Yes, it’s that time of the week again, time to pimp my newsletter, shamelessly.

This week I’ll feature the Steel ETF (SLX). The model exited in July 2008 above $90 and is still out (last week’s close: $27.88). The model also exited the Basic Materials SPDR (XLB) and the Ultra Basic Materials (UYM) the very same week — sure, they’re all highly correlated, but it’s interesting to see how Metals & Mining (XME) and Coal (KOL) hung in there for another week or two before also reversing.

There will only be one more freebie newsletter since I’ll be going away for Christmas in early December and won’t be back until the New Year, so email me today to get on the list.

India’s Economy Will Likely Withstand Terror Attacks

“‘This sort of incident is not new in India,’ said Templeton Asset Management Ltd. Chairman Mark Mobius, who oversees more than $24 billion in emerging-market stocks. ‘Life does go on in India. It’s a very vibrant economy.’”

The little bald man in his snazzy white suit is good at talking his book, but one look at the chart of the rupee plunging below its 2002 lows tells you all you need to know.

Post title may be too obscure, so I’ll remind you of the full verse (by Gus Kahn):

He doesn’t make much money
Five thousand dollars per;
Some judge who thinks he’s funny
Says, “You pay six to her.”
He says, “Now judge, suppose I fail?”
The judge says, “Bud, right into jail.
You’d better keep her
You’ll find it cheaper
Than making whoopee.”

Related: Asia’s Worst-Performing Currency, June 23, 2008

China Rate Cut Highlights Concern Over Slowdown, Unemployment

“The central bank cut the key one-year lending rate 108 basis points to 5.58 percent. The deposit rate fell by the same amount to 2.52 percent.”

Here’s a look at the three year deposit rate in China (where we park our RMB). It was possible to lock in 5.4% for nearly a year, a level at which our real returns were slightly less negative. :-)

Gome Halts Shares Pending Statement on Chairman’s Detention

“Huang may have manipulated shares of Shandong Jintai Group Co., a Chinese drugmaker that is controlled by his brother, Huang Junqin, Beijing-based Caijing reported.”

A weird looking chart anyway. Locked limit-up every day for weeks?

U.S. Pledges Top $7.7 Trillion to Ease Frozen Credit

“The money that’s been pledged is equivalent to $24,000 for every man, woman and child in the country. It’s nine times what the U.S. has spent so far on wars in Iraq and Afghanistan, according to Congressional Budget Office figures. It could pay off more than half the country’s mortgages.”

Keep a beady eye on the US dollar index. My guess is that it will give up all its gains and fall below 70 once it reverses. You can’t socialize losses and privatize profits without a reckoning. I have no doubt now that the USD will lose its reserve currency status in my lifetime.

My readers tend to be both better looking and smarter than me. Back when I was shredding what little credibility I have by suggesting a bunch of “cheap” stocks when the old VIX hit 50, commenter Brian wondered if Campbell (CPB) wasn’t a better idea.

Brian was absolutely right, and to make amends for poo-pooing his comment, may I suggest pairing a Bagel-ful with your bowl of soup? It should take some of the sting away from the 1000 mg of sodium you’re ingesting.

Campbell Beats Bear Market as Consumers Seek Out Soup:

“Campbell controls about 70 percent of the $5 billion-a-year U.S. soup market.”

Bonus points to those who recognized the post title from the classic Seinfeld episode:

JERRY: There’s only one caveat — the guy who runs the place is a little temperamental, especially about the ordering procedure. He’s secretly referred to as the Soup Nazi.

ELAINE: Why? What happens if you don’t order right?

JERRY: He yells and you don’t get your soup.

ELAINE: What?

JERRY: Just follow the ordering procedure and you will be fine.

GEORGE: All right. All right. Let’s - let’s go over that again.

JERRY: All right. As you walk in the place move immediately to your right.

ELAINE: What?

JERRY: The main thing is to keep the line moving.

GEORGE: All right. So, you hold out your money, speak your soup in a loud, clear voice, step to the left and receive.

JERRY: Right. It’s very important not to embellish on your order. No extraneous comments. No questions. No compliments.

I have to email the newsletter over several days because Gmail identifies me as a spammer and puts me in the penalty box if I send out more than 500 emails a day, so please be patient.

This week I’ll feature the Homebuilders ETF (XHB) … the system most recently exited XHB in May and hasn’t reversed yet. Fancy pants who got short would be sitting on huge gains and wouldn’t have been shaken out during the late summer ramp back into the low 20s. People who just got out back in May would have missed a lot of pain.

There will only be two more freebie newsletters since I’ll be going away for Christmas in early December and won’t be back until the New Year, so email me today to get on the list.

U.S. Stocks Plunge, Sending S&P to Lowest Level Since 1997

“The S&P 500 extended its 2008 tumble to 49 percent, poised for the worst annual decline in its 80-year history … all 10 of the index’s main industry groups slid at least 3.5 percent … The S&P 500 slid 6.7 percent to 752.44, under the low of 776.76 reached during the bear market in 2002. The Dow Jones Industrial Average sank 444.99 points, or 5.6 percent, to 7,552.29. The Nasdaq Composite decreased 5.1 percent to 1,316.12.”

Revisiting the long-term chart of the Dow Industrials with key Fibonacci retracement levels (last posted in early October), we can see that 7500 is a pretty key level, but if it gives way then 5900 is next.

On a happy note, readers of my newsletter know that last week the model said to buy the Ultrashort Financials (SKF) on Monday around $169. It’s currently $262 … not a bad return over a few days.

U.S. Stocks Slide to Five-Year Lows as Banks, Carmakers Tumble

“The S&P 500 plunged 6.1 percent to 806.58 and extended its 2008 retreat to 45 percent, poised for its worst year since 1931. The Dow Jones Industrial Average lost 427.47 points, or 5.1 percent, to 7,997.28. The Nasdaq Composite Index decreased 6.5 percent to 1,386.42.”

The “support” level everyone has been watching (838.50 on the SP futures) finally gave way, with a thud. Has so much (paper) wealth ever evaporated so quickly?

Berkshire’s Credit Risk Soars on $37 Billion Bet

“Buffett has taken a series of bets on four stock indexes across the globe, including the Standard & Poor’s 500 Index, selling contracts to undisclosed buyers for $4.85 billion that protect the buyers against declines in those markets.

Under the agreements, Berkshire will pay as much as $37 billion if, on specific dates beginning in 2019, the market indexes are below the point where they were when he made the agreements. Berkshire hasn’t disclosed which stock indexes besides the S&P are covered under the contracts or how they’re structured.”

I’d love to know what the strike price is for any of the four indexes on which he wrote the puts. And what are the other three indexes? Any guesses?

Looking out to 2019, you’d think Buffett would be safe, though the five-year CDS chart below shows a lot of (irratonal?) fear.