1. If the Bank of America February 5 puts weren’t so expensive, I’d be buying a few thousand of them. It isn’t if this stock is going to trade on the pink sheets, it is when this stock will trade on the pink sheets.

2. 847 remains the level to watch on the S&P 500. Stronger above weaker below.

3. Existing home sales numbers came out this morning. They were better than expected based on revised downward manipulated estimates. REITs will go lower. They have no choice. Nature’s math will prevail. It always does.

Peace

The Golden Ratio

General Electric (GE) announces a horrid, dismal quarter. Then, they fire up their Public Relations machine by putting their delusional thinking into a press release that says not to worry.

“The first quarter dividend is done, and we are committed to our plan for $1.24 per share for the year. We believe the GE dividend provides our investors with a solid return in this uncertain time,” Immelt said.

Stop believing. You are hoping when you should fear. GE’s dividend will be cut. It is already written. GE grew through acquisitions. That games works really well…until it doesn’t. GE is an over leveraged hedge fund. When you grow through acquisitions and you are over leveraged, the survival of your business becomes dependent on the price of your equity. As GE’s common stock moves lower, it’s probability of gambler’s ruin increases. Moodys already looks ridiculous for not yet having lowered GE’s Triple A rating. As the stock moves below 10, they will look even more ridiculous.

Peace

The dividend is safe, until it isn't

In markets we often look to historical comparisons. As they say, history doesn’t repeat, but it often rhymes.

This chart is courtesy of dshort.com

The blue line is our current market. We are in a nasty global recession. The market has more work to do on the downside before anyone should be thinking about a potential bottom. It is nowhere in sight. Stay tuned.

Peace

Click to Enlarge

Are you hoping when you should fear and fearing when you should hope?  Fear and hope are strangely intertwined emotional states.  Next time you feel either, think about whether you should be thinking about the inverse.

The market did not do too much today.  The S&P 500 ($SPX) is destined to break down through support from December 29th at 857.  I am not sure if it will fall through gradually or suddenly.  Whichever way, nature’s math will prevail.  It has no choice.  It is written.   Stay tuned to Trade the Picture.  You’re on the right channel.

S&P 500

What is nature’s math?  I’d describe it as the circadian rhythm of the universe.  Nature’s math is the foundation of all we are.  The building blocks of everything, from waves in the ocean to biology to fashion and market trends.  Everything beats to the same rhythm.  Strange place.

We live in Hyperspace.

Peace

The Swim

Probe of Lehman collapse escalated: report

This collapse was easy to see and I have written on if extensively in other forums.

Click to view larger

On to other things…I want to tell you about my pal, Ida. Ida is a golfer. She took up golf in her forties. Ida has 11 hole in ones. Quite a large number for a golfer. She is 97. I can hear her now saying….”I’m gonna get one more.”

The other night I finally asked her. How do you do it? How do you get so many?

She says, “oh, you just hit it down the middle, say a few hail marries, and it goes in the hole.”

That rang familiar with what I wrote here. Dream it, see it, do it, repeat.

While I am away, take some time to read one of my all time favorites. Bobby Evans definitely has a place in the volatilist hall of fame. He was optioning movie scripts that didn’t even exist while head of Paramount. He created a derivative market in the movie industry. What an unbelievable story. It also translates well to film. I am looking forward to having lunch with Bobby.

Peace

Bobby Evans