Disaster

I couldnt' find a picture of Bernanke in this kind of position... YET.

On Vacation

I will be on a one week cruise.

Please stop selling in the meantime so I don't miss the ultimate crash. Pause. Just pause. (Dear Trading Gods, please don't let me miss anything really really cool... I don't want to be THAT guy... trading from the cruise ship in my Hawaiian shirt, raging at my laptop... spilling my beer all over the place.)

Or better yet, bounce equities for me so I can re-short when I get back from my vacation.

Oil and Gas: Will they Break Down?

Natural Gas (NATGAS) gapped below the rising 10 day EMA (blue line) that has provided reliable support during this up trend. Prices fell immediately to support at the 50 day EMA (red line).

Even as prices moved to new highs, MACD we losing momentum and did not confirm. Expect this move to turn into a very significant correction. A bounce back to just below $13.00 to fill the gap is possible.

Even as oil ($WTIC) prices moved to new highs, MACD we losing momentum and did not confirm. Expect this move to turn into a very significant correction. Oil ($WTIC) is at support at the 10 day EMA (blue line) where the Bulls have been able to marshal their forces for moves higher in the past. Failure here would result in a violation of up trend (black line) started in 2008 since the break OUT and UP from $100.

As equities peaked ($SPX, grey area) and money began pouring OUT of equities... it needed to find a new home. So, despite deteriorating economic fundamentals, this 'hot money' flowed into commodities. The faster equities fell, the faster commodities rose. Now this party too shall end.

Former Federal Reserve Presidents Says Fannie Mae and Freddie Mac are Insolvent

Former St. Louis Federal Reserve President William Poole says Fannie Mae (FNM) and Freddie Mac (FRE) are insolvent.

Nice. Nuff said.

Fannie, Freddie `Insolvent' After Losses, Poole Says (Update1): “Borrowing at Fannie Mae, the U.S. government-sponsored mortgage company, has never been so expensive and it may not get better any time soon.

Fannie Mae paid a record yield relative to Treasuries on the sale of $3 billion in two-year notes yesterday amid concern the biggest provider of financing for U.S. home loans won't have enough capital to weather the worst housing slump since the Great Depression. The company's credit-default swaps show traders are treating the AAA rated debt as if it were five steps lower. Fannie Mae shares tumbled 13 percent yesterday in New York to the lowest level in almost 14 years.

Chances are increasing that the U.S. may need to bail out Fannie Mae and the smaller Freddie Mac, former St. Louis Federal Reserve President William Poole said in an interview. Freddie Mac owed $5.2 billion more than its assets were worth in the first quarter, making it insolvent under fair value accounting rules, he said. The fair value of Fannie Mae's assets fell 66 percent to $12.2 billion, data provided by the Washington-based company show, and may be negative next quarter, Poole said.”

Poole only said what traders already knew: Fannie Mae, Freddie Mac: Downgraded by Traders.

It may not yet be too late. Using Fannie Mae and Freddie Mac as Disaster Insurance might still be feasible on bounces (Update1).

FNM and FRE Make Me Angry:
Fannie Mae and UBS Miss, Bankruptcy Filings Up Big Time
Sarcastic Rant on Fannie and Freddie.
Fannie Mae, Freddie Mac: The Dumbest Idea Ever
Fannie Mae: Another Shoe Drops

Calculated Risk:
Fannie Mae Tightens Guidelines Again
WSJ Repots: Fannie Mae Eliminate “declining market” Rules
Fannie Mae’s 120% Refinances
Fannie Mae on 2/28 Delinquencies
Fannie Mae’s Credit Loss Ratio: Fuzzy Math or Fuzzy Reporter?
On Freddie Mac Accounting Change
Freddie Mac Conference Call
Freddie Mac on Walking Away
Freddie Mac: Project MI Lifeline?
More on Freddie Mac Housing Forecast

Mish’s:
Fannie Mae Cumulative Defaults (and other disasters)
New Rules At Fannie Mae Combat Appraisal Fraud
Delinquency Footnote #12
Misinformation From Fannie and Freddie On Walking Away

Excellent Sources of Real Estate Data:
Calculated Risk
Countrywide Foreclosure Blog
Paper Economy
UK Bubble

FNM and FRE Make Me Angry:
Fannie Mae and UBS Miss, Bankruptcy Filings Up Big Time
Sarcastic Rant on Fannie and Freddie.
Fannie Mae, Freddie Mac: The Dumbest Idea Ever
Fannie Mae: Another Shoe Drops

Time to be Short Commodities

In Commodities Seeing Demand Destruction, Canada Rolls Over I went over some short commodity ETFs.

Since then DUG broke OUT and UP from $26.50 to $31.00, or 17%.
Since then SMN broke OUT and UP from $27.50 to $34.00, or 24%.

Both still have room to run before hitting any significant resistance.

I didn’t get ‘full size off’ in KOL before it collapsed and will be adding on any bounces as mentioned in Coal Gets Smashed.

Other short commodity ETFs that I’m looking at or have positions in:

HED.TO (Horizons BetaPro S&P/TSX Capped Energy Bear Plus ETF)
HOD.TO (Horizons BetaPro Crude Oil Bear Plus ETF)
HXD.TO (Horizons BetaPro S&P/TSX 60 Bear Plus)

For a complete list of Horizons BetaPro ETFs click here.

I think it's time to be short commodities now as this is the last bastion of the cheap credit bubble Bulls...