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Wednesday, April 22, 2009

Freddie Mac, Accounting Violations, Suicide

Freddie Mac Acting CFO David Kellermann Found Dead by Police: " Freddie Mac Acting Chief Financial Officer David Kellermann was found dead early today in his home in the Washington suburbs, police said.

The “unintended” death is under active investigation and a cause has yet to be determined, Fairfax County Officer Shelley Broderick said. Kellermann’s body was found around 4:48 a.m. local time at a home in Reston, Virginia, police said. There were no signs of “foul play,” Broderick said."

The Wall Street Journal (WSJ) is digging deeper and has linked the probable suicide to accounting fraud. Rumors are flying about RECENT accounting violations.

Freddie's Acting CFO Found Dead: "Investigators from the Securities and Exchange Commission and Justice Department have been questioning officials of Freddie Mac about possible accounting violations and other matters in recent months, the company disclosed in March.

Freddie disclosed in the recent SEC filing that in September it received a federal grand jury subpoena from the U.S. Attorney's Office for the Southern District of New York seeking documents related to accounting, disclosure and corporate governance matters. That subpoena was later withdrawn, Freddie has disclosed, and the investigation was taken over by the U.S. Attorney's Office for the Eastern District of Virginia.

Freddie said the SEC also is investigating and has told the company to preserve documents. Freddie has said it is "cooperating fully in these matters."
... "

FN: Where have we seen this before? Or right, ENRON. A trip down memory lane...

Former Enron exec dies in apparent suicide: "Former Enron Corp. vice chairman J. Clifford Baxter was found dead in his car in a Houston suburb early Friday, the victim of an apparent suicide, police said.

Baxter made millions on the sale of Enron stock, but reportedly was unhappy with Enron's business practices and resigned as vice chairman in May. He had remained as an Enron consultant.

Enron, once a giant energy corporation, has collapsed in the biggest bankruptcy filing in U.S. history amid accusations of mishandling of funds and shredding of crucial documents. Enron and its accounting firm, Andersen LLP, are under congressional investigation."

Tuesday, April 21, 2009

Oil, Energy: No Signs of a Recovery

Tyler Durden over at Zero Hedge called this a “crap rally”. It was. The dead and dying doubled and tripled as the shorts were forced out.

The media obfuscated this fact by talking about "green shoots of recovery" and "mustard seeds".
A real rally on the back of a real economic recovery would involve commodities in general, but energy specifically.

1) Oil has failed to move higher and now threatens to break down completely. I last mentioned oil in Rising Bear Wedge, Break Down.

2) The Energy Select Sector SPDR (XLE) did not participate in this rally and now threatens to break down completely. XLE is now below both the 20 and 50 day EMAs (blue and red lines). Volume almost disappeared as prices tried weakly to push higher...

Reasons Why Yesterday Signals a Trend Change

Reasons why the sell off yesterday was not just a profit taking correction, but a trend change.

1) Yesterday was a Major Distribution Day. When this occurs AFTER a large, long rally it signals a trend change.

2) After a big decline in volatility (VIX) the sell off was confirmed by a 15% spike in the VIX.

3) The US dollar index (USD) strengthened, clearing resistance and is now above both the 20 and 50 day EMAs. A strengthening dollar represents a flight to safety and foreshadows weakness in equities.

After all, the market is The Most Overbought Market in at Least 23 Years.

Monday, April 20, 2009

That Was Fast

That was fast.

This looks and feels real. We will (probably) know by end of day tomorrow if this ends the trend. If UP now gives way to DOWN.

Just to be clear... as impressive as this "rip your face off" Bear Market rally was, the plunge (rate of change) will be at least twice as fast.

Liquidity Dying, Rally is on Fumes

Tyler Durden over at Zero Hedge explains this “crap rally” in great detail in Equity Rally Reaches Escape Velocity. The future implications are not pretty and time is quickly running out…

Although I don’t currently post about it this Ninja does quite a bit of intraday trading using proprietary “gray box” strategies (Working on a NinjaCam. Patience). Some of the tricks in my arsenal consist of hunting for and abusing “black box” strategies. This has become more difficult as it would appear that quite a few quants are simply shutting off their computers. Liquidity is dying as evidenced by the ever increasing number and ever increasing size of the overnight gaps in single names and entire indices.