FAKE RALLY ?

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

MY THOUGHTS ON GOOGLE

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

BACK AGAIN

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

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

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

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

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

STOCK PICKS FOR WEEK OF MARCH 10

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

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

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

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

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

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

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

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

A quick update on our previous picks.

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

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

SNDK - same as above.

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

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

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

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

Thats all folks. Happy hunting .

NEW PICKS

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

AAPL LONG TARGET: $ 72 STOP: $67.50

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

CRED LONG TARGET: $ 30 STOP: $ 19

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

DXPE LONG TARGET: $ 20 STOP: $17.50

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

OTIV LONG TARGET: $17 STOP $14.25

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

SNDK LONG TARGET: $ 70 STOP: $59

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

TRAD LONG TARGET : $17 STOP $15.25

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


Happy Hunting Folks.

ENERGY SECTOR

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

SHORT TERM TRADE

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

AAPL LONG TARGET : $68 STOP : $62.50

TRAD LONG TARGET : $ 16.50 STOP : $14.50

SUN LONG TARGET : $75 STOP : $70.75

GLW LONG TARGET: $25 STOP : $22.50

CRED LONG TARGET: $28.50 STOP: $21.25

RVSN LONG TARGET: $24 STOP : $19.25

QSII SHORT TARGET: $67 STOP: $ 73

STOCKS I AM CONSIDERING FOR PURCHASE

Neoware Systems. NWRE. Look at the chart. pretty impressive. Looks to have a long term uptrend .





CIT group. CIT.



TRAD. Tradestation. Online brokerage. Very popular. 25% plus increases in net income year to year. Good stock chart.

An Apple a day

AH.WHAT A BEAUTIFUL CHART. Like my mother used to say "An Apple a day keeps the doctor away" . Lucky for me I have been invested in this stock since April of 2004. April 15 2004 to be exact. High volume day, high upside 62 mil shares traded. In for at $28.95 ( pre split - current prices $14.475). 500% gain to date. BEAUTIFUL.

Holdings and market outlook

Google News

Forbes

Fortune

Currently Long on

• STV
• GROW
• QSII
• ENG
• UPL
• URGI
• CFK
• GOOG
• HOM
• RWC
• PQ
• PKD
• TALX
• CBG
• GOL
• XTO
• ASVI
• EPEX
• BLSC
• AAPL
• APL
• BWLD
• CAKE
• PZZA
• SBUX
• SIRF
• AQNT
• GLW
• VLO
• OXY

Short on

• THOR
• F
• WGO
• LUV
• JBLU
• NT
• LU
• GM
• KKD
• NFLX
• ALDN
• TOL
• KBH
• LEN
• PHM
• DHI

Market will stay choppy till February atleast. Housing market ready to go bust. Short home builders , construction companies etc.

THE GREAT REAL ESTATE MARKET COLLAPSE

Housing Prices going up ? Not for long . Not living in a real estate ' bubble' ..think again. Prices across the nation are going up 15-25 % a yr and that is considered 'normal'. A crash bigger than anyone can imagine is right around the corner and I will explain why .
In the last few years particularly after 2001 , alot of people have bought homes using adjustable rate mortgages ( ARMs) . Can't afford that dream home , no problem. Just get that ARM interest only mortgage and your monthly payments will be 25-50 % less than what you would be paying with a fixed mortgage amortized over 30 years. These days we have ARMs starting as low as 1% . The problem lies in the fact alot of people are using these ARMs not to free up additional income to use for other purposes but rather to make up for the fact they cannot afford that home on a fixed rate fully amortized loan . In expensive markets - think California , people on incomes of $50,000 a year are buying $500,000 homes. Using ARM options their monthly payments are affordable initially but things change down the road. Most ARMs are fixed from a few months up to 10 years with most being of the variety that are fixed for 3 years . ARMs are generally tied to an index - T-Bill, Libor etc. If anyone has tracked these indexes,they would notice the rapid uptrend in the last few years with rising rates. By the time the fixed period for these ARMs are over, the rate these home owners will be paying will be ridiculously high , think 8-9 % and to top it off it will be fully amortized ( interest and principle payments) . Those people making mortgage payments of $2000-2500 a month will be paying close to twice that $4000-4500 a month . Now we raise the question , if people could barely afford the homes with ARMs, how will they ever afford the payments at the higher rate ? In California according to studies conducted by the mortgage industry , close to 70% of new home buyers have used ARMs to purchase their homes over the last 3 years. Many of these ARMs are just starting to reach the adjustable period where they will be tied to the higher index . Many of these homeowners do not have the option of refinancing to a fixed rate mortgage because they would not financially qualify for them . The only option for a lot of these people will be to sell the house or go into foreclosure . The number of homes on the market for sale will rapidly increase through out 2005 and 2006 causing real estate prices to plummet especially in areas like California where the affordability is so limited.

The Good, The Bad and the Ugly

Oil is going to $100 a barrel . Yeah right. It was only a few years ago, 1998 if I recall correctly where oil was hovering just above $10 a barrel. So what happened ? Did world demand increase 5 times in the last 7 years to cause oil to crack $50 a barrel ? NO. The demand for oil has increased by less than 25% yet prices have are up 300-400%. Its ridiculous and sooner or later prices will be back at an equilibrium of $30 a barrel. SHORT OIL . Sell Sell Sell. $100 a Barrel !!! Those crazy analysts at Goldman Sachs. What were they smoking ? Before this decade is over oil will fall to $30 a barrel or less. One only needs to look at the historical prices of oil and see the large increases followed by larger drops in price. Current production is more than enough to meet demand . There are enough proven reserves to last us most of this century. New sources are being discovered - Alberta , Siberia . The big oil producers have enough spare capacity to jack up production 25-30% if needed. So why the price increase ? Fear , panic , greed ..the same old culprits . Instability in the Middle East, Terrorism , China is going to drain all the worlds oil. NEVER . Like I said $30 a barrel or below .