“Economic history is a never-ending series of
episodes based on falsehoods and lies, not truths. It represents the
path to big money. The object is to recognize the trend whose premise
is false, ride that trend, and step off before it is discredited."
I believe that gratitude is an important quality. And readers know that Thanksgiving is my favorite holiday. It is about being grateful for the bounty of land that nurtures our body and grateful to our families who nurture us--body and mind. What better way than to celebrate these things than over a shared meal?Mental conflict that occurs when beliefs or assumptions are contradicted by new information. The concept was introduced by the psychologist Leon Festinger (1919–89) in the late 1950s. He and later researchers showed that, when confronted with challenging new information, most people seek to preserve their current understanding of the world by rejecting, explaining away, or avoiding the new information or by convincing themselves that no conflict really exists. Cognitive dissonance is nonetheless considered an explanation for attitude change.
As you can see, quite a bit of volume came in two days before earnings---followed through on the second day with good volume and good price action. The third day--earnings--had the long black candle that you see in the chart above.
While I'll take an entry on technicals (volatility squeeze set up) as I did with Wuhan, I like to hold based on what I understand about the company's prospects. For a company with a 30% decrease in sales, I do not expect rises in inventory (171%) and receivables (15%)--they should be liquidating. These numbers are worrisome. Let's take a peek at the backlog:
Today is another transport day. I'm not sure if I'm driving, but I'll go to help. I'm hoping to take the day off, as I'm a bit under the weather--but no so much that I cannot drive if needed--a short jaunt to Fredericksburg.
The Federal Housing Finance Agency (FHFA) was created on July 30, 2008, when the President signed into law the Housing and Economic Recovery Act of 2008. The Act created a world-class, empowered regulator with all of the authorities necessary to oversee vital components of our country’s secondary mortgage markets – Fannie Mae, Freddie Mac, and the Federal Home Loan Banks. In addition, this law combined the staffs of the Office of Federal Housing Enterprise Oversight (OFHEO), the Federal Housing Finance Board (FHFB), and the GSE mission office at the Department of Housing and Urban Development (HUD). With a very turbulent market facing our nation, the strengthening of the regulatory and supervisory oversight of the 14 housing-related GSEs is imperative. The establishment of FHFA will promote a stronger, safer U.S. housing finance system. As of June 2008, the combined debt and obligations of these GSEs totaled $6.6 trillion, exceeding the total publicly held debt of the USA by $1.3 trillion. The GSEs also purchased or guaranteed 84% of new mortgages. Considering the impact of these GSEs on the U.S. economy and mortgage market, it is critical that we intensify our focus on oversight of Fannie Mae, Freddie Mac, and the Federal Home Loan Banks.I thought the highlighted text to be an eye-popping fact. There are two other GSE's: Farmer Mac (AGM) and the Farm Credit Administration--both serving agriculture. Readers may remember the lonely trade that I did not take--shorting AGM. Here's the post. Let it serve as a reminder that there are many jewels of ideas for trading that are not in mainstream media.
FHLBank members include thrift institutions, commercial banks, credit unions, and insurance companies. A financial institution joins the FHLBank district that serves the state where the institution's home office or principal place of business is located.
From website.
Source: July 2009 Report on Federal Home Loan Bank Collateral for Advances and Interagency Guidance on Nontraditional Mortgage ProductsFirst Federal of Northern Michigan Bancorp, Inc.
press release shows where you see the stock purchased from FHLB as well as the advances.
(Click image to view)
The main point of their argument is
that the state of mind of a man short
of the market is radically different from
the state of mind of one who is long.
Their whole study, in such a conversation,
is the mental attitude of those interested
in the market. If a majority
of the volatile class of in-and-out traders
are long, many of them will hasten
to sell on any sign of weakness and
a decline will result. If the majority
are short, they will buy on any development
of strength and an advance may
be expected.
G. C. Selden, Psychology of the Stock Market, p. 11
The oscillator (I use the Ulitmate Oscillator), is divergent from the price action in both indices. I look for these divergences, and I treat them as a heads up. 
Click to make larger
Yesterday was a long day. I did a double run (Richmond - Springfield) for the animal transport. We had two older puppies, one cat and 6 tethered dogs. Pups, small dogs and cats are always in crates. Tethered dogs pose some interesting logistics because they are riding in passenger vehicles (sedans/SUV's) of various sizes. Temperament, then, plays a large part in who rides with whom. Abbott was an 8 month old massive boy. He needed to be in a car by himself. He appeared to my eye to have some Akita in him. We agreed that he would ride as a single tether in the other volunteer's Passat.
One of my clients, who is also a very good friend, lets me use an extra company vehicle. It is a Ford Freestyle, and is perfect, as I can fold down all of the seats to make a 'van-type' back.
Alpha dogs (male are female) have to be considered carefully. I had three females. Sapphire rode shotgun (passenger seat) with me. I had two 'humpy-boys', and I had to crate one of them, Stanley. I tried some MacGyver contraption with a gate to keep my other humpy boy, Sampson, in line. It worked until one of the girls, Dana, took a dump about 10 minutes into the trip. I had to get off the interstate. Unfortunately, my protective covering was short by 2 inches. She had a 6-inch diameter dump, and managed to hit the uncovered portion. I got up what I could and covered the spot with a towel. But there was that 'odor' wafting about the entire remaining passage.
If you've ever ridden with a dog in your car, you know that they are very sensitive to changes in speed. So slowing down is some sort of 'signal' to them that they need to do a 'heads-up'. In this particular instance, I was stopped, and all heads and tails were up. That's when my MacGyver contraption failed. I'll not bore you with the details on the contraption, but it took me about 8 minutes to get everyone untangled--and somehow one of the leads which was clipped on the collar also managed to get clipped onto the gate (which is made from wire). So the dog basically was hung on the pen. Thankfully, none of them panicked, and none of them snipped or snarled at the other. They placed complete trust in me. Sapphire was interested, but she stayed in her seat.
I decided that my other humpy boy, Sampson, would just have to be loose. Thankfully, he responded to my voice when I yelled at him to settle down when he had "other" ideas. Stanley in his crate was snarling (not sure why as he was a really sweet boy--probably didn't like being thwarted), and Claire snapped back at him. I yelled at her, yanked on her lead, and she stopped and came forward. 30 miles later, they were all asleep, each resting their head on the haunch of another with Sampson's head on the lip of the bed closest to the front. (He did not like my yelling at him or anyone else, and he was anxious to please).
All in all I had to drive about 260 miles round trip. It makes for a long day. Sapphire was on her way to West Virginia to an adoptive home. Because your 'shotgun' passenger is so close to you during your trip, you always bond with them during the drive. This time was no different.
Here are Dana and Sampson. I did not have pics from the shelter for Claire and Stanley.
HPJ is another one. This one broke out along with the other lithium-ion battery producers.
The current price action suggest that it is fixin' to get ready to do something........
They were even downgraded by themselves to 'Sell' (From FINVIZ)
 Federal Financial Institutions Examination Council | Press Release |
| For Immediate Release | October 30, 2009 |
|
Financial Regulators Adopt Guidance on The Federal Financial Institutions Examination Council (FFIEC) released a policy statement today supporting prudent commercial real estate (CRE) loan workouts. This policy statement, adopted by each of the financial regulators,1 provides guidance for examiners, and for financial institutions that are working with CRE borrowers who are experiencing diminished operating cash flows, depreciated collateral values, or prolonged delays in selling or renting commercial properties. The financial regulators recognize that prudent loan workouts are often in the best interest of both financial institutions and borrowers, particularly during difficult economic conditions. This policy statement details risk-management practices for loan workouts that support prudent and pragmatic credit and business decision making within the framework of financial accuracy, transparency, and timely loss recognition. Financial institutions that implement prudent loan workout arrangements after performing comprehensive reviews of borrowers’ financial conditions will not be subject to criticism for engaging in these efforts, even if the restructured loans have weaknesses that result in adverse credit classifications.2 In addition, performing loans, including those renewed or restructured on reasonable modified terms, made to creditworthy borrowers, will not be subject to adverse classification solely because the value of the underlying collateral declined. The policy statement includes examples of CRE loan workouts. The examples, provided for illustrative purposes only, reflect examiners’ analytical processes for credit classifications and assessments of institutions’ accounting and reporting treatments for restructured loans. The policy statement reiterates existing guidance that examiners are expected to take a balanced approach in assessing institutions’ risk-management practices for loan workout activities. Policy Statement on Prudent Commercial Real Estate Loan Workouts (docx) (pdf) | |
There's my little HPJ....
If the broad market goes up, I believe this position will pop out of the apex. If the broad market goes down, then I think I've a pretty decent short set up.
Who knew that the market could be so easy!
