MARKET UPDATE

I smell a strong Rally coming. Stocks have been taking to the cleaners the past few days. Momentum stocks are being targeted in a 'seek and destroy' operation. CROX VDSI ALGN NIHD BCSI UA AMZN FTK LVS are some of the names that have been run over the last few weeks.

NTES BOOM LLNW INAP are some of my holdings that have something going today. Sort of. Everything else is being taken to the cleaners.

I am buying some CROX ( $42.35) here as a trade and a gamble. Maybe we will get some lucky bounce to $50. Either way its a pure gamble on an oversold stock.

I though November was a month that was always bullish. So far its been more bearish that September. This subprime nonsense is killing the market. I think things are not as bad as people are making it to be. Seems to be an overreaction. Then again, things could continue to get worse.
I should really stay put and see how things play out but I want to make money and I think staying long is the smartest choice of action vs getting short and seeing a huge short covering rally. I still believe 15000 is on the cards for the Dow by year end. There is too much negative opinion in the air. All this negativity means there are a lot of short players out there who could fuel a rally. I want to see a strong bounce in financials.

First day of November recap

November is the strongest months for stocks. Boy did this month get of to a great start ..... if you read charts upside down or if you are a bear. 2.6%, 2.6% , 2.4% the respective percentage declines on the Dow, S&P and Nasdaq. Financials got obliterated with banks down over 5% . Citi C was to blame with analyst downgrades on rumors that further asset right downs, would leave the global financial giant short on capital.

While I write this Asian markets are plunging and fear and panic gripes the globe. I see this as yet another buying opportunity unless we cut through the loans we made a couple of weeks back in which case we may see the Dow back to 13000 or lower. I am preparing to cut more positions and raise cash in this inevitability.

I did buy some C today because I believe this stock is too damn cheap. Anything below $40 is too cheap and I got some gifts under $38.50. I expect a double within 24 months.

I added some more to my NTES position because this Chinese online gaming stock bucked the overall trend and was up an amazing 7.7% in a terrible tape. SNDK MU BOOM INAP also looked strong until later on in the day. Once 3:30 came along the plunge was in earnest. Nothing stopping the bears.

The less I talk about my other positions the better though I am thankful I sold out of LVS and COGT in light of this evenings massacres in both these issues.

While I don't like the looks of the market , we may get a rally on the back of strong employment numbers tomorrow. I would however be reluctant to buy a higher open preferring insead to buy SRS QID SDS DXD as protection . A weak open will be bought atleast on my part.

I did buy more SLV today on that dip below $140 . I see silver prices with a lot more upside.

Halloween Recap

Well it was an enjoyable Halloween . Bernanke and company handed out candy to the bulls via a quarter point interest rate cut. Woohoo !! The market reacted with an initial dip which was great for me as I managed to buy a boatload of QLDs and SSOs on the cheap. See there was a reason for me cutting down a lot of positions the last few days. I wanted to take full advantage of today.

I believe tech stocks will continue to do well though I dumped FFIV at $36 today. Tired of playing with this stock. I will continue building up positions in AKAM LLNW INAP NTES OVTI and other tech names that are doing well. I think NTES may be the most undervalued play in China . Would not be surprised to see $40 by December 31st.

Speaking of tech, I also like SIRF. This stock was a steal at $16 a few months back. Too bad I did not take a position. I was planning on but brushed it off after reading their annual report. Thats why reading annual reports don't make much sense. Too much bullshit in there. Making money in stocks is all about price volume action.

And CROX finally took a beating today. At $57 I think CROX might be a decent buy. Trades at less than 22 times next years earnings. Pretty cheap for a stock growing this fast.

TRICK OR TREAT ?

Thats right. Halloween is right around the corner. What will Mr. Bernanke have in store for us ? Thats the million dollar question . "To cut or not to cut ?" Half a point cut and we will get a good rally. Quarter point and perhaps a little upside. No cut and we will probably collapse like a stack of cards.



I think we will get some sort of rate cut. Bernanke has his hands tied. Credit market are in a tight spot. Long Gold and Silver are my plays for tomorrow. We got a slight pullback which allowed me to add to my GLD and SLV positions. I expect them to soar on a cut. Financials and Homebuilders should get a good boost too.



I continue to clean out my portfolio dumping out stuff like IBKR among others. When all is done I expect to be down to 25 positions or so. I'm tired of holding underperforming positions. Its time to add quality. I'm expecting a recession. I don't think the US consumer is going to be around much longer. The fall in home values added to increasing prices at the pump, grocery stores and retail establishments is pressuring the consumer. Once the layoffs pick up, the party will be over. No amount of rate cuts will save us. I think we need a good hard recession. Some hardship is good. Makes one stronger. Us Americans have become a lazy bunch, always expecting someone to help us out.

Well tomorrow is the big day. Everyone better be prepared.

UPDATE

The market looks fairly strong so far. Tech is doing well and the Nasdaq leads the way.

Oil continues to stay high partially due to rumors of war with Iran. I still think oil is peaking here. I believe we will see lower prices in the next month or so.

Fed meets on Wednesday and the market is predicting a rate cut. is a rate cut already priced in ? What happens if the Fed does not cut ? Those are two questions I am currently pondering.

I have dumped my position in SBUX. I think Starbucks has serious problems and will move lower in the coming months. I just don't buy their story anymore.

I have been adding to my positions in BOOM LLNW INAP MCHX AKAM MPEL NIHD QLD HANS this morning. I like what I am seeing with the above names.

I think CMG is grossly overvalued and will drop after earnings. On the other hand I could be wrong.

BIDU continues to move higher and it looks like $400 is on the cards. I continue to sell my position in small increments. I bought this between $95-110 and it has been my best gainer this year.

Pre Market Brief

Great earnings from MSFT and a positive outlook from CFC this morning have send the futures racing skyward. I expect a strong rally today and continuing into next week. I think the bears have had their chance to cover. Any attempts to bring the market down will only in further rate cut rumors sending the market upward. Microsoft is up over 12% in premarket and Countrywide is up over 21%.

I started building a position in NIHD yesterday below $55. Keep an eye on this one. There is still plenty of growth ahead.

Got into BOOM prior to earnings. Earning growth continues to be solid and I will continue adding.

I think financials are poised to rally today particularly the mortgage lenders on the back of CFC solid outlook. Brokers are alos a good place on the back of IBKR blowout earnings. Have been long IBKR since the IPO at $30. Added as it went lower.

I expect a very bullish trading session.

MARKET UPDATE

Overall market is looking weak today. I expect strength into the close. Shanghai fell hard overnight. Gold and Silver are going through the roof in anticipation of a rate cut. Broker stocks are doing well too.

In IPO news ULTA is soaring. I am long. Got in at IPO price $18. Currently at $30. Will buy more below $28 ( if it gets there). I see $50 in 12 months.

I am adding to DFS. I cannot believe how low this one is. Should be a top 10 position by year end.

My NTRI position is picking up steam. We saw the bottom. I expect a strong rally in the coming days. I added more after hours and pre market today.

Buying some NIHD here. I've been keeping an eye on this. I think below $55 is a good place to take a position. Even if the company earns $3 next year which is 20% below consensus, at 25 x next years earnings this should be a $75 stock. I will keep adding each $1 this stock falls. We may see $45-50 but I think Latin American telecom growth cannot be ignored. I plan on making NIHD one of my top 5 positions.

Market Recap

In After Hour trading my positions in FFIV and NTRI got blown away. I was stopped out of half my FFIV position during regular trading hours. I like RVBD better and will probably buy some in the next few days. I will probably double up on NTRI because I don't think things can get any worse though I felt the same 20 points back ....

Lets break NTRI down. They will earn around $3 this year. At $25 a share that is a PE of 8.33. They will likely do atleast $3 next year if you factor in international growth . I figure NTRI will double its earnings in 5 years to atleast $6 a share. Even at a conservative PE of 15 thats $90 a share in 5 years. Thats an annualized return of better than 25%. To top it of, management is repurchasing up to $100 million of shares in the coming months. And Tiger Global management recently doubled their stake.

AKAM released earnings an beat by a penny. The stock was up a little in after hours trading. I believe AKAM should be trading at $45-50 and not where it currently is ($33.54). Having averaged better than 100% annualized growth over the last 5 years and and expected growth rate of 30% over the next 5 years I believe at even 30 times next years earnings ($1.66) AKAM shoud be $49.80.

NYX continues moving higher printing $90 today. I think $100 is close at hand and perhaps even $120 by years end.

AMZN got beaten up today. While hope is not a viable investment strategy, I really do want to see AMZN back at $50. People who paid $100 for AMZN are stupid. This is a retail play. AMZN will not grow at better than 40% annually over the next 5 years. Even 30% growth is pushing it. How can you justify paying even $87 for a stock that has earned 87 cents per share the last 12 months ? Even if AMZN does $2 a share next year which is 30% higher than consensus it still trades at almost 44 times 2008 earnings ! The only thing that keeps AMZN up is Bill Miller and Legg Mason. They own 20% of the company and are reducing holdings by half by years end. AMZN is an old lady and Legg Mason/Bill Miller is her walker. Take the walker away and the old lady crumbles.

The market appears to have put in a bottom today. Oil is looking toppy. A Fed rate cut is coming. The Bulls are hungry. The Bears defeated. I sense a strong rally tomorrow.

I continue buying SNDK. This chip stock has been beaten up for no fault of its own. Trading at 17 times 2008 earnings with a 5 year growth rate of 35% and expected to grow at better than 22% going forward, this is a great buy. I see an easy $100 inside of 3 years.

AFTER HOURS MARKET SUMMARY

AMZN earnings beat was actually a disappointment. 19 cents a share does not quite cut it. Many investors were looking for a blowout something along the lines of 22 to 24 cents a share.
The stock is taking it to the nuts in AH trading down 10%. A beautiful island reversal beckons on the charts if AMZN continues sinking in the days ahead.

RVBD is getting punched around like Apollo Creed at the hands of Ivan Drago. RVBD is a buy as long as $36.50 holds tomorrow. Investors pay for growth and RVBD is a growth story. Earnings were great; guidance a little weak. No big deal. I'll probably take a position in the coming days. I've owned RVBD before. FFIV is down as a result in AH. Earnings are out tomorrow. I'm long FFIV.

Comcast admits delaying some subscribers traffic. Shame on Comcast. Who cares if people share files. The world has changed. Got over it. Either you keep up or get killed.

CFC has appeared to have started its second leg down. This stock appears it may ultimately fall down into single digits. CFC is dirt cheap and any one with cojones big enough to handle this volatility will have a pot full of gold a few years down the road.

LVLT was massacred today. Wasn't Cramer pumping this a few months back. Put a $6 handle on it ? At $3.24 it must be a case of 'back the truck up' right Booyah boy ?

I think DUG might be a good buy here. I think oil prices are topping out short term. Oil is sold in November and bought back in March.

I like having all this extra cash lying around courtesy of getting stopped out a multitude of positions. Allows me to relax, refocus and put money into winning trades. You always need 10-15% of cash lying around. Feels really good. The market could drop 30% tomorrow and I would still feel good.

And NYX is a BUY here. I feel a run to $100+.

Market Summary

Yes I notice I haven't blogged in 20 days. I needed a break. The damage was done on Friday. Was today a bottom ? I don't know. This is what I am doing. Actually better yet like me break it down point by point.

• Keeping tight stops thus protecting profits.I don't like seeing 200% + profits disappearing on holdings like BIDU.
• Hedging via SRS. The real estate sector stinks and will lead the way down during any pullback.
• Raising cash. A lot of my stops have already been hit. I am out of OXPS LVS (Valuation) HANS (50% out) COGT GDX DDM SSO AKAM( 75% out) RACK .
• Ready to deploy cash into QLD . As the market pulls back I am adding into QLD since the Qs are the strongest group here.
• Watching GOOG AAPL RIMM CROX GRMN BIDU CMG SPWR carefully. These are the markets top dogs and their failure will ultimately lead us into a bear market.
• Keeping an eye on the 10 year Treasury. At 4.39% I don't think we are heading into a bear. I need to see 5.5% plus before I push the sell button. Money is always looking for the highest yield.
• Drinking JW Blue Label religiously. It just tastes so much better.

Market Commentary

The major indices did not go anywhere today though stocks as a whole did pretty damn good. The sector that impressed me are the casino stocks with huge gains in two of my holdings LVS and MPEL. Home builders powered upwards since they are heavily shorted and anything can send them rocketing. Ridiculous gains in HOV TOL KBH DHI BZH MTH RYL . I am thinking of adding SRS as a hedge if this craziness continues. Homebuilders will be a great short very soon.

Broker stocks have been doing well as of late. I sold out my GS position between $204 and $212 with a cost basis of $174. GS printed $228 today. It was a short term trade and I was ok with it. OXPS is the broker I love and I am long and will continue to hold till this prints $35 or gets bought out.

In the semis/chips, MU had a solid day though gave back some in after hours after a not so cheery earnings report. OVTI continues powering higher and I continue to stay long. This has been one of my best plays this year. I bought between $13 all the way till $18.

AKAM and LLNW put on a little show today. I have been pounding the table on AKAM for quite some time now and it looks like some big funds are taking notice. What you have here is a growth play that offers tremendous value. FFIV is another one of my networkers that put on a show. I like RVBD too. Its been strong the last few sessions. I owned this between $28 and $45 and am considering taking a position again here.

BRLC and JADE are in my dog house along with JSDA. I have strong expectations on these names in the long run. I could sell now , take the loss and buy later. The problem is these micro caps run so fast that by the time you notice them running up, they are already up 100% or more. All 3 are spec names and constitute less than 3% of my portfolio. So I am not too worried.

BIDU continues its crazy ascent. This stock is easily my stock of the year. I sold half my stake over 100 points back and this monster continues its climb. I am looking at taking more of the table because once again BIDU is creeping towards being my biggest position. I am trying to keep BIDU to around 5% of the portfolio but am failing miserably though I am not complaining.

Gold and Silver had a poor day. I sold a major portion yesterday after I felt a pullback was due. I didn't expect to time it so perfectly. I think I will hold of buying till next week.

The market looks like it wants to continue going higher. lot of skeptics out there. Nobody believes in this rally. The Dow will likely print 15,000 before year end. I think oil peaks here and heads down below $70 by end of the year. I would be long DUG.

AMZN V GOOG

AMZN will need to grow earnings 40% per year or better over the next 5 years to justify its current valuation. If GOOG was able to grow earnings 40% per year over the next 5 years, its present stock price would be $1200+, more than double its current $567. Now you tell me, which company would you pick to grow quicker over the next 5 years - AMZN or GOOG ?
An online retailer vs the most dominant force in the internet world ? Seriously folks, either AMZN is massively overvalued or GOOG is massively undervalued. The truth is probably somewhere in between.

Of note, AMZNs largest shareholder at 22% - Legg Mason and its legendary manager Bill Miller is preparing to tone down risk in the portfolio by reducing sizeable positions . Could this mean cutting down the $8.5 billion worth of AMZN stock he currently owns ? Me thinks so. AMZN is Millers largest position. AMZNs second largest holder T. Rowe Price is also cutting back.

Market Update

Consumer spending Up. Big surprise there. With home equity being tapped out, its likely consumers will be turning to the plastic. Thats good news for MA and DFS.

Business activity continues to rise. Strength in exports is a big factor.

The Dollar continues its slide. Thats good news for the Euro, Gold, Silver and commodities. Long FXE GLD SLV DBA.

Stocks to watch : AAPL GOOG BIDU CMG GS CROX GRMN RIMM When these stocks are having a good day, so is the market.

HOLDINGS

TOP 10 HOLDINGS MAKING UP 50% OF PORTFOLIO

1. GE
2. SLV
3. GLD
4. HANS
5. BIDU
6. LVS
7. NYX
8. NTRI
9. SBUX
10. AMGN

MIDDLE OF THE PACK 35% OF PORTFOLIO IN NO PARTICULAR ORDER

• DBA
• OMRI
• DFS
• COGT
• AKAM
• NTES
• UNG
• FXE
• QLD
• SSO
• DDM
• BWLD
• MPEL
• GDX
• ORCL
• FMCN
• AA
• OXPS
• OVTI
• HNR
• MMS
• SNDK
• MU
• IBKR
• FFIV

BOTTOM 15% SPECULATIVE PART OF PORTFOLIO IN NO PARTICULAR ORDER

• RACK
• BRLC
• JSDA
• JADE
• LLNW
• BBND
• INAP
• GRZ
• UXG
• KRY
• WGDFF
• GNPI
• DIVX
• PNWIF
• KNOT
• VCLK
• CUUEF

Market Commentary

The market defies gravity and continues to soar higher. The bears are full of excuses and concoct imaginative reasons as to why the market should fall. It seems the bear trade is over crowded and thus the market continues it ascent. All time highs are round the corner.

New speculation involving Buffett taking a stake in Bear Stearns continues to propel this market as another buyout falls through the cracks. Seems like Buffett is rumored to be taking a stake in every company out there from Countrywide to Hovanian and this time Bear Stearns. What next ? Home Depot ?

How do you help a mentally challenged President ? This is how.....

WHAT NOW ? Thats the question on a lot of investors minds. Do we invest for the long haul here ? Do we go into cash and wait for a fallout from the coming recession ? The best strategy is probably to stay long and wait for a breakdown in the leading stocks such as GOOG AAPL AMZN BIDU GRMN CROX BCSI CMG . Once they breakdown its likely the overall market will fall soon after.
TCG TIP: The leading stocks breakdown well in advance of the overall market.

MARKET UPDATE

The market continues to advance. Oil, technology and housing are some of the sectors leading the way. Solid earnings growth from Oracle and Nike are contributing tho this wave of bullishness. Billionaire Wilbur Ross bid for American Home Mortgage servicing unit is another bullish factor.

Shares of Harman International are plunging on speculation that KKR and Goldman Sachs will abandon their bid to buy the audio equipment maker.Buyout and private equity transactions are going to be more select going forward . Money is not as easy to come by these days. Interest rates may be lower but, the cost of debt financing has increased. Investors will only do deals that make absolute sense. Nothing of a speculative nature that we so in the not so distant past.

The Dollar continues its decline into the dustbin of history. Great for Gold, Silver, the Euro, Oil and anything that is denominated in the greenback. Foreign banks will reduce their dollar holdings. Eventually oil and other commodities will be priced in a currency other than the USD.

A quick review of some of my holdings. NYX is looking to break out of its slump. The past few sessions have been bullish as Borse Dubai takes a 20% stake in the Nasdaq and Qatar takes 20% of the LSE. I reduced my position in LVS which continues to advance in relentless fashion on news of strong turnout in Macau. HANS continues its rise to new 52 week highs. Same with OVTI. My biggest holding at 8% GE has been another solid performer. I sold off my GS position between $204 and $210. BRLC and JADE have been very frustrating do I've increased stakes in both positions to around 4% of the portfolio combined. My AMZN short continues to leave me with a headache. Amazon needs to grow earnings 40% annually over the next 5 years to justify its current valuation. A recession and retail slowdown will not help. Once Bill Miller starts selling the fall will occur. Patience is required.

Market Recap

"Hell hath no fury like a Bull scorned" - The Capital Game 09/18/2007

All of last week and leading into todays Fed meeting the consensus was that the bulls were treading on shaky ground and a rate cut would lead to a sell off. Time and time again, the strength of the bull was questioned and today the answer was provided in resounding fashion.

Did the Fed really need to drop rates by half a point ? Maybe not. Is a half point cut a sign that the economy is a lot worse than the Fed are letting on ? Probably. Will we have a recession ? Very likely. So why did we rally 336 on the Dow, 43 on the S&P 500 and 70 on the Nasdaq ? Optimism, jubilation over a rate cut,more buyers than sellers and the fact that the stock market operates independently of the underlying economy. Traders see a rate cut as a sign that the economy will improve down the road. I would use todays rally as an opportunity to lighten up on some positions especially the more speculative names.

Today was a ridiculously good day in the portfolio courtesy of some huge gains in GS DFS OXPS BIDU HANS GE LVS AKAM QLD DDM SSO . I expect some continuation of this rally tomorrow though I intend to reduce around 5-10% of my long exposure. September is not a good month historically especially the latter half and sitting on cash will allow me to pick up some bargains when they come.

Markets Mexican standoff - "the asymmetrical nature of a Mexican standoff means that - in the event of conflict - each party will face a tactical decision as to which other party to strike first."

USD moves to record lows against the Euro as a Fed rate cut looms. How will our biggest creditors Japan and China feel about this ? Not too good I'm sure.

Paulson points his finger at the mortgage lenders for the subprime crisis. Paulson needs to remember that for the finger he points towards the mortgage lenders, there are three finges pointed back at him. Was he not the boss at Goldman Sachs during this period of subprime excess. Did Goldmans not help securitize and sell mortgage CDOs to investors ?

The market so far has opened very bullish. Probably a good move would be to fade this rally. Gold and Silver are weak though with a falling Dollar I expect them to gain strength.

Good One

A fictional (or real ?) conversation between LCD maker Syntax-Brillian Corporation BRLC CEO Vincent F. Sollitto and CFO Wayne A. Pratt. BRLC postponed their earnings release today for no apparent reason.

Vince:
..." Hey Wayne....aren't you supposed to deduct operating costs instead of adding them?

Wayne:

..." Oh @#$% Vince, you might be right...let me double check on my Accounting 101 book. You are right!!...damn...hey Vince do you have a calculator?

Vince:

.." are you nuts? we don't make calculators....we make LCD TVs here"...besides, if you buy one you will lower the EPS by one cent. Keep doing what you have been doing. Do it by hand"

Wayne:

...Don't we have a CC today?....or is that tomorrow??

Vince:

..."@#$%, today is the 11th....we have to issue a quickie PR to postpone this @#$%. I hate CCs, I much rather be counting money...."

Wayne:

..." Okey Vince ....you are the boss"

Vince:

..."there goes your bonner you idiot"

.......and so on....

Funny Stuff.

Market Update

The market has put on a solid showing so far perhaps as a patrotic gesture on 9/11. The last two hours will be crucial as always.

Bernanke gave no hints as far as whether rates would be cut in a speech in Berlin today. He did say global interest rates were very low. Perhaps the Fed will not cut afterall. I don't believe they will cut.

Stocks moving up on heavy volume include URGI CORT IMCL GIII ASIA COGT DLLR DRL TSL IVN CRZ

Gold and Silver continue their strong up move today. The strength in precious metals has been unbelievable as of late. And to think I nearly gave up on Gold a few weeks back.

Market Update

The world is ending today or so it seems based on the bearish drop to start proceedings on Wall Street here on Friday September 7th 2007. The reason for the drop is ostensibly the deteriorating economic situation made visible in todays payroll numbers which showed the first loss of jobs in 4 years. Job losses in construction, manufacturing, transportation and government swamped gains in education and health care, leisure and hospitality, and retail. Employment in financial services was flat. Well now we have a good snapshot of the sectors which are expanding and those which are contracting.Keep in mind the last job decline was in August 2003 and the US stock market was coming out of recession and expanding at a phenomenal rate back then.


Gold, Silver and precious metals are going through the roof today along with the Euro. Gold finally seems to be distancing itself from the overall market. A move over $700 and perhaps closer to $800 in the coming months. GLD SLV GDX FXE are all doing brilliant this morning.

Market Update

STOCKS cheapest in 12 years ? This seems to be the consensus based on this article. However despite the fact stocks are 'cheap' , one needs to take into consideration the fact that we are closer to the end of a multi year bull market and past the peak of the economic cycle. In other words, I believe stocks can still get cheaper.

Mortgage insurers MGIC Investment Corp. and Radian Group Inc have agreed to terminate their merger agreement some two months after the deal became jeopardized by losses at their subprime-mortgage joint venture. MTG and RDN are both great stocks to short. Mortgage woes are going to get worse and these insurers are going to bear the brunt of the fallout.

U.S. private employers likely added 38,000 jobs in August, far fewer than analysts had expected and the slowest rate of growth in four years, a report by a private employment service said on Wednesday. With slowing job growth, increasing unemployment, slowing consumer spending, decreasing home values and slower economic growth, I am surprised we are not already in a recession.

Yahoo, the struggling internet giant, has acquired BlueLithium, the online advertising group, for $300 million in cash, in a renewed effort to close the yawning gap between it and the market leader Google. I believe this should be a big boost for online advertiser ValueClick which is the biggest independent internet advertiser left. VCLK was rumors of a takeover at $40+ a share and right now the stock is $21 and change. VCLK is growing at an amazing rate and a buyout is likely on the cards.

Currently the market is taking quite a dip as investors fear the Fed will not cut rates. It appears Tuesdays are not good days for the market. We have had quite a few large market drops on Tuesdays over the past few weeks. Tuesday July 10th, 148 point Dow drop, Tuesday July 24th, 226 point drop, Tuesday July 31st 147 point drop, Tuesday August 14th, 208 point drop, Tuesday August 28th 281 point drop. Thats a 1000 points lost on the Dow on just the Tuesdays I've mentioned. And the other Tuesdays I have not mentioned from July and August were a break even if added up. Maybe the theme should be to not be long on Tuesdays or short Tuesdays.

Market Update

The pain from higher borrowing costs may be spreading as consumers and businesses follow investors in shying away from risk, increasing the odds of a recession.

``While there is no basis for predicting a recession right now, the risks have surely gone up,'' says former Treasury Secretary Lawrence Summers, now a professor at Harvard University in Cambridge, Massachusetts. ``The combination of softness in the housing sector, contractions in credit, increased uncertainty and volatility, and losses in wealth make the chances significantly greater now.'' Bloomberg

As Wall Street lowers economic forecasts and increases the odds of a recession the markets are jittery this morning. Its all about adding 2 plus 2. The market is in trouble, home equity is decreasing and consumers are no longer able to use their homes as an ATM. The net effect will be seen in consumer spending which will drop of significantly. A recession in the US will be felt across the globe since we are the worlds biggest consumer. We decrease our buying of Chinese imports which in turn leads to a recession in China as layoffs there increase due to lower demand for their goods. The effect will be like a domino as it spreads all over the globe. I am not suggesting this will happen but, thiere is a strong possibility.

This morning, tech is looking very strong with solid gains in AAPL GOOG SNDK GRMN AMZN . Other stocks making big moves include LLNW JADE BBND RACK KALU SPWR FSLR TNH NFLX VDSI BCSI CREE LEAP HOKU LOCM ASTSF.

Market Update

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.

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.

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.

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.

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).

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.

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.

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.

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.

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.

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.

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.

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.

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.

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 .

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.

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.

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.

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.

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.

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.

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 ?

"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.

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 ?

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.

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.

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.

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.

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.

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.

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

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.

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

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.

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.