Here comes the big bailout everyone was waiting (hoping) for. The Bush Administration will help people keep their homes. Does this mean its all good ? You can go buy that million dollar home on a $50k/yr salary and not worry about making payments on the loan . Looks like the good times are back.
Bernanake is set to speak at Jackson Hole, Wyo right about now and the market is expecting signs of an imminent rate cut. Will they have their cake and eat it too ?
Investors are placing their money into high yield corporate bond funds for the first time in 12 weeks. The credit crunch appears to be easing.
Consumer spending rising and inflation cooling.Things are looking good so far. A lot better than they were a few weeks back. Can the good news last forever or will it all come crashing down again ?
Talking about buying homes , with this bailout coming, I am looking through some of these homes. Tough deciding which one I'll buy......
Market looks very good today so far. Financials home builders and Gold and Silver in particular are outperforming. Stocks that are doing really well are GS MER MS CFC LEND NFI KBH BZ HOV RYL DHI SPF .
JADE which I mentioned yesterday continues to do really well. Appears they are close to filing their annual report and once that is taken care of we could see much higher prices.
OVTI is one of my long positions back from April which is jumping higher due to strong earnings and even stronger guidance.
If one wants to look at a momentum stock look no further than BCSI . This one has been on an absolute tear. Another would be VDSI.
Friday, August 31, 2007
Thursday, August 30, 2007
Market Update
After a great day for the bulls yesterday, the market opened down a 100 points today before rallying. I am seeing a lot of strength out there especially in the Nasdaq which is firmly in the green. Semis, disk drives and computer makers all doing really well along with biotech. Solid moves in SNDK AAPL RIMM GRMN DELL NETL AMD CELG BIIB TASR FSLR . Tech is leading the way as it has the past few weeks and being long the Qs or QLD is a very good bet.
US economic growth in the 2nd quarter was faster than estimated. Commercial construction jumped 28% which was the biggest move since 1981. It appears the US economy is still strong though the housing crisis is taking its toll.
Two speculative names that I am buying here are JADE and BRLC. I have previously had postions in them and am buying here. They both look the type that could double in a matter of weeks. HDTV maker BRLC in particular has an extreme short positions despite excellent revenue and earnings growth. JADE which is a manufacturer and retailer of fine jewelry in China has delayed filing it 2006 annual report due to a change in its auditors and the stock has been shredded over the last few months. I believe both of these stocks are poised to move considerably higher over the short term.
US economic growth in the 2nd quarter was faster than estimated. Commercial construction jumped 28% which was the biggest move since 1981. It appears the US economy is still strong though the housing crisis is taking its toll.
Two speculative names that I am buying here are JADE and BRLC. I have previously had postions in them and am buying here. They both look the type that could double in a matter of weeks. HDTV maker BRLC in particular has an extreme short positions despite excellent revenue and earnings growth. JADE which is a manufacturer and retailer of fine jewelry in China has delayed filing it 2006 annual report due to a change in its auditors and the stock has been shredded over the last few months. I believe both of these stocks are poised to move considerably higher over the short term.
Wednesday, August 29, 2007
Market Update
We are getting a strong rebound today though I would not be surprised to see this rally fade.
Key levels to watch : Dow 12,885(support) & 13,132 (resistance) , S&P 1427(Support) and 1457(resistance) , Nasdaq 2491(support) and 2525(resistance).
Another victim of the credit crunch. Bodies continue to be discovered on a regular basis. Once this is all over the casualty list will likely be extensive.
The Yen is moving lower which is good news for equities.The Yen has had a tremendous run the last few weeks evoking fears of an unwinding of the carry trade. With the BOJ keeping rates constant I think the carry trade is safe and the Yen will continue drifting lower in the months head.
The subprime crisis was not just limited to blue collar America. Higher end homes are getting hit too. The 'Keeping up with the Joneses' mentality is taking its toll.
Key levels to watch : Dow 12,885(support) & 13,132 (resistance) , S&P 1427(Support) and 1457(resistance) , Nasdaq 2491(support) and 2525(resistance).
Another victim of the credit crunch. Bodies continue to be discovered on a regular basis. Once this is all over the casualty list will likely be extensive.
The Yen is moving lower which is good news for equities.The Yen has had a tremendous run the last few weeks evoking fears of an unwinding of the carry trade. With the BOJ keeping rates constant I think the carry trade is safe and the Yen will continue drifting lower in the months head.
The subprime crisis was not just limited to blue collar America. Higher end homes are getting hit too. The 'Keeping up with the Joneses' mentality is taking its toll.
Tuesday, August 28, 2007
Market Recap
It was quite a day today. Close to a 300 point drop on the Dow with even bigger percentage drops on the Nasdaq and S&P 500. Volume was on the light side though thats expected around this time of the year. The question is where do we go from here ? A pullback was needed to consolidate last weeks gains and that is what we are getting. A retest of Dow 12,500 may be in order or perhaps a test of the 200 day moving average of 12,880 . Whatever the case, I believe the markets capitulation last Thursday and subsequent recevery was indeed the market bottom. Whether I am correct remains to be seen. Within my fund I am positioned almost 30% in cash. As mentioned I had sold 90% of my bull ETFs QLD SSO DDM MVV UWM last week. I reduced a few equity postions Monday and I feel comfortable whatever happens apart from perhaps a 50% drop in the market.
REVIEW OF FED MINUTES
Fed Minutes
The information reviewed at the August meeting suggested that economic activity picked up in the second quarter from the slow pace in the first quarter. On average, the economy expanded at a moderate pace during the first half of the year despite the ongoing drag from the housing sector. While the growth of consumer spending slowed in the second quarter from its rapid pace in prior quarters, wages and salaries increased solidly and household sentiment appeared supportive of further gains in spending. Business fixed investment picked up in the second quarter after little net change in the preceding two quarters. Inventories generally appeared to be well aligned with sales at midyear. Overall inflation receded in June because of a decline in energy prices, while the core personal consumption expenditure (PCE) price index rose a bit less than its average pace over the past year.
So core inflation is still a problem. Cutting rates will be tough in this environment.
However, a sustained moderation in inflation pressures had yet to be convincingly demonstrated.Moreover, the high level of resource utilization had the potential to sustain those pressures. The Committee's predominant policy concern remained the risk that inflation would fail to moderate as expected. Future policy adjustments would depend on the evolution of the outlook for both inflation and economic growth, as implied by incoming information.
Can't take the foot of the inflation pedal yet.
Participants agreed that the housing sector was apt to remain a drag on growth for some time and represented a significant downside risk to the economic outlook.
Several participants noted the risks that house prices could decline significantly and that credit standards for home equity loans could be tightened substantially as factors that could weigh on consumer spending.
Something we can all agree with and that is the fragile state of housing and the negative effect it could potentially have on consumer spending.
Funding had become more costly and difficult to obtain for riskier corporate borrowers, but there had been little net change in the cost of credit for investment-grade businesses. Also, businesses in the aggregate continued to have sufficient internally generated funds to finance the expected level of real investment. Nonetheless, participants recognized that conditions in corporate credit markets could change rapidly, and that adverse effects on business spending were possible.
While top credit worthy businesses are safe for now, the Fed recognizes the risk in the corporate credit market as loans are harder to secure. An illiquid environment in corporate credit markets could lead to a big mess as we witnessed in subprime a few weeks back.
Overall it looks to me like the Fed is very unlikey to cut rates when they meet in mid September. The market has stabilized for now and unless we see another plunge to Dow 12,000 or below, rates are likely to stay the same. Fighting inflation is the Feds number one priority and a rate cut would be an impediment to this objective.
For now the market is not handling news of the Fed minutes well. The major indices are all down well over 1%. I did expect a pullback this week as I mentioned before. I expect the markets to be choppy the rest of the week.
The information reviewed at the August meeting suggested that economic activity picked up in the second quarter from the slow pace in the first quarter. On average, the economy expanded at a moderate pace during the first half of the year despite the ongoing drag from the housing sector. While the growth of consumer spending slowed in the second quarter from its rapid pace in prior quarters, wages and salaries increased solidly and household sentiment appeared supportive of further gains in spending. Business fixed investment picked up in the second quarter after little net change in the preceding two quarters. Inventories generally appeared to be well aligned with sales at midyear. Overall inflation receded in June because of a decline in energy prices, while the core personal consumption expenditure (PCE) price index rose a bit less than its average pace over the past year.
So core inflation is still a problem. Cutting rates will be tough in this environment.
However, a sustained moderation in inflation pressures had yet to be convincingly demonstrated.Moreover, the high level of resource utilization had the potential to sustain those pressures. The Committee's predominant policy concern remained the risk that inflation would fail to moderate as expected. Future policy adjustments would depend on the evolution of the outlook for both inflation and economic growth, as implied by incoming information.
Can't take the foot of the inflation pedal yet.
Participants agreed that the housing sector was apt to remain a drag on growth for some time and represented a significant downside risk to the economic outlook.
Several participants noted the risks that house prices could decline significantly and that credit standards for home equity loans could be tightened substantially as factors that could weigh on consumer spending.
Something we can all agree with and that is the fragile state of housing and the negative effect it could potentially have on consumer spending.
Funding had become more costly and difficult to obtain for riskier corporate borrowers, but there had been little net change in the cost of credit for investment-grade businesses. Also, businesses in the aggregate continued to have sufficient internally generated funds to finance the expected level of real investment. Nonetheless, participants recognized that conditions in corporate credit markets could change rapidly, and that adverse effects on business spending were possible.
While top credit worthy businesses are safe for now, the Fed recognizes the risk in the corporate credit market as loans are harder to secure. An illiquid environment in corporate credit markets could lead to a big mess as we witnessed in subprime a few weeks back.
Overall it looks to me like the Fed is very unlikey to cut rates when they meet in mid September. The market has stabilized for now and unless we see another plunge to Dow 12,000 or below, rates are likely to stay the same. Fighting inflation is the Feds number one priority and a rate cut would be an impediment to this objective.
For now the market is not handling news of the Fed minutes well. The major indices are all down well over 1%. I did expect a pullback this week as I mentioned before. I expect the markets to be choppy the rest of the week.
Monday, August 27, 2007
TOTAL LUNAR ECLIPSE AND THE MARKET
A total lunar eclipse is expected tomorrow and I decided to pull up some recent charts of the Dow to see market performance before and after total lunar eclipses starting from 2000 onwards. 4 of the last 5 total lunar eclipses have seen big rallies in the market. It appears markets tend to change direction around the time of these eclipses.
January 21 2000 - Talk about timing a top. Dow made an intra day high of 11,513 before closing at 11,251. The market broke down with the Dow falling to an intra day low of 9,611 on March 8. Close to a 15% gain for anyone shorting the Dow in under 2 months.
July 16 2000 - Weekend. Previous close was 10,812 and the following close was 10,804 with a low of 10,653. Dow rallied to an intra day high of 11,518 on September 6. A 6.6% gain in under 2 months.
January 9 2001 - Dow closed at 10,572. Rallied to an intra day high of 11,140 on February 7. Just over a 5% gain. The market however proceeded to tumble from there onwards to an intraday low of 9,047 on March 22. If one had shorted the Dow on January 9 the gain would have been over 14% in two and a half months.
May 16 2003 - Dow closed at 8,678. Markets proceeded to rally over 24% till the end of the year.
November 9 2003 - Was a weekend. Dow closed the precious day at 9,809 and the trading session after at 9,756. Rallied 10% till the end of January.
May 4 2004 - Dow closed at 10,317. Proceeded to fall as low as 9,827 two weeks later. Rallied as high as 10,530 near the end of June. While there was volatility the markets were relatively flat.
October 28 2004 - Dow made a low of 9,900 and closed at 10,004.Rallied to as high as 10,895 near right before Christmas. A 9 % gain in less than 2 months.
March 3 2007 - Was Saturday and the market was closed. The Dow closed the previous trading day at 12,114 . On Monday, the Dow went as low as 11,973 before recovering to close at 12,050. The markets bottomed out over the next 2 weeks and started a 4 month rally all the way till July. Total gains would have been over 16% for anyone buying the Dow on March 5th (first trading day after the eclipse).
January 21 2000 - Talk about timing a top. Dow made an intra day high of 11,513 before closing at 11,251. The market broke down with the Dow falling to an intra day low of 9,611 on March 8. Close to a 15% gain for anyone shorting the Dow in under 2 months.
July 16 2000 - Weekend. Previous close was 10,812 and the following close was 10,804 with a low of 10,653. Dow rallied to an intra day high of 11,518 on September 6. A 6.6% gain in under 2 months.
January 9 2001 - Dow closed at 10,572. Rallied to an intra day high of 11,140 on February 7. Just over a 5% gain. The market however proceeded to tumble from there onwards to an intraday low of 9,047 on March 22. If one had shorted the Dow on January 9 the gain would have been over 14% in two and a half months.
May 16 2003 - Dow closed at 8,678. Markets proceeded to rally over 24% till the end of the year.
November 9 2003 - Was a weekend. Dow closed the precious day at 9,809 and the trading session after at 9,756. Rallied 10% till the end of January.
May 4 2004 - Dow closed at 10,317. Proceeded to fall as low as 9,827 two weeks later. Rallied as high as 10,530 near the end of June. While there was volatility the markets were relatively flat.
October 28 2004 - Dow made a low of 9,900 and closed at 10,004.Rallied to as high as 10,895 near right before Christmas. A 9 % gain in less than 2 months.
March 3 2007 - Was Saturday and the market was closed. The Dow closed the previous trading day at 12,114 . On Monday, the Dow went as low as 11,973 before recovering to close at 12,050. The markets bottomed out over the next 2 weeks and started a 4 month rally all the way till July. Total gains would have been over 16% for anyone buying the Dow on March 5th (first trading day after the eclipse).
Market Update
Very bullish markets across Asia and Europe.Hong Kong soared 2.9% to new highs along with China. The markets here in the US are pointing to a lower open though I would expect a rally.
US Steel is buying Canada's Stelco as the steel industry under goes further consolidation. This should boost steel and other metals stocks today.
The other big merger news today is Gateway being bought out by Acer of Taiwan.Finally some good news for GTW shareholders who have suffered for a very long time.
August saw the biggest insider buying activity among executives of financial firms since 1995. Banks, mortgage lenders and insurance companies have been hit hard by recent market turmoil and the insider buying is an expression of confidence about their respective businesses.
US Steel is buying Canada's Stelco as the steel industry under goes further consolidation. This should boost steel and other metals stocks today.
The other big merger news today is Gateway being bought out by Acer of Taiwan.Finally some good news for GTW shareholders who have suffered for a very long time.
August saw the biggest insider buying activity among executives of financial firms since 1995. Banks, mortgage lenders and insurance companies have been hit hard by recent market turmoil and the insider buying is an expression of confidence about their respective businesses.
Friday, August 24, 2007
UPDATE
The market has been very strong today. Strenght in the tech sector, oil, gold, silver, steel and other metals. Mortgage finance and real estate are lagging. I've gone ahead and sold another big chunk of bull ETFs QLD SSO DDM MVV UWM this past hour.So far I have sold 90% of the my bull ETF positions that I held from last Thursdays lows. I think we will test levels below 13,000 on the Dow next week as well as lower levels on the S&P and Nasdaq. I don't care much for V-shaped bottoms or the volume. September is historically a bad month for stocks with last year being an exception. I wouldn't be surprised if funds start reducing long exposure next week.
Pre Market Update
The markets across Asia and Europe are mixed. Shanghai continues on higher as usual.
Durable good orders rose sharply in July by 5.9% versus a consensus of 1%.Orders went up for machinery, automobiles, metal products, airplanes and communications equipment. That blunted a drop in demand for computers, as well as electrical equipment and appliances. This is good news for manufacturing and the economy as a hole but not so good for stocks as this reduces the likelihood of a Fed rate cut.
The markets are expected to open lower today.The trend is still pointing upwards though a pullback is not out of the question as traders cash in gains ahead of the weekend.
Durable good orders rose sharply in July by 5.9% versus a consensus of 1%.Orders went up for machinery, automobiles, metal products, airplanes and communications equipment. That blunted a drop in demand for computers, as well as electrical equipment and appliances. This is good news for manufacturing and the economy as a hole but not so good for stocks as this reduces the likelihood of a Fed rate cut.
The markets are expected to open lower today.The trend is still pointing upwards though a pullback is not out of the question as traders cash in gains ahead of the weekend.
Thursday, August 23, 2007
Market Recap
A seesaw day in the equity market with the Dow and S&P flat while the Nasdaq was down 0.4%. Oil was the best performing sector while transports lagged. SHRP ALOT GME AVGN LNDC EGI HRT TIS BSM were among the days biggest gainers. SLI FLML CCBL NWY PLCE ARGN were among the days biggest losers.
Is the Fed rate cut in September a sure thing ? Maybe not according to this piece. A rate cut would kill the US Dollar and thrust gold and silver upwards.
Mortgage woes soon to be history ? Not so fast. It is estimated that it will take roughly $150 billion to $250 billion of new capital to "normalize pricing" in the mortgage market.
Betting against Amazon will cost you. Ken Heebner learns the hard way.Just for the record I am short AMZN. It will work out in a big way eventually.
Commerical paper appears to be the new focus of the credit squeeze.The inability to sell commerical paper is having an adverse effect on many companies like Coventree for example. Investors have lost their appetite for commercial debt and the reprecussions will be huge.
Is the Fed rate cut in September a sure thing ? Maybe not according to this piece. A rate cut would kill the US Dollar and thrust gold and silver upwards.
Mortgage woes soon to be history ? Not so fast. It is estimated that it will take roughly $150 billion to $250 billion of new capital to "normalize pricing" in the mortgage market.
Betting against Amazon will cost you. Ken Heebner learns the hard way.Just for the record I am short AMZN. It will work out in a big way eventually.
Commerical paper appears to be the new focus of the credit squeeze.The inability to sell commerical paper is having an adverse effect on many companies like Coventree for example. Investors have lost their appetite for commercial debt and the reprecussions will be huge.
Pre Market Update
Bullish markets across Asia and Europe. Shanghai has crossed above the 5,000 market. Most Asian market closed up over 2%.
The decision by Bank of America to invest $2 billion in Countrywide has boosted investor confidence. BofA has gotten themselves a great deal. Rumors of them acquiring CFC a few months back raised Countrywide stock price to $45. CFC is currently at $25. The financial sector will be strong today especially among some of the mortgage lenders like IMB WM LEND NFI FMT.
The Bank of Japan has held interest rates at the current 0.5% level signalling credit will remain cheap. The Yen is down as a result and the carry trade should continue.
Quant hedge funds including Goldman Sachs Global Equity fund had huge gains last week as the markets returned to normal. The average investor is not as lucky to be able to obtain a $3 billion cash infusion as Goldmans fund did. I don't care much for quant strategies. They could work 99% of times but, the 1% they don't, you could lose your shirt and much more. The 100 year storm happens every 100 days or so it seems.
For now long is the way to go. The markets are rebounding strongly. 13,250-13,300 is another level of resistance for the Dow. S&P has some overhead at 1480-1490. The Nasdaq at 1575. Wall Street has priced in a rate cut. If it doesn't happen we could see some more carnage in the coming months. The markets should be safe for now till the September 18 Fed meeting.
The decision by Bank of America to invest $2 billion in Countrywide has boosted investor confidence. BofA has gotten themselves a great deal. Rumors of them acquiring CFC a few months back raised Countrywide stock price to $45. CFC is currently at $25. The financial sector will be strong today especially among some of the mortgage lenders like IMB WM LEND NFI FMT.
The Bank of Japan has held interest rates at the current 0.5% level signalling credit will remain cheap. The Yen is down as a result and the carry trade should continue.
Quant hedge funds including Goldman Sachs Global Equity fund had huge gains last week as the markets returned to normal. The average investor is not as lucky to be able to obtain a $3 billion cash infusion as Goldmans fund did. I don't care much for quant strategies. They could work 99% of times but, the 1% they don't, you could lose your shirt and much more. The 100 year storm happens every 100 days or so it seems.
For now long is the way to go. The markets are rebounding strongly. 13,250-13,300 is another level of resistance for the Dow. S&P has some overhead at 1480-1490. The Nasdaq at 1575. Wall Street has priced in a rate cut. If it doesn't happen we could see some more carnage in the coming months. The markets should be safe for now till the September 18 Fed meeting.
Wednesday, August 22, 2007
Market Recap
Strong gains in the Dow, S&P and Nasdaq all closing up better than 1%. Basic materials lead the way with big gains in steel, nonferrous metals and heavy construction. Water, consumer electronics and automobiles lagged. Big gains in NFI BCSI AVCI PLX SVT BYI ACH while the losers on the day included TWB TOA MSNQ Some notable outperformers included AMZN AAPL BIDU GOOG SPWR FFIV RVBD MRVL NVDA IBKR MGM AA TIE CRS FWLT JEC JASO .
Dubai Worlds disclosure of a $5 billion stake in MGM Mirage had a positive effect on casino stocks today with good size gains in MGM LVS WYNN MPEL BYD.
More subprime fallout as Lehman, HSBC, Accredited and H&R Block trim their mortgage businesses. Atleast the market is taking the news in stride. Announcements like this a week or 2 ago and the market would have dropped like a rock.
Another hedge fund bites the dust. The global credit crunch will continue to claim victims especially among the hedge fund industry as non-correlated and quant stratagies are not as air tight as thought. Strategies are only non-correlated until they are correlated and stuff blows up. Funny how the finance world works.
The FEDs decision to inject liquidity into the market appears to be working for now and big banks such as BofA,Wachovia, Citi and JP Morgan are tapping the discount window. However this liquidity injection is more like a bandage over a bullet wound and the problems beneath the surface remains. The bigger the liquidity bubble grows , the worse the eventual outcome. Wall Street screwed up and now they deserve to pay the price. The Fed can always say it intervened to save the average American but the truth is they intervened on behalf of the big swinging dicks of Wall Street. We all know who the Fed really works for. Its about time a few big Wall Street banks and other major banks went out of business for their poor lending and investment practices. Funny how the big boys are trying to take Countrywide Financial under when CFC has been the most prudent player in the mortgage industry.
Dubai Worlds disclosure of a $5 billion stake in MGM Mirage had a positive effect on casino stocks today with good size gains in MGM LVS WYNN MPEL BYD.
More subprime fallout as Lehman, HSBC, Accredited and H&R Block trim their mortgage businesses. Atleast the market is taking the news in stride. Announcements like this a week or 2 ago and the market would have dropped like a rock.
Another hedge fund bites the dust. The global credit crunch will continue to claim victims especially among the hedge fund industry as non-correlated and quant stratagies are not as air tight as thought. Strategies are only non-correlated until they are correlated and stuff blows up. Funny how the finance world works.
The FEDs decision to inject liquidity into the market appears to be working for now and big banks such as BofA,Wachovia, Citi and JP Morgan are tapping the discount window. However this liquidity injection is more like a bandage over a bullet wound and the problems beneath the surface remains. The bigger the liquidity bubble grows , the worse the eventual outcome. Wall Street screwed up and now they deserve to pay the price. The Fed can always say it intervened to save the average American but the truth is they intervened on behalf of the big swinging dicks of Wall Street. We all know who the Fed really works for. Its about time a few big Wall Street banks and other major banks went out of business for their poor lending and investment practices. Funny how the big boys are trying to take Countrywide Financial under when CFC has been the most prudent player in the mortgage industry.
Pre Market Commentary
The Asian and European markets are very bullish and sign point to a higher open here on Wall Street.
Talks of a merger between ETrade and Ameritrade are having a bullish effect on the broker stocks and the overall markets in general.4 trading days ago, ETFC was as low as $9.92. Today it is over $16. Thats a better than 60% gain in 4 days. Simply amazing.
Are money market accounts safe ? Its appears a whole lot of money market accounts have subprime exposure which means serious problems could still lie ahead especially for investors who though money market accounts were risk free.
The global commodity boom continues as BHP Billiton reports strong profit growth and expects solid growth in the future as international demand soars.I would take this opportunity to add to basic material stocks - steel, aluminum , copper and so on. TIE RS AA FCX RIO all look very attractive here.
From a technical standpoint, I would be looking at S&P 1455 as resistance though I would look to add SSO if we decisively break this level and SDS if we fail. In the case of the Dow, it appears resistance is around 13200-13250 with support at the 200 day at 12851. The Nasdaq has support at the 200 day 2502 level while 2530 appears to be resistance. I will be watching these levels closely today.
Talks of a merger between ETrade and Ameritrade are having a bullish effect on the broker stocks and the overall markets in general.4 trading days ago, ETFC was as low as $9.92. Today it is over $16. Thats a better than 60% gain in 4 days. Simply amazing.
Are money market accounts safe ? Its appears a whole lot of money market accounts have subprime exposure which means serious problems could still lie ahead especially for investors who though money market accounts were risk free.
The global commodity boom continues as BHP Billiton reports strong profit growth and expects solid growth in the future as international demand soars.I would take this opportunity to add to basic material stocks - steel, aluminum , copper and so on. TIE RS AA FCX RIO all look very attractive here.
From a technical standpoint, I would be looking at S&P 1455 as resistance though I would look to add SSO if we decisively break this level and SDS if we fail. In the case of the Dow, it appears resistance is around 13200-13250 with support at the 200 day at 12851. The Nasdaq has support at the 200 day 2502 level while 2530 appears to be resistance. I will be watching these levels closely today.
Tuesday, August 21, 2007
A mixed day on the market though it was mainly positive for the bulls. Less volatility and a good finish on the Nasdaq and S&P though the Dow was down. Stocks as a whole advanced . Airlines were the strongest performers as oil prices fell while energy was a big loser.
The Federal Reserve may be able to avoid an emergency reduction in the benchmark interest rate as some of its steps to increase liquidity show signs of success. Bloomberg
I Don't know if this is good news for the bulls considering speculation of an emergency rate cut is the impetus for this rally.
Yields on U.S. three-month Treasury bills climbed the most since 2000 as demand fell for the safest government securities. Bloomberg
Foreclosures across the US surged in July up 9% from June and 93% from the previous year. Nevada, Michigan and Georgia are at the top with California, Florida and Ohio not too far behind. The real estate market will only get worse( for sellers and owners)while buyers will be the beneficiaries through depressed prices. In the mean time I will be putting together a real estate fund to snap up deals. Plenty of bargains to be snatched up in the next 3 years or so. 30 cents on the dollar or better.
It appears a lot of stock market gurus and bloggers are bullish on the market in the near term. Many feel a bottom is in. I like going against the crowd. Today I sold of plenty of QLD DDM SSO MVV UWM positions that I had (unexpectedly) picked up at bargain levels during Thursdays plunge. I will not be lulled into a false sense of security. All we need is another major blowup and we could be down 500 points in a hurry. Plus, the dimming prospects of a Fed rate cut does not help. I do not want to be short here. But I would like to have plenty of cash to work with. SLV AKAM AMGN NTRI MU DFS CFC all look like great long term buys here.
The Federal Reserve may be able to avoid an emergency reduction in the benchmark interest rate as some of its steps to increase liquidity show signs of success. Bloomberg
I Don't know if this is good news for the bulls considering speculation of an emergency rate cut is the impetus for this rally.
Yields on U.S. three-month Treasury bills climbed the most since 2000 as demand fell for the safest government securities. Bloomberg
Foreclosures across the US surged in July up 9% from June and 93% from the previous year. Nevada, Michigan and Georgia are at the top with California, Florida and Ohio not too far behind. The real estate market will only get worse( for sellers and owners)while buyers will be the beneficiaries through depressed prices. In the mean time I will be putting together a real estate fund to snap up deals. Plenty of bargains to be snatched up in the next 3 years or so. 30 cents on the dollar or better.
It appears a lot of stock market gurus and bloggers are bullish on the market in the near term. Many feel a bottom is in. I like going against the crowd. Today I sold of plenty of QLD DDM SSO MVV UWM positions that I had (unexpectedly) picked up at bargain levels during Thursdays plunge. I will not be lulled into a false sense of security. All we need is another major blowup and we could be down 500 points in a hurry. Plus, the dimming prospects of a Fed rate cut does not help. I do not want to be short here. But I would like to have plenty of cash to work with. SLV AKAM AMGN NTRI MU DFS CFC all look like great long term buys here.
Pre Market Update
The markets across Asia and Europe ae mixed. China raised interest rates but the Shanghai composite continues upwards.
US stock index futures climb on speculation of a Fed rate cut. Rumors of Warren Buffett buying Countrywide are also helping. CFC is up by a fair amount this morning. I believe this will be a $50 stock before the end of the decade.
Several retailers are reporting earnings today. Wall Street will be keeping a close eye on TGT SKS SPLS BJ AEO DKS. Staples has reported inline profits though the forecast is on the low side. BJs club reported earnings above expectations.
I expect plenty of market volatility today. A big pullback will not surprise me. I expect more downside action today. The credit crunch is still alive and subprime related problems are popping up everyday like in the case of German state owned bank Landesbank Sachsen Girozentrale. Nobody can tell exactly where the next blowup will occur. Subprime contagion is not just limited to the financial sector but to any company in general that is sitting on investments that could potentially be linked to subprime. The case of money market fund Sentinel blowing up adds to investor worries. The Fed can artificially pump the market up but for how long remains to be seen.
US stock index futures climb on speculation of a Fed rate cut. Rumors of Warren Buffett buying Countrywide are also helping. CFC is up by a fair amount this morning. I believe this will be a $50 stock before the end of the decade.
Several retailers are reporting earnings today. Wall Street will be keeping a close eye on TGT SKS SPLS BJ AEO DKS. Staples has reported inline profits though the forecast is on the low side. BJs club reported earnings above expectations.
I expect plenty of market volatility today. A big pullback will not surprise me. I expect more downside action today. The credit crunch is still alive and subprime related problems are popping up everyday like in the case of German state owned bank Landesbank Sachsen Girozentrale. Nobody can tell exactly where the next blowup will occur. Subprime contagion is not just limited to the financial sector but to any company in general that is sitting on investments that could potentially be linked to subprime. The case of money market fund Sentinel blowing up adds to investor worries. The Fed can artificially pump the market up but for how long remains to be seen.
Monday, August 20, 2007
Market Recap
A good day for the bulls . The Dow and Nasdaq finished up while the S&P was marginally lower. Overall though the bulls came out on top as attempts to take down the market were thwarted. Transports and oils were the leading sectors while banking as expected lagged with big names like GS BAC C JPM MER BSC UBS CFC all closing down.
Big drop in natural gas prices as hurricane Dean moves away from oil and gas producing areas of the Gulf of Mexico. I continue to add UNG here since we are still in hurricane season and all it takes is one big storm to send Natural gas 20-30% higher. The odds favor atleast one spike.
The credit crunch has forced Treasury Bill yields down the most in two decades as investors scramble to safer grounds.
Will Countrywide survive this mortgage crisis ? Thats seems to be the question on a lot of investors minds as CFC has lost two thirds of its value in the last few months. I believe CFC will survive and buying below $20 is a great bargain. Capital One in the meantime is shutting down its mortgage unit Greenpoint.
The Conference Board index of leading economic indicators rose in July and suggests continued economic growth again. This remains to be seen. I take all indicators with a grain of salt.
It appears a lot of investors feel we saw the bottom on Thursday. If this was indeed the bottom, I expect some sort of retest over the next few weeks. I would be cautious about adding to long positions here and probably start building up some hedges just in case another leg down starts. While the economy appears to be fine especially when global growth is taken into account, investors seem to be very jittery and any rumor or actual negative event could take this market down in a hurry.
Big drop in natural gas prices as hurricane Dean moves away from oil and gas producing areas of the Gulf of Mexico. I continue to add UNG here since we are still in hurricane season and all it takes is one big storm to send Natural gas 20-30% higher. The odds favor atleast one spike.
The credit crunch has forced Treasury Bill yields down the most in two decades as investors scramble to safer grounds.
Will Countrywide survive this mortgage crisis ? Thats seems to be the question on a lot of investors minds as CFC has lost two thirds of its value in the last few months. I believe CFC will survive and buying below $20 is a great bargain. Capital One in the meantime is shutting down its mortgage unit Greenpoint.
The Conference Board index of leading economic indicators rose in July and suggests continued economic growth again. This remains to be seen. I take all indicators with a grain of salt.
It appears a lot of investors feel we saw the bottom on Thursday. If this was indeed the bottom, I expect some sort of retest over the next few weeks. I would be cautious about adding to long positions here and probably start building up some hedges just in case another leg down starts. While the economy appears to be fine especially when global growth is taken into account, investors seem to be very jittery and any rumor or actual negative event could take this market down in a hurry.
Saturday, August 18, 2007
Week Recap
With the market falling apart I decided to take a hiatus. Off to the ocean in sunny California for 3 days all while the markets collapsed than proceeded to U Turn in amazing fashion. I had orders set in place to buy bull ETFs DDM SDS QLD MVV UWM at market levels 1% to 5% below Tuesdays close and much to my amazement most of them were filled. I am glad I skipped out the last 3 days of the week as I doubt I would have kept the composure to enter those trades manually. In all it was a great week. I am starting to have doubts as to how long this rally will last though. I believe the market has been broken. I can imagine we will see a lot of selling at Dow 13200 and S&P 1454 ( 200 day moving average). I think it may be wise to stay in cash till late October early November. It appears even precious metals like Gold and Silver are no longer safe havens. Silver in particular appears to be breaking down. Gold is so unimpressive that I may sell half my position on Monday. They are better trades out there, UNG for one. Hurricane season is here and the big one is ready to hit Jamaica. A little closer to home like Florida and Nat. Gas could see $10+.
A few equity names that have caught my eye due to their relative strength during this decline are CSCO HPQ RIMM WYNN CMG OVTI UA .
A few equity names that have caught my eye due to their relative strength during this decline are CSCO HPQ RIMM WYNN CMG OVTI UA .
Wednesday, August 15, 2007
Pre Market Update
The markets in Asia collapsed overnight with the Jakarta composite down over 6%. The European market are very bearish and the trend looks to continue when Wall Street opens despite a benign Consumer Price Index report.With inflation easing there is a greater chance of a Fed rate cut.
This morning, Merrill Lynch has cut the nations largest mortgage lender Countrywide Financial to a sell and raised the possibility of bankruptcy. Personally I feel CFC will make it through this crisis and the chances of bankruptcy are slim.
Deere & Co.'s fiscal third-quarter net income rose 23%, topping expectations, amid strong sales gains for agricultural, commercial and consumer equipment. DE is probably a bargain here in this market environment.
Whats Buffett been buying and selling ? Very strange how Berkshire takes a stake in Dow Jones & Co. right before Ruport Murdochs buyout offer. Insider trading or is Warren just very lucky ......
Judging by stock index futures, the US markets will open substantially lower. Will this set the stage for a rally or are we going to melt downwards ? We could see 12,700-12,800 on the Dow today. I would be very cautious though the extreme bearishness in sentiment makes me a believe a strong rally is near.
This morning, Merrill Lynch has cut the nations largest mortgage lender Countrywide Financial to a sell and raised the possibility of bankruptcy. Personally I feel CFC will make it through this crisis and the chances of bankruptcy are slim.
Deere & Co.'s fiscal third-quarter net income rose 23%, topping expectations, amid strong sales gains for agricultural, commercial and consumer equipment. DE is probably a bargain here in this market environment.
Whats Buffett been buying and selling ? Very strange how Berkshire takes a stake in Dow Jones & Co. right before Ruport Murdochs buyout offer. Insider trading or is Warren just very lucky ......
Judging by stock index futures, the US markets will open substantially lower. Will this set the stage for a rally or are we going to melt downwards ? We could see 12,700-12,800 on the Dow today. I would be very cautious though the extreme bearishness in sentiment makes me a believe a strong rally is near.
Tuesday, August 14, 2007
Late Night Thoughts
The Asian markets are in free fall. The Global economy has collapsed. All is lost. OK maybe not. But things are getting pretty ugly. While there is still all this liquidity floating around the globe, it appears investors are too shell shocked to put it into equities. They prefer running to the safety of false safe havens such as the unmighty US Dollar. Why isn't Gold and Silver rocketing skywards ? Is a piece of paper more valuable than solid Gold ?
Looking over charts from 1990 and 1998, we look to be in a similar state. A credit shock followed by a sharp pullback of 20%+ in the markets. I'm starting to feel we could see 11,000 on the Dow by late September. If we don't rally hard, I see 12,800 on the cards for the Dow before the week is over.
Looking over charts from 1990 and 1998, we look to be in a similar state. A credit shock followed by a sharp pullback of 20%+ in the markets. I'm starting to feel we could see 11,000 on the Dow by late September. If we don't rally hard, I see 12,800 on the cards for the Dow before the week is over.
Market Update
This is either a great opportunity to go long or the last chance to sell. If the market breaks here, we could go a long way down perhaps Dow 12700 and S&P 1375. I personally think the market is overally bearish and the setting is ripe for a powerful rally. On the other hand the market could drop like a rock.
Pre Market Update
The markets across Asia and Europe are a mixed bag. The Shanghai Composite continues it amazing run to 5000. Central Banks continue to pump liquidity into the system.
The Producer Price Index PPI rose more than forecast by 0.6% in July though excluding food and fuel, the gain was only 0.1% versus a 0.2% consensus. The lower core will give the Fed an opportunity to lower rates in the future.
Walmart reports a jump in profit but cuts outlook causing a drop in shares in pre market trading.While I've never been a fan of WMT , the stock is safe bet during unstable times. Perhaps the elite of Wall Street will be forced to shop here as their incomes fall this year due to the financial crisis.
UBS reported a 79% increase in profits and warns about the second half of the year due to credit market turbulence. UBS appears to be doing a better job of containing subprime versus its US counterparts.Perhaps its that Swiss efficiency.
Futures are pointing to a slightly higher open on Wall Street. Lately, higher opens are to be sold and lower opens bought. There is a higher degree of tension among market paticipants and volatility levels are elevated. After a rather benign trading session yesterday, I expect more volatility the rest of the week especially in light of option expiration on Friday.
The Producer Price Index PPI rose more than forecast by 0.6% in July though excluding food and fuel, the gain was only 0.1% versus a 0.2% consensus. The lower core will give the Fed an opportunity to lower rates in the future.
Walmart reports a jump in profit but cuts outlook causing a drop in shares in pre market trading.While I've never been a fan of WMT , the stock is safe bet during unstable times. Perhaps the elite of Wall Street will be forced to shop here as their incomes fall this year due to the financial crisis.
UBS reported a 79% increase in profits and warns about the second half of the year due to credit market turbulence. UBS appears to be doing a better job of containing subprime versus its US counterparts.Perhaps its that Swiss efficiency.
Futures are pointing to a slightly higher open on Wall Street. Lately, higher opens are to be sold and lower opens bought. There is a higher degree of tension among market paticipants and volatility levels are elevated. After a rather benign trading session yesterday, I expect more volatility the rest of the week especially in light of option expiration on Friday.
Monday, August 13, 2007
Pre Market Update
The news is all good this morning. Asia and Europe in particular are very bullish. Japans growth came in lower than forecast eroding and prospects for a rate hike and sending the Yen lower. China's monthly consumer inflation rose to a decade high of 5.6% and several rate hikes are expected this year. The Shanghai composite continues to head higher.
The ECB injected another $65 billion into the market and believes it is 'normalizing'. Liquidity reigns supreme once again.
Retail sales numbers came in solid. If they can't tap into their home equity, consumers are just going to turn to plastic. Credit card companies MA DFS and AXP are all good buys here.
Goldmans Sachs Global Equity Fund is getting a $3 billion bailout.Its good to be in a position where you screw up and get away with it. Thats why you want to own GS.
Blackstone Group is soaring on earning news after more than tripling profits. The stock is still trading below its IPO price though its far above its lows. BX CEO Schwarzman acknowledges the 'more challenging financing conditions' ahead.
US stock index futures are soaring this morning and the markets are expected to open higher. The trend will be established after 10am and if we get a pullback it may be profitable to add to long positions.
The ECB injected another $65 billion into the market and believes it is 'normalizing'. Liquidity reigns supreme once again.
Retail sales numbers came in solid. If they can't tap into their home equity, consumers are just going to turn to plastic. Credit card companies MA DFS and AXP are all good buys here.
Goldmans Sachs Global Equity Fund is getting a $3 billion bailout.Its good to be in a position where you screw up and get away with it. Thats why you want to own GS.
Blackstone Group is soaring on earning news after more than tripling profits. The stock is still trading below its IPO price though its far above its lows. BX CEO Schwarzman acknowledges the 'more challenging financing conditions' ahead.
US stock index futures are soaring this morning and the markets are expected to open higher. The trend will be established after 10am and if we get a pullback it may be profitable to add to long positions.
Saturday, August 11, 2007
LOOKING AT DNA
Genentech Inc. DNA
Genentech, Inc. engages in the discovery, development, manufacture, and commercialization of biotherapeutics in the United States.
DNA has grown earnings at an annual rate of almost 50% the last 5 years. Even if one is to estimate a modest growth rate of 25% over the next 5 years, DNA is still very cheap on a valuation basis. The stock price has not been this low since May of 2005 and is currently trading more than 20% below is 52 week high set in January. DNA is expected to earn between $3.20 to $3.80 next year meaning its trading at 20-22 times next years earnings. I am a buyer at this price. I am looking for $100 + over the next 12 months.
Genentech, Inc. engages in the discovery, development, manufacture, and commercialization of biotherapeutics in the United States.
DNA has grown earnings at an annual rate of almost 50% the last 5 years. Even if one is to estimate a modest growth rate of 25% over the next 5 years, DNA is still very cheap on a valuation basis. The stock price has not been this low since May of 2005 and is currently trading more than 20% below is 52 week high set in January. DNA is expected to earn between $3.20 to $3.80 next year meaning its trading at 20-22 times next years earnings. I am a buyer at this price. I am looking for $100 + over the next 12 months.
Friday, August 10, 2007
RECAP
Surveying the market like a general perched upon a tank overlooking a battlefield, I concur that the worst damage has been done. We have seen the bottom though I cross my fingers as I write this. Senile old men spoke of black Friday and Black Monday and a 1000 point Dow drop while the calculating minds like yours truely decided to stay put and watch the market. While things could quickly unravel on Monday, I feel its safe that we get a decent rally next week. Liquidity flows into the market were very high and at levels not seen since 2005. The Fed continues to inject liquidity and give traders confidence. Certain high profile solid names are selling dirt cheap and small caps considered risky are actually outperforming. While a riverboat gambler with a stomach of steel could try to pick financials which are being handed out for free - GS LEH MS MER C JPM to name a few, its probably better to stick with tech names like CSCO INTC MSFT HPQ EMC TXN . Large cap tech stocks are poised to outperform on the back of fantastic global growth. Gold and Silver continue to look solid here and talks of a rate cut will boost them further. Once Gold breaks $700, 800 could be upon us in a flash. I continue to like chip stocks too like SNDK MU MRVL OVTI . I would also like to add some WYNN and LVS here too.
MARKET UPDATE
We tested the lows and survived. Could this bounce be fake and we could head lower in the last 2 hours. That we shall see. Alot of traders are nervous and nobody wants to be long going into the weekend. Even going short may not be palatable too most market participants. Financial have once again been the weak link while the gold and silver sector has soared. GLD SLV UNG and DUG have all performed for me today. There has also been strength in the Russell 2000 small cap stocks. I continue to sit on plenty of cash which I can put to use once the direction becomes clearer. If today was a successful test of the lows, we should be moving up. Therefore I would be inclined to go long. But I will not take any position till Monday because anything can happen this weekend. Who knows, a major wallstreet bank could go under.
Pre Market Analysis
Fasten your seat belts. We are going to be in for a bumpy ride. The markets across Asia and Europe are all down big. There is talk that the US is entering into a bear market.
Countrywides stock is plummeting this morning after is said it faces 'unprecedented disruptions.' due to the credit crunch. If CFC falls under $20 it will be an absolute steal. They will make it past this subprime turmoil.
More talk of hedge funds liquidating positions as the worldwide financial turmoil is affecting firms black box strategies. Quant hedge funds- those using statistical computer generated data to trade positions, are not prepared for the current state of the financial market and many of these funds are falling apart as I write this.
This morning I'm preparing to play things as they come. Just for the record, I had a dream last night that the Dow fell over 1000 points. While I am not suggesting this will happen, I am including the possibility of it happening in my gameplan for today. 13,132 and 13,000 are levels on the Dow I am looking at to reduce long exposure and add to the short side if they fail. The first 30 minutes are meaningless. Might add some SRS and SKF for protection. I would not be surprised if we actually have a test of last Fridays lows and reverse to close positive. On the other hand a plunge below may mean a test of 12,700. The S&P is sitting on its 200 day moving average at 1453. Another level to look for is 1427. Below that and 1400 could be tested. Gold is up this morning which is a positive sign. Whether it says up waits to be seen.
Countrywides stock is plummeting this morning after is said it faces 'unprecedented disruptions.' due to the credit crunch. If CFC falls under $20 it will be an absolute steal. They will make it past this subprime turmoil.
More talk of hedge funds liquidating positions as the worldwide financial turmoil is affecting firms black box strategies. Quant hedge funds- those using statistical computer generated data to trade positions, are not prepared for the current state of the financial market and many of these funds are falling apart as I write this.
This morning I'm preparing to play things as they come. Just for the record, I had a dream last night that the Dow fell over 1000 points. While I am not suggesting this will happen, I am including the possibility of it happening in my gameplan for today. 13,132 and 13,000 are levels on the Dow I am looking at to reduce long exposure and add to the short side if they fail. The first 30 minutes are meaningless. Might add some SRS and SKF for protection. I would not be surprised if we actually have a test of last Fridays lows and reverse to close positive. On the other hand a plunge below may mean a test of 12,700. The S&P is sitting on its 200 day moving average at 1453. Another level to look for is 1427. Below that and 1400 could be tested. Gold is up this morning which is a positive sign. Whether it says up waits to be seen.
Thursday, August 09, 2007
MARKET RECAP
So much fear and panic. A 6-1 ratio of decliners to advancers on the NYSE. 387 points lost on the Dow, 56 on the Nasdaq and 44 on the S&P . Banking was the worst hit sector for obvious reasons while semiconductors were left relatively unscathed in the selloff.
Quant hedge funds are getting an ass kicking and perhaps this explains some of the heavy selling as these funds readjust their positions. Thats why in my opinion the best way to approach the market is to be as flexible as possible. Having a set strategy only to find out it doesn't work under certain conditions can be costly. Just ask LTCM , Amaranth and co. The market is like a wave and the successful trader a surfer.
Did President Bush just jinx the markets or what ?
And that was just yesterday. The Dow responds with its second biggest loss of the year.
When there is fear and panic, its often profitable to bet against it. This is a great trading market. Playing the swings is highly profitable. I would buy a bearish open tomorrow and sell into a bullish open. We may test last Fridays lows tomorrow or next week.
Quant hedge funds are getting an ass kicking and perhaps this explains some of the heavy selling as these funds readjust their positions. Thats why in my opinion the best way to approach the market is to be as flexible as possible. Having a set strategy only to find out it doesn't work under certain conditions can be costly. Just ask LTCM , Amaranth and co. The market is like a wave and the successful trader a surfer.
Did President Bush just jinx the markets or what ?
"I'm not an economist, but my hope is that the market, if it functions normally,
will be able to yield a soft landing," Bush told a small group of reporters at
the Treasury Department on Wednesday. "That's kind of what it looks like so
far."
And that was just yesterday. The Dow responds with its second biggest loss of the year.
When there is fear and panic, its often profitable to bet against it. This is a great trading market. Playing the swings is highly profitable. I would buy a bearish open tomorrow and sell into a bullish open. We may test last Fridays lows tomorrow or next week.
MARKET UPDATE
Volatile session so far. Bears are in control but one cannot rule out a reverse to the upside. Slowly adding some SLV and QLD here. UNG looks good as natural gas makes a nice run. Despite the downslide today,quite a few of my positions are doing very nicely including SNDK MU HANS SBUX FFIV BWLD AKAM MMS. Makes me believe a reverse is quite possible since its financials that are bearing the brunt of the downside action. This credit anxiety is going to be relieved courtesy of the Fed via liquidity injections into the market.
PRE MARKET ANALYSIS
Abandon Ship ! Thats the general thought process going around today as bearish markets in Europe and word that financial giant BNP Paribas is halting withdrawals from three of its investment funds due to an inability to fairly value their subprime assets, or should I saw liabilities. The ECB is coming to the rescue lending $130 billion to banks as liquidity injections in response to the subprime crisis.
Here in the US, retail sales for July were very weak putting added pressure on the markets. Obviously the lack of ability to withdraw money from homes and increasing gas prices is effecting US consumers to a greater extent than most people think.
There is talk that a bottom in housing is near. Unfortunately I do not believe any bottom is near. Things are going to get far worse. NO BOTTOM TILL 2009 and thats my final word !
US markets are expected to take a huge dump this morning. I will look to add into long positions on this decline. I feel subprime is already priced in and people are overly bearish in general. Plus we need one last shakeout before we continue upwards.
Here in the US, retail sales for July were very weak putting added pressure on the markets. Obviously the lack of ability to withdraw money from homes and increasing gas prices is effecting US consumers to a greater extent than most people think.
There is talk that a bottom in housing is near. Unfortunately I do not believe any bottom is near. Things are going to get far worse. NO BOTTOM TILL 2009 and thats my final word !
US markets are expected to take a huge dump this morning. I will look to add into long positions on this decline. I feel subprime is already priced in and people are overly bearish in general. Plus we need one last shakeout before we continue upwards.
Wednesday, August 08, 2007
Market Recap
Now that I am done counting all the money I made today I can say that today was a great day to be long tech and financials and everything else for that matter. Apart from a little hiccup in the last hour, the bulls were in total control. Talk of resistance at S&P 1490 was eliminated. 1500-1505 maybe be another layer to watch out for. I added some DUG as a short play on oil and gas and added some SDS for protection. Housing and semis were the leading sectors while utilities lagged. Water,home construction and coal were the leading industry groups while mobile telecom, footwear (thank you HLYS) and media agencies lagged.
Has liquidity returned to the marketplace ? Todays heavy bond appetite seems to think so.
Always thank your lucky stars you don't own stocks that fall like this. Apologies to all that do own it.
Is China going to start dumping US Treasuries ?
Has liquidity returned to the marketplace ? Todays heavy bond appetite seems to think so.
Always thank your lucky stars you don't own stocks that fall like this. Apologies to all that do own it.
Is China going to start dumping US Treasuries ?
China may sell its Treasury holdings if Washington imposes trade sanctions to
force a revaluation of the Chinese yuan, U.K.'s Telegraph reported Wednesday.
Xia Bin, finance chief at the Development Research Centre, said that Beijing's
foreign reserves should be used as a "bargaining chip" in talks with the U.S.
Pre Market Analysis
The Asian and European indices are both very solid here.US equities are expected to open higher especially due to Cisco strong earnings report and bullish future outlook. CSCO is one of those market moving stocks. Going long the ROM - bull tech ETF might be a good idead here in light of CSCOs outlook.
EARNINGS
Keeping an eye on AIRN OMRI KNOT STKL ORA NOOF JUPM IDCC FLS among others.
Hansen Natural HANS, the maker of Monster Energy drink reported huge profit growth and the stock is soaring pre market.
The end of leverage buyouts ? I don't think so. Blackstone has raised over $21 billion for the worlds biggest buyout fund. Maybe its time to get long BX.
Precious metals continue to show strength this morning with Gold and Silver both up. The US Dollar continues to weaken.
Keeping a close eye on the Dow 50 day moving average at 13,561. Expect some resistance there.
Nasdaq 50 day is 2615 and the S&P 500 is at 1512 though another level of resistance lies at 1490.
EARNINGS
Keeping an eye on AIRN OMRI KNOT STKL ORA NOOF JUPM IDCC FLS among others.
Hansen Natural HANS, the maker of Monster Energy drink reported huge profit growth and the stock is soaring pre market.
The end of leverage buyouts ? I don't think so. Blackstone has raised over $21 billion for the worlds biggest buyout fund. Maybe its time to get long BX.
Precious metals continue to show strength this morning with Gold and Silver both up. The US Dollar continues to weaken.
Keeping a close eye on the Dow 50 day moving average at 13,561. Expect some resistance there.
Nasdaq 50 day is 2615 and the S&P 500 is at 1512 though another level of resistance lies at 1490.
Tuesday, August 07, 2007
Market Recap
What a day ! Talk about volatility. First time in a while we have not closed 3 digits in one direction on the Dow. But we moved 3 digits in both directions throughout the day. The bears took control after the Fed announcement to drag the market down over 100 points. Then the bulls staged a comeback of their own, turning around the market over 250 points to the north. Then we weakened a little into the close though traders made money today. Lots of money from the volatility. Option traders made bank.
Oil, housing and utilities were the strongest sectors while semiconductors were the weakest. In the industry groups, home construction, coal and media agencies led while insurance brokers, platinum and precious metals lagged.
Today was a great opportunity for the bears to take the markets down. The FOMC comments showed no signs of softening. Inflation is their key priority. Despite the sustained harsh tone, the bears were unable to take advantage despite dropping the Dow down 140 at one stage. After a day like this, long is the way to go.
Former Brocade CEO Gregory Reyes was found guilty on all charges of option backdating. "I didn't know the law" is no longer an excuse. Steve Jobs watch out !
Going long the double inverse oil and gas ETF DUG might be a good bet here. Oil and gas stocks have a tendancy to weaken around this time of the year till the early part of the following year.
I would hedge DUG by being long UNG which is the natural gas ETF which tends to spike September ownwards especially around hurricane season.
Oil, housing and utilities were the strongest sectors while semiconductors were the weakest. In the industry groups, home construction, coal and media agencies led while insurance brokers, platinum and precious metals lagged.
Today was a great opportunity for the bears to take the markets down. The FOMC comments showed no signs of softening. Inflation is their key priority. Despite the sustained harsh tone, the bears were unable to take advantage despite dropping the Dow down 140 at one stage. After a day like this, long is the way to go.
Former Brocade CEO Gregory Reyes was found guilty on all charges of option backdating. "I didn't know the law" is no longer an excuse. Steve Jobs watch out !
Going long the double inverse oil and gas ETF DUG might be a good bet here. Oil and gas stocks have a tendancy to weaken around this time of the year till the early part of the following year.
I would hedge DUG by being long UNG which is the natural gas ETF which tends to spike September ownwards especially around hurricane season.
Morning Update
The Asian markets are looking pretty solid with Shanghai continuing to soar. Europe is very bullish especially the FTSE. The US markets have opened weak though strength is picking up and it looks like we may go green after the hour. All hangs on the FOMC announcement at 2:15pm ET.
Oil prices continue to move lower which is a relief of sorts.Its time equities rally on oil moving lower like they are supposed to. Gold is weak this morning though it appears to be gaining while silver is up slightly. The US dollar is gaining strength though it may weaken after the FOMC annoucement.
There is news that Bear Stearns is trying to screw investors in its hedge funds by liquidating in the Cayman Islands instead of New York. Cayman laws favor the fund over the investor. I so hope Bear Stearns goes under. Such evil thoughts on my part. Maybe Jim Cayne, Warren Spector and Sam Molinaro will be the new Ken Lay, Jeff Skilling and Andrew Fastow. Imagine that !
This morning I've been buying AKAM and BWLD. Why ? AKAM looks dirt cheap here and if it gets below $30 I'll double my position. Trading less than 20 times 2008 earnings for a company growing earnings 30-40% a year. Internet content providers are here to stay. AKAM hasn't been this cheap since last July. And BWLD just got an analyst upgrade today. This restaurant is growing astonishingly fast and there is immense growth ahead yet the stock price has been knocked to the ground after reporting inline earnings.
Contempleting selling off some LVS and adding WYNN instead. WYNN earnings were phenomenol. The growth in Macau is way beyond anyones expectations. I like MPEL here too. Macau is going to be a lot bigger than Vegas. 3 billion customers withing a 5 hour flight. Wow !!
I expect a strong market reaction after 2:15pm. A very strong reaction. Don't know which way yet but I'm sitting on plenty of cash and ready to go in once I see the correct direction.
Oil prices continue to move lower which is a relief of sorts.Its time equities rally on oil moving lower like they are supposed to. Gold is weak this morning though it appears to be gaining while silver is up slightly. The US dollar is gaining strength though it may weaken after the FOMC annoucement.
There is news that Bear Stearns is trying to screw investors in its hedge funds by liquidating in the Cayman Islands instead of New York. Cayman laws favor the fund over the investor. I so hope Bear Stearns goes under. Such evil thoughts on my part. Maybe Jim Cayne, Warren Spector and Sam Molinaro will be the new Ken Lay, Jeff Skilling and Andrew Fastow. Imagine that !
This morning I've been buying AKAM and BWLD. Why ? AKAM looks dirt cheap here and if it gets below $30 I'll double my position. Trading less than 20 times 2008 earnings for a company growing earnings 30-40% a year. Internet content providers are here to stay. AKAM hasn't been this cheap since last July. And BWLD just got an analyst upgrade today. This restaurant is growing astonishingly fast and there is immense growth ahead yet the stock price has been knocked to the ground after reporting inline earnings.
Contempleting selling off some LVS and adding WYNN instead. WYNN earnings were phenomenol. The growth in Macau is way beyond anyones expectations. I like MPEL here too. Macau is going to be a lot bigger than Vegas. 3 billion customers withing a 5 hour flight. Wow !!
I expect a strong market reaction after 2:15pm. A very strong reaction. Don't know which way yet but I'm sitting on plenty of cash and ready to go in once I see the correct direction.
Monday, August 06, 2007
Recap
Houston we've hit bottom. The Dow made back everything it lost during Fridays sell-off and more. While the breadth was not impressive, the fact that we made such a strong rally in the face of Fridays action is a bullish sign. Volatility is back in a big way. As far as sectors go, banking was easily the cream of the crop with the financial ETF XLF gaining over 5%. The I-banks were on fire with huge gain in GS MER MS and even BSC came back from below $100 to close over $110. I suppose investors had time to reflect over the weekend and realise things were not all that bad in the financial industry subprime and all.
Oil dropped over $3 today and it appears prices have topped for now. Oil topped last summer and I have mentioned before that oil is likely to top soon and it appears it has.
Merrill thinks the Fed will cut rates in October as the credit crunch forces their hand.
Tomorrow is the big FOMC announcement. The market is likely to swing around a bit before going crazy once the announcement is out. Nobody is looking for a rate cut though if it happens we may see 14,000 on the Dow tomorrow. The language is going to be key. Investors are looking for soft language with hints of a rate cut to sustain this rally. Tough language is going to play into the bears hands. If I was a gambling man I would bet on a sustained rally tomorrow and perhaps a move to 13600 on the Dow.
Oil dropped over $3 today and it appears prices have topped for now. Oil topped last summer and I have mentioned before that oil is likely to top soon and it appears it has.
Merrill thinks the Fed will cut rates in October as the credit crunch forces their hand.
Tomorrow is the big FOMC announcement. The market is likely to swing around a bit before going crazy once the announcement is out. Nobody is looking for a rate cut though if it happens we may see 14,000 on the Dow tomorrow. The language is going to be key. Investors are looking for soft language with hints of a rate cut to sustain this rally. Tough language is going to play into the bears hands. If I was a gambling man I would bet on a sustained rally tomorrow and perhaps a move to 13600 on the Dow.
Market Update
Strong rally here so far though theres only a few sectors that are doing well today. Its been the beaten up banking sector thats leading the way with big gains in I-banks and large financial institutions such as GS MER MS DB CS C JPM WM. Oil and Gold/Silver continue to lag .
NYX continues to get beaten up and looks like a great buy here since its trading at less than 35 times this years earnings and under 25 times next years. For a company growing at 35-40% a year this is quite cheap. I am adding to my position.
LVS has looked great the last few sessions in the face of a terrible market. Once the market turns around this stock could really soar. Like I said, cheap US Dollar = more foreign tourists in Vegas = more money for LVS.
NYX continues to get beaten up and looks like a great buy here since its trading at less than 35 times this years earnings and under 25 times next years. For a company growing at 35-40% a year this is quite cheap. I am adding to my position.
LVS has looked great the last few sessions in the face of a terrible market. Once the market turns around this stock could really soar. Like I said, cheap US Dollar = more foreign tourists in Vegas = more money for LVS.
Friday, August 03, 2007
Recap
The market ended in a grip of panic as traders dumped equities in mass. Blame it on Bear Stearns for their CFO commenting on the current fixed-income market being the worst he has seen in his 22 years on Wall Street. Banking and housing were the worst hit sectors with big financial names like BSC GS MER MS C JPM BAC CFC and housing stocks like HOV BZH TOL KBH DHI all getting killed . Gold and Silver sector was the only one that escaped relatively unscathed and the price of gold and silver were both up nicely today along with the Euro.
The current market problem can be summed up in one word and that is Liquidity. What we have right now is an increase in borrowing costs, lack of available capital and large scale redemptions in hedge funds as investors panic. The problem I believe is temporary and will be solved courtesy of Bernanke and Co. via large scale liquidity injections into the trading desks of the big institutions. It appears to be a perfect time to take long positions in anticipation of a bail out of sorts.
My strategy right now is to hold tight and add into long positions selectively. I like the bull ETFs here as a sudden sharp rally could lead to substantial gains. Shorting here would be counter productive due to the large number of puts and short positions in play. The Fed meeting could be the backdrop for an explosive rally.
The current market problem can be summed up in one word and that is Liquidity. What we have right now is an increase in borrowing costs, lack of available capital and large scale redemptions in hedge funds as investors panic. The problem I believe is temporary and will be solved courtesy of Bernanke and Co. via large scale liquidity injections into the trading desks of the big institutions. It appears to be a perfect time to take long positions in anticipation of a bail out of sorts.
My strategy right now is to hold tight and add into long positions selectively. I like the bull ETFs here as a sudden sharp rally could lead to substantial gains. Shorting here would be counter productive due to the large number of puts and short positions in play. The Fed meeting could be the backdrop for an explosive rally.
UPDATE
Borrowing the Japanese Yen here looks like a good trade. Short term the Yen appears overbought and is likely to continue its decline. The BOJ will not raise rates at the risk of slowing growth and sending Japan back into a recession that lasted the entire 1990s. The carry trade is fine.
Market Update
Early morning weakness due to a very weak job report.
Credit-Default Swaps Fall for Week as Traders See Risks Abating
Prices to protect corporate bonds against default fell for the first week since June as global financial markets stabilized. Bloomberg
Could this mean the worst is behind ? It appears the worst case scenarios in subprime and real estate are already priced in.
Legendary investor Jim Rogers is short the investment banks and homebuilders. He believes there is a lot more downside ahead. While he could be correct and Jim usually is in the long run, we could have a period of choppiness ahead where I-banks and builders spike up in price before heading back down.
Gold and silver are showing strength today and so is the Euro on the back of Dollar weakness.
Equities showing strength include SNDK LVS TOPT EYE OPWV MHGC SWIM SPAR FCN
Credit-Default Swaps Fall for Week as Traders See Risks Abating
Prices to protect corporate bonds against default fell for the first week since June as global financial markets stabilized. Bloomberg
Could this mean the worst is behind ? It appears the worst case scenarios in subprime and real estate are already priced in.
Legendary investor Jim Rogers is short the investment banks and homebuilders. He believes there is a lot more downside ahead. While he could be correct and Jim usually is in the long run, we could have a period of choppiness ahead where I-banks and builders spike up in price before heading back down.
Gold and silver are showing strength today and so is the Euro on the back of Dollar weakness.
Equities showing strength include SNDK LVS TOPT EYE OPWV MHGC SWIM SPAR FCN
Thursday, August 02, 2007
Recap
The Bulls took control the last hour of trading running the market up triple digits on the Dow.
The housing sector was by far the best performer while oil and semis were the only down sectors. Among industry groups, construction and home builders led the way while paper and coal were the laggards. Among individual stocks PHRM CKFR APKT MORN CUB PLX were the biggest gainers while AHHA GYI POZN LEND LQDT SXCI were the biggest decliners.
Speaking of opportunity , anyone who bought AHM at $1 or so on Tuesday afternoon could have made a 400% profit today as the stock at one staged spiked to $4.60. AHM is a mortgage lender that declined due to concerns of possible bankruptcy due to liquidity issues.
The stock market is safe for now as two thirds of Americans see a recession ahead. Markets like to climb a wall of worry. The fact so many Americans are pessimistic is a sign that the market will go much higher. Tops occur during times of 'irrational exhuberence' to borrow a Greenspan quote.
The housing sector was by far the best performer while oil and semis were the only down sectors. Among industry groups, construction and home builders led the way while paper and coal were the laggards. Among individual stocks PHRM CKFR APKT MORN CUB PLX were the biggest gainers while AHHA GYI POZN LEND LQDT SXCI were the biggest decliners.
Speaking of opportunity , anyone who bought AHM at $1 or so on Tuesday afternoon could have made a 400% profit today as the stock at one staged spiked to $4.60. AHM is a mortgage lender that declined due to concerns of possible bankruptcy due to liquidity issues.
The stock market is safe for now as two thirds of Americans see a recession ahead. Markets like to climb a wall of worry. The fact so many Americans are pessimistic is a sign that the market will go much higher. Tops occur during times of 'irrational exhuberence' to borrow a Greenspan quote.
MORNING UPDATE
So far a solid start to the market. Yesterdays late rally sure felt like a bottom is in. I would expect perhaps a retest of yesterdays low either this week or next before we make a run up.
The 1440 number seems to be a low for the S&P 500 atleast for now.
Economic news has been fairly solid. The European Central Bank and the Bank of England kept their rates unchanged as expected. Factory orders were up though less than expected. The big employment number is out tomorrow.
Stocks I am watching include LVS SBUX COGT NYX FFIV BBND CMG GS CROX AAPL
The 1440 number seems to be a low for the S&P 500 atleast for now.
Economic news has been fairly solid. The European Central Bank and the Bank of England kept their rates unchanged as expected. Factory orders were up though less than expected. The big employment number is out tomorrow.
Stocks I am watching include LVS SBUX COGT NYX FFIV BBND CMG GS CROX AAPL
I think Las Vegas Sands LVS is going to have a great summer with record revenues from foreign tourists taking advantage of a weak US Dollar.
If McDonalds MCD is a great global growth play, then I wonder why people are not talking about Starbucks the same way. Just imagine all the potential in China and India. I imagine once SBUX is at $50+ a share, the analysts will be jumping all over it calling it the greatest global growth play ever.
Oil prices are at record highs but I am not feeling the pain at the pump. Must be something to do with the crack spread. Gas prices were a lot higher 2 months back thats for sure.
Wednesday, August 01, 2007
BLACK WEDNESDAY ?
Markets across the globe have pulled back substantially though the US markets are holding up relatively well at the open. The S&P 200 day moving average is at 1449 and that appears to be a level the bulls will desperately try to hold. A failure to hold could see a sharp move down.
The best thing to do in a bearish tape is look for names with strength and try to add into them. GRMN CMG WFMI FFIV SBUX MCD GOOG are some of the strong names today.
The best thing to do in a bearish tape is look for names with strength and try to add into them. GRMN CMG WFMI FFIV SBUX MCD GOOG are some of the strong names today.
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