ECONOMIC HEADLINES

RIMM misses by penny
NEWS corp sends Direct TV to Liberty
PERSONAL spending up in November (Playstation 3 and Wii effect?)
TOYOTA forecasts record sales
ARIZONA is fastest growing state
GODFATHER of the Merc

Happy holidays. I am off to enjoy mine.

HEADLINES AND ANALYSIS

LEADING index up
GDP revised lower
FEARLESS forecasts


The market is evidently slowing as the data suggests. Yet analysts are overwhelming bullish about the coming year 2007. The 'soft-landing' theory is still in play and is mostly likely fully priced in to the markets. Any deviation from this theory and evidence of a hard landing may lead to a a fleeting exit from the equity markets and potentially a large drop in the indices. We have had an extremely bullish run from the June lows- nearly 1800 points on the Dow, almost 200 on the S&P 500 and over 400 on the NASDAQ. A big portion of this move came during the typically bearish months of September and October while we have had a rather mellow November and December. While January is a typically bullish month, we could see a market pullback especially if the data continues so suggest we are in for something more than a 'soft-landing'. For now I continue to be bearish equities in general with short positions in several leading tech stocks - GOOG, AAPL, RIMM and AKAM to name a few.
I am long energy for now as well as metal producers. I also have index shorts in anticipation of a broad market pullback.

HEADLINES

THAI turnaround unleashes rally
CAUTION on FedEx
ARE all hedge fund investors really rich ?
ANOTHER tech buyout
BIGGEST innovation surprises for 2007
MORTGAGE applications drop

ECONOMIC HEADLINES

THAILAND takes a plunge
INFLATION rears its ugly head
CIRCUIT CITY short circuited
10 HOUSING markets to fall hardest
TRANSATLANTIC exchange merger approved

START TO ANOTHER WEEK

SOARING current account deficit
IS it me or does this happen every week
RISK free trade ?
YET another buyout
COULD buyouts spell trouble ahead ?
SURVIVING the Real Estate Bust ( which hasn't even happened !@!)
HANS (makers of Monster) a potential takeover candidate ?

FINANCE HEADLINES

BEIJING and Washington sign nuclear reactor agreement pact
INFLATION MIA ?
US will be eclipsed by China - Jim Cramer
YAHOO playing catch up with Google
DOLLARS biggest gain in 4 months
ALL time high for Dow
GOOD times ahead ?

ARTICLES OF CONFLICTING INTEREST

REAL estate market going to hell
FIRST time buyers getting back in real estate
RECESSION ahead (Merrill Lynchs David Rosenberg courtsey of Bill Cara)
BIGGEST Japanese takeover ever

BUSINESS HEADLINES

http://news.yahoo.com/s/ap/20061029/ap_on_go_ot/america_the_bankrupt

http://news.yahoo.com/s/ap/20061028/ap_on_re_as/china_iraq_oil

http://news.yahoo.com/s/ap/20061029/ap_on_re_la_am_ca/bolivia_nationalization

http://www.bloomberg.com/apps/news?pid=20601087&sid=aEdLpEIQMQFw&refer=home

http://www.thestreet.com/_dm/newsanalysis/retail/10318379.html

DESPERATE LONGS

Todays market reflects the desperation of Longs. Valiantly defending the 11000 ( Fridays low)levels on the Dow and trying to hold the S&P above its 200MA at around 1270. Valiant but foolish. Inflation, slowing economic growth, sharp slowdown in the housing market, decline of the dollar , record gas prices, slow down in consumer spending , you name it things are getting bad. The market will follow suit. You cannot artificially hold up the equity market which what is happening now. The powers that be are projecting an 'all is well' scenario while they quitely unload their positions. You do not want to be left holding the bag when it all comes tumbling down. When liquidity dries up the bids disappear and things get ugly, real ugly and real fast. Now is the time to read the data and have conviction. Conviction that things will get really bad in the equity markets before they get better.

DEAD CAT BOUNCE CONFIRMED

Wow. Markets getting ugly huh ? Despite that 200+ point rally we had on the Dow and the great Nasdaq comeback, we are still firmly in a downtrend. Huge rallies occur in bear markets, thats a given when conditions hit deeply oversold, you have shorts who book profits and start covering sending prices higher while bargain hunters jump in to pick up what seems 'undervalued' stocks. Than you have the momentum traders who follow tail and before you know it, a nice rally develops. The thing I love most about big rallies in a bear market is that it gives you the chance to short more stocks. Look for stocks that rally the most but, are still in a downtrend and have rallied to a resistance point be it the 50 or 200 MA or a downtrend line. Than go ahead and short some more. I love this game.

DOWNSIDE DAY

Nice downside we had today. Markets sucked if you were on the longside the whole of today. But in my case I am 50% long and 100% short so math question of the day. What is the total net sum of my positions ? 50% Short . Yep short as I like to be. I am getting sick of Google jumping around. A great GOOG play is buying September put options. They move around alot . Look for GOOG to score a 70+ on the hourly RSI and buy some Puts or atleast thats what I enjoy doing. Talking about POS, will you take a look at HANS. Made a 52 week high on the weakest volume last week and its been downhill since than. I keep trading in and out of my HANS short positions using RSI as my guide . Looking at GOOG and HANS they are both trading near the upper ends of their Bollinger bands and I would look for a move towards the middle of the band or even the lower end in the coming weeks.

Now to move on to a bullish picture . Even in these bearish times its nice to keep an eye on stocks making new highs on huge volume. Take a look at MEA. Its been spiralling upwards on way above normal volume. Interesting stock to keep an eye on. Might be overextended with the Bollinger bands and all but would not be surprised at further upside.

WHAT TO EXPECT IN THE COMING WEEKS

The markets have been moving higher as of late though with a substantial decrease in volume. This is telling us that the rally lacks the strength to take us to new highs. The 11,700 on the DOW will be the high for this year. I am expecting the markets to break down in the weeks ahead with an occasional plunge which should take us below 10,000 on the DOW and under 2000 on the Nasdaq. As I write I am seeing increasing sign of a sell off across the board with many leaders showing weakness. I would use this opportunity to add to my short positions particularly in HANS and GOOG.

LOOKING TO TAKE SHORT POSITION IN HANS

Today I am looking to take a short position in HANS. The price movement is showing a fade play i.e the big money is trying to take price back up to 52 week high around $202 and sell off the stock. There was plenty of window dressing on Friday end of close with HANS jumping $5 bucks around 3.55pm with large blocks being traded. Money managers trying to improve the look of their portfolios by acting as if they held the best performing stocks of the quarter. The increases in price over the last two weeks, has come on relatively lower volume and todays volume is not impressive, in comparison to the volume last time around when HANS headed to $200. Added to this, is a stock that is trading at 65x trailing earnings which is extremely high, for a $4.5 billion plus market capitalized company which sells soft and energy drinks - infact one energy drink, Monster which seems to have the market in a spin. Competition is fierce and energy drinks for the most part are a fad which can go either way. Monster may be hot today but, there are no guarantee it will be hot 6 months from now and with ever changing consumer tastes, a one trick pony such as HANS is way overpriced especially taking into account that the markets are setting up for a further drop to the downside.

FAKE RALLY ?

Today has the makings of a fake rally. Low volume and stocks are flying through the roof ahead of the Fed meeting. Either Bernanke has preannounced he is dropping rates by a full point or we have a fake rally on our hands. Either way I am scouting out short positions and adding more where I can. This rally cannot be sustained in the long run. Bulls are in for a long and brutal summer. We have already had earning misses - RHAT comes to mind, and the downside is brutal. Either way, time will tell and I have my fingers on the trigger ready to go all in short.

MY THOUGHTS ON GOOGLE

I previously mentioned we are in a bear market. Google in my mind is a stock that will suffer tremendously at the hands of the bears. PE of over 70 , stock price that has quadrupled in less than 2 years and expectations higher than that of Brazil winning the soccer World Cup. All said, GOOG could be in for a nasty fall . The 50 day moving average is around $393 and currently GOOG sits above $400. You can be sure GOOG will drop below its 50MA within the next few weeks to its 200MA at $383 and than even below that. The expectations to beat earnings soundly are already priced into the stock and blowout earnings, may only lift the stock 20 points or even less. On the other hand, any hint of disappointing earnings or even just meeting earnings, could drop this stock an easy 50 points like we saw in early February, when GOOG lost nearly a 100 points in just over a week.You even have the Google CFO admitting that growth may not match investor expectations and is clearly slowing yet, multiples have not been cut. It seems unlike most Wall Street analysts, I still remember Yahoo, the spectacular expectations everyone had and that $500 stock price on January 4th 2000.Taking splits into account, Yahoos share price has fallen a spectacular 75% from its peak. What happened ? People saw growth slowing, cut multiples and this is the end result. Now you have Google with sky high expectations priced into the stock. Expectations are not met for December 05 quarter and GOOG drops like a rock. Expectations are exceeded for March 06 quarter and GOOG only jumps 25 points and than proceeds to lose 50 points in the coming days. This clearly indicates that there is far more downside to this stock than upside.It also appears a lot of fund managers used the March quarter profit beat to reduce their holdings of the stock. With the bear market upon us, GOOG is likely to have a very rough road ahead.

BACK AGAIN

Well I am back to blogging. Its been a couple of tough months . Been moving offices, traveling as well as busy with other side projects. I have made a promise that I will try to update my blog atleast once a week from here on forth.
Alright now back to the markets and my outlook. Ok so I don't exactly have a crystal ball. At one time last year I envisioned oil prices falling back to $30 a barrel. I admit I was dead wrong. What was I thinking. While I do not think we will hit $100 anytime soon, I do think $50 is the lowest we can go over the next few years. I was listening to a report in Economist suggesting that there will be an oversupply of oil around 2010 which may ease prices perhaps even into the $30 range. The reasoning behind it was growth in China and India would not be as rapid as it currently is as well as the growth in popularity of cars consuming low amounts of gas.
The current equity markets suggest we have entered into a Bear market. Yes the Big Bad Bear is finally upon us. It was inevitable considering we have had a long running cyclical bull since early 2003 and the last bear ended end of 2002. You can expect a bear every four years and on cue its here. Time to cut out the longs and short every rally. As can be expected I am currently heavily in cash - almost 70% . The rest of my funds are selectively shorting securities that have broken their uptrend and are falling below levels of support like 50ma or 200ma. I expect this bear market to last till atleast September though it may go on till early 2007. We may get a light summer rally but do not count on it. As we speak the bear appears it is setting itself up for a further drop down. I do expect the Dow 10,000 level to be breached and we may even see sub 9,000 on the Dow. Nasdaq will breach 2,000 per my expectations and S&P 500 could fall below 1100.

Turkcell Iletisim Hizmetleri A.S. (ADR) TKC analysis.

A quick analysis 0f Turkcell Iletisim Hizmetleri A.S. (ADR) TKC. Turkcell is the major provider of mobile communication services in Turkey, a fast growing nation of 70 million plus inhabitants. Turkcell is expected to grow its earnings by over 20% a year for the next 10 years and here it is priced just over $18 and a P/E ratio of under 15. Here ladies and gentleman, is a company that grew revenues between 2004 and 2005 by 33% and recorded a 78% increase in net income year over year. Some of the highlights were :

• Turkcell recorded strong subscriber growth year on year. Turkcell added 4.5 million (4.4 million) net new subscribers during 2005 and recorded a 19% increase in its overall subscriber base to 27.9 million (23.4 million) as of December 31, 2005
• Usage increased by 4% to 67.7 minutes (64.9 minutes) as a result of improvements in the macroeconomic environment, positive consumer sentiment and the effects of volume-based campaigns
• Revenue increased 33% to US$4.3 billion (US$3.2 billion) during the year ended December 31, 2005
• EBITDA increased to US$1,933.3 million (US$1,338.8 million) during the year ended December 31, 2005 and Turkcell recorded an EBITDA margin of 45% mainly due to improved operational performance
• Net income increased 78% to US$910.9 million (US$511.8 million) during the year ended December 31, 2005

Outside of Turley, Turkcell also has interests in international GSM operations in Azerbaijan, Georgia, Kazakhstan, Moldova, Northern Cyprus and Ukraine. Turkcell has a potential market of over 300 million people and has so far acquired less than 30 million subcribers. Thats less than a 10 percent penetration with huge potential for future growth. Using a Discounted Cash Flow model based on a very conservative estimate of 15% growth over 10 years, Turkcell has a fair book value of around $28 which is a full $10 above the current price. For anybody interested in value investing, Turkcell is easily one of the most undervalued stocks in the market based on its current and future growth expectancy. I am sure even the great Warren Buffet would agree with the last statement.

STOCK PICKS FOR WEEK OF MARCH 10

FOR THOSE OF YOU STILL IN DXPE , CONGRATULATIONS. I SOLD OUT MOST OF MY POSITION AROUND $28.STILL FOR THOSE GETTING IN AT UNDER $20 PER MY RECOMMENDATION, THATS A PRETTY 50% GAIN. GOOD JOB !

Now for my picks for this week. After reviewing the markets and checking the indices I feel these are some of the stocks we need to be looking into.

CMG - Stock has pulled back on relatively light volume compared to huge increased volume on 3 day run up. $50 is an excellent buy in point. I don't see a downside of more than $2-3 . Keep stops right under $47.

IFO - Stock has pulled back slightly after run up to close to $12 last Friday. Stock is a Great buy under $11 and we will keep a stop at $9.70. This stock has an easy $5-10 upside short term and I would not take any money of the table before the stock hits $15 atleast.

TFSM - Now here is a stock ready to explode upwards. Momentum is building and we could easily see $15-20 very short term. I recommend a buy at around $10 ( 52 week high) and watch this stock soar. Stops need to be placed right below $9.

ICE - Stock has been volatile but I feel we will clear the 52 week high at$72.20 before running on past $80. Buy with a stop at $67.50. Sector as a whole has been RED HOT.

BUD - Yes go ahead laugh at me. Stock has made a double bottom at $40.15. Once we take out $44 I feel we should see $48 very shortly. Smart money has been pouring into this stock with the rate hikes and all. Place protective stop at $40.15.

ACAD - Stock has bounced of support at around $14.50. Buy in and place stops right below $14.00. Look for a ride up beyond 52 week highs of $17.94 set last week. Momentum is on ourside.

A quick update on our previous picks.

TKC is holding up nicely . Middle East markets have been rocked the past few weeks falling as much as 25% .In the face of all this TKC has barely flinched. Once the markets clear up TKC willclear 52 week highs at $19.60.

AAPL is a bust. I am out of this stock and so should you. The stock is out of steam.

SNDK - same as above.

OTIV - Stock is forming a nice base at around $15. Should move past 52 week highat $17.26 in the very near future.

CRED - I don't know what to make of this stock. But atleast it has not broken $20. Hang in there. We will see a move to the upside. This reminds me of DXPE.

DXPE - Take half of the table. 50% gain here folks. Lets not get greedy.

TRAD - Hope you guys take half off the table when this stock cleared $17. I think this is a good time to get back in with stops at $ 13.67.

Thats all folks. Happy hunting .

NEW PICKS

Sorry for the delay between posts. Its been a busy past few weeks. Lots of changes in my portfolio. Here is my new list. I am committed to Short term trades in the following stocks . I will also provide reasoning for my picks.

AAPL LONG TARGET: $ 72 STOP: $67.50

Reasoning: AAPL has been down because of GOOG CFO comments on Tuesday. AAPL has been on an uptrend as of late and I would look for that to continue.

CRED LONG TARGET: $ 30 STOP: $ 19

Reasoning: CRED has fallen as of late but I expect stock to rise back towards 30 as momentum shifts to upside as 20-21 appears to be a solid base. I took profits of CRED last time it went to $26-27 couple weeks back.

DXPE LONG TARGET: $ 20 STOP: $17.50

Reasoning: DXPE has been bashed up as of late for no fault of its own. Earnings were up and we expect the trend to continue with latest earning news ahead. Stock will rebound nicely.

OTIV LONG TARGET: $17 STOP $14.25

Reasoning: OTIV has great upside momentum and than BOOM. Downgrade. Overreaction caused stock to full from 16s to 14s . Stock was inching towards 18 just a couple weeks back.

SNDK LONG TARGET: $ 70 STOP: $59

Reasoning: Here we go Baby . SNDK is back. After that rather long dreary pullback stock is ready to climb upwards and has such strong momentum that Tuesdays broad pullback did not affect it.

TRAD LONG TARGET : $17 STOP $15.25

Reasoning: TRAD is in uptrend. It has pulled back as of late and is in a trading range between 15-17. Buy when its 15s and sell high 16s low 17s


Happy Hunting Folks.

ENERGY SECTOR

Keep an eye on the energy sector in particular XLE - the ETF for that sector. It appears Big Money is moving out of the energy sector - gas , oil etc. Look at the big name companies - XOM, BP, COP, CVX, SLB ..All down big over the last few days. Is this the end of the energy sector bull ? Is Wall Street anticipating the end of the Oil run up ? Guess we will just have to wait and see. Until than I am going to keep my eyes and ears open searching for the next sector that will lead the way.

SHORT TERM TRADE

I am going to start posting a weekly short term trade list of stocks. Here is the list for this week.

AAPL LONG TARGET : $68 STOP : $62.50

TRAD LONG TARGET : $ 16.50 STOP : $14.50

SUN LONG TARGET : $75 STOP : $70.75

GLW LONG TARGET: $25 STOP : $22.50

CRED LONG TARGET: $28.50 STOP: $21.25

RVSN LONG TARGET: $24 STOP : $19.25

QSII SHORT TARGET: $67 STOP: $ 73