A Chart a Day #1: GMGMQ (Gov Moto) and CIT

I've been slacking on posting charts here lately, sorry about that. So to try and make up for it, I've decided to post a chart a day for at least the next week. Things are starting to get interesting for the first time in a while from a technical standpoint, so I don't expect to have any trouble finding charts. I'll post some nice breakouts, some common big patterns I'm seeing, and some charts of stocks with news. The usual stuff I guess. Tonight I've got two to kick it off.

First is GMGMQ, which is the new ticker for the bankrupted Government Motors. All I have are questions about this one...

• if GM is bankrupt, why is this a ~$1 stock?
• when GM exits bankruptcy tomorrow, is this the new co?
• why is the sept. $1 call trading for $0.13?
• wtf?

Next I've got CIT "group," which also has that zombie look. The CIT chart below is on a much longer time frame, a three year with weekly candles (as opposed to the sixmonth, daily above). You can see that $1.65 has been an area of support for the past nine months or so after a multi year decline. Well today CIT got some bad news from the FDIC and its trading below that *key* level in the after hours.

You couldn't pay me to touch this stock, but agressive traders might try and short it at or above that key level. Although given the news, it might not ever see $1.65 again. On the other hand, I would have said the same thing about GM...

Gangsta' Government

Hat to my mom.

Saturday Rock Blog: Like a Rock (in water)

Monday will see the end of an American icon in the stock market. The General Motors name and business will live on but the stock will go to zero. It just goes to show that the truth is that most stocks do not go up in the long run. A few stocks go up a ton to balance out all the losers like GM. Those winners combined with the rebalancing of indexes like the dow jones and S&P create the illusion that stocks are a winning investment vehicle on average. Buy and hold is a scam sold by wall street to the American public in my opinion. Buy low, but don't forget to sell when you are high!

I have to say though, the public and the stock market sure are taking the bankruptcy of GM and Crystler disturbingly well. How is it that the broad market can rally as the biggest US corporations fold under stress? Do investors not see that wave corporate defaults moving from industry to industry? First it was home builders, then we had the financial sector essentially go bankrupt (subsidies mostly prevented actual chapter 11 filings(but I didn't forget Bear Stearns, Lehman, Wamu and IndyMac!!)), now its spread to the car industry, only Ford was saved. I can imagine next we'll see a wave of retailer bankruptcies, Circuit City already went under. I'm no expert but maybe Dillards and Sears will be among the dead. Then I suspect the airlines will file for Chapter 11 again after rising fuel costs combine with less frequent travel and horrible customer service. Eventually it will hit the technology sector as unemployment takes its toll on business and consumer spending. Is it really that hard to figure out, is the stock market so naive? Investors should be looking at GM and wondering which shoe will drop next, not assuming gleefully that this *must* be it, finally. Sometimes I just have to laugh at this market because it really seems like a big joke to me. Its supposed to be funny, right?

Here's GM since 1970:

And by the way, vehicle sales are about where they were when GM went public. Where did all that money go I wonder? Hmmmm! Vehicle sales over roughly the same period as the stock chart from Calculated Risk:

As a side note, it looks like the taxpayer gets shafted yet again on the GM situation. Silly taxpayers. How did we so rapidly go to a system where the feds have to throw money at anything that moves? And as they run out of taxpayer money, they print cash as a underhanded tax. This can not end well.

Saturday Rock Blog: Sure Shot or Can't/Won't/Don't Stop the Bailouts

Bear Stearns bailed out by JPM bailed out by feds
FNM and FRE bailed out by feds
GS bailed out by BRKA
MS bailed out by MUFG
AIG $130B in bridge loan bailouts
Emergency Economic Stabilization Act of 2008
Citigroup gets $45B then splits up
GM $13B warm-up bailout
Crystler gets $5.5B in warm-up bailouts
CFC & MER bailed out by BAC bailed out by feds

What am I forgetting?

Update:
Throw BofA and Citi out of the Dow!

GM Death Spiral or Another $0 Price Target

This time its on GM, already down over 90% in a year. Whats with these jerk off analysts, have they no shame? To set the record straight and note the incompetency of Deutsche Bank (read douchebag bank) (DB) analysts, I'd point out that they had a buy on GM as recently as February and were recomending hold until today. I find it comical that they tell their clients to hold GM all the way up until today when they recomend selling and the stock drops another 30% under their clients. I'm sure that DB's customers that held until now were happy to see their bank finally recomending sell to save the last 5% of their investment. Way to go douchebag bank! Note this is a follow up to a post I did on IMB.

Bullish Setups for Knife Jugglers

Where to start? This market is full of amazing buying opportunities. Tonight I'm going to throw a few long ideas out there in stocks that seem to have stabilized and a few more that might get a dead cat bounce. Obviously, its going to be very hard for any stock to rally if the market continues to collapse next week but I think we have reached a point where buying stocks is extremely low risk. There is no reason to think that the bear market is over but there are alot of reasons to expect the market to bounce after the Dow had its worst weekly loss ever.

This weekend everyone is talking about AAPL which had a 9% gain Friday and barely had a loss for the week despite the broader market getting crushed. I see AAPL finding support at $87.5 and not having resistance till $115. I would note however, that AAPL is in a severe downtrend (see the cross of death) and there is no reason to expect anything more than a bounce based on this chart. I'm targeting $115 and keep a tight stop at $87.

The reward to risk ratio on that trade is not very high and you might be looking to hold AAPL for longer than the week or so it should take it to hit $115. A decent looking longer term pair trade is to short three QQQQ's for each AAPL that you go long. The AAPL/QQQQ ratio has found long term support at 2.7 and is showing positive divergence on the CCI. This chart really emphasizes the relative strength in AAPL lately:


Two others that I ran into this weekend were ICE and IBKR. These are both companies that I have liked for a while and the stocks seem to be finding some serious support. I had been tageting $65 on ICE since June and buyers have sure stepped in at that level. It looks good for a rally back up to that breakdown area at $115:


IBKR looks good up $26 but might find resistance at the declining trendline shown in red. Part of IBKR's business is in options market making and you have to think they are making a killing right now in that area. This is one I would want to buy and hold.


Other stocks that I won't bother posting charts for but have been crushed and might get a big dead cat bounce are CHK, CVX, NVDA, JWN, GM, JASO & SPWRA.

Disclosure: I own AAPL calls