Hammy PT

Been running hills the last few weeks, usually every day.

Yesterday got my p90x workout in. Today is going to be a swim day.

Hammy Trade: SDS

6/16: Bought SDS at 55.37 to hedge against my longs. Last night i remember wishing I had bought some during the day, and was pissed I hadn't when SPX futures were so low.

The SPX is indecisive, and I don't feel like getting "dropped down an empty elevator shaft" as Fly would put it.

UT O-Course proposed location

Hammy Trades: ABAT, CEP

Got in ABAT on 6/10 at 4.10. Current chart (6/15): Pattern not yet broke out, or down. Hold.

Update 6/16: Still consolidating. Breakout box listed. Will either break out, or be sold soon.

Got in CEP on 6/11 at 4.24. Current Chart (6/15 close): Viable triangle breakout. Still holding. Price target around 5.00

Update 6/16: Still healthy, looking fine. Large price range ahead though. Not sure I like holding onto these, when the market is stalling out.

Hammy Trade: UNG

Triangle breakout-- plain and simple. Also not a bad fundamental play. Talked about a lot on Fly's blog:

Bought at 15.65

Stories:

http://seekingalpha.com/article/143167-natural-gas-the-next-big-thing

UPDATE 6/15/09: Still holding:

Update 6/16: holding, good technicals and good fundies.

UNG Breakout?

and the SPX:

Position Review

Down day today. I'm down about a buck fifty. Here are my positions and their trading ranges:

ABAT:

GLW:

XTXI:

ACAS:

CEP:

Position Review - June 12, 2009

Sold WTI - it broke down from its pattern after a fake-out breakout. Rather not "hope" with a stock, so sold this one down a few percent. 

Sold COMS - a sloppy formation that morphed from a solid bear flag to a piece of crap. My money can do better elsewhere.

ABAT - Ascending triangle breakout, hasn't been stellar but also hasn't failed yet. Still holding its own. 

CEP - Triangle breakout still performing within the box.

GLW - Good, still bouncing around its range box.

 XTXI - My fave, still striving to reach that price target at the top of the box.

Position Review - June 10, 2009

Still no mac, so still no graphics.

General condition: Banking coin like crazy this week. Up 6% the last 3 days alone.

ABAT: Stop buy bought at where it should have broken out, but it was a fake-out. Still in ascending triangle. Still good. Hold.

COMS: Bull flag pattern ascended upwards. Upwards consolidation not very good. Hold, but watch for it to break down below handle. Set stop for just below handle at 4.71.

GLW: Poised for breakout, sitting at the top of the channel. This could also backfire and dip back down into the channel for another oscillation. Should have waited to see breakout before buying. Hold, though with stop at bottom of channel at 13.29, a good 20% down. This is not the type of position I like to be in. Might sell tomorrow. 

TRID: Sloppy. Should have sold at 2.03. My money could do better elsewhere. Sell.

XTXI: Still in breakout from triangle formation. Still holding the formation, but hasn't reached price target. Hold. 

Sold: LDK reached price target. TEN reached price target. 

Potential buys: LDK forming a tight bull flag. Stop buy set at 14.35.

Position review

GLW - Hold. Tightening up its consolidation (hopefully). I'm prepared to hold this longer-term. Box forward goes down 10% to about 14.20, and up to about 16.05. A break above 16.05 is long-term goal.

LDK - Hold. Broke out of a 5 week triangle, and holds its pattern.

TEN - Hold. Still holding breakout pattern fine.

TRID - Sloppy consolidation, but is up big after-hours (6% or so.. not that big). Hold at least to 2.25 (supply)

XTXI - Performing well, but not perfectly. Still holding the breakout, so its a hold. 

Potential buys: BIOS and COMS. Each are showing tight consolidation on flag formations.

Hammy Trade: LDK

Bought @ 10.28. Month long triangle pattern break-out from 100 and 50 DMA. Could have caught this one lower, the actual breakout was at about 9.77, so this was about 5% above the breakout point.

No pictures today since my Mac died.

The only thing I need to be careful with, when buying later stage break-outs, is that they can correct down past my buy point while still holding their breakout pattern. Getting it earliest, and lowest, is key to staying sane while holding a breakout.

UPDATE 6/10: Sold at 13.49.

Hammy Trade: GLW

Bot @ 15.63

This is more of a fundamental play. GLW has stellar fundamentals and prospects for business with small LCD screens.

Here's a chart, which looks like it could break out of a cup with handle. This wasn't a patiently timed out trade, so I may see some volatility before a breakout.

And here's my box of future movement. As long as the price remains in the box, I hold. If it breaks out, I'll buy more. If it breaks down, I'll sell for about a 12% loss:

Update 6/15/09: STill in the box, still holding. FLY just bought more:

Update 6/16: Still in the box:

Hammy Trade: TEN

Bought @ 7.24

Update 6/4/09: I put a stop at 7.16, because I was leaving the desk. It stopped out. This was a stupid trade to begin with, since it never actually broke out. I will keep it on my radar, however, because it might be a good trade (tomorrow perhaps).

Hammy Trade: APL

Bought APL @ 6.11 on 6/3/09:

BOX 6/4/09

update 6/4/09: sold at 7.50 for a 22% gain. This got outside the box, hit the target, and did its job well.

Hammy Trade: MIDD

In at 48.1995

Update: This just didn't seem like it was going to do anything. I had little conviction for holding it, and let it go at 49.06

Hammy Trade: AXL

in at 2.55

Update 6/3/09:

Out at 2.29. This was about 10% down. It didn't break formation, but this is more than I wish to wait for.. for now. I'll get back into this if it shows an actual breakout.

Hammy Trade: XTXI

In at 3.85.

Bull flag breakout. Nice pattern, though it got a little close to the apex for my tastes.

Update 6/4/09: Decent pattern so far, not perfect,but not failed.

UPDATE 6/15: Still holding:

Update 6/16: Not sure if I wanna keep holding these breakouts when the market is stalling. Still holding until SPX breaks down:

Hammy Trade: BEE

bought at 1.32. I'm in a bit late, and will be getting out later today.

Triangle Breakout:

  

UPDATE: 6/4/09 Sold at 1.44. There was support at 1.43, but thick selling in this area. Got out with around 9 percent.

Chart Addict's Q & A

Copied here for my future reference.

This will be the weekend educational post. I decided to openly answer some recently submitted questions. Apologize for any grammatical errors in advance.

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1) “OpihiMan” wanted to know about my trading routine, post-trade analysis, record-keeping, my definition of trading success, if I pay attention to macro situations/news, the stylistic differences between day and swing trading, and whether I subscribed to any paid services.

a) Trading Routine - I create my watch list the night before. Then, I try to be ready 2 hrs before the market opens. I watch the futures market as well any gap ups or downs on any of the stocks on my watch. I plot them on “blank boxes” to see if they will fade or break higher. I also plot the approximate open of the market on the chart. I go through my scan one more time in case I missed anything (and I do miss things anyway).

b) Post-trade Analysis - I review the daily charts of my holdings and the market indices. I mark all holdings as either “hold” or “possible sell” for the next day. The ones with a “possible sell” are given higher priority the next morning.I also monitor the Asian and European markets and plot them on the daily as they progress.

c) Record-keeping - A simple spreadsheet for the trades. The blog is my trading journal.

d) Trading Success - My personal definition is measured on monthly percentage returns. My goal is 10%+ per month. If I don’t hit double-digits in any given month, then I know I did something wrong. March 2009 was the first month in 15 months where I made less than 10% and I did make quite a few mistakes.

e) Macro Situation/News - I do pay attention, but I don’t put much weight on them at all. I let the charts do the decision making. Sometimes, news can gap the markets beyond a consolidation range and form a breakaway, in which case it is technically significant.

f) Day/Swing Trading - same patterns, different time frames. Tolerance for risk and loss and the margin of safety is greater for swing trading than for day trading.

g) Subscriptions - I only have a monthly membership to Stockcharts.com, which I highly recommend for candlestick chartists.

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2) “Kush” wanted to know how trading the opposite of the media (CNBC, Cramer) makes you money, finding a trader that’s a contrary indicator, best time to buy, and FAS/FAZ range trading.

a) Trading Opposite of Media - I use CNBC only for breaking news, economic data results, etc. I do not watch Cramer’s show and ultimately, you shouldn’t blindly trade a stock because someone mentioned it. You have to do your own homework. Sometimes the media is right, sometimes they’re wrong. You should trust in your decisions based on fundamental and/or technical facts.

b) Contrary Indicator - Josh. He bet against me for 7 weeks, and look what happened to him.

c) Best Time to Buy - For anything, the best time to buy is when a high-probability setup emerges. Doesn’t matter when. Same goes for short setups. High-probability setups ensure that the odds are in your favor in most cases.

d) FAS/FAZ Trading Range - First of all, when and if I trade FAS/FAZ, I use the SPY. It may not be as accurate, but it will help when the market gets to become too volatile and it can help you control your emotions. I personally do not recommend day trading within a tight range, such as the triangle we’ve been seeing for the entire month of May. The range is about to close, and the market will make a major imminent move.

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3) “GonzoTrader” wanted to know what intra-day scans I am running, the most reliable chart setup, pre-market homework, setting stops and limits on buy orders, finding stocks with the most market orders pre-market, and what sectors are in play for next week.

a) Intra-day Scans - I hardly run intra-day scans. I get my slaves to do that. Since I am a swing trader, I can get away with scanning after the market closes each day. My scan right now is all stocks between $1-3 with volume above 100K. Prior to the dollar stock circus, my “normal” scan was stocks above $5 with volume above 500K.

b) Most Reliable Setup - This one goes to the High-and-Tight Bull Flag. I drew it out below:

c) Pre-market Homework - refer to (1a).

d) Setting Limit and Stop Buys - In cases where I believe that a multiple number of stocks will breakout at or near the same time, I will set limit orders immediately above their breakout resistance levels. The vast majority of time, I use market orders and manually make entry.

e) Finding Stocks with most Pre-market Interest - You can use http://money.cnn.com/data/premarket/nyse (also contains NASDAQ stocks). You can also go to http://www.allstocks.com/markets/premarketactive.html or http://dynamic.nasdaq.com/dynamic/premarketma.stm.

f) Next Week’s Sectors in Play - TBD, but I am long biotech/pharma, oil/gas, and commodities.

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4) “Cuervos Laugh” wanted to ask how I managed my information flow.

a) I actually do not read blogs on my blogroll unless something is brought up to my attention. As for the links on the sidebar, I primarily look at pre-market action and analyst upgrades/downgrades. The link library is for the readers, not me.

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5) “P” wanted to know about using different time frames.

a) Using Different timeframes - Intra-day, daily, weekly, and monthly time frames should all support each other. Which time frames should you use? It all depends on your holding period. I use intra-day and daily charts since I am a swing trader. If you are a buy-and-hold investor, you should use the daily and weekly charts more frequently. Intra-day and one-day breakouts or breakdowns are your earliest signals for entry or exit.

When you mentioned the SPY, the weekly pattern is not a bear flag, it is a bull flag as noted below:

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6) “Juice” wanted to know how I spot s FEED, CAR, DDRX in it’s early stages and how I can tell if it’s going to go to sub-$1 to $5+, and if ATSG can get over $5.

a) Finding Next Multi-bagger - This is a difficult question because no one knows for certain whether a stock will go from sub-$1 to $5+. The only thing that I can tell you is to keep true to the technical pattern of the chart. If the chart remains intact, then hold the stock. It also depends on your time frame. In these cases, you’ll most likely have to be a positions trader, holding positions for several weeks or longer. The important thing is to catch the first high-probability setup for the stock and ride it until one of the wheels fall off.

b) ATSG - I would be mindful of the May 2008 breakaway gap down as it will create some resistance. Like I mentioned above, ride the trend until it trends no more. See chart below:

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7) “Kel” wanted to know about target setting.

a) Targets - Usually, my targets are located at major moving averages and support resistance areas. I do not use MA crossovers, because they are lagging. Instead, I first determine which MA a stock is following (e.g. 15-day, 20,day, 50-day, etc.). When the stock reaches striking distance, it is automatically placed on my watch list. An intra-day setup and/or breakout will confirm the entry. As for exits, I usually sell at least a partial position at the first major resistance area (by major, I mean the 50,day, 100-day, MA’s or 200-day or any large previous breakaway gap downs). It all depends on the individual stock.

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8 ) “Susannah” wanted to know about setting stops and exiting positions.

a) Stops - I rarely use them. The last time I used stops was when I was on vacation in Mexico. I use flexible and mental stops and the shorter-term MA’s, such as 15 or 20-day MA’s, dictate my decisions. If a stock closes below a short-term support area, I would most likely exit the position. If I am wrong, I can always re-enter the stock.

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9) “Yogi & Boo Boo” wanted to know how I keep myself from blowing up.

a) Anti-Blowup - Keep most of your positions small. With the exception of CTIC, all of my positions are between 5-10% per position. This way, ff a stock drops -20%, you don’t freak out (you shouldn’t). In addition, make sure your stocks have the best setups, thus ensuring a higher success rate. Sometimes I recommend stashing away your gains to protect them during times of extreme uncertainty.

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10) “Lindsay” wanted to know if I watched any bellweather stocks during the day, hedging long/short positions, the US Dollar, China, hyperinflation, and ETF use.

a) Bellweather Stocks - I do not, but that doesn’t mean people shouldn’t. I keep things very simple, so basically I simply keep an eye on the SPY, my existing positions, and my watch list stocks.

b) Hedging - Hedging is highly recommended during times of consolidation to avoid whipsaw and during times of uncertainty of market direction. Once it becomes apparent that one side has the greater odds of winning, release the hedges.

c) I do not particularly pay attention to the US Dollar, China, or hyperinflation for my trading. I refer to the other bloggers to answer these questions for you (feel free to chime in).

d) Using ETFs - The positives are less vs. individual stocks, diversification. The big negative associated with ETFs (I’ll refer to the 2x & 3x ETFs) is time decay. Over time, price will decay as a result of the daily compounding of the NAV. This is especially true for the 3x ETFs (e.g. FAS, FAZ).

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11) “Fortune8” wanted to know about trading options the “right way”.

a) Options - Not an expert. Comments are open for expert options traders who use them frequently since I do not use them often enough.

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12) “All About Health” asked what my process is for deciding to switch from long to short and vice versa during the day, as well as selecting the right industries/sectors to trade.

a) Switching Sides - Under extreme circumstances, I find myself having to entirely switch sides. This occurred at the March bottom when I was briefly caught short, a mistake that contributed to my worst month in 2009 (+2%). I am not a primary day trader, but the same patterns that apply for swing trading also apply to day trading. Use chart patterns, intra-day moving averages and trailing stops to guide you from one direction to another. It’s all the same thing, just a different time frame.

b) Choosing the Best Industries/Sectors - First, I look at the SPRD sector ETFs for any clues (XLV, XLB, XLK, XLI, XLY, XLP, XLF, XLE, XLU). I then look closer into sub-sectors (e.g. for Health Care, I’d look into biotech, drug manufacturers, healthcare providers, etc.). Then I’d look into individual names. This is a variation of the top-down approach.

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13) “Nashville Cat” wanted to know about gap strategies at the open.

a) Morning Gaps - When a stock gaps within a range/consolidation/S&R, then it is not very meaningful to me and the gap has a higher chance of fading. However, when a stock gaps outside of the above, it has a higher chance of following through. This is not true for exhaustion gaps (which fade anyway), but they are true for breakaway gaps and continuation gaps.

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14) “Relaxsome” wanted to know if I used oscillators.

a) Oscillators - I don’t use them. They are unnecessary. Focus on the basics.

Video Summary: The Limits of Power (2 of 3)

Bacevich The Limits of Power 2 of 3

Market Outlook and Today's Action

Stopped out of SIGM today w/ a 3 percent trailing stop, and held onto OPXS for a little bit of a loss. The market went lower, and possibly broke down through its most recent up-trend. Once it breaks down through a key level at 885, we'll have confirmation of a better chance of a downturn:

SIGM stopped out, and then jumped back up. It's down 2.5% in after hours:

OXPS is about to get killed. It has not confirmed itself as a good breakout. I'm up, and don't have much more tolerance for downside (especially in this market right now):

In summary, the Market looks like its about to fall over. These stocks probably won't do well if that happens. I'm just holding one small, profitable position, and will probably be getting out of it soon. No need to trade until the market shows its true colors.

Daily Stock Checkup

The S&P 500 is still in an upward channel. It's important to note, that there has not been a secondary down-trend for some time. I predict the S&P re-touches the recent previous high around 935, and then has a correction. 200 DMA is close overhead as well. We don't have much, if any, time:

OXPS - Hit strong supply after a strong move up today, and gave up most of the gains. This is OK, but unacceptable if it goes below the lower range of its flag:

SIGM has met supply as well, but isn't acting out of the ordinary for a triangle breakout:

The Limits of Power: Video

The Limits of Power (1 of 3)

Hammy Trade: OPLK

In at 11.42 on the bull flag. Check image for technical pattern info:

Another 2.8 move will put us at 14.22. If we look at it percentage wise, a 32% move up would put us at 15.04. Chart resistance is at levels shown:

UPDATE 5/19: Sold out of this because it was never really a "breakout". It certainly is a potential future breakout, but I'd rather wait for confirmation before holding it for another full swing down then up.

Hamy Trade: THQI

Awesome bull flag setup. 3% above buy point, confirming strength with price and volume:

"Mets - Look at RC's PPT blog post with a target. Also, refer to the rule of thumb about flag patterns: "the explosion in price then practically duplicates the original price movement of the “mast” formation." RC puts a target around 6.75, and the rule of thumb would duplicate the move from 3.86 to 5.19, a $1.33 move, to a breakout target of 6.58 "

Here's why i'm going to sell THQI at 6.45:

UPDATE 5/19: SOLD at 6.16. I think this has some room to run, but I don't have a real idea of what to expect for the overall market. I got cold feet and decided to walk away with 8.5%

Hammy Trade: SIGM

SIGM showed its volume in a run-up by the end of the day. It showed a solid triangle break-out formation, with volume confirmation.

UPDATE 5/21: Got in at 14.54, out at 15.56.

Why I sold: the market is getting a little dicey. I wasn't going to be watching the screen for a while, and decided to put a 3% stop on the stock as an insurance policy. later today i might get back, check it out, and reevaluate.

Possible trade set-ups

Some Triangles, and some bull flags. My goal this week is to make one disciplined, well thought out trade.

These are some prospects:

FLAGS:

"Usually forms after a rapid and fairly extensive advance which produces a nearly verticle, or at least quite steep price track on the charts. On such moves, volume normally shows a progressive increase until it reaches a high rate. Eventually profit-taking halts the markup. Then follows a series of minor fluctuations, sloping down somewhat, with volume shrinking markedly. and constantly as the pattern develops. The pattern might go on for five days, or three weeks. The explosion in price then practically duplicates the original price movement of the "mast" formation."

Wait until the example is clear - a nearly vertical, almost unbelievable rise, followed by several days of congestion with practically no volume.

Triangles:

Letter between me and one of my plebes

Sir...Hope everything is going well for you and that you're having fun in the Marines. I can't believe you have been in for a year.

I just wanted to let you know that I'm going to be

bringing the SPEED and INTENSITY come next year because I'm 1st semester Training Sergeant. It's going to be quite strange being a 2/C and if you have any tips about training and what to keep in mind/how it compares to the"real" miliary, I would be very appreciative.

Thanks and talk to you later.

Wells Hamilton

Today at 3:59am

Dear Elle,



Thanks for checking in! Everything has been going very well. I'm almost a year out of the Naval Academy and I'm still waiting around to start flight school. TBS was excellent training, and I'm excited to begin flying whenever they have a spot for me (mid-august is the estimate right now).



WIll you be in Texas anytime soon? I'm on PTAD at UT in Austin, probably until the end of June or so. Perhaps even longer, if they need me.



The "Speed & Intensity" was direction taken from MCDP-1, a Marine Corps publication called "Warfighting". I found it in Nimitz Hall when I was training you guys and decided it had some good stuff to teach during the "grey" time of plebe summer. I later learned that it is foundational to modern Marine Corps tactics, which is referred to as "maneuver warfare."



I also remember reading "Message to Garcia" by Elbert Hubbard to you plebes during the summer time. That was a lesson we were supposed to teach you. In case they forget that this summer, I'd recommend that book for some training. Also, remember myself and Rob Epstein reading you passages from "Starship Troopers"? A few of you guys fell asleep those days. The author, Robert Heinlen, was a Naval Academy grad before WW I and wrote many books. Check that out and take some lessons to pass on to your plebes.



Looking back, I feel as though my experience as a second class was a lesson of trial and error. As a youngster going into my second-class year, I was critical of the leniency of the class of '07 and '06 toward my plebes ('09) and I decided that I'd certainly give my plebes some of the hard time I found beneficial from my firsties, the class of '05.



Choosing to be "hard" on plebes can be a great thing under certain conditions, but destructive under a few misconceptions. The misconception is that being a hard trainer is, in itself, good for their development as officers. The benefit of hard training comes from the confidence they'll gain and the camaraderie which they'll grow into through training.



I considered "easy" second class as simply lazy. Since they didn't rate hard, or ask many questions, I figured they didn't care. This mindset was true to an extent, but became a source of arrogance on my part as a second class. I certainly cared about my plebes and challenged them to become better midshipmen, but my pride and ignorance took me to rate and punish them beyond their benefit. I'm sure you could ask anyone of your soon-to-be Firsties if this was so and they'll agree with me.



Compared to the upperclass who do nothing, the fact is, it's easy to swing to the opposite, and equally irrational side of the spectrum, into being too demanding and challenging. Both sides are equally reprehensible. In the middle ground is the leader who loves his or her plebes and puts in the effort to help them become better people.



First of all, I was "mean". This doesn't equate to irrational abusiveness to plebes, but merely being an asshole. The only real benefit that kind of "leadership" gives is to teach people to learn to deal with asshole leaders. I really doubt that even the sensitive, weak-hearted people who join the military really benefit from experience with assholes. Rather, it is unrelenting insistence on meeting standards, a quality found in few leaders, that actually creates results in their people. You can be encouraging while being unrelenting. Consider your plebes as babies who haven't learned how to walk yet, or have just begun to take a few steps. Would a loving mother berate or abandon her baby for stumbling after trying a few steps? Each of your plebes will have a goal and reason for being at the Naval Academy. Appeal to that goal in them as you show them the correct way to do things. As they're falling short of the standard, make sure they know and acknowledge they're wrong as you correct them. If they don't have a higher purpose and standard they're trying to obtain, they've been failed by their leadership, or they are mistakenly in the wrong place. The latter is a very small minority.



Think about the few things that stand out about the leaders you've had and respected over your *lifetime*, not just at the Naval Academy. You're training plebes to be leaders, not just good, idealistic midshipmen. They need to be taught real skills for leading people. They need to be taught that life will give them NOTHING that they have not earned, even if they've made it to the sparkling Naval Academy (which, by the way, gives literally NO ADDITIONAL BENEFIT WHATSOEVER towards being a good Marine Officer). It is THEIR responsibility, not the Naval Academy's, to develop themselves into leaders and officers.



You're going to have to get up early and miss time with friends because you'll be at blue & gold. Don't let them ever see you look tired or worn out. Let them see a smile on your face when you can, and a look of concern otherwise. Your disappointment will be their greatest fear, because their ultimate goal will be to live up to the standard you set for them. Set it high enough to challenge and transform them, but realistic enough that they can reach it.



Last of all, you have to know yourself. Don't try to fool anyone. Be the leader God made you to be, and strive for THAT fullest potential.



Semper Fidelis



Wells

Non-linear Reading Experiment: 1st Book Finished

The notes took much longer than I thought they would. It got easier toward the end to take notes, since my PTML was much better as time went on. I think this is definitely a skill to work on, and something that will get better and easier with time.

Definitely learned a ton from this book, and I have a much better memory of the main details from reading it in this method.

Next on my list is "What's so great about America." That should be a little lighter and easier to read.

The Limits of Power - Full Notes

Notes, Quotes, and Synopsis of Andrew Bacevich’s

The Limits of Power

by J. Wells Hamilton

One sentence summary:

Background information:Bacevich is a retired army Colonel and a current instructor at Boston University. This book is a part of “The American Empire Project”, an effort by authors such as Noam Chomsky to expose the de-facto empire instated around the world by the United States. Bacevich has published books and articles for at least the last ten years on foreign policy and diplomacy.

Notes & Framework:

Economic & Cultural Crisis

The “pursuit of happiness” has become for Americans a personal quest to acquire, consume, to indulge, and to shed whatever constraints might interfere with those endeavors. Efforts to satisfy this consumer demand on a national level have driven the U.S. to a condition of profound dependency. Ultimately, this self-gratification threatens the wellbeing of the United States. (16)

o      American success has depended on expansion and abundance since its inception.

o      From expansion came abundance. From abundance comes substantive freedom. (22)

§       “Not the Constitution, but free land and an abundance of natural resources open to a fit people” makes American democracy possible. (23)

o      The “tradition of freedom” is a farce. Once the US faced a limit on its resources (land, natural resources) did it begin to exert itself in order to “liberate” others. (19)

o      The additional freedom created in the 1960s is a result of our emergence from WW2 as the most powerful and rich nation on Earth. More power abroad meant greater abundance at home, which paved the way for greater freedom—gay rights, racial equality, etc.

o      Economic success once enhanced and supported military success. Now, it is our military that is being used to keep our economy on life support.

o      The shift occurred after the Vietnam War. The costs of the war destabilized the economy. (29)

§       We can see evidence of this in resulting devaluation of the dollar and suspension of its convertibility to gold. (29)

§       This is also evident in increased reliance on imports – goods and resources. Also, the ’73 Oil Shock. (30)

o      Americans were faced with a fateful choice: live within their means or start using military force to perpetuate expansion and in turn, abundance. They chose the latter. Addressing the nation, Carter proposed Americans to conserve, and to get off foreign oil. (35) Carter’s message failed, and Reagan took his place.

o      Reagan gave moral sanction to the empire of consumption.

§       Drove for more power, more prosperity. “Don’t cut back, fight back”. “We must decide that ‘less’ is not enough.”(37) The Middle East suddenly starts becoming an important region for U.S. economic wellbeing.

§       Government grew under Reagan by 5 percent. Reagan demanded an invulnerable US, and established the mind-set that military power can assure the essential American lifestyle of gaudy excess.

§       The US ceased to be a creditor nation. Federal and individual citizen’s budgets slid into debt.

o      The Persian Gulf- The spend-without-limit peacefully ended the cold war, but was also the reason the US got embroiled in the Persian Gulf. Reagan put in efforts to secure US domination over the gulf in order to prevent recurrence of the oil shocks of ’73 and ’79. (49)

§       Military presence is in the Persian Gulf to maintain the flow of oil, mitigating the implications of American energy dependence.

§       Operation Desert Storm was a derivative of Reagan’s policy, and really only led to new complications. One is a permanent, problematic US military presence.

·       Few Americans stood up against the military presence, the bombing, and the sanctions.

·       Rumsfeld echoes Reagan: “We have two choices. Either we change the way we live, or we must change the way they live. We choose the latter.”

·       Bush added a twisted moral base to it our presence there. We were now “fighting evil.”

§       American lifestyle didn’t change during the wars.

·       Personal savings rate continued to plummet.

·       “Americans subscribed to a limited-liability version of patriotism, one that emphasized the display of bumper stickers in preference to shouldering a rucksack.” (63)

o      Conclusion: Iraq came apart at the seams due to a generation of profligacy that had produced strategic insolvency.

o      U.S. was running out of soldiers and funds.

o      Americans have been complicit so long about the use of their country that they’ve lost command of its destiny. (65)

o      The reciprocal relationship between expansionism, abundance, and freedom—each reinforcing the other—no longer exists.

o      Rather than confront this reality, Americans since the early 80s have attempted to wish reality away.

Political Crisis:

False ideas on security and freedom lead to a swelling bureaucracy, and confidence misplaced with untrustworthy “wise men”. These problems have led to the Iraq and Afghan wars.

o      Successive “emergencies” have swelled federal power and responsibility beyond the scope ever intended by the framers, and beyond usefulness to the nation.

o      The Tradition of Freedom is a Myth -“Spreading Freedom” is an ideology that mainly serves to legitimize the exercise of executive power.

§       It in inconsistent- US does nothing in many enslaved countries. “Nothing in this ideology mandates action in support of the ideals it celebrates.” (77)

§       Conviction follows self-interest. This ideology has become hard-wired into the American psyche. It persists not because of its truth, but because it serves the interests of those who created the national security state. (81)

§       This has been used to excuse large military build-ups, government action, and foreign policy.

o      The U.S. is plagued with a secret, bloated, and ineffective national security apparatus.

o      “Secret” not because its really a matter of national security, but more to hide institutional incompetence and poor performance. The cloak of secrecy helps top brass evade all responsibility. The private on the ground who loses a rifle is punished more than a general who loses a war.

o      Institutions are ineffective because of ineptitude and/or disagreement with the president. Example: CIA in the Bay of Pigs – hapless schemes were promoted by the CIA. Joint Chiefs of Staff didn’t offer much help, convincing Kennedy that they were either stupid or untrustworthy. (91)

o      Higher-ups are not rewarded for candid thought but for political pandering. Second-guessing superiors is not allowed.

o      Tommy Franks to Bush: “Sir, I think exactly what my secretary thinks, what he’s ever thought, whatever he will ever think, or whatever he thought he might think.” (99)

o      Tommy Franks acted as the Bush Administration’s compliant enabler, allowing to country to proceed with impaling itself on Iraq.

o      George Tenet of the CIA told the president exactly what he wanted to hear.

o      Conclusion: we ought to consider dismantling an apparatus that demonstrably serves no useful purpose.

o      Wise Men– The president has come to rely upon a small circle of advisors rather than on a leaky, obstreperous bureaucracy. These men have been seduced by the idea that military and economic power will bring security.

o      Why wise men at all?– Presidents believe wise men are more likely to make good decisions. Shielded from the public, wise men can be relied upon for their candor instead of political, masses-influenced advice.

o      Why wise men aren’t a good thing

§       Example: Forrestal - constantly urged prompt action to forestall disaster. He succumbed to the “garrison” mentality, that military power is the optimum method of resolving international issues.

§       Paul Nitze – Facing Soviet atom bomb and Chinese communists, he faced three options: isolationism, preventative war, or “a more rapid build-up”. The third was chosen, and thus a permanent militarizationof US policy and economy was in effect.

§       Paul Wolfowitz – His phrase: “The risks of inaction outweigh the risks of action.” This man’s action led to the gulf war, and the “anticipatory self-defense” IE preventative war.

o      Conclusion– The security of power tempted Forrestal, Nitze, and Wolfowitz. In turn, it enshrined preventative war as core US policy after 9/11. The Iraq war is the result of all their work, along with the ideology of national security. Iraq teaches us the following lessons:

o      The ideology of national security poses an insurmountable obstacle to sound policy.

o      Americans can’t afford a government that doesn’t work.

o      Wise men have repeatedly misconstrued and exaggerated threats, with perverse effects. (123)

The Military Crisis:

America’s military has come up short in both Afghanistan and Iraq. They failed to eliminate the leadership of Al Qaeda and the Taliban movement, and did not provide the quick war expected in Iraq. Why didn’t things go as expected? We believed three false illusions about the US military. We’ve derived the wrong lessons from Iraq.

·       False Illusions. Estimates of U.S. military capabilities have been wildly overstated. The global war on terror illustrates this point.

1)     The illusion that the U.S. had succeeded in reinventing armed conflict through technology that allows precise, surgical application of extreme force. This illusion led the U.S. to believe it could take the easy way out of targeting a regime, instead of a nation, with full spectrum dominance. Reality: The last twenty years shows that US forces only win decisively if the enemy fights on American terms.

2)     The illusion that civilian and military leaders had a common set of principles for application of said dominant force. Namely, we’d fight only when vital interests are at stake and there are clear, attainable objectives. Reality: The restraint learned in Vietnam did not survive the 90s.

3)     The illusion that Americans could be counted on to “support our troops.” Reality: 9/11 reaffirmed the popular preference for hiring someone else’s kid to chase terrorists.

4)     Conclusion: The gap between what Bush called America’s soldiers to do and what they actually could do defines the military crisis experienced today.

·       The lessons currently drawn from America’s post-9/11 experience are the wrong ones. They seek to reconfigure the armed forces to fight “small wars”, to give more power to the generals, and to reconnect soldiering to citizenship:

o      Small Wars

§       First wrong “lesson”: Sustained presence will now be the norm. Frequent, protracted, and perpetual presence is reality now. Hard Power and soft power will merge. The officer corps now sees more Iraqs and Afghanistan in the future. Pursuit of global dominance needs both advanced weaponry AND boots on the ground.The facts are:

§       Small Wars always have an imperial context.

§       It is a fallacy that the present foretells the future. This is true from Vietnam, Desert Storm, and probably for GWOT.

§       Solution: Why not pursue more realistic and affordable objectives, abandoning plans to “liberate” the Islamic world, and then configure US forces accordingly? We need to devise a non-imperial foreign policy.

o      Giving Power back to the Generals. Second wrong “lesson” is: that civilian meddling back in Washington is the problem, not military performance. We need to tilt balance back to the generals and untie the hands of senior commanders. The facts are:

§       Franks’ American Soldier makes it quite clear that General Franks was in complete control of US involvement in Iraq and Afghanistan, from start to finish.

§       Civilian meddling wasn’t a problem because Franks wouldn’t allow civilians to meddle. Unless American Soldier is a lie, the Wise Men like Rumsfeld aren’t to blame.

§       The quality of American generalship since the end of the cold war has seldom risen above mediocre. It has been consistently disappointing. Civilian meddling, however objectionable, cannot fully explain the disappointing results achieved by U.S. forces since the cold war ended.

·       Desert Storm – Schwarzkopf left the Repulican Guard standing and the cease-fire he made assured Saddam’s continued power. (148)

·       Somalia – Commanders ignored basic principles of security, and the requirement for unity of command. (148)

·       Operation Allied Force – Wesley Clark made idle threats, and Milosevik called his bluffs. His concept of “using fores, not force” didn’t work. (149)

o      Why The Draft is a bad, unrealistic Idea. Third wrong “lesson” is: There is a poor relationship between army and society in America. People are removed from the conduct of war. People have little say in its use. Reliance on professional soldiers eviscerates the concept of civic duty. We ought to reinstate the draft, to get people out of the mall and into the streets. It would restore the governmental system of checks and balances. The facts are:     

§       A large draftee army is unaffordable. To train, equip, and sustain a military twice as large would cost much more money. (153)

§       The military doesn’t want draftees. Generals and admirals view citizen-soldiers as more trouble than they’re worth. (153)

§       Being against the draft is the easiest stance to take politically. (154)

§       Parents, realistically, will not support this. They are not going to put their kids in danger to support some political ideal. (154)

§       The law would be unenforceable.

§       To anyone with a conscience, sending soldiers back to Iraq or Afghanistan for multiple tours while the rest of the country chills out can hardly seem an acceptable arrangement. It is unfair, unjust, and morally corrosive.(155)

·       The Right Lessons from the wars. What is the point of using this superb army of ours if the result is Iraq and Afghanistan? Why has post-cold-war military supremacy not enhanced security, but produced the prospect of open-ended conflict?

1)     The Nature of War is fixed: Any notion that innovative techniques and new technologies will subject war to definitive human direction is simply whimsical.

§       The IED and homemade bombs proves that no matter what your amount of technology, war’s nature is fixed as ugly and grindingly tough.

§       The pentagon had believed that technologically enhanced speed yielding both operational and political certainty was a formula for ultimate success. The IED ruined this view.

§       The IED had strategic as well as tactical implications. The US could not attend to other looming threats while tied down to IED-equipped insurgents.

2)     The Utility of Force Remains finite:

§       Whether the US has been attempting to liberate or dominate, events in Iraq and Afghanistan suggest that the effort is not working. (161)

§       After four years, Iraqi electrical generation still met barely half of the nation’s requirements. Oil production still has not returned to pre-invasion levels. Fraud, waste, etc are rapant.

§       Afghan drug trade is appalling. (162)

§       Conclusion: As a problem solver, war leaves much to be desired. (162)

3)     The Folly of Preventative War

§       Bush thought that 9/11 discredited the cold war concepts of containment and deterrence. The result, preventative war, failed both normatively and pragmatically.

§       So long as war has not broken out, we still have the possibility of avoiding it.

§       A military operation expected to demonstrate the efficacy of preventative war accomplished just the reverse. WMDs proved to be non-existent.

§       Conclusion: Preemptive war is irrational. The country should conform to the Just War tradition.

4)     Military officers confuse Strategy with Operations

§       Tommy Franks’ template for victory did not even remotely approximate a strategy. It paid no attention to the aftermath. It had no moral dimension.

§       This naivete leads generals and civilians to assume that quick battlefied victories will make everything else fall into place.

·       Conclusion on the Military Crisis: Events have exposed as illusory American pretensions to having mastered war.

o      Even more money, technology, or smart leadership will not change the fact that war is out of our control.

o      US military performance has been unimpressive.

o      America doesn’t need a bigger army. It needs a smaller and more modest foreign policy, that assigns soldiers missions that are consistent with their capabilities.

Conclusion: We must acknowledge the limits of American power. We must accept our limits and work within them.

• United States will cease to lead the west if it abuses the privileges of leadership.



• An open-ended global war is not a strategy. We should instead pursue a strategy of containment. The goal of containment could be to prevent the sponsors of radical Islam from extending their influence.



• We must allow the inadequacies of Islamic extremism to manifest itself.



• Reduce dependency on fossil fuels.



• Abolishing nuclear weapons should be an urgent national security policy.



• 
  
  
  
  • They are unusable.
  
  
  
  • They do not play a legitimate role in international politics.
  
  
  
  



• People for whom freedom has become synonymous with consumption and self-actualization will have to sacrifice.

End Synopsis

Key Terms & Concepts

·       Ideology of national security

·       Niebuhr

·       National Security & state, and the apparatus thereof

o      The "system"

o      Unweildy

o      build-up of institutions

• President choice of who to rely upon



• Civil-military mistrust



• Members of the national security elite

o      Presidential reliance upon them

• Soviet union

o      Containment

o      Nuclear weapons

• Nitze doctrine



• NSC 68



• Wise Men



• Paul Wolfowitz



• Forrestal



• The Bush doctrine



• Weinberger-Powell doctrine



• “Doctrine of the Big Enchillada”



• Volunteer military and draft



• Small wars



• Douglas Feith



• Office of Special Planning



• Degrading quality of generalship after the cold war.



• Great illusions



• Donald Rumsfeld



• Tommy Franks



• Nature of War



• IEDs



• Afghanistan



• Preemptive war



• Tommy Franks’ American Soldier



• Performance & size of the military



• Freedom, abundance, and dependence.

Hammy Trade: FSIN

Need to research this position a little more.

UPDATE: out at 7.07

I put down an arbitrary stop before leaving the house, and behold- it stopped out at a low open then jumped back up.

I would like to get back into this stock, as it's set to run up, but I'm tired of chasing stocks right now. It feels like I'm chasing my own tail.

No.. some money is going to sit on the sidelines for now. I'm going to cool the jets for the time being.

Update: FSIN about a week later:

The lesson learned on triangle breakouts is to allow them to move back down to their previous uptrend. Don't get jerked around by volatility. If need be, scale back a little bit.