Dow Jones Industrial Stocks with Statistical and Historical Perspectives; Market Cap vs Price Weight, Don't Be Fooled ...

Official Name (Symbol) Market Capitalization = Shares Outstanding X Share Price

01) *Exxon Mobil (XOM) $307B = 4.73B shares X $65.00

02) *Microsoft (MSFT) $251B = 8.77B shares X $28.67

03) Wal-Mart (WMT) $206B = 3.81B shares X $54.07

04) Procter & Gamble (PG) $184B = 2.98B shares X $63.28

05) Johnson & Johnson (JNJ) $174B = 2.76B shares X $63.00

06) *General Electric (GE) $171B = 10.67B shares X $16.06

07) *International Business Machines (IBM) $167B = 1.31B shares X $127

08) JP Morgan (JPM) $166B = 3.95B shares X $42.00

09) AT&T (T) $146B = 5.9B shares X $24.80

10) *Chevron (CVX) $145B = 2B shares X $72.30

11) *Bank of America (BAC) $144B = 8.65B shares X $16.66

12) Pfizer (PFE) $142B = 8.07B shares X $17.55

13) *Cisco Systems (CSCO) $139B = 5.73B shares X $24.37

14) Coca-Cola (KO) $121B = 2.3B shares X $52.72

15) *Hewlett-Packard (HPQ) $120B = 2.36B shares X $50.80

16) *Intel (INTC) $113B = 5.52B shares X $20.53

17) *Verizon (VZ) $82B = 2.84B shares X $28.93

18) Merck (MRK) $78B = 2.11B shares X $36.88

19) McDonald's (MCD) $69B = 1.08B shares X $63.85

20) United Technologies (UTX) $64B = 937M shares X $68.65

21) Walt Disney (DIS) $61B = 1.94B shares X $31.24

22) *3M (MMM) $57B = 711M shares X $80.15

23) Home Depot (HD) $53B = 1.7B shares X $31.20

24) Boeing (BA) $46B = 727M shares X $63.16

25) American Express (AXP) $45.5B = 1.19B shares X $38.19

26) Kraft (KFT) $42B = 1.48B shares X $28.43

27) Caterpillar (CAT) $36B = 625M shares X $57.05

28) El Du Pont de Nemours (DD) $30B = 903M shares X $33.72

29) *Travelers (TRV) $27B = 513M X $52.59

30) *Alcoa (AA) 13.5B = 1.02B X $13.30

*We use this simple yet important information in our Psychological Financial Fusion (PFF ratio) analysis. Please review the names again and imagine the consequences of legislation like: "Cap and Trade" or the "Employee Free Choice Act (EFCA)" on valuations.

*The five technology names of MSFT, IBM, CSCO,  HPQ, and INTC carry a $790B market capitalization and a $250+ price weighting. Will a strong dollar help or hurt sales and earnings? Which Dow stocks would perform best in a strong dollar environment in your opinion?

*XOM carries the largest market cap, nearly 23X larger than the smallest, AA. And the most important Dow stock is IBM, at $127, since the Dow is a price weighted index. Least important components are AA, at $13.30, GE at $16.06, and BAC at $16.66.

POTC believes market capitalization is a stronger metric than price, reason why money managers follow and are judged by the S&P 500. The S&P 500 is a market capitalization weighted index.

*The fact XOM's market cap is nearly double IBM's must not confuse you, since a $1 move in IBM is equivalent to nearly a $2 move in XOM as far as Dow volatility. The price weighted nature causes many to wince, yet it makes for great volatility and trading opportunity to those who are educated.

Ever wonder why Goldman Sachs (GS) isn't part of the Dow with its Verizon like market cap and more importantly $156 price tag? GS would be the most important Dow component overnight, eclipsing IBM by $30.

*Could AA get booted out of the Dow and be replaced by GS? POTC guesstimates either GS becomes part of the Dow by 2012, or they will go private if the govt noose tightens, but especially with asinine policies like the Volcker Rule, which would undercut or ban some proprietary trading.

*The only stock that has a longer symbol than name is MMM, or 3M.

You can play many fun games and devise interesting scenarios for the Dow Jones Industrial Average. And now you realize how not industrial the Dow has become. It would be smartly renamed the Dow Jones Technology Index.

Hopefully Warren Buffet's purchase of Burlington Northern Santa Fe in November of 2009 is a sign U.S. manufacturing will come back. We remind today's Dow index has no transportation companies, and the first index of 12 stocks was comprised of 9 railroads, back in 1896.

Perhaps Buffett agrees with our futuristic piece that Obama's legislative goal is to cause a labor revolution in China, leveling the manufacturing cost conundrum and paradigm.

*Only Thomas Edison's genius of GE survived from the original index of 114 years, and the amount of spilts is reflected in its 10.67B shares outstanding, yikes! GE has more shares than any other component and nearly 21X as many as TRV, which has the least amount at 513M shares. POTC likes TRV, but especially in broad market pullbacks.

Will the Dow reflect a strong American manufacturing sector in our lifetimes? It's difficult to believe a one-sided service sector economy will propel GDP and enable paying down trillions of dollars of debt created under the current Administration.
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If manufacturing doesn't make a comeback and "Made in the U.S.A." is not resurrected soon, the U.S. could face becoming the 23rd province of China.

The Dow Jones was the global barometer of free-market capitalism and wealth for well over 100 years, and it will be interesting to monitor its changes as the geopolitical and socioeconomic landscapes of our world shift.

Thanks for reading and spreading our efforts to friends and family, we were very appreciative.

The Psychology of the Call team will continue to educate as well as send subscribers thoroughly researched stock and option trade alerts. The last few have turned out pretty well, especially: GOOG, BIDU, FSLR, and ICE. 

Dimon: CA Can Cause Contagion; Europe will Weather; $200M in Spending to Improve Trading Software Technology; POTC Thinks Stricter Regs will be Boom for Financial Software Cos ...

By Matthias Rieker

DOW JONES NEWSWIRES
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NEW YORK (Dow Jones)--J.P. Morgan Chase & Co. (JPM) Chief Executive Jamie Dimon said he remained cautious about the economic outlook, and that a double dip in the economy is still possible.
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Dimon, speaking Thursday during the bank's annual investor day, also said that trading revenue from investment banking "so far have been good this quarter," but "we don't know" how J.P. Morgan will reserve for credit losses going forward. "We are cautious."
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He said risk from potential sovereign defaults is hedged. "Greece itself would not be an issue for this company, nor would any other country," Dimon said. "We don't really foresee the European Union coming apart."
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California, however, could be another story. Given the size of the state and its economy, "there could be contagion" if the state would run into problems in servicing its debt, he said.
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He reiterated that J.P. Morgan would not raise the dividend until they are sure the banking environment has improved, and that the company's preference is to expand rather than buying back stock, unless growth opportunities are rare and the stock cheap.
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J.P. Morgan Chase & Co. (JPM) Chief Financial Officer Michael Cavanagh told investors about half of the bank's current reserve for loan losses is excess when losses come down.
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Also on Thursday, the bank's investment banking chief, Jes Staley, said J.P. Morgan doesn't plan any strategic shifts despite a "dramatically" changing regulatory environment.
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"We have to be innovative" to keep the investment bank at the top of the league tables comparing companies, but "we need to adjust our business model for changes to come," Staley said.
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Dimon, speaking on potential new banking regulation, said that higher capital requirements for capital markets businesses would not be "life threatening." Dimon said that the discussion about regulation in Washington, at times, doesn't "sound completely rational" and sometimes "hurts your feelings." But, ultimately, "I do think we'll end up at a more rational space," he said.
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Staley told investors the bank wants to maintain pricing discipline even when the market recovery will lead to new excesses driven by more aggressive competitors. J.P. Morgan "has to have the discipline to give up market shares" through pricing discipline and careful risk management, Staley said.
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Staley said he aims for a return on equity of 17% for the investment banking business, down from 21% last year, and slightly below the 18% J.P. Morgan generated in 2006.
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Staley predicted a decline in capital markets activities. Last year a big part of J.P. Morgan's capital markets activity came from banks raising capital, and J.P. Morgan was a leader in that area. In addition, profit margins in the fixed income businesses are coming down, he said.
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He also said the bank aims to improve its trading technology, increasing its investment in new technology this year by $200 million, to a total of $1 billion, to build a "best-in-class" trading system.
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The investment banking chief said J.P. Morgan has "not much room to increase headcount" this year, so the division's main expense remains variable compensation.
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"We have to pay competitively," Staley said. "Last year we needed to reorganize the environment we were in. We needed to be mindful. I don't think we are out of the compensation issue as a political matter. Our people have to recognize that [compensation] is a variable number" that it is tied to the performance J.P. Morgan.
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"All of Wall Street" needs to continue to focus on the issue of compensation, he said.
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Meanwhile, J.P. Morgan Chase's head of asset management, Mary Erdoes, said the earnings of her division "should double in a very short time."
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Erdoes said the firm will continue to invest in technology and retail distribution of J.P. Morgan's mutual funds, and expects to grow faster abroad. Only one-third of the division's results come from abroad, and it should not be that way, she said.
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J.P. Morgan is also testing a new credit card product for high-net-worth individuals, she said.
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J.P. Morgan's chief executive of card services, Gordon Smith, said delinquencies have continued to improve. Improvements late last year were mainly in the decline in new delinquencies for customers who missed their first payment. However, in recent weeks the trend has been trickling down into those groups of customers who are 60 and 90 days late with their payments.
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However, the improvement is less pronounced as improvements in early delinquencies, Smith said. That is a material change, he said. J.P. Morgan is also seeing improvements in bankruptcies among card customers.
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"We are seeing that it is very difficult to get new jobs into the economy," Smith said. But customers with little debt have started spending more, particularly in markets where housing prices are falling less than during earlier parts of the crisis.
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-By Matthias Rieker, Dow Jones Newswires; 212-416-2471; matthias.rieker@dowjones.com
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Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http://www.djnewsplus.com/access/al?rnd=wHuqRwwQiQU3%2BJwivXIRGA%3D%3D. You can use this link on the day this article is published and the following day.
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(END) Dow Jones Newswires
February 25, 2010 17:53 ET (22:53 GMT)
Copyright (c) 2010 Dow Jones & Company, Inc.- - 05 53 PM EST 02-25-10
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POTC Guesstimates GOOG Will Go From Low $520's to $600+ by mid April ..

Google

George W. Bush Appointee Casey's Free-Market Sanity is Reason Why Equities Spiked Sharply After 10:30ET ..

By Fawn Johnson

DOW JONES NEWSWIRES
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WASHINGTON (Dow Jones)--U.S. Securities and Exchange Commissioner Kathleen Casey on Wednesday said she would vote "no" on a final rule to curb short selling in certain securities that are experiencing severe declines.
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The SEC is set to vote on the rule Wednesday.
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Casey last year voted in favor of a proposal to seek information on whether short selling, in which investors attempt to profit by selling borrowed shares of a stock that is losing value, contributed to the widespread market downturn of the last few years.
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In a statement Wednesday, Casey said there is no empirical evidence that short selling contributed to market downturns.
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Casey, who holds a Republican slot on the commission, said the commission shouldn't act "simply to say we have acted."
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-By Fawn Johnson, Dow Jones Newswires; 202-862-9263; fawn.johnson@dowjones.com
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Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http://www.djnewsplus.com/access/al?rnd=QsG3LaF8dURIzDAUoKZP1w%3D%3D. You can use this link on the day this article is published and the following day.
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(END) Dow Jones Newswires
February 24, 2010 10:50 ET (15:50 GMT)
Copyright (c) 2010 Dow Jones & Company, Inc.- - 10 50 AM EST 02-24-10
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ALERT: Global Warming is Due to Human Activity, Insists EPA's Lisa Jackson, Capitalist Pig Bob Smells a Big Govt Rat ...

By Siobhan Hughes

DOW JONES NEWSWIRES
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WASHINGTON (Dow Jones)--U.S. Environmental Protection Agency Administrator Lisa Jackson on Tuesday defended the agency's decision to go forward with regulating greenhouse-gases, affirming her support for studies that say that the climate is changing because of human activity.
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She also emphasized that new regulations to limit emissions from power plants and other stationary sources would be phased in, giving Congress time to write laws instead. She told reporters after testifying on Capitol Hill that the EPA still plans to finalize those regulations in March, though a delay in the effectives of the rules will give companies time to plan for new regulations in the event that Congress doesn't act.
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"It's very respectful of our prerogatives," Sen. John Kerry (D., Mass.) said of the EPA's decision to delay the regulations. "I think they want to give us the opportunity to legislate."
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The EPA chief portrayed her decision to delay the start of rules to 2011 as responding to lawmakers "of my own party" who fear that EPA rules will damage their local economies. The biggest threat is from Sen. Jay Rockefeller (D., W.Va.), who last week lobbed a hardball at the EPA when he led a group of Democrats in urging the agency to suspend planed regulations of greenhouse-gas emissions from power plants and other stationary sources. Many of those facilities use coal, a big source of revenue for West Virginia.
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The Obama administration's outreach appeared to pay off on Tuesday, when Rockefeller told reporters that he would not support an amendment from Sen. Lisa Murkowski (R., Alaska) who is seeking to block the EPA from regulating greenhouse-gas emissions. The Republican lawmaker has lined up her own supporters for the amendment, which could force Senators to cast an uncomfortable vote on a controversial issue in an election year.
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Rockefeller said that he couldn't support the amendment because it "obliterates all EPA's functions," especially the agency's plans to regulate greenhouse-gas emissions from motor vehicles. The amendment would overturn an EPA finding that greenhouse gases pose a danger to public health and welfare. That could undercut a carefully crafted deal on motor vehicle emissions, since "the actual rules are predicated on the finding of endangerment," the EPA's Jackson warned the Senate Environment and Public Works Committee on Tuesday. The motor vehicle rules are to be finalized next month and will take effect beginning with cars made for the 2011 model year.
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The direction that the Senate takes remains unclear, since lawmakers are in a stalemate over climate legislation. Rockefeller said that his bill would give the EPA "the powers that they need to have" but would give more time for the greenhouse-gas rules for power plants and other such facilities to take effect. He said that an additional six- to 12-month delay beyond what the EPA has already announced would be appropriate.
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The Obama administration has been trying to start up a domestic electric vehicle industry, pouring billions of dollars into Michigan and Indiana to build the batteries and parts needed for a new generation of vehicles. But the demand for those vehicles is tied to federal fuel-efficiency standards, which effectively mandate that a certain share of the market consist of vehicles that run at least in part on electricity. Without federal standards, the demand for those vehicles is uncertain.
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-By Siobhan Hughes, Dow Jones Newswires, siobhan.hughes@dowjones.com, 202-862-6654
Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http://www.djnewsplus.com/access/al?rnd=jJxlthnersh%2FZz%2FRIMyvFw%3D%3D. You can use this link on the day this article is published and the following day.
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(END) Dow Jones Newswires
February 23, 2010 16:52 ET (21:52 GMT)
Copyright (c) 2010 Dow Jones & Company, Inc.- - 04 52 PM EST 02-23-10
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TRINA SOLAR (TSL) OPTION TRADE ALERT ..

POTC is working on an option trade alert based on our PFF ratio analysis for Trina Solar. All subscribers will receive this alert on Tuesday, February 23 between 12ET - 1ET. TSL reports earnings on Wednesday at 8ET.


We have performed our exhaustive PFF ratio analysis over the past 5 days in hopes of  giving you a trading advantage ...

Expect our option trade alert for TSL to hit your mailboxes Tuesday afternoon, between 12ET - 1ET. That'll give you 3 hours to review the anlaysis and decide whether it makes sense to trade.

In case you were wondering, the gentleman pictured is Mr. Jifan Gao, founder of TSL in 1997, still Chief Executive Officer today.

FIRST SOLAR OPTION TRADE ALERT WAS SENT at 11:30ET ..

The Psychology of the Call team (POTC) has sent our PFF ratio analysis ahead of schedule, congrats to all subscribers.

Though there are never any guarantees, we feel very confident in this trade. It was in strict adherence to the  11 Commandments and  thoroughly researched.

POTC spent the 7 days listening to Q2, Q3, and the Dec 16th updated guidance CCs, and performing hours upon hours of fundamental and geopoltical analysis.

If not a subscriber and would like to receive our next PFF ratio option trade alert, please send an email to: Psychologyofthecall@gmail.com with
"SUBSCRIBE" in the subject line.


Live CC link to FSLR's Q4 2009 earnings presentation scheduled for Thurs, Feb., 18th at 4:30ET:
http://investor.firstsolar.com/phoenix.zhtml?c=201491&p=irol-EventDetails&EventId=2734388

First Solar, Inc.
Herr Jens Meyerhoff: Chief Financial Officer
602-414-9315
investor@firstsolar.com
or
Mr. Larry Polizzotto:VP of Investor Relations
602-414-9315
investor@firstsolar.com
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Norway's Yara Buying Iowa-based Terra (TRA) for a 25% Premium to Friday's Close; Here are TWO Other Stocks to Watch:

With China leading the world in terms of fertilizer usage over U.S. by more than 2:1 (19% - 9%), Oslo-based Yara is looking to take andvatage of the 60% drop in natural-gas prices in last two years and secure this geosociographic business opportunity:
http://www.nytimes.com/2010/02/16/business/16yara.html?partner=yahoofinance

Interesting nugget: 2.9M shares of TERRA (TRA) SHARES ARE TRAPPED SHORT, previous month's short interest was 3.7M, so 22% of hedge funds squared up,  just in time.
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Here are two stocks POTC recommends subscribing to for technical alerts and eventually trading volatility over the next several days to weeks:

1) AGRIUM INC (AGU)
2) THE MOSAIC CO. (MOS)

Developing countries have become a boom for fertilizer companies, click image to view:

Happy Presidents' Day to U.S. subscribers, and to a profitable four-day week ahead to all,
POTC-
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A BLESSED AND HAPPY CHINESE NEW YEAR; MAY THE TIGER BRING YOU EXCELLENT HEALTH AND GOOD FORTUNE ..

The Chinese calendar associates 2010 with the "Tiger", and underlying element of "metal". 

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The Year of the Tiger is celebrated in areas with large population of Chinese ethnic: Korea, Tibet, Bhutan, Mongolia, China, Hong Kong, Vietnam, Singapore, Taiwan, Indonesia, Laos, Malaysia, Philippines, Thailand, Japan, U.S. Australia, and Canada. 

The two weeks leading up to the Chinese 2010 New Year, February 14th, were filled with parties and gift giving, similar to what is experienced in the U.S. from mid December through January 1st. Thus, from a business standpoint, this quarter is the most positive of the year for Asian corporations. Perhaps reason for BIDU's upbeat conference call and even GOOG's political divot, POTC's thinks so. 
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The Psychological Financial Fusion (PFF ratio) we've devised for stock and option trade alerts incorporates a great deal of common sense, which we believe is more important than solely relying on charts and or some robotic trading system. 

May your 2010 be filled with happy family moments, good friends, delicious food, some drink, and more financial successes than 2009. Wishing, Capitalist Pig Bob on Facebook along with the entire Psychology of the Call team.

Using the S&P 500 to Enter and Exit Trades ...

Successful traders know that anticipating market direction is extremely important. Do your current long and short positions reflect the direction of the S&P 500 after President's Day weekend?

The S&P 500 sold off in the morning to 1,063, yet closed at 1,076, 10 points higher than last Friday's 1,066. So net-net, the broad market was up for the week, not bad considering the bad geopolitics regarding sovereign debt in southern Europe, specifically Greece.

POTC believes it's extremely important, from a trading standpoint, to follow the S&P 500 and have an  opinion on its direction from week to week.

If you have a charting service you like, that's great, but if you don't, or would like a second opinion on market direction, just click any of the links in this piece and begin following the biggest and baddest in the world, America's Stalwart Index: The Standard and Poors 500.

Congratulations to all subscribers who profited from the BIDU trade based on on our PFF ratio analysis. Though we recommended an early exit, a return of 133% - 150% in 30 minutes of trading is still excellent.

We're looking forward to trading FSLR next week. We've spent many exhaustive hours researching, thinking, crunching, and feeling; here's looking-forward to Thursday, February 18th !

The Psychology of the Call team wishes everyone a happy and healthy weekend.

POTC's Option Trade Alert for First Solar (FSLR) is Coming Soon ...

POTC is working on our proprietary Psychological Financial Fusion (PFF ratio) option trade analysis for FSLR. We will send an in depth time-sensitive email to all subscribers on Thursday, February 18th, at 3:30pm ET.
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E-mail: Psychologyofthecall@gmail.com with "FSLR" in the subject line if interested.
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Time and price are key to your success in trading stock options, as well as strict adherence to POTC's 11 Commandments.

The PFF ratio incorporates analysis fusing micro and macro trends, backward and forward-looking in reagrds to: technicals, fundamentals, as well as politics. 33.333% of the ratio is charting.

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Sincere thanks to every person who expressed appreciation through emails in regards to: GOOG, CME, and BIDU, as well as to our Chief Political Correspondent on Facebook, Capilatist Pig Bob.

Without your appreciation and support of our only sponsor, our efforts would  become dull and muted.
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Please find 2 minutes in your day to watch the timely video on market direction from our technical partners in the left margin.

We believe the video is heartfelt and professional,  and we agree with Adam's historical and directional analysis regarding the Dow Jones Industrail Average.
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Live CC link to FSLR's Q4 2009 earnings presentation scheduled for: Thurs, Feb., 18th at 4:30ET:
http://investor.firstsolar.com/phoenix.zhtml?c=201491&p=irol-EventDetails&EventId=2734388

First Solar, Inc.

Jens Meyerhoff: Chief Financial Officer

602-414-9315

investor@firstsolar.com

or

Larry Polizzotto:VP of Investor Relations

602-414-9315

investor@firstsolar.com

Baidu.com Inc. (BIDU) Earnings After Close Today:

Our PFF ratio for BIDU reveals ...
Please send an email to Psychologyofthecall@gmail.com to receive our analysis.

                                                                     

Q4 estimates are for $180M in sales and $1.65 in earnings.
NOTE: Fast Money's Talking head, Tim Seymour, is negative ahead of the release ...

Dow Jones Breaks Below 10,000 First Time in Three Months ...

The index's creator: Charles Dow (1851 - 1902)
1) ALCOA AA
2) AMERICAN EXPRESS AXP
3) BOEING BA
4) BANK OF AMERICA BAC
5) CATERPILLAR CAT
6) CISCO SYSTEMS CSCO
7) CHEVRON CVX
8) DUPONT DD
9) WALT DISNEY DIS
10) GENERAL ELECTRIC GE
11) HOME DEPOT HD
12) HEWLETT PACKARD HPQ
13) INTERNATIONAL BUSINESS MACHINES IBM
14) INTEL INTC
15) JOHNSON & JOHNSON JNJ

16) JP MORGAN CHASE JPM
17) KRAFT FOODS KFT
18) COCA COLA KO
19) McDONALDS MCD
20) 3M MMM 
21) MERCK MRK
22) MICROSOFT MSFT
23) PFIZER PFE
24) PROCTER GAMBLE PG
25) AT&T T
26) TRAVELERS TRV
27) UNITED TECHNOLOGIES UTX
28) VERIZON VZ
29) WAL MART WMT
30) EXXON MOBIL XOM
After clicking the DJIA chart to the right, notice it took 26 years for the index to climb from 1K to 10K, though only a number, round numbers matter to chartistoes more than most political science and accounting majors know. Therefore POTC's PFF ratio incorporates all three studies.

POTC Forewarned of the Foundational Crack in Banking/Credit, Good Reason to Subscribe to Verifiably Insightful Blogs ...

Here's a reminder of how we addressed the "Foundational Crack" in banking back on February 28, 2008.
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This information below has been copied and pasted from this blog. POTC wanted to highlight we were ahead of the herd, and if you were a reader and subscriber then, you may have saved a lot of money.
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The following piece titled: "The Foundational Crack Revealed/Mass Confusion" predated the beginning of Bear Stearns' death spiral which started on that bloody St. Patrick's Massacre of Monday, March 17, 2008; a full three week warning from this blog posting.  

Here's looking back in our rear view mirror to 2/28/2008:
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Psychology of the Call did finger Alan Greenspan yesterday for causing the "irrational speculation" in the Real Estate/Mortgage market, and today the fallout continues. The Unemployment numbers released this morning are inching up to disastrous levels. Greenspan's lowering of the Fed Funds rate to 1.25% unleashed a steroidal effect across the U.S. economy and now the credit and stock markets are in panic mode. The foundational crack has been revealed and it'll take a lot more than carpenters to fix it.
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--Wall Street prefers the ability to forecast the future, giving them an understanding of what to do with their capital. Wall Street prefers growth orientated momentum on both sides of the accounting ledger, but neither stocks nor bonds feel comfortable here.
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--A good childhood buddy in the Corporate Offices of Goldman Sachs in Manhattan, New York is beginning to question the legitimacy of what is left in the subprime market. The credit spreads are causing bewilderment in the most powerful Wall Street Institutions. Now that we know that, do we advise our readers to buy stocks today? Absolutely NOT! We actually see more lay offs on the horizon at major Wall Street houses, so exhibit caution.
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We see the "biggest hammer being wielded" in anticipation of the Unemployment Number on March 7. This hammer will not be kind to those who are long stocks and investors should shy away from adding to any positions until after that date.. Your Cash Will Be King as you sit and listen to the confused talking heads on CNBC and other for-profit channels.
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As for Bernanke, the tone of his delivery and the trembling in his voice will only get worse after this morning’s employment data – ugly, ugly, ugly. What is the Fed to do? We’re not Economists and we wouldn’t wish Bernanke's job on Mahmud Ahmadinajad (well, maybe we would). But we urge our readers to sit back and watch the show, with cash and buttered popcorn in hand; don't step in what we see as a deep foundational crack.
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--Happy trading and remember, Psychology of the Call matters.
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Global Movement Toward Quixoticism on a Par with Narcissism; Days of Chivalric Free-Market Romance in Danger under Obama ...

Pimco's Heavyweight Champion of Safe Money, William H. Gross, appeared on CNBC after the enigmatic unemployment data long & palefaced.

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He tactfully and effectively jabbed at the developing socioeconomic conundrum when addressing where future global economic growth would come from:.

"We're now delevering instead of levering, and we're now regulating instead of deregulating".

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POTC added this emphasis we feel Gross meant to convey in a time constrained CNBC episode:

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"Businesses and consumers are now delevering (selling assets and cutting expenses/workers), instead of levering (buying assets and investing in R&D and workers), all in the midst of governments now regulating banks with new rules and taxes, instead of deregulating and allowing free-market forces to reward the winners and punish losers".

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POTC does not believe any global movement toward socioeconomic quixoticism today is sexy, even with our Cowboy leading the charge. We'd prefer kill or be killed Darwinian-type markets, where winners and losers, booms and busts, and profits and bankruptcies are all critical elements in order for the American Dream to thrive.

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We're against any fiscal or social policies that would destabilize Wall Street and stain the art of risk taking. Any legislation that would layer government on the private sector: Public Heathcare, Cap and Trade Tax, and the Employee Free Choice Act (EFCA) are all dangerously quixotic to us Old-Fashioned free-market Chivalrists.

Giant financial minds, like Gross, agree that Western European Governments' falling in love and subsidizing alternative energy projects has turned out to be a bust, hence Obama not backing away from such foolhardy idealogies in midst of 8.4M unemployed borders on narcissism.

POTC credits Gross for supporting the socioeconomic argument we've been making even before Obama took office. Today Gross is alerting investors to this emerging paradox of flawed global governmental idealisms in the midst of global economic crises.

Lower Manhattan's capital spigots must flow unrestricted, with no uncertainties of useless government  regulations ahead. POTC believes the hard lessons learned in real estate and banking would be better corrected and adjusted by free-market forces. Today's current economic woes mustn't be used as a tool in favor of stoking class warfare, but especially against Wall Street; the Street that donates more to charities than most countries.

Larry Kudlow said it best on CNBC's morning show "The Call" with Melissa Francis:

"Obama's policies are focused on eating the rich". POTC is worried this insane ideology could win out and choke-off risk-takers.

Citizens in free-market societies must be leary of governments that consistently attempt to legislate policies that would undermine the foundation of entrepreneurship. Government's ability to outlast the private sector post severe depression, God forbid a terrorist strike for example, is why POTC is vehemently opposed to current policies of: print-print-print, spend-spend-spend, tax-tax-tax, and regulate-regulate-regulate.

Such long-term fiscal policies work to starve the private sector and stimulate a very Un-American banking paradigm, especially if the worst case scenario of terrorism unfolded: Federal Reserve Bank would take on title: "Lender of Only Resort, instead of Last Resort." Pardon our playfullness with only and last, as the socioeconomic ramifications betwixt the two are merely socialism vs capitalism. Cheers to Wall Street, and Long Love for $upply-$ide Economists like Larry Kudlow.   

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Thanks for reading and supporting the Psychology of the Call blog, Where Forward-Thinkers Evolve ... .....

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Chicago Mercantile Exchange (CME) Congratulations ...

Congratulations to all  who successfully traded CME based on Wednesday's subscriber trade alert.

The FEB $290 Put Options closed up 130%. Anytime a trader scores that kind of return in a single day, it's recommended to book profits and enjoy the rest of the day with friends and family.

Hiding in cash clears your mind and does wonders for your psyche. An updated trade alert was sent to all subscribers at 11ET.

Most financial advisors are hogtied by corporate policies and or ignorant to the facts of option trading.

Please continue using the 11 Commandments.
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Sign up for our time-sensitive stock option trade alerts based on our proprietary PFF ratio: Psychologyofthecall@gmail.com Add yourself to a smart list of traders who demand more scientific methodologies to establish trades than merely backward-looking charts.

POTC's Time-Sensitive Option Trade Alert for Chicago Merc (CME):

Wednesday Greetings to you,


CME reports earnings before market open tomorrow (Thursday). The PFF ratio signals shares ...
If you are interesting in receiving our time-sensitive option trade alerts, please send an email to: Psychologyofthecall@gmail.com

Saturday's Prediction of a 2.5% S&P Bounce Just Printed at 1,100 on Very Light Volume; Cash Should be King Right Here, and Aggressive Traders Should Consider Going Short ...

Some short Option candidates to consider (all symbols are clickable for more technical information):

ISRG at $334
AAPL at $195
FSLR at $118
GS at $156
RIG at $89
OXY at $80
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POTC's 2.5% S&P rally has unfolded, we now believe aggressive traders should be in cash and more aggressive traders, short. An S&P pullback to that gap at 1,016 could send the six aforementioned stocks down 10% rather quickly.

We remind you of the importance of capping option losses at 15%, and accepting them as part of a disciplined trading strategy.
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There will be plenty of 100%+ option trades in the future, and the only way to experience those future winners is to stay in the game by managing losses and trading small.
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No long-term successful trader holds losing trades without either an electronic or mental sell stop/limit.
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Trading losses must be managed, and the 11 Commandments were designed to make sure you never fall in love with a loser.
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A fine trendy Tuesday is wished to all subscribers from the entire Psychology of the Call team.

An Emerging Paradox in Investment Finance: Ratcheting Up Fees/Taxes and Regulations, in Conjunction with Talking Down Proprietary Trading, then Hoping Banks Make Loans, Ay Karamba ...

WASHINGTON (Dow Jones)--The U.S. Securities and Exchange Commission would be able to anew investigators, examiners, and other staffers if President Barack Obama's budget request for close to $1.3 billion for the regulator is granted by Congress, SEC officials said Monday.

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The boost for fiscal year 2011, which begins Oct. 1, would represent about a 10% increase in the SEC staff, from about 3,800 currently to just under 4,200.
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But the White House has requested that $24 million of the proposed $147 million SEC budget increase be held back until Congress passes a broad financial overhaul bill. That would put on hold about 38 new full-time jobs, most of them for the Enforcement Division and Office of Compliance Inspections and Examinations.
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"If enacted, the President's request will do a great deal to help us keep pace with the continuing growth of the markets and provide necessary resources to support important regulatory initiatives in 2011," SEC Chairman Mary Schapiro said in a statement
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If Congress succeeds in passing a financial overhaul measure, the SEC will see its responsibilities increase. Advisers to hedge funds and other private pools of capital would be required to register with the SEC under a bill passed by the House late last year and a measure now being mulled in the Senate.
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SEC officials said the hedge-fund provision would add about 2,000 registered entities to the SEC's watch. Right now, the agency examines about 11,500 registered firms.
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The president's budget would enable the agency to add 131 new full-time investigators to the Enforcement Division and 72 new inspectors in the Office of Compliance Inspections and Examinations, or OCIE.
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In the Enforcement Division, the SEC estimates it will be able to open 75 additional inquiries, conduct 314 additional formal investigations, and file charges in 70 additional civil or administrative cases with the staffing levels requested by the White House.
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In the OCIE, the SEC said the budget will allow it to conduct 50 additional exams of investment advisers, 25 additional mutual fund exams, and 75 examinations of newly registered fund advisers, assuming the legislation is enacted.
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The SEC's new division of risk, strategy, and financial innovation would get 19 new full-time staffers under the president's budget request. Fourteen full-time staffers would be added to the Investment Management Division.
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The White House is asking for 33 new full-time staffers in the Division of Trading and Markets and 26 additional workers in the Corporate Finance division.
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The SEC budget is fully offset by fees it collects from the institutions it regulates. Next year, the SEC said it will set fees at levels sufficient to raise $1.7 billion in collections, an increase of $220 million over the previous year.
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A copy of the full SEC budget request is available at http://www.sec.gov/about/secfy11congbudgjust.pdf.
-By Fawn Johnson, Dow Jones Newswires; 202-862-9263; fawn.johnson@dowjones.com
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Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http://www.djnewsplus.com/access/al?rnd=qs15tWrVLLdzr4eA1z8i2A%3D%3D. You can use this link on the day this article is published and the following day.
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(END) Dow Jones Newswires
February 01, 2010 15:55 ET (20:55 GMT)



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