Ana_Idkit

Speaking of Bonuses, Cuomo Might Seek Return of Merrill Payouts – Morning Call 30 Jan 09

Whether this is the last year for big bonuses on Wall Street or not, the clawback reality might start earlier than one thought thanks to Andrew Cuomo. Cuomo continues to probe the situation at Merrill, and intends to ask Ken Lewis what he knew and when.

Andrew Cuomo, New York’s attorney general, may demand the return of $4 billion in bonuses paid by Merrill Lynch & Co. just before it was acquired by Bank of America Corp., a person familiar with the matter said.

Cuomo also wants to know what Bank of America Chief Executive Officer Kenneth Lewis, 61, knew about the accelerated bonuses and about Merrill’s surprise $15 billion net loss in the fourth quarter, the person said. Lewis fired Merrill’s CEO John Thain this month after the losses required more federal aid.

The attorney general’s office is looking at whether the companies’ shareholders had all necessary information about Merrill’s finances and whether federal bail-out loans to Bank of America were used properly, the person said, asking not to be identified because the investigation is confidential.

“No longer will this country stand for wasteful spending of tax dollars on bonuses for executives whose companies have taken huge losses and required taxpayer bailouts,” Cuomo said yesterday in a statement about bonuses paid at Wall Street firms that received funds from the Troubled Assets Relief Program, or TARP

Ed Goodman Jr asked if I’d explain what I mean about the ‘gap rule’.

The framework of the ‘rule’ has two phases:

1. The market generally will close at least 50% of an open-gap (i.e. an open that gaps above the previous close) in the first 60-minutes; and
2. If the market does not do this, we can expect a strong day in the direction of the gap.

The are a number of filters that I use:

• The setup does not work on every market. It works best in the S&P and 30-Year Bonds. I have not tried it on the 10-Year Notes and T-Bills. It does not work on Gold, and the Currencies.
• The open-gap must be at least mean +1 ATR of the current structure. If you are unfamiliar with Barros Swings,  use a 40-day ATR.
• If at the end of 60-minutes, the market has not closed at least 50% of the open-gap but is trading near extreme closest to the 50%, I would wait another 30-minutes.

The tactics I use with the open-gap are many, especially when combined with some other tools:

• Market Delta Volume indications
• Market Profile ideas: open relationship with the previous day’s value area; the type of open; where we  are trading relative to the open-range of 5, 30 and 60-minutes intervals.
• Larger time frame context: for example prior to the open-gap, have the market ranges been compressing (this makes a trend day more likely) or they have been experiencing above average range days (this makes a rotational day likely and therefore ‘fading’ is likely to succeed).

What is fading? This brings me to the two general strategies.

The first and most common is to fade the open-gap and the second is to ‘go-with’ with the open-gap looking for a trend day. By ‘fade’ I mean take a contra open-gap trade; by ‘go-with’ I mean take a position in the direction of the gap.

If I am fading a gap, I will usually take a position in the second 5-minutes. As a rule with an open gap, the market will spend the first 5 minutes moving in the direction of the gap. ‘Five minutes’ is not a fast and hard time but rather an indication of some time spent. Here Market Delta volume and Open-Range ideas are very useful.

Here’s an example for a ‘fade’ entry. Let’s say that:

• The context would favour a rotational day. And,
• The market gaps up and nearing the end of the first 5-minutes, we see Market Delta Volume signifying at least a potential short-term top.
• The market then closes below the low of first 5-minutes bar.

In this situation, generally, I’ll wait for a rotation back up to sell.As far as exit strategies for ‘the fade’ are concerned, here are some ideas:

• Stop: One place for the stop would be above the highs of the day plus filter
• Profit Target (core profit contract): a tick or two above the closing of the gap (if day-trading).

For trend days, if I were day trading, for core profit exits, I’d use a trailing stop and look to exit at 4:00 am EST – since a trend day usually closes in the extreme 25% of its range. Thus in an up day that has a range of 32 points, I’d expect the close to close within 8 points of the high.

Today, we are dissecting and examining one of my favorite markets … the Forex market. The Forex market is the biggest in the world and is traded on a 24/7 basis.

What makes these markets so exciting is the fact that they have a very strong tendency to trend, that is, once they get started in one direction they tend to continue in that direction for some time.

I learned how to trade Forex in the trading pits of Chicago where I was a member of the IMM, a division of the Chicago Mercantile exchange. The CME has grown dramatically over the years, and I have many fond memories of trading in the old exchange in Chicago. Today, you can trade the stock of the CME (NASDAQ_CME). That’s a good idea for our next video, let us know if you would like to see a video on trading the stock of the CME.

I digress to today’s video.

http://www.ino.com/info/284/CD3131/&dp=0&l=0&campaignid=3

Today we are exploring the relationship between the Euro and the Dollar (EURUSD). In this short video, which we are making available without cost or registration, you’ll catch a glimpse of a conservative way to trade the Forex markets. This approach will detach you from your computer screen and show you how to enjoy your free time without having to worry about the markets.

I would not recommend this movie if you are risk adverse. Trading in Forex, the futures markets, and in any market for that matter always has an element of risk.

http://www.ino.com/info/284/CD3131/&dp=0&l=0&campaignid=3

I hope you enjoy this educational Forex trading video and that you’re able to see the value in this approach.

Every success in the markets.

Sincerely,

Adam Hewison
President, INO.com
Co-creator, MarketClub

TV appearance for Ray Barros :

Mon Feb 9 @ 7.30am at BBC Spore studio

Anchor: Rico Hizon

MONEY SHOW HK ON MAR 17 – 19 2009 @ The Grand Hyatt HK

SPEAKERS:
http://www.moneyshow.com/hkms/speakers.asp

STEVE FORBES Chairman, CEO, and Editor-in-Chief Forbes more >	Jim Rogers Investor and Author more >	Victor Chu Chairman & CEO First Eastern Investment Group more >
MARC FABER Publisher, The Gloom Boom & Doom Report more >	JOHN BOLLINGER Author, Bollinger on Bollinger Bands more >	emily chan Anchor, CNBC more >
LORRAINE TAN Asian Research DirectorStandard & Poor’s more >	SAM STOVALL Chief Investment Strategist Standard & Poor’s more >	Joseph Battipaglia Market Strategist-Private Client Group Stifel Nicolaus more >
Yonghao Pu Chief Regional Economist UBS Wealth Management and Business Banking more >	Ray barros Author The Nature of Trends more >	Linda Raschke President, LBRGroup Principal Trader, Granat Fund more >
Simon ting CEO, Tanrich Futures Limited more >	Robert McTeer Former President & CEO Dallas Federal Reserve Bank more >	Peter stein Hong Kong Bureau Chief Wall Street Journal Asia more >
tim murphy Founder IPGlobal Limited more >	JOHN PERSON Author, The Complete Guide to Technical Analysis for the Futures Markets more >	leon goldfeld Chief Investment Officer HSBC more >

Speaker Biography & Schedule LEON GOLDFELD
Chief Investment Strategist, HSBC

As acting moderator for our mentor today, I am reproducing my post as at:

http://tradingsuccess.com/blog/the-green-wave-753.html#respond

I have just received a message from our mentor to act as Moderator for today’s post. Given his itinerant nature lately, I have agreed to step into the breach once more. I just recall President Obama’s clarion call lately – to go for green energy.

President Obama has been a proponent of green energy for awhile
and it is going to be a priority. In his inauguration speech he talked about creating a new clean energy economy, and how to double the production of alternative energy in the next three years, modernize more than 75% of federal buildings and improve the energy efficiency of two
million American homes.

Not only will this save consumers and taxpayers billions on their energy bills but smart investors can make incredible profits.

I came across a new book by Tobin Smith – Billion Dollar Green.

Billion Dollar Green has just come out and in it he shows investors or traders everything they need
to make life-altering profits from the Green Wave.

Check it out.

ANA aka IDKIT

Ag Moderator

Here is my comment following the post at

http://tradingsuccess.com/blog/decision-making-process-vi-751.html#comments

January 27th, 2009 at 8:59 am e

Ray

It is not surprising you often assume the role of the Devil’s Advocate, being a lawyer by training, too.

Quote
A devil’s advocate is someone who takes a position, sometimes one he or she disagrees with, for the sake of argument. This process can be used to test the quality of the original argument and identify weaknesses in its structure.Unquote

It is akin to dialectics, a method of argument which has been central to both Eastern and Western philosophy since ancient times. The word “dialectic” originates in Ancient Greece, and was made popular by Plato’s Socratic dialogues. Dialectic is rooted in the ordinary practice of a dialogue between two persons, each of whom holds different ideas and wishes to persuade the other.

The presupposition of a dialectical argument is that the participants share at least some meanings and principles of inference in common, even if they do not agree.

Hence, this form of argument applies equally effective to technical analysis to reach a high probability trade opportunity.

By: Antonia Oprita, Associate Web Producer | 26 Jan 2009 | 01:35 PM ET

Government leaders, not commercial bankers, will dominate the stage at this year’s annual meeting of the World Economic forum in Davos, Switzerland. But policy experts say they’ll have to do more than just show up.

Among the 41 top politicians and government leaders making their way to the Swiss resort are Russian Prime Minister Vladimir Putin, Japanese Prime Minister Taro Aso, Chinese Premier Wen Jiabao, German Chancellor Angela Merkel and British Prime Minister Gordon Brown.

US President Barack Obama, however, won’t be there. Instead, he’ll be trying to dominate the Washington stage by getting his fiscal stimulus package pushed through Congress quickly as America’s economic slump deepens.

Many analysts agree that until the US economy shows signs of recovery, none of the other countries will be able to take off. Yet at the same time the US needs the other countries’ help to achieve that.

“We need stabilization in the US economy,” said Hans Engel, equities analyst at Erste Bank.

But the earliest that signs of stabilization could emerge is two months, Engel added; if the Obama administration fiscal stimulus package is passed quickly and kicks in about as quickly.

Without growth in the US., the rest of the world is feeling the pain.

Did you know?

Last spring GE was at $35 then. Today it is under $13. How it maintains its AAA credit rating is a mystery, but you won’t hear anything about that on CNBC for the obvious reasons that GE owns CNBC!

Warren Buffett is getting junk bond rates for his $3 billion loan to GE and the reason is: GE is junk!

Last January Bank of America  was at $42,  still close to its all-time high, and it appeared invincible.

Now the stock is trading below $6.00,  But, as with so many companies today, the worst is yet to come.

Bank of America just bought Merrill Lynch—a bet that was made with your money, by the way. A bet that is already going sour.

But you may not know that Kenneth Lewis, executive officer of Bank of America, used $15 billion of U.S. government bailout money to double its stake in state-owned China Construction Bank—instead of lending that money to U.S. homeowners and businesses.

This after paying $2.5 billion for Countrywide’s $100 million-worth of assets!

Today, Lewis is doing whatever he can to mask losses rather than take care of clients.

The breakup of Citigroup is now the model for Bank of America’s fate.