More Reasons to Avoid Bottled Water

Back in January, I had pointed out at least 4 reasons to avoid excessive drinking of bottled water. Now, there's another reason...there are contaminants in bottled water. While the water is still within EPA standards, and thus, legally safe, it really is no purer than standard tap water. (thanks to a faithful reader pointing this out in the comments section...I felt it should be highlighted).

P.S. Have you noticed that many of the bottles have gone to these hourglass-shaped designs? The claim is that it reduces the amount of plastic used to make the bottle by about 30%. Nice move by the companies (financially and for the environment).

Good Week, Bad Week

Good week for:
1. Scholar athletes, after a report from the NCAA revealed that the graduation rate for these student-athletes increased to 79%, an all-time high. However, only 60% of athletes in men's baseball, football and basketball are only graduating. Overall, this is encouraging, but there still needs to be a better metric. Are more graduating because of more help (i.e., getting answers to test and super easy courses)? Or, are they truly achieving more academic success? Perhaps they can examine how many progress successfully into the work-force or go on to graduate school.

2. Googlers, as researchers at UCLA found that searching the internet improves cognitive function over time. Now just don't search the internet while drinking alcohol, as this will offset the effect, as researchers at Boston University found that alcohol results in brain shrinkage.

3. AIG executives, after they partied in a luxury resort one week after the US government gave them an $85 billion bailout. This is disgusting and these people should be prosecuted to the fullest extent of the law.

Bad week for:

1. Government oversight, when a former government auditor revealed that an agency within the Department of the Interior that was supposed to help regulate the oil industry, was routinely engage in unethical practices, including bribes and sexual favors. This report is nauseating, but is blatant evidence for how the oil industry has congress and the government wrapped around their finger.

2. Adam "Pacman" Jones, who got into trouble, yet again, after he brawled with one of his bodyguards in a hotel last weekend. He was suspended for 4 games by the commissioner. This man is out of control, and he should be banned from the NFL. He has repeatedly demonstrated that he just cannot behave. A man is paralyzed because of him. He is a supreme troublemaker. Playing in the NFL is not a right, it's a privilege.

3. Not having a prenuptial agreement, after a Cambodian man literally sawed off half of his house, leaving half to his wife (see above image).

4. The "Father of Conservatism", after his son, Christopher Buckley, a writer for the National Review, officially endorsed Barack Obama over John McCain. He had many criticisms of McCain, including his changing stances on issues, his anger, negative attacks, and also his choice of VP candidate. He also praised the demeanor and intellect of Obama. That is impressive honesty. You've got to admire someone in that type of spotlight who has the courage to say those types of things rather than blindly following one party or the other.

Holy Cow!

In the words of the late, great Phil Rizzuto....HOLY COW!! The markets EXPLODED upward today. The DOW was up 936 points (an all-time record). It appears that the coordinated efforts that came out of the G7 meeting on Friday and from European leaders on Sunday to back up banks (2 trillion dollars in Europe) and free up the credit markets finally relieved some fears. This allowed the follow-through day to occur today in the markets after the wildly volatile day on Friday. The gap up held and it was steady buying throughout the day for 10-11% gains on most of the indices.

This DOES NOT mean it is the start of a brand new bull market. The market is only back to the point it was last Wednesday. But it certainly is promising. The healthiest thing for an intermediate term rally would actually be consolidation (a pull-back) for a couple of days. Today involved panic buying (people not wanting to miss the huge rally) just as last week was manifested by panic selling. The truth will come on a pull back. Will the sellers re-emerge? Will the bulls step up and defend the recent low? Will we put in a HIGHER low, and big the classic "stair-step" upwards? Then we will see. For now, let's call it a great day, and take it one day at a time. While the price action was bullish, this rally was way overdue. On the bearish-side, extreme governmental invention was needed to stave off disaster. The fact is, we still may be facing a pretty hard recession, and company earnings will likely be less than stellar for some time to come.

Futures

Early check on the futures markets shows that the major indices are up 3-4% in early trading. This COULD be the intermediate-term bottom folks. We now have two major ingredients in place: 1) Very oversold conditions; 2) A "reversal" day (futures down big, gap down hard, rally into the close and close at high of day in positive territory)...it was almost perfect (indices closed slightly negative). We could now have the 3rd and final piece: A follow-through day (major accumulation day on heavy volume). If the futures remain up large, the gap open doesn't fall apart, and the markets stay strong until the close, this 3rd criterion will be fulfilled. That should lead to a nice 15-25% rally up until we meet heavy resistance at around 10,000-10,500 on the Dow. This is the area from which the markets went into free-fall and will also be where the decline 20 and 50 day moving averages will be located after the rally. Thus, this should only be a bounce within a primary down trend. In addition, there still could be extreme price swings in both directions given the unprecedented level of the volatility index (VIX- closed near 70 on Friday), so you may have to stomach big turns for the next several days. More cautious investors may want to let the dust settle some more before making sizable entries.

Happy trading and good luck!

The Psychology of Tipping

Great article in the NYT today entitled "Why Tip?". Basically it discusses the pros and cons of tipping in restaurants and details the story of a restaurant in San Diego that has abandoned tips and placed a service charge in place for all meals. I have to admit, I haven't thought about tipping much lately...I pretty much standardly tip 20% without thinking about it. I don't really factor in the quality of service, and I honestly can't remember any times that the service was so bad that I even had to think about reducing the tip amount.

The main reason the owner of the San Diego restaurant eliminated tips was because the staff was squabbling over money, including waiters angling for better shifts and tables, and the kitchen workers didn’t feel they were getting a fair share of the profits. One of waitress interviewed for the piece claims she can concentrate on the job better now because she's not focused on kissing up for good tips. The counter-argument, of course, is that by leaving the size of the tip up to the discretion of the customer, it places incentive on the waitstaff to provide the best service possible. However, a study found that there is only a 2% correlation between the quality of service and quality of tip, thus overall, the incentives may be diminished.It would have been interesting to know if the quality of service improved or declined after elimination of the tipping rules at that restaurant (or at others that have done the same thing).

How do you all feel? Do you feel that tipping gives you leverage in obtaining better service? Do you change the size of tip based on quality of service or only reserve that for only major offensive violations in quality? A lot of restaurants do have gratuity included for parties > 6...is quality of service diminished for bigger parties? In Europe, where tipping is much smaller, how does the quality of service compare on a systematic basis? (in my experience quality in Europe has been good). Do you give bigger tips at restaurants where the waitstaff are forced to memorize all of the specials of the day and recite them without notes vs. with notes? (although impressive, I don't think I have ever decreased my tip size for the restaurants in which they allowed the waitstaff to use notes).

Can cockroaches live without a head?

I couldn't help but click on this headline story on MSN.com (ok, it wasn't a headline story, but it was on the front page). Amazingly, they can live for about a month without their head. They don't need their heads to breath and ultimately die of dehydration. That's why their indestructable! An entomologist at Delaware Valley College, who carefully decapitated cockroaches, found that although they live for weeks, their learning is quite impaired.

There is an interesting quiz on insects on the Mythbusters page on Discovery.com.

Finally, A Bottom?????

What a wild day for the stock market on Friday. The Dow was down 600 pts in the first half hour and broke below 8000. This was followed by a massive rally, all the way to the area of the closing of the previous day's close. However, the bears stepped in again and produced a slow and steady decline again throughout the day back to below 8000. It would have been very ominous for Monday if we fell below that opening low. Then, around 3 PM, like like the Phoenix rising out of the ashes, the market started a 1000 point rally in a matter of less than an hour. At 3:45 the rally fizzled, and prices fell back 300 points, producing a negative close (-128 points). If one only saw the closing prices, one would conclude that it was a quiet day for the market. WRONG! An analogy for football fans out there, it was the equivalent of one of Barry Sanders famous criss-crossing spinning backcutting runs that netted a 1 yard loss. Check out the intraday chart below to see this volatility.

Thus, the major question is whether we saw the "bottom" on Friday. Some have remarked that it is very rare to make a "bottom" in the market on a Friday. However, data from the last 68 intermediate-term lows (at least 3 month low), shows that although Mondays and Tuesdays are the most likely days for the low to occur, Friday surprisingly, is the not the least common day, but instead the 3rd most common day to create an intermediate term low.

Day of Week # %
Monday 16 24%
Tuesday 20 29%
Wednesday 11 16%
Thursday 8 12%
Friday 13 19%

Check out this article from Jason Geopart at SentimentTrader.com. He provides data and accompanying charts from all previous market crashes. As you can see from history, the "low" after the crash was always challenged again. Things are not going to go straight up from here. "V" bottoms are very very rare. There is often a period of backing and filling.

Furthermore, I did some 'word on the street' investigation this weekend at the mall. I asked almost everyone I saw about the volume of customers and actual spending. Nearly every employee/worker noted a decrease in both volume of shoppers and actual spending, including those at the car wash, Bloomingdales, the men's shoes department at Nordstrom, and college students trying to raise money for kids with cancer. The only place where things were mobbed and the employees reported no decline in shopping and spending over the past several months was the women's shoe department.

So, in summary, we may have a tradable low in the market. Conditions are extremely ripe for a good relief rally given extremely oversold conditions (only 1% of stocks are above 40 day moving averag). But, let price action in the early week confirm that we saw the low on Friday. Is it going to be a final low in the bear market? Probably not. Look at this longer term chart of the Dow. It would be very unlikely to just abruptly stop the decline here and not retest the lows at around 7500 from the 2001-2003 bear market.



And, caution from an excellent technical analyst, Brian Shannon, who gives some historical bear market perspective on his blog alphatrends.net:

Dow Jones October 1929: Over a 23 day period, the Dow lost 49% of its value,
but that was just the start of the bear market during which the Dow would
eventually lose 89% of its value (386.10 to 40.56). How many people do you think
called the October 1929 low of 195 "the bottom" only to get decimated by the
continued weakness over the next 3 years? We remain in a bear market and ALL
rallies should be treated as guilty until proven innocent, meaning you need to
maintain a super strong defense. Do not be too quick to call Friday's low "the
bottom", there are serious flaws in our economic system and a lot of closets
with ugly contents are still being opened.

If you're quick and have some guts, it may be profitable to risk some capital now on the long-side, but don't go all in just yet.

Free Fallin'

The stock market continues its extremely rapid descent. The markets are not behaving like they do, even in "regular bear markets". Typically, there are viscous snap-back rallies even in the midst of a bear market. The price declines are simply remarkable and historic. Look at the chart. I said the other night that the Dow will hit 8500 soon, but I didn't expect it would be this week. People are simply liquidating their 401Ks, and institutional investors are just not stepping in. No one wants to hold positions overnight, as there is just too much bad news that keeps cropping out overnight.

I'm extremely concerned that the market decline will lead to an even deeper recession due to decreased spending. Simply, millions of people who have been piling money into 401Ks, IRA, and standard investment accounts are going to cut their discretionary spending as they have seen their wealth shrink. I know it will cut back my spending...fewer new clothes, big screen TVs, DVDs, expensive dinners. Consumer spending accounts for 70% of GDP. Car sales are plummeting. Did you see that GM's stock is at a 58-year low? So much for buy and hold strategies, right?

People keep calling me telling me to buy stocks now because they are so cheap. Well, you could have said they were cheap 2 weeks ago, and now their 20-30% lower. Let the market show you the bottom. Feel comfortable missing the first 5% rally. It's much better than losing 10% in one day. Please.

Now, to cheer up, go to NBC.com to watch the videos from the special edition of Thursday night SNL if you haven't seen it. Go play with your kids, if you have children. Tell someone you love them. Watch this video of Dana Carvey on the Tonight Show last night doing some great impressions. He's still got the skills.

Monkey Waiters

Ok, we need to lighten the mood. Watch this video (about 40 seconds in) to see monkees functioning as waiters at a restaurant in Japan. It's pretty remarkable and cute.

Otherwise, it's all doom and gloom. The economy is tanking, a coordinator world-wide rate cut fails to stimulate the plunging stock market, there's less than a month until we elect a new President. It's certainly not an enviable position (i.e., becoming POTUS). Whoever it is is going to have to deal with this economy, the credit crisis, high unemployment, 2 wars, global warming, a huge federal debt. One candidate has virtually no executive experience, and, while the other candidate may be more experienced, he is old, grumpy, uninspired, and has the equivalent of Miss Teen South Carolina as his running mate (and possible replacement President if he should fall ill).

Uggghhhh..................

Townhall Debate

Debate about to wrap up...haven't paid as close attention as I did to the VP debate, but it seems at first blush, that both gave relatively coherent answers, and reiteriated a lot of the points they have been making for months now. Both had good answers to whether Russia is an "evil empire". McCain tried to stress his experience, especially on foreign policy. Obama was overall more relaxed. I agreed with Obama's line on prioritization of major issues (and the order- energy first)...it was pragmatic and comforting.

I don't know. It seems like everything is falling apart at the seams in this country, but I don't know if either of them instilled confidence in the American people that they can turn this situation around. McCain has the albatross of being linked with Bush, and this disaster is happening on the Bush watch. Obama has the albatross of voting on the liberal side, which may or may not be good for some parts of the economy.

In the end, both held their own, and thus, although a solid job for McCain, Obama comes out the winner, as he has the lead in the national polls. McCain needed a home run, but I don't think he got one. Good closing comments for both. I will look at the post-debate transcripts to see if there is something big that I missed. Also, post your comments.

This is a philosophical issue between right and left, but Obama is definitely going to win points on considering health care a right, rather than a privilege. McCain said it is a responsibility. Personally, I think it is unjust that health care in this country is tied to your employment status and your specific employer. Just doesn't work efficiently and doesn't lead to good public health.

McCain: Not sure how he is defining "victory" in Iraq. What exactly does that mean?

McCain: Accuses Obama of voting for a fat bill with tons of subsidies for oil companies. Shame on you, Senator (Obama).

Obama: Good points on energy plan. McCain voted against alternative energy 23 times? Not a good move, Senator (McCain).

McCain: Tax credits (e.g., health care credits) won't do much for people in this horrible economy (lower wages, lack of jobs).

McCain: Has a nice line that Obama said he would forgo tax increases if economy was bad. McCain says, "I've got some news for you Senator, the news is bad." Nice zinger (and fundamentally correct).

Obama: I disagree with him. We cannot raise corporate taxes at this time. Curbs on CEO packages, yes, but if corporate taxes are raised as we head INTO a HUGE recession, it will mean leaner balance sheets and thus lower wages for workers and fewer jobs. Taxing companies may actually paradoxically decrease tax revenues to the government. Consumer spending accounts for 70% of GDP. We will not get out of debt by raising corporate taxes (or raising taxes on people making more than $250,000). The time to raise taxes has now passed. We need our economy to be thriving, and corporate tax increases will be like a firehose dousing out a fading campfire.

Markets Devastated

Today was another historic day on Wall Street. Markets plunged again, as the "sell the news" reaction to the Wall Street bailout package passed by Congress on Friday continued in the markets today. At one point the Dow was down over 700 points (after being down 777 points last Monday). A late day rally, due to rumors of a coordinated global central bank rate cut, provided a significant rebound, even though most major indices ended down about 4%.

Apparently, Jim Cramer was on the Today Show this morning telling people to sell. Unfortunately, this is not very good advice, at least not right now. I am not a perma-bull. In fact, even though my blog was shut down for some time, as those of you who speak to me on a regular basis know, I actually have been quite bearish for the past several weeks.

The market will still have more downside to come, and the Dow will probably hit around 8,500, however, this price retracement will likely occur after we experience a short-term rally. Why am I suddenly bullish? First, again, it is only on a short-term basis (on the order of 4-12 weeks). Second, we have hit extremes on mutiple technical and sentiment indicators which are all indicating that we are about to bounce. For example, the VIX (volatility index) hit an all-time high today (56), new 52-week lows his an all-time high, and the % of stocks above their respective 40-day moving averages is only 4%. Stochastics are showing over-sold conditions, and the markets printed a "hammer" candlestick today, which is often a good indicator of a reversal in trend.

We may still go down tomorrow, and may even retest the lows that were experienced intra-day today, but things cannot get much more oversold than they are right now, and the "rubber band" that defines the price action of the markets will undergo a snap-back rally. We don't know how far the rally will go, as there are multiple levels of price resistance overhead in the forms of horizontal and moving average resistance, however, selling what you own today, or even tomorrow, would be at a time when a short to intermediate bottom might be emerging on the charts. The time to sell will be when the next rally loses steam. Why then?

Because the stock market is undergoing a major correction, and rightfully so, as this is one of the worst financial crises in the history of the U.S. Joblessness claims are only going to start ramping up signficantly after the new year. Yes, the market "looks ahead" by about 6 months, but folks, sad to say, this economy is not going to get better in the next 6 months. We will be looking at 1-3 years of economic slowdown/recession. The charts look horrific, and it will take a significant amount of time to correct the extensive technical damage on all of the charts. Bear market rallies are expected, and they can be vigorous, but don't lose sight of the long-term trend (down, down, down).

Hang in there.

Offshore Drilling

Why we shouldn't be increasing offshore drilling for oil: Exhibit B- oil spills that destroy our coastlines and marine life (this one is due to damage to the oil rigs from Hurricaine Ike).

(Exhibit A was the government's own study that indicated that the impact on the price of oil would be negligible and that it would take 10 years for the oil to come on-line).

Let's follow Boone Pickens' plan for alternative energy.

This one of my favorite commericals for wind energy.

SNL Parodies

In case you missed it, SNL had two must see skits last night.

First, Tina Fey continued her string of remarkable impressions of Gov. Palin in a spoof of her debate showdown with Joe Biden. She has her down perfectly.

Second, a funny yet scathing look at our leaders and the handling of the economy and the bailout package. Not only are the impressions amazing (particularly the one of Barney Frank), but the portrayal of the stereotypical American citizens is dead on.

Wonderful stuff.

O'Reilly Loses It

Caught this video on Youtube. Bill O'Reilly goes off on Barney Frank. Even those I am not a fan of Bill-O, I have to admit that he has a point on this one.

Basically, not only has Barney Frank been deceitful, but so have many other members of congress and many execs at the financial companies. Policies enacted several years ago that allowed lending and awarding of mortgages to people that simply didn't deserve them have contributed significantly to this financial crisis. The "bailout package" that was just passed on Friday is not going to work. It's not going to stop the recession, it's not going to bring jobs back, it's not going to improve the plunging stock market. It's laden with good pork (temporary fix of AMT, tax subsidies for alternative energy) and bad pork (tax exemption for wooden areas, wool research, auto racing tracks, rum from Puerto Rico and Virgin Islands). This package is going to increase our debt and tax burden for decades to come. The country is headed for hard times ahead.

In Progress Debate Updates

Hard to know who won this one. Palin carried out an effective gameplan put forth by her coaches. She didn't say anything as ridiculous as she had in her interviews with Couric. It certainly was not a knockout by Biden. She may have connected with a lot of people in America with her "folksy" talk. Same people who wanted to hang out with Bush at a BBQ. However, Palin wasn't really challenged on some of her answers, by either Gwen Ifill or Biden. She probably gained more than Biden tonight, given that many Republicans were calling for her to step aside.

Post-debate fact check.

10:32 PM. Palin- Will fight for America, middle-class, proud to be an American, need freedoms. Biden- most important election, last 8 years have been poor, need change in economic and foreign policy, can accomplish anything if work hard.

10:28 PM. Closing statements coming.

10:23 PM. Biden calls out "the Maverick". He points out how his positions have mimicked Bush's all along. Excellent rebuttal.

10:22 PM. She calls McCain the Maverick again!! And again a few sentences later! In reality, McCain has not been much a 'maverick' over the past several years. He has become quite predictable and partisan.

10:20 PM. Both trying to connect with American people, mentioning sitting around kitchen table.

10:13 PM. Another wink. She must have watched the Town Hall Debate Bush v. Kerry in 2004- Bush was winking at the whole crowd.

10:11 PM. "Say it ain't so Joe". She was waiting all night to use that!

10:08 PM. Palin mentions "maverick" again. That's enough, please.

10:05 PM. Palin mentions divestment of Alaskan holdings in Darfur. She avoids whether we should intervene in some manner.

10:03 PM. Palin calling out Biden for voting for the war before voting against it.

10:01 PM. 1 hour in, and I have to admit, Palin has certainly exceeded the expectations that I, and many, had going into this. The "Hustler"?

10 PM. Biden says General in Afghanistan says surge will not work in that country, right after Palin suggests this as a strategy difference.

9:55 PM. Biden calling out McCain/Palin...how will policies be different from George W. Bush....

9:54 PM. Biden recounting the mistakes of the current administration regarding policies and elections in the Middle East. Very powerful (and true).

9:48 PM. Palin with somewhat cogent arguments re: Iran.

9:46 PM. Biden making great points about where the heart of terrorism is located (not Iraq).

9:42 PM. Touche. Biden comes back with good counterpoints (re: timeline, etc).

9:41 PM. Palin making a nice point by pointing out the fact that Biden called out Obama about his votes on funding for the troops.

9:39 PM. Here comes foreign policy questions.

9:38 PM. Biden's right on with rights for same-sex couples. Palin has a pretty good answer as well. Points for both.

9:35 PM. Good for Biden going after the stupid "drill, drill, drill" mantra. Oh, gosh, then she comes back and corrects him on the mantra ("drill, baby, drill"). I'm going to puke.

9:33 PM. Circular arguments on climate change. If cyclical and not man-made, then nothing we can do. How many times is she going to say "energy independence"? Wow, she just mentioned conservation. I have to give her props for that. It's about time a politician mentions this as an option. Biden's arguments on global warming much more direct and objective.

9:25 PM. We are 25 minutes in, and Palin is holding up. Again, the expectations were so low, so it's not saying much. She is trying to pour on the charm with the repeated winks, big smile, and cute little words. She's been practicing a great deal....she's sticking to the script.

Great Hustler or Great Debacle????

Folks, I'm back. I can't take it anymore, there is just too much to say. Wall Street is crumbling, banks are failing, congress is scurrying around to pass a "bailout package", which will only be a temporary band-aide on the overall crisis, and, oh, something else is going on.....Sarah Palin is running for Vice President!!

I just cannot believe what my eyes have seen, and more importantly, what my ears have heard. I hope you have been following her interviews with Katie Couric. What is she talking about? Her answers are incomprehensible and seem to lack the knowledge needed by someone running for the 2nd highest office in the country!

Tonight is the vice-presidential debate. From the buzz on the streets, it is the most anticipated debate of all-time. Biden should be able to clean her clock, unless he commits his achilles heel of verbal diarrhea necessitating a "foot in mouth moment" (e.g., Obama is so clean and articulate").

In preparation for tonight, please, please, please watch these videos. Why? First, you will get to laugh a little. Second, you may a chance for a good cry (realizing that she has a chance to hold the VP office). Third, you will see the preamble, the set-up for tonight. It is either one big hoax, a giant "hustle" (in the memory of the late and great Paul Newman), and she will do "well" tonight as she has set expectations sooooooo low, or it will be an absolute catastrophe. There is no middle ground with her.

Please watch these videos if you haven't seen them:

1. Her answer on the economy and the bailout

2. Trying to name one other time McCain has supported stricter regulation

3. Trying to name one newspaper she reads (hint: she can't name one!!)

4. Trying to name one other Supreme Court except Roe v. Wade (she names Roe v. Wade again!!!).

5. Palin talking about the Rick Davis case

Wow. She is in WAY OVER HER HEAD. If someone out there can defend her possibly become our VP, please post your comments, because if we thought we had fun for the past 8 years with "Bushisms", the next 4 years will provide an exponential number of "Palinisms".

But, seriously, this is sad, because it shouldn't be a joke, and McCain could legitimately die while in office. I am not trying to be mean, but anyone who looks at her performance objectively has got to admit that she simply is not a strong enough candidate.

Good Week Bad Week

Good Week for:

1. Being a dumb enophile, after Steven Levitt from Freakonomics reported on his blog that two studies (one that he performed and one more recent from the American Association of Wine Economists) demonstrated that people who are not wine experts had a very hard time differentiating expensive from cheap wine (when blinded). Levitt recommends that no one should become a wine expert, so that you can save money yet still enjoy it. The mind is so powerful and thus can be such a nuisance.

2. Any enophile, after scientists at Hebrew University in Jerusalem found that animals fed red wine along with beef had much lower levels of fat-derived toxins in their blood than animals fed beef alone. This may explain the French paradox- the low rate of heart-disease among wine-drinking French despite a high-fat diet.

3. The Great White Shark, as Greg Norman entered the final round of the British Open with a 2 stroke lead. Why is this so remarkable? First, Norman would be the older person ever to win a major golf championship (previous record 46 years of age). Second, Norma has not even been on the radar in the world of golf for years. His last tour victory was in 1997. I hope Norman keeps this lead (he's lost 7 of 8 majors in which he held the lead entering the final round). Also, see my blog post on Norman from April.


Bad Week for:

1. Doing laundry, after a women in Maine discovered an 8 foot python mixed up with her load of clothes in her washing machine. It was successfully removed by an animal control expert.

2. Antartic inhabitants, after hundreds of baby penguins washed up dead on the shores of Rio de Janeiro. The reasons for why this is occuring is unknown. Some theorize that overfishing has forced penguins to swim futher from shore and get caught up in strong currents that carry them away, while others blame polution as many are found drenched in petroleum. I still think that the whole process that the Emperor Penguins engage in to mate and raise their young is one of the most amazing things in nature.

3. Fidel's concept of socialism, when Raul Castro said "Socialism means social justice and equality, but equality of rights, of opportunities, not of income." The new leader of Cuba has been loosening Fidel's iron grip, granting Cubans some new rights and privielges, such as the ability to buy consumer goods such as cellular phones, DVD players, and washing machines. Also, restrictions on foreign travel have been relaxed and farmers can decide for themselves what to plant. Now, it remains to be see how these people will be able to earn higher incomes in order to afford these "luxuries" (things we have taken for granted). The infrastructure to support entrepreneurship and capitalism still doesn't really exist. Thus, as access to the internet and international TV increases, there may be a social revolt, and young "capitalists" may flee the country for better economic opportunities.

Rebuttal

Oil plunged again today (as did natural gas, steel, coal, ag names- basically anything that has had a tremendous run over the past several months).

An avid reader of the blog stated the following in the comments section: "I just am dubious that all of your charts coalesced the same day, and oil buyers and sellers coincidentally decided to apply lower prices to oil the same day W said we'd finally act like Norway when it comes to oil drilling."

To this, I offer an alternative explanation as to why the precipitous drop in oil/energy/commodities. As Addison Armstrong, Tradition Energy Director Of Market Research explained tonight on Fast Money:

We’re seeing liquidation pure and simple, which is being driven by the weak balance sheets of the banks. They’ve been cleaning them up by raising cash and they’re doing that by selling oil and other commodities.”That suggests at least some investors are selling crude contracts even though they really don't want to be sellers

OK, listen, companies report earnings on a quarterly basis. A large number of companies, including some of the big financial institutions reported this week. The large brokerages, such as JP Morgan, Merrill Lynch, Citigroup are reporting (or have reported) earnings. These brokerages are (or were) invested heavily in commodities, including oil. Now, as you know, the stock prices of any financial company has been in absolute free-fall for the past year. So, how do these huge companies stop the bleeding? They sell what was working (commodity positions),
raise cash, improve the balance sheet, and report earnings that are better than expected. The selling of energy stocks/ETFs is the reason why the price of oil and energy started dropping, as shown in the chart in the previous post, well BEFORE President Bush made any announcements on offshore drilling. And, sad to say, this implies that the price of oil is NOT completely dependent on supply and demand, but instead was artificially elevated by speculators/investors. You cannot tell me that demand dropped and supply rose that precipitously in the past 2 weeks to cause the marked fall in price.

Also, for those who doubt the power of technical analysis, and for those who refer to the big price moves as "all of the charts coalescing in one day", I submit this point. Technicians (half of active traders) follow price action, and when something moves, the buying or selling is amplified if a key technical level is breached or broken.

For example, look at the chart of this stock, VVUS, below. It doesn't matter what the company does, but I will tell you that the company has nothing to do with oil or energy. Anyway, what caused it to move dramatically up in the middle of May and then the end of June into early July? Are you telling me that the fundamentals of this company changed TWICE within the span of 2
months? NO WAY. It was trading on technicals....the market watchers saw it "break out" of its trading range and piled in with loads of cash and scooped up this stock. Then, after taking a breather (consolidation) it resumed its remarkable run upward. This is classic momentum of a trading vehicle. And, all of oil and energy and commodities are publically traded, thus their price can move dramatically based on the money flow from hedge funds, mutual funds, institutional investors, and individual investors. So, I will give GW Bush ZERO credit for dropping the price of oil.

P.S. I don't want to clutter this with a new post, but 2 things Don. First, why does this chart of Freeport-McMoran, a gold and copper mining company, look almost identical to the oil/energy chart I posted? All of the commodities are moving together, nothing to do with the plan to drill. Second, the "sell signal" on the XLE energy ETF was made not on the day Bush made the announcement. It was made at the beginning of June when the price fell from 90 down through the 50 day moving average (the blue line that was in an uptrend). When it broke below 85.56 on June 3rd, that was a major bearish move, and the ensuing weakness was not unexpected. These are fundamental principles of technical analysis.

Random Musings

1. Israel is making a mistake by performing unequal hostage swaps. They exchanged 5 militant Lebanese prisoners for the remains of 2 Israeli soldiers. I know it is their moral code, but this will only encourage more kidnappings/killings of Israelis. They keep giving their enemies positive reinforcement with these exchanges. Dumb.

2. Double-standard on the N-word. I hate it. Read the story. Again, Jesse Jackson deserves no respect by the media or the population at large.

3. Score one for Dr. Aktins (and the Mediterraneans), as the low-carb (high-fat high-protein) and Mediterranean diets were found to be superior for weight loss to a low-fat diet after 2 years of follow-up.

4. The JibJab crew has another great political satire video. Very funny, as usual.

5. The price of oil fell sharply for the 2nd straight day. Jury is still out whether the long-term trend is still intact and this is a correction (just as all of the other commodities have corrected signficantly over the past few weeks). Also, few, if any, stories tied this week's decline to Bush's wonderful announcement about moving forward with plans to drill offshore. In fact, given the drop in consumption (driving and flying have decreased, companies are figuring out more efficient ways to transport goods), it may be that the decreased demand has increased supply, thus decreasing the price of oil. Furthermore, the continued panic about further economic downturns in the US and around the world is not bullish for the price of oil. The prices of oil are also driven by the large amount of ETFs that are tied to commodities. Investors looking for a safe-haven in this bear market that has ravished the financial sector have moved lots of money to energy stocks/ETFs. However, as witnessed by the monster rally in the stock market today, led by the 10% surge in financials, it appears that sector rotation is taking place, and money is shifting back from energy to financials. I wonder, did Bush's announcement of drilling offshore also fuel the rally in the financial sector today.

Also, let's look at the chart of the XLE (iShares Energy ETF). From a technical analysis standpoint, energy has been weakening for the past several weeks. The chart was calling for this sell-off. Why?

1. RSI at top of chart has been very weak.

2. Double top formed in main price action

3. MACD (another momentum indicator) has been very weak/declining for weeks.

4. Money flow indicators (On balance volume and Chalkin money flow, both at bottom of chart) indicate that net flow of money has been OUT of energy since the end of May/early June.

So, the announcement by Bush to drill offshore was like punching a man while he was already beaten up and laying on the ground bleeding. Of course, people are going to give him the credit for dropping the price of oil. The timing and the chart do NOT support this whatsoever.

Good Week Bad Week

Good week for:

Not much


Bad week for:

1. Tilapia, after a Wake Forest University study found that tilapia, a farm-raised corn-fed fish, actually contains high levels of omega-6 fatty acids (pro-inflammatory) and very little omega-3 fatty acids. In fact, tilapia contains more omega-6 than bacon or doughnuts. I'm still waiting for the transgenic pigs rich in omega-3 to come to market. Yummy and healthy!

2. The Clydesdale, the symbol of American and Anheuser-Busch, after the St. Louis-based company was sold to the Belgian company InBev (makers of Stella Artois and Becks). My first concern is what will happen to the Budweiser Super Bowl commericials. Will they continue???

3. Following your father's lead, after George W. Bush lifted an executive ban on offshore drilling that was put in place by his father in 1990. Just a few years after his "addicted to oil" speech, George just wants another hit of the pipe (forward to about 5 min 30 secs on this video for some laughs). As I've outlined before, the government's own studies have indicated that this manuever would have little effect on the price of oil...we will follow closely. I doubt this will have much of an effect.

4. Humans, after a 149-page scientific report from the government oulined many reasons why global warming will impact health, including an increase in smog (increases risk of death), heat waves, infectious diseases (particularly those carried by ticks), and from wildfires. It's too bad the White House officials didn't even want to read the report...they wouldn't open the email!!

5. The Colonel, after a police-officer's family in Omaha won $40,000 in a lawsuit against KFC because of an episode of severe illness after eating at the fast-food chain. The cause of illness? Employees at this KFC would routinely spit and urinate onto food to create "special servings" reserved for police officers. This hasn't been a good year for KFC. As you may recall, earlier this year a KFC in NYC was shut-down after video taken from the street showed several huge rats crawling around premises.

6. The Bull, after the stock market entered official Bear Market territory (down 2o% from recent highs). Ugghhhh....

Shots on the Left and Right

Well, well...it seems both of the Presidential candidates are dealing with remarks that people "close" to their party have made.

Regarding Barack Obama, Jesse Jackson said another "memorable" (AKA ludicrous) thing. He said that "Obama is talking down to black people", and that he wants to "cut his nuts off". Watch Jesse make a little cut motion with his right arm immediately after he states it. The funny thing is that his apology pretty much consisted of him saying that he didn't know the microphone was on. What kind of excuse is that?!?!? Jesse Jackson is so pathetic. He has made a career of grabbing the spotlight on controversial issues and pretends to "crusade" for his people. Blacks don't even like him. He never could get even 5% of the vote in the primaries when he ran for the Democratic Party nominee for President. I don't even know why people interview him. Does anyone care what he has to say?

Oh, by the way, the quote from Obama that Jesse so inflamed? Here it is:

``Any fool can have a child. That doesn't make you a father,'' Obama, 46,
said at the Apostolic Church of God, which has more than 20,000 members. ``Too
many fathers are AWOL, missing from too many lives and too many homes.''

Good for you Barack...you're just telling the truth and trying to inspire some sense of responsibility in young black men, just like Bill Cosby and Charles Barkley have been trying to do for the past several years. Keep it up.

McCain's issue is a little less exciting. Former Senator Phil Gramm, one of McCain's economic advisors, said in an interview with the Washington Post that the economy is not so bad and that we have a "nation of whiners". McCain tried to distance himself from Gramm and showed his distaste for those comments. And check out where he wanted to send Mr. Gramm...

"I don't agree with Sen. Gramm," McCain said. "I believe that the person
here in Michigan that just lost his job isn't suffering a mental recession. I
believe the mother here in Michigan and around America who is trying to get
enough money to educate their children isn't whining."
"Phil Gramm does not speak for me," he said. "I speak for me."

Asked if there was any chance Gramm would be treasury secretary or
handle economic policy under a McCain administration, McCain quickly turned to
humor. "I think Sen. Gramm would be in serious consideration for ambassador to
Belarus, although I'm not sure the citizens of Minsk would welcome that," he
said.

I don't have too much to say about this. Obviously, McCain cannot openly agree with Gramm. That would be complete political suicide, as most polls show the economy is the number issue for voters at this time. Plus, the economy IS a big issue right now, isn't it???? GDP is nearly stagnant, fuel and food prices are at all-time highs, job losses are increasing, and our dollar is pathetically weak.

Things I Just Don't Get

1. Why do people need to drive Hummers? I saw two tonight in a parking lot. This is CONNECTICUT, not the jungle or the deserts in the Middle East. It's a free country, and people can choose do drive whatever they want, but I still don't understand the mentality of the owners. They must be trying to make up for inadequate genital size. At least the high costs of fuel have caused a decrease in overall driving in the US and in SUV/light truck sales, so supply/demand continues to work efficiently.

2. Why is the American Academy of Pediatrics recommending cholesterol screening and treatment with statins starting at age 8? Granted, the amount of childhood obesity is continually increasing and leading to premature diabetes and heart disease, but why not strongly push exercise and healthy diets? The problem is partially genetic, but the creep of adult cardiac diseases into childhood is NOT from genetics, it is from poor behavioral patterns. I think we need a prominent athelete to take a cabinet position such as a "Secretary of Fitness". Recruit Michael Jordan or Magic Johnson for this position...or someone else that could really inspire kids to get off their butts, stop playing so many video games and start exercising. I do not think a lifetime of blood tests (to check cholesterol levels and monitor liver function) and 70+ years of exposure to statins (if they live that long) is a smart idea.

3. Why can tennis players hit a screeching 1st serve well over 100 times in a match and play every other day when baseball pitchers are babied and routinely are pulled when they throw about 100 pitches? The tennis players are swinging their arm and putting as much torque on their rotator cuff as major league pitchers. The serves in tennis often exceed 120 MPH. Then add all of the 2nd serves, forehands, and backhands to the total load on the shoulder. I think the current day major league pitchers are coddled far too much. Back in the day, it was commonplace for the great pitchers such as Koufax, Gibson, Drysdale, etc. to have more than 20 complete games. In 1968, Bob Gibson had 28 complete games!! Now, a pitcher is considered to have an amazing year if they have 3-4 complete games. They are put on strict "pitch counts" and pulled in the 6th or 7th inning. Then, starting pitchers get 4-5 days off until their next start. FYI, Nadal had 221 1st serves and Federer had 197 1st serves in their final match at Wimbledon yesterday!

4. How did the Colombian hostages surive after living in the jungle, eating terribly, being tortured, and experiencing severe infections for 5 1/2 years? It is an amazing story of human determination.

Don't "Aks", Don't tell

Freakonomics is one of my favorite books, and lucky for me (and the world), Levitt and Dubner have continued their analyses of the culture on the NYTimes opinion page. They have a very interesting post regarding a U of Chicago study that examined whether sounding black (or Southern) influences one's salary. The study found that people who sounded black, as judged over the phone, earned 10% less than those who sounded white. Blacks who "sounded white" earned roughly the same amount as their white counterparts.

This is very interesting, as it provides ongoing evidence of racial discrimination in the U.S. This is unacceptable. However, while I do not condone any racial discrimination, common sense also tells us that speaking "ebonics" is not exactly compatible with a highly productive business/sales model. Furthermore, only the minority of blacks actually speak ebonics, but it only takes a few bad eggs to ruin it for the larger group and promote long-lasting stereotypes. Simply put, slang will never be widely accepted, and PARENTS and the school systems must do their best to teach children proper English. Bill Cosby had an excellent rant about this a few years ago. I agree with Bill.

We are on the precipice of potentially electing a black president of the United States for the first time. Many racial barriers in this country have been obliterated. Thus, it is not too much to ask our future generations, of any racial background, to speak English properly.

Nadal Ends Federer's Streak- Wins Wimbledon

Today, Rafael Nadal of Spain, beat Roger Federer of Switzerland in one of the most amazing sporting events I have ever seen. It was an epic battle, the longest Wimbledon Men's final EVER at 4 hours 48 minutes. It didn't end until 4:15 EST (started at 9 AM....there were 2 rain delays).

The match itself was extremely intense. It was filled with drama. The last 3 sets all went to either tie-breakers or were extended (last set goes until someone wins by 2) after Nadal took an early 2 set lead. I hope many of you got to see it today. If you haven't...don't fret. ESPN Classic will be showing this "Instant Classic" at 7 PM Monday night. Aside from it being such a brilliantly played, intense, and exciting match, the drama was heightened even more by the story of these two giants entering this final match.

Consider these facts:

1. Federer had won FIVE straight Wimbledon titles, and won 40 straight matches at Wimbledon.
2. Federer had not lost ONE SET this entire tournament.

3. Nadal had lost the last 2 Wimbledon finals to Federer.

4. Despite Nadal's domination of Federer on clay, and his 4 French Open titles, Nadal had never beaten Federer in a major tournament except for the French.

5. Coming into the match, Federer has been ranked #1 in the ATP rankings for 231 consecutive weeks. Nadal has been ranked #2 for 154 weeks.

6. Nadal became the first to win the French Open and Wimbledon in the same year since 1980 (Borg).

The match certainly lived up to the hype and beyond. It was like Maximus vs. Commodus in the movie Gladiator. It was like Achilles vs. Hector in the movie Troy.

It had me thinking about the 10 best sports finals I have ever seen. Please add or argue with some of the choices on this list in the comments section. (they are not ranked in order)

1. Nadal defeats Federer, 2008 Wimbledon Final

2. NY Giants defeat the undefeated NE Patriots, Super Bowl XLII. The prologue to this game again contributed significantly to the greatness of this game. The Patriots were on the verge of an undeprecedented, historical undefeated season. The Giants were truly "David", who had been given little chance to win after a tumultuous season. However, sans Tiki Barber, and in Michael Strahan's final game, the G-Men shut down the mightly Patriots offense and won on one of the most dramatic drives in Super Bowl history.

3. Boston Red Sox defeat NY Yankees, 2004 AL Championship Series. Again, what a storyline entering this playoff series. The Red Sox had been without a World Series title in 86 years, while the Yankees had 26 World Series titles. The Red Sox had lost a bitterly contested playoff series in 2003 to the Yankees, that culminated with an 11th inning homerun by Aaron Boone, of all people, to put the final nail in the Sox that year. However, the 2004 series was magical for the Sox, as they battled back from a 3-0 deficit to win the final 4 games. Games 4, 5, and 6 were absolute classics, as game 4 and 5 were the 2 longest in ACLS history, going into the 12th and 14th innnings, respectively. Both wins involved blown saves by the best closer in history, Mariano Rivera. Game 6 was the Schilling "bloody sock" game. Game 7 was a blow-out, but occurred in the "House that Ruth Built", finally ending the Curse of the Bambino.

4. Villanova Wildcats defeat the Georgetown Hoyas, 1985 NCAA Mens College BB Championship. This was another David vs. Goliath match-up. The 8th seeded Wildcats shot 78.6% from the field, shut down the mighty Patrick Ewing, and pulled off one of the greatest upsets in NCAA history. I still remember little Rollie Massimino being mobbed in jubilation by his much taller teammates as time expired.

5. Texas Longhorns defeat USC Trojans, 2006 BSC Championship. There was no David vs. Goliath here...it was Goliath vs. Goliath. The Trojans had won 34 striaght games and were going for their 3rd straight NCAA title. The Trojans had the exhilarating Reggie Bush. The Longhorns had won 20 straight and had the powerful quarterback Vince Young. The play was incredible, and the ending was a thriller, with Texas pulling it out in a shootout, 41-38.

6. NY Mets defeat Boston Red Sox, 1986 World Series. The Mets had just finished pulling out a dramatic 6 game series with the Houston Astros, that including 3 extra-inning nailbiters, including the final game that went 16 innings. The Red Sox had just defeated the Angels after being one strike away from being eliminated in Game 5 on a dramatic home run by Dave Henderson to tie the game and send it into extra innings. The Red Sox came in to the WS looking for their first title since 1918. This series makes my list primarily for Game 6. I've outlined the drama of this game before on this blog here, so I won't do it again.

7. Boise State defeats Oklahoma Sooners, 2007 Fiesta Bowl. OK, this wasn't for the BSC Championship, but the game itself was probably the most dramatic college FB games I've ever seen. Boise St went into the 4th quarter with a 28-17 lead. Oklahoma scored 11 points (FG and TD + 2pt conversion) to tie the game with 1:26 left in 4th qtr. Boise St comes out to try to march down the field for a FG, and their QB gets picked-off, and the Sooner DB returns it for a 33 yd interception TD return. Game over, right? Wrong! On 4th and 18, down 7 points, Boise St complete a 50 yard "hook-and-ladder play" to tie the game with 7 seconds left. The games goes to OT, and Adrian Peterson takes the 1st handoff and races 25 yards for a go-ahead TD. Boise St, needing a TD to tie, gets a TD, and decides to go for the 2 pt conversion. They run a "Statue of Liberty" play for the 2 point conversion. Unbelievable.

I'm going to stop here for now...I will try to add 3 more games to this list. Please provide your suggestions.

Runaway Chimp

OK, just a quick news piece. It is an unbelievable story. The story initially caught my eye because the link on the front page of CNN.com read "Toilet trained Chimp on the Loose". Given my fascination with toilets, I eagerly clicked on the link to read the story. He apparently can not only use the toilet, but can use a knife and fork.

A couple in California had raised the chimp for 30 years in their house until he was taken away for his violent behavior. There were distraut today when they heard he escaped and hired a search helicopter to find him. The chimp was taken away from the couple because he had bitten off someone's finger and mauled a policeman's hand.

Here are the hilarious things. First read about what happened to the couple when they were visiting him after he was taken away from them:

In 2005, when they took a cake to celebrate Moe's birthday with him, the
couple was viciously attacked by two other chimpanzees who had escaped their
cages. The chimps nearly killed St. James Davis, chewing off his nose, testicles
and foot and biting off chunks of his buttocks and legs, before the sanctuary owner shot the animals to death.

The other thing that made me laugh was when the man who owned him (the one who had his testicles chewed off), said the following to the media:

"He meant the world to us," St. James Davis said. "He was the best man at my wedding."