.
To our loyal forward-thinkers we suggest not going long ANY financial stocks as the nationalization of some banks seems imminent. The new administration is effectively ignorant to the needs of the free market system in lower Manhattan, which in turn affects the average Joe on main street.
The administration has dropped the ball with their spending act. The fact President Obama chose to be a Chicago precinct captain/organizer after Harvard is coming home to roost. This reality finally has many Wall Street experts very disturbed. As a result, everyone who has money in the capital markets today is more confused and less confident by the hour...
The policies so far have reflected an anti private sector bent. We thought the right thing to do was to freeze corporate & small business tax rates before expanding/forcing big government type programs.
Although POTC respects President Obama's intellect in regard to opening up the lines of communication with foreign countries, we STRONGLY disagree with his public tirade against Wall Street banks just 2 weeks ago, as he attempted to build public support against Wall Street by announcing "now is not the time for profits". This appears to have ruined President Obama's credibility with many capitalists who supported his candidacy.
POTC feels it is a calamity and a paradox to tear down the Street that financed and made the United States & the world a great place for over 100 years. Expanding government programs on an unprecedented scale will backfire in the long-run, as big brother attempts to manipulate the free market system.
President Obama is failing the American people by siding with truculent Speaker Pelosi and Senate majority leader Reid. It was our initial belief that the new President would be a lot more bipartisan and we never fathomed he would publicly diss Wall Street banks and then parade the bankers in front of Congress. Are bankers more to blame than the politicians who did away with Glass Steagall in 1999 and opened the door for various exotics/derivatives to trade?
POTC thought President Obama and his "change" cabinet would do everything and anything to build Wall Street back up, not play a public psychological chess match against it. We are of the fiscally conservative belief that larger centralized governments, such as that ignited by the $800B spending act, develop bureaucratic classes that may be indifferent or even hostile to capitalism/commerce/free market system. Did we not get a whiff of that powerful government when the bankers were demoralized at the expense of mental midgets like
1) Maxine Waters (refers to bankers as "captains of the universe":
and 2) Michael Capuano, who is repulsively ignorant and rude: The President's psychology is flawed and he should have a closed door with the above mentioned Congressmen/women who unfortunately are representatives of "change"? Without Wall Street Mr. Obama, the United States is pointed to a very different type of capital structure, a structure that borders on socialism. POTC predicted in a January 12th post that the '08 scars would not heal quickly, yet we never envisioned such a partisan President in times of such crisis; (after clicking, please scroll down to Jan 12th piece); S&P could break that 741 ahead of our prediction:

Tuesday, February 17, 2009

Tuesday Morning's Trading Alert & Market Psychology

Morning to all, The three day weekend brought no substantive bank policy news from Mr. Tim Geithner and the market is not saying 'good morning' but screaming 'good murder'... With the S&P down under 800, POTC recommends not establishing any long February option positions until late Wednesday afternoon at the earliest, as we do see a short covering rally beginning Thursday either due to positive bank policy announcement(s), or an SEC policy announcement regarding mark to market accounting in combination with a reaping of profits technical rally ahead of the weekend. Oil is selling off hard, and although a negative in the short-run as S&P heavyweights like XOM are correlated, the long-term effects will be very positive for business and the consumer. POTC would consider buying CHK into what we view as a near bottom (within 10%) for oil and natural gas. Companies like CHK are stock piling supplies at current prices, and with the global population not going away anytime soon the need for these commodities will not vanish. Consider CHK as a core concentrated holding in 2009. (POTC just broke Commandment #5, "never fall in love with a stock": we confess and ask for your forgiveness.) POTC recommends buying CHK in the low $17 range and having a sell stop in 15% below. We strongly believe CHK could be up over 30% in the next several months as clearer minds prevail. The Peter Schiff''s and Marc Faber's of the world look brilliant today, yet their perma-bear rhetoric is stale, monolithic and too rigid to profit from as the market will eventually find some equilibrium and pivot higher, leaving the perma-bears with their fools’ gold medal. The global landscape is experiencing a paradigm shift away from traditional brokerage & banking and as the details are ironed out, technology and other unrelated sectors will thrive; nobody will invest capital in nationalized entities. Money will begin to flow to large technology names in time; consider "cream of the crop" companies like GOOG & AAPL as the market washes out more weak sisters. GOOG and AAPL are two cash rich companies that will continue to shock the world through innovation & win great market share in this environment. Cash rich leaders will emerge stronger, so we are excited by gap down type pullbacks as they offer terrific opportunities for retirement accounts. IF we do close on the lows today, we envision a massive ripple effect around the globe, and a climactic swing/pivot point tomorrow or Thursday perhaps. Exhibiting patience today may be difficult, yet we believe it will reward you over the short & long-run; forcing trades and merely hoping the market turns makes less/little sense. The Psychology of the Call team thanks you for your Tuesday morning attention.

Friday, February 13, 2009

A Leading Economic Indicator that Dates back to the 21st President of the United States

From coast to coast, border to border, & sea to shining sea, a Happy Presidents' Day weekend to all U.S. readers from the Psychology of the Call team. The Dow Jones Transportation (DJT) Index is a trusted leading economic indicator followed by wise men. The index was created by Mr. Charles Dow in 1884 (, a time when railroads were as important as today's internet superhighway, perhaps even more so. The index consisted of 11 stocks of which 9 were railroads, and all aboard have been derailed of late ===== = == The deleveraging and divesting of every asset class in the cosmos has not been kind to the transport industry's equity holders, yet this sudden business shock may work to strengthen their business models as the world begins to dig itself out of this unprecedented trough. Today's DJT is made up of 20 stocks of which only 4 are railroads: Burlington Northern (BNI), CSX Corp (CSX), Norfolk Southern (NSC), and Union Pacific (UNP). The other 16 stocks are airlines, trucking, and shipping. Interestingly enough, today's talking heads insist on quoting the S&P 500 index as the best leading economic indicator; yet the DJT Index is 68 years its’ senior. That takes us back to just after President James A. Garfield (R-20th) became the second U.S. President to be assassinated. The unfortunate event enabled Vice President Chester A. Arthur to power: (R-21st) Here's a maximum time frame chart that doesn't even go back to its beginning in 1884:

Since corporate financial officers (CFO) are always striving to lower costs, many today would think their jobs have become easier since oil has fallen over $100/barrel, but that can't be further from the truth.

As CFO's experience this lower cost, the global economic slowdown is taking an even bigger toll on sales, share price, and margins. Profit margins at many of these companies are contracting due to desperate attempts to hedge what was a run-away oil market. Some airline CFO's stock piled crude supplies after it broke through $100/barrel, then $90/barrel, and then $80/barrel, and so on and so on. Thus the current price of sub $40/barrel has them miffed as global deleveraging is causing a domino effect of anemic business with the added burden of a higher cost supply glut in the short-term. Even though the DJT's are a cyclical bunch, they usually signal an economic recovery before most other sectors since they must deliver raw materials from point A to B to point C. The raw materials then become manufactured before eventually being sold at your Best Buy, WalMart, or Sears. The signals aren't looking too positive from a fundamental aspect of late since GDP and unemployment continue to suffer; the short-term technicals aren't giving us any bullish confirmations either. Please notice the DJT's dragging the S&P lower in this 3 month chart, foreshadowing a lower stock market ahead: ^GSPC = S&P 500 ^DJT = Dow Jones Transportation Index

Since the DJT index is a corner stone of market history, forward-thinkers would be wise to follow it and use it in addition to the S&P when setting up pivot points for trades. The financial sector is still a large weight inside the S&P index, and yet it hasn't dragged the S&P below the DJT in the last 3 months. The index is not signaling an economic recovery anytime soon, yet the longer-term(5 year) chart does reveal some fairly solid footing in the 2,700-2,800 range.

While you can invest in thousands of stocks that are not directly part of the DJT, just about every stock you choose will be at the mercy of some transport cost(s). If you share our optimism in an eventual economic recovery, monitor this index in the next few days, weeks and months; it may help you profit... POTC respects the Dow Jones Transportation index because it has stood the test of the most powerful judge, Father Time. We were happy to dust off this little piece from our blog archive. The entire Psychology of the Call team thanks you for the opportunity to educate. We wish you a wonderful three day Presidents' weekend; special wishes to Lance S. J., who will be recovering quickly; thoughts & prayers to the 50 who perished late last night in Buffalo as well. We leave you with a little science, what most successful traders follow in order to evolve/profit: -----------------------------The 11 Commandments of Trading---------------------- 1 Never trade more than 10% of your total capital/account value in any one position. 2 Cash is King, and we recommend keeping a minimum of 30% liquid to take advantage of dislocations and volatility. 3 Cut losses to 15% maximum whenever possible. If your psyche is shaken, step away and don't trade for 1 week; defense is of critical importance. 4 Take and enjoy profits of 30% or more. 5 Never fall in love with a stock/option and never force trades or over trade; remember commandment #2. 6 Never accept excuses from corporate management or politicians. 7 Use technicals, fundamentals, politics (policy), & psychology/sentiment from the conference calls to select trades: Psychological Financial Fusion. ~8~ There are two sides to the market, long & short; take advantage of that leverage and trading volatility. 9 Understand & respect the significance of the macro geo-political environment. 10 Unforeseen events/shocks will happen, inverting the market upside down or right side up (remember commandments #1 & #2). 11 All of the above are void without reading the Psychology of the Call.

Thursday, February 12, 2009

Happy President Abraham Lincoln's Birthday, 16th President of the United States of America (R)

One of President Obama's biggest role models is Abraham Lincoln, and this should be enough to light a fire under stocks at the finish. We advise you to not be short today!! A Dow rally of 200 points+ is to be expected... We predict a patriotic stock market rally Thursday, as we celebrate one of the most true & most famous Republican Presidents in history; Happy 200th birthday: We believe President Obama will deliver a passionate bipartisan speech today, the opposite of the under-handed behavior we witnessed just yesterday from Congress. The pendulum will swing today as sentiment improves. We also anticipate a little more clarity on the bank bailout from Secretary of the Treasury Geithner soon. Even if it doesn't come today, the smart money will flow in ahead of an announcement and sell on the news. We hope you enjoyed & profit from the Psychology of this Call.

Wednesday, February 11, 2009

The Height of Political Hypocrisy; Lynch Mob vs Wall Street

Today's circus was headlined by the head donkey Barney Frank; final score: Donkeys: classless & clueless Elephants: respectful, reasonable, & intelligent The questions and the tone of the questions asked by the Congress of the banking executives bordered on the obscene, but especially those asked by the donkeys. Congresswoman Maxine Waters (D-Ca) acted worse than the wicked witch as she used her time to berate the bankers. We're shocked she didn't make them stand up, get in a single file and then slap their hands with a wooden ruler. Ironically it was this party of fire-breathing animals, through their legislation in the late 1990's, which laid the stage for this real estate/mortgage problem. House Finance committee head Barney Frank should be ashamed of himself and his gang of wild half-breed horses. Although the elephants are not entirely without fault, their abilities to reason and ask lucid questions must be noted. This kind of Orwellian donkey circus MUST be highlighted & understood by every voter. POTC has blogged about the deficiencies of the Clinton administration in the past, especially those of his Secretary of the Treasury Robert Rubin. It was under this regime that Glass-Steagall was finally repealed in November of 1999. Forward-thinkers take note of government officials who are pro-capitalism versus the ones who are unprofessional idiotic hypocrites, with NO conscience that their party pioneered these porous credit standards. Government animals began digging this banking hole decades ago and finally finished in 1999. Now they are attempting to lynch the heart of American capitalism, Wall Street: shame on them, but especially the rudeness and hypocrisy of the donkeys. Long live respect, reason, and good human intellect; from the entire Psychology of the Call team.

The Upcoming Commercial Real Estate Woe

Forward-Thinkers Must Brace Themselves for the Commercial Real Estate (CRE) Fall-Out Ahead; One Sub Sector of CRE is Retail, and Next Week the Reality of Plummeting Retail Sales & Balance Sheet Erosion will be Confessed; EXTRA CAUTION is URGED with Sears (SHLD); Director Richard Perry Recently Sold Nearly $69M Worth of Stock. POTC Did Give All an Early Warning with First Solar (FSLR) Several Months Ago After a Walton Family Member Sold a Large Stake; Now We Are Concerned About SHLD in the Weeks & Months Ahead, as We Predict a Much Lower Share Price; SHLD is Supposed to Release their Earnings Report Around Thursday, Feb 26th: NEW YORK (Dow Jones)--Retailers will begin posting fourth-quarter results en masse next week, with the reports illustrating the impacts from one of their roughest periods on record. The expected 33% drop in retail earnings for the period will be accompanied by severe margin strain and scant signs of stabilization. -All seven of the retail groups in the Standard & Poor's 500 Index are projected to see their fourth-quarter earnings fall from a year ago, according to Thomson Reuters. -Wal-Mart Stores Inc. (WMT) is classified differently, as a consumer staples company because of its large supermarket business, and its fourth-quarter earnings are expected to be down 5% from a year ago. -Most retailers' fourth quarters closed at the end of January, meaning the period will reflect the strain of consumer scarcity in November, deep discounts in December, and continued apathy and low gift card redemptions last month. -"This was a very tough period for retailers, beginning with their toplines," said Carl Steidt, chief economist at Deloitte Research. -Of the seven S&P retail groups, home improvement retailers are projected to see the biggest tumble, with earnings falling 56%. The group is made up of S&P 500 members Home Depot Inc. (HD), Lowe's Inc. (LOW) and Sherwin-Williams Inc. (SHW). -Department stores' fourth-quarter earnings are projected to fall 37%. The S&P group is made up of J.C. Penney (JCP), Kohl's Corp. (KSS), Macy's Inc. (M) and Sears Holdings Corp. (SHLD). -Apparel retailers are projected to see fourth-quarter earnings drop 29%. The sector is made up of Abercrombie & Fitch (ANF), Gap Inc. (GPS), Limited Inc. (LTD) and TJX Cos. (TJX). A 26% profit decline is pegged for discounters, including Target Corp. (TGT), Big Lots Inc. (BIG) and Family Dollar Inc. (FDO). -Fourth-quarter profit for specialty retailers is projected to fall by 24%, a group made up of Tiffany Inc. (TIF), Staples Inc. (SPLS) and Office Depot Inc. (ODP). -Best Buy Inc. (BBY), RadioShack Inc. (RASH) and GameStop Inc. (GME) make up the consumer electronics group whose fourth-quarter profit is pegged to fall 10%. -Amazon Inc. (AMZN) and Expedia (EXPE) make up the Internet retail group whose fourth-quarter earnings are expected to decline 1%. -Wal-Mart will be the first major retailer to report fourth-quarter results, on Feb. 17. -The reports will encompass a fourth quarter that was marked by same-store sales declines for each month for most retailers. -The period saw severe and margin-cutting markdowns that continued after the holidays. -"There was no Christmas for retailers," said Todd Slater, retail analyst with Lazard Capital Markets. -Slater said the industry's troubles are hardly over and that outlooks from companies should be taken with a grain of salt, when they are provided. -"Several more retailers probably will say they are not providing guidance, which isn't good because it crystalizes already-negative sentiment," Slater said. "Retailers that do provide guidance will remain very conservative; even coming in lower than what they believe internally." -The best guidance will be gleaned from retailers' comments about their financial position and how they plan to improve it, Slater said. "This year is all about financial controls, managing liquidity" to fund operations and pay down debt. -As things presently stand, results for retailers' current quarter are not expected to show much improvement. -Department stores are expected to show a loss for the fiscal first quarter, while apparel retailers are projected to see earnings fall 32%. -The projection for home improvement chains is a 28% drop; and for specialty retailers should see earnings fall 26%, Thomson Reuters said. -Consumer electronics retailers are expected to report an 18% decline in first-quarter earnings, discounters a 23% decline and Internet merchants a 15% drop, Thomson Reuters said. -By Karen Talley, Dow Jones Newswires; 201-938-5106; (END) Dow Jones Newswires February 11, 2009 08:30 ET (13:30 GMT) Copyright (c) 2009 Dow Jones & Company, Inc.- - 08 30 AM EST 02-11-09

Sunday, February 8, 2009

Trouble Filled Waters for Traditional Buy & Hold in '09; CAUTION URGED

Sunday night greetings from the Psychology of the Call team (POTC),
If you've ever been on the receiving end of a "heads I win, tails you lose" coin toss, you understand the type of equity market we envision throughout '09 for buy & hold investors. The unfortunate demise of Wall Street's historic investment banks may soon be followed by the traditional retail broker-dealer model's obsolescence. Our grandfathers' C, GM, and GE are collapsing by the minute and a brutal struggle for survival is raging in the capital markets. Deleveraging of assets at fire-sale prices is bad for equity holders, yet it's worse when no buyers for these divestitures are to be found. Unfortunately our government insists it is part of the solution by doing the same exact thing that got us in this mess, hurriedly attempting to pass a bill that would spend zillions of borrowed dollars. A full 75% wouldn't kick in until after 2010; solution you say, we say simple political nonsense.
Only skilled forward-thinking traders will survive the whipsaws ahead, as volatility works to gut account values as the bear growls and flexes his deadly nails. As horrific as all this sounds, there will be a way for forward-thinkers to profit in '09....
POTC pleads with every reader to make a resolution "to better understand volatility and profit from it once or twice a week." Embrace violent swings and take advantage of them by setting tight S&P pivot points to trade stocks off. Only trade highly liquid stocks/options, with small initial positions and tight stop limits (defense is a must). POTC predicts fewer solutions than fixes from the government as the days, weeks, and months of '09 evolve. Here's a brief forward think...
The anniversary of that bloody St. Patrick's day of '08, when Bear Stearns opened down at $2.00 is only five weeks away. Such anniversaries always bring back painful memories, especially of the buy & hold misery.
POTC predicts the S&P will retest the November '08 741 level between March 6th and April 15th. So our medium-term equity market forecast is dismal; be happy IF the market rallies in the days ahead, as we are very confident in its downward spiral by the tax time deadline. -
The process of restarting the deepest financial model in modern human history will take longer than most economists and politicians forecast. We understand that politicians and economists often have vested interests attached to their projections/models, therefore we interpret them with a copious measure of skepticism (grano salis). Now for some quick stats as to what the brain trust who shorted subprime predicts:
Goldman Sachs' economists foresee Q1 '09 Gross Domestic Product (GDP) to come in at -3%, an improvement from -3.8% actual Q4 '08 number. They have Q2 pegged at -1% and then paint a more rosy picture in Q3 & Q4, both at +1%, got that? The most respected name on the Street has the economy expanding/improving every quarter until Q4 '09, which is the same as Q3 '09?
POTC found this perplexing and foreshadowing more economic problems ahead. How could Goldman rationalize the July-August-September quarter to be the same in terms of GDP as the October-November-December quarter, where Thanksgiving travel, Black Monday sales, and all the holy-days of spending sprees and inventory ramps lead us into the Happy New Year. Or is Goldman's rationale of a slowing Q4 spot on, giving forward-thinkers ammunition to use to their trading advantage. We think that is the correct interpretation as you dig deeper into Goldman's 2009 & 2010 unemployment predictions...
The U.S. ended 2008 with a 5.8% unemployment rate. There are many who do not believe the reported rate is a good real measure since some unemployed individuals never officially register for unemployment checks or exhaust their benefits without finding work, thus getting lost in some mystery ratio. Perhaps this ratio will be talked about more as our government becomes larger, spends more dollars, and focuses more time on extending unemployment benefits, rather than creating real jobs through cutting corporate tax rates, thereby allowing the wheels of capitalism to grease themselves. After all, nobody is ever hired by an unemployed individual, only by small businesses and publicly traded corporations that have confidence and access to capital. All those for tax cuts instead of a bloated government bureaucracy say "I"
Goldman estimates the unemployment rate to be 8.4% by the end of '09, and will worsen to 9.3% by end of 2010. As forward-thinkers we notice another dark cloud in Goldman's predictions. IF they are correct that Q4 GDP will not beat Q3, and the unemployment rate in 2010 will be greater than 2009, that's a grim and compelling argument against holding any equity positions long. Here's what you're facing IF you jump in to the dangerous & bottomless looking Bear pool; the dirty waters of unemployment:
With all due respect to Goldman's economists, POTC believes that unemployment will be 50% greater at end of '09 than '08, so 8.7% at a minimum. The latest reading for January came in at 7.6%, and that was up from December's 7.2%. History shows that more temporary people are hired in December for Christmas and other holy-days, yet some economists argue this year was an anomaly since so many retailers were struggling with credit and inventories. Is it possible retailers did not hire as much and thus did not shed as much? IF that were to be true, Goldman's and POTC's forecasts could be very off. We can only hope for the best, yet forward-thinkers must arm themselves with these trading nuggets. IF the unemployment rate were to surprise in either direction on March 6th, the reaction in equities will NOT be a one day event, the reaction will be good for a sustained 10%+ swing in either direction for at least two weeks.
POTC believes that market direction for '09 will occur on March 6th and April 3rd, so heed the warning and set-up small trades with tight sell stops accordingly. We do not see a sudden 180 in unemployment from March to April, only exacerbation of the trend/cycle, and we are very pessimistic. Perhaps our pessimism will motivate some of you contrarians to take the other side? That's why we never claim to be expert economists or to be right every time, far from it. POTC only offers our most educated Psychological Financial Fusion, and we ask you to fill in the blanks.
We know the spiral of unemployment will eventually stop and bounce, as everything in nature eventually hits some kind of bottom. It could be well into 2011 where the unemployment rate strikes some exhaustive point, yet the effects of the sideways equilibrium move and retest could be more painful for equity holders than today's anticipatory optimism. We believe Goldman Sachs is guilty of being overly optimistic on GDP and employment, and the consequences of the brightest being wrong could be ugly for accounts at traditional broker-dealers who still believe in unicorns.
When and where the unemployment spiral stops is open to debate, yet POTC sees no real/meaningful economic impact for most equity holders even after it bottoms. Let's assume it occurs in 2010 and Goldman is spot on at 9.3%. Forward-thinkers have to understand the final bottom will be smoothed due to effects from larger government and therefore more mediocre type jobs.
POTC believes there is NO substitute for lower tax rates and thus greater capital in the hands of entrepreneurs. Research & development (R&D) is something a bigger government chokes off, and until the citizens of this nation understand the paradox of "I'm from the government and I'm here to help you", equities will be trapped under a thick sheet of ice.
Without pointing fingers at either party too quickly, both are to blame lately. Here's a clip from President Reagan, who President Obama has admitted to respecting more than ex President Bill Clinton in public. President Reagan understood the government's role, and his legacy will only explode during this extreme political/economic paradox: Please forward to the 5 minute mark and listen closely until what is spoken at exactly the 6 minute 9 second mark:
Although this video is aged, it's message is timeless, and we urge President Obama's administration to heed Reagan's warning, or else take a huge risk of being a one-term administration. The American people will never embrace a larger more controlling government; after all our greatest Fathers/pioneers stated these three words, "we the people", NOT "we the government".
Due to the recent bailouts and hurried spending bills, the United States has strayed from the path of true Capitalism. Raising taxes on successful small business owners and individuals making around $200K or more is ludicrous, ignorant, and dangerous.
Punishing entrepreneurs is not what this nation needs during this developing crisis. This nation needs a leader to emerge from the Obama team who will convince him to shrink the government and lower small business & corporate taxes ASAP. It is after all corporations and small businesses who are responsible for creating high paying jobs and this extends our leadership in medicine, computer software, and other manufacturing technologies, patents, and intellectual property. We the people, NOT we the government must be reinforced.
Imagine there was a park near your home that had two seesaws, one 15 feet in length and the other 5 feet. If you enjoyed the exhilarating ride on the 15 foot seesaw for many years it would be very unfortunate if city managers eliminated the 15 footer and added ten 5 foot seesaws instead. Boo-hoo many would say, but the ones who rode the only 15 footer would be sad, and ironically, only the ones who never witnessed or rode the 15 footer would be excited to ride the 5 footers all day long. So although more people will eventually ride the 5 footers since there are ten of them, only the ones who rode 15 footer will truly understand the "bad change" this has caused. Bear with us...
When the unemployment rate finally bottoms, it will have a similar effect. A great many of the venture capitalist/dare devils who experienced the 15 foot seesaw will no longer come to the park, and the ones riding the 5 footers will flourish. If this administration continues down the path of not rewarding success but rewarding failure, it will create a park with millions of little seesaws in order to make the masses happy. The risk part of the equation will be lessened, therefore the ride/return is expected to be lower. Buy & hold equities in '09 anyone, not us!
Expect some naive economists/people/investors to cheer when the unemployment rate begins to improve under this administration, but forward-thinkers will be prepared and will know better. The smoothing effect of more government jobs will not fool us. With passage of anti-entrepreneur policies, the only betterment that can result is in more mediocre government jobs; far from the American dream we've come to enjoy for well over 100 years, albeit cyclical. The United States and world has always prospered with more Wall Street financing and less government interventions/manipulations, period.
In addition, the authors of this latest $800B bill admit it won't have much impact until after 2011, and that almost takes us to the next presidential primary! POTC would prefer to see this administration not pass this bill and instead cut taxes across the board for all tomorrow. Corporate tax rates for banks and other struggling sectors should be frozen at zero until real growth in GDP and employment comes back. We are not excited by any growth due to the smoothing effect from a larger government workforce. President Obama should show us what real change is, and that kind of change hasn't occurred since the late President Ronald Reagan. POTC reminds forward-thinkers, "Government is not the solution to the problem, government is the problem".
POTC retracts our praise of ex Secretary of State Hank Paulson, and criticizes ex Presidential candidate Senator McCain and ex President George W. Bush for passing the first $700B bailout, shame on them. IF President Obama was for real change, he would stop the spending madness and allow the ship of Capitalism to right itself. Just as in any survival experiment, the weak go extinct and the strong thrive; capital markets are no different Mr. Geithner.
Goldman Sachs publicly said they are close to giving back the $10B of TARP. Perhaps the new name and acronym should be simply "TAR", it makes a lot more sense now that a little time has passed and we know some institutions did not even need it!
The government has now taken center stage and that's tragic for the stock market. Although we warned that regulations were on the way after Bear Stearns collapsed, we must admit we didn't envision anything this nasty.
Unless the message out of Washington takes a 180 in the next few days, the only change buy & scold equity holders will have in '09 will be loose coins jingling in their pockets (oh yeah, make sure your pockets have no holes). POTC is very bearish on holding stocks throughout '09 as the witch hunt against Wall Street is out of control. When a U.S. President goes on public tv and warns Wall Street that the time for making profits is not now, the capitalistic compass is broken; not shattered, but definitely broke.
The only rewards to come from equities in '09 will be from strict adherence to trading the most liquid stocks based on maximum pain swings in S&P, trading smaller, and setting up tight sell stop limits. We will attempt to guide you through these filthy & treacherously dangerous bear waters, because if you're not careful, your portfolio value will get mauled. Speaking of malls, watch out for Feb 23rd Monday after close: retail REIT giant GGP will report horrific news that will send shock waves throughout the REIT sector, esp retail. GGP's report may well have you singing the praises of going long SRS again and or shorting/buying put options on Sears Holding (SHLD). POTC has noticed many troubling developments at SHLD.
The Psychology of the Call team thanks every forward-thinking subscriber for taking the time to read us and for contributing through emails. The Island Where Forward Thinkers Evolve mission is to keep you away from the mortal claws of the bear, and only through Psychological Financial Fusion will we have the courage to dip our right toes into these murky bear waters. We look to celebrate in 2010 regardless of what this administration cooks up; good, brilliant, mirage or sabotage. Here's some music video relief from some venture capitalists, native New Yorkers:

Friday, February 6, 2009

Friday's Intraday Trading Alert

A good Friday morning to you,
We are selling our entire BP position for a gain.
POTC has decided that because of the uncertainties of the current partisan political environment the market's recent rise could be eroded quickly. IF nothing substantive comes from Sec of Treasury Geithner regarding the structure of banking operations going forward, the risk of being overly bullish into the weekend is too great. The institutions are starving for clarification, and this administration must administer it fast, and it better make sense for Wall Street.
The entire Psychology of the Call team wishes all a good weekend & dreams of greater knowledge and profits ahead of us ~

POTC Takes Notice of Ex-WalMart Board Member's First Trip

Secretary of State Hillary Clinton's trip to Asia will be covered 24/7 and the trip falls on the week of options expiration. POTC believes the Employee Free Choice Act (EFCA) is a gigantic overhang on WalMart's share price recently; it's shocking that no talking head on CNBC has picked up on this fact.
WalMart's labor costs -IF the unionization bill is passed- would sky rocket. Smart money has been liquidating lately. It was in fact the Clinton administration that helped WalMart & the Chinese economy explode in the late 1990's. Sam Walton was a native Arkansan and so is President Bill Clinton. Mrs. Hillary Clinton sat on WalMart's board and still has close ties with the Walton children, who supported her campaign for president. It's fascinating that under Pres Clinton's democratic administration (pro-union) EFCA was not passed, yet during all the economic turmoil Sec of State Clinton chose Asia as her first foreign trip.
Does it surprise you that Secretary of the Treasury Geithner's tone toward the Chinese currency manipulation was so quick and harsh? (Not us.) It was in fact Pres Clinton's Secretary of the Treasury, Mr. Robert Rubin, who was responsible for repealing the Glass Steagal Act, and also for the Yuan/Dollar peg. Those were the two worst blunders in the history of U.S. economic policy, as it allowed the Chinese to have a strong currency without addressing labor laws and fair salaries. On the contrary, Chinese hourly wages in many manufacturing outfits today are on the scale of slave pay.
What are the chances that Sec of State Clinton shakes her fist at China and their labor laws? (The same labor laws which, paradoxically exploded WalMart because they imported and sold many slave wage products in a Goliath like retail expansion.) Ironically, EFCA is now poised to ruin the company's profitability. Perhaps WalMart had it coming...
Is Sec of State Clinton making this trip to send a signal of real change on the issue of human rights/slave labor, or will she be representing WalMart's future EFCA legacy: the union legacy costs that bankrupted GM & Ford. POTC will be monitoring this ex-WalMart board member's words very closely, not to mention WalMart's share price.
TOKYO (AFP)--Japan on Friday hailed U.S. Secretary of State Hillary Clinton's decision to visit Tokyo on her first foreign trip since taking office.
-Clinton is scheduled to arrive in Japan on Feb. 16 on the first leg of her Asian trip, which will also take her to Indonesia, South Korea and China.
-"The decision to choose Japan as the destination of her first foreign trip shows her stance of emphasizing the Japan-U.S. alliance," said Chief Cabinet Secretary Takeo Kawamura, the government spokesman.
-"It is significant," he told a news conference.
-Foreign minister Hirofumi Nakasone separately said he wanted to strengthen the Japan-U.S. alliance when he holds his first talks with Clinton.
-In Washington, State Department spokesman Robert Wood said Clinton would discuss issues including the global financial crisis, security and climate change during her trip to Asia.
-Her choice of Asia for her first trip "is a tremendous signal of the importance of Asia to her foreign policy," Wood said.
-Japan is highly sensitive about its standing as the key U.S. ally in Asia and some policymakers had worried that President Barack Obama would focus more on China.
-Many Japanese leaders have bitter memories of the last Democratic president, the secretary of state's husband Bill Clinton, who pressed Tokyo hard on trade issues and flew over Japan when heading on a key 1998 visit to China.
-(END) Dow Jones Newswires February 05, 2009 22:07 ET (03:07 GMT) Copyright (c) 2009 Dow Jones & Company, Inc.- - 10 07 PM EST 02-05-09

Wednesday, February 4, 2009

GSachs' Tone is Bullish

POTC believes Goldman Sachs' Tone is Bullish for the Financial Sector; If Goldman was in Any Trouble, they Would Never Release this Kind of Information Regarding TARP, Especially as Transparency is Such a Major Issue Today; Perma-Bears Take Cover, Equity Rally Set to Begin; No Maximum Wage Employees at Goldman Sachs, uh uh, no way.
NEW YORK (Dow Jones)--Goldman Sachs (GS) is pondering ways to pay back the government, but it might take some time, CFO David Viniar said at the Credit Suisse financial services conference Wednesday.
-Goldman Sachs, along with fellow surviving investment bank Morgan Stanley (MS), received $10 billion from the government last year. -"It is never too early to start thinking" about paying the government back, but there are restrictions on how that can be done, he said. The money can only be paid back when the company raises Tier 1 capital, not from Goldman's earnings. However, the government might change the rules regarding repayment, Viniar said. Whether Goldman issues a large common-stock offering or preferred-stock offerings remains to be seen, he said.
-"I am sure the Treasury wants us to pay it back at some point, and we want to as well," Viniar said. Goldman Sachs would like to get out from under the restrictions of the capital structure, which include some minor executive compensation restrictions, he said, adding, "it will send a good signal to pay it back."
-Additionally, Viniar said, while the credit market seems to have hit the bottom in mid-December, Goldman's economists remain very bearish for the next six months.
-Goldman has been effectively managing its risk position throughout the crisis. The company wrote down $53.6 billion or 70% of risky assets last year, including leverage loans, residential and commercial real-estate loans.
-The bank is starting to see opportunities in its basic business of trading with clients, and some distressed portfolios of assets are starting to become available. They aren't large in size, and aren't trading yet, but it is a precursor to a more robust market, Viniar said.
-While the firm marks assets according to fair-value accounting rules, Goldman is most worried about "anything real-estate related," Viniar said. The company has principal investments in the area of real estate, which is a long-term, defensive portfolio, but some assets may be worth less in the future, he said.
-Viniar said Goldman, which became a bank holding company last September, will look at acquisition opportunities to raise bank deposits, and it is "not stubborn." He indicated that acquisitions are difficult, and it is very hard to merge company cultures. "There is a very short history of successful acquisitions," he said.
-Goldman's new status won't change the company's focus. "We will largely remain a wholesale company, and we don't like or know the retail business very well," Viniar said.
-After the Bear Stearns collapse, Fed regulators started visiting Goldman Sachs regularly. "We were used to them coming, and it wasn't so bad," Viniar said.
-Goldman Sachs is trading up 7.9% at $89.41. The stock is up roughly 5% for the year.
-By Jessica Papini, Dow Jones Newswires; 201-938-2437;
Copyright (c) 2009 Dow Jones & Company, Inc.- - 12 25 PM EST 02-04-09

Pairs Trade Update

Good Evening
-BP reported Q4 results today.
-We are extremely bullish short-term and will sell our XOM $70 Puts Wednesday morning. Then we will double down on BP!!!
-Our Goldman Sachs connections are sounding more upbeat about deals than in the last three months; perma-bears take cover!

Tuesday, February 3, 2009

Pres Obama's Honeymoon Blitz (ABC, CBS, NBC, & Fox News); Elephants Not Stimulated by Bill

President Obama's media blitz to push the stimulus/spending initiatives through the Senate will make for interesting analysis today. He has scheduled live interviews with ABC, CBS, NBC, CNN, & Fox News.
POTC will pay close attention to his tone. We would prefer the President stop being overly critical of Wall Street during this time of financial and psychological crisis. Wall Street must not be bashed publicly because of the recent mistakes of a few bankers and many more political decisions/legislation. We think lower Manhattan's bankers are more important to the fiber of capitalism than 99% of past and future government officials.
We're still optimistic about Wall Street due to the intellect of this President coupled with the overwhelming economic negativity around the world. POTC feels people are over-reacting on the dark side; the pendulum will swing bullish soon.
When the rally begins on or before Lincoln's Birthday (Feb 12), we'll be able to give credit to bipartisan behavior from what looks to be a highly effective President. Even though we feel the public lashing of Wall Street bankers should have been done behind closed doors, POTC is super confident a strong short-term bounce is near; the market is completely oversold. With great hope for positive rhetoric from our 44th President as he blitzes the media circuit today. The Psychology of the Call team wishes all a great "Trend Setting Tuesday"!
WASHINGTON (AFP)--Republican senators continued their call Tuesday for major changes to President Barack Obama's huge stimulus plan, now worth nearly $900 billion, as the White House sought public support with a media blitz.
-Obama, a day after expressing hope that the Senate could give bipartisan backing to the bill, was to sit later Tuesday for interviews with all five major U.S. television news outlets - ABC, CBS, NBC, CNN and Fox News - to sell the plan to the American public.
-The Democratic president admitted that gaps remained between the parties on the stimulus bill, which passed the Democrat-controlled House of Representatives last week without a shred of Republican backing.
-"But what we can't do is let very modest differences get in the way of the overall package moving forward quickly," Obama told reporters in the Oval Office.
-Senate Republican minority leader Mitch McConnell, R-Ky., said major changes were needed, heralding possible clashes in the Senate debate as lawmakers attempt to amend the package, with a vote possible later this week.
-"The package that most of my members would support would be dramatically different from what passed the House," McConnell told reporters, adding that it would be also "dramatically different" from the current Senate version.
-"We need to make sure that we're not borrowing money to spend on projects that are not going to stimulate the economy," McConnell said, voicing Republican complaints the bill is partly a Democratic spending wish-list.
-McConnell called on Democrats to strip a "Buy American" clause from the bill, designed to ensure only U.S. steel, iron and manufactured goods are used on infrastructure projects designed to revive the economy.
-"I don't think we ought to use a measure that is supposed to be timely, temporary, and targeted to set off trade wars when the entire world is experiencing a downturn in the economy," he said.
Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary:
Copyright (c) 2009 Dow Jones & Company, Inc.- - 07 22 AM EST 02-03-09

Monday, February 2, 2009

Time Sensitive Technical Trading Alert

Good Monday evening to all,
POTC noticed a substantially bullish bounce in REITS (real estate investment trusts) in the final hour of trading. Although you may not always beat the institutional money to the first move up, it should make you smile when you notice the initial bullish confirmation.
IF these moves and volumes are further confirmed Tuesday, you may have a very good trade through President Lincoln's Birthday (Feb 12th). Please study the price movements and impressive volume blip for BXP, VNO, and BPO; three REIT stalwarts that reacted on NO news:

Please consider either going long one of the above stocks or buying Call options IF they all exhibit similar behavior Tuesday. Buying Put options on SRS may make good sense here also. SRS is an ultrashort fund that closed down in a down market, another positive indicator that something may be brewing in the REIT world.
With credit to one of our forward-thinking readers Jason, we offer you this Barron's video interview of Mr. Martin Cohen of Cohen & Steers regarding REITs. The video link is on page 2 of the article and he argues the technicals to go long REITs makes sense. Since Martin has a lot of skin in this commercial r/e game, we ask you to take his advice with a grain of salt. We found his demeanor to be calm, gentlemenly, & honest:
Aristotle once said: "We are what we repeatedly do; excellence then is not an act but a habit." The Psychology of the Call team thanks you allowing us to be part of your research as you persevere to profit from your investing/trading.

President Obama, Stop Tearing Down that Wall

Dear President Obama & all forward-thinkers, IF you are able to extend a hand of diplomacy, "an unclenched fist", to the Iranians and entire Muslim world, you should show the same respect for the mustard seed of the free world; Wall Street. Your rhetoric on Friday was too harsh considering the unstable emotions and pains of equity holders/markets. IF it weren't for Wall Street, the United States of America and many other countries would have never attained such greatness and prosperity over the last 100 years. Please stop thrashing Wall Street bankers in public, it does nothing to stabilize our financial system. IF you can offer an open hand to Iran, a country with a thug that has publicly stated the holocaust never occurred and believes Israel should be wiped off the map; is it possible you begin to show the same respect & forgiveness to an area and people who suffered a tremendous emotional and financial setback after the September eleventh attacks? As much as we respect your intellect and selection of a balanced cabinet, we urge you to stop tearing down the Street that made this country great. You know the terrorists committed murderous-mortal acts on that bloody day in September, the day citizens of this country paused, cried, and began witnessing the fall of their equity stakes, and from that day ironically the downward spiral continues. We think your chances for a second-term will be damaged IF you continue to attack lower Manhattan. President Obama, we beg you to "unclench your fist for Capitalism, and stop tearing down that Wall on public tv": POTC has no problem with President Obama's argument, but we'd prefer he'd round up the bankers in a room and speak to them in private, as investors are on pins and needles as the market falls. We need reinforcement, not a public bashing. And for the record, there were bankers/traders that made a ton of money in the last year, so not ALL bonuses were unfair. The Psychology of the Call team never apologizes for our views, as we pride ourselves on calling it as we see it. Great week wished to all forward-thinkers and defenders of the greatest street in the world, long live Wall Street, its bankers, and its bonuses; three cheers for Capitalism !!!

Sunday, February 1, 2009

POTC's Short-term Option Trading Alert & Update of XOM/BP

Hello to all forward-thinkers thirsty for profits! The Psychology of the Call team has spent countless hours researching/searching for a block buster options trade, and we have found what we feel is a gem. We will be buying 50% of the position on open Monday morning before 10ET, and adding the remainder 50% on close Monday.
Here's a hint: If you would like more details subcribe my sending an e-mail to
As for the XOM/BP trade we recommended two weeks ago, we will be sending an update to subscribers on Tuesday night after BP's earnings report is disseminated.
With sincere thanks for your Sunday attention,