I want these markets to cool down a little, as it's getting near that time of year when I start putting down my early grain spreads.  Grain spreads are really my bread and butter, and I don't like putting them on with all the volatility as the risk is too high.

I need to fire up the coffee maker, as I suspect that it will be a long night.  I've spent so much time in front of a screen as of late that my skin has developed a sort of pallor.

Jeff

The first few paragraphs of Chapter 2 provide a summation of what successful speculation is all about.  His advice about trading panics stands up well a hundred years later.  He said:

But few gain sufficient experience in Wall Street to command success until they reach that period of life in which they have one foot in the grave.  When this time comes these old veterans of the Street usually spend long intervals of repose at their comfortable homes, and in times of panic, which recur sometimes oftener than once a year, these old fellows will be seen in Wall Street hobbling down on their canes to their brokers' offices.

Then they buy good stocks to the extent of their bank balances, which have been permitted to accumulate for just such an emergency.  The panic usually rages until enough of these cash purchases of stock is made to afford a big, "rake in."  When the panic has spent its force, these old fellows, who have been resting judiciously on their oars in expectation of the inevitable event,  which usually returns with the regularity of the seasons, quickly realize, deposit their profits with their bankers,  or the overplus thereof, after purchasing more real estate that is on the upgrade, for permanent investment, and retire for another season to the quietude of their splendid homes and the bosoms of their happy families.

Mr Clews did a good job summing up how one should work during a panic.  I've known other people who have studied this book in the past as it's a classic.  They all made a lot of money in the markets by following the wisdom within the pages.

Jeff

My protege busted my balls for making him cover his emini's.  He still was short one contract over the weekend, and he shorted a few more today, early.  He covered when the market started rallying, and made some decent money.  Now, I just have to work on his hubris.  He digested Clewes excellent book(Fifty Years in Wall Street) that I gave him for homework over the weekend.  He did get a better understanding of panics, andlearned that all panics share some of the same important elements.  It was good to let the kid learn some history, and also learn that things were the same 150 years ago as they are today.  We might have faster communication and computers today, but all panics have fear behind them.  It is a very valuable lesson to learn when to duck your head while everyone is panicking.  The first paragraph of the book contains one of the most valuable trading lessons on earth.

Time for 40 winks.

Good trading tomorrow,

Jeff

The grains are getting hit really hard and I don't know where there will be a bottom.

This market is totally fascinating.

Europe seems to be having as many problems as the USA.  Russia closed a couple of exchanges today.

The real bad news.  Our local Waffle House is closing, as the franchisee went bankrupt.  I will miss Waffle House, as it's one of my favorite places on the planet.

Jeff

Forex swap is in a way a borrowing mechanism. You basically borrow one currency while lending another for a selected period of time. In other words swap is interest rates for the currency pairs you sell or buy. Depending on the pair, you may either earn or pay swap interests. 

Forex swap means that you can buy/sell a base currency today and sell/buy that currency sometime in the future. For example, let’s say you bought fixed amount of Euro for Dollars and sold those Euro 3 months afterwards for Dollars. This is defined as Euro Swap. 

So, how can forex swap help you profit? Consider an example: 

Let’s swap US Dollar and Euro. Forex trader enters a swap and buys $100,000 with exchange rate of $0.1 per euro (yeah right! It’s just an example!). At the same time, another trader agrees to sell in 3 month the same $100,000 dollars to buy Euros at the exchange rate of $0.09. During this trade the trader makes up to 50,000 euro profit because the value of dollar changed. 

In other words, forex swap is when the trader and the broker trade one currency for another at an agreed rate and then convert those selected currencies back at a selected date in the future, at the previously agreed exchange rate. The common forex swap involves the combination of a spot transaction and a forward transaction.

Read on here: http://www.forexexplore.com/blog/viewpost/448.html

(Source: http://www.forexexplore.com)

I suspect that a room full of this would keep the bears at bay.

One could meet a lot of margin calls with this pile.

Jeff

Jeff

I made a mistake and turned on the talking heads on CNBC right after the close.  Seriously, I wonder if any of them have ever had to make a profit.

My day was spent keenly watching the markets, without doing any trading.  I really can't put on any more positions, as I'm maxed out at my risk level, and I never change my risk level.  Anyways, my positions didn't do too badly, and it was quite a week.

Now the states are running out of money.....very interesting.

My protege is mad at me, as I made him close 4 out of his 5 ES contracts, as his account size vs. positions can't withstand the risk of a weekend.  He wants steady action, and I see that there is a bit of gamble in him. I'll have to cure him of his desire to gamble.  I gave him a copy of Clews book, "50 Years in Wall Street" to read by Monday.  I want that book back, as it's a first print.  If that book is in publication anywhere, or you can find a copy of it, I strongly recommend it.

Another book I've been reading is Derren Brown's excellent "Tricks of the Mind."  I won't tell you anything about it until I get around to writing a short review, but will say that it has many a good trading lesson.

I'm going to  buy that Leroy Neiman serigraph this weekend.  It's still for sale, and I want it. In fact, there's a few different exchange related works that he did, and I might buy one of each.

Jeff

Capitalism is still alive and well.

I got up at 3:30 AM, glanced at the action and promptly went back to bed.

Today will be a defensive day for me, trying to rest after playing a hard offense that was surprisingly weak.  My A game hasn't been evident for the past couple of days.

The short euro trade is the brightest spot in my universe right now.  The only problem with  this trade is that it's been painless, in fact it's been too painless.  Makes me wonder when I'm going to have to pay the piper.

I wonder if there's going to be a rate cut.

I wonder where gold is going, and how low oil can go.

I'm confused about this "Bailout" and wonder what will happen if it doesn't work.

With a 28% decline in the S&P from this time last year, how much more room is there on the downside. My friends have been holding a pool to see if/when the DJIA breaks 10,000.  I passed on that pool, as there's better ways to play it.

These markets and the price action has been fascinating.  One can learn a lot from these markets.  With all of the time I've been spent on the screen, I wonder if the "observer effect" really works on such a macro scale.

If and when will we see blood on the streets?

Jeff

Although I like to cover profitable trades with options, sometimes it doesn't work to my best interest.  I wasted a week and a half in the grains and pulled out an average profit of a nickel/bushel after it was all said and done.  My money could have better served me somewhere else. However, it still doesn't hurt to take a profit.

As I've said before, I feel like I'm a hamster running on one of those little wheels.

That being said and done, now I'll have to get my position back in the grains when this settles down.

My protegee has done well trading the e-minis with my direction, and is mentally taking credit for his success.  He's getting arrogant again, and finds my fear of the markets to be unfounded. I got rather heated with him when I mentioned his blowing out half of his account a few short days ago. I like his cockiness, and that's one thing that made me agree to give him a hand. He gets mad at me that I don't like to have CNBC on while I trade.  He also doesn't like my choice of music I play when trading, as I choose music to complement the tone of the market.  Sometimes, my music therapy works, it certainly doesn't hurt.

I've been rather focused, as of late, and need him to do research.  He doesn't like to do what he calls "scut work." Scut work is asking him to run programs analyzing data, looking stuff up, and getting me answers to my questions.

I've been trying to figure out what level oil will finally settle at.  I also am wondering about the oil vs. natural gas, and where that will settle.  I wonder where the dollar will seek a level.  How high can treasuries really go?  How low will the gold go? I think that I know where the stock market is going, and have a huge bet on that.

My fade indicators haven't given me any signals yet, and I'm patiently waiting.

I've got so many questions and so few answers.

GE selling stock isn't a good sign.

Jeff

How were people able to get the bill passed by the Senate?  Changes and gifts... 

Some key features of the Senate Bill voted last night:

Section 211: "Transportation Fringe Benefit to Bicycle Commuters"

Section 317: "Seven-Year Cost Recovery Period for Motorsports Racing Track Facility"

Section 310: "Extension of Mine Rescue Team Training Credit"

Section 314: "Indian Employment Credit"

Section 503: "Exemption from excise tax for certain wooden arrows designed for use by children"

House plan voted down: 125 pages

Senate plan: 451 pages (I hope they double sided)

Good to see our tax dollars are hard at work!!

Everyone should know my stance by now.  While it sucks that this has to happen...IT HAS TO HAPPEN!!  Without this bailout we are heading towards another depression, something no one wants.

The correct way to identify a Divergence and correctly draw divergence trendlines.

I still had a pretty good day in the markets, despite the fact that I was waiting for the python to bite me when I least expect it. His python can be pretty mean, especially when he's hungry. He also bites, unprovoked, and the bite is painful.

My plan is to go over to the pet store, get a rat,  and put him in a box in the living room.  Hopefully, that will attract the python and I can grab him.

As I said before, this really threw me off my game.

Jeff

One might expect the grains to open a bit higher this morning.  However, there's 6 hours until the grains open and a lot can happen between now and then.  Time to crank up the coffee maker, as it's going to be a long day.

Gold looks interesting.

Jeff

In light of this financial crisis, and inspired by a friend inspired by the color gray, I thought it might be time to gamble on those experiencing unfortunate misfortune by preying on those less fortunate.

It’s pretty simple. You have to guess where the Dow will be when the first jumper hits the pavement. First to claim the number gets it. Add your guess to the comments to be added to the board. Closest guess wins. 

The gauge is the Dow Jones Industrial Average (DJI), which you can find here: The Dow Right Now
 

Should any discrepancies erupt in determining the index versus the time of death, I reserve the right to make the final call based on whatever means I deem appropriate and the results are not subject to challenge or oversight. Other methods of suicide will be considered and traders should be encouraged to leave notes if not considering jumping.

Traders with suicide attempts (and subsequent failures) will be disqualified, as attempted suicide is a sign of mental illness and not desperation. In addition, suicide is illegal and we cannot support or reward lawbreaking.

Presently, this is how it's shaping up:

9950 - Kazys

9800 - Smoghat

8001 - Robert

6700 - Brandon

**THESE WORDS OF WISWOM ARE FOR INTERNAL AND EXTERNAL USE ONLY!!**

If you had purchased $1,000 of Delta Air Lines stock one year ago, you would have $49 left.

With Fannie Mae, you would have $2.50 left of the original $1,000.

With AIG, you would have less than $15 left.

But if you had purchased $1,000 worth of beer one year ago, drunk all of the beer, then turned in the cans for the aluminum recycling REFUND, you would have $214 cash.

Based on the above, the best current investment advice is to drink heavily and recycle.

 

Cheers to that.

With all eyes on a bail out package, I try to look into a crystal ball and see if there will also be a  rate cut.  If so, I wonder how the yield curve will respond. Trying to apply logic, I still remain confused as to when and how all this added liquidity is going to be translated into hard inflation, despite the lower demand. I also remain confused about how the election is going to affect the market, as there's a good probability that both houses and the Executive branch will be of the same party.  If that is the case, I wonder what that will do to capital gains, and when they'll raise the rate. I wonder how the market will react through all of this election noise.  Although I've managed to keep my head above water throughout these trying times, I wonder when the next shoe is going to drop.  These times require a strong defensive game, with capital preservation a must. The equities are the bright spot today, and I've managed to hold on to my position, and that's what counts.

I need to get some sleep, and also work on finishing my book.  I've had such a case of writer's block, and keep going over what I've already written, trying to polish it up.  I feel rather guilty for neglecting my book this past week, and don't enjoy missing my self imposed deadlines.

Somehow, I've managed to muddle through all of this volatility and make a couple of bucks.  If I were to grade myself on performance, I'd give it a solid "B."

One thing I need to do is reduce my intake of caffeine, as it leaves me very uncomfortable when I'm trying to unwind.

Jeff

The DJIA lost 777 points yesterday.  The last time I saw 777 appear was on a slot machine in Vegas, and and my lovely wife won a big jackpot.

Not that I believe in the concept of luck, as luck doesn't exist, but this coincidence was pretty funny.

Jeff

Sarkozy président du monde mondial, et DSK l'invisible pessimiste.

Merci à Michèle pour son idée d'affiche ;-)