Wednesday, December 31, 2008

The Obligatory End Of The Year Post

I'll keep it short and sweet.

Taiwan

A lot has happened since Ma Ying-Jeou was elected, but I, like many others, feel that the worst is yet to come for Taiwan in terms of its sovereignty, freedoms, and economy. Perhaps a glimpse of what is to come, Hu Jintao (Communist leader of China) held a speech outlining China's policy towards Taiwan. The key quotes and what they actually mean:
  • "As long as the 'one China' principle is recognised by both sides.... we can discuss anything," (Read: As long as you admit Taiwan is a part of China, of course we can talk about trade agreements and international space, but that doesn't gurantee anything)
  • If Taiwan's opposition Democratic Progressive Party gives up "splittist activities" and "changes its attitude," it would elicit a "positive response," (Read: We hope your party dies, once we take over Taiwan, your party will cease to exist; if you happen to give up your splittist activites, then maybe we won't kill you when we takeover the island- just place you in jail)
  • "We understand the Taiwan people's feelings on participating in international activities, and we attach great importance to related issues on this," (Read: Blah blah blah, fluff fluff fluff)
  • "...We can have realistic negotiations to reach a reasonable approach for the issue of Taiwan participating in the activities of international organisations on the premise of not causing one China, one Taiwan." (Read: Again, we can negotiate participation in international organizations if you admit Taiwan is a part of China; that does not gurantee anything)
A few articles mentioned some sort of armistice or peace accord. That is exactly what I described a few months ago as one of the signs that Taiwan is falling into the grasp of China. The sad part is that the 50-60% of Taiwanese who support 'status quo,' are too afraid or actually think that what is happening is still, 'status quo.' By the time the 'status quo' actually changes, it'll be too late.

The Markets

Over the past couple years I've read many books on investing and trading. One key theme throughout all the books (it seems like), is similar to what Dwight Schrute said in the television show, The Office:
Mr. Brown: Great, well, what is a hero to you?
Dwight Schrute: A hero kills people, people that wish him harm. A hero is part human and part supernatural. A hero is born out of a childhood trauma, or out of a disaster, that must be avenged.
Most notably, the last sentence. One theme throughout those books was that they "saw the light" or became "great" at what they did, only after going through a crash, or losing it all once, or something like that.

Like a hero born out of a disaster
.

Those who were in the markets for 2008 should be able to claim this year as a disastorous year. Perhaps it is as it is, that only after something like this year, can we truly become a great investor/trader.

Earlier this year my account was at an all time high. At the time, since it's inception in December 2006, my account was up somewhere between 350%-400%. Sometime between then and now, my account value ended up really close to where it was 2 years ago. No I did not lose everything, but all those gains that I never realized when my account value was at an all time high, evaporated in just a few months.

Looking back, I easily thought I knew what I was doing when I was up 300%+. I mean, who does 300% ROI in their first year trading? This year has been a tough year, but I'm glad I learned what I learned in my first 2 years of trading- better now then later as they always say.

Here's to those who survived this year: May we become true heroes.

Sunday, December 21, 2008

The Perfect Storm

So I've been "bunkered" down in our house for the past week with what started as mediocre snow in this region, but the past few days, has become quite a blizzard. Having ventured out once, traffic is slow, people are pissed, people do not like shopping in this weather.

This is icing on the cake, for a poor shopping season for retailers. Huge markdowns and last minute e-mail trying to get me to buy their items with free 2-day shipping to get it in time for Christmas speaks volumes. Now add to the fact that many families are stuck in their houses, and now you have less shoppers than even intended due to weather. I wouldn't think there be much impact if it was just this area, but this is happening across the U.S. Despite what they say, the patriotic thing is not to go out and consume and buy up more stuff on credit. Work and save is the way to go.

Too lazy to put up charts, but I'm in VFC puts and short the actual stock on ANF.

Sunday, December 14, 2008

Why The World Thinks Taiwan Is A Part of China

When Taiwan actually does get some front-page status on CNN.com, you can bet they'll get the history of Taiwan wrong. And this is why everyone except Taiwanese people think that Taiwan is a part of China.

"China, Taiwan reopen regular links" - CNN.com

As if CNN were a part of China's propaganda machine:

Taiwan separated from China after the communist victory in the Chinese civil war in 1949, with the defeated Nationalists setting up a government there. Beijing has always considered the island a renegade province and has threatened to go to war should Taiwan declare formal independence.

Please note that Taiwan did not separate from China in 1949. What actually happened was Chiang Kai-Shek lost the civil war against the Communists and fled to the island of Taiwan. At the time, Taiwan was to be a temporary-camp where he hoped to eventually launch a counter campaign against Mao Zedong to retake China. But, that never came to pass and eventually the KMT and Chiang Kai-Shek stayed on Taiwan and occupied it for the next 30-40 years.

Edit: I came across this editorial in the TaipeiTimes.com, which I found to be very well written and digs deeper to the underlying cultural ramifications that underpin how China views the world, and the U.S.

Jeffrey Garten, an undersecretary of commerce in the administration of former president Bill Clinton, has said: “Barack Obama’s first overseas trip should be to China and it should occur within a month after his inauguration on Jan. 20. He should bring Secretary of State Hillary Rodham Clinton, Secretary of the Treasury Timothy Geithner, Secretary of Defense Robert Gates and his ambassador to Beijing.”

“Such a trip would be a showstopper, breaking all precedents,” Gartner, a professor at Yale, wrote in Newsweek magazine last weekend. “The trip would not be designed to negotiate or resolve specific issues. Instead, Obama would be setting the style and the tone of a new US approach to China.”

The Chinese, however, would see that visit as the young, new, and relatively inexperienced president coming, like the envoys of old, to pay tribute to China. In Asia, where symbols command more attention than in the West, an early Obama journey would be seen as the “Western barbarian” submitting to the power of the Chinese court.
What you don't want to do with China is cuddle it, feed it, and make it feel like a superpower. Because they'll feed on it, and use it to their advantage. Don't think you can make a bully not bully you by continuing to give him your lunch money. For the most part, dong hong lang all know that China is the biggest threat to stability in the Pacific region, but do we all realize that China will be one of the two biggest threats to stability, in this world. Watch and see, China /Taiwan & Israel/"Everyone Else In That Region" will be the key tipping points over the next decade.

Friday, December 12, 2008

The Chart That Everyone Is Looking At



Getting caught up in the short-term 3/5/10 min charts, that I forgot to step back and look at the daily movement. The parallel trendline in red sloping downwards has kept us within that bound for a good two months now. Notice the two red vertical lines I drew indicating the overbought condition on the stochs, with the short-term indicator crossing over. Both times, the rally up was on decreasing volume. For a similar downside to result now as it happened in early November, I'd like to see the SPY overshoot the upper trendline on volume less than 400 million, and then correct and resume to the lower channel.

Wednesday, December 10, 2008

Short Idea - VFC

I wasn't paying much attention to the "sales" and "deals" that the North Face [.com] (yes I subscribe to them) was sending me, but after being bombarded with many emails in the past couple weeks, I realized that they could be a good short candidate once this rally runs it course. Retailers should get smashed (once again) once their 4Q numbers come out next January/February. (VFC is the parent company, which has a whole lot of other retail companies under them.)

Now why did I think to short them after getting bombarded with their "sales" e-mails? To me, it speaks volumes about how bad they need customers/cash. For the most part, the North Face fad is over, and everyone and their mom has one by now. Out of the other retailers in that brands list, it would make sense if the North Face was one of their best products with the highest margins. So as you may have noticed, or not, the deals that the retailers have been putting on (at least for clothing) have been many and steep. The retailers are hurting for money, and it's looking to be a bad Christmas season for them.

Here's the chart:



It's had a full retracement back to the Obama (Election) highs from Nov 4th. That retracement coincides with the declining 50DMA as well as a decent trendline that if, falls below, would make it a great short candidate. I will be eyeing this one closely as a potential short to put capital towards rather than towards the regular index shorts.

Tuesday, December 9, 2008

Governor of Illinois Facing Corruption Charges in Attempt to Sell President-Elect Obama's Senate Seat

Alrite, look. Obama is our next president, like it (most of you) or not (a few of us). I was not going to post on this, as I thought some media outlets would propose the real question, the tough questions, in their articles, but I didn't find much at all. See the title for this blog? That's what the biggest headlines on news websites should be.

Lets look at it another way. Had the governor of AZ been in this situation isntead, do you really think that McCain's name would only be mentioned once, or twice in an article about the governor's corruption charges on selling off McCain's senate seat? An onslaught of articles headlined something like, "Governor of AZ jailed on allegations of selling McCain's senate seat,"
would be hitting the wires, instead of some vague, "Governor of Illinois jailed."

To think that Obama has no connection at all is ridiculous. From CNN articles, Obama is quoted as saying, he's had no contact with the governor and has no clue what was going on. Serious? An intelligent man (Obama) who is going to be our next president, had no clue at all about what was going on in his state? Puh-lease. Lies, Lies, LIES. So much for all of you guys being head over heels in uproar about Bush lying to us-- Obama's following down Bush's path already, and guess what, it only took him -45 days (yes that's a negative in front) of his presidential term to do so.

I didn't even do any research, but I'll leave that to you guys. If I did, I bet I could find a connection between Obama and the governor within 5 minutes. Anyways, just another thing for you Obama-fans to make an excuse for.

Lastly, I can understand this bias. With the U.S. facing a depression, and just having elected a new president on a platform of "hope" and "change," it'd be a real blow to the image of the United States if our president-elect was brought down before he even was inaugurated on allegations of connection with corrupt politicians. So, I believe that's the real reason. Life's not fair, but that's the way it is.

Anyways, remember that Dark Knight, Obama connection I made in the past? Well what do you know, Dark Knight (the movie) was shot in Chicago, i.e. Gotham = Chicago. And oh, if you haven't seen the movie yet, the politicians of Gotham were corrupt as well.

Friday, December 5, 2008

Missed The Boat

Here's a snapshot of some of my orders for today:



Pretty much, I was going to close out all shorts at SPX 792~ and immediately turn long. Looks like that 792 number should have been SPX 822, the initial line I drew in my previous chart below. Sums up the day- missed opportunities. I have a lot of re-thinking to do over the weekend in terms how I'm trading this market.

Haven't had time to look at the charts yet, but from just a quick glance at today's close, we should have put in a higher low. Higher low, next is higher high? If we put that in, things are looking extremely good on the long side. I ended up buying that SSO position at end of day today in case we just blow through the gap area on Monday (from the last Monday's gap), but I suspect a pullback will be in play. I will likely update Saturday night with a chart of where I will add to SSO/UYG/QLD. For the time being, I will not be entering short positions as I feel the momentum has temporarily significantly shifted towards the long side.

Edit:
I just had to show this to you guys. Seriously, is this what the 52% of the people that voted for Obama believe? If so, we're in deep sh*boop*, because what we don't need is people still thinking that things are getting better before they get worse. Why? Then we are ignoring the problem, because the problem doesn't exist in their minds.

Has any body noticed the market reacts the opposite way from the general thinking. Oil, houses, commodities were reaching new peaks not too long ago; newspapers, cabdrivers, barbers every one was following the trend of S&P 500 reaching new highs, every one was buying stocks. They all over reacted as the past 3 months have shown. Now there is gloom and doom every where. This will change with President elect Obama assure office. From what I have heard from him, he will be a Peoples' president, common man and main street will thrive, so will the economy. The gloom days will end in a few more weeks, look for the rainbow soon. Shorting at these levels can prove to be worst then being long in November 2007. We will see a new and prosperous USA emerging soon.
Edit: Back with my weekend charts:

Alrite, the bad unemployment numbers managed to be shrugged off and the market rallied on Friday. What gives? A lot of people are whispering about a Christmas rally, which would coincide with things in terms of Fib series and EWs, which I do not know enough about to comment on; but looking at my own charts, it would pay to continue to be very cautious on the short side. Yes, we are in a primary downtrend (aka bear market), but as they say, bear market rallies are the fiercest and fastest of all rallies. I've decided to not enter any more short positions for the time being as I feel the market is sending a message that it wants to go higher. I'd consider easing into some puts again if we get to SPY 95-96 (although will likely wait for 100), followed by SPY 100, followed by SPY 106 of positions.



There's a lot going on in this chart, but bear with me. Once again, we're coming into that gap zone from Monday's gap down, where it looks like we're right under the 25DMA as well as the middle line of the upper and lower channel. If we break this 88-90 gap, it would clear the way for a test of 95, where we first met resistance on a bounce, after the election highs. On a move up, especially with the Christmas cheer rally spreading, a run to 100 in the next couple weeks seems very viable. Above 100 though, would require us to break out of this channel we're in, and IMO not very likely as of this point. But, things will change if/when we get closer to those prices.

So, where does this put me in terms of trading this market? I'm looking right now to buy the dips, rather than short the rips. If we get a pullback next week, I would be a buyer at the 85 resistance/support that we've had a lot of fights over, these past 5 days. Any lower, I would be buying at the 82-83 low that we've held onto this week, with a stop right below at ~81.

All that being said, I am still in short positions, mostly Jan/Feb/June put options, that have time to work out, but I have one IWM Dec puts that will be begging for a pullback to exit out of.

The bigger picture:



We will likely test that 50DMA on any move up, but the 200DMA is well above us, and is continuing downwards.

Finally, a spotlight on one of my old-time-favorite stock, LDK:



LDK has been one of the most controversial solar stocks of the past, and perhaps of all solar stocks. They had some previous trouble with allegations of fradulent accounting pratices, which were eventually cleared- but the bias against them (IMO), never really faded. Anyways, LDK is one of the only solar companies that reported solid 3Q earnings, while maintaining FY08 earnings, and upping guidance for FY09. Which, is why I would like to dump my position in JASO as soon as a decent rally appears. It's a long term position, so I will have good tax treatment on that (0%!), so I'd really like to get something out of it, and not have to pay taxes to the next administration to give away as welfare.

So, LDK is seeing overhead resistance at the 15.50-16, where it's been unable to overcome that resistance twice now. A rally in the markets could easily spike LDK past the resistance and towards the 38.2 RL (~$25), which is also a level that corresponds to the gap down on 10/06. I may add LDK to my list of stocks/ETFs that I will trade if we get a rally moving. Currently looking at SSO, QLD, and I suppose LDK, for stocks to buy on dips.

Lastly, more of me trying to read into what happened in Taiwan, and infer from that the U.S. Markets' future:



Again, there's really no basis for this other than the fact that there have been a lot of similarities between what happened in Taiwan and what is happening in the U.S. in terms of politics, presidential elections, and stuff to do with that. Check this post for more information on that.

So, days to watch for if U.S. plays out like Taiwan:

Dec 16 - temporary high?
Jan 9 - temporary bottom?
Jan 19 - temporary high?

Thursday, December 4, 2008

Just One Chart

Just a chart to see what I'm looking at tomorrow. Pretty much across the board, the bloggers are all in one accord, that tomorrow will be a "judgement" type day. We either fall hard, or solidify a multi-leg rally.

Wednesday, December 3, 2008

More Indecision

A lot more of what we've been seeing the past two days- that is, more choppiness and range-bound trading. Although, we are putting in a significant up trend on the 3-day chart from Monday's lows. Two charts, both of which make a more bullish case:



First chart above is the 3 day chart I mentioned. If we don't gap up or down tomorrow, we should open right at the resistance, and it should be a battle right from the start to determine the rest of the day. Although, these days, the market seems to want to fakeout every single person. I still would rather remain in cash, waiting for a better sense of direction of where the market is heading, rather than jumping in. Even though, I jumped into some puts yesterday when we hit the 61.8% retracement at around 87, and as such, currently holding them for a loss. Again, I'm paying for my mistakes that I'm blogging about to not do. Yeah, horrible. I'm still hedging sort of with shares of SSO, and will continue to add to the SSO position on down moves- most likely at 84, where we've found significant support there over the past couple months. Why? Well, most of what I see on the charts is just making the case for the bulls:



The descending triangle is usually a continuation pattern, and it worked the first time as we broke down on 11/19 to the downside (continuing the downtrend); but the market quickly reclaimed that support over the next three trading days. So, I know the descending triangle is usually a continuation pattern, and not a reversal pattern, but perhaps we are breaking to the upside temporarily in this case. Adding to that, the SPY also reclaimed the 5DMA.

The good news for the bears, we're still in a downtrend as seen by the 50DMA, and obviously the 200DMA. But, if we were to test even the 50DMA, there will be a world of pain for the bears to ride that one out.

On a side note, Obama can't seem to get off the air. He's been... maybe off the air for maybe one or two days out of the past week and half? And one of those days was Thanksgiving, so he's been on everyday in my opinion. Isn't this guy the one that said that there's only one president at a time? So why is he acting like he's the president already? As much as Bush is a lame-duck president already, please, we have set terms and inaugurations for a reason. They aren't there as guidelines, but as rules.

Monday, December 1, 2008

Quick Update

Even after seeing multiple 600+ point drops in a day, I'm still pretty "wowed" by the fact that we continue to drop like we have been dropping. The calmness and "un-panicky" feel of today adds to my feeling that we haven't quite gotten to that short-term bottom. As I, did not really suspect, but mentioned last week, the buying of stocks last week might have been some sort of ploy to instill a sense of calm in the markets, that things are getting better, in order to manipulate consumers (who apparently make up 2/3rds of the U.S. economy) to get out there and, buy buy buy! Following that, some sort of "Black Monday?" was my comment.

And, what did we get? Monday Meltdown, or Meltdown Monday. :)

Anyways, I'm trying to stay out of large positions even though I think the chances for another big drop in the next week or two is decent, but after messing up on this last shorting party, I've decided I just need to manage risk. Most of that is waiting for the confirmation, instead of trying to get that extra 1 to 1.5 points that you may miss, if you wait for the breakout. And what do you know, that goes back to what I previously said... patience, patience, and, patience.

Friday, November 28, 2008

SLW

I entered into a small SLW position on Wednesday as part of my move to build a commodities position. Obama + massive spending projects + bailouts = (long term) buy commodities and short the dollar.

Here's a chart of SLW:



A decent breakout might be in the works as we're starting to bump up against a trend-line from way back in March. My only concern is that this recent run-up has happened during a holiday week, and thus the volume indicators are not following through in support of a rally. You can also see that we've established a double bottom already, and so there should be good support at current price, minus a dollar. Why SLW? No reason really, but it seems like gold might have started to take off without me, so for a larger % gain, I should go with the equity that still has yet to breakout. ABX, GG, AUY, they are all on my watch lists for gold.

A look at the SPY shows that we're about to make a decisive move up or down, once again:



As noted in previous posts, a break above the 84-85 should easily get us to that 61.8% retracement level. We will likely see a test of that price on Monday, and that should dictate the rest of the week, as we will have the big boys back in play with regular volume. Note that we are getting quite a-ways above the 5 DMA, so we may start to see some consolidation early next week between the 90.63 level and its 5 DMA before making a move. We've still got room on stochs before we get into overbought territory, so I'm still waiting to pounce on the next short opportunity.

If we're going higher though, there's a lot of stocks out there that have a lot of room to run- a lot of the techs: GOOG, AAPL, BIDU. Also, the beaten down solars: LDK and STP of note, have more room to run, unlike others like JASO and ENER.

Anyways, I tried to force my last short position and totally payed for it. So,
patience, patience, patience....

Tuesday, November 25, 2008

Battleground

I've had a horrible past two days due to my short positions that I entered last Friday. A good lesson learned I suppose, that is, don't enter trades when you haven't had time to do your research. A quick glance at the chart I put up this weekend would have given me enough hesitation to put off buying those puts Friday afternoon. As I expected, a test of the 38.2% rt level was in play, and we hit that 84-85 resistance level first thing on Monday. It ended up being a battleground of bears vs bulls as we ended up fighting that line up until the last hour and half on Monday. Since Monday closed right at 85, I was hoping for the buying to subside and have a closing candle below for Tuesday. As you'll see below, we've got a closing candle above the 38.2 rt level for Tuesday:



It seems like we might be stuck trending between 84-85 and 90 for now, but I've taken the liberty to draw out 4 possible scenarios (of the dozens there are) that I can foresee happening. Obviously they won't depict the minute-by-minute whipsaw action we've seen, nor even the daily- but I think we can use these to slowly pick off one by one which ones have been invalidated over the next week or so.

As I mentioned in my previous post, I'm continuing to monitor our markets post-election with that of Taiwan's election/inauguration. In my last post, I thought that the post-election market reaction in Taiwan was likely out of play for now, but now with the 3 up days the bulls have put up, the 100% retracement to the election high that was seen in Taiwan, may also be in play for U.S. That would look something like case 3 in the chart above.

Case 1 is the other Taiwan-related movement that I will be watching for. Case 1 is what happened in Taiwan markets after the inauguration of their new president. That is, they sold off for the first 13-14 days after the inauguration, followed by a 2 day rally, followed by fresh lows, breaking the previous support.

Case 2 and 4 are just other things to be watchful for. The chart certainly favors the long side as there's basically 3 up predictions, and 1 down prediction. We should be able to eliminate Case 1 fairly soon, as any pro-longed rally or lingering in this area will invalidate my case for the U.S. markets following Taiwan's markets, post-inauguration.

I will look for an opportunity to exit my puts, as I feel a great uncertainty and indecision in the markets right now. I'd rather be in cash than try and ride this wave up and hope that it does not become extended.

So, a caution on my usual, "3 things to do in this bear market," may be to hold off on #2, which is to go short. The risk/reward here does not justify shorting [more] at these levels. If anything, ease into your positions and add to the position when the move is confirmed. Here's an interesting chart that someone else posted online:



Not much to say other than all those bear markets in the past hit a temporary bottom after a 50% decline, two of which pictured here, ended up being the end of the bear market. Yes, this time might be different, but just something to keep in the back of our minds.

Also, something I thought of for this week... perhaps the markets are being inflated for Black Friday, so that consumers will feel giddy and have less on their minds than their portfolio that is in the drain. Then, when the first numbers come out about how the consumers have disappointed, perhaps we follow through [Black Friday] with a Black Monday?

This will likely be my last post until the weekend, but may update if something reveals itself to me. Happy Thanksgiving everyone, be thankful that we are still in the game. Everyone can do well in a bull market, but the real test is how you do in a bear market. The fact that we have preserved capital is enough for me to be thankful. Looking forward to eating some duck. :)

Saturday, November 22, 2008

Weekend Update

Here's what I'm looking at for this week:



I put in retracement levels from the highs of November 4th, down to the lows on Friday. There is strong overhead resistance in the 84-85 area (click on the chart for my comments). I think if there is any legitimacy to Friday's last half hour rally (just in time for OpEx), then 84-85 has to be overtaken on sizable volume. Above that, at 90 we run into more resistance and any rally past that would get me in on the long side for a multi-week rally. But before we get too far of ourselves, let's stick to that 84-85 range.

As we have a shortened week this week, and with Thanksgiving usually being an up-week on light volume, I think a test of the 84-85 resistance level is definitely in play for this coming week. But, the fact that we've seen light volume in the past will make any rally attempt at that resistance, suspect. If we test it this week and aren't able to take it with force, then we should be in for another round of selling into the 60s on the SPY. Remember, there is basically no support level underneath the 01-02 bottoms of ~77; there is a long way to fall if we can't hold this area.

I bought puts (SPY & IWM) on the rally late Friday, and will look to add more puts if we hit that 84-85 range.

I'm continuing to watch and compare the "aftermath" of what happened in Taiwan's stock market after Ma Ying-Jeou was elected president, and that of Obama's election. In Taiwan, on the 13th trading day after the elections, their general index (TWII / TAIEX / Taiwan Weighted Index) rallied off previous support and ended up fully retracing back to where the markets were before the post-election drop. Now, this past Friday was the 13th trading day after the U.S. elections, also with a significant up day. If the U.S. markets are to follow what the Taiwan markets did, the U.S. markets should rally back to 99-100 on the SPY, the high on November 5th. But, that is very unlikely as of this point. Something that may turn out to be a better fit is taking the days prior and after the Taiwan inauguration of Ma Ying-Jeou, and that of U.S.'s elections.

Although they are for different events, looking at the charts around these two events have a much higher correlation between the two. Using the Taiwan inauguration, that would give the U.S. markets a rally up to the 38.2% retracement level (see above) [the TAIEX actually pierced through it intra-day, but fell the next day], before falling back down. This would fall in line with what would be a reasonable situation this week. But, for it to be valid, the rally up to the 38.2% retracement would have to occur soon, as in Monday or Tuesday; Wednesday would put the rally much too late when compared with the rally in Taiwan.

Anyways, probably not that much to look into there. I definitely wouldn't base any plays off of purely that. Obviously I may be creating things that aren't really there, but I just think there's a lot of similarities between Taiwan and the U.S. right now in terms of the presidential electoins/politics (and maybe markets). If something does pan out, I'll put up a chart comparing the two, but for now- just something I'll watch for, for fun.

Friday, November 21, 2008

Geithner Rally?

You know what to do (Who is this Geithner guy anyways) :

1) Exit longs and:

a) stay in cash
b) go short
c) fetal position sucking thumb

There's one trend right now, and that's down. All rallies should be treated as nothing more than a blip on the way down until proven otherwise.

Thursday, November 20, 2008

Witnessing History

At the same time that I am sort of "proud" to be witnessing history, it's not quite the same kind of "proud" most people would think of. We've reached new lows on the general indices, not seen since the 97-98 run. Here's a chart showing the relative bear markets and how long it took for them to bottom, courtesy of NYTimes. And keep in mind that the chart presented there is from Oct. 11, and we're down much farther than that now.

You'll see that we've fallen harder and faster than any of the previous bear markets, and there really is not a sure bottom in sight. My prediction to see new lows this year was true, but I believe there are still more lows to come before the year is over. Furthermore, more lows next year after Obama is inaugurated.

Maybe I'm so giddy and "proud" because I wasn't caught on the wrong side in this bear market. And, that got me thinking. Is it bad for me to be happy to see stocks tanking? Sure, I'm profiting from this, but at what cost? I know for certain that a majority of your parents 401ks and IRAs are probably down 50%+ since the start of this year, and that certainly doesn't help out your family. So in a way, I'm glad that I'm doing well, but sad for everyone else. Yet, at the same time, I feel like there's a sense of, "well if you didn't see it coming, you deserve it." And in a way, I really do feel that way.

But, as I type this, I realize that no one deserves to be financially wiped out. No one wants to see blood on the streets. But, the reality is that there will be blood. It surprises me that people still laugh when they hear that we're headed into a recession, or a depression. They don't seem to grasp the gravity at what is at hand. We're about to take the markets another 10-20% lower, and completely wipe out a generation of "buy and hold" investors. I've heard from many people, that those that were wiped out by the Tech Bubble crash of the 2000-2002 bear market, have never returned to the markets because of how scared they are now. And here's the problem, losing a generation of investors results in a market where there is just not enough buyers to step in. Ever heard of the "Lost Decade" for Japan? Well, if not, here's a quick refresher and an editorial on if the U.S. might have it's own "Lost Decade."

The warning signs are all there, if you don't prepare yourselves, well truly I can say you deserve it. People have been laughing in a way when I say I'm thinking about getting a gun- but I'm serious. When people start losing massive amounts of money, no jobs to be obtained, and a trip to the grocery starts becoming as expensive as a PS3, there will be civil unrest. And when you get that, you get problems. No, that does not mean I'm going to become a vigilante maverick, but you never know in an environment like that when you may need that kind of protection.

One last thing on my mind... to my own generation:

We've lived in a time where all we've ever known was a sense of entitlement to everything. We've lived in a generation where, for the most part, we've believed in the government and that they do what's best for us. We've lived in a generation where, there is always safety and comfort in the homes of our parents. We've lived in a generation where we only hear about the pains and sufferings during the depressions of the past- and yet probably still don't truly understand.

The harsh reality is that we are entitled to nothing. We deserve nothing, and yet we feel like we deserve it all. We've heard about the depression and recession, but believe they'll never come because we are happy and content with our iPods and HDTVs. How can they ever disappear, right? We believe in our government and let them do their thing, and yet they do things that are in the best interests of themselves, and the people that put them on a payroll. We believe in democracy just because we can vote, but democracy is currently dead in our country. Democracy is something that comes from active, independent-thinking people who actively pursue the "Democracy" that we on the other hand, fake ourselves into believing we have. Democracy is the people.

In the words of Lincoln,

"Democracy is the government of the people, by the people, for the people."

Like a true conservative, in a depression, I'm going to stick to my guns and religion. I truly hope there will be better days ahead, but the facts that face us do not depict that hope.

Friday, November 14, 2008

A Crazy Week

We saw new lows for this year on Thursday as we tested the previous 83 support, and as we started to breakthrough that, a rush of selling (stops likely) started and created an avalanche on huge volume. But, about 10-15 minutes later, that huge volume started to turn into huge buying, which pretty much snowballed (upwards) with shorts trying to cover (myself included). Here's a two day chart of the SPY showing Thursday and Friday:



I drew up the retracement lines from the intra-day bottom of Thursday to the intra-high, which was the close pretty much. The 5 DMA and 2DMA are also shown in blue, purple, respectively. We're currently under that 38.2% retracement level, but it struggled at that line on Friday, rallying from that, but selling off into the close. The 2 day moving average is right about with the 38.2% retracement, so we may get some support there on Monday. But, the worst case may be to go down to the 61.8% retracement level at around 85.77, which showed good support prior to breaking below it Thursday mid-day.

I'm still looking for a general up-trend through this week into Options Expirations, but I wouldn't be surprised to have another sweep low to scare out some more longs before bringing things back in equilibrium for max pain- which is ridiculously high on the SPY at 97. But, the theory is that prices will gravitate towards that price for OpEx, not necessarily end there. So, with the profit-taking on Friday, the likelihood of a continuation seems higher than heading back down, as of this point. The downside in my opinion is to 85, while the upside could reasonably be into the low to mid 90s. That said, this past Thursday may have very well been the last rally attempt before the big fall....



The above chart has the daily over the past two months, with the retracement levels marked from the high on 9/21. Currently it looks like we might just fall back to the previous lows and perhaps this time, just completely fall through. So, I'm really lost right now as the previous post on Elliot Waves was not valid. I failed to realize that one of the waves created a higher low, where a valid wave should not have done so.

In any case, I've realized over the past couple weeks that I've made pretty much all the right moves, but because of my previous long positions from earlier this year that I've just held onto, even though I've made large percentage gains on trading the SPY, the others have continue to hold back my total account value.

I really need conviction this week to simply let go of long positions that are just strapping up cash that could be used in better ways. I've come a long ways in being able to sell losing positions, but I feel I have one more step to go before I fully becoming emotionally detached from my positions- and that's something all investors and traders should have the ability to do.

My positions: I exited all SPY put positions last Thursday, even the ones that I wanted to hold for the huge drop that will give us new lows this year. Then, Friday I entered SPY Nov. 85 calls positions on Friday, as well as AAPL Nov 90 calls in anticipation of a mini-rally this week. But, I realize that my position is way to large, considering we are in a bear market. I hope to exit half on any decent rally, or even for a small loss early next week. At the same time, start to re-build a large put position on the SPY. If we're looking at the next support on the SPY at 76-77, a strike price in the low to mid 80s on the SPY would prob give a nice risk/reward ratio as the delta on those would increase from around .25 into the .70+ range as the SPY heads towards 77. I may also consider doing something with the Russell 2000 as a potential index to buy puts on, as it has generally been the larger % performer on up days, and larger % down on down days.

A crazy week it has been, but we may be in for an even crazier week over the next two weeks.

Wednesday, November 12, 2008

Just A Quick Update

Lots of news going on in Taiwan about Chen Shui-bian's "detainment." Not going to delve into this further, but just to say that it sure is great timing for Ma Ying-Jeou, whose approval rating has dropped just as quickly as the TAIEX, and the overall markets in general. Note, once again, I do not approve of what CSB did, and I fully agree that he should be punished for whatever wrongs he did, although it seems like in Taiwan, you are guilty, until provent innocent. At least, if you are DPP that is. And for everyone who still thinks the general DPP party still supports CSB, you're wrong. The only people left that I can reasonably support supporting CSB still are those who are relatives/family of his, personal friends, and maybe DPP supporters who have had family tortured/persecuted by the KMT authoritarian rule in the past. Regardless, the new DPP chairwoman has clearly stated a new path for the DPP, one which does not go through CSB.

An interesting note while I make use of this segway into stocks: So far, the Ma Ying-jeou and Barack Obama similarities continue in the stock markets. The day before elections, both Taiwan and U.S. had temporary highs, and since, have fallen sharply- I will be keeping an eye on this one.

I've been busy lately, but managed to do well these past couple days because I jumped the gun early on those Jan 85 Puts on the SPY. Yesterday I doubled my position in SPY puts with Nov 95 Puts, and today went in to some FXP (UltraShort China/Xinhua ETF) calls today. I will look for the gap down tomorrow to sell a substantial portion of my shorts. This volatile market is unforgiving, and as such, I will be glad to take profits. Note, I still do expect to see a substantial snap-back rally, especially with Options Expiration next Friday; which gives me all the more reason to protect my profits on those puts. I will have a larger general update on the markets this Friday probably. Until then, be safe, protect your profits and manage your risk!

11/13/08 Update: Went from basically 5% cash, to around 70% cash, exiting all SPY puts, all FXP calls, and exiting SDS position. Looking for that mini-rally over the next couple days...

Friday, November 7, 2008

Obama's Effect on the Markets

Today's market was relatively calm, a "mere" 2% gain across the broad indices, especially considering that Obama was speaking today (which I didn't know until it already happened). A look at today's price movement showed that for the most part the market was waiting on Obama's speech, as the market just trending sideways in a symmetrical triangle and then broke to the downside after/during Obama's speech. The indices recovered late in the day from likely short-sellers locking in profits for the previous two day rout of the indices.

I had some entertaining comments on my Facebook in regards to my status update of:

"Richard is thanking Barack for exceeding my expectation. A quick 10% downturn in just 2 days."

I know I was asking for trouble from the Obama fans who had to come to his rescue and defend him. Eventually, things started escalating and I decided to stay out of it. But, I wanted to clear things up here. The reality is that what I said is completely fair. I made the call last week on shorting any election rally, especially if Obama is elected, and riding the wave down into Friday. Recall:

So, to my predictions. I'm thinking we trend sideways Monday and Tuesday with a lot of volatility. With Obama winning Tuesday night, I would have said we'd see a big fall the next day, but I'm thinking we're going to get a head-fake upwards. So, Wednesday we get a bull trap and it fades possibly even by the same day, then head down for the rest of the week. It's inevitable to have the markets go down when you are bringing in a president threatening to raise capital gains taxes to anywhere from 25% to almost double what it is now. Again, I believe we will see new lows on the indices before the year is over. The target many people and I have is that 7500 DJIA, 800 SPX support.


Although we never got that head-fake upwards as it was just a complete rush of selling from the opening bell, it should have been apparent from my tone above that regardless of if there was that head-fake upwards, the play was clearly down.

So back to those comments trying to defend Obama. Look, we're here to make money. I don't care if I was right or wrong, in the end, all that matters is that I made money. Furthermore, the call to short an "Obama-rally" was valid on a purely technical play. Technicals indicated that we were entering into an overbought situation Tuesday night. Add to that the resulting election of Obama, and we have a catalyst to have a technical correction. Yes, I am more bearish on the markets with Obama as president than if McCain was president, but the play here was short-term, not long-term. I've mentioned and commented in other places about what the play was for the elections. My belief was simple; if McCain won, markets down; if Obama won, markets down x2. I would have just as easily "thanked" McCain for a similar downturn if he had been elected even though I voted for McCain, and I would have likely seen comments like, "See! McCain sucks! He's going to bring down our markets!" Whoever was going to win (although Obama was a lock), I was going to capitalize on that. And, Obama was merely the catalyst for this play.

So, as far as where I see this market headed now, take a look at this chart below where I have marked the Fibonacci retracement levels as well as the Elliot Waves (click for larger image):



5 waves down, 3 correction waves up, before resuming the larger overall trend- in this case, the down trend in a bear market. If you can't read the Fibonacci levels, they are:

38.2%: 100.54
50%: 105.79
61.8%: 111.03

As you can see, the second wave hit resistance at about the 50% retracement level at $105 and change. The 38.2% also acted as resistance for the 1st Correction Wave at $100. This one I plotted is predicting the 3rd Correction Wave up, likely hitting resitance at either the 38.2% retracement, and if it breaks that, at the 50% retracement. But, if I move each wave, one wave back, so that the first wave actually ends on 9/18, we could easily head towards the lows of this year as the Correction Wave 1 becomes Correction Wave 3, finishing off a cycle, and resuming the overall downtrend.

But based on the holding of the 90 level which could have acted as a psychological support, it looks like we're in the 3rd Correction Wave, and will likely trend up for the next days, possibly up to a week. A run back at 100 is likely if the 3rd Correction Wave forms, with 105 being a strong resistance, and the 107-108 acting as a huge resistance. The 107-108 area is where the markets gapped down earlier this month, as well as it being approximately where the 38.2% retracement level is (looking on a 1 year time frame). If we get to 105, I will likely go all-in short and with that, hope to wrap up this year and take the last month or so off, ignoring the markets and enjoying the Christmas season. :)

As far as what I've done: I've held onto my UltraShort QQQ position (QID) that I bought for the election fall-out, even after the 10% drop. But, I did cover it with a call to protect some of my profits Thursday near the close. Along with the UltraShort QQQ play, I also bought puts on the SPY on Monday and Tuesday and cashed out for a very nice profit on Thursday. I have started building a position in SPY JAN 85 puts as part of my plan to "wrap up this year."

Lastly, always keep in the back of your mind when you want to go long, that this is bear market:



From the chart, we can see that the trend is clearly down, with the 200 and 50 DMA still trending down. Any long plays should be short-term, and should be used to exit existing long positions. In a bear market, bears get fat, pigs get slaughtered.

As always, take what I say with a grain of salt. I cannot be held responsible for any losses, as well as potential profits you incur from what you read. What you do with your money, is your problem, or hopefully, your delight.

How Long Can Obama Hold Out?

Officials from China once again reiterate that the new president must oppose Taiwan Independence in order for the U.S. and China to have "good relations." This is fresh off the heels of a similar occurrence a few weeks ago for what then was the two presidential candidates, Obama and McCain. See my post about that here.

As we've seen from President Bush's first year in office, Bush was quick to talk the big talk against China, but failed to walk that big talk as the weeks turned into months turned into years in office. How long will Obama be able to hold out against this China force that is trying to control things on capital hill. This will be one of Obama's true tests that I will look forward to seeing how he handles it- whether he caves into China like president Bush did (so much for change), or will he stand firm and give the people of Taiwan hope.

This brings up a point that I have always wished to ask the presidential candidates. That is, how can they support the 'One China' policy, while at the same time act as the leaders and promoters of the 'free world.' The One China policy is all about how there is only one China, and Taiwan is a part of China. Again, China once again imposing it's will onto others. And the ironic thing is that the candidates (both McCain and Obama) have come out saying they support the free and democratic Taiwan, yet adhere to the 'One China' policy, which specifically states that Taiwan is not a free and democratic country, rather, a part of China, a censored, communist, country.

Wednesday, November 5, 2008

No words to describe what is happening...

http://news.bbc.co.uk/1/hi/world/asia-pacific/7712318.stm

Seriously, are the "Taiwan" police actually Communists from China in disguise?

What irritates me more so than them trying to hide every ROC flag is that, why then, do they not tell those who wave PRC flags to take them down as well? In one picture, can't find it now, but I saw police manhandling a Taiwanese person waving a ROC flag, while in the background is a huge PRC flag, one of those 4' x 6' flags.

Tuesday, November 4, 2008

President Barack oMa Ying-Jeou

For those who haven't been paying attention to the media, Obama is your president-elect. Something that I called a couple weeks ago. And for those who don't know, Ma, Ying-Jeou is the current president in Taiwan, recently elected this past March.

I've mentioned this surprising similarity between Obama and Ma in the past, but now I'll take the time to lay it all out.


"Not Normal" Backgrounds:

Ma is not an ethnic Taiwanese. His parents are from Hong Kong, and he was also born in Hong Kong, although moved to Taiwan at an early age. During Taiwan's presidential campaigning, much noise was made about Ma's personal history, that being of Hong Kong. Furthermore, allegations of Ma's dual-citizenship came up about his possible green card in the U.S.

Obama is not "ethnic" American. And by that I mean he is not our usual presidential candidate, white, middle-aged, male. He's the first of the U.S., the first president-elect, black, young, male. Much about where Obama was born was also raised in the couple months (raising in question his actual nationality). That is, whether Obama was actually born a U.S. citizen, something that is required to be a president.

Personal Facts:

Ma is by all means, a young and charismatic president. Ma graduated from Harvard Law School. Ma rose to power rather quickly, becoming the Taipei Mayor and a becoming a star of the young KMT generation.

Obama is also, by all means, a young and charismatic president. Obama also graduated from Harvard Law School. Obama also rose to power rather quickly, with just one term as a U.S. senator. Obama became the star of the Democratic party at the last Democratic National Convention.


Economic Campagining:

Ma ran his campaign on the idea of economic prosperty, economic change. He outlined his 633 plan of 6% GDP growth per year, 3% unemployment rate by 2012, and 3% per capita income by 2012. This was in response to the "horrible" economic problems that were facing Taiwan under the previous DPP administration (albeit KMT controlled legislative).

Obama ran his campaign on change, hope, and a stronger economy. No doubt the economy was one of the biggest factor of this presidential election. I would say change and economy would make up more than 2/3rds of the reason for which they based their vote on. Again, this was in response to the horrible economic problems that the United States are currently facing under the Republican administration (albeit for the last 2 years, Democratically controlled).


Election Results:

Ma was favored to win largely throughout the campaign, especially in the last few weeks leading up to the election. won by a "landslide." Approximately a 60/40 win.

Obama was also largely favored to win throughout the whole campaign. Although polls didn't show it, the young "hype" votes solidified Obama's presidenty (sorry, a brief commentary by me). Obama by all means will also likely win by a "landslide," by historical standards of previous U.S. presidential elections.


How They Won:

Ma won on hopes of change from the previous administration. Moreover, won on economic promises that will turn Taiwan into one that will have the same prosperous growth that China had been experiencing. Ma received a lot of cross-party votes from "light-Greens," because of their disappointment with A-bian. These light-Greens voted for Ma, not so much because they wanted him, but in a way, to "punish" the DPP for their failings (whatever failings they were believed to have been responsible for).

Obama also won on hopes of change from the previous administration. His campaign remarkably trademarked the words, "hope" and "change," as part of his campaign rhetoric. Obama also won in part due to the current economic mess in the U.S., with this mess (inproperly?) being totally blamed on the current Bush administration and Republicans. Obama also received a lot of cross-party votes from Republicans of all kinds. This is also much in part to the Republicans disappointment in President Bush.


The Hope
:

Ma was sworn into office with very high expectations, obviously because of his landslide election, but also because of his high promises by him and his administration (20,000 TAIEX comment?). Ma, you could say, had a mandate by the people of Taiwan to implement his changes he campaigned about.

Obama has won the 44th presidency on also, very high expectations, also because of his landslide election. Obama has a mandate from a large majority of the people to also implement his changes and policies he campaigned about.

(By mandate, I mean a mandate. If a president wins on a 51/49 margin, there is not really a mandate)


The Drop
:

The day before Taiwan's election, Ma Ying-Jeou had the stocks at its highest point in the recent months. The day after, a huge drop, followed by more selling in the successive days, weeks, months after. Taiwan's index continues to slide as we speak. Down from a high of around 9400 to half of that, at 4700.

The day before the U.S. elections, the Obama hope and change had the stocks at a monthly high of about 100 on the S&P500. The day after the election, stocks dropped 5%, with another 5% the day after, totalling 10% in just two days. Where the stocks go from here is still in question, but [commentary here] I have no doubt that we will have new 52wk lows this year. This will follow in line with what has happened in Taiwan since Ma won the elections there.


Where The Country Goes From Here
:

Ma Ying, Jeou has taken Taiwan down a path, backwards, towards the era of martial law, of one-party authoritarian rule. His party and he have reverted back to "communist" ways in censoring media, censoring freedom of speech, censoring and detaining opposition political figures. All this has been done with with no "blocks" in the legislative yuan due to the full control of the LY by the KMT.

Obama is no doubt a very liberal Democrat. The only reason you would think that Obama's policies are not socialist is if you think calling someone a "socialist" is an insult, so you don't want your president you voted for to be insulted. Obama's tax, health care, regulatory policies he hopes to implement are very socialist. It's all about equalling the playing field and redistributing the wealth. Although there is no actual censoring of idealogies, like Ma, Obama will be taking their country to the left wing. Finally, Obama will also (likely) have the full support of congress, with Democratic majorities in the Senate and House, to pass whatever bills he has in his book.


With all that said...

The, "Where the country goes from here" part, I hope, will be different for Obama than the history Ma is making in Taiwan. By all means, Obama is our next president, so he deserves all the respect, that is, until he loses it (hopefully he never will, unlike with Ma). But I have no doubt in my mind, 4 years from now, we'll have bigger government, paying more taxes, higher gas prices, and not doing any better than we are now.

Two plays I am almost 100% sure of:
Long oil, and long commodities. You cannot spend what Obama wants to spend, along with what has been spent already on the bailouts, and not have inflation.

Edit: Link to an editorial in the TaipeiTimes that also caught onto the Ma-Obama similarities. Also, an interesting note was that one of my friends on Facebook noted how Obama was "Ma Ying-Jeou #2," and following right after was about 5 other young Taiwanese who basically all said, "My mom said the exact same thing!" What makes it even more bizzarre is the fact that last night, while talking to my mom about the elections, without any sort of leading on, she made the comment about how she thought the Obama and Ma elections were eerily similar also. Is there some sort of supernatural/divine Taiwanese mother telepathy going on? :)

Friday, October 31, 2008

Preparing For Obama & My Rant

We're finally near the end with just three days until the elections. I'm pretty much sick of all this presidential stuff as I bet a lot of you are. Every day, every night, news on Obama and McCain, their ads taking up all the commercial times repeating the same lies one after the other. Anyways, if you couldn't tell from the title, that's a yes- I've written off McCain, and that was quite some time ago. It's just impossible to win an election when your likely to have the largest turnout in recent history, especially among young voters. And where that block of young voters stand is clearly in favor of Obama.

It is not so much the fact that young people are coming out in flocks to vote for Obama, but the fact that many of the young people voting for Obama don't have the slightest clue of what Obama will do, besides "change" in the vaguest terms. Anyways, I'm not here to further make points for/against McCain/Obama because I'm tired of preaching (I shouldn't say preaching should I?) to the choir, and if not to the choir, having it fall on deaf ears.

In this generation where Republicans are the worst thing ever, and voting liberal/Democrat is the right thing to do and will let you 'fit in,' I just hope we are all ready for what's coming in the next few years.

Socialism. As if it's a bad word, right? Obama denies it, the democrats deny it, most supporters of Obama deny it. And it's not so much an insult to call someone a socialist, because afterall, it's just the name of a set of economic theories. Just as you can call Republicans capitalist-leaning, you can call Democrats socialist-leaning.

So, to my predictions. I'm thinking we trend sideways Monday and Tuesday with a lot of volatility. With Obama winning Tuesday night, I would have said we'd see a big fall the next day, but I'm thinking we're going to get a head-fake upwards. So, Wednesday we get a bull trap and it fades possibly even by the same day, then head down for the rest of the week. It's inevitable to have the markets go down when you are bringing in a president threatening to raise capital gains taxes to anywhere from 25% to almost double what it is now. Again, I believe we will see new lows on the indices before the year is over. The target many people and I have is that 7500 DJIA, 800 SPX support.

I've started to research Elliot Waves, and it's quite intriguing. From my novice experience in charting Elliot Waves, it's likely (according to the Elliot Wave Theory, and if I'm applying it correctly) we will get two waves up now (for the 4th and 5th leg) before resuming the overall down trend.

So in the short term, we may actually get some strength, but that strength should only be used to short-term trade long, and really used to exit long positions and go short.

Anyways, other than the markets... good news I suppose for the troops, because they'll be back in 16 months. Right? We shall see. Also, all of us should be able to "feel better" about ourselves since we will now be footing even more of a bill for welfare, aka, "spreading the wealth." Yes sir, glad to be helping the poor in this country. What the majority of Americans are saying is that we all need to be concerned about equality, everything else such as the economy doesn't really matter, as long as no one is getting ahead of the other... it's all about leveling the playing field!

Now I'm going to sound like a selfish prick now, but it's truly what I feel. Now that we'll be punished (taxed more) for getting ahead, there's really no reason to get ahead. So much for being an engineer. Scientists, doctors, engineers, research, these are all the driving force behind a growing economy. And to inadvertently discourage that through taxes is just sad. Sorry if you're one of these majors, but seriously, I might as well have majored in religion or art history or any of the other 10 majors listed in that article where I could have had partied my way through college and still came out with the grade I have now, rather than slaving my days away in the labs each and every week. [Please don't get offended by that "Top 10 Worst Majors" article, it was merely used to make a point, although I'm not going to lie, some of those majors are pretty... well, let's just leave it at that.]

Lastly, I'd just like to remark that those who think trickle-down economics is ridiculous, and that it's just the Wall Street Crooks and Corporations that are getting rich, and no one below them. You're wrong. Just look at all your Finance friends that ended up with no internship last summer, or who have no idea where they are going to work now. When the company dries up, so do we. And it's not just finance majors, I have many engineer friends who are having a hard time finding jobs right now. Why? Because the companies that are supposed to trickle-down that money to us via hiring us are no longer hiring. When the companies do bad, they stop hiring. It's a simple fact. And as a graduate this year, I'm going to have to fight to find a job. Thanks guys, I guess I have no choice but to trust what you guys are voting for, really. Let's all band together and miraculously "trickle-up" that money starting from the poorest of poor receiving welfare.

United States of America : No longer a place where the government gives you a hand-up, instead, a hand-out!

Saturday, October 25, 2008

ABT in Taiwan Speaks Up

Recently an American born Taiwanese by the name of Eric has made national news in Taiwan. Naturally he speaks English very well, and surprisingly, his Taiwanese is also very good. I urge everyone to watch the following interview with Eric, after he spoke out against Zhang Mingqing (an ARATS official from China).

At the university: http://taiwanyes.ning.com/video/video/show?id=1970702%3AVideo%3A374755
Interview: http://www.youtube.com/watch?v=wbqBn00bpaE

It's now or never. Taiwan will be decided by our generation.

Wednesday, October 22, 2008

DaHwa News (大話新聞) Host, Cheng Hong-Yi Coming to Seattle

Found out from my dad this weekend that the "all-star" of political talk shows in Taiwan (at least for the Green side), is coming to Seattle to help raise money for FAPA. Check out the flier in Mandarin here. According to the FAPA September newsletter, these are also his other tour stops:

October 31: New York City
November 1: Washington, DC
November 2: Houston
November 3: Seattle
November 5: Los Angeles

Although it says to go to fapa.org for more details, I can't seem to find more details. If you find those, "more details," feel free to let me know!

In any case, word from my dad says that he will be speaking in Seattle at the University of Washington campus on the 3rd of November. I believe the time was 6 or 7PM, and the location is in Kane Hall. I'll update this if/when I get confirmed time. I assume he'll be covering just the general happenings in Taiwan right now, and probably take some Q&A. But, I'm just speculating. Edit: Looks like there may be a dinner involved as well, so the location may actually be in Bellevue, will update if I find the right information!

Saturday, October 18, 2008

Ma's Peace Agreement

As if Ma was reading the minds of all those who are cautious of him, Ma hopes to achieve a peace agreement with China sometime in the future, and does not rule out doing so during his term in office. If you've been following my comments and posts, you've probably seen me comment a few times about how there might not be a 2012 election- well, a peace agreement is certainly one of those things to be on the watch for that may affect the 2012 elections.

Can anyone name anything good that Taiwan has received in return for Ma's agreements in his 5 months in office? Let's see:

Cross-strait flights have been dismal, and Taiwan airlines were notably left out of some of the new cross-strait flights in the agreements. Cargo flights, which would have benefited Taiwan's air-cargo industry greatly, were also left out of those agreements.

Ma praises the agreement with China to use Zhonghua Taipei, even though there was already an agreement in the past that requires them to do so. What does Taiwan get? Slip-ups in China less than a week after, referring to Taiwan as Zhongguoa Taipei, as well as being placed near the "C" category in the Olympic line.

I think it's safe to say, that any sort of agreement with China on such a thing as a peace agreement, would be devastating to the safety and sovereignty of Taiwan. I surmise that a peace agreement would be only putting into paper what China has already stated, that China will not attack with their horde of missiles as long as Taiwan does not formally declare independence. But knowing how China works in its wile ways, something along the lines of reducing the number of missiles aimed at Taiwan will be done in exchange for a a formal declaration by Taiwan that they will never declare independence, thus forever ruining Taiwan's autonomous future.

Taiwan is currently in a box, with two doors. One goes to China, the other goes to a free and democratic Taiwan. An agreement with China would most certainly close and lock that door of a free and democratic Taiwan. Thus, the only way out for Taiwan in this box is the go to China. Taiwan cannot remain in this box forever, in this de-facto, in-limbo, autonomous-state. Why? If you were stuck in a box, eventually you will suffocate to death, or starve to death. You need a way out. Just like as if you were in that box, China will slowly suffocate Taiwan's international space until Taiwan has no other option than to go through that one door that is Taiwan's only option at that point.

Case in point: This article in today's TaipeiTimes points out Bush's most recent move to continue to distance the U.S. from Taiwan, even though the unofficial, official, comments by the U.S. in regards to Taiwan has always been that is one of U.S. greatest democratic ally in the Asia-Pacific region. Bush has left-out Taiwan in the "visa-free" countries list, that Taiwan was likely qualified for. Although I can think of one (or some) incidents where a "Taiwanese" was in the U.S. spying for China. But the likely reality is that these "Taiwanese" that are spying for China are actually Chinese living in Taiwan, that moved to the U.S. Anyways, regardless, it is clear that China is suffocating Taiwan in this respect.

Sunday, October 12, 2008

China to McCain and Obama - "Watch Yo' Self!"

As ridiculous as it sounds, China has not only warned the United States of it's "wrong-doing" in approving half of the original $12 billion arms package to Taiwan, but also proceeded to turn the tables on the two presidential candidates (another article here), Barack Obama and John McCain. Both Obama and McCain had good things to say about the package finally being approved, with McCain taking it a step further and calling for the U.S. to also approved the F-16s that were not included in this arms deal.

Really? I mean seriously. We are now taking threats/orders/warnings from China?

"We expect U.S. presidential candidates can realize this and stick to the one-China policy, observe the three Sino-U.S. joint communiques, oppose 'Taiwan independence' and advance bilateral ties,"


How about expecting the U.S. to also stick to the Taiwan Relations Act as well as the Six Assurances, from which the U.S. promises to continually provide Taiwan with arms sales in order to allow Taiwan to defend itself, without consultation with the third party, China. And yet, by allowing China to call on the two presidential candidates to stop with the arms sales and proceeded not to respond harshly against China's threat, they are in affect bringing China to this "bargaining table."

Can we get a president who has the balls to tell China no? The biggest threat of this century will be how the U.S. deals with the growing threat of a "soft" China. We cannot standby and wait for them to evolve "softly" into a "soft superpower" without checks. When China gets to where it wants to be, there will be not "softness" in their projection of power across the world. China rules with an iron fist, and does what needs to be done to drive its propaganda machine across the globe. That is why, no matter how optimistic the world and Ma's administration may be, expecting China to "see the light" in Taiwan's democracy and hope for them to become democratic is a lost cause. This is easily apparent in a lot of Chinese-Americans.

There are basically two types of Chinese-Americans in the U.S. (besides the apathetic, don't care ones). One type are the ones that, even though living in the U.S., for whatever reason (parents, extensive upbringing in China), they continue to spew the propaganda that the Communists crank out in Beijing. They cannot think for themselves. Even when they read/see/hear something opposite of what the propaganda machine says, they ignore it or deem it a lie. There is absolutely no doubt in their mind that Taiwan is an inseparable part of China, and there is absolutely no doubt that Taiwan is, and will always be a part of China. Even though they've experienced things like free speech, unfiltered internet, education that says otherwise to the Communists propaganda, they still eat up the propaganda that China throws at them.

So where does these optimism for change in China come from? Is it wrong to be optimistic about things like this? No, absolutely not. But perhaps it can be dangerous to be so optimistic, that we lack realistic expectations. When China says things like, "will prevent Taiwan from officially declaring independence, by force if necessary," and, "is of grave concern to China," when describing the arms deal by U.S. to Taiwan, and finally things such as this:

"[China aims] to subject the United States to coercive nuclear threats to limit potential U.S. intervention in a regional conflict"


Then, it should be clear where China stands. So lets be realistic, no, Chinese are not going to come to Taiwan, see how wonderful democracy is, then attempt to gather the people in a revolution to end communism in China. Sorry folks, the TAIEX has a better chance to hit 20,000 before China becomes a democratic nation.

EDIT: Again, just letting you guys know to check out the "Evri" button below. It's pretty cool, see my previous "Edit" in my previous blog entry for more info.

Friday, October 10, 2008

十十

Today is the "National Day" for Taiwan (or yesterday in Taiwan), or should I say Republic of China. It's actually quite a sad day for a supposed national celebration of Taiwan, because of the fact that President Ma has completely reverted things back to One China, different interpretations. Whereas in the past 8 years, Taiwan had made great progress in distinguishing Taiwan as a separate country from China, and that "One China" was really only, China.

If you did not know, which I would assume you don't unless you scour the web for articles on Taiwan everyday, Ma made the claim that China is a part of the Republic of China. Sure, the constitution may still say that, but everyone knows the constitution is outdated and needs to be redone. So much for the "mutual expectations" that he referred to in his national speech on 10/10.

"The people's mutual expectations are 'no reunification, no independence and no use of force' between the two sides. But we will not have wishful thinking, we will firmly uphold Taiwan's dignity and Taiwanese people's welfare," he said.

How can the people expect him to follow through with 'no reunification' if:
1) His party (KMT) is clear on the fact that the eventual goal of Taiwan is to be united with China.
2) He has continually downgraded the importance of Taiwan's sovereignty through his actions and words (remember his inaugural speech?)
3) He has the guts to still state that China (PRC) and Taiwan (ROC) are one country, and even further, that China is a part of the Republic of China (Taiwan). (Sorry for all these parenthesis with ROC, PRC, Taiwan, etc. but it's needed now that Ma has reverted back to these terms that are confusing as hell)

This is no longer about the internal bickering within the country, DPP, KMT, whatever. If you are Taiwanese, if you are from Taiwan, if you live in Taiwan, you need to know that the path that Ma and his cronies are taking Taiwan is one slippery slope. That slippery slope that once Taiwan has fallen on, will likely never be able to recover from again. Ma's administration is quickly turning everything Taiwan, into China this-and-that. At the same time, their administration is moving towards censoring the media- one of the finest points about Taiwan's democracy, which has consisntely been rated #1 in terms of its freedom of speech and media. If you aren't alarmed about this, you should be. One of the best ways to control the people is through media. Feed them what makes you look good, and block all that criticize you. It's what China does, and it's what the KMT is trying to start to do.

Wake up people.

EDIT: By the way, check out the "Evri" button right below! It's a new company that's about content discovery. It's a local company as well, so support them by adding them to your blogs. Basically it tries to analyze the text from my blog post and then when you click on it, it comes up with potential articles on the internet that may be related/of interest to you. More info can be found at their website, here.

Friday, October 3, 2008

Vote These Communist Bandits Out This November

Find your representative here. If your representative voted for this bailout, it is your duty to remove them from office this November. Regardless of party and affiliation, they must go. All polls prior to these votes as well as even after point to a majority of Americans who are against this bailout. We voted these representatives into office to represent us. How can this supposed "bailout, save the economy, save the world," legislation fly through the senate and pass the House when the majority of us are against it?

So do the right thing, vote them out of office. For those in WA, these are your "Patriotic" (Communist) bandits that have chosen to take your taxpayer money and send it to foreign countries around the world, including China.

Adam Smith - Dist. 9
Rick Larsen - Dist. 2
Norm Dicks - Dist. 6
Brian Baird - Dist. 3

Not proud of my district, where Adam Smith decided to AYE for this bill. But I am surprised/pleased to see that WA state actually went from a 5-4 (out of the 9 representatives for WA) FOR the original bill on Monday, to a 5-4 AGAINST the revised bill today.

Moving onto the markets... So much for the bill that needed to be passed in order to bring "stability" to the markets. If by stability they meant more selling, well that was a given for anyone who had an ounce of brain left, which none of the four above do. If you've had any sort of conversation with me about the market, and/or, read any of my previous posts, you know where to be:

1) Short
2) Cash
3) Fetal position

From Yahoo! Finance:

The turnabout came after Congress approved an amended version of a $700 billion plan to purchase distressed assets from financial companies. A knee-jerk reaction by traders sent stocks down sharply as they sold the news of the plan's approval.




Notice the immediate impact of the bill passing, a long red candle, the shorts' best friend. Furthermore, it is down AH, as well as the Futures being down. Monday? Doesn't look too happy for bulls.

Anyways, if you were too lazy to call, fax, e-mail, write, talk to your senators and representatives, fine. But you can make up for it by voting the above "AYE"-ers, that said AYE to socialism, out of office.

Sunday, September 21, 2008

Another Reason Why I Don't Fly China Airlines

I have always flown Eva Air when flying to and from Taiwan. Even when it was more costly to fly Eva Air over China Airlines, I've chosen Eva Air. Even these past few years when China Airlines seemed to have cleaned up its act somewhat, and offered better/larger/roomier seats (from what I hear) compared to Eva Air, I've chosen Eva Air. Furthermore, China Airlines provides personal TVs for each seat, whereas Eva Air economy class did not.

Why? Things like, severe turbulence injuring 30 passengers (Sept. 21, 2008), and exploding jets (Aug. 20, 2007), I tend to like to avoid.

Unfortunately last year when I was in Taiwan and made a trip to Hong Kong, I had to fly China Airlines due to certain time constraints. That was probably the most scared I've ever been on an airplane. Even though there was hardly any turbulence, you just never know with China Airlines.

Take a look at this website here that has a list of all airlines and their "accident rates."

China Airlines ranked 90 out of 90- where 1 is best, 90 is worst. For some reason Eva Air is not on the list, not sure why, but Eva Air is regarded as one of the best airlines in the world in regards to safety.

From Eva Air's Wikipedia:

Internationally, EVA Air's rapid expansion and increased passenger volume was boosted by its safety record, in [stark (emphasis added)] contrast to its primary competitor, China Airlines.
Especially for those who fly between Taiwan and Seattle, is there any reason to fly China Airlines? Considering the fact that China Airlines has discontinued flights between Taiwan and Seattle, there shouldn't be any reason. Do yourself a favor and avoid CAL. Is that 2-4 inches of extra seat width worth it when you consider they have one of the worst, if not worst, safety records of all airlines?

Thursday, September 18, 2008

Market Action

The volatility was ridiculous today. S&P was down 40, then back up 60 to close up 3% or so. VIX off the charts as well, spiking into 52-wk high territories above 40. The "fear" is here. It seems that the breakdown of the SPY is failing, but that's what I said a few days ago before it dropped into the 116s. Huge news regarding shorting all over the place today, most notably the UK banning short selling of financials, which quickly prompted shorters to run for cover and marked the significant reversal today. After hours, rumors of the SEC to temporarily ban short selling (on financials only?) as well, has created a positive opening for tomorrow.

I took a significant position in SPY puts today and will likely hurt for a few days as the market responds to possible short selling rule changes. I still remain significantly bearish on the market, and there is probably temptations to get on the bull train and ride this rally for whatever it's worth. But, just as quickly as the indices reversed today, it could be just as fast and hard to reverse the other way.

I have some LDK 40 calls expiring tomorrow with a cost basis of $5. Prior to today, it looked like the best I'd be able to get was around $2, a loss of $3 per contract. But, hopefully with the gap up in the morning, I will be able to get out with even a profit! If the calls are above $5 at open, I will likely exit half the position, and set a trailing stop on the second half.

Good luck, happy tradings!

Wednesday, September 17, 2008

Toxic Milk From China, Wait Panda-Love!

A couple days late, but if you haven't heard, tainted milk powder containing melamine was exported to Taiwan from China, resulting in a few deaths and thousands sick. Furthermore, the tainted milk powder was apparently known way back in June, but was kept quiet due to the upcoming Olympics. "We don't want to mess up our coming-out party, so lets cover this up, and let it blow up in Taiwan." Although I'm not too familiar with the actual trade regulations currently in place and the actual details concerning this specific export of milk powder from the Chinese company, Sanlu, to Taiwan, I think it is safe to say that stricter oversight and regulations need to be in place regarding trade between China and Taiwan. The people of Taiwan should be calling for their government to do more than just set a temporary ban on dairy imports from China. This article states,

During the meeting, Liu also promised that the government will tighten safety inspections of all dairy products imported from China, with each shipment subject to careful scrutiny.


Is it just dairy products we need to be worried about? What about the previous toy products contaminated with lead? What's next after dairy products? The government of Taiwan needs to tighten safety inspections of all dairy products imported from China. This is even more imperative as Ma, Ying-jeou continues to relax trade with China. In a world where, God forbid, there exists a "Taiwan province, China", to me it would seem like trade regulations would completely cease to exist. No regulations and no oversight would mean any and all products made in China would easily be shipped around, including to a, "Taiwan province."

I'm almost prompted to even say, Taiwan deserves this, as the majority chose to pick the leader who will literally open up the island to China. With everything comes consequences. I've mentioned in the past, sure the opening up of trade to China may even boost Taiwan's economy for a bit (something that has yet to materialize), but at the same time, Taiwan will be more reliant on China. Thus, when China's economy busts, so will Taiwan. And in this case, when China's products bust, they'll just pass it on to Taiwan, because that's what Taiwan wanted. "We want to enjoy the economic growth that China has."

But then I take a step back and realize, no one deserves this (Except for maybe the CCP, and Hu, Jintao, and
China's foreign ministry spokesman Qin Gang, and the unscrupulous business owners who try and nickle-n-dime their way through life at the expense of other people's lives).

But hey! Look on the bright side, we're getting pandas, so all is good and well. This specific article is nice in that it touches upon the facade that China is putting up. A sort of hand-waving technique that China is so good at. If there was an Olympic sport for hand-waving, China would win, hands-down-- or is it hands up? China has a Staples Easy Button
™ with the word "Taiwan Only" on it. But don't mind that button that will unleash 1000+ missiles at Taiwan, here's some pandas. The article also mentions the history of panda giving by China, citing a "Tradition of Giving,"

Tradition of giving

— Panda diplomacy existed centuries ago, when Empress Wu Zetian (690-705) gave two to the Emperor of Japan

— In 1972 President Nixon was given a pair of pandas by Chairman Mao while visiting Beijing. Two years later Sir Edward Heath received a pair from Chairman Mao

— China offered the reunion pair to Taiwan in 2005, but the gift was refused

— In 2006 Robert Zoellick, the US Deputy Secretary of State, cuddled a five-month-old panda cub during a visit to China, which was seen widely as a signal that he wanted to improve Sino-US relations


I'd say, the pandas are more like a symbolic gesture of China telling you that you are their bitch now.