Bear Rally, Intact
Research for Online Investors

by John Dalt

4/24/09

The big news today is the “stress tests”.  The market did not know what to anticipate.  If the tests showed the nation’s l9 largest banks were ok, the report would be treated as a joke.  If any banks are singled out, they will be pummeled.  Most of the big banks are in trouble, some actually worthless, if cash and cash equivalents are balanced against liabilities.  The question is can they generate revenue fast enough to cover future write-offs and increase coverage of present liabilities.  The New York Times had a good article on this issue.

For a list of banks subject to the stress test and the latest release Yahoo had a late story.

The Ken Lewis saga continues. This is taking on the look of a divorce; he said, she said. Ken Lewis has been through a “John Galt Moment”, and did not like what he saw. He thought the government was there to help him. They ended up telling him what to do. Once you go to the dance, you have to realize what happens at the end of the night. Somebody is going to get what they want. The government has the money, the car, and makes the rules. Who calls the game?

Ford only lost. $0.75 per share in the first quarter, better than expected. Sales were stronger than expected. Ford is looking more like a survivor all the time. They have enough money and credit to survive into 2011. Its stock price is rebounding, in anticipation of picking up market share as GM and Chrysler fall by the wayside. Alan Mulaly released a statement that was upbeat, feeling Ford had turned the corner in North America, and would profitable in 2011. Ford is talking about ramping up production, GM is shuttering 13 of 20 plants for nine weeks this summer.

Worldwide gold mining production has been falling for eight years.  Throughout the ‘90’s prices did not justify exploration budgets.  Miners hunkered down and protected their cash.  Annual gold production is approximately 80 million ounces.  A large discovery is 5 million ounces, but there have been only five discoveries this large in the last 15 years!  Reserves are not being replaced. The industry is expecting a buying spree by large miners looking for reserves.

Be careful, exploration companies are dangerous territory, they are shoestring operations.  They may have an office, a claim, and boring logs that show gold, but no permits to mine.  Mining permits can take years to obtain, and bringing a mine into production takes more time and millions of dollars.  The Canadian exchange is chock full of junior miners waiting on a buyer, their prices are depressed even more than the general market as they have no cash flow.  Three junior miners I have followed, and traded a few times, are Polymet Mining (PLM), Capital Gold (CGLD), and Uranium Energy (UEC).  This is not a recommendation, these things jump and fall like frogs, be careful.

I have written for the last three weeks, I am short the market expecting a back test of lows.  At the very least, I expect the market to correct to 800 on the SP500, possibly to the 750 level.  Today I can verify, watching the screen does not influence it one bit.  When do you jump off a sinking ship?  The rally of the last six weeks has taken on a life of its own.  It is like the monster from the black lagoon, eating everything in front of it, especially my trading account balance.  The SP500 is at 866!

There is a political storm brewing over the interrogation of al Qaeda prisoners, and allegations of torture. Oh! Bama released TOP SECRET legal documents from the former administration and justice department concerning the enhanced interrogation technics.  He promised no prosecution, it was time to look forward not backward. Many of his supporters want prosecutions, Oh! Bama has reversed course, and left it up to the Justice Department to decide. Yesterday, Nancy Pelosi issued a statement that she was never briefed and did not know anything about water boarding, or other enhanced interrogation techniques. Today she is backtracking, as chair of the house intelligence committee she was briefed multiple times, but she denies that she was told that the CIA would use any enhanced interrogations. I have read the TOP SECRET reports at the center of this issue, they are available at our website under the diversion heading.  You can access them here.  These have nothing to do with investing, but everything to do with your freedom.  The capitalist system, our ability to invest in profitable companies, and individual freedom are at the core of our existance.  I think you will be amazed at the care taken to protect terrorists rights.  To call SEER training torture...

I'm from the government, and here to help you!

The information presented in this newsletter is based on generally available news releases, corporate filings, current events, interviews and the editor’s opinions. It may contain errors and you should not make investment decisions based solely on what you believe you have read here. Do your own research, it is your money. If you lose it, it is your responsibility, not ours or your grandmothers! The editor may or may not have a position in any securities discussed. The editor may have held a position in a security earlier, or in the future.

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