KL+G=R

by Larry Levin

Today’s market gapped open higher but became weak fairly early. At one point, just 90-minutes after the open, the market traded lower on day. This early weakness, however, couldn’t make a new daily low which led to a small bounce. After two hours of sideways trading, investors got their math books out and looked for a calculation that would lead to higher prices. They soon found it: (KL + G = R), where KL = Ken Lewis, G = Gullibility and R = Rally!

The afternoon rally was attributed to Ken Lewis. In case you have forgotten, Mr. Lewis is the mastermind behind the decision to wildly OVERPAY for Merrill Lynch. Yes, Ken Lewis is the CEO of Bank of America - the man that is running BAC right into the ground with his numerous preposterous acquisitions. He was the boisterous banker that exclaimed, (paraphrased) “We don’t need TARP money! We’re just fine.”

Fast forward a few months and Ken Lewis is singing a new tune. Not only did he need the original $25-billion of TARP money, he begged for $20-billion MORE a short time ago. But Mr. Lewis didn’t stop there. Oh no, he got the Treasury to cough up over $100-billion in loan guarantees, which of course YOU and your children will have to pay off if the markets worsen. And yesterday we receive word that Mr. Lewis and BAC will need ANOTHER $80-billion of YOUR TAXDOLLARS to keep his bank and putrid decisions afloat.

BAC shares have been eviscerated; falling 87% in a little over 3 months. Yes, sir, that’s some damn good stewardship of the firm.

But don’t worry folks, the market rallied today when gullible investors heard that Ken Lewis bought BAC stock with his own money yesterday (KL + G = R). That’s how it was reported anyway. I doubt it. I bet this joker and Jamie Dimon both bought shares using TARP funds - not their own.

How else can I describe an investor who, knowing what horrifically bad judgment this man possesses, will use a Ken Lewis stock purchase story as a reason to plow headlong into stocks? Well, actually a few other descriptions do come to mind like; idiot, moron, sucker, dupe, rube, and fool to name a few.

I like to think that the market rallied for other reasons no matter what a journalism major-turned-financial-expert has to say on television says. If one disregards a few miniscule daily gains, the market has essentially dropped for 9-consecutive days and was ready to bounce. The Dow again found support in the psychologically important 8,000 area and was ready to pop. Furthermore, there was some GOOD earnings news for a change and this is exactly what the market needed to pop.

Both Apple and IBM reported better than expected earnings, which surely helped the market up. So which is more important - Ken Lewis buying a measly $1.2 million in stock, or IBM beating the Street?

Previous Day's Trading Room Results:

Trade Date: 1/21/09

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


1) VA buy @ 9:50am at 807.50 = -2.25 (1 lot)

2) FT sell @ 10:45am at 811.00 = +.50 (1 lot)

3) TP sell @ 11:30am at 812.25 = +2.25 (1 lot)

4) FT buy @ 12:50pm at 814.00 = b/e (1 lot)

5) VA sell @ 2:10pm at 829.00 = b/e (1 lot)

6) Engf sell @ 2:15pm at 828.75 = -2.00 (1 lot)

7) Algorithm positions (4)…combined SofT and Algo total…-1.50

ZB (30 Year Bond) Trades*
(before fees and commissions):


1) No trades today.



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