Thursday, May 31, 2007


A fairly flat day despite some noticeable strength in tech. After yesterdays surge, the bulls decided to take their foot of the accelerator. It seems this market can continue moving higher despite the summer doldrums.

DELL is surging in after hours after news of plans to cut over 8,000 workers. Earnings missed estimates but it seems Dells earnings are the least of investors worries at this stage. Cost cutting is good news as far as this market is concerned.

US economic growth last quarter was the slowest in four years. Investors are however betting on rate cuts and growth is expected to pick up. I do not see a rate cut unless we have a stock market slump.

Wachovia is buying AG Edwards for $6.8 billion. This acquisition is further evidence that Wachovia is trying to become a major player in the financial services industry to go up against BAC and C.

Wednesday, May 30, 2007

Pre market

The markets in Asia are red with China down 6.5%. Europe is taking it on the chin. Looks like we may have a down day in the US markets unless something dramatic happens.

A "'dramatic contraction' in the Chinese markets is not likely to affect international markets according to experts. Lets see what happens today.

Goldmans hedge fund is down 3.4% through April with losses in the currency market. Betting against the Canadian Dollar is not very profitable eh ?

I will be on the road the next few days. I will not be blogging till Friday.

Tuesday, May 29, 2007


Strong close to what looked to be a weak day after early morning strength. The Russell 2000, Transports, Utilities and Semis very especially strong. Real estate and construction led the way while Oil was the weakest sector.

Speculation on a Commerce Bancorp buyout. Smaller regional banks look to be good buys as consolidation in the industry is expected.

China increases in efforts to cool stock market.The problem is these measures do not have any effect during the midst of a mania but later come back to haunt the market once the indices top out.

Consumer confidence made a strong rebound in May. Very unexpected when one considers the high gas prices. Perhaps things may not be so rosy in June if high prices at the pump persist.

I am in NYC engaging in some research on the alternative energy industry. I picked the minds of some industry insiders and have learnt some very useful stuff.There really is no substitute to gaining information from well placed sources within companies - no I don't mean illegal information such as earning numbers and knowledge about deals before they happen. Its good to know how a company operates, what kind of people are managing it, what their motivations are, who the customers are, who the suppliers how, what their competition is like, what gives them an edge etc etc. Good stuff. I plan on writing about it some time in the near future.


Strength in the morning was followed by mid day weakness in the major indices. The stocks I mentioned earlier are all pretty strong. There does seem to be some momentum heading into the close.

Pre Market

Indices in Asia continue to move higher as Shanghai soars to new record highs. Europe is mixed probably waiting to see which way the US opens.

A Royal Bank of Scotland led consortium makes a hostile bid for ABN Amro trumping Barclays previous bid.

URS makes $2.6 billion bid to buy engineering and construction company Washington Group International. Stock of construction and engineering companies such as JEC SAI FWLT FLR KBR TTEK should do well as a result.

Shares of Vodafone are at 5 year highs after the worlds second largest mobile phone company announces solid earnings combined with postive forward guidance. NTT DT VZ T FTE DCM are all good long plays based on the VOD news.

Alcan shares rose once again due to takeover speculaton involving Norsk Hydro and Rio Tinto. ACH CENX NX TG KALU are some potential long plays in the aluminum sector on the back of this news .

Pre market futures are pointing to a strong open in the US markets.I expect this strong momentum to continue throughout the day.

Thursday, May 24, 2007


A slight rally in the last thirty minutes saved what could have been a disasterous day for the bulls. All in all the major indices ended down. The Dow only lost 0.62% while the Nasdaq down 1.52% and S&P down 0.97% fared worse. Gold, Silver , Oil and Utilities were massacred all down over 2.5%. Retailers and Home Improvement along with Aerospace led the way.

GLRE BWS HRT SHRP GYMB were some of the notable winners. NFLD NTMD NTAP KOMG were some of the notable losers.

I happen to thing that this selling was due to the long weekend ahead. I see a rally in the week ahead though I could be wrong. Either way lets see how the overseas markets react. The S&P 500 sure has had a tough time breaking and actually staying at all time highs. Maybe a double top is at hand.

Update 2

The markets look and feel like they want to go down. Those early morning spikes followed by weakness throughout the day are not a good sign. Usually indicates big money is trying to distribute. Its been going on for 4 days now. Maybe we need a 2-3% pullback here. Just a little breather so we can head back up again.


An unexpected rise in new home sales has sent the indices surging. However the median price is down by a record 11% from March suggesting builders are slashing prices by large amounts to entice buyers. Despite the upbeat news I expect the housing market will not bottom till atleast late 2008. Remember the average peak to bottom in housing is around 3 years. If the peak was late 2005 than 3 yrs on is late 2008.

Pre Market

Weakness in the markets across Asia and Europe .

Orders for durable goods rose 0.6% against a consensus of 1.2%.

Jobless claims are up for the first time in 6 weeks.

Toll Brothers net income plummets 79% on write downs and cancellations.

Pre market futures are indicating a flat to lower open.

Wednesday, May 23, 2007


After a very strong start, the markets weakened as the day wore on and the major indices finished in the red near the lows of the day. Precious metals, aluminum and mining were the best performing sectors while semis and telecom were the worst. CYPB SRR FMT NFI LEND were some of the biggesr gainers on the day while VION NFLD TRMM CSS were among the big losers.

If one looks at a trading day like today where the market gaps up strongly and the S&P and Dow make all time highs and later, the market proceeds to fall apart over the last couple of hours, it may seem like a good idea to sell and go short. The problem is too many traders seem to have the same idea and the the market proceeds to rocket up the following day.

Greenspan is predicting a 'dramatic correction' for the Chinese stock market. Everyone is predicting a Chinese market crash or correction. If everyone thinks it will happen it could reduce the likelyhood of it happening .

The 10-year Treasury note yield hits its highest level since January on speculation that a rate cut will not be forthcoming.

The chart above shows that over the last 3 sessions the Dow experienced strong opens and weak closes. The closes were all below the open which in itself is fairly bearish. Under normal circumstances one would expect a pullback. However it will not surprise me if the bulls along with short covering proceed to take the markets to new highs tomorrow.

Pre market

The indices across Asia are fairly bullish as Shanghai continues making record highs. Europe is even more bullish .

Target beats analyst profit expectations though revenue is slightly lower than forecast.

The US Dollar has been growing stronger as of late though its approaching the bottom of its 50 day MA where resistance lies.If the USD can break out perhaps there will be a change in the market trend.

Pre market futures show a strong open for the markets.

Tuesday, May 22, 2007

Pre Market

The Asian markets showed plenty of strength with Shanghai continuing its rise. Europe as well is mostly green.

Stocks In Play

Shares of MGM Mirage are surging this morning following news that majority shareholder Kerkorian is pursuing 'financial restructuring transactions'. Shares of other casino operators such as LVS WYNN MPEL are all up as a result.

Mortgage lender Fremont is surging over 45% in pre market following an agreement to sell its commercial real estate lending business. There are plenty of names in the mortgage lending arena that are underpriced due to overreaction to the subprime scare.

Paulson wants the Chinese yuan currency to appreciate faster . He is meeting behind closed doors today with Chinese Vice Premier Wu Yi along with Bernanke.

The Pre market futures are indicating a higher open. I would be inclined to say that the Nasdaq, smallcaps and midcaps will be relative outperformers over the Dow and S&P.

Monday, May 21, 2007


Today was all about the techs and small caps leading the way while the Dow lost ground and the S&P underperformed relatively speaking. The precious metal sector was on fire today with monstrous gains in SIL PAAS SWC SSRI. Telecom was another big winner on the Alltel buyout news. Aluminum producers, home improvement and airlines were the losers.

VCLK which I mentioned on Friday was a big winner today up over 14%. Seriously this is the most obvious trade of all time. They are the only big guys left in the online advertising space. Even if they don't get bought out the share price will hit $40 in the short term or atleast I think so.

The fund had monstrous gains in OXPS FFIV NYX TOPT FRO KRY UXG VCLK DNDN to name a few.

I think the Nasdaq and small caps will continue leading this week while the Dow and S&P take a breather.

Pre Market

Strength across the boards in Asia and Europe.

Stocks In Play

More buyouts as Goldman Sachs and TPG buy Alltel.

Blackstone plans to raise $7.75 billion in IPO. Simply a case of cashing in while you can.In related news China is injecting $3 billion into Blackstone.

The slowdown in housing is hurting Lowes as profits slump. Estimates are missed, guidance is slashed and it all looks ugly.

Gas prices continue to move to record highs and adjusting for inflation has actually topped the 1981 peak prce.

The futures pre market are indicating a higher open.

Friday, May 18, 2007


The Dow continues to surge along with the Nasdaq and S&P. Transports, real estate and Semis were down, everything else was up. For a change even the small caps decided to join in the action up almost 1%. Looks like there is no stopping this market. On a personal note despite the presence of hedges, the fund still rose by ridiculous amounts. I don't know whether I should be worried because the last time the fund did so well was prior to the May June decline of last year. The Dow is up 7 straight weeks which is a phenomenal achievement. Can we go up next week and the week after ?

The rising stock market has also helped boost consumer sentiment along with job growth. Higher gas prices have had no effect or so it seems. All is well with the US consumer. So much for all the pessimism.

Microsoft's acquisition of aQuantive has put Valueclick in play. Long VCLK is almost a no brainer.

On a side note I have been thinking lately about the possible reason for this phenomenal bull streak. Apart from cheap money, I keep hearing talk about the lack of retail participation. I believe that the retail investor still has memories of 2000-02 and the large losses they sustained. I feel it will be years before retail investors become bullish about the markets again. If one goes back to the 1929 Wall Street crash, it wasn't until the 1950s thats investors once again became comfortable with stocks. Without retail participation, the big funds really don't have anyone to distribute stocks too. So the only alternative is to keep buying and drive prices higher. This theory may not be correct but it is something to consider. Smart money loves selling to dumb money. But if there is no dumb money to sell to then, smart money doesn't sell to anyone.

All I can say is forget about the Bear.

Pre Market

The Asian markets are mixed while Europe is strong.

Stocks In Play

Earnings Announcements

Microsoft has agreed to purchase online advertiser aQuantive for $6 billion, an 85% premimum to its previous closing price.This comes on the back of Googles purchase of DoubleClick and the acquisition of 24/7 Real Media by WPP. On the back of these deals, I think ValueClick VCLK appears to be a great buy, especially considering the premiums the aforementioned companies were bought out for.

China has increased interest rates for the 2nd time in two months to slow down an overheated economy. Reserve requirements for commercial banks were also increased.

Pre market futures indicate a bullish open on the indices. Will this be an open to buy or sell into thats considering its option expiration.

Thursday, May 17, 2007

Pre Market

The markets across Asia are very bullish and the same is the case with Europe. The world markets have been buoyed by the bullish performance put in by US equities yesterday.

Stocks in Play

Earnings Announcements

TOPT FMCN MRVL PDC KSS JWN INTU ADSK are some names to keep an eye on.

Bernanke is about the subprime market. Philly Fed survey is out later in the day. Everything is setting up for another rally.

The Bank of Japan has decided not to raise interest rates.The carry trade therefore stays in effect. Borrow money at 0.5% in Japan and invest it elsewhere.

Li Ka-shing, Asias richest man says the Chinese market is in a bubble and he is worried. This comes on the back of similar statements by the central bank governor and the Chinese premier.

Inital jobless claims have dropped to a four month low pointing to labor market strength. Or perhaps the unemployed don't have money for $3.50 gas so, they cannot drive to the local unemployment office and register a claim !

Another bad bet on natural gas prices. The Bank of Montreal discloses $680 million in losses. Why can't banks stick to what they do best like taking deposits and lending money ?

Pre Market futures are down indicating a lower open for the market. Buy the dip is almost a no brainer. Dow 13500 is on the cards today. Lets see how high we can go.

Wednesday, May 16, 2007


After some mid morning jitters, the bulls took control of this market and sent the Dow to all time highs yet again. The S&P and Nasdaq were not far behind. Small caps continue to lag and semis appear weak. Precious metal is being murdered and I am taking a beating in GLD and SLV though I am allowing this weakness to add to my postions. I find it hard to believe that the Dow continues to make all time highs while gold and silver sell off.

As far as individual sectors, the airlines and internets led the way today being up 2.66% and 2.28% respectively. The irony is these two sectors have been among the weakest over the last month with airlines in particular being down over 11%. I suppose today was a buy the weakest link type of day. Autmobiles, gold, coal and mining were the weakest sectors.

Pre Market

The markets in Asia are strong with China up over 2%. Europe is a mixed bag.

Stocks In Play

Earnings Announcements

Sony posts its worst quarterly loss in 4 years but expects a recovery. The PS3 is being schooled by the WII. Nintendo is the video game consule maker play here.

Industrial Production numbers are out today. A hot number may indicate inflationary pressures while conversely a weak number signals economic retraction. The bulls prefer a weak number. Anything that increases the likelyhood of Fed rate cuts.

An unexpected rise in new home starts though building permits have dropped to their lowest levels since June 1997. It continues to get worse for housing.

Pre market futures are indicating a positive open to the market. Will the Dow continue its record setting ways ?

Tuesday, May 15, 2007


Weak finish to a strong day. The Nasdaq and the Qs in particular look very weak with some heavy downside volume. The S&P also looked weak deperately trying to hold above 1500. The Dow finished at record highs but up only 37 points compared to it being up as high as 115. Infact the Dow was over 100 for a lot of the trading session. Looks like we could have weakness ahead especially with option expiration on Friday. Then again, with 'buythedip' being the current market theme one cannot rule out a 100 point + Dow rally tomorrow. Small caps are the weakest group now with the Russell 2000 losing a percent. Aluminum and chemicals lead the way up while airlines and real estate lagged.

US home prices fell for the 3rd straight quarter. Obviously a housing recovery is not on the horizon despite what the so called experts say. I follow the RE industry very closely and have conversations with realtors all across the nation on a bi weekly basis to get a feel for local markets. Things are ugly and will likely stay that way for quite some time.

Amgen continues its slump with proposed medicare coverage cuts for its anti-anemia drug. I am long AMGN at these levels. I got in under $55 and will continue building a position. I love buying solid businesses at relatively depressed prices.

Limited is selling its Express brand. I think Limited would have more value with its brands( Victoria's Secret, Bath and Body Works, Structure etc) been broken into seperate companies and sold off. GAP is another company that can benefit from a sale of its brands.

Looking over todays market action, I would be inclined to be bearish and possibly take some of the table as far as longs and add some more inverse ETFs. However with the recent trend being up and the bulls taking advantage of any selling to buy more, I am probably going to stay out and possibly add some more long positions. I feel like bearish sentiment spikes at every little opportunity.

Years ending in 7

Some stats for years ending in 7. Courtesy of Jeffrey Cooper at Minyanville.

1887 saw a five-month fourteen percent decline.
1897 saw a two-month twenty
percent decline.
1907 was the Rich Man's Panic which saw an eleven-month
forty-five percent drop.
1917 saw a six-month thirty-three percent decline.
1927 had a one-month eleven percent decline.
1937 saw a three-month
forty percent waterfall.
1947 saw a three-month nine percent decline.
1957 saw a five-month nineteen percent decline.
1967 saw a three-month
ten percent decline.
1977 was a bear year, down almost the whole year, down
eighteen percent.
1987 saw a twenty percent crash in one month.
1997 saw
a two to three month sixteen percent decline.

Pre Market

The markets across Asia all closed in the red with China leading the way down 3.64%. The European markets were weak until the CPI number came out and they simultaneously spiked. Speaking of the CPI, the numbers came in better than consensus indicating inflation may be abating. With the recent rise in gas prices, I suspect the number will be a lot higher next month.

Stocks In Play

Earnings Announcements

Looking to buy MPEL on any further weakness.

Home Depot announces a 30% drop in earnings blaming the weak housing market.Perhaps earnings would be better if HD didn't have to pay Nardelli.

Walmart profit comes in line with expectations but issues a profit warning. Have we not seen this before ? It feels like this is the 3rd of 4th straight quarter that WMT has warned.

Daimler Chrysler profit more than doubles with Mercedes sales playing a big role. The sale of Chrysler is going to help them going forward.

Manufacturing in New York state has been expanding as inventories decline. Is an economic recovery on the horizon or this this just a blimp ?

Futures are indicating a positive open. We may get some nice upside today with the bettert han expected CPI numbers.

Monday, May 14, 2007


As I head off to bed, I notice the Asian markets are very weak with China down close to 2%.
I will sleep with one eye open like I always do.


The indices opened strong but got progressively weaker throughout the day though they did manage the rally a little into the close with the Dow finishing green yet again. The all important CPI number is out tomorrow. Probably a good day for some traders to position themselves on the sideline. This rally has been going on for quite some time and a pullback to below 13,000 on the Dow will not be unexpected.

I used todays market weakness to go long stocks I've been watching for some time. I decided to add LVS SBUX and ZUMZ to the fund. The first two are solid growth companies that look relatively oversold while the latter is a retailer which appears to be very popular with Gen Y.
I was also considering adding to my GRZ position though I will wait for this junior miner to settle down first. $6 does look very tempting for a $250 mil market cap company with a couple of billion dollars in gold reserves.

Tomorrow is going to be all about the CPI number. If it comes in too hot meaning above 0.6%, we could see a sell off.

Pre Market

The markets in Asia are very bullish with big gains in Hong Kong. Europe while not as bullish is still fairly strong.

Stocks In Play

Earnings Announcements

A GBE SINA TGB AUY ELOS STEC DMH CBD CNTF BNG VOXX are same of the names I am keeping an eye on.

I love reading articles like this.

"We still can make money," Ding said as she stood at the counter at Tiantong
Securities with the paperwork for her new account. Asked what stocks she would
buy, Ding said, "I don't know. I'm still learning."
Could we really be in the early stages of a 'Super Bull' market as some theorize or is it more likely that we are somehwere at the end. Just follow the 'dumb' money and you will find out.
And for all those that are suggesting that the retail investor is not participating in this rally I ask the question

' What retail ? The broke American consumer that has a negative savings rate ? The same American consumer that has negative home equity because they cashed it out and spent it ? The same American consumer that is now close to losing their home in foreclosure ? The same American consumer that is enjoying record gas prices not to mention inflationary increases in most products of daily consumption ? '

In takeover news, Chrysler is being bought out by private equity firm Cerberus. The big loser are Chrysler shareholders who have been screwed with all the equity erosion over the years.

Here are the top 10 stocks as rated by Investor Business Daily. IBD stocks tend to do well during the early and mid stages of bull market since they are momentum based.

Pre market futures are pointing to a mixed open. I would say you cannot go wrong buying weakness in the indices. The question is how many points do we run up today ?

Saturday, May 12, 2007

The Dow and S&P are both up 6 straight weeks. The last time the Dow was up six straight weeks was in November and December of 2003 which was the early stage of the bull market. The Dow was up 8 straight weeks and the S&P was up 9 during that period. The last time the S&P was up 6 straight weeks was in August and September of 2004. The S&P went from a low of 1060 on August 13 to a high of 1131 on September 21 or a 7% gain. Over the next 5 weeks, the S&P went as low as 1090 on October 25 or a loss of 4%. That ofcourse was right before the Presidential elections and than we proceeded to rally all the way to years end.

The Carlyle Group is the latest private equity outfit seeking to raise $1 billion via an IPO of an investment fund. This follows in the footsteps of similar offerings by Apollo Management LP and Kohlberg Kravis Robert & Co. Add in the potential IPO of Blackstone Group and the recent Fortress Investment Group IPO and what you have is alot of opportunistic dealmakers trying to cash in on this liquidity bubble while it lasts.

Below is an interesting equity style box courtesy of Morningstar showing how showing how growth, value, blend, midcaps, small cap, large cap have played out over the last several years.

Friday, May 11, 2007


The markets did a 180 from yesterday with an orgy of buying and perhaps some short covering . Things couldn't look better though a little more volume would have helped. Then again its Friday. The spin is that the containment of inflation could lead to a Fed rate cut.

Almost every sector was green with huge gains in the metals with TIE up 9%+, heavy constuction had a ball with FWLT (9.13%) having a monstrous day. Transportation and retail lagged . High oil prices and poor retail sales having an effect no doubt.

This man sold most of his stocks and put money into big cap Dow names like Walmart because, he believes the Dow will go up over the next 25 years. I have news for him. Walmart won't exist in 25 years time. WMT has been around for 50+ years. I doubt it will be around in 25 years expecially in the rapidly evolving world we live in.

Biotech giant AMGN has taken a beating as of late with more bad news concerning its blockbuster anemia drug. Shares are down almost 20% in the last 8 trading sessions. I took a dip in this stock today at under $55. I actually had an accidental buy limit order which got filled. But I am not complaining. Some of my best investments have come of accidental orders that got filled. Like the time I bought Ebay last August at $23 .

Lets see what merger mania Monday brings us. What $500 trillion buyout will we see ? Will MSFT buy GOOG ? Will AAPL bid for MOT ? Will XOM buy COP ? Will Warren Buffett come in and leverage his $100 billion of cash 100-1 and buyout the Dow index ? Will Mexican billionaire Carlos Slim team up with British based Russian billionaire Roman Abramovich and buyout the S&P 500 ?

Than again, its all a casino till something or someone blows up.


Every stock I own is Green . Everything . Is this a good sign or should I be selling ? Thats the dilemma I am faced with. Its almost like yesterday never happened. We never got a big distribution day with heavy volume to boot. I'll be keeping an close eye on the last 2 hrs of trading. Specifically 2:15pm to 2:30pm and 3:30pm to 4pm. Those are the time slots the BIG boys come out to play.

Pre Market

Weakness in the Asian and European markets.

Stocks In Play

Earnings Announcements

Producer price index was up 0.7% in April which is inline with expectations. Excluding fuel and food it was unchanged.

Retail sales fell 0.2% in April versus a consensus of a 0.4% increase. Rising fuel costs are having their effect on consumers.

The Yen is set for its first weekly gain in 10 weeks. The last time the Yen was up was the week of the Feb 27 market plunge.The USD has also been gaining as of late.

Keep an eye on this one. This on demand video service looks very promising. When an IPO is in the works,I will be buying.

The pre market futures are suggesting a higher open. Will this be one to sell ?

Thursday, May 10, 2007


A pretty ugly day in the market if you were long. Dow S&P, Nasdaq all down over 1% on heavy volume. Thats the key here volume. And the close was at the lows of the day. Could 'Sell in May' be the order of things. If I recall last year, we sold of a day or two after the FOMC announcement and the sell off continued till July. Added to the equity markets, gold and silver got killed today. Its starting to look like the precious metals may be topping out.

Pre Market

The Asian markets are fairly bullish and Shanghai is up yet again. Europe is down all across the board.

Stocks In Play

Earnings Announcements

ACOR AIRN BSQR CBOU CRYP ISIS MED MBLX NFI NVDA BRLC are some of the names I am keeping an eye on.

Viacom net falls 36% on restructuring.

TXU swings to Q1 loss due to plant shutdowns.

US trade deficit continues to expand as gap is largest since September.Imports rose greater than exports. You would think a cheap USD should help out our exporters.

Retailers posted weak April sales ostensibly due to a slowing housing market and rising gas prices. SAKS is still a growth story in retail with their turnaround.

US initial jobless claims are down. Could companies be firing fewer workers ?

The Bank of England raises its benchmark rate to a 6 yr high.

The Pre market futures are pointing to a lower open. The theme is buy the dip. It will probably work again today.

Wednesday, May 09, 2007


New highs on the Dow yet again with a 50+ point gain. This is almost unreal. I'm not complaining with my long positions going through the roof in SNDK MU COGT MMS, NYX JADE FFIV RVBD USD and so on. I do think this will end with a Chinese market crash. The Shanghai Composite crossed 4,000 today and I think maybe another 100-200 points to the upside followed by a collapse. Maybe another week or so. I like bull market like any investor or trader but, I also like to see healthy market with pullbacks of 2-3% every so often. Up 25 of 29 trading sessions on the Dow and yesterday hardly constituted a downday with a gap down open and spike lower, followed by a rally which almost put us in the green. We may still have a healthy pullback in the coming days but something tells me we are past the point of no return.

"Men, it has been well said, think in herds; it will be seen that they go
mad in herds, while they only recover their senses slowly, and one by one!"

Extraordinary Popular Delusions and the Madness of Crowds - Charles Mackay

FOMC announcement

No rate changes and the language is the same. Inflation is still a concern with the core being somewhat 'elevated'.

The market has been all over the place since the announcement, spiking down than up than flat and now up again. I suppose if everything is the same, the best course of action is to stick with whats been working and go long.

Pre Market

The markets in Asia are up and the Shanghai composite has crossed the 4,000 mark.
The European markets are mixed.

The FOMC announcement at 2:15pm ET is the main event in todays economic calendar.

Stocks In Play

Earnings Announcements

TFSM TOL WFMI TM TKC TK PEIX NWS LM ID JUPM FTO & BORL are some of the companies reporting ernings today.

Cisco reports a 34% jump in profit but shares decline as investors had already run this stock up in the days leading to earnings.

Rio Tinto shares rise on speculation of a buyout by BHP Billiton. A merger appears to make economic sense though whether it occurs is anyones guess.

Economists are dim about US economic growth prospect. Does not look like the market cares. With strong overseas growth should they care ?

The futures pre market suggest a lower open. Will it be another buy the dip type of day or will the Fed announcement cause a sell off ?

Tuesday, May 08, 2007

Market Recap

Well it looks like buy the dip has worked once again. The major indices climbed from deep in the red to being flat to up for the day.Bad news or good news, it does not matter. Just keep buying. Thats the message the market is sending.

More speculation as Countrywide stock climbs as much as 10% on rumors of a buyout.

Two charged with insider trading on the Dow Jones buyout offer. These two are just small fish in my opinion.

McDonalds sales rise 4.8% with strong growth in the Asia Pacific region.

CSCO earnings will be released after market close. All eyes will still be on the FOMC decision tomorrow.

Pre Market

The Asian markets are all red save China (and New Zealand) which is up almost 3%. Like I keep mentioning, the Chinese market is coming real close to topping out. I feel a week or two longer and a top will be made. How long can an index keep running up 4-5% a week ? The European markets are all red.

Stocks In Play

Earnings Announcements

Some earnings I will be keeping an eye on - CELL, CSCO, EXPE, FTK, PZZA, TAP, HET, NUAN, OMRI, PCLN, GOLD, STKL, VSE, TRLG and DIS.

US retailer April sales may have fallen for the first time in 4 years. I think higher gas prices are going to continue to pinch consumers pockets.

The USD continues to act strong this morning which may be a negative for equities.Same with the Japanese Yen.

Stock index futures are suggesting a weak open to the market. Will this weakness be another buying opportunity or will traders show caution ahead of tomorrows FOMC decision ?

Monday, May 07, 2007

Market Recap

The Dow ended up (yet again) along with the S&P 500. Nasdaq finished down and Midcap and the Russell 2000 were weak. Aluminium companies outperformed today as aluminium producer Alcoa made a bid for Alcan. Toys, gambling and internet were the big losers.

Speaking of gambling, LVS and WYNN both look like good buys here. Infact WYNN is soaring in after hours after beating profit expectations. Wynn and Venetian(LVS) are the two top hotels in Vegas. They make more money than anyone and I don't think one can go wrong betting on them. People don't just go to the Venetian or Wynn for the gambling but also for the food and entertainment and the shopping. With a drop in the US Dollar, Vegas has become cheaper for foreigners. I met a lot of Europeans on my recent trip and they were saying how cheap it was to come out to Vegas. With a weak USD Vegas is going to florish and I want to be long the two top dogs - WYNN and LVS. At $80 a pop, LVS in particular looks to be a steal and the company is going to florish once its Singapore casino is in full swing.

Why I am Shorting Amazon

Amazon shares have run up 40% since April 24. A move from below $45 to above $63. Earnings were much better than expected but, I hardly believe great earnings alone were responsible for this runup. Short interest of 16% and rising as of early April played a major role in my opinion. As the stock price soared, more shorts came in and eventually covered at higher prices which boosted the stock. As far as valuation, AMZN is trading at over 60 times 2007 earnings which is a little too expensive for my liking, especially for a company with at best 25% year over year growth over the next 3 years. If we look at stock price as a pendulum which swings wildly over fair market value, than I would think AMZN has swung a little too wildly to the north of its fair market value. AMZN was trading at $27 last August and the share price has more than doubled in less than 9 months. Famed investor Bill Miller of Legg Mason was advocating this stock when it was trading below $30 but, I believe he will be a seller at these prices and considering his fund own close to 5% of the company, any sales on his part will have a negative impact on the stock price. I think AMZN will see a share price of $50 in the coming weeks and I think a short position here is a fairly safe bet.

Pre market

The Chinese market remains closed. The rest of Asia is fairly bullish with big gains in Japan. The European indices are mixed.


NILE, CIB, BBD, MCK, FLR, HANS, WYNN, JCOM, KGC, OSIS and SONS are some of the earnings I will be keeping an eye out for.

Buffett is looking for a $40 to $60 billion acquisition though he would first need to find something attractive to buy. I suppose we will today see a speculative jump in the stock price of all companies trading in the $40-60 billion market capitalization range.

Insider trading concerns are begining to surface with the surge in option activity prior to the announcement of mergers and buyouts. I think it would be hard to find any deal where there is absolutely no insider trading. Look at the case of Armor Holdings that rose sharply on Friday ostensibly due to an analyst upgrade. AH started the week at $70 and closed over $82.This morning the news is that Armor has gotten a buyout offer for $88 a share. No insider trading ?

Sunday, May 06, 2007

The Week Ahead

Here is an economic calendar for the week ahead. All eyes will be on the Fed meeting and subsequent announcement concerning interest rates. International trade, producer price index and retail sales will also be the big economic data to keep a lookout for. This market rally began with the Fed announcement in late March. Could this announcement reverse the market especially if the Fed makes it clear that rate cuts will not be forthcoming ?

I will be keeping an eye on the Shanghai Composite to see how it reacts after being closed for almost a whole week. I still believe that a reversal in the current market trend will start in China. In addition, I will be closely watching the US Dollar and the Japanese Yen for any change in trend. If the USD rallies, the markets could reverse course. The same is true of a Yen rally. So far the correlation has been strong between a declining USD and Yen and a rising equity market.
I expect traders will be more circumspect in the trading days ahead due to the important Fed announcement.

Friday, May 04, 2007


I'm back from my hiatus. I went 'missing' in Las Vegas of all places. Every so often I need to get away. I figured the market does not usually do anything unexpected during the first week of May and it was a safe time to be AWOL. It seems nothing much has changed. More takeovers more speculation and even more rumors. Microsoft buying out Yahoo ? Seriously where do people pull this nonsense from. I can safely say we are in the last few weeks of this 2002 bull market based on all the ridiculous news flying around.

Tuesday, May 01, 2007

ISM and Housing

Manufacturing grew at a higher than expected pace with an ISM number above consensus. While orders are up and inventories down, a high ISM number is less likely to cause a cut in rates. If the bulls are looking for a rate cut, this number will not be to their liking. On the other hand this number indicates that we are not in approaching a recession as the bears would like us to believe. Nonetheless, I expect a pullback in the markets and yesterdays decline indicates a short term change int trend. Perhaps we will get a good buying opportunity later this week or early next.

Sales of existing homes fell to their lowest level in four years. Thereare those that continue calling a bottom in housing. I highly doubt any bottom will occur in housing till late 2008 at the very least. Inventory across the nation is at record highs and builders continue churning out new homes.With an increasing supply and decreasing demand caused in part by stricter lending standards, it will be a long time before supply and demand are in balance. The way things stand, supply keeps increasing with new builds and foreclosures among others while demand keeps falling as lending standards tighten up.

Pre market

Most markets in Asia were closed including China and India are closed for May Day. Japan ended down. The European markets are closed as well apart from London which is trading down.


Proctor and Gamble reported stronger than expected sales and earnings. The shares are however trading odwn in pre market.

Liz Claiborne share price is being ripped to pieces as earnings fall sharply . LIZ investors are not too Lucky(Brand) as earnings are not Juicy(Couture)enough ?

Archer Daniels reports profit below analyst expectations as grain costs rose sharply. Share price is down.

I expect continues weakness in the market today. We need to get a test of 13,000 or even less before the uptrend continues.