How do you spell "BEAR"?

by Larry Levin


Do you remember the old commercial that asked us how we spell “relief,” and the answer was R-O-L-A-I-D-S? I’m guessing there were a few million bulls that needed Rolaids today, but we ask a different question this afternoon. How would you spell B-E-A-R? The first few ways that come to mind are; NASDAQ, CFC, BSC, KBH, or simply T.

All of the indices were hit hard again with the NASDAQ leading the way. It was down another 2.36% today, marking its 8th-consecutive losing day, and already posting a horrible -8.0% loss for 2008. The Dow is worth mentioning too, plummeting 341-points from its early crest. If these two markets don’t spell “B-E-A-R,” I don’t know what does. Oh wait – there’s more!

Countrywide Financial Corp (CFC) wallowed in BANKRUPTCY speculation today, falling 30% at one point. "This is the largest mortgage originator in the country, trading like it wants to go out of business," said Peter Boockvar, equity strategist at Miller Tabak. Countrywide denied the speculation saying, "There is no substance to the rumor that Countrywide is planning to file for bankruptcy." With that, its shares closed down a scant 17.2%. If this doesn’t spell “B-E-A-R,” I don’t know what does. Oh wait – there’s more!

KB Home reported a fourth-quarter loss of about $773 million, hurt by a tax-related charge and land write-downs as the builder predicted more tough times for the U.S. housing market this year. With a loss of 9.2% on the day, KBH’s share price is now down 80.3% from its high. "The challenging market conditions we experienced through the first three quarters of 2007 continued during the fourth quarter," said Jeffrey Mezger, KB Home's chief executive, in the earnings release. He cited a litany of problems for home builders: a glut of homes for sale, rising foreclosures, more competition to close sales, lower affordability, mortgage and credit turmoil, and weak consumer confidence. "We believe 2008 will be another tough year for the homebuilding industry," said Mezger.

Adding fuel to the housing fire, the National Association of Realtors' reported that pending home sales fell 2.6% in November and were down 19.2% in the past year.

Housing was responsible for the vast majority of the US economy’s growth from 2003-2007…what does the KBH & Realtor’s news say about the US economy going forward…B-E-A-R? Wait, there’s more.

The financials were hammered again. Citigroup was down another 3.96%, E*Trade was down 20.49% and Bear Stearns (BSC) was down 6.70% following reports that Jimmy Cayne would relinquish his post as CEO, but remain as chairman in the wake of losses and a distressed share price. This angered several large shareholders, which ignited the BSC sell off.

And finally, what happened to AT&T (T)? At an investor’s conference in Phoenix , Ariz. , the CEO of AT&T said the company has disconnected more customers who've failed to pay their bills, but he also expects wireless and corporate sales to boost overall growth. The mere mention, however, of customers not paying their bills scared the hell out of investors as it once again drove up fears of a looming recession.

There was MORE bad news to write about today (quite a bit more actually), but I think we’re depressed enough…so I’ll try to end on a slightly positive note. The major indices have been beaten down significantly enough that I’ll be anticipating a short covering pop pretty soon. Will it come tomorrow? Perhaps, but I believe we’ll see some new lows first. Whether a rally begins tomorrow or the next day, it will only be (imho) an opportunity to exit beaten up longs and add to new short positions. Trade well and follow the trend, not the so-called “experts.”

Real Time Trading Signals*for

Trade Date: 1/08/08

E-Mini S&P Trades*
(before fees and commissions):


8:32 B/A Buy 30.25 = -1.50 all

9:15 MD BUy 36.50 = -1.50 all

9:20 FT Buy 35.00 = +.75 all

9:30 MD BUy 33.50 = +.75, -1.50

10:03 ID VA BUy 29.75 = +.75, -1.75

10:50 MD Buy 18.00 = b/e all

11:04 FT Sell 20.75 = +.75, +2.75, +.50

12:37 FT Buy 3.50 = -1.00 all

12:52 VA Sell 5.25 = -1.75 all

1:35 OTF Buy 7.50 = 1.50 all

1:43 ID VA Sell 21.75 = +.75, +1.25, b/e

2:28 FT Sell 10.00 = -1.50 all

2:50 FT Sell 01.75 = +.75, +1.75, +6.25

E-Mini Russell Trades*
(before fees and commissions):


1) Buy @ 8:50am at 734.6 = +.5 & -.9

2) Buy @ 9:01am at 734.2 = +.5 & +4.2

3) Buy @ 9:15am at 737.4 = -.7 (1 lot)

4) Sell @ 9:43am at 734.1 = +.5 & +2.8

5) Sell @ 9:53am at 732.7 = +.5 (1 lot)

6) Sell @ 10:08am at 731.4 = +.5 & +5.0

7) Sell @ 10:27am at 727.1 = +4.5 (1 lot)

8) Buy @ 11:38am at 722.0 = -1.1 (1 lot)

9) Buy @ 11:55am at 722.2 = b/e & -1.1

10) Sell @ 12:44pm at 722.8 = +.5 & -.7

11) Buy @ 1:04pm at 723.5 = +2.5 (1 lot)

12) Buy @ 1:37pm at 727.8 = -1.2 & -1.2

13) Buy @ 1:40pm at 725.4 = -1.0 (1 lot)

14) Sell @ 2:05pm at 717.6 = -.9 (1 lot)

15) Sell @ 2:16pm at 716.5 = +1.0 & +2.7

16) Sell @ 2:25pm at 714.3 = -.5 (1 lot)

17) Buy @ 2:37pm at 715.9 = +1.0 & b/e

18) Sell @ 2:54pm at 709.7 = +4.3 (1 lot)…

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